Protecting Your Rights As An Investor When a Country Violates a Bilateral Investment Treaty.
Many people may not know this but when they have a contract with a country to perform some type of business within that country and that nation violates the contract, they may be able to be paid for their losses in what is called “investor-state disputes”. Typically, corporations enter into contracts called “bilateral investment treaties” (or “BITs”) with countries in order to conduct some type of business such as manufacturing, or retail (i.e. selling products like pharmaceuticals, commodities, etc.). If a BIT is violated, any party to the contract who suffered monetary losses can sue for compensation depending on whether the contract states disputes can be settled either through litigation or arbitration.
These contracts, or BITs, aim to provide all investors: a.) Fair and equitable treatment; b.) Protection and security of investments; c.) Free transfer of investments and returns; and d.) Protection from expropriation without compensation.
In what way can a country violate a BIT?
Countries have violated BITs in the past. In the case of Micula ( EWCA Civ 1801), the Claimants (a company and others) brought a claim against Romania alleging they sustained damages as a result of Romania revoking investor incentives in violation of the BIT in order to conform to EU laws upon its accession to the EU. The arbitral tribunal found in favor of the claimant.
Last year, the judgment in the Achmeacase stated that if a BIT is not compatible with EU law then a dispute over a BIT could not be decided by an international tribunal and any award given by an international tribunal could not be enforced by the EU country it was awarded against. Having such a case decided by a domestic court or tribunal brought up issues of bias and investors were worried that their case could not be fairly decided by a court of the country with which it had a dispute. Achmea also brought about the termination of intra-EU BITs.
There is case law that has shown that obtaining an award against a country that violated a BIT can be enforced- and the court of the Southern District of New York has enforced such an award.
With the termination of intra-EU bilateral investment treaties, it is understandable that investors may feel uneasy about being able to win a dispute with an EU nation. Investors need to feel that their investments are protected. They need to be sure that they have legal recourse (and if so, that there is also legal certainty), that they will be treated fairly and free from discrimination and their investments will not be under threat of expropriation by state actions.
If your company signed a BIT with a nation and believe your rights have been violated please contact us at email@example.com to learn more about your rights and if you are entitled to compensation.