5 - Armed Conflict Clauses

Summary

Chapter 5 commences the book’s analysis of the operation of the most important investment treaty standards in armed conflict. It focuses on so-called war or armed conflict clauses. These provisions, present in many investment agreements, establish state obligations vis-à-vis investors who have suffered losses during armed conflict and other emergencies. Considering recent arbitral practice in the context of the so-called Arab Spring, the chapter gives guidance on how to understand these understudied clauses, their specific elements as well as their systematic function. While ‘basic’ armed conflict clauses establish a duty of non-discrimination in case the host state compensates other investors for losses suffered, ‘extended’ clauses give a standalone right to claim compensation for certain losses. These clauses convey such a right, among others, in case of requisitioning or unnecessary destruction at the hands of the state’s authorities or armed forces. The chapter shows how the general rules of attribution as well as the rules of international humanitarian law should crucially inform the application of these extended armed conflict clauses.