IIA Issues Note, No. 1, 2024
- Damages awards are growing. Tribunals have awarded sums exceeding US dollars 100 million in more than a quarter of all investor- State dispute settlement (ISDS) cases won by investors.
- Old-generation international investment agreements (IIAs) do not sufficiently define the compensation rules for treaty breaches. In the absence of specific treaty provisions, the issue is governed by customary international law which leaves scope for ISDS tribunals' interpretation.
- Different techniques to determine the amount of compensation exist. ISDS tribunals often rely on those that use a wide range of speculative assumptions about future profits and risks.
- In many recent IIAs, States seek to counter the trend of excessive awards. Treaty parties can specify ISDS tribunals' approaches to compensation, for example, by limiting the award of hypothetical future profits, prescribing guidance on valuation techniques, or developing techniques to disincentivize excessive claims.
- Ninety-eight per cent of ISDS cases are based on old-generation IIAs that typically lack any clear guidance on compensation. Reforming these treaties is crucial to reduce the risk of excessively large awards.
Compensation and Damages in Investor-State Dispute Settlement Proceedings - IIA Issues Note, No. 1, 2024 (UNCTAD/DIAE/PCB/INF/2024/3)
9 Sep 2024
