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The Efficient Breach Theory In International Investment Law, Sangwani Patrick Ng’Ambi
The Efficient Breach Theory In International Investment Law, Sangwani Patrick Ng’Ambi
Northwestern Journal of International Law & Business
When a State unilaterally abrogates its contractual obligations, it is under a duty to compensate the investor. The aim of the compensation regime under International Investment Law is to restore the investor to a position he or she would have been in had the breach not taken place. Thus, the award of compensation should not only include sunk costs (damnum emergens) but also lost future profits (lucrum cessans).
In this article it is argued that the rules relating to compensation promote efficiency, as per the ‘efficient breach theory’ because they dissuade governments from unilaterally abrogating concession agreements, unless they can …