This blog was originally published on Illuminem, and has been co-authored with Rhian-Mari Thomas. She is the CEO...
Financing Climate & Sustainable Development / Report
Diagnosing how the sovereign ceiling functions as a simplifying shortcut that can obscure meaningful differences across borrowers, and proposing an alternative credit rating approach based on disaggregating sovereign risk into specific transmission channels.
Governments are increasingly turning to the private sector to provide the capital, resources, and/or know-how necessary for development and operation of infrastructure. In some cases, the involvement by the private sector will trigger coverage by an international investment treaty that overlies, and can override, the domestic law and contract that would otherwise be applicable to the project. This working paper discusses the circumstances affecting when an investment treaty will apply and also highlights some of the ways that investment treaties can impact governance of infrastructure development and operation. While focusing on the relationship between investment treaties and investments in infrastructure, this paper is also relevant for the connections between investment treaties and other activities involving investor-state contracts (or quasi-contractual relationships) such as investments in the extractive industries.
