Requiem for Crimea: Why Tribunals Should Have Declined Jurisdiction over the Claims of Ukrainian Investors against Russian under the Ukraine–Russia BIT

Requiem for Crimea: Why Tribunals Should Have Declined Jurisdiction over the Claims of Ukrainian... ABSTRACT This article examines claims filed by Ukrainian investors against Russia under the Ukraine–Russia BIT alleging violations committed in Crimea after its annexation by Russia in 2014. Six tribunals have recently rendered awards concluding that they have jurisdiction over these disputes. I will argue that the only logical way for them to come to this conclusion is to consider that Crimea is now part of Russia for the application of the BIT. Yet, Crimea is still part of Ukraine under international because the annexation was in violation of the jus cogens prohibition of the use of force. Tribunals should therefore have declined their jurisdiction over these claims. Their decisions have certainly been influenced by the unprecedented context of these proceedings, including Ukraine’s intervention recognizing the effectiveness of the occupation. Yet, such decisions are giving legal effect to Crimea’s change of status contrary to the non-recognition obligation under international law. 1. INTRODUCTION Until recently, investment arbitration lawyers and scholars did not pay much attention to the question of the interaction between the different fields of State succession and international investment law. To the best of the present author’s knowledge, the first article to fully address the specific question of State succession to BITs was the one published in 2015 by myself.1 The question of State succession to BITs has since gained some attention by scholars.2 The present author has recently published a book on the topic.3 In fact, the issue has been featured centre stage in an increasing number of recent awards. Thus, in the Sanum v Laos case, the Tribunal addressed in its 2013 award, the controversial question of whether the China–Laos BIT extended to Macao after the cession of territory in 1999.4 The award was later set aside by a judgment of the High Court of Singapore in 2015,5 which was subsequently overturned by the Singapore Court of Appeal in its 2016 judgment (which held that the BIT does apply to Macao and that the Tribunal had jurisdiction over the claim brought by Sanum).6 Since then, many other awards have examined complex questions of State succession. For instance, the WWM v Kazakhstan Tribunal held in its (still confidential) 2015 award that the 1989 Canada–USSR BIT was binding on Kazakhstan.7 At the time of writing my book (May 2017), issues of State succession had arisen in no less than 46 publicly known BIT arbitration cases.8 This article examines a number of arbitration claims which have been recently filed by Ukrainian investors against Russia under the Ukraine–Russia BIT, alleging violations committed in Crimea after its annexation by Russia in 2014. Six tribunals have recently rendered awards on jurisdiction in these cases. Although the awards remain confidential, the limited information available about them indicates that tribunals have concluded they had jurisdiction over these claims. I will argue in this article that the only logical way for the tribunals to conclude that they have jurisdiction over these claims under the Ukraine–Russia BIT is to consider that the territory of Crimea is now part of Russia. This is because the BIT only applies to Ukrainian investors making an investment in Russia. The illegal annexation of Crimea by Russia was in violation of the jus cogens prohibition of the use of force (and the territorial integrity of Ukraine). Under international law, Crimea is still part of the territory of Ukraine. Russia is the occupying power in that territory. For these basic reasons, tribunals should have declined their jurisdiction over these claims. Yet, it cannot be denied that these tribunals were faced with a rather unique and in many ways unprecedented context. Thus, none of the parties involved in the proceedings (Russia did not participate) formally contested the application of the Ukraine-Russia BIT to the territory of Crimea. Ukraine even took the very surprising step of intervening in these proceedings to argue in favour of recognizing the effectiveness of the occupation and the obligation for Russia to protect Ukrainian investors in that territory after the annexation. There is no doubt that these extraordinary circumstances influenced the findings of these tribunals. This has apparently allowed them to avoid examining the fundamental question of the legality of the annexation of Crimea. In my view, by holding jurisdiction over these claims, they are (at least implicitly) considering that Crimea is part of Russia for the purpose of the application of the BIT. In doing so, tribunals are giving a legal effect to Crimea’s change of status. This is contrary to the non-recognition obligation of acquisition of territories by the use of force in violation of a jus cogens norm. While this non-recognition obligation is generally considered to apply to States, I will argue in this article that there are good reasons to support extending this duty to arbitral tribunals. After having briefly examined in Section 2 the sequence of events that led to the annexation of the territory of Crimea, Section 3 will provide an overview of relevant international law issues arising from this event. Some of the questions explored include the consequences of the illegal use of force by Russia in violation of a jus cogens norm, the obligation for States not to recognize the annexation or to give any effect to Crimea’s change of status, and whether the provisions of the 1978 Vienna Convention apply to cases of illegal annexation. This article will specifically focus on the impact of the annexation on investment treaties. One controversial issue is whether the BITs to which Ukraine was a party prior to the events should continue to apply to the territory of Crimea after the annexation or whether Russia’s BITs should now find application. Another very controversial question examined in this article is the fate of the Ukraine–Russia BIT and whether it now applies to the territory of Crimea.9 Finally, Section 4 will analyse the claims filed by Ukrainian investors against Russia under the Ukraine–Russia BIT. 2. OUTLINE OF THE SEQUENCE OF EVENTS In 1783, Crimea was annexed by the Russian Empire. Following the Russian Revolution of 1917, Crimea became an autonomous republic within the Russian Soviet Federative Socialist Republic in the USSR. Crimea is populated by a Russian-speaking majority.10 In 1954, the territory of Crimea was transferred to the Ukrainian Soviet Socialist Republic. When Ukraine became an independent State in 1991, Crimea was part of its territory. Ukraine’s territorial integrity, including the territory of Crimea, was recognized by Russia after its independence.11 The February 2014 revolution, which ousted Ukrainian President Viktor Yanukovych, sparked a political crisis in Crimea. By the end of the month, elements of Russian troops (although this point is contested by Russia) had seized official buildings and were occupying part of the territory.12 However, it is indisputable that after the referendum Russian troops openly took control of Crimea, seized Ukrainian military equipment and forced Ukrainian troops to surrender.13 On 6 March, the local legislative organ of Crimea, the Supreme Council, adopted a decree on the All Crimean Referendum presenting two options to the population, including the ‘reunification’ of Crimea with the Russian Federation.14 In the meantime, a ‘Declaration of independence of the Republic of Crimea’ was adopted on 11 March 2014. The Ukrainian Ministry of Foreign Affairs issued a statement the same day stating that the declaration was ‘unconstitutional, illegal and having no legal effect’15 which was followed by an order by the Acting President of Ukraine to the same effect. The referendum took place on 16 March. The overwhelming majority of participating voters (96.77%) voted in favour of the ‘reunification’ with Russia. Many commentators have raised serious doubt about the legitimacy of the referendum and the accuracy of the result given the fact that it took place in a context of an armed emergency with Russian troops on the ground.16 There is little doubt that the referendum and the declaration of independence were illegal acts under Ukrainian law which uphold the principle of territorial integrity and the inviolability of borders.17 The referendum was deemed unconstitutional by the Constitutional Court of Ukraine.18 The same position was adopted, inter alia, by the Venice Commission of the Council of Europe as well as by the Chairman of the OSCE,19 the G-7,20 and in a joint statement issued by the President of the European Commission and the President of the European Council.21 It should be added (as further examined below) that the United Nations General Assembly (GA) Resolution 68/262 also held that the referendum was invalid.22 On 17 March, the Supreme Council of Crimea declared the formal independence of the Republic of Crimea.23 It should be noted that the actual wording of the resolution is quite illogical. While correctly stating that the referendum ‘showed that the people of the Crimea want[ed] to join Russia, and consequently, separate from Ukraine’, it also added that the people wanted to ‘create an independent State’ and decided ‘to proclaim Crimea an independent sovereign State’. Yet, voters were not asked any question on independence per se, but only on ‘reunification’.24 In any event, the very same day, the Parliament of Crimea submitted a formal request to the Russian government for Crimea to be integrated into Russia.25 On 17 March, Russia officially recognized the Republic of Crimea ‘as a sovereign and independent State’ by an executive order signed by the President.26 The same day, President Putin also notified the Russian parliament27 of the proposal made by Crimea to become part of Russia. On 18 March, Russia’s President and Crimean authorities signed an ‘Agreement’ on the accession of Crimea to Russia.28 The annexation was formalized under Russian law in the following days.29 In sum, the sequence of events can be summarized as follows: After a referendum, Crimea declared its independence and seceded from Ukraine; The day after, Russia recognized the Republic of Crimea as a ‘sovereign and independent State’ by decree; One day later, the Republic of Crimea and Russia signed a Treaty on Accession of Crimea to the Russian Federation; Three days later, the annexation of Crimea was formalized by a Russian law. 3. INTERNATIONAL LAW ISSUES ARISING FROM THE CRISIS IN CRIMEA A. What happened in Crimea is not a ‘transfer’ of territory, but an illegal annexation The sequence of events seems to suggest (at first) that what took place in Crimea is a case of ‘secession’, whereby a new State was established. If it were to be the case, as rightly noted by one writer, ‘les habitants de la Crimée resteront dans les annales comme ayant procédé à la sécession effective la plus rapide de l'histoire moderne’,30 Not only would that secession be the quickest in history, but it would also be the shortest. This is because ‘secession’ was very quickly followed by the integration of one ‘State’ (Crimea) into an already existing State (Russia). Yet, the fact that all these events took place within only a couple of days clearly suggests that this is not a case of secession where the newly independent State, subsequently freely ‘decided’ to be integrated with another existing State. If one looks at the events with a rather limited measure of ‘distance’ (in fact, merely one week would suffice in that case …), the most realistic view is to consider the Crimean crisis as a ‘transfer of territory’. Thus, part of the Ukraine territory was ‘transferred’ (without its consent) to Russia. Yet, the Crimean crisis cannot be considered as a ‘normal’ case of ‘transfer of territory’. This is because the ‘transfer’ was preceded by an armed intervention by Russian forces in the territory of Crimea (and also in other parts of Eastern Ukraine). It is the use of force by Russia which led to a violation of the territorial integrity of Ukraine, and ultimately resulted in the annexation of the territory of Crimea by Russia.31 There exists a general prohibition of the use of force in international relations,32 which is now largely considered as a jus cogens norm.33 The annexation of a territory by the use of force is consequently considered as illegal.34 In sum, the annexation of Crimea is illegal under international law.35 B. States have the obligation not to recognize the annexation or to give any effect to Crimea’s change of status States have an obligation not to recognize new situations arising from an illegal act of annexation.36 This obligation is found in the 1974 GA Resolution 3314 (XXIX) on the definition of aggression,37 and at Article 41 of the ILC Articles on State responsibility.38 The Security Council has affirmed such an obligation not to recognize on many occasions.39 It is now well-established (by the ICJ,40 the ILC41 and by many scholars42) that this non-recognition obligation, in the context of violations of jus cogens norms, is a rule of customary international law. How do these principles apply to the case of Crimea?43 As put by one writer, ‘the process in which Crimea was integrated into Russia relied on the use of force by Russian troops and therefore gives rise to an obligation not to recognize Crimea’s accession to Russia’.44 Many States have declared the annexation of Crimea as an illegal act and have consequently refused to recognize it.45 This is also the position adopted by the European Union,46 and that of several international organizations (NATO,47 OSCE,48 Council of Europe49). A number of States have put in place sanctions against Russia.50 Only a small number of States have recognized Crimea’s accession to Russia.51 The GA’s Resolution 68/262, adopted on 27 March 2014 (with 100 votes in favour, 11 against and 58 abstentions), affirmed the Assembly’s commitment to the territorial integrity of Ukraine and directed States ‘not to recognize any alteration of the status of [the] autonomous Republic of Crimea and the city of Sevastopol on the basis of referendum’.52 The Resolution also called all States ‘to refrain from any action or dealing that might be interpreted as recognizing any such altered status’. The Resolution has been considered as a ‘collective application of the rule of non-recognition’.53 A similar resolution was blocked by a Russian veto at the Security Council.54 In any event, it is important to note that any determination by the Security Council of the illegality of an annexation is not essential for the non-recognition obligation to arise.55 The obligation not to recognize exists for all States notwithstanding any prior determination by the Security Council or any other United Nations (UN) body. The non-recognition obligation arises from the unlawful character of the annexation. C. Do BITs signed by Ukraine continue to apply in Crimea? Article 15 of the 1978 Vienna Convention on Succession of States to Treaties (VCST) provides for the application of the moving treaty frontiers (MTF) rule in the context of cession and transfer of territory.56 Under that rule, when a territory of a State (State A) becomes (after the date of succession) part of the territory of another one (State B), the change of sovereignty over that territory has two effects: (i) the treaties of State B become applicable to the territory, and (ii) the treaties of State A cease to be applicable to that territory.57 The application of this principle to the case of Crimea would result in two consequences: the treaties of the predecessor State (Ukraine) would cease to be in force from the date of the annexation on the territory of Crimea, and those of the successor State (Russia) would come into force with respect to that territory from that date. In other words, if the MTF rule was applied, the BITs entered into by Russia with other States apply in Crimea. Ukrainian BITs would simply no longer apply to this territory. Importantly, Article 6 of the Vienna Convention indicates that its provisions ‘apply only to the effects of a succession of States occurring in conformity with international law and, in particular, the principles of international law embodied in the Charter of the United Nations’.58 In other words, the Convention does not apply to cases of annexation by the use of force which are considered to be illegal under international law,59 and to situations of illegal occupation of territory.60 As a result, the MTF rule set out at Article 15 VCST does not apply to the annexation of Crimea.61 The fact that the Convention does not apply in the context of the annexation of Crimea,62 does not mean that there are no applicable rules of State succession. Those rules which are considered as reflecting customary international law will continue to apply.63 For this reason, it has been argued that ‘the customary equivalent to the rule reflected’ in 15 VCST [and Article 29 Vienna Convention on the Law of Treaties (VCLT)64] should apply ‘by default’ in Crimea.65 It is true that the Sanum Arbitral Tribunal and the Singapore’s High Court and Court of Appeal have considered that the MTF rule contained at Articles 29 VCLT and 15 VCST is reflective of a rule of custom.66 Many scholars have adopted the same position.67 However, as noted by Gaggioli, all will depend on how other States react to a claim in favour of the application of the MFT rule to specific situation of Crimea.68 States may indeed oppose such a claim by invoking a violation of a jus cogens norm.69 There are good reasons for arguing that, as a matter of principle, the MTF rule simply cannot apply to an illegal annexation of territory. The goal of Article 6 of the Convention is to prevent giving any legal effect to an illegal situation.70 In the context of Crimea, the aim is to prevent the ‘normal’ application of the MTF rule under which Russia’s treaties would simply apply in Crimea. This is because the annexation of Crimea is anything but a ‘normal’ situation whereby Russia could benefit from the rights existing under rules of State succession in its newly acquired territory. In my view, the application of the MTF rule to the specific situation of Crimea based on the ground that it is a rule of custom would clearly undermine the purpose of Article 6 of the Convention. Moreover, any such application of the MTF rule should be considered as an implicit recognition by other States of the effectivité of an illegal action under international law.71 For all of these reasons, States should strongly reject the application of Russia’s BITs to the territory of Crimea (even if the MTF rule is considered as custom). While recognizing that the MTF rule set out at Article 15 VCST does not apply to the case of the illegal annexation of Crimea, two writers have recently stated that Article 29 VCLT could find application.72 They have highlighted the fact that the provision refers to a treaty being binding upon each party in respect of its ‘entire territory’.73 In fact, in their view, some examples of State practice ‘might further support the argument of a broad reading of Article 29 VCLT that would also encompass annexed territories’.74 According to them, such an interpretation would be in accordance with the purpose of BITs, which is to protect investors and that logically, more investors would be covered in the event that the Russian BITs were to apply to Crimea.75 In my view, without any evidence to the contrary, Article 29 VCLT would normally solely apply to situations that are in conformity with international law. Thus, the expression ‘entire territory’ should be considered as a reference to a State’s de jure territory. The ordinary meaning of the term ‘territory’ found in a fundamental multilateral treaty such as the VCLT should not be understood as including a territory under occupation which has been illegally annexed by the use of force.76 As further discussed in Section 3 below, the tribunals in the Ukrnafta and Stabil cases have apparently adopted the opposite position.77 In sum, as a matter of principle, the MTF rule should not apply to the case of Crimea. Consequently, treaties to which Russia is a party should not find application on this territory. The BITs to which Ukraine was a party should continue to apply to the territory of Crimea after the annexation. Finally, it should be added that the effect of an armed conflict on treaties is a complicated question which has recently been codified by the ILC’s ‘Draft Articles on the Effects of Armed Conflict on Treaties’.78 The question has been examined by scholars in light of the events in Crimea79 and is beyond the scope of this article.80 In any event, the present author is not aware of any party to a BIT enter into by Ukraine having notified the other of the suspension or the termination of the treaty because of the war in Crimea. D. The practical consequences for foreign investors arising from Russia’s occupation of Crimea Under international law, Crimea still belongs to Ukraine ‘whatever the de facto situation may look like’.81 Ukraine retains international responsibility for its entire territory, including Crimea.82 As a matter of principle, Ukrainian BITs continue to offer legal protection to the foreign investors of the other contracting parties doing business in Crimea. Yet, the question of the application of Ukrainian BITs to Crimea will only have any real and concrete implications in the event that a foreign investor starts a claim against Ukraine alleging violations of the BIT in that territory. Ukraine’s line of defence in any such proceedings would certainly be centred around the fact that while it has sovereignty over Crimea, the territory is nevertheless presently under foreign occupation by Russia.83 The reality is that Ukraine has effectively no control over what is happening on the ground in Crimea since its annexation by Russia. Even if Ukraine is, as a matter of principle, still responsible for the legal protection of foreign investors, the fact of the matter is that it simply cannot ensure that protection. It is Russia which exercises the de facto authority over the territory of Crimea since the annexation. Logically, Russia should be responsible for the actions that took place in Crimea since its annexation. But, as noted by one writer, ‘the annexing state, even though it effectively controls the annexed territory, cannot be deemed to have succeeded to any obligations the original or de jure sovereign had entered into in relation to that piece of land’.84 Russia cannot be considered as the beneficiary of any rights connected with the annexed territory of Crimea.85 In practical terms, this means that foreign investors doing business in Crimea would benefit from none of the protection existing either under Ukraine’s BITs or Russia’s BITs. The situation can be summarized as follows: The legitimate authority in Crimea (Ukraine) cannot effectively provide legal protection to investors on the ground; The only State which could provide legal protection to investors (Russia) is prevented from doing so because the authority it exercises in Crimea is illegal.86 As noted by two writers, ‘no attribution to the original or de jure sovereign of acts committed on that territory can be established’ regarding the territory of Crimea.87 It has been pointed out by them that the result ‘would leave investors in a legal vacuum’ as no BIT protection would apply.88 Yet, since Crimea is an ‘occupied territory’,89 international law imposes important obligations and responsibilities on Russia, as the force occupying Crimea.90 As noted by one writer, ‘the annexation may be expected to impose some of the main obligations of territorial power on Russia without transferring the main rights, those remain where they had been - that is to say, with Ukraine’.91 For one thing, the applicable rules in the field of humanitarian law continue to apply independently of BITs.92 Russia must also apply in Crimea the fundamental human rights treaties to which it is a party,93 including the European Convention of Human Rights, which includes important property rights protection.94 The reason for applying such treaties in Crimea is to avoid a vacuum whereby individuals under occupation would otherwise be left with no legal protection and no State would assume any responsibility.95 Clearly, the same logic cannot apply to BITs whose purpose is to provide legal protections to foreign investors, and not to the local population living in the territory controlled by a foreign power. As the occupying force in Crimea, Russia must also apply the minimum standard of treatment (MST) under custom.96 This obligation applies to all States, including those that have not entered into any BITs. Moreover, it means that this standard of protection can be invoked by any foreign investor regardless of whether or not its State of origin has entered into a BIT with Russia. The MST is an umbrella concept, which itself incorporates different elements. The present author has examined the scope and content of the MST elsewhere.97 Suffice it to say that the MST encompasses (at the very least) an obligation for host States to prevent denial of justice in the administration of justice and to provide due process, an obligation to prevent arbitrary conduct, and an obligation to provide investors with ‘full protection and security’.98 Foreign investors may also still be protected by rights contained in contracts (although the economic sanctions imposed by States on Russia may have rendered such contracts void and unenforceable). In sum, foreign investors doing business in Crimea will benefit from none of the protections offered under BITs entered into by Russia or Ukraine.99 While such an outcome is clearly regrettable for investors, they are nonetheless not in a total legal vacuum. Thus, they will remain protected by certain legal norms, but not to the extent they would be expecting under a typical BIT. Specifically, they will benefit from no access to international arbitration (unless consent to arbitration can be found in a contract or the host State’s laws).100 The next section examines specifically the fate of the Ukraine–Russia BIT after the annexation. The controversial question of the application of this BIT to Crimea has been the focal point of a number of recent claims filed by Ukrainian investors against Russia (they are examined in the next section). 