Free «Resolving International Dispute» Essay Sample


This article is on advice that International Chamber of Commerce should take in an attempt to solve the disagreement between Agricultural Products Limited, a company incorporated in Cyprus, and Bulgaria represented by a state-owned company, "Borovitsa". This is after the deal in which the Agricultural Products Limited, entered in 2003 with Bulgaria in order to undertake an engineering, industrial, and agricultural investment turns sour. On seeing this, the foreign company in Bulgaria approaches The International Centre for Settlement of Investment Disputes (ICSID) requesting them to arbitrate Bulgaria for what they call acts of expropriation. Bulgaria on the other hand refers to Act. Sixteen of the Agreement, which provides that disputes between the Parties shall be resolved by arbitration of the International Chamber of Commerce and that Swiss law, shall be applicable.


International economic law controls economic order at the international level, which involves countries. This mainly applies in matters relating to trade where investments are involved. For instance, in our case, the law can be used to regulate the investment raw between Agricultural Products Limited, which hails from Cyprus and Bulgaria, which in this case appoints Borovitsa, a state owned company to represent them. In order to operate well, the international economic law is guided by a number of principles such as freedom, sovereignty in terms of equality and economic besides reciprocation.

With time, the economic law has adopted other principles such as responsibilities to cooperate, sovereignty of resources that are natural in permanent basis, special treatment for nations that are still developing and the least developed ones specifically (Lowenfeld, 2003). This has been put like this in order to protect the rights of the minority and to protect them against expropriation. In the same breadth, the economic law is very categorical on what the court taking up the matter, which has risen up, should do (Qureshi, 1999). Among them is recognition of rules expressed by the protesting state. The court should also apply customs, which are generally applied and accepted by states; in this case, one that is accepted by nations, which are fully developed.

Arbitration is a way in which disputes are solved without necessarily going to a court of law. This method is not only inexpensive but also speeds up the whole process. Instead of having experts in law, arbitrators in form of tribunals are left with the sole mandate of determining who is in the wrong and the mode of compensation (Hill & Newman, 2008). Upon making the decision on the mater in hand, it is considered final and no party can appeal. The appeal, which is very rare to happen, comes on very rare occasions and under strict conditions. Given that Agricultural Products Limited was seeking for arbitration of Bulgaria, the two parties would not have appealed the decision that would have been made. If at all, any of the two was to question the decision made by arbitrators it would have been within a period of three months.

Expropriation is an act in which the authority in power takes away private property. This is mainly done when there is a public interest. The government in most countries has the power to do that but only after compensations, which are considered just, have been made. However, with laws being clear on this, expropriation has always been there. In this particular case, Agricultural Products Limited accused the Bulgarian government for expropriation in which they declared the joint venture impossible and left the participation and investment in the joint venture valueless. This is what this paper attempts to discuss in order to advise the tribunal taking up this matter on the way forward. It should be remembered that, international economic law should apply concerning this matter. Therefore, the tribunal must put that in mind, in order to ensure justice is served.


To begin with, this a matter that involves two nations that have entered into an agreement for investment purposes. Putting that into consideration, I would advise the tribunal in this case to apply the principles that govern international economic law. In doing so, the tribunal will not look biased, as these principles are internationally recognized. The first issue that is raised by Agricultural Products Limited is that, On 22 August 2004, a most significant part of the farm was formally expropriated and transferred to villagers by Bulgaria, namely 200 ha amounting to 20 % of the total farm and its most fertile area. This happened oblivion of the complainant.

In the above case, the first thing that the tribunal should put into consideration is that, the Bulgarian authority overlooked the principle of territorial integrity. In addition, the principle of non-intervention was equally bleached. In their argument, the Agricultural Products Limited has all the rights to call this expropriation. Given that there was an agreement between them and the Bulgarian government, the organization should have been left to operate without any government intervention. The international economic law does not allow trespass, which is what the Bulgarian government did. They transferred a piece of land, to villagers without the approval of Agricultural Products Limited. From when the organization started operating in Bulgaria, the land in which the two were operating was a private property. In other words, it was their territory and anybody getting there without their approval as partners in the investment deal was breaking the law.

Another thing that the tribunal should consider while looking at the first issue is that, there was no compensation of the 200 ha which was transferred to the villagers by the Bulgarian authority. This is expropriation of the highest degree. The law is very clear that any private property that is taken away from the owner by the authority should be compensated in a just manner (Qureshi, 1999). Although Borovitsa, was a state owned company, the land in which it operated on was a private property. It could not be transferred without the approval of the other partner that in this case is Agricultural Products Limited, based in Cyprus. From the time when they signed the agreement on 29 January 2004 and the Agreement was approved by an act of the Bulgarian Ministry of Foreign Economic Affairs called Authorization, the land ceased to be public and became private property. It was supposed to be respected as so, unless anything changes.

