Decades ago, a visionary concept took root, and meticulous preparations were set in motion. We are ushered into a new era of hope with the realization of the Gelephu Mindfulness City (GMC) or Gelephu Special Administrative Zone (GeSAR), guided by His Majesty as the vigilant gatekeeper ensuring the vision’s unwavering success. As the nation embarks on this transformative journey, the establishment of a robust dispute settlement mechanism emerges as a pivotal first step, recognizing its significance as a precursor to any investment endeavor.

Investment contracts dispute resolution “clauses are among the most sensitive legal issues, where the host country safeguards its national sovereignty, while investors seek a stable legal environment and an unbiased forum for dispute resolution.” International investors scrutinize investment contracts, giving paramount importance to dispute resolution clauses. This sensitive legal aspect holds strategic significance, as the host country aims to protect its national sovereignty, while investors prioritize a “legal order that ensures stability and predictability, coupled with a dispute resolution forum devoid of bias or political influence”. 

Some may ask, given Bhutan’s existing legal system and Alternative Dispute Resolution mechanisms, why establish an entirely new dispute resolution framework? His Majesty insightfully recognizes that most foreign investors would opt to settle any disputes in a major international arbitration hub like Singapore, rather than rely on Bhutan’s domestic courts. While Bhutan’s judiciary is independent, it lacks the specialized experience and procedural infrastructure to generate the same confidence among global commercial players. 

Singapore International Arbitration Centre (SIAC), established in 1991, has evolved into a preeminent global arbitration institution, renowned for impartial and enforceable awards. Ranked 2nd among international arbitration bodies, SIAC boasts a distinguished panel of over 600 arbitrators from 40+ countries, making it the preferred choice in the Asia-Pacific region.

While our current legal system includes judicial proceedings and Bhutan Alternative Dispute Resolution, it lacks the expertise and efficient rules found in international jurisdictions particularly international commercial and investment laws. Considering these factors, GMC faces a critical choice. One option is to allow investors the flexibility to opt for well-established jurisdictions such as Singapore, Dubai, ICC, or London Arbitration Centre. The alternative is to institute a robust, reliable, and flexible dispute resolution system within GMC, tailored to the specific needs of investors. Historical experiences reveal instances where host nations and investors have tailored national and international rules to align with their relationship dynamics, fostering transparent economic growth that mutually benefits both parties. 

The best choice lies in establishing an independent dispute resolution system within GeSAR, have several advantages. As a special administrative zone, it remains insulated from political influence, ensuring perpetual independence in its functions related to investment and business. This presents an opportunity to attract renowned lawyers and experts globally, fostering a faster, cost-effective, and uniform dispute resolution process aligned with GMC’s requirements. This model, if successful, can extend beyond GeSAR, positioning Bhutan as an international hub for dispute settlement, while Bhutanese individuals may become internationally recognized arbitrators.

With visionary leadership, Bhutan is strategically positioned to leverage its unique strengths. This strategic move has the potential to draw more investors to the GeSAR, contributing to its economic growth and solidifying its status as an exemplar of international dispute resolution excellence. Further, the creation of GeSAR opens avenues for judicial innovation and international integration and learning platform for Bhutanese experts, lawyers, and legal fraternity and reform our own system.  

Sonam Tshering

Lawyer, Thimphu

Disclaimer: The views expressed in this article are author’s own.