Abstract

By its nature a Special Economic Zone (SEZ) envisages the establishment of economic relations between a state where this zone is situated and an investor which is a national of another state. These kinds of relations fall into the scope of International Investment Agreements (IIAs), including Bilateral Investment Treaties (BITs). The rights and protections of an investor of SEZ under BIT have a high potential to be breached as the state provides investors in SEZ with exceptionally preferential conditions. Considering the increasing number of SEZs in the world, enhancement of dispute resolution mechanisms in respective circumstances becomes an urgent issue for academic research and attention of practitioners. This article begins by defining the concept of SEZ and its main characteristics, before describing the legal framework and elaborating on the main reasons for disputes to arise in  SEZ, as well as the options for handling such disputes. The author places emphasis on the three groups of claims which are likely to be brought by an investor against the State: expropriation claims, discrimination claims and claims alleging a breach of fair and equitable treatment standard. Notwithstanding its considerable theoretical character, this paper also identifies 14 arbitration cases, involving SEZ issues, and includes brief analysis of some of these cases.

This paper will be part of the upcoming TDM Special Issue on "The Interaction Between International Investment Law and Special Economic Zones (SEZs)". More information here www.transnational-dispute-management.com/news.asp?key=1771