Page 369 - Regional Comprehensive Economic Partnership (RCEP)

ANNEX 10A ANNEX 10B

CUSTOMARY INTERNATIONAL LAW EXPROPRIATION

The Parties confirm their shared understanding that “customary The Parties confirm their shared understanding that:
international law” generally and as specifically referenced in Article 10.5
(Treatment of Investment), including in relation to the customary 1. An action or a series of related actions by a Party cannot
international law minimum standard of treatment of aliens, results from constitute an expropriation unless it interferes with a tangible or
a general and consistent practice of States that they follow from a sense intangible property right or property interest in a covered
1
of legal obligation. investment.

2. Article 10.13 (Expropriation) addresses two situations:

(a) the first situation is direct expropriation, where a covered
investment is nationalised or otherwise directly
expropriated through formal transfer of title or outright
seizure; and

(b) the second situation is where an action or a series of
related actions by a Party has an effect equivalent to direct
expropriation without formal transfer of title or outright
seizure.

3. The determination of whether an action or series of related actions
by a Party, in a specific fact situation, constitutes an expropriation
of the type referred to in subparagraph 2(b) requires a case-by-
case, fact-based inquiry that considers, among other factors:

(a) the economic impact of the government action, although
the fact that an action or a series of related actions by a
Party has an adverse effect on the economic value of an
investment, standing alone, does not establish that such
an expropriation has occurred;

(b) whether the government action breaches the government’s
prior binding written commitment to the investor, whether
by contract, licence, or other legal document; and

1 For the purposes of this Annex, “property interest” refers to such property interest as
may be recognised under the laws and regulations of that Party.

10A-1 10B-1