4. ARBITRATION CLAIMS FILED BY UKRAINIAN INVESTORS AGAINST RUSSIA UNDER THE UKRAINE–RUSSIA BIT A number of claims have recently been filed by Ukrainian investors against Russia for breaches of the Russia–Ukraine BIT committed in the territory of Crimea after the annexation. These claims have been the subject of much discussion lately.101 As of December 2017, eight claims had been filed against Russia.102 In the following sections, I will examine a number of questions in relation to these claims. A. Tribunals have to determine their jurisdiction over these claims, even if it is uncontested by the parties The first obvious and fundamental question which each of these tribunals will have to determine is whether they have jurisdiction over the disputes. At the time of writing, the tribunals in the Everest,103Belbek,104PJSC CB PrivatBank,105Ukrnafta,106Stabil107 and Lugzor108 cases had rendered their decisions on jurisdiction. All awards are confidential. One particular aspect of these proceedings is the fact that the parties do not seem (at first) to deny the jurisdiction of the tribunals and do not appear (at first) to be contesting the application of the BIT to investments made by Ukrainian investors in the territory of Crimea. Thus, in these cases, the investors have argued that the territory of Crimea is now part of Russia because otherwise the BIT simply does not apply to them. Russia is also of the view that Crimea is now part of its territory (Russia has decided not to participate in these proceedings, as further explained below). It has been argued that since none of the parties to the proceedings is formally contesting the application of the BIT to these disputes, tribunals may not have to decide the controversial question of whether Crimea should be considered as part of the territory of Russia.109 Others have suggested that this situation could be considered as an implicit ad hoc submission agreement between the parties in giving jurisdiction to the tribunals over the disputes.110 In my view, an arbitral tribunal necessarily has to decide ex officio the question of its jurisdiction notwithstanding the position of the parties on the matter. This is based on the principle of compétence de la competence and that of iura novit curia, which has been recognized by tribunals in the context of investment disputes.111 This is apparently also the position adopted by the tribunals in, inter alia, the Ukrnafta and Stabil cases.112 As noted by one writer, ‘investment tribunals generally consider that they are entitled to and even obliged to conduct an ex officio review of their jurisdiction’.113 This is because ‘arbitrators have a duty to render an enforceable award that is, at the same time, also not prone to challenges’.114 In my view, this duty is all the more apparent given the very controversial and highly politically sensitive nature of these proceedings. The question of the legality of the annexation must be addressed by them from the outset of the proceedings.115 In any event, Russia decided to not participate in these proceedings.116 Tribunals have nevertheless ordered the continuation of these proceedings.117 They have also granted an application from Ukraine to make submissions as a non-disputing party to the BIT in all six cases (a point further discussed below).118 It has been suggested by one writer that ‘had Russia participated in the proceedings it would have most likely accepted the application of Articles 15 or 31 VCST, but would have raised one of the exceptions to this article’.119 But, since Russia is not participating in the proceedings, the same writer then asked the question as to how a tribunal should determine what could have been Russia’s approach to the matter.120 It may be difficult to infer anything from Russia’s decision not to participate in the proceedings. What matters is that an arbitral tribunal has to decide the question of jurisdiction ex officio in default proceedings.121 The question of the legality of the annexation should not be discarded by a tribunal. This is, however, what the tribunals did in the Ukrnafta and Stabil cases.122 Finally, it should be added that there is an additional complication regarding the proceedings in two of these claims, which have been filed by Ukrainian State-owned enterprises.123 The companies are controlled by the government of Ukraine. They certainly have filed such politically sensitive claims with the approval of the appropriate authority from the government of Ukraine. If this is the case (and there is limited information available to assess whether it is the case), this would suggest that Ukraine is of the view that Crimea should be considered as a part of Russia for the application of this BIT. This is indeed the only way for Ukrainian investors to claim the benefit of the BIT before these tribunals. This position would be rather strange given the fact that Ukraine has thus far maintained strongly and continuously that its territorial integrity had been breached by Russia as a result of the illegal annexation of Crimea. In my view, this position would seriously undermine Ukraine’s claim that Crimea remains part of its territory.124 In any event, such a surprising position by Ukraine will certainly influence tribunals having to decide the question of their jurisdiction over these cases. B. The Ukraine–Russia BIT does not apply to these disputes because Crimea is not part of the territory of Russia This section explains that, based on the language contained in the Ukraine–Russia BIT, the tribunals should, logically, only have jurisdiction over these disputes if they come to the conclusion that Crimea is part of the territory of Russia. The Ukraine–Russia BIT only covers ‘Investments’ made by ‘Investors’ of ‘one Contracting Party on the territory of the other Contracting Party …’ (Article 1(1)) (emphasis added). Let us assume for the sake of argument that the Ukrainian claimants have made an ‘investment’ in accordance with the BIT and that they fulfil the ratione personae requirements under Article 1(2)b.125 The fundamental question remains whether any such investment can be considered as being made ‘on the territory of the other Contracting Party’, ie Russia. Thus, in the context of claims filed by Ukrainian claimants, the BIT only provides them with protection if they have made an investment in Russia. The problematic aspect of these claims is that claimants alleged violations of the Ukraine–Russia BIT by Russia for actions which have taken place on the territory of Crimea. Tribunals therefore have to determine whether Crimea can be considered as part of the territory of Russia at the date of the commencement of the proceedings.126 This is the inescapable question that each tribunal needs to address from the outset of the proceedings. That question will be answered by examining the definition of ‘territory’ in the BIT at Article 1(4): the territory of the Russian Federation or the territory of the Ukraine and also their respective exclusive economic zone and the continental shelf as defined in conformity with the international law. Three observations can be made about this clause. First, the definition does not refer specifically to the territory of Crimea. This is a rather obvious observation from which not much can be deducted. Thus, the definition of the term ‘territory’ contained in the BIT does not refer to any specific territories as being part of either State. In any event, such absence is logical given the fact that at the time when the treaty was signed, Crimea was considered by both States as being part of Ukraine. Secondly, the clause explicitly defines the territories of both States as including their respective exclusive economic zones and continental shelf. As noted by one writer, ‘where such territorial restrictions are present, support for arguing that the treaty extends protections beyond de jure territory is fairly thin’.127 That may be true, but this definition is not unique and is often found in BITs. As such, a reference to the exclusive economic zone and continental shelf does not in itself indicate much as to whether the parties intended for the BIT to cover only de jure territory. Thirdly, the clause contains an explicit reference to ‘international law’. The use of the words ‘as defined in conformity with the international law’ were most likely meant to qualify only the territorial scope of the ‘exclusive economic zone and the continental shelf’. In other words, the extent of each State’s exclusive economic zone and continental shelf should be in accordance with international law. This is apparently the position adopted by the tribunals in the Ukrnafta and Stabil cases.128 Another possible interpretation would be that these words were meant to qualify, more generally, the expression ‘territory of the Russian Federation’. Thus, the ‘territory’ of Russia would have to be ‘as defined in conformity with the international law’. Under such an interpretation, the ‘territory’ of Russia would not include those parts which were integrated in violation of international law. This is in fact the position which has been adopted by certain writers. For Costelloe, ‘qualifying words such as “in conformity with international law” limit a treaty’s application in certain territories or areas by explicit reference to the international lawfulness of a State’s exercise of rights over such territories or areas’.129 The question of the legality of the annexation of Crimea by Russia is not to be determined under the domestic laws of Russia, but under international law.130 The annexation of territories by the use of force is illegal under international law. In sum, given the BIT’s specific features regarding the definition of ‘territory’, there are good reasons for arguing that a tribunal should not come to the conclusion that Crimea is part of Russia for the application of the treaty. C. Tribunals should have logically concluded that they have no jurisdiction over these disputes I have argued above that the only logical way for tribunals to conclude that they have jurisdiction over these claims under the Ukraine–Russia BIT is to consider that the territory of Crimea is now part of Russia under the Ukraine–Russia BIT. This is because the BIT only applies to Ukrainian investors making an investment in Russia. Given the fact that under international law Crimea is still part of the territory of Ukraine, it should logically follow that the tribunals have no jurisdiction over these claims. At least, this is the solution which would seem to be the most coherent from a ‘pure’ international law perspective. Yet, it seems that things are not as ‘simple’ in the specific context of these claims. Six tribunals (Belbek, Everest, PJSC CB PrivatBank, Ukrnafta, Stabil and Lugnor) have held that they have jurisdiction over these claims. The awards remain confidential. Very limited information is currently available regarding the actual reasoning of these tribunals. The limited information available suggests that the tribunals’ decisions may have been influenced by very specific factors and circumstances arising in these claims. It has been reported that the tribunals have held in the Belbek and PJSC CB PrivatBank cases that Russia ‘had obligations to protect Ukrainian investors in Crimea under the Ukraine-Russia BIT from the date of 21 March 2014 onward’ (ie the date of the formal incorporation of Crimea into the Russian Federation).131 The news report on the cases further added that ‘it appears that the arbitrators have sidestepped the thorny question as to the lawfulness of the Russian occupation and annexation of Crimea, instead zeroing in on the effectiveness of the occupation and the consequent finding that Russia should be liable for protection of Ukrainian investors in that territory’.132 This would suggest that the tribunals have interpreted the expression ‘territory of the Russian Federation’ solely based on the de facto situation on the ground without examining the question of the legality of annexation. This is also apparently what the tribunals did in the Ukrnafta and Stabil cases.133 The tribunals in the Everest and Lugnor cases have taken the same position.134 At first, the tribunals’ decision to (apparently) focus on the effectiveness of the occupation in Crimea may seem surprising. Yet, their decision was certainly influenced by the position adopted by Ukraine itself, which intervened as a non-disputing party in the arbitration proceedings. Thus, it has been reported that Ukraine ‘portrayed the occupation as unlawful, but ultimately effective (such that Russia should subsequently bear the responsibility of protecting Ukrainian investors under the BIT)’.135 Very limited information is currently available regarding the position which was adopted by Ukraine in these proceedings. Yet, any such position focusing on the effectiveness of the occupation on the ground would be peculiar. In my view, the position (apparently) adopted by Ukraine gives effect to the annexation of Crimea. It is therefore rather surprising for Ukraine to have adopted such a position in these proceedings. It may be that these proceedings filed by Ukrainian investors are in fact encouraged by Ukraine as part of a broader strategy to fight on all possible legal fronts the illegal annexation of Crimea.136 The next section examines one additional reason which, in my view, militates in favour of concluding that tribunals should have declined to exercise jurisdiction over disputes submitted by Ukrainian nationals against Russia under the BIT for events which took place in Crimea after the annexation. D. The Obligation under custom not to recognize the illegal annexation of Crimea should apply to tribunals It should be recalled that GA Resolution 68/262 calls for ‘all States, international organizations and specialized agencies’ to not recognize any ‘alteration of the status’ of Crimea and ‘to refrain from any action or dealing that might be interpreted as recognizing any such altered status’.137 In my view, a tribunal concluding that Crimea is part of Russia for the application of the Ukraine–Russia BIT would undoubtedly fly in the face of both the letter and the spirit of the Resolution. The next paragraphs explain the reasons why. It is true that unlike Security Council Resolutions, those adopted by the GA are not mandatory under international law. But, it is also well-known that ‘the obligation and content of non-recognition do not depend upon any action by the appropriate political organs of the United Nations’.138 In that sense, it does not matter that the obligation of non-recognition was affirmed by the GA, and not by the Security Council. In fact, as noted by Talmon, the fact that ‘the obligation arises directly under customary international law is also shown by the fact that, in several cases, the call for non recognition has been contained in a non-binding resolution of the General Assembly or in a statement of the President of the Security Council, which do not create any obligation’.139 The authoritative value of the obligation of non-recognition of the annexation of Crimea is therefore a consequence of its status as a rule of custom, not by the fact that it was affirmed by one organ of the UN or another. It is also true that GA Resolution 68/262 is only addressed to ‘all States, international organizations and specialized agencies’, and not to any other actors.140 Yet, the obligation not to recognize an illegal annexation of territory that occurred in violation of the prohibition of the use of force is largely recognized as a rule of custom. Arbitral tribunals must apply rules of custom when deciding disputes under BITs. This is because tribunals will apply international law to solve disputes under BITs. This is the case whether or not the BIT contains a choice of law clause and even in cases where that choice of law does not refer to international law.141 At the end of the day, international law will always find application in BIT disputes.142 Therefore, when a tribunal is applying international law in these circumstances, it will necessarily have to take into account relevant rules of customary international law.143 Under Article 31(3)(c) of the Vienna Convention, a tribunal should take into account ‘any relevant rules of international law applicable in the relations between the parties’, which certainly includes rules of customary international law.144 In sum, a tribunal established under the Ukraine–Russia BIT must apply the customary obligation of non-recognition of illegal annexation of territories when deciding whether it has jurisdiction over a dispute under this treaty. This is a fortiori the case given the fact that the illegal annexation of Crimea was in violation of the prohibition of the use of force, which is considered as one of the few existing jus cogens norms. There is no doubt that a tribunal must apply jus cogens norms. The Methanex Tribunal made it clear that ‘as a matter of international constitutional law a tribunal has an independent duty to apply imperative principles of law or jus cogens and not to give effect to parties’ choices of law that are inconsistent with such principles’.145 Tribunals established under the Ukraine–Russia BIT therefore have an ‘independent duty’ to apply jus cogens norms, including the prohibition of the use of force. According to the ILC, the non-recognition obligation under Article 41(2) of the Draft Articles on State Responsibility does not only cover formal recognition ‘but also prohibits acts which would imply such recognition’.146 In the Namibia opinion, the Court also affirmed that any dealings with South Africa which may ‘imply a recognition that South Africa's presence in Namibia is legal’ would be inconsistent with the Security Council's declaration of illegality and as such proscribed.147 In my view, an award concluding that the territory of Crimea is part of Russia under the Ukraine–Russia BIT is implying a recognition of the annexation of that territory by Russia. Such an award is in fact giving legal effect to a situation in violation of a jus cogens norm. Even if one were to consider that this non-recognition obligation is formally imposed only on States,148 it remains that a tribunal should be particularly sensitive about deciding to exercise its jurisdiction over a dispute under the specific circumstances previously described. This decision could be considered as contrary to international or transnational public policy. Recent ICSID tribunals have held that they either lack jurisdiction or that a claim was inadmissible when faced with the illegal conduct of an investor, such as misrepresentations made by the claimant,149 fraud150 or bribery/corruption.151 In the World Duty Free case, the tribunal mentioned that the concept of ‘international or transnational public policy’ as ‘signifying an international consensus as to universal standards and accepted norms of conduct that must be applied in all fora’.152 In that case, the tribunal concluded that it was ‘convinced that bribery is contrary to the international public policy of most, if not all, States or, to use another formula, to transnational public policy’.153 It is true that in these cases, tribunals dealt with the illegal acts committed by investors, rather than by the respondent State like in the present case. Yet, it remains that an annexation of territory in violation of a jus cogens norm should certainly be considered as contrary to the ‘transnational public policy’ of all States. At any rate, any award which implies the recognition of an illegal annexation of territory in violation of a jus cogens norm could be open for a challenge, an annulment procedure, and may also be unenforceable.154 At the time of writing, Russia (which did not participate in the proceedings) started set aside proceedings in Switzerland against the award in the Ukrnafta and Stabil cases.155 For all of these reasons, in my view, tribunals should have concluded that they had no jurisdiction under the Ukraine–Russia BIT over claims filed by Ukrainian investors against Russia for investments made in Crimea. This would mean, in practical terms, that these Ukrainian claimants (as well as all Ukrainian nationals) will be left with no recourse under this BIT for measures taken in Crimea after the annexation. The consequences of such a unique situation are further discussed in the next section. E. Should a ‘pragmatic’ approach be adopted instead? Some writers have been critical of the position taken in the previous sections in favour of adopting a ‘stricto sensu interpretation’ of the definition of the term ‘territory’ under Russian BITs and its consequence that investors would no longer benefit from any BIT protection in Crimea. Happ and Wuschka have argued for the adoption of a ‘pragmatic approach’ in order to free ‘investors from the legal vacuum an annexation might put them in’.156 One easy solution to prevent any such ‘vacuum’ would be to extend Russian BITs to the territory of Crimea. Thus, for them, in order to determine the territorial scope of a BIT under Article 29 VCLT, what matters is not a State’s de jure sovereignty over a given territory, but rather whether it exercises control over that territory.157 The tribunals in the Ukrnafta and Stabil cases apparently adopted that position.158 While acknowledging that ‘the obligation not to recognize illegally acquired territory is said to be well-regarded in general international law’, Happ and Wuschka add that ‘there is obviously no clear path, yet, in a situation where non-recognition benefits the occupying power’.159 For Happ and Wuschka, Russia would indeed benefit from the application of the principle of non-recognition because it would not be responsible under Russian BITs for actions taken place in Crimea. For them, it would result in providing ‘for a lesser degree of obligations on the part of the annexing State as if that State had lawfully acquired the territory and the investment treaty was to apply’.160 Since this situation ‘would contravene the object and purpose of the sanction and frustrate the application of the ex injuria jus non oritur principle’, these two writers have argued that ‘as a matter of policy, the principle of non-recognition cannot be applied strictly to illegally annexed territory’ and ‘it must be applied in a modified way’.161 Tribunals should therefore ‘limit the application of the respective treaty only to the annexing State’s obligations’ without granting Russia any rights under the BITs.162 This is, in their view, ‘precisely what the obligation of non-recognition and its underlying principle ex injuria non oritur jus mandate’.163 The next paragraphs will briefly examine the arguments put forward by these two writers. The starting point is their affirmation that the goal of the principle of non-recognition ‘is that the [annexing] state should not benefit from illegal conduct’ and that ‘non-recognition serves the purpose of a sanction’.164 This is no doubt true. Lauterpacht noted that ‘no recognition is based on the view that acts contrary to international law are invalid and cannot become a source of rights for the wrongdoer’.165 As a matter of principle, the wrongdoer should not benefit from the annexation. Whether or not non-recognition should be considered as a ‘sanction’ is controversial. Some writers have endorsed this position.166 Yet, as noted by Crawford, non-recognition ‘is not as such either a method of enforcement or a sanction’.167 For him, non-recognition is ‘a precondition for other enforcement action’ such as sanctions.168 In other words, non-recognition is not a sanction in itself. It is rather the legal foundation upon which States can individually (or collectively) set up economical, political and diplomatic sanctions against the wrongdoer. In any event, even if one considers that the obligation of non-recognition encompasses a sanction dimension, it is clearly not only limited to that aspect. According to one writer, ‘at a minimum, the rationale of the obligation of non-recognition is to prevent, in so far as possible, the validation of an unlawful situation by seeking to ensure that a fait accompli resulting from serious illegalities do not consolidate and crystallize over time into situations recognized by the international legal order …’.169 The same rational has been explained by the ICJ in the Wall case.170 Milano has also well-explained that the aim of the principle of non-recognition is ‘the protection of subjective rights of the injured party; the affirmation of a community interest in the protection of fundamental norms; and the need to enforce the legal norms which are being breached’.171 Thus, it seems that the basic reason behind the adoption of the non-recognition principle is to ensure that fundamental norms of international law are respected by States.172 As noted by Dugard, the practice of non-recognition is confined to those situations ‘which most seriously offend international law and public policy’.173 The principle of non-recognition is aimed at preventing giving of any legal effect to any violations of those principles; it has a ‘status-denying effect’.174 As noted by Crawford, ‘non-recognition helps to prevent the consolidation of unlawful situations’.175 In the context of Crimea, the ultimate goal is to prevent the illegal annexation from gaining any legal recognition and from bearing any legal effect. In my view, extending Russian BITs to the territory of Crimea would amount to recognizing the annexation on the ground and giving legal effect to an unlawful action. In this context, ‘sanctioning’ the action of Russia seems to be just part of the overall intention of non-recognition. In this context, the position adopted by Ukraine in these on-going arbitration proceedings is quite surprising. One reason the writers mentioned above have argued for the application of a ‘modified’ non-recognition obligation is because they say that Russia will benefit from the non-application of its BITs to the territory of Crimea insofar as it will not have to provide any BIT protection to foreign investors doing business there. It may very well be that Russia would be better off under this scenario when compared to the situation which would prevail had it legally incorporated Crimea (in which case Russian BITs would have applied to that territory under the MTF principle). Yet, any such ‘benefit’ enjoyed by Russia may only be in the short term. This is because foreign investors may be under the obligation to not continue doing business in Crimea under sanction regimes imposed by many States.176 In any event, given the great uncertainty regarding their legal situation (including the lack of BIT protection), investors may be reluctant to maintain their investments very long in a post-annexation Crimea. One can logically predict an important reduction in foreign direct investments (FDI) in that region. At the end of the day, Russia may not benefit at all from the non-application of its BITs to the territory of Crimea because of a potential FDI exodus. In my view, the better solution remains adopting the strict application of the non-recognition principle and, consequently, refusing to extend Russian BITs to the territory of Crimea. This seems like the most efficient way to ‘sanction’ the illegal action of Russia. 