Changing Trajectories of Investment Protection In India: An Analysis of Compensation for Expropriation

Abstract

The standard of compensation for expropriation of alien property continues to remain one of the most contentious issues in international law. Despite persistent objection from the developing countries, the Hull formula and its variants have become an integral part of international investment jurisprudence. This paper examines the global discourse on the continuing relevance and the resurgence of the Hull standard in investment law and practice, with specific emphasis on the evolving Indian practice. The author views that the international processes have overwhelmingly favored the Hull standard and paid lip service to ‘appropriate’' standard, relegating the discourse to a remnant of a bygone era. The author urges that the contemporary relevance of ‘appropriate’ compensation is not at all lost, and the development of an international consensus should be the way-forward, rather than leaving the matter at the mercy of bilateral engagements dictated by the power imbalance or at the pleasure of the arbitration tribunals’ interpretations, whose legitimacy is already suspect. Reviving the debate for seeking a universal standard is a crucial option available to the new Third World - Africa and other less developed countries.