Foreign investments, which constitute an important part of international commercial activities, plays an important and effective role in the national and international economic order. This role has a greater impact on developing countries than on developed countries where the majority of investments are taking place. The ability of developing countries to host foreign investments depends on the ability of the dispute resolution mechanisms arising from the bilateral investment agreements between the parties to produce reliable, predictable and consistent results and to meet mutual trust and protection expectations of both the investor and the host state.
ICSID Arbitration, one of the effective and developing dispute resolution mechanisms regarding legal disputes between a foreign investor and the host state regarding a certain investment, is the international central arbitration (“ICSID” or “Centre”) which was established and has been operating within the framework of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”). The main objective of ICSID Arbitration is to create an environment of mutual trust between the parties of the investment at the international level as well as to protect foreign investment before the host states and to provide effective mechanisms and arrangements for the settlement of disputes between the parties. For such purposes, the main issue that has been frequently discussed both within the content of the arbitral court decisions and the doctrine studies is whether the arbitration courts that are resolving the investment arbitration disputes are bound by precedent (“stare decisis”)and therefore the role of precedent in the field of investment arbitration. In addition, as the arbitration court decisions are not subject to any higher court/board supervision in terms of accuracy and consistency, the need of establishing continuity and hierarchy in the field of investment arbitration is also being discussed in terms of whether there is a need to establish a permanent upper application authority/mechanism in the field of ICSID Arbitration.
In the field of investment arbitration arising from international investment disputes and especially in arbitration disputes arising from investment agreements between the investor and the state; the application of the principle of dependence with precedent decisions and the place and importance of precedent decisions in terms of arbitration courts which are the decision-makers in investment arbitration; both the arbitration courts and the doctrine are examined in detail in different aspects. While the place and importance of precedent in investment arbitration is discussed, it is determined that the relationship between the rules of national and international law is also included in the discussion. The reason for examining this relationship is the fact that worldwide investment disputes are being resolved by selecting the arbitration path and the number of disputes being applied to the arbitration are increasing day by day and as a result of the existence of the expectation regarding the protection of the investment within the international law standards as well as the national law of the host state and the natural result of all these counts, is to try to ensure the development of case law.
As the ICSID Arbitration Courts are specifically set up for each dispute, therefore the ICSID courts cannot act as national courts and their decisions are not legally binding as precedents as in other investment dispute resolution mechanisms, it can be interpreted that the opinion that the decision given by the arbitration courts established in the dispute-specific nature are not bound by the precedent of the previous courts has been found to be more widespread. In support of this situation, when some of the decisions of the Center are examined, it is noteworthy that the number of judgments referring to the precedent decisions is very small, the courts have been content with referring only to the content of precedent decisions, and that there is no wide-ranging assessment in the field of ICSID arbitration.
In a study in which the impact of precedent in the field of ICSID Arbitration was examined, it was concluded that reference to previous decision has increased in the settlement of investment disputes settled before the Center since 1995, courts started to mention the previous decisions even if they do not directly apply the previous court decisions and their legal effects. The factor affecting this situation is the fact that the disputes subject to the settlement before the Center arise from investment agreements with similar content and cases have similar arguments.
As a result, at arbitral courts which are not directly and legally bind by precedent maintain to refer to and rely on previous awards particularly in ICSID Arbitration, in order to ensure that the investment law field to develop consistently in a foreseeable and permanent ground. It can also be said that arbitral tribunals are preferred more by investors as a legal dispute resolution and tribunals tend to support their interpretations of investment agreements by referring previous decisions but sometimes give separated decisions themselves from previous courts by stating their justification in case they are faced with a similar dispute. Considering the findings in the light of doctrine studies, it can be said that the arbitration courts have adopted the idea of supporting the preference of investors as a legal dispute resolution method because of the development of the investment law field by providing legal security in the background and for coherence and predictability of dispute settlement decisions.
 August Reinisch, “The Role of Precedent in ICISD Arbitration”, Austrian Arbitration Yearbook, 2008, p.508.
 Jeffery P. Commission, “Precedent in Investment Treaty Arbitration—A Citation Analysis of a Developing Jurisprudence”, Journal of International Arbitration, S. 2, 2007, p. 129.