¹ See the differences between the majority and dissenting arbitrators in Quiborax v. Bolivia, ICSID Case No. ARB/06/2, Award and Partially Dissenting Opinion of Brigitte Stern (Sept. 16, 2015) [hereinafter Quiborax].

² See UNCTAD, International Investment Agreements: Key Issues Volume I, UNCTAD/ITE/IIT/2004/10, 243–46 (2004)Google Scholar.

³ These two categories of restrictions in the IIA are similar to liability rules and property rules in the sense of Calabresi and Melamed, but not quite the same. Both of those rules are closely associated with court-ordered remedies (compensation in the former, injunction in the latter), whereas the IIA itself specifies the compensation for expropriation and generally investors do not have the ability to prevent takings by host states. Cf. Joost Pauwelyn, Optimal Protection of International Law: Navigating Between European Absolutism and American Voluntarism 148–50 (2008) (using these terms to describe IIA protections).

⁴ See Coleman, Jules L. & Kraus, Jody, Rethinking the Theory of Legal Rights, 95 Yale L.J. 1335, 1348–57 (1986)Google Scholar.

⁵ Case Concerning the Factory at Chorzów, 1928 PCIJ Rep. (ser. A) No. 17 (Sept. 13) [hereinafter Chorzów Factory].

⁶ See Yukos Universal Ltd. v. Russian Fed'n, UNCITRAL, PCA Case No. AA 227 (July 18, 2014), set aside, Russian Fed'n v. Veteran Petroleum Ltd., Yukos Universal Ltd., and Hulley Enterprises Ltd., Hague Dist. Ct. (Apr. 20, 2016) [hereinafter Yukos].

⁷ Certain German Interests in Polish Upper Silesia (Ger. v. Pol.), 1926 PCIJ Rep. (ser. A) No. 7 (May 25).

⁸ Id. at 21.

⁹ Chorzów Factory, supra note 5, at 46.

¹⁰ Id. at 47.

¹¹ I leave aside for now whether that full value is based solely on information at the time of the expropriation or information that later became available. In any case, it should not reflect any change in value due to knowledge of the expropriation before it actually occurred.

¹² Chorzów Factory, supra note 5, at 47.

¹³ Id. at 51–52.

¹⁴ For a charitable interpretation, see Abdala, Manuel A. & Spiller, Pablo T., Chorzów's Standard Rejuvenated: Assessing Damages in Investment Treaty Arbitration , 25 J. Int'l Arb. 103, 105–08 (2008)Google Scholar.

¹⁵ BP Exploration Co. (Libya) Ltd. v. Libyan Arab Rep., 53 ILR 297, 337–40 (1973).

¹⁶ Id. at 329, 355.

¹⁷ Texas Overseas Petroleum Co. (TOPCO) v. Libyan Arab Rep., 17 ILM 1, paras. 93–109 (1977).

¹⁸ Id., para. 103; see also id., paras. 97–109, dispositif.

¹⁹ See Higgins, Rosalyn, The Taking of Property by the State: Recent Developments in International Law , 176 Recueil des Cours 259, 321 (1982)Google Scholar (favoring restitution in principle but finding “very little evidence that [it] is perceived as a required remedy or that it is anticipated as being likely to be granted.”).

²⁰ For academic endorsement of an unlawful taking as one violating a concession agreement, see Amerasinghe, C.F., Issues of Compensation for the Taking of Alien Property in the Light of Recent Cases and Practice , 41 Int'l. & Comp. L.Q. 22, 37 (1992)CrossRefGoogle Scholar.

²¹ Libyan Am. Oil Co. (Liamco) v. Libya, 20 ILM 1, 59, 61, 76–77 (1981); State of Kuwait v. Am. Indep. Oil Co., 21 ILM 976, 1024, paras. 102, 104; 1025, paras. 109–110; 1031, para. 138; 1034, paras. 148–49 (1982).

²² Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims Between the Government of the United States of America and the Government of the Islamic Republic of Iran, Art. II, Jan. 19, 1981; Treaty of Amity, Economic Relations, and Consular Rights, U.S.-Iran, Aug. 15, 1955, 284 UNTS 93. Article 4(2) of the latter provides that property of nationals of each state “shall not be taken except for a public purpose, nor shall it be taken without the prompt payment of just compensation.”

²³ See Martin J. Valasek, A “Simple Scheme”: Exploring the Meaning of Chorzów Factory for the Valuation of Opportunistic Expropriation in the BIT Generation, 4 TDM 6, 42 (2007); see generally Pellonpää, Matti, Compensable Claims Before the Tribunal: Expropriation Claims , in The Iran-United States Claims Tribunal: Its Contribution to the Law of State Responsibility 185, 198–217 (Lillich, Richard B. & Magraw, Daniel Barstow eds., 1998)Google Scholar.

²⁴ INA Corp. v. Islamic Rep. of Iran, Case No. 161, 8 Iran-U.S. Claims Trib. Rep. 373, 378 (Aug. 12, 1985).

²⁵ Id. at 385–90 (Lagergren, sep. op.) (calling discriminatory expropriations “inherently unlawful” and entitling investor to damages “as closely as possible in monetary terms to … restitutio in integrum,” while large-scale nationalizations may call for less than full compensation); id. at 393–401 (Holtzmann, sep. op.) (disagreeing with Lagergren's latter proposition); id. at 411 (Ameli, dissenting) (unlawful measures involving breach “of its international obligations” including “its contractual obligations,” may allow for restitutio in integrum). See also Sedco v. Nat'l Iranian Oil Co. and the Islamic Rep. of Iran, Case No. 129, 10 Iran-U.S. Claims Trib. Rep. 180, 187 (Mar. 27, 1986) (full value applies to a “discrete expropriation of alien property,” “whether or not the expropriation itself was otherwise lawful”) [hereinafter Sedco].

²⁶ Amoco Int'l Fin. Corp. (AIF) v. Islamic Rep. of Iran, Case. No. 56, 15 Iran-U.S. Claims Trib. Rep. 189 (July 14, 1987) [hereinafter AIF].

²⁷ Id. at 234, para. 147.

