Moral Damages In Investor-State Arbitration After Emergofin

• Published date: 20 July 2026
• Subject Matter: International Law, Litigation, Mediation & Arbitration, International Courts & Tribunals, International Trade & Investment, Arbitration & Dispute Resolution
• Law Firm: Aceris Law
• Author: Aceris Law

In Emergofin B.V. and Velbay Holdings Ltd. v. Ukraine, the Tribunal rejected the claim for moral damages from the outset. It did not treat moral damages as only a question of evidence or valuation; the Tribunal went further and held that the claim fell outside its jurisdiction or, alternatively, was inadmissible.¹

The Award incorporates the Tribunal's earlier Decision on Jurisdiction, Admissibility and Liability, in which the Tribunal addressed the claim for moral damages. In this case, the Claimants' claim for moral damages was based on alleged reputational harm to themselves and their representatives, as well as physical and psychological harm allegedly suffered by their representatives.²

Investor-State arbitration is a mechanism through which a foreign investor may bring a claim directly against the host State of the investment before an international arbitral tribunal for an alleged breach of an investment treaty.³

In Emergofin v. Ukraine, the Tribunal took a restrictive approach. Before considering whether the alleged harm had been established, or how it should be valued, the Tribunal examined whether the claim fell within the scope of the Netherlands-Ukraine BIT and within its mandate. The Tribunal considered not only whether the Claimants had suffered non-material harm, but also whether it had the power to hear such a claim.⁴

Consequently, the Tribunal adopted a narrow approach to the circumstances in which claimants may seek compensation for personal distress, reputational injury to individuals or harm suffered by corporate representatives. However, the Tribunal did not exclude moral damages altogether. It left open the possibility that such damages might, in some circumstances, be recovered for reputational harm suffered by the investment itself.⁵

The Facts

The Claimants, Emergofin B.V. and Velbay Holdings Ltd., sought USD 5,000,000 for “non-material or moral damages”, in addition to their claim for material damages. They argued that Ukraine's conduct had caused harm that was not purely economic and relied on three alleged categories of harm to establish moral damages.⁶

First, the Claimants relied on reputational harm to themselves and their representatives, said to have resulted from criminal investigations involving serious accusations, including terrorism and organised crime. Second, they alleged that their representatives had suffered physical and psychological harm during ZAlK management and shareholder meetings, including threats and...