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Foreign direct investment offers many benefits to recipient nations, but in order to take advantage, investors need the assurance of legal protection. While there is no universal treaty governing foreign investment, a growing number of frameworks are available to provide varying protections. These include free trade agreements, bilateral investment treaties (BITs), multilateral investment treaties (MITs) and the Energy Charter Treaty, for example. BITs and MITs offer investors full compensation for direct or indirect expropriation, even if unintended, and for other forms of detrimental interference with investments.

CANADA

Bennett Jones

“Canada has seen a steady volume of investor-treaty arbitrations. Within the last 12 months, cases were initiated, withdrawn, settled and otherwise concluded against the government of Canada. Canadian companies initiated or are continuing cases against Mexico, Colombia, Serbia, Venezuela, Kazakhstan, Romania, Kenya and Costa Rica, among others. As of 1 July 2020, the United States-Mexico-Canada Agreement (USMCA) entered into force.”

MEXICO

LITREDI, S.C.

“Large infrastructure projects are frequently engaged in investor-treaty arbitration. These projects include investments made in the oil & gas sector, electricity and renewable energies, mining and telecommunications. With the new wave of nationalism and protectionism present in some governments, the policies implemented by some regimes are giving rise to decisions that are in direct violation of obligations assumed in bilateral investment treaties (BITs). However, these governments are not much inclined to resolve these matters in the investor-state forum and are opting to negotiate and settle their disputes.”

ARGENTINA

Marval O’Farrell & Mairal

“The position of Latin American countries toward the investor state dispute settlement system (ISDS) has fluctuated over time, in line with regional political and economic developments. In recent years, investor-treaty arbitration has again been at the centre of the debate, after Bolivia, Ecuador and Venezuela announced their withdrawal from the International Centre for Settlement of Investment Disputes (ICSID) Convention, while other countries expressed their intention to revise their investment policies.”

UNITED KINGDOM

Proskauer Rose LLP

“The UK has one of the largest networks of bilateral investment treaties (BITs) in the world, with around 90. It is also party to a large number of multilateral investment and trade treaties. While there are no public treaty awards against the UK, and only two known cases, the UK plays multiple roles in global investor-state dispute settlement (ISDS). Including as the home state of investors – UK claimants have brought more than 8 percent of all known treaty-based ISDS cases, as a venue for hearings and at award enforcement, in which regard the English courts are very pro arbitration.”

SPAIN

King & Spalding

“Spain is among the most frequently sued states in investor-state arbitration. Based on the latest statistics, Spain faced five new cases in 2018 – surpassed only by Colombia – and at least three new cases in 2019. Spain currently faces roughly 47 cases – perhaps more than any other country worldwide. Of those 47 cases, 33 are pending before tribunals, while the remaining 14 are in the enforcement stage. The onslaught of cases against Spain started just seven years ago. Until that time, Spain had faced roughly four cases in total. Yet circumstances changed significantly in response to a series of regulatory measures that Spain adopted starting in 2010.”

SWEDEN

Hannes Snellman

“The first ever investor-state arbitration with Sweden as responding state was notified in December 2019 when a foreign prospector raised a claim against Sweden under the Energy Charter Treaty (ECT) (Aura). The dispute relates to mining rights. Apart from this case, there are a number of setting aside proceedings in investor-state cases pending in Swedish courts. For example, PL Holdings v The Republic of Poland, which is a case based on a bilateral investment treaty (BIT). This case is currently being handled by the Swedish Supreme Court, which has referred an issue to the Court of Justice of the European Union (CJEU) for a preliminary ruling.”

AUSTRIA

Freshfields Bruckhaus Deringer LLP

“Austria’s foreign trade policy aims to support domestic companies in their investment ventures abroad and to minimise any risks that might occur. To promote and protect foreign investment, Austria has concluded a number of bilateral investment treaties (BITs) with other countries, focusing on those countries that are of greatest importance as business partners or future markets for Austrian companies. At present, Austria is party to 63 BITs. Austrian claimants have commenced investment arbitration proceedings 25 times in total, including three times in 2019. There is only one case on record against Austria.”

ROMANIA

Reed Smith LLP

“Investment arbitration involving Romania has encompassed a number of specific industries, such as duty-free shops, newspaper distribution, energy, mining and oil & gas. Numerous disputes arose out of investments made during the privatisation period in the 1990s. Over the last 12 months, Romania has seen a significant increase in investment arbitration claims, mainly in the renewables energy sector under the Energy Charter Treaty. This development was a predictable and direct consequence of the cuts and changes made recently by the Romanian government regarding the support scheme for renewable energy.”

SINGAPORE

WongPartnership LLP

“In recent years, Singapore has actively developed its legal and physical infrastructure in support of investor-treaty arbitration. In 2017, the Singapore International Arbitration Centre became the first private arbitral institution to promulgate dedicated rules for investor-treaty arbitration. The Permanent Court of Arbitration has opened an office and the International Centre for Settlement of Investment Disputes (ICSID) has also signed a memorandum of understanding for hearings to be held at Maxwell Chambers in Singapore.”

UNITED ARAB EMIRATES

King & Spalding

“With the United Arab Emirates’ (UAE’s) ongoing strategy to reduce its dependence on oil and gas revenues and to develop a knowledge and tourism-based economy, foreign investment of both funds and knowhow is paramount. The Foreign Direct Investment Law of 2018 further opens up inward foreign investment into the UAE. In addition to investor-state arbitration, foreign direct investment claims can now also be brought in the UAE courts in an expedited manner. This development is likely to keep in check the number of investor-state arbitrations brought against the UAE.”

CONTRIBUTORS

Bennett Jones

Freshfields Bruckhaus Deringer LLP

Hannes Snellman

King & Spalding

LITREDI, S.C.

Marval O’Farrell & Mairal

Proskauer Rose LLP

Reed Smith LLP

WongPartnership LLP