This chapter explores how the United Arab Emirates (UAE) can design and implement investment dispute prevention policies as part of its national investment strategy. It examines the types of investment dispute prevention policies and mechanisms implemented in peer countries and analyses institutional setups that can be considered by the UAE in designing and implementing such reforms.
Investment Policy Perspectives in the United Arab Emirates
Abstract
Accessible enforcement procedures and reliable court systems are critical pillars of a stable and predictable business environment. Having the assurance that any dispute that may arise is resolved swiftly and fairly is essential to sustaining investor confidence, therefore contributing to the overall attraction and retention of investment. Yet, states are increasingly recognising that dispute prevention is as important as effective resolution of disputes, especially with respect to investment disputes. Investment dispute prevention policies and mechanisms, which aim to reduce the number of conflicts that escalate into formal investment disputes, have become a pillar of investment governance reform. Institutional systems for investment dispute prevention also serve as channels for post-investment aftercare, supporting investors through their operations and expansions. This combination strengthens the predictability of the business environment and enhances accountability across government institutions. At present, the UAE does not have established policies or mechanisms specifically aimed at preventing disputes between investors and the state.
This chapter explores how the UAE can draw on examples of other countries’ innovative frameworks for the prevention of investment disputes and policy-setting activities to drive such reforms as part of its national investment strategy. The design and implementation of these dispute prevention policies could focus on enhancing intra-governmental communication and co‑ordination and establishing formalised channels of communication between the State and investors, to support investment retention more broadly.
Consider establishing investment dispute prevention policies and mechanisms. Dispute prevention policies refer to measures designed and implemented by governments to address investors’ conflicts and grievances with the state before they escalate into formal disputes. Introducing such policies not only helps prevent conflicts from escalating into formal investmenr disputes but also strengthens investment aftercare services, by fostering early engagement and addressing investors’ concerns proactively, therefore enhancing long-term investor confidence.
Consider designing and implementing investment dispute prevention policies aimed at enhancing intra-government co‑ordination and communication, in particular between federal and Emirates’ authorities. To enhance intra-governmental communication and institutional co‑ordination, and take stock of recurrent investment issues, the UAE could consider (i) creating dedicated information sharing channels and early alert mechanism to ensure timely detection of conflicts and co‑ordinated responses to investors’ grievances, (ii) designing a system for identifying, mapping and monitoring most recuring issues faced by investors, which in turn, would allow for more targeted policy responses for relevant sectors or matters and (iii) designing awareness raising activities – e.g. online central repository compiling all international agreements, laws and regulations, handbooks and capacity building activities – designed to increase the legal knowledge of government officials on international commitments taken by the UAE and the consequences of a breach thereof.
Consider designing and implementing investment dispute prevention policies that create a mechanism for the early detection and resolution of investment conflicts for local and foreign investors alike. The scope of the mechanism and applicable processes should be clearly set out in the legal or administrative instrument establishing the mechanism. Applicable procedures should define, amongst other, how complaints should be submitted, the internal steps for handling them, the overall timeframe for resolution, and whether use of the mechanism is mandatory or optional.
Explore the most appropriate institutional set up for designing and implementing these policies in the UAE. The UAE’s institutional landscape offers a range of options for designing and implementing investment dispute prevention mechanisms. Three main potential institutional models for dispute prevention policy could be considered (i) the designation of a single lead agency responsible for designing and implementing dispute prevention policies, (ii) the involvement of several governmental entities, in dispute prevention, without designating a single lead agency; or (iii) the establishment of a formal inter-ministerial committee focussed on investment dispute prevention and response.The extent of the Ministry of Investment’s (MoI) involvement in implementing such measures would depend on broader policy considerations.
Investment dispute prevention refers to measures designed and implemented by governments to address investors’ conflicts and grievances before they escalate into formal investment disputes. In this context, the terms grievances and conflicts are to be understood as problems faced by investors in their interactions with public authorities that have not yet escalated into disputes. Investors’ grievances can, for instance, pertain to the State’s denial to grant or renew a permit or licence or the negative consequence of proposed changes to a regulation to the investor’s investment. By contrast, a dispute arises when such conflict/grievance has devolved into a formal or legally contested disagreement between the investor and the State (UNCITRAL WGIII, 2023[1]).
Investment dispute prevention policies are therefore intended to address conflicts before they emerge or escalate, thereby maintaining investor confidence and reducing litigation risks. Alternative dispute resolution (ADR) mechanisms, such as mediation or arbitration, are designed to resolve conflicts after they have escalated into formal disputes. Together, dispute prevention and ADR represent complementary approaches within the broader framework of investment governance.
In practice, investment dispute prevention policies allow governments to have earlier and better knowledge of potential emerging conflicts, enabling States to identify and respond swiftly to investor concerns. Such co‑ordinated efforts, including the involvement of investment promotion agencies (IPAs) and ombuds services, foster constructive engagement and trust between investors and the host state, ultimately enhancing investment retention, reducing litigation risk, and strengthening the rule of law (Joubin-Bret and Knoerich, 2010[2]).
