Defenses of states in investment arbitration: theoretical case study of Lydian International Ltd v. the Republic of Armenia

Abstract

The problem question or subject matter of the present thesis paper is the examination of the possible defense mechanisms for the States in Investor-State Arbitration in general, and for the Republic of Armenia in Lydian International Ltd vs. Armenia hypothetical case, in particular. The choice of the subject matter is justified by the fact that the Dispute is still unset and in case Investor-State negotiations go wrong, problems will rise both for the State and the Investor itself. The practical significance of the paper lies in the fact that nowadays the number of the disputes between the investors and the state is not less all over the world and in Armenia as well. Moreover, the outcome of the Dispute will be essential for both foreign current and potential investors to consider whether or not to make further investments in Armenia. Hence, the paper will serve as a useful guideline for similar cases and situations for both Armenia and foreign investors. The paper aims to examine the possible mechanisms for the State to be utmost prepared to face the challenges in the investment arbitration, meanwhile saving its face in international investment climate for future and potential investors. To achieve the aim of the research the following objectives have been set forth: to envisage the potential claims to be raised by the Investor in Lydian International Ltd vs. Armenia hypothetical case; to present and analyse possible defense mechanisms for the States in Investor-State Arbitration in general; to examine possible defense mechanisms for the Republic of Armenia in Lydian International Ltd vs. Armenia hypothetical case in particular; to offer an insight on international best practices with regard to State defenses in Investor - Host State Arbitration; to discuss the strong and weak points and positions of both the State and the Investor; to come up with some general recommendations to manage and prepare for such Disputes in International Investment Arbitration.