What do investors recover in investment treaty arbitration?
Less than they claim, and in more than half of decided ICSID cases, nothing. In the cumulative statistics of the International Centre for Settlement of Investment Disputes (ICSID), 55% of arbitrations decided by a tribunal ended with no damages awarded. Where damages were awarded, the principal was half the claim or less in about two cases in three.
A 2021 study by the British Institute of International and Comparative Law (BIICL) and Allen & Overy found that successful claimants recovered a median 33% of the amount claimed. Our guide to investment treaty arbitration covers the process.
The figures use different denominators. Of tribunal decisions, ICSID counts 48% upholding claims in part or in full. Of all concluded arbitrations, 34% settled or were discontinued. The two-in-three figure adds ICSID's three lowest bands (22%, 19% and 26% of the claim) among cases where damages were awarded. The BIICL study is secondary, and its data stop in May 2020. One year can mislead, too: the all-time share is 55%, but in the year to 30 June 2026 it was 70%.
Which standard of compensation applies: full reparation or fair market value?
Both, depending on the breach. For a lawful expropriation the treaty sets the measure. Article 13(1) of the Energy Charter Treaty requires fair market value immediately before the expropriation became known, plus interest. A UN Secretariat draft for UNCITRAL Working Group III (WP.255, June 2025) says such clauses typically follow the Hull formula.
Every other breach falls to customary international law, including unlawful expropriation and most claims under the fair and equitable treatment standard. Chorzow Factory (1928) requires reparation to "wipe out all the consequences of the illegal act", as the UN draft quotes it. Article 31(1) of the ILC's Articles on State Responsibility states the same principle.
For a total loss the two usually give the same number, because value after expropriation is typically zero, but they part company on partial harm.
How do tribunals value the loss, and when do they reject DCF?
Tribunals pick among income, market and asset-based methods according to the asset. Discounted cash flow (DCF) is the income method used most, and slight changes in its inputs can significantly affect the result, the UN draft says.
Tribunals are reluctant to use DCF when the claimant cannot show future profitability with enough certainty, for instance where the company is not a going concern. The draft cites Metalclad v. Mexico (ICSID Case No. ARB(AF)/97/1) and Vivendi v. Argentina I (ICSID Case No. ARB/97/3). A cost-based valuation, which looks at what the investor spent, suits a project not yet in production. Rejection is still the exception for operating businesses: a PwC study (secondary) of 181 awards found tribunals using an income approach in almost half.
The number must also fit the breach found. In Pey Casado v. Chile (ICSID Case No. ARB/98/2), the first award rested on a calculation that assumed expropriation and was annulled in 2012. In 2016 the resubmitted tribunal held that the claimants had not shown what injury the fair and equitable treatment breach had caused them.
What do interest and costs add or take away?
Interest adds, and costs can go either way. The UN draft says interest can sometimes equal or exceed the principal sum. ICSID's damages statistics leave interest out, along with costs and non-monetary relief. In Nachingwea U.K. Limited v. Tanzania (ICSID Case No. ARB/20/38), press reports put the award at roughly US$76.7m in damages plus interest, and US$3.86m in costs.
Costs are a real deduction. In the BIICL study, investors' own costs averaged over US$6.4m, although since June 2017, 77% of tribunals have made fully or partly adjusted costs orders, against 43% before December 2012.
How can you size a claim before it is filed?
Start with the government measure, because it fixes what was taken and when. Article 6 of the 2012 US Model BIT says compensation "shall not reflect any change in value occurring because the intended expropriation had become known earlier".
The UN draft notes that investors normally engage quantum experts at an early stage, partly to obtain funding. The first filing then carries a number: ICSID's Institution Rules call for the relief sought "including an estimate of damages".
An outside observer needs the measure, its date and whether the asset was producing. That is enough for a bracket and no more, because DCF is so sensitive to its inputs. The hard part is finding the measure while it is still a draft law or a ministerial statement. Our page on early warning of investment treaty disputes explains what to watch.
What should a funder check on damages before committing?
Five checks matter most to a funder.
- Which breach is pleaded, since it sets the standard of compensation.
- Whether the asset was operating with a record of profits, which decides between a DCF case and a cost-based one.
- The claim against the usual discount: a median 33% for successful claimants, and no damages in 55% of ICSID decisions.
- Interest and costs, with investors' own costs averaging over US$6.4m.
- Whether the award can be collected, since ICSID's statistics exclude enforcement.
Our page on investment treaty claim sourcing for litigation funders and our article on how funders source treaty claims cover how claims are found.
What this means for practice
Treat a pleaded damages figure as an opening range. The median result for a successful claimant is a third of the amount claimed. We would size any claim twice, once on the claimant's income case and once on the money actually invested, and read the gap as the risk.
DSPT Finder is an AI tool that sources international arbitration leads. It finds investment treaty disputes before they are filed, so arbitration lawyers reach the client first. It is a research aid, not a damages opinion.
For more on this topic, see notice of intent in investment arbitration and ICSID caseload trends in 2026.
Frequently asked questions
What are damages in investment treaty arbitration?
Damages are the money a tribunal orders a state to pay an investor for the loss caused by a treaty breach. A UN Secretariat draft says they compensate and do not punish.
What is the standard of compensation for expropriation under a treaty?
For a lawful expropriation, treaties usually follow the Hull formula: fair market value immediately before the expropriation, plus interest. Article 13(1) of the Energy Charter Treaty and Article 6 of the 2012 US Model BIT follow this pattern.
Do tribunals award the full amount claimed?
Rarely. In the BIICL and Allen & Overy study, with data to May 2020, successful claimants recovered a median 33% and a mean 37% of the amount claimed. ICSID reports that in 21% of cases with damages the principal was 76% to 100% of the claim.
Does an investor recover its legal costs?
Often some. In the BIICL and Allen & Overy study, successful investors recovered at least some costs in 62% of cases, and since June 2017, 77% of tribunals have made fully or partly adjusted costs orders.
How can a funder or law firm spot a damages-heavy dispute before it is filed?
By watching the government measure behind the claim, because it fixes what was taken and when. Monitoring tools such as DSPT Finder surface those measures early enough for counsel or a funder to start sizing a claim before a notice of intent is served.