Research On Indirect Expropriation Of International Investment

Expropriation has always been the most controversial issue in International investment area. Since 1980s, International investment has changed from traditional investment legal protection to investment liberalization. However, any country that implement economic liberalization excessively, would damage social value itself. In order to protect environment, public health, labour rights and so on, host governments took sorts of social government measures, and then indirect expropriation emerged. It should be noticed that indirect expropriation often emerged in developing country in the past, however, because of social management measures, indirect expropriation come into being in more developed country nowadays. To developed country, indirect expropriation changed from weapon to fighting with developing country, to double edged sword that may hurt itself. Through how indirect expropriation emerged and its conception, the author of this article introduced theoretical foundation, Criterion of Ascertaining and compensation, then analyzed shortcomings of indirect expropriation in China, and finally made some suggestions to it.There are four parts of this article. In the first part the author introduced indirect expropriation in international investment. About how indirect expropriation emerged, the author considered that accompanied universalization of the market economic reform and global economic integration and liberalization, developing country changed its ecnomical management style, then indirect expropriation emerged. The author researched conception of indirect expropriation, because of its particularity, normally international treaty and domestic law would not definite it with concept nature, but in description nature. This manner brought out indeterminacy of indirect expropriation. Then the author analyzed its origin through economical, political, environmental and energy aspects, finally discussed its substance and specific types.In the second part, the author introduced theoretical foundation of indirect expropriation through perspective of national economic sovereignty and national public interests. National economic sovereignty reflects national sovereignty in economic field, which is the first important theoretical foundation that host country would expropriate investors' property. National sovereignty is sacred and inviolable, also in economic field, national economic sovereignty is in the first level. National public interests is related to people's livelihood in a country, so government should intervene investors' interests in order to protect economic foundation, energy, health and environment of that country.In the third part, the author introduced four implementing conditions of indirect expropriation: in order to protect public interests, rule of non-discrimination, according to due legal process and relative provisions, give compensation.The author discussed recognized standards of indirect expropriation. There are three standards: pure effect standard, aim standard, and standard that consider both effect and aim. Pure effect standard is decided by influences that be produced by management measures which host government adopt to govern foreign investments and investors. Aim standard is decided by host governments' purposes. The standard which consider both effect and aim, not only consider behavioral effect, but also behavioral purpose and nature.About the fifth part, the author first elaborated standards of traditional expropriation compensation: "full, timely, effective" compensation standard, "no compensation" standard, and "due compensation" standard. Then the author brought out new compensation standard of indirect expropriation, which should first distinct legal indirect expropriation and illegal indirect expropriation, then adopt different compensation standard.In the last part, the author discussed indirect expropriation system in China. The author first analyzed main points and legal rules in China. Finally the author introduced the drawback of indirect expropriation in China, and then put forward suggestions to complete it.