The jurisdiction of arbitral tribunals to entertain sovereign bond disputes, which is primarily governed by the definition of investment as provided in applicable investment treaties, is the first stage at which such an appropriate balance is to be explored. This study has found that both the inclusion and exclusion of sovereign bonds as a protected investment reflect the policy decisions of contracting parties, and the ‘negotiated restructuring’ exception may embody a possible balance between bondholder protection and respect for negotiated debt restructuring. In the absence of an explicit reference to sovereign bond instruments, interpretative yardsticks, such as contribution, risk and territoriality as identified either in investment treaties or in the ICSID Convention may afford a balanced consideration taking into account of both the modern development of financial markets and policy decisions regarding the extent to which treaty protection should be provided.

This chapter addresses shareholders’ claims for reflective loss in the context of international investment law. It starts by analyzing the treatment of shareholders and shares in international investment agreements and under the ICSID Convention. In this regard, it sets forth the extent to which shares are considered as covered investments and to which shareholders qualify as foreign investors in investment treaty practice, as well as whether shares qualify as investments under article 25 of the ICSID Convention as interpreted by investment tribunals. This chapter also studies the difference between shareholders’ claims for reflective loss and claims brought under article 25(2)(b) of the ICSID Convention, as well as derivative actions in investment arbitration. Finally, this chapter undertakes an exhaustive analysis of investment arbitration cases that have addressed shareholders’ claims for reflective loss and highlights the reasons relied upon by investment tribunals to generally accept such claims.