Discord Over Judicial Expropriation

Abstract

A confusion has progressively emerged and is increasingly being relied on by sovereign States in practice with relation to the standard of judicial expropriation and more specifically on the question, whether it differs or not, from the one of denial of justice. This Note proposes to identify the causes of this confusion and to address its impact before engaging in an effort to alleviate this confusion. The causes of this confusion are multiple. One is the scarcity of literature on the subject. The authors2 and case law3 that have made and recognized the independent nature of the two concepts have not addressed their differences nor whether the threshold for judicial expropriation is the same or any different than the one for executive or legislative expropriation. More alarming is the confusion caused by some awards rendered under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) or the spin that some have put on them. One is Robert Azinian and others v United Mexican States.4 A concession contract governed by Mexican law was cancelled by Ayuntamiento (City Council) of Naucalpan. The foreign investor then challenged the termination of the concession contract by the Ayuntamiento of Naucalpan before ICSID under the North American Free Trade Agreement (NAFTA) for expropriation. The ICSID Tribunal, presided by Jan Paulsson, dismissed the claim. In doing so it held that: