Analysis of the applicable principles in studying indirect expropriation in the El Paso arbitration award

Indirect expropriation has been studied in numerous arbitration awards regarding foreign investor’s claims against host states. By studying these claims, especially claims which have been awarded recently, one can extract two principles. The first principle is that some general regulations can amount to indirect expropriation, meaning that as a general principle general regulations do not amount to indirect expropriation except if they are enacted in an unreasonable manner. The second principle which the tribunals applied is that the necessary requirement for expropriation is neutralization of use of investment, meaning that at least one of the essential components of the property rights must have disappeared and a mere loss in value of the investment, even though important, is not an indirect expropriation. The said principles which are indeed explanation of the requirements for indirect expropriation, in studying the indirect expropriation claims are an innovation in their kind. The purpose of the present article is to assess the said principles.