Investments Under Occupation: The Application of Investment Treaties to Occupied Territory

The occupation and annexation of Crimea have led to several investment claims brought forward by Ukrainian investors against Russia concerning measures taken on the Crimean Peninsula. These cases have, among others, raised the underexplored issue whose, if any, investment treaties apply to occupied territory. In answering this question, the present contribution first assesses the duties of the occupant under the law of occupation vis-à-vis investment treaty obligations of the occupied State. It is argued that although the occupant has to respect these obligations, it is ultimately not subject to investor-State dispute settlement. In contrast, recent decisions in which arbitral tribunals have affirmed their jurisdiction in the Crimean context show that Russia’s own investment treaty obligations are applied to the occupied territory. The second section of the contribution critically assesses this interpretation of the common reference to “territory”. It finds that the territorial application of these treaties can, without violating other rules of international law, in fact be extended to foreign territory under the State party’s effective control. Despite the politically charged implications such an interpretation could mean for the cementation of occupation, the independent legal review of measures taken by occupying States should be welcomed.