Compañía del Desarrollo de Santa Elena, SA v. Republic of Costa Rica

Abstract

Applicable law — Internal or international law — No requirement that agreement as to applicable law be in writing or express — Article 42(1) of icsid Convention applies in absence of agreement — Internal law and rules of international law applicable — Substance of internal law consistent with international law — International law prevails if any inconsistency — International law controlling in light of parties’ divergent positions

Expropriation — Purpose of expropriation does not alter legal character of taking — State’s obligation to pay adequate compensation remains — Determination of date of expropriation — Date on which “interference” deprive downer of rights — Practical and economic use of property irretrievably lost — Property ceased to have resale value

Valuation — Fair market value calculated by reference to “highest and best use” — Factors arising after date of expropriation excluded — Tribunal cannot perform appraisal after twenty years — Requirement to make assessment of parties’ conflicting valuations — Reasonable and air approximation of value

Compensation — Amount should reflect additional sum money would have earnedhadit been reinvested at generally prevailing rates of interest

Interest — No uniform rule on determination of interest — Product of exercise of judgment in light of circumstances and considerations of fairness — Amount should reflect additional sum money would have earned had it been reinvested at generally prevailing rates of interest — Not purpose of compound interest to attribute blame or punish delay in compensation — Compound interest ensures compensation is appropriate — Simple interest inappropriate when owner unable to use or sell property over many years — Full compound interest inappropriate when owner remains in possession and is able to exploit to limited extent