Environmental Expropriation in Foreign Investment Arbitration Practice

There seem to be conflict of interests between protecting environment and supporting foreign investment. On one hand, expropriation is mentioned in investment agreements and arbitration practice. On the other hand, host states emphasize on states sovereignty and expropriate foreign investor by claiming environmental and natural resources protection. To solve the conflicts between foreign investment law and international environmental law, some international agreements, instruments and awards mentioned the priority of environmental protection. Foreign investment arbitration practice has a considerable approach in this regard. Arbitral tribunals assessed the claim of environmental risk as a cause of legitimate expropriation. Since compensation is a result of legitimate expropriation, arbitral tribunals mentioned it in their awards. In some cases, according to international practice or findings of the tribunal, as occurrence of environmental risks seems to be serious, the tribunal assessed the host state approach as a legal act and the compensation is excluded.