²⁸ It further found the breach of the contract by AIF's Iranian partner was not an unlawful act by Iran because Iran was not party to the contract, concluding that AIF's interests were “lawfully expropriated by Iran.” This second finding suggests indirectly that illegality can arise from a breach of contract as well. Id. at 244, para. 182.

²⁹ Id. at 246, para. 189.

³⁰ Id. at 247, para. 195.

³¹ Id. at 248–52, paras. 197–206; 258–64, paras. 227–46. For excellent critiques, see Lieblich, William C., Determinations by International Tribunals of the Economic Value of Expropriated Enterprises , 7 J. Int'l Arb. 37, 57–67 (1990)Google Scholar; Valasek, supra note 23, at 16–20.

³² AIF, supra note 26, at 300–01, para. 18 (Brower, concurring).

³³ The Tribunal elaborated a bit on the distinction a few years later, holding that even lawful expropriations required payment of full value, while unlawful expropriations might require either restitution or payment for “any increase in the value of the property between the date of taking and the date of the [award].” Phillips Petroleum Co. Iran v. Islamic Rep. of Iran, Case No. 39, 21 Iran-U.S. Claims Trib. Rep. 79, 122, para. 110 (June 29, 1989).

³⁴ For a recent example, see the competing opinions in Quiborax, supra note 1.

³⁵ I elaborate on this point in Part IV.A below.

³⁶ Arbitrations whose governing law was customary international law or a state's domestic law would still need to adopt the distinction.

³⁷ See Kinnear, Meg, Damages in Investment Treaty Arbitration , in Arbitration Under International Investment Agreements: A Guide to The Key Issues 551, 559–60 (Katia Yannaca-Small ed., 2010)Google Scholar.

³⁸ Unless otherwise noted, the treaty standard in all of the cases discussed here was the FV_DE, so differences in treaty language do not account for the different approaches to remedies.

³⁹ ICSID Case No. ARB(AF)/97/1, para. 118 (Aug. 30, 2000).

⁴⁰ ICSID Case No. ARB/98/4, para. 118 (Dec. 8, 2000) [hereinafter Wena Hotels].

⁴¹ ICSID Case No. ARB/99/6, paras. 144, 146 (Apr. 12, 2002).

⁴² ICSID Case No. ARB(AF)/00/2, paras. 151, 187–88 (May 29, 2003).

⁴³ ICSID Case No. ARB/05/16, para. 785 (July 29, 2008) [hereinafter Rumeli Telekom].

⁴⁴ ICSID Case No. ARB(AF)/06/1, paras. 121, 156, 159 (Sept. 9, 2009).

⁴⁵ ICSID Case No. ARB/06/11, para. 707 (Oct. 5, 2012).

⁴⁶ ICSID Case No. ARB(AF)/09/2, para. 681 (Apr. 18, 2013).

⁴⁷ ICSID Case No. ARB/04/4, para. 85 (Mar. 22, 2014). See also Alpha Projektholding v. Ukraine, ICSID Case No. ARB/07/16, paras. 481–93 (Nov. 8, 2010); Goetz v. Burundi, ICSID Case No. ARB/01/2, para. 295 (June 21, 2012) (both endorsing FV_DE without mention of a treaty standard); Santa Elena v. Costa Rica, ICSID Case No. ARB/96/1, paras. 78–84 (Feb. 17, 2000) (endorsing FV_DE but no IIA governing dispute).

⁴⁸ ICSID Case No. ARB/11/26, paras. 512–17 (Jan. 29, 2016) [hereinafter Tenaris].

⁴⁹ UNCITRAL, Partial Award, paras. 615–16 (Sept. 13, 2001); Final Award, paras. 494–508 (Mar. 14, 2003) (treaty standard of “just compensation” is amount under customary law, which was FV_DE).

⁵⁰ ICSID Case Nos. ARB(AF)/04/3 and 04/4, paras. 8-25, 12-43, 12-53, 13-93 (June 16, 2010) (treaty standard a “useful guide” for compensation for unlawful expropriations and investment valued as of date of expropriation) [hereinafter Unglaube].

⁵¹ ICSID Case No. ARB/08/1, paras. 305–18 (May 16, 2012) (treaty and custom generally require valuation of asset at highest fair market value).

⁵² UNCITRAL, PCA Case No. 2011-17, paras. 441, 443–44, 613–14 (Jan. 31, 2014) (hinting that FV_DA might apply in principle).

⁵³ UNCITRAL, PCA Case No. 2010-18, paras. 241, 260–61 (Dec. 19, 2014) (BIT's standard of FV_DE a lex specialis regardless of whether expropriation was lawful or unlawful, but awarding no expropriation damages based on absence of evidence from claimant) [hereinafter British Caribbean Bank].

⁵⁴ ICSID Case No. ARB(AF)/12/5, paras. 639–40, 646 (Aug. 22, 2016). For two cases where the tribunal called the expropriation illegal but relied on the treaty without explanation, see OI European Grp. v. Venezuela, ICSID Case No. ARB/11/25, paras. 426, 647 (Mar. 10, 2015); Flughafen Zurich v. Venezuela, ICSID Case No. ARB/10/19, paras. 744–47 (Nov. 18, 2014).

⁵⁵ ICSID Case No. ARB/05/6, paras. 108–23 (Apr. 22, 2009) (using treaty standard of “genuine value,” interpreted to be FV_DE, because investment had not appreciated since its taking).

⁵⁶ ICSID Case No. ARB/05/15, paras. 443, 539–41 (June 1, 2009) (using FV_DE because investors not seeking loss of profits per se) [hereinafter Siag & Vecchi].

⁵⁷ ICSID Case No. ARB/05/18, paras. 514–17 (Mar. 3, 2010) (applying treaty standard of FV_DE on the grounds that claimants would have sold their business at that time).

⁵⁸ ICSID Case No. ARB/13/7, paras. 219–26, 236–39 (Jan. 12, 2016) (using FV_DE because claimant could not prove consequential damages or an increase in value of the investment).

⁵⁹ ICSID Case No. ARB(AF)/11/2, paras. 841–53 (Apr. 4, 2016) (applying FV_DE because parties agree on valuation date).

⁶⁰ ICSID Case No. ARB/06/4, paras. 329–31, 350, 437–40 (Apr. 15, 2016) (applying FV_DE because parties agree on valuation date) [hereinafter Vestey].

