Summary

In March 2019, the International Centre for Settlement of Investment Disputes (ICSID) revealed proposals for amendment of its rules. These proposals have intensified the discussion of transparency and convergence in tribunal rulings. As part of this discussion, we analyze how tribunals approach valuation topics, using country risk premium (CRP) as an example. Our analysis focuses on how tribunals address five questions:

(1) should one include a country risk premium in the discount rate;
(2) what is the appropriate size of the country risk premium;
(3) what is the proper method to calculate the country risk premium;
(4) what is a suitable way to apply the country risk premium to a valuation model; and
(5) should expropriation risk be included as part of the country risk premium?