Indirect Expropriation Research Articles

ANALYSIS ON THE TERMINATION OF FOREIGN PUBLIC-PRIVATE PARTNERSHIP BY THE GOVERNMENT

The implementation of foreign public-private partnerships (PPP) as alternative funding to build an infrastructure of a country has been a common practice. However, upon the termination of the PPP, the government may intend to own and manage the infrastructure fully. This article analyses whether such a situation falls under the legal concept of expropriation or a breach of contract. The article uses the doctrinal research method that combines the statute approaches, conceptual approaches, and case approach. The research concludes that the distinction can be made based on the government's capacity as an authority or a party to the contract. If the government acts as a public authority, then the termination of PPP is considered as an indirect expropriation; if the government action is based on its commercial capacity or as a party to a contract, then the termination of PPP is considered a breach of contract.

Standard of Review in Indirect Expropriation: Reconciling the Effect Rule with the Doctrine of Intent

Abstract The standard of review that underpins investor-state dispute resolution particularly in the energy and natural resources sectors remains mired in a conundrum of legitimacy. While the jurisprudence of arbitral tribunals illustrates that the effect doctrine constitutes the central standard of review, and the intent behind the measure is largely jettisoned, questions remain as to whether the exclusive reliance on the effect doctrine reflects the interest of both parties and actually balances such interests in such strategic sectors as oil and gas where a trade-off is critical in view of massive State reliance on accrued revenue. In essence, it is contended that the doctrine of intent be deployed to complement the effect doctrine. Such an approach will not only enhance the substantive legitimacy of the dispute settlement process but equally reflect the balanced interest emblematic of the proportionate commitment of both parties.

Creating a Balance in Bilateral Investment Treaty: A Perspective from Indonesia

The previous movement of Government of Indonesia (GOI) to terminate its expiring Bilateral Investment Treaties (BITs) with many countries does not mean like the end point of rigorous policy. It then leaves a question mark about the legal standing after the concession and how the government establishes a new model to create a balance in BIT. This research is conducted to, firstly, analyze the legal position of government and foreign investor in a terminated BIT. Furthermore, it will discuss how the government can take benefit through learning experience from the previous mistakes in old BITs and the latest development in international investment law. Finally, this study focuses how a balance on BIT can be achieved for both host state and foreign investor. The result of this study shows that the government did not breach any international law procedure in particular by fathoming Vienna Convention on the Law and Treaties and protection for the investor is not diminish immediately due to the existence of survival clause. Further investigation identifies that to obtain a greater benefit following the termination, GOI should develop better balanced provisions in its next BIT model. This effort can be done by taking care of principle of extraterritorial obligation, full protection and security clause, indirect expropriation, and regulatory measure clause, and most importantly how to deal with dispute settlement.

Uluslararası Yatırım Antlaşmalarının İhlalinde Demokratik Yönetişim ve Dolaylı Kamulaştırmanın Rolü

Democracies are thought to violate treaties less frequently than non-democracies, yet democracies violate
 bilateral investment treaties (BITs) just as often as non-democracies. Though democratic governments may
 intend to meet their international obligations, and though democratic institutions provide greater political
 constraints to encourage compliance, investment agreements may conflict with the goal of maintaining domestic
 public support. Specifically, we argue that credible elections create strong incentives for governments to side
 with domestic voters, and to pass legislation that violates investment agreements. The results suggest that the
 ability of voters to sanction leaders is an important mechanism that incentivizes governments to pass legislation
 that potentially violates investment treaties through indirect expropriation.

The Investment Protection Rules of the EU-Canada Trade Agreement

Abstract This article provides an in-depth analysis of the substantive protection provided to investors against indirect expropriations under the EU-Canada Free Trade Agreement (ceta) and under the Constitution of Finland. More specifically, we analyse these respective spheres of protection in a regulatory context in Finland where Canadian investors operate actively: industrial mining. The purpose of the comparative analysis is to provide tentative answers to three broad research questions: Can investors challenge legitimate public interest measures under ceta’s investment protection rules? Is the protection provided under ceta co-extensive with the protection provided under the constitutions of countries placing high on global rule of law rankings? And are countries upholding the rule of law safe from investor claims under ceta’s reformed investment protection rules? A more general purpose is to bring more depth and nuance into the debates concerning the reform of the investment treaty regime, which often travel at a high level of abstraction.

Police Powers Doctrine: a reliable State Defense in times of Covid-19?

