Metalclad v. Mexico highlights indirect expropriation under NAFTA, where regulatory actions deprived an investor of economic use. The tribunal ruled in favor of Metalclad, awarding $16.5M, but a Canadian court partially annulled the decision, limiting its scope.

The doctrine of regulatory taking in international investment law ensures compensation when state regulations significantly impact foreign investments, even without formal expropriation. Balancing sovereign regulation and investor rights remains a key challenge.