Indirect Expropriation in International Investment Law

Ruzza, Alice (2013) Indirect Expropriation in International Investment Law. PhD thesis, University of Trento.

PDF - Doctoral Thesis


Regulating indirect expropriation in international investment law is a challenging task for investment tribunals. No universally agreed definition of the concept exists and international investment treaties (IITs) provide a defective legal framework––paralleled to that of expropriation tout court––to govern the issue. This work contributes to the discourse on indirect expropriation in international investment law by elaborating upon existing literature and scholarship and by examining judicial and arbitral decisions. It suggests an alternative interpretative framework useful to the analysis and decision of international expropriatory cases. To this end, the research adopts an inductive methodology. In light of the decisions of several international fora, the study examines the concept of property (Chapter IV), the concept of taking (Chapter V), the lawfulness or unlawfulness of expropriation (Chapter VI) and the concept of public purpose (Chapter VII) which are deemed as the constitutive elements of the customary international law definition of expropriation to which the concept of indirect expropriation is paralleled in international treaty-law (and practice). The study begins with the analysis of the German and the American domestic experiences on takings in view of the influence that such constitutional and administrative systems have exerted on the development of international criteria and standards for deciding ‘international taking issues’. It is here argued that a comparative approach to indirect takings issues may shed light on current interpretative obstacles faced by arbitral tribunals, chief of which is the lack of an international consensus about the function of property at the international level. A reconceptualization of indirect expropriation as unlawful de facto expropriation is advocated as a prospect for future developments. The adjective indirect is deemed superfluous and it is claimed that non-expropriatory interferences with property rights are to be sanctioned by means of other substantive standards of protection. Such reconceptualization aims at removing trivial categories and misleading labels thus far employed to describe indirectly expropriatory measures and suggests to focus on the actual variables at stake––compensable expropriation vis-à-vis non-compensable regulation by the host State. In addition, a degree of deference to host States is also advised for, to the extent that provisions in IITs are stipulated in a more specific manner that duly defines legitimate regulatory purposes and takes into account the consequences of a State’s unlawful conducts. This would reduce adjudicators’ discretion in the exercise of their interpretative powers. This study cannot and aims not at answering the question concerning where to draw a dividing line between regulation and compensable (indirect) expropriation. This is deemed to remain a case-by-case decision of investment tribunals. Rather, by drawing from both international and national models, the proposed interpretative framework would reconcile or guide arbitral approaches to takings issues towards the development of an intelligible legal methodology.

Item Type:Doctoral Thesis (PhD)
Doctoral School:International Studies
PhD Cycle:XXV
Subjects:Area 12 - Scienze giuridiche > IUS/13 DIRITTO INTERNAZIONALE
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