Empirical Study: International Investment Law Protections in Global Banking and Finance
The British Institute of International and Comparative Law (BIICL) and Dechert have the pleasure to present a comprehensive empirical study on investment protection in global banking and finance. The present study examines the publicly available decisions of investor-State tribunals addressing the protection of investments in the banking and finance sector. It complements the first detailed treatise dedicated to the subject, co-authored by Prof. Arif Ali and Dr. David Attanasio, entitled International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice (2021).
Confronted by rising geopolitical tensions, price instability and a lack of prospects for stable growth, host States may act precipitously in the face of real, imagined, or invented financial instability in banks and other financial institutions. More than ever, banking institutions and investors of financial products face increased regulatory risks which may arise out of politically motivated measures.
An example is the impact of economic risk on foreign holders of sovereign bonds. With higher interest rates and increases in government spending, the risks of States and related entities defaulting on their debts has also increased. According to the IMF, as of April 2024, 34 low-income economies were already experiencing, or at high risk of, debt distress. For example, in December 2023, Ethiopia, grappling with severe inflation, defaulted on its sovereign debt following stalled restructuring negotiations with private credit and pension funds. Countries like Ghana, Zambia and Sri Lanka were engaging in serious yet difficult discussions with their international lenders on ways to restructure their debts. Faced with these difficulties, foreign investors in the sovereign bonds of these countries may find their rights impaired during the debt restructuring process.
Sovereign debt is just one example of an investment that can be affected by a State: no banking or finance investment is immune from governmental measures, some of which may adversely impact the investment or the investor. Does international law offer effective protection to investors in the banking and finance sector affected by purported emergency regulations, sovereign debt restructuring, financial sector reform, or other measures? How can investors in the banking and financial sector benefit from the protection of international law?
We address these and other questions in this first empirical study of 149 international investment cases related to banking and finance.
This study is co-authored by Prof. Yarik Kryvoi, Director of the Investment Treaty Forum (ITF) at BIICL with Prof. Arif Hyder Ali, Dr. David L. Attanasio and Kai-Chieh Chan.
