Defining the Scope of Indirect Expropriation for International Investments

Global Business Law Review, Vol. 3, No. 2, 2013

22 Pages Posted: 14 Feb 2014 Last revised: 20 Feb 2014

Date Written: 2013

Abstract

At present, arbitral tribunals have applied a variety of standards to ascertain when indirect expropriation occurs. This article examines the complexities and ambiguities of current indirect expropriation standards and argues that a clear, uniform standard is needed to identify indirect expropriation. Ultimately, this article proposes that arbitral tribunals should only find that indirect expropriation occurs when (i) a state takes actions that substantially deprive the foreign investor of the profitability of its investment, and (ii) the state action was not reasonably predictable to the investor. Part I of this article provides a summary of the current state of expropriation doctrine. Part II exposes the ambiguities of current indirect expropriation standards and outlines several potential solutions that scholars have proposed. Part III offers a succinct, two-part standard for identifying compensable indirect expropriation claims. Part IV applies this proposed standard to the recent PM Asia arbitration.

Keywords: International Arbitration, Indirect Expropriation, PM Asia, Philip Morris, Expropriation, Bilateral Investment Treaties

Suggested Citation

Isakoff, Peter, Defining the Scope of Indirect Expropriation for International Investments (2013). Global Business Law Review, Vol. 3, No. 2, 2013, Available at SSRN: https://ssrn.com/abstract=2394980

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