Reparation/Compensation for the Investor: A Primer on Protecting Foreign Investments (Part 7) By Ania Farren and James Holden (London) We have previously set out, in Parts 3–5 of this multi-part series, an overview of the typical protection standards that an investor can expect to find in an international investment agreements (“IIA”); and in Part 6 of this series, the access to dispute resolution mechanisms an investor can typically expect pursuant to the IIA with regard to breaches of those protection standards. In this Part 7, we look at the rights to reparation or compensation an investor can expect when bringing a claim for breach of an IIA. THE RIGHT TO FULL REPARATION OR COMPENSATION The concept of damages (reparation) was most prominently spelled out in the Judgment of 13 September 1928 of the Permanent Court of International Justice in the Chorzów Factory case: “[t]he essential principle contained in the actual notion of an illegal act—a principle which seems to be established by international prac- tice and in particular by the decisions of Arbitral Tribunals—is that reparation must, as far as possible, wipe out all the consequences of the illegal act and reestablish the situation which would, in all prob- ability, have existed if the act had not been committed ” (P.C.I.J., Series A, No. 17, p. 47)” It is clear from the Chorzów Factory case that the first and the most favourable way of redressing damage is restitution, i.e. “reestablishment of the situation which would, in all probability, have existed if the act had not been committed.” This could include, for example, the reversal of an expropriatory act by the state, such that the assets are returned to the investor. In practice, however, restitution is rare, as discussed in more detail below. The prevailing form of compensation is monetary damages. 63