Privatization: Is International Law Relevant?

Over the years, much has been written concerning the taking of property by the state through confiscation, expropriation, and more generally nationalization from an international law point of view. By contrast, there is a dearth of authority on the subject of denationalization, or privatization as it is called today. The rolling back of nationalization that first took hold in Britain a few years ago has gained momentum as Canada and France have decided to return many state-owned enterprises to the private sector. The objective is clear, but the methods to accomplish it are not uniform, nor is it certain that all states concerned desire to achieve popular capitalism. Thus, foreign multinational corporations as well as institutional investors may be interested in acquiring these state owned enterprises. This possibility raises the question of whether they will be given an opportunity to do so, as the privatizing law may forbid or limit foreign ownership. Furthermore, a question of valuation arises. In this connection can state-owned enterprises be sold at less than their value, especially to foreign purchasers? Does international law have anything to say concerning these matters? In other words, should there be a parallel between nationalization and privatization? Are there any international treaties that are applicable? Antitrust issues may also be involved where the state-owned enterprise to be sold has a complete monopoly or is in a position to abuse its dominant market position once it is deregulated. Another issue is whether approval of the sale to foreign investors must be obtained, in other words whether, in Canada, for instance, the procedures found in the Investment Canada Act must be followed. What is the situation if the state-owned enterprise has foreign subsidiaries