Abstract

The forum to which investor-state disputes are referred for adjudication is of critical importance. This is because it brings into play factors such as who adjudicates the dispute, which law the forum should apply, the legal consequence of the outcome of the forum, and the remedies available to a losing party in order to challenge the outcome. There are two main forums to which investor-state disputes are referred, namely international arbitration, and litigation before the courts of a host state. International arbitration is the mainstream forum, as investment treaties support it. Both fora have advantages and disadvantages. International arbitration is expensive, it takes time to conclude, and it lacks an appeal mechanism. Litigation faces challenges such as: a poor state of rule of law; there may be no guarantee of an efficient and independent judicial system by a host state; local courts may lack independence; and litigation may take time to conclude, thus resulting in costly litigation. This article evaluates the pros and cons of international arbitration and litigation, and concludes that litigation is indispensable in investor-state dispute resolution, while international arbitration can be necessary in circumstances where the rule of law is poor, although it can be dispensed with where the rule of law is satisfactory. On the other hand, it notes that investors generally prefer international arbitration. In the African context, this article proposes the use of the African Justice Scoreboard as a gateway to the courts of host states. The scoreboard will ensure that investor-state disputes are only referred to the courts of host states that have adequate levels of the rule of law.