⁶¹ ICSID Case No. ARB/03/16, paras. 426–44, 481, 483–99 (Oct. 2, 2006) (finding BIT violation an “unlawful expropriation,” applying Chorzów Factory, and calculating damages based on FV_DA) [hereinafter ADC]. On the difference in the award from using FV_DA, see Valasek, supra note 23.

⁶² ICSID Case No. ARB/02/8, paras. 349, 352, 360 (Feb. 6, 2007) (breach of BIT renders expropriation “unlawful,” requiring payment of FV_DA plus consequential damages, but basing FV_DA on book value as of date of expropriation) [hereinafter Siemens].

⁶³ ICSID Case No. ARB/07/30, paras. 342–43, 362, 401 (Sept. 3, 2013) (BIT's compensation criterion requires only that host state negotiate with investor in good faith over compensation, but concluding that Venezuela had failed to do so, leading to an unlawful expropriation and damages based on FV_DA) [hereinafter ConocoPhillips]. The tribunal has not issued an award on the quantum due to attempts by Venezuela to remove two arbitrators.

⁶⁴ Yukos, supra note 6, paras. 1581–85, 1758–69, 1826–27 (breach of Energy Charter Treaty an “unlawful expropriation,” triggering Chorzów Factory and the Articles on Responsibility of States for Internationally Wrongful Acts, and allowing claimant to choose between FV_DE and FV_DA).

⁶⁵ ICSID Case No. ARB 07/27, paras. 301–06 (Oct. 9, 2014) (expropriation did not violate BIT requirement of “just compensation” because state had made a serious proposal to the investor for compensation, and awarding FV_DE, also specified in the BIT); annulled, Mar. 9, 2017 [hereinafter Venezuela Holdings].

⁶⁶ ICSID Case. No. ARB/10/5, paras. 140–46, 159–63 (Mar. 13, 2015) (holding that “an expropriation only wanting fair compensation has to be considered as a provisionally lawful expropriation,” which was the case here because Venezuelan law required state to pay investor only book value, and calculating damages based on BIT's standard of FV_DE) [hereinafter Tidewater].

⁶⁷ Quiborax, supra note 1, paras. 240–55, 325–30, 343–47, 370–85 (BIT violation triggers remedy under Chorzów Factory and the Articles on Responsibility of States for Internationally Wrongful Acts, interpreted as FV_DA).

⁶⁸ I appreciate Charles Brower's point in this regard. See also the summary of the case law in UNCTAD, Expropriation: A Sequel, UNCTAD/DIAE/IA/2011/7, at 114–16 (2011).

⁶⁹ See Quiborax, supra note 1, paras. 54–56 (Stern, dissenting). As noted, an award on quantum has not been issued in ConocoPhillips. In Tenaris, supra note 48, paras. 542–49, the tribunal suggested that part of its valuation of certain side companies was based on Chorzów Factory and not merely the treaty.

⁷⁰ DCF is not always used, whether because an asset is no longer performing or because a tribunal regards data on cash flow as too contingent, in which case other methods to determine fair market value (e.g., share prices) are used.

⁷¹ ICSID Case No. ARB/81/1, paras. 613–14 (Nov. 20, 1984) [hereinafter Amco Asia].

⁷² Quiborax, supra note 1, paras. 379–85. For other examples, see Beharry, Christina L., Lawful Versus Unlawful Expropriation: Heads I Win, Tails You Lose , in Investment Treaty Arbitration and International Law 185 (Laird, Ian A., Sabahi, Borzu, Sourgens, Frédéric G. & Weiler, Todd J. eds., 2016)Google Scholar.

⁷³ See Quiborax, supra note 1, (Stern, dissenting).

⁷⁴ Compare Marboe, Irmgard, Calculation of Compensation and Damages in International Investment Law 237 (2009)Google Scholar and Lieblich, William C., Determining the Economic Value of Expropriated Income-Producing Property in International Arbitrations , 8 J. Int'l Arb. 59, 72 (1991)Google Scholar with Abdala & Spiller, supra note 14, at 109–18.

⁷⁵ Papamichalopoulos v. Greece (Article 50), App. No. 14556/89, 21 EHRR 439, paras. 36–40 (1996). For cases citing it, see, e.g., Tidewater, supra note 66, at n. 218, and ADC, supra note 61, para. 497. The European Court of Human Rights has cited the case in some judgments under Protocol I—particularly those involving land or other physical assets—for the proposition that the state must provide restitution, or, failing that, FV_DA plus nonpecuniary damages. Velcheva v. Bulgaria, App. No. 35355/08, [2015] ECHR 552, para. 56 (2015); Borzhonov v. Russia, App. No. 1827/04, ECHR, para. 69 (2009); Brumarescu v. Romania, App. No. 28342/95, [1999] ECHR 105, para. 20 (2001).

⁷⁶ Guiso-Gallisay v. Italy (Just Satisfaction), App. No. 58858/00, ECHR, paras. 102–07 (2009).

⁷⁷ See Ichim, Octavian, Just Satisfaction Under the European Convention on Human Rights 102–05 (2014)Google Scholar. Unlike Ichim, I interpret Guiso-Gallisay as restoring somewhat the distinctions among expropriations based on the way they are carried out.

⁷⁸ It is not listed as an ECHR case cited by tribunals in the www.investorstatelawguide.com database, as of publication date.

⁷⁹ Dolzer, Rudolf & Schreuer, Christoph, Principles of International Investment Law 99–100 (2d ed. 2012)Google Scholar; Arnaud de Nanteuil, Droit International de L'Investissement 342–47 (2014)

⁸⁰ See de Nanteuil, supra note 79, at 347–48; Marboe, supra note 74, at 75–79. I will use the terms interchangeably in this piece. See also Ripinsky, Sergey & Williams, Kevin, Damages in International Investment Law 66, 86–88 (2008)Google Scholar. For an argument that the BIT standard is close to that of customary law for unlawful takings, see Sacerdoti, Giorgio, Bilateral Treaties and Multilateral Instruments on Investment Protection , 269 Recueil des Cours 251, 396 (1997)Google Scholar.

