Compensation and Valuation in Investment Arbitration

Abstract

The subject of this volume of the ICSID Reports is remedies. This analytical report focuses on the most consequential and controversial aspect of remedies, the issue of compensation for injury to investments. The question of how much compensation is due for breaches of the standards in investment treaties, including expropriation and fair and equitable treatment, is at the core of investor-state arbitrations. For investors, obtaining compensation is the main reason why they bring investment arbitrations against host states, at least most of the time. For host states, paying compensation to investors because of investor-state arbitrations can significantly affect cost-benefit calculations of governmental measures (and chill such measures in some circumstances) and can lead states to reconsider their investment treaties, particularly in case of what some consider to be superlative monetary awards by investor-state tribunals. The question of compensation thus also features prominently in ongoing reform discussions of investor-state dispute settlement, in UNCITRAL Working Group III and elsewhere.