Remedies Of Expropriation In Investor-state Arbitration

The international study of modern reparation for expropriation begins with the Chorzow factory case and the Draft articles on Responsibility of States for Internationally Wrongful Acts published by the PCIJ.Since the Mexican government took the US real estate and oil facilities in 1938,instead of regarding the taking as an internationally wrongful act,the tribunal draw a line between lawfulness and unlawfulness of expropriation,and then discussions began about the different compensation standards for the different kind of expropriations.With the advance of the tide of globalization,the western countries have gradually established the compensation standard based on the "Hull formula" for the lawful expropriation,and the calculation of the compensation amount has gradually entered the view of the public from the previously neglected corner.At present,despite the fact that the vast majority of bilateral investment agreements(hereinafter as BITs)and free trade agreements(hereinafter as FTAs)currently signed have made specific provisions on the compensation standards,and the settlement of international investment disputes is mostly based on these provisions,those provisions of BITs and FTAs are often too principled,which would make the arbitral tribunal in the settlement of investment disputes enjoy a lot of discretion.Hence,it is difficult to make accurate prediction about the exact amount of compensation.In addition,there is no international investment agreements between certain countries,leading to the fact that disputes between these countries require settlements based on customary international law.Besides,there are few academic researches focusing on restitution as a way of reparation for unlawful expropriation,because those awards ruling restitutions are barely enforced in the host states.It is agreed that enforcing the awards that revoking a domestic decreed or regulation concerns the theory of dualism of domestic and international law.Nevertheless,it is of theoretical and practical significance to study the restitution as an indispensable part of reparation for expropriation.Taking into account the role of China in international investments in recent years and the development and changes of the theory of reparation for expropriation,an in-depth study on it with the help of international investment arbitration practice will do good for China's future BITs and her performance in arbitration practice.This paper consists of four parts.In the first part,the author summarizes the origin of expropriation at the beginning and next introduces the two forms of reparation with respect to expropriation.To be more persuasive,the author refers to provisions of the Draft articles on Responsibility of States for Internationally Wrongful Acts to clarify the history of the gap between lawful and unlawful expropriation,and then briefly introduces the theoretical basis of compensation and constitution.In the following the author presents the calculation formula of the two.In the second part,the author intends to make an in-depth study on compensation as a way of reparation.First of all,the author sets out the two criteria for compensation,namely,fair market value and actual investment cost standards.For fair market value standard,the author,after briefing plenty of relevant arbitration cases,explains three specific valuation methods,and clarify the importance of the valuation date.For the actual investment cost standard,examples are given that the arbitral tribunal tends to apply the standard in the first place.Next,the author introduces some supplemental compensation in the practice and explains the possibility of the acceptance by the arbitral tribunal of a similar claim proposed.At the end of this part,the author puts forward some cases that may lead to the reduction of compensation,with the support of several relevant arbitral cases.In the third part,the author focuses on restitution as a way of reparation,introducing the two main forms of restitution,namely,the material restitution and judicial restitution.Also,the author addresses some cases to elaborate these two forms as well as explains the restrictions a tribunal faces when awarding restitution.Through this part,the author intends to show the fact that despite restitution has been far less favorable in modern investment practice than the 19th century,the arbitral tribunal is prone to make a similar decision in the light of the specific circumstances.Hence,containing a variety of ways,constitution can be resorted to as a modern way of reparation.In the last part of this paper,the author,referring to some model BITs and international arbitral practice,analyzes the current status of China's investment agreements and puts forward some suggestions for China's BIT negotiation.In addition,the author hopes that investors will be able to recognize the importance of the arbitration precedents,and suggests that the study of the arbitral tribunal's ruling tendencies will grant China a better performance in international arbitrations related to expropriation.