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The extent of governmental involvement in their national economies goes to the very heart of political and economic debates that have raged since time immemorial, and as such can seem to be an issue on which opinions are clearly and irrevocably set. However, the last few years of political upheaval has shown that those sands can, and do, shift. The last few weeks have arguably accelerated this momentum, albeit in response to a punctual threat: governments have torn up what were perceived as immutable rules of economic engagement in response to the COVID-19 pandemic. The question is whether the genie can be put back in the bottle.

Working with David Chmiel, geopolitical commentator, business advisor and co-founder of Global Torchlight, we dispel four commonly-held misconceptions about the nature of nationalization policy, (each of which has been disproved by governments’ responses to the current crisis), namely:

  • Misconception One: Nationalization risk is limited to countries with weak political and legal systems

  • Misconception Two: Nationalization policies focus on natural resources companies

  • Misconception Three: Nationalization is driven only by economic concerns

  • Misconception Four: Nationalization is carried out only by expropriation

Risk blue abstract graphic

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We have also looked at the treaty framework that underpins investment decisions, assessing the protections afforded by investment treaties and tax treaties - how they are valuable to international investors and how investments can be structured to take advantage of them. While debates around nationalization are widespread, we have applied this analysis to five case study jurisdictions of particular relevance, each demonstrating a particular aspect of the debate: Argentina, Indonesia, South Africa, the UK and the US.

Our uniquely global platform enables us to assess these risks and the associated practical considerations with an equal focus on local remedies and global protections. In this report, we draw upon the collective knowledge of more than 1100 international disputes lawyers around the world, embedded in their local markets, experts in their industries.

In a related report, our team has partnered with the Investment Treaty Forum at the British Institute of International Comparative Law (BIICL) to present the first comprehensive empirical study of corporate restructuring and investment treaty protections, examining all publicly available decisions of investor-state tribunals dealing with issues of corporate structuring and restructuring. Our findings from that study support and inform the recommendations we make here.