Emerging Markets Private Equity Association has published the article "Investment Treaties and Investor-State Arbitration: Tools to Manage Political Risk in Emerging Markets," written by Akin Gump litigation partner Justin Williams. The article offers some suggestions for investors on how to manage political risk and protect their international investments.
Williams writes that protecting one's investments can best be done if they are structured at the outset "to take advantage of investment treaties." These treaties, he notes, are "between two or more states, which provide private-sector investors from one state that invest into another participating state with the benefit of legally enforceable protections."
The article then describes what specific protections are available and also outlines ways in which some investors can protect themselves against changes in government policy. As for how to obtain treaty protection, Williams writes that an investor "needs to show that it has a qualifying investment," which typically needs to involve, "(i) a contribution of money or assets; (ii) be of a certain duration; and (iii) involve an element of risk."
To read the entire article, which includes a look at some case studies, please click here.
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.
