4 Methods to Quantify Moral Damages in International Arbitrations

How do you put a monetary value on “moral damages”? In international treaty arbitration, the compensation of moral damages (e.g., emotional harm, pain and suffering, humiliation, mental stress, other non-economic losses) has long been deemed unsatisfactory due to a lack of empirical guidelines or established methodologies.

Dr. Manuel A. Abdala and Franco Abdala-Arata argue that established economic techniques, along with expert psychological assessment, can replace guesswork with rigor and steer moral damages awards toward the fundamental principle of full reparation.

They present four approaches:

1. the hedonic method for valuing loss of a pleasurable life
2. willingness-to-pay analysis
3. schedule compensations from market and statutory data
4. lost productivity estimation

This article is based on the authors’ earlier article “Quantifying Compensation for Moral Damages in Treaty Arbitration” in ICSID Review.