KluwerLawOnline.com - Legal Issues of Economic Integration

Framing the Debate: Sanctions and International Investment Law at the Crossroads

Sun, 14 Dec 2025 00:01:06 GMT

Volume 52 Online ISSN 1566-6573

Jurisdiction over Claims for Expropriation Arising Out of USSR and First-Generation Chinese BITs: An Endless Debate?

Sun, 14 Dec 2025 00:01:06 GMT

The wave of cases emerging from the sanctions and counter-sanctions imposed in the wake of Russia’s full-scale invasion of Ukraine in 2022 is likely to bring back into the spotlight the longstanding issue of the jurisdiction of arbitral tribunals over claims for expropriation arising out of ISDS provisions that restrict access to arbitration only to disputes concerning the amount of compensation payable in case of expropriation. This article takes stock of the diverse case law developed so far on the issue – arguably one of the most controversial and divisive in investment law – and concludes that it remains far from settled, perhaps even more so than before.

Volume 52 Online ISSN 1566-6573

Sanctions and International Investment Law: Issues of Jurisdiction Ratione Personae

Sun, 14 Dec 2025 00:01:06 GMT

The Russia-Ukraine conflict has triggered an unprecedented wave of unilateral sanctions by Ukraine and its allies, significantly impacting businesses run by investors that are directly or indirectly affected by these measures. In response, investors are turning to international investment agreements (IIAs) to seek compensation for losses. This article examines the ratione personae issues that may arise in sanctions-based investment disputes, including whether holding the home state’s nationality alone is sufficient for protected investor status, or whether tribunals should look to the corporate claimant’s shareholders to determine its nationality. It also proposes treaty reforms that states can adopt to clarify and resolve the challenges posed by nationality requirements in the context of such disputes.

Volume 52 Online ISSN 1566-6573

The Impact of Economic Sanctions on the Fair and Equitable Treatment Standard in International Investment Arbitration

Sun, 14 Dec 2025 00:01:06 GMT

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.

Volume 52 Online ISSN 1566-6573

Sanction as Lawful Countermeasures in International Investment Law: A Primer

Sun, 14 Dec 2025 00:01:06 GMT

This paper examines the legal permissibility of a state using the doctrine of countermeasures as a defence against liability for destruction of foreign investor assets through the imposition of sanctions. Part I briefly surveys the origins and history of countermeasures, particularly in light of Articles for the Responsibility of States for Internationally Wrongful Acts (ARSIWA), before outlining their substantive and procedural requirements in current doctrine. Then, Part II examines several recurring questions within the doctrine of countermeasures. It explores whether third-party countermeasures are permissible within the context of erga omnes obligations, where all states have a shared interest in enforcement. It then addresses the unsettled issue of whether countermeasures may be raised as a defence against claims by private investors brought under bilateral investment treaties. Here, arbitral decisions, such as ADM v. Mexico, Corn Products v. Mexico, and Cargill v. Mexico, which were decided in the context of the North American Free Trade Agreement (NAFTA), illustrate a sharp divergence in opinion over whether investor rights are derivative of states, or independent in nature. Finally, consideration is given to the relationship between lex specialis and lex generalis, assessing whether and when specific treaty provisions can displace Customary International Law (CIL) on countermeasures. This paper aims to introduce, in brief, the ongoing tension between state sovereignty, collective enforcement of international norms, and investor protections, while underscoring the lack of consensus on the permissibility of unilateral third-party countermeasures.

Volume 52 Online ISSN 1566-6573

Damages (and Non-pecuniary Remedies) for Sanctions in Breach of International Investment Law

Sun, 14 Dec 2025 00:01:06 GMT

A number of high-profile arbitration proceedings have been initiated, challenging the legality of sanctions under international investment law. These include Mikhail Fridman’s USD fifteen billion claim against Luxembourg for the implementation against him of the sanctions regime adopted by the EU in response to the Russian invasion of Ukraine. This contribution will focus on the heretofore unexplored question of available remedies in such cases, particularly damages and their quantification. Three main questions will be addressed in turn: first that of the compensable harm for which compensation may be sought, second that of the potential relevance to the assessment of damages of public interest considerations, and third the possible availability of non-pecuniary relief. Through an examination of how these remedial matters are addressed in other jurisdictional settings and the principles of customary international law as generally interpreted and applied by past arbitral tribunals, I will argue that claims such as Mr Fridman’s should normally not lead to large sums of damages, be resolved primarily through non-pecuniary remedies, and ultimately may serve to reconsider some tendencies found in the arbitral case law that have misguidedly led to an inflation of ISDS awards.

Volume 52 Online ISSN 1566-6573

The Impact of Economic Sanctions on the Recognition and Enforcement of International Arbitration Awards

Sun, 14 Dec 2025 00:01:06 GMT

The recognition and enforcement stage may be the clearest example of interaction between international arbitration and economic sanctions. From a legal perspective, economic sanctions may lead to a domestic court’s refusal to recognize an award, most notably on the grounds of international public policy or, even, lack of jurisdiction. The refusal to recognize the award leads ipso jure to the refusal to enforce the award. However, economic sanctions can also lead to the refusal to enforce an international arbitration award irrespective of the recognition of the award by the relevant state. Economic sanctions targeting the award debtor or the award creditor in the country where enforcement is sought will in all likelihood bar enforcement, either because the provision of resources to the sanctioned award creditor is prohibited or because the assets of the sanctioned award debtor are frozen. Without aiming for comprehensiveness, this article considers various scenarios in which economic sanctions interact with the recognition and enforcement of arbitral awards.

Volume 52 Online ISSN 1566-6573

Execution of Arbitral Awards and Judgments Against Frozen or Immobilized Assets in Euroclear

Sun, 14 Dec 2025 00:01:06 GMT

The widely known and reported fact that approximately 300 billion EUR of Russian assets have been frozen in the EU’s Central Securities Depositories (‘CSD’), in particular in Euroclear and Clearstream, has prompted many questions as to whether creditors with a title can take their benefit from this temporally indefinite concentration of such vast amounts at Euroclear to obtain satisfaction of their claims. This seemingly straightforward question reveals more nuanced complexities of EU restrictive measures, the role and structure of financial intermediaries and CSD, as well as pressing questions of foreign sovereign immunity and EU public policy. The paper attempts to clearly dissect the various factors that drive the analysis and to take into account the EU’s geo-economic context and (public) policy interests.

Volume 52 Online ISSN 1566-6573