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3 Global Bus. L. Rev. 189 (2012-2013)
Defining the Scope of Indirect Expropriation for International Investments

handle is hein.journals/glbure3 and id is 197 raw text is: DEFINING THE SCOPE OF INDIRECT EXPROPRIATION FOR INTERNATIONAL INVESTMENTS PETER D. ISAKOFFt ABSTRACT 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 PMAsia arbitration. I. INTRODUCTION ................................... ......... 189 II. DIRECT AND INDIRECT EXPROPRIATION: A GENERAL BACKGROUND ............................................ 191 A. Direct Expropriation...............................191 B. State Police Powers................ ................192 C. Indirect Expropriation..............................193 1. Measures Tantamount to Expropriation ................193 2. Regulatory Takings....... .........................194 3. Creeping Expropriation......................195 III. THE AMBIGUITY OF CURRENT STANDARDS FOR INDIRECT EXPROPRIATION................................196 A. Arbitral Standards for Determining Indirect Expropriation..............................197 1. Effect on the Investor ....................... ....... 197 2. Purpose of the State Action.................................. 199 B. Alternatives to Indirect Expropriation................... 200 1. An End to Indirect Expropriation .................... 200 2. Fair and Equitable Treatment ............................... 201 t Duke University School of Law, J.D. 2012; University of Virginia, B.A. 2009. Licensed to practice law in North Carolina. I would like to thank Professor Julie Maupin for teaching a class at Duke Law that sparked my interest in this fascinating topic. I am also grateful to Leslie Loyd for her day-to-day encouragement. My deepest gratitude, as always, goes to my parents, Susan and Louis, and my sister, Jennie, for their support in all of my endeavors. 189

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