Between war and peace: Intermittent armed conflict and investment arbitration

During periods of armed conflict, a State’s treaty commitments may be suspended or replaced by other international legal obligations, often relating to international humanitarian law, the laws of war or international human rights law. However, international investment agreements (IIAs) may be distinct in this respect. A State’s ability to derogate from its IIA obligations during periods of armed conflict is likely to be extremely limited or impossible; many IIAs explicitly provide protections to foreign investors in times of armed conflict or war. What is less clear is how the incidence of armed conflict within the territory of a State subject to an investment treaty dispute is to be resolved by an arbitral tribunal when the armed conflict is not – and possibly cannot be – clearly defined; or where there are cycles of war and peace within short periods of time and relating to the same general situation. We address this question in the context of the Libyan Civil War, considering the most relevant standards of protection included in IIAs concluded by Libya, as well as the most likely defences which Libya may invoke to preclude wrongfulness for possible breaches of its IIA obligations.