Positive local engagement

Big businesses which invest overseas should engage positively with the local community as a way of protecting their investments, says a law firm specialising in emerging market litigation.

‘Investors and major corporations must move toward transparency and best practices in their global conduct as a protective measure,’ said Robert Amsterdam, of Amsterdam & Peroff. He argued that through positive participation abroad, foreign firms could legally assert their rights of property ownership. ‘Virtue is a necessity,’ he said.

International oil, gas and mining companies are having difficulty competing with state-controlled companies as well as with state-backed firms from China, India and Russia who often gain a competitive edge by coupling their bids with aid packages or arms sales, according to Amsterdam.

If businesses get serious about investing in the local community a lot can be done to change their reputation in emerging markets, he argued.

“If businesses get serious about investing in the local community a lot can be done to change their reputation in emerging markets.

Investors who bring major new technologies and capital improvements can develop strong local allies. ‘If an investor can structure operations in such a way as to be either economically or politically invaluable to the host government, that may buy considerable protection,’ said Amsterdam.

Faced with a wave of emerging market state intervention, Amsterdam also urged foreign investors to seek recourse both inside and outside the resource nationalist state.

According to the lawyer, there is a stronger than ever international legal framework for investors, particularly through Bilateral Investment Treaties (BITs) and through options for direct investor-state arbitration. ‘Post 9/11, the US courts have said they can litigate almost anything, anywhere if you connect money laundering to it,’ quipped Amsterdam.