REMEDIES FOR EXPROPRIATION UNDER INTERNATIONAL INVESTMENT LAW: A FAIR REASSURANCE?

Abstract

One of the key concepts that is intrinsic to international investment is that of expropriation. The act of expropriation can be said to be the act of taking over. In the terms of international law, expropriation refers to the act of taking over of the property of another State or person by the State, where the investment in located. The act of expropriation is viewed as inseparable from the sovereign right enjoyed by every State to regulate and act in its name for the public interest. On the other hand, the investor has the right to expect that the State where his investment is situated takes all steps and measures to ensure that the protection of his property is the primary aim of the State. 

It is at the crossroads of this clash of ideals, rights and expectations that most of the issues in international investment arise as while there might exist a recognition of the right of the State, the matter of restitution arises as both parties differ on the issues of payment to the investor in case such a situation arises. While the State may feel that it is merely performing its functions, the issue for the investor arises from the possible loss of its/his/her investment and the manner of recouping the losses for the same Therefore this Article delves into the concept of the various remedies that are available to an investor and how the same have been viewed by the Courts and the Tribunals as well as the nuances and the application of the various remedies mentioned herewith. 

With regard to expropriation, the investor whose property/investment has been expropriated has recourse to remedies in order to recover the value of his investments or his property. The existence of remedies for investors is one that has been recognized under international customary law on investment in order for the investor to regain his footing before such investment was made and to ensure that no loss occurs to him for his efforts for an act that was not within his realm of control. Under International investment law, there are two main remedies that are available to an investor, reparation and compensation, which are discusses in detail below. 

The nature of the remedy that is afforded to the investor depends on the nature of the expropriation. The Court, in the Chorzow Factory case has clearly laid down the distinction between a lawful and an unlawful expropriation. Lawful expropriation was referred to those situations where expropriation took place according to the due process of the law and wherein such expropriation must be accompanied by fair and just compensation. On the other hand, as unlawful expropriation is per se illegal, in such cases, international customary law provides for the concept of “restitutio in integrum”, that is restitution., failing the impossibility of which, the law provides for the equivalent monetary value of such property to the investor. Further, the concept of lawful expropriation requiring compensation and is that has been affirmed by the Tribunals in various international law decisions such as ADC v. Hungary, Siemens v. Argentina and Vivendi v. Argentina.