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The purpose of this article is to consider how legal standards of compensation in international arbitration interact with the bases of value commonly used by valuation practitioners. It also considers whether different bases of value for lawful and unlawful expropriation might generate reliably differentiated outcomes for compensation in each case.1
Bases of value according to legal practitioners
Although legal and valuation practitioners seek to address similar issues of quantum in international arbitration, it appears that there is no common set of terms used by practitioners in both fields to describe the appropriate measurement of a claimant's loss.2 In addition, established legal concepts, some of which are quite venerable, may not closely match the (generally quite recent) financial theory that valuation practitioners apply in their work.
In considering the appropriate amount of money to pay to property owners who have suffered harm as a result of the acts or omissions of a third party, legal commentators and practitioners have used a variety of terms. In some contexts, the term ‘compensation' is used to denote payments made in connection with lawful acts or omissions, while ‘damages' or ‘reparation' is used to denote payments made in connection with unlawful acts or omissions. A variety of adjectives may accompany these nouns: ‘full', ‘just', ‘adequate, effective and prompt', to name a few.3 Investment treaties also make reference to ‘market value', ‘fair market value', ‘actual value', ‘genuine value', ‘true value' or ‘real value' as the basis for assessing compensation, damages or reparation.4
There does not, however, appear to be a universal consensus among legal and valuation practitioners as to the precise meaning of these various terms.5 Nor is it evident that the various languages and cultures in which international law is practised all understand the same thing by the terms used in each language to describe these concepts.
As international investment law has developed, arbitration tribunals have published a growing number of awards in relation to the lawful expropriation of investors. Tribunals have found that certain nationalisations by states met the requirements of lawful expropriations, namely that they be for a public purpose, non-discriminatory, carried out with due process and offer the payment of compensation.6
In cases of lawful expropriation, the appropriate basis of the compensation payable to the investor is often specified in an international investment agreement, such as a bilateral investment treaty (BIT) or a multilateral investment treaty (such as NAFTA). For example, Clause 2 of Article 1110 of the NAFTA Treaty clearly states that ‘fair market value' is the appropriate basis of compensation:
Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (‘date of expropriation'), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.
As a broad generality, it appears that tribunals have usually applied an objective valuation basis in cases of lawful expropriation.7 An objective valuation requires an assessment of value by reference to the asset alone and does not take account of its usage or the circumstances of the individual investor to whom the asset belongs.
In cases of unlawful expropriation, however, there are no treaties to set out the standards of value that should be applied as the acts complained of themselves constitute breaches of the treaty. In those circumstances, I understand that tribunals are obliged to rely on customary international law.8 The perhaps most often cited passage of the perhaps most often cited case relating to compensation under international law, the PCIJ judgment in the Factory at Chorzów case states that:
The essential principle contained in the actual notion of an illegal act - a principle which seems to be established by international practice and in particular by the decisions of arbitral tribunals - is that reparation must, as far as possible, wipe-out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed. Restitution in kind, or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; the award, if need be, of damages for loss sustained which would not be covered by restitution in kind or payment in place of it-such are the principles which should serve to determine the amount of compensation due for an act contrary to international law.9
The requirement to ‘wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed' suggests that consideration should be given to the specific circumstances of the investor ‘but for' the illegality complained of. For that reason, such a valuation is subjective rather than objective.
