Designing Compensation Methodologies from General Principles in Public International Arbitration

Abstract

A body of inter-state claims has built up from the experience of two arbitral tribunals, the Iran-United States Claims Tribunal and the Eritrea-Ethiopia Claims Commission, and a non-arbitral tribunal, the United Nations Compensation Commission. These claims serve as an instructive guide as to how compensation methodologies may be developed from the general principle that a state is under an obligation to make “full reparation” for the injury caused by its internationally wrongful act. This paper suggests that a uniform test for legal causation would make a positive contribution to the development of compensation methodologies, which could be informed by recourse to private law. In addition, this paper proposes that the analytical difficulty of distinguishing between the existence and the extent of a state’s liability requires special consideration with respect to restoration obligations. Finally, this paper suggests that more innovative approaches towards determining the appropriate form of reparation are needed in order to better respond to the practical difficulties of awarding restitution and compensation.