Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest
AbstractInternational investment agreements allow investors to bring compensation claims when their investments are hurt by new regulations. This requirement that host governments compensate for indirect expropriation helps solve post-investment moral hazard problems such as hold-ups, thereby helping to prevent inefficient over-regulation and encouraging foreign investment. However, when the social or environmental harm of a project is uncertain pre-investment, compensation requirements can interact with National Treatment clauses in a manner that reduces host government welfare and makes them less likely to admit investment. A police powers carve-out from the definition of compensable expropriation can be Pareto-improving and increase foreign investment.
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Bibliographic InfoArticle provided by De Gruyter in its journal Journal of Globalization and Development.
Volume (Year): 1 (2010)
Issue (Month): 2 (December)
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Other versions of this item:
- Emma Aisbett & Larry Karp & Carol McAusland, 2010. "Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest," CEPR Discussion Papers 648, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- K3 - Law and Economics - - Other Substantive Areas of Law
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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