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legal standard and recognizes that its task calls for a “concrete
interpretation” of that standard. Section seven states that a
determination of appropriate compensation “is better carried out
by means of an enquiry into all the circumstances relevant to the
particular concrete case, than through abstract theoretical
discussion.” Section seven recognizes that, in applying that
standard to the case before it, “there is no room for rules of
compensation that would make nonsense of foreign investment.”
The tribunal adds: “Compensation then, must be calculated on a
basis such as to warrant the upkeep of a flow of investment in
the future.”
Considering in that light the circumstances of the case
before it, the tribunal decided that the “legitimate
expectations” of the parties must be the basis for deciding on
compensation. The tribunal rejected the notion that Aminoil’s
legitimate expectations were to be measured by the then-present
value of the projected net revenues it might have anticipated
over the remaining 30 years of the concession agreement, finding,
instead, that “the Parties adopted a different conception in the
course of their relations and negotiations, - namely that of the
reasonable rate of return. This it is, therefore, that must
guide the Tribunal.”
The tribunal then focused more precisely on “the basis on
which the evaluation of the legitimate expectations of Aminoil
must proceed.” Section seven provides: “whereas the contract of
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