Indirect Expropriation Research On International Investment

Expropriation issue has been a controversial topic on international investment. Any country performing economic liberalization excessively will have consequent damage to social values. For the reason of national environmental protection, labor rights, public health and other public interest, host government takes different kinds of economic management measures which will lead to indirect expropriation problems. For a long time, international bilateral or multilateral agreements and the tribunal have not make a clear definition of indirect expropriation and there are still difficulties for identified in practice. With economic development of China, foreign investment is gradually increasing. Chinese enterprises for foreign investment are also facing the risk of indirect expropriation, while China is also facing the claim of indirect expropriation. Therefore, study the issues of indirect expropriation is significant.The first part is "general theory of indirect expropriation". Expropriation is evolved from indirect expropriation and the focus of controversy has evolved into how to identify indirect expropriation. International law and bilateral agreements for indirect expropriation has not clearly defined, but the descriptive ones.The second part is "Form of indirect expropriation." This section summarizes the several types of indirect expropriation which help us better define indirect expropriation. Specifically, forms include host government’s intervention of property, government changes permission, government administration behavior in order to disrupt investment and localization.The third part is “controversy of indirect expropriation identified." After knowing the concepts and forms of indirect expropriation, we can better understand indirect expropriation. First of all, we need to distinguish between indirect expropriation and government behavior. Method of "the purpose test" should be used. We should consider the government purpose of the method after considering the impact of indirect expropriation to investors. Second, we must distinguish between legitimate indirect expropriation and the illegal ones.The fourth part is "the principle of proportionality in indirect expropriation." In this section, we further discuss the indirect expropriation identified using the principle of proportionality to avoid similar cases but different judgment.The fifth part is "indirect expropriation in Chinese Law." We describe Chinese legislative provisions on expropriation, such as the PRC Constitution; then explain the indirect expropriation in provisions of bilateral investment and how to improve them.