As measures taken against the threats of Coronavirus to the public health affect investments in South America and internationally, states are looking for defenses under international law to counter potential Investor-State claims. This article explores whether the Police Powers Doctrine could justify the policy measures taken to protect the public health during the Covid-19 sanitary crisis and avoid the payment of compensation for alleged indirect expropriations. The analysis will first lay out the general application of Police Powers Doctrine under international investment law. To do so, it will mainly investigate the interpretation of the Doctrine in cases relating to the protection of public health. Finally, it will assess the strength of the Doctrine in defending general policy measures taken during the Covid-19 sanitary crisis. The paper argues that, while most measures should qualify under the Police Powers Doctrine, arbitral tribunals might examine additional conditions to accord their legal qualification of an exercise of police powers with the specific facts of a case.

AUTONOMY TO SET THE LEVEL OF REGULATORY PROTECTION IN INTERNATIONAL INVESTMENT LAW

AbstractThis article argues that State autonomy in setting the level of protection for permissible regulatory aims can be better operationalised in the investment treaty regime. The article draws on comparative insights from WTO law, where it is established that WTO members have the right to determine the level of protection for permissible regulatory aims, although significant disciplines are placed on the means used to achieve those aims. It is then argued that investment treaties are, properly interpreted, consistent with the idea that States retain autonomy to determine the level of protection for permissible regulatory aims. Finally, the article proposes removing from the fair and equitable treatment and indirect expropriation standards proportionality balancingstricto sensu, as this undermines State autonomy in setting the level of protection. Overall, this article argues for a partial reorientation of investment law, in which non-discriminatory measures that pursue a permissible regulatory aim, including at a particular level, should not amount to a breach of a treaty where a State uses the means that involve the least possible restriction of the competing interests protected by relevant investment treaty obligations.

A Study on the Criteria of Determining Indirect Expropriation through the Cases of the ISD

A Study on the Criteria of Determining Indirect Expropriation through the Cases of the ISD

ISDS and Intellectual Property in 2020 - Protecting Public Health in the Age of Pandemics

Many countries have responded (or have considered responding) to the COVID pandemic by modifying their intellectual property laws to ensure the availability of vaccines, medicines, diagnostics, and related information. Some have asked the World Trade Organization (WTO) for a waiver to excuse any steps they might take that are inconsistent with obligations under the TRIPS Agreement. Although a waiver would protect WTO members from challenges in the WTO’s Dispute Settlement Body, a state that is a party to an international investment agreement (IIA) that includes investor-state dispute resolution has something else to worry about. Investors could claim that its actions amount to an indirect expropriation or a denial fair and equitable treatment in violation of the obligations in the IIA. In this piece, I conduct a thought experiment on how such suits might unfold. The first part describes how states sought or may seek to exercise control over the knowledge and products needed to protect public health during the global pandemic. The second part considers the challenges that investors might lodge and how they might be resolved. I identify the places where safeguards in IIAs that are intended to protect sovereign authority over healthcare may fall short.

The Brazil-India Investment Cooperation and Facilitation Treaty: Giving Concrete Meaning to the “Right to Regulate” in Investment Treaty-Making

Brazil and India signed, in January 2020, the Investment Cooperation and Facilitation Treaty. The agreement is unique by many measures, not least because Brazil and India—two of the largest global economies and respectively the 6th and 9th global recipients of FDI in 2019—have approaches to investment agreements that depart from the BIT model in important ways. This Note argues that the Brazil-India agreement represents a strong contribution to the safeguard of the “right to regulate”, by which we mean the incorporation of clauses that protect the state’s ability to make public policies. The agreement does not contain provisions on “fair and equitable treatment”, “indirect expropriation” and the traditional standards of treatment that often feature in BITs (and are the cause of many arbitral disputes). At the same time, it lays down a number of exceptions for public policies as well as some investor obligations. Yet, for all its uniqueness the Brazil-India agreement can be placed within a trend, visible particularly in developed economies, to tilt the balance in the direction of a more robust protection of the state’s capacity to regulate and to eschew traditional forms of dispute resolution.

Do Investor–State Disputes (Still) Harm FDI?

