Since taking office for the second time, President Trump has unleashed a torrent of executive orders aimed at reshaping America’s legal and political landscape — from immigration and climate change to trade, civil rights, energy policy, and tariffs.[1] His unpredictable approach to governance has sparked domestic and international concerns, particularly among foreign investors who may be affected by sweeping changes.[2] However, this is not the 19th century, and President Trump’s powers are effectively constrained by Bilateral Investment Treaties (BITs) and Treaties with Investment Provisions (TIPs).
Drastic policy shifts, such as sudden regulatory changes, tax hikes, or trade restrictions, can significantly impact the profitability and viability of foreign investments in the United States. Under certain conditions, if these changes harm a foreign investor’s business and are discriminatory or do not provide adequate compensation, the investor could have grounds to claim a violation of investment protections under a BIT or TIP. In such cases, these investors may resort to Investor-State Dispute Settlement (ISDS) mechanisms to sue the State responsible, potentially seeking compensation for the harm to their investments.
This note will explore the protections that foreign investors may enjoy under the United States’ BITs and TIPs, in the event of harmful measures.
BIT Protections of Foreign Investors
The United States is a party to numerous BITs that provide protections for foreign investors. While each BIT may vary slightly, they generally contain core provisions aimed at safeguarding the interests of investors in the event of government action that harms their investments. The following are examples of such provisions found in US BITs that could become relevant if foreign investors believe President Trump’s policy changes violate their rights:
- National treatment: The US must treat protected investments and investors in a manner that is no less favourable than the treatment that it accords to national investors/investments in like circumstances.[3] Discriminatory intent is not necessary for a government measure to violate this standard.[4]
- Most-favoured nation treatment: The US must give protected investors treatment no less favourable than that it accords, in like circumstances, to investors of any third State with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.[5]
- Freedom from expropriation: The US must not expropriate or nationalise a covered investment either directly or indirectly through measures equivalent to expropriation or nationalisation, except: (a) for a public purpose; (b) in a non-discriminatory manner; (c) on payment of prompt, adequate, and effective compensation; and (d) in accordance with due process of law.[6] Expropriation can occur directly, where the legal ownership of an investment is transferred from the investor to the host State, or indirectly, where the host State implements measures that effectively deprive the investor of the economic use and enjoyment of the investment, even though the investor retains legal ownership.[7]
- Free transfer of funds: The US must permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory.[8] This includes the transfer of income, funds necessary to finance the investment, royalties, proceeds from the sale or liquidation of the investment, loan payments, salaries and other remuneration.[9]
- Fair and equitable treatment: The US must not deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world.[10] This may include protections against regulations that are substantively arbitrary or discriminatory in their applications to foreign investors or a total alteration of the entire regulatory framework for foreign investments in the particular field that has the effect of virtually eliminating the benefits that the investor reasonably anticipated upon making the investment.[11]
- Full protection and security: The US must provide the level of police protection required under customary international law.[12] This generally requires the host State to exercise reasonable due diligence with regard to the physical protection of investors and investments.[13]
Treaties and Investor-State Dispute Settlement Mechanisms
When a host State of investment, like the United States, breaches the aforementioned treaty obligations, foreign investors protected by a BIT are typically allowed to pursue a claim through investor-State arbitration. This can occur under the international arbitration mechanisms specified in each treaty – generally, the ICSID Convention (International Centre for Settlement of Investment Disputes) or the UNCITRAL Arbitration Rules.
The United States has BITs in force with the following countries:
Albania; Argentina; Armenia; Azerbaijan; Bahrain; Bangladesh; Bulgaria; Cameroon; Congo; Democratic Republic of the Congo; Croatia; Czechia; Egypt; Estonia; Georgia; Grenada; Honduras; Jamaica; Jordan; Kazakhstan; Kyrgyzstan; Latvia; Lithuania; Moldova; Mongolia; Morocco; Mozambique; Panama; Poland; Romania; Rwanda; Senegal; Slovakia; Sri Lanka; Trinidad and Tobago; Tunisia; Türkiye; Ukraine; and Uruguay.
These agreements may allow investors from the relevant countries to bring claims against the US in ICSID and/or UNCITRAL arbitrations.
