Part III Remedies, 12 The Standard of Compensation

Subject(s):

Expropriation — Investor — Standards of treatment — Customary international law — Compensation — Damages

This chapter focuses on the standard of compensation as an important factor in determining the compensation for expropriation of an investment in investment treaty arbitration. It first provides an overview of the treaty standard of compensation, taking into account the so-called HULL formula — the requirement to pay ‘full compensation’. It then explains the standard of compensation for unlawful expropriation, along with the importance of the date of valuation date in lawful expropriation. It also considers cases that illustrate how investment treaty tribunals apply the treaty standard of compensation and customary international law, as well as assess damages in accordance with the foreign investor's expectation at the time of the expropriation. Finally, the chapter revisits CME Czech Republic v Czech Republic, a case which demonstrates the merit (or otherwise) of re-conceptualising the approach to damages.