CYIL vol. 8 (2017)

PETR STEJSKAL CYIL 8 ȍ2017Ȏ be considered as an irresistible force or unforeseen event beyond the control of the host state, making it materially impossible in the circumstances to perform the obligation to protect the investment. 38 Secondly, circumstances precluding wrongfulness can be triggered also in relation to the host state’s failure to refrain itself from damaging the investments via its own state organs. In this case it would be typically a state of necessity if the military operation was the only way for the State to safeguard an essential interest against a grave and imminent peril and if the other requirements were met. 39 Nevertheless, it must not be forgotten that also the law of armed conflict operates with the term ‘necessity’. Art. 23 letter g) of the 1907 Hague Regulations contains military necessity as an exception from the prohibition of destruction and seizure of the enemy’s property as part of the primary rule (in comparison with state of necessity in the sense of Art. 25 of DARS dealing with secondary rules of international law). The state of necessity as a circumstance precluding wrongfulness, therefore, seems to be applicable in those cases where Art. 23 letter g) is in breach because the threshold of military necessity is not met. The question is which particular examples of conduct of hostilities could fall outside the ‘imperative demand by the necessity of war’ in the sense of Art. 23 letter g) but would sufficiently fulfil the requirements of the state of necessity at the same time. Even more difficult is the question of the role of customary law concerning the state of necessity in the interpretation of security clauses contained in investment treaties. This issue seems to be the subject of different approaches in the practice of arbitral tribunals. 40 One hypothesis is that requirements of the state of necessity seem to be stricter than the typical wording of security exceptions provided in investment agreements. 41 Finally, as mentioned before, an investment treaty may contain an extended war clause providing investors with a certain standard of compensation. However, such clauses in their extended form typically address only the conduct of the host state which was not required by the necessity of the situation. In other words, extended war clauses represent another type of provision which makes reference to the term ‘necessity’. Consequently, we can see that the situation of necessity may play a role in several legal aspects, from military necessity in humanitarian law, through the necessity of the situation in extended war clauses to a state of necessity as a circumstance precluding wrongfulness. The same pattern of duties of the host state seems to be applicable towards investments on its territory which belong to investors with the nationality of state A, the attacking one (on the grounds of an investment treaty concluded between state A and B). But for the definite answer, more comprehensive research needs to be done. It seems that at least the issue of suspension and termination of investment treaties might be more pertinent here. 3.1.4 The law of foreign investments – obligations of the attacking state Concerning the military operations of state A damaging investments in the territory of state B, applicability of investment treaties towards that attacking state is difficult. Most 38 DARS, Art. 23 par. 1. Even the International Law Commission commentary to this article gives in its par. 3 the loss of control over a portion of the state’s territory as a result of devastation of an area by military operation carried out by a third state or as a result of insurrection as examples of events giving rise to force majeure . 39 DARS. Art. 25 par. 1. 40 Principles of International Investment Law , pp. 189-190. 41 See for example analysis of KURTZ, J., Adjudging the Exceptional at International Investment Law: Security, Public Order and Financial Crisis. International & Comparative Law Quarterly , Vol. 52, Issue 2, 2010, pp. 325-371.

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