The Valuation Date of an Unlawfully Expropriated Property in International Investment Arbitration: A Critique of Acquisitive Valuation

Abstract The valuation date of an expropriated property is considered a major element in the calculation of compensation. Some international investment tribunals, relying on the standard set by the Permanent Court of International Justice (PCIJ) in the Chorzów Factory case, have adopted a dual standard for determining the valuation date and have switched between the date of taking and the date of award to secure the highest amount of compensation in cases of unlawful expropriation. For the proponents of this method, it helps to distinguish between compensation for lawful and unlawful expropriations. This article labels such an approach as ‘acquisitive valuation’ and challenges its legal justification. It shows that acquisitive valuation is associated with punitive damages and fails to comply with the standard set out in the Chorzów Factory case. Using the ex post information is similarly to be avoided under that standard. Finally, although mindful of the hindsight issue, the article advocates the adoption of the date of taking as the valuation date in both lawful and unlawful expropriations. The extension of the scope of damages, including the loss of profit and consequential damages, if incurred, to the point in time when the investment was reasonably expected to continue instead of limiting the compensation to the fair market value of investment at the date of taking would more properly reflect the difference between lawful and unlawful expropriations.