International Law Review

International Law Review

The Standard of Causation and Compensation for Non-Expropriatory Breaches of International Investment Agreements in the Investment Arbitration Practice

Document Type : academic

Authors
Hassan FARAJ MEHRABI
Mohsen Mohebi
Islamic Azad University, Science and Research Branch, Faculty of Law,, Tehran
10.22066/cilamag.2022.252561
Abstract
This article aims to discover the standard of compensation for damages caused to foreign investors due to the non-expropriatory violations of bilateral or multilateral International Investment Agreements (IIA). A review of the investment arbitration practice as an important source of Foreign Investment Law, reveals that the amount of compensation in these cases is determined according to the standard put forward by the PCIJ in Chorzów Factory case as well as the relevant standards of the ILC Articles on Responsibility of States for Internationally Wrongful Acts. In cases where the violation of the IIA has amounted to expropriation, the payable compensation to the aggrieved investor would be determined in the same manner as an unlawful expropriation. In other cases, however, the assessment of compensation lies in the existence of a causal link between the wrongful act of the Host State and the damages caused to the investor. Despite the relative coherence of the arbitral tribunals’ rulings regarding the compensation standard in non-expropriatory violations in similar cases, this article concludes that the method by which the causal link is examined by arbitral tribunals remains utterly inconsistent, which can undermine the coherence and predictability of the international investment arbitration system.
Keywords
International Investment Law
Compensation
Non-Expropriatory Violations
Chorzów Factory
Causal Link
Investment Arbitration Practice

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  • Receive Date 19 March 2020
  • Revise Date 07 May 2020
  • Accept Date 28 May 2020