Settlements in Investor–State Arbitration: Are Minority Shareholders Precluded from Having its Treaty Claims Adjudicated?

Abstract

One of the most problematic issues in investor–state arbitration arises from the possibility of multiple proceedings initiated against the host state, in one instance, by foreign shareholders in their capacity as investors; and in another instance, by the local subsidiary. The issue becomes more difficult when the local company decides to settle its claim but the investors—usually minority shareholders—decide to continue the arbitration proceedings against the state. This article will address the effects of a settlement agreement, between a subsidiary and a host state, on a foreign shareholder’s pending treaty claim considering the object and purpose of investment protection treaties as well as the risk of double recovery.