The claimant Swiss company, a wholly owned subsidiary of Standard Oil, a US company, entered into a 1966 joint venture agreement with NPC, and Iranian company controlled by the Iranian government to process and sell Iranian natural gas. In 1980 the agreement, which by its terms was valid for 35 years, was declared null and void by the Iranian government following the 1979 Iranian revolution. The claimant sought compensation.
Expropriation can be defined as a compulsory transfer of property rights, may extend to any right which can be the object of a commercial transaction, i.e. freely sold and bought and thus has a monetary value.
A leading expression of these rules is Case concerning Certain German interest in Polish Upper Silesia 1926.
The right to nationalise foreign property for public purpose is today unanimously accepted, even by states which reject the principle of permanent sovereignty over natural resources, considered by a majority of States as the legal foundation of such right
Discrimination is widely held as prohibited by CIL in the field of expropriation. As observed by Aminoil (1982) a coherent policy of nationalization can reasonably be operated gradually in successive stages, the tribunal declines to find that the present expropriation was discriminatory
A precise definition of public purpose has neither been agreed upon international law nor even suggested. As a result of the modern acceptance of the right to nationalise this term is broadly interpreted. An expropriation, the only purpose of which would have been to avoid contractual obligations of the state could not be considered as lawful under international law. Such an expropriation, indeed, would be contrary to the principle of good faith.
Amoco’s rights and interests were lawfully expropriated by Iran.