Investment dispute prevention policies are not only intended to avoid conflicts but are typically integrated into a broader investment policy strategy, which include attracting, protecting, expanding and retaining investments that bring value to the country and contribute to its sustainable development (UNCITRAL WGIII, 2023[1]). This is because by nature, dispute prevention policies operate amid the aftercare and retention space represented in Figure 5.1 below, therefore impacting policy space well beyond the existence of disputes.
Source: UNCITRAL WGIII (2024[3]), Possible of investor-State dispute settlement Draft toolkit on prevention and mitigation of international investment disputes, https://docs.un.org/en/A/CN.9/1185
5.3.1. A rich and complex existing judicial and alternative dispute resolution landscape
The UAE judicial system is multi-layered and differs from one Emirate to the other. At the federal level, the UAE judiciary is composed of the Federal Supreme Court and federal first instance courts, which handle matters outlined in the Constitution, such as constitutional reviews, civil, commercial and administrative disputes with the state and matters related to personal status. At local level, Emirates may establish independent local courts or transfer jurisdiction to the federal system for matters constitutionally within local courts’ jurisdiction; Abu Dhabi, Dubai and Ras Al Khaimah have maintained their own courts. Both federal and local courts follow a civil law tradition influenced by Islamic Sharia, French and Egyptian law, and include specialised commercial courts. Additionally, financial free zones such as the Dubai International Financial Centre (DIFC) and Abu Dhabi’s International Financial Centre (ADGM) have their own independent judicial systems, with ADGM applying English common law.
These diverse judicial structures provide tailored avenues for resolving a wide range of legal disputes. Stakeholders have consistently reported that the multi-faceted judicial system in the UAE allows for choice of appropriate recourse depending on the specific needs of each matter and expressed their satisfaction with the existing judiciary system. This is in line with international rankings of the UAE such as the World Justice Project Rule of Law Index for 2024, which ranks the UAE judiciary system 39th out 142 economies analysed (World Justice Project, 2024[4]).
With respect to arbitration, the UAE adopted a new Federal Law No. 6 on Arbitration in May 2018. The law regulates (i) arbitrations carried out within the UAE, (ii) international commercial arbitrations carried out outside of the UAE but subject to the provisions thereof and (iii) arbitrations arising from a dispute on a contractual or non-contractual legal relationship governed by UAE law. Federal Law No. 6 on Arbitration defines the conditions under which a request for annulment may be lodged against an arbitration award; conversely, pursuant to Article 53 of said law, UAE courts shall, on their own initiative, nullify the arbitral award in the event that the subject-matter of the dispute is not capable of settlement by arbitration or if it is in conflict with “the public order and the public morality of the State”. While conformity with public order is very often recognised as grounds for annulment, the possibility for courts to annul arbitral awards sua sponte for inconsistency with public morality is less common and may pose a risk of arbitrary annulments of awards, insofar as the possibility of an annulment would solely depend on the courts’ initiative and the notion of public morality of the State may be broadly interpreted.
In parallel, the UAE has also strengthened its framework for alternative dispute resolution (ADR) through the adoption of Federal Decree Law No. 40 of 2023, which consolidates mediation and conciliation procedures specifically in civil and commercial disputes. This initiative aligns with the UAE’s commitment to international standards, including its decision to sign the Singapore Convention on Mediation. Federal Decree Law No. 40 codifies a strict confidentiality regime, widely seen as essential to productive mediations: all content and conduct of mediation must remain confidential, and parties are prohibited from relying on any documents, statements, or concessions made during mediation in subsequent court proceedings, unless both parties agree otherwise. It further modernises the mediation process by authorising mediators to conduct proceedings through electronic means and remote communication, subject to applicable regulations.
Separately, as set out in Chapter 4, the largest share of the UAE’s investment treaties in force features older designs and recourse to international arbitration, which continues to expose the UAE to substantial risks. Globally, the growing number of Investor-State Dispute Settlement (ISDS) cases, often pertaining to public policy or regulatory measures, has resulted in concerns about a potential chilling effect on regulations to avoid future disputes. Substantive provisions contained in early generation treaties are often broadly defined, allowing for extensive interpretation by arbitral tribunals. Importantly, recognition of breach of an investment treaty by the host state often leads to high amounts of compensation in damages in ISDS cases.
5.3.2. Moving from reactive systems to proactive policies
The UAE’s current investment policy primarily focusses on dispute resolution with limited emphasis on dispute prevention. Yet, while timely and effective dispute resolution remains an essential element of a healthy investment climate, such mechanisms have well-known limitations (Chapter 4), including cost, duration, and enforceability challenges. Against this backdrop, governments are increasingly recognising the importance of complementing existing dispute resolution mechanisms with investment dispute prevention policies as a critical component of a sound investment climate.
