Annals of the University of Oradea: Economic Science (Jul 2020)
FACTORS’ IMPACT ON DAMAGES PAID IN ICSID CASES, EVALUATED ON MARKET VALUE PREMISES
Abstract
The present paper intends to present the impact of different factors, such as - the legal standard breached by the host state, the method used in calculating the damages and the requested amount, on the damages awarded in ICSID - International Centre for Settlement of Investment Disputes – concluded cases in which the Tribunal ordered the Respondent to pay damages to the Claimant, and that damages had been calculated based on the market value. Usually, the Company Valuation process is driven by economists following the frame settled by the International Standards, which recommends three main categories of valuation bases: asset approach, income approach or market approach. The damages valuation in ICSID Cases are made primary following the same rules, and in the present paper will be presented the ones using the market value approach. We will present three regression analysis based on the 7 cases that are meeting these conditions, cases that were started against countries such as: Russia, Costa Rica, Egypt, Slovak Republic, Georgia or Macedonia. The industries from which these cases aroused are different, we are talking about petroleum industry, tourism, bank and finance. Going further in analysis in order to see which was the breach identified by the Tribunal, we can see that there is not any direct link between the valuation approach and the legal standard breached by the Respondent but we can find a direct link between the standard breached and the amount awarded. In the cases presented in the following pages we will see that in some cases we were taking about expropriation and in other about breaching the fair and equitable treatment that the host state must insure to the foreign investor. Anyway, these cases had a common aspect, and that is the fact that were other valuations approaches were presented by the claimants, those had higher values. The present paper is an analysing study, using the statistical instrument of regression, based on a previous paper published by the authors in which was presented a briefly description of those cases in which the ICSID Tribunal decided the amount of damages to be paid by the Respondent, using the market approach.
