Restitution and Compensation Reconstructing the Relationship in Investment Treaty Law

published in: Hofmann/Tams (eds.), International Investment Law and General International Law: From Clinical Isolation to Systemic Integration, Nomos, Juni 2011, p. 161

Walter Hallstein-Institut (WHI) Paper No. 02/11

24 Pages Posted: 18 Nov 2014

See all articles by Steffen Hindelang

Steffen Hindelang

Uppsala University - Faculty of Law; University of Southern Denmark - Department of Law; Humboldt-Universität zu Berlin Walter Hallstein Institute for European Constitutional Law; CELIS Institute; YSEC - Yearbook of Socio-Economic Constitutions

Date Written: November 16, 2011

Abstract

Stay or leave? Restitution or compensation? Perhaps in this admittedly simplified way one could sketch strikingly the choice to be made when deciding between the two forms of reparation in investment arbitration. While the restitution of, e.g., unlawfully taken property means continued presence and perhaps retention of business activities in a host State, compensation often opens up the possibility to seek new investment opportunities beyond the borders of the host State. This paper intends to shed light on the rules governing the abovementioned choice in investment treaty law. Starting point of this elaboration will be the “general” rules governing the consequences of the commitment of an international wrong. These rules are contained in the International Law Commission’s (“ILC”) Articles on Responsibility of States for Internationally Wrongful Acts (“ASR” or “ILC Articles”) and basically mirror customary international law. Thereafter it will turn to the rules applicable to investment treaties, hereby answering the question of whether and to what extent the “general” rules on the relationship between restitution and compensation are also valid within this specific area of investment treaty law. A review of recent arbitral awards will form the basis for a normative construction of the relationship in investment treaty law. This construction will proceed from the assumption that the purposes State parties pursue with the conclusion of investment treaties essentially remain in an inter-State sphere and, hence, substantive treatment rights in respect of foreign investment accrue to the host State of the investor. Based on such understanding of the purposes pursued with the conclusion of investment treaties, this paper comes to an end with suggesting to strictly “prioritise” restitution among the forms of reparation available in the area of investment treaty law.

Keywords: investment law, investment arbitration, restitution, compensation, direct rights, derivate rights. state responsibility

Suggested Citation

Hindelang, Steffen, Restitution and Compensation Reconstructing the Relationship in Investment Treaty Law (November 16, 2011). published in: Hofmann/Tams (eds.), International Investment Law and General International Law: From Clinical Isolation to Systemic Integration, Nomos, Juni 2011, p. 161, Walter Hallstein-Institut (WHI) Paper No. 02/11, Available at SSRN: https://ssrn.com/abstract=2525065

Steffen Hindelang (Contact Author)

Uppsala University - Faculty of Law ( email )

Faculty of Law Box 512
Uppsala, SE-751 20
Sweden

University of Southern Denmark - Department of Law ( email )

Odense
Denmark

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Humboldt-Universität zu Berlin Walter Hallstein Institute for European Constitutional Law ( email )

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CELIS Institute ( email )

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YSEC - Yearbook of Socio-Economic Constitutions ( email )

Berlin
Germany

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