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Review of Disputes on Investment Projects with Foreign Participation
 
PIIS231243500022394-1-1
DOI10.18572/2410-4396-2021-2-58-62
Publication type Article
Status Published
Authors
Andrey G. Lisitsin-Svetlanov 
Affiliation: Institute of State and Law of the Russian Academy of Sciences
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 2
Pages58-62
Abstract

The experience in attracting foreign investments accumulated in Russia objectively gives reason to assess the state of the legal framework and this area of regulation. Political problems in relations with the West that have aggravated in recent years, and their negative impact on economic relations, especially in the energy industry, make this problem especially urgent. Along with civil law relations concerning corporate relations, supply,contractor,leasing,licensing agreements, etc., energy projects (as elements of investment projects) involve the issues of subsoil use, water resources, and ecology. Besides, the energy industry, being a universal basis of the economy, also determines the problems of the economic security of the country, i.e., from the legal standpoint, refers to the area involving public law and order. Over the past years, a legal system in Russia that is necessary to regulate investment relations in the energy sector has developed. The task of its further development is not to create any special conditions for foreign investors including conditions for a special dispute resolution procedure but to ensure a general investment regime based on fair competition.

Keywordsenergy law, legal regulation of investment projects in the energy sector, dispute resolution procedure
Received01.06.2021
Publication date30.06.2021
Number of characters15964
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Table of contents

Characteristics of the existing laws
Private law disputes between investors.
Disputes related to the use of natural resources inherently involve problems that go beyond the scope of private law regulation.
Disputes between a foreign investor and the recipient country.
1

Characteristics of the existing laws
2 From 1987 onwards, the Soviet and then the Russian investment regulation were conceptually built as universal and multipurpose one, designed for the development of all sectors of the economy. This process took place in the conditions of «political romanticism»: the fall of the Iron Curtain, the destruction of real and imaginary walls, the dissolution of the military bloc, and so on and so forth. The sphere of economics revolved against the fervent desire to join the WTO and fulfill the requirements set by this organization to the Russian laws. Finally, in the field of law, an objectively critical attitude to the own laws rooted in the nonmarket principles of legal development formed. The exception was the international commercial arbitration successfully operating since the 1930s.
3 Such attitude influenced the nature of the legal policy of Russia in relation to the regulation of foreign investments. The main idea reduced to the task of creating law and order that would be attractive for foreign investments and be a reliable protection of the rights and interests of foreign investors. The Russian interest in foreign investments was mainly associated with the attraction of a wide range of advanced technologies. This law and order started to take shape at the national and international levels. The main legal institutions that guarantee the protection of the rights and interests of a foreign investor are guarantees against nationalization and expropriation of investments; stability of laws of the recipient country ensured by the so-called grandfather clause; corporate law convenient for the investor and the withdrawal of investment disputes to a foreign jurisdiction. Besides, the attractiveness of foreign investments was ensured by the special regime in the field of public law: tax, customs, and foreign exchange regulation.
4 For more than half a century, the international commercial arbitration has been viewed not only as the best way to protect the rights of investors, but also as a necessary condition for the establishment of a favorable investment climate in the recipient country. The system of concluded international treaties has been considered a guarantee of the stability of the legal regime for foreign investments secured by national laws. Attention is drawn to the fact that these are international investment protection agreements, both multilateral and bilateral, that consistently consolidate the arbitration dispute review procedure in a third country as an indisputable priority of form.
5 However, this approach supported by the doctrine and practice of industrialized countries has not always been shared by developing countries. For example, the problematic character of the use of the «third country law and arbitration» approach in respect to the international technology transfer dates back to the 1970s and the 1980s. This problem has ruined the almost finished International Technology Transfer Code. The existing experience should serve as a serious warning even now when the problems of energy innovations in the context of the search for alternative energy sources are of particular importance.
6 If we turn to the Russian experience, it should be noted that the problem of review of investment disputes in commercial arbitration arose, in fact, in the late 1980s, when the first joint ventures with foreign participation started to appear in the USSR. Thus, Clause 20 of Resolution of the Council of Ministers of the USSR No. 49 of January 13, 1987, On the Procedure for the Establishment of Joint Ventures with the Participation of Soviet Organizations and Firms of Capitalist and Developing Countries and on the Activities Thereof in the Territory of the USSR stipulated that the «Disputes between Soviet enterprises and the Soviet state, cooperative and other public organizations, disputes between Soviet enterprises themselves as well as disputes between the parties to a joint venture on the issues related to its activities are resolved in the courts of the USSR or in an arbitration court, as the parties may agree, in accordance with the laws of the USSR». The cited provision clearly reflects the legal policy of the state at that time. Firstly, the exclusive Soviet jurisdiction was established when applying to the judicial form of protection of rights. Secondly, an alternative (arbitration) form of protection of rights was admissible based on an agreement between the parties. Interestingly, the arbitration proceedings were not linked exclusively to the territory of the USSR. As for the need for an agreement between the parties on the arbitration dispute review procedure, this meant, among other things, determination of the nature of disputes referred to the arbitration court (admissibility of arbitration proceedings). The choice of a Russian or foreign arbitration court was left to the discretion of the parties.
7 Foreign investment regulation was not limited to national laws alone. Practice also followed the path of the establishment of international law regulation.

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