Defending the Interests of State-Owned Companies in International Investment Arbitration

According to the UN Conference on Trade and Development, there were a total of 1,500 transnational state-owned enterprises in 2019. This number is on the rise, in part because several states acquired stakes in private companies in difficult financial situations during the era of the COVID-19 pandemic as a method of state support. Considering the growing volume of transnational investments by state-owned enterprises, as well as political instability, which creates increased risks of the expropriation of investments, it is no surprise that state-owned enterprises are increasingly resorting to investor-state dispute resolution mechanisms contained in international investment treaties. However, given the close ties between state-owned enterprises and countries that are parties to international investment treaties, there have repeatedly been questions in the practice of international investment arbitration about whether it is reasonable to assert that state-owned enterprises, as investors, have the right to initiate arbitration proceedings against the country that is receiving the investment. The enforcement of decisions against the Russian Federation through foreclosure on the property of Russian state-owned enterprises is also an important issue that needs to be addressed. Claimants often rely on doctrines similar to the doctrine on piercing the corporate veil. When deciding whether to pierce the corporate veil, courts determine whether a state-owned company is an alter ego or an extension of the state. Is this approach by arbitrators reasonable and what standard of proof should be applied in this case?