Disputes in International Investment and Trade

Ossa, Ralph; Staiger, Robert W.

doi:10.2139/ssrn.4001260

Cited by 1 publication

(2 citation statements)

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“…11 In contrast, investment disputes also generate uncertainties about the International System of Dispute Settlement (ISDS) . To begin with, ISDS of investment disputes is different from that used in the resolution of trade disputes (Ossa et al, 2020), they are subject to different provisions of IIA and those provisions have been evolving over time (Pohl, 2018). This makes it more complicated for market participants to evaluate and anticipate the outcomes of arbitrations.…”

Section: The Theory In the Literaturementioning

confidence: 99%

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Investment Disputes and Abnormal Volatility of Stocks

Baruník¹,

Drábek²,

Nevrla³

2020

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Dramatic growth of investment disputes between foreign investors and host states rises serious questions about the impact of those disputes on investors. This paper is the first to explain increased uncertainty of investors about the outcome of arbitration, which may or may not lead to compensation for damages claimed by the investor. We find robust evidence that investment disputes lead to abnormal share fluctuations of companies involved in disputes with host countries. Importantly, while a positive outcome for an investor decreases uncertainty back to original levels, we document strong increase in the volatility of companies with negative outcome for the investor. We find that several variables including size of the award, political instability, location of arbitration, country of origin of investor or public policy considerations in host country explain large portion of the investor's uncertainty.

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Section: The Theory In the Literaturementioning

confidence: 99%

“…See Ossa et al (2020)Kohler and Staller (2019);Horn and Tangerås (2019).10 To quote, "The pool of arbitrators is made up mostly of individuals from developed countries, which are likely to be the homes of many MNCs, while respondents are frequently developing countries.…”

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confidence: 99%