The Marcona Settlement: New Forms of Negotiation and Compensation for Nationalized Property

Abstract

On September 22, 1976, the United States and the Government of Peru signed an agreement resolving the nationalization of the Marcona Mining Company’s Peruvian branch. The settlement, the intergovernmental negotiations leading up to it, and the expropriation itself are of more than passing interest. The settlement has been characterized by the U.S. Government as providing, when fully implemented, prompt, adequate, and effective compensation through a package—a combination of cash and long term sales relationship—which represents a relatively beneficial arrangement economically and politically for the Government of Peru. These arrangements were the more remarkable for having been concluded with a leading Third World country that has a long history of nationalization of foreign investment. In light of the frequency of expropriations of American-owned property abroad, and of the fact that in one or more ways such expropriations involve issues of the public interest as well as those of private U.S. companies, the Marcona settlement has implications for the handling of other investment disputes.