How bilateral investment treaties shape infrastructure access

You're evaluating a cross-border infrastructure deal. The host country has strong growth projections, a willing government partner, and a clear pipeline of projects. But one question keeps you up at night: what happens if the political landscape shifts and your investment is suddenly at risk?

That's where bilateral investment treaties (BITs) come in. These agreements between two countries set the rules for how private investments from one country are treated in the other. They're not abstract legal documents—they're the safety net that makes large-scale infrastructure projects bankable across borders.

What a BIT actually does for your project

A BIT is an international agreement between two sovereign states that contains reciprocal promises to promote and protect private investments made by investors from one country in the territory of the other. Over 2,500 such treaties are in force today, shaping the terms of foreign investment globally.

For infrastructure investors, BITs deliver six core protections:

• National treatment and most-favored-nation status: Your investment must be treated as favorably as local investors or investors from any third country.
• Limits on expropriation: The host state cannot seize your assets without prompt, adequate, and effective compensation.
• Free transfer of funds: You can move capital in and out of the host country without delay and at market exchange rates.
• Restrictions on performance requirements: The host cannot force you to use local content or meet export quotas as a condition of investment.
• Fair and equitable treatment: A broad guarantee that protects against arbitrary or discriminatory state action.
• Access to international arbitration: If the host breaches the treaty, you can sue the state directly before an international tribunal—without relying on local courts.

Why infrastructure is especially exposed

Infrastructure projects are long-term, capital-intensive, and deeply embedded in the host country's regulatory environment. A change in government, a new law, or a renegotiated concession can wipe out years of planning and millions in capital.

In 2023 alone, over half of all investor-state dispute settlement (ISDS) cases involved disputes from the construction, manufacturing, and infrastructure sectors. That's not a coincidence. The very features that make infrastructure attractive—stable long-term returns, government backing, strategic importance—also make it vulnerable to political risk.

Consider the case of Borkowski v Armenia, a claim brought under the Armenia-United States BIT. The dispute, initiated in 2018, centered on an infrastructure investment that allegedly suffered from state actions that undermined the treaty's protections. Cases like this underscore why BITs matter: they give investors a seat at the table when things go wrong.

How to use BITs in your deal strategy

You don't need to be a treaty lawyer to benefit from BITs. But you do need to ask the right questions early.

Step 1: Check if a BIT exists between your home country and the host. The UNCTAD Investment Policy Hub maintains a searchable database of all known BITs. Start there.

Step 2: Read the treaty's definition of "investment." Not all BITs cover the same assets. Some explicitly include concessions, contracts, and intellectual property. Others are narrower. Make sure your project structure qualifies.

Step 3: Understand the dispute resolution mechanism. Most BITs allow you to bring claims to ICSID or UNCITRAL arbitration. But some require you to exhaust local remedies first or impose waiting periods. Know the timeline before you need it.

Step 4: Structure your investment to maximize protection. If your project involves a joint venture or a special purpose vehicle, confirm that the entity qualifies as an "investor" under the treaty. Some BITs require substantial business activity in the home state.

Step 5: Monitor political risk continuously. A BIT is only as good as your ability to enforce it. Track changes in the host country's regulatory environment, and maintain thorough documentation of all government interactions.

The bottom line

BITs are not a cure-all. They don't prevent expropriation or guarantee a favorable outcome in arbitration. But they do shift the risk calculus in your favor. For infrastructure investors operating across borders, understanding BITs is not optional—it's a core competency.

How the Resident Expert Can Help

Navigating the intersection of governments, infrastructure, and cross-border investment requires more than generalist advice. VERTEX Strategic Group specializes in strategic access and institutional execution across complex jurisdictions. Their team understands procurement pathways, regulatory navigation, and the quiet coordination that happens before a deal closes. Whether you're structuring a new project or managing an existing exposure, VERTEX provides the sector-specific insight and government access that makes BITs work for you.