Minimising potential areas of disagreement through proactive planning and early dialogue allows governments to create a more predictable and secure environment for investors. By continuously engaging with investors after their initial establishment, governments can help address persistent investment climate issues and encourage reinvestment. (OECD, 2015[5]). Introducing investment dispute prevention policies would not only help prevent conflicts from escalating into investment disputes but also strengthen the UAE’s investment aftercare services, by fostering early engagement, addressing investors’ concerns proactively and enhancing long-term investor confidence.
Robust investment dispute prevention systems typically rely on close co‑ordination with relevant governmental entities, supported by institutionalised communication channels within the government. They also seek to enhance communication with investors, to allow for earlier and better knowledge of issues faced by investors (UNCITRAL WGIII, 2023[6]). Existing international practices show that dispute prevention policies typically fall into two categories: (i) the first category focusses on enhancing intra-government communication and institutional co‑ordination, and (ii) the second category focusses on streamlining communication with investors for an earlier detection and resolution of conflicts. The following sections explore the types of dispute prevention policies and mechanisms that could be considered by the UAE to strengthen investor confidence and sustain investment.
5.4.1. Reinforcing intra government communication and co‑ordination for effective implementation of dispute prevention policies
Effective communication and co‑ordination amongst governmental agencies are critical to the success of dispute prevention policies. International practices reveal a range of approaches aimed at enhancing internal coherence and responsiveness. The following practices are offered as illustrative examples; while the countries highlighted are not directly comparable to the economy under review, the approaches illustrate best practices and innovative solutions that may inform similar initiatives. Other approaches may also be considered based on context and policy goals.
Awareness raising initiatives among governmental and related agencies help prevent investment disputes, by ensuring that relevant entities are informed of the state’s commitments towards foreign investors, including under existing investment treaties. Considering that most ISDS cases pertain to measures taken by subnational or sector-specific authorities – sometimes less aware of the state’s international commitments than at central level – awareness raising activities, including on local levels, is crucial in efforts to prevent disputes. Awareness raising could be achieved through various means, including online platforms and handbooks – as seen in the Republic of Korea, Czechia and the Republic of Colombia (UNCITRAL WGIII, 2024[3]) or capacity building sessions for public officials – as seen in Peru, where its dispute prevention and management system, the SICRECI, has developed a capacity-building programme for public officials on topics related to investment disputes (IISD, 2022[7]). Creating a central repository of investment instruments, and monitoring and keeping track of legal obligations towards foreign investors also contribute to raising awareness and building capacities of relevant entities. By way of example, Czechia’s Ministry of finance publishes and regularly updates the overview of Czechia’s stock of bilateral and multilateral agreements for the promotion and protection of investment on its website (UNCITRAL WGIII, 2023[6]). Peru’s SICRECI also compiles a database of all agreements that provide for ISDS to allow government agencies to access all the state’s commitments in a single place (IISD, 2022[7]).
Information-sharing systems and early alert mechanisms are increasingly common amongst countries that have adopted dispute prevention policies. State entities are required to inform the appropriate body of potential issues with the administration before they escalate into disputes These measures aim at monitoring the emergence of investors’ grievances, therefore allowing states to respond in a timely manner (Joubin-Bret and Knoerich, 2010[2]). For instance, in Georgia and Kyrgyzstan, public bodies have a duty to assist the business ombudsman in the exercise of its mandate and, in turn, the business ombudsman has the right to request and receive information concerning cases under review (OECD, 2024[8]).
Identifying, mapping and monitoring most common issues in investors’ complaints can also enable states to develop more effective dispute prevention and mitigation policies. Empirical evidence shows that a sizable number of investment disputes relate to certain sectors in which specific forms of legal commitments are taken, such as concessions and build-operate‑transfer contracts (Joubin-Bret and Knoerich, 2010[2]). Areas of focus often include economic sectors which are most likely to give rise to disputes with the state, recurring conflicts or disputes, and gaps between domestic obligations and international obligations contained in investment treaties. In the Republic of Colombia for instance, the Directorate of Foreign Investment and Services established within Ministry of Commerce is mandated to design, co‑ordinate, and execute dissemination and training programmes on international investment agreements for state entities, which, due to the sector and the matters under their responsibility, are strategic in the prevention of investment disputes; in the past, entities included those related to public works, infrastructure and environment (IISD, 2022[7]). In the Dominican Republic, the Directorate of Dispute Prevention and Resolution monitors investors’ complaints and analyses disputes to identify which government entities are most frequently implicated (UNCITRAL WGIII, 2024[3]).
In addition to identifying common issues which appear in complaints from investors, business ombudsmen in Ukraine and Kyrgyzstan develop recommendations to address systematic problems identified with the administration and conduct regulatory impact assessment of proposed legislations (Box 5.1).
Apart from aiding companies in individual cases, business ombudsman institutions in Ukraine and Kyrgyzstan can also make an impact by identifying most common issues which appear in complaints from companies and develop recommendations to address these systemic problems. They also conduct regulatory impact assessments of proposed legislation
The Ukrainian Business Ombudsman Council (BOC)
The BOC collects and publishes comprehensive information on the systemic recommendations it develops, as part of its own “systemic reports”. The institution’s website has a special section where all its systemic recommendations are listed along with the current status of their implementation. As of 2021, the BOC has published 18 systemic reports and produced a total of 435 systemic recommendations. To date, 159 (37%) of such recommendations have been implemented, with many more ongoing.
