Compensation standards and permanent sovereignty over natural resources

Abstract

In case of direct expropriation, the host State is required to pay compensation. The form and amount of such compensation used to be the subject of a heated debate. An ‘appropriate’ compensation needs to be paid, but does it mean that the compensation should cover the entire market price of the expropriated assets> This question is today considered moot, given the proliferation of investment treaties, which almost unanimously adopt the Hull formula. The present study argues, however, that the permanent sovereignty over natural resources or peoples’ right of economic self-determination may come into play in cases of expropriations of a general and impersonal character so that the strict application of the Hull formula is to be limited to cases of individual expropriations.