The last two decades have witnessed an exponential increase in arbitral disputes between investors and states under international investment treaties. UNCTAD reports 357 known registered cases by the end of 2009; of those, 202 cases—or 57 percent—were initiated after 2004. Independent investment tribunals now regularly render binding decisions as to whether states have violated investment protection standards guaranteed under various bilateral and multilateral investment treaties—a phenomenon that has turned international investment law into one of the most dynamic fields of public international law.
However, while attention is increasingly focused on the investment protection standards enshrined in international investment treaties, relatively little discussion has been lent to the interaction between international investment law and other sub-fields of international law. But rather than operating in a vacuum, international investment law has important implications for, and is impacted by, other rules of international law, including human rights law, international trade law, and sources of regional law, such as the law of the European Union.
This brief essay zooms in on one interactive relationship that is particularly timely given the present unrest in parts of the Middle East and North Africa: foreign investment law and the law applied to armed conflict. No definitive conclusions will be put forward; rather, this article is rather intended to set out areas for further discussion.
The ‘full protection and security’ standard
There is no obvious or express link between international investment law and the law which applies in situations of armed conflict or hostilities. However, rules on protection of foreign investors are not automatically suspended as soon as an armed conflict erupts; on the contrary, bilateral investment treaties (BITs) often contain clauses which address precisely such situations—often termed ‘full protection and security’ or ‘constant protection and security’ clauses. These clauses have been applied and interpreted by arbitral tribunals. In Amco Asia v. the Republic of Indonesia, the investor’s local contracting partner (PT Wisma) took over the investment project (a hotel) by force with the help of the Indonesian armed forces.  The tribunal decided that although the forcible takeover was not attributable to Indonesia, it was still in breach of its international obligations because it failed to protect the investor against such a takeover by Indonesian citizens. Also in AMT v. Zaire, the tribunal held that Zaire breached its obligations by not preventing the looting of the investment by the armed forces.
Notably, the interpretation of full protection and security clauses has been extended beyond physical security to guarantee a certain degree of legal security. Examples include the CME v Czech Republic and Lauder v The Czech Republic cases, where both panels assessed the same facts (termination of a contract), reached a different conclusion but agreed that the full protection and security standard encompasses the protection of legal rights including access to a judicial system. However, this standard merely prescribes due diligence and does not impose absolute liability. Moreover, during armed conflict, foreign investors could be also protected under other investment treaty obligations, for example expropriation or national treatment— depending on the formulation of the BIT in question.
Conflict of norms: Does investor protection or the law of armed conflict prevail?
International investment law contains a tension between its existence as a primarily treaty-based lex specialis and its claim to being a projection of principles of general international law. It is indeed consistent with the inner logic of international investment law that only those rules of investment protection which must yield to the law of armed conflict should be expected to yield. Yet, in an international legal order where even certain fundamental human rights become subject to derogation in situations of armed conflict, certain questions inevitably must be raised. It is true that international investment law transcends its origins as a primarily self-contained regime; and indeed, there are areas in which investment law has borrowed extensively by analogy from international humanitarian law, such as the protection of aliens. However, the effects of armed conflict on general international law (and, in particular, the law of treaties) remain substantial, and there is extensive practice outside the realm of investment law which explains the effect of humanitarian law on general international law. Thus, any claim of the continued application of investment law in situations where international humanitarian law supersedes general international law must be scrutinized with a certain dose of skepticism.
Exceptional circumstances: Necessity and force majeure
Under the international rules on State responsibility, States can justify ‘internationally wrongful conduct’ via reliance on circumstances which preclude such wrongfulness, most notably ‘necessity’ and force majeure. These general international law justifications also apply in the context of international investment law. In AAPL v. Sri Lanka, military necessity in particular was assessed by the tribunal when examining acts of the Sri Lankan security forces executing a counter-insurgency operation during which the investment (a prawn farm) was destroyed. Nevertheless, the tribunal held that the force deployed by the armed forces had been excessive and found Sri Lanka responsible.
Necessity has also been invoked in cases involving economic crises such as CMS v. Argentina, Enron v. Argentina, LG&E v. Argentina and Sempra v. Argentina. However, tribunals have been very reluctant to accept such justification—with the exception of the LG&E tribunal (annulment procedure still pending). Finally, even if a tribunal accepts the justification of ‘necessity’ or force majeure, this does not necessarily release the respondent State from payment of compensation for material loss or preclude wrongfulness for breach of peremptory norms of general international law, whether the conduct is carried out by the outgoing government or by the insurrectional movement which forms the new government, in accordance with the principle of continuity of the State.
