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Legal Focus
OCTOBER 2013
Trade and Investment Disputes
With companies and other parties increasingly using dispute resolution methods under international trade and investment agreements to enforce their rights and protect their businesses, we find out about the issues that arise by speaking to Pam Webster, founder of Webster.
Please introduce yourself, your role and your firm.
I began practicing as a lawyer in 1986 as Crown Counsel for the Anguilla Government. Following a two year tour of office in the Attorney General’s chambers, I established the firm that subsequently became Webster Dyrud, when John Dyrud joined me in partnership, and which became Webster Dyrud Mitchell when the firm acquired Mitchell’s Chamber’s, on the elevation to the bench of now Lord Justice of Appeal I.D. (Don) Mitchell. From January 2013 I became sole principal and the firm changed its name to WEBSTER and embarked upon a new phase of its successful development.
Reports from the beginning of the year suggested that the World trade organization was preparing for a surge in trade disputes and litigation in 2013. Has this happened so far? If so, why do you think this is?
There has indeed been a surge in trade disputes. This can be directly attributed to the meltdown in the global economy, which has increased the cost of cross border transactions and led to each sovereign seeking to protect its own interests through the introduction of tariffs and other regulatory practices, which are invariably contrary to trade agreements.
What are the main causes of trade and investment disputes in your professional experience?
In my view one of the major causes of trade and investment disputes is a lack of appreciation for culture. Although the trade agreements are invariably between state and investor, it is persons indigenous to the benefitting country who have to interact with the investor and cultural policies and practices may conflict, leading to a direct impact on the investment being made.
Another major cause is poorly drafted trade agreements, where precedents are slavishly followed without due regard to the intricacies of the particular investment being made and the business and regulatory policies/practices of both investor and state.
How has the legal environment for international trade and foreign investment changed in recent years?
The legal environment for international trade and foreign investment has become more litigious. There has also been an increase in the number of claims being made in both developed and developing countries. Notably, China has initiated a number of claims against the United States of America.
What are the current trends in investment arbitration and trade disputes?
An important trend is the increased use of arbitration by investors, as an alternative to local courts, although the procedure provided by ICSID and UNCITRAL are imperfect, particularly in jurisdictions such as China, where the legal system is viewed as inadequate.
What strategies are available to investors or other parties involved in a trade dispute?
It is very important that investor and state alike review all options available to them when involved in a trade dispute, as it is in the interest of both parties to reach a quick resolution. To ensure that the investor can continue his occupation or business, and that the state is able to reap the benefits of the investment, the parties should strive to use methods which are not costly or lengthy or which offer an unpredictable outcome. I would recommend Alternative Dispute Resolution (ADR) methods rather than local remedies.
What are the benefits of alternative dispute resolution methods?
In the context of international trade and
investment, parties normally opt for settlement by international arbitration rather than by local remedies. The greatest benefit of ADR is that it helps to salvage relationships, as the parties are encouraged to arrive at a mutually satisfactory solution so that any feeling that there is a winner and loser, as with the adversarial system, is minimised. This is attributable to the flexibility offered by ADR methods.
Secondly, ADR offers the opportunity to appoint someone with specialised knowledge of the field to facilitate the process. It cannot be disputed that trade and investment are highly specialised areas of law, so that this saves time and expense, as the parties do not need to explain technicalities and specialised jargon to a judge who is unlikely to have specialised expertise in the issues involved. This perceived need for specialised expertise can, however, be a two-edged sword on occasion, as it may make it more difficult for the parties to agree on criteria. LM
contact: Pam Webster Managing Partner victoria House Mahogany tree Lane Po Box 58 the valley aI-2640 anguilla British West Indies