Investment contract
An investment contract , also known as an investor-state contract , is an agreement between a foreign investor and a host state, in which mutual rights and obligations are laid down.
In it, the investor can be promised certain permits or subsidies . It is also customary to guarantee the investor that the host state will not change any laws or regulations to the detriment of the investor (“stabilization clause”). In return, the investor promises B. a certain amount of investment over a certain period of time.
Typical investment contracts are agreements to set up joint ventures with local state-owned partner companies, contracts for the delivery of turnkey plants ( turnkey contracts ) or so-called build, operate, transfer contracts in which the investor builds a plant in the host country and operates it for a limited period .
Although investment contracts can be made subject to international law by the parties, they are not international treaties and their breach is therefore not a breach of international law . However, the investor is often granted the right in the investment contract to initiate investment arbitration and to claim damages if the host state breaches the contract.