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A Need for Preventive Investment Protection?

It is not unusual that a foreign investor is put in a situation where the investment has not been infringed yet and no damage has been caused, but an infringement is very likely to happen. The investor is then often left without any available domestic recourse, which is particularly true as regards general legislative measures. In this context recent developments in Poland call anew the question of preventive investment protection and the pre-emptive use of bilateral investment treaties (“BIT”).

On 5 August 2015 the lower chamber of the Polish Parliament adopted a draft law concerning the restructuring of consumer mortgage loans denominated in foreign currency. In practice, restructurin [...]

Bilcon of Delaware et. al v. Canada: A Story About Legitimate Expectations and Broken Promises

It comes as no surprise to those familiar with investment treaty law to see the concept of legitimate expectations continuously refined by case law. One of the facets of legitimate expectations, which is most often the topic of intensive debate in the investment treaty arbitration arena, is the analysis of the extent to which representations of the host State are capable of arousing legitimate expectations. International arbitral tribunals have generally confirmed that representations by the host State may, under certain conditions, generate legitimate expectations that are protected under the fair and equitable treatment standard.

For example, the often-quoted and largely-accepted award in [...]

Enforcement of Treaty Awards against Russia in Asia: A Safe Haven for Russian Assets?

In recent years, Russia has become a frequent respondent in investment treaty matters. This is a new development. There are currently at least ten treaty claims pending against Russia, with a number of other disputes threatened. At the same time, Russia is trying to protect its assets against a large-scale enforcement campaign in Europe and the US.

On 6 August 2015, in response to these developments, the government of the Russian Federation introduced a draft law ‘On Jurisdictional Immunity of Foreign States and Foreign Sovereign Assets in the Russian Federation’ in the State Duma. Under the draft law, Russian courts would be entitled, based “on a reciprocity principle”, to exercise [...]

Treaty Shopping by Dual Nationals Through the Use of Interposed Corporate Entities

Treaty shopping, also called corporate (re-)structuring, is most often associated with legal persons, in particular mailbox companies. Much discussed in this respect is the practice of “round-tripping” where the investor-claimant is foreign-incorporated, but majority-controlled by natural or legal persons of host State nationality (see e.g. Tokios Tokeles v Ukraine, ICSID Case No. ARB/02/18, Decision on Jurisdiction, 29 April 2004). In these cases, arbitral tribunals have virtually uniformly rejected Respondents´ pleas to “pierce the corporate veil” and look for the “real” (upstream) investor in the absence of a corresponding, treaty-based requirement, thus adopting a strictly f [...]

The Duty to Negotiate in Good Faith: Compensation for Expropriation

The Dissenting Opinion of Georges Abi-Saab to the Decision on Jurisdiction and Merits of September 3, 2013 in the case ConocoPhillips, Petrozuata B.V., ConocoPhillips Hamaca B.V. and ConocoPhillips Gulf of Paria B.V. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30 (hereinafter the “Dissenting Opinion”), raises the issue of whether there is a duty to negotiate compensation in good faith, and if there is, the subsequent question of whether the lack of good faith in compensation negotiations defines the lawfulness or unlawfulness of an expropriation.

Good faith is a general principle of international law, which in different forms permeates the entirety of international legal order [...]

New Rules for Foreign Investment In Chile

On of the most important developments this year in Latin America is the  Chilean Act N°20.848, which sets forth a new framework for foreign investment in Chile (hereinafter, the “ New Foreign Investment Act” or the “Act”), replacing the regime contained in the Decree Law N°600 of 1974 (hereinafter, the “DL 600”).

According to the DL 600, foreign investors bringing capital, physical goods or other forms of investment into Chile had to apply for an authorization before the Foreign Investment Committee on behalf of the State of Chile.

Upon receiving approval from the Foreign Investment Committee, the foreign investor would enter into a Foreign Investment Contract with the State o [...]

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