Compensation and Restitution in Investor-State Arbitration

This book examines the history, principles, and practice of awarding compensation and restitution in investor-state arbitration disputes initiated under investment treaties. The principles discussed may be applied to all international law cases where damage to property is an issue.

The book starts by tracing the roots of the applicable international legal principles to Roman law, and from there follows their evolution through the European law of extra-contractual liability and eventually through the Chorzow Factory case to the modern international investment law principles of compensation and restitution.

The greater part of the book is then dedicated to an examination of the modern application of these principles, focusing on the jurisprudence of international tribunals under various arbitral rules such as ICSID and UNCITRAL. Monetary compensation, the prevalent form of remedy sought and awarded in investorstate disputes, is discussed in detail, including the amount of compensation for damage resulting from breach of investment treaties such as unlawful expropriation of a foreign investor's property, a brief overview of valuation methods, supplementary compensation for moral damages, interest, costs, and currency fluctuations as well as various principles that may limit the amount of recoverable compensation, such as causation. A chapter is dedicated to the discussion of the theory and practice of awarding restitution in investor-state disputes. The book also covers the general principle of reparation in international law as applied in investor-state arbitrations. The topics discussed cover the theoretical as well as practical issues that may be raised in awarding compensation and restitution in investment treaty disputes between states and foreign investors.

Borzu Sabahi is Counsel at Fulbright & Jaworski LLP in Washington DC.