Grounds for Reducing the Scope of Liability in International Investment Arbitration

This graduation qualifying thesis is dedicated to the analysis of the grounds for reducing the scope of liability in international investment arbitration. The relevance of this research is stipulated by the necessity for the security of transparent and predictable investment arbitration practices. Current research represents a big scientific value, since more than thirty-five investment cases were analyzed by the author with the purpose of finding the main trends in liability of the States violating the provision of bilateral investment treaties (BIT’s) and of determining, which grounds for the reduction of damage amount awarded to the investor currently exist. During the development of this thesis, author had to: divide the concepts of “compensation” and “damages” as the types of State’s liability in international investment arbitration, investigate the role of proximate causation test in the proceedings, as well as analyze the legal nature of certain grounds allowing to proportionally reduce the amount of damages awarded in investment disputes. As the result of the research, Author comes to the conclusion that proportional reduction due to the negligent actions of the investor concerns only the amount of damages, but not the compensation. During the investigation of the arbitration practices and doctrine sources of international investment arbitration, Author has ascertained two main foundations for liability reductions: contributory negligence (contributory fault) and mitigation of damages. Meanwhile, the crucial role in order to implement these foundations is played by careless and non-sufficient business decisions taken by an investor during entrepreneurship, which have to be in a proximate causation with the undertaken damages.