Compensation Under Investment Treaties: What are the problems and what can be done?

In this brief, the authors explore the subject of compensation under investment treaties, which arbitral tribunals can award to foreign investors if they find that a host state has breached that treaty. The level of that compensation is determined by a combination of factors, including the legal principles that govern compensation as well as past jurisprudence on the same. These principles have significant and direct implications for states, investors, and other participants in the investment treaty regime.

By Jonathan Bonnitcha, Sarah Brewin on December 16, 2020

While the practical significance of the issue is clear, the question of compensation (or “damages”) under investment treaties has received limited attention to date. In this brief, the authors identify key concerns with tribunals’ current approach and suggest a range of reforms that states could consider in response.

A longer paper exploring these issues, including options for reform, was published in November 2020. IISD has also held two webinars on the issue, in August 2019 and November 2020, respectively.