“Transnational Investment Arbitration and Armed Conflicts,” by Fabrizio Marrella, Ed. A. Pedone, 2025.
Commentary by Alexandre Malan, Doctor of Law, barrister at the Paris Bar (Belot Malan & Associés)
Professor Marrella’s book will be of interest to practitioners and researchers alike, as it deals with a highly topical subject. Dense yet easy to read and illustrated with numerous examples, it is not simply a review of the current legal situation, but a genuine thesis. We will modestly attempt to summarise its main features and guiding principles here, in the hope of not betraying the author’s thinking.
It is well known that bilateral investment treaties (BITs) have been invoked in the context of armed conflicts – both internal and international – and more recently in the war in Ukraine, in order to establish the claims of investors who have suffered confiscation or destruction of their investments. Used as an instrument of lawfare, the author dismantles the mechanisms at work, without taking sides in an eminently political debate, seeking to analyse the place of investment law instruments within public international law, treaties, customary law and international case law, particularly that of the ICJ.
The example of the conflict in Ukraine, due to its topicality, occupies an important place and structures a significant part of the book.
A number of arbitral awards bear witness to these arbitration disputes, which have become known in Anglo-Saxon circles as the Crimea Disputes. Crimea is indeed the focal point of most of these disputes, some of which began as soon as the territory was annexed by the Russian Federation in 2014. The typical scenario is that of a Ukrainian company which, following the annexation, has had its activities seized or disrupted by the Russian authorities, with the bilateral treaty serving as the basis for the claim brought by the shareholder(s). The question of the jurisdiction of arbitral tribunals is at issue here, as is the question of whether arbitrators are only empowered to apply the investment protection convention, or whether they are also required (or entitled) to apply the instruments specific to the law of war, namely the conventions of international humanitarian law (IHL).
In the case of Ukraine, the claims are most often based on the idea that Russia’s occupation of Crimea and its claim to sovereignty over that territory constitute grounds for applying the treaty. In a dispute involving a Ukrainian investor in a territory that Russia considers to be under its sovereignty, Russia cannot, without contradicting itself, raise the issue of the arbitral tribunal’s lack of jurisdiction. In fact, this argument and its variations are accepted by arbitral tribunals in most cases that have been made public, leading in most cases to decisions against the Russian Federation. To date, all of the awards rendered have been subject to exequatur decisions or rejections of requests for annulment by the courts hearing the appeals in the Netherlands, Switzerland and France.
After refusing to participate in these arbitrations, focusing instead on appeals against the awards rendered, the Russian Federation changed its strategy: rather than challenging jurisdiction, it raised the inapplicability of the treaty ratione temporis, arguing that only investments made after the start of Russia’s occupation of Crimea would be covered. This argument, which had been rejected in publicly available awards ( ), was upheld by the Paris Court of Appeal in a decision on an appeal for annulment dated 30 March 2021 (19/04161), but this ruling was overturned by the Court of Cassation in a ruling dated 7 December 2022 (21-15.390).
The author’s criticism, supported by solid evidence, is based on an analysis of the place of bilateral investment protection agreements within the norms of public international law. In particular, he shows how the protection of property and persons in times of war is governed by a specific regime under public international law, based on humanitarian law conventions (in particular the Geneva Conventions and their protocols, the 1907 Hague Convention) and customary law, which, insofar as we are concerned here, prohibit belligerents, and in particular occupying authorities, from destroying or confiscating the property of private individuals, except in specific and conditional circumstances (including absolute military necessity, requisitioning for the occupying army, etc.).
However, in times of war, these norms supersede bilateral investment protection agreements, as they are lex specialis and, moreover, jus cogens norms.
More importantly, the author demonstrates, in our view convincingly, that public international law prohibits the community of States from recognising the sovereignty of a State over a territory conquered by force, as provided for in the Charter of the United Nations, but also in specific UN resolutions (with regard to Ukraine in particular, resolutions 68/262; ES-11/1 (2022); ES-11/6 (2023). However, this is precisely the conclusion reached by the admissibility of the applicability of bilateral agreements between Ukraine and Russia to deal with claims by Ukrainian investors against Russia concerning assets invested in the territory of Crimea. The issue therefore arises in relation to the applicability of these agreements and, consequently, the jurisdiction of the arbitral tribunals to hear them. The awards are therefore liable to be set aside, as the international rules of the law of war are jus cogens rules, and as such are normally incorporated into “genuine international” public policy, which the author opportunely recalls was defined in its time by Emmanuel Gaillard, and whose model is now widely recognised in French case law.
