The Global Economy following COVID-19 - Asset Protection

In response to the unprecedented health crisis following the COVID-19 pandemic, emergency measures have passed, and old laws have been newly invoked, all of which will have a direct impact on entrepreneurs and organizations in many countries.

The regulations allow governments to direct private companies to meet the needs of national interest. The impact of these measures includes harsh limitations on investors’ property rights, potential discriminations between domestic and foreign companies, unpredictable changes to the regulations of the investment, and possibly, failure to provide investors and their managers or employees with the safeguard they need to carry out their regular business activities.

In summary, the regulations may affect the fundamental freedom of entrepreneurs and their competition. Some examples of what these measures might be:

• The European Commission has allowed temporary nationalization of enterprises
• The US Defense Production Act may force private companies to the benefit of public interest
• The Mexican government has decreed the extinction of public fideicomisos based on the principle of the welfare economy

As such, these measures may violate the standard of protection included in the applicable bilateral investment treaties (BIT). BITs might be a tool for foreign investors trying to mitigate the impact of state actions and provide a direct right of action against a state. Additional measures adopted by sovereign states during this pandemic include the temporary take of property rights to prop up hospitals and address medical material shortages, industry or company-specific government bailouts, and prohibition of exporting certain materials.

In such a case, BITs substantive protections may be invoked before arbitral tribunals to ensure the guarantees. The most common standards include the right to:

• Fair, prompt and adequate compensation for direct or indirect expropriations
• Fair and equitable treatment
• Not be discriminated against nationals of the state (national treatment) or nationals of other states (most favored nation treatment)
• Full protection and security

HOW AMICORP CAN HELP YOU

We are offering 360º solutions to have access to a fair and equitable treatment through a transparent legal environment with the protection of legitimate expectations and access to justice, protecting investors and investments from illegitimate expropriations, guaranteeing the corresponding fair price compensation.

Amicorp also offers:

• Due diligence of the network of international investment agreements to determine the most favorable standards of protection and the compliance of their requirements
• Incorporation of the right vehicle, with economic substance and management
• Assessing the impact of the state actions on a particular investment or investor
• Analysis and preparation of a potential dispute with a sovereign state
• Negotiation and dispute resolution

For more information, please contact:

Carla Cerqueira - Specialist – Global Solutions Development
c.cerqueira@amicorp.com