Few would deny that the investment arbitration system has become one of the most prominent international dispute resolution forums. 13 For the purposes of this document, the concept of 'partial compensation' includes the approximation of compensation and the subsequent reduction of the amount of compensation. Chile, failure of investors to properly assess investment risk resulted in damage reduction.
However, in the recovery phase, the tribunal reduced the amount of damages awarded to the plaintiffs by 25%, resulting in a reduction in damages from $66.7 billion to $50 billion.
Adjustments in light of other international obligations
The court concludes that there is a sufficient causal link between Yukos' abuse of the system in some of the low-tax regions and its demise, triggering a finding of contributory guilt on Yukos' part.43. Finds, in the exercise of its broad discretion, that as a result of the material and substantial misconduct of the Claimants and of Yukos [which they controlled], the Claimants have contributed 25 percent to the damage they have suffered as a result of the Respondent's destruction of Yukos. The resulting apportionment of liability between the plaintiffs and the respondents, viz., 25 percent and 75 percent, is fair and reasonable in the circumstances of the instant case.44.
It should be noted that the board's use of contributory negligence in this case is criticized for the following reasons. If, as the court found, the tax case was merely a pretext to expropriate Yukos, "the impact of the tax structure on the destruction of Yukos should be accepted as zero", and "Russia's clearly disproportionate response would have trumped the implications of (such) causality".45 For the second, .. the estimation of contributory fault in terms of proportional reduction of damages by a given percentage" would be much more than "the justifiable amount of Yuko's re-assessed tax arrears". It first noted that the DCF method "in reality would award lucrum cessans through the year 1995 on the assumption that lot sales would have continued through that year", but such lot sales in the areas registered with the World Heritage Committee under the UNESCO Convention would have been illegal under both international law and Egyptian law after 1979.48 The Court held that the award of lucrum cessans must involve only those profits that are legitimate, concluding that "even if the Court was disposed to accept the validity of the plaintiffs' DCF calculations, it could award lucrum cessans until 1979”,49 because.
As mentioned, granting partial compensation is an effective way to balance the public interest of the host state and the protection of foreign investment, once the responsibility of the former has been established. As George Kahale reminded us, this level of discretion would make arbitral decision-making resemble a Turkish "bargain" in which arbitrators will throw in percentages as part of what is effectively a settlement negotiation process aimed at reaching a number solomonic reminiscent of private commercial arbitration rather than arbitration proper. Having demonstrated the possibilities of partial compensation and its problems in investment arbitration, the next section examines the possible role of precautionary principles and the polluter pays during the remedial phase.
The role of the precautionary and polluter pays principles during the remedy phase
The precautionary principle and the polluter pays principle: an overview
- The precautionary principle
- The polluter pays principle
In the 1990s, the precautionary principle was recognized as a legal principle capable of general applicability in international law.54 It was explicitly recognized in four of the five instruments adopted at the United Nations Conference on Environment and Development (UNCED ), respectively, the Rio Declaration,55 Agenda 21,56 the United Nations Framework Convention on Climate Change (UNFCCC),57 and the Convention on Biodiversity.58 Since then, it has been noted that "the preliminary concept has been included in almost every treaty and document of recent policies related to the protection and preservation of the environment",59 and the principle is also a binding treaty principle in EU law under Article 191(2) of the Treaty on the Functioning of the European Union (former Article 174(2) of the EC Treaty), which adopts the precautionary principle as a general principle. There are different definitions of the preemption principle, ranging from the weak version which means that the absence of decisive evidence of harm should not be used as a basis for deferring measures60 to the strong version which calls for the reversal of the normal burden of proof. . This was to extend the principle of prevention to the whole environment. eds), The Advance Principle in the 20th Century: Late Lessons from Early Warnings (Earthscan, 2002) 5.
61 International instruments that determine the transfer of the burden of proof include: Oscom Resolution 89/1 of 1989 (June 14, 1989) on the reduction and cessation of dumping of industrial waste into the sea; EC Commission, Communication from the Commission on the Precautionary Principle (2 February 2000) COM (2000) 1, Section 6.4; Article 3(3)(c) of the OSPAR Convention; para. Steele considers the reversed burden of proof to be the strongest version of the precautionary principle because it “acts as a veto” in the sense that safety must be prioritized regardless of cost when doubt is established. 62 Christoforou claims that diversity in the formulation of the principle does not "affect the core and basic rationality of the principle" (T.