In other words, the author also takes a critical view of the approach adopted to date by the reviewing judges, both in France and in countries (the Netherlands, Switzerland) where these awards have been subject to review, in rejecting applications for annulment. It is true that the argument of systematic non-compliance with the norm of public international law based on the prohibition of recognising a territory annexed by force had not been invoked by the parties. In fact, the parties had generally not taken this position, for the strategic reasons mentioned above. The Russian position on the inapplicability ratione temporis (and not ratione loci) of the bilateral Russian-Ukrainian convention was taken up by the Paris Court of Appeal in its aforementioned ruling of 30 March 2021. However, the Court does not take a position on international public policy.
The author then raises a more procedural but essential question, namely that of the role and mission of the arbitrator in relation to standards of public international law in particular, especially if they are likely to be raised in the debate on public policy before the reviewing judges. While it is not universally accepted that it is the arbitrator’s responsibility to apply standards not invoked by the parties – jura novit curia – it is known that, at least in France, the reviewing judges have a broad conception of public policy and allow themselves to sanction the award even if the issue has not been debated before the arbitral tribunal.
Another question, which is related to this, is whether the reviewing judge may raise the public policy exception on his own initiative if the parties do not do so before him, if he considers that the violation of the IHL standard is sufficiently serious to warrant doing so, particularly if it is a Jus Cogens standard. This question is not addressed directly by the author, but we believe that, at least under French law, this is part of the review judge’s role (Article 12 of the CPC), provided that he invites the parties to debate the issue (Article 16 of the CPC).
Ultimately, the author convincingly sets out the benefits for the investment arbitration community of distancing itself from any politicisation and returning to the fundamental principles of public international law at a time when the legitimacy of arbitration as a means of settling investment disputes is being called into question.
His argument also has the great merit of reminding us that bilateral investment protection treaties are a specific application of the norms of public international law and, as such, cannot be interpreted in isolation, abstracted from the fundamental norms of that law, which are in particular customary law, the law of war and jus cogens. As he points out at the end of a stimulating argument, the “self-contained regimes” approach – which would like to see international investment law as an autonomous body of law, with its counterpart being the prohibition on arbitrators from applying international law standards other than those strictly derived from investment law – runs counter to the unity of the international legal order.
Once the test of the court’s jurisdiction on the basis of the BIT has been passed – a test which may prove negative, as in the Crimea cases mentioned above – the question then arises of how to reconcile IHL standards with the rules derived from BITs.
The author demonstrates that in most cases there is a certain conjunction between the obligations arising from BITs and those arising from IHL, particularly with regard to the obligation to protect civilian property. IHL will here “support” the obligations arising from BITs and may usefully reinforce the reasoning of arbitrators. Conversely, the application of IHL may, in certain cases, lead to the State being exonerated from liability, even if the facts denounced would have led to its conviction if judged solely on the basis of the bilateral investment protection treaty. This will be the case in particular if the destruction of the property is lawful under IHL, for example if the property in question was used for military purposes (e.g. a building used for military purposes); This is also the case when property is requisitioned for military purposes (e.g. an arms manufacturing company), provided that the conditions of IHL are met in such a case (i.e. the conditions of distinction between civilians and military personnel, proportionality of the measures taken and precautions taken with regard to civilians).
The final point examined by the author is the essential issue of the jurisdiction of arbitral tribunals seized on the basis of a BIT to sanction violations of IHL. As the author points out, the States party to a BIT did not intend to entrust arbitral tribunals with the task of awarding compensation for war damage, which, in accordance with general international law, falls within the strict jurisdiction of inter-State law (i.e. it is to be settled by means of a peace treaty, part of which will deal with war damage).
This is clearly a question of jurisdiction, since the arbitral tribunal derives its jurisdiction from the bilateral treaty, an issue of consent to arbitration that is well known to specialists in the field. According to the author, the solution to the problem – and therefore to the question of the arbitral tribunal’s jurisdiction to rule on IHL matters – lies in the wording of the clause containing the host State’s consent to arbitration.
This link may be textual, if an investment protection treaty contains express references to war (a “war clause”), which will be rare. It may also apply where IHL issues are ancillary to the parties’ claims based on the BIT. Finally, it may be established through Article 31(3)(c) of the Vienna Convention on the Law of Treaties, which was used in the 2016 Ubraser award (Ubraser SA v. Argentina) and provides that a treaty binding two States must be interpreted in light of “any relevant rules of international law applicable in the relations between the parties “.
The author also devotes considerable space to the concept of accountability, which is obviously important in the context of armed conflict. The question is, in fact, in which cases a State may be held accountable for acts committed by armed groups that do not necessarily respond systematically to its authority. One thinks of the case of civil wars, or the case of paramilitaries.
This extremely rich and well-documented work is therefore of obvious interest, opening up reflection on a highly topical subject and essential reading for all investment law practitioners confronted with issues that, unfortunately, are becoming increasingly common. It also makes an important contribution to the equally contemporary debate on ways to strengthen the effectiveness and enforceability of international law at a time when it is being brutally challenged by certain states.