Posted: October 20th, 2022

Expropriation in International Law

You should prepare a report on Expropriation in International Law.
Expropriation in International Law
The taking of foreign property by a state for any reason is known as expropriation (Baetens, 2017). In the past, the activity entailed the outright taking of property, but it has evolved to include the indirect governmental measures that cause a similar effect as the formal taking of a property. The property also includes intangible property, which are the rights that arise from a contract which are susceptible to expropriation in a similar manner as tangible property (Schreuer, 2005). In the definitions of investments in the treaties focused on investments’ protection.
From the 19th century, International law has been protecting foreigners from their properties being taken. The aftermath of World War II would create a way for customary International law as it brought in changes such as the development of minimum standards to take a foreign property lawfully (Baetens, 2017). The measures included that the expropriation should occur for a public reason, done in a non-discriminatory manner, follows the due process of the law, and accompanied with adequate compensation. Currently, the International Investment Agreements (IIAS) regulate this right to take foreign property (Baetens, 2017). Apart from the aforementioned minimal standards, it also lays out further rules on the property types protected, requirements for protection, and actions to be taken for a particular property to be protected.
Over time direct and overt expropriations have reduced in number with the typical form currently being the indirect expropriations or measures with similar effects (Henckels, 2012). The transfer in direct expropriation will benefit the state or the mandated third party state. Conversely, indirect expropriations entail the total or the nearly-total deprivation of investments with no formal transfers of title or outright seizure (Heckels, 2012). While the concept of indirect expropriations has been known for some time and was reflected in investments’ protection, it became well established in International Judicial practice much later. Indirect expropriation has several subcategories, such as de facto, creeping, constructive, disguised, or virtual expropriation (UNCTAD, 2012). The most common subcategory is the creeping expropriation that entails a simultaneous series of actions leading to property deprivation or loss of control. The set of state actions are taken within a limited period then considered constituent parts of a unified treatment to the investor or investment. Its counterpart is in the State law, whose function in the breach concept includes a composite act (UNCTAD, 2012).
In international law, not every breach of contract by a state will lead to economic loss for the investor will be considered an expropriation (Schreuer, 2005). The distinguishing criterion followed between a simple breach, and the expropriation factor is whether the actions by the state were under their commercial functions as a party to the agreement or they acted in their sovereign capacity. Just because a legitimate public purpose underlying a regulatory measure was present in the transfer of property, the existence of expropriation is not excluded. The distinction made here between the regulatory expropriation needing compensation and regular regulatory action is dependent on the scope, gravity, and time taken by the deprivation (Schreuer, 2005). In this case, the intended purpose of the government in the expropriation is not considered.
It is, however, essential to note that the IIAS has been facing the question of differentiating the compensable indirect expropriations and the legitimate non-compensable regulatory measures (Baetens, 2017). Its tribunals have not come up with guiding principles to quantify compensation and the steps to be followed in the valuation of expropriated property.

References
Baetens, F. (2017). Expropriation in International Investment Law. Oxford Bibliographies. Retrieved from https://www.oxfordbibliographies.com/view/document/obo-9780199796953/obo-9780199796953-0159.xml
Henckels, C. (2012). Indirect expropriation and the right to regulate: revisiting proportionality analysis and the standard of review in investor-state arbitration. Journal of International Economic Law, 15(1), 223-255.
Schreuer, C. (2005). The Concept of Expropriation under the ETC and other Investment Protection Treaties. Retrieved from https://www.univie.ac.at/intlaw/pdf/csunpublpaper_3.pdf
UNCTAD. (2012). Expropriation. UNCTAD Series on Issues in International Investment Agreements. New York and Geneva: UN. Retrieved from https://unctad.org/en/Docs/unctaddiaeia2011d7_en.pdf