Hall, David ORCID: 0000-0003-3574-8863 and Weghmann, Vera (2019) The political economy of compensation for nationalisation or municipalisation: national and international law and practice, and the implications for potential (re)nationalisation in the UK and elsewhere. In: 13th ECPR General Conference Wrocław, 4 - 7 September 2019, 4th - 7th Sep, 2019, The University of Wrocław, Poland.

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Abstract

The potential cost of compensation is a significant factor in political decisions to nationalise or municipalise. The legal framework now includes not only national law, but also international treaties relating to investment and trade which provide for investor-state dispute settlement (ISDS) which may enable foreign investors to seek compensation through arbitration. These legal frameworks create expectations for investors of clear and quantifiable entitlement, but an examination of the law and actual practice shows rather an intensely political process between governments and business interests, with varying contested valuation principles, contested positions on national and international law, and strategic use of law-suits and arbitration by either party. In the 2017 election in the UK the Labour Party announced plans to renationalise water, energy, rail and postal companies - the first time that a major political party has done so since the government of Mrs Thatcher privatised large parts of UK utilities. During the election campaign and subsequently these proposals proved to be immensely popular, with a major survey by a (right-wing) think-tank finding huge majorities supporting public ownership of water (83%), energy systems (77%), railways (77%) (Legatum Institute 2017, Labour Party 2019). This has led to a public debate on the advantages of public ownership of companies providing public services, of the desirability of ending PPPs, and of returning outsourced services to inhouse direct provision. The main issue raised by investors and their advisors in this debate has been the question of how much compensation would have to be paid to the current private owners, and thus how much the policies would cost. The discussion concerns what is required or permitted under UK law, and especially whether it requires compensation to be based on the ‘market value’ of the company nationalised. Corporate law firms and others have been also talking up the possibilities for using BITs or the Energy Charter Treaty (ECT) to claim higher compensation. (Clifford Chance 2019, Macquarie 2018). These treaties are now being used more frequently by various investors against some high income countries in western Europe, especially under the ECT (TNI 2018), but at the same time there is a growing resistance to this use of the treaties: “the legitimacy of the international investment regime is increasingly questioned.” (Hoffman 2018). This paper considers both policy and analytical questions about national law and the international treaties. The policy question is whether investors can exploit these legal frameworks and practice to create a significant obstacle to the implementation of Labour party public ownership policies. The analytical question concerns the political economy of these legal frameworks and in particular the interaction of different actors and factors in the complex and evolving conflicts over the use of international treaties to claim compensation. It is structured as follows.
− Section 1: Introduction
− Section 2 analyses the framework of national law on compensation in the UK, and historical practice, and compares the legal framework in Germany and the USA.
− Section 3 concerns BITs and the ECT, and the potential relevance in the UK context.
− Section 4 concerns the interactions between governments, campaigners, investors, courts and arbitration tribunals over BITs, the ECT and FTAs.
− Section 5: conclusions

Item Type:	Conference or Conference Paper (Paper)
Uncontrolled Keywords:	compensation; nationalisation; municipalisation; investor-state dispute settlement; eminent domain
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory K Law > K Law (General)
Faculty / School / Research Centre / Research Group:	Faculty of Business
Related URLs:	Organisation Organisation Organisation
Last Modified:	06 Mar 2024 11:51
URI:	http://gala.gre.ac.uk/id/eprint/45991

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