5. Conclusion This article has shown that the illegal annexation of Crimea was in violation of the prohibition of the use of force, which is considered as a jus cogens norm. This conclusion is of fundamental importance in the context of claims filed by Ukrainian investors against Russia under the Ukraine–Russia BIT for breach allegedly committed in Crimea after the annexation. I have argued in this article that the only logical way for tribunals to conclude that they have jurisdiction over these claims is to consider that the territory of Crimea is now part of Russia under the Ukraine–Russia BIT. Yet, under international law Crimea is still part of the territory of Ukraine. Russia is the occupying power in that territory. In my view, the question of the legality of the annexation cannot be discarded by tribunals on the ground that none of the parties involved in these proceedings contest the effective application of the Ukraine–Russia BIT to the territory of Crimea. This is so even if Ukraine has taken this (very awkward) position during these proceedings. Tribunals should have concluded that they had no jurisdiction over these disputes. The practical outcome of the solution put forward here is admittedly not ideal insofar as it results in foreign investors no longer benefitting from any BIT protection in Crimea. Ultimately, as noted by two writers, not extending Russian BITs to the territory of Crimea leads to a clash of divergent interests: ‘the interest of the international community to sanction illegal acquisition of territory by means of annexation clashes with the investors’ individual interest to have their investment protected under international law’.177 This is a classic case where one needs to basically choose between the lesser of two evils. In my view, the Crimean crisis and its aftermath is a situation where the interest of the international community as a whole should supersede those of a few foreign investors. Arbitral tribunals should act as guardians of the international legal order. As such, they should not recognize (even implicitly) an illegal annexation of territory and should not render awards giving any legal effect to such a basic violation of international law. As noted by Christakis, ‘l'obligation de non-reconnaissance n'est certainement pas une panacée, elle constitue néanmoins la sanction minimale de droit commun prévue par un ordre juridique qui ne pourrait, sans s'autodétruire, accepter sa capitulation devant le fait accompli’.178 This is a fundamental duty. But, it comes at an important cost for foreign investors who will benefit from no BIT protection in Crimea. I would argue that this is (sadly) the price to pay for fundamental norms of international law to have any meaning in the realm of investor–State arbitration. This article reflects facts current as of December 2017. This article is a modified version of a chapter in my book: A Guide to State Succession in International Investment Law, Elgar Publications 2018. The author wishes to thank Nicolas Karsenti, Corey Spector, and Evan Bernstein (all students at the University of Ottawa) for their assistance and suggestions. Footnotes 1 P Dumberry, ‘An Uncharted Question of State Succession: Are New States Automatically Bound by the BITs Concluded by Predecessor States Before Independence?’ (2015) 6(1) JIDS 74. 2 CJ Tams, ‘State Succession to Investment Treaties: Mapping the Issues’ (2016) 31(2) ICSID Rev 315; A Genest, ‘Sudan Bilateral Investment Treaties and South Sudan: Musings on State Succession to Bilateral Treaties in the Wake of Yugoslavia’s Breakup’ (2014) 3 TDM 1. Another article examining only partly the question of succession to BITs is: JA Fraterman, ‘Secession, State Succession and International Arbitration’ (2013) SSRN Paper <https://ssrn.com/abstract=2313401> accessed 1 December 2017. More recently, see: RP Fleury, ‘State Succession and Bits: Challenges for Investment Arbitration’ (2016) 27 Am Rev Int'l Arb 451. 3 P Dumberry, A Guide to State Succession in International Investment Law (Elgar Publications 2018). 4 Sanum Investments Limited v Laos, UNCITRAL, PCA Case No 2013-13, Award on Jurisdiction, 13 December 2013. The Sanum saga is examined in: Dumberry (n 3); P Dumberry, ‘State Succession to BITs in the Context of the Transfer of Territory of Macao to China: Lessons Learned from the Sanum Saga’ (2018) 35(1) J Int Arb (forthcoming). 5 Lao People’s Republic v Sanum Investments Limited [2015] SGHC 15. 6 Sanum Investments Ltd v Government of the Lao People’s Democratic Republic [2016] SGCA 57. 7 World Wide Minerals Ltd and Mr Paul A Carroll, QC v. Kazakhstan, UNCITRAL, Award, 19 October 2015. 8 These cases are examined in: Dumberry (n 3). 9 Agreement Between the Government of the Russian Federation and the Cabinet of Ministers of the Ukraine on the Encouragement and Mutual Protection of Investments, 27 November 1998, <http://investmentpolicyhub.unctad.org/Download/TreatyFile/2233> accessed 1 December 2017 (hereinafter, ‘Ukraine–Russia BIT’). 10 See N Cwicinskaja, ‘The Legality and Certain Legal Consequences of the “Accession” Of Crimea to the Russian Federation’ (2014) 34 Polish YIL 72, referring to the latest Ukrainian census in 2001 showing that Russians accounted for close to 60% of the population in Crimea. Other groups include Ukrainians (25%), Crimean Tatars (12%), etc. 11 Under the Budapest Memorandum, signed on 5 December 1994, the USA, the UK and Russia committed to ‘respect the Independence and Sovereignty and the existing borders of Ukraine’ and reaffirmed ‘their obligation to refrain from the threat or use of force against the territorial integrity or political independence of Ukraine and that none of their weapons will ever be used against Ukraine except in self-defense or otherwise in accordance with the Charter of the United Nations’ (1–2). The 1997 Treaty on Friendship, Cooperation, and Partnership (signed on 31 May 1997) between Ukraine and Russia also affirmed the inviolability of the borders between both States (Article 3). 12 For a detailed analysis: V Bílková, ‘The Use of Force by the Russian Federation in Crimea’ (2015) 74 ZaöRV 27. 13 C Marxsen, ‘The Crimea Crisis - An International Law Perspective’ (2014) 74 ZaöRV 389. 14 The questions asked was as follows: ‘1. Are you in favor of the Autonomous Republic of Crimea reuniting with Russia as a constituent part of the Russian Federation?’ or ‘2. Are you in favor of restoring the Constitution of the Republic of Crimea of 1992 and of Crimea’s status as part of Ukraine?’. 15 Statement of the Ministry of Foreign Affairs of Ukraine, 11 March 2014. 16 TD Grant, ‘Annexation of Crimea’ (2015) 109(1) AJIL 85; Marxsen (n 13) 381; Cwicinskaja (n 10) 74–75; TW White, ‘Referendum in Crimea: Developing International Law on "Territorial Realignment" Referendums’ (2016) 38(3) Houston JIL 843; A Peters, ‘Sense and Nonsense of Territorial Referendums in Ukraine, and Why the 16 March Referendum in Crimea Does Not Justify Crimea’s Alteration of Territorial Status under International Law’ (EJIL Talks!, 16 April 2014) <http://www.ejiltalk.org/sense-and-nonsense-of-territorial-referendums-in-ukraine-and-why-the-16-march-referendum-in-crimea-does-not-justify-crimeas-alteration-of-territorial-status-under-international-law/> accessed 1 December 2017. 17 Grant, ibid 69; Marxsen (n 13) 380; Cwicinskaja (n 10) 66ff. 18 The Decision of the Constitutional Court of Ukraine in relation to the case arising from the constitutional petition of the Acting President of Ukraine, Chairman of the Verkhovna Rada of Ukraine and the Ukrainian Parliament Commissioner for Human Rights on compliance with the Constitution of Ukraine (constitutionality) of the Resolution of the Supreme Council of the Autonomous Republic of Crimea ‘On holding the Crimean referendum’ (the case of local referendum in the Autonomous Republic of Crimea) OJ of Ukraine 2014 No 26, item 766. 19 See Grant (n 16) 69. 20 Statement of G-7 Leaders on Ukraine, 12 March 2014, <www.whitehouse.gov/the-press-office/2014/03/12/statement-g-7-leaders-ukraine>. 21 Joint statement on Crimea by the President of the European Council, Herman Van Rompuy, and the President of the European Commission, José Manuel Barroso, 16 March 2014, <http://ec.europa.eu/commission_2010-2014/president/news/archives/ 2014/03/20140317_1_en.htm> accessed 1 December 2017. 22 GA Res 68/262. 23 Resolution State Council Republic of Crimea no 1745-6/14, 17 March 2014. 24 Cwicinskaja (n 10) 69. 25 L Harding and S Walker, ‘Crimea Applies to Be Part of Russian Federation after Vote to Leave Ukraine’ The Guardian, London (17 March 2014). 26 Order of the President of the Russian Federation of 17 March 2014, No 147 ‘On recognition of the Republic of Crimea’, The Collection of Legislation of the Russian Federation, 24 March 2014, No 12, item 1259: ‘Given the declaration of will by the Crimean people in a nationwide referendum held on March 16, 2014, the Russian Federation is to recognize the Republic of Crimea as a sovereign and independent state, whose city of Sevastopol has a special status.’ 27 Specifically, the Federation Council of the Federal Assembly and the State Duma of the Federal Assembly. 28 The Agreement between the Russian Federation and the Republic of Crimea on the Accession of Republic of Crimea to the Russian Federation and on Forming New Federal Constituent Entities within the Russian Federation, signed in Moscow on 18 March 2014, The Collection of Legislation of the Russian Federation, 7 April 2014, No 14, item 1570. Russia’s Constitutional Court confirmed on 19 March the ‘compliance’ of the treaty between two ‘subjects’ of international law with the Constitution. The question remains whether Crimea was indeed an ‘independent State’ merely 2 days after the referendum and whether it had the legal capacity to enter into a treaty with another sovereign State. On this question, see: Grant (n 16) 71; Marxsen (n 13) 390. 29 The State Duma and the Federation Council ratified the Agreement on 20 and 21 March, respectively, and a federal constitutional law was adopted on 21 March 2014: The Federal Constitutional Law of 21 March 2014, No 6-FCL ‘On the Accession to the Russian Federation the Republic of Crimea and Establishing within the Russian Federation new constituent entities of the Republic of Crimea and the City of Federal Importance Sevastopol’, The Collection of Legislation of the Russian Federation, 24 March 2014, No 12, item 1201. The law was then signed by President Putin: The Federal Law of 21 March 2014 No. 36-FL ‘On Ratifying the Agreement between the Russian Federation and the Republic of Crimea on the Accession of the Republic of Crimea in the Russian Federation and on Forming New Constituent Entities within the Russian Federation’, The Collection of Legislation of the Russian Federation, 24 March 2014, No 12, item 1202. On this question, see: Cwicinskaja (n 10) 68ff, 69 (noting that ‘It thus appears that during the Crimean accession process the sequence of events and the events themselves were artificially created in an attempt to ensure their compliance with the Russian legislation.’). 30 T Christakis, ‘Les conflits de sécession en Crimée et dans l'est de l'Ukraine et le droit International’ (2014) JDI 2. 31 Marxsen (n 13) 389; Christakis (n 30) 6ff; A Tancredi, ‘Neither Authorized nor Prohibited?: Secession and International Law after Kosovo, South Ossetia and Abkhazia’ (2008) 18 Italian YIL 37; PM Olson, ‘The Lawfulness of Russian Use of Force in Crimea’ (2014) 53 Mil L & L War Rev 17, 19–24; Bílková (n 12); A Tancredi, ‘The Russian Annexation of the Crimea: Questions Relating to the Use of Force’ (2014) 1 Questions Int'l L 5. 32 Charter of the United Nations, art 2(4). 33 J Crawford, Brownlie's Principles of Public International Law (8th edn, OUP 2012) 242–43, 595; Cwicinskaja (n 10) 71; Bílková (n 31) 27; C Christakis, ‘L’obligation de non-reconnaissance des situations créées par le recours illicite à la force ou d’autres actes enfreignant des règles fondamentales’ in C Tomuschat and JM Thouvenin (eds), The Fundamental Rules of the International Legal Order: Jus cogens and Obligations Erga Omnes (Martinus Nijhoff 2005) 127. 34 See Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States in Accordance with the Charter of the United Nations, GA Res 2625 (XXV), UN GAOR, 25th Sess, Supp No 28, UN Doc A/RES/8082 (24 October 1970), principle I (‘no territorial acquisition resulting from the threat or use of force shall be recognized as legal’). See R Hofmann, ‘Annexation’ in Max Planck Encyclopedia of Public International Law (OUP online edn, 2006). 35 Grant (n 16); Marxsen (n 13) 379; R Geiss, ‘Russia’s Annexation of Crimea: The Mills of International Law Grind Slowly but They Do Grind’ (2015) 91 Int’l L Stud 431; Tancredi, ‘Neither Authorized nor Prohibited’ (n 31) 37–62; Christakis (n 30) 10–11. 36 Christakis, ibid 9–10, 12ff. 37 art 5(3) GA Res 3314 (XXIX) declares that ‘[n]o territorial acquisition or special advantage resulting from aggression is or shall be recognized as lawful.’ 38 Titles and Texts of the Draft Articles on Responsibility of States for Internationally Wrongful Acts Adopted by the Drafting Committee on Second Reading, 26 July 2001, UN Doc A/CN.4/L.602/Rev.1. 39 SC Res 662, UN Doc S/RES/662 (9 August 1990) (Iraq’s annexation of Kuwait); SC Res 497, UN Doc S/RES/497 (annexation of Golan Heights by Israel). See also: proclamation of the Republic of Northern Cyprus in 1983: SC Res 541, UN Doc S/RES/541 (18 November 1983); SC Res 550, UN Doc S/RES/550 (11 May 1984). 40 Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, ICJ Rep 2004, 136 [87]. 41 Commentaries to the Draft Articles on Responsibility of States for Internationally Wrongful Acts Adopted by the International Law Commission at its Fifty-Third Session (2001), November 2001, Report of the ILC on the Work of its Fifty-third Session, Official Records of the General Assembly, Fifty-sixth Session, Supplement No 10 (A/56/10), ch.IV.E.2), 114. 42 Crawford (n 33) 598, 600; J Dugard, Recognition and the United Nations (Grotius 1987) 135–36, 152ff; M Dawidowicz, ‘The Obligation of Non-Recognition of an Unlawful Situation’ in J Crawford, A Pellet and S Olleson (eds), The Law of International Responsibility (OUP 2010) 683; Christakis (n 30) 11; A Lagerwall, ‘L’agression et l’annexion de la Crimée par la Fédération de Russie: Quels enseignements au sujet du droit international? vol 1, (2014) Questions Int’l L, Zoom Out I 63; L Mälksoo, Illegal Annexation and State Continuity: The Case of the Incorporation of the Baltic States by the USSR (A Study of the Tension between Normativity and Power in International Law) (Martinus Nijhoff 2003) 294; Christakis (n 33) 142–44; J Crawford, The Creation of States in International Law (2nd edn, OUP 2006) 160. See, however, S Talmon, ‘The Duty Not to ‘Recognize as Lawful’ a Situation Created by the Illegal Use of Force or Other Serious Breaches of a Jus Cogens Obligation: An Obligation Without Real Substance?’ in C Tomuschat and JM Thouvenin (eds), The Fundamental Rules of the International Legal Order: Jus cogens and Obligations Erga Omnes (Martinus Nijhoff 2005) 125. 43 See E Milano, ‘The Non-Recognition of Russia's Annexation of Crimea: Three Different Legal Approaches and One Unanswered Question’ (2014) 1 Questions Int’l L 37. 44 Marxsen (n 13) 391. 45 See discussion in: Grant (n 16) 87ff. 46 Joint statement on Crimea by the President of the European Council, Herman Van Rompuy, and the President of the European Commission, José Manuel Barroso, 18 March 2014, <http://europa.eu/rapid/press-release_STATEMENT-14-74_en.htm> accessed 1 December 2017. 47 NATO, ‘Crimea’s Annexation is Illegal and Illegitimate and NATO Allies Will Not Recognize It’, 18 March 2014, <www.nato.int/cps/en/natolive/news_108100.htm> accessed 1 December 2017. 48 OSCE, Resolution on Clear, Gross and Uncorrected Violations of Helsinki Principles by the Russian Federation, Declaration and resolutions adopted by the OSCE Parliamentary Assembly at the twenty-third annual secession, Baku, 28 June to 2 July 2014, 17–19. 49 Parliamentary Assembly, Res 1990 (2014), Assembly debate on 10 April 2014 (16th Sitting). 50 See, on this point, Christakis (n 30) 13ff. For an overview of sanctions imposed by the European Union, see: ‘Sanctions against Russia over Ukraine Crisis’ (EU Newsroom) <http://europa.eu/newsroom/highlights/special-coverage/eu sanctions/index> accessed 1 December 2017. For sanctions imposed by the USA, see US Department of State, ‘Ukraine and Russia Sanctions’ <http://www.state.gov/e/eb/tfs/spi/ukrainerussia/> accessed 1 December 2017. 51 Afghanistan, Cuba, Kyrgyzstan, Nicaragua, North Korea, Syria, Venezuela. 52 GA Res 68/262, 27 March 2014 [1 ,4, 5]. 53 Grant (n 16) 91. 54 The draft resolution was presented by 41 countries at the meeting of 15 March but was vetoed by Russia (China abstained): UNSC Draft Res UN Doc S/2014/189; UNSC Verbatim Record (15 March 2014) UN Doc S/PV.7138. See in: Milano (n 43) 38. 55 Christakis (n 30) 13. 56 Vienna Convention on Succession of States in Respect of Treaties, signed on 23 August 1978 and entered into force on 6 November 1996, 1946 UNTS 3, in: 17 ILM, 1978, 1488 [hereinafter, ‘Vienna Convention on Succession to Treaties’]. 57 The MTF rule is examined in Dumberry (n 3). 58 For an analysis of this provision, see G Gagglioli, ‘Article 6’ in G Distephano and G Gaggioli (eds), La Convention de Vienne de 1978 sur la succession d'États en matière de traités : Commentaire article par article et études thématiques (Bruylant 2015) 181ff. 59 ILC, Report of the International Law Commission on the Work of its Twenty-Sixth Session, 6 May to 26 July 1974, A/9610/Rev.1, in: YILC, 1974, vol II (Part One) 181. See also: T Christakis, Le droit à l’autodétermination en dehors des situations de décolonisation (La documentation française 1999) 172–73; Gagglioli (n 58) 202–04. 60 Tams (n 2) 320. 61 D Costelloe, ‘Treaty Succession in Annexed Territory’ (2016) 65 ICLQ 348; A Tanzi and L Iapichino, ‘Article 15’ in Distephano and Gaggioli (n 58) 554–55. 62 Grant (n 16 ) 92–93. 63 Gagglioli (n 58) 219, citing Rapporteur Special Vallat in (1974) Yearbook ILC, vol 2 (2nd pt) 35. 64 The MTF principle is also found at art 29 of the 1969 VCLT: ‘[u]nless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory.’ 65 Costelloe (n 61) 358. 66 Sanum, Award (n 4) [221], [222–24]; Sanum (n 6) [47]. 67 Tanzi and Iapichino (n 61) 547–49; G Hafner and G Novak, ‘State Succession in Respect of Treaties’ in DB Hollis (ed), The Oxford Guide to Treaties (OUP 2012) 411; A Zimmermann and JG Devaney, ‘Succession to Treaties and the Inherent Limits of International Law’ in CJ Tams, A Tzanakopoulos and A Zimmermann (eds), Research Handbook on the Law of Treaties (Edward Elgar 2014) 520–21; Tams (n 2) 337; K Odendahl, ‘Commentary to Article 29’ in O Dorr and K Schmalenbach (eds), The Vienna Convention on the Law of Treaties (Springer 2012) 498–500; Costelloe (n 61) 351. 68 Gagglioli (n 58) 220. 69 ibid 220–21. 70 ibid 193–95, 223. See also O Mayorga, ‘Occupants, Beware of BITs: Applicability of Investment Treaties to Occupied Territories’ (2017) 19 Palestine YIL fn 19. 71 ibid. 72 R Happ and S Wuschka, ‘Horror Vacui: Or Why Investment Treaties Should Apply to Illegally Annexed Territories’ (2016) 33(3) J Int Arb 255ff. 73 ibid 258. 74 The argument is developed more generally (ie without referring to the situation in Crimea) in: ibid 259, 260ff. 75 ibid 259, 260. 76 Costelloe (n 61) 358: ‘Neither Article 29 nor its commentary mentions territory over which a State exercises de facto authority, yet which is not legally part of that State’s territory. However, the use of the term “territory of each party” in Article 29 seems to reflect the understanding that only territory which is de jure part of a State is included. The same holds true for the term “territory of another State” in Article 15 VCST. Here, too, the obvious implication is that the provision applies only to de jure territory. These unqualified provisions simply do not address a situation of extraterritorial application, though they do not exclude such a possibility. It would be straining the text to an impermissible extent to read into these provision an exception to the otherwise only de jure character of ‘territory’, since that term cannot by itself sustain a reading that includes annexed territory and, in fact, that is not what these provisions were designed for.’ See also 378: ‘The moving treaty-frontiers rule is itself formulated by reference to “territory”. The rule, however, may not permit a reading of the term “territory” in such a way that includes annexed territory, which is ex hypothesi not part of the annexing State’s de jure territory. The same holds true for an unqualified reference to “territory” in a treaty’s provisions … .’ 77 See IAReporter, ‘Investigation’: Further Russia Investment Treaty Decisions Uncovered, Offering Broader Window into Arbitrators’ Approaches to Crimea Controversy’, 17 November 2017. 78 ILC, Draft Articles on the Effects of Armed Conflict on Treaties, with Commentaries, UN Doc A/66/10, YB ILC, vol II (pt 2) (2011). The Articles were subsequently adopted by the UN GA in 2011. Under the Articles, the general principle of the effects of armed conflict on treaties is the continued operation of those treaties. The Articles provide a number of exceptions to the general principle, including when a treaty contains an express provision regarding its operation in situations of armed conflict (art 4). In the event that the treaty does not contain a specific clause on the issue at hand, the AREAC provides under art 6 for the application of a test to determine whether a treaty is susceptible to termination, withdrawal or suspension in the event of an armed conflict. 79 OG Repousis and J Fry, ‘Armed Conflict and State Succession in Investor-State Arbitration’ (2016) 23(3) Columbia JEL 424ff; See also J Ostfansky, ‘The Termination and Suspension of Bilateral Investment Treaties Due To an Armed Conflict’ (2015) 6 JIDS 145; C Schreuer, ‘The Protection of Investments in Armed Conflict’ in F Baetens (ed), Investment Law Within International Law (CUP 2013) 3, 5 (see also: C Schreuer, ‘The Protection of Investments in Armed Conflict’ (2012) 3 TDM) 1; A Pronto, ‘The Effect of War on Law What Happens to Their Treaties When States Go to War?’ (2013) 2 Cambridge JICL 227, 233. See also, several papers presented at the Athens Colloquium, International Investment Law & the Law of Armed Conflict, 5–6 October 2017. 80 On this question, see Dumberry (n 3). 81 Marxsen (n 13) 390. See also: Cwicinskaja (n 10) 75; Geiss (n 35) 431. 82 Grant (n 16) 93. 83 Ukraine could invoke, for instance, the argument of force majeure and its impossibility to provide legal protections existing under BITs after the annexation. On this question, see: Costelloe (n 61) 375; Schreuer, ‘The Protection of Investments in Armed Conflict’ (n 79) 18ff. 84 Happ and Wuschka (n 72) 253 (emphasis added). 85 Grant (n 16) 93. 86 See, more generally (ie without referring to the situation in Crimea): Happ and Wuschka (n 72) 255: ‘In relation to our hypothetical investors’ claims, a tribunal might, in light of the above, feel tempted to read the applicable territorial requirements stricto sensu. This, in turn, would exclude any protection under either of the two potentially relevant investment treaties (assuming the investors are nationals of a third state). The investors could not rely on an investment treaty between their home state and the state that lost the territory, because that state cannot be considered responsible. They also could not rely on an investment treaty between their home state and the annexing state, because the tribunal, reading the applicable territorial requirements stricto sensu, would not consider the annexed area to be part of that state’s territory.’ 