4th November 2026 | Jan Kunstyr | Dispute Resolution, International Law, International Arbitration

A government withdraws a licence, takes over a business or blocks the transfer of profits. For an overseas investor, the consequences can be severe. An investment treaty may provide a route to compensation, even without a direct contract with the government. Sherrards helps investors and their advisers identify those rights, plan for political and regulatory risk, and pursue remedies when disputes arise.

Treaties can give investors a direct remedy

Bilateral investment treaties and the investment chapters of some trade agreements give qualifying foreign investors rights under international law. Depending on the wording, they may protect against unlawful expropriation, unfair or discriminatory treatment and restrictions on transferring funds. Covered investments can include shares, businesses, property, concessions and certain contractual rights.

Where the treaty provides for it, an investor may bring a claim directly against the host state before an independent international tribunal. Compensation is the usual remedy. A fall in value or an unwelcome policy change does not, by itself, establish a breach, and governments retain the right to regulate lawfully.

British Steel shows how a treaty claim starts

British Steel was taken into public ownership on 16 July 2026 under the Steel Industry (Nationalisation) Act 2026. Jingye Group, which bought the business in 2020, says it has started consultations under the 1986 China-UK bilateral investment treaty and reserved its right to arbitrate. On the public information available, this is a treaty notice and consultation step rather than an arbitration.

The treaty allows six months for an amicable settlement after written notice. It permits expropriation or nationalisation only for a public purpose and against reasonable compensation. The dispute is therefore likely to turn on whether that standard was met and on how the investment should be valued. Nationalisation by itself does not decide the outcome.

Coverage is international and continues to change

These protections can be relevant to investments across Africa, the Americas, Asia and Europe. The answer depends on the investor’s nationality, the ownership structure, the host state and the treaty in force at the relevant time.

Recent changes show why a fresh review matters. Following Canada’s ratification, the Pacific trade agreement known as CPTPP has applied between the UK and all 11 other members since 1 September 2026. Its investment chapter offers protections and access to arbitration, subject to country-specific exceptions, including the exclusion of investor-state arbitration between the UK and Australia or New Zealand.

Elsewhere, treaty terminations can leave gaps. Some treaties preserve rights for existing investments after termination, but the dates and terms need checking. A trade agreement does not necessarily include investment protection or a right to arbitrate.

Protection should be considered before a dispute

Treaty protection belongs alongside tax, financing and regulatory advice when an investment is planned or restructured. A holding company may help secure protection if the arrangement meets the treaty’s requirements. Incorporation alone is not enough, and restructuring to obtain protection once a dispute is foreseeable may fail.

When a problem emerges, early advice can preserve options. Notice requirements, consultation periods, time limits and choices about local proceedings may affect whether a treaty claim can proceed.

Sherrards brings practical investment treaty experience

Our lawyers’ experience includes acting for investors and state entities, mining and natural resources disputes in Africa and Latin America, and treaty disputes involving Eastern Europe and EU states. It includes ICSID merits and annulment proceedings, alongside experience under UNCITRAL, ICC and SCC rules.

We advise from investment structuring and treaty analysis through negotiations, arbitration and award enforcement. At the outset, we assess jurisdiction, the merits, potential compensation and the prospects of recovery, including issues of state immunity.

Working with overseas counsel and clients’ existing advisers, we bring specialist treaty and arbitration support to the wider commercial strategy. We welcome discussions about planned investments, emerging disputes and enforcement of existing awards.

To discuss an investment or potential claim, contact Jan Kunstyr or Marta Grieve at Sherrards.

 

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