Developments in Indirect Expropriation Case Law in ICSID Transnational Arbitration Bjørn KUNOY* * Master, European Legal Studies, College of Europe, Bruges, Belgium; Master, International Trade and Investment Law, Universite Paris Xâ ฀฀Nanterre; Degree in Law, Universite Paris Vâ ฀฀ RenéDescartes. The author can be contacted at: â฀¹bkunoy@students.coleurop.beâ฀º. I. INTRODUCTION Awards by International Centre for Settlement of Investment Disputes (ICSID) tribunals in cases where indirect expropriation has been alleged have been characterized as highlighting a distinct line of thinking, ฀ and the international case law on indirect expropriation has been characterized as in disarray.2 There are several reasons which can, if not justify, at least illuminate and explain the divergent interpretative approach taken by 1(-SID tribunals. This is partially due to the multiple and heterogeneous forms of legal instruments on which the ICSID tribunals ground their jurisdiction and in which there is no definition of an indirect expropriation,.3 The ICSID Tribunal in Feldman was confronted with this question when interpreting Article 1110(1) of the North American Free Trade Agreement (NAFTA)'* and stated that "the Article 1110 language is of such generality as to be difficult to apply in specific cases".5 Furthermore, the difference in composition of the ICSID tribunals seems to be a problem for establishing a jurisprudence constant. ó The determination of an indirect expropriation is not an easy task and demands a casuistic approach.7 In accordance with Article 53(1) of the ICSID Convention, the awards shall be binding only on the parties to the dispute.8 By contrast, this article R . Dolzer, Indirect Expropriation: New Developments? 75 N.Y.U. Envt'l L J. 3, 2002, p. 72. 2 Ibid., p. 71. 3 The number of disputes brought to ICSID has increased exponentially during recent years. In 1999, ten cases were dealt with by ICSID Tribunals, and in 2003 this number grew to thirty. In 2003, only one IcsiD tribunal did not ground its jurisdiction on a bilateral investment treaty (BIT). 4 NAFTA Article 1110(1) reads: "No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ..." The full text of the NAFTA is available at: www.iiafta-sec-alciia.org> (visited on 17 December 2004). 5 Man,ill Roy Feldman Karpa v. United Mexican States (Feldman), IcsID Case No. Attts(AF)/99/1, Award, 16 December 2002, 18 ICSID Rev.-F.I.L.J. 488, 2003, at p. 522, para. 98. 6 The ICSID tribunals are, in accordance with Articles 12-1G of the ICSID Convention, comprised of arbitrators designated by the disputing parties. 7 Recent U.S. BITS/free trade agreements (FTAS) have inserted express clauses stating that the determination of an indirect expropriation needs a thorough case-by-case study. For an illustrative example, see Annex 10-D, para. 4(a) of the latest FTA between the United States and Chile: " The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers ..."; available at: ฀www.ustr.gov> (visited on 13 May 2005). 1 The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, concluded 25 March 1965 at Washington, D.C.; text available at: ฀www.worldbank.org/icsid/ basicdoc/main-eng.htm> (visited on 13 May 2005).