⁸¹ Sornorajah, Muthucumaraswamy, The International Law on Foreign Investment 406–10 (3d ed. 2010)Google Scholar. See also Crawford, James, Brownlie's Principles of Public International Law 624–25 (8th ed. 2012)Google Scholar (finding most expropriations “unlawful only… if appropriate compensation is not provided for,” but some (e.g., discriminatory takings) unlawful per se, but then endorsing AIF’s, supra note 26, economically flawed view on damage calculations).

⁸² See Henry Weisberg & Christopher Ryan, Means to Be Made Whole: Damages in the Context of International Investment Arbitration, in Evaluation of Damages in International Arbitration 165, 169–70 (Yves Derains & Richard H. Kreindler eds., 2006).

⁸³ A right that is beyond question. See, e.g., GA Res. 1803 (XVII) (Dec. 14, 1962).

⁸⁴ The terminology might have relevance in situations not covered by an investment treaty, e.g., where the investor or its home state bases its claims on custom (perhaps if an insurance contract only covers unlawful expropriations); or in interpreting other clauses of IIAs, e.g., an umbrella clause (where illegality for breach of a contract can be a treaty violation) or fair and equitable treatment (where the tribunal may have recourse to customary international law).

⁸⁵ Int'l Law Comm'n, Articles on Responsibility of States for Internationally Wrongful Acts, Arts. 30–31, 35–36, UN Doc. A/56/10 (2001) [hereinafter ASRs].

⁸⁶ Wintershall Aktiengesellschaft v. Argentina, ICSID Case No. ARB/04/14, para. 113 (Dec. 8, 2008) (ASRs “contain[] no rules and regulations of State Responsibility vis-à-vis non-State actors.”).

⁸⁷ Douglas, Zachary, Other Specific Regimes of Responsibility: Investment Treaty Arbitrations and ICSID , in The Law of International Responsibility 815, 829 (Crawford, James, Pellet, Alain & Olleson, Simon eds., 2010)Google Scholar; see also Zachary Douglas, The Hybrid Foundations of Investment Treaty Arbitration, 74 Brit. Y.B. Int'l L. 183. For a critique, see Leben, Charles, The Advancement of International Law 54–61 (2010)Google Scholar.

⁸⁸ Brigitte Stern, The Obligation to Make Reparation, in The Law of International Responsibility, supra note 87, at 563, 567. But see Paparinskis, Martins, Investment Treaty Arbitration and the (New) Law of State Responsibility , 24 Eur. J. Int'l L. 617, 635–40 (2013)Google Scholar (offering arguments for extending ASR rules to investor-state disputes).

⁸⁹ ASRs, supra note 85, Art. 33 comm.

⁹⁰ See Vestey, supra note 60, paras. 327–29 (acknowledging this possibility).

⁹¹ Thomas Schultz, Against Consistency in Investment Arbitration, in The Foundations of International Investment Law: Bringing Theory into Practice 297 (Zachary Douglas, Joost Pauwelyn & Jorge E. Viñuales eds., 2014).

⁹² See Jürgen Kurtz, Building Legitimacy Through Interpretation in Investor-State Arbitration: On Consistency, Coherence, and the Identification of Applicable Law, in The Foundations of International Investment Law, supra note 91, at 257, 269–75.

⁹³ See generally Van Harten, Gus, Investment Treaty Arbitration and Public Law (2008)CrossRefGoogle Scholar. For an endorsement of some but not all of this characterization, see Alvarez, José E., Is Investor-State Arbitration “Public”? , 7 J. Int'l Disp. Settlement 534 (2016)Google Scholar.

⁹⁴ Vienna Convention on the Law of Treaties, Art. 31(3)(b), May 23, 1969, 1155 UNTS 331.

⁹⁵ See, e.g., Sedco, supra note 25, at 184–89.

⁹⁶ See Higgins, supra note 19, at 321; McDougal, Myres S. & Reisman, W. Michael, The Prescribing Function in the World Constitutive Process: How International Law is Made , in International Law Essays 355, 368 (1981)Google Scholar.

⁹⁷ For an examination of the goals of remedies for human rights violations, see Szilvia Altwicker-Hámori, Tilmann Altwicker & Anne Peters, Measuring Violations of Human Rights: An Empirical Analysis of Awards in Respect of Non-pecuniary Damages Under the European Convention on Human Rights, 76 Zeitschrift für Ausländisches Öffentliches Recht und Völkerrecht 1, 10–12 (2016). For a critical work developing the concept of sanctioning goals, see Richard Arens & Harold D. Lasswell, In Defense of Public Order: The Emerging Field of Sanction Law 198–203 (1961).

⁹⁸ For a set of complementary goals of investor-state arbitration generally, see Sergio Puig, No Right Without a Remedy: Foundations of Investor-State Arbitration, in The Foundations of International Investment Law, supra note 91, at 235, 243–48. See also Anne van Aaken, Shared Responsibility in International Law: A Political Economy Analysis, in Distribution of Responsibilities in International Law 153, 158–61 (André Nollkaemper & Dov Jacobs eds., 2015) (contrasting instrumental and noninstrumental goals).

⁹⁹ Benson, Peter, Philosophy of Property Law , in The Oxford Handbook of Jurisprudence and Philosophy of Law 752, 798 (Coleman, Jules & Shapiro, Scott eds., 2002)Google Scholar; Coleman, Jules, Hershovitz, Scott & Mendlow, Gabriel, Theories of the Common Law of Torts, in Stanford Encyclopedia of Philosophy, sec. 3.1 (Zalta, Edward N. ed., 2015)Google Scholar, at https://plato.stanford.edu/cgi-bin/encyclopedia/archinfo.cgi?entry=tort-theories; Feinberg, Joel, Voluntary Euthanasia and the Inalienable Right to Life , 7 Phil. Pub. Aff. 93, 102 (1978)Google Scholar.

¹⁰⁰ Coleman & Kraus, supra note 4, at 1337.

¹⁰¹ I am not assuming that the compensation paid in a treaty-compliant expropriation, i.e., FV_DE, eliminates the harm to the investor, as the investor may value the investment more than the FV_DE.

¹⁰² See, e.g., José Enrique Alvarez, The Public International Law Regime Governing International Investment, 344 Recueil des Cours 54, 193, 231–32 (2011) (“the point is to make claimants whole for their losses”); Puig, supra note 98, at 245, 252 (“corrective” rationale); van Aaken, supra note 98, at 160.

