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Abstract

A fundamental principle in international law is state immunity or state sovereignty. When interacting with investment law, this principle presents significant challenges, especially regarding investment protection. This study focuses on balancing sovereign rights and investor protection by exploring the issues and complications related to state immunity in investment disputes concerning arbitration, for execution of arbitral awards. It is found that legal safeguards for state immunity often obstruct investors from finding remedies for breaches of investment contracts. To reconcile these issues, this study discusses modern-day techniques regarding international investment treaties, following the emerging trends in customary law. By analyzing multiple case laws, the study sheds light on the challenges investors face during the arbitration process and enforcement of arbitral awards against the host state. In search of reforms to find a balanced legal framework, the role of prominent international organizations in the arbitration system is also discussed. The findings of this study suggest that, although state sovereignty is a substantial barrier, specific provisions in agreements including a transparent arbitration process, clarity in attaching assets, continuous review of contracts and right of appeal against arbitral awards should be incorporated.