Taking in international law

Description

This monograph is based on the SJD dissertation of the author. The primary goal of the work is to examine the requirements of lawful taking of foreign property in international law. Furthermore, it tries to prove that there are three1 requirements of such taking, that is to say, taking should be for public purpose, non-discriminatory and appropriate compensation should be provided. To prove this, international jurisprudence, related academic literature, and international case law is analyzed. Taking of foreign property is one of the so-called non-commercial risks foreign investors have to face abroad.2 There might be other noncommercial risks as well, like that of currency inconvertibility, repatriation limitation, currency devaluation, political violence (which includes war, terrorism and revolution), and deterioration in investment environment.3 However, the risk of taking property constitutes the greatest risk for a foreign investor.4 This does not need much explanation: when the investment is taken it is not possible to operate it any more. Thus, for many investors the issue of decreasing the risk of taking their investment is a crucial one. With good investment protection systems (e.g., investment protection treaties, investment insurance) the risk of taking cannot be avoided entirely - but, the loss to the investor can be minimized. However, many times, even a good investment protection system can only mitigate the loss. The reason is that even if there is compensation paid for the property taken, usually it does not gratify foreign investors. For example, they will not be compensated for (as appropriate or full compensation usually does not include)5 the expected future profits, or for the business idea and know-how of where (it can be geographic place or an economic branch) and how to look for good profit. Transferred technology and transferred know-how can also constitute a considerable value, for what there is usually no compensation paid. Therefore, the risk factor is many times present for the investors. In addition, many investments require high initial expenditure. This means that in the case of indirect expropriation, it is very expensive to withdraw from the host state quickly if the investment environment becomes hostile. Therefore, investors usually look for investment opportunities with low risk of taking. Such law risk of taking exists in countries with long tradition of stable political and economic system.