When regulation is expropriation

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http://urn.fi/URN:NBN:fi:hulib-201910153636
Title: When regulation is expropriation
Author: Santikko, Jenny
Contributor: University of Helsinki, Faculty of Law
Publisher: Helsingin yliopisto
Date: 2019
Language: eng
URI: http://urn.fi/URN:NBN:fi:hulib-201910153636
http://hdl.handle.net/10138/306100
Thesis level: master's thesis
Discipline: Kansainvälinen oikeus
International law
Folkrätt
Abstract: This thesis aims to answer the question of when regulatory measures taken with regard to environmental concerns amount to expropriation. International investment treaties provide protection against both direct and indirect expropriation and initially cover also indirect takings caused by regulatory measures. Two opposite doctrines, the sole effects doctrine and the police powers doctrine, have evolved to answer the very question of when regulatory measures amount to expropriation. In this thesis I will execute a doctrinal study in order to argue that while the police powers doctrine might be more politically legitimate, it does not find sufficient legal support from the sources of international law, and therefore, the sole effects doctrine finding firm legal support from the investment treaties should prevail. The sole effects doctrine determines the existence of regulatory expropriation by examining the effect that the regulatory measure has on the investment. This doctrine finds its legal support from the investment treaties. It is supported by the wordings and terms used in the expropriation clauses. When interpreting the investment treaties according to the rules of treaty interpretation laid down in the Article 31 of the Vienna Convention on Law of Treaties, it is rather evident that the sole effects doctrine should prevail. The police powers doctrine on the other hand states that measures falling into the police powers of the state fall out of the scope of indirect expropriation. According to the police powers doctrine non-discriminatory regulatory measures that are taken in the public interest and enacted with due process shall not be deemed expropriatory and compensable. The police powers doctrine does not find any support from the investment treaties and the expropriation clauses initially cover general regulatory measures. Thus the police powers doctrine relies on its alleged support from the customary international law. In order to determine if the police powers doctrine is legally sustainable, I will first analyse the rulings of the investment tribunals, and observe how the tribunals have answered the question of regulatory expropriation. In the case law analysis, I will conclude that tribunals tend to determine indirect expropriation by referring to the effect of the measure. Correspondingly, the initial examination of the existence of an indirect expropriation is executed by examining the effect that the government measure has on the investment. As to the question of the weight given to the public interest concerns, no unified opinion is to be found. Some of the tribunals do endorse the police powers doctrine but no unified practice seems to exist also on this regard. The placement and way of endorsement of the police powers doctrine in the practice suggest that the police powers doctrine is a possible exception doctrine. The treaty clauses regarding expropriation do not include exceptions of any kind, and therefore, in order to support the police powers doctrine this exception needs to be found from the customary international law. Since a profound examination of the existence of a customary international law norm would require extensive research, in this thesis will concentrate on pointing out factors that indicate that such norm odes not exists. After concluding that the police powers doctrine does not find sufficient legal support from the investment treaties or from the customary international law, I will discuss the argument that the police powers doctrine often uses to justify itself and that is the need for balancing the interests. I will also discuss shortly about the transplantation of the proportionality analysis into the investment treaty sphere and conclude that neither of these gives support to the endorsement of the police powers doctrine. At the end of the thesis I can conclude that since the police powers doctrine does not find sufficient legal support, the sole effects doctrine should prevail.


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