Investment treaty security exceptions, necessity and self-defence in the context of armed conflict

Security exceptions are becoming increasingly prevalent in investment treaties, yet uncertainty remains as to their relationship with the defences of necessity and self-defence, both in general and in the context of armed conflict. Inconsistent interpretations of these provisions by investment tribunals and annulment committees and by the International Court of Justice under treaties of friendship, commerce and navigation have only added to this uncertainty. This chapter argues that security exceptions are conceptually distinct from the circumstances precluding wrongfulness, and in particular are not leges speciales vis-à-vis necessity or self-defence. Rather, security exceptions should be understood as either limiting the scope of the treaty obligations, or as treaty-internal affirmative defences. These different interpretations of security exceptions have practical implications for the way that the substantive obligations that may be relevant to investment claims arising from a situation of armed conflict (such as fair and equitable treatment and full protection and security) are interpreted where a security exception is present in the relevant treaty, and for the allocation of the burden of proof. Moreover, because successful invocation of the security exception renders the challenged conduct lawful, no duty of compensation arises. Relatedly, successful invocation of the necessity defence does not give rise to any obligation of compensation as a form of reparation.