Arbitrating Losses in an Active War

Aişe Gül Akkoyun
May 1
3 min read

Ukraine's investment-treaty exposure didn't pause for the invasion. It got more complicated.

Background

Investment treaty arbitration involving Ukraine has continued throughout the full-scale war, running on two separate tracks that are easy to conflate but legally distinct. One track consists of pre-war disputes, arising from grievances that predate February 2022, working their way through ICSID and other fora on their own long-standing procedural timelines. The other, newer track consists of investors attempting to attribute wartime losses — destroyed or seized assets, disrupted operations, denial of full protection and security — to Ukraine itself, notwithstanding that the proximate cause of the loss is the conduct of a foreign invading force.

Why attribution is the hard legal question here

Under the customary international law codified in the Articles on State Responsibility for Internationally Wrongful Acts, damage caused by the military actions of a foreign state is not, as a general matter, attributable to the host state whose territory the fighting occurs on. That principle creates an obvious difficulty for investors seeking compensation from Ukraine for losses actually inflicted by Russian forces. The workaround argument investors have available is narrower and more demanding to prove: not that Ukraine caused the damage, but that Ukraine breached the treaty's full-protection-and-security standard by failing to take reasonable preventive measures available to it — a standard that has historically been read as requiring a level of diligence appropriate to the circumstances a state actually faced, not an unconditional guarantee of investor safety.

Ukraine's own institutional response

In parallel with defending against these claims, Ukraine has been developing its domestic arbitral infrastructure. Legislative proposals under consideration would give the International Commercial Arbitration Court a clearer statutory foundation to hear investment disputes under both domestic and international legal frameworks — a move that, if adopted, would make Ukraine one of relatively few countries in the region with a national arbitral institution formally empowered to hear this category of case, alongside the international avenues investors already use.

Why this matters beyond Ukraine specifically

Wartime and conflict-adjacent investment claims are flagged, in several of the 2026 arbitration-trend forecasts surveyed elsewhere in this archive, as one of the more significant growth areas expected over the coming years, given how much of the current geopolitical landscape involves active or recent armed conflict. Ukraine's caseload is, in that sense, an early and unusually well-documented test of how tribunals will actually apply the full-protection-and-security standard, and the ARSIWA non-attribution principle, to a state defending itself against a large-scale invasion rather than managing an isolated security incident.

What would be worth measuring

How many wartime-loss claims against Ukraine explicitly plead a full-protection-and-security breach, as opposed to attempting a more direct (and legally harder) attribution argument
Whether tribunals asked to assess FPS breaches during active, large-scale war apply a materially different diligence standard than they have in prior cases involving more limited internal unrest
How the pre-war and wartime dispute tracks compare in duration, given that pre-war claims were already running on long timelines before the invasion began
Whether the domestic arbitral-institution reform, if adopted, measurably shifts future filings away from ICSID and toward the Ukrainian forum

The open question

If full protection and security becomes the primary route for wartime investment claims against host states facing invasion, tribunals will effectively be setting the diligence bar a state must clear while actively fighting for its territory — a very different institutional position from the one FPS jurisprudence was originally built around. How that bar gets set, case by case, may end up mattering well beyond Ukraine's own docket.

Related on DLS

The Treaty That Never Entered Into Force — the other side of this conflict, where the enforcement gap runs against Russia rather than the invaded state

Sources