Jurisdiction(s):
United Kingdom

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Key definition

Expropriation definition

What does Expropriation mean? In practice, expropriation describes when a state takes, or so interferes with, an investor’s property that its use or value is effectively neutralised, triggering a duty to compensate. In investment treaty arbitration (ICSID/UNCITRAL), expropriation is usually defined in bilateral investment treaties and investment chapters, and developed in case law. Treaties permit expropriation only if for a public purpose, on a non‑discriminatory basis, in accordance with due process, and with prompt, adequate and effective compensation (often the fair market value at the date of taking). It includes direct expropriation (formal seizure) and indirect or “creeping” expropriation (measures tantamount to...

Expropriation under investment treaties: direct, indirect and creeping takings, regulatory carve-outs, compensation and jurisdictional scope

Published by a LexisNexis Arbitration expert

Practice notes

A definition of Expropriation

In the setting of Investment Treaty Arbitration, expropriation arises where a state appropriates the property of a foreign investor and payment of compensation is required. A central safeguard found in almost all bilateral investment treaties (BITs) and multilateral investment treaties (MITs) is the bar on expropriation (or nationalisation) unless adequate compensation is provided. Yet the drafting of many treaties offers scant, express direction on what, precisely, is meant by expropriation. Consequently, numerous investment treaty arbitration tribunals have wrestled with drawing the boundaries of what amounts to a “taking” of property and identifying the minimum elements of what qualifies as “adequate” compensation. The effort to craft a stable definition is further hindered by the reality that the clauses in BITs are alike, though not the same. These fine textual variations have, in several investment treaty awards, become the subject of close scrutiny. This Practice Note employs the UK Model BIT to examine these questions in greater depth. Practice Notes: Investment treaty arbitration—an introduction and Protections for foreign Investors and investment treaty arbitration supply introductory guidance on investor protection and investment treaty arbitration and furnish essential preliminaries on these...

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Web page updated on 21/05/2026

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