87 ibid 253. 88 ibid 255. 89 Geiss (n 35) 443ff; Tancredi, ‘The Russian Annexation of the Crimea’ (n 31) 21ff. 90 ibid. See discussion in: P Reznik, ‘Survival of BITs and Investor Rights in Crimea - Russia’s Trick or Treat(y) with Investors’ (PhD Thesis, Stockholm University 2014) 29ff. See also, several papers presented at the Athens Colloquium (n 79). 91 Grant (n 16) 93. 92 On this question, see: GI Hernández, ‘The Interaction Between Investment Law and the Law of Armed Conflict in the Interpretation of Full Protection and Security Clauses’ in Baetens (n 79) 24ff. 93 Wall in the Occupied Palestinian Territory (n 40) [112]; Application of the International Convention on the Elimination of all Forms of Racial Discrimination (Georgia v Russian Federation), Provisional Measures, Order of 15 October 2008, ICJ Rep 2008 [109]. 94 European Convention for the Protection of Human Rights and Fundamental Freedom (in 213 UNTS 222), see art 1 of Additional Protocol 1. 95 Costelloe (n 61) 361–62, concluding that one can acknowledge the applicability in Crimea of human rights treaties while ‘at the same time maintaining a position of non-recognition towards the purported change to the status’ of Crimea (362). 96 Reznik (n 90) 39ff, 44. 97 See, the analysis of the concept in P Dumberry, Formation and Identification of Rules of Customary International Law (CUP 2016) 61ff, 94ff. 98 On this question, see KS Lim, ‘Armed Conflicts and Customary Law on Investment Protection: Codification and Fragmentation of Protection and Security’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017). Another controversial question is whether the fair and equitable treatment standard is one of the elements encompassed within the larger umbrella concept of the MST or whether it is an autonomous standard. See, P Dumberry, The Fair and Equitable Treatment Standard: A Guide to NAFTA Case Law on Article 1105 (Wolters Kluwer 2013) 37ff; P Dumberry, Fair and Equitable Treatment: Its Interaction with the Minimum Standard and its Customary Status (Brill Research Perspectives in International Investment Law and Arbitration 2018). 99 It has been argued by some writers [Reznik (n 90) 46] that Russia could somehow be under the obligation to provide legal protections to foreign investors doing business in Crimea which are available under the BITs to which Ukraine (… not Russia) was a party. One obvious objection that Russia would certainly raise in the context of any claim submitted by an investor under such circumstances is the fact that it is not a party to these Ukrainian BITs. 100 There is no ‘right’ to international arbitration under custom: Dumberry (n 97) 383ff. 101 See, story reported in IAReporter, ‘Russia Disputes Round-Up: Updates on Status of 11 Known Investment Treaty Claims’, 19 January 2016. See also: Y Kryvoi, ‘Annexation of Crimea and International Investment Law’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017); L Rees-Evans, ‘Litigating the Use of Force: Reflections on the Interaction between Investor-State Dispute Settlement and Other Forms of International Dispute Settlement in the Context of the Conflict in Ukraine’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017). 102 The claims (as of December 2017) are the following: Aeroport Belbek LLC and Mr Igor Valerievich Kolomoisky v Russia, PCA Case No 2015-07; PJSC CB PrivatBank and Finance Company Finilon LLC v Russia, PCA Case No 2015-21; PJSC Ukrnafta (Ukraine) v Russia, PCA Case No 2015-34; (i) Stabil LLC, (ii) Rubenor LLC, (iii) Rustel LLC, (iv) Novel-Estate LLC, (v) PII Kirovograd-Nafta LLC, (vi) Crimea-Petrol LLC, (vii) Pirsan LLC, (viii) Trade- Trust LLC, (ix) Elefteria LLC, (x) VKF Satek LLC, (xi) Stemv Group LLC v Russia, PCA Case No 2015-35; Everest Estate LLC et al v Russia, PCA Case No 2015-36; (1) Limited Liability Company Lugzor, (2) Limited Liability Company Libset, (3) Limited Liability Company Ukrinterinvest, (4) Public Joint Stock Company DniproAzot, (5) Limited Liability Company Aberon Ltd v Russia, PCA Case No 2015-29; NJSC Naftogaz of Ukraine, PJSC State Joint Stock Company Chornomornaftogaz, PJSC Ukrtransgaz, Subsidiary Company Likvo, PJSC Ukrgasvydobuvannya, PJSC Ukrtransnafta, and Subsidiary Company Gaz Ukraiiny v Russia, SCC Arbitration Rules; Oschadbank v Russia, UNCITRAL. It should be added that the Aeroport Belbek and the PJSC CB PrivatBank cases are being heard before the same tribunal (consisting of Pierre-Marie Dupuy, Daniel Bethlehem and Vaclav Mikulka). The same situation applies to both the PJSC Ukrnafta and the Stabil et al cases (with the same tribunal consisting of Gabrielle Kaufmann-Kohler, Daniel Price and Brigitte Stern). The Everest case is examined by a different tribunal (consisting of Andres Rigo Sureda, Michael Reisman and Rolf Knieper). The Ludzor case also has a different panel (Don McRae, Bruno Simma and Eduardo Zuleta). Another interesting aspect is the fact that two claims (NJSC Naftogaz and the Oschadbank) have been filed by Ukrainian State-owned companies (a question examined below). It has been reported that these five separate claims were filed by members of the business empire of the Ukrainian oligarch, Mr Igor Kolomoisky. See, story reported in IAReporter (n 101). 103 Everest Estate, Decision on Jurisdiction, 20 March 2017. See, PCA Press Release, 9 August 2016, <http://www.italaw.com/sites/default/files/case-documents/italaw8625_0.pdf> accessed 1 December 2017. 104 Aeroport Belbek, Interim Award Addressing Certain Issues of Jurisdiction and Admissibility, 24 February 2017 (PCA Press Release, 9 March 2017) <https://pcacases.com/web/sendAttach/2090> accessed 1 December 2017. 105 PJSC CB PrivatBank, Interim Award Addressing Certain Issues of Jurisdiction and Admissibility, 24 February 2017 (PCA Press Release, 9 March 2017) <https://pcacases.com/web/sendAttach/2093> accessed 1 December 2017. 106 PJSC Ukrnafta, Awards on Jurisdiction, 26 June 2017 (PCA Press Release, 4 July 2017), <http://www.pcacases.com/web/sendAttach/2184> accessed 1 December 2017. 107 Stabil, Awards on Jurisdiction, 26 June 2017 (PCA Press Release, 4 July 2017), <http://www.pcacases.com/web/sendAttach/2186> accessed 1 December 2017. 108 Limited Liability Company Lugzor et al, Tribunal’s letter dated 29 August 2017, informing the Parties that ‘it intends, in due course, to render a final award in which it will uphold its jurisdiction over the dispute submitted to it in this arbitration and find that all of the claims made by the Claimants are admissible’ (PCA Press Release, 13 December 2017) <https://www.pcacases.com/web/sendAttach/2262> accessed 1 December 2017. 109 P Tzeng, ‘Sovereignty over Crimea: a Case for State-to-State Investment Arbitration’ (2016) 41(2) Yale JIL 462. See also the comment made by Repousis and Fry (n 79) 449; OG Repousis, ‘Why Russian Investment Treaties Could Apply to Crimea and What Would This Mean for the Ongoing Russo–Ukrainian Territorial Conflict’ (2016) 32(3) Arb Int 12. 110 Happ and Wuschka (n 72) 265: ‘this illustrates the possibility of the creation of an ad hoc agreement both for jurisdiction as well as regarding the merits of the dispute. Not only could the annexing state be deemed to have consented to the arbitration procedure by way of non-objection. It might also be deemed to have accepted the investment treaty in question generally to be applicable law between the two parties to the proceedings. Notwithstanding the question whether or not the annexed territory could be considered the territory of the annexing state under international law, the substantive protections of the treaty would then apply by way of an implicit agreement between the parties that their disputes shall be decided according to the terms of the treaty’. 111 Metal-Tech Ltd v Uzbekistan, ICSID Case No ARB/10/3, Award, 4 October 2013 [123] indicating that it ‘is the duty of a tribunal established on the basis of a treaty to verify its jurisdiction under that treaty, even if the parties have not objected to it’. See also: Wintershall Aktiengesellschaft v Argentina, ICSID Case No ARB/04/14, Award, 8 December 2008 [68]; Gustav F W Hamester GmbH & Co KG v Ghana, ICSID Case No ARB/07/24, Award, 18 June 2010, [94] Ioan Micula, Viorel Micula, SC European Food SA, SC Starmill SRL and SC Multipick SRL v Romania, ICSID Case No ARB/05/20, Decision on Jurisdiction and Admissibility, 24 September 2008 [65]. 112 See IAReporter (n 77). 113 Happ and Wuschka (n 72) 254. 114 ibid. 115 More generally, on this question, see: S Wuschka, ‘The Obligation of Non-Recognition of Situations Created by an Illegal Use of Force before International Investment Tribunals’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017). Contra: Repousis and Fry (n 79) 447 (basing their argument on the ‘consensual nature of international arbitration’). See also: Repousis (n 109) 8. Another argument examined by the author (20ff) is whether a tribunal constituted under the Russia–Ukraine BIT could invoke the Monetary Gold principle to deny the vesting of jurisdiction. 116 In the Aeroport Belbek case, the Tribunal noted that Russia had not appointed any representatives and referred to letters dated 16 June 2015 and 1 July 2015 in which Russia indicated that the ‘[Ukraine-Russia BIT] cannot serve as a basis for composing an arbitral tribunal to settle [the Claimants’ claims]’, that it ‘does not recognize the jurisdiction of an international arbitral tribunal at the [PCA] in settlement of the [Claimants’ claims]’ and, finally, that nothing in its correspondence ‘should be considered as consent of the Russian Federation to constitution of an arbitral tribunal, participation in arbitral proceedings, or as procedural actions taken in the framework of the proceedings.’ See, PCA Press Release, 6 January 2016, <http://www.pcacases.com/web/sendAttach/1553> accessed 1 December 2017. The same letters have also been filed by Russia in other cases. 117 See, Aeroport Belbek case, Procedural Order No 3, 30 November 2015; see, PCA Press Release, 6 January 2016. The same orders have been adopted by tribunals in other cases (available at the PCA site). 118 See, for instance, Aeroport Belbek, PCA Press Release, <http://www.pcacases.com/web/sendAttach/1865> accessed 1 December 2017. 119 Repousis (n 109) 12. Thus, by relying on the exceptions contained in these provisions, Russia could argue that the BIT does not apply specifically to these disputes while being consistent with its basic general position that Crimea is now part of the Russian territory. The same writer also suggests that Russia could oppose the application of the BIT based on the ground of jurisdiction ratione temporis (13). 120 ibid 13: ‘However, Russia is not participating in the proceedings. Should the tribunal then infer that Russia’s approach is the one offered above, or should it examine the application of Article 15 or 31 VCST at face value? As already noted, the difference between the two is of fundamental importance. For if Russia’s abstinence is read as an acceptance of the application of Article 15 or 31 VCST, then the tribunal has a way out since the tribunal would not have to examine the presupposed legitimacy of the succession. On the contrary, it would need to accept the applicability of Article 15 or 31 VCST at face value and examine whether any of the exceptions to this article are potentially met. In light of this analysis, one may wonder whether Russia’s decision not to participate in the proceedings is eventually to the benefit of her expressed position.’ 121 This is what ICSID Arbitration r 42(4) provides for, although it does not apply to these cases filed under the UNCITRAL Rules. On this question, see: Wuschka (n 115). 122 See IAReporter (n 77). 123 One claim was filed by NJSC Naftogaz of Ukraine and six of its subsidiaries (See Press Release at <http://www.italaw.com/sites/default/files/case-documents/italaw7648.pdf> accessed 1 December 2017). The other claim was filed by the Ukrainian State-owned bank, Oschadbank (see: IAReporter, ‘As Yukos Enforcement Grabs Headlines, Russia Has Faced At Least 10 New Treaty Arbitrations Since 2012, With Others Threatened’, 14 July 2015, <http://tinyurl.com/oytv3av> accessed 1 December 2017. It should be added that since the commencement of the PrivatBank v Russia proceedings, Ukraine has nationalized PrivatBank. 124 See discussion: Repousis (n 109) 18ff. Relying on the reasoning of the Tribunal in CSOB v Slovakia which focused to the nature rather than purpose of the activities discharged by State-owned enterprise, he concluded that ‘there are good reasons to assert that claims by state-owned enterprises should not necessarily be regarded as claims filed by the contracting parties to an investment treaty’. If this is the case, he argued that ‘the claims of Ukrainian state-owned enterprises would not necessarily reflect Ukraine’s position on the territorial application of the Russia–Ukraine BIT to Crimea’ (19–20). 125 That is, that they are a ‘legal entity’ which have been ‘set up or instituted in conformity with the legislation prevailing’ in Ukraine and that they are “legally capable” under Ukrainian legislation “to carry out investments on the territory of the other Contracting Party”. 126 On this question, more generally (ie without referring to the situation in Crimea), see Happ and Wuschka (n 72) 251ff. 127 Costelloe (n 61) 365. 128 See IAReporter (n 77). 129 Costelloe (n 61) 365, 366: ‘where the exercise of territorial or maritime rights is qualified by words such as “in accordance with international law” the conclusion that the geographic scope of the treaty or an obligation under it is restricted to de jure territory or maritime areas is impossible to overcome’. See also: Rees-Evans (n 101) 7. 130 The reason why a tribunal ruling on this question must apply international law is simple. The Ukraine–Russia BIT does not contain a choice of law clause indicating the law applicable to settle disputes under the instrument. When this is the case, under art 35 of the UNCITRAL Rules (applicable in the above-mentioned disputes) the tribunal ‘shall apply the law which it determines to be appropriate’. The question of the interpretation of the term ‘territory’ under the BIT will have to be determined under Vienna Convention on the Law of Treaties, 1155 UNTS 331 (to which both Russia and Ukraine are parties). arts 31 and 32 of the Convention are generally recognized as rules of customary international law on matters of treaty interpretation. Under art 31(3)(c)), a tribunal should take into account, together with the context of the treaty, ‘any relevant rules of international law applicable in the relations between the parties’. The prohibition of annexation of territories by the use of force under custom is clearly one such applicable ‘relevant rules of international law’. 131 IAReporter, ‘In Jurisdiction Ruling, Arbitrators Rule That Russia is Obliged under Bit to Protect Ukrainian Investors in Crimea Following Annexation’, 9 March 2017, <https://www-iareporter-com.proxy.bib.uottawa.ca/articles/in-jurisdiction-ruling-arbitrators-rule-that-russia-is-obliged-under-bit-to-protect-ukrainian-investors-in-crimea-following-annexation/> accessed 1 December 2017. See also: GAR On-line, ‘Crimea Cases against RUSSIA to Proceed’, 9 March 2017, <https://s3.amazonaws.com/hhr-web/files/Crimea_cases_against_Russia_to_proceed.pdf> accessed 1 December 2017. 132 ibid. 133 IAReporter (n 77). 134 IAReporter, ‘Russia BIT Claims: Recent Developments in Arbitrations Against the Russian Federation’, 13 April 2017, <https://www-iareporter-com.proxy.bib.uottawa.ca/articles/russia-bit-claims-recent-developments-in-arbitrations-against-the-russian-federation/> accessed 1 December 2017. A more detailed account of the Everest award is found in: IAReporter, ‘Investigation: Full Jurisdictional Reasoning Comes to Light in Crimea-Related Bit Arbitration vs. Russia’, 9 November 2017, <https://www.iareporter.com/articles/full-jurisdictional-reasoning-comes-to-light-in-crimea-related-arbitration-everest-estate-v-russia/> accessed 1 December 2017. On the Lugzor case, see: IAReporter, ‘Crimea-related Lugzor v Russia Arbitration Clears Jurisdictional Hurdles’, 13 December 2017, <https://www.iareporter.com/articles/crimea-related-lugzor-v-russia-arbitration-clears-jurisdictional-hurdles/> accessed 1 December 2017. 135 ibid. 136 Rees-Evans (n 101) 5: ‘It would appear that Ukraine has expressly encouraged such claims as part of its “lawfare” strategy in responding to events in Crimea and beyond. For example, commenting on a dispute between Oscadbank (a Ukrainian State-owned bank) and Russia, the Ukrainian Prime Minister stated that the claim was to compensate for “the damage and loss inflicted by the Russian Federation’s illegal annexation of Crimea and the consequent losses by Oschadbank of revenue and property in Ukrainian territory”. He called another State-owned companies to bring similar proceedings against Russia to “recover losses caused by the illegal annexation of Crimea” (referring to Yatseniuk, Interfax-Ukraine, 8 July 2015, <http://en.interfax.com.ua/news/economic/276618.html> accessed 1 December 2017). 137 GA Res 68/262. 138 Talmon (n 42) 113; Dugard (n 42) 135 (resolution ‘confirm an already existing duty on States not recognize such situations’). 139 Talmon (n 42) 113. 140 Happ and Wuschka (n 72) 255–56. 141 Dumberry (n 97) 376ff. 142 The question as to whether or not the same conclusion can also be reached regarding disputes arising from State contracts or the host State’s laws is examined in: ibid 369ff. 143 LG&E Energy Corp, LG&E Capital Corp, and LG&E International, Inc v Argentina, ICSID Case No ARB/02/1, Decision on Liability, 3 October 2006 [89] (‘applying the rules of international law is to be understood as comprising the general international law, including customary international law, to be used as an instrument for the interpretation of the [BIT]’). See also: ADC Affiliate Ltd & ADC & ADMC Management Ltd v Hungary, ICSID Case No ARB /03/16, Award, 2 October 2006 [290]. 144 The question is examined in detail in Dumberry (n 97) 380ff (examining the position of writers). See: Saluka Investments BV v Czech Republic, UNCITRAL, Partial Award, 17 March 2006 [254]: ‘In interpreting a treaty, account has to be taken of “any relevant rules of international law applicable in the relations between the parties” – a requirement which the [ICJ] has held includes relevant rules of general customary international law’. 145 Methanex Corporation v United States, UNCITRAL, Award, 3 August 2005, pt IV, ch C, 11 [24]. 146 ILC Rep (n 51). 147 Legal Consequences for States of the Continued Presence of South-Africa in Namibia (South-West Africa) notwithstanding Security Council Resolution 276 (1970) (c) ICJ Rep 1971 16, [121, 133]. 148 Milano (n 43) 51: ‘A comprehensive approach to non-recognition is not limited to the formal recognition of the legality of the situation as such, such as an act of annexation, but it also extends to all relations, of an economic, political, diplomatic, commercial nature which imply recognition of the illegal situation. In broad terms, and with regard to the application of the doctrine of non-recognition to the situation in Crimea, States and international organizations shall refrain from any formal act of recognition of Russia’s legal authority over Crimea and from any act which implies recognition of such authority’. He provides a number of examples of policy measures which could be adopted. 149 Plama Consortium Ltd v Bulgaria, ICSID Case No ARB/03/24, Award, 27 August 2008 [130–146]. 150 Inceysa Vallisoletana, SL v El Salvador, ICSID Case No ARB/03/26, Award, 2 August 2006 [248–252]. 151 World Duty Free Company Limited v Kenya, ICSID Case No ARB (AF)/00/7, Award, 4 October 2006 [123, 157]; Metal-Tech v Uzbekistan (n 111). More generally: AP Llamzon, Corruption in International Investment Arbitration (OUP 2014). As explained by the tribunal in Gustav F W Hamester GmbH & Co KG v Ghana, ICSID Case No ARB/07/24, Award, 18 June 2010 [123], ‘an investment will not be protected if it has been created in violation of national or international principles of good faith; by way of corruption, fraud, or deceitful conduct; or if its creation itself constitutes a misuse of the system of international investment protection under the ICSID Convention’ and ‘It will also not be protected if it is made in violation of the host State’s law’. 152 World Duty Free, ibid [139]. 153 ibid [157]. 154 Happ and Wuschka (n 72) 255. While recognizing that an arbitral tribunal would not be ‘bound directly nor indirectly by the [non-recognition] obligation’, they also added that tribunals ‘will presumably be reluctant to make any finding that could be interpreted as recognizing unlawful acquisition of territory as legitimate and thus render their award subject to challenge or annulment or even unenforceable’. But their general conclusion is that ‘a tribunal, as a consequence, could feel comfortable to apply the principle of non-recognition in a manner that would not allow the annexing state to escape the obligations it had if the acquisition of territory had been lawful’ (264). 155 See, judgment of the Tribunal fédéral, 23 November 2017, in: ATF 4A_396/201. 156 See, more generally (ie without referring to the situation in Crimea): Happ and Wuschka (n 72) 268, see also 255. 157 ibid 259: ‘As long as the annexing state excludes the former sovereign on the annexed territory from the exercise of any rights on that territory, thereby exercising de facto sovereignty, it cannot be decisive whether it exercises de jure sovereignty, as well. Any other approach would frustrate both the obligation of non-recognition as well as the effective implementation of obligations under a treaty. Accepting the state’s exercise of control as sufficient to satisfy the territorial requirement of a treaty could, from a policy perspective, be the way to grant the provisional recognition required to deny benefits.’ See also: ‘The exercise of de facto sovereignty, accordingly, could be sufficient to establish “territory” in cases where the de jure sovereign is completely deprived of the exercise of its rights’. See also 263–64. 158 See IAReporter (n 77). 159 Happ and Wuschka (n 72) 262–63 (emphasis added). 160 ibid 263. 161 ibid 263. 162 ibid 264 (emphasis added). For this reason, they believe that a tribunal could apply the principle of non-recognition ‘in a manner that would not allow the annexing state to escape the obligations it had if the acquisition of territory had been lawful’. 163 ibid. 164 ibid 262–63. 165 H Lauterpacht, Recognition of States in International Law (CUP 1947) 420. 166 See SP Sharma, Territorial Acquisition, Disputes, and International Law (Brill 1997) 158. See also, the comment made by Talmon (n 42) 125 (‘the obligation of non-recognition does have real substance and may prove a powerful sanction by the international community against the responsible State’). 167 Crawford, The Creation of States (n 42) 159, 173 (emphasis added). 168 ibid 160. See also V Gowlland-Debbas, Collective Responses to Illegal Acts in International Law: United Nations Action in the Question of Southern Rhodesia (Martinus Nijhoff 1990) 278. 169 Dawidowicz (n 42) 683. 170 Wall in the Occupied Palestinian Territory (n 40) [121]: ‘The Court considers that the construction of the wall and its associated régime create a "fait accompli" on the ground that could well become permanent, in which case, and notwithstanding the formal characterization of the wall by Israel, it would be tantamount to a defacto annexation.’ 171 Milano (n 43) 54–55. 172 Crawford, The Creation of States (n 42) 160. 173 Dugard (n 42) 163. Thus, for him, the ‘violation of an ordinary rule of international law could not possibly result in so drastic a sanction as the collective non-recognition of a State or territorial acquisition’, and, consequently, only the ‘norm essential to the maintenance of the prevailing international public order could possibly warrant collective actions of this kind’ (153–54). 174 S Talmon, ‘The Constitutive versus the Declaratory Theory of Recognition: Tertium Non Datur?’ (2004) 75 British YIL 180. 175 Crawford, The Creation of States (n 42) 159. 176 The scope of these sanctions is clearly beyond the scope of this article. Suffice it to say, that the EU has now adopted sanctions that cover a wide range of activities by companies that are now prohibited in Crimea. See <https://europa.eu/newsroom/highlights/special-coverage/eu_sanctions_en> accessed 1 December 2017, referring to: Council Regulation (EU) No 692/2014, 23 June 2014 concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol, <http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02014R0692-20141220&qid=1444987014323&from=EN> accessed 1 December 2017. Similar sanctions have also been adopted by the United States: US Department of State, ‘Ukraine and Russia Sanctions’ <http://www.state.gov/e/eb/tfs/spi/ukrainerussia/> accessed 1 December 2017. 177 Happ and Wuschka (n 72) 255, 267: ‘allowing a state to enter a legal black hole and putting investors in the annexed territory in a legal vacuum clashes with the rationale behind the obligation of non-recognition of illegal acquisition of territory’. 178 Christakis (n 30) 17. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of International Dispute Settlement Oxford University Press

