The Dichotomous Investor-State Relations : A Critical Analysis of the Devas Bit Arbitration

Transnational investments continue to be a crucial determinant of a nations' economic and political vigour. Most countries prefer such investment policy measures that are aligned with the objectives of investment liberalisation, promotion and facilitation. The international law of foreign investments scrupulously safeguards the foreign investments vis-à-vis the rights of a foreign investor under the bilateral investment treaties. The substantive and procedural protections afforded under such treaties allow foreign investors the right to engage a host nation for violations of the bilateral investment treaty obligations in investment treaty arbitration. The byzantine challenges stemming from the diversities in the provisions of such treaties have rendered the host nation maladroit of maintaining congruity between the crucial substantive and procedural rights protecting the foreign investments and the flexible determination of sovereign regulatory autonomy inherent in a host nation, thereby failing to strike equipoise between the investor-state dyad.This paper explores the dichotomous dynamics of an investor-state relation in the light of the investment dispute settlement mechanism provided under a bilateral investment treaty. In so exploring, the paper analyses the recent case of Devas BIT arbitration which primarily highlights the susceptibility of a host nation which has wilfully yielded to the austerity of investment treaty arbitration thus axing the ease of exerting sovereign regulatory autonomy vested in the host nation. This paper argues that there exists a profound dichotomous inequity in the investor-state relations arising out of its failure to reconcile investment protection provisions with the sovereign right to regulate of a host nation under the current bilateral investment treaty paradigm thus urging the need to re-visit the current legal framework of investor-state dispute settlement provisions which remains focally responsible for such incongruities bearing substantial fallouts