By invoking the Bangladesh-Singapore Bilateral Investment Treaty (BIT), Mohammed Saiful Alam -- founder of S Alam Group and alleged orchestrator of a $10 billion banking scandal in Bangladesh -- seeks to portray himself as a victim of government overreach.
This audacious claim raises significant legal and ethical questions about the misuse of investment treaties, the definition of “foreign investments,” and the boundaries of international investment-treaty arbitration.
A strategy of diversion?
As reported by The Financial Times, S Alam’s legal team, represented by the prominent law firm Quinn Emanuel Urquhart & Sullivan, has threatened legal proceedings under the BIT, alleging that Bangladesh's actions violate his rights as a foreign investor.
While the exact contents of the legal notice are not public, the surrounding context strongly suggests that Alam’s claim is fraught with legal complications.
The investments Alam seeks to protect under the BIT were most likely made while he was a Bangladeshi citizen, using local funds. Alam and his family obtained Singaporean citizenship between 2021 and 2023, after years of dominance over Bangladesh’s banking sector, which included allegations of coercive takeovers of bank shares.
This timeline suggests a post-hoc attempt by Alam to cloak domestic investments in international legal protections -- a tactic that has historically faced skepticism from ICSID’s arbitral tribunals.
Can local investments qualify as foreign?
Investment treaties are crafted to encourage cross-border economic activity by protecting investments made by nationals of one treaty partner in the territory of another. However, Alam’s case appears to challenge the very core of this principle.
His investments, which are likely funded entirely through local resources in Bangladesh, presumably lack any substantial nexus to Singapore. This raises a pivotal legal question: Can investments with purely domestic origins retroactively qualify as "foreign" because the investor later acquires a new nationality?
The Bangladesh-Singapore BIT, like most BITs, protects investments “made” by the nationals of a treaty partner state to qualify for protection, as opposed to existing domestic investments. The purpose of such a requirement is that BIT protections are extended to incentivize foreign capital, expertise, and technology to flow across borders.
In Alam’s case, the lack of a financial or operational link to Singapore will most likely undermine the core rationale for invoking the BIT.
Moreover, arbitral tribunals have increasingly emphasized the "substance over form" doctrine, scrutinizing not just the legal status of the investor but also the economic realities of the investment. If Alam’s investments were made entirely with Bangladeshi funds, they might not satisfy the threshold requirement of being an investment deserving of protection under the BIT.
The ‘clean hands’ doctrine and allegations of fraud
Another critical issue is the nature of the investments themselves. Bangladesh’s central bank alleges that Alam siphoned off billions through fraudulent methods -- a claim that has led to the freezing of assets and investigations for money laundering. These allegations are not trivial; they strike at the legitimacy of Alam’s wealth and, by extension, the legality of his investments.
In international law, the "clean hands" doctrine holds that a party cannot seek protection under a BIT if the investments in question were obtained through unlawful means. This principle may become very relevant in Alam’s case, particularly if the investigations already opened can swiftly lead to solid judicial findings on the legality of Alam’s accumulation of wealth.
If an arbitral tribunal finds that Alam’s wealth was amassed through fraud or money laundering, his claim for BIT protection would likely face an uphill battle. International arbitration tribunals have consistently refused to shield investments tainted by illegality, as doing so would erode the integrity of the arbitration system and international law itself.
Allowing claims like Alam’s would set a dangerous precedent, encouraging individuals to manipulate nationalities or fabricate international dimensions to purely domestic disputes
Abuse of investment treaties
Alam’s acquisition of Singaporean citizenship, and simultaneous renunciation of Bangladeshi citizenship, adds another layer of complexity. Investment treaties are not designed to shield individuals from the consequences of domestic misconduct.
By renouncing Bangladeshi citizenship after accumulating substantial local wealth and then claiming BIT protections, Alam’s actions could be viewed as “treaty shopping” -- a strategic attempt to invoke international protections for investments that were, in substance, domestic.
ICSID tribunals and other arbitral bodies have repeatedly warned against the abuse of investment treaties. In cases such as Phoenix Action Ltd v The Czech Republic, ICSID tribunals have emphasized that BITs must not be used as instruments to mask domestic disputes as international ones. Such abuse undermines the credibility of investment treaties and dilutes their intended purpose of fostering genuine foreign investment.
Broader implications for the investment arbitration system
This case is emblematic of the challenges facing the global investment arbitration system. While BITs are vital tools for protecting legitimate foreign investments, they are increasingly susceptible to misuse by parties seeking to exploit legal loopholes.
Allowing claims like Alam’s would set a dangerous precedent, encouraging individuals to manipulate nationalities or fabricate international dimensions to purely domestic disputes.
Nevertheless, there is a broader tension between sovereignty and international arbitration. On the one hand, states must honour their treaty obligations and provide fair treatment to foreign investors. On the other hand, states must also retain the right to address domestic financial misconduct and protect the integrity of their legal and financial systems.
Striking this balance is critical to maintaining both the legitimacy of investment treaties and the rule of law within sovereign states.
Ultimately, this case represents a critical test for the Bangladesh-Singapore BIT. Any decision to grant Alam protection under the treaty would risk opening the door to abuse by domestic actors seeking to internationalize disputes through strategic nationality changes.
Conversely, a tribunal’s rejection of Alam’s claims would reaffirm the principle that BITs are tools to foster genuine foreign investment, not instruments to evade domestic accountability. Bangladesh, therefore, has strong grounds to challenge the admissibility of this claim and to defend its right to pursue enforcement actions against domestic financial misconduct.
Saqeb Mahbub is a Barrister-at-Law and Partner at leading law firm, Mahbub & Company and can be contacted at [email protected]
