Moral Damages as an ‘Exceptional’ Remedy in International Investment Law – Re-Connecting Practice with General International Law

Moral damages under international investment law have been extensively addressed in the literature. Notoriously, arbitral tribunals have subjected any claim for moral damages to a requirement unknown to general international law, that is exceptional circumstances. This practice is widely criticised in the field mainly due to the seeming inconsistency with general international law. This article challenges this view by arguing that a deviation from general international law does not – in and of itself – suffice to discard the tribunals’ approach. This argument is based on the insight that general international law only deals with inter-State responsibility and is, thus, open to deviations from general international law in case of State responsibility vis-à-vis the individual. On that basis, the article explores possible legal bases for exceptional circumstances in international law. While it discards the idea that such a requirement for awarding moral damages is implicit in prior inter-State cases, the article rather argues that the arbitral practice witnesses the emergence of a new rule of customary international law applicable to the responsibility of a State vis-à-vis the individual. Thereby, the article seeks to contribute to the wider debate on the content and contours of State responsibility for claims of the individual.