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
1 James Pickavance is a partner in the litigation division at Eversheds LLP in London, specialising in construction and engineering. He leads Eversheds’ global construction international arbitration practice and is the author of A Practical Guide to Construction Adjudication, published by Wiley Blackwell in December 2015. Greg Falkof is a senior associate at Eversheds LLP in Paris, specialising in international disputes in the construction and oil & gas sectors, and in investment treaty claims. The authors wish to thank of counsel Loretta Malintoppi and associates, Laura Zielinski and Rima Bugaighis, all of Eversheds for their input.
2 PwC, Capital Project and Infrastructure Spending: Outlook to 2025, 2015, p 23.
3 KPMG, Global Construction Survey 2013: Ready For The Next Big Wave?, October 2013, p 14.
4 UNCTAD, World Investment Report 2015: Reforming International Investment Governance, 2015, pp 14, 40, 53 and 72.
5 See, e.g., UNCTAD, ASEAN Investment Report 2015 – Infrastructure Investment and Connectivity; 2015; PwC, Capital Project and Infrastructure Spending: Outlook to 2025, 2015; FDI Intelligence, The fDi Report 2014 – Global Greenfield Investment Trends, Financial Times Ltd, 2014; Turner & Townsend, International Construction Market Survey 2015 – Global Rebalancing: A Changing Landscape, 2015.
Pt 3] Accessing Foreign Investment Protection
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