Borzu Sabahi

in Compensation and Restitution in Investor-State Arbitration

Published in print June 2011 | ISBN: 9780199601189
Published online September 2011 | e-ISBN: 9780191729201 | DOI:

Series: International Economic Law Series


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This chapter examines compensation in investment treaty arbitration. It shows the development of principles of compensation for expropriation in customary international law, and how investment treaties have treated compensation for expropriation and for other breaches. It outlines the treatment of both unlawful and lawful expropriation prior to the milestone ADC v Hungary decision, and how that award has impacted thought and practice on compensation for expropriation since then. The chapter also outlines how the amount of compensation has been determined in investment arbitrations, focusing on the concept of Fair Market Value. It discusses the determination of the date of the injury and the proper date of valuation, central to setting the amount of compensation, as well as the treatment of post-act events. It outlines a number of valuation methods used to set the amount of compensation, both for valuing investments and for contractual and business interruption damages.

Keywords: compensation; expropriation; investment treaties; hypothetical position; fair market value; valuation; damages; sunk costs; post-act events; hindsight

Chapter.  23379 words. 

Subjects: Public International Law

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