Combatting Economic Sanctions: Investment Disputes in Times of Political Hostility: A Case Study of Iran
57 Pages Posted: 21 Mar 2015
Date Written: November 1, 2014
Abstract
International investment law grew significantly since the end of the Cold War, as did the international sanctions regimes designed to change the behavior of recalcitrant states. Yet, inevitably, the overreaching scope of both regimes resulted in clash between the two, creating unprecedented legal challenges. The question is whether one regime could override the other one and whether targeted states could combat economic sanctions by resorting to the international investment regime. These challenges have not been addressed in the existing literature. This article is the first attempt to investigate this complex matter by addressing the problematic of investment in Iran. Following the recent rapprochement between Iran and P5-plus-one countries, many multi-national companies showed eagerness to invest or revive their previous investments in Iran. This has posed a new set of challenges mainly revolving around the clash between the sanction and investment regimes. A third important factor at play is investment hurdles stemming from Iranian Constitution. This article argues that countries subject to sanctions could combat the negative results of economic isolation by resorting to the investment law regime. This article argues that countries subject to sanctions could combat the negative results of economic isolation by resorting to the investment law regime, demonstrating that international investment law significantly undermines the effect of economic sanctions. Leaving the Security Council resolutions aside, the precedent of investment arbitral tribunals attest to their willingness to take on cases involving economic sanctions. More importantly, as the article argues, in most cases, economic sanctions could not justify ceasing operations in targeted states. Even in the case of Security Council sanctions, this article argues that investment tribunals enjoy reviewability power, albeit limited.
Keywords: International Law, Investment Arbitration, Economic Sanctions, Bilateral Investment Treaties, Arbitral Review, Iran Foreign Investment
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