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Assume a country wanted to simply:

  • expropriate all foreign assets and foreign investments in its possession;
  • nationalize all resources; and
  • refuse to pay back foreign debt.

What (if any) international mechanisms are in place that would trigger automatic sanctions imposed by third parties or signatories?

For example, BlackRock an American company has bought the Panama Canal port for 23 Billion. If Panama expropriated the canal, and America refused to intervene militarily, what mechanisms of international law exist as a remedy?

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    All: "in the expanded info. ... Regardless of enforceability, or the political aspect of international law, that does not remove its status as law." Commented yesterday
  • UNCTAD has a list of 1909 bilateral investment treaties, including free trade agreements with investment provisions, signed since 2000 (it has more from earlier but I got bored of scrolling), most of which are in force. Commented 4 hours ago

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Politics

It’s happened many times. Most of those are domestic nationalisation, but there are a few international ones.

The most significant would probably be the Egyptian nationalisation of the Suez Canal in 1956. In the Suez Crisis, the Egyptians seized the Anglo-French Suez Canal Company, the French and British invaded, the USA told them to GTF out, the French and British GTF out. See, politics in action.

Of course, not all nationalisations are unlawful. For example, the Australian Constitution allows acquisition of property “on just terms”, that doesn’t (necessarily) mean market value. And the US requires “due process”. The political.

Having your assets nationalised by a foreign jurisdiction is all part of international business (and domestic business for that matter), and falls under the general heading of country risk.

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    Generally, there are no such treaties Commented 2 days ago
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    What exactly is the test to distinguish lawful vs. political that you're applying? It seems that political transitions to lawful just by virtue of being put on paper and signed. Commented 2 days ago
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    @Greendrake no, things are always political. Commented 2 days ago
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    "not all nationalisations are unlawful" - from the perspective of the governments which pass a law to implement it, they are always "lawful". So that terms means nothing. Commented yesterday
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    "not all nationalisations are unlawful. The freezing of Russian-owned assets are part of a lawful international sanctions regime." - by what standard? What makes this any more lawful than any other arbitrary seizure of assets other than "they're the bad guys and we can get away with it", i.e. politics? As vsz notes, the seizer always says it's lawful and the seizee usually disagrees. Genuine question, I'm not saying there is no such distinction, but I'm not aware of it and there's no evidence here. Commented yesterday
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Defaulting on debt is its own punishment. Not being able to obtain international financing is devastating to countries. See sovereign default.

Making the country that owns most of the investments mad can also be devastating. See Cuba.

There are no automatic anythings in international relations, including treaties that supposedly obligate countries to come to each others' aid militarily, because only war and statecraft affect things between two sovereign nations. These are political questions, not legal ones. Note how little Europe really wants to tweak Russia's nose with the seized Russian assets.

Certainly the concept of International Law exists, but it ony exists under the frameworks of agreements between countries, who can opt out of such agreements at any time. This is the entire meaning of a sovereign state. Within a nation, laws have power and meaning because no citizen or non-citizen in its borders can opt out of following those laws - they will be enforced by the state itself. If I don't pay my debts eventually someone will show up to take my stuff to pay that debt. Across national borders, this only happens via war or statecraft (sanctions, etc.).

Your example of the Panama Canal is because of the immense pressure the US can bring to bear on countries, especially those in its immediate sphere of influence, backed by both financial penalties and ultimately bombs and guns. The US propensity for invasion is well known.

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    The third paragraph is wrong. Consider for example the EU treaties which very clearly have legal mechanisms built into them. Commented 2 days ago
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    Comments debating whether international law is law for the purpose of this Q&A been Law Chat. Comments continuing discussion may be removed. Commented yesterday
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The prohibition on expropriation by the host state without full compensation to the foreign investor company is a principle of customary international law. See generally, Suzy H. Nikièma, Compensation for Expropration (International Institute for Sustainable Development, 2013). However, there are debates about the precise content of the customary international law norm (degree of compensation, distinction between lawful and wrongful exproprations, dispute resolution mechanisms, etc.), so having such norm made more precise in treaties is still useful for the States party.

For example, the former awarded a complainant corporation, Metalclad, USD $16,685,000.00 when Mexico took a measure "tantamount to nationalization or expropriation" of Metalclad's landfill site. The parties to NAFTA agreed that the ICSID could be an arbitration venue for expropriation disputes (Article 1120).

The ICSID recognized that:

expropriation under NAFTA includes not only open, deliberate and acknowledged takings of property, such as outright seizure or formal or obligatory transfer of title in favour of the host State, but also covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property even if not necessarily to the obvious benefit of the host State.

The prohibition on expropriation without compensation has been carried forward into Article 14.8 of the Canada–United States–Mexico Agreement (CUSMA):

No Party shall expropriate or nationalize a covered investment either directly or indirectly through measures to expropriation or nationalization (expropriation), except:

... (c) on payment of prompt, adequate, and effective compensation in accordance with paragraphs 2, 3, and 4; ...

[Paragraphs 2, 3, and 4 go on to require fair market value.]

See also Phillips Petroleum Co. Iran v. The Islamic Republic of Iran (1989) 1955 Treaty of Amity:

As the Tribunal has held in a number of cases, expropriation by or attributable to a State of the property of an alien gives rise under international law to liability for compensation, and this is so whether the expropriation is formal or de facto and whether the property is tangible, such as real estate or a factory, or intangible, such as the contract rights involved in the present Case.

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You make the very common mistake of international politics - in truth, on international level there isn't any law at all

For law to be a law, for the "rule of the law" one requires at least monopoly on violence. And when each entity has its own military force (and multiple entities wield nuclear weaponry) that becomes very problematic

And even when most entities agree on some set of rules, it's still down to individual interests of the members on how to react to infractions.
You can still bomb all the bakeries and water desalination plants and go away scot-free, or you can hunt your own citizens and strip protections off of churches and languages and still be hailed as beacon of freedom or smth - as long as you have enough weight behind you

All that to say, while balance of power and national interests prohibit "automatic sanctions" (or automatic anything, as was noted in the comments), there's still the basic principle of "action and reaction"
Entities react on actions of others, and act within their reach and abilities

What actions are possible on international level?

One obvious example is militarian, "Ultima ratio" so to say. You can see how your example of "Panama seizing american possessions" got answered with "USA will just invade, lol" kind of reply

The other possibility is trade - it's quite possible to express many of sanctions against Russia as simply "some countries stopped trading with some entities and threat to stop trading with anyone trading with those entities" (which becomes a cost-benefit analysis not guaranteed to comply)

But what might answer closest to the spirit of your question is the notion of "international law courts"
By that I mean that some countries have set up some organizations (not necessarily with "international" in the name), with some sets of rules, that allow countries to participate in legal battles with each other (or other entities) under judgement of some 3rd party, which supposedly enforces its decisions within its "reach and abilities"

So for example if Costa-Rica seizes some Peruvian business, it might get brought to Chinese court which, after proclaiming said seizing illegal, would direct Chinese law enforcement to seize some Costa-Rican possessions (in China) for Peru to control

As always, some vested interested is still present (3rd party =/= independent or unaffected), but with stakes low enough and with procedures legal and muddied enough to not cause reactions to such action of 3rd party - some semblance of real laws can be created

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