Abouchar, The Precautionary Principle: A Fundamental Principle of Law and Policy for the Protection of the Global Environment, 14 Boston College International and Comparative Law Review. It should be noted that the principle was already endorsed by the OECD in 1972 (Council Recommendation on Guiding Principles Concerning the International Economic Aspects of Environmental Policy of 1972, available at: http://www.oecd.org). 70 Note by the Executive Director in the Fourth Program for the Development and Periodic Review of Environmental Legislation at the UNEP ECB Council in 2008, UNEP/GC/25/INF/15/Add.3.
Partial compensation in light of the polluter pays and precautionary principles
Finally, the concept of strict liability included in the precautionary principle and the polluter pays principle79 indicates that environmental costs should be borne by those responsible for such damage (rather than society in general), even when there is no fault on the part of the side of the polluter.80 This is so, where bona fide environmental measures have been adopted in response to environmental concerns related to the investment project in question, the polluter pays principle requires downward adjustments to the compensation amount so as not to completely shift the environmental costs and negative externalities on the general public. Argentina85), where the expropriated enterprise was actually a 'going concern'.86 The DCF method consists of the following steps. 79 The preamble of the Lugano Convention provides for example the following: "Considering the desirability of provision for strict liability in this field taking into account the 'Polluter pays'.
86 The use of the DCF method is subject to the condition that the expected cash flows of the company can be reasonably determined. In the Indonesian cases, the damages awarded by the second court were about half of the amount awarded by the first court "for the same faults, using the same DCF valuation method", with the discount rate being one of the factors led to this discrepancy. 94. The precautionary principle and the polluter pays principle state that the possibility of changes in environmental regulations, which cause business fluctuations, should be considered as one of the general risk factors in certain circumstances.
According to the polluter pays principle, the factory owner had to pay for the costs of the cleanup. But suppose that instead of requiring the factory owner to pay for the pollution it has caused, the government passes a law prohibiting the operation of the factory. 96 The court made downward adjustments to the DCF valuation presented by the plaintiff's experts, stating that "[s]uch adjustments reflect the reality of the crisis that occurred in Argentina and the specific impact it has on valuation and compensation" .
Application – the Santa Elena case revisited
That is, the purpose of protecting the environment for which the Property was taken does not change the legal nature of the taking for which adequate compensation must be paid. 117 It should be noted that the Court treated this case as a case of lawful expropriation despite the fact that "the expropriation in question had taken place 22 years before the end of the arbitral proceedings" (Sabahi (n footnote)). Rather, the central issue in this case was the application of the Act, that is, how to calculate the property's FMV as appropriate compensation in relation to applying the Act at the date of calculation.
For example, these principles provide theoretical grounds for reducing the amount of compensation by approximating the FMV. 120 For the concept of a pending case in the context of the Iran-US Claims Tribunal, see A. Mouri, The International Law of Expropriation as Reflected in the Work of the Iran-US Claims Tribunal (Martinus Nijhoff Publishers.
As in Santa Elena, the court did not provide a detailed analysis of its FMV calculation. Interestingly, this court did not choose the peak market period as the basis for calculating FMV. Accordingly, the tribunal concluded that the FV of the property was $3.1 million, approximately 30% less than the amount offered by the plaintiffs' expert.
Concluding remarks: ideas for implementing the theory into practice
However, where appropriate, the assessment of fair and adequate compensation will be based on a fair balance between the public interest and the interests of those affected, taking into account all relevant circumstances and taking into account: the current and past use of the property , the history of its acquisition, the fair market value of the investment, the purpose of the expropriation, the extent of previous profit made by the foreign investor through the investment, and the duration of the investment. The tribunal can therefore consider, for example, the fact that the expropriated investment has produced extraordinary profits in the past in order to set "fair and adequate" compensation below the current market value of the property. Also the non-exhaustive list of the elements for consideration such as 'the current and previous use of the property' and 'the purpose of the expropriation' fall short of establishing criteria that can objectively guide the exercise of the discretion of arbitral tribunals not.
A more practical approach may be to include some elements of environmental management accounting (EMA) in the compensation assessment. Therefore, when considering the approximation or reduction of the compensation amount in light of the preliminary and polluter pays principles, the determination of these 'environmental costs' would play a central role. Burritt identifies the following problems with the lack of recognition of environmental impacts in conventional management accounting: 1.
Burritt, Tobias Hahn and Stefan Schaltegger, Towards a Comprehensive Framework for Environmental Management Accounting – Linkages between Business Actors and EMA Tools (2013) available at: http://www.apira2013.org/past/apira2001/papers/Burritt110 .pdf . For the differences between conventional management accounting and environmental management accounting, see United Nations, “Environmental Management Accounting: Policies and Connections” (n. 130) at 4;. Rikhardsson, and Stefan Schaltegger, Adopting Environmental Management Accounting: EMA as a Value-Adding Activity, in Martin Bennett, Pall M.
