The Chapter on Damages in Commercial Arbitration deals with the structuring of damages claims, in particular, with respect to income-generating contracts such as Joint Venture Agreements, Public-Private Partnerships (PPPs) and concessions. The authors recall the fundamental requirements of damages analysis referring to different rules of law, followed by the analysis of the key issues to be considered when framing a damages claim, and the particular issues faced with respect to income generating contracts. The measure of damages as a legal notion defines what the applicable law allows to be compensated and merits in-depth considerations which include findings on the origins of damnum emergens and lucrum cessans. Furthermore, this Chapter clarifies the different functions of the but-for premise when framing a damages claim. This is followed by the analysis of different topics that pose challenges in damages analysis such as loss of a chance, unjust enrichment and the difference between these concepts and lost profits, as well as the use of ex-post or hindsight information in the light of the full compensation principle. Different approaches and the rational of cost allocation are being considered in the light of the full compensation principle. Damages analysis in commercial arbitration is contract specific, as the damages case is a mirror-image of the liability case and aims to determine the economic effect of the violation of a particular contract clause as compared to the economic situation that would have prevailed in the absence of the breach. Framing a damages claim is a highly analytical process, whereby the but-for premise plays an essential role in order to answer the various questions that appear throughout it. There are no general recipes that apply to the different damages scenarios, but only tools for the framing of a damages claim or the formulation of an award as analysed in this Chapter.
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