Originally from The American Review of International Arbitration (ARIA)

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Russian aggression in Ukraine has cost domestic and international companies operating in Ukraine billions of dollars, which they now want to recover from Russia.

One legal avenue for recovery is to initiate an investment treaty arbitration against Russia. The interest to use this option is partially explained through the recent successful experience of several Ukrainian investors in the so-called “Crimean arbitrations.” So far, the arbitral tribunals in those cases have confirmed their jurisdiction under the Russia-Ukraine bilateral investment treaty (BIT) and have rendered awards in favor of the investors, ordering Russia to pay damages. The most interesting issue in those cases has concerned the notion of “territory” under the BIT in light of the illegal annexation of Crimea by Russia in 2014. The drafters of the BIT hardly could have imagined its application in a case where the control over some territories changed between the contracting parties. However, this has not stopped the arbitral tribunals in the Crimean arbitrations from interpreting the BIT’s provisions about “territory” extensively and concluding that Russia is liable for the expropriation it committed in Crimea since 2014. In essence, those cases have opened the door to bringing claims against a state that has occupied and exercised control, albeit illegally, over a certain territory of another state.

Unfortunately, in the first months of the war, Russia occupied certain Ukrainian territories, including in the Kyiv, Chernyhiv, Symy, Kharkiv, Kherson, Zaporizhzhia, Donetsk and Luhansk regions. However, these occupations differ from the situation in Crimea in 2014 and pose even more challenging questions regarding the BIT’s application. Most of these questions await clear answers and it is important to start discussing them to find a solution.