The law is applicable to international investment contracts

Abstract

Given the unique nature of investment contracts, which are concluded between a public law entity (the state or one of its public institutions) and a private law entity (either a natural or a legal person), the issue arises of reconciling the general objectives that the state seeks to achieve with the interests that the investor seeks to fulfill.

In cases of dispute, when the parties to the contract seek to resolve the dispute amicably, they are not required to apply the applicable law; instead, they agree to settle the dispute based on principles of equity and fairness. In contrast, the arbitrator is bound to resolve the dispute by applying the applicable law. However, an exception allows the parties to agree to exempt the arbitrator from adhering to the provisions of the law and to settle the dispute based on principles of equity, provided that such permission does not grant the arbitrator the authority to violate mandatory legal provisions or public order.