In the remainder of this article the term ‘subjective value' is used to mean that the value of an asset may also depend on its usage, ownership or other contextual factors and is to be assessed from the perspective of a specific party. As used here, subjective value does not take account of emotional or psychological considerations. In my opinion, a subjective value is not inherently more uncertain than an ‘objective value'. Indeed, identifying the value of an asset to a specific investor may require less speculation than identifying its value to a hypothetical ‘market' investor whose identity is unknown.10
Before considering whether objective and subjective valuation bases reliably deliver different outcomes, it is important to understand the four main bases of value described in the financial literature for going concerns, two of which are objective and two subjective.11
Table 1: Summary of bases of value
|Market value||Intrinsic value||Fair value||Investment value|
|Is a transaction assumed?||•||•|
|Must a market exist?||•||•|
|Discounts / premiums?||•|
|Owner's / managers' characteristics?||•|
|Synergies with other assets?||•|
Bases of value used by valuation practitioners
The International Valuation Standards Council (IVSC) defines a basis of value as ‘a statement of the fundamental measurement assumptions of a valuation'. When the asset in question represents a going concern, valuation practitioners have four common bases of value to choose from, namely market value, intrinsic value, fair value and investment value.12 The basis of valuation does not say anything about the appropriate valuation method in a given situation.13 My understanding of the main differences between the four bases of value are summarised in Table 1 and discussed below in the order shown.14
The IVSC defines ‘market value' as:15
The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
It is important to note that the concept of market value assumes a transaction in the asset, even if no transaction is actually contemplated at the date of valuation. Note also that the buyer and seller are hypothetical ones that are assumed to be representative of the market as a whole.16 Discounts to the assessed value of the asset are taken into account to the extent that they would be by willing and informed buyers and sellers. For example, a discount is often applied to business interests if they represent a minority of voting rights or if the shares are not readily marketable.17
Market value, or fair market value, is commonly applied in courts and tribunals around the world and most legal practitioners are familiar with the general concepts it entails. This article assumes that ‘fair market value' and ‘market value' are identical. A critical feature of market value is the assumption of a transaction, which presupposes the existence of a market.18 The various definitions of (fair) market value tend to be quite restrictive and raise abstract questions about the characteristics of ‘market' investors, the form and extent of ‘proper marketing' and the degree of knowledge needed to ‘act knowledgeably'. Other bases of value, in contrast, impose fewer constraints on the valuation and also remove some or all of the abstractions.19
‘Intrinsic value', in contrast, is the value considered to be inherent in the property itself irrespective of whether there is any market for or transaction in the asset. Although not a standard of value defined by the IVSC, intrinsic value has been cited in judicial opinions. For example: ‘[the] true, inherent and essential value, independent of accident, place or person, the same to every one.'20
The concept of intrinsic value, like that of fair market value, is an objective standard. In other words, it assumes that the value of an asset may be identified from the asset alone and not from its context. Importantly, however, no transaction is assumed.21
As an example of where intrinsic value might be a useful concept, consider the case of a widow who holds a 20 per cent minority interest in a private company, Deadlock NV, that she is prevented from selling, save by agreement with the four other family members who each hold an equal number of the remaining shares. Let us further assume that the other family members do not wish to purchase the widow's stake at the date of valuation and that there is a stated intention in the shareholders' agreement to hold the business in perpetuity. In this case, there is no market in the company's shares and the market value of the shares is nil. That does not mean, however, that the widow's stake is valueless. Rather, it has an intrinsic value, which might be calculated (say) by reference to the present value of the expected future dividends that may be received by its owner.
The present value of expected future dividends is also at the heart of fundamental valuations of publicly traded shares. Excepting those who believe markets are always efficient, many valuation practitioners would agree that the intrinsic value of (say) a quoted share may differ from its market price, perhaps in times of market stress (eg, when trading volumes are very thin), during periods of heightened uncertainty (which tends to reduce prices) or during periods of investors' ‘irrational exuberance' (which might tend to increase prices above intrinsic value). Even then, however, the share's intrinsic and market value should still bear some relationship to one another: a fall in market value is generally indicative of a fall in intrinsic value. In ‘normal' market conditions, the natural assumption is that market prices are an important guide to the intrinsic value of an asset. For that reason, when conducting an objective valuation, it might be unusual to apply the standard of ‘intrinsic value' to an asset except in times when there may be reason to consider market prices unreliable or in circumstances where there is no available market in the asset.
The IVSC definition of ‘fair value' is: ‘The estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those parties.'
Courts often consider ‘fair value' to be identical to ‘market value' save that there are no discounts or premiums applied in a ‘fair value' assessment.
