Coercion and Foreign Investment Rearrangements

Abstract

Expropriations in the later 1970’s often proceed more suavely than in the past. Straightforward seizure, to be sure, still has devotees. However, an increasingly favored approach is to induce the foreign investor to convey his property (or an interest therein) by an instrument that on its face represents an ordinary sale. That sale may be accompanied by a revision of the terms of some underlying contract between the investor and the government. The purpose of this article is to explore whether any body of rules now exists setting limits to the means that a government can use to obtain the investor’s consent. It then asks whether that law could be further developed so as to improve the quality of such negotiations and to cause them to produce more equitable results. Thereby it would indirectly improve the security and efficiency of the whole process of foreign direct investment.