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Czech Mate: Expropriation and Investor Protection in a Converging World

Mihir A. Desai
Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Alberto Moel
Monitor Corporate Finance, Monitor Group

April 2006

ECGI - Working Paper No. 62/2004

Abstract:
This paper examines the expropriation of a foreign investor by a local partner and the subsequent resolution of that case through international arbitration in favor of the investor. Despite the investor's 99% interest in joint venture, the local partner managed to divert the entire value of the underlying entity for his personal benefit. This clinical examination of an expropriation and its aftermath illustrates the interaction of property and contract rights in a global setting, how corporate control is shaped by geography, and how multinational firms may be advantaged by availing themselves of stronger investor protections than local firms.

Keywords: Investor protections, corporate governance, expropriation, multinational firms, FDI, foreign direct investment, media, bilateral investment

JEL Classifications: F21, F23, F36, F42, G15, G30

Working Paper Series

Date posted: September 06, 2004 ; Last revised: May 01, 2006

Suggested Citation

Desai, Mihir A. and Moel, Alberto, Czech Mate: Expropriation and Investor Protection in a Converging World (April 2006). ECGI - Working Paper No. 62/2004. Available at SSRN: http://ssrn.com/abstract=585843 or doi:10.2139/ssrn.585843

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Contact Information

Mihir A. Desai (Contact Author) Harvard Business School - Finance Unit ( email ) Boston, MA 02163 United States 617-495-6693 (Phone) 617-496-6592 (Fax)
National Bureau of Economic Research (NBER) 1050 Massachusetts Avenue Cambridge, MA 02138 United States
Alberto Moel Monitor Corporate Finance, Monitor Group ( email ) Two Canal Park Cambridge, MA 02141 United States