The formulation and determination of expropriation clauses in BITs of Sri Lanka: gaps and prospects

ABSTRACT The expropriation clause is the most frequently challenged provision in Bilateral Investment Treaties (BITs). Differences in the text of treaties and sometimes similar provisions have led the tribunals to offer varying views adopting different tests for determining expropriation. The consequences of such decisions ranged from the denunciation of investment treaty obligations to renewing the investment treaties. Against this backdrop, this article provides a detailed analysis of the expropriation clause in Sri Lanka’s BITs. This paper critically analyses the textual formation of the expropriation clause in all of Sri Lanka’s BITs by mapping each of them and argues that the present formulation of expropriation clause is inadequate for exercising the regulatory power of Sri Lanka to realize its public policy concerns. In light of growing trends in the BIT regime, the article concludes that the expropriation clauses of Sri Lanka’s BITs should be reformulated in a manner balancing investment protection with Sri Lanka’s regulatory power to pursue non-commercial policy concerns.