Indirect Expropriation in International Law

Indirect Expropriation in International Law

Leuven Global Governance series

Sebastián López Escarcena

Sebastián López Escarcena offers a comprehensive coverage of the history and main concepts of the international law of expropriation. The interaction between human rights conventions and investment treaties are analysed from a global perspective, providing the reader with a unique insight into expropriation at an international level. Within the course of his examination, the author illuminates important concepts of public law, from deprivation of property to payment of compensation, and from margin of appreciation to proportionality.

Chapter 5: Bilateral treaties and international awards

Sebastián López Escarcena

Subjects: law - academic, public international law


The first treaties to protect the property of aliens were FCNs, replaced in the late 1950s by BITs. A positive approach towards private property and foreign investment in third- and former second-world states during the last decades of the 20th century, led to the gradual establishment of a wide network of these treaties, originally concluded between developed and developing countries that needed funds or materials to boost their economies. BITs provide for an international minimum standard, comprising a protection against takings, fair and equitable treatment, full protection and security, most-favoured-nation treatment, and national treatment, among other commitments. This wide network of treaties includes today most of the formerly reluctant Latin American states, commonly associated with the Calvo doctrine, the principle of permanent sovereignty over natural resources, and the now dated NIEO. BITs follow the three traditional conditions of a lawful expropriation - i.e., public purpose, non-discrimination and compensation - normally adding a fourth requirement, due process of law. Property is called investment, and is broadly defined in these treaties. The conventional concept of investment is essential to the takings provision, for anything within its contours will be protected against deprivations. BITs mention direct and indirect expropriations as such, but give no definition of them, leaving the development of these notions to the case-law of international arbitral tribunals, established under the dispute settlement mechanism of these treaties. ICSID, UNCITRAL and ad hoc panels generally refer in their awards to other judicial decisions.

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