CYIL vol. 10 (2019)

PETR STEJSKAL CYIL 10 ȍ2019Ȏ much more space to be detailed and complete. Dealing with this specific issue, this paper serves as a contribution to recent debates related to the protection of FI during armed conflict as it should be an important part of this broader topic. 3 2. Applicable rules (layers of protection) Foreign investments situated in a host state which is engaging in armed conflict can suffer damage in various forms, ranging from administrative measures caused by the needs of the war economy to physical impairment such as seizure, confiscation or destruction of assets. Unlawful seizure or expropriation of property by Russia in Crimea is in fact a very common alleged violation (particularly unlawful expropriation of banks, petrol stations, cash and real estate assets etc.). 4 During armed conflict and belligerent occupation, the relevant norms of armed conflict apply on the conduct of parties to the conflict. At the same time, BITs are presumed to apply during armed conflict 5 and, similarly, the protection offered by human rights conventions does not cease in case of armed conflict. 6 Which particular norms are then concerned in the topic of this article? BITs play a major role as a source of investment protection by which states make commitments to other states with respect to treatment they will accord to investors and investments from those other states, and agree to some mechanism for settlement of disputes. 7 During hostilities or belligerent occupation, it is very likely that the so called full protection and security clause (FPS) will be triggered. This clause obliges host state to protect the investment from physical injury caused by third parties and at the same time against the actions by organs and representatives of the host state itself. 8 The standard of protection is of due diligence, 9 requiring the host state to take reasonable measures of prevention which a well- administered government could be expected to exercise. 10 Investment treaties typically contain also specific provisions covering preconditions for and consequences of expropriation. 11 Next to it, some investment treaties refer particularly to war or civil disturbances in so called war clauses (usually titled as compensation for losses). One can distinguish between ordinary (non-discrimination) clauses which do not create substantive right to compensation and only oblige host state to provide for national treatment and most favoured nation treatment in 3 These debates concern various issues including for example the applicability of investment treaties in occupied territories. For an overview of recent debates on the topic, see for example DUMBERRY, P. Requiem for Crimea: Why Tribunals Should Have Declined Jurisdiction over the Claims of Ukrainian Investors against Russian under the Ukraine-Russia BIT . Journal of International Dispute Settlement, 2018, Vol. 9. 4 Crimean Investors’ Claims Against Russia Will Proceed [online]. law360.com, April 5, 2017 [accessed on April 29, 2019]. Available at < https://www.law360.com/articles/910320/crimean-investors-claims-against-russia-will-proceed >. 5 SCHREURER, Ch. The Protection of Investments in Armed Conflicts. In: BAETENS, F. Investment Law within International Law. Integrationist Perspectives , Cambridge University Press, 2013, p. 2-3. 6 Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory , ICJ, Advisory Opinion (2004), par. 106. 7 SALACUSE, J. W. The Law of Investment Treaties , Oxford University Press, 2nd edition, 2015, p. 1. 8 For more detailed analysis of the content of FPS 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. 9 E. g. AAPL v. Sri Lanka , Award, June 21, 1990, par. 85. 10 Ibid , p. 148. 11 SCHREURER, Ch., DOLZER, R. Principles of International Investment Law , 2nd Edition, Oxford University Press, 2012, p. 98.

398