Abstract: (When the) Quantum Expert Matters: An Empirical Study of ICSID Arbitration Awards
Luis Bergolla
Party-appointed quantum experts are ubiquitous in investment arbitration, while tribunal-appointed experts - often associated with civil law systems - are rarely used. Quantum experts help the parties understand what is at stake, and the tribunals award fair compensation. However, apparent expert partisanship has led to severe criticism. The frequent and extreme gap in compensation recommendations creates a perception that party-appointed experts tend to exaggerate their appointers’ positions. This study of ICSID arbitration awards assesses the role and the degree of influence that quantum experts have in the monetary outcome of the awards. Using content analysis methodology, Luis Bergolla showes how the quantum expert ICSID practice is a repeat players game where a few individuals associated with even fewer firms concentrate most of the appointments. Despite this dominance, a series of statistical tests fail to establish a relationship between the mere presence of repeat-player party-appointed experts and the awards’ monetary outcomes. He observes, however, that under a very narrow scenario - when the experts occupy a particular position in the repeat player’s network and where the recommendation gap is smaller - tribunals appear more likely to adopt the claimant-appointed experts’ quantum recommendations. This finding suggests that contrary to conventional wisdom, experts retained by the claimants have little incentive to inflate their clients’ claims.
Abstract: Counsel, Valuation, and Experts in Investment Treaty Arbitration
Tobias Traxler
This article presents the most pressing findings of a larger research project on the influence of counsel on outcomes in investment treaty arbitrations. Its insights derive from original interview data. The central thesis is that counsel influence outcomes on the valuation of damages in investment treaty arbitrations by selecting and working with valuation experts. This thesis is predicated on the fact that arbitrators struggle to understand valuation analyses, especially discounted cash flow analyses. Under these circumstances, valuation experts tend to be influential if their analysis seems credible, they are well-reputed, and they effectively relay their expert knowledge to arbitrators. In turn, counsel shape valuation outcomes by selecting and instructing valuation experts, through their advocacy, and during cross-examinations. Experts’ and counsels’ influence may advantage players who spend more on their legal case. The article proposes two policy interventions to eradicate resulting inequities: ensuring financial literacy among adjudicators and regulating valuation.
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