ower of the less-developed host state (Schaffer, Earle, and August 453-454).
In this century, however, the modern traditional theory developed and held that the sovereign had the right to nationalize foreign-owned property, though conditions were placed on the exercise of that right, which must be:
2) nondiscriminatory, or not directed specifically against a foreign person; and
3) accompanied by prompt, adequate, and effective compensation.
This means that a sovereign is not to take property for harassment, personal aggrandizement, or other nonpublic purposes and cannot target the property of one nationality in a discriminatory fashion. It also means that compensation is to be paid, which means fair market value (including future earnings and intangibles) in a prompt and effective manner (Schaffer, Earle and August 455-456).
Nationalization is a process that is bound with a number of political and nationalistic forces. Sovereignty gives a country complete control within a given geographic area, including the ability to pass laws and regulations the power to use necessary enforcement. Governments often see sovereignty as a key to reaching the goal of self-preservation. Subsidiaries, or branch offices, of international companies are substantially controlled or influenced by decisions made in headquarters, beyond the physical or legal control of the host government. Because of th
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