Mohammad Belayet Hossain


This article aims to analyse the jurisprudence developed by international courts and tribunals with regard to the standard of treatment of foreign investors, with particular focus on issues concerning expropriation. In doing so, it will analyse some of the standard-setting decisions and far-reaching implications of: the Iran-US Claims Tribunals, the International Court of Justice and the ICSID. It will also examine the recent trend in jurisprudence on the so-called regulatory takings of foreign investment. It will explore: (a) how the decisions of international courts and tribunals have ‘fleshed out’ the principles of the law of foreign investment on, inter alia, the definition of expropriation and nationalisation and determination of the quantum of compensation; (b) how the frontiers of expropriation have been extended to cover regulatory takings


Foreign investment, expropriation, quantum of compensation, the ICSID, International Court of Justice.

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Asante, loc.cit., note 17, p.590.

PCIJ Rep., Series A, No.2, p.12.

4 RIAA 60.

USA (L.F.Neer) v United Mexican states (1926), RIAA iv.60, at 61–62, as cited in Brownlie, I. Principles of public international law (Oxford: Oxford University Press,), sixth edition, 2003, p.503.

Barcelona traction, light and power co case (Belgium v Spain), ICJ reports 1970, p.3, para 33.

Chorzow factory case (Indemnity) (Merits) Germany v Poland, PCIJ Rep. Series A.No.17, at p.29 (1928).

Chorzow factory case, ibid., pp.46–48.

Schachter, O. ‘Compensation for expropriation’, 78 AJIL (1984), pp.121– 130.

Asante, op.cit., note 17, p.595.

Case concerning Elettronica Sicula S.p.A. (ELSI) (United states v Italy), ICJ Reports, 1989, p.15, para.119.

Article 10 (3) of the Draft Convention on the International Responsibility of states for Injury to Aliens, 55 AJIL (1961), p.545.

23 ILM 1090 (1984); 4 Iran–US C.T.R. 122 (1983).

6 Iran–US C.T.R. 219 (1984).

15 Iran–US C.T.R. 189.

However, in the Limaco case (20 ILM 1 (1981), at pp.58-59) the sole arbitrator held that for nationalisation to be lawful there was no separate public purpose requirement in international law. Neither the 1803 PSNR resolution nor the 1974 CERD mention non-discrimination as a requirement. There are scholars who do not agree that to be lawful nationalizations should be non-discriminatory. See Baade, Miller and Stranger (eds.), Essays on Expropriation (1967), p.24. However, most BITs and MITs make both public purpose and non-discrimination necessary conditions for expropriation and nationalisation.

Bowett, D.W. ‘State contracts with aliens: contemporary developments on compensation for termination or breach’, BYIL (1988), pp.49–74 at 67.

Amoco International Finance Corporation v Iran (1987) 15 Iran-US CTR 189, para. 264.

Bowett, op.cit, note 130, pp.59–60.

53 ILR 389 (1977).

21 ILM 976.

See generally, Schachter, O. ‘Compensation for Expropriation’, 78 AJIL (1984), pp.121–130; Mendelson, W.H. ‘Compensation for expropriation’, 79 AJIL (1985), p.414 ff.

In the American International Group Inc. v Iran case the tribunal rejected the assertion by the claimant that in the absence of prompt, adequate and effective compensation the Iranian nationalisation was unlawful. The tribunal did agree that the claimant was entitled to compensation but not as demanded. 4 Iran-US C.T.R.

52 ILR 389 (1977), para. 87.

17 ILM (1978), p.3

Kuwait v American Independent Oil Co. case: 21 ILM 976, paras 143, 144.

8 Iran–US C.T.R. p.380.

Libyan American Oil Co. (Liamco) v Libya, 62 ILR 139 (1977).

Bowett, op.cit., note 130, p.69.

Amerasinghe, C.F. ‘Assessment of compensation for expropriated foreign property: three critical problems’ in Ronald St John Macdonald (ed.), Essays in honour of Wang Tieya (London: Martinus Nijhoff, 1994), pp.55–65 at 59.

Bowett, op.cit.note, 130, p.73.

