How to prevent an international investment dispute before reaching arbitration

To prevent is also question consulting

A dispute between a foreign investor and a public authority can escalate if it is not identified promptly , if conflicting responses are received, or if relevant documentation is lost . UNCITRAL adopted tools for preventing and mitigating international investment disputes in July 2025, according to its official communication . This issue is of interest to the Dominican Republic because the handling of a claim can affect projects, public resources , and business decisions long before arbitration takes place.

A guiding tool, not a new court

The remedy is available on UNCITRAL's official portal for mediation and prevention of investment disputes . It should be understood as a tool to support prevention strategies, not as a treaty that automatically creates indemnification obligations . Nor does it, in itself, grant access to arbitration. The existence of international jurisdiction depends on consent and the applicable instrument, while the merits of a claim require examining the facts and the obligations actually assumed.

Distinguishing between administrative procedures and international claims

Not every delay, contractual disagreement, or unfavorable decision against a foreign company constitutes a violation of international law. A thorough review must identify the challenged measure, the authority that issued it, the legal basis, and the available mechanism for challenging it. It must also distinguish between contractual obligations and those that may arise from a treaty. This distinction allows for a proportionate response and avoids presenting arbitration as inevitable when its legal basis has not yet been established.

Coordination and preservation of information

As a preventative measure, it is advisable to establish a channel for receiving concerns, identify who should respond, and maintain a shared file containing permits, communications, contracts, and decisions. If several entities are involved, coordination helps detect inconsistencies before they escalate into conflicts. These are management measures that must be adapted to the legal powers of each body: they do not authorize an official to promise exemptions, compensation, or regulatory changes that they cannot validly grant.

Negotiating does not mean giving up on the public interest.

Prevention requires listening to and analyzing a claim, but also preserving legality, equality, and the State's regulatory powers. Any solution must respect applicable procedures and authorizations. From the investor's perspective, documenting the problem and formulating a concrete proposal usually facilitates its evaluation. Negotiation or mediation should be considered on a case-by-case basis, without assuming that they always suspend appeal deadlines or replace the actions necessary to protect rights.

Practical application for projects linked to the country

Before threatening arbitration or summarily dismissing a complaint, the parties can prepare a verifiable timeline, identify the instrument invoked, and assess what legally feasible solution is. The 2025 UNCITRAL report documents the adoption of these tools. Their contribution lies in promoting an early and informed response; their use should not be presented as an automatic incorporation of new rules into the Dominican legal system nor as a guarantee that litigation will never occur.