Originally from The American Review of International Arbitration (ARIA)

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I.     INTRODUCTION

On September 30th, 2022, Russia unilaterally annexed four Ukrainian oblasts: Donetsk, Kherson, Luhansk, and Zaporizhzhia (the “four oblasts”). Two oblasts, Donetsk and Luhansk, were previously recognized as independent by Russia on the eve of its invasion of Ukrainian. The other two, the Kherson and Zaporizhzhia oblasts, were subjected to Russian military administrations after being occupied in the first weeks of the invasion. This paper will argue that this chain of events provides the jurisdictional hook for Ukrainian and other non-Russian investors to commence investor-State proceedings against Russia under its bilateral investment treaties (BITs). This conclusion is reached by analyzing the so-called Crimea cases, referring to the flurry of investor-State disputes that arose out of Russia’s 2014 annexation of Crimea, and by highlighting the differences between Crimea and the four oblasts from an investor-State perspective. 

Although investment tribunals must satisfy several rationae to assert jurisdiction, the biggest hurdle that claimants have to face in this context is the ratione loci. Specifically, ratione loci requires an investment to be made in the territory of the host State, Russia. This paper first sets out how the Crimea tribunals have resolved this issue and how these approaches have been received by domestic courts during set-aside proceedings. Next, the difficulties of applying the tribunals’ analyses to investments made in the four oblasts are highlighted. Finally, this paper concludes that tribunals could assert jurisdiction over disputes brought by both Ukrainian and non-Ukrainian claimants against Russia arising out of investments made in the four oblasts.