Indirect Expropriation And Its Effect On State Regulatory Power: In Light Of Ethiopia Bits

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.