The Invasion Of Ukraine And Investment Arbitration- The Doctrine Of Force Majeure

• Published date: 19 April 2022
• Subject Matter: Government, Public Sector, Inward/ Foreign Investment, Government Contracts, Procurement & PPP
• Law Firm: OBLIN Attorneys at Law LLP
• Author: Magdalena Skuza LLM Skuza and Klaus Oblin

Introduction

Chapter V of the Articles on the Responsibility of States for Internationally Wrongful Acts (ARS) codifies the circumstances precluding the wrongfulness of a state's measures that would otherwise not be in conformity with its international obligations¹. Investment tribunals are known for commonly referring to the general principles on state responsibility included in the ARS and articulated in the jurisprudence of the International Court of Justice.² The defenses which are the most likely to be used by a state against a conflict-related investment claim include necessity, force majeure, and countermeasures.³ This article focuses on force majeure in the context of the recent invasion of Ukraine by Russia. In the first part the definition of force majeure and its place in international law are briefly introduced. The second part serves to answer whether the war is a force majeure event, and, therefore, whether the wrongfulness of a failure by Ukraine to fulfil its treaty obligations could be precluded by the force majeure defense.

What is force majeure?

The concept of force majeure has been present since Roman law, and is codified in the ARS. According to Article 23 ARS, there are three main conditions that a State must meet to successfully invoke this defense. First, the force majeure act must be due to either an irresistible force or an unforeseen event. Second, the act must be beyond the State's control. Third, the unforeseeable or irresistible event must make it materially impossible for the State to perform its obligation.⁴

Is Russia's invasion of Ukraine a force majeure event?

In international law, it has been argued that a force majeure event can be a natural disaster (e.g. an earthquake) or a situation made by man, such as war, revolution, or mob violence.⁵ On 24^th of February, Russia started invasion of Ukraine. A few days before start of the invasion, leaders of States participated in diplomatic meetings with Vladimir Putin to prevent invasion.⁶ Furthermore, since the beginning of the war, Russian and Ukrainian delegations have taken part in negotiations. While Ukraine demands ceasefire and withdrawal of Russian troops, Russia insists on Ukraine's neutrality, no membership in the North Atlantic Treaty Organization (NATO), demilitarization and denazification, recognition of Crimea as a part of Russian, and the independence of Donetsk and Luhansk.⁷ President Zalensky has already announced that Ukraine will not join NATO,⁸ however...