The concept of indirect taking lacks of a clear definition. Instead, it appears as a concept having a variable geometry. Contrary to the characterization of a situation of direct expropriation which is relatively easy and straightforward (ex: nationalization of an investment), the characterization of a situation of indirect taking appears as a much more complex operation. While determining whether a situation can fall within the category of indirect taking, tribunals undertake a case by case study and seem to refer to a myriad of criteria. To this respect, the CMS case seems to develop and elaborate much more complete and clear criteria that the Saluka case. This aspect may be partially due to the very wording of the different Bilateral Investment Treaties or BITs in question in each case. A very vague and general wording of a BIT will certainly give a tribunal more latitude in its interpretation than a meticulously written BIT.
[...] The Argentine Republic case, the tribunal had to determine whether an indirect taking could be imputed to the Argentinean Republic. The tribunal arrived at the conclusion that the latter did not breach its obligations as mentioned in article IV of the U.S.-Argentina BIT as it did not violate the “substantial deprivation” standard which implies a violation of the “fundamental right of ownership”. In its reasoning, the tribunal referred to previous case law existing on the subject. It must be stressed that no clear course of action can be inferred from the caselaw referred to. [...]
[...] The quality of the formulation of BITs appears therefore as fundamental in the appreciation of the concept of indirect taking. In short, the notions of direct and indirect taking have the same effect that deprives an investment of its interest for the investor but they reach this result by different means. While some flexibility is necessary, it is of paramount importance that, for the sake of clarity and legal certainty, legal instruments such as investment treaties define and implement clear- cut definitions and criteria in order to determine whether a situation can be qualified of indirect taking and thus allow compensation. [...]
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