Originally from the Journal of Damages in International Arbitration

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ABSTRACT

In this article, the author examines the effect of different causation theories on damages and of extraordinary events as alternative causes, which are often overlooked in comparative damages law. The topic is particularly relevant for the assessment of damages incurred during the Covid-19 pandemic. It is also related to the date of valuation and to the hypothetical normal course of events as well as to its effect on the fair market value. 

I. INTRODUCTION

The Covid-19 pandemic has led to widespread disruption of supply chains, in particular as regards China, and affected many large construction, infrastructure, and energy projects around the world. According to the Organisation for Economic Co-operation and Development (OECD), the year 2020 was marked by some of the largest reductions in trade and output volumes since World War II, similar in depth as during the Global Financial Crisis between mid-2007 and early 2009. Whereas trade recovered in 2021, the recovery was different across products, economic sectors, and trading relationships, and pressure was higher with respect to specific sectors and supply chains such as fuels, aircrafts, cars, mechanical machinery, and steel.