A company involved in the operation of a port and lumber business located in a Baltic state was allegedly wrongfully expropriated by the government. The owner of the allegedly expropriated company claimed for losses from the government in a Permanent Court of Arbitration dispute.

The government retained NERA to assess the economic basis of the claimant’s asserted losses and to provide an independent estimate of damages. The NERA team, consisting of Senior Managing Director Richard Hern and Consultant Tarek Badrakhan, reviewed historical account data for the allegedly expropriated company and studied business plans for port and lumber businesses to assess their relevance to damages. NERA concluded the claim for damages was entirely unsubstantiated, as it was based on numerous baseless assumptions in the company’s business plan for a short forecast period (in some cases one year), which the claimant’s damages expert extrapolated indefinitely into the future. The NERA team also compared amounts invested by the company with forecasted required capital expenditure (capex) amounts and found the business was still in its very early stages of operation, and only a fraction of the necessary capital investment to achieve forecast growth had been made by the owner.

Dr. Hern presented NERA’s analysis of damages and provided oral testimony at the hearing stage in January 2022.