Investment law in times of war has gained greater significance, particularly over the last decade, due to the emergence of new armed conflicts and their coincidence with the era of foreign direct investment and investor-state arbitration. Accordingly, counsels and arbitrators found themselves in an ever-expanding geopolitical conflict in which investment arbitration rapidly gained geoeconomic importance. That makes the interplay between investment law and international humanitarian law (IHL) even more timely. In this sense, this short essay will examine two issues regarding this interplay: investment treaty obligations in times of occupation and protections against the expropriation of property during wartime.
Investment Treaty Obligations in Times of Occupation
The first issue pertains to the application of international investment agreement (IIA) rules in occupied territories. The obligations of occupying powers in occupied territories are governed by IHL rules. Accordingly, the 1907 Hague Convention sets out the definition of an occupied territory: “territory is considered occupied when it is actually placed under the authority of the hostile army.” [1] Generally, questions arising from the law of occupation and investment arbitration concern whether an occupying power is bound by the IIA obligations of the occupied State and whether it must comply with its own IIA obligations within occupied territories. Since arbitral or judicial practice on this question is limited, the issue is rather understudied, with most sources being scholarly writings.
In principle, since war does not terminate the application of treaties, the treaties to which the occupied state is a party, including IIAs, continue to apply during occupation. [2] Although the occupying power does not become a party to those treaties, it must respect and ensure their application in the occupied territory. [3] That, for sure, includes obligations from IIAs. This principle gives rise to two different interpretations. First, Ackermann suggests that, since the occupying power is not a party to the IIAs of the occupied state, its non-compliance with those IIAs does not constitute a breach of those agreements. [4] A second view argues that, since Article 43 of the Hague Convention [5] requires the occupying power to respect the laws in force in the occupied State, such non-compliance also breaches IIAs and, thus, the right to bring claims under the relevant dispute resolution provisions of the IIA. [6] This essay subscribes to the latter view, as contrary interpretations may result in unjust consequences for the investment laws of the occupied State.
For example, if the former view is accepted, a non-citizen of an occupied State cannot bring claims against the occupying power for damage to their investments in occupied territories under agreements of the occupied State. That is, of course, incompatible with the spirit of justice and international investment law. At the same time, it prevents investors from claiming their rights under agreements that they signed. If an occupying power should respect laws in force in the occupied State, it should be held responsible for the breaches of IIAs as well. An interpretation otherwise would be inconsistent with the protection and security of investments. As such, investors should be able to bring claims against occupying powers for breaches of the occupied State’s IIAs in occupied territories.
Protections Against the Expropriation of Property During Wartime
The protection of property under IHL is not as extensive as that of investment. The notion of investment potentially includes any economic activity, including the sales of goods and services. [7] Also, if there is no definition of investment in an agreement or convention at hand, arbitral tribunals tend to interpret “investment” broadly. [8] IHL, on the other hand, treats property as a tangible subject [9], excluding certain types of investment from its scope of protection. Geneva Conventions, for instance, do not mention property unless it is associated with a civilian object or military objective. It should be noted, however, that unlike most bilateral investment treaties, which interpret property as people’s homes and personal possessions, IHL protection is broader, including all tangible properties.
IHL protection prohibits the confiscation of private property in occupied territories. [10] It also prohibits such confiscation during times of international armed conflict, as the Ethiopia–Eritrea Claims Commission confirmed that, where a property seizure occurs during war, the obligation to provide full compensation continues to apply. [11] However, two issues are still problematic in IHL. First, there is no rule prohibiting confiscation in non-international armed conflicts; the matter is left to domestic jurisdictions. [12] Second, in naval warfare, prize [13] laws allow belligerents to capture property without paying compensation; instead, ownership is transferred, subject to the approval of the prize court. [14] By way of example, if an enemy merchant vessel carries neutral goods from several investors who are not combatants, and the belligerent state captures the vessel, it can confiscate the goods.
