State of Necessity: Effect on Compensation

Abstract

This paper discusses the effect on compensation of the state of necessity, one of the so-called “circumstances precluding wrongfulness”. For some, it would seem obvious that if wrongfulness of an act is excluded, an obligation to pay compensation for the losses caused by this act is also excluded. However, perhaps counter-intuitively, this is not necessarily the case under international law. The issue is relatively novel and there is little clarity as to what exactly the law requires and how it should be applied in the investment context.