¹⁰³ Indeed, the requirement in IIAs that the state pay for expropriation deters the taking of private property in the first place, just as the lack of such a requirement for bona fide regulations of a nonexpropriatory character signals that such measures are permissible (although the risk of an FET violation can interfere with this signal).

¹⁰⁴ For a suggestion that the purpose of the IIA expropriation provisions is to channel takings into particular methods, see Siag & Vecchi, supra note 56, para. 428.

¹⁰⁵ See van Aaken, supra note 98, at 159–61 (noting also that absence of fault requirement serves a deterrence function).

¹⁰⁶ See, e.g., Guzmán, Andrew T., How International Law Works: A Rational Choice Theory 71–117 (2008)Google Scholar.

¹⁰⁷ The state's prediction regarding whether the foreign investor will sue in response to a treaty violation will also affect incentives. See Sasse, Jan Peter, An Economic Analysis of Bilateral Investment Treaties 91–93 (2011)Google Scholar.

¹⁰⁸ Id.at 100–01; see also Wells, Louis T., Double-Dipping in Arbitration Awards? An Economist Questions Damages Awarded to Karaha Bodas Company in Indonesia , 19 Arb. Int'l 471, 478 (2003)CrossRefGoogle Scholar; van Aaken, supra note 98, at 184, 186. High damage awards can also send economically inefficient signals to investors, as noted infra note 131.

¹⁰⁹ See generally Feinberg, Joel, The Expressive Function of Punishment , in Doing and Deserving: Essays in the Theory of Responsibility 95 (1970)Google Scholar. On such theories in constitutional law, see Anderson, Elizabeth S. & Pildes, Richard H., Expressive Theories of Law: A Restatement , 148 U. Penn. L. Rev. 1503 (2000)Google Scholar. On international criminal law, see Mark Drumbl, Atrocity, Punishment, and International Law (2007).

¹¹⁰ See Puig, supra note 98, at 235.

¹¹¹ See McDougal & Reisman, supra note 96, at 377–78.

¹¹² See UN Charter, Art. 19. As evidence of the unwillingness of the UN's member states to enforce that sanction, see Rep. of the Comm. on Contributions, Seventy-First Session, UN Doc. A/71/11 (2016).

¹¹³ See Chorzów Factory, supra note 5, at 47.

¹¹⁴ U.S. Diplomatic and Consular Staff in Iran (U.S. v. Iran), 1980 ICJ Rep. 3, paras. 91–92 (May 24). The ASRs confusingly suggest that only cessation of unlawful activities serves this function and compensation is not mean to serve an expressive function; rather, only the remedy of satisfaction, can achieve that goal. ASRs, supra note 85, Art. 30, comm. para. 5; Art. 36, comm. para. 4; Art. 37, comm. para. 3. But this position represents a narrow understanding of the expressive function of a remedy. Indeed, restitution or payment of compensation in many ways offers a far stronger validation of legal rules than an expression of regret.

¹¹⁵ Gabčíkovo-Nagymaros Project (Hung./Slovk.), 1997 ICJ Rep. 7, paras. 141–42, 150 (Sept. 25) (ordering parties to resume cooperation “that takes account of the objectives of the Treaty”); Fisheries Jurisdiction (U.K. v. Ice.), 1974 ICJ Rep. 3, para. 78 (July 25) (directing parties to find an “equitable solution derived from the applicable law,” including treaties between them).

¹¹⁶ See Whaling in the Antarctic (Austl. v. Japan, N.Z. intervening), 2014 ICJ Rep. 226, paras. 55–58 (Mar. 31); ASRs, supra note 85, Art. 12, comm. para. 1.

¹¹⁷ See generally Dinah Shelton, Remedies in International Human Rights Law 97–102 (2d ed. 2005) (linking remedies to unique nature of human rights treaties). See also Chorzów Factory, supra note 5, at 47 (noting “aim of … the Convention” as preserving the property rights of Germans in Poland). Cf. Audley Sheppard, The Distinction Between Lawful and Unlawful Expropriation, in Investment Arbitration and the Energy Charter Treaty 169, 184 (Clarisse Ribeiro ed., 2006) (noting complete prohibition on expropriation in Chorzów Factory’s scenario).

¹¹⁸ For a review of those changes, see generally Steven R. Ratner, Corporations and Human Rights: A Theory of Legal Responsibility, 111 Yale L.J. 443 (2001).

¹¹⁹ See, e.g., Free Trade Agreement Between the European Union and the Socialist Republic of Vietnam, draft agreement, Feb. 1, 2016, pmbl. (goal to “strengthen their economic, trade, and investment relations in accordance with the objective of sustainable development” and “raise living standards, promote economic growth and stability, create new employment opportunities and improve the general welfare …”) [hereinafter EU-Vietnam FTA].

¹²⁰ See, e.g., id., ch. 8.2, Arts. 14, 16, ann. on Expropriation; ch. 8.3, Art. 1.

¹²¹ See, e.g., ST-AD GmbH v. Bulgaria, PCA Case No. 2011–06, Award on Jurisdiction, paras. 382–84 (July 18, 2013), and the cases cited therein.

¹²² See, e.g., Noble Energy v. Ecuador, ICSID Case. No. ARB/05/12, Decision on Jurisdiction, para. 50 (Mar. 5, 2008).

¹²³ See, e.g., CMS v. Argentina, ICSID Case No. ARB/01/8, para. 406 (May 12, 2005) [hereinafter CMS]; ASRs, supra note 85, Art. 35, comm. para. 4.

¹²⁴ Reisman, W. Michael, ‘Case Specific Mandates’ Versus ‘Systemic Implications’: How Should Investment Tribunals Decide?: The Freshfields Arbitration Lecture , 29 Arb. Int'l 131 (2013)Google Scholar.

¹²⁵ Id. at 149–50.

¹²⁶ See, e.g., LG&E Energy Corp. v. Argentina, ICSID Case No. ARB/02/1, para. 87 (July 25, 2007) (restitution beyond the power of a tribunal); Arif v. Moldova, ICSID Case No. ARB/11/23, para. 571 (Apr. 8, 2013); Christine Gray, The Different Forms of Reparation: Restitution, in The Law of International Responsibility, supra note 87, at 589, 595–96.

