The Public Interest as a Condition for Expropriating Foreign Investors: A Comparative Study

Prof. Nawara Taher Hussain

Lecturing professor “A” – Faculty of Law and Political Science – Mouloud Mammeri University – Tizi Ouzou – Algeria


The investment agreement between the foreign investor and the host country usually extends for many years, and during its validity the host country may terminate the agreement unilaterally, or seize the investment project, nationalize it, leverage it, or confiscate it. The state’s right to expropriate ownership is one of the principles recognized by international law as it determines guarantees to protect the foreign investor from these principles if they are carried out in an illegal manner.
The condition of achieving the public benefit or the public interest is considered a restriction on the state’s freedom of expropriating the foreign investor’s ownership, since private property is a constitutional right, a way to legitimize the foreign investor’s expropriation procedures and a mechanism to ensure the minimum protection allotted to the foreign investor within the framework of international conventions. Hence, achieving the public benefit is prioritized over the private interest, and the expropriating procedures are accompanied by a fair and equitable compensation for the foreign investor.
The minimum rights of foreigners established by international law have placed multiple restrictions on the state’s right to expropriation. The most important of these restrictions is the obligation not to violate the principle of equality and non-discrimination. The rules of international law unanimously stipulate the possibility of foreign investments being subjected to nationalization, expropriation and confiscation procedures, provided that both the national and foreign investor are subject to these procedures and provisions without any discrimination as the sole aim of the procedure is achieving the public benefit.
Among the objectives of the study is to search for a mechanism that balances between the state’s right to expropriate the foreign investor’s ownership and the foreign investor’s private property right, and to affirm the obligation of prioritizing public benefit of the state to legitimize the expropriation procedures within the framework of the common and contradictory interests of the parties to the international investment contract.
This research was conducted within an analytical and descriptive framework through comparing some legislations in light of the international law for foreign investment. We concluded that the need to attract foreign investments as a mechanism for economic recovery in the midst of the economic crises experienced by the various developing countries is not a justification for freezing the state’s right to expropriate the foreign investor’s property when necessary and for achieving the public interest as long as compensation is granted.

Keywords: property right, public interest, foreign investment, termination of investment agreement, requisition, expropriation, investor compensation.

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