The US is also party to several Free Trade Agreements (FTAs) containing investment provisions. These include agreements with Australia,[14] Chile, Colombia, Republic of Korea, Morocco, Oman, Panama, Peru and Singapore.
Additionally, the US is a party to the CAFTA-DR along with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua, and the USMCA with Mexico and Canada.[15] However, the USMCA substantially changed the framework for investment arbitration compared to NAFTA.
These additional treaties may also offer investors from the party States a path to seek compensation from the US in investor-State arbitration for losses incurred should Trump’s actions amount to a breach thereof.
Conclusion
With President Trump’s aggressive approach to reshaping US policy, protected foreign investors should remain vigilant to the risks of potential treaty breaches. If Trump’s policies disproportionately harm foreign investments in the United States, investors could turn to international arbitration to challenge the government’s actions.
Foreign investors from many nations are not protected by BITs and TIPs. For instance, there is no BIT between the United States and China. However, numerous foreign investors in the United States benefit from treaty protections.
[1] C. Hayes & P. McCausland, What Trump has done since taking power, 27 January 2025, https://www.bbc.com/news/articles/ced961egp65o (last accessed 27 January 2025).
[2] F. Islam, Davos elite nod along as Trump delivers ultimatum, 24 January 2025, https://www.bbc.com/news/articles/cq5g3y6dxzgo (last accessed 27 January 2025).
[3] See Treaty Between the Government of the United States of America and the Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed 19 February 2008, Article 3; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005, Article 3; Treaty Between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment, signed 29 September 1999, Articles 2(1), 4; Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.3.
[4] Corn Products International, Inc. v. United Mexican States, ICSID Case No. ARB (AF)/04/1, Decision on Responsibility, 15 January 2008, para. 138.
[5] See Treaty Between the Government of the United States of America and the Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed 19 February 2008, Article 4; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005, Article 4; Treaty Between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment, signed 29 September 1999, Articles 2(1), 4; Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.4.
[6] See Treaty Between the Government of the United States of America and the Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed 19 February 2008, Article 6; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005, Article 6; Treaty Between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment, signed 29 September 1999, Article 3; Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.7.
[7] Handbook on Obligations in International Investment Treaties, 2020, https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/apec_handbook_on_obligations_in_iit.pdf (last accessed 27 January 2025).
[8] See Treaty Between the Government of the United States of America and the Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed 19 February 2008, Article 7; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005, Article 7; Treaty Between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment, signed 29 September 1999, Article 5; Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.8.
[9] Handbook on Obligations in International Investment Treaties, 2020, https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/apec_handbook_on_obligations_in_iit.pdf (last accessed 27 January 2025).
[10] See Treaty Between the Government of the United States of America and the Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed 19 February 2008, Article 5; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005, Article 5; Treaty Between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment, signed 29 September 1999, Article 2(3); Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.5.
[11] C. McLachlan et al., International Investment Arbitration: Substantive Principles, (2nd edn., 2017), para. 7.165.
[12] See Treaty Between the Government of the United States of America and the Government of the Republic of Rwanda Concerning the Encouragement and Reciprocal Protection of Investment, signed 19 February 2008, Article 5; Treaty Between the United States of America and the Oriental Republic of Uruguay Concerning the Encouragement and Reciprocal Protection of Investment, signed 4 November 2005, Article 5; Treaty Between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment, signed 29 September 1999, Article 2(3); Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.5.
[13] Ampal-American Israel Corporation and others v. Arab Republic of Egypt, ICSID Case No. ARB/12/11, Decision on Liability and Heads of Loss, 21 February 2017, para. 241; Copper Mesa Mining Corporation v. Republic of Ecuador, PCA No. 2012-2, Award, 15 March 2016, para. 6.81.
[14] There is no established ISDS procedure under this treaty. Article 11.16 only requires that when an investment dispute arises, “the Parties shall promptly enter into consultations with a view towards allowing such a claim and establishing such procedures.” Australia-United States Free Trade Agreement, signed 18 May 2004, Article 11.16.
[15] S. Becker et al., Investment Treaty Arbitration: USA, 30 July 2024, https://globalarbitrationreview.com/insight/know-how/investment-treaty-arbitration/report/usa (last accessed 27 January 2025).
