Demystifying Moral Damages in International Investment Arbitration

Simon Weber

doi:10.1163/15718034-12341430

Abstract

Abstract Claims for compensation of material damages in investment arbitration are well known – they are part of every dispute. Tribunals deal extensively with such claims and do not accord much attention to another type of damages: moral damages. Until today, no uniform solution has been found. There seems to be stark disagreement between arbitral tribunals on how to deal with a claim for moral damages. This article sheds light on moral damages and proposes a possible solution under international law. To this end, it introduces the concept of moral damages and its history in international disputes. After having set out such general overview, it then applies the concept to investment arbitration by analysing five issues arbitral tribunals have been faced with when confronted by a claim for moral damages. Finally, it comments on the most prominent awards and provides an outlook for a possible solution.

Highlights

Introduction1.1 Background On 4 October 2019, an ICSID tribunal rendered an award rejecting a claim for moral damages in a dispute between a group of Turkish businessmen and the
1.1 Background On 4 October 2019, an ICSID tribunal rendered an award rejecting a claim for moral damages in a dispute between a group of Turkish businessmen and the via free access WeberState of Uzbekistan.[1]
After having set out such general overview, it applies the concept to investment arbitration by analysing five issues arbitral tribunals have been faced with when confronted by a claim for moral damages

Summary

Introduction

1.1 Background On 4 October 2019, an ICSID tribunal rendered an award rejecting a claim for moral damages in a dispute between a group of Turkish businessmen and the. This article briefly touches upon the history of moral damages in international disputes, analysing the decision of the United States-Germany Mixed Claims Commission in the Lusitania case (1923) and the decision of the Permanent Court of International Justice in the Chorzów Factory case (1928), where both agreed that moral damages can be compensated and that the reparation needs to wipe out all consequences of the wrongful act. The present article addresses the punitive character of some decisions on moral damages This is because according compensation for moral damages to investors suffering at the hands of States that have acted maliciously can have a punitive character, which is prohibited under international economic law. IV.E.2), para. 4. For further discussion, see Julien Cazala, La réparation du préjudice moral dans le contentieux international de l’investissement (Pedone, 2015), 282. European Convention on Human Rights, Rome 1950, Preamble

The History of Moral Damages in International Disputes

Issues Arbitral Tribunals Have Been Faced with over Time

Restitution and Compensation in Context

Findings

The Tests Applied by Arbitral Tribunals