Lawful vs unlawful expropriation: understanding the distinction

When does an expropriation become unlawful under public international law? A key question for tribunals is whether failure to compensate renders an expropriation unlawful per se and warrants the award of damages, or whether such failure can be remedied through subsequent compensation. The distinction affects the applicable standard of compensation and the valuation date. The principle from the seminal Chorzów Factory case (Award on Merits, 13 September 1928) remains central: when property is taken unlawfully, full reparation is required, restoring the investor to the position they would have been in but for the breach. Gherson’s arbitration specialists regularly assess state measures and treaty protections to determine compliance with international investment obligations, including expropriation and compensation provisions.

How Gherson can assist

Gherson’s Litigation and Arbitration Team are highly experienced in advising on international commercial litigation and arbitration matters. If you have any questions arising from this blog, please do not hesitate to contact us for advice, or send us an e-mail. Don’t forget to follow us on X, Facebook, Instagram, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

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Source: David Khachvani, “Compensation for Unlawful Expropriation: Targeting the Illegality”, ICSID Review, Vol. 32, No. 2 (2017).