It is known that the determination of the valuation date of an investment can have a considerable impact for the valuation of compensation and damages claim. How it is fixed is often the subject of great debate between the parties, their experts and the tribunal.2
II. How international tribunals fix valuation dates
A. Lawful expropriation
In lawful expropriations, the practice of international tribunals has varied depending on the circumstances of the case. Tribunals have frequently considered the valuation date as the date of the expropriation or respective State act4 and if the expropriation becomes effective later, the valuation date would be consider the date when the expropriation became publicly known or took effect.5 In cases where the expropriation has become effective later, tribunals have also taken into account political, social, and economic changes up until the expropriation.6 In other cases, the valuation date has been set just before the expropriation took place or before the date at which the decision to expropriate became publicly known.7
Compañia del Desarrollo de Santa Elena S.A. v. Republic of Costa Rica, ICSID Case No. ARB/96/1, Award, 17 February 2000, para. 83; Tidewater Investment SRL and Tidewater Caribe, C.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5, Award, 13 March 2015, para. 159; American International Group, Inc. and American Life Insurance Company v. Islamic Republic of Iran and Central Insurance of Iran (Bimeh Markazi Iran), IUSCT Case No. 2, Award (Award No. 93-2-3), 7 December 1983, para. 57; The American Independent Oil Company v. The Government of the State of Kuwait, Final Award, 24 March 1982, para. 175.
World Bank, Guidelines on the Treatment of Foreign Direct Investment, 1992, Art. IV.3; North American Free Trade Agreement, 17 December 1992, 1 January 1994, Article 1110(2); The Energy Charter Treaty, 17 December 1994, 16 April 1998, Article 13 (1); Mobil Cerro Negro Holding, Ltd., Mobil Cerro Negro, Ltd., Mobil Corporation and others v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27, Award of the Tribunal, 9 October 2014, para. 307.
B. Unlawful expropriations
Though most BITs provide the valuation conditions and standards for expropriations in general, some tribunals have ruled that these provisions do not apply to an unlawful expropriation. Contrary opinion has also been proposed and the case law is not settled.8 In cases where tribunals have made such distinction, they have applied standards of reparations under international law.9 In Factory at Chorzow, the Permanent Court of International Justice ruled that in order to come as close as possible to restitutio in integrum, the experts should determine the financial situation the enterprise would have had in at the date of the judgment, if the expropriation had not taken place.10 Therefore, for the application of this exercise the value should be assessed at both the date of the expropriation and the date of the judgment.11
Based on the above, adjudicators are split and have adopted two different views. The first view builds off Factory at Chorzow and supports the argument that the valuation date can be moved to the date of the award. Here, tribunals have chosen the date of the judgment as they have found that the value of the expropriated property increased between the expropriation date and the judgment date or at least accepted the difference and awarded damages incurred after the expropriation date.12 However, other tribunals have found that the date of expropriation should be still considered as the valuation date,13 in some instances because valuating at the date of the judgment might lead to arbitrary decisions,14 meaning that, under Chorzów, the valuation date would not necessarily always automatically be replaced by the date of the award.
Lavaud, F. and Recena Costa, G., Valuation Date in Investment Arbitration: A Fundamental Examination of Chorzow’s Principles, Journal of Damages in International Arbitration, 2016, p. 44; ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary, ICSID Case No. ARB/03/16, Award, 2 October 2006, para. 483; British Caribbean Bank Ltd. v. The Government of Belize, PCA Case No. 2010-18, Award, 19 December 2014, para. 288.
ADC Affiliate Limited and ADC & ADMC Management Limited v. Republic of Hungary, ICSID Case No. ARB/03/16, Award, 2 October 2006, para. 497; Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/02/8, Award, 6 February 2007, para. 353; Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. (formerly Compañía de Aguas del Aconquija, S.A. and Compagnie Générale des Eaux) v. Argentine Republic (I), ICSID Case No. ARB/97/3, Award II, 20 August 2007, para 8.3.20; Marion Unglaube v. Republic of Costa Rica, ICSID Case No. ARB/08/1, Award, 16 May 2012, para. 318; Yukos Universal Limited (Isle of Man) v. The Russian Federation, PCA Case No. 2005-04/AA227, Final Award, 18 July 2014, para. 1763; Quiborax S.A., Non-Metallic Minerals S.A. v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Award, 16 September 2015, para. 377.
Bernardus Henricus Funnekotter and others v. Republic of Zimbabwe, ICSID Case No. ARB/05/6, Award, 22 April 2009, para. 115; Waguih Elie George Siag and Clorinda Vecchi v. Arab Republic of Egypt, ICSID Case No. ARB/05/15, Award, 1 June 2009, para. 542; Ioannis Kardassopoulos v. Georgia, ICSID Case No. ARB/05/18, Award, 3 March 2010, para. 517; Quasar de Valores SICAV S.A., Orgor de Valores SICAV S.A., GBI 9000 SICAV S.A. and ALOS 34 S.L. v. The Russian Federation, SCC Case No. 24/2007, Award, 20 July 2012, para. 226; Quiborax S.A., Non-Metallic Minerals S.A. v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Partially Dissenting Opinion of Professor Brigitte Stern, para. 24.
C. Indirect expropriation
In cases of indirect expropriations, fixing a valuation date is more difficult as the expropriation takes place through a combination of acts and over a longer period of time.15 Tribunals have varied their practice in different cases. They have sometimes fixed the valuation date at the stage when the depravation of property rights was irreversible.16 Other tribunals have fixed the date of the taking as the valuation date to avoid to reduce the amount of compensation.17 Furthermore, in cases of creeping expropriations, the Articles on State Responsibility provides a solution for the problem of the date of the wrongful act, which distinguishes the time between the occurrence of the unlawful act and the duration of the breach.18 By application of Article 15, tribunals need to decide which action or omission is sufficient to constitute the wrongful act.19
International Technical Products Corporation and Itp Export Corporation, Its Wholly-Owned Subsidiary v. The Government of the Islamic Republic of Iran and Its Agencies, The Islamic Republic Iranian Air Force and the Ministry of National Defense, Acting for the Civil Aviation Organization, IUSCT Case No. 302, Final Award (Award No. 196-302-3), 28 October 1985, para 120; Foremost Tehran, Inc., Foremost Shir, Inc. and others v. The Government of the Islamic Republic of Iran, The Ministry of Economic Affairs and Finance and others, IUSCT Case Nos. 37 And 231, Award (Award No. 220-37/231-1), 11 April 1986, para. 74; Phillips Petroleum Company Iran v. The Islamic Republic of Iran, the National Iranian Oil Company, IUSCT Case No. 39, Award (Award No. 425-39-2), 29 June 1989, para. 101.
Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16, Award, 8 November 2010, para. 481; Reinhard Hans Unglaube v. Republic of Costa Rica, ICSID Case No. ARB/09/20, Award, 16 May 2012, para. 315; Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Republic of Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008, para. 708.
Burgstaller, M., and Ketcheson, J., Should Expropriation Risk Be Taken into Account in the Assessment of Damages?, ICSID Review - Foreign Investment Law Journal, 2017, pp. 193 – 215.
Marboe, I., Calculation of Compensation and Damages in International Investment Law, 2nd ed., 2017.
Sabahi, B., Rubins, N. and Wallace Jr., D., Investor-State Arbitration, 2nd ed., 2019.