Procedural Context and Scope

This Award exclusively addresses the determination of damages and costs following the Tribunal's Decision on Liability of 3 October 2006. In that prior decision, the Tribunal found that the Argentine Republic had breached its obligations under the US-Argentina Bilateral Investment Treaty, including the standards of fair and equitable treatment, non-discrimination, and the umbrella clause. However, the Tribunal also held that Argentina's conduct was justified under the state of necessity defense for the period from 1 December 2001 to 26 April 2003, exempting it from responsibility during that time.

Analysis of Damages

The central legal issue was the appropriate standard for compensation for treaty breaches not amounting to expropriation. The Claimants argued for full compensation based on the Fair Market Value (FMV) of their investment prior to the breaches, calculated using stock market data, which they quantified at approximately US$248 million. Argentina contested this, arguing that FMV was inapplicable and that any loss was attributable to the general economic crisis rather than its specific measures.

The Tribunal rejected the FMV standard, reasoning that it is primarily applicable to cases of expropriation. It noted that the Claimants had not been deprived of their investment, which had since rebounded in value, and thus a claim for loss of capital value was premature. Instead, the Tribunal adopted an "actual loss" standard, defining the compensable damage as the amount of dividends the Claimants would have received 'but for' Argentina's wrongful acts. This approach focused on the direct financial consequence of abrogating the gas regulatory framework's guarantees, such as dollar-denominated tariffs and PPI adjustments.

The Tribunal further rejected the Claimants' claim for lost future profits as overly speculative, given that they retained title to their investment and its future earning potential. The calculation of damages was confined to the period from 18 August 2000 to 28 February 2005, the evidentiary cut-off date in the proceedings. The Tribunal determined that compound interest, reflecting modern financial practice, was appropriate to ensure full reparation and should run from the date of the first breach.

Decision and Costs

Based on its 'but for' dividend methodology, the Tribunal quantified the Claimants' actual loss. It calculated the hypothetical dividends that would have been paid, subtracted the dividends actually received, and then deducted losses attributable to the period of the state of necessity. The Tribunal awarded the Claimants a total of US$57,400,000.00, inclusive of compound interest calculated up to the date of the Award. The Tribunal also ordered that, in the event of non-payment within 30 days, further compound interest would accrue at the rate of six-month U.S. Treasury bills. Concluding that neither party was wholly successful, the Tribunal directed that each party should bear its own costs, expenses, and attorneys' fees.