Constrained investments (foreign investor vs state)

Article

Constrained investments (foreign investor vs state)

Dispute Services

In the era with fewer restraints on the international flow of capital, private investors are allowed to or even encouraged to invest in a foreign country.

The complexity of relationships between foreign private investors and states give rise to a wide range of disputes, which typically focus around:

  • discriminatory measures towards foreign investors;
  • uncompensated expropriation;
  • lack of fair and equitable treatment; and
  • constraints on the transfer of capital.

To address this issue, legal developments and established practices have enabled foreign investors to legally challenge host states. This is usually implemented through an international investment agreements such as bilateral investment treaties (BIT) or multilateral arrangements (e.g. the Energy Charter Treaty) providing a guarantee that the foreign investor will have access to effective and independent dispute resolution.

One of the mechanisms commonly offered is international arbitration, where investors bring actions against states for losses suffered by their foreign investments.

The widely recognized forums for investor-state dispute settlement such as:

 

Number of cases registered by ICSID and PCA over the last decade (2010-2020)

pl_dispute_services_forensic_non-performing_contracts_wykres_2.png (1167×426)

Source: https://icsid.worldbank.org/ (ICSID Web Stats 2020-1), https://pca-cpa.org/en/resources/publications/

 

Due to the inherent complexity of such investments and corresponding foreign investor-state relations, the loss assessment is always a sophisticated and multifaceted exercise.

To maximize our value added we offer Clients:

  • in-depth expertise of the relevant technical skills, including accounting, business valuation and forensic;
  • tailor-made international project teams with a strong focus on local and expertise comprising seasoned damages and industry experts; and
  • smooth co-operation with legal counsel and other experts (if any).

Type of dispute: Constrained investments (foreign investor v state)

Type of proceedings: Arbitration

Our role: Party-appointed expert

Industry: Consumer

Our services: Review of the quantification of the claim submitted by the Indian investor and preparation of an independent damage computation for the respondent (Republic of Poland) under the regime of United Nations Commission on International Trade Law. The investor – operator of commercial airport areas - alleged that it has suffered a loss in respect of to its investment in a Polish subsidiary (a duty-free and duty-paid operator) as a result of acts by Poland contrary to the provisions of the BIT agreement between India and Poland.

Type of dispute: Constrained investments (foreign investor v state)

Type of proceedings: Arbitration

Our role: Party-appointed expert

Industry: Energy, Resources & Industrial

Our services: Assistance the Republic of Poland (Respondent) and its legal counsel in an investment arbitration under the rules of arbitration of the United Nations Commission on International Trade Law whereby the German investor (Claimant) raised claims against Poland allegedly acting – with regard to claimant’s failed mining investments - contrary to the provisions of the BIT agreement Poland and Germany. Reviewed quantification of the claim and prepared an independent damage computation report.

Type of dispute: Constrained investments (foreign investor v state)

Type of proceedings: Arbitration

Our role: Party-appointed expert

Industry: Consumer

Our services: Assistance to the Republic of Poland (Respondent) in an investment arbitration under the rules of arbitration of the United Nations Commission on International Trade Law whereby German sugar company (Claimant) alleged that it has suffered losses in respect to the non-performance of the privatization agreement with Polish government pertaining to the sale of 5 sugar plants. Prepared an expert report on the disputed issues.

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