xr Trans-Lex.org Law Research Trans-Lex.org Law Research - Docid: 948750 -
Principle

No. VII.3.3 - Future damages/Lost profits

(a) A claim for compensation of future damages - including lost profits - is not excluded by a claim raised under Principle VII.3.2 above, provided that such harm was foreseeable under Principle VII.2 and is established with a reasonable degree of certainty.

(b) The aggrieved party may only recover lost net profits. This requires that the benefits of avoiding performance - the operating or other costs avoided by the absence of performance - must be deducted from the value to be received through performance.

Commentary
1 Subsection (a) makes it clear that the aggrieved party may claim compensation for damages for additional future harm, including lost profits ("consequential loss"), which it may have sustained due to the non-performance of the other party, provided that such harm was foreseeable and is established with a reasonable degree of certainty. Such future harm may include any gain of which the aggrieved party has been deprived by the non-performance of the other party. However, Subsection (a) provides that recovery of such future harm is always subject to the principle of forseeability and certainty. A party may never recover damages for alleged future harm which, from a reasonable perspective, may never have occured (forseeability) or for which there is no sufficient causal nexus between the non-performance and the occurence of the harm (certainty). This would contravene the principle of full compensation which provides not only the scope, but also the limits of any claim  for compensation of damages. Compensation for damages may never result in an enrichment of the aggrieved party. Therefore, the application of the principle of forseeability and certainty relates both to the occurence of the future harm and to its extent.

2 Subsection (b) applies the limitations outlined above to the recovery of lost profits as a sub-species of future damages. Compensation for lost profits may not lead to an enrichment of the aggrieved party. Therefore, the aggrieved party may claim compensation only for net lost profits. Any benefits resulting from the fact that the aggrieved party must not perform must therefore be deducted from the value to be received through performance.

Please cite as: "Commentary to Trans-Lex Principle , http://www.trans-lex.org/948750"
References
Arbitral Awards
ICSID Award of June 16, 2010, Gemplus S.A. & SLP S.A. & Gempluas Industrial S.A. de C.V. v. The United Mexican States, Talsud S.A. v. The United Mexican States, ICSID Cases No. ARB/04/3 & ARB/04/4
Court Decisions
Chaplin v. Hicks [1911] 2 KB 786
Doctrine
McGregor, Harvey; McGregor on Damages, London 2009
Perret, Francois, La juriprudence arbitrale peut-elle donner une nouvelle chance a la theorie de la perte d'une chance?, Economie Environnement Ethique, 2009, at Page 289 et seq.
Principles / Restatements
Principles of European Contract Law - PECL
UNIDROIT Principles of International Commercial Contracts
Contract Clauses
There are currently no contract clauses.
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