Investment Law is an important part of Public International Law. This branch requires actors who are both sovereign states and individuals. States look up to investments as important enticements for strengthening their economic status. But at the same time, states being sovereigns are also required to exercise their regulatory powers. The legal framework for regulating foreign investments exists under municipal legal systems. It falls within the domain of State laws. By implementing domestic laws for regulating foreign investment, States exercise their sovereign powers. The approach of states is different for Foreign Investments as compared to foreign investments. These laws implemented by States are based on international conventions like the Washington Convention (ICSID Convention) and New York Convention and United Nations Convention on International Trade Law (UNCITRAL). Investment Arbitration is a mechanism to resolve disputes between investors and states. International conventions and institutions are means to administer Investment Arbitration. In this field, there is a number of significant aspects like the agreement upon which arbitration would be based, consent on the part of the state and individual investor, the institution to administer, the finality of the award, and challenges to enforcement. In this paper, the author will try to analyze the concept of investment arbitration and the legal framework in Australia highlighting the main provisions for the regulation of foreign investment.