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Mr. Müller Daniel

Member of the Paris Bar

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Moral Damages

I. Definition


Moral damages, or non-material damages, are damages awarded as a remedy for non-material harm, e.g. for losses that are non-pecuniary in nature.1


Claims for moral damages are rather new in investment arbitration.2 Their importance and frequency has increased in recent years.3


Awarding moral damages has been distinguished from the general sanction of awarding the total costs of the arbitration on the responsible party.4

II. Origin


Compensation of moral damages arises from the obligation under customary international law of full reparation of an injury (whether material or moral) caused by an internationally wrongful act,5 as codified in the ILC Draft Articles on the Responsibility of States for Internationally Wrongful Acts.6 Recoverability of moral damages is widely accepted in most legal systems and arbitral practice.7 For instance, it has been recognized in France, for both natural persons8 and legal persons,9 in the United-Kingdom,10 in Russia,11 in Chile,12 in Libya,13 in Egypt,14 in Lebanon,15 in Yemen,16 in the Philippines,17 in Azerbaidjan18 and in Malta.19

III. Components


Moral damages may remedy different types of non-material harm in the context of investment arbitration, including damages to personality and reputation,20 to physical health,21 individual pain and suffering,22 personal affront associated with an intrusion on one’s home or private life,23 and also for legal entities and corporation,24 for instance in case of loss of business credit, reputation, good will and opportunities.25

IV. Whose moral damages can be claimed


Moral damages are available to investors that are both natural26 and legal persons,27 even if awarding moral damages remains rather rare in international investment disputes.28 Some tribunals have considered that the question of moral damages in international investment arbitration remains controversial29 and that a considerable degree of caution is prompted in respect of moral damages of corporate investors.30


It has also been found that in certain circumstances and given the absence of other possible remedies, investors may also be entitles to claim moral damages for suffering of their employees.31

V. Conditions to award moral damages


Several tribunals have acknowledged the possibility and the power to award moral damages.32


No clear and consistent arbitral practice regarding award of moral damages has yet emerged. As one tribunal has noted, a general principle, like abuse of process, for instance, could hardly be regarded a sufficient legal basis for an award of moral damages.33 The absence of economic harm is not sufficient for an award of moral damages.34 Besides, the award of moral damages could be precluded on the basis of the “unclean hands” doctrine.35


In a number of cases, arbitral tribunals have rejected claims for moral damages, mainly on the basis of:

  1. lack of proof;36
  2. lack of competence of the tribunal;37
  3. absence of a treaty breach;38
  4. absence of an entitlement to moral damages under the applicable domestic law;39
  5. absence of payment of the administrative fee covering the examination of the claim.40

In others, claims for compensation of moral damages have been granted.41 Two criteria are often referred to to award moral damages: 

A. Exceptional circumstances or gravity requirement


The Desert Line v. Yemen tribunal introduced the “exceptional circumstances” requirement of the moral damages claim.42 Subsequent tribunals have readily accepted this requirement.43 The element has also been referred to as a “gravity” requirement.44 The threshold of gravity and substantiality has not been met in several cases.45


There is no precise definition of what constitutes “exceptional circumstances” when evaluating moral damages claims. On the basis of the existing case law, it is possible to establish some indicative non-cumulative criteria for the “exceptional circumstances” test:

  • the State’s actions imply physical threat, illegal detention or other analogous situations in which ill-treatment involved contravenes the norms according to which civilized nations are expected to act;46
  • the State’s actions cause a deterioration of health, stress, anxiety, or cause other mental suffering such as humiliation, shame and degradation, or loss of reputation, credit and social position;47 and
  • both cause and effect of State’s actions are grave or substantial.48 The effect of the State’s actions should be appreciated in concreto, against the specific circumstances of the case.49

B. "Malicious" and "fault based" conduct of the respondent


Arbitral tribunals are split on the necessity of showing fault for the award of moral damages. Some tribunals have considered malicious and fault-based conduct when assessing moral damages.50 Other tribunals have disregarded such consideration.51


