Expropriation and Other Forms of Unlawful Government Interference
OPIC can protect against expropriatory acts and other forms of unlawful interference by the host government that deprive investors of their fundamental rights in a project. OPIC’s traditional expropriation coverage protects against nationalization, confiscation and creeping expropriations which result in a loss of the total investment.
Government interference in a project can take many forms, among them:
- Abrogation, repudiation, and/or impairment of contract, including forced renegotiation of contract terms
- Imposing of confiscatory taxes
- Confiscation of funds and/or tangible assets
- Outright nationalization of a project
OPIC can provide arbitral award default (AAD) and denial of justice coverage for U.S. debt and equity investors. AAD protects the insured from non-payment of an arbitral award by a host country government.
Bid, Performance, Advance Payment and Other Guaranty Coverages
Bid, performance, advance payment and other guaranties issued on behalf of a U.S. exporter of goods or services, or a U.S. contractor in favor of a foreign government buyer, can be covered against the risk of a wrongful calling. The guaranties usually are in the form of irrevocable, on-demand, standby letters of credit. A wrongful calling is one not justified by the terms of the underlying contract, or the invitation for bids.
In the case of a bid guaranty, the insured may file a claim when it believes a wrongful calling has occurred and OPIC will then determine if the calling was, in fact, wrongful. With performance, advance payment and other guaranties, the insured must invoke the dispute resolution procedure in its contract with the foreign buyer before OPIC will pay compensation.