CYIL vol. 8 (2017)

PETR STEJSKAL CYIL 8 ȍ2017Ȏ investments. They are instruments of international law by which states make commitments to other states with respect to the treatment they will accord to investors and investments from those other states, and agree to some mechanism for enforcement of those commitments. 10 General treatment standards typically guaranteed by investment treaties consist of absolute standards (full protection and security, fair and equitable treatment, treatment in accordance with the minimum standard of international law) and relative standards (most- favoured nation treatment and national treatment), depending on the composition and wording of the particular treaty (it is up to states how generous the standards of protection are they provide to foreign investors on sovereign territory). The latter type of standard requires a comparator for its application, the former does not. 11 Furthermore, all modern investment treaties contain specific provisions covering preconditions for and consequences of expropriation. 12 This article focuses on the significance of full protection and security clauses in the first place. 13 Those clauses oblige host states generally to protect the investment from physical injury 14 caused by third parties (in other words, to take reasonable measures of prevention which a well-administered government could be expected to exercise) 15 and at the same time against the actions by organs and representatives of the host state itself. 16 The important fact is that according to case-law, this clause does not impose a strict liability towards the host state. Rather, the standard of protection is one of due diligence. 17 Next to it, some investment treaties refer particularly to war or other forms of armed conflict or civil disturbances in so- called war clauses which are usually titled as ‘Compensation for losses.’ They do not normally establish an absolute right to compensation, but only promise that foreign investors will be treated in a certain way when it comes to compensation for physical damage caused by war, revolution or civil disturbance. 18 However, we must distinguish those ordinary, only non-discrimination clauses which do not create substantive rights to compensation and only oblige the host state to provide for national treatment and most favoured nation treatment in relation to compensation, and extended war clauses. In the case of extended war clauses, three essential differences can be identified. Firstly, they address particularly the conduct of the host state organs. Secondly, they usually contain a condition that the destruction of investment was not required by the necessity of the situation. Finally, and probably most importantly, 10 The Law of Investment Treaties , p. 1. 11 Ibid , p. 229. 12 SCHREURER, Ch., DOLZER, R., Principles of International Investment Law. 2nd Edition, Oxford University Press, 2012, p. 98. 13 Even though the other standards can also be breached by the conduct of states during the armed conflict. Mostly fair and equitable treatment and most favoured nation treatment can be breached by the conduct of the states participating in armed conflict. However, these provisions seem to cover a much wider area of state behaviour, including a variety of administrative measures of states, which are not the objectives of this article. 14 Conduct causing physical injury to foreign investments is the core topic of this article. Though, the duty of protection and security extends also to the duty to provide a legal framework that offers legal protection to foreign investors. See SCHREURER, Ch., Full Protection and Security. Journal of International Dispute Settlement , Vol. 1, Issue 2, 2010, p. 10. 15 The Law of Investment Treaties , p. 148. 16 For more detailed analysis of the content of full protection and security clauses see for example ZEITLER, H. E., Full Protection and Security. In: SCHILL, S. W., International Investment Law and Comparative Public Law , Oxford University Press, 2010. 17 E. g. AAPL v. Sri Lanka , Award, June 21, 1990, par. 85. 18 The Law of Investment Treaties , p. 368-371.

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