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Investment Claims Amid Civil Unrest: Questions of Attribution and Responsibility

Meriam Al-Rashid, Ulyana Bardyn & Levon Golendukhin

ABSTRACT

Political instability and civil strife are known inhibitors of foreign investment. The Middle East is a region with tremendous investment potential due to a constellation of factors, including abundant natural resources, convenient geographical location, and an increasingly educated population. However, the instability reverberating through the region since the inception of the Arab Spring has amplified the risks associated with that potential. This article explores international law protections that may be available to foreign investors and host states in the context of civil unrest. It sets out an analytical framework for the issues of attribution and responsibility in this context. Addressing first the issue of attribution (i.e. whether the host state may bear responsibility for unrest-related damage caused by third parties), the article surveys historical cases addressing revolution-related claims against Mexico, Venezuela, Costa Rica, and the United States, with a view to defining the circumstances under which attribution can exist. Turning to the issue of responsibility, the article analyzes both the claims potentially available to investors and the defenses potentially available to host states. The article demonstrates that while international law continues to apply amid political volatility, additional considerations come into play. Therefore, for foreign investors and host states alike, careful planning and tailored legal advice can help considerably towards understanding the risks and managing expectations with regard to a particular investment opportunity.