ASBR ICEIPI 2022, 02 February 2023
* Author to whom correspondence should be addressed.
Foreign investors might suffer loss to their overseas investment resulting from war or armed conflict, and thus raise the issue of seeking war damage compensation. Under the international legal system, foreign investors could resort to diplomatic methods and legal methods for claiming war damage compensation. Some of these diplomatic methods, commonly represented by negotiation and mediation, are incorporated in a vast number of BITs. Using diplomatic methods allows a certain degree of flexibility but they cannot guarantee any outcomes. Instead, foreign investors could resort to legal methods, which include litigation and investment arbitration. Litigation before domestic courts imposes the obstacles of state immunity and other preliminary requisites for foreign investors. Investment arbitration, regarded as a major measure of resolving international investment-related disputes, provides foreign investors an effective forum for seeking war damage compensation. Yet foreign investors should be aware that arbitral tribunals might exercise different standards on the host state’s obligations and valuation of investment losses.
Foreign investment, war, war damage compensation, mechanism.
1. Nehemiah Robinson, ‘War Damage Compensation and Restitution in Foreign Countries’, (1951) 16 Law and Contemporary Problems 347
2. Christoph Schreuer, ‘The protection of investments in armed conflicts’ in F. Baetens (ed), Investment Law within International Law: Integrationist Perspectives (p3 Cambridge University Press 2013)
3. Francesco De Santi di Nicola, ‘Civil actions for damages caused by war crimes vs. State Immunity from jurisdiction and the political act doctrine: ECtHR, ICJ and Italian Courts, (2016) 2 International Comparative Law 107
4. John Merrills, ‘The Means of Dispute Settlement’ in Malcolm D Evans (ed) International law (fourth edition, Chapter 19, OUP 2014)
5. See ICSID website, ‘Other Alternative Dispute Resolution Mechanisms’, <https://icsid.worldbank.org/services-arbitration-other-adr-mechanisms>, accessed 27 May 2022
6. See ICSID Arbitration Rule 43(2)
7. See United Nations Conference on Trade and Development, <https://investmentpolicy.unctad.org/international-investment-agreements>, accessed 27 May 2022
8. The 5 BITs reviewed are: 1. Colombia - Spain BIT (2021); 2. Georgia - Japan BIT (2021), article 23 of which is reviewed; 3. Israel - United Arab Emirates BIT (2020), article 16 and 17 of which are reviewed; 4. Hungary - Kyrgyzstan BIT (2020), article 9 of which is reviewed; and 5. Brazil - India BIT (2020), article 18 and 19 of which are reviewed.
9. Overview of Investment Treaty Clauses on Mediation, July 2021, <https://icsid.worldbank.org/sites/default/files/publications/Overview_Mediation_in_Treaties.pdf>, accessed 27 May 2022
10. Xiaodong Yang, ‘State immunity in international law’ (2012) 89 Cambridge University Press
11. Information from UNCTAD, <https://investmentpolicy.unctad.org/international-investment-agreements> accessed 27 May 2022
12. Christoph Scheruer, ‘Full Protection and Security’  Journal of International Dispute Settlement 1
13. See Amco Asia Corporation and Others V. The Republic of Indonesia, ICSID Reports 413. It should be noticed that in this case the trespass to foreign investment was committed by Indonesia’s citizens. The tribunal ruled that it is a generally accepted rule of international law that a state has a duty to protect aliens and their investment against unlawful acts committed by some of its citizens.
14. Jonathan Bonnitcha and Sarah Brewin, ‘Compensation Under Investment Treaties’ (2020) IISD Best Practices Series, International Institute for Sustainable Development <https://www.iisd.org/system/files/publications/compensation-treaties-best-practicies-en.pdf> accessed 27 May 2022
15. Noradèle Radjai, Laura Halonen and Panagiotis A. Kyriakou, ‘An Analysis of the Compensation Regime Applicable to Claims Arising from Armed Conflicts Affecting Investments in MENA’ (2016) 3 no.2 BCDR International Arbitration Review 219
16. See Recognition and Enforcement - ICSID Convention <https://icsid.worldbank.org/services/arbitration/convention/process/recognition-enforcement> accessed 27 May 2022
17. Elke Schwager, ‘The Right to Compensation for Victims of an Armed Conflict’ (2005) 4 no.2 Chinese Journal of International Law 417
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