Compensation for Moral Damages in Investor-State Arbitration Disputes

Abstract

This article examines the issue of monetary compensation awarded by arbitral tribunals for moral damages suffered by foreign investors in the context of investor-State arbitration. It examines the nature and the function of moral damages in international investment law as well as several controversial issues, including the proper form of reparation to remediate moral damages suffered by a State, whether proof of malicious intent is a necessary condition for a tribunal to award compensation and whether compensation should be limited to cases involving “egregious” or grave treaty violations. The article argues that particularly condemnable governmental actions toward foreign investors will have a bearing on the actual quantification of the amount of compensation to be awarded for moral damages. The goal is not only to remediate the actual damage suffered but also to send a “clear message” to the host State.

Keywords: moral damages, compensation, investor-State arbitration, ICSID