Requiem for Crimea: Why Tribunals Should Have Declined Jurisdiction over the Claims of Ukrainian Investors against Russian under the Ukraine–Russia BIT

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Abstract

ABSTRACT This article examines claims filed by Ukrainian investors against Russia under the Ukraine–Russia BIT alleging violations committed in Crimea after its annexation by Russia in 2014. Six tribunals have recently rendered awards concluding that they have jurisdiction over these disputes. I will argue that the only logical way for them to come to this conclusion is to consider that Crimea is now part of Russia for the application of the BIT. Yet, Crimea is still part of Ukraine under international because the annexation was in violation of the jus cogens prohibition of the use of force. Tribunals should therefore have declined their jurisdiction over these claims. Their decisions have certainly been influenced by the unprecedented context of these proceedings, including Ukraine’s intervention recognizing the effectiveness of the occupation. Yet, such decisions are giving legal effect to Crimea’s change of status contrary to the non-recognition obligation under international law. 1. INTRODUCTION Until recently, investment arbitration lawyers and scholars did not pay much attention to the question of the interaction between the different fields of State succession and international investment law. To the best of the present author’s knowledge, the first article to fully address the specific question of State succession to BITs was the one published in 2015 by myself.1 The question of State succession to BITs has since gained some attention by scholars.2 The present author has recently published a book on the topic.3 In fact, the issue has been featured centre stage in an increasing number of recent awards. Thus, in the Sanum v Laos case, the Tribunal addressed in its 2013 award, the controversial question of whether the China–Laos BIT extended to Macao after the cession of territory in 1999.4 The award was later set aside by a judgment of the High Court of Singapore in 2015,5 which was subsequently overturned by the Singapore Court of Appeal in its 2016 judgment (which held that the BIT does apply to Macao and that the Tribunal had jurisdiction over the claim brought by Sanum).6 Since then, many other awards have examined complex questions of State succession. For instance, the WWM v Kazakhstan Tribunal held in its (still confidential) 2015 award that the 1989 Canada–USSR BIT was binding on Kazakhstan.7 At the time of writing my book (May 2017), issues of State succession had arisen in no less than 46 publicly known BIT arbitration cases.8 This article examines a number of arbitration claims which have been recently filed by Ukrainian investors against Russia under the Ukraine–Russia BIT, alleging violations committed in Crimea after its annexation by Russia in 2014. Six tribunals have recently rendered awards on jurisdiction in these cases. Although the awards remain confidential, the limited information available about them indicates that tribunals have concluded they had jurisdiction over these claims. I will argue in this article that the only logical way for the tribunals to conclude that they have jurisdiction over these claims under the Ukraine–Russia BIT is to consider that the territory of Crimea is now part of Russia. This is because the BIT only applies to Ukrainian investors making an investment in Russia. The illegal annexation of Crimea by Russia was in violation of the jus cogens prohibition of the use of force (and the territorial integrity of Ukraine). Under international law, Crimea is still part of the territory of Ukraine. Russia is the occupying power in that territory. For these basic reasons, tribunals should have declined their jurisdiction over these claims. Yet, it cannot be denied that these tribunals were faced with a rather unique and in many ways unprecedented context. Thus, none of the parties involved in the proceedings (Russia did not participate) formally contested the application of the Ukraine-Russia BIT to the territory of Crimea. Ukraine even took the very surprising step of intervening in these proceedings to argue in favour of recognizing the effectiveness of the occupation and the obligation for Russia to protect Ukrainian investors in that territory after the annexation. There is no doubt that these extraordinary circumstances influenced the findings of these tribunals. This has apparently allowed them to avoid examining the fundamental question of the legality of the annexation of Crimea. In my view, by holding jurisdiction over these claims, they are (at least implicitly) considering that Crimea is part of Russia for the purpose of the application of the BIT. In doing so, tribunals are giving a legal effect to Crimea’s change of status. This is contrary to the non-recognition obligation of acquisition of territories by the use of force in violation of a jus cogens norm. While this non-recognition obligation is generally considered to apply to States, I will argue in this article that there are good reasons to support extending this duty to arbitral tribunals. After having briefly examined in Section 2 the sequence of events that led to the annexation of the territory of Crimea, Section 3 will provide an overview of relevant international law issues arising from this event. Some of the questions explored include the consequences of the illegal use of force by Russia in violation of a jus cogens norm, the obligation for States not to recognize the annexation or to give any effect to Crimea’s change of status, and whether the provisions of the 1978 Vienna Convention apply to cases of illegal annexation. This article will specifically focus on the impact of the annexation on investment treaties. One controversial issue is whether the BITs to which Ukraine was a party prior to the events should continue to apply to the territory of Crimea after the annexation or whether Russia’s BITs should now find application. Another very controversial question examined in this article is the fate of the Ukraine–Russia BIT and whether it now applies to the territory of Crimea.9 Finally, Section 4 will analyse the claims filed by Ukrainian investors against Russia under the Ukraine–Russia BIT. 2. OUTLINE OF THE SEQUENCE OF EVENTS In 1783, Crimea was annexed by the Russian Empire. Following the Russian Revolution of 1917, Crimea became an autonomous republic within the Russian Soviet Federative Socialist Republic in the USSR. Crimea is populated by a Russian-speaking majority.10 In 1954, the territory of Crimea was transferred to the Ukrainian Soviet Socialist Republic. When Ukraine became an independent State in 1991, Crimea was part of its territory. Ukraine’s territorial integrity, including the territory of Crimea, was recognized by Russia after its independence.11 The February 2014 revolution, which ousted Ukrainian President Viktor Yanukovych, sparked a political crisis in Crimea. By the end of the month, elements of Russian troops (although this point is contested by Russia) had seized official buildings and were occupying part of the territory.12 However, it is indisputable that after the referendum Russian troops openly took control of Crimea, seized Ukrainian military equipment and forced Ukrainian troops to surrender.13 On 6 March, the local legislative organ of Crimea, the Supreme Council, adopted a decree on the All Crimean Referendum presenting two options to the population, including the ‘reunification’ of Crimea with the Russian Federation.14 In the meantime, a ‘Declaration of independence of the Republic of Crimea’ was adopted on 11 March 2014. The Ukrainian Ministry of Foreign Affairs issued a statement the same day stating that the declaration was ‘unconstitutional, illegal and having no legal effect’15 which was followed by an order by the Acting President of Ukraine to the same effect. The referendum took place on 16 March. The overwhelming majority of participating voters (96.77%) voted in favour of the ‘reunification’ with Russia. Many commentators have raised serious doubt about the legitimacy of the referendum and the accuracy of the result given the fact that it took place in a context of an armed emergency with Russian troops on the ground.16 There is little doubt that the referendum and the declaration of independence were illegal acts under Ukrainian law which uphold the principle of territorial integrity and the inviolability of borders.17 The referendum was deemed unconstitutional by the Constitutional Court of Ukraine.18 The same position was adopted, inter alia, by the Venice Commission of the Council of Europe as well as by the Chairman of the OSCE,19 the G-7,20 and in a joint statement issued by the President of the European Commission and the President of the European Council.21 It should be added (as further examined below) that the United Nations General Assembly (GA) Resolution 68/262 also held that the referendum was invalid.22 On 17 March, the Supreme Council of Crimea declared the formal independence of the Republic of Crimea.23 It should be noted that the actual wording of the resolution is quite illogical. While correctly stating that the referendum ‘showed that the people of the Crimea want[ed] to join Russia, and consequently, separate from Ukraine’, it also added that the people wanted to ‘create an independent State’ and decided ‘to proclaim Crimea an independent sovereign State’. Yet, voters were not asked any question on independence per se, but only on ‘reunification’.24 In any event, the very same day, the Parliament of Crimea submitted a formal request to the Russian government for Crimea to be integrated into Russia.25 On 17 March, Russia officially recognized the Republic of Crimea ‘as a sovereign and independent State’ by an executive order signed by the President.26 The same day, President Putin also notified the Russian parliament27 of the proposal made by Crimea to become part of Russia. On 18 March, Russia’s President and Crimean authorities signed an ‘Agreement’ on the accession of Crimea to Russia.28 The annexation was formalized under Russian law in the following days.29 In sum, the sequence of events can be summarized as follows: After a referendum, Crimea declared its independence and seceded from Ukraine; The day after, Russia recognized the Republic of Crimea as a ‘sovereign and independent State’ by decree; One day later, the Republic of Crimea and Russia signed a Treaty on Accession of Crimea to the Russian Federation; Three days later, the annexation of Crimea was formalized by a Russian law. 3. INTERNATIONAL LAW ISSUES ARISING FROM THE CRISIS IN CRIMEA A. What happened in Crimea is not a ‘transfer’ of territory, but an illegal annexation The sequence of events seems to suggest (at first) that what took place in Crimea is a case of ‘secession’, whereby a new State was established. If it were to be the case, as rightly noted by one writer, ‘les habitants de la Crimée resteront dans les annales comme ayant procédé à la sécession effective la plus rapide de l'histoire moderne’,30 Not only would that secession be the quickest in history, but it would also be the shortest. This is because ‘secession’ was very quickly followed by the integration of one ‘State’ (Crimea) into an already existing State (Russia). Yet, the fact that all these events took place within only a couple of days clearly suggests that this is not a case of secession where the newly independent State, subsequently freely ‘decided’ to be integrated with another existing State. If one looks at the events with a rather limited measure of ‘distance’ (in fact, merely one week would suffice in that case …), the most realistic view is to consider the Crimean crisis as a ‘transfer of territory’. Thus, part of the Ukraine territory was ‘transferred’ (without its consent) to Russia. Yet, the Crimean crisis cannot be considered as a ‘normal’ case of ‘transfer of territory’. This is because the ‘transfer’ was preceded by an armed intervention by Russian forces in the territory of Crimea (and also in other parts of Eastern Ukraine). It is the use of force by Russia which led to a violation of the territorial integrity of Ukraine, and ultimately resulted in the annexation of the territory of Crimea by Russia.31 There exists a general prohibition of the use of force in international relations,32 which is now largely considered as a jus cogens norm.33 The annexation of a territory by the use of force is consequently considered as illegal.34 In sum, the annexation of Crimea is illegal under international law.35 B. States have the obligation not to recognize the annexation or to give any effect to Crimea’s change of status States have an obligation not to recognize new situations arising from an illegal act of annexation.36 This obligation is found in the 1974 GA Resolution 3314 (XXIX) on the definition of aggression,37 and at Article 41 of the ILC Articles on State responsibility.38 The Security Council has affirmed such an obligation not to recognize on many occasions.39 It is now well-established (by the ICJ,40 the ILC41 and by many scholars42) that this non-recognition obligation, in the context of violations of jus cogens norms, is a rule of customary international law. How do these principles apply to the case of Crimea?43 As put by one writer, ‘the process in which Crimea was integrated into Russia relied on the use of force by Russian troops and therefore gives rise to an obligation not to recognize Crimea’s accession to Russia’.44 Many States have declared the annexation of Crimea as an illegal act and have consequently refused to recognize it.45 This is also the position adopted by the European Union,46 and that of several international organizations (NATO,47 OSCE,48 Council of Europe49). A number of States have put in place sanctions against Russia.50 Only a small number of States have recognized Crimea’s accession to Russia.51 The GA’s Resolution 68/262, adopted on 27 March 2014 (with 100 votes in favour, 11 against and 58 abstentions), affirmed the Assembly’s commitment to the territorial integrity of Ukraine and directed States ‘not to recognize any alteration of the status of [the] autonomous Republic of Crimea and the city of Sevastopol on the basis of referendum’.52 The Resolution also called all States ‘to refrain from any action or dealing that might be interpreted as recognizing any such altered status’. The Resolution has been considered as a ‘collective application of the rule of non-recognition’.53 A similar resolution was blocked by a Russian veto at the Security Council.54 In any event, it is important to note that any determination by the Security Council of the illegality of an annexation is not essential for the non-recognition obligation to arise.55 The obligation not to recognize exists for all States notwithstanding any prior determination by the Security Council or any other United Nations (UN) body. The non-recognition obligation arises from the unlawful character of the annexation. C. Do BITs signed by Ukraine continue to apply in Crimea? Article 15 of the 1978 Vienna Convention on Succession of States to Treaties (VCST) provides for the application of the moving treaty frontiers (MTF) rule in the context of cession and transfer of territory.56 Under that rule, when a territory of a State (State A) becomes (after the date of succession) part of the territory of another one (State B), the change of sovereignty over that territory has two effects: (i) the treaties of State B become applicable to the territory, and (ii) the treaties of State A cease to be applicable to that territory.57 The application of this principle to the case of Crimea would result in two consequences: the treaties of the predecessor State (Ukraine) would cease to be in force from the date of the annexation on the territory of Crimea, and those of the successor State (Russia) would come into force with respect to that territory from that date. In other words, if the MTF rule was applied, the BITs entered into by Russia with other States apply in Crimea. Ukrainian BITs would simply no longer apply to this territory. Importantly, Article 6 of the Vienna Convention indicates that its provisions ‘apply only to the effects of a succession of States occurring in conformity with international law and, in particular, the principles of international law embodied in the Charter of the United Nations’.58 In other words, the Convention does not apply to cases of annexation by the use of force which are considered to be illegal under international law,59 and to situations of illegal occupation of territory.60 As a result, the MTF rule set out at Article 15 VCST does not apply to the annexation of Crimea.61 The fact that the Convention does not apply in the context of the annexation of Crimea,62 does not mean that there are no applicable rules of State succession. Those rules which are considered as reflecting customary international law will continue to apply.63 For this reason, it has been argued that ‘the customary equivalent to the rule reflected’ in 15 VCST [and Article 29 Vienna Convention on the Law of Treaties (VCLT)64] should apply ‘by default’ in Crimea.65 It is true that the Sanum Arbitral Tribunal and the Singapore’s High Court and Court of Appeal have considered that the MTF rule contained at Articles 29 VCLT and 15 VCST is reflective of a rule of custom.66 Many scholars have adopted the same position.67 However, as noted by Gaggioli, all will depend on how other States react to a claim in favour of the application of the MFT rule to specific situation of Crimea.68 States may indeed oppose such a claim by invoking a violation of a jus cogens norm.69 There are good reasons for arguing that, as a matter of principle, the MTF rule simply cannot apply to an illegal annexation of territory. The goal of Article 6 of the Convention is to prevent giving any legal effect to an illegal situation.70 In the context of Crimea, the aim is to prevent the ‘normal’ application of the MTF rule under which Russia’s treaties would simply apply in Crimea. This is because the annexation of Crimea is anything but a ‘normal’ situation whereby Russia could benefit from the rights existing under rules of State succession in its newly acquired territory. In my view, the application of the MTF rule to the specific situation of Crimea based on the ground that it is a rule of custom would clearly undermine the purpose of Article 6 of the Convention. Moreover, any such application of the MTF rule should be considered as an implicit recognition by other States of the effectivité of an illegal action under international law.71 For all of these reasons, States should strongly reject the application of Russia’s BITs to the territory of Crimea (even if the MTF rule is considered as custom). While recognizing that the MTF rule set out at Article 15 VCST does not apply to the case of the illegal annexation of Crimea, two writers have recently stated that Article 29 VCLT could find application.72 They have highlighted the fact that the provision refers to a treaty being binding upon each party in respect of its ‘entire territory’.73 In fact, in their view, some examples of State practice ‘might further support the argument of a broad reading of Article 29 VCLT that would also encompass annexed territories’.74 According to them, such an interpretation would be in accordance with the purpose of BITs, which is to protect investors and that logically, more investors would be covered in the event that the Russian BITs were to apply to Crimea.75 In my view, without any evidence to the contrary, Article 29 VCLT would normally solely apply to situations that are in conformity with international law. Thus, the expression ‘entire territory’ should be considered as a reference to a State’s de jure territory. The ordinary meaning of the term ‘territory’ found in a fundamental multilateral treaty such as the VCLT should not be understood as including a territory under occupation which has been illegally annexed by the use of force.76 As further discussed in Section 3 below, the tribunals in the Ukrnafta and Stabil cases have apparently adopted the opposite position.77 In sum, as a matter of principle, the MTF rule should not apply to the case of Crimea. Consequently, treaties to which Russia is a party should not find application on this territory. The BITs to which Ukraine was a party should continue to apply to the territory of Crimea after the annexation. Finally, it should be added that the effect of an armed conflict on treaties is a complicated question which has recently been codified by the ILC’s ‘Draft Articles on the Effects of Armed Conflict on Treaties’.78 The question has been examined by scholars in light of the events in Crimea79 and is beyond the scope of this article.80 In any event, the present author is not aware of any party to a BIT enter into by Ukraine having notified the other of the suspension or the termination of the treaty because of the war in Crimea. D. The practical consequences for foreign investors arising from Russia’s occupation of Crimea Under international law, Crimea still belongs to Ukraine ‘whatever the de facto situation may look like’.81 Ukraine retains international responsibility for its entire territory, including Crimea.82 As a matter of principle, Ukrainian BITs continue to offer legal protection to the foreign investors of the other contracting parties doing business in Crimea. Yet, the question of the application of Ukrainian BITs to Crimea will only have any real and concrete implications in the event that a foreign investor starts a claim against Ukraine alleging violations of the BIT in that territory. Ukraine’s line of defence in any such proceedings would certainly be centred around the fact that while it has sovereignty over Crimea, the territory is nevertheless presently under foreign occupation by Russia.83 The reality is that Ukraine has effectively no control over what is happening on the ground in Crimea since its annexation by Russia. Even if Ukraine is, as a matter of principle, still responsible for the legal protection of foreign investors, the fact of the matter is that it simply cannot ensure that protection. It is Russia which exercises the de facto authority over the territory of Crimea since the annexation. Logically, Russia should be responsible for the actions that took place in Crimea since its annexation. But, as noted by one writer, ‘the annexing state, even though it effectively controls the annexed territory, cannot be deemed to have succeeded to any obligations the original or de jure sovereign had entered into in relation to that piece of land’.84 Russia cannot be considered as the beneficiary of any rights connected with the annexed territory of Crimea.85 In practical terms, this means that foreign investors doing business in Crimea would benefit from none of the protection existing either under Ukraine’s BITs or Russia’s BITs. The situation can be summarized as follows: The legitimate authority in Crimea (Ukraine) cannot effectively provide legal protection to investors on the ground; The only State which could provide legal protection to investors (Russia) is prevented from doing so because the authority it exercises in Crimea is illegal.86 As noted by two writers, ‘no attribution to the original or de jure sovereign of acts committed on that territory can be established’ regarding the territory of Crimea.87 It has been pointed out by them that the result ‘would leave investors in a legal vacuum’ as no BIT protection would apply.88 Yet, since Crimea is an ‘occupied territory’,89 international law imposes important obligations and responsibilities on Russia, as the force occupying Crimea.90 As noted by one writer, ‘the annexation may be expected to impose some of the main obligations of territorial power on Russia without transferring the main rights, those remain where they had been - that is to say, with Ukraine’.91 For one thing, the applicable rules in the field of humanitarian law continue to apply independently of BITs.92 Russia must also apply in Crimea the fundamental human rights treaties to which it is a party,93 including the European Convention of Human Rights, which includes important property rights protection.94 The reason for applying such treaties in Crimea is to avoid a vacuum whereby individuals under occupation would otherwise be left with no legal protection and no State would assume any responsibility.95 Clearly, the same logic cannot apply to BITs whose purpose is to provide legal protections to foreign investors, and not to the local population living in the territory controlled by a foreign power. As the occupying force in Crimea, Russia must also apply the minimum standard of treatment (MST) under custom.96 This obligation applies to all States, including those that have not entered into any BITs. Moreover, it means that this standard of protection can be invoked by any foreign investor regardless of whether or not its State of origin has entered into a BIT with Russia. The MST is an umbrella concept, which itself incorporates different elements. The present author has examined the scope and content of the MST elsewhere.97 Suffice it to say that the MST encompasses (at the very least) an obligation for host States to prevent denial of justice in the administration of justice and to provide due process, an obligation to prevent arbitrary conduct, and an obligation to provide investors with ‘full protection and security’.98 Foreign investors may also still be protected by rights contained in contracts (although the economic sanctions imposed by States on Russia may have rendered such contracts void and unenforceable). In sum, foreign investors doing business in Crimea will benefit from none of the protections offered under BITs entered into by Russia or Ukraine.99 While such an outcome is clearly regrettable for investors, they are nonetheless not in a total legal vacuum. Thus, they will remain protected by certain legal norms, but not to the extent they would be expecting under a typical BIT. Specifically, they will benefit from no access to international arbitration (unless consent to arbitration can be found in a contract or the host State’s laws).100 The next section examines specifically the fate of the Ukraine–Russia BIT after the annexation. The controversial question of the application of this BIT to Crimea has been the focal point of a number of recent claims filed by Ukrainian investors against Russia (they are examined in the next section). 