This is a guest post from Csongor István Nagy, Professor of Law at the University of Galway, Ireland, and at the University of Szeged, Hungary, and research professor at the HUN-REN Center for Social Sciences, Hungary
At first it may raise eyebrows. But think it over! Why couldn’t the Russia-Ukraine BIT (RUBIT) be used by Ukrainians to claim compensation for war damage in certain cases? And why couldn’t a part of the frozen Russian assets be used to enforce these investment awards? In my paper forthcoming in the University of Pennsylvania Journal of International Law I argue that both are possible. The pre-print version is available at SSRN.
The key issue of applicability is territorial scope. In the Crimea cases, arbitral tribunals consistently applied the RUBIT to Russian measures and treated Crimea (strictly for the purpose of the BIT!) as the territory of Russia on account of de facto control and legal incorporation. This is a question of treaty interpretation (one may say a contractual dispute and not a quiet title action!) and the foregoing principles should be valid outside Crimea in cases where Russia occupies a territory and/or unilaterally incorporates (annexes) it. And if these territories can be treated as a territory for which Russia bears responsibility under international law, Ukrainians may be able rely on this responsibility.
The Crimea arbitral awards’ notion of territorial scope is not unprecedented in international law at all. For instance, in Loizidou v. Turkey and in Cyprus v Turkey, the European Court of Human Rights applied the European Convention on Human Rights to Turkey by reason of its occupation of Northern Cyprus. In Al-Skeini v. United Kingdom, it found the Convention applicable to the UK’s operations in Iraq on account of the occupation of the country.
Legal title, effective control (occupation) and unilateral claim (incorporation) generate the following matrix of scenarios for the territorial applicability of RUBIT.
- Ukrainian territory controlled by Ukraine and neither claimed, nor controlled by Russia;
- Ukrainian territory controlled by Ukraine and claimed by Russia (those parts of the Luhansk, Donetsk, Kherson, and Zaporizhzhia oblasts that are not occupied by Russia);
- Line of contact (line of battle) on Ukrainian territory claimed by Russia (the line of contact in the above four oblasts);
- Line of contact on Ukrainian territory not claimed by Russia (the line of contact during the offensive towards Kyiv);
- Ukrainian territory controlled but not claimed by Russia (e.g. the areas captured during the offensive towards Kyiv, such as Bucha);
- Ukrainian territory controlled and claimed by Russia (e.g. Crimea, occupied parts of the Luhansk, Donetsk, Kherson, and Zaporizhzhia oblasts).
The applicability of the RUBIT is not an academic question. Russian assets of enormous value were frozen throughout the world. It is highly dubious if these can be used for the purpose of war reparations under international law. Nonetheless, a good part of these assets can be used to enforce (investment) arbitral award. Although “non-commercial” assets, such as the property of diplomatic missions, military assets, cultural property, items displayed at an exhibition and, most importantly, the property of the central bank are immune from enforcement due to sovereign immunity, sovereign direct investments, airplanes, ships and the assets of persons attributable to the state can be used to satisfy investment awards.
Although the RUBIT was recently terminated by Ukraine, it remains in force until January 27, 2025, and has a “continuing effects” clause in Article 14(3), which sustains investment claims for ten years after termination.