The IVSC definition, however, requires that the parties be identified (ie, not hypothetical) and specifically fails to assume an arm's length transaction, proper marketing, knowledge, prudence or an absence of compulsion. For that reason, ‘fair value' and ‘(fair) market value' (as used in this article) represent different concepts. A fair value assessment does not assume an available but anonymous market, but instead contemplates a transaction between two specific parties. ‘Fair value' assessments thus permit a degree of subjectivity because the specific characteristics of the parties may be explicitly considered.22
Even if a market for the asset exists, a ‘fair value' assessment generally ignores asset market conditions.23 Because marketability considerations are excluded, the value of a business interest is usually assessed pro-rata to the value of the asset as a whole: discounts for minority interest or lack of marketability often reflect ‘market' considerations and are ignored unless they would be taken into account by the specific parties.24 In addition, although the value of the asset is not assumed to be realised in a liquidation or forced sale, there is no requirement that the buyer and seller be uncompelled or that the terms of the transaction be arm's length. In other words, the superior bargaining position of one of the parties over the other can be reflected in the valuation that would be likely to emerge from any negotiation between them.
Adapting the example above, let us assume that the family's explicit intention to hold the business remains but that any of the four family members can buy the widow's interest without restriction. In this case, the fair value of the Deadlock shares would be pro-rata to the value of the enterprise.25 The market value of the shares, however, is still nil because a hypothetical market participant could not purchase the shares.
In the context of expropriation, fair value may be useful where a business has been expropriated in its entirety, but there are multiple minority shareholdings in the business. In that case, if a discount to minority interest were applied to all of the shareholders in a ‘market value' approach, the sum of their value would be less than the value of 100 per cent of the business. Clearly, in this situation, application of a discount would fail adequately to compensate the shareholders, both individually and as a whole, leading to a windfall gain to the expropriating state.
Finally, there is the concept of ‘investment value', in which the value of the asset to a specific actual or prospective owner is explicitly taken into account. According to the IVSC, investment value is: ‘The value of an asset to the owner or a prospective owner for individual investment or operational objectives.'
Thus, the effect of the specific owner's knowledge, skills, reputation, risk expectations and profit expectations are allowed to influence the assessment of value. For a company, the quality of the management and its expectations should also be taken into account. Any synergies the asset may have in combination with other assets held by the owner are also acknowledged in the valuation. Investment value also incorporates ‘special value', which the IVSC defines as the ‘amount that reflects particular attributes of an asset that are of value only to a special purchaser'.
In addition, ‘investment value' requires a specific consideration of the financial characteristics of the asset's owner. For example, in a ‘market value' assessment, the cost of capital calculation might entail analysis of industry-level data about debt-to-equity ratios or credit ratings. In contrast, in an ‘investment value' assessment, it is the actual debt-to-equity ratio and actual credit rating of the asset owner that should be used in the cost of capital calculation.
In the Deadlock example above, ‘investment value' permits further assumptions to be made about, say, the liquidity or tax position of the family members most likely to purchase the widow's interest. For example, let us assume that all four family member could purchase some of the widow's shares, but that one daughter lives in a country where she pays a lower rate of tax on investment income than the other family members. In that case, it might be appropriate to assume that some or all of the shares would be sold to the daughter at a price that reflected, to some extent, their higher value to her. If the daughter pays less tax, the shares would be worth more to her than the other family members and some of that extra value could be offered by the daughter to the widow to persuade her to sell the shares to the daughter.
Clearly, the concept of ‘investment value' is less prescriptive than other valuation standards. An ‘investment value' assessment permits consideration not only of the characteristics of the asset, but also those of its owner, those of specific potential buyers and the context in which the asset is used. No transaction is assumed and there is no requirement to consider the value that might be agreed with a specific or market purchaser: it is the value to the specific holder (or in some cases specific purchaser) that counts.
‘Investment value' might be the most appropriate valuation standard to follow in unlawful expropriation cases because it considers the value of the investment only to its owner, potentially best meeting the test of ‘re-establish[ing] the situation that would, in all probability have existed' but for the unlawful act.
Valuation standards for lawful and unlawful expropriation
The first point to note in respect of awards of compensation and bases of valuation is that arbitral tribunals appear at times to have struggled to identify the applicable valuation basis. For instance, in the Metalclad v Mexico decision, the tribunal stated that ‘the Tribunal agrees with the parties that fair market value is best arrived at in this case by reference to Metalclad's actual investment in the project'.26 Despite the parties' agreement, however, there is no evidence in the award that the claimant could have realised the amount of its actual investment in a sale of the asset to a willing, well-informed market participant. That is not to say that the return of the claimant's actual investment was inappropriate compensation for the harm suffered: merely that it does not appear that the asset's ‘fair market value' was actually measured and found to be the same as the amount invested in the project.27
Legal practitioners also continue to debate, in the context of investment treaty arbitration, whether the lawfulness of an expropriation should influence the amount of compensation to be received.28 According to some sources, it would be illogical for the financial consequences of an unlawful expropriation to be identical to those arising out of a lawful expropriation.29 An alternative point of view, also logical at face value, is that expropriated assets should have the same value irrespective of the circumstances in which they are taken.
