The Application of the Principle of Proportionality to Assess Compensation: Some Reflections Arising from the Case of Joseph Charles Lemire v. Ukraine

In the last few years, the principle of proportionality has appeared with a certain frequency in international investment case law: arbitrators have employed it to determine whether the State’s regulatory measure under scrutiny represents a form of indirect expropriation, to assess violations of the fair and equitable treatment (‘FET’) standard, to counterbalance competing obligations drawn from international investment law and international human rights law, and to assess compensation. This article will focus on the so-called "quantum phase" – the part of the award devoted to the assessment of the monetary compensation due to the foreign investor for the breach of the investment treaty provision – and will discuss whether the principle of proportionality can effectively play a role in the assessment of compensation. The work will start from the analysis of the case of Joseph Charles Lemire v. Ukraine, where arbitrators expressly resorted to proportionality to verify whether the indemnity awarded to the claimant for the breach of the FET standard was adequate in light of the specific characteristics of the investment lato sensu and the investor, to then approach the issue of proportionality more in detail.