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Braun: International (Investment) Law in Times of Geoeconomic Realignment: On the Role of ‘Police Powers’ and ‘Countermeasures’ as Justifications to Sanctions-based Investment Claims
Tillmann Rudolf Braun (Federal Ministry for Economic Affairs and Energy, Germany; Humboldt Univ. of Berlin) has posted International (Investment) Law in Times of Geoeconomic Realignment: On the Role of ‘Police Powers’ and ‘Countermeasures’ as Justifications to Sanctions-based Investment Claims (in Economic Sanctions in International Commercial and Investment Arbitration, Tobias Ackermann & Sebastian Wuschka eds., forthcoming). Here's the abstract:
Alongside the States’ instruments of geoeconomic realignment used to enforce strategic foreign political and security interests, unilateral sanctions stand out as a particularly potent weapon. From the perspective of public international law, and in particular with regard to the legal position of investors protected by BITs, the arguments and justifications for such unilateral sanctions raise a number of thoroughly challenging questions—questions which, despite the sharp increase in the use of these sanctions in recent times, have not yet been sufficiently clarified.
The sanctioning State is very likely to argue that its sanction, despite its severity, qualifies as a genuine exercise of police powers. In that case there would therefore be no violation of the BIT at the primary treaty level. But does the doctrine of police powers confer, as it were, unlimited power and authority? Or should the sanction, alongside further conditions such as an ‘individualised nexus’ and others which derive from the principle of the rule of law be proportionate? Given that the principle of proportionality has so far only been recognised in selected areas of public international law, how can such a principle of proportionality be adequately justified and applied? If this prinicple were to apply, should it apply only relating to the expropriation clause, or should it apply to all the standards set out in a BIT? And finally: why do the outcomes of cases before the European Court of Justice often differ in this respect from those decided by investment tribunals?
Sanctions are usually a response to violations of international law by the sanctioned state. Could potential violations of a BIT standard be justified as a permissible countermeasure at the secondary level of customary international law? Can the countermeasures defence be raised (at all) against a non-State actor? And does this really depend on whether the investor's rights are qualified as individual direct rights or merely derivative rights? Could an investor rely on ILC Art. 50 (1)(b), which exempts fundamental human rights from countermeasures? Could it be argued a fortiori that, if Article 51 of the UN Charter permits under strict conditions even military support in favour of the state under attack, it must in principle also permit less intrusive, non-coercive measures, such as sanctions, which serve the same defensive and protective function?
And finally, what is arguably the most challenging question, as most sanctions are imposed by States that have not been directly injured, can these non-injured States justify their sanctions as ‘third-party’ or ‘collective’ countermeasures? Has a justification under customary international law emerged for such countermeasures? And if so, what would be the prerequisites for such permissible 'third-party' or ‘collective’ countermeasures, and what would be their consequences?
If the findings are correct, that (i) the doctrine of police powers imposes ever stricter conditions; that (ii) as regards the justification as collective countermeasures, there is likely to be a lack of opinio iuris for a corresponding universally accepted customary international law; and that, (iii) even the individual treaty defence, by way of an essential security interest exception, rarely prevails, then this effectively means: in a great many cases, sanctioning States face the risk of being held liable for breaches of a BIT – even though they are (often) acting through their (politically legitimised) sanctions in the service of ‘obligations erga omnes’. So, it appears that current public international law remains ‘under-calibrated’ for sanctions and, therefore, endangers the effectuation of general goals of public international law.
Against the background of this finding, what normative guiding principles should be drawn to ensure that public international law can continue to serve as a credible framework for the limitation of state power and the allocation of risk in a geo-economically fragmented world? Those are the questions the present contribution addresses.
