8 Expropriation and its Relationship With Good Faith

Subject(s):

Expropriation — Good faith — Compensation — Due process

This chapter examines the use of good faith to determine whether an expropriation is legal or illegal. It first traces the origins of protection against expropriation that guarantees investments as stipulated in international investment agreements before discussing a state’s sovereign right with respect to expropriation. It then explains the language of some expropriation provisions that either directly or indirectly reference the principle of good faith, along with the emphasis on due process in assessing the legality of an expropriation. It also considers the requirements to negotiate compensation in good faith and reviews a number of cases where the tribunal interacted with the principle of good faith in taking the decision on expropriation. The chapter goes on to describe exceptions to expropriation and concludes with an analysis of the benefits of the interplay between expropriation and good faith.