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
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
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