Surviving a Change of Government

The Challenge

A populist turn at the ballot box brought in a government openly hostile to its predecessor’s deals, and the client’s concession was put “under review.” The new administration framed the contract as a symbol of the old regime’s corruption, exactly the kind of story that wins elections and ends investments. A formal legal fight through treaty arbitration was available, but slow, expensive, and certain to poison the operating relationship even in victory. The investor needed to protect a long-life asset and a long- term relationship at the same time, which ruled out winning the argument while losing the business.

The Approach

The central move was to re-legitimize the investment in the new government’s own terms rather than defend it on the old ones. We reframed the project around what this administration actually cared about, jobs, local development, energy access, and revenue to the treasury, and retired the language of the original deal, which carried all the wrong associations. We chose quiet diplomacy over the megaphone, engaging the new decision-makers and their advisers discreetly before public positions hardened into commitments nobody could walk back. We mobilized third-party validators with genuine standing in front of the new government: the development-finance institutions that had co-financed the project, the workforce, the customer base, and relevant multilatConcession preserved; $480m asset retained Nationalization and a multi-year arbitration avoided Renegotiated terms with a net impact of about 6%, accepted by both sides

eral relationships, voices the administration could not dismiss as the company speaking in its own interest. Crucially, we kept the legal option alive but holstered. The client’s protections under the applicable bilateral investment treaty, including the route to ICSID arbitration, were carefully preserved as leverage and insurance, never brandished as a threat. That distinction kept a negotiating channel open while ensuring the client was not defenseless if talks failed. The settlement was designed to let the government win in public. We offered a modest, genuinely mutually beneficial renegotiation, adjustments the administration could present to its base as having tamed a bad old deal, without crossing into expropriation, which would have triggered the arbitration nobody wanted. The legal architecture beneath the diplomacy mattered more than it looked. Many bilateral investment treaties protect against indirect or creeping expropriation and, in some cases, contain umbrella clauses that lift contract breaches into treaty breaches, which is exactly why preserving those rights quietly gave the negotiated track its weight. The government’s advisers understood the asset was protected even though the client never said so aloud, and that unspoken backstop kept the talks honest. The political economy is what made the face-saving settlement work. A new administration cannot be seen to honor an unpopular deal, but it can be seen to fix one, so the design handed it a fixable story and a visible win. The development-finance institutions that had co-financed the project acted as de facto political-risk insurance, not through any payout but through their presence: expropriating an asset backed by the institutions a government still needs to borrow from carries a price most governments would rather not pay.

The Outcome

The concession was preserved on adjusted terms with a net impact of about 6%. Nationalization was averted, the multi-year arbitration never had to be filed, and the relationship with the new government stabilized on a footing both sides could live with. The asset stayed in the client’s hands and kept producing.