Originally from World Arbitration And Mediation Review (WAMR)

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"DAMAGES IN INTERNATIONAL ARBITRATION:

STRATEGIES, TECHNIQUES & PRESENTATION"

INTRODUCTION TO ACT I
Stephen Jagusch, Workshop Co-Chair

Thank you very much, David. On behalf of my co-chairs, Andrea
and Claudia, may I thank the ITA for entrusting to us this fabulous
event, the Annual Workshop of the ITA. We hope that you will enjoy
and take from it as much as we have in putting it together.
As you know from the papers, and from David’s introduction, this
workshop focuses on damages in international arbitration. We have
therefore created a mock scenario that has produced a liability award in
an ICSID arbitration proceeding where both claims and counterclaims
have succeeded. We have miraculously reduced this entire scenario to a
single page, which you will find in your packs. I shall not read to you
the scenario. Like counsel before arbitrators, I will courageously, but
perhaps foolishly, assume that you have in fact read the papers.
(Laughter) But I will summarize the scenario for you.
The mock proceeding arises from the construction and operation
by United, a Ruritanian company, of a power generation plant in
Paragonia pursuant to a concession agreement that requires
Pareléctrico, which is Paragonia’s state-owned power distribution
company, to purchase all of the plant’s output for a ten year period.
After United constructs the plant, and after its foreign subsidiary
begins to operate it, local inhabitants begin to complain that the
plant’s emissions are causing environmental damage. In response to
these complaints, the Paragonian government conducts several
environmental impact assessments. It concludes that United, indeed,
failed to construct the plant in accordance with certain environmental
requirements, which had been outlined in the concession agreement.
Eventually, local politicians take up the issue – surprisingly in an
election year – and pass a resolution terminating United’s ownership
and management of the plant. In response, United commences an
ICSID arbitration and subsequently wins a partial award on liability
for Paragonia’s violation of the BIT.
The operative parts of the award are in your materials. Again, in
summary, the award declares that the plant was not constructed in