The Factory at Chorzów case, however, raises the possibility that an expropriated investment might be valued on a different footing in cases of unlawful expropriation if what is sought is restitutio in integrum, which I understand to mean making the investor whole as opposed merely to compensating the investor for the value of its investment.30 Such a valuation would be subjective, taking account of the specific characteristics of the investor.
One question that arises, therefore, is whether the different bases of value deliver predictable outcomes about quantum. For instance, if a subjective valuation basis generally offered a value that was greater than or equal to the one offered by an objective valuation, it might serve to satisfy those who consider that unlawful acts should impose a higher cost on the perpetrator than lawful acts.
The short answer to that question, however, is ‘no'. The most that one can say, in general, is that in cases of unlawful expropriation, if a subjective valuation basis is appropriate, the tribunal has the latitude to consider the specific circumstances of the investor and, even if a market exists for the asset, to ignore market factors. In cases of lawful expropriation, in contrast, the tribunal will generally follow the basis of valuation set out in the treaty, which may consider only the value of the asset itself, in a market context if a market exists or on an ‘intrinsic' basis if it does not. Which approach might yield the higher value in any given case is not generally knowable in advance.
The difference between an objective and a subjective valuation basis, if any, depends on the characteristics of the specific investor whose asset has been expropriated or the context in which the asset is used, and not on the nature of the acts leading to the need for compensation. Potentially, therefore, the assessed value could be higher than, lower than or the same under an objective or subjective approach.
In some circumstances, the asset may be more valuable in the hands of the specific investor than in the hands of the ‘market' investor. For example, if the state expropriated an investor's petrochemical facility that made propylene, and the investor also owned facilities that made polypropylene and that used the by-products of polypropylene manufacture, the vertical integration of the propylene plant with its downstream customers might yield synergies in the combined operation of the assets. In this case, a subjective valuation might well yield a higher value for the propylene plant than an objective valuation.
In other circumstances, the choice of valuation standard may make little difference to the result. If the asset in question is a coastal oil refinery, for example, the market value, fair value, intrinsic value and investment value are likely to be quite close. That is so because the prices of the refinery's inputs and outputs are set globally in US dollars, the costs of the refining operation are largely a function of its technical design (rather than the superior management skills of a specific owner), the refinery is exposed to competition from other coastal refineries (subject only to differences in transport cost) and the owner of an oil refinery is likely to be an oil company and therefore similar to other ‘market' investors in oil refineries. For these reasons, there may be relatively little opportunity for the operator to influence the value of the oil refinery (assuming a reasonable level of competence on its part), suggesting that objective and subjective valuation methods would reach similar conclusions.31
It is also possible to conceive of situations in which a subjective valuation might lead to a lower valuation than an objective valuation. For example, if the propylene plant mentioned above required significant investment to maintain its market share, and the investor was capital constrained (whereas a ‘market' investor might be assumed not to be), a subjective valuation might yield a lower assessed value than an objective valuation.
This article has noted that the language used by legal practitioners to describe compensation (or damages) does not neatly overlap with the bases of value used by the valuation practitioners that they sometimes call upon for expert opinions about quantum. The article has sought clearly to define the most common bases of value and to illustrate when they might be used.
Past tribunal awards indicate a preference for objective bases of valuation - particularly (fair) market value - in cases of lawful expropriation; in cases of unlawful expropriation, tribunals have sometimes explicitly stated a preference for subjective valuation methods - fair value or investment value - but there has been no consistent application of subjective valuation standards by tribunals.32
There remains debate as to whether the amount of compensation due to an investor should be influenced by the character (lawful or unlawful) of the expropriation. If the Factory at Chorzów judgments represent the benchmark for compensation in customary international law, it would appear that either fair value or investment value should be applied in cases of unlawful expropriation: absent consideration of the investor's position in relation to the asset, it may not be possible to re-establish the situation that would, in all probability, have existed.