¹²⁷ In addition, if DCF requires that the tribunal consider only information known to the parties as of a particular date, then uncertainties arise not merely over prediction, but retrospection.

¹²⁸ ASRs, supra note 85, Art. 12, comm. para. 1; Art. 36, comm. para. 27; and cites therein. For a typical statement by a tribunal, see BG Group Plc. v. Argentina, UNCITRAL, para. 428 (Dec. 24, 2007).

¹²⁹ Of particular relevance to expropriations, see e.g., Landes, William M. & Posner, Richard A., An Economic Theory of Intentional Torts , 1 Int'l Rev. L. & Econ. 127 (1981)Google Scholar; Hermalin, Benjamin, An Economic Analysis of Takings , 11 J. L. Econ. & Org. 64 (1995)Google Scholar; Thomas S. Ulen, The Public Use of Private Property: A Dual-Constraint Theory of Efficient Governmental Takings, in Taking Property and Just Compensation: Law and Economics Perspectives of the Takings Issue 163 (Nicholas Mercuro ed., 1992).

¹³⁰ On the last point, see Cook, Philip J. & Graham, Daniel A., The Demand for Insurance of Protection: The Case of Irreplaceable Commodities , 91 Quarterly J. Econ. 144 (1977)Google Scholar.

¹³¹ For commentary invoking these insights in the international investment law context, see Sykes, Alan O., Economic “Necessity” in International Law , 109 AJIL 296, 321 (2015)CrossRefGoogle Scholar (suggesting lower compensation for expropriated investors to prevent overinvestment in the host state); Wells, supra note 108, at 478–81.

¹³² Though economists have examined the effect of IIAs on investment flows to host states, they have not addressed the effects of different remedies on the host state, investor, or investment flows. See generally The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows (Karl P. Sauvant & Lisa E. Sachs eds., 2009).

¹³³ See, e.g., Reisman, supra note 124.

¹³⁴ ASRs, supra note 85, Art. 36, comm. para. 4.

¹³⁵ Jørgensen, Nina H.B., A Reappraisal of Punitive Damages in International Law , 68 Brit. Y.B. Int'l L. 247, 259–62 (1998)Google Scholar.

¹³⁶ For one endorsement of punitive damages, see Sedco, supra note 25, at 204–05 and n. 40 (Brower, sep. op.).

¹³⁷ See, e.g., ADC, supra note 61, para. 497; Tidewater, supra note 66, para. 133, n. 218.

¹³⁸ ASRs, supra note 85, Arts. 33, 55.

¹³⁹ Int'l Law Comm'n, Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law, paras. 152, 192–94, UN Doc. A/CN.4/L.682 (Apr. 13, 2006).

¹⁴⁰ Ratner, Steven R., Regulatory Takings in Institutional Context: Beyond the Fear of Fragmented International Law , 102 AJIL 475 (2008)Google Scholar.

¹⁴¹ Cf. Stern, supra note 88.

¹⁴² See Ratner, Regulatory Takings, supra note 140, at 489–93. For an example of OPIC coverage, see Memorandum of Determination: Expropriation of Global Forestry Management Group (Russia), OPIC Contract of Insurance No. F339, at 8 (Apr. 16, 2011) (citing limitation in compensation and investor's duty to bear 10 percent of loss).

¹⁴³ These critiques are summarized in Steven R. Ratner, The Thin Justice of International Law: A Moral Reckoning of the Law of Nations 373–77 (2015).

¹⁴⁴ See id. at 352–73.

¹⁴⁵ I will assume that restitution is not possible, an assumption justified by the remedies awarded even by tribunals invoking Chorzów Factory or the ASRs.

¹⁴⁶ See August Reinisch, Legality of Expropriations, in Standards of Investment Protection 171, 178–86 (August Reinisch ed., 2008).

¹⁴⁷ Though beyond the scope of this paper, another option for tribunals is to provide a different remedy for large-scale nationalizations, as recognized by the World Bank Guidelines, World Bank, Legal Framework for the Treatment of Foreign Investment: Report to the Development Committee and Guidelines on the Treatment of Foreign Direct Investment, vol. II, at 43, princ. IV(10) (1992) [hereinafter World Bank Guidelines].

¹⁴⁸ In some situations, the investment ceases to produce income at some time before DA, but the basic conclusions below remain the same.

¹⁴⁹ For a proposal suggesting valuation well before the expropriation is complete, see Reisman, W. Michael & Sloane, Robert D., Indirect Expropriation and its Valuation in the BIT Generation , 74 Brit. Y.B. Int'l L. 115 (2004)Google Scholar.

¹⁵⁰ The ex ante information is that known just before the expropriation, so it does not consider the expropriation's effect on the value of the investment.

¹⁵¹ It is important to note that all DCFs after the expropriation must be calculated on the assumption that the investment remains in the hands of the investor. So even information known to the tribunal at DA must be information relevant to a valuation based on that assumption.

¹⁵² For an example, see Valasek, supra note 23, at 23–31.

¹⁵³ As noted in note 151, the accumulated income is also based on the assumption that the investor still owns the investment.

¹⁵⁴ See, e.g., Abdala & Spiller, supra note 14, at 107–08; Lieblich, Determinations by International Tribunals, supra note 31, at 43.

¹⁵⁵ The rate for bringing performance forward may differ from the rate for discounting future income back, but the equivalence remains the same. I appreciate clarification on this point from Amiyatosh Purnanandam and James Hines.

¹⁵⁶ FV_DA will exclude other damages that might be related to an expropriation, e.g., certain consequential damages.

¹⁵⁷ Cf. Kinnear, supra note 37, at 558–59.

¹⁵⁸ See the posting by James Searby in the OGEMID Virtual Seminar on Damages in Investment Arbitration – Session 3, Nov. 25, 2016.

¹⁵⁹ See Jan Paulsson, Ghosts of Chorzów: Maha Nuñez-Schultz v. Republic of the Americas, in International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law 777, 787–91 (Todd Weiler ed., 2005).

¹⁶⁰ For one summary of the Capital Asset Pricing Model, see Fama, Eugene F. & French, Kenneth R., The Capital Asset Pricing Model: Theory and Evidence , 18 J. Econ. Persp. 25 (2004)Google Scholar.

