State responsibility assess “fair market value”, however, depends on the nature of the asset concerned. Where the property in question or comparable property is freely traded on an open market, value is more readily determined. In such cases, the choice and application of asset-based valuation methods based on market data and the physical properties of the assets is relatively unproblematic, apart from evidentiary difficulties associated with long outstanding claims.551 Where the property interests in question are unique or unusual, for example, art works or other cultural property,552 or are not the subject of frequent or recent market transactions, the determination of value is more difficult. This may be true, for example, in respect of certain business entities in the nature of a going concern, especially if shares are not regularly traded.553 (23) Decisions of various ad hoc tribunals since 1945 have been dominated by claims in respect of nationalized business entities. The preferred approach in these cases has been to examine the assets of the business, making allowance for goodwill and profitability, as appropriate. This method has the advantage of grounding compensation as much as possible in some objective assessment of value linked to the tangible asset backing of the business. The value of goodwill and other indicators of profitability may be uncertain, unless derived from information provided by a recent sale or acceptable arms-length offer. Yet, for profitable business entities where the whole is greater than the sum of the parts, compensation would be incomplete without paying due regard to such factors.554 for the Treatment of Foreign Investment (Washington, D.C., 1992), vol. II, p. 41. Likewise, according to article 13, paragraph 1, of the Energy Charter Treaty, compensation for expropriation “shall amount to the fair market value of the Investment expropriated at the time immediately before the Expropriation”. 551 Particularly in the case of lump-sum settlements, agreements have been concluded decades after the claims arose. See, e.g., the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Union of Soviet Socialist Republics concerning the Settlement of Mutual Financial and Property Claims arising before 1939 of 15 July 1986 (Treaty Series, No. 65 (1986)) (London, HM Stationery Office) concerning claims dating back to 1917 and the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of China concerning the Settlement of Mutual Historical Property Claims of 5 June 1987 (Treaty Series, No. 37 (1987), ibid.) in respect of claims arising in 1949. In such cases, the choice of valuation method was sometimes determined by availability of evidence. 552 See Report and recommendations made by the panel of Commissioners concerning part two of the first instalment of individual claims for damages above US$ 100 000 (category “D” claims), 12 March 1998 (S/AC.26/1998/3), paras. 48–49, where UNCC considered a compensation claim in relation to the taking of the claimant’s Islamic art collection by Iraqi military personnel. 553 Where share prices provide good evidence of value, they may be utilized, as in INA Corporation v. The Government of the Islamic Republic of Iran, Iran-U.S. C.T.R., vol. 8, p. 373 (1985). 554 Early claims recognized that even where a taking of property was lawful, compensation for a going concern called for something more than the value of the property elements of the business. The AmericanMexican Claims Commission, in rejecting a claim for lost profits in the case of a lawful taking, stated that payment for property elements would be “augmented by the existence of those elements which constitute a going concern”: Wells Fargo and Company (Decision No. 22–B) (1926), American-Mexican Claims Commission (Washington, D.C., United States Government Printing Office, 1948), p. 153 (1926). See also decision No. 9 of the UNCC Governing Council in “Propositions and conclusions on compensation for business losses: types of damages and their valuation” (S/AC.26/1992/9), para. 16. 103 (24) An alternative valuation method for capital loss is the determination of net book value, i.e. the difference between the total assets of the business and total liabilities as shown on its books. Its advantages are that the figures can be determined by reference to market costs, they are normally drawn from a contemporaneous record, and they are based on data generated for some other purpose than supporting the claim. Accordingly, net book value (or some variant of this method) has been employed to assess the value of businesses. The limitations of the method lie in the reliance on historical figures, the use of accounting principles which tend to undervalue assets, especially in periods of inflation, and the fact that the purpose for which the figures were produced does not take account of the compensation context and any rules specific to it. The balance sheet may contain an entry for goodwill, but the reliability of such figures depends upon their proximity to the moment of an actual sale. (25) In cases where a business is not a going concern,555 so-called “break-up”, “liquidation” or “dissolution” value is generally employed. In such cases, no provision is made for value over and above the market value of the individual assets. Techniques have been developed to construct, in the absence of actual transactions, hypothetical values representing what a willing buyer and willing seller might agree.556 (26) Since 1945, valuation techniques have been developed to factor in different elements of risk and probability.557 The discounted cash flow (DCF) method has gained some favour, especially in the context of calculations involving income over a limited duration, as in the case of wasting assets. Although developed as a tool for assessing commercial value, it can also be useful in the context of calculating value for compensation purposes.558 But difficulties can arise in the application of the DCF method to establish capital value in the compensation context. The method analyses a wide range of inherently speculative elements, some of which have a significant impact upon the outcome (e.g. discount rates, currency fluctuations, inflation figures, commodity prices, interest rates and other commercial risks). This has led tribunals to adopt a 555 For an example of a business found not to be a going concern, see Phelps Dodge Corp. v. The Islamic Republic of Iran, Iran-U.S. C.T.R., vol. 10, p. 121 (1986), where the enterprise had not been established long enough to demonstrate its viability. In SEDCO, Inc. v. National Iranian Oil Co., the claimant sought dissolution value only, ibid., p. 180 (1986). 556 The hypothetical nature of the result is discussed in Amoco International Finance Corporation (see footnote 549 above), at pp. 256– 257, paras. 220–223. 557 See, for example, the detailed methodology developed by UNCC for assessing Kuwaiti corporate claims (report and recommendations made by the panel of Commissioners concerning the first instalment of “E4” claims, 19 March 1999 (S/AC.26/1999/4), paras. 32–62) and claims filed on behalf of non‑Kuwaiti corporations and other business entities, excluding oil sector, construction/engineering and export guarantee claims (report and recommendations made by the panel of Commissioners concerning the third instalment of “E2” claims, 9 December 1999 (S/AC.26/1999/22)). 558 The use of the discounted cash flow method to assess capital value was analysed in some detail in Amoco International Finance Corporation (see footnote 549 above); Starrett Housing Corporation (ibid.); Phillips Petroleum Company Iran (see footnote 164 above); and Ebrahimi (Shahin Shaine) v. Islamic Republic of Iran, Iran-U.S. C.T.R., vol. 30, p. 170 (1994).