Nationalization of foreign investments in international law : the experience of selected African countries

This work is divided into four broad chapters. The first, discusses historical background to the concept and the rules governing nationalization of foreign-owned property in general, the second chapter deals with the question. of payment of compensation for nationalized foreign-owned property, the third is concerned with the role of foreign investments in African economic development and lastly the fourth chapter is devoted to case studies of nationalization measures in respect of selected African countries. Regarding the rules of international law governing nationalization measures, it is argued in the first chapter that, before the Second World War, when nationalization measures were not popular, international law concerned itself more with general acts of expropriation of private property. Although expropriation is related to the concept of nationalization, the two however, are distinct legal phenomena. It was during the Middle Ages that international law developed rules to regulate expropriation acts. The rules which emerged, required that expropriation be carried out in furtherance of public purpose and upon payment of prompt adequate and effective compensation. This rule is attributed to natural law, the rationale of which is the protection of the \acquired rights\" (droits acquis). After the Second World War when acts of nationalization became popular the same rule developed during the Middle Ages to regulate acts of expropriation was applied to regulate and protect foreign investors from acts of nationalization by the host states. It was therefore claimed that like expropriation nationalization is lawful if it is carried out in furtherance of public purpose and is accompanied by payment of adequate prompt and effective compensation and without discrimination. This principle has been stated in all leading text books in statements issued by foreign offices of capital exporting nations in bilateral commercial treaties in conventions drafted by international agencies in judgments of national courts and in statements issued by foreign offices of capital exporting nations and in statements issued by multinational corporations. Although the requirements of public purpose and non-discrimination have been readily accepted by the international community the rule which requires payment of prompt adequate and effective compensation has received a considerable amount of opposition from capital importing countries. This is so because the norm which requires payment of prompt adequate and effective compensation is inconsistent with the definition of nationalization. Reference of such controversies to international tribunals by deploying concept of diplomatic protection would have been the best way of resolving the conflict. The major obstacle in this regard however is the fact that the concept of diplomatic protection itself has not received a universal acceptance in the international community. The most vocal opponents of this concept are the countries adhering to the concept of national treatment. Because of non-acceptability of traditional norm regarding payment of compensation upon nationalization of foreign-owned property new norms were evolved by nationalizing states."