The DCF standard in the calculation of compensation : some comments in connection with the standard of compensation adopted by the tribunal in the Rockhopper v Italy Award

Arbitration International 2025, t. 41, nr 3, s. 647–674.

As of 2021, there were reported at least 231 Investor-State Dispute Settlement (ISDS) cases related to fossil fuel investments, which was almost 20% of the total known number of ISDS cases across all sectors. The vast majority (92%) of fossil fuel cases were related to oil and gas investments. Fossil fuel investors have been successful in 72% of cases that were decided on the merits, where the final award was disclosed. Fossil fuel cases have a high average amount of compensation awarded (ca $600 million). It has been observed that an increase in the amount of compensation awarded in recent years that could vastly exceed the amount that the investor has invested is caused, inter alia, by the more frequent use of Discounted Cash Flow (DCF) as a method of computation of due compensation. This, in turn, may have a serious impact on the economy of host States and could lead to States refraining from, or delaying, measures to phase out fossil fuels in order to protect the climate. Thus, the problem of appropriate use of DCF in the computation of damages is important in the context of both the private and public good.

Wyrok

Współautorstwo: Sołtysik, Stanisław; Tomczyk, Barbara; Dudzińska, Maria

Regulamin sądu arbitrażowego przy konfederacji Lewiatan : komentarz / redakcja naukowa Marcin Asłanowicz. Warszawa : Wolters Kluwer, 2025, s. 254-304.