The valuation date of an expropriated investment represents a crucial factor in assessing the amount of compensation to be paid in investor-State arbitrations, as the value of investments may change dramatically over the course of time.
Arbitral tribunals are keenly aware that the value of investments change over time. For example, the Iran-US Claims Tribunal held that “[t]he choice of the date of taking is not without significance because the value of the shareholder’s expropriated interest may change dramatically during the surrounding time.”
The determination of the correct valuation date depends on the nature of the event giving rise to international responsibility of the host State. It is rather common that investment arbitration tribunals follow different valuation methods in expropriation cases and in non-expropriation cases (i.e., violations of other treaty provisions, such as the full protection and security standard, the fair and equitable treatment standard, etc.).
In case of expropriation of an investment, the determination of the valuation date of expropriated investments also depends on the nature of the expropriation itself. Therefore, a distinction needs to be made between lawful and unlawful expropriations.
Valuation Date in the Event of a Lawful Expropriation
Regarding lawful expropriations (States do have the right to expropriate foreign investments under international law, as long as prompt, adequate and effective compensation is paid), most bilateral investment treaties (“BITs”) define the valuation date as the moment of expropriation or the moment immediately before expropriation. This approach was also put forward in Article IV(3) of the World Bank Guidelines on the Treatment of Foreign Direct Investments: “Compensation will be deemed ‘adequate’ if it is based on the fair market value of the taken asset as such value is determined immediately before the time at which the taking occurred or the decision to take the asset became publicly known.”
This method of determining the valuation date is called the ex ante approach, under which “the injured party will receive the value of the investment at the time of the taking, adjusted at the time of the award by an appropriate pre-judgment interest rate (with post-judgment interest typically to accrue thereafter until payment).”
Thus, if a State expropriates a plot of land on date X, which then increases in value by date Y when an arbitration is commenced, the foreign investor will normally be entitled only to compensation equal to the value of the land at date X.
Valuation Date in the Event of an Unlawful Expropriation
The method to determine the valuation date in cases of unlawful expropriation is rarely provided for in investment instruments explicitly, which instead focus on compensation for lawful expropriations. Unlawful expropriation is an expropriation that does not comply with the conditions for expropriation set forth in international law.
Compensation for unlawful expropriation is generally based on assessing “the difference between the actual financial situation of the person affected and the financial situation he or she would be in, if the expropriation had not taken place.” Accordingly, the determination of the valuation date should follow the same pattern since such a comparison “can logically only be made on the day of the judgment or award.”
This ex post assessment follows the principle of full compensation decided in the PCIJ Chorzow case. In his concurring opinion in the Amoco case, Judge Brower accurately stated that “[i]n the case of an unlawful taking […] either the injured party is to be actually restored to enjoyment of his property, or, should this be impossible or impractical, he is to be awarded damages equal to the greater of (i) the value of the undertaking at the date of loss (again including lost profits), judged on the basis of information available as of that date, and (ii) its value (likewise including lost profits) as shown by its probable performance subsequent to the date of loss and prior to the date of the award, based on actual post-taking experience, plus (in either alternative) any consequential damages […]this is what Chorzow Factory says.”
 Sedco International v. National Iranian Oil Company and The Islamic Republic of Iran, Interlocutory Award dated 24 October 1985, para. 22.
 See for example Cyprus-Hungary BIT, Article 4(2). See also Rumeli Telekom v. The Republic of Kazakhstan, ICSID Case No. ARB/05/16, Award dated 29 July 2008, pp. 215-216, para. 788: “[T]he moment at which the expropriation took place is not to be determined by any principle of international law, but is a question of fact to be determined by the Tribunal in the particular circumstances of the case. In some cases the moment of expropriation may be clearly established by a single expropriatory act. In other cases, such as the present case, the expropriation may be gradual or ‘creeping,’ or it may be indirect rather than direct, so that to determine the moment of expropriation may be a matter of judgment rather than of direct and clear evidence.”
 See for example Barbados-Venezuela BIT, Article 5.1; Kazakhstan-Turkey BIT, Article III(2). See also Tidewater v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5, Award dated 13 March 2015, p. 53, paras. 159-160: “it is to apply the Treaty standard of compensation for expropriation […]. Article 5 itself prescribes that what is to be determined is ‘the market value of the investment expropriated immediately before the expropriation’. In other words, the question is what a willing buyer would have paid a willing seller for the expropriated investment at that time […]. This type of valuation has been commonly referred to in shorthand as an ex ante valuation, because it seeks to determine the value of the investment before the expropriatory measure.”
 J. Tenor, The Guide to Damages in International Arbitration, GAR Publication (2017), p. 104.
 I. Marboe, Calculation of compensation and damages in international investment law, Oxford University Press (2017), 2nd ed., p. 135, para. 3.285.
 Amoco International Finance Corporation v. The Islamic Republic of Iran, Concurring opinion of Judge Brower, para. 18.