Founding Attorney
The short answer: yes — but not the way you would sue a private company, and not usually in the government’s own courts. Foreign investors and contractors have three realistic routes against a state that has taken, frozen, or destroyed the value of their investment. Which one applies to you depends on where you invested, how your investment is structured, and what exactly the government did.
Why You Usually Cannot Just Sue in Court
Sovereign states are generally immune from suit in foreign courts. In the United States, the Foreign Sovereign Immunities Act (FSIA) makes immunity the default and allows suit only through specific exceptions — most importantly where the state engaged in commercial activity with a U.S. nexus, where it waived immunity, or where the suit enforces an arbitration agreement or award. Suing the state in its own courts is formally available but practically compromised: the judge, the treasury, and the defendant answer to the same government. That is why the serious routes run through arbitration.
Route 1: Investment Treaty Arbitration
If you are a foreign investor — you or your company hold an investment in a country other than your own — you may have rights under a bilateral investment treaty (BIT) or a multilateral agreement between your home state and the host state. These treaties let investors bring claims directly against the state before a neutral international tribunal — typically under the ICSID Convention or UNCITRAL rules — without asking their own government to intervene.
Treaty claims cover the ways states most often destroy foreign investments: expropriation and nationalization, whether outright seizure or regulation that strips an asset’s value; revoked licences and cancelled concessions; unfair or arbitrary treatment; discrimination against foreigners; and blocked transfer of funds. Compensation is measured by international standards — generally fair market value — not by what the state’s own law would concede. Two practical points matter early. First, coverage often depends on corporate structure: an investment held through a Dutch, Swiss, or U.S. vehicle may enjoy treaty protection the operating company alone would not. Second, most treaties impose waiting periods and some contain “fork in the road” clauses — suing in local courts first can forfeit the treaty claim. What you do in the first weeks matters.
Route 2: Arbitration Under Your Contract
If your agreement is with the government or a state-owned entity and contains an arbitration clause — ICC, ICSID, UNCITRAL, or another forum — that clause is itself a waiver of immunity for the dispute. Contract arbitration is often the cleanest route for unpaid invoices, terminated concessions, and frustrated government contracts, and it can run alongside a treaty claim where both apply. State-owned enterprises deserve special attention: their commercial contracts are frequently arbitrable even when the state itself never signed anything.
Route 3: National Courts — Narrow but Real
Court litigation against states works in defined lanes: enforcing an arbitral award against state commercial assets (the New York and ICSID Conventions make awards enforceable in over 170 countries), commercial-activity claims under the FSIA and its foreign equivalents, and attachment of state-owned commercial property. U.S. courts, including the Southern District of Florida and the D.C. courts, regularly confirm and enforce awards against sovereigns. Court proceedings are usually the end of the strategy — collection — rather than the beginning.
What Does Not Work
Purely political grievances without an investment or contract; claims filed after treaty limitation periods (often three years from knowledge of the breach); suits brought in local courts that trigger fork-in-the-road clauses; and threats made before the evidence is preserved. States defend these cases hard, and procedural missteps early are the most common reason strong claims die.
What to Do First
Preserve everything — licences, correspondence, meeting notes, the paper trail of the measure that harmed you. Map your corporate structure against available treaties before restructuring anything. Calendar the deadlines. And get a professional read on coverage and claim strength before you write the government a letter: a well-founded treaty notice opens settlement conversations, while a premature threat closes them.
Want to know where you stand?
Our fixed-fee Confidential Treaty-Risk Assessment delivers a written analysis of your treaty coverage, claim strength, deadlines, and options — US$2,500, fully credited against any engagement.
This article is general information, not legal advice. Treaty coverage, immunity, and limitation periods are jurisdiction-specific and fact-dependent.
