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Czech Mate: Expropriation and Investor Protection in a Converging World

Review of Finance
Volume Issue
Volume 12, Number 1
Page range
pp. 221–251
Date published:
Published Article
Working paper version
Abstract

Abstract This paper examines the expropriation of a foreign investor by a local partner and the subsequent resolution of the case through international arbitration in favor of the investor. Despite the investor's 99% interest in the joint venture, the local partner managed to divert the entire value of the underlying entity for his personal benefit. This clinical examination of an expropriation and its aftermath illustrates the interaction of property and contract rights in a global setting, how corporate control is shaped by geography, and how multinational firms may be advantaged by availing themselves of stronger investor protections than local firms.

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