The Kyrgyz Business Ombudsman
The Business Ombudsman (BO) of Kyrgyzstan provides recommendations concerning systemic problems in legislation. These recommendations have been developed based on the results of reviews of business complaints about decisions, actions or inaction of state bodies, municipal bodies and public sector enterprises and analysis of the legislative framework regulating business operations. Of the 55 recommendations proposed by the BO, 17 were accepted in full or in part (33%).
Source: OECD, (2024[8]), Business ombudsman institutions in Eastern Europe and Central Asia: New trends and good practices, https://doi.org/10.1787/bf84ff64-en
5.4.2. Establishing a formalised mechanism of communication with aggrieved investors
Formal communication channels with investors, particularly those designed for the early detection and resolution of conflicts, have become a standard feature of institutional investment frameworks in many countries. By engaging proactively with investors through structured mechanisms, governments can address grievances before they escalate into formal disputes. Such mechanisms provide an avenue to resolve legitimate concerns related to regulatory clarity, administrative procedures, or post-establishment challenges in a timely and transparent manner.
Access to reliable information also plays a critical role. Ensuring that investors can easily obtain relevant laws, regulations, and administrative guidance facilitates both market entry and business expansion, as further examined in Chapter 3. Among the most effective channels of communication are grievance‑handling mechanisms that allow investors to submit conflicts or complaints directly to the administration, while also serving as a platform for advocating broader policy reforms related to foreign investment regulation (Chen Yu, 2022[9]). The scope of such mechanisms varies across countries: in some jurisdictions access is limited to local investors, while in others no distinction is made between local and foreign investors. In most cases, complaints arising from the conduct of the judiciary are excluded, whereas grievances linked to the actions of the executive branch are commonly addressed. In certain instances, concerns related to the enactment of laws or regulations are also within scope (UNCITRAL WGIII, 2024[3]).
Effective grievance resolution frameworks depend on structured collaboration with the private sector. Chambers of commerce, business associations, and sector-specific investor councils can act as trusted intermediaries, aggregating and validating concerns from their members and relaying them to government authorities. Their participation not only strengthens the quality and representativeness of feedback but also fosters shared ownership of the dispute prevention agenda. Involving these actors in the design and oversight of grievance review mechanisms, or in structured policy dialogues, can enhance the legitimacy of the process and encourage more responsive government action.
For credibility, grievance mechanisms must be governed by clear and transparent procedures. These should specify how complaints are submitted, the internal steps for review and handling, the overall timeframe for resolution, and whether recourse to the mechanism is mandatory or optional (UNCITRAL WGIII, 2024[3]). Equally important, recommendations resulting from the review process should be communicated both to the investor and to the competent administrative authority to ensure proper follow-up. In some countries, governments have reinforced the standing of such recommendations by granting the mandated body formal powers vis-à-vis administrative agencies. For example, in Ukraine and Georgia, administrative authorities are legally required to report back to the business ombudsmen on the actions taken to implement their recommendations (OECD, 2024[8]).
5.4.3. Implementing the key components of dispute prevention mechanisms in the UAE
The UAE’s investment policy focusses on dispute resolution rather than dispute prevention, though selected practices have the effect of preventing the occurrence/escalation of disputes – mainly through international investment treaties:
The adoption by the UAE of a model BIT, which addresses dispute settlement, enables the harmonisation of dispute settlement provisions across its treaty practice and serves as a guideline for negotiators (Chapter 4);
The involvement of the MoI in the negotiation and drafting of international investment agreements ensures that dispute settlement provisions are more or less coherent across the UAE’s investment treaty policy;1
A number of international investment agreements (IIAs) concluded by the UAE provide for the establishment of co‑ordination committees empowered to monitor the emergence of conflicts between investors.2
The UAE has yet to adopt more generalised and systemic investment dispute prevention policies. Introducing such policies would enable the government to gather insights into investors’ experiences, which would in turn inform future policy adjustments.
The UAE could implement awareness-raising activities at both the federal and local levels through the MoI or other designated bodies. Implementation by a federally mandated body would enable broader outreach and co‑ordination of relevant activities across Emirates. For instance, the UAE could develop an online central repository to compile all the UAE’s international investment agreements, laws and regulations, accompanied by clear guidelines for both government officials and investors alike (Chapters 3 and 6). The UAE could also publish practical handbooks to help government officials better understand its international commitments and the potential implications of their decisions. These handbooks could include illustrative case studies of previous disputes with the state to demonstrate how certain measures have triggered investor claims in the past. Strengthening institutional knowledge through structured capacity-building programmes will also be valuable. By offering regular training sessions for staff across ministries, sectoral agencies, and local authorities, including those operating at the emirate level, the UAE could significantly increase awareness of the state’s obligations and thereby reduce the occurrence of events that could give rise to investment disputes.
