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International Construction Law Review

ACCESSING FOREIGN INVESTMENT PROTECTION FOR INTERNATIONAL CONSTRUCTION AND ENGINEERING PROJECTS

James Pickavance and Greg Falkof1

Recent years have seen an increase in the amount of cross-border activity in the construction and engineering sector, particularly for projects in developing economies. In 2012, PwC noted that “infrastructure spending has begun to rebound from the global financial crisis and is expected to grow significantly over the coming decade” and predicted that “some regions, particularly emerging Asia, are projected to enjoy a bigger boom in infrastructure development than more advanced economies.”2 This prediction was soon reflected in the market. Almost half of the major construction and engineering firms surveyed by KPMG in 2013 indicated that they planned to expand internationally by targeting projects in new locations, most commonly in Africa and Asia, and particularly major infrastructure projects in the energy, mining, rail and water sectors.3 This increased international activity was observed by the United Nations Conference on Trade and Development (“UNCTAD”) in 2015; it estimated that the amount of foreign direct investment (“FDI”) for the construction of greenfield projects in developing economies had jumped from US$22 billion in 2013 to US$42 billion in 2014, with year-on-year increases experienced particularly in the least-developed economies (562% increase from 2013 to 2014), East and South-East Asia (116%), West Asia (136%) and developed economies (55%).4 This trend is expected to continue in the medium term, with investment in international construction projects forecast to rise, particularly for large infrastructure projects in developing countries.5
Many of the locations for these new projects have traditionally been perceived as having higher country risk factors, including greater political


Pt 3] Accessing Foreign Investment Protection

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