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Investment Agreements in the Western Hemisphere: A Compendium

Trade and Integration Agreements


V. Expropriation | B. Compensation

North American Free Trade Agreement (NAFTA)

Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place, and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate. (Article 1110 (2)).

Compensation shall be paid without delay, be fully realizable and freely transferable. If made in a G7 currency, compensation shall include interest at a commercially reasonable rate for that currency from the date of expropriation until the date of actual payment. Norms are also included for those cases where payment is made in a non G7 currency. (Article 1110 (3)(4)(5)(6)).

Free Trade Agreement of the Group of Three among Mexico, Colombia, and Venezuela (Group of Three)

Compensation shall be equivalent to the fair market value of the investment at the time of expropriation, and shall not reflect any change in value owing to the fact that the intent to expropriate became known prior to the date of expropriation. Valuation criteria shall include declared tax value of tangible property and other criteria, as appropriate, to determine fair market value. (Article 17-08(2)).

Compensation shall be fully realizable and freely transferable under the terms of Article 17-07. (Article 17-08(3)).

Payment shall be made without delay. The time elapsing between the time the compensation is determined and the time payment is made shall not adversely affect the investor. As a result, the amount of compensation shall be sufficient to ensure that should the investor decide to transfer his payment, he can obtain, at the time of payment, an equal amount of the international currency normally used as a reference by the Party making the expropiation. Payment shall also include interest at the current market rate for the reference currency. (Article 17-08(4)).

Common Market of the South (MERCOSUR)

Members
Compensation shall be prompt, adequate and effective. It shall be equivalent to the real value of the expropriated investment immediately before the decision to expropriate became known; include interests until the date of payment or its value adjusted accordingly. (Article 4 of the Colonia Protocol).

Non-Members
Compensation shall be just, adequate, and prompt. It shall be equivalent to the value of the expropriated investment. (Article 2(D)(1) of the Buenos Aires Protocol).

Andean Pact


Caribbean Community and the Caribbean Common Market (CARICOM)

Valuation of such investments shall, as far as practicable, reflect the fair market value of the investments at the time of the disclosure of the intention to nationalise, but with due regard being paid to the maintanance of assets by the enterprise. Compensation for the nationalisation of investments shall be on terms and conditions consistent with the Constitution of the host country. (1982 Principles and Guidelines on Foreign Investment).

 
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