Even if a subjective valuation approach was applied in cases of unlawful expropriation, however, the result would not necessarily be a higher value to the claimant, even if it met the test of providing ‘full reparation' instead of merely ‘just compensation'!
1 Although I recognise that a distinction is sometimes drawn between ‘compensation', ‘reparation' and ‘damages', for the purposes of this article, I have sought to use the term ‘compensation' throughout. No legal inference is intended by my use of this term.
2 Other professionals, such as accountants, may attach their own meanings to terms, such as ‘fair value' that have a different specific meaning to valuers or lawyers.
3 See, for instance, Irmgard Marboe, Calculation of Compensation and Damages in International Investment Law, Oxford University Press, 2009, paragraphs 2.40 - 2.95. See also Abby Cohen Smutny, Principles Relating to Compensation in the Investment Treaty Context, IBA Annual Conference, Investment Treaty Arbitration Workshop, 19 September 2006, (‘Smutny'), III.A, pp. 8-9.
4 Sergey Ripinsky, Damages in International Investment Law (‘Ripinsky'), p. 79.
5 See, for instance, Mark Kantor, Valuation for Arbitration, (‘Kantor') pp. 49-50, Ripinsky, pp. 75 - 79.
6 It appears that an expropriation may be lawful even if compensation is not paid at the time, provided that the State recognises that compensation is due and offers to pay a reasonable sum without undue delay. See, for instance, Marboe, paragraphs 3.32 - 3.50, Ripinsky p. 68.
7 Please note that, in this article, the term ‘objective value' is used to mean that the value of an asset is identifiable from the asset itself.
8 See, for instance, discussion in Marboe, paragraphs 3.02 - 3.14.
9 Permanent Court of International Justice, Factory at Chorzów (Merits), Judgment of 13 September 1928, p. 47, sourced from www.icj-cij.org/pcij/series-a.php?p1=9&p2=1.
10 A discussion of the difference between objective and subjective valuation from the perspective of a legal practitioner is set out in Marboe, paragraphs 2.98 - 2.118.
11 See, for instance, Standards of Value: Theory and Applications, Jay E. Fishman, Shannon P. Pratt, William J. Morrison, Second Edition, John Wiley & Sons, 2013, pp. 21-28.
12 See Fishman, Pratt & Morrison, Standards of Value: Theory and Applications, 2nd Edition, John Wiley & Sons, 2013, pp. 21-28. The IVSC offers a definition of all, with the exception of ‘intrinsic value'. I have selected the IVSC definitions of market value, fair value and investment value for reasons of consistency. I recognise, however, that other definitions exist and that the precise wording of these definitions may differ from the wording used by the IVSC.
13 There are possible three valuation approaches: income, market and cost - which is appropriate in any given situation will depend on the nature of the asset and the quality and availability of the data needed to carry out a valuation under each of the three approaches. In principle, an income-based approach may be applied to any cash flow-generating asset; a market-based approach, clearly, requires that there be a market in the asset at the valuation date.
14 There may be exceptions to the summarised characteristics in particular circumstances that fall outside the intended ambit of this article. The characteristics shown in the table are based on the IVSC standards for market value, fair value and investment value, which are intended to encompass a broad range of potential valuation situations.
15 The IVSC also offers no definition of ‘fair market value', although its definition of ‘market value' is similar to various judicial definitions of ‘fair market value' see, eg, United States v Cartwright, 411 U.S. 546 (1973).
16 In practice, the requirement to consider the characteristics of hypothetical market participants may not make much difference to the assessed value. The actual owners of (say) copper mines are usually mining companies and any hypothetical ‘market' vendor and purchaser of a mine would also be expected to be a mining company.
17 I say ‘often' because there are circumstances in which it may not be appropriate to apply a discount. Experts may also disagree as to whether, in general, these types of discounts ought to be applied or whether they should be applied as an exception. In this article, the term ‘marketability' refers to an ability to liquidate an asset for cash quickly without incurring onerous transaction costs. Barriers to marketability include the lack of a ready market for the asset or high transaction costs. Real estate is an asset that is commonly cited as lacking in marketability: each property is unique, in some way, while transaction costs can be up to 10 per cent or more of the property's value. Even for publicly traded shares, only the most commonly traded stocks are perhaps truly liquid in the sense that it is possible to sell a large quantity quickly without having the market move materially against the seller.
