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Domestic and international legal framework for investment arbitration

Francisco Darío Lobo

In Honduras, domestic and foreign investment is regulated by the Investment Promotion and Protection Law (in force since May 27 2011). This law provides for a series of guarantees for the investors and their investments, regulates private investment insurance, title insurance for the acquisition of real estate, and protection for investments over real estate.

The Investment Law also allows the execution of stabilisation contracts between the State and investors, and recognises the validity of arbitration awards issued under the New York and Panama Conventions on the Recognition of Foreign Arbitration Awards and under the International Centre for the Settlement of Investment Disputes Convention.

In regard to international treaties related to investment disputes, Honduras has signed bilateral investment treaties with: Chile, Ecuador, France, Germany, the Republic of Korea, Netherlands, Spain, Switzerland, the United Kingdom and the United States. Honduras has also signed the following free trade agreements: United States, Central America and the Dominican Republic FTA; Central American and Dominican Republic FTA; Mexico and the Northern Central American Triangle (El Salvador, Guatemala and Honduras) FTA; Taiwan, El Salvador and Honduras FTA; Chile and Central America FTA; and Panama Central America FTA.

For both domestic and international regulations on investment disputes, the parties are required to try to settle their disputes through consultation, negotiation and conciliation, or any other amicable means. If the dispute cannot be settled through amicable means, the investors are authorised to bring their claim before the competent courts in Honduras or before international investment dispute resolution centres such as the International Centre for the Solution of Investment Disputes (Icsid).

Depending on the case, parties may also bring their claim before an ad-hoc arbitration tribunal established pursuant to the United Nations Commission on International Trade Law (Uncitral) Arbitration Rules, or according to the rules agreed upon by the parties.

Francisco Darío Lobo

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