Investment Disputes With a Foreign Element: Typological Classification and Jurisdictional Approaches

Abstract

The article is devoted to a comprehensive study of investment disputes with a foreign element, their typological classification, and jurisdictional approaches to their resolution in the context of globalization of economic activity and the growth of foreign direct investment. It is noted that the increase in international economic integration is accompanied by the growing complexity of legal regulation of investment relations arising between foreign investors, states, and other entities of different jurisdictions. The lack of unified approaches to the classification of such disputes and the definition of jurisdictional mechanisms creates legal uncertainty, complicating the protection of investors’ rights and ensuring the stability of the investment climate.

The article distinguishes two main categories of investment disputes: interstate disputes governed by the norms of public international law, and transnational disputes arising from civil, administrative, or other public law relations, which are resolved within the framework of national legal systems or international commercial arbitration. Interstate disputes are related to violations by states of their international obligations, such as unlawful expropriation or discriminatory measures, and are often considered by international institutions such as the International Court of Justice, in accordance with the provisions of the 1965 Washington Convention.

Transnational disputes, in turn, cover relations between investors and private or public entities, including disputes over investment agreements, joint ventures, or the protection of minority shareholders’ rights. The article analyzes classifications that focus on the composition of the parties and the legal nature of the relations but do not fully take into account the interstate character of some disputes.

Special attention is paid to jurisdictional mechanisms, particularly the role of international commercial arbitration based on arbitration agreements and the activity of the International Centre for Settlement of Investment Disputes (ICSID). It is noted that Ukraine, as a party to the Washington Convention, provides a legal basis for resolving investment disputes, which contributes to attracting foreign investment.

The article also examines the legal nature of investment disputes, in particular the debate over whether they fall under private or public law. The author expresses the view that disputes between an investor and a state regarding compensation for damages or fulfillment of contractual obligations are predominantly of a private legal nature, as confirmed by the provisions of the Civil Code of Ukraine. At the same time, when the state acts as a public authority, the dispute may acquire a public-law character, especially in the context of diplomatic protection.

The issue of state immunity is also analyzed, particularly the shift from the doctrine of absolute immunity to functional immunity, which allows states to be held liable in foreign courts for private legal relations. The article emphasizes the importance of clearly defining international jurisdiction and harmonizing national and international legislation for the effective resolution of investment disputes. The study is based on international treaties such as the New York and European Conventions, as well as national legislation of Ukraine, including the Civil Code and the Civil Procedure Code. Attention is also given to the issue of recognition and enforcement of foreign court and arbitral awards in Ukraine, which is complicated by the limited number of applicable international treaties and the principle of reciprocity.