Moral Damages in Investment Arbitration
As has been chronicled in previous postings, the 2008 decision of an ICSID arbitral tribunal to award $1 Million (US) in “moral damages” to an injured company has been eyed covetously by other investor-claimants in investment treaty disputes.
Such sums may be “small change” compared to the more conventional forms of economic compensation claimed for treaty breaches. Still, it’s become de rigeur for claimants – and even some states – to tack on claims for a few million Dollars in moral damages.
Arbitrators have been slower to award moral damages. However, in a recently-concluded ICSID arbitration proceeding, a tribunal grappled at considerable length with the claimant’s $3Milli [...]
Why and How Arbitral Tribunals Award Compensation For Moral Damages?
Until very recently, the issue of moral damages had arisen in only a handful of investor-State disputes. However in 2008 and 2009 alone, no less than five arbitration awards discussed the issue. While some tribunals dismissed moral damages claims based on lack of evidence (Pey Casado v. Chile; Biwater v. Tanzania and Europe Cement v. Turkey) or lack of jurisdiction (Cementownia v. Turkey), in one such case, Desert Line Projects LLC v. Yemen, the Arbitral tribunal awarded an amount of US$1 million in compensation to a corporation. This post examines why and how arbitral tribunals established under investment treaties award monetary compensation for moral damages suffered by foreign investors [...]
