War and Peace in International Investment Law

In situations involving international investments and armed conflict three areas of international law come together: investment law proper, international humanitarian law and human rights law. The law of treaties offers some rules relevant to situations of armed conflict. These rules address the effects of armed conflicts on treaties, impossibility of performance and fundamental change of circumstances. Generally, these rules do not offer a ready excuse for a departure from obligations arising under investment treaties. The treaty standard of full protection and security is a potentially powerful basis of protection for investors against violent attacks. Some investment treaties contain clauses that specifically refer to armed conflict. One variant of these clauses only provides for non-discrimination in the context of restitution or compensation. A more elaborate version also guarantees compensation for losses suffered through requisitioning or destruction not required by the necessity of war. Some investment treaties contain clauses that allow States to invoke essential security interests to defend action that is otherwise unlawful. Only a small number of these clauses are self-judging. Under the law of State responsibility, necessity and force majeure give limited comfort to States under circumstances of armed conflict. Action by a State in the exercise of self-defense does not exculpate action that violates human rights or humanitarian law. By the same token, States acting in self-defense are not exempted from obligations arising from investment law. Economic sanctions ordered or authorized by the Security Council may require action that is incompatible with certain guarantees under investment treaties.