Research On Moral Damages To Respondent States In ICSID Investment Treaty Arbitration

Moral damages were awarded for the first time for the breach of a bilateral investment treaty in the ICSID case of Desert Line v.Yemen.This has attracted attention to moral damages in investment treaty arbitration.The center of attention is the investor's moral damages,and little research was done on moral damages to respondent States.To date,the ICSID tribunals haven't supported any State's counterclaims for moral damages.It's largely the result of the fact that States rarely presented this kind of counterclaims,rather than meaning that such counterclaims can't be supported by ICSID tribunals.As we can see from awards,international investment treaties,the ICSID Convention and other legal instruments,there are many disputes over States' counterclaims for moral damages.However,there is still a possibility that the ICSID tribunals will accept and support States'counterclaims for moral damages.The tribunals should award moral damages to States when the conditions are met.Part I is an overview of moral damages to respondent States.Firstly,it explains the reason why the present paper draws a distinction between damage suffered by a State in its own right and damage suffered by a State through one of its nationals.It's a tradition in international law.Then it clarifies the concepts and concrete manifestations of moral damage suffered by the States.Finally,it summarizes relevant disputes over moral damages to respondent States.As can be seen,these disputes are over two aspects of procedural and substantive matters.Part II briefly demonstrates that the ICSID tribunals could have competence to hear counterclaims for moral damages submitted by respondent States.According to the ICSID Convention,there are three main requirements for the presentation of counterclaims on the part of respondent States.Firstly,whether such counterclaims are within the scope of the consent of the parties mainly depends on the wording of international investment treaties.Some treaties' wording is so broad that they can be understood to include such counterclaims.In this case,investors cannot exclude such counterclaims from the scope of the consent of the parties by limiting the scope of their own consent.Moreover,if investors abuse the process,the ICSID tribunals will not need to pay attention to the wording of treaties and will have jurisdiction over such counterclaims merely basing on a general principle of law.Secondly,do such counterclaims have to arise directly out of an investment?This requirement is controversial.Thirdly,if the required connection between the main claims and such counterclaims is factual connection rather than legal connection,it would be easy for such counterclaims to meet the connection requirement.Part III provides arguments to support ICSID tribunals awarding moral damages to respondent States.In fact,investors could commit a breach of law and resulting in moral damage to respondent States,According to international law,States are entitled to moral damages and these damages are not necessarily nominal damages.It is untenable to deny moral damages basing on the misunderstanding that they are punitive damages.Moreover,it is appropriate to award moral damages to respondent States in investment treaty arbitration.Although the ICSID tribunals often awarded declaratory relief or shifted the costs to investors,the award of moral damages should not be ruled out a priori.By the way,there is no legal basis for awarding moral damages to respondent States only in exceptional circumstances.Part IV returns to the enlightenment for China to participate in ICSID investment treaty arbitration in the future.We should correctly understand and pay attention to moral damages basing on clarifying misapprehension.Moreover,some international investment treaties allow us to present counterclaims for moral damages.Also,we should take them into consideration before signing investment treaties in the future.In summary,by combining case and theoretical research,the present paper examines in detail the obstacles faced by States in presenting counterclaims for moral damages and provides arguments in support of States' right to moral damages.Finally,basing on the status quo of Chinese international investment treaties,it puts forward some suggestions.