Political risk insurance in the litigation test: benchmarks and practical determinants

Abstract

Companies expand their operations abroad despite the risk of government-related losses. Mitigating that risk is at the core of Political Risk Insurance (“PRI”). This paper delves into disputes among policyholders and private, public and multilateral insurers. In this litigation test, it seeks to identify benchmarks on practical determinants. Section II looks at the main aspects of PRI within the dynamic context of its insurable risks. Section III presents the principles of the international law on foreign investment that parallel PRI in the task of mitigating political risk for foreign investors. Section IV brings methodological notes on the case selection and Section V accounts for several benchmarks derived from case law. Section VI proceeds to a conceptual inquiry of three themes that enhance PRI as a legal tool: adequate boundaries between national and international law; party autonomy to determine the scope of protection; and enforcement of subrogation rights.