Right of Foreign Investors to Sue Directly against a Host State Base on Mechanism of Dispute Resolution in the Energy Charter Treaty

International arbitration as an accepted method of mediating between a host state and investor, has encountered a major drawback, namely that the foreign investor is required to resort to diplomatic protection of the subject State against the host State. This may make it difficult to use such a method. The Energy Charter Treaty, as the most important multilateral treaty in energy sector, has provide a solution to the aforementioned fault by giving foreign investors the right to bring a claim directly before international tribunals without resorting to the diplomatic protection of the subject State. In this study, an attempt has been made to analyze this right, its advantages and effectiveness legally. Such a right has prevented disputes between an investor and host State becoming a dispute between States. So the Charter has removed resort to international arbitration dependent on diplomatic protection as an unreliable method for investor finally leading to the legal resolution of a dispute. Additionally, recognizing principles such as not obliging an investor to bring a suit before the domestic courts of the host State with the purpose of ensuring non-discriminatory treatment, freedom of choice in using the method of dispute resolution, allowing foreign investors to enjoy the highest privileges granted to domestic nationals and foreign nationals and suggesting different methods, including negotiation and compromise, prior to bringing a suit before international arbitration may result in greater reliability for investors and an increase of investment in the host State’s territory.