Actions of the Injured Party in Mitigating Damages in the Practice of International Investment Arbitration

Abstract

Compensation and damage mitigation constitute a significant part of processes related to claims arising from obligations and contracts. Considering the importance of actions by the injured party to prevent further damage in the realm of international investment arbitration, this study examines the role of the injured party in mitigating damages within arbitration practices. In light of the significance of damage mitigation, the central question of this research is: what responsibilities does the injured party bear in mitigating damages in the field of international investment? The findings of this study indicate that the primary action by the injured party to mitigate damages is, above all, acknowledging their fault and role in the occurrence of a dispute. Subsequently, accepting responsibility to resolve the dispute, even if it entails incurring certain losses, ultimately prevents greater harm. In disputes arising from foreign investment, international investment arbitration has utilized damage mitigation as an essential mechanism to prevent harm to the promisee. Given that this article employs an analytical and descriptive approach and uses library-based research methods, the results demonstrate that, although damage mitigation is considered a dispute resolution strategy in the common law legal system, it primarily serves as a means for the injured party to address a breach of obligation caused by the obligor's non-performance. Nevertheless, from a logical and calculative perspective, preventing the escalation of harm is a desirable solution for the injured party to avert larger losses.