One of the most notorious dilemmas of international rules on the protection of foreign investment is how to decrease the tension between a state’s regulatory freedom and private property rights in addressing indirect expropriation. Bilateral investment treaties need to achieve a crucial balance: to protect the interests of foreign investors and support rights of states to regulate in pursuit of sustainable development. In dealing with indirect expropriation past tribunals relied on different approaches and adopted mutually inconsistent positions. By demonstrating this incoherence, this thesis reviews the most recent BITs and identifies an archetype of investment treaty provisions and language that may result in the interpretation of indirect expropriation most compatible with states being free to act to achieve sustainable development.