At present, arbitral tribunals have applied a variety of standards to ascertain when indirect expropriation occurs. This article examines the complexities and ambiguities of current indirect expropriation standards and argues that a clear, uniform standard is needed to identify indirect expropriation. Ultimately, this article proposes that arbitral tribunals should only find that indirect expropriation occurs when (i) a state takes actions that substantially deprive the foreign investor of the profitability of its investment, and (ii) the state action was not reasonably predictable to the investor. Part I of this article provides a summary of the current state of expropriation doctrine. Part II exposes the ambiguities of current indirect expropriation standards and outlines several potential solutions that scholars have proposed. Part III offers a succinct, two part standard for identifying compensable indirect expropriation claims. Part IV applies this proposed standard to the recent PM Asia arbitration.
Peter D. Isakoff,
Defining the Scope of Indirect Expropriation for International Investments ,
3 Global Bus. L. Rev.
available at https://engagedscholarship.csuohio.edu/gblr/vol3/iss2/4