5 - Legal Uncertainty and Inconsistency Militating against Shareholders’ Claims for Reflective Loss: The Unpredictability of Investment Disputes Involving Shareholders

Summary

This chapter focuses on the policy considerations weighing against shareholders’ claims for reflective loss, which are generally put forward in domestic corporate law regimes to justify the no-reflective loss principle. These policy considerations are analyzed in the context of international investment law and arbitration. In particular, this chapter successively critically assesses the potential floodgates of the courts and the disincentive to settle which shareholders’ claims for reflective loss can create, as well as treaty and forum shopping, which such claims can lead to. This chapter concludes that these concerns are sometimes exaggerated and not always justified in the context of international investment law, but, more importantly, that they can be cured.