LEGAL PROTECTION AGAINST THE FAILURE TO COMPENSATE ON INTERNATIONAL INVESTMENT DISPUTE

Abstract

A dispute between two or more countries involved in a foreign investment may arises
from investment agreement agreed upon by the parties. If one of the parties breaches
the agreement, the parties will automatically agree to resolve the dispute to the agreed
arbitration forum based on the dispute settlement clause on the agreement, those
forum such as the ICSID arbitration. Therefore, the existence of dispute settlement
clause on an investment agreement (Bilateral Investment Treaty) is very necessary.
The result of the above-mentioned arbitration proceeding is a binding and final
decision for the parties. An arbitral award, should contain relief or compensation
set by the arbitrator as the result of the proceeding. The reliefs are given as orders to
indemnify the damages obtained by Claimant. Issues arises when Respondent has been
proven to have done detrimental damage to the Claimant yet Respondent deliberately
neglected his/her obligation to compensate Claimant accordingly based on the relief/
compensation specified in the award. The non-compliance of the Respondent to
fulfill the compensation obligation is due to the fact that the party habitually assume
that the arbitration award does not have the legal force equivalent to the decision
of general court, even though the nature of the award is final and binding. Thus the
interests and rights of the Applicant who has been declared entitled to compensation
based on the arbitration award must be protected so that their rights can be fulfilled
according to the law.