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Another vital thing that the tribunal should consider is that the amount of land transferred was equivalent to 20% of the total farm and it was the most fertile area. This is vandalism and there is no other word to describe it. Considering the fact that the agreement read that the investment was a joint venture, which was commercial in nature to use the 1170 ha in cultivation of agricultural plants/crops, fruits and vegetables in the fields, meant that a fertile land was needed. In addition, the land was supposed to be used in development of stock raising/animal products, and the necessary activities pertaining to the processing of milk, meat, and any activities relative to the land and to products yielded by it for the domestic market or exportation. Therefore, transferring the fertile land to villagers meant that this would not be impossible. For the above-mentioned activities to take place, a fertile land was the first requirement. Putting the above into consideration, it would have been impossible when the fertile land is being taken away. In this case, Agricultural Products Limited had all the rights to stop the investment deal. The Agricultural Products Limited had all the rights to complain and it was supposed to be compensated. This ruling was supposed to come from the tribunal handling this matter.

The second issue that the Agricultural Products Limited raised that made the investment impossible was that, crop production, cattle, and seed supplies were stolen by the villagers at an almost steady rate of 20 % between March and October 2004 and work of the management of the joint venture was often impossible because of threats and acts of violence. This very sensitive issue is touching on insecurity. It is equally an act of vandalism. The tribunal should consider the fact that, it is impossible to make investment in an area full of violence (Lowenfeld, 2003). Given that the agreement was between two nations, and the headquarters were in Bulgaria, it therefore transpired that, the Bulgarian authority was supposed to offer security. However, the authority does not appear to offer any security if assets that were valuable were stolen and threats issued. The fact that no one had been apprehended in connection to this is a clear indication of negligence on the side of Bulgaria.

The international economic law recognizes the principle of non-aggression in a situation where there is an economic relation between states. The tribunal should be very quick to note that this is not observed in this investment agreement between Agricultural Products Limited and Bulgaria. The villagers in Bulgaria stole plants production, animals, and seeds and later sparked violence. If this is anything to go by, the principle of non-aggression is not put into consideration. In addition, the international economic law observes the principle of peaceful coexistence among states. The issuing of threats and stealing of property does not abide by this. Therefore, the Agricultural Products Limited has a valid complain and the tribunal should not overlook that. The Bulgarian government should not go scot-free; they should compensate the Agricultural Products Limited. In the wake of the rising insecurity that was reported, the tribunal should have demanded the government to provide security to the investors and make arrests on those who participated in looting of the company's assets as well as those behind issuance of threats.

In addition to that, the international economic law has a principle of cooperation for development. The tribunal should realize that the villagers in Bulgaria were very uncooperative. This was to be blamed on the government. Given that the joint venture was commercial and based in Bulgaria, the cooperation of the government and its people was highly needed (Natov, 2000). Stealing from the organization was not an act of cooperation. If this was to continue happening, then development was hard to achieve. In the light of this, the tribunal therefore had the entire mandate to demand for compensation to Agricultural Products Limited by the Bulgarian government. The claim by the Bulgarian government that Borovista is a separate legal entity with full capacity to sue and be sued should not be put into consideration by the tribunal. This is because Borovista is owned by the state. In other words, it represents the government of Bulgaria in their dealing with Agricultural Products Limited. Therefore, by saying that, it was only a plan to shift blame.

Another complain that made the joint venture impossible and valueless forcing  Agricultural Products Limited to quit was that, beginning December 2004, the entry of Agricultural Products Limited personnel to the farm was made completely impossible because of the seizure and occupation of the farm by villagers. This is yet another incidence that went against the principles of international economic law (Lowenfeld, 2003). The principle demands for a peaceful coexistence, which appeared hard to achieve in this particular case. The workers were equally denied right to access the investment premises. The tribunal therefore should not forget that, the above acts were against the international economic law. There was simply no mutual and equitable benefit that existed and respect for human rights was equally not observed. This was in fact an act of expropriation, given that the villagers in Bulgaria seemed to have taken over the investment.

The tribunal should also consider the fact that the harassment of personnel went to an extent of denying them freedom of movement. It should therefore be noted that International Declaration of Human Rights does not allow this. Denial of any rights amounts to a crime and is punishable by law. In that regard, the International Chamber of Commerce should take this with a lot of seriousness and defend the rights of the Agricultural Products Limited personnel who were denied entry into the premises. Through arbitration, the tribunal should take a stand that would demand for compensation of losses experienced by Agricultural Products Limited. This is because the authority failed in its responsibility of controlling its people not to interfere with the day-to-day operations of the organization (Qureshi, 1999).

In addition, the international economic law categorically states in one of its principles that, there should be no attempt to seek hegemony. This can be interpreted to mean that one partner is not allowed to exert pressure on the other partner in order to be dominant. This injustice was met on Agricultural Products Limited personnel. By villagers denying them access to the premises, it was a clear indication that they were exerting pressure on them in order fro them to dominate the investment. Owing to the fact that the economic law does not allow this, it is understood that the villagers had committed a crime. The tribunal should therefore order for their arrest in order fro justice to be served.

In the same breadth, the international economic law fights for promotion of international social justice. This means that, the society in which business or any from of investment is taking place, should observe equality and solidarity (Natov, 2000). In line with the above principle, it is clear that the villagers in Bulgaria did not observe this. Instead, they thought that they were the right people to own the premise where business was being operated. With this kind of mind, they denied workers the access to operate without being interfered. Putting all this into consideration, the tribunal should not overlook this issue and an appropriate action ought to be taken. The personnel and the organization should be compensated. This is because their minds were subjected to torture during this period, making it difficult to work. On the other hand, the Agricultural Products Limited experienced losses during that period.

The final complain that Agricultural Products Limited had for termination of the joint venture was that, by letters in late 2004 and early 2003, Agricultural Products Limited requested in vain the intervention by Bulgaria as a last effort to save the investment. To their amazement, Agricultural Products Limited was obliged to hand over the 200 ha mentioned together with cultivations, cattle, and supplies. This was not a fair deal in any way. The tribunal should not take this particular issue lightly. Among the many principles that international economic law observes, is doing all transactions with good faith (Qureshi, 1999). By taking everything away, the government of Bulgaria did not observe this specific principle. They wanted to end up benefiting from the entire investment in addition to all the injustices they had meted on the Agricultural Products Limited.

Although the tribunal is supposed to use arbitration method in solving this dispute, they should not forget that some of the injustices that were meted on Agricultural Products Limited were acts of violence (Mwenda, 2003). In this particular one, it is clear that the Bulgarian government was shortchanging them. In its principles, the international economic laws observe mutual and equitable benefit. This can be interpreted to mean that, in an attempt to investment or to develop, all partners should benefit from the activity in question. The benefits, which are mutual in perspective, should observe equality (Bennett, 2002). In such a case where the Agricultural Products Limited decided to withdraw, the government of Bulgaria should have compensated them for all the losses thy experienced and share the remaining property equally. This is putting into consideration that they have equal rights in the investment project.

Equally important for the tribunal to observe is that, the laws of Bulgaria should not be followed in solving this dispute. The tribunal should use international laws that govern any deal that involves investment of joint venture like in this particular case. The government should be brought on board to respond to charges. This is because, although Borovitsa is a separate legal entity with full capacity to sue and be sued, the government of Bulgaria sponsored it. My advice to the tribunal is to ask for a commission that would investigate independently, present the facts, and therefore draw conclusions on the way forward based on the findings of the commission.


In a bid to ensure fair hearing, the tribunal is supposed to look for a neutral ground where the two parties would feel comfortable. More importantly is to ensure that the international economic laws were observed in all the dealings between the Agricultural Products Limited and Bulgaria. All parties should be given an equal chance to present their complains. This would contribute a lot in ensuring the whole process is peaceful.

In the first issue where the Bulgarian authority transferred land to the villagers without the knowledge of the other party, the tribunal should treat that as an act of expropriation. This is for the simple fact that the organization did not receive any compensation for that. This should also be treated as an act of vandalism given that they took only the fertile area. In the second complain where assets were stolen by the villagers and threats issued besides acts of violence, the Bulgarian government should be held accountable for not providing security. The international economic laws observe the principle of providing a peaceful environment for investments to take place (Centre for Co-operation with Economies in Transition, 1996). This was not the case on the ground. In that regard, Agricultural Products Limited should be compensated for all the losses experienced.

In the final complain where the personnel were denied access to the investment premises, human rights were not observed. In that respect, the agony met on the workers should equally be compensated. Finally, the property that was taken by the Bulgarian government should be surrendered and that which is missing be paid back. The government did not have any right in taking all the assets.


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