See for an analysis of the awards made by the Iran–US Claims Tribunal up to about 1993, Amerasinghe, op.cit. note 143, pp.55–65.

http//:www.dfait-maeci.ge.ca/tna- nac/gov-en.asp; NAFTA chapter 11 arbitration tribunal, 2000–2002.

Barcelona traction, light and power co. case (Belgium v Spain), ICJ reports, 1970, p.3, para.44.

Case concerning Elettronica Sicula S.p.A. (ELSI) (United States v Italy), ICJ reports, 1989, p.15.

Interhandel case (Switzerland v United states) (Preliminary objections), ICJ reports 1959, p.6, at pp.26–30.

Case concerning Elettronica Sicula S.p.A. (ELSI) (United States v Italy), ICJ reports, 1989, p.15.

See both para.59 and 63 of the ICJ judgment.

23 ILR 306 (1956).

WT/DS44/R, Panel report adopted by the DSB on 23 July 1998.

See for a detailed examination of the principle of ‘fair and equitable treatment’, Stephen Vasciannie, ‘The fair and equitable treatment standard in international investment law and practice’, 70 BYIL (1999), pp.99–164.

ICSID Case No. ARB (AF)/97/1 of 30 August 2000; ICSID Review Foreign investment law journal, vol.16, No.1 (Spring 2001) pp.165 ff.

Ibid. para.103.

Emilio Augustin Maffezini v Kingdom of Spain (ICSID case): 124 ILR (2003).


Compania Del Desarrollo de Santa Elena S.A. v Republic of Costa Rica (2000), 39 ILM 1317 (2001), para 77. It reads as follows: ‘There is ample authority for the proposition that a property has been expropriated when the effect of the measures taken by the state has been to deprive the owner of title, possession or access to the benefit and economic use of his property’.

Lowe, op.cit., note 158, p.7.

Pope and Talbot Inc. v Government of Canada: 122 ILR 2002, 293 ff.

Pope and Talbot, ibid, para 110. When making this pronouncement the tribunal was relying on not only Article 1105 of NAFTA but also regarding the BITs concluded by the US and other industrialised states as a principal source of the obligations of states with respect to their treatment of foreign investment.

United Mexican states v Metalclad Corporation, Judicial review, Supreme Court of British Columbia, (Tysoe J.), (2 May 2001). See ICSID reports, Vol. 5 (2002). In this case Mexico challenged the arbitration award issued by the ICSID Tribunal of 30 August 2000 and the Canadian Court annulled in part the award of the ICSID Tribunal and revised the payment payable thereunder.

Joint statement on NAFTA Free Trade Commission, 31 July 2001, reproduced in John Jackson et al., Legal problems of international economic relations: cases, materials and text (St Paul, Minn.: West Group, 2002 p.1166) fourth edition.

Barry Appleton under the title ‘Investment disputes and NAFTA chapter 11’ in the ASIL proceedings, 2001, p.198.

Lowe, op.cit, note 158, p.21.

Emilio Augustin Maffezini v Kingdom of Spain (ICSID case): 124 ILR (2003).

As cited in Lowenfeld, A. International economic law (Oxford: Oxford University Press, 2003), pp.477–78.

As cited in Lowenfeld, op.cit. note 168, p.479.

42 ILM (2003), p.625 at 669.

As quoted in John H. Jackson, William J. Davey and Alan O. Sykes, Jr., Legal problems of international economic relations: cases, materials and text (St.Paul, Minn.: West Group, 2002), p.1166 fourth edition.

London Court of Arbitration, Final award in the matter of an UNCITRAL arbitration: Occidental Exploration and Production Company v The Republic of Ecuador (Case No. UN 3467) (July 1, 2004).


Asian Agricultural Products Ltd. v Republic of Sri Lanka, 30 ILM (1991), 577, paras 85–86.

Sampliner, G.H. ‘Arbitration of expropriation cases under US investment treaties - a threat to democracy or the dog that didn’t bark?’, 18 (1) ICSID Review: Foreign investment law journal (Spring 2003), pp.1-43 at 8–9.

438 US 104, 124 (1978), Sampliner, ibid.

Sampliner, ibid.


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