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Investment Treaties and Shareholder Claims: Analysis of Treaty Practice


  • David Gaukrodger



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.

Suggested Citation

  • David Gaukrodger, 2014. "Investment Treaties and Shareholder Claims: Analysis of Treaty Practice," OECD Working Papers on International Investment 2014/3, OECD Publishing.
  • Handle: RePEc:oec:dafaaa:2014/3-en
    DOI: 10.1787/5jxvk6shpvs4-en

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    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;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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