A Comparative Study of the Calculation Method of the Monetary Damages in International Arbitration

Document Type : Research Paper

Authors

1 Faculty of Law, University of Tehran, Tehran, Iran.

2 Faculty of Law, University of Shahid Beheshti, Tehran, Iran.

10.22059/ier.2025.360045.1007734

Abstract

Different factors contribute to the assessment of monetary damage, whose ignoring results in an inaccurate evaluation of monetary damage. One such factor is the approach used to calculate monetary damages. Concrete and abstract methods of calculation, namely, have been adopted for this purpose. Applying one of the aforementioned methods may result in no monetary compensation for the aggrieved party, whereas the other method may result in substantial monetary damages. Articles 75 and 76 of the United Nations Convention on Contracts for the International Sale of Goods 1980 Vienna (CISG) have embraced both of these methods. Nonetheless, the Convention does not specify the priority or prerequisites for applying these methods, which has led the tribunal to employ them arbitrarily. A circumstance that not only renders the rights of the aggrieved party unpredictable, but also causes inconsistency in the application of the Convention. This article is descriptive and analytical, which analyzes these methods and their application conditions, and concludes that the concrete method for calculating monetary damages has precedence over the abstract method. When the abstract method’s prerequisites are not met, it is utilized.
 

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References

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Iranian Economic Review
Volume 29, Issue 2
June 2025
Pages 605-622

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