NON-PROFIT ENTITIES AS FOREIGN INVESTORS? THE CASE OF INTERNATIONAL SPORT GOVERNING BODIES.

International sports governing bodies (SGBs) such as the International Olympic Committee (IOC) are incorporated as either limited liability companies or non-profit entities in a single jurisdiction, with the latter being the more prevalent model. Non-profit SBGs engage in at least four types of commercial activity, namely: a) conferring on states by means of contract the right to host tournaments or events under their aegis, which in turn generates revenues; b) broadcasting, image, and sponsorship rights; c) portfolio investment (i.e. purchase of shares, stocks, debentures and other intangible assets) with surplus revenue; and d) developmental and outreach activities with a view to grow their fan and athlete base and thus generate profits from the above commercial activities. Even though SGBs can secure agreements with host states that contain personalized investment guarantees (in most cases far superior to treaty-based guarantees), neither they nor participating states (e.g. tournament hosts) view SGB investors under applicable bilateral investment treaties (BITs) or host state investment laws. This is puzzling, because with very few exceptions, BITs and Model BITs either expressly recognize non-profit entities as investors, or otherwise do not expressly exclude them from their ambit so long as they engage in some commercial activity. The four aforementioned types of commercial activity clearly constitute investments. SGBs refrain from being characterized as investors out of fear of losing their non-profit status, which in turn shields them from taxes and confers significant privileges. [ABSTRACT FROM AUTHOR]