International Construction Law Review
CONSTRUCTION ARBITRATION AND BITS: IS THERE STILL A FUTURE FOR INTRA-EU INVESTMENT ARBITRATION?
Frédéric Gillion and Leonardo Carpentieri1
Pinsent Masons LLP
INTRODUCTION
Bilateral investment treaties, or BITs, are international agreements signed between two states establishing the terms and conditions for private investment by nationals and companies of one state in the other state.
Typically, BITs set forth standards of conduct that apply to governments in their treatment of foreign investors. These standards of protection include fair and equitable treatment, protection from expropriation, free transfer of investment proceeds, and full protection and security for the investment. The distinctive feature of many BITs is that they allow for an alternative dispute resolution mechanism, whereby an investor whose rights under the BIT have been violated could have recourse to international arbitration, under the auspices of various arbitration institutions such as the International Centre for the Settlement of Investment Disputes (“ICSID”),2 rather than suing the host state in its own courts.
The protections offered by BITs are particularly relevant in the context of large international construction projects in which contractors often negotiate and contract with various emanations of the state in which their project is located. As long as a contractor qualifies as a “foreign investor”3 then the BIT with the host state is likely to apply and afford protection to the Contractor and its investment, whether this is capital investment,
1 Frédéric Gillion is a Partner in the Paris office of Pinsent Masons LLP. Leonardo Carpentieri is an Associate in the London office of Pinsent Masons LLP. The authors would like to thank Iulia Anghelescu for her assistance with the research. The views expressed in this article, as well as any errors or omissions, are the authors’ own (pinsentmasons.com).
2 The International Centre for Settlement of Investment Disputes is an international arbitration institution established in 1965 for the resolution of disputes between international investors (https://icsid.worldbank.org/en/). The ICSID is part of and funded by the World Bank Group, headquartered in Washington, DC. It is an autonomous, multilateral institution aimed to encourage international flow of investment and mitigate non-commercial risks by a treaty drafted by the International Bank for Reconstruction and Development’s executive directors and signed by member countries.
3 As an example, the Malta-Austria bilateral investment treaty, signed on 29 May 2002, defines investors as follows: “(1) ‘investor of a Contracting Party’ means: (a) a natural person having the nationality of either Contracting Party in accordance with its applicable law; or (b) an enterprise constituted or organised under the applicable law of either Contracting Party making or having made an investment in the other Contracting Party’s territory.”
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