Barbados' International Investment Treaties

In this article published on Business Barbados website, our Barbados team discuss how Barbados' robust regulatory framework, network of bilateral investment treaties and solid business infrastructure create the perfect climate for business-oriented investors. 

Barbados is a renowned jurisdiction in the face of its stable economic and political environment, prosperous business infrastructure, and excellent connectivity to major global markets. But the appeal of Barbados extends beyond these pragmatic benefits and includes long-standing diplomatic relations and robust double taxation agreements, bilateral investment treaties and tax information exchange agreements between Barbados and other countries.

Investors are increasingly looking outward for secure, economically stable locations to establish new ventures, and Barbados is emerging as an attractive destination. It is undeniable that Barbados boasts the perfect climate for business-oriented investors, especially given its bilateral treaty framework which lays a foundation of mutual trust and cooperation and promotes protection for your investments.

What are Bilateral Investment Treaties?

A Bilateral Investment Treaty is an agreement between two countries, as Contracting Parties, which seeks to promote and safeguard investments made by investors and/or companies in each other’s respective territories. The treaty serves as a necessary preventative measure to protect foreign investment by one country into another. It therefore operates to defend each country from nationalization, discrimination, and expropriation, while ensuring compensation for losses, most favoured and national treatment provisions, promotion and protection of investment, fair and equitable transfer of funds, reasonable repatriation, subrogation and guarantee, when each Contracting Party is engaging in investment business with the other, and vice versa.

These treaties provide an array of benefits for each Contracting Party such as:

• The Promotion and Protection of Investments of every kind;
• The Granting of National Treatment and Most-Favoured-Nation Provisions (Favourable Treatment for some states);
• Compensation for Losses accrued;
• The Protection from Expropriation and/or Nationalisation of investments;
• The Repatriation of Investment and Returns (The Granting of Freely Transferable Payments in connection with an investment for some states);
• Subrogation; and
• The Settlement of Disputes between Investor and Host State.

Bilateral Investment Treaties: Barbados

Barbados has effected bilateral investment agreements with several countries including: Canada, China, Cuba, Germany, Italy, Mauritius, Switzerland, The United Kingdom and Venezuela. These countries are among many in Trident Trust Barbados’ portfolio. Bilateral investment treaties have proved so beneficial that in as recent as 2022, it was reported that Barbados is seeking to forge strong ties with Algeria by cooperating on various agreements, particularly a bilateral investment treaty.

It is important to not only be aware of the benefits these bilateral investment treaties have afforded you due to Barbados’ relationship with your country, but it is also important to understand what these benefits mean for you as an investor.

It is also to be observed that Canada, China, Cuba, Germany, Italy, Mauritius, Switzerland, the United Kingdom, and Venezuela majorly share the same benefits.

The Promotion and Protections of Investments of every kind

The legislation stipulates this benefit as regulating favourable conditions for all nationals/companies of Barbados and the other country when investing capital in each’s territories, subject to their laws. It is pivotal to note that the investments of any national or company is accorded fair and equitable treatment and shall enjoy full protection and security in each other’s territories.

This means therefore that the parties are protected from being impaired by way of unreasonable/ discriminatory measures on the management, maintenance, use, enjoyment or disposal of investments, etc. in its territory of nationals or companies of the other Contracting Party as so stipulated by their law.

The Granting of National Treatment and Most-Favoured-Nation Provisions (Favourable Treatment in some states)

This benefit awards favourable treatment on all investments or returns of nationals or companies of both Barbados and the other country, as would be accorded to its own nationals, companies or those of any other 3rd state.

Further, this means that the parties’ management, maintenance, use, enjoyment or disposal of their investments are protected from less favourable treatment. There is therefore no allowance for discrimination or unfair, unjust or unequitable treatment on any investments made.

Compensation for Losses accrued

Compensation for losses is awarded in exceptional circumstances where the investments of one Contracting Party were affected by a major unforeseen event, which occurred in the state of the other Contracting Party and vice versa.

The legislation states that where one country’s investments are lost whilst in the other state, due to war, any other armed conflict, revolution, state of national emergency, revolt, insurrection or riot, that country shall be awarded restitution, indemnification, compensation or other settlement, favourably in accordance to how they would to nationals/companies of their own contracting state. As such, the resulting payments are freely transferrable.

Further, nationals/companies of each territory shall be accorded restitution/adequate compensation where loss is suffered regarding the requisitioning of their property by its forces/authorities or destruction of their property by its forces or authorities, not caused by combat or necessity. These payments are also freely transferable.

The Protection from Expropriation and/or Nationalisation of investments

The legislation affirms that investments of nationals/companies of either Contracting Party shall not be expropriated or subjected to measures equivalent to nationalization or expropriation except for where necessary, but on a non-discriminatory basis, and followed by prompt, adequate and effective compensation, which amounts to the market value of the investment without delay.

This simply means that as an investor, you will be protected from being substantially deprived of your ownership, control or economic benefit in your investment located within Barbados, by the government of Barbados. Further, this also means that your investments will be protected from becoming controlled and owned by the government of Barbados.

The Repatriation of Investment and Returns (The Granting of Freely Transferable Payments in connection with an investment for some states)

Each Contracting Party is guaranteed the unrestricted and free transfer of their investment and returns. These are effected without delay and are constituted of the originally invested capital, or of easily convertible currency agreed by the investor.

Subrogation

Where one Contracting Party has granted any financial guarantee against non-commercial risks, regarding investment by one of its investors in the territory of the other Contracting Party, the rights of the first Contracting Party shall be recognised by virtue of the principle of subrogation.

The principle of subrogation originated in insurance law, where an insurer, on an insured's behalf, has a legal right to bring a liability suit against a third party who caused losses to the insured. With subrogation in bilateral treaties, this relates to the transfer of rights that foreign investors might have and serves to indemnify the foreign investor under the issued guarantee.  

The Settlement of Disputes between Investor and Host State

This shall be done via the diplomatic channel in the first instance, after which arbitration can be sought.

Conclusion

In summary, the existence of bilateral treaties between Barbados and other global jurisdictions as Contracting Parties, exists to extend and intensify the economic relations between them, particularly with respect to investments by the nationals and companies of one Contracting Party in the territory of the other Contracting Party. Investing in Barbados is therefore considered more than a strategic business move; it is an opportunity to unlock a world of potential. With its robust regulatory framework, bilateral investment safeguards, and appealing lifestyle offerings, Barbados is ideally positioned to cater to the needs of foreign investors.