Document Type : Article


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


Given the role of causation in international investment law, which acts as an intermediary between the liability of host states and the quantum of damages, the causal link is of great importance in international investment disputes. Therefore this article focuses on factual causation to firstly identify factors that, despite the responsibility of a state for committing a wrongful act can be considered as the sole cause of an investor's injury and secondly, to seek an accurate test for establishing the causal link in case of concurrent causation. Concerning factors affecting causation, this article concludes that the investor's bad business judgment, 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 injury. Regarding the criteria for establishing factual causation, this article, considering the possibility of human intervention factor between the breach of treaty and investor's loss, recommends that in case of concurrent causation, arbitral tribunals employ the "NESS" test instead of the "but-for" test, because the former can better help the tribunals in determining the factual causes of harm.


  1. A) Books
  2. Dimsey, Mariel (2008), The Resolution of International Investment Disputes: Challenges and Solutions, Eleven International Publishing.
  3. Hylton, Keith N. (2016), Tort Law: A Modern Perspective, Cambridge University Press.
  4. Jarrett, Martin (2019), Contributory Fault and Investor Misconduct in Investment Arbitration, Cambridge University Press.
  5. Moore, Michael S. (2009), Causation and responsibility: an essay in law, morals, and metaphysics, Oxford University Press.
  6. Sabahi, Borzu (2011), Compensation and Restitution in Investor-State Arbitration: Principles and Practice, Oxford University Press.
  7. Schefer, Krista Nadakavukaren (2020), International Investment Law: Text, Cases and Materials, Edward Elgar Publishing


  1. B) Articles
  2. Alschner, Wolfgang (2017), “Aligning Loss and Liability – Toward an Integrated Assessment of Damages in Investment Arbitration”, in The Use of Economics in International Trade and Investment Disputes, Theresa Carpenter, Marion Jansen, Joost Pauwelyn (eds), Cambridge University Press, pp.283-318.
  3. El-Hosseny, Farouk & Devine, Patrick (2020), “Contributory Fault under International Law: A Gateway for Human Rights in ISDS? ”, ICSID Review - Foreign Investment Law Journal, Vol. 35, Issue. 1-2, pp. 105–129.
  4. Faccio, Sondra (2014), “The Application of the Principle of Proportionality to Assess Compensation: Some Reflections Arising from the Case of Joseph Charles Lemire v. Ukraine”, The Law and Practice of International Courts and Tribunals, Vol.13, Issue.2, pp.199-222.
  5. Pearsall, Patrick W. & Heath, J. Benton (2018), “Causation and Injury in Investor-State Arbitration”, in Contemporary and Emerging Issues on the Law of Damages and Valuation in International Investment Arbitration, Christina L. Beharry(ed), Brill Nijhoff, Nijhoff International Investment Law Series, Vol.11, pp.83-110.
  6. Plakokefalos, Ilias(2015). “Causation in the Law of State Responsibility and the Problem of Overdetermination: In Search of Clarity”, The European Journal of International Law, Vol. 26, No. 2, pp.471-492.
  7. Puppe, Ingeborg & Wright, Richard W.(2017), “Causation in the Law: Philosophy, Doctrine and Practice”, in Causation in European Tort Law, Marta Infantino and Eleni Zervogianni (eds), Cambridge University Press, pp.17-59.
  8. Sebok, Anthony J.(2017), “Actual Causation in the Second and Third Restatements: Or, the Expulsion of the Substantial Factor Test”, in Causation in European Tort Law, Marta Infantino and Eleni Zervogianni (eds), Cambridge University Press, pp.60-84.


  1. C) Case Law
  2. Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, Award, ICSID Case NO. ARB/05/22, 24 July 2008.
  3. CME Czech Republic B.V. vs. The Czech Republic, Partial Award, UNCITRAL Arbitration Proceedings, 13 September 2001.
  4. CMS Gas Transmission Company v. Republic of Argentina, Decision of the Tribunal on Objections to Jurisdiction, ICSID Case No. ARB/01/8, 17 July 2003.
  5. Copper Mesa Mining Corporation v. The Republic of Ecuador, Award, PCA Case No. 2012-2, 15 March 2016.
  6. El Paso Energy International Company v. The Argentine Republic, Award, ICSID Case No. ARB/03/15, 31 October 2011.
  7. Emilio Agustı´n Maffezini v. Kingdom of Spain, Award, ICSID Case No. ARB/97/7, 13 November 2000.
  8. Ioan Micula, Viorel Micula, S.C. European Food S.A., S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v. Romania, Award, ICSID Case No. ARB/05/20, 11 December 2013.
  9. Joseph Charles Lemire v. Ukraine, Award, ICSID Case No. ARB/06/18, 28 March 2011.
  10. Joseph Charles Lemire v. Ukraine, Dissenting Opinion of Arbitrator Dr. Jurgen Voss, ICSID Case No. ARB/06/18, 1 March 2011.
  11. MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, Award, ICSID Case No. ARB/01/07, 25 May 2004.
  12. Occidental Petroleum Corporation & Occidental Exploration and Production Company v. The Republic of Ecuador, Award, ICSID Case No. ARB/06/11, 5 October 2012.
  13. Quiborax S.A. & Non-Metallic Minerals S.A. v. Plurinational State of Bolivia, Partially Dissenting Opinion of Brigitte Stern, ICSID Case No. ARB/06/2, 7 September 2015.
  14. Ronald S. Lauder v. The Czech Republic, Final Award, UNCITRAL Arbitration, 3 September 2001.
  15. Socie´te ´ Ge´ne´rale In respect of DR Energy Holdings Limited and Empresa Distribuidora de Electricidad del Este, S.A. v. Dominican Republic, Award on Preliminary Objections to Jurisdiction, UNCITRAL Arbitration, LCIA Case No. UN 7927, 19 September 2008.
  16. Tidewater Inc., Tidewater Investment SRL, Tidewater Caribe, C.A., et al. v. The Bolivarian Republic of Venezuela, Award, ICSID Case No. ARB/10/5, 13 March 2015.
  17. Victor Pey Casado and Foundation “PRESIDENTE ALLENDE” v. The Republic of Chile, Award, ICSID Case No. ARB/98/2, 13 September 2016.
  18. Waste Management, Inc. v. United Mexican States (II), Award, Case No. ARB(AF)/00/3, 30 April 2004.
  19. Yukos Universal Limited (Isle of Man) v. The Russian Federation, Award, UNCITRAL, PCA Case No. AA 227, 18 July 2014.