Expropriation - A Sequel

UNCTAD Series on Issues in International Investment Agreements II

image of Expropriation - A Sequel
In this publication, Section I defines the concepts of direct and indirect expropriation and reviews the variety of measures that can constitute an expropriation. Section II focuses on the core issue of establishing an indirect expropriation: the recent treaty practice on defining indirect expropriation as well as arbitral practice. Section III discusses the differences between compensation for a lawful expropriation and reparation for unlawful expropriations, as well as the question of valuation of investments. Section IV offers options which policy makers and negotiators may wish to consider.



Policy options

The policy choices with respect to expropriation provisions can be grouped into three main models – a “high protection” model, an “increased predictability” model and a “qualified” model. The high protection model is more or less uniform and can be found in many existing treaties. The “increased predictability” model refers to the clarifications of the type introduced by Canada and the United States in their model BITs in 2004, which give additional guidance as regards indirect expropriation and reaffirm the right to regulate. Finally, there is the “qualified” model, which may feature a variety of limitations and qualifications to the expropriation provision in order to respond to States' particular policy objectives and concerns. The three models are discussed in turn.


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