Public Law Studies Quarterly

Factual Causation in International Investment Arbitration: Functions and Criteria

Document Type : Article

Authors

Hossein Sobhi 1
Mansour Amini 2
Mir Hossein Abedian 3

1 Ph.D. Candidate in International Commercial & Investment Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

2 Associate Professor, Department of Private Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

3 Visiting Professor of Private Law, Faculty of Law, Shahid Beheshti University, Tehran, Iran

https://doi.org/10.22059/jplsq.2021.320398.2720
Abstract
The causal link is of great importance in international investment disputes, as it acts as an intermediary between the liability of the host state and the evaluation of damages. This paper, seeks to identify the factors that can be considered as the sole cause of the investor's loss despite the commission of a wrongful act by the host state, and, on the other hand, seeks to identify an accurate test for establishing the causal link in case of concurrent causation. Concerning factors affecting causation, the paper concludes that the incorrect business decisions of the investor, the general economic situation of the host state, and bona fide third parties can be regarded as factors that can break the causal link between the wrongful act and loss. Regarding the criteria for establishing factual causation, considering the possibility of human intervention betwixt the breach of the investment treaty and investor's loss, it is recommended that in case of concurrent causation, arbitral tribunals employ the NESS test instead of the but-for test, since the former can better help the tribunals in determining the factual causes of harm.

Keywords

bad business judgment
concurrent causation
factual causation
general economic situation of the host state
human intervention factor
third party act
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Public Law Studies Quarterly
Volume 53, Issue 1
Spring 2023
Spring 2023
Pages 139-161

  • Receive Date 09 March 2021
  • Revise Date 09 June 2021
  • Accept Date 25 September 2021

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