Approaches of International Courts and Tribunals to the Award of Compensation in International Private Property Cases and Implications for the Reform of Investor-State Arbitration

In recent years, investor–state arbitral tribunals have awarded increasingly high amounts of compensation to foreign investors, which can exacerbate the negative impacts of investment treaties on people and the economy in host states. This paper contributes to discussions on how to address this issue by comparing approaches used to award compensation in investment tribunals with those used by some of the most active and/or high-profile international courts and tribunals in international private property claims cases.

From this comparative analysis, the paper identifies the following options for states and other proponents to consider when considering investor–state dispute settlement reform:

• Crafting new treaty language that requires investor–state arbitral tribunals to apply a different standard of reparation to customary international law or provides greater guidance on how to put such standards of reparation into practice.
• Requiring investor–state arbitral tribunals to engage more with the decisions of domestic mechanisms regarding reparation for investment treaty breaches.
• Encouraging parties to seek agreement on matters of reparation, including through negotiated or mediated settlements following arbitral decisions on the merits.
• Encouraging—or requiring—greater use of tribunal-appointed experts to reduce reliance on party-appointed experts when calculating compensation for investment treaty breaches.