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Article 1120 NAFTA does not modify Article 48 of the Additional Facility Rules
Article 1105 NAFTA requires the host state to ensure a transparent and predictable framework for the investor’s business activities
In determining whether an indirect expropriation took place, a tribunal may pay particular attention to the investor’s justified reliance on the government’s representation
The relinquishment of title in the investment is an additional consequence of being compensated for an indirect expropriation
Protection against expropriation under NAFTA includes protection against covert or incidental interferences with the use of property, which have the effect of depriving the owner in whole or in significant part of the use or reasonably-to-be-expected economic benefit
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Expropriation > Indirect Expropriation / Regulations > Determining Whether a Regulation Constitutes an Indirect Expropriation
- North American Free Trade Agreement > Chapter Eleven – Section A – Investment > Article 1110 – Expropriation and Compensation > Indirect Expropriation / Regulations > Determining Whether a Regulation Constitutes an Indirect Expropriation
Tax filings, together with independent audit documents supporting the filings, are to be accorded substantial evidentiary weight; difficulties in verifying expense items due to incomplete files do not necessarily render the expenses claimed fundamentally erroneous
The claimant must show a causal relationship between the host state’s actions and the asserted damages
A party of NAFTA is responsible for the conduct of all territorial units, even in case of ultra vires-acts
In determining whether an indirect expropriation took place, a tribunal may pay particular regard to the investor’s justified reliance on the government’s representation
Article 1105 requires the host state to ensure a transparent and predictable framework for the investor’s business activities
Where the investment was never operative and any award based on future profits would be wholly speculative, the tribunal may determine the fair market value by reference to the actual investment in the project
The fair market value of a going concern may be based on an estimate of future profits subject to a discounted cash flow analysis unless the investment was never operative and any award based on future profits would be wholly speculative
While confidentiality is regarded as advantageous, there is no general principle of confidentiality
Exhaustion of local remedies is not a precondition to filing a claim under NAFTA
- International Investment Treaties (IITs) > Protection of Investors under IITs > Dispute Settlement Clauses > Exhaustion of Local Remedies Clauses
- North American Free Trade Agreement > Chapter Eleven – Section B – Settlement of Disputes between a Party and an Investor of Another Party > Article 1121 – Conditions Precedent to Submission of a Claim to Arbitration
International Law Rules Applicable to IITs
Law of State Responsibility
Attribution of Acts
Attribution of Acts by Organs / Provinces / Municipalities
A party of NAFTA is responsible for the conduct of all territorial units, even in case of ultra vires-acts
Protection of Investors under IITs
Expropriation and Standards of Protection
Expropriation
Indirect Expropriation / Regulations
Determining Whether a Regulation Constitutes an Indirect Expropriation
In determining whether an indirect expropriation took place, a tribunal may pay particular attention to the investor’s justified reliance on the government’s representation
Protection against expropriation under NAFTA includes protection against covert or incidental interferences with the use of property, which have the effect of depriving the owner in whole or in significant part of the use or reasonably-to-be-expected economic benefit
Further Problems
The relinquishment of title in the investment is an additional consequence of being compensated for an indirect expropriation
Fair and Equitable Treatment
Case Groups
Transparency
Article 1105 NAFTA requires the host state to ensure a transparent and predictable framework for the investor’s business activities
Dispute Settlement Clauses
Exhaustion of Local Remedies Clauses
Exhaustion of local remedies is not a precondition to filing a claim under NAFTA
Procedural Questions
Further Problems
While confidentiality is regarded as advantageous, there is no general principle of confidentiality
Damages and Interest
Causation
Tax filings, together with independent audit documents supporting the filings, are to be accorded substantial evidentiary weight; difficulties in verifying expense items due to incomplete files do not necessarily render the expenses claimed fundamentally erroneous
The claimant must show a causal relationship between the host state’s actions and the asserted damages
Basis for Calculating Damages
Where the investment was never operative and any award based on future profits would be wholly speculative, the tribunal may determine the fair market value by reference to the actual investment in the project
The fair market value of a going concern may be based on an estimate of future profits subject to a discounted cash flow analysis unless the investment was never operative and any award based on future profits would be wholly speculative
Chapter Eleven – Section A – Investment
Article 1105 – Minimum Standard of Treatment
Case Groups
Article 1105 requires the host state to ensure a transparent and predictable framework for the investor’s business activities
Article 1110 – Expropriation and Compensation
Indirect Expropriation / Regulations
Determining Whether a Regulation Constitutes an Indirect Expropriation
Protection against expropriation under NAFTA includes protection against covert or incidental interferences with the use of property, which have the effect of depriving the owner in whole or in significant part of the use or reasonably-to-be-expected economic benefit
In determining whether an indirect expropriation took place, a tribunal may pay particular regard to the investor’s justified reliance on the government’s representation
Chapter Eleven – Section B – Settlement of Disputes between a Party and an Investor of Another Party
Article 1121 – Conditions Precedent to Submission of a Claim to Arbitration
Exhaustion of local remedies is not a precondition to filing a claim under NAFTA
Article 48
Article 1120 NAFTA does not modify Article 48 of the Additional Facility Rules