Armed Conflict And State Succession In Investor-state Arbitration

Abstract

The topics of armed conflict and annexation have to date not attracted much attention when it comes to international investment law and investor-state arbitration. However, a series of recent events, ranging from investment claims under Soviet and Yugoslav investment treaties to claims against Russia for investments in Crimea, has drastically altered the importance of the law of state succession in investor-state arbitration. Furthermore, the Ukrainian crisis of 2014, also provides the medium for an examination of the impact of armed conflict on international investment law. As of the writing of this article, eight claims have been filed by Ukrainian investors against Russia under the Russia- Ukraine bilateral investment treaty (BIT), over the alleged breach of their investments in Crimea. For its part, Russia has decided not to participate in the proceedings. Regardless, these claims bring about significant questions with respect to the law of state succession in general and the application of Russian investment treaties to Crimea in particular. Furthermore, it has to be examined whether armed conflicts can affect the operation of investment treaties, and in particular, whether the conflict in Crimea left the operation of Russian and Ukrainian investment treaties intact or suspended the operation of such treaties. Setting out from these questions, this article provides the foundational elements on the importance of the impact of armed conflict and the law on state succession on investor-state arbitration.