An International Humanitarian Law Approach to Interpreting Extended War Clauses in International Investment Agreements

Extended war clauses (EWCs), designed to provide additional protection for foreign investors during times of armed conflict, remain fraught with ambiguity due to inconsistent and insufficient interpretation in investment arbitration. The evolution of property protection rules under international humanitarian law (IHL), viewed through a constructivism lens, and the development of compensation for war losses under international investment law (IIL) that is profoundly shaped by IHL demonstrate an intricate and dynamic intersection between IHL and IIL. This intersection renders IHL indispensable for the interpretation of essential elements of EWCs. This article makes critical inquiries into whether and to what extent IHL should be integrated into the interpretation of EWCs by delineating the sui generis nature of EWCs and their controversial application by tribunals, and further scrutinizing the necessity, feasibility and appropriateness of the IHL approach. Acknowledging the inherent limitations of the IHL approach, the article presents pragmatic suggestions for refining its application to strike a delicate equilibrium between safeguarding investors’ legitimate interests and upholding States’ sovereignty, and eventually ensures a viable adjudicative framework that not only embodies legal precision but also reflects broader equitable and humanitarian considerations.