4. ARBITRATION CLAIMS FILED BY UKRAINIAN INVESTORS AGAINST RUSSIA UNDER THE UKRAINE–RUSSIA BIT A number of claims have recently been filed by Ukrainian investors against Russia for breaches of the Russia–Ukraine BIT committed in the territory of Crimea after the annexation. These claims have been the subject of much discussion lately.101 As of December 2017, eight claims had been filed against Russia.102 In the following sections, I will examine a number of questions in relation to these claims. A. Tribunals have to determine their jurisdiction over these claims, even if it is uncontested by the parties The first obvious and fundamental question which each of these tribunals will have to determine is whether they have jurisdiction over the disputes. At the time of writing, the tribunals in the Everest,103Belbek,104PJSC CB PrivatBank,105Ukrnafta,106Stabil107 and Lugzor108 cases had rendered their decisions on jurisdiction. All awards are confidential. One particular aspect of these proceedings is the fact that the parties do not seem (at first) to deny the jurisdiction of the tribunals and do not appear (at first) to be contesting the application of the BIT to investments made by Ukrainian investors in the territory of Crimea. Thus, in these cases, the investors have argued that the territory of Crimea is now part of Russia because otherwise the BIT simply does not apply to them. Russia is also of the view that Crimea is now part of its territory (Russia has decided not to participate in these proceedings, as further explained below). It has been argued that since none of the parties to the proceedings is formally contesting the application of the BIT to these disputes, tribunals may not have to decide the controversial question of whether Crimea should be considered as part of the territory of Russia.109 Others have suggested that this situation could be considered as an implicit ad hoc submission agreement between the parties in giving jurisdiction to the tribunals over the disputes.110 In my view, an arbitral tribunal necessarily has to decide ex officio the question of its jurisdiction notwithstanding the position of the parties on the matter. This is based on the principle of compétence de la competence and that of iura novit curia, which has been recognized by tribunals in the context of investment disputes.111 This is apparently also the position adopted by the tribunals in, inter alia, the Ukrnafta and Stabil cases.112 As noted by one writer, ‘investment tribunals generally consider that they are entitled to and even obliged to conduct an ex officio review of their jurisdiction’.113 This is because ‘arbitrators have a duty to render an enforceable award that is, at the same time, also not prone to challenges’.114 In my view, this duty is all the more apparent given the very controversial and highly politically sensitive nature of these proceedings. The question of the legality of the annexation must be addressed by them from the outset of the proceedings.115 In any event, Russia decided to not participate in these proceedings.116 Tribunals have nevertheless ordered the continuation of these proceedings.117 They have also granted an application from Ukraine to make submissions as a non-disputing party to the BIT in all six cases (a point further discussed below).118 It has been suggested by one writer that ‘had Russia participated in the proceedings it would have most likely accepted the application of Articles 15 or 31 VCST, but would have raised one of the exceptions to this article’.119 But, since Russia is not participating in the proceedings, the same writer then asked the question as to how a tribunal should determine what could have been Russia’s approach to the matter.120 It may be difficult to infer anything from Russia’s decision not to participate in the proceedings. What matters is that an arbitral tribunal has to decide the question of jurisdiction ex officio in default proceedings.121 The question of the legality of the annexation should not be discarded by a tribunal. This is, however, what the tribunals did in the Ukrnafta and Stabil cases.122 Finally, it should be added that there is an additional complication regarding the proceedings in two of these claims, which have been filed by Ukrainian State-owned enterprises.123 The companies are controlled by the government of Ukraine. They certainly have filed such politically sensitive claims with the approval of the appropriate authority from the government of Ukraine. If this is the case (and there is limited information available to assess whether it is the case), this would suggest that Ukraine is of the view that Crimea should be considered as a part of Russia for the application of this BIT. This is indeed the only way for Ukrainian investors to claim the benefit of the BIT before these tribunals. This position would be rather strange given the fact that Ukraine has thus far maintained strongly and continuously that its territorial integrity had been breached by Russia as a result of the illegal annexation of Crimea. In my view, this position would seriously undermine Ukraine’s claim that Crimea remains part of its territory.124 In any event, such a surprising position by Ukraine will certainly influence tribunals having to decide the question of their jurisdiction over these cases. B. The Ukraine–Russia BIT does not apply to these disputes because Crimea is not part of the territory of Russia This section explains that, based on the language contained in the Ukraine–Russia BIT, the tribunals should, logically, only have jurisdiction over these disputes if they come to the conclusion that Crimea is part of the territory of Russia. The Ukraine–Russia BIT only covers ‘Investments’ made by ‘Investors’ of ‘one Contracting Party on the territory of the other Contracting Party …’ (Article 1(1)) (emphasis added). Let us assume for the sake of argument that the Ukrainian claimants have made an ‘investment’ in accordance with the BIT and that they fulfil the ratione personae requirements under Article 1(2)b.125 The fundamental question remains whether any such investment can be considered as being made ‘on the territory of the other Contracting Party’, ie Russia. Thus, in the context of claims filed by Ukrainian claimants, the BIT only provides them with protection if they have made an investment in Russia. The problematic aspect of these claims is that claimants alleged violations of the Ukraine–Russia BIT by Russia for actions which have taken place on the territory of Crimea. Tribunals therefore have to determine whether Crimea can be considered as part of the territory of Russia at the date of the commencement of the proceedings.126 This is the inescapable question that each tribunal needs to address from the outset of the proceedings. That question will be answered by examining the definition of ‘territory’ in the BIT at Article 1(4): the territory of the Russian Federation or the territory of the Ukraine and also their respective exclusive economic zone and the continental shelf as defined in conformity with the international law. Three observations can be made about this clause. First, the definition does not refer specifically to the territory of Crimea. This is a rather obvious observation from which not much can be deducted. Thus, the definition of the term ‘territory’ contained in the BIT does not refer to any specific territories as being part of either State. In any event, such absence is logical given the fact that at the time when the treaty was signed, Crimea was considered by both States as being part of Ukraine. Secondly, the clause explicitly defines the territories of both States as including their respective exclusive economic zones and continental shelf. As noted by one writer, ‘where such territorial restrictions are present, support for arguing that the treaty extends protections beyond de jure territory is fairly thin’.127 That may be true, but this definition is not unique and is often found in BITs. As such, a reference to the exclusive economic zone and continental shelf does not in itself indicate much as to whether the parties intended for the BIT to cover only de jure territory. Thirdly, the clause contains an explicit reference to ‘international law’. The use of the words ‘as defined in conformity with the international law’ were most likely meant to qualify only the territorial scope of the ‘exclusive economic zone and the continental shelf’. In other words, the extent of each State’s exclusive economic zone and continental shelf should be in accordance with international law. This is apparently the position adopted by the tribunals in the Ukrnafta and Stabil cases.128 Another possible interpretation would be that these words were meant to qualify, more generally, the expression ‘territory of the Russian Federation’. Thus, the ‘territory’ of Russia would have to be ‘as defined in conformity with the international law’. Under such an interpretation, the ‘territory’ of Russia would not include those parts which were integrated in violation of international law. This is in fact the position which has been adopted by certain writers. For Costelloe, ‘qualifying words such as “in conformity with international law” limit a treaty’s application in certain territories or areas by explicit reference to the international lawfulness of a State’s exercise of rights over such territories or areas’.129 The question of the legality of the annexation of Crimea by Russia is not to be determined under the domestic laws of Russia, but under international law.130 The annexation of territories by the use of force is illegal under international law. In sum, given the BIT’s specific features regarding the definition of ‘territory’, there are good reasons for arguing that a tribunal should not come to the conclusion that Crimea is part of Russia for the application of the treaty. C. Tribunals should have logically concluded that they have no jurisdiction over these disputes I have argued above that the only logical way for tribunals to conclude that they have jurisdiction over these claims under the Ukraine–Russia BIT is to consider that the territory of Crimea is now part of Russia under the Ukraine–Russia BIT. This is because the BIT only applies to Ukrainian investors making an investment in Russia. Given the fact that under international law Crimea is still part of the territory of Ukraine, it should logically follow that the tribunals have no jurisdiction over these claims. At least, this is the solution which would seem to be the most coherent from a ‘pure’ international law perspective. Yet, it seems that things are not as ‘simple’ in the specific context of these claims. Six tribunals (Belbek, Everest, PJSC CB PrivatBank, Ukrnafta, Stabil and Lugnor) have held that they have jurisdiction over these claims. The awards remain confidential. Very limited information is currently available regarding the actual reasoning of these tribunals. The limited information available suggests that the tribunals’ decisions may have been influenced by very specific factors and circumstances arising in these claims. It has been reported that the tribunals have held in the Belbek and PJSC CB PrivatBank cases that Russia ‘had obligations to protect Ukrainian investors in Crimea under the Ukraine-Russia BIT from the date of 21 March 2014 onward’ (ie the date of the formal incorporation of Crimea into the Russian Federation).131 The news report on the cases further added that ‘it appears that the arbitrators have sidestepped the thorny question as to the lawfulness of the Russian occupation and annexation of Crimea, instead zeroing in on the effectiveness of the occupation and the consequent finding that Russia should be liable for protection of Ukrainian investors in that territory’.132 This would suggest that the tribunals have interpreted the expression ‘territory of the Russian Federation’ solely based on the de facto situation on the ground without examining the question of the legality of annexation. This is also apparently what the tribunals did in the Ukrnafta and Stabil cases.133 The tribunals in the Everest and Lugnor cases have taken the same position.134 At first, the tribunals’ decision to (apparently) focus on the effectiveness of the occupation in Crimea may seem surprising. Yet, their decision was certainly influenced by the position adopted by Ukraine itself, which intervened as a non-disputing party in the arbitration proceedings. Thus, it has been reported that Ukraine ‘portrayed the occupation as unlawful, but ultimately effective (such that Russia should subsequently bear the responsibility of protecting Ukrainian investors under the BIT)’.135 Very limited information is currently available regarding the position which was adopted by Ukraine in these proceedings. Yet, any such position focusing on the effectiveness of the occupation on the ground would be peculiar. In my view, the position (apparently) adopted by Ukraine gives effect to the annexation of Crimea. It is therefore rather surprising for Ukraine to have adopted such a position in these proceedings. It may be that these proceedings filed by Ukrainian investors are in fact encouraged by Ukraine as part of a broader strategy to fight on all possible legal fronts the illegal annexation of Crimea.136 The next section examines one additional reason which, in my view, militates in favour of concluding that tribunals should have declined to exercise jurisdiction over disputes submitted by Ukrainian nationals against Russia under the BIT for events which took place in Crimea after the annexation. D. The Obligation under custom not to recognize the illegal annexation of Crimea should apply to tribunals It should be recalled that GA Resolution 68/262 calls for ‘all States, international organizations and specialized agencies’ to not recognize any ‘alteration of the status’ of Crimea and ‘to refrain from any action or dealing that might be interpreted as recognizing any such altered status’.137 In my view, a tribunal concluding that Crimea is part of Russia for the application of the Ukraine–Russia BIT would undoubtedly fly in the face of both the letter and the spirit of the Resolution. The next paragraphs explain the reasons why. It is true that unlike Security Council Resolutions, those adopted by the GA are not mandatory under international law. But, it is also well-known that ‘the obligation and content of non-recognition do not depend upon any action by the appropriate political organs of the United Nations’.138 In that sense, it does not matter that the obligation of non-recognition was affirmed by the GA, and not by the Security Council. In fact, as noted by Talmon, the fact that ‘the obligation arises directly under customary international law is also shown by the fact that, in several cases, the call for non recognition has been contained in a non-binding resolution of the General Assembly or in a statement of the President of the Security Council, which do not create any obligation’.139 The authoritative value of the obligation of non-recognition of the annexation of Crimea is therefore a consequence of its status as a rule of custom, not by the fact that it was affirmed by one organ of the UN or another. It is also true that GA Resolution 68/262 is only addressed to ‘all States, international organizations and specialized agencies’, and not to any other actors.140 Yet, the obligation not to recognize an illegal annexation of territory that occurred in violation of the prohibition of the use of force is largely recognized as a rule of custom. Arbitral tribunals must apply rules of custom when deciding disputes under BITs. This is because tribunals will apply international law to solve disputes under BITs. This is the case whether or not the BIT contains a choice of law clause and even in cases where that choice of law does not refer to international law.141 At the end of the day, international law will always find application in BIT disputes.142 Therefore, when a tribunal is applying international law in these circumstances, it will necessarily have to take into account relevant rules of customary international law.143 Under Article 31(3)(c) of the Vienna Convention, a tribunal should take into account ‘any relevant rules of international law applicable in the relations between the parties’, which certainly includes rules of customary international law.144 In sum, a tribunal established under the Ukraine–Russia BIT must apply the customary obligation of non-recognition of illegal annexation of territories when deciding whether it has jurisdiction over a dispute under this treaty. This is a fortiori the case given the fact that the illegal annexation of Crimea was in violation of the prohibition of the use of force, which is considered as one of the few existing jus cogens norms. There is no doubt that a tribunal must apply jus cogens norms. The Methanex Tribunal made it clear that ‘as a matter of international constitutional law a tribunal has an independent duty to apply imperative principles of law or jus cogens and not to give effect to parties’ choices of law that are inconsistent with such principles’.145 Tribunals established under the Ukraine–Russia BIT therefore have an ‘independent duty’ to apply jus cogens norms, including the prohibition of the use of force. According to the ILC, the non-recognition obligation under Article 41(2) of the Draft Articles on State Responsibility does not only cover formal recognition ‘but also prohibits acts which would imply such recognition’.146 In the Namibia opinion, the Court also affirmed that any dealings with South Africa which may ‘imply a recognition that South Africa's presence in Namibia is legal’ would be inconsistent with the Security Council's declaration of illegality and as such proscribed.147 In my view, an award concluding that the territory of Crimea is part of Russia under the Ukraine–Russia BIT is implying a recognition of the annexation of that territory by Russia. Such an award is in fact giving legal effect to a situation in violation of a jus cogens norm. Even if one were to consider that this non-recognition obligation is formally imposed only on States,148 it remains that a tribunal should be particularly sensitive about deciding to exercise its jurisdiction over a dispute under the specific circumstances previously described. This decision could be considered as contrary to international or transnational public policy. Recent ICSID tribunals have held that they either lack jurisdiction or that a claim was inadmissible when faced with the illegal conduct of an investor, such as misrepresentations made by the claimant,149 fraud150 or bribery/corruption.151 In the World Duty Free case, the tribunal mentioned that the concept of ‘international or transnational public policy’ as ‘signifying an international consensus as to universal standards and accepted norms of conduct that must be applied in all fora’.152 In that case, the tribunal concluded that it was ‘convinced that bribery is contrary to the international public policy of most, if not all, States or, to use another formula, to transnational public policy’.153 It is true that in these cases, tribunals dealt with the illegal acts committed by investors, rather than by the respondent State like in the present case. Yet, it remains that an annexation of territory in violation of a jus cogens norm should certainly be considered as contrary to the ‘transnational public policy’ of all States. At any rate, any award which implies the recognition of an illegal annexation of territory in violation of a jus cogens norm could be open for a challenge, an annulment procedure, and may also be unenforceable.154 At the time of writing, Russia (which did not participate in the proceedings) started set aside proceedings in Switzerland against the award in the Ukrnafta and Stabil cases.155 For all of these reasons, in my view, tribunals should have concluded that they had no jurisdiction under the Ukraine–Russia BIT over claims filed by Ukrainian investors against Russia for investments made in Crimea. This would mean, in practical terms, that these Ukrainian claimants (as well as all Ukrainian nationals) will be left with no recourse under this BIT for measures taken in Crimea after the annexation. The consequences of such a unique situation are further discussed in the next section. E. Should a ‘pragmatic’ approach be adopted instead? Some writers have been critical of the position taken in the previous sections in favour of adopting a ‘stricto sensu interpretation’ of the definition of the term ‘territory’ under Russian BITs and its consequence that investors would no longer benefit from any BIT protection in Crimea. Happ and Wuschka have argued for the adoption of a ‘pragmatic approach’ in order to free ‘investors from the legal vacuum an annexation might put them in’.156 One easy solution to prevent any such ‘vacuum’ would be to extend Russian BITs to the territory of Crimea. Thus, for them, in order to determine the territorial scope of a BIT under Article 29 VCLT, what matters is not a State’s de jure sovereignty over a given territory, but rather whether it exercises control over that territory.157 The tribunals in the Ukrnafta and Stabil cases apparently adopted that position.158 While acknowledging that ‘the obligation not to recognize illegally acquired territory is said to be well-regarded in general international law’, Happ and Wuschka add that ‘there is obviously no clear path, yet, in a situation where non-recognition benefits the occupying power’.159 For Happ and Wuschka, Russia would indeed benefit from the application of the principle of non-recognition because it would not be responsible under Russian BITs for actions taken place in Crimea. For them, it would result in providing ‘for a lesser degree of obligations on the part of the annexing State as if that State had lawfully acquired the territory and the investment treaty was to apply’.160 Since this situation ‘would contravene the object and purpose of the sanction and frustrate the application of the ex injuria jus non oritur principle’, these two writers have argued that ‘as a matter of policy, the principle of non-recognition cannot be applied strictly to illegally annexed territory’ and ‘it must be applied in a modified way’.161 Tribunals should therefore ‘limit the application of the respective treaty only to the annexing State’s obligations’ without granting Russia any rights under the BITs.162 This is, in their view, ‘precisely what the obligation of non-recognition and its underlying principle ex injuria non oritur jus mandate’.163 The next paragraphs will briefly examine the arguments put forward by these two writers. The starting point is their affirmation that the goal of the principle of non-recognition ‘is that the [annexing] state should not benefit from illegal conduct’ and that ‘non-recognition serves the purpose of a sanction’.164 This is no doubt true. Lauterpacht noted that ‘no recognition is based on the view that acts contrary to international law are invalid and cannot become a source of rights for the wrongdoer’.165 As a matter of principle, the wrongdoer should not benefit from the annexation. Whether or not non-recognition should be considered as a ‘sanction’ is controversial. Some writers have endorsed this position.166 Yet, as noted by Crawford, non-recognition ‘is not as such either a method of enforcement or a sanction’.167 For him, non-recognition is ‘a precondition for other enforcement action’ such as sanctions.168 In other words, non-recognition is not a sanction in itself. It is rather the legal foundation upon which States can individually (or collectively) set up economical, political and diplomatic sanctions against the wrongdoer. In any event, even if one considers that the obligation of non-recognition encompasses a sanction dimension, it is clearly not only limited to that aspect. According to one writer, ‘at a minimum, the rationale of the obligation of non-recognition is to prevent, in so far as possible, the validation of an unlawful situation by seeking to ensure that a fait accompli resulting from serious illegalities do not consolidate and crystallize over time into situations recognized by the international legal order …’.169 The same rational has been explained by the ICJ in the Wall case.170 Milano has also well-explained that the aim of the principle of non-recognition is ‘the protection of subjective rights of the injured party; the affirmation of a community interest in the protection of fundamental norms; and the need to enforce the legal norms which are being breached’.171 Thus, it seems that the basic reason behind the adoption of the non-recognition principle is to ensure that fundamental norms of international law are respected by States.172 As noted by Dugard, the practice of non-recognition is confined to those situations ‘which most seriously offend international law and public policy’.173 The principle of non-recognition is aimed at preventing giving of any legal effect to any violations of those principles; it has a ‘status-denying effect’.174 As noted by Crawford, ‘non-recognition helps to prevent the consolidation of unlawful situations’.175 In the context of Crimea, the ultimate goal is to prevent the illegal annexation from gaining any legal recognition and from bearing any legal effect. In my view, extending Russian BITs to the territory of Crimea would amount to recognizing the annexation on the ground and giving legal effect to an unlawful action. In this context, ‘sanctioning’ the action of Russia seems to be just part of the overall intention of non-recognition. In this context, the position adopted by Ukraine in these on-going arbitration proceedings is quite surprising. One reason the writers mentioned above have argued for the application of a ‘modified’ non-recognition obligation is because they say that Russia will benefit from the non-application of its BITs to the territory of Crimea insofar as it will not have to provide any BIT protection to foreign investors doing business there. It may very well be that Russia would be better off under this scenario when compared to the situation which would prevail had it legally incorporated Crimea (in which case Russian BITs would have applied to that territory under the MTF principle). Yet, any such ‘benefit’ enjoyed by Russia may only be in the short term. This is because foreign investors may be under the obligation to not continue doing business in Crimea under sanction regimes imposed by many States.176 In any event, given the great uncertainty regarding their legal situation (including the lack of BIT protection), investors may be reluctant to maintain their investments very long in a post-annexation Crimea. One can logically predict an important reduction in foreign direct investments (FDI) in that region. At the end of the day, Russia may not benefit at all from the non-application of its BITs to the territory of Crimea because of a potential FDI exodus. In my view, the better solution remains adopting the strict application of the non-recognition principle and, consequently, refusing to extend Russian BITs to the territory of Crimea. This seems like the most efficient way to ‘sanction’ the illegal action of Russia. 