Quarterly Publication

Document Type : Original Article

Author

Assistant Professor, LL.B; LL.M in Private Law, LL.M in International Business Law (Shahid Beheshti University of Iran); LL.M in International Oil and Gas Law & Policy (CEPMLP, University of Dundee, UK); DPhil in Law (University of York, UK); Email: hamid.r.younesi@alumni.york.ac.uk

Abstract

The present article aims to examine the risk of host governments’ interference with the property of foreign investors (expropriation) in the petroleum industry. Host states have the police power to make regulatory changes. The “police power” is defined as the inherent and plenary power of a sovereign to make all laws necessary and proper to preserve public security, order, health, morality, and justice. It is a fundamental power essential to government, and it cannot be surrendered by the legislature or irrevocably transferred away from government. The government can interfere with the contract, change the terms, or directly take the investment. This is why international petroleum disputes and arbitration practices have addressed such risk. For this purpose, the concept of property and compensable property rights under international law are significant. Indeed, expropriation conveys a deprivation of a property owner of this property. This paper assesses the concept of expropriation, the international legal requirements for a lawful expropriation, and then analyzes the relevant international arbitral awards in petroleum jurisprudence.  

Keywords

Main Subjects

ADC Affiliate Ltd and ADC and ADC Management Ltd v. Republic of Hungary, ICSID Case No. ARB/03/16, (2 October 2006).
AGIP Company v. Popular Republic of the Congo, (1982) 21 ILM 726.
AMOCO International Finance Corp. v. Government of the Islamic Republic of Iran, Award No. 310-56-3 (14 July 1987), 15 Iran–US Claims Tribunal Reports, 189, 220.
British Petroleum v Libya, 53 (1974) ILR 297.  
Brower, Charles and Brueschke, Jason, (1998), The Iran–United States Claims Tribunal, The Hague: Martinus Nijhoff Publisher.
Brownlie, Ian, (2003), Principles of Public International Law, 6th ed., Oxford University Press.
Charter on Economic Rights and Duties of States (CERDS) UNGAR 3281 of 1974.
Dolzer, Rudolf and Schreuer, Christoph, (2008), Principles of International Investment Law, Oxford University Press.
Dugan, Christopher; Wallace, Don and Sabahi, Borzu, (2011), Investor-State Arbitration, Oxford University Press.
Ellindis, George Thomas, (1995) “Foreign Direct Investment in Developing and Newly Liberalized Nations”, 4 J. Int’l L and Prac. 299.
Government of the State of Kuwait v. American Independent Oil Co. (AMINOIL), (1982) 21 ILM, 976.
Herz, John, (1941) “Expropriation of Foreign Property”, 35 Am. J. Int’l L. 243.
Hoffmann, Anne, (2008) “Indirect Expropriation” in Reinisch, August (ed.), Standards of Investment Protection, Oxford University Press.
Ingram, George (1974), Expropriation of US Property in South America: Nationalization of Oil and Copper Companies in Peru, Bolivia, and Chile, New York: Praeger Publishers.
Khalil, Mohamed (1992) “Treatment of Foreign Investment in Bilateral Investment Treaties”, 7 ICISD Rev. FILJ 339.
Liberian Eastern Timber Corporation (LETCO) v. the Republic of Liberia, ICSID Case No. ARB/83/2 (1986).
Libyan American Oil Company (LIAMCO) v. Government of the Libyan Arab Republic, (1981) 20 ILM 1.
Macpherson Crawford, (1978) “The Meaning of Property”, in Macpherson, Crawford (ed.), Property: Main Stream and Critical Positions, Oxford: Basil Blackwell.
Mewett, Alan, (1959) “The Theory of Government Contracts”, 5 McGill L. J. 222.
Mobil Oil Iran, Inc. v. Iran, Award No. 311-74/76/81/150-3 (14 July 1987), 16 Iran–US Claims Tribunal Reports 3.
Muchlinski, Peter (1995), Multinational Enterprises and the law, Oxford, Cambridge, Blackwell.
Phillips Petroleum Co. Iran v. Iran, Award No. 425-39-2, (1989) 21 Iran–US Claims Tribunal Reports 79.
Pope and Talbot, Inc. v. Government of Canada, Interim Award, (26 June 2000).
Rubins, Noah and Kinsella, Thomas, (2005), International Investment, Political Risk and Dispute Resolution: A Practitioner’s Guide, Oceana Publications.
Sedco Inc. v. National Iranian Oil Company (Sedco v. Iran), (1987) 9 Iran–US Claims Tribunal Reports, 284.
Sedle-Hohenveldern, Ignaz, (1999), International Economic Law, The Hague, London, Kluwer Law International.
Shaw, Malcom, (2003), International Law, 5th ed., Cambridge.
Sornarajah, Muthucumaraswamy, (1986), The Pursuit of Nationalized Property, Kluwer Academic Publishers.
Texaco Overseas Petroleum Co. And California Asiatic Oil Co. v. The Government of the Libyan Arab Republic (TOPCO), (1977) 53 ILR. 389.
The Factory at Chorzow (Germany v. Poland), 1928 PCIJ (ser. A) N0.17, 47.) 1928.
The United Nations General Assembly Resolution (UNGAR) 1803 (XVII) of 14 December 1962, Permanent Sovereignty Over Natural Resources.  
United Nations Conference on Trade and Development (UNCTAD) (2000), Taking of Property, (United Nations, New York, and Geneva.
Van Hecke, George, (1951) “Confiscation, Expropriation and the Conflict of Laws”, 4 International Law Quarterly, 545.
Van Houtte, Hans, (2002), The Law of International Trade, 2nd ed., London, Sweet and Maxwell.
Vienna Convention on the Law of the Treaties, (1969).
Waelde, Thomas and Kolo, Abba, (2001) “Environmental Regulation, Investment Protection and “Regulatory taking” in International Law”, 50 ICLQ 811.
Wallace, Cynthia, (2002), The Multinational Enterprise and legal Control: Host State Sovereignty in an Era of Economic Globalization, The Hague, London, New York, 2nd ed., Martinus Nijhoff Publishers.