Legal Responses to Corporate Manoeuvring in International Investment Arbitration
(2014) Journal of International Dispute Settlement, 41-68
28 Pages Posted: 28 Aug 2013 Last revised: 21 Apr 2015
Date Written: August 26, 2013
Host states not infrequently find themselves responding to claims by investors under international investment agreements (‘IIAs’) following a series of corporate steps to enable the claim to take place: restructuring of existing chains of corporate ownership; transfers of assets to new or existing entities; changes in corporate nationality. These corporate manoeuvres can create legal difficulties for investor claimants in both procedural and substantive terms. If the actions precede the claim but post-date the underlying ‘dispute,’ the investor may be unable to enjoy the protection of the relevant IIA. If the actions indicate that the investment is not in fact owned or controlled by the claimant, treaty protection may be similarly barred based on the definition of investment or investor or the inclusion of a ‘denial of benefits’ clause. Finally, at least the most egregious forms of corporate manoeuvring in view of an ongoing or foreseeable dispute with the host State may constitute an ‘abuse of rights,’ again excluding the investor from protection under the relevant IIA. The incoherent manner in which tribunals have resolved these questions makes their significance unpredictable, including in the Philip Morris v Asia case currently underway under the Hong Kong-Australia Bilateral Investment Treaty. Less formalistic responses and a willingness to recognise a doctrine of abuse of rights could assist in increasing consistency in this important field of international investment law.
Keywords: International Investment Law, International Investment Agreements, Pre-existing dispute, Ownership of an investment, Control of an investment, Corporate Restructuring, Denial of Benefits, Abuse of Rights, Date of Harm or Injury, Definition of Investment, Definition of Investor, Good Faith
JEL Classification: K33
Suggested Citation: Suggested Citation