Rogue Debtors and Unanticipated Risk
10 Pages Posted: 14 Jan 2014
Date Written: January 14, 2014
Commercial actors are becoming increasingly concerned about the effect that various types of political risk, including the risk of sovereign default, has on their investments. This Essay considers the problem of rogue debtors (i.e., states that intentionally ignore their legal and financial obligations) as a type of unanticipated risk and analyzes how well various responses, including domestic litigation, interstate negotiation and investment arbitration, address investors’ needs. In particular, the discussion focuses on how effective investment arbitration is in overcoming a number of difficulties traditionally associated with rogue debtors and the various means by which states are attempting to bypass the threat of investment arbitration, including the use of exclusionary treaty provisions, contractual waivers of investment arbitration and collective action clauses.
Keywords: Investment arbitration, investor-state arbitration, treaties, international litigation, international law, international relations, waiver, collective action clauses, unanticipated risk, political risk, regulatory litigation, regulatory arbitration, foreign direct investment (FDI), concession agreem
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