Originally from European International Arbitration Review

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I.    Introduction

Damages are the substitute of everything. Or so are they deemed to be. In the abstract legal word, they are granted to compensate a harm done, be it an economic loss or other types of detriment. The allocation of an amount of money is deemed to repair what it cannot be undone. In a way, damages are the consequence of the passing of a time and the impossibility of going backward.

When awarding damages, adjudicators need first to establish that the alleged victim is entitled to be awarded damages. Once the right to damages and its modalities (to which extent they should be granted, on which basis ...) have been decided, remains the question of how exactly to assess them. This contribution will focus only to this last issue. It will not be dealt with issues relating to payments (place and mean of payment) nor will it tackle the issue of penalty clauses. The only perspective adopted in this contribution will be the assessment of damages in international arbitration  and whether there are – or should be – soft law rules in the process of allocating damages that might procure some guidance to the arbitrators, in the absence of any hard law rules on that matter. Damages and soft law are two legal concepts scarcely brought face to face. Their confrontation is however interesting for it shows how legal vacuum is readily filled by soft law rules.

This paper will first focus on the question of the nature of the power of arbitrators when they assess damages and will inquire whether arbitrators are under the obligation to follow any rules. In other terms, the question whether the assessment of damages is a legal issue will be addressed. Second, a brief overview of the main methods of valuation will be recalled. Then, the paper will verify whether “hard law rules” exist on this issue and finally, whether soft law rules exist or should be created to fill the previously observed gap of binding rules.