CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ WAR: FOREIGN INVESTMENTS IN DANGER … There may be some issues arising from interactions of humanitarian law and the law of foreign investments. For example, when assessing the legality of a military operation of the host state against civilian objects situated in the occupied territory, a hypothetical situation can happen that from the point of view of the law of armed conflict, the object would be a legal military target, but from the point of view of the law of foreign investments, neither the security exception clause nor state of necessity would apply. The security exception clause could be inapplicable because such a clause is missing in a particular investment treaty, 53 whereas the state of necessity would be excluded because the operation was not in the particular situation, the only way for the host state to safeguard an essential interest against a grave and imminent peril or for the reason that the host state has substantially contributed to the state of emergency. 54 In that case, the factual situation can lead to a contradiction between the law of foreign investments represented by the full protection and security clause in an investment treaty prohibiting the host state from harming the foreign investment of particular nationals, and the law of armed conflict allowing parties to the conflict in certain circumstances to use force against civilian objects if used for military purposes. 3.2.2 Occupying state and its obligations towards foreign investments in the occupied territory An assessment of the belligerent occupation from the perspective of an occupying state is quite different. The occupying power can harm foreign investments situated in the occupied territory typically by its physical destruction (not mentioning the destruction during the invasion phase previous to occupation, which is covered by previous subchapter 3.1), by looting or by administrative measures, namely confiscation. Concerning the Russian Federation as an example of the occupying state, it is also bound by the norms arising from the law of armed conflict (both anchored in the 1907 Geneva Conventions and 1907 Hague Regulations or customary international law) and is a party to more than 80 investment treaties. Concerning investors in Crimea, unlawful seizure 55 or expropriation of property situated in Crimea by Russia is in fact a very commonly alleged violation of their rights, particularly unlawful expropriation of banks, petrol stations, cash and real estate assets, etc.). 56 The norms of the law of armed conflict limit the conduct of the occupying power towards private (and, therefore, also a foreign investor’s) property. During belligerent occupation, the principle of distinction and protection of civilian objects against attack and prohibition of pillage apply again. However, certain norms address particularly the event of belligerent occupation. According to Art. 53 of Geneva Convention IV, the destruction of real or personal property belonging to private persons is prohibited, but this prohibition does not apply in 53 For example, the investment treaty between the Czech Republic and Ukraine is lacking a security exception clause. 54 DARS, Art. 25 paras 1 and 2. 55 Many Ukrainian and foreign investments are situated in occupied Crimea. For example, Shelton Petroleum has a joint investment agreement with Chornomornaftogaz, Crimean subsidiary of Ukrainian gas utility, Naftogaz. They share licences to explore for gas deposits in the Black Sea and the Sea of Azov. However, a number of gunmen allegedly took control of the Chornomornaftogaz company on March 2014. See Canadian investors in Ukraine call for action [online]. theglobeandmail.com, March 24, 2014 [accessed on May 29, 2017]. Available at < https://www.theglobeandmail.com/report-on-business/international-business/european-business/canadian-investors- in-ukraine-call-for-action/article17643797/ >. 56 Crimean Investors’ Claims Against Russia Will Proceed [online]. law360.com, April 5, 2017 [accessed on May 29, 2017]. Available at < https://www.law360.com/articles/910320/crimean-investors-claims-against-russia-will-proceed >.

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