Procedural Aspects of the Obligation of Non-Recognition Before International Investment Tribunals

In the case of the investment claims filed against Russia with regard to its illegal annexation of Crimea in 2014, the international law principle of non-recognition of illegal acquisition of territory could serve as a jurisdictional defence. Due to the illegality of the territorial acquisition, Russia could try to argue, its investment treaties would not apply ratione loci to Crimea. It is, however, highly unlikely that a State would invoke its own illegal actions as a defence in international arbitrations. This contribution therefore analyses—on an abstract level—how ICSID and non-ICSID investment tribunals should approach such a situation. It shows that the obligation of non-recognition needs to be taken into account by arbitral tribunals in both frameworks. As long as both parties participate in the proceedings, the tribunal may interpret any lack of jurisdictional objections as a basis for a forum prorogatum. It would not need to make any (ancillary) determination with regard to the case’s underlying territorial dispute to hear the case on the merits that could potentially contravene the obligation of non-recognition. In default proceedings, to the contrary, the tribunal cannot rely on the concept of forum prorogatum. It is under a duty to review its jurisdiction ex officio in both the ICSID and the non-ICSID investment arbitration framework. This does not mean, however, that its interpretation of the treaty’s territorial nexus, assuming it accepts jurisdiction, will always contravene the obligation of non-recognition.