PANEL 2: Re-thinking the “New Business Rule”—Can or Should Income-based Approaches Be Used to Assess Damages for Non-operating Projects? - Journal of Damages in International Arbitration, Vol.8 No.1
Originally from the Journal of Damages in International Arbitration
MR. MILES: Welcome back, everyone. I hope you enjoyed the short break, and we’re ready to resume with panel two. If you’ve read the program, you have the title of this panel: Re-thinking the “New Business Rule”: Can or Should Income-based Approaches Be Used to Assess Damages for Non-operating Projects? I’ll give a brief introduction of the topic and then introduce how we’ll present the program. For those who don’t know me, my name is Craig Miles, I’m a partner in the Houston office of King & Spalding on the international arbitration team, I practice exclusively international arbitration, primarily investor-state. And for reasons that still remain a bit of a mystery to me, I’m interested in the quantum aspects of cases, which involve, you know, math and many things that lawyers typically don’t like to get involved in. But for some reason, I have found it interesting over the years, which is why I like to be involved in this conference and the Juris journal, because I think they are a great resource for practitioners who ultimately, as we know, have to deal with the quantum issues, because that’s really what the cases are all about at the end of the day. So, to introduce the topic, it’s a long-standing trope, you might say, in international arbitration, as well as in many national jurisdictions, that businesses that lack a history of operating profitability should not be awarded lost profits or other income-based methods of damages, such as DCF, when those businesses are the subject of wrongful conduct, whether it’s contractual, or sovereign, which is where the issue has come up most recently in the investor state context. And this is the so-called new business rule of quantum theory. And in investor state realm, I think the new business rule is well encapsulated in the Siag v. Egypt Award, an ICSID award that was issued in June of 2009. And that’s what we’re going to observe in that case, which did involve a business, a resort project on the Red Sea that was expropriated about halfway through its construction and never operated. When you have a business with an operating history, there’s a much higher degree of certainty as to what to expect of the performance of the business in the future.