In personal injury cases, damages are often calculated as the “out-of-pocket loss” of an investor. Out-of-pocket loss is equal to the amount an investor has lost, minus any withdrawals. As an example, assume that an individual invests $100 in a ten-year bond with a ten percent annual interest rate. For the next decade, the individual will receive a check for $10, and in the end, the initial investment is worthless.
The US Model BIT (2012) sets the standards for damages under an investment treaty, and the arbitral tribunal should apply the same standards in damages calculations. This includes a comprehensive review of the rate of return, as well as the state’s ability to pay the amount. In the Chorzow case, the US State was found liable for the loss of its own license. As a result, the arbitral tribunal must consider both factors to determine an appropriate amount of damages.
A common approach for calculating damages is based on the liquidation value of the assets and liabilities of the business. The value is similar to that of a liquidation proceeding, and the World Bank Guidelines suggest that this method is best suited when a business is no longer a going concern or cannot sustain profits. However, it is important to note that this method can be difficult to estimate. To avoid confusion, the investment treaty arbitration rules specify that a claimant can appeal the tribunal’s decision.
Investment arbitral tribunals are unlikely to consider claims that are highly speculative, particularly in the context of a monetary loss. The damage award should be proportionate to the amount of loss and should be based on a comprehensive analysis of the damages. Using a comprehensive analysis of the damage, the parties should try to determine the best way to measure it. For example, the investment should take into consideration the cost of the transaction.
In calculating damages, the investor has two options. One option is to use the liquidation value of the business’s assets. This will give the investor a clearer idea of how much the loss was worth. The investor has to prove that they are not liable for the loss. Alternatively, they can hire a professional to conduct the assessment. A third approach is to make a hypothetical investor’s claim. In this scenario, the hypothetical investor is an actual person who falls within the criteria of sub-paragraphs (2) and (4). The investment fund will be depleted at the end of the damage period.
If the investor has lost an investment, the investor must pay the loss of capital. In such cases, the state must pay the amount of profit by granting the damages. In other words, the victim cannot win if the other side is not willing to compensate him. In addition, a hypothetical investor can be a company that has lost an asset. Moreover, the arbitral panel can award a lower amount than a plaintiff would have if he is successful in a civil action.