On The Indirect Expropriation Insurance Of American Overseas Investment

Expropriation is quite a big one political risk investors face in the overseas investment. China has for two consecutive years to become one of the three largest foreign investor in the world, with the rapid development of overseas investment, the investor risk that investors and enterprises who go out of the country suffer from are more and more serious. A typical case is the 2008 Ping An-Fortis deal, where Ping An suffered a loss of ￥22.8 billion yuan in the acquisition of Fortis. In this regard, the United States has a successful approach, and US’s overseas investment insurance agency, OPIC, is experienced in the compensation for expropriation risk. It is necessary for us to make a systematical analysis and research of US’s indirect expropriation insurance, especially study about expropriation insurance’s conception, insurance coverage, and the evolution and determination of indirect expropriation insurance. Upon learning US’s experience, the article aims at offering some concrete suggestions in view of Chinese present situation.This essay consists of three parts. The first part is mainly about the theoretical analysis about the indirect insurance that OPIC insure, which consists of the concept and the coverage of the expropriation insurance. What’s more, with typical cases, this part introduces 8 kinds of conditions that shall not be regarded as an expropriation behavior in American regulations. And this part also analyzes the legitimacy and evolution of indirect expropriation. With the introduction of two cases, Global Forest Management Company claims, Mid-America Energy Holding Company claims, the second part is mainly about the empirical analysis about the composition of the expropriation insurance that OPIC insured. Based on these two cases, this essay analyzes the identification standard of the indirect expropriation, the factors should be considered in the process of expropriation, and the theory about how the OPIC determine of losses of the insured. The third part is about the enlightenment of the empirical analysis of the expropriation that America insured. Based on the investment and trade agreements China has signed, this essay comes to the conclusion that the investment and trade treaties signed with other countries in our country, in addition to the treaties signed with India, New Zealand, and Peru, haven’t clarified the definition and the identification standard of the indirect expropriation. So, the view of this essay is that we can make efforts as follows. Firstly, we have to clarify the definition and the identification standard of the indirect expropriation in the investment and trade treaties. Secondly, we have to add the exception clause of the national management power. Finally, it’s necessary for the contract to provide clear provisions of determining the insured losses. The author hopes that the suggestions proposed in this essay can make a contribution to our country to implement the strategy of "going out".