- Compensation — Damages — Host state law
Investor-state arbitration is different from commercial arbitration between two private entities in that the involvement of a state or a state entity may entail considerations connected to sovereignty. States as sovereigns have certain rights and prerogatives stemming from the right to self-determination and their responsibility to safeguard public interests. On the other hand, states are also bound by the obligations they have freely decided to enter into. This chapter provides an overview of some important issues and problems in the calculation of compensation and damages in investor-state arbitration. It starts with the legal rules applicable and then addresses some important issues which must be identified in practice, such as causation and the valuation date. Thereafter, it discusses the circumstances which might limit the amount of compensation or damages before concluding with some remarks about the appropriate valuation method.
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