AbstractWhat are the consequences of being sued for violating bilateral investment treaties? The conventional wisdom is that investor–state disputes (ISDS) tarnish countries' compliance records, and harm foreign direct investment in the process. This article re-examines this belief in light of recent trends in ISDS. The regime has witnessed a proliferation of claims, a growing proportion of which allege breaches of provisions like fair and equitable treatment and indirect expropriation. Combined with a decrease in the rate of success of such claims, the authors argue that the average ISDS claim now contains less information than it once did. If this is the case, investors should be less likely to update their expectations and reduce investments. This study examines 812 investor–state disputes from 1987 to the present day, and finds consistent evidence for this across two different datasets relating to firms' risk perceptions. Consequences of investor–state claims on foreign direct investment are only apparent in cases that allege direct expropriation. Even among these, the effects are smaller today than they were in the past. In sum, the reputational effects of ISDS claims appear to have been eroded by the developments of the last two decades. ISDS just isn't what it used to be.

Parks and non-expropriated properties: a proposal for the practice of temporary and low impact activities / Os parques e os imóveis não desapropriados: uma proposta para a prática de atividades temporárias e de baixo impacto

Abstract This article intends to analyze the situation in which the administration issues a public utility decree for the creation of an integral protection conservation unit, a park, covering private properties. The issue of the mentioned decree entails a series of limitations on the property rights of its holders. It happens that the effective implantation of the park does not happen and the decree of public utility has expired. In spite of this, the owners of the affected properties are required to respect the environmental protection standards relating to the park, which are extremely restrictive. It is discussed in the text whether, in these cases, authorization by the public authority for the exercise of temporary and low-impact activities in the park would be possible, until the property is effectively expropriated and the compensation paid. The STJ's jurisprudence on indirect expropriation, the applicable legal provisions are analyzed and interests are weighed in the hypothesis, having as a guiding principle the principle of proportionality. Keywords: Park, Public utility, Integral protection conservation unit, Expropriation, Exercise of temporary activities. Resumo O presente artigo pretende analisar a situacao na qual a administracao edita decreto de utilidade publica para a criacao de uma unidade de conservacao de protecao integral, um parque, abrangendo imoveis privados. A edicao do referido decreto acarreta uma serie de limitacoes ao direito de propriedade de seus titulares. Ocorre que a efetiva implantacao do parque nao acontece e tem-se a caducidade do decreto de utilidade publica. Apesar disso, exige-se que os proprietarios dos imoveis atingidos respeitem as normas de protecao ambiental relativas ao parque, que sao extremamente restritivas. Discute-se no texto se, nesses casos, seria possivel a autorizacao pelo poder publico para o exercicio de atividades temporarias e de baixo impacto no parque, ate que seja o imovel efetivamente desapropriado e a indenizacao paga. Analisa-se a jurisprudencia do STJ sobre desapropriacao indireta, os dispositivos legais aplicaveis e procede-se a uma ponderacao de interesses na hipotese, tendo como fio condutor o principio da proporcionalidade. Palavras-chave: Parque, Utilidade publica, Unidade de conservacao de protecao integral, Desapropriacao, Exercicio de atividades temporarias.

Međunarodno investiciono pravo i zaštita radnih prava - standard poštenog i pravičnog tretmana i indirektna eksproprijacija u svetlu izmena radnopravnih propisa države domaćina

The purpose of this paper is to answer the question whether investors may challenge domestic labour legislation by invoking breach of international investment agreements, in particular violations of fair and equitable treatment standard, as well as illegal expropriation of investments. The answer to this question is especially relevant for developing countries, such as the Republic of Serbia, which seek to harmonize their legal systems with international principles of labour rights protection. Therefore, the paper will explore the interpretations of the fair and equitable treatment standard and indirect expropriation given by arbitration tribunals and accepted among scholars, as well as their application with respect to the labour regulation changes. Particularly analysed is the relevant case law before arbitration tribunals dealing with the question whether host states may violate these standards by amending their domestic labour legislation. Research has shown that domestic labour regulation amendments may rarely be interpreted as indirect expropriation, while the fair and equitable treatment standard may be breached in case of unpredictable labour legislation changes which would significantly violate guarantees given by the state to attract foreign investments but cannot protect investors from the introduction of bona fide labour regulations.

Features of the application of the international legal standard of expropriation in energy disputes

The article considers the specifics of the application by international investment arbitrations of the rules on expropriation in accordance with the Energy Charter Treaty of 1996 and bilateral investment treaties. Examples are given of how disputes related to activities in the energy sector are protected from expropriation and state regulatory measures are qualified as direct and indirect expropriation. The criteria and reasons used by the arbitrators in determining whether the expro-priation constitutes a violation of international legal obligations by the host State, as well as determining the components and extent of the damage caused, are set out. Conclusions are drawn and recommendations are made regarding the legal support of the state policy in the energy sector to minimize the likelihood of liability for expropriation.

