Originally from The American Review of International Arbitration (ARIA)

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ABSTRACT

The Russia-Ukraine conflict has raised interesting questions for International Investment Law protections in disputed territories. Ukraine, in an attempt to drain Russian resources, has encouraged its investors to initiate investment arbitration claims against Russia under the 1998 Russia-Ukraine Bilateral Investment Treaty (‘BIT’). The change in the territorial landscape of Ukraine with the Russian annexation of Crimea provided a foundation for Ukrainian investors to raise BIT claims against Russia. The treatment of Ukrainian investments made in the disputed territories of Crimea, Donbas and Luhansk is uncertain as questions arise as to whether these investments are covered under the BITs while these territories are under de facto Russian control. Crucially, the status of these territories under Public International Law (‘PIL’) will determine whether Ukraine’s ‘Lawfare’ strategy against Russia will be successful.

Significantly, in over ten investment arbitration claims raised against Russia in the context of Crimean-based investments, arbitral tribunals have proceeded on the merits of the disputes without Russian participation. A primary consideration is whether the adjudication of such claims over the territories of Crimea, Donbas and Luhansk by arbitral tribunals legitimizes or otherwise recognizes Russia’s territorial claims in the region and the autonomous sovereignty of these territories. This is compounded by Ukraine’s support to their investors and its participation in the arbitral proceedings as a non-disputing party, as it contradicts Ukraine’s stance of condemning Russian claims of sovereignty over these territories