Establishing robust information-sharing systems and early alert mechanisms is also critical to proactively prevent investment disputes. By monitoring investor grievances in a timely manner, the UAE could help maintain constructive relationships with investors and reduce the risk of issues escalating into formal disputes. A digitalised platform for submitting and sharing information would help streamline communication between relevant authorities, ensuring that potential risks are identified and addressed as early as possible. For such a system to be effective, it is nevertheless vital that both federal and emirate‑level authorities promptly report any potential conflicts or complaints to the designated body.
In the UAE’s decentralised governance system, effective dispute prevention requires not only federal co‑ordination but also systematic engagement with subnational authorities. Under the inter-ministerial co‑ordination model, establishing subnational co‑ordination mechanisms to ensure alignment with Emirates’ DEDs, free zone authorities and other local investment bodies will be central to ensuring the effectiveness of dispute prevention policies. Building on its federal mandate, the MoI could act as a convener and strategic anchor for cohesive investment governance throughout the country by establishing mechanisms such as:
Joint early-warning protocols for identifying and escalating investor concerns that arise at the Emirate or free zone level;
Regular co‑ordination forums bringing together MoI, DEDs and free zone representatives to discuss emerging risks, legal inconsistencies and procedural delays affecting investors;
Interoperable digital systems to track and share grievance data in real time, allowing central authorities to intervene proactively when systemic issues emerge;
Shared standards for grievance response and escalation, including timelines, reporting duties and decision making authority.
By fostering alignment across jurisdictions, these types of mechanisms would reduce the risk of forum shopping, legal inconsistencies and investor confusion resulting from divergent practices. They would also enable the federal government to intervene earlier and more effectively in preventing disputes, particularly where capacity gaps or regulatory ambiguity exist at the subnational level.
Identifying, mapping and monitoring the most common issues will also help the UAE develop targeted policies to prevent disputes more effectively. By tackling systemic issues at the root of investment disputes with the state, the UAE could develop targeted responses to remedy these issues. Based on information sharing systems in place, the UAE could identify sensitive sectors and types of contracts, closely monitor them and develop tailored responses, including training and materials for authorities that deal with these sectors or matters.
The UAE could also consider drawing on international experiences to establish a mechanism for the early detection and resolution of conflicts, adapted to the country’s institutional context and investment priorities. The scope of this mechanism should be formally defined in a legal or administrative instrument (such as a law or decree) and specify whether it will apply to both local and foreign investors or only to certain categories. Consistent with international practice, the mechanism could primarily address grievances stemming from executive branch decisions and actions, rather than judicial proceedings, which is particularly advisable given the UAE’s complex judicial system. Where appropriate, the mechanism could also review issues related to the implementation of federal laws and regulations. The establishing instrument should set out the applicable procedures in detail. This includes the process for lodging complaints, the procedural steps for their assessment and resolution, the timeframe for handling cases, and the determination of whether use of the mechanism is voluntary or a prerequisite to pursuing other remedies. Such clarity is essential to ensuring predictability, investor confidence, and the effective functioning of the mechanism.
Dispute prevention policies are usually designed and implemented through the establishment of institutional mechanisms within the government. In setting up such institutions, there is no one size fits all approach. States have taken different avenues to preventing disputes, depending on their broader governance frameworks and specificities.
A common feature of robust dispute prevention systems is the designation of a body whose role is to gather information and facilitate communication with investors, co‑ordinate with relevant governmental entities and decentralised authorities and establish institutionalised communication channels within the government (UNCITRAL WGIII, 2023[6]). Existing practices also show that such body can take various forms, such as a single lead agency, multiple agencies acting in tandem or an inter-institutional committee composed of representatives of relevant governmental entities. Whichever structure is adopted, studies have shown that dispute prevention bodies that work collaboratively with the administration are often more effective than those operating entirely independently in an oversight role (R. Echandi, et al., 2019[10]).
The UAE’s institutional landscape offers a range of options for designing and implementing dispute prevention mechanisms. The choice of institutional setting will depend on broader policy priorities, including considerations of efficiency, co‑ordination, and stakeholder engagement. Importantly, any approach should ensure inclusive participation across all relevant institutions, including those at the Emirate level, to reflect the UAE’s decentralised governance structure and to promote coherence and effectiveness in implementation.
The establishment of the MoI presents a valuable opportunity to centralise a key aspect of dispute prevention. The MoI’s legal mandate reflects a focus on high-level co‑ordination and acts as a policymaking and co‑ordinating entity at the federal level (Chapters 3 and 6). The powers granted to the MoI by Federal Decree Law No. 37 of 2023 can position it as a central player for strategic coherence, which can ensure that the UAE’s investment environment is governed by a consistent framework that reflects both national priorities and international standards.
