1887

OECD Working Papers on International Investment

Selected studies on international investment and investment policy prepared for use within the OECD. They address such issues as investment agreements, dispute settlement, fair and equitable treatment, most favored nation treatment, and corruption.

English

Investment Treaties and Shareholder Claims: Analysis of Treaty Practice

Advanced systems of domestic corporate law generally apply a “no reflective loss” principle to shareholder claims. Shareholder claims are permitted for direct injury to shareholder rights (such as voting rights). But shareholders generally cannot bring claims for reflective loss incurred as a result of injury to "their" company (such as loss in value of shares). Only the directly-injured company can claim.

In contrast, shareholder claims for reflective loss have consistently been permitted under typical bilateral investment treaties (BITs) in recent years. This paper analyses investment treaty provisions relating to shareholder claims. It addresses (i) treaty regimes for shareholder recovery and company recovery of damages, including their consequences for investor protection and government liability; (ii) the interaction of reflective loss claims with treaty provisions that seek to limit multiple claims; and (iii) treaty provisions applicable to government objections to shareholder claims for reflective loss.

English

Keywords: investor-state dispute settlement, foreign investment, derivative action, separate legal personality, reflective loss, investment treaties, stockholders, consistency of arbitral decisions, access to justice, shareholder claims, international economic law, overlapping claims, shareholder rights, creditors, bilateral investment treaties, related claims, international arbitration, comparative law, creditors’ rights, treaty shopping, arbitrators, international investment law, settlement, concurrent claims, international investment, reflective injury, business corporations, domestic impact of investment law, investment arbitration, stockholder remedies, consistency, competitive neutrality, agency costs, derivative loss, corporate law, international investment agreements, judicial economy, derivative injury, shareholders, shareholder remedies, level playing field, company law
JEL: K23: Law and Economics / Regulation and Business Law / Regulated Industries and Administrative Law; G32: Financial Economics / Corporate Finance and Governance / Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill; F53: International Economics / International Relations, National Security, and International Political Economy / International Agreements and Observance; International Organizations; G38: Financial Economics / Corporate Finance and Governance / Corporate Finance and Governance: Government Policy and Regulation; F23: International Economics / International Factor Movements and International Business / Multinational Firms; International Business; K33: Law and Economics / Other Substantive Areas of Law / International Law; F63: International Economics / Economic Impacts of Globalization / Economic Impacts of Globalization: Economic Development; G34: Financial Economics / Corporate Finance and Governance / Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance; F21: International Economics / International Factor Movements and International Business / International Investment; Long-term Capital Movements; F55: International Economics / International Relations, National Security, and International Political Economy / International Institutional Arrangements; K41: Law and Economics / Legal Procedure, the Legal System, and Illegal Behavior / Litigation Process
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