Business risk is one thing, but arbitrary and malicious actions by a government are quite another. What if governments change the rules after the investment has been made? Or, what if they apply one set of rules to foreign companies, and another to domestic companies? Or, what if the venture is profitable, and the government decides to sabotage the business so that investors are forced to sell the business at a loss, for example, to friends of the government? Clauses that allow companies to seek redress if they feel that they have been treated unfairly are in important part of international agreements related to foreign trade and investment.
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Date: 24/11/13 13:37 (UTC)What if governments change the rules after the investment has been made? Or, what if they apply one set of rules to foreign companies, and another to domestic companies? Or, what if the venture is profitable, and the government decides to sabotage the business so that investors are forced to sell the business at a loss, for example, to friends of the government?
Clauses that allow companies to seek redress if they feel that they have been treated unfairly are in important part of international agreements related to foreign trade and investment.