Kyrgyz Republic’s experience with investment treaties and arbitration cases

24 July 2017

The Kyrgyz Republic currently faces investment claims in the proximity of 1 billion USD, arising out of investment dispute settlement cases. If these have to be paid out, this will have a serious impact on the public budget of a country where 32% of the population lives below the poverty line.

Big cases have arisen out of the mining sector. Worldwide, investors in the mining and extractives industry are among the most frequent users of the investor-to- state dispute settlement system (ISDS). As such, the Kyrgyz Republic’s reliance on foreign capital in its strategically important mining sector comes with a risk. The ISDS system enables foreign investors to claim compensation for any government intervention that stands to impact negatively on their investments. It is not only this Central Asian country’s systemic corruption and its weak rule of law that makes the mountainous nation vulnerable to investment claims. The Kyrgyz state also risks more investment claims should the implementation of its plans to better harness the country’s mineral wealth in order to promote economic diversification and environmentally and socially sustainable development require more strict regulation of foreign investments.