¹⁶¹ See Fisher, Franklin M. & Romaine, R. Craig, Janis Joplin's Yearbook and the Theory of Damages , 5 J. Acct. Auditing & Fin. 145, 153–56 (1990)Google Scholar; Beharry, supra note 72, at 211–12.

¹⁶² See Lieblich, Determining the Economic Value, supra note 74, at 63. See also Merrill, Thomas W., Incomplete Compensation for Takings , 11 N.Y.U. Envt'l L.J. 110, 119 (2002)Google Scholar (fair market value as neglecting subjective value to the owner).

¹⁶³ In re Estate of Mark Rothko, 43 N.Y.2d 305, 322 (1977) (“To make the injured party whole … since the paintings cannot be returned, the estate is therefore entitled to … appreciation damages.”). These issues have arisen in contract law's treatment of post-breach events for valuation purposes, as seen in the UK House of Lords’ decision in Golden Strait Corp. v. Nippon Yusen Kubishka Kaisha, [2007] UKHL 12 (Mar. 28).

¹⁶⁴ Rothko, supra note 163, at 321–22.

¹⁶⁵ See supra note 4.

¹⁶⁶ See Merrill, supra note 162, at 118.

¹⁶⁷ Marboe, supra note 74, at 68.

¹⁶⁸ Valasek, supra note 23, at 3.

¹⁶⁹ Thus, in ADC v. Hungary, assuming the parties could have predicted that the airport would improve financially as a result of Hungary's entrance into the EU, then the FV_DA should have been the same as the FV_DE. Indeed, the tribunal seems to rely on FV_DE at a certain point in its valuation. See ADC, supra note 61, para. 507.

¹⁷⁰ See British Caribbean Bank, supra note 53, para. 261 (because article on expropriation was “specifically negotiated by the Parties of the Treaty … there is no room for another method of evaluation of the compensation sought.”). For an academic endorsement, see Sheppard, supra note 117, at 196.

¹⁷¹ Quiborax, supra note 1, para. 56 (FV_DA is “biased in favor of the investors”), 59, 102 (Stern, dissenting).

¹⁷² See Charles N. Brower & Jarrod Wong, General Valuation Principles: The Case of Santa Elena, in International Investment Law and Arbitration, supra note 159, at 747, 765–68 (discussing tribunal's decision to avoid ex post information).

¹⁷³ See, e.g., Yukos, supra note 6, paras. 1758–69.

¹⁷⁴ See Amco Asia, supra note 71, para. 186; Quiborax, supra note 1, para. 379. The classic citation to this effect is Georg Schwarzenberger, International Law 666 (3rd ed. 1957) (“If restitution in kind were possible, it would have to take place as soon as possible after the judgment or award.”); see also Marboe, supra note 71, at 23; Wöss, Herfried, Rivera, Adriana San Román, Spiller, Pablo, & Dellepiane, Santiago, Damages in International Arbitration Under Complex Long-Term Contracts 267–68 (2014)Google Scholar. Whether restitution is truly preferred over compensation remains unclear. See Yann Kerbat, Interaction Between the Forms of Reparation, in The Law of International Responsibility, supra note 88, at 573.

¹⁷⁵ Quiborax, supra note 1, para. 84 (Stern, dissenting).

¹⁷⁶ Id., para. 103 (using this argument to show unfairness of full reparation under some circumstances).

¹⁷⁷ Abdala & Spiller, supra note 14, at 118.

¹⁷⁸ I appreciate this point from an AJIL anonymous reviewer.

¹⁷⁹ AIF, supra note 26, at 300–01, para. 18 (Brower, concurring).

¹⁸⁰ Abdala & Spiller, supra note 14, at 108, 118; Marboe, supra note 74, at 132. But see Quiborax, supra note 1, para. 56 (Stern, dissenting) (arguing that this is biased in favor of investors).

¹⁸¹ I appreciate this example from Kyle Logue. Whether this can be quantified is a matter for item (5) below.

¹⁸² See infra notes 189–190 and accompanying text (Tidewater, Venezuela Holdings, and ConocoPhillips); Quiborax, supra note 1, paras. 9–13 (Stern, dissenting).

¹⁸³ This requirement offsets a normal advantage of calculating damages as of the date of the award, namely that one can use actual returns after the original loss. See Wöss et al., supra note 174, at 268. (For indirect expropriations, the post-expropriation performance will need to assume the absence of those measures.) In the case of FV_DE, although the tribunal must assume that the investor remained the owner of the asset, it should be basing its calculations solely on information available at FV_DE (or right before the expropriation became known), which would not reflect the possibility of increased (or decreased) profits due to a government takeover.

¹⁸⁴ Rumeli Telekom, supra note 43, paras. 807–13.

¹⁸⁵ This challenge seems to be underestimated by Marboe, supra note 74, at 37.

¹⁸⁶ Yukos, supra note 6, paras. 1782–824.

¹⁸⁷ Cf. Les Laboratoires Servier, Biofarma, and Arts et Techniques du Progrès v. Poland, UNCITRAL, PCA, para. 645 (Feb. 14, 2012) (tribunals have discretion to impose additional damages “to punish Treaty violations of particular seriousness, such as discrimination … .”). See also id., para. 642 (suggesting normal remedy is the treaty standard, i.e., in Group 2 in Part I.B above).

¹⁸⁸ See generally Rogers, Catherine A., Ethics in International Arbitration 315–34 (2014)Google Scholar.

¹⁸⁹ ConocoPhillips, supra note 63, para. 362. See also Sheppard, supra note 117, at 171 (calling an expropriation where only payment is lacking “provisionally lawful”).

¹⁹⁰ See Venezuela Holdings, supra note 65, paras. 301–06; Tidewater, supra note 66, para. 145. Cf. EnCana Corporation v. Ecuador, UNCITRAL, LCIA Case No. UN3481, paras. 194–95 (Feb. 3, 2006) (nonpayment of a legally guaranteed tax refund does not amount in the first instance to an expropriation if the claimant has other options and act is not willful). The annulment committee in Venezuela Holdings did not question the Panel's finding that the expropriation did not violate the BIT.

