Abstract
This study examines the full compensation standard for lawful and unlawful indirect expropriation from Third World Approaches to International Law (TWAIL) pespective. Its purpose is to evaluate the compatibility of the international law standard of compensation for expropriated alien investments with the development aspirations of Third World countries. The main question for the thesis is to what extent and in which way the compensation standard impedes the realisation of the right to development of Third World countries. The compensation standard is therefore evaluated in light of four select development concerns that have been the subject of investment arbitration. The thesis uses imperialism as a lens for analysing the central question. Using Bhupinder Singh Chimni’s description of imperialism as entailing the prioritisation of financial interests of foreign investors over public interests, this thesis asssesses more specifically in chapter 6 the extent to which development concerns (right to water, right to health, right to a clean environment and the right to exercise permanent sovereignty over natural resources) of Third World countries are taken into account to assess the amount of compensation that is awarded a foreign investor for expropriation of its investment. It concludes that indeed the compensation standard for indirect expropriation is in most of the times applied in a manner that is insensitive to the delicate public interests of Third World countries. However, indirect expropriation is often construed narrowly in cases involving the right to water and public health so that states’ regulatory measures in these areas are not compensable. To fully contextualise the analysis, the thesis analyses the doctrinal origins of the doctrine of indirect expropriation from a TWAIL perspective. Then it conceptualises the doctrine and explains the requirement for a lawful expropriation including the compensation requirement for lawful and inlawful expropriation. Precisely, it discusses the public interest, non-discrimination, due process of law and, importantly, the compensation requirement using the sources of international law that are stipulated in Article 38(1) of the Statute of the International Court of Justice (ICJ). It notes that fair market value is required for lawful expropriation whereas fair market value plus consequential damages are required for unlawful expropriation.
Given the finding that the compensation requirement of expropriation to a certain extent carries with it the elements of imperialism, the thesis concludes by recommending the use of the concept of global justice, which is centred on human rights, to provide alternative ways of mitigating the imperial nature of the compensation requirement.