Founding Attorney
Concessions tend to be intricate on their own and sometimes confusing. There are several analyses to be made prior to making any sort of investments dependent on a concession given by a municipality or a state government:
1. The first analysis to be made is whether the political environment of the state where you intend to apply for a concession and invest is stable enough to make that investment. Remember that this analysis is crucial no matter what resources are being extracted. The reason is that some governments decide to take that concession away due to a political change or because of corruption.
2. The second analysis is whether such concession or investment would be protected under a Bilateral Investment Treaty. It is important to note that foreign investors tend to have more protections under a BIT than a national one. This is because tribunals such as ICSID require a diversity of jurisdiction. There can be issues of dual nationality, but an argument can be made as to whether the tribunal has jurisdiction.
3. The Third analysis is whether the concession on its own has some arbitrational clause. It is possible that some concessions tend to have an arbitrational clause in case of a dispute.
4. The Fourth analysis is how you can make sure that no such injustice occurs and minimize your risk knowing that whatever you are extracting is rich in minerals and unique. The only way to do this is to insure your investment through different ventures. You can insure your investments which minimizes the political risks of your investment being taken away without justification which can be a breach under the BIT.
Overall, each investment has its own risk, and having counsel on your side to guide you in navigating these risks is essential to know what remedy you have when you see that a government has expropriated your assets and whether a claim can be brought to the appropriate tribunal.
