Click cover to download

(Subscriber-only password access)

Not a subscriber?

Click here to join the FREE mailing list and receive password access

Foreign direct investment (FDI) presents risks for both the investor and the recipient country. Although those risks have intensified in recent years, FDI remains an important facet of the global economy. Investors looking to invest in a foreign territory need to do their homework. It is important to understand the risks attached not just to the investment itself, but to the prospects for resolving potential disputes down the line. Knowledge is key to protecting investors’ interests.

ARGENTINA

Marval O’Farrell Mairal

“Historically, Latin America has moved with the times with respect to investor-state dispute settlements (ISDS), keeping pace with the constant economic, political and social changes in the region. Argentina was a forerunner in this area and between 1990 and 2000 signed 58 bilateral investment treaties (BITs), more than any other country in Latin America. Also, since 1994, Argentina has been a party to the International Centre for Settlement of Investment Disputes (ICSID) Convention. Until the 1990s, ICSID had registered only nine cases against Latin American countries.”

UNITED KINGDOM

Kirkland & Ellis

“UK investors continue to rely on and extensively enforce their rights under applicable investment treaties. The last year saw a record number of investment arbitration cases being commenced globally, with many of such cases being brought by developed country claimants, including many UK investors. At the same time, there is a continued push by states to reform or restrict the existing network of investment treaties, seeking to limit both the protections available under such treaties and the availability of investor-state dispute settlement (ISDS) for such disputes.”

SWITZERLAND

Schellenberg Wittmer

“In Switzerland, international investment arbitration is governed by chapter 12 of the Swiss Act on Private International Law (1987). This ‘code’ of international arbitration was recently updated to incorporate modern developments in comparative arbitration law. The revised text entered into force on 1 January 2021. During the revision process, a proposal was made to enact specific provisions on investment arbitration, but this proposal was ultimately dropped. Arbitral institutions are increasingly designating Switzerland as their preferred place of arbitration. This can also be seen by the number of investment matters in setting-aside proceedings before the Swiss Supreme Court.”

UKRAINE

Quinn Emanuel Urquhart & Sullivan LLP

“Ukraine has faced several investment treaty claims in recent years, and has successfully defended against a number of them. During 2021, four investment treaty arbitrations were commenced against Ukraine, including two cases relating to its renewable energy tariff reform. Two investment treaty disputes against Ukraine were resolved in 2021, with outcomes evenly split between the state and investors. The Russian invasion of Ukraine in February 2022 reportedly resulted in the suspension of the eight pending investment treaty arbitrations against the state.”

RUSSIAN FEDERATION

RPC

“The recent events in Ukraine have prompted a wave of responses from Western countries, the majority of which imposed economic sanctions against the Russian government, state-owned and state-related entities, and a large number of individuals who are believed to be connected to Putin’s regime. In response to such unprecedented outflow of foreign investment, the Russian government threatened to nationalise assets of those foreign companies which chose to cease operations. Should Russia adopt and implement its nationalisation plan, it is likely that a new wave of claims by foreign investors will follow.”

INDIA

Norton Rose Fulbright LLP

“One key recent development is that India has terminated approximately 77 bilateral investment treaties (BITs) since 2017, most recently the India- Latvia BIT on 26 November 2020. The new generation of BITs with Belarus, Kyrgyzstan, Taiwan and Brazil are based on India’s Model BIT published in 2015. A notable feature in the India-Brazil BIT is the requirement to engage in a confidential dispute prevention procedure prior to submission to arbitration. Investments made prior to termination may still be protected for up to 15 years by sunset clauses, subject to analysis of the relevant language.”

SOUTH AFRICA

Herbert Smith Freehills

“The position of investment treaty arbitrations in South Africa is quite unique. South Africa terminated or failed to renew several bilateral investment treaties (BITs) which it had in place with European states prior to the Foresti dispute. In this International Centre for Settlement of Investment Disputes (ICSID) arbitration, foreign investors challenged an affirmative action policy entrenched in the South African national laws, which they claimed were a breach of the South African government’s obligations in terms of its BITs.”

CONTRIBUTORS

Herbert Smith Freehills

Kirkland & Ellis

Marval O’Farrell Mairal

Norton Rose Fulbright LLP

Quinn Emanuel Urquhart & Sullivan LLP

RPC

Schellenberg Wittmer