In the past years it has been increasingly questioned whether
investment arbitration is the appropriate dispute resolution mechanism capable
of striking a balance between the conflicting interests in safeguarding
investors’ acquired rights and expectations on the one hand, and ensuring the
host state’s right to regulate for the purpose of protecting the public interest
on the other hand. This article analyses the significance of local law and
local circumstances, which often are only considered as a first, necessary step
preceding the institution of investment arbitration proceedings, but under some
circumstances may turn out to be so attractive, that they even may substitute
investment arbitration. The main point of the paper is that investment
arbitration, or the larger concept of investor-state dispute settlement, is not
the only mechanism available to foreign investors. Local law may provide
remedies that are at least as interesting as, if not more interesting than,
investment arbitration.