Originally from the Journal of Damages in International Arbitration

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I.  INTRODUCTION

In arbitrations where compensation is based on a specific well-written clause in the contract signed by the involved parties, or cases involving a specific identifiable amount in dispute, the amount of compensation to be paid if the claimant prevails is often relatively clear-cut and not a major point of controversy between the parties. In contrast, other arbitrations may relate to existing contracts that do not provide clear, specific guidance as to the amounts or calculation methods to be adopted if compensation should be assessed and valuators have many alternatives at their disposal, in most cases, involving goods and/or services traded in marketplaces.

In instances where the goods or services related to the arbitration dispute were traded in a regulated market, some of the standard methods for estimating compensation cannot be applied in the same way they are applied in unregulated markets.  Estimating compensation for disputes involving investments in regulated markets may involve special considerations regarding the method of damages estimation.  Further, the specific actions or inactions of the respondent which allegedly led to damages are often of a unique nature.  Together, these factors cause the number of alternative damages estimation methods to narrow and the specific characteristics of the market involved to have a significant bearing on the valuation.