Originally from Investment Treaty Arbitration and International Law Volume 15

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ABSTRACT

The most principled way to value expropriated assets is to use only information known or reasonably knowable at the time of expropriation (an “ex-ante” valuation). This information best reflects what returns the investor did or could reasonably have expected to make at that time. It is difficult to justify taking an ex-post approach that would give an investor all of the benefits of an unanticipated event while imposing on the State the consequences of any risks, even those unforeseeable at the time of expropriation. For all expropriations occurring before 2020, the ex-ante approach will necessarily exclude the effects of the COVID-19 Pandemic. The only reason to include the effects of the Pandemic is if it was foreseeable at the time of expropriation. The COVID-19 Pandemic was an exogenous and unpredictable event, whose effects were not foreseeable before 1 January 2020. In these circumstances, these effects should not impact valuation, especially as States could not have committed the illegal act to profit from the Pandemic.