¹⁹¹ See, e.g., EU-Vietnam FTA, supra note 119, ch. 8.2, Art. 16 (“Neither Party shall … expropriate … except … against payment of prompt, adequate and effective compensation,” further defined as the “fair market value of the investment at the time immediately before the expropriation or the impending expropriation became public knowledge.”). A requirement of “just compensation” that did not mention FV_DE might give arbitrators more interpretive maneuverability, but this was not the case in the four arbitrations mentioned. It is also possible that nonpayment is not per se a ground of unlawfulness under customary international law.

¹⁹² See Tidewater, supra note 66, paras. 43–45, 55–57 (Claimants’ arguments).

¹⁹³ Except in one extreme case—if the state offers FV_DE, as later determined by the tribunal, and the investor refuses to accept payment in the hope of getting more damages during arbitration, then in my view the state has not violated the treaty. I appreciate this point from Zachary Douglas.

¹⁹⁴ See Marboe, supra note 74, at 58; Ripinsky & Williams, supra note 80, at 67; Reinisch, supra note 146, at 198–99.

¹⁹⁵ I appreciate this point from Rachael Kent.

¹⁹⁶ See John Y. Gotanda, Damages in Private International Law, 326 Recueil des Cours 73, 105–11, 129–30, 145 (2007).

¹⁹⁷ See, e.g., Jan Paulsson, The Expectation Model, in Evaluation of Damages, supra note 82, 57, 62–65; Wells, supra note 108; Beharry, supra note 72, at 203–08.

¹⁹⁸ See, e.g., Sacerdoti, supra note 80; Crawford, supra note 81.

¹⁹⁹ World Bank Guidelines, supra note 147, at 41–42, principles IV(5)–(6).

²⁰⁰ A separate question would be whether the FV_DE determination arrived at by such procedures is entitled to any deference by an investor-state tribunal.

²⁰¹ See Dodge, William S., The Case for Punitive Damages in Contracts , 48 Duke L.J. 629, 636–41 (1999)Google Scholar (discussing key U.S. cases). The analogy is not perfect because the normal damages for breach of the contract, i.e., the amount specified in the contract, are based on the idea of expectation damages—which is akin in international law to full reparation—and the additional damages are generally considered punitive damages. In the case of an IIA, the additional damages beyond FV_DE would be part of what is needed to make the investor whole.

²⁰² ConocoPhillips, supra note 63, paras. 382–401; Venezuela Holdings, supra note 65, paras. 301–06; Tidewater, supra note 66, paras. 144–45.

²⁰³ ASRs, supra note 85, Art. 2, comm. para. 10; Arts. 20–26. For example, I am not seeking to justify the lower payment on some claim of necessity by the state given the very narrow grounds of that excuse.

²⁰⁴ Id. Art. 35, comm. para. 5; Art. 37(3); Art. 49, comm. para. 6 (limits of countermeasures).

²⁰⁵ Eri.-Eth. Claims Comm'n, Final Award of Ethiopia's Damages, para. 312 (Aug. 17, 2009), at https://pcacases.com/web/sendAttach/767.

²⁰⁶ Indeed, some of these arguments might extend to a lower standard of payment for regulatory takings in all circumstances. For an economic argument to this effect, see Merrill, supra note 162, at 134–35.

²⁰⁷ See generally Ratner, Regulatory Takings, supra note 140; see also Electrabel v. Hungary, ICSID Case No. ARB/07/19, para. 6.62 (Nov. 25, 2015) (“for both direct and indirect expropriation … the requirement under international law [is] for the investor to establish the substantial, radical, severe, devastating or fundamental deprivation of its rights or the virtual annihilation, effective neutralisation or factual destruction of its investment, its value or enjoyment.”).

²⁰⁸ See, e.g., EU-Vietnam FTA, supra note 119, ch. 8.2, Art. 16, ann. on Expropriation.

²⁰⁹ Tribunals have much more often found some of these regulations to violate the treaty's standard of fair and equitable treatment, a point I address later.

²¹⁰ In situations where full reparation requires some amount other than FV_DA, e.g., in the case of a partial expropriation, that amount should be awarded.

²¹¹ See Stephan Wittich, Punitive Damages, in The Law of International Responsibility, supra note 87, at 667, 672.

²¹² See Quiborax, supra note 1, paras. 56–60 (Stern, dissenting).

²¹³ Although the investor may have been harmed due to these acts by the state, I am not suggesting that the investor's human rights have been violated.

²¹⁴ I do not regard this as analogous to the manipulation of the primary rules regarding compensation that I criticized earlier, because in these situations, the text is open-textured enough to give the tribunal the discretion to avoid finding a violation of the process conditions.

²¹⁵ See, e.g., Siemens, supra note 62, para. 352; Marboe, supra note 74, at 304–15 (collecting cases).

²¹⁶ See, e.g., Siemens, supra note 62, paras. 387–89; Unglaube, supra note 50, para. 307; on reputation, see Desert Line Projects v. Yemen, ICSID Case No. ARB/05/17, paras. 289–91 (Feb. 6, 2008) (FET claims) [hereinafter Desert Line]; Marboe, supra note 74, at 305–08.

²¹⁷ Siemens, supra note 62, para. 403; Desert Line, supra note 216, paras. C.5, C.9 (converted to dollars).

²¹⁸ For further thoughts, see Rukia Baruti, Available Remedies in Investment Arbitration: Is There a Need for Explicit Provision in Investment Treaties? OGEMID Virtual Seminar, supra note 158 (Nov. 14, 2016).

²¹⁹ See the cases discussed in Marboe, supra note 74, at 87–88.

²²⁰ See Wena Hotels, supra note 40, para. 118; CMS, supra note 123, para. 410; see generally discussion in Marboe, supra note 74, at 94–96.

²²¹ For a recent case, see Micula v. Romania, ICSID Case No. ARB/05/20, paras. 944–48 (Dec. 11, 2013) (endorsing this method as flowing from Chorzów Factory).

²²² See id., paras. 950–1118.

²²³ Glamis Gold, Ltd. v. United States, UNCITRAL, para. 627 (June 8, 2009); see also Clayton and Bilcon v. Canada, UNCITRAL, PCA Case No. 2009-4, paras. 445, 589 (Mar. 17, 2015) (reneging on “specific representations” triggers FET violation).