No rights without obligations: When investors are involved in armed conflict
Focusing only on investor protection during armed conflict highlights only part of the picture; critically, the interests of the civil communities affected by armed conflict must also be protected. These communities need protection not only from the immediate effects of the armed conflict, but also from the persons or entities pulling the strings, as the vast majority of modern armed conflicts, if not based on, at least are closely connected with economic interests of the belligerent parties. Business corporations which maintain trade relations with partner groups or entities that are at the same time engaged in (internal) armed conflicts may become indirectly involved in the commission of serious crimes. Through the provision of financial resources to regional armed groups for example, the exploitation of natural resources in conflict zones, international business actors may even incur criminal liability if they know that their resources are also used to provide these armed groups with weapons subsequently used against civilians. The crimes committed may amount to international crimes such as war crimes, crimes against humanity or even genocide. In such (extreme) cases, corporate actors may even come under scrutiny by the International Criminal Court for their participatory role in such crimes, if the individual criminal liability of the person(s) in control of such financial transactions on behalf of a corporate actor can be established.
However unlikely it may seem prima facie—the rules of international investment law and the law of armed conflict do interact in practice. This has recently become painfully clear for foreign investors in Libya and elsewhere in North Africa and the Middle East, where people and property (particularly of foreign origin) are facing violence and destruction. That raises the question: could foreign investors in Libya challenge the Libyan government (the present or the future one) for loss of profits or property due to a violation of ‘full protection and security’? Libya currently has only 13 BITs in force (6 of which are with EU members) but other countries going through a period of unrest (to say the least) may have many more—Egypt for example is a party to more than 70 BITs. The good news from an investor perspective, of course, is that these treaties remain valid in spite of radical changes of government. So international obligations continue and the insurrectional government which subsequently becomes the legitimate government can be held responsible for violations that occured during the insurrection. The practical implications of this, however, are unclear.
This article has highlighted one example of how developments in ‘other fields of international law’ influence the development of international investment law, but also vice versa, developments in investment law impact on the evolution of other fields of international law. That raises the need for scrutiny of how concepts, principles and rules developed in the context of other sub-fields could (or should) inform the content of investment law. Moreover, certain solutions conceived for resolving problems in these other settings may provide examples for addressing current problems in the field of investment law. This can subsequently serve as an aid to determine whether international investment law is open to developments in other sub-fields of international law, or, whether it is evolving into the direction of a self-contained regime.*
Author: Dr. Freya Baetens isAssistant Professor of Public International Law, Leiden University. This article includes topics that have been suggested by the members of the panel on ‘International Investment and Armed Conflict’ (Ms. Meg Kinnear, Dr. Gleider Hernandez, Judge (Ret.) Koorosh Ameli and Dr. Philipp Ambach) at the conference on “The Interaction of International Investment Law with Other Fields of Public International Law” (Leiden, 8-9 April 2011); see below for more information about the conference. The issues addressed in this article, however, are those of this author alone and are not necessarily shared by all panel members.
*Those who are interested in further discussing these issues, are invited to participate in the conference on “The Interaction of International Investment Law with Other Fields of Public International Law” which will take place on8 and 9 April 2011 at Leiden University, The Netherlands. The conference will bring together experts from the field of international investment law and renowned scholars and practitioners from other sub-fields of international law. For the draft programme and online registration, please visit http://www.law.leiden.edu/research/news/conference-iil.html
For enquiries, please contact Dr. Freya Baetens at email@example.com
 “Latest Issues in Investor-State Dispute Settlement”, IIA Issues Note No. 1 (2010), UNCTAD: http://www.unctad.org/en/docs/webdiaeia20103_en.pdf
 For an extensive analysis, see C. Schreuer, ‘Full Protection and Security’,J.IDS (2010) 1–17.
 Amco Asia Corporation and Others v The Republic of Indonesia, Award, 20 November 1984, 1 ICSID Rep 413; see also Rumeli v Kazakhstan, Award, 29 July 2008; Saluka Investments BV (The Netherlands) v The Czech Republic, Partial Award, 17 March 2006; Eastern Sugar v Czech Republic, Partial Award, 27 March 2007.
 AMT v Zaire, Award, 21 February 1997, 5 ICSID Rep 11.
 CME v The Czech Republic, Partial Award, 13 September 2001, 9 ICSID Rep 121; Ronald S. Lauder v The Czech Republic, Award, 3 September 2001, 9 ICSID Rep 66.
 AAPL v Sri Lanka, Award, 21 June 1990, 4 ICSID Rep 246.
 CMS Gas Transmission Company v Argentina, Award, 12 May 2005; Enron Corporation and Ponderosa Assets, LP v Argentina, Award, 22 May 2007; LG&E Energy Corp and ors v Argentina, Decision on Liability, 3 October 2006; Sempra v Argentina, Award, 28 September 2007.