NERA Experts Bring Economic Insights to the Latest Investment Treaty Arbitration Review

10 July 2019
Dr. Jeff D. Makholm and Dr Laura T.W. Olive

The Investment Treaty Arbitration Review, edited by Barton Legum, provides a current perspective on the quickly evolving topic of investment treaty arbitrations. The biggest challenge for practitioners and clients over the past year has been to keep up with the flow of new developments and jurisprudence in the field. To help navigate these complex issues, NERA Managing Director Dr. Jeff D. Makholm and Senior Consultant Dr. Laura T.W. Olive describe the benefits of using economic and statistical tools to establish causation and value damages.

The Discounted Cash Flow Method of Valuing Damages in Arbitration by Dr. Jeff D. Makholm and Dr. Laura T.W. Olive

The discounted cash flow (DCF) model is a widely used and effective method for valuing enterprises. As such, it is useful for assessing damages associated with enterprise lost profits in international arbitration. In their chapter, Dr. Makholm and Dr. Olive explain how, far from being unduly abstract or restrictive as a model of investment behavior, the DCF model usefully links finance and economic theory in an uncertain world without making claims about what is known about future business conditions. It has a demonstrated track record among administrative agencies, courts, and arbitral tribunals for whom objectivity is of paramount importance. The DCF model represents an objective method focused on the essential underlying elements that spur arbitrations—the interruption of stable, going-concern profitability.

Accreditation: These chapters are an extract from the fourth edition of The Law Reviews’ The Investment Treaty Arbitration Review, published in June 2019 and edited by Bartom Legum. The whole publication is available here.