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NEWCO is an inward investment services provider specializing in the implementation of foreign investment in Portugal, including Madeira Island, and Malta.

Bilateral investment treaties: what are they for? The Portuguese example
28 Sep 2022 . By Roberto Castro Mendonça - Lawyer

Bilateral investment treaties: what are they for? The Portuguese example

A bilateral investment promotion and protection agreement (commonly called a bilateral investment treaty) is, essentially, a pact that defines the terms and conditions for foreign direct investment between two countries.

Portugal has an extensive network of bilateral investment promotion and protection agreements, most of which are concluded with countries that are not members of the European Union.

Within this network, agreements with several Latin American countries (Venezuela, Argentina, Peru), Portuguese-speaking African countries (Angola, Cape Verde, Mozambique, and Guinea-Bissau) and China stand out.


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What are bilateral investment treaties for?

As a rule, these agreements aim to

  • Create favourable conditions for investments and grant non-discriminatory and equitable treatment;
  • Prohibit arbitrary measures;
  • Guarantee that investments will not be nationalised, expropriated or subject to equivalent measures, except for purposes of public interest and upon payment of adequate and effective compensation and, even so, on a non-discriminatory basis and in accordance with legal procedures;
  • Amend losses caused to investments due to wars, armed conflicts or similar situations;
  • Guarantee the free transfer of amounts related to investments after compliance with tax obligations;
  • Foresee mechanisms for the resolution of disputes between the investor and the State where the investment is made, namely through arbitration and binding to its decisions.

Given the risk involved in certain overseas investments, the validity of these agreements is of particular relevance to investors who invest in these jurisdictions through a company incorporated in Portugal, guaranteeing them greater legal protection.

Thus, the Portuguese network of agreements provides a robust framework of fundamental rights throughout the investment process.