5. Conclusion This article has shown that the illegal annexation of Crimea was in violation of the prohibition of the use of force, which is considered as a jus cogens norm. This conclusion is of fundamental importance in the context of claims filed by Ukrainian investors against Russia under the Ukraine–Russia BIT for breach allegedly committed in Crimea after the annexation. I have argued in this article that the only logical way for tribunals to conclude that they have jurisdiction over these claims is to consider that the territory of Crimea is now part of Russia under the Ukraine–Russia BIT. Yet, under international law Crimea is still part of the territory of Ukraine. Russia is the occupying power in that territory. In my view, the question of the legality of the annexation cannot be discarded by tribunals on the ground that none of the parties involved in these proceedings contest the effective application of the Ukraine–Russia BIT to the territory of Crimea. This is so even if Ukraine has taken this (very awkward) position during these proceedings. Tribunals should have concluded that they had no jurisdiction over these disputes. The practical outcome of the solution put forward here is admittedly not ideal insofar as it results in foreign investors no longer benefitting from any BIT protection in Crimea. Ultimately, as noted by two writers, not extending Russian BITs to the territory of Crimea leads to a clash of divergent interests: ‘the interest of the international community to sanction illegal acquisition of territory by means of annexation clashes with the investors’ individual interest to have their investment protected under international law’.177 This is a classic case where one needs to basically choose between the lesser of two evils. In my view, the Crimean crisis and its aftermath is a situation where the interest of the international community as a whole should supersede those of a few foreign investors. Arbitral tribunals should act as guardians of the international legal order. As such, they should not recognize (even implicitly) an illegal annexation of territory and should not render awards giving any legal effect to such a basic violation of international law. As noted by Christakis, ‘l'obligation de non-reconnaissance n'est certainement pas une panacée, elle constitue néanmoins la sanction minimale de droit commun prévue par un ordre juridique qui ne pourrait, sans s'autodétruire, accepter sa capitulation devant le fait accompli’.178 This is a fundamental duty. But, it comes at an important cost for foreign investors who will benefit from no BIT protection in Crimea. I would argue that this is (sadly) the price to pay for fundamental norms of international law to have any meaning in the realm of investor–State arbitration. This article reflects facts current as of December 2017. This article is a modified version of a chapter in my book: A Guide to State Succession in International Investment Law, Elgar Publications 2018. The author wishes to thank Nicolas Karsenti, Corey Spector, and Evan Bernstein (all students at the University of Ottawa) for their assistance and suggestions. Footnotes 1 P Dumberry, ‘An Uncharted Question of State Succession: Are New States Automatically Bound by the BITs Concluded by Predecessor States Before Independence?’ (2015) 6(1) JIDS 74. 2 CJ Tams, ‘State Succession to Investment Treaties: Mapping the Issues’ (2016) 31(2) ICSID Rev 315; A Genest, ‘Sudan Bilateral Investment Treaties and South Sudan: Musings on State Succession to Bilateral Treaties in the Wake of Yugoslavia’s Breakup’ (2014) 3 TDM 1. Another article examining only partly the question of succession to BITs is: JA Fraterman, ‘Secession, State Succession and International Arbitration’ (2013) SSRN Paper <https://ssrn.com/abstract=2313401> accessed 1 December 2017. More recently, see: RP Fleury, ‘State Succession and Bits: Challenges for Investment Arbitration’ (2016) 27 Am Rev Int'l Arb 451. 3 P Dumberry, A Guide to State Succession in International Investment Law (Elgar Publications 2018). 4 Sanum Investments Limited v Laos, UNCITRAL, PCA Case No 2013-13, Award on Jurisdiction, 13 December 2013. The Sanum saga is examined in: Dumberry (n 3); P Dumberry, ‘State Succession to BITs in the Context of the Transfer of Territory of Macao to China: Lessons Learned from the Sanum Saga’ (2018) 35(1) J Int Arb (forthcoming). 5 Lao People’s Republic v Sanum Investments Limited [2015] SGHC 15. 6 Sanum Investments Ltd v Government of the Lao People’s Democratic Republic [2016] SGCA 57. 7 World Wide Minerals Ltd and Mr Paul A Carroll, QC v. Kazakhstan, UNCITRAL, Award, 19 October 2015. 8 These cases are examined in: Dumberry (n 3). 9 Agreement Between the Government of the Russian Federation and the Cabinet of Ministers of the Ukraine on the Encouragement and Mutual Protection of Investments, 27 November 1998, <http://investmentpolicyhub.unctad.org/Download/TreatyFile/2233> accessed 1 December 2017 (hereinafter, ‘Ukraine–Russia BIT’). 10 See N Cwicinskaja, ‘The Legality and Certain Legal Consequences of the “Accession” Of Crimea to the Russian Federation’ (2014) 34 Polish YIL 72, referring to the latest Ukrainian census in 2001 showing that Russians accounted for close to 60% of the population in Crimea. Other groups include Ukrainians (25%), Crimean Tatars (12%), etc. 11 Under the Budapest Memorandum, signed on 5 December 1994, the USA, the UK and Russia committed to ‘respect the Independence and Sovereignty and the existing borders of Ukraine’ and reaffirmed ‘their obligation to refrain from the threat or use of force against the territorial integrity or political independence of Ukraine and that none of their weapons will ever be used against Ukraine except in self-defense or otherwise in accordance with the Charter of the United Nations’ (1–2). The 1997 Treaty on Friendship, Cooperation, and Partnership (signed on 31 May 1997) between Ukraine and Russia also affirmed the inviolability of the borders between both States (Article 3). 12 For a detailed analysis: V Bílková, ‘The Use of Force by the Russian Federation in Crimea’ (2015) 74 ZaöRV 27. 13 C Marxsen, ‘The Crimea Crisis - An International Law Perspective’ (2014) 74 ZaöRV 389. 14 The questions asked was as follows: ‘1. Are you in favor of the Autonomous Republic of Crimea reuniting with Russia as a constituent part of the Russian Federation?’ or ‘2. Are you in favor of restoring the Constitution of the Republic of Crimea of 1992 and of Crimea’s status as part of Ukraine?’. 15 Statement of the Ministry of Foreign Affairs of Ukraine, 11 March 2014. 16 TD Grant, ‘Annexation of Crimea’ (2015) 109(1) AJIL 85; Marxsen (n 13) 381; Cwicinskaja (n 10) 74–75; TW White, ‘Referendum in Crimea: Developing International Law on "Territorial Realignment" Referendums’ (2016) 38(3) Houston JIL 843; A Peters, ‘Sense and Nonsense of Territorial Referendums in Ukraine, and Why the 16 March Referendum in Crimea Does Not Justify Crimea’s Alteration of Territorial Status under International Law’ (EJIL Talks!, 16 April 2014) <http://www.ejiltalk.org/sense-and-nonsense-of-territorial-referendums-in-ukraine-and-why-the-16-march-referendum-in-crimea-does-not-justify-crimeas-alteration-of-territorial-status-under-international-law/> accessed 1 December 2017. 17 Grant, ibid 69; Marxsen (n 13) 380; Cwicinskaja (n 10) 66ff. 18 The Decision of the Constitutional Court of Ukraine in relation to the case arising from the constitutional petition of the Acting President of Ukraine, Chairman of the Verkhovna Rada of Ukraine and the Ukrainian Parliament Commissioner for Human Rights on compliance with the Constitution of Ukraine (constitutionality) of the Resolution of the Supreme Council of the Autonomous Republic of Crimea ‘On holding the Crimean referendum’ (the case of local referendum in the Autonomous Republic of Crimea) OJ of Ukraine 2014 No 26, item 766. 19 See Grant (n 16) 69. 20 Statement of G-7 Leaders on Ukraine, 12 March 2014, <www.whitehouse.gov/the-press-office/2014/03/12/statement-g-7-leaders-ukraine>. 21 Joint statement on Crimea by the President of the European Council, Herman Van Rompuy, and the President of the European Commission, José Manuel Barroso, 16 March 2014, <http://ec.europa.eu/commission_2010-2014/president/news/archives/ 2014/03/20140317_1_en.htm> accessed 1 December 2017. 22 GA Res 68/262. 23 Resolution State Council Republic of Crimea no 1745-6/14, 17 March 2014. 24 Cwicinskaja (n 10) 69. 25 L Harding and S Walker, ‘Crimea Applies to Be Part of Russian Federation after Vote to Leave Ukraine’ The Guardian, London (17 March 2014). 26 Order of the President of the Russian Federation of 17 March 2014, No 147 ‘On recognition of the Republic of Crimea’, The Collection of Legislation of the Russian Federation, 24 March 2014, No 12, item 1259: ‘Given the declaration of will by the Crimean people in a nationwide referendum held on March 16, 2014, the Russian Federation is to recognize the Republic of Crimea as a sovereign and independent state, whose city of Sevastopol has a special status.’ 27 Specifically, the Federation Council of the Federal Assembly and the State Duma of the Federal Assembly. 28 The Agreement between the Russian Federation and the Republic of Crimea on the Accession of Republic of Crimea to the Russian Federation and on Forming New Federal Constituent Entities within the Russian Federation, signed in Moscow on 18 March 2014, The Collection of Legislation of the Russian Federation, 7 April 2014, No 14, item 1570. Russia’s Constitutional Court confirmed on 19 March the ‘compliance’ of the treaty between two ‘subjects’ of international law with the Constitution. The question remains whether Crimea was indeed an ‘independent State’ merely 2 days after the referendum and whether it had the legal capacity to enter into a treaty with another sovereign State. On this question, see: Grant (n 16) 71; Marxsen (n 13) 390. 29 The State Duma and the Federation Council ratified the Agreement on 20 and 21 March, respectively, and a federal constitutional law was adopted on 21 March 2014: The Federal Constitutional Law of 21 March 2014, No 6-FCL ‘On the Accession to the Russian Federation the Republic of Crimea and Establishing within the Russian Federation new constituent entities of the Republic of Crimea and the City of Federal Importance Sevastopol’, The Collection of Legislation of the Russian Federation, 24 March 2014, No 12, item 1201. The law was then signed by President Putin: The Federal Law of 21 March 2014 No. 36-FL ‘On Ratifying the Agreement between the Russian Federation and the Republic of Crimea on the Accession of the Republic of Crimea in the Russian Federation and on Forming New Constituent Entities within the Russian Federation’, The Collection of Legislation of the Russian Federation, 24 March 2014, No 12, item 1202. On this question, see: Cwicinskaja (n 10) 68ff, 69 (noting that ‘It thus appears that during the Crimean accession process the sequence of events and the events themselves were artificially created in an attempt to ensure their compliance with the Russian legislation.’). 30 T Christakis, ‘Les conflits de sécession en Crimée et dans l'est de l'Ukraine et le droit International’ (2014) JDI 2. 31 Marxsen (n 13) 389; Christakis (n 30) 6ff; A Tancredi, ‘Neither Authorized nor Prohibited?: Secession and International Law after Kosovo, South Ossetia and Abkhazia’ (2008) 18 Italian YIL 37; PM Olson, ‘The Lawfulness of Russian Use of Force in Crimea’ (2014) 53 Mil L & L War Rev 17, 19–24; Bílková (n 12); A Tancredi, ‘The Russian Annexation of the Crimea: Questions Relating to the Use of Force’ (2014) 1 Questions Int'l L 5. 32 Charter of the United Nations, art 2(4). 33 J Crawford, Brownlie's Principles of Public International Law (8th edn, OUP 2012) 242–43, 595; Cwicinskaja (n 10) 71; Bílková (n 31) 27; C Christakis, ‘L’obligation de non-reconnaissance des situations créées par le recours illicite à la force ou d’autres actes enfreignant des règles fondamentales’ in C Tomuschat and JM Thouvenin (eds), The Fundamental Rules of the International Legal Order: Jus cogens and Obligations Erga Omnes (Martinus Nijhoff 2005) 127. 34 See Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States in Accordance with the Charter of the United Nations, GA Res 2625 (XXV), UN GAOR, 25th Sess, Supp No 28, UN Doc A/RES/8082 (24 October 1970), principle I (‘no territorial acquisition resulting from the threat or use of force shall be recognized as legal’). See R Hofmann, ‘Annexation’ in Max Planck Encyclopedia of Public International Law (OUP online edn, 2006). 35 Grant (n 16); Marxsen (n 13) 379; R Geiss, ‘Russia’s Annexation of Crimea: The Mills of International Law Grind Slowly but They Do Grind’ (2015) 91 Int’l L Stud 431; Tancredi, ‘Neither Authorized nor Prohibited’ (n 31) 37–62; Christakis (n 30) 10–11. 36 Christakis, ibid 9–10, 12ff. 37 art 5(3) GA Res 3314 (XXIX) declares that ‘[n]o territorial acquisition or special advantage resulting from aggression is or shall be recognized as lawful.’ 38 Titles and Texts of the Draft Articles on Responsibility of States for Internationally Wrongful Acts Adopted by the Drafting Committee on Second Reading, 26 July 2001, UN Doc A/CN.4/L.602/Rev.1. 39 SC Res 662, UN Doc S/RES/662 (9 August 1990) (Iraq’s annexation of Kuwait); SC Res 497, UN Doc S/RES/497 (annexation of Golan Heights by Israel). See also: proclamation of the Republic of Northern Cyprus in 1983: SC Res 541, UN Doc S/RES/541 (18 November 1983); SC Res 550, UN Doc S/RES/550 (11 May 1984). 40 Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, ICJ Rep 2004, 136 [87]. 41 Commentaries to the Draft Articles on Responsibility of States for Internationally Wrongful Acts Adopted by the International Law Commission at its Fifty-Third Session (2001), November 2001, Report of the ILC on the Work of its Fifty-third Session, Official Records of the General Assembly, Fifty-sixth Session, Supplement No 10 (A/56/10), ch.IV.E.2), 114. 42 Crawford (n 33) 598, 600; J Dugard, Recognition and the United Nations (Grotius 1987) 135–36, 152ff; M Dawidowicz, ‘The Obligation of Non-Recognition of an Unlawful Situation’ in J Crawford, A Pellet and S Olleson (eds), The Law of International Responsibility (OUP 2010) 683; Christakis (n 30) 11; A Lagerwall, ‘L’agression et l’annexion de la Crimée par la Fédération de Russie: Quels enseignements au sujet du droit international? vol 1, (2014) Questions Int’l L, Zoom Out I 63; L Mälksoo, Illegal Annexation and State Continuity: The Case of the Incorporation of the Baltic States by the USSR (A Study of the Tension between Normativity and Power in International Law) (Martinus Nijhoff 2003) 294; Christakis (n 33) 142–44; J Crawford, The Creation of States in International Law (2nd edn, OUP 2006) 160. See, however, S Talmon, ‘The Duty Not to ‘Recognize as Lawful’ a Situation Created by the Illegal Use of Force or Other Serious Breaches of a Jus Cogens Obligation: An Obligation Without Real Substance?’ in C Tomuschat and JM Thouvenin (eds), The Fundamental Rules of the International Legal Order: Jus cogens and Obligations Erga Omnes (Martinus Nijhoff 2005) 125. 43 See E Milano, ‘The Non-Recognition of Russia's Annexation of Crimea: Three Different Legal Approaches and One Unanswered Question’ (2014) 1 Questions Int’l L 37. 44 Marxsen (n 13) 391. 45 See discussion in: Grant (n 16) 87ff. 46 Joint statement on Crimea by the President of the European Council, Herman Van Rompuy, and the President of the European Commission, José Manuel Barroso, 18 March 2014, <http://europa.eu/rapid/press-release_STATEMENT-14-74_en.htm> accessed 1 December 2017. 47 NATO, ‘Crimea’s Annexation is Illegal and Illegitimate and NATO Allies Will Not Recognize It’, 18 March 2014, <www.nato.int/cps/en/natolive/news_108100.htm> accessed 1 December 2017. 48 OSCE, Resolution on Clear, Gross and Uncorrected Violations of Helsinki Principles by the Russian Federation, Declaration and resolutions adopted by the OSCE Parliamentary Assembly at the twenty-third annual secession, Baku, 28 June to 2 July 2014, 17–19. 49 Parliamentary Assembly, Res 1990 (2014), Assembly debate on 10 April 2014 (16th Sitting). 50 See, on this point, Christakis (n 30) 13ff. For an overview of sanctions imposed by the European Union, see: ‘Sanctions against Russia over Ukraine Crisis’ (EU Newsroom) <http://europa.eu/newsroom/highlights/special-coverage/eu sanctions/index> accessed 1 December 2017. For sanctions imposed by the USA, see US Department of State, ‘Ukraine and Russia Sanctions’ <http://www.state.gov/e/eb/tfs/spi/ukrainerussia/> accessed 1 December 2017. 51 Afghanistan, Cuba, Kyrgyzstan, Nicaragua, North Korea, Syria, Venezuela. 52 GA Res 68/262, 27 March 2014 [1 ,4, 5]. 53 Grant (n 16) 91. 54 The draft resolution was presented by 41 countries at the meeting of 15 March but was vetoed by Russia (China abstained): UNSC Draft Res UN Doc S/2014/189; UNSC Verbatim Record (15 March 2014) UN Doc S/PV.7138. See in: Milano (n 43) 38. 55 Christakis (n 30) 13. 56 Vienna Convention on Succession of States in Respect of Treaties, signed on 23 August 1978 and entered into force on 6 November 1996, 1946 UNTS 3, in: 17 ILM, 1978, 1488 [hereinafter, ‘Vienna Convention on Succession to Treaties’]. 57 The MTF rule is examined in Dumberry (n 3). 58 For an analysis of this provision, see G Gagglioli, ‘Article 6’ in G Distephano and G Gaggioli (eds), La Convention de Vienne de 1978 sur la succession d'États en matière de traités : Commentaire article par article et études thématiques (Bruylant 2015) 181ff. 59 ILC, Report of the International Law Commission on the Work of its Twenty-Sixth Session, 6 May to 26 July 1974, A/9610/Rev.1, in: YILC, 1974, vol II (Part One) 181. See also: T Christakis, Le droit à l’autodétermination en dehors des situations de décolonisation (La documentation française 1999) 172–73; Gagglioli (n 58) 202–04. 60 Tams (n 2) 320. 61 D Costelloe, ‘Treaty Succession in Annexed Territory’ (2016) 65 ICLQ 348; A Tanzi and L Iapichino, ‘Article 15’ in Distephano and Gaggioli (n 58) 554–55. 62 Grant (n 16 ) 92–93. 63 Gagglioli (n 58) 219, citing Rapporteur Special Vallat in (1974) Yearbook ILC, vol 2 (2nd pt) 35. 64 The MTF principle is also found at art 29 of the 1969 VCLT: ‘[u]nless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory.’ 65 Costelloe (n 61) 358. 66 Sanum, Award (n 4) [221], [222–24]; Sanum (n 6) [47]. 67 Tanzi and Iapichino (n 61) 547–49; G Hafner and G Novak, ‘State Succession in Respect of Treaties’ in DB Hollis (ed), The Oxford Guide to Treaties (OUP 2012) 411; A Zimmermann and JG Devaney, ‘Succession to Treaties and the Inherent Limits of International Law’ in CJ Tams, A Tzanakopoulos and A Zimmermann (eds), Research Handbook on the Law of Treaties (Edward Elgar 2014) 520–21; Tams (n 2) 337; K Odendahl, ‘Commentary to Article 29’ in O Dorr and K Schmalenbach (eds), The Vienna Convention on the Law of Treaties (Springer 2012) 498–500; Costelloe (n 61) 351. 68 Gagglioli (n 58) 220. 69 ibid 220–21. 70 ibid 193–95, 223. See also O Mayorga, ‘Occupants, Beware of BITs: Applicability of Investment Treaties to Occupied Territories’ (2017) 19 Palestine YIL fn 19. 71 ibid. 72 R Happ and S Wuschka, ‘Horror Vacui: Or Why Investment Treaties Should Apply to Illegally Annexed Territories’ (2016) 33(3) J Int Arb 255ff. 73 ibid 258. 74 The argument is developed more generally (ie without referring to the situation in Crimea) in: ibid 259, 260ff. 75 ibid 259, 260. 76 Costelloe (n 61) 358: ‘Neither Article 29 nor its commentary mentions territory over which a State exercises de facto authority, yet which is not legally part of that State’s territory. However, the use of the term “territory of each party” in Article 29 seems to reflect the understanding that only territory which is de jure part of a State is included. The same holds true for the term “territory of another State” in Article 15 VCST. Here, too, the obvious implication is that the provision applies only to de jure territory. These unqualified provisions simply do not address a situation of extraterritorial application, though they do not exclude such a possibility. It would be straining the text to an impermissible extent to read into these provision an exception to the otherwise only de jure character of ‘territory’, since that term cannot by itself sustain a reading that includes annexed territory and, in fact, that is not what these provisions were designed for.’ See also 378: ‘The moving treaty-frontiers rule is itself formulated by reference to “territory”. The rule, however, may not permit a reading of the term “territory” in such a way that includes annexed territory, which is ex hypothesi not part of the annexing State’s de jure territory. The same holds true for an unqualified reference to “territory” in a treaty’s provisions … .’ 77 See IAReporter, ‘Investigation’: Further Russia Investment Treaty Decisions Uncovered, Offering Broader Window into Arbitrators’ Approaches to Crimea Controversy’, 17 November 2017. 78 ILC, Draft Articles on the Effects of Armed Conflict on Treaties, with Commentaries, UN Doc A/66/10, YB ILC, vol II (pt 2) (2011). The Articles were subsequently adopted by the UN GA in 2011. Under the Articles, the general principle of the effects of armed conflict on treaties is the continued operation of those treaties. The Articles provide a number of exceptions to the general principle, including when a treaty contains an express provision regarding its operation in situations of armed conflict (art 4). In the event that the treaty does not contain a specific clause on the issue at hand, the AREAC provides under art 6 for the application of a test to determine whether a treaty is susceptible to termination, withdrawal or suspension in the event of an armed conflict. 79 OG Repousis and J Fry, ‘Armed Conflict and State Succession in Investor-State Arbitration’ (2016) 23(3) Columbia JEL 424ff; See also J Ostfansky, ‘The Termination and Suspension of Bilateral Investment Treaties Due To an Armed Conflict’ (2015) 6 JIDS 145; C Schreuer, ‘The Protection of Investments in Armed Conflict’ in F Baetens (ed), Investment Law Within International Law (CUP 2013) 3, 5 (see also: C Schreuer, ‘The Protection of Investments in Armed Conflict’ (2012) 3 TDM) 1; A Pronto, ‘The Effect of War on Law What Happens to Their Treaties When States Go to War?’ (2013) 2 Cambridge JICL 227, 233. See also, several papers presented at the Athens Colloquium, International Investment Law & the Law of Armed Conflict, 5–6 October 2017. 80 On this question, see Dumberry (n 3). 81 Marxsen (n 13) 390. See also: Cwicinskaja (n 10) 75; Geiss (n 35) 431. 82 Grant (n 16) 93. 83 Ukraine could invoke, for instance, the argument of force majeure and its impossibility to provide legal protections existing under BITs after the annexation. On this question, see: Costelloe (n 61) 375; Schreuer, ‘The Protection of Investments in Armed Conflict’ (n 79) 18ff. 84 Happ and Wuschka (n 72) 253 (emphasis added). 85 Grant (n 16) 93. 86 See, more generally (ie without referring to the situation in Crimea): Happ and Wuschka (n 72) 255: ‘In relation to our hypothetical investors’ claims, a tribunal might, in light of the above, feel tempted to read the applicable territorial requirements stricto sensu. This, in turn, would exclude any protection under either of the two potentially relevant investment treaties (assuming the investors are nationals of a third state). The investors could not rely on an investment treaty between their home state and the state that lost the territory, because that state cannot be considered responsible. They also could not rely on an investment treaty between their home state and the annexing state, because the tribunal, reading the applicable territorial requirements stricto sensu, would not consider the annexed area to be part of that state’s territory.’ 