Russia’s Narrow Arbitration Clauses – Can Foreign Investors Bring BIT-Claims For Expropriation Under MFN Clauses? (Kluwer Arbitration Blog, 2022)
Following the Russian military invasion of Ukraine, dozens of states imposed sanctions against Russia. In response, Russia imposed or threatened to impose severe countermeasures on foreign investments associated with such “unfriendly states”. In this regard, several news outlets reported that Russia is in the process of implementing legislation that will interfere with foreign investments in Russia, and might potentially even lead to investors being expropriated. Russia concluded more than 60 bilateral investment treaties (BITs) that should – in theory – protect foreign investors from expropriation without adequate and timely compensation by allowing investors to bring claims in investor-state arbitration (ISDS). However, the road to investor-state arbitration is more cumbersome for some investors than for others. This post analyses BITs concluded by Russia containing narrow dispute resolution clauses that limit the scope of disputes to the amount of compensation for expropriation. The post also discusses the utility of most-favoured-nation (MFN) clauses as a tool to bypass these narrow dispute resolution mechanisms.