The following sections explore three institutional models that the UAE could adopt for dispute prevention, as well as the role that the MoI could play in this area. The first option consists in the designation of a single lead agency responsible for designing and managing dispute prevention policies. The second option examines the involvement of several agencies in the design and implementation of dispute prevention policies. Finally, the third option proposes establishing an inter-ministerial committee for dispute prevention. These three models explore varying degrees of responsibility and authority of the MoI; the extent of the MoI’s involvement will ultimately depend on broader policy considerations.
5.5.1. Establishing a single lead agency for dispute prevention
As a central player in investment policymaking, one possible approach to establishing dispute prevention policies and mechanisms in the UAE is to designate a single lead agency responsible for the design and implementation of such policies. This model has been adopted by many countries, reflecting a preference for centralised co‑ordination and streamlined communication with both investors and line government entities.
The structure of a single lead agency varies depending on the country’s needs and institutional framework. It may operate as an autonomous entity or be integrated in an existing body like a ministry or an IPA as a natural extension of the mandate to support investors throughout their journey (Box 5.2).
The structure and mandate of a single lead agency vary depending on the country’s needs and institutional framework. It can focus on either inter-governmental co‑ordination and communication, or on communication with aggrieved investors. In some cases, its mandate covers both functions
Single lead agency established within a government body
Canada – Canada’s Trade Law Bureau of the Department of Foreign Affairs and Trade (JLT) provides litigation services, legal training and legal advice to all government departments on all aspects of international trade law. It participates in the negotiation and implementation of investment and trade agreements and provides legal advice to the Government of Canada regarding the consistency of existing or proposed measures with international obligations in addition to managing investment disputes (UNCITRAL WGIII, 2023[6]).
Czechia – Czechia’s Ministry of Finance is the central administration body responsible for protection of foreign investment. Within the Ministry of Finance, the Investment Protection Unit is mandated to design and implement dispute prevention policies in addition to managing investment disputes (UNCITRAL WGIII, 2023[6]).
United States – Hosted by the U.S. Department of Commerce, SelectUSA is the only federal entity dedicated to facilitating and retaining high-impact business investment in the United States. SelectUSA’s operates ombudsmen services and works towards successful resolutions of problems across the federal government, addressing investor concerns and issues involving federal agencies.
Single lead agency established as an independent body or an ombudsman
Republic of Korea – South Korea’s Office of the Foreign Investment Ombudsman (OFIO) was established in 1999 under the Foreign Investment Promotion Act and, while it is housed within Korea’s trade and investment promotion agency, KOTRA, it remains independent from it, accountable solely and directly to the Prime Minister. The primary focus of OFIO is to assist in the attraction and retention of FDI through aftercare for foreign investors, and, to a lesser extent, in the prevention of ISDS. The Foreign Investment Ombudsman, the head of the OFIO, is appointed directly by the President of South Korea on the recommendation of the relevant minister, giving OFIO further institutional authority in dealing with other parts of government (IISD, 2022[7]).
Georgia – Initially established to deal with tax issues, the Business Ombudsman of Georgia’s mandate was expanded in 2015, to address complaints of companies and promote business integrity in the country. The Business Ombudsman of Georgia was created upon the government’s initiative and is appointed by the Prime Minister, with the parliament Chairperson’s consent. It reports to both bodies, through the submission and publication of annual reports. To ensure the independence of the Ombudsman, the relevant law protects it from arbitrary removal through an exhaustive list of legitimate reasons for dismissal (OECD, 2024[8]).
Ukraine – The Business Ombudsman Council (BOC) is an independent permanent advisory body of the Cabinet of Ministers in Ukraine established in 2014 through a government decree. The BOC was created through a co‑operation between the government, EBRD, the OECD and five Ukrainian business associations. The BOC’s mandate is to help establish a transparent business environment and prevent corruption, including at the local government levels and in state‑owned and state‑controlled enterprises. The BOC selection process is based on an open and competitive process. It reports to its supervisory board – which comprises of representatives of the three founding parties namely the government, international organisations and business associations – on a quarterly basis as well as annually and by presenting financial accounts along with highly detailed activity reports (OECD, 2024[8]).
Kyrgyzstan – The Business Ombudsman of Kyrgyzstan was inspired and based on Ukraine’s experience. It was established in 2019 through a government decree as an independent non-state body and whose role is to protect the rights, freedoms and legitimate interests of business entities, both local and foreign. Similarly to the BOC, the Business Ombudsman of Kyrgyzstan and deputies are selected through an open and competitive process and report to its supervisory board (made up of representatives of three founding parties as well) (OECD, 2024[8]).
Source: UNCITRAL WGIII, (2023[6]), Compilation of best practices on investment dispute prevention and mitigation, https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/wg_iii_compilation_on_dispute_prevention_and_summary.pdf; IISD (2022[7]), Investment Dispute Prevention and Management Agencies: Towards a more informed policy discussion, https://www.iisd.org/system/files/2021-10/investment-dispute-prevention-management-agencies-policy-discussion.pdf; Joubin-Bret and Knoerich, (2010[2]), Investor-State Disputes: Prevention and Alternatives to Arbitration, https://unctad.org/system/files/official-document/diaeia200911_en.pdf; OECD (2024[8]), Business ombudsman institutions in Eastern Europe and Central Asia: New trends and good practices, https://doi.org/10.1787/bf84ff64-en
The mandate of the single lead agency varies across jurisdictions; some focus solely on investor grievances, while others also handle dispute management. Its overall effectiveness hinges on critical factors, such as operational and financial independence, integrity and accessibility for and to investors. Core functions typically include co‑ordinating with government bodies through information sharing and regulatory monitoring and engaging directly with investors to address concerns. (UNCITRAL WGIII, 2023[6]).
