7. Determination of Indirect Expropriation and Doctrine of Police Power in International Investment Law

The chapter aims at examining the role of the doctrine of police powers in judging a claim of indirect expropriation against a host State. It seeks to answer if the ITA tribunals, while judging if a host State’s regulatory measures amount to indirect expropriation or not, have been able to develop and apply the police power doctrine in a uniform manner? The significance of the inquiry lies in understanding suitability of this doctrine as a benchmark to judge a host State’s regulatory measures. The methodology adopted includes the study of ITA cases where this doctrine has been invoked, followed by studying cases where the doctrine of police power was referred by the parties or used for disputes, related to indirect expropriation, by ITA tribunals and to see whether the approach of different arbitral tribunals was similar or different. The study concludes by observing that the actual scope and application of the police power doctrine remains unclear in ITA and thus its use as a benchmark to judge host State’s regulatory action is questionable.