papers

When a host state fails to meet its obligations in accordance with the contract or fails to provide protections embodied in a bilateral or multilateral investment treaty, the question of available remedies carries a paramount significance to a foreign investor. Courts and arbitral tribunals usually react to breach of obligations on the part of the host state by awarding monetary compensation and rarely grant specific performance. The majority of bilateral investment treaties are also silent with regard to the available remedies and some multilateral treaties also restrict the availability of non-pecuniary remedies in investor-state dispute settlement (hereafter, ISDS). Jurisprudence and scholarship illuminate on the reasons accounting for the scarcity of specific performance in ISDS; apparent infringement of non-pecuniary remedies with states’ sovereignty, difficulty of enforcement of non-pecuniary remedies, and the fact that investors almost always frame their claims in terms of monetary damages are among the most significant of these reasons. Therefore, the question that the paper seeks to answer is whether it is feasible or good idea to award specific performance in ISDS. The paper shall argue that it is not only theoretically possible to grant specific performance in ISDS but, as the literature indicate, there are situation where granting specific performance will be inevitable or desirable. The example for the former will be situations where the calculation of recoverable damages turns out to be acute or impossible or simply the host state is unable to pay damages. Desirability of specific performance shall include situations where the host state itself shows willingness to perform its obligations specifically and there is high chance of continuation of a friendly relationship between an investor and a host state. The paper will explore the feasibility and compatibility of specific performance with international law in general and international investment law in particular in light of the principle of pacta sunt servanda. The inevitability and desirability of specific performance in ISDS will also be addressed relying on the doctrines of “change of remedy” and “accumulation of remedies”. We will use UNIDROIT Principles of international commercial contracts (hereafter, PICC) to shed some light on the principle of pacta sunt servanda and doctrines of “change of remedy” and “accumulation of remedies” in ISDS. The paper proposes that full-on prohibitions of the remedy of specific performance should not be written into the texts of future investment treaties nor read into the texts of the many existing treaties that are silent with regard to the types of available remedies.