MITs meaning

The primary gateway question for any claim under a bilateral investment treaty (BIT), multilateral investment treaty (MIT) or foreign investment laws is whether the claimant truly qualifies as an ‘investor’ and whether its interests in the host state amount to an ‘investment’. If a prospective claimant is not a qualifying investor holding a qualifying investment under the relevant treaty or law, the substantive protections will not engage and there will be no lawful jurisdictional basis for pursuing investor–state arbitration. The definitions of ‘investor’ and ‘investment’ differ across BITs, yet common themes emerge and certain components recur. This Practice Note provides an overview of those themes and the typical issues arising around the definitions of ‘investor’ and ‘investment’. The meaning of investor An investor will typically be an individual citizen of the investor’s home state or a company incorporated in the investor’s home state (domicile). Nonetheless, with individuals holding multiple nationalities and multinational corporations, this question can be complex. Investor—key elements An investor can be a natural...

Foreign direct investment (FDI) remains an ever more significant driver within the world economy today, and its importance continues to grow. For multinational groups, and any enterprise hoping to launch operations in another jurisdiction, a key consideration is the legal stability of that location when entering a host market. Careful investors will wish to be confident their capital is safe and shielded from improper intervention by the host state, both now and in future. Shifts in political or economic conditions can prompt state action that may, directly or indirectly, diminish an investment; in the most severe cases, the nationalisation of industries or sectors may lead to expropriation of assets (see, for example, Practice Note: Expropriation—investment treaty arbitration). In those situations, investors might possess rights and remedies arising under the contractual frameworks through which the investment was made, depending on the terms agreed. Often, however, such agreements stipulate that any claims must be pursued in the host state’s courts, or restrict the scope of relief that can be obtained. Accordingly, acknowledging...

Under bilateral investment treaties (BITs) and other investment protection treaties such as multilateral investment treaties (MITs), host states generally commit to provide baseline standards of protection and treatment to foreign investors. These baseline standards can range from an undertaking not to discriminate against foreign investors in favour of domestic companies, through to a commitment not to nationalise or expropriate an investment without the payment of adequate compensation. Among other reasons, appreciating the nature and extent of these safeguards is important for advising on related disputes. This Practice Note summarises the forms of protection typically available under BITs and MITs, including: fair and equitable treatment (FET) of investors (sometimes referred to as the FET standard) full protection and security of investments 'national treatment' of investors 'most favoured nation' (MFN) treatment of investors, and protection from expropriation without adequate compensation UNCTAD, the United Nations Conference on Trade and Development, maintains a useful, searchable database of BITs for each of the world’s countries...