To date, we are aware of only one ISDS arbitral tribunal that has awarded compensation for non-pecuniary damages without referring to those two criteria52 and one inter-State case.53

VI. Proof of moral damages

A. Burden of proof

B. Standard of proof

VII. Relief and quantum


Moral damages may take the form of, and have been granted as, compensation58 and satisfaction.59


Quantification of moral damages is a difficult task60 that must not stay in the way of granting compensation to the party that suffered moral harm.61 The ICJ has held that award of moral damages should rest on “equitable considerations”.62 Arbitral practice is scarce on the issue of quantum in moral damages claims and contains little consistent guidelines. Arbitral tribunals usually enjoy significant discretion in determining the amount of moral damages.63


Compensation has ranged from a small sum on equitable grounds64 to millions of dollars, including awards of USD 1,000,000,65 USD 30,000,00066 and 1 billion CFA Francs.67


Moral damages may be denied when monetary compensation has already been granted for material damages.68

VIII. Moral damages as counterclaims


Articles in Academic Journals

Dumberry, P., Why and How Arbitral Tribunals Award Compensation For Moral Damages?, Kluwer Arbitration Blog, 2010.

Dumberry, P., Compensation for Moral Damages in Investor-State Arbitration Disputes, Journal of International Arbitration, 2010, Issue 23, p. 247.

Dumberry, P., Satisfaction as a Form of Reparation for Moral Damages Suffered by Investors and Respondent States in Investor-State Arbitration Disputes, Journal of International Dispute Settlement, 2012, Issue 3, p. 205.

Dumberry, P. and Cusson, S., Wrong Direction: “Exceptional Circumstances” and Moral Damages in International Investment Arbitration, The Journal of Damages in International Arbitration, 2014, Issue 1, p. 33.

Markert, L. and Freiburg, E., Moral Damages in International Investment Disputes - On the Search for a Legal Basis and Guiding Principles, Journal of World Investment & Trade, 2013, Issue 14, p. 1.

Moyano García, J. P., Moral Damages in Investment Arbitration: Diverging Trends, Journal of International Dispute Settlement, 2015, Issue 6, p. 485.

van Houtte, H. and McAsey, B., Future Damages in Investment Arbitration— a Tribunal with a Crystal Ball?, in Caron, D.D., Schill, S. W., Cohen Smutny, A. and Triantafilou, E.E. (eds.), Practising Virtue, Oxford University Press, 2015, p. 2.

Mohtashami, R., QC, Holland, R., and El-Hosseny, F., Non-Compensatory Damages in Civil- and Common-Law Jurisdictions – Requirements and Underlying Principles, The Guide to Damages in International Arbitration, Oxford University Press, 2015.

Vasudev, S., Damages for Non-Material Harm in Investment Treaty Arbitration, 37 ASA Bulletin, 2019, Issue 37, p. 97.

Wong, J., Making a Muddle of Moral Damages, Kluwer Arbitration Blog, 2014.

Sabahi, B., Compensation and Restitution in Investor-State Arbitration, Principles and Practice, International Economic Law Series, 2011.

Crawford, J., Pellet, A. and Olleson, S., The Law of International Responsibility, Oxford Commentaries on International Law, Oxford University Press, 2010.

Zeynep Pirim, C.Z., Reparation by Pecuniary Means of Direct Moral Damages Suffered by States as a Result of Internationally Wrongful ActsJournal of International Dispute Settlement, Vol. 11, Issue 2, June 2020, pp. 242–261.



International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts with Commentaries, Report of the Commission to the General Assembly on the Work of its Fifty-Third Session,Yearbook of the International Law Commission, 2001, Vol. II, Part Two.

Crawford, J., Peel, J. and Olleson, S., The ILC's Articles on Responsibility of States for Internationally Wrongful Acts: Completion of the Second Reading, European Journal of International Law, Vol. 12, Issue 5, 1 December 2001.

Crawford, J., Investment Arbitration and the ILC Articles on State Responsibility, ICSID Review, 25(1), 2010.

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