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Compensation and Restitution in Investor-State Arbitration: Principles and Practice

Borzu Sabahi


This book presents a detailed study on compensation and restitution in investor state arbitration pursuant to investment treaties. The study begins by examining the historical roots of the principles of reparation, restitution, and compensation in international law as reflected in the landmark Chorzów Factory case. The roots of these principles are traced to Roman law and private law concepts that entered into the European continent's legal systems. Moving to modern times, the study focuses on the principle of reparation set out in the Chorzów Factory case and its requirement that reparation put the aggrieved party in the ‘hypothetical position’ that would have existed if not for the wrongful act. Restitution, both material and judicial, is discussed as a form of reparation. Compensation, by far the more common form of reparation in modern international investment disputes, is discussed in detail. In dealing with compensation for expropriation, this book examines the recent trends in which lawful and unlawful expropriation cases are distinguished and the impact that this distinction can have on the amount of compensation. This book additionally outlines some of the main valuation and accounting methods used in setting the hypothetical position to measure compensation due. Various forms of supplemental compensation, such as moral damages, interest, or arbitration costs, may also be necessary to fully restore the hypothetical position; these are discussed along with applicable limitations. This study also sets out important principles that may limit compensation generally, such as causation and the prohibition on double counting.

Bibliographic Information

Borzu Sabahi, author

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