- International investment law — Customary international law — Damages — Valuation — Law of treaties
This chapter assesses the consequences of treaty violations. As a general rule, investment treaties do not specifically state the consequences of a state's breach of treaty provisions. In fact, many, if not most investment treaties make no reference at all to the obligation of an offending state to pay compensation or make reparation to investors injured by a breach. While investment treaties generally do not specify rules on damages for failure to respect their provisions, they nearly always provide that tribunals are to decide disputes not only in accordance with the applicable treaty provisions but also in accordance with ‘the relevant principles of international law’, ‘the general principles of international law’, or ‘the applicable principles of international law’. Thus, all investment treaties stipulate that international law, customary international law, or some variation of that formulation is the source of law that tribunals are to apply in deciding the issues that they confront, which of course includes compensation for investments that have been injured by a contracting state's failure to respect treaty provisions. In order to determine the value of the loss to an injured investment, one must have recourse to valuation techniques drawn from the science of finance.
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