Calculation of Compensation and Damages in International Investment Law

1. Introduction
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2. The Function of Compensation and Damages
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	A. Distinct Functions of Compensation and Damages
		(1) Compensation
		(2) Damages
	B. The Functions in Detail
		(1) The Function of Compensation upon Expropriation under International Law
			(a) Full Reparation?
			(b) Restitution of Value
		(2) The Function of Damages
			(a) Reparation
			(b) Punishment?
	C. Consequences for the Calculation
		(1) Objective–abstract Valuation
		(2) Subjective–concrete Valuation
		(3) Selection of a Valuation Method
3. Valuation Standards and Criteria
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	A. Compensation upon Expropriation
		(1) The Standard of Compensation
			(a) Customary International Law
			(b) International Treaty Law
			(c) International Jurisprudence
		(2) The Role of Compensation for the Lawfulness of the Expropriation
		(3) Can Indirect Expropriations ever be Lawful?
		(4) Violation of Stabilization Clauses
		(5) The Difference between Lawful and Unlawful Expropriations
			(a) Lucrum Cessans?
			(b) Punitive Damages?
			(c) Compensation versus Reparation
	B. Reparation and Damages
		(1) Violations of International Law
			(a) Subjective–concrete Valuation
			(b) Objective–abstract Valuation
		(2) Breaches of Contract
			(a) Damnum Emergens and Lucrum Cessans
			(b) Reliance Interest and Compliance Interest
			(c) Rejection of Lost Profits
			(d) Damages for Lost Opportunities?
		(3) Simultaneous Violation of International and Contractual Obligations
		(4) Reasons for Reducing the Amount of Damages
			(a) Contributory Negligence
			(b) Mitigation of Damages
	C. The Valuation Date
		(1) The Valuation Date in Expropriation Cases
			(a) Lawful Expropriations
			(b) Unlawful Expropriations
			(c) Indirect Expropriations
		(2) The Valuation Date in Other Cases
			(a) Violations of International Law
			(b) Breaches of Contract
	D. The Exercise of Discretion and Equity Considerations
		(1) Estimation and Equity
		(2) Relevance of the Respondent's Economic Situation
4. International Standards, Bases of Value, and Valuation Approaches
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	A. International Standards
		(1) International Valuation Standards
		(2) World Bank Guidelines
		(3) MIGA
		(4) UN Compensation Commission
	B. Bases of Value
		(1) Market Value Basis of Valuation
		(2) Bases Other Than Market Value
			(a) Investment Value or Worth
			(b) Special Value, Synergistic Value, Price
			(c) Contractual Value
	C. Valuation Approaches
		(1) Market Approach
			(a) Stock Prices
			(b) Prior Transactions
			(c) Multiples
		(2) Income Approach
			(a) Basis of Income: Profits, Earnings, Cash Flow?
			(b) Going Concern
			(c) Forecasting
			(d) Discounting
		(3) Asset-Based or Cost Approach
			(a) Book Value
			(b) Replacement Value
			(c) Liquidation Value
	D. Transparency
	E. Experts in Arbitration Proceedings
5. Methods of Valuation in International Practice
	A. Market or Sales Comparison Approach
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		(1) Stock Prices
		(2) Prior Transactions
		(3) Offerings
		(4) Partial Sales
		(5) Comparable Sales
		(6) Comparable Companies and Multiples
	B. The Income Approach
		(1) Basis of Income: Profits, Earnings, Dividends, Cash Flows?
		(2) Going Concern
		(3) Forecasting
			(a) Analysis of Past Performance
			(b) Value Drivers
			(c) Business Plans
			(d) Economic Circumstances
			(e) Role of Contracts
			(f) Comparison of Two Future Scenarios—'But for' Approach
			(g) Valuation Phases
		(4) Discounting and Country Risk
		(5) Inflation
		(6) Reasons for Rejecting the Income Approach in International Practice
			(a) Insufficient Past Performance
			(b) No Future Prospects
			(c) Divergence of Amount of Investment and Expected Profits
			(d) Divergence of Submissions by the Parties
			(e) The Financial Situation of the Company
			(f) Valuation Procedure too Expensive
	C. The Asset-Based or Cost Approach
		(1) Book Value
			(a) Acceptance of Book Value for Particular Items
			(b) Adjustment of Book Value
			(c) 'Sunk Investment' and Wasted Costs
		(2) Replacement Value
		(3) Liquidation Value
	D. Other Approaches
		(1) Mixed Methods
		(2) Contract-based Valuation
		(3) Court and Arbitral Decisions
		(4) Insurance Value
		(5) Tax Value
	E. Consequential Damages
		(1) Liability to Subcontractors
		(2) Costs for Damage Limitation, Repair, and Maintenance
		(3) Costs and Expenses of Pursuing the Claim
	F. Moral Damages
6. Interest
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	A. The Function of Interest
		(1) 'Prompt' Compensation
		(2) 'Full' Reparation
			(a) State Responsibility
			(b) Breach of Contract
		(3) Prevention of Enrichment
		(4) Improvement of Payment Practices
	B. Pre-award Interest
		(1) Interest Rate
			(a) Legal Interest
			(b) Agreed Interest
			(c) Borrowing Rate
			(d) Investment Alternatives
			(e) Government Bonds
			(f) Interbank Interest
			(g) 'Fair' Interest in Practice
		(2) Dies a quo
			(a) Expropriations
			(b) State Responsibility
			(c) Breaches of Contract
		(3) Compound Interest
			(a) Repudiation in Early Cases
			(b) Increasing Acceptance in Recent Jurisprudence
			(c) Exceptions
	C. Post-award Interest
		(1) Dies a quo
			(a) Continuation of Pre-award Interest
			(b) Date of the Award
			(c) Grace Period
		(2) Interest Rate
		(3) Compound Interest
	D. Conclusions on Interest
7. Conclusions
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	A. Interrelation between the Claim's Legal Basis and the Valuation Basis
	B. The Choice of a Valuation Method
	C. Interest
Appendix 1. Table of ICSID Cases since 2008
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Appendix 2. Table of NAFTA Cases since 2008
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Appendix 3. Table of ECT Cases since 2008
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Appendix 4. Table of Ad hoc Investment Arbitration Cases since 2008
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Bibliography
	I. MONOGRAPHS AND OMNIBUS VOLUMES
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	II. ARTICLES IN JOURNALS AND OMNIBUS VOLUMES