Expropriation and nationalization
Act by which a state deprives a foreign investor of all or part of its assets, either by a direct measure or by a series of indirect measures that leave the investment economically worthless. It is the central risk of investment insurance.
On February 26, 2007, decree-law 5200 required the Orinoco oil projects to become joint ventures controlled by Venezuela's national oil company. A U.S. investor refused, and on March 8, 2019, an ICSID tribunal awarded it more than 8 billion dollars (ARB/07/30). That is direct expropriation, or nationalization: the state formally takes title. International law allows it on conditions: public purpose, due process, non-discrimination and "prompt, adequate and effective" compensation. The last is the Hull formula, sent to Mexico in 1938, never codified and still contested. Creeping expropriation is harder to pin down. An extraordinary extraction tax, a cap on dividend repatriation, a 51% local partner requirement, then a license that is not renewed: no single measure expropriates, and together they hollow out the investment. ICSID tribunals have built abundant case law to separate legitimate regulation from compensable deprivation. Investment insurance policies, public (Bpifrance Assurance Export, MIGA, DFC) or private, set by contract the threshold at which a government act becomes a covered loss.
Dated case, in Africa: in August 2023 Mali adopted a new mining code raising the state's share and royalties; Barrick, which holds 80% of the Loulo-Gounkoto gold complex, refused to renegotiate on the new terms. In mid-January 2025, the state blocked exports and seized about three tonnes of gold, and the group suspended production. On June 16, 2025, a Bamako court placed the complex under provisional administration for six months. Barrick remained the legal owner and went to ICSID: creeping expropriation in its pure form, a loss of effective control with no transfer of title. On November 24, 2025, a settlement ended the dispute: Barrick paid about 430 million dollars, accepted the 2023 code and withdrew the arbitration, and the provisional administration was lifted. A CEND insurer would have seen its waiting period start in January, then a settlement take its recourse away. Dated case: on February 26, 2007, decree-law 5200 forced the conversion of the Orinoco oil projects into joint ventures controlled by Venezuela's national oil company. A U.S. investor refused. On March 8, 2019, an ICSID tribunal awarded it more than 8 billion dollars (case ARB/07/30).
- Cordell Hull, note to the Mexican government, 22 August 1938 (Hull formula)
- ICSID, ConocoPhillips Petrozuata B.V. and others v. Venezuela, case ARB/07/30, award of March 8, 2019
- Miningmx, "Mali court places Barrick gold complex under administration", June 17, 2025
- IISD, Investment Treaty News, "Barrick and Mali Implement Settlement Ending ICSID Dispute Over Loulo-Gounkoto", September 9, 2026
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