From Delegation to Prescription: Interpretive Authority in International Investment Agreements

The proper allocation of interpretive authority between states and arbitral tribunals is central to current debates about investment treaty arbitration. States traditionally have given arbitrators broad latitude to interpret and apply international investment agreements. But as states gain greater experience with international investment arbitration, they are reclaiming interpretive authority from arbitrators as part of states’ broader reform efforts. To that end, states have devised at least four treaty-drafting techniques: interpretive guidelines, which tell tribunals how to interpret important treaty provisions, such as indirect expropriation, national treatment, and fair and equitable treatment; interpretive clarifications, which provide “greater certainty” on the meaning of investment protections in new treaties and interpretive gloss on existing treaties; interpretive indicators, which may tilt the interpretive balance toward the drafting states’ policy preferences, such as environmental protection; and interpretive markers, which record in the travaux preparatoires states’ preferred treaty interpretations. These drafting techniques can be enormously important. They may curtail arbitrators’ interpretive discretion, influence the interpretation of prior investment treaties, and even alter the outcome of arbitral cases. These techniques starkly illustrate the move from a traditional “delegation” model of IIAs to a more “prescriptive” model. Given their increasing use, these techniques are likely to significantly affect the development of international investment law and arbitration for years to come.

Ensuring a balance between protection of investors from indirect expropriation and regulatory powers of states

Ensuring a balance between protection of investors from indirect expropriation and regulatory powers of states

Thinking Two Steps Ahead: Do Export Restrictions on Australian Gas Amount to Indirect Expropriation?

Thinking Two Steps Ahead: Do Export Restrictions on Australian Gas Amount to Indirect Expropriation?

¿A igual razón, igual derecho? La tutela constitucional del inversionista nacional por expropiaciones indirectas

This essay deals with the thesis of the protection of indirect expropriations of national investors, invoking the equal treatment —with the advantages, rights and guarantees of the foreign investor— established in article 63 of the Peruvian Constitution. Our goal is to make explicit the reasons why is it now possible to go forward in the procedural protection of the national investor against cases of indirect expropriation, by using arbitration instead of the amparo process for that purpose. This other procedural protection derives from the Bilateral Investment Treaties and Free Trade Agreements that provides for national or international investment arbitration. Given that this arbitration procedure arises from a legal source, the national investor, under the principle of equality of treatment of the foreign investor is also entitled to use it.

If One Thai Bottle Should Accidentally Fall: Health Information, Alcohol Labelling and International Investment Law

Abstract This article considers the issues that would arise in a dispute under an international investment agreement about two innovative, public health alcohol labelling policies pursued by Thailand. One measure proposes graphic health warnings on alcoholic beverages. The other measure places extensive restrictions on the words and images that producers can use on alcoholic beverage labels. We focus on the consistency of these measures with the obligations of fair and equitable treatment and indirect expropriation. We place particular emphasis on the evidence that would likely be needed to defend these measures, including the areas where the science is somewhat tentative and might therefore pose problems for ‘first-mover’ States like Thailand. We conclude that there is a good chance that the warnings measure would be found compatible with investment law obligations. However, some aspects of the marketing measure are more vulnerable to findings of inconsistency.

NCD Prevention and International Investment Law in Latin America: Chile’s Experience in Preventing Obesity and Unhealthy Diets

Abstract In 2016, Chile became the first country in Latin America to implement comprehensive regulations aimed at preventing obesity and diet-related non-communicable diseases. It introduced innovative measures including a mandatory front-of-pack nutrition labelling scheme for food products high in sodium, free sugars, fats, and calories, and strict advertising and marketing restrictions of unhealthy foods to children under 14 years of age. However, food-exporting countries have questioned the lawfulness of these measures in the context of the World Trade Organization’s Technical Barriers to Trade Committee, and multinational food companies have filed several complaints before Chilean courts challenging their implementation. This article provides an overview of specific legal issues discussed in domestic courts and examines Chile’s measures under the rules of international investment law. It assesses whether they would withstand a treaty claim based on indirect expropriation, breach of the national treatment standard, and breach of the fair and equitable treatment standard.