Approaches of International Courts and Tribunals to the Award of Compensation in International Private Property Cases and Implications for the Reform of Investor-State Arbitration
As the amount of compensation being awarded in investment tribunals rises, this report analyzes how it is calculated in other international courts and tribunals to help inform reform processes that seek to address the negative socio-economic impacts of investment treaties.
In recent years, investor–state arbitral tribunals have awarded increasingly high amounts of compensation to foreign investors, which can exacerbate the negative impacts of investment treaties on people and the economy in host states. This paper contributes to discussions on how to address this issue by comparing approaches used to award compensation in investment tribunals with those used by some of the most active and/or high-profile international courts and tribunals in international private property claims cases.
From this comparative analysis, the paper identifies the following options for states and other proponents to consider when considering investor–state dispute settlement reform:
- Crafting new treaty language that requires investor–state arbitral tribunals to apply a different standard of reparation to customary international law or provides greater guidance on how to put such standards of reparation into practice.
- Requiring investor–state arbitral tribunals to engage more with the decisions of domestic mechanisms regarding reparation for investment treaty breaches.
- Encouraging parties to seek agreement on matters of reparation, including through negotiated or mediated settlements following arbitral decisions on the merits.
- Encouraging—or requiring—greater use of tribunal-appointed experts to reduce reliance on party-appointed experts when calculating compensation for investment treaty breaches.
You might also be interested in
Comparative Approaches to Compensation Under International Investment Law
An interview with Esmé Shirlow on her forthcoming IISD paper comparing approaches used by international investment tribunals to determine compensation awards.
Compensation Under Investment Treaties: What are the problems and what can be done?
In this brief, the authors explore the subject of compensation under investment treaties, as well as options for reform, drawing from their analysis in a related longer paper.
IISD Best Practices Series: Compensation Under Investment Treaties
This paper from IISD's Best Practices series takes a deep dive into the legal principles, arbitral jurisprudence, and lessons learned from how compensation is treated in investor–state arbitration, while presenting possible options for reform.
What Drives Investment Policy-makers in Developing Countries to Use Tax Incentives?
The article explores the reasons behind the use of tax incentives in developing countries to attract investment, examining the pressures, challenges, and alternative strategies that exist.