Occupants, Beware of BITs: Applicability of Investment Treaties to Occupied Territories

Abstract

This article argues that Occupying Powers are bound by Bilateral Investment Treaties (BITs) incorporated into the domestic legal system of the occupied State before the occupation. Indeed, Article 43 of the Hague Regulations of 1907 requires the Occupying Power to respect the laws in force in occupied territories. Part II of this Article shows that the phrase laws in force in Article 43 of the Hague Regulations includes pre-occupation BITs between the occupied State and third States. Therefore, the occupant's consent to be bound by those BITs, even if the occupant is not a party to them, is indirect or derivative. This form of consent not only includes the occupant's submission to the substantive guarantees of the applicable BIT, but also to its dispute resolution clauses. This means that foreign investors could assert their rights under pre-occupation BITs against the occupant through international arbitration. Part III explains that the occupant could not rely on its purported immunity from local law to avoid jurisdiction of an investment tribunal.Finally, Part IV discusses the impact of the concurrent application of the law of occupation and BITs in investor-State disputes.