On 25 January, over 60% of Bolivian voters approved a new constitution drawn up in order to bolster the government's control over the country's considerable natural resource wealth. As well as empowering the state to assume the reins in respect of all activities related to the exploitation of natural resources, the constitution prohibits recourse to international arbitration by foreign investors in hydrocarbons, requiring them instead to resolve disputes in the Bolivian national courts.

The advent of this constitution comes on the heels of a proactive "nationalisation" policy, commenced in 2006, whereby Bolivia sought to take majority control of existing projects to exploit its natural resources, in particular in the hydrocarbon sector. A number of international investors have successfully negotiated their exit from Bolivia during this process. However, others have had their assets seized by force. What recourse they may have, now that the new constitution mandates domestic remedies only, and given Bolivia's withdrawal from ICSID in 2007, remains to be seen.

While the constitution has attracted criticism from many who fear that Bolivia will lose much-needed foreign investment, the reality is that the constitution merely enshrines what has been, for some years now, a relatively hostile investment environment. Given the vastness of Bolivia's resources, foreign investors with experience of more difficult environments are unlikely to be deterred.