Indirect expropriation and political risk insurance for energy projects

Abstract

Sellers and buyers of political risk insurance (PRI) ask a simple question about a claimed indirect expropriation: ‘Is it covered by the PRI policy?’ The answer is far from simple. This article investigates only one PRI coverage—compensation for indirect expropriatory conduct. Numerous definitional issues and uncertainties exist. Investors in energy projects and PRI insurance providers will therefore both benefit from direct and clear discussions about the scope of indirect expropriation cover under a PRI policy before the policy is purchased.