Book Symposium Investment Law: The Interaction Between Investment Law And The Law Of Armed Conflict In The Interpretation Of Full Protection And Security Clauses

[Dr Gleider I. Hernandez is a Lecturer at Durham Law School]

I am grateful to the organisers of this symposium on the collection, edited by Dr Baetens, on the interaction of international investment law (‘IIL’) with other areas of public international law (‘PIL’). Broadly speaking, I identify as a ‘generalist’ international lawyer, one who is interested in the system as a whole and how its organs and agents grapple with emerging problems of global governance. As such, when I was approached in 2011 to consider and address the interaction between two specialised regimes within international law, I leapt at the opportunity to consider how the law of armed conflict, and specifically, international humanitarian law (jus in bello or ‘IHL’), a distinct legal regime that, in its modern form, has been developing through multilateral treaty practice for well over a century, would be considered within the sphere of international investment law, a relatively new area of international law that has blossomed in the last two decades, yet primarily through bilateral treaty practice and through a rich body of case law.

The results were very interesting. With abundant treaty practice in which bilateral investment treaties (BITs) embedded variously-termed clauses providing for protection and security in various forms, the interaction and possible conflict of norms between these two specialised regimes was inevitable. Indeed, factually speaking, a substantial portion of modern investment disputes have arisen precisely through the continued scourge of armed conflicts between and within States. As such, two questions needed to be considered: first, the manner through which public international law has addressed and considered the effects of armed conflicts on rights and obligations, and whether generalised, abstract rules and principles can be distilled; and secondly, whether practice in the area of investment law—specifically treaty practice in BITs and the interpretation of such treaties by specialised investment tribunals—could be said to be in harmony with the general international law framework.

Whatever definition one prefers of the term ‘armed conflict’ (whether it is derived from Common Article 2 of the Geneva Conventions, or that formulated by international courts and tribunals (e.g. the ICTY’s definition proffered in Tadić, which was endorsed in the ILC’s Articles on the Effects of Armed Conflict on Treaties, adopted after the chapter under discussion went to press), a few conclusions can be drawn about how public international law accommodates armed conflict. First, it seems relatively uncontested that jus in bello constitutes lex specialis, a distinct set of special rules that apply, clarify, update or modify general legal principles. To view the interaction of IHL with PIL through this prism is by definition integrationist: although when an armed conflict triggers the application of IHL as the special regime, superseding the general PIL regime, the latter rules remain in the background, providing interpretative direction and context to the former (as concluded the ILC in its Report on Fragmentation in 2006). This was the approach favoured by the ICJ in its Nuclear Weapons and Israeli Wall advisory opinions, which staunchly defended the continued applicability, albeit in modified form, of rules of general PIL. If rules of investment law were no more than rules of general PIL, a fortiori, the same process of reconciliation could take place when the application of IHL would be triggered.

But what if IIL itself constitutes lex specialis, departing from the general regime to establish a new set of obligations that supersede general PIL? In such situations, from the perspective of IIL at least, an apparent conflict between norms contained in a BIT and those of IHL should be resolved by the obligations contained in a BIT yielding, when in conflict, to those obligations of IHL, which provide a ‘floor’ for human rights protection in times of armed conflict.  The ICJ has on numerous occasions termed the body of IHL as containing ‘intransgressible’ norms, suggesting that these have transcended mere jus dispositivum. What is more, the widespread accession of States to the four Geneva Conventions and a range of multilateral treaty instruments providing for the protection of certain human rights and norms even during times of armed conflict suggests that these constitute customary international law norms that can only be derogated from with express, clear, and unequivocal terms.

Language of derogation, where the obligations of IHL are expressly declaimed, does not to my knowledge exist in any BIT, giving a first impression that the PIL technique of viewing IHL as lex specialis would apply similarly in the investment law context, with the prevalence of full protection and security clauses in their various guises being embodied in BITs. According to the terms of these, States provide safeguards so as to protect investments against the outbreak of physical violence. Whatever their wording, arbitral practice has been to interpret these clauses broadly the same, and has tended also to view them not as independent treaty standards, but in fact as a reference to no more, and no less, than the international minimum standards required under customary international law. The arbitral tribunals’ integrationist approach is marked, signalling a hesitation to depart from rules of international law. Moreover, it seems to apply both to physical violence committed by State organs (e.g. AAPL v Sri Lanka, AMT v Zaire, or Eureko v Poland) and to physical violence committed by non-State actors (Biwater Gauff v Tanzania, AMCO v Indonesia, Tecmed v Mexico, Noble Ventures v Romania). If taken as a coherent body of law, which is to be expected if IIL is to be viewed as a specialised regime and not merely a collection of arbitral cases, the case law suggests uniformly that the standard of diligence exercised by a State is not absolute, and that the situation of civil disorder is to be taken into account when assessing the level of diligence required. In fact, the standard of diligence itself is variable as to the intensity of the strife, the resources that can be diverted for the purpose of protection, and other similar factors. This is exactly how PIL accommodates IHL when situations of armed conflict arise: on a case-by-case basis, viewing IHL as the minimum standard from which States cannot deviate. Even in situations where respondent States have been found liable by investment tribunals (e.g. Wena Hotels v Egypt), the investment tribunal has concluded that the host State had not met an international minimum standard of due diligence, and not merely breached the relevant clause of the BIT. A similar approach seems to obtain in cases where investors claim breaches of the obligation to provide ‘legal certainty’.

In the final analysis, the profusion of BITs has not, to date, entailed a break between IIL and its roots in PIL with respect to the relevance and applicability of norms of armed conflict. By and large, the heritage of IIL in PIL is apparent, with investment tribunals drawing from the same underlying principles that govern PIL in their reasoning, and the underlying logic behind BITs seems to be to create treaty rights and obligations between States that give investors direct standing, and not to create some new normative order. There is no emerging systemic distinction in the realm of investment protection, and to date, no perceptible ‘disintegrative inclination’, as have suggested Bruno Simma and Ted Kill. If anything, for now the investment law regime suggests that the normative environment for BITs remains PIL, and the phenomenon of systemic integration suggests that, so far as the generalist PIL lawyer is concerned, there is as yet no real danger that IIL will transform itself into a fully self-contained regime and depart from its orbit.