Expropriatory and Non-Expropriatory Takings Under International Investment Law

21 Pages Posted: 29 Aug 2012 Last revised: 2 Apr 2013

Jan H. Hendrik Dalhuisen

King's College London; University of California, Berkeley; Catolica Global School of Law

Andrew T. Guzman

USC Gould School of Law

Date Written: August 27, 2012

Abstract

The question of expropriation is at the heart of modern foreign investment law, yet remains an area of great uncertainty and ambiguity. Neither treaty law nor existing jurisprudence provides clarity on the questions of when government action amounts to an expropriation or what to do if does.

This Article provides a framework for approaching questions of expropriation that helps understand the key questions that must be addressed by investment tribunals or, for that matters, host countries and investors. We begin with the neutral category of takings, meaning any government action that negatively affects that value of an investment. We argue that a taking that is more than de minimis is an expropriation unless it promotes public welfare (which we also term “super public purpose”) or is incidental to normal government activity. Whether the taking is an expropriation or not, we must next ask if it is unlawful. As is well known, an expropriation is lawful if it is made for a public purpose, is non-discriminatory, satisfies due process, and if the required compensation is paid. Whether lawful or not, the taking must not violate the fair and equitable obligation. Finally, the Article considers the compensation owed (if any) under each of the four categories constructed above: a lawful expropriation, an unlawful expropriation, an unlawful non-expropriatory taking, and, of course, a lawful non-expropriatory taking.

Our approach to questions of expropriation cannot offer a simple and obvious result in every dispute. No discussion of the topic could do so. It does, however, guide the analysis and identify the key questions that must be answered in order to determine the legal implications of a governmental taking. In so doing, it offers a more coherent view of the international investment law of expropriation.

Keywords: expropriation, foreign investment law

JEL Classification: K33

Suggested Citation

Dalhuisen, Jan H. Hendrik and Guzman, Andrew T., Expropriatory and Non-Expropriatory Takings Under International Investment Law (August 27, 2012). UC Berkeley Public Law Research Paper No. 2137107. Available at SSRN: https://ssrn.com/abstract=2137107 or http://dx.doi.org/10.2139/ssrn.2137107

Jan H. Hendrik Dalhuisen

King's College London ( email )

London

University of California, Berkeley ( email )

Berkeley, CA
United States

Catolica Global School of Law ( email )

Palma de Cima
Lisbon, 1649-023
Portugal

Andrew T. Guzman (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

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