The Impact of Bilateral Investment Treaty (BIT) Proliferation on Demand for Investment Insurance:

Reassessing Political Risk Insurance After the "BIT Bang"

Pieter Bekker, Akiko Ogawa

    Research output: Contribution to journalArticle

    4 Citations (Scopus)

    Abstract

    This Article explores whether there is a causal link between the surge in bilateral investment treaties (BITs) in the 1990s and the decline in political risk insurance (PRI) policies issued by public providers such as the Overseas Private Investment Corporation (OPIC) which coincided with BIT proliferation. The central question addressed in this Article is how the availability of rights and remedies which are directly actionable and enforceable against host countries has affected, or should affect, foreign investors’ desire or need to purchase PRI in today’s investment environment, and how this affects the demand for public PRI in comparison to private PRI.
    In this context, the Article offers a comparison of the protective architecture of BITs with that provided by PRI policies.
    The Article, which draws on PRI industry reports and survey data, also explores to what extent BITs have helped to create an environment enabling private insurers to enter the PRI market. Given the steady growth of private PRI providers, the Article finally offers a reassessment of the role of public insurance in the light of today’s political risks, real and perceived.
    Original languageEnglish
    Pages (from-to)314-350
    Number of pages37
    JournalICSID Review-Foreign Investment Law Journal
    Volume28
    Issue number2
    DOIs
    Publication statusPublished - 2013

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    treaty
    proliferation
    insurance
    demand
    private investment
    overseas
    investor
    remedies
    purchase
    corporation
    industry
    market

    Cite this

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    abstract = "This Article explores whether there is a causal link between the surge in bilateral investment treaties (BITs) in the 1990s and the decline in political risk insurance (PRI) policies issued by public providers such as the Overseas Private Investment Corporation (OPIC) which coincided with BIT proliferation. The central question addressed in this Article is how the availability of rights and remedies which are directly actionable and enforceable against host countries has affected, or should affect, foreign investors’ desire or need to purchase PRI in today’s investment environment, and how this affects the demand for public PRI in comparison to private PRI.In this context, the Article offers a comparison of the protective architecture of BITs with that provided by PRI policies.The Article, which draws on PRI industry reports and survey data, also explores to what extent BITs have helped to create an environment enabling private insurers to enter the PRI market. Given the steady growth of private PRI providers, the Article finally offers a reassessment of the role of public insurance in the light of today’s political risks, real and perceived.",
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    AU - Ogawa, Akiko

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    AB - This Article explores whether there is a causal link between the surge in bilateral investment treaties (BITs) in the 1990s and the decline in political risk insurance (PRI) policies issued by public providers such as the Overseas Private Investment Corporation (OPIC) which coincided with BIT proliferation. The central question addressed in this Article is how the availability of rights and remedies which are directly actionable and enforceable against host countries has affected, or should affect, foreign investors’ desire or need to purchase PRI in today’s investment environment, and how this affects the demand for public PRI in comparison to private PRI.In this context, the Article offers a comparison of the protective architecture of BITs with that provided by PRI policies.The Article, which draws on PRI industry reports and survey data, also explores to what extent BITs have helped to create an environment enabling private insurers to enter the PRI market. Given the steady growth of private PRI providers, the Article finally offers a reassessment of the role of public insurance in the light of today’s political risks, real and perceived.

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