Part I The Concept of Expropriation, 2 Applicable Law

Subject(s):

Expropriation — Investor — ECT (Energy Charter Treaty) — NAFTA (North American Free Trade Agreement) — Host state law — Compensation — UNCITRAL Arbitration Rules

This chapter considers the laws that are applicable to expropriation in investment treaty arbitration, including international law. It begins with a discussion of the local law of the host State on expropriation, which offers constitutional protections with regard to property rights, the circumstances in which expropriation is permissible and the payment of compensation. It then examines the role of international law in bilateral investment treaties (BITs) ad other international treaties such as NAFTA and ECT, along with the ICSID Convention that includes a mechanism allowing the arbitral tribunal to decide which law will apply to an investment dispute. It also explains how investment treaty arbitration is initiated under a combination of treaties as well as the option available to foreign investors to institute ad hoc UNCITRAL arbitration. The chapter cites a number of relevant international cases that illustrate which law should apply to expropriation in investment treaty arbitration.