Drawing from the examples of Canada and Czechia, the UAE could consider establishing single lead agency through the creation of a specialised dispute prevention policy unit within, or under the auspices of a relevant ministry, such as the MoI, whose role would be to design and implement dispute prevention policies, both in the relations with other governmental entities as well as with aggrieved investors. The federal nature of such unit would allow for broader outreach.
Designing and establishing dispute prevention policies, processes and reporting obligations via dedicated laws and regulations will be key in ensuring the transparency and integrity of the system and therefore in fostering stakeholders’ trust in its services. Equally important is the appointment of qualified staff and the allocation of a dedicated budget to the unit. Making dispute prevention services visible and user-friendly is also crucial in ensuring that all investors, including SMEs and foreign entities, can readily benefit from dispute prevention policies in place.
5.5.2. Allocating the responsibility of designing and implementing dispute prevention policies to several agencies
In the absence of a single lead agency, practice shows that some States have opted for a shared responsibility for designing and implementing dispute prevention policies amongst several governmental bodies (UNCITRAL WGIII, 2024[3]).
In this approach, several agencies would be concurrently contributing to the design and implementation of dispute prevention policies, albeit to a narrower extent. These agencies would likely include the MoI, Ministries of Justice, Finance, Economy and Tourism, Foreign Trade, Foreign Affairs and sectoral regulators. Subnational entities, including DEDs of the respective Emirates, free zone authorities and other local investment bodies should also be included in the process, in order to ensure a comprehensive approach to dispute prevention.
In this scenario, the designated body could focus on policy development, working to help government regulators design investment laws and regulations that reduce the potential for conflict between investors and the state, falling under its existing policy advocacy functions mandated to the ministry. The MoI’s co‑ordination role could also be central to ensuring that all government entities involved in investment regulation are working together effectively. The MoI could also consider operationalising support mechanisms, including investor-dedicated liaison teams or sectoral account managers, to manage ongoing investor relations and escalate unresolved grievances to relevant authorities or a lead agency. In doing so, the ministry would fulfil a proactive dispute‑prevention role consistent with international best practice, without duplicating the formal mandates of judicial or arbitration institutions.
5.5.3. Establishing an inter-ministerial co‑ordination committee for dispute prevention
In designing and implementing dispute prevention policies, some countries have opted for the creation of an inter-institutional committee, composed of several ministries and governmental institutions (Box 5.3). In systems where multiple government bodies play roles in investment governance, the effectiveness of dispute prevention often hinges on the strength of inter-ministerial co‑ordination.
Costa Rica – The Inter-Institutional Commission for the Settlement of International Trade and Investment Disputes of Costa Rica was established in 2009, through Decree N° 35 452‑MP-COMEX Regulation for the Prevention and Management of International Trade and Investment Disputes. Its role is to co‑ordinate and track international trade and investment disputes involving Costa Rica, in addition to taking necessary actions with respect to ISDS and advising on dispute prevention policies. The commission is co‑ordinated by the Office of the President and is composed of representatives of the ministries of Trade, Foreign Affairs, Finance and Justice. The Office of Application of International Trade Agreements within the Ministry of Trade functions as the technical secretariat of the commission in an advisory role.
Colombia – The High-Level Government Instance for the Prevention and Management of Internation Investment Disputes of Colombia was established in 2013, by government decree no. 1939 of 2013 on addressing international investment disputes. Its role is to guide and formulate recommendations to prevent and manage international investment disputes. It is also mandated to recommend alternative dispute settlement mechanisms as well as measures to prevent and resolve international disputes. This instance comprises of the Board of Advisors of the National Agency of Legal Defence of the State, who are the ministers of Justice Law, Finance, Foreign Affairs, Trade, and Tourism, the Legal Secretary of the Office of the President and two external advisors. The functions of technical secretariat are exercised by the Directorate of Foreign Investment and Services of the Ministry of Commerce, with the support of the Director of the National Agency of Defence of the State.
Chile – The Inter-Ministerial Committee for Defence of the State in International Investment Disputes and Regulation of Co‑ordination for Resolution of such Disputes was established in 2016, by Decree 125 on the creation of the Inter-Ministerial Committee for Defence of the State in International Investment Disputes and Regulation of Co‑ordination for Resolution of such Disputes dated August 2016. Its role is to advise and propose actions, guidelines and specific measures on matters of international investment disputes. The committee is permanently composed of the Minister of Finance and the Minister of Foreign Affairs, but other ministries or authorities may be invited to participate when necessary. The Undersecretariat for Foreign Affairs of the Ministry of Foreign Affairs acts as the technical secretariat of the committee.
