Abstract:
International investment law is failing to strike a balance between the principles that are
made in use to protect and promote foreign investment, on one hand and the principles that
gives the regulatory power to the host State on the other hand. In dealing with indirect
expropriation past tribunals relied in different approaches and adopted mutually inconsistent
positions. The practical implication of this challenge is that it is difficult to draw a dividing
line between non compensable and compensable regulatory taking. By demonstrating this
incoherence, this thesis reviews and analyze the effect of indirect expropriation protection
provisions on regulatory discretion of the State in Ethiopia BITs, mainly in light of model
BITs and the jurisprudence of arbitral tribunals. This study fully employed doctrinal type and
the reviewed Ethiopia BITs were selected and analyzed by using their representativeness. The
finding of the thesis is that the Ethiopia BITs were based upon the traditional approach which
only seeks to promote and protect the interest of foreign investor and it failed to explicitly
articulate the scope of indirect expropriation in order to give meaning for State regulatory
space. It also recommends that, in order to safeguard State right to regulate, the preambles
and indirect expropriation provisions of the BITs should be reconsidered. For this to happen,
a resort to renegotiation of the agreement would be a solution for the problem encountered.
