Business Disputes and Political Risks
Within the business environment, various international disputes occur. An international argument refers to a disagreement among two or more states over the rights regarding the control of a given item and in this case, a business right. Foreign investment dispute is an example of such an international argument, and it is the dispute of concern for this dissertation. It focuses on the Amazon incorporation carrying out a foreign investment in food retail in India.
A foreign investment dispute entails a disagreement over the business rights where an individual or a company from one state invests in the assets or the ownership stakes of an organization situated in another state and in this case, the Amazon Incorporation investing in food retail in India. On the other hand, a political risk refers to the type of risk faced by the corporations, investors as well as the governments that the political decisions, conditions or events will considerably have an impact on the profitability of the business actor or even the expected value of a specific economic action.
How it works
Regarding the situation of foreign investment dispute and political risk, it entails a condition where an investment for this case an external investment made by the Amazon organization in retailing food in India will be adversely impacted by the regulatory or political decisions of that host country, i.e., India. The supervisory or political decisions may result in the revocation of a license of the business, unfavorable tax legislation, nationalization or expropriation of this particular investment by say, for example, indirect or direct taking of the control over that Amazon investment by the Indian government. Due to this situation, there will arise a case of disagreement between the investor and the government of host country. Moreover, the condition of foreign investment dispute and political risk may entail a situation whereby the host government nationalizes or otherwise interferes with the rights of alien property (Rubins, 2005).? For example, the Indian government interferes with the rights of the Amazons Incorporation property.
Due to the interference with the rights of an alien property, there arises a dispute between the foreign investor and the government of host country. Therefore, it is highly advisable that an investor should, first of all, consider the political risk before engaging in foreign investment. Regarding the case of the Amazon Incorporation investing in food retail in India, this organization ought to consider the political factors both macro and micro-political to avoid such an encounter.Despite the existence of the dispute, there exists a possible manner of avoiding the dispute or even resolving it. Regarding the avoiding of the conflict, the foreign investors may engage in the practice of structuring their investment so that it may fall in protections offered by the investment treaty in which the host nation is a member or party. In the case of resolving the dispute, arbitration is the best method of possible resolution to the dispute (Papanastasiou, 2015). It entails the procedure of submitting the issue or dispute through the agreement of all the parties involved to either one or more individuals, i.e., arbitrators that give a binding decision on the dispute
The Amazon Corporation will engage the Indian government through an arbitrator to solve the dispute. Therefore, with the existence of arbitration method and the structuring of investment to obtain protection of the host government, there are the possibilities of avoiding or resolving the dispute. In the end, none of the parties, i.e., the Amazon Incorporation of the government of host country may suffer adverse consequences as a result of the dispute.
- Top of FormBottom of FormPapanastasiou, T. N. (2015).
- Legal protection of foreign investments against political risk.Rubins, N., & Kinsella, N. S. (2005).
- International investment, political risk and dispute resolution: A practitioner’s guide. Dobbs Ferry, N.Y.: Oceana Publications.