Sanctions as an Institutionalized Structural Barrier in International Investment Law

In recent decades, economic sanctions have evolved from a merely political and ad hoc instrument into a structural and institutionalized mechanism for regulating international economic relations. This transformation has had profound effects on the international investment law regime, such that sanctions are no longer regarded merely as an external and exceptional factor affecting foreign investment; rather, they operate as a structural barrier to the establishment, continuation, operation, and protection of foreign investments. The principal question addressed in this study is how, and through which mechanisms, sanctions have become an institutionalized structural barrier within the framework of international investment law, and what consequences this development entails for states’ obligations, investors’ legal certainty, and the effectiveness of the foreign investment protection regime. Employing a descriptive–analytical method and drawing on library-based sources and legal doctrine, this article demonstrates that sanctions, particularly unilateral and secondary sanctions, have become a systematic and self-reproducing barrier within the international investment order by disrupting capital flows, fund transfers, contractual performance, access to financial systems, regulatory stability, and investors’ legitimate expectations. The findings indicate that the institutionalization of sanctions in the investment sphere undermines the fundamental principles of this regime, including fair and equitable treatment, investment protection, the prohibition of indirect expropriation, and the principle of predictability. This situation further reveals that the international investment law regime still lacks an adequate institutional and normative response to the structural effects of sanctions. It is therefore concluded that reconsidering the balance between states’ sovereign considerations and the need to provide effective protection for foreign investment requires the regulation of sanctions, the limitation of their extraterritorial effects, and the redefinition of compensatory mechanisms under international investment law.