Damages in international arbitration
Produced in partnership with CMS
Damages in international arbitration

The following Arbitration guidance note Produced in partnership with CMS provides comprehensive and up to date legal information covering:

  • Damages in international arbitration
  • What law applies for the purposes of calculating damages?
  • Contractual damages
  • Proving the loss and quantifying it
  • Interest on damages

This Practice Note provides an introduction to how damages are determined and quantified in international arbitration proceedings, with a focus on damages for breach of contract. An introduction to non-damages remedies in international arbitration is provided in Practice Note: Non-damages remedies in international arbitration.

What law applies for the purposes of calculating damages?

Generally, in international arbitration proceedings, the law that governs the substance of the dispute between the parties will also apply to the assessment of damages (Chaplin v Boys). However, this should be checked in respect of the jurisdictions concerned and causes of action at issue as courts (in particular the English court) have found that while heads of damage may be a matter to be determined under the substantive law, quantification of damage is more of a procedural matter (Harding v Wealands).

For contractual disputes, the substantive law will be either:

  1. the law which the parties have chosen to govern the contract, or

  2. if they have not chosen a governing (or applicable) law, the law which the tribunal determines is appropriate in the circumstances. This will also be the case for non-contractual causes of action arising from the substance of the contract caught by the parties' arbitration agreement.

This approach is reflected in several of the leading arbitration rules, including those of UNCITRAL, the London Court of international