1 / 14

Political Risk Insurance: Opportunities and Pitfalls

Political Risk Insurance: Opportunities and Pitfalls. LAW OFFICES robert wray PLLC 1150 connecticut avenue, nw ● suite 350 washington, dc 20036 main 202.349.5000 ● fax 202.293.7877. Political Risk Insurance: Basic Coverages. Currency Inconvertibility Expropriation

shira
Download Presentation

Political Risk Insurance: Opportunities and Pitfalls

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Political Risk Insurance: Opportunities and Pitfalls LAW OFFICES robert wrayPLLC 1150 connecticut avenue, nw ● suite 350 washington, dc 20036 main 202.349.5000 ● fax 202.293.7877

  2. Political Risk Insurance: Basic Coverages • Currency Inconvertibility • Expropriation • Breach of Contract/Disputes • Political Violence robert wrayPLLC

  3. The Political Risk Insurance Marketplace • Public sector • Deterrence • Innovation • Private sector • Absence of public policy constraints • Speed • Commercial opportunism robert wrayPLLC

  4. Currency Inconvertibility • Convertibility and transfer of debt service, dividends, etc. • Active or passive blockage • Not devaluation coverage – prevailing rate robert wrayPLLC

  5. Currency Inconvertibility: Pitfalls • Waiting period • Rate at which compensation for blocked local currency is calculated robert wrayPLLC

  6. Expropriation (“CEN”) • Various wordings, same general intent • Loss of fundamental rights (including creditor’s rights) • Outright and “creeping” expropriation • Exclusion for bona fide government acts • Exclusion for government commercial acts robert wrayPLLC

  7. Expropriation: Pitfalls • Wording ambiguity • Exclusions • Total vs. partial loss coverage • Pledge of shares robert wrayPLLC

  8. Breach of Contract/Disputes • Plugs government commercial obligation exclusion hole • Specific government obligations • Failure to honor arbitration award robert wrayPLLC

  9. Breach of Contract/Disputes: Pitfalls • No better than the underlying agreement with the government • What you can recover • The arbitral forum • Typically no faster recovery than the arbitral forum allows • Inability to obtain a timely (or any) award robert wrayPLLC

  10. Political Violence • Broad spectrum of events: from war to civil commotion, including terrorism • Causing a loss • For loans: default • For equity: damage or inability to operate • Book/replacement value compensation for damage • Lost income or investment book value for inability to operate robert wrayPLLC

  11. Political Violence: Pitfalls • Disputed causation • Damage to what? • Loss without damage robert wrayPLLC

  12. Some General Issues • Waiting periods • Percentage of coverage • Term • Exclusions and limitations • Claims arbitration • Creditworthiness robert wrayPLLC

  13. Pitfalls and Opportunities • Choosing the right insurer for the transaction and the buyer (price isn’t everything) • Negotiating the terms and wording • Breaking new ground • Managing the claims (and incipient claims) process robert wrayPLLC

More Related