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When foreign investment is concerned and disputes involving the
host state begin to arise, the relevant paperwork for a company to
review is not only their own contracts, but also any relevant
treaties.
Looking at the news as of late, I am often struck by the
quote “those who cannot remember the past are
condemned to repeat it.” Regardless of who that
quote is attributed to (philosopher George Santayana being the
prime suspect), it certainly rings true in many respects. On the
one hand, very few people saw all of this coming in the way that it
did, but on the other hand, there is historical precedent for just
about every single, shocking event which we have recently witnessed
– from war and sanctions to high inflation, an energy crisis
and arbitrary measures discussed and/or taken by certain states
against foreign companies operating in those states.
As all of us know, the pandemic made everyone take a long and
hard look at the force majeure clauses in their major contracts
– previously regarded as the ‘will never happen’
clause. Now, however, it seems that we are approaching a time of
taking a closer look at investor-state dispute settlement
mechanisms, and with that, the rights granted to investors who are
based in states which have entered into either bilateral or
multilateral investment treaties with other states.
A new era in the Nordics?
For many Nordic investors (e.g. companies), it can
appear very strange that they might have significant rights against
states based on treaties that these companies have not themselves
signed. While a large number of international companies which have
made investments in foreign states are already familiar with these
rights, and the arbitrations through which these rights are
enforced, the Nordics have stayed relatively absent from dispute
settlement through investment arbitration. Now, however, it seems
that the tide is slowly turning. Nordic companies are taking a
closer look at the relevant investment treaties and the rights
granted to investors thereunder – as they should, given the
changing political climate and recent arbitrary actions of certain
states.
As such, when foreign investment is concerned and disputes which
involve the host state begin to arise, the relevant paperwork for a
company to review when considering legal recourse is not only their
own contracts; but also any relevant treaties. Is there a treaty
between the home state of the investor and the host state where the
investment was made? If so, does it appear that this treaty has
been breached?
In these times, it is certainly worth looking into.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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