Review Reports

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The article addresses the compensation frameworks applicable to the nationalisation of distressed foreign-owned essential service providers, analysing both bilateral investment treaties and the European Convention on Human Rights.

Structurally, it would be helpful to explain what may happen in the UK courts before discussing the ECHR's potential endpoint. The discussion implies that the national treatment would be worse than the BIT treatment, but it does not explain how the national framework works. The only mention is “while domestic investors receive whatever compensation satisfies the less demanding 'fair balance' test (Kriebaum and Reinisch 2019).”  This is quite a logical gap in the analysis.

Rigour and citation style need improving throughout the text.

Comments for author File: Comments.pdf

Author Response

We are grateful for your review and apologies that the rigour and citation formatting needed improvement.  

Comment 1

Structurally, it would be helpful to explain what may happen in the UK courts before discussing the ECHR's potential endpoint. The discussion implies that the national treatment would be worse than the BIT treatment, but it does not explain how the national framework works. The only mention is “while domestic investors receive whatever compensation satisfies the less demanding 'fair balance' test (Kriebaum and Reinisch 2019).”  This is quite a logical gap in the analysis.

Response: This was an excellent comment and we have incorporated it at lines 479-495 in the tracked document

Comment 2: Rigour and citation style need improving throughout the text.

Response: Again we apologies and thank you for the list of points to improve.  We tightened up the rigour of the paper further by adding additional references.

Reviewer 2 Report

Comments and Suggestions for Authors

The paper is well structured and written. The Author(s)' position is clearly expressed and well argumented and it is absolutely shareble. In my opinion, the text could be published in the present form. 

I will limit myself to offer some (optional) advices to improve the text completeness and argumentation robustness: 

• the issue of public interests (service access continuity, price equity, employment level maintennace)  that make some public service undertakings too important to fail is becoming increasingly relevant in the choices operated by the Governments to nationalize these undertakings. This awareness sometimes stimulates investors (mainly investment funds) to moral hazard behaviours, inducing them to invest in critical undertakings without the proper warranties of solidity, as they know that, in case of crisis, the public Authorities cannot stay still. I think that this kind of considerations should be enphasized within the text to corroborate the hypothesis of compensation ;calculation  the the basis of the inbsolvency value; 
• on the basis of analogous considertaions, I would include (with a minus sign)  in the computation of compensation also the amount of State aids and incentives (as tax credit) that the undertaking obtained from the beginning of its crisis phase. Incentive expectations are one of the most frequent leverage of moral hazard behaviours by the investors;
• in analyzing the countearguments to the first approach (ennanched regulatory intervention), attention should be paid to the grandfathers and umbrella clauses included in solem BITs  that could impede or significantly delay the application of new rules to current investors. Regulatory intervention is always a desirable way, but generally it is useful to prevent future risks rather than solve current problems.   

Author Response

For research article

Response to Reviewer 2 Comments
1. Summary
Thank you very much for taking the time to review this manuscript. We found your suggested comments very helpful indeed.  We show below our detailed responses and the corresponding revisions/corrections highlighted/in track changes in the re-submitted files.
3. Point-by-point response to Comments and Suggestions for Authors
Comments 1: the issue of public interests (service access continuity, price equity, employment level maintennace)  that make some public service undertakings too important to fail is becoming increasingly relevant in the choices operated by the Governments to nationalize these undertakings. This awareness sometimes stimulates investors (mainly investment funds) to moral hazard behaviours, inducing them to invest in critical undertakings without the proper warranties of solidity, as they know that, in case of crisis, the public Authorities cannot stay still. I think that this kind of considerations should be enphasized within the text to corroborate the hypothesis of compensation ;calculation  the the basis of the inbsolvency value;
Response 1: this comment was very helpful.  We agree entirely.  We have incorporated it from line 479 onwards in the tracked document.
Comments 2:
on the basis of analogous considertaions, I would include (with a minus sign)  in the computation of compensation also the amount of State aids and incentives (as tax credit) that the undertaking obtained from the beginning of its crisis phase. Incentive expectations are one of the most frequent leverage of moral hazard behaviours by the investors; Response 2: This was another excellent comment.  We agree and have added text at 881-900.
Comment 3 in analyzing the countearguments to the first approach (ennanched regulatory intervention), attention should be paid to the grandfathers and umbrella clauses included in solem BITs  that could impede or significantly delay the application of new rules to current investors. Regulatory intervention is always a desirable way, but generally it is useful to prevent future risks rather than solve current problems.
Response 3: We are again grateful for your insight.  This point has been incorporated at lines 688-709

 

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

No further comments