Arbitration & ADR, Insights

An Examination of Triple Identity Test in Resolving Fork-In-The-Road Clause Objections

Most often, investors engage in investments activities by establishing or investing in a local company in the host State(s) to enable them participate in large scale projects and take advantage of some economic opportunities in those State(s). By virtue of these investments, there exists a business relationship between an investor and the host State, which occasionally is prone to disputes. A vast majority of bilateral investment treaties (BITs) as well as some regional agreements and other instruments, contain provisions for settlement of disputes between Investors and the host State.

A significant provision of investment treaties is the one on settlement of disputes arising from such treaties between the investor and the host State. This provision, although, may be drafted in different terms, provides for recourse to international arbitration (“arbitral tribunal”) or domestic courts of the host State in settlement of disputes, specifying that a choice made by the investor shall be exclusive and final. This is called the fork in the road (“FITR”) clause and by implication, an investor cannot institute an arbitral proceeding to address the same claim for which he had instituted a suit in the domestic court…

 

 

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