Damages in International Arbitration under Complex Long-Term Contracts by Herfried Wöss, Adriana San Román Rivera, Pablo T. Spiller, Santiago Dellepiane - Journal of Damages in International Arbitration, Vol.3 No.2
The book is the result of a fortunate cooperation of experts in international arbitration in the area of law and valuation. This is most adequate for a topic that is inherently interdisciplinary. The calculation of damages in international arbitration involves the application of legal norms and economic principles in a manner that leads to adequate results both from the perspective of the rule of law as well as in economic terms.
Herwig Wöss and Adriana San Román, the legal experts of the group, elaborate on the legal principles and concepts that should guide the calculation of damages in cases of long-term contracts. They do not only present and analyze legal norms but also scholarly commentary and legal theory, with a focus on European thinkers. Friedrich Mommsen’s Doctrine of interest of 1855 and Rudolf von Jhering’s (1818-1892) concept of the “expectation interest”, and even some earlier ideas, such as the notion of “corrective or distributive justice” from Aristotle’s Nichomachean Ethics, provide the theoretical fundament on which the subsequent analysis of principles and cases is based.
A useful point of reference is the classification of complex long-term contracts, as well as the description of some typical examples, in the third chapter of the book. The authors distinguish between PPP contracts, turnkey construction contracts, operation and maintenance agreements, off-take sales agreements, and joint venture agreements. As a preliminary conclusion they point out that complex long-term contracts are self-contained and self-executing agreements, which contain risk allocation and adaptation mechanisms. The main aim of these mechanisms is to achieve the performance of the contract and the successful execution of a project to avoid disputes. Only when these mechanisms fail, litigation and arbitration are the consequence. The authors conclusively emphasize that arbitral tribunals must respect the underlying risk allocation of complex long-term agreements and may not rewrite the rules agreed by the parties, when it comes to the valuation of damages.