Law Studies
Hamid Reza Younesi
Abstract
The present article aims to argue indirect expropriation in international petroleum agreements and analyze the response of international arbitrations. In particular, international arbitral awards by the Iran–US claims tribunal, the Yukos case as an energy charter treaty arbitration, and certain ...
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The present article aims to argue indirect expropriation in international petroleum agreements and analyze the response of international arbitrations. In particular, international arbitral awards by the Iran–US claims tribunal, the Yukos case as an energy charter treaty arbitration, and certain North American Free Trade Agreement cases have been examined. The recent trend shows that taking foreign investors’ property may occur not only through legislation or nationalization but also by indirect methods that can have the same effect as direct expropriation. Indirect expropriation does not necessarily require the transfer of legal title from the international oil company to the host state. Hence, it is difficult to distinguish between legitimate regulation and measures that are tantamount to expropriation with the payment of compensation. Identifying an indirect expropriation is complex and depends upon the examination of the legitimate expectations of the investor concerning the enjoyment of its investment. Host governments may employ different methods to achieve what amounts to direct taking, but without acknowledging it as such, to avoid legal consequences of expropriation and then payment of compensation
Law Studies
Hamid Reza Younesi
Abstract
The present article aims to examine the risk of host governments’ interference with the property of foreign investors (expropriation) in the petroleum industry. Host states have the police power to make regulatory changes. The “police power” is defined as the inherent and plenary power ...
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The present article aims to examine the risk of host governments’ interference with the property of foreign investors (expropriation) in the petroleum industry. Host states have the police power to make regulatory changes. The “police power” is defined as the inherent and plenary power of a sovereign to make all laws necessary and proper to preserve public security, order, health, morality, and justice. It is a fundamental power essential to government, and it cannot be surrendered by the legislature or irrevocably transferred away from government. The government can interfere with the contract, change the terms, or directly take the investment. This is why international petroleum disputes and arbitration practices have addressed such risk. For this purpose, the concept of property and compensable property rights under international law are significant. Indeed, expropriation conveys a deprivation of a property owner of this property. This paper assesses the concept of expropriation, the international legal requirements for a lawful expropriation, and then analyzes the relevant international arbitral awards in petroleum jurisprudence.
