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International and foreign Investment Law Part III Expropriation

International and foreign Investment Law Part III Expropriation. Azar Aliyev LL.M. (University of Heidelberg). Overview. Expropriation as a legal term Legality of expropriation Direct and indirect expropriation Compensation. I. Expropriation as a legal term.

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International and foreign Investment Law Part III Expropriation

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  1. International and foreign Investment LawPart IIIExpropriation Azar Aliyev LL.M. (University of Heidelberg)

  2. Overview • Expropriation as a legal term • Legality of expropriation • Direct and indirect expropriation • Compensation

  3. I. Expropriation as a legal term • Protection of aliens’ property rights • Chozrowfactrory (PCIJ) • Norwegian Shipowners (PCIJ) • Expropriation, nationalization, confiscation, taking of property • Taking of property in national law and international law

  4. II.Definition of Expropriation • Article 13 (1) ECT • Right to expropriate (rare exceptions: Kazakh law on foreign investment 1992) • “Hull formula” and “Calvo doctrine” • Wording of the expropriation clauses (ECT, CIS-Treaty)

  5. III.Actors, Objects • Who can expropriate • State • State can be held responsible for actions of third parties (Draft Articles on State responsibility) • What can be expropriated • Expropriation of property • Expropriation of rights • Expropriation of contracts

  6. IV.Form • Form of expropriation • Acts • Omissions (Olguin v. Paraguay)

  7. V.LegalityofExpropriation Legal expropriation • for a purpose which is in the public interest; • not discriminatory; • carried out under due process of law; and • accompanied by the payment of prompt, adequate and effective compensation. Difference to the ‘illegal’ expropriation (AMD v. Hungary)

  8. VII.Indirect Expropriation • Indirect Expropriation • Direct and indirect expropriation • Doctrine of ‘sole effect’Intentionof the State? (Siemens v. Argentina, Rumeli v. Kazakhastan) • Benefit of the State (Rumeli v. Kazakhastan)

  9. VII.Indirect Expropriation Regulatory measures and indirect expropriation (Feldman v. Mexico, Generation Ukraine v. Ukraine) • Intensity of interference with investors rights • Frustration of legitimate expectation (Metalclad v. Mexico) • Disproportion of measures • Non-transpareny, arbitrariness, discrimination (Rumeli v. Kazakhstan) • New Treaty wording (US Model-BIT)

  10. VII. Indirect Expropriation • Typical forms of indirect expropriation • Tax increase (Occidental exploration v. Equador) • Revocation of licenses and permits (ecological measures) (s. below) • Interference with management (Rumeliv. Kazakhatan) • Breach of contractual obligations

  11. Sakhalin Sachalin II Projekt: 1994 Establishment ofSakhalinEnergy, Proiduction Sharing Agreement Production: Offshore oiland gas Problem: protectedforests, erosion, floraund fauna. Stakeholders: till2006 Mitsui, Royal Dutch Shell undMitsubishi. Since2006 Gazprom 50% +1, Mitsui 12,5%, Royal Dutch Shell 27,5% undMitsubishi 10%. Disptute: 18.9.2006 revocationoftheecologicallisence 19.04.2007 newstakeholderstructure Project isgoing on with minimal cha.

  12. I. Investment • Compensation • Hull formula • Prompt • Adequate • Effective • Calvo doctrine

  13. Thank you very much!

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