Overview

When investing abroad, one should not only take tax considerations into account, but also the protections offered by Bilateral Investment Treaties (“BITs”). These protections are often overlooked when structures for foreign investments are created or when the value of existing investments is threatened by hostile government action. However, as is shown by the recent ExxonMobil case, one would be mistaken not to take the protection of BITs into account when structuring investments in countries with a political climate that may have a higher risk profile.

After the expropriation of ExxonMobil’s assets in Venezuela, ExxonMobil was able to freeze USD 12 billion of Venezuela’s state owned oil company’s assets after claiming the protection of the Netherlands – Venezuela BIT. The arbitration procedure is still pending, but this clearly shows that BIT protection should be strongly considered when structuring future or existing foreign investments.

Baker & McKenzie looks into the Bilateral Investment Treaties and the protection it offers.

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