18 It is not enough under the IVSC definition for the value to be ‘objective, real and full' (Smutny, p. 9): a market for the asset must also exist.
19 In any given set of circumstances, the differences between bases of valuation may not give rise to meaningful differences in value, eg, in the case of the shares of large, publicly traded corporations.
20 Chicago R I & P Ry Co v Clements, 115 S.W. 664, 666, 53 Texas Civil Appeals 143.
21 See, for instance, American International Group v Iran, Award No. 93-2-3 (19 December 1983), 4 Iran-US CTR 96, 106- 07, in which the tribunal found that there was no active market for Iran American's shares and instead relied upon a valuation performed by two independent actuaries.
22 The IVSC definition mentions that the parties are ‘identified', suggesting that their specific characteristics should be taken into account in the assessment of value.
23 This is not to suggest that market information about, say, demand for a company's products, prices of raw materials or the cost of credit should be ignored in the valuation. Rather, I mean that a ‘fair value' assessment ignores issues relating to the marketability of the asset itself.
24 Note that, as defined in International Financial Reporting Standard 13, ‘fair value' for financial reporting purposes is ‘the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date'. Such a definition is closer to the IVSC definition of market value above than to the IVSC definition of ‘fair value'.
25 The value of 100 per cent of the business could be determined on a market value basis, if the tribunal had no specific purchaser in mind, or on an intrinsic basis, if the tribunal found that no market for the asset existed, or on a fair value basis if the tribunal knew of a specific purchaser who might want to buy it, or (see below) on an investment value basis. The appropriate standard to apply would depend on the facts of the case.
26 Metalclad Corporation v The United Mexican States, ICSID Case No. ARB(AF)/97/1, paragraph 122.
27 In the author's experience, it would be a matter of coincidence if the amount invested in a long-lived operational asset, such as the landfill site in Metalclad v Mexico, were identical to the asset's market value at a given point in time, notwithstanding the agreement of the parties in this case that they were the same at the date of valuation. In general, cash flow generating assets are valued by reference to their risk-adjusted expected future income, which may or may not bear any relationship to the cost of constructing the asset.
28 Marboe, paragraph 3.75.
29 See, for instance, Permanent Court of International Justice, Factory at Chorzów (Merits), Judgment of 13 September 1928, Rabel Observations, p. 66, or Separate Concurring Opinion of Judge Bower: ‘The remedy for a lawful taking is full compensation; the remedy for an unlawful taking is restitution, or where restitution is not practical, full compensation. Even in cases of unlawful takings, particularly where restitution is not possible, a difference in remedies potentially could still remain insofar as punitive or exemplary damages might be sought… In the absence of such damages being awarded against an unlawfully expropriating State, where restitution is impracticable or otherwise inadvisable, that State is required to furnish only the same full compensation as it would need to provide if it had acted lawfully. Thus, the injured party would receive nothing additional for the enhanced wrong done it and the offending State would experience no disincentive to repetition of unlawful conduct.'
30 Marboe: paragraph 3.99, paragraphs 3.122 - 3.123.
31 As an aside, I note that several of these factors also have a potential bearing on the investor's exposure to country risk (including expropriation risk). That, however, is a topic for another article.
32 Marboe, paragraph 3.152 notes that international tribunals have ‘sometimes also applied objective valuation criteria, such as the ‘fair market value', even if the principle of full reparation was indicated'. Ripinsky, pp. 84-86, notes that a number of tribunals have ‘applied the treaty provision on compensation without addressing the issue of the lawfulness the expropriation, even where the expropriation appeared to have been unlawful'. Even tribunals that have offered investors a choice as to the date or valuation specifically because the expropriation was deemed unlawful, eg, in ADC v Hungary, Siemens v Argentina and Vivendi v Argentina, have ‘used the fair market value of the investment as the main element of compensation' despite the Factory at Chorzów judgment's finding that full reparation be afforded to the investor, which implies a subjective valuation basis.