The Interplay between Investment Law and the Duty of Non-Recognition in Situations of Contested Sovereignty

The protection of foreign investments located in contested territories is both pivotal and uncertain. It is pivotal as the promotion and protection of investments represent important tools to sustain and encourage economic development. In this regard, not only States, but also de facto entities have proven to be very sensitive towards the issue, up to the point that some among them have decided to implement ad hoc domestic laws with the aim of protecting and thus attracting investments and related capacity development from abroad. The protection of foreign investments in situations of contested sovereignty is also uncertain: questions of non-recognition of de facto entities as States and non-recognition of unlawful situations brought about by serious breaches of international law may significantly impact upon home States’ scope of manoeuvre in protecting investors located abroad and on the capacity of the investor itself to implement those instruments provided for by either international law or domestic law to protect its economic interests. In light of the above, the article aims to investigate whether and to what extent international investment agreements and customary international investment law apply to protect investors in cases of contested sovereignty and whether and to what extent the interplay with the duty of non-recognition limits the protection granted to investors. The article will further investigate whether investors can take advantage of domestic laws on investments enacted by the occupying State or de facto entities in order to protect their investments located in territories subject to contested sovereignty and the limits that investors may encounter at the enforcement stage deriving from the application of the duty of non-recognition.