87 ibid 253. 88 ibid 255. 89 Geiss (n 35) 443ff; Tancredi, ‘The Russian Annexation of the Crimea’ (n 31) 21ff. 90 ibid. See discussion in: P Reznik, ‘Survival of BITs and Investor Rights in Crimea - Russia’s Trick or Treat(y) with Investors’ (PhD Thesis, Stockholm University 2014) 29ff. See also, several papers presented at the Athens Colloquium (n 79). 91 Grant (n 16) 93. 92 On this question, see: GI Hernández, ‘The Interaction Between Investment Law and the Law of Armed Conflict in the Interpretation of Full Protection and Security Clauses’ in Baetens (n 79) 24ff. 93 Wall in the Occupied Palestinian Territory (n 40) [112]; Application of the International Convention on the Elimination of all Forms of Racial Discrimination (Georgia v Russian Federation), Provisional Measures, Order of 15 October 2008, ICJ Rep 2008 [109]. 94 European Convention for the Protection of Human Rights and Fundamental Freedom (in 213 UNTS 222), see art 1 of Additional Protocol 1. 95 Costelloe (n 61) 361–62, concluding that one can acknowledge the applicability in Crimea of human rights treaties while ‘at the same time maintaining a position of non-recognition towards the purported change to the status’ of Crimea (362). 96 Reznik (n 90) 39ff, 44. 97 See, the analysis of the concept in P Dumberry, Formation and Identification of Rules of Customary International Law (CUP 2016) 61ff, 94ff. 98 On this question, see KS Lim, ‘Armed Conflicts and Customary Law on Investment Protection: Codification and Fragmentation of Protection and Security’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017). Another controversial question is whether the fair and equitable treatment standard is one of the elements encompassed within the larger umbrella concept of the MST or whether it is an autonomous standard. See, P Dumberry, The Fair and Equitable Treatment Standard: A Guide to NAFTA Case Law on Article 1105 (Wolters Kluwer 2013) 37ff; P Dumberry, Fair and Equitable Treatment: Its Interaction with the Minimum Standard and its Customary Status (Brill Research Perspectives in International Investment Law and Arbitration 2018). 99 It has been argued by some writers [Reznik (n 90) 46] that Russia could somehow be under the obligation to provide legal protections to foreign investors doing business in Crimea which are available under the BITs to which Ukraine (… not Russia) was a party. One obvious objection that Russia would certainly raise in the context of any claim submitted by an investor under such circumstances is the fact that it is not a party to these Ukrainian BITs. 100 There is no ‘right’ to international arbitration under custom: Dumberry (n 97) 383ff. 101 See, story reported in IAReporter, ‘Russia Disputes Round-Up: Updates on Status of 11 Known Investment Treaty Claims’, 19 January 2016. See also: Y Kryvoi, ‘Annexation of Crimea and International Investment Law’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017); L Rees-Evans, ‘Litigating the Use of Force: Reflections on the Interaction between Investor-State Dispute Settlement and Other Forms of International Dispute Settlement in the Context of the Conflict in Ukraine’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017). 102 The claims (as of December 2017) are the following: Aeroport Belbek LLC and Mr Igor Valerievich Kolomoisky v Russia, PCA Case No 2015-07; PJSC CB PrivatBank and Finance Company Finilon LLC v Russia, PCA Case No 2015-21; PJSC Ukrnafta (Ukraine) v Russia, PCA Case No 2015-34; (i) Stabil LLC, (ii) Rubenor LLC, (iii) Rustel LLC, (iv) Novel-Estate LLC, (v) PII Kirovograd-Nafta LLC, (vi) Crimea-Petrol LLC, (vii) Pirsan LLC, (viii) Trade- Trust LLC, (ix) Elefteria LLC, (x) VKF Satek LLC, (xi) Stemv Group LLC v Russia, PCA Case No 2015-35; Everest Estate LLC et al v Russia, PCA Case No 2015-36; (1) Limited Liability Company Lugzor, (2) Limited Liability Company Libset, (3) Limited Liability Company Ukrinterinvest, (4) Public Joint Stock Company DniproAzot, (5) Limited Liability Company Aberon Ltd v Russia, PCA Case No 2015-29; NJSC Naftogaz of Ukraine, PJSC State Joint Stock Company Chornomornaftogaz, PJSC Ukrtransgaz, Subsidiary Company Likvo, PJSC Ukrgasvydobuvannya, PJSC Ukrtransnafta, and Subsidiary Company Gaz Ukraiiny v Russia, SCC Arbitration Rules; Oschadbank v Russia, UNCITRAL. It should be added that the Aeroport Belbek and the PJSC CB PrivatBank cases are being heard before the same tribunal (consisting of Pierre-Marie Dupuy, Daniel Bethlehem and Vaclav Mikulka). The same situation applies to both the PJSC Ukrnafta and the Stabil et al cases (with the same tribunal consisting of Gabrielle Kaufmann-Kohler, Daniel Price and Brigitte Stern). The Everest case is examined by a different tribunal (consisting of Andres Rigo Sureda, Michael Reisman and Rolf Knieper). The Ludzor case also has a different panel (Don McRae, Bruno Simma and Eduardo Zuleta). Another interesting aspect is the fact that two claims (NJSC Naftogaz and the Oschadbank) have been filed by Ukrainian State-owned companies (a question examined below). It has been reported that these five separate claims were filed by members of the business empire of the Ukrainian oligarch, Mr Igor Kolomoisky. See, story reported in IAReporter (n 101). 103 Everest Estate, Decision on Jurisdiction, 20 March 2017. See, PCA Press Release, 9 August 2016, <http://www.italaw.com/sites/default/files/case-documents/italaw8625_0.pdf> accessed 1 December 2017. 104 Aeroport Belbek, Interim Award Addressing Certain Issues of Jurisdiction and Admissibility, 24 February 2017 (PCA Press Release, 9 March 2017) <https://pcacases.com/web/sendAttach/2090> accessed 1 December 2017. 105 PJSC CB PrivatBank, Interim Award Addressing Certain Issues of Jurisdiction and Admissibility, 24 February 2017 (PCA Press Release, 9 March 2017) <https://pcacases.com/web/sendAttach/2093> accessed 1 December 2017. 106 PJSC Ukrnafta, Awards on Jurisdiction, 26 June 2017 (PCA Press Release, 4 July 2017), <http://www.pcacases.com/web/sendAttach/2184> accessed 1 December 2017. 107 Stabil, Awards on Jurisdiction, 26 June 2017 (PCA Press Release, 4 July 2017), <http://www.pcacases.com/web/sendAttach/2186> accessed 1 December 2017. 108 Limited Liability Company Lugzor et al, Tribunal’s letter dated 29 August 2017, informing the Parties that ‘it intends, in due course, to render a final award in which it will uphold its jurisdiction over the dispute submitted to it in this arbitration and find that all of the claims made by the Claimants are admissible’ (PCA Press Release, 13 December 2017) <https://www.pcacases.com/web/sendAttach/2262> accessed 1 December 2017. 109 P Tzeng, ‘Sovereignty over Crimea: a Case for State-to-State Investment Arbitration’ (2016) 41(2) Yale JIL 462. See also the comment made by Repousis and Fry (n 79) 449; OG Repousis, ‘Why Russian Investment Treaties Could Apply to Crimea and What Would This Mean for the Ongoing Russo–Ukrainian Territorial Conflict’ (2016) 32(3) Arb Int 12. 110 Happ and Wuschka (n 72) 265: ‘this illustrates the possibility of the creation of an ad hoc agreement both for jurisdiction as well as regarding the merits of the dispute. Not only could the annexing state be deemed to have consented to the arbitration procedure by way of non-objection. It might also be deemed to have accepted the investment treaty in question generally to be applicable law between the two parties to the proceedings. Notwithstanding the question whether or not the annexed territory could be considered the territory of the annexing state under international law, the substantive protections of the treaty would then apply by way of an implicit agreement between the parties that their disputes shall be decided according to the terms of the treaty’. 111 Metal-Tech Ltd v Uzbekistan, ICSID Case No ARB/10/3, Award, 4 October 2013 [123] indicating that it ‘is the duty of a tribunal established on the basis of a treaty to verify its jurisdiction under that treaty, even if the parties have not objected to it’. See also: Wintershall Aktiengesellschaft v Argentina, ICSID Case No ARB/04/14, Award, 8 December 2008 [68]; Gustav F W Hamester GmbH & Co KG v Ghana, ICSID Case No ARB/07/24, Award, 18 June 2010, [94] Ioan Micula, Viorel Micula, SC European Food SA, SC Starmill SRL and SC Multipick SRL v Romania, ICSID Case No ARB/05/20, Decision on Jurisdiction and Admissibility, 24 September 2008 [65]. 112 See IAReporter (n 77). 113 Happ and Wuschka (n 72) 254. 114 ibid. 115 More generally, on this question, see: S Wuschka, ‘The Obligation of Non-Recognition of Situations Created by an Illegal Use of Force before International Investment Tribunals’ (International Investment Law & the Law of Armed Conflict, Athens Colloquium, 5–6 October 2017). Contra: Repousis and Fry (n 79) 447 (basing their argument on the ‘consensual nature of international arbitration’). See also: Repousis (n 109) 8. Another argument examined by the author (20ff) is whether a tribunal constituted under the Russia–Ukraine BIT could invoke the Monetary Gold principle to deny the vesting of jurisdiction. 116 In the Aeroport Belbek case, the Tribunal noted that Russia had not appointed any representatives and referred to letters dated 16 June 2015 and 1 July 2015 in which Russia indicated that the ‘[Ukraine-Russia BIT] cannot serve as a basis for composing an arbitral tribunal to settle [the Claimants’ claims]’, that it ‘does not recognize the jurisdiction of an international arbitral tribunal at the [PCA] in settlement of the [Claimants’ claims]’ and, finally, that nothing in its correspondence ‘should be considered as consent of the Russian Federation to constitution of an arbitral tribunal, participation in arbitral proceedings, or as procedural actions taken in the framework of the proceedings.’ See, PCA Press Release, 6 January 2016, <http://www.pcacases.com/web/sendAttach/1553> accessed 1 December 2017. The same letters have also been filed by Russia in other cases. 117 See, Aeroport Belbek case, Procedural Order No 3, 30 November 2015; see, PCA Press Release, 6 January 2016. The same orders have been adopted by tribunals in other cases (available at the PCA site). 118 See, for instance, Aeroport Belbek, PCA Press Release, <http://www.pcacases.com/web/sendAttach/1865> accessed 1 December 2017. 119 Repousis (n 109) 12. Thus, by relying on the exceptions contained in these provisions, Russia could argue that the BIT does not apply specifically to these disputes while being consistent with its basic general position that Crimea is now part of the Russian territory. The same writer also suggests that Russia could oppose the application of the BIT based on the ground of jurisdiction ratione temporis (13). 120 ibid 13: ‘However, Russia is not participating in the proceedings. Should the tribunal then infer that Russia’s approach is the one offered above, or should it examine the application of Article 15 or 31 VCST at face value? As already noted, the difference between the two is of fundamental importance. For if Russia’s abstinence is read as an acceptance of the application of Article 15 or 31 VCST, then the tribunal has a way out since the tribunal would not have to examine the presupposed legitimacy of the succession. On the contrary, it would need to accept the applicability of Article 15 or 31 VCST at face value and examine whether any of the exceptions to this article are potentially met. In light of this analysis, one may wonder whether Russia’s decision not to participate in the proceedings is eventually to the benefit of her expressed position.’ 121 This is what ICSID Arbitration r 42(4) provides for, although it does not apply to these cases filed under the UNCITRAL Rules. On this question, see: Wuschka (n 115). 122 See IAReporter (n 77). 123 One claim was filed by NJSC Naftogaz of Ukraine and six of its subsidiaries (See Press Release at <http://www.italaw.com/sites/default/files/case-documents/italaw7648.pdf> accessed 1 December 2017). The other claim was filed by the Ukrainian State-owned bank, Oschadbank (see: IAReporter, ‘As Yukos Enforcement Grabs Headlines, Russia Has Faced At Least 10 New Treaty Arbitrations Since 2012, With Others Threatened’, 14 July 2015, <http://tinyurl.com/oytv3av> accessed 1 December 2017. It should be added that since the commencement of the PrivatBank v Russia proceedings, Ukraine has nationalized PrivatBank. 124 See discussion: Repousis (n 109) 18ff. Relying on the reasoning of the Tribunal in CSOB v Slovakia which focused to the nature rather than purpose of the activities discharged by State-owned enterprise, he concluded that ‘there are good reasons to assert that claims by state-owned enterprises should not necessarily be regarded as claims filed by the contracting parties to an investment treaty’. If this is the case, he argued that ‘the claims of Ukrainian state-owned enterprises would not necessarily reflect Ukraine’s position on the territorial application of the Russia–Ukraine BIT to Crimea’ (19–20). 125 That is, that they are a ‘legal entity’ which have been ‘set up or instituted in conformity with the legislation prevailing’ in Ukraine and that they are “legally capable” under Ukrainian legislation “to carry out investments on the territory of the other Contracting Party”. 126 On this question, more generally (ie without referring to the situation in Crimea), see Happ and Wuschka (n 72) 251ff. 127 Costelloe (n 61) 365. 128 See IAReporter (n 77). 129 Costelloe (n 61) 365, 366: ‘where the exercise of territorial or maritime rights is qualified by words such as “in accordance with international law” the conclusion that the geographic scope of the treaty or an obligation under it is restricted to de jure territory or maritime areas is impossible to overcome’. See also: Rees-Evans (n 101) 7. 130 The reason why a tribunal ruling on this question must apply international law is simple. The Ukraine–Russia BIT does not contain a choice of law clause indicating the law applicable to settle disputes under the instrument. When this is the case, under art 35 of the UNCITRAL Rules (applicable in the above-mentioned disputes) the tribunal ‘shall apply the law which it determines to be appropriate’. The question of the interpretation of the term ‘territory’ under the BIT will have to be determined under Vienna Convention on the Law of Treaties, 1155 UNTS 331 (to which both Russia and Ukraine are parties). arts 31 and 32 of the Convention are generally recognized as rules of customary international law on matters of treaty interpretation. Under art 31(3)(c)), a tribunal should take into account, together with the context of the treaty, ‘any relevant rules of international law applicable in the relations between the parties’. The prohibition of annexation of territories by the use of force under custom is clearly one such applicable ‘relevant rules of international law’. 131 IAReporter, ‘In Jurisdiction Ruling, Arbitrators Rule That Russia is Obliged under Bit to Protect Ukrainian Investors in Crimea Following Annexation’, 9 March 2017, <https://www-iareporter-com.proxy.bib.uottawa.ca/articles/in-jurisdiction-ruling-arbitrators-rule-that-russia-is-obliged-under-bit-to-protect-ukrainian-investors-in-crimea-following-annexation/> accessed 1 December 2017. See also: GAR On-line, ‘Crimea Cases against RUSSIA to Proceed’, 9 March 2017, <https://s3.amazonaws.com/hhr-web/files/Crimea_cases_against_Russia_to_proceed.pdf> accessed 1 December 2017. 132 ibid. 133 IAReporter (n 77). 134 IAReporter, ‘Russia BIT Claims: Recent Developments in Arbitrations Against the Russian Federation’, 13 April 2017, <https://www-iareporter-com.proxy.bib.uottawa.ca/articles/russia-bit-claims-recent-developments-in-arbitrations-against-the-russian-federation/> accessed 1 December 2017. A more detailed account of the Everest award is found in: IAReporter, ‘Investigation: Full Jurisdictional Reasoning Comes to Light in Crimea-Related Bit Arbitration vs. Russia’, 9 November 2017, <https://www.iareporter.com/articles/full-jurisdictional-reasoning-comes-to-light-in-crimea-related-arbitration-everest-estate-v-russia/> accessed 1 December 2017. On the Lugzor case, see: IAReporter, ‘Crimea-related Lugzor v Russia Arbitration Clears Jurisdictional Hurdles’, 13 December 2017, <https://www.iareporter.com/articles/crimea-related-lugzor-v-russia-arbitration-clears-jurisdictional-hurdles/> accessed 1 December 2017. 135 ibid. 136 Rees-Evans (n 101) 5: ‘It would appear that Ukraine has expressly encouraged such claims as part of its “lawfare” strategy in responding to events in Crimea and beyond. For example, commenting on a dispute between Oscadbank (a Ukrainian State-owned bank) and Russia, the Ukrainian Prime Minister stated that the claim was to compensate for “the damage and loss inflicted by the Russian Federation’s illegal annexation of Crimea and the consequent losses by Oschadbank of revenue and property in Ukrainian territory”. He called another State-owned companies to bring similar proceedings against Russia to “recover losses caused by the illegal annexation of Crimea” (referring to Yatseniuk, Interfax-Ukraine, 8 July 2015, <http://en.interfax.com.ua/news/economic/276618.html> accessed 1 December 2017). 137 GA Res 68/262. 138 Talmon (n 42) 113; Dugard (n 42) 135 (resolution ‘confirm an already existing duty on States not recognize such situations’). 139 Talmon (n 42) 113. 140 Happ and Wuschka (n 72) 255–56. 141 Dumberry (n 97) 376ff. 142 The question as to whether or not the same conclusion can also be reached regarding disputes arising from State contracts or the host State’s laws is examined in: ibid 369ff. 143 LG&E Energy Corp, LG&E Capital Corp, and LG&E International, Inc v Argentina, ICSID Case No ARB/02/1, Decision on Liability, 3 October 2006 [89] (‘applying the rules of international law is to be understood as comprising the general international law, including customary international law, to be used as an instrument for the interpretation of the [BIT]’). See also: ADC Affiliate Ltd & ADC & ADMC Management Ltd v Hungary, ICSID Case No ARB /03/16, Award, 2 October 2006 [290]. 144 The question is examined in detail in Dumberry (n 97) 380ff (examining the position of writers). See: Saluka Investments BV v Czech Republic, UNCITRAL, Partial Award, 17 March 2006 [254]: ‘In interpreting a treaty, account has to be taken of “any relevant rules of international law applicable in the relations between the parties” – a requirement which the [ICJ] has held includes relevant rules of general customary international law’. 145 Methanex Corporation v United States, UNCITRAL, Award, 3 August 2005, pt IV, ch C, 11 [24]. 146 ILC Rep (n 51). 147 Legal Consequences for States of the Continued Presence of South-Africa in Namibia (South-West Africa) notwithstanding Security Council Resolution 276 (1970) (c) ICJ Rep 1971 16, [121, 133]. 148 Milano (n 43) 51: ‘A comprehensive approach to non-recognition is not limited to the formal recognition of the legality of the situation as such, such as an act of annexation, but it also extends to all relations, of an economic, political, diplomatic, commercial nature which imply recognition of the illegal situation. In broad terms, and with regard to the application of the doctrine of non-recognition to the situation in Crimea, States and international organizations shall refrain from any formal act of recognition of Russia’s legal authority over Crimea and from any act which implies recognition of such authority’. He provides a number of examples of policy measures which could be adopted. 149 Plama Consortium Ltd v Bulgaria, ICSID Case No ARB/03/24, Award, 27 August 2008 [130–146]. 150 Inceysa Vallisoletana, SL v El Salvador, ICSID Case No ARB/03/26, Award, 2 August 2006 [248–252]. 151 World Duty Free Company Limited v Kenya, ICSID Case No ARB (AF)/00/7, Award, 4 October 2006 [123, 157]; Metal-Tech v Uzbekistan (n 111). More generally: AP Llamzon, Corruption in International Investment Arbitration (OUP 2014). As explained by the tribunal in Gustav F W Hamester GmbH & Co KG v Ghana, ICSID Case No ARB/07/24, Award, 18 June 2010 [123], ‘an investment will not be protected if it has been created in violation of national or international principles of good faith; by way of corruption, fraud, or deceitful conduct; or if its creation itself constitutes a misuse of the system of international investment protection under the ICSID Convention’ and ‘It will also not be protected if it is made in violation of the host State’s law’. 152 World Duty Free, ibid [139]. 153 ibid [157]. 154 Happ and Wuschka (n 72) 255. While recognizing that an arbitral tribunal would not be ‘bound directly nor indirectly by the [non-recognition] obligation’, they also added that tribunals ‘will presumably be reluctant to make any finding that could be interpreted as recognizing unlawful acquisition of territory as legitimate and thus render their award subject to challenge or annulment or even unenforceable’. But their general conclusion is that ‘a tribunal, as a consequence, could feel comfortable to apply the principle of non-recognition in a manner that would not allow the annexing state to escape the obligations it had if the acquisition of territory had been lawful’ (264). 155 See, judgment of the Tribunal fédéral, 23 November 2017, in: ATF 4A_396/201. 156 See, more generally (ie without referring to the situation in Crimea): Happ and Wuschka (n 72) 268, see also 255. 157 ibid 259: ‘As long as the annexing state excludes the former sovereign on the annexed territory from the exercise of any rights on that territory, thereby exercising de facto sovereignty, it cannot be decisive whether it exercises de jure sovereignty, as well. Any other approach would frustrate both the obligation of non-recognition as well as the effective implementation of obligations under a treaty. Accepting the state’s exercise of control as sufficient to satisfy the territorial requirement of a treaty could, from a policy perspective, be the way to grant the provisional recognition required to deny benefits.’ See also: ‘The exercise of de facto sovereignty, accordingly, could be sufficient to establish “territory” in cases where the de jure sovereign is completely deprived of the exercise of its rights’. See also 263–64. 158 See IAReporter (n 77). 159 Happ and Wuschka (n 72) 262–63 (emphasis added). 160 ibid 263. 161 ibid 263. 162 ibid 264 (emphasis added). For this reason, they believe that a tribunal could apply the principle of non-recognition ‘in a manner that would not allow the annexing state to escape the obligations it had if the acquisition of territory had been lawful’. 163 ibid. 164 ibid 262–63. 165 H Lauterpacht, Recognition of States in International Law (CUP 1947) 420. 166 See SP Sharma, Territorial Acquisition, Disputes, and International Law (Brill 1997) 158. See also, the comment made by Talmon (n 42) 125 (‘the obligation of non-recognition does have real substance and may prove a powerful sanction by the international community against the responsible State’). 167 Crawford, The Creation of States (n 42) 159, 173 (emphasis added). 168 ibid 160. See also V Gowlland-Debbas, Collective Responses to Illegal Acts in International Law: United Nations Action in the Question of Southern Rhodesia (Martinus Nijhoff 1990) 278. 169 Dawidowicz (n 42) 683. 170 Wall in the Occupied Palestinian Territory (n 40) [121]: ‘The Court considers that the construction of the wall and its associated régime create a "fait accompli" on the ground that could well become permanent, in which case, and notwithstanding the formal characterization of the wall by Israel, it would be tantamount to a defacto annexation.’ 171 Milano (n 43) 54–55. 172 Crawford, The Creation of States (n 42) 160. 173 Dugard (n 42) 163. Thus, for him, the ‘violation of an ordinary rule of international law could not possibly result in so drastic a sanction as the collective non-recognition of a State or territorial acquisition’, and, consequently, only the ‘norm essential to the maintenance of the prevailing international public order could possibly warrant collective actions of this kind’ (153–54). 174 S Talmon, ‘The Constitutive versus the Declaratory Theory of Recognition: Tertium Non Datur?’ (2004) 75 British YIL 180. 175 Crawford, The Creation of States (n 42) 159. 176 The scope of these sanctions is clearly beyond the scope of this article. Suffice it to say, that the EU has now adopted sanctions that cover a wide range of activities by companies that are now prohibited in Crimea. See <https://europa.eu/newsroom/highlights/special-coverage/eu_sanctions_en> accessed 1 December 2017, referring to: Council Regulation (EU) No 692/2014, 23 June 2014 concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol, <http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02014R0692-20141220&qid=1444987014323&from=EN> accessed 1 December 2017. Similar sanctions have also been adopted by the United States: US Department of State, ‘Ukraine and Russia Sanctions’ <http://www.state.gov/e/eb/tfs/spi/ukrainerussia/> accessed 1 December 2017. 177 Happ and Wuschka (n 72) 255, 267: ‘allowing a state to enter a legal black hole and putting investors in the annexed territory in a legal vacuum clashes with the rationale behind the obligation of non-recognition of illegal acquisition of territory’. 178 Christakis (n 30) 17. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices)

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Journal of International Dispute SettlementOxford University Press

Published: Jun 2, 2018

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