It is surprising in comparative terms how little has been written to date about damages in international arbitration. Yet quantification of damages is usually integral to the whole process and is normally the issue of greatest relevance to the parties themselves. Damages represent in monetary form reimbursement for the loss suffered by the innocent party. In cases where the claim or counterclaim is for damages, an award favourable on liability alone is likely to be of no real value to a claimant or counter-claimant, unless possibly if it is a partial award in a bifurcated hearing and is a trigger for settlement.
Assessment of damages can be a hugely complex process, both legally and factually. At the time of the Watergate scandal Deep Throat may have advised Bob Woodward to “follow the money”, to find out who was behind the Watergate break-in, but the achievement of a “finding for the money” or a favourable damages award in an arbitration can often require not dissimilar thoroughness and determination. To assume that establishing quantum is the easy part and can thus be put on one side is a trap the unwary should avoid.
While the thrust of this chapter is directed to international commercial arbitration, it would not be complete without some reference to investment treaty disputes. Many of the issues are common to both kinds of international arbitration, but there are some significant differences, not least because international commercial arbitration is based on private international and national law and is largely contract based, whereas investment treaty arbitration is normally founded on public international law and is treaty based.