In investment arbitration, on the other hand, such claims are relatively rare. The prohibition of the confiscation of property in occupied territories is also prohibited in international investment law. [15] In addition, Mitchell v. Congo took the issue of indirect expropriation even further by approaching it broadly. The claimant’s law firm had its premises searched and put under seal; two of its documents were seized, and two of its lawyers were imprisoned. Although these measures were temporary and later reversed by a court, the tribunal found that they amounted to an expropriation, as the claimant definitively and totally lost some of its clients after the incident. [16]
The broad interpretation of property in investment law provides broader protection for individuals, including investors. Thus, this essay suggests that instead of the old-fashioned approach of lex specialis, international courts and tribunals should exercise what Anne Peters called “systemic harmonization” [17] in which both branches may be applied to the case at hand whenever possible. Thereby, investors can benefit from investment protection without impairing the rules and principles of IHL.
Conclusion
In conclusion, the interplay between investment law and IHL creates both tensions and opportunities for coherence in times of armed conflict. While IHL provides essential safeguards for property and governance during occupation, its protections remain narrower and sometimes incomplete compared to investment law. By contrast, investment law offers broader and more flexible mechanisms to protect investors, particularly against expropriation. Bridging these regimes through systemic harmonization prevents them from undermining one another. Such an approach promotes legal consistency, strengthens investor protection, and upholds fundamental humanitarian principles, ultimately contributing to a more balanced and effective international legal framework in conflict situations.
[1] 1907 Convention (IV) respecting the Laws and Customs of War on Land and its annex: Regulations concerning the Laws and Customs of War on Land, Article 42.
[2] Tobias Ackermann, ‘Investments under Occupation: The Application of Investment Treaties to Occupied Territory’ in Katia Fach Gómez, Anastasios Gourgourinis and Catharine Titi (eds.), International Investment Law and the Law of Armed Conflict (Springer 2019) 69.
[3] Katharina Wende, ‘The Application of Bilateral Investment Treaties in Annexed Territories: Whose BITs are Applicable in Crimea after its Annexation?’ in Jure Vidmar and Ruth Bonnevalle-Kok (eds.), Hague Yearbook of International Law (Brill 2016) 166.
[4] Ackermann (n 2) 77.
[5] Article 43 is as follows: “The authority of the legitimate power having in fact passed into the hands of the occupant, the latter shall take all the measures in his power to restore, and ensure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country.”
[6] Ofilio Mayorga, ‘Occupants, beware of BITs: applicability of investment treaties to occupied territories’ (2016) 19 PYIL 136, 142; Helin Laufer, ‘Investment arbitration and armed conflict—international investment law asks; international humanitarian law answers’ (2025) 41 Arbitration International 819, 839.
[7] See. M Waibel, ‘Subject Matter Jurisdiction: The Notion of Investment’ (2021) 19 ICSID Rep 25.
[8] See. e.g. Ambiente Ufficio S.p.A. and Others v. Argentine Republic, ICSID Case No. ARB/08/9, Decision on Jurisdiction and Admissibility (2013), para. 454.
[9] Kathryn Greenman, ‘Of War and International Investment Law’ (2024) 73 International and Comparative Law Quarterly 579, 594.
[10] 1907 Hague Convention, Article 46.
[11] Ethiopia–Eritrea Claims Commission Partial Award: Loss of Property in Ethiopia Owned by Non-Residents – Eritrea’s Claim 24 (2005) 26 RIAA 429, para 24.
[12] Greenman (n 9) 596.
[13] Prize is defined as “enemy merchant vessels, aircraft, or goods that can be captured.” See. Newport Manual on the Law of Naval Warfare, Section 9.1. In this sense, belligerents can capture enemy vessels carrying neutral goods and neutral vessels carrying enemy goods.
[14] See. Andrew Clapham, War (Oxford University Press 2021) 339-350.
[15] See. inter alia: Stabil and others v Russia, PCA Case No 2015-35, Award (26 November 2018); Oschadbank v Russia, PCA Case No 2016-14, Award (26 November 2018).
[16] Mitchell v Democratic Republic of Congo, ICSID Case No ARB/99/7, Decision on the Application for Annulment of the Award (1 November 2006) paras. 65, 71-72.
[17] Anne Peters, ‘The Refinement of International Law: From Fragmentation to Regime Interaction and Politicization’ (2017) 15 International Journal of Constitutional Law 671.
