Investment Treaties and Shareholder Claims: Analysis of Treaty Practice

David Gaukrodger
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David Gaukrodger: OECD

No 2014/3, OECD Working Papers on International Investment from OECD Publishing

Abstract: Advanced systems of domestic corporate law generally apply a “no reflective loss” principle to shareholder claims. Shareholder claims are permitted for direct injury to shareholder rights (such as voting rights). But shareholders generally cannot bring claims for reflective loss incurred as a result of injury to "their" company (such as loss in value of shares). Only the directly-injured company can claim. In contrast, shareholder claims for reflective loss have consistently been permitted under typical bilateral investment treaties (BITs) in recent years. This paper analyses investment treaty provisions relating to shareholder claims. It addresses (i) treaty regimes for shareholder recovery and company recovery of damages, including their consequences for investor protection and government liability; (ii) the interaction of reflective loss claims with treaty provisions that seek to limit multiple claims; and (iii) treaty provisions applicable to government objections to shareholder claims for reflective loss.

Keywords: access to justice; agency costs; arbitrators; bilateral investment treaties; business corporations; company law; comparative law; competitive neutrality; concurrent claims; consistency; consistency of arbitral decisions; corporate law; creditors; creditors’ rights; derivative action; derivative injury; derivative loss; domestic impact of investment law; foreign investment; international arbitration; international economic law; international investment; international investment agreements; international investment law; investment arbitration; investment treaties; investor-state dispute settlement; judicial economy; level playing field; overlapping claims; reflective injury; reflective loss; related claims; separate legal personality; settlement; shareholder claims; shareholder remedies; shareholder rights; shareholders; stockholder remedies; stockholders; treaty shopping (search for similar items in EconPapers)
JEL-codes: F21 F23 F53 F55 F63 G32 G34 G38 K23 K33 K41 (search for similar items in EconPapers)
Date: 2014-10-10
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