Indirect Expropriation in International Investment Law, between States Regulatory Powers and Investors Protection

Today, indirect expropriation, as opposed to direct expropriation, represents the most serious and recurrent type of interference with foreign investors' rights; yet, its definition is still characterised by great uncertainty and ambiguity, and remains one of the “hot topics” for investment treaty arbitration and scholarly debate. The difficulty of this topic rests with finding the right balance between the regulatory powers of host States and the adequate protection of investors and their investments. The current work zooms into the intricate issue of distinguishing between compensable indirect expropriation versus non-compensable general regulation by the State and develops a new perspective for the interpretation and application of investment law provisions on indirect expropriation. This new perspective identifies clear cut interpretative tools to detect cases of indirect expropriation, relying on the effects of the State measure; and assures a fair balance between the interests of the foreign investor and the conflicting public interests of the State in the application of investment law provisions and in particular in the assessment of compensation for indirect expropriation.