Published 3 February 2021
In the world of international arbitration, disputes between foreign investors and sovereign states are often settled by rights and protections granted in investment treaties. As a general rule, if a foreign investor makes an investment in a country in which the investor's home country has a bilateral or multilateral investment treaty, that treaty often offers protections for the investor in the event of certain adverse actions by the host country, such as expropriation or inequitable treatment. If an investor feels that the host country has violated the investment treaty, the investor can file an international arbitration to try to recover the loss of value in its investment as a result of the alleged bad act of the host government. Many investment treaties specify which arbitral institution can administer an arbitration or, in some cases, the parties can choose.
The first edition of this study, published in January 2014, focused on arbitrations handled by the International Center for the Settlement of Investment Disputes ("ICSID"), a member of the World Bank Group. The study was based upon merit awards issued and publicly available as of 30 June 2013, and the analysis included 99 cases.
This second edition of the study is a more comprehensive study of all investor-state cases which are primarily investment treaty cases, with a few contract cases, based on publicly available awards as of 31 March 2020. This edition analyzes additional arbitrations under ICSID rules, as well as arbitrations under UNCITRAL, SCC, PCA, ICC, LCIA, and CRCICA rules.
It includes an additional 70 ICSID awards, as well as 72 awards from other forums, totaling 241 awards, 143% more than the first edition. As in the first edition, in this second edition we endeavored to study the damages and quantitative aspects of the awards, including interest and costs. Our analyses exclude cases that were dismissed on jurisdictional grounds or were otherwise discontinued or settled prior to a final merits award.
Based on the publicly available data for the 241 awards included in this analysis, damages awarded total almost $71.9 billion on claims of over $219 billion, which results in an average award as a percentage of claim amount of 32.8%. The average awarded amount was $298.3 million on an average claim amount of $910.6 million. Three awards alone accounted for 81.7% of the awarded damages and 70.1% of the amount claimed. Excluding these three awards, the average damages awarded were $55.2 million, with the average claimed amount being $275.3 million.
Our analyses indicate that the respondent won in approximately 61% of the reviewed cases, either through awards of no liability or awards with liability but less than 20% of the amount claimed being awarded. The claimant was awarded more than 20% of the claim in 38% of the cases.
The study of the awards also shows interesting insights into the players in these matters. These 241 awards involve 50 arbitrators who issued four or more merit awards while only 12 have issued more than ten awards. With law firms, there are 41 firms with four or more awards and 12 with ten or more awards. The analysis of damages experts indicates there are 13 experts who have been involved in four or more reported cases and just five who have been reported in ten or more damages awards. We studied the track records of the arbitrators, law firms, and experts and scored the results they achieved in cases that reached the final merit award stage.
Footnotes omitted from this introduction.
First edition available here:
T.H. Hart; R. Vélez; "Study of Damages in International Center for the Settlement of Investment Disputes Cases (Credibility International, 1st Edition, June 2014)"
TDM 3 (2014), URL: https://www.transnational-dispute-management.com/article.asp?key=2114