chapter  9
Compensation for violation of obligations
Pages 59

The principal objective of contemporary international investment law is to provide a normative framework for encouraging the smooth cross-border flow of capital and technology. To achieve this purpose, the normative framework must be mutually beneficial to both the recipient-the host state-and foreign investors. As the worldwide supply of capital is not unlimited, and with all countries competing for what is available, new-generation BITs, in order to attract foreign investment, competitively provide preferential treatment and guarantees to foreign investors, including minimum standards of treatment, fair and equitable treatment, and full protection and security, in addition to the traditional MFN and national treatment. In such circumstances, where a host state breaches its obligations under BITs and customary international law, it will be held liable for the damages caused to foreign investors and will be obligated to pay compensation. This chapter examines the treaty provisions and practices in respect of compensation for breaches of expropriation provisions and, in particular, for non-expropriatory breaches.