Part A –
‘As demonstrated by investment arbitration practice, investment treaty law does not adequately balance the protection of foreign investment with regulatory needs of host states. The law as it stands does not provide any space for host governments to pursue important public policy objectives.’
Critically evaluate the above statement with reference to concrete treaty provisions, arbitral case law and academic literature.
Part B –
ABC Ltd is a company registered in Hungary and owned by Mr Bogdan, a Hungarian national, and Ms Felix, a dual national of Latvia and Canada. They own 90% and 10% of the company respectively. The company entered into a number of contracts with Hungarian government agencies. One contract envisaged a delivery and 4-year servicing of specialist video monitoring equipment for the security control at Hungarian airports. Another contract was for the design and installation of a specialist monitoring software programme to record and analyse the traffic of goods and persons crossing Hungarian borders. Although the company had performed its obligations under the contracts, the Hungarian government withheld part of the payment due (the final 25% of the contracted sum). This was done after a new Prime Minister condemned procurement contracts signed by the previous government. He publicly announced that those contracts were a drain on the public budget and did not benefit the nation. ABC Ltd made an attempt to recover the outstanding amounts by applying to the local court. In the course of the hearing, the defence team for the Hungarian government resorted to xenophobic comments, claiming that the company was “owned by foreign hawks bent on exploiting Hungary.”
The judge did not intervene and subsequently dismissed the claim on the ground that, in line with the Prime Minister’s public speech, honouring the disputed contracts would be against national interests. Advise ABC Ltd on the possibilities of pursuing its claim against the Hungarian government under investment treaty la
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