Moral Damages in International Investment Law

Abstract

This article discusses the notion of moral damages in international investment arbitration. Although there are currently more than 2500 bilateral investment agreements (hereinafter — BIT) in force, none of them regulates moral damages. The analysis focuses on the historical background of moral damages, which shows that international law has not been overly concerned with their assessment within the last hundred years. As such, despite their almost universal acceptance by international courts and tribunals, there is still no guidance for tribunals on how to approach moral damages, making their assessment a topical issue of modern international law. The article highlights the reasons tribunals give for either completely disregarding such claims, or granting merely symbolic sums, such as non-tangible nature of moral damages, lack of any concrete evidence, or an extremely high threshold. The author concludes that international law still lacks a strict and uniform test, when it comes to moral damages, which are bound to face rather broad and subjective decisions rendered by the tribunals. The author further discusses the problem of assessing moral damages, which also lacks established methodology, and often refers to national law of domestic legal systems instead of a unified standard. In some cases, tribunals do not provide any reasoning or legal basis for their assessment. The author concludes that in the absence of a strict test, investment tribunals may turn to human rights instruments to make the assessment of moral damages clearer and more consistent.