The ADC et al v. Hungary case: lessons on valuation and compensation

The ADC et al v. Hungary (Award, 2 October 2006) remains one of the often-cited investor-state arbitration cases on unlawful expropriation. The tribunal found multiple treaty breaches, from lack of due process to absence of compensation, and applied the Chorzów Factory rationale to determine damages.

One of the important features of the case was that the tribunal adopted an ex-post method, i.e. the preparation of the valuation using hindsight. That was done in recognising that the value of the investment had increased substantially between expropriation and the date of the award. The case illustrates how valuation timing can materially affect compensation outcomes in investor-state disputes.

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Source: Hon. Charles N. Brower, “Judging Iran” (2023), discussing ADC v. Hungary, Award (2006).