Investment Treaty Arbitration: An Option Not to Be Overlooked

• Author: Barton Legum
• Pages: 231-237

231

“I have a huge mess in a rea lly bad place,” says Heidi Warren, general couns el of a

longtime client of the fir m. “We invested millions and mi llions of dollars in a

brand-new facility in a developing country. Things were going well—and then

there was a coup d’ét at. The new government took over the facility a nd gave it to

its cronies . . . but without payi ng us a cent.”

Heidi anticipate s your f irst instinct. “ We thought about sui ng in local court,”

she interrupts, “but found out there is no real distinction between the govern-

ment and the courts—it will take years and the end result is a foregone conclu-

sion. Short of writi ng our congressperson, I jus t can’t fig ure out what to do.”

Twenty or 30 years ago, writing the local congressperson might well have

been the best option. Today there may be a better option, a lthough it is one that

has not yet come to the attention of many pr actitioners. That option is arbit ration

under intern ational investment treaties.

HWHAT ARE INVESTMENT TREATIES?

Investment treaties are a particular k ind of international agreement between

states. These treat ies provide basic protection for investments made by nationals

of one state in the terr itory of the other state.1

This ty pe of treaty was origina lly conceived in the 1960s as a way to supple-

ment public aid to developing countries by promoting pr ivate investment. A

1. For a disc ussion on definit ions of “investor” and “ investment,” see Barton Leg um,

Defining Invest ment and Investor: Who Is Ent itled to Claim?, 22 Ar. I’ 52 (2006).

CHAPTER 15

Investment Treaty Arbitration: An

Option Not to Be Overlooked

Barton Legum

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