Resource Nationalism in Investor-State Arbitration

Presentation

Over the past century, waves of so-called “resource nationalism” affected investments made by foreign investors in emerging markets through government measures ranging from policy changes in the tax regime and repatriation of profits to, in the extreme, expropriation without compensation.

The reasons why States have traditionally engaged in exerting political power and economic control over strategic natural resources located within their territories were numerous and multifaceted. Mexico justified the expropriation of foreign oil investments in the late 1930s by a need to manage a consolidated industry. Resource nationalism in the Pacific tuna fishing industry in the late 1980s and early 1990s was motivated by the unsatisfactory outcomes of negotiations between coastal and fishing states. An increase in the North Sea tax in 2006 by the UK government was justified by a rise in oil process, and the list of examples can continue.

At the other end of the spectrum, deprived of their protection under negotiated instruments, foreign investors turned to the guarantees offered by international law to seek justice and relief, and a whole body of investment Treaty case law emerged. Until recently, all these were text book examples. Yet, prompted by the economic crisis in the wake of the COVID-19 pandemic, the gas and electricity shortages and the ascending inflation, resource nationalistic policies start showing teeth again in different regions in the world. How can States legitimately justify such measures and protect themselves against Treaty claims? How can investors preserve their investments and meet their legitimate expectations?

Join us to discuss whether and why history repeats itself, what are the predictions for the investor-State arbitration, and the lessons learned from the past which will enable those concerned to navigate muddy waters.