The importance of calculation and valuation matters in investment arbitration has long been underestimated. Only recently, there is a growing understanding that financial aspects play an equally important role for claimants and respondents as the purely legal bases of claims. Also for general preventive reasons the amounts awarded should as closely as possible reflect economic realities. The book tries to combine the various types of claims – based on expropriations, violations of international law (i.e. mostly BIT-violations) and contract breaches – with internationally accepted valuation standards and approaches. In doing so, it puts an emphasis on the specific function of compensation and damages. This functional approach is characteristic for the entire book, including the chapter on interest where the different functions of ‘pre-award interest’ and ‘post-award interest’ are highlighted. After a short general introduction in Chapter 1, Chapter 2 analyses the function of compensation and damages in international investment disputes. It shows that compensation upon expropriation serves a different function than damages after an unlawful act, be it a breach of a treaty, such as a BIT, or a contract. It concludes that an appropriate valuation approach should reflect these functions. Chapter 3 gives an outline of the legal framework of compensation and damages in international investment law. Starting from the standard of compensation upon expropriation under international law it analyses the difference between lawful and unlawful expropriations. It then examines the criteria of the calculation in cases of State responsibility and breaches of contract. Chapter 4 introduces some internationally recognized valuation standards and bases of value. Chapter 5 analyses how the three most important valuation approaches – the market approach, the income approach, and the asset based or cost approach – are reflected in the practice of international investment tribunals. Chapter 6 discusses the most important issues with regard to the determination of interest, namely the rate of interest, the period of interest, and the question of whether interest should be compounded, and underlines the difference between ‘pre-award interest’ and ‘post-award interest’. Chapter 7 summarizes the most important economic and legal principles and filters out some guidelines for application in practice.