Source: Costa Rica – Decree N° 35 452‑MP-COMEX Regulation for the Prevention and Management of International Trade and Investment Disputes, Colombia – Decree No. 1939 of 2013 on addressing international investment disputes, Chile – Decree 125 on the creation of Interministerial committee for the defence of the state in international disputes in matters related to investments and regulates co‑ordination for the settlement of such disputes
Under this model, the UAE would establish a formal inter-ministerial committee focussed on investment dispute prevention and response. This committee would institutionalise collaboration among key actors, including the MoI, Ministries of Justice, Finance, Economy and Tourism, Foreign Affairs and sectoral regulators, thereby ensuring structured dialogue, a unified government approach to mitigating investor conflicts and collective accountability for dispute prevention, a characteristic especially valuable in federal systems where regulatory mandates are distributed across multiple entities. The integration of subnational entities, including DEDs of the respective Emirates, free zone authorities and other local investment bodies, will also be key in ensuring a cohesive investment governance and effective dispute prevention.
The MoI could either chair or actively participate in this committee. It could serve as the technical secretariat for such committee, and therefore be responsible for setting agendas, collecting data, aligning institutional mandates and ensuring implementation of dispute prevention protocols across the administration. This includes overseeing the systematic exchange of information about recurring investor grievances, emerging risks and overlapping responsibilities that may contribute to fragmented or conflicting responses from different parts of government. If the MoI were to act as a participating member rather than the lead, its role would remain central to ensuring that investment policy coherence is preserved across legal, regulatory and administrative reforms. In this capacity, the MoI would advocate for reforms that enhance transparency and predictability, propose updates to investment-related laws that reduce legal ambiguity and ensure that investor feedback from aftercare and policy advocacy channels is integrated into broader policy discussions.
References
[9] Chen Yu (2022), Towards a three-tiered ombuds system for investment, https://www.tandfonline.com/action/showCitFormats?doi=10.1080/10192557.2022.2073710.
[7] IISD (2022), Investment Dispute Prevention and Management Agencies: Towards a more informed policy discussion, International Institute for Sustainable Development, https://www.iisd.org/system/files/2021-10/investment-dispute-prevention-management-agencies-policy-discussion.pdf.
[2] Joubin-Bret, A. and J. Knoerich (2010), Investor-State Disputes: Prevention and Alternatives to Arbitration, United Nations Publications, https://unctad.org/system/files/official-document/diaeia200911_en.pdf.
[8] OECD (2024), Business ombudsman institutions in Eastern Europe and Central Asia: New trends and good practices, OECD, Paris, https://doi.org/10.1787/bf84ff64-en.
[5] OECD (2015), Policy Framework for Investment 2015 Edition, OECD Publishing.
[10] R. Echandi, et al. (2019), Retention and Expansion of Foreign Direct Investment: Political Risk and Policy Responses, Washington, D.C. : World Bank Group., https://documents1.worldbank.org/curated/en/387801576142339003/pdf/Political-Risk-and-Policy-Responses.pdf.
[3] UNCITRAL WGIII (2024), Possible of investor-State dispute settlement Draft toolkit on prevention and mitigation of international investment disputes, https://docs.un.org/en/A/CN.9/1185.
[6] UNCITRAL WGIII (2023), Compilation of best practices on investment dispute prevention and mitigation, https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/wg_iii_compilation_on_dispute_prevention_and_summary.pdf.
[1] UNCITRAL WGIII (2023), Possible reform of investor-State dispute settlement Draft legislative guide on investment dispute prevention and mitigation, https://documents.un.org/doc/undoc/ltd/v23/004/26/pdf/v2300426.pdf?OpenElement.
[4] World Justice Project (2024), WJP Rule of Law Index, https://worldjusticeproject.org/rule-of-law-index/country/2024/United%20Arab%20Emirates/.
← 1. See Chapter 4.
← 2. See Chapter 4. For instance, the Brazil – UAE Co‑operation and Facilitation Investment Agreement (CFIA), excludes recourse to ISDS altogether and instead contains a provision solely focussed on “Institutional governance and dispute prevention and settlement”. Part III of the Brazil-UAE CFIA provides for the establishment of a “committee for the administration of the agreement” whose role is to address any issues concerning investments in an amicable manner. The said agreement also promotes the regular exchanges of information and provides for the designation of an ombudsperson, which has the responsibility to support investors from the other party in its territory, by, inter alia, endeavouring to follow recommendations issued by the joint committee, assess complaints and recommend actions to improve the investment environment and seek to prevent differences in investment matters. Another notable example is that of the UAE‑Israel BIT concluded in 2020; while the BIT still offers the possibility of recourse to arbitration, it provides for the creation of a joint committee on investments, whose role is, inter alia, the consideration of issues or matters related to the implementation of the agreement, including solving conflicts before their submission to arbitration.