Dutch Bilateral Investment Treaties: A Gateway to ‘Treaty Shopping’ for Investment Protection by Multinational Companies

Abstract

Multinational companies (MNCs) investing abroad have been using Dutch bilateral investment treaties (BITs) to sue host country governments for over 100 billion dollars for alleged damages to the profitability of their investments. This is one of the outcomes of new SOMO research into the unknown and opaque field of Dutch BITs and their legal impacts. In addition, the majority of companies enjoying generous investment protections offered by Dutch BITs are so-called ‘mailbox companies’, Companies with no employees on their payroll and no real economic activity in the Netherlands. It is a known fact that many transnational companies choose the jurisdiction of the Netherlands as the base for their global trade and investment operations because of its favorable tax regime that facilitates corporate tax avoidance strategies (SOMO, 2007). This SOMO report highlights the until now unexplored role Dutch investment protection policy plays in establishment decisions of MNCs. The report argues that current Dutch investment policies are used for treaty shopping, allowing for investor–state dispute settlement based on broad-based BIT definitions that pose a danger to policy space and the safeguarding of public goods and interests. Treaty shopping is not only highly problematic from a sustainable development perspective for southern countries, but increasingly for northern states as well.