The Application of the Non-Expropriation Guarantee in Light of the State's Policy Orientation towards Concession Contracts

Abstract

Investment in real property — in all its forms — constitutes one of the most important pillars of the economy upon which the Algerian State relies to drive economic development. To that end, the State has established a set of legal guarantees designed to encourage and protect investors against the risks that may affect their ownership of the real property in which they invest.
The non-expropriation guarantee represents the most significant of these guarantees, as it obliges the State to refrain from taking any measure aimed at expropriating real property except, by way of exception, for the achievement of a public utility purpose — subject to essential conditions and principles that must be observed, as well as the payment of a fair and equitable indemnity, thereby protecting the operator of real property held by way of ownership.
However, the State's orientation towards the adoption of the concession contract as the sole mechanism for investment in private national property entails that the investor benefits only from a usufruct right rather than ownership. This diminishes the level of protection afforded to the investor, given the possibility of arbitrary State action upon the withdrawal or rescission of the concession contract — an instrument that is fundamentally incompatible with the application of the non-expropriation guarantee.