This article examines
the interplay between economic sanctions and the fair and equitable treatment
(FET) standard under international investment agreements (IIAs). Sanctions,
whether unilateral or multilateral, can disrupt the stability and
predictability expected by foreign investors, raising claims of FET breaches. Key
issues include violations of due process, frustration of legitimate
expectations, and discriminatory treatment. The article explores how sanctions,
such as Russia’s countersanctions or secondary sanctions impacting third-party
investors, may interfere with investors’ rights. It also highlights notable
cases, including Fridman v. Luxembourg, Kadi v. EU, Dayyani v. South Korea, and
Stabil LLC v. Russia, which illustrate the challenges sanctions pose to
procedural fairness and investment protections. Additionally, the article
evaluates state defences such as nonprecluded measures (NPM), countermeasures,
and force majeure, and their applicability in sanctions-related disputes. As
sanctions regimes evolve, the article underscores the need for arbitral tribunals
to balance investor protections with state sovereignty and legitimate policy
objectives.