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Protecting investments

Our expertise

Countries have for centuries been trying to protect foreign investments made by their citizens. This has often led to political conflicts, use of military force, or court or arbitral proceedings between the two countries involved. Investment treaty arbitration, as is customary today, depoliticises such conflicts as it takes place directly between the investor and the foreign state. The arbitration is conducted before, for example, the International Centre for Settlement of Investment Disputes (ICSID) or arbitral tribunals according to the rules of the Stockholm Chamber of Commerce (SCC). Since the negotiations surrounding TTIP and CETA took place, this issue has become known to a larger audience.

We have been providing advice on how to protect investments already at a time when this was not a topic that was discussed in the media. We have advised and represented companies in this politically sensitive area for more than ten years now. In 2008, Luther was one of the first German law firms to initiate and win arbitral proceedings on behalf of German clients before the ICSID. We have since been instructed by both German and foreign companies. Our clients include Vattenfall, a Swedish state-owned company that retained us for, inter alia, the ICSID proceedings against the Federal Republic of Germany concerning the phasing out of nuclear power.

Investment treaty structuring

Investments are protected on the basis of bilateral investment treaties (BITs) and multilateral investment treaties. Since the year 1959, Germany has entered into investment treaties with a total of 127 countries. These treaties cover many but not all of the countries where German companies make investments. Furthermore, not all of these treaties are up to date; this applies to, for example, the treaties with Turkey and Russia. This is why any investment should be preceded by an investigation into whether such investment will be safe. Structuring the investment via a subsidiary in a third country may be preferable if this third country has entered into a more favourable investment treaty. Such investment structuring is generally permitted. If, however, an investment has already been made, restructuring it will only be possible within narrow restraints and will require a careful examination to ensure the restructuring will not be considered an abuse of law in subsequent proceedings.

We can examine for you what protection exists for your planned investment and present you with alternatives, if you so wish. If you wish to restructure an investment that has already been made, we can help you reduce the risks.

Investment treaty compliance

During the investment process, important decisions are made for the future. If, for example, an investor wishes to demonstrate that it relied on promises and commitments made by the foreign state, there is often no written evidence to this effect. Arbitral tribunals also expect that investors have carried out a reasonable due diligence review. We help investors find the best possible position for themselves under a BIT and ensure that they do not carelessly risk losing the existing protection.

As far as states are concerned, regulatory measures may result in disputes and proceedings if their consequences for foreign investors are underestimated or entirely disregarded. The chances of winning a case before an arbitral tribunal can be influenced by involving the investor and, where appropriate, by granting the investor the right to turn to the state courts for legal protection. We carry out an expert assessment of the risks involved in state measures and advise countries on how to reduce the risk of actions being brought under an investment treaty to a minimum.

Investment treaty arbitration

We can represent you in such proceedings. We know lots of arbitrators and experts. Furthermore, we are perfectly familiar with the rules and any special features. Our lawyers’ publications include a commentary on the ICSID Arbitration Rules and a two-volume summary of 30 years of ICSID case law. We know what we are doing.

Contact

Dr. Richard Happ, Partner
Phone +49 40 18067 12766
richard.happ@luther-lawfirm.com

Tim Rauschning, Senior Associate
Phone +49 40 18067 15999
tim.rauschning@luther-lawfirm.com

Georg Scherpf, Senior Associate
Phone +49 40 18067 12913
georg.scherpf@luther-lawfirm.com

David Probst, LL.M., Associate
Phone +49 40 18067 24915
david.probst@luther-lawfirm.com

Sebastian Wuschka LL.M. (Geneva MIDS), Associate
Phone +49 40 18067 12944
sebastian.wuschka@luther-lawfirm.com

Nikita Kondrashov, LL.M (Bucerius Law School), Associate
Phone +49 40 18067 15309
nikita.kondrashov@luther-lawfirm.com

Protecting investments