Where the protections come from
Protections for foreign investors usually come from bilateral investment treaties and investment chapters in free trade agreements. These often include commitments such as fair and equitable treatment and compensation for expropriation, though the wording varies from treaty to treaty. Many treaties let investors bring claims directly against the host state through arbitration, often under ICSID or UNCITRAL rules. Some newer agreements narrow or remove that option, and some countries have withdrawn from older treaties. Whether a particular treaty covers you depends on how it defines an investor and an investment.
Planning before trouble
Treaty coverage often depends on the nationality of the company that holds the investment, which is why holding it through a company in a treaty partner country is sometimes considered at the outset. A restructuring made after a dispute is already foreseeable may be rejected by tribunals as an abuse, so timing matters. Investment contracts with the host government, licenses, and permits should be preserved, along with records of the investor's dealings with officials. Many treaties require written notice and a period for negotiation before arbitration can begin. Political risk insurance is another tool worth considering for investments in less stable markets.
Evaluating a situation
We start by identifying the investment, the entity that holds it, and the treaties that may apply between its home country and the host state. We review the government measures at issue, such as permit revocations, regulatory changes, or tax assessments, and the record of how the investor was treated. We coordinate with counsel in the host country, since local remedies and treaty claims can interact, and some treaties require choosing between them. Some treaties also set time limits for bringing claims, so delay carries risk. Even when arbitration is not the right step, a clear view of the treaty position can strengthen discussions with the host government. Bring the corporate chart, investment agreements, and correspondence with the authorities.
