A second option concerns the standard of
compensation for expropriation. The majority of IIAs
set out a standard of prompt, adequate and effective
compensation (the so-called “Hull formula”), rigidly
connected to the investment’s fair market value. This
standard may result in high amounts of compensation,
especially if the expropriated investment is valued using
certain valuation methods such as the discounted cash
flow analysis. Countries concerned about this possibility
could consider terms such as “appropriate”, “fair” or
“equitable” compensation and “relax” the link between
the standard of compensation and the market value of
investment (SADC model BIT (2012), draft Indian model
BIT (2015)). Another approach would be to provide that