War and International Investment Law: Possible Breaches and Possible Defences for Economic Sanctions Against Russia

On 24 February 2022, the Russian Federation launched a full-scale invasion of Ukraine. At the time of writing, the fighting continues, with the frontlines constantly shifting, at the cost of several thousand lives, many of them civilians.

The aggression has triggered a wave of economic sanctions against Russia and Russian investors. Some of them were already in place following Russia's illegal annexation of the Crimean peninsula and the start of a military conflict in eastern Ukraine in 2014. This time, however, the implementation of such sanctions has been broader and more far-reaching.

These economic sanctions are diverse and range from sanctions against Russian sovereign debt and freezing of the Russian Central Bank's assets to technological and transportation sanctions. They also include restrictions against hundreds of Russian companies and thousands of Russian citizens. The imposed restrictions sparked recurrent debates on the legality of unilateral economic sanctions, their effectiveness, enforcement and circumvention practices. Besides these traditional concerns, a new issue that attracted significant attention is the possibility of using international courts and tribunals, or international arbitration, to challenge the legality of economic sanctions. Recently initiated investor-state disputes against Ukraine, Luxembourg, and Canada, later discussed in this article, illustrate this tendency.

In such a context, this article explores the potential role of international investment arbitration in providing Russian companies and individuals with a right to question economic sanctions' legality and seek redress and in allowing states that imposed such measures to defend their right to do so under international law.