CYIL vol. 14 (2023)

CYIL 14 (2023) ASSET FREEZING IN INVESTMENT ARBITRATION: LESSONS LEARNED … of mere ‘material impossibility’ 59 when the compliance with the State’s obligations implied ‘a sacrifice’ 60 that could not be reasonably required. Although the doctrine settled that the existence of a political or economic crisis which made it for the State more difficult to perform its duties would generally not satisfy the conditions of Art. 23 of the ILC Articles, there is a historic precedent that seems to take a different approach. In French Company of Venezuelan Roads , the umpire upheld Venezuela’s defence that it could not repay its debts to a French investor, noting that the revolution in the Venezuelan territory exhausted the country’s resources which had to be prioritized to preserve its own existence. 61 While the reasoning was equally cited in subsequent proceedings, 62 the arbitrators were less inclined to accept that the payment of financial liabilities could be ever rendered materially impossible. 63 A similarly negative stance would arguably prevail where the non-payment or any other action of the State resulted from a conscious decision. 64 Indeed, as Art. 23 of the ILC Articles expressly sets out, the force majeure event must not stem from the In the light of the design of unilateral sanctions, States may be encouraged to conceptualise their actions alternatively as countermeasures within the meaning of Art. 49 of the ILC Articles, addressing a prior international wrongful act of their target. While this narrative frequently appears in statements of public officials, it raises also numerous controversies. First, the concept of unilateral sanctions is highly imprecise and remains largely unregulated in public international law. 65 So far, there is no consensus on their legal status which would arguably differ depending on the scope and purpose of the measures. 66 As most unilateral sanctions seek to coerce their target into changing its conduct, the main rule regulating such acts is the principle of non-intervention. 67 According to the Nicaragua case, this norm is actions of the State invoking it in the first place. 4.2 Unilateral sanctions as countermeasures 59 CRAWFORD, J. (1999). Second Report on State Responsibility , UN Doc. A/CN.4/498, para. 259. 60 AGO, R. (1979). Eighth Report on State Responsibility , UN Doc. A/CN.4/318 and ADD.1-4, para. 106. 61 1888 French Company of Venezuelan Railroads (1904) 10 RIAA 285, pp. 314, 327 and 335. 62 Russian Claim for Interest on Indemnities (Russia v. Turkey) (1912) 11 RIAA 421, p. 434; Serbian Loans (France v. Serb-Croat-Slovene State) [1929] PCIJ Ser. A No. 20, para. 82; Brazilian Loans (France v. Brazil) [1929] PCIJ Ser. A No. 21, para. 66. 63 WANG, L. and SHAN, W. (2022). Force Majeure and Investment Arbitration. ICSID Review-Foreign Investment Law Journal , Vol. 37, No. 1–2, pp. 145–146. Lately, the tribunal in Güris and others found that the respondent had failed to provide fact-specific evidence as to whether the performance of its purely economic obligation towards the investor had been materially impossible amidst Syria’s armed conflict. See Güris Construction and Engineering Inc v Syrian Arab Republic , ICC Case No. 21845/ZF/AYZ, Final Award, 31 August 2020, paras. 319–220. 64 In Libyan Arab Foreign Investment Company , the tribunal rejected the force majeure plea, arguing that the material impossibility had not stemmed from an irresistible force or unforeseen event beyond Burundi’s control, but rather its unilateral decision. See Libyan Arab Foreign Investment Company v. Republic of Burundi (1994) 96 ILR 279, p. 318, para. 55. 65 HOFER, A. (2020). The Proportionality of Unilateral “Targeted” Sanctions: Whose Interests Should Count? Nordic Journal of International Law , Vol. 89, 399, p. 401. 66 For a debate on the distinction between unilateral sanctions as retorsions and countermeasures, see SCHMIDT, J. (2022). The Legality of Unilateral Extra-territorial Sanctions under International Law. Journal of Conflict and Security Law , Vol. 27, No. 1, 53, pp. 71–77. 67 TZANAKOPOULOS, A. (2015). The Right to Be Free from Economic Coercion. Cambridge Journal of International and Comparative Law , Vol. 4, No. 3, 616, pp. 618–619.

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