Part III Procedural Issues, Ch.26 Compensation, Damages, and Valuation

Subject(s):

Compensation — Damages — Costs and expenses — Discounted cash flow (DCF), anticipated future profits — Interest — Valuation — Expropriation — Standards of treatment — Evidence — Burden of proof

This chapter begins by explaining the terminology, different functions, effect of damages awards on the acceptability of investment arbitration jurisprudence, and the main principles (mainly the Chorzow Factory dictum) governing awarding damages. Section 2 explains some of the elements that may have an impact on awarding damages, such as litigation dynamics, overcompensation, and moral hazard, and finally damnum emergens and lucrum cessans. Section 3 examines compensation for expropriation, including standard of compensation, valuation methods, compensation for creeping and regulatory expropriation, date and time of expropriation. Section 4 discusses compensation for breach of nonexpropriatory investment treaty disciplines such as national treatment, denial of justice, legitimate expectations. Section 5 examines the damages for contractual breaches as well as the breach of an umbrella clause. Section 6 touches upon the concepts of causation, as well as compensation-reducing and compensation-enhancing elements. Section 7 examines the role of equitable considerations in awarding damages. Section 8 examines different aspects of awarding interest. Section 9 discusses burden of proof and evidentiary issues. Section 10 provides an overview of other issues not discussed in this chapter.