The Dilemma of Bilateral Investment Treaty (BIT) in Times of Political Crises: The Application of the Russia-Ukraine BIT and its Implications on Interstate War

Abstract This paper navigates the legal challenges of BIT implementation during wartime by examining key dispute cases between Russia and Ukraine and aims to analyze the legal applicability of BIT in times of political crises, the necessity of such applications, and the feasibility of its implementation. The paper aims to clarify the legal basis for protecting foreign investments during political instability. Since Russia’s invasion of Ukraine, various investment disputes have arisen between the two countries. The cases involving Ukrainian investors and the Russian State share several common features that help analyze the role and impact of BITs and investor-state dispute settlement in political crisis situations. In terms of legal applicability, even in the absence of an explicit clause, conflict does not, in itself, suspend the treaty. Regarding necessity, upholding BIT can be considered in light of its core purpose of protecting investors, maintaining the rule of law, and preventing further political crises. In implementing BITs in crises, the political and economic feasibility must also be considered, with attention to procedural matters and the enforcement of arbitration awards.