Originally from the Journal of Damages in International Arbitration

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Should the Global SARS-COVID-19 Pandemic Have any Impact on the Valuation of Expropriations that Occurred before 2020? The Case for “No Impact” 

Elizabeth Chan1 

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. 

I.  Introduction 

More than a year after the World Health Organisation (WHO) first declared COVID-19 to be a pandemic, there have been more than 173 million recorded infections, leading to almost 3.8 million recorded deaths around the world.2 Even as vaccination programmes are being rolled out, there is not yet an end to the pandemic in sight. World governments’ responses to the pandemic, in the form of lockdowns, social restrictions, economic stimulus packages and more, have dramatically impacted business globally.