On 26 November 2013 the Netherlands and the United Arab Emirates signed a bilateral investment protection treaty (BIT). The BIT is aimed at strengthening the ties between these two countries by promoting economic development and investments.
A BIT is an international agreement establishing the terms and conditions for private investments by nationals and companies of one state in another state. In short, a BIT sets forth actionable standards of conduct that apply to governments in their treatment of investors from other states, including (i) a fair and equitable treatment of investments from investors from the other state, (ii) protection from expropriation, (iii) free transfer of means and full protection and security, and (iv) an alternative dispute resolution mechanism, whereby an investor whose rights under the BIT have been violated could have recourse to international arbitration. Both the Netherlands and the UAE are party to the Convention of New York and the Convention on the Settlement of Investment Disputes. An arbitral award would therefore be enforceable in 149 different states, making this a highly effective instrument for dispute settlement.
The Netherlands has concluded around 90 BITs. This vast network of BITs, together with nearly 100 income tax treaties (for the avoidance of double taxation) ensures that the Netherlands remains a highly sought after jurisdiction for the establishment of international joint venture, holding and financing companies in relation to the Middle East (both inbound and outbound).