Shareholder Claims For Reflective Loss In Investor-State Arbitration: An Overview

Reflective losses are indirect losses, such as a decrease in the value of the shares, suffered by shareholders as a result of harm to the company in which their shares are held.¹ Reflective losses differ from direct losses suffered by shareholders, which may occur through the seizure of shares or barriers to shareholder attendance of company general meetings.²

Reflective losses are widely accepted as non-recoverable under domestic corporate law,³ which stresses the distinction between the company and its shareholders.⁴ For example, in the 1982 case, Prudential Assurance v Newman Industries (No 2), which established the "No Reflective Loss Principle" in England, the English Court of Appeals explained that a shareholder has no right to bring reflective loss claims because his shares are simply a right of participation in the company, which is unaffected when the company suffers damage: