MNF, Inc., a large multinational firm incorporated and headquar- tered in Country C, entered into an investment agreement with Needyland, a small less developed country. MNF agreed to set up a mine to extract copper ore, a refinery, and a plant to manufac- ture electrical wiring. Needyland agreed to give MNF a 20-year tax holiday (i.e., MNF would not have to pay any local taxes for 20 years). Finally, MNF agreed that "MNF, Inc. will not seek the diplomatic assistance of Country C in resolving any dispute it may have with Needyland." After MNF completed construction of the mine, refinery, and plant, and just as it began to make a profit on its investment, the government of Needyland changed. The new government enacted a statute that imposed a "nontax operating fee" of 30 percent on the annual earnings of all businesses involved in the mining, refining, or processing of copper. MNF was the only such firm. MNF complained to the new government, with no result, that this "fee" violated its investment agreement. The local courts dismissed MNF's request for an injunction as baseless. MNF then sought the diplomatic assistance of Country C. Country C and Needyland are parties to an Arbitration Treaty, and they agree to submit the dispute to arbitration. Needyland argues that MNF had no right to seek the diplomatic assistance of Country C and, therefore, Country C has no right to seek compen- sation from Needyland on behalf of MNF.

Assume in the preceding case that MNF, lac., had purchased politi cal risk insurance from an agency of Country C. Assume, as well, that the Country C insurance program is identical to that offered by the United States Overseas Private Investment Corporation (OPIC). Has the MNF operation in Needyland been ruined by creeping expropriation? Must the Country C insurance program pay MNF for its losses? Discuss.