Treaty Shopping and Denial of Benefits Clauses - What Investors Should Know

Abstract

This Article examines the concept of treaty shopping by international investors to find a preferred jurisdiction in which to incorporate for best protections under bilateral investment treaties or free trade agreements.

It examines case law that sets out the tests for when treaty shopping is allowable and when it runs afoul of the rules.

The article also examines the concept of denial of benefits under bilateral investment treaties and the Energy Charter Treaty to determine when and how a host state can deny benefits of treaty protection of investments to an investor. It examines the meaning of the term “substantial business activities” in connection with denial of benefits clauses.

Keywords: Treaty Shopping, Denial of Benefits, Bilateral Investment Treaties, Energy Charter Treaty

JEL Classification: K33, K4, K2, M16, M38, M48, F01, F02, F2, F21, F23, F33, F34, F38