L’expropriation indirecte

This report by the International Institute for Sustainable Development (IISD) examines the legal complexities of 'indirect expropriation' in international investment law. It analyzes how the lack of a precise definition in treaties allows arbitral tribunals to apply varying criteria—such as the 'sole effect doctrine' or proportionality—which can conflict with a state's sovereign right to regulate for the public interest, including health, environment, and human rights.

• Indirect expropriation occurs when a state measure causes severe prejudice to a foreign private investment, even if the investor formally retains the title of property.
• Most investment treaties do not explicitly define indirect expropriation, leading to inconsistent interpretations by arbitral tribunals. While some treaties use terms like 'measures equivalent to expropriation' or 'measures having a similar effect', these are often viewed by tribunals as functionally equivalent.
• The 'sole effect doctrine' (or 'ligne Tippets-Biloune-Metalclad') posits that the economic impact on the investor is the primary or only factor in determining expropriation, regardless of the state's intent or the public interest served.
• To qualify as indirect expropriation under the effect-based approach, the prejudice must be 'substantial', 'severe', or 'grave', and the deprivation must be 'persistent' or 'permanent' rather than ephemeral.
• The proportionality criterion seeks a balance between public interest and private interest, requiring that a measure be the least damaging option available to achieve a legitimate public goal.
• The 'police powers' doctrine suggests that non-discriminatory regulations adopted in good faith for the general welfare (e.g., public health, environment) are not compensable indirect expropriations, regardless of their economic effect.
• Recent treaty models from Canada (2004), the US (2004), COMESA (2007), and ASEAN (2009) attempt to protect the state's right to regulate by introducing specific exclusions or explanatory annexes that guide tribunals on factors like economic effect and the character of the measure.
• The 'appropriation' criterion, though marginal in jurisprudence, argues that indirect expropriation should only be recognized if the state derives an economic benefit from the prejudice caused to the investor.
• The report recommends that states renegotiate treaties to include more explicit definitions of 'police powers' and a hierarchy of criteria to ensure a better balance between investor protection and the state's ability to protect the public interest.

APA

Nikièma, S. H. (2012). L’expropriation indirecte. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/best_practice_indirect_expropriation_fr.pdf

Chicago

Nikièma, Suzy H. L’expropriation indirecte. International Institute for Sustainable Development, 2012. https://www.iisd.org/system/files/publications/best_practice_indirect_expropriation_fr.pdf.

Wikipedia

{{cite report |last1=Nikièma |first1=Suzy H. |title=L’expropriation indirecte |publisher=International Institute for Sustainable Development |date=March 2012 |url=https://www.iisd.org/system/files/publications/best_practice_indirect_expropriation_fr.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nikima2012lexpropriation, author = {Nikièma, Suzy H.}, title = {{L’expropriation indirecte}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = mar, url = {https://www.iisd.org/system/files/publications/best_practice_indirect_expropriation_fr.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }