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Territory Exclusions from Treaty Application

I. Definition


As matter of general practice, a treaty can expand or restrict the territorial scope of its application. The general rule is that a treaty is binding upon each party in respect of its entire territory unless a different intention appears from the treaty or is otherwise established.1 This general rule applies with equal force to multilateral and bilateral investment treaties.


Whether a different intention appears or is otherwise established is a matter of standard treaty interpretation.2 The issue of territorial expansion or exclusion may intertwine with issues of State succession and/or sovereignty.3 If a State’s territory expands, for instance, the moving treaty-frontiers rule provides that the treaties then in force for that State normally will be deemed to apply to the newly expanded territory.4 Illustrating this principle, several international arbitral tribunals have found that Russia’s annexation and de facto control of the Crimean peninsula extended Russia’s “territory” for purposes of the Russia-Ukraine BIT, irrespective of whether the annexation was lawful under international law.5 See further Territoriality of investment, Section III.D.

II. Jurisdictional characterization


Commentators take different approaches as to the jurisdictional characterization of the issue. The prevailing view is that territorial considerations can form a constituent part of a tribunal’s jurisdiction ratione materiae, in the case of the situs of the investment,6 or of jurisdiction ratione personae, in the case of questions regarding whether an individual in a territory can qualify as an investor of a State Party to the investment treaty.7 Others refer to a tribunal’s jurisdiction ratione loci as an separate or independent criterion.8 The issue of “territorial link” or nexus may be especially salient when determining whether securitized, aggregated, or de-localized financial instruments qualify as protected investments.9 Territorial considerations may also implicate the application of a denial-of-benefits clauses. See also Territoriality of investment, Section III.

III. Treaty practice


The ICSID Convention provides that the Convention “shall apply to all territories for whose international relations a Contracting State is responsible, except those which are excluded by such State by written notice to the depositary of this Convention either at the time of ratification, acceptance or approval or subsequently.”10 The ICSID Secretariat maintains a list of Contracting Parties that have provided such written notice.11 In an ICSID proceeding, a tribunal must assess both the territorial scope of the ICSID Convention with respect to a State Party against the territorial scope the specific investment treaty at issue.12


The New York Convention provides that “[a]ny State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible.”13


Multilateral investment treaties may require that the investment be made in the “territory” or “area” of the host State.14 These treaties may provide a definition of “territory” or “area.”15 A multilateral investment treaty may have a provision explicitly permitting States Parties to restrict or expand the territorial application of the treaty.16


Bilateral investment treaties may require that the investment be made in the “territory” or “area” of the host State.17 These treaties may provide a definition of “territory” or “area,” which may take several different forms:

  • A tautological definition;18
  • A definition that invokes the territorial seas, the Exclusive Economic Zone, the continental shelf, and/or UNCLOS to include maritime territory;19
  • A definition that includes airspace;20
  • A definition that defines territory as in conformity with international law;21 or
  • A definition that takes into account other important legal considerations, such as a non-State territory’s authority to enter into the agreement.22

A bilateral treaty may further discuss the territorial exclusions or other treatment.23 Special care should be given to the text of each individual BIT; even States that seem to employ near uniform language in their BITs may nevertheless reveal subtle differences among them.24 See further Territoriality of investment.


Baltag, C., Territoriality Under the ICSID Convention: Two Issues, TDM, 2007.

Grant, T.D., International Dispute Settlement in Response to an Unlawful Seizure of Territory: Three Mechanisms, Chicago Journal International Law, 2015.

Happ, R. and Wuschka, S., Horror Vacui: Or Why Investment Treaties Should Apply to Illegally Annexed Territories, Journal of International Arbitration, 2016, pp. 245-268.

Ho, J., Sanum Investments Ltd v The Government of the Lao People’s Democratic Republic: Circumtantial Indicia in Treaty Interpretation, ICSID Review-Foreign Investment Law Journal, 2018, pp. 67-73.

Hwang, M. and Chang, A., Government of the Lao People’s Democratic Republic v Sanum Investments Ltd: A Tale of Two Letters, ICSID Review-Foreign Investment Law Journal, 2015, pp. 506–524.

Hwang, M. and Chang, A., Of Forks and Dead Ends: Sanum Investments Ltd v Government of the Lao People’s Democratic Republic, ICSID Review-Foreign Investment Law Journal, 2018, pp. 156–180.

Kalderimis, D.R., Rubins, N. and Love, B., ICSID Convention, Chapter X, Article 70 [Notice of Territorial Exclusion], in Mistelis, L.A. (ed), Concise International Arbitration, 2nd ed., 2015, pp. 171-173.

Khamsi, K., Investments in Unsettled Maritime Boundary Contexts: The Role of Bilateral Investment Treaties in Delivering Certainty, ICSID Review-Foreign Investment Law Journal, 2019, pp. 666-696.

Kleiner, C. and Costamagna, F., Territoriality in Investment Arbitration: The Case of Financial Instruments, Journal of International Dispute Settlement, 2018, pp. 315-338.

Knahr, C., Investments ‘in the Territory’ of the Host State Y in Binder, C., Kriebaum, U., Reinisch, A. and Wittich, S. (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Shreuer, 2009.

Knahr, C., The Territorial Nexus between an Investment and the Host State, in Bungenberg, M., Griebel, J., Hobe, S. and Reinisch, A. (eds), International Investment Law, 2015, pp. 590-597.

Mayorga, O.J., Occupants, Beware of BITs: Applicability of Investment Treaties to Occupied Territories, 6 Palestine Yearbook of International Law, 2016, p.136.

Shijian Mo, J., The Dilemma of Applying Bilateral Investment Treaties of China to Hong Kong and Macao: Challenge Raised by Sanum Investments to China, ICSID Review-Foreign Investment Law Journal, 2018, pp. 125–155.

Mistelis, L.A. and di Pietro, D., New York Convention, Article X [Territorial Application Declaration], in Mistelis, L.A. (ed.), Concise International Arbitration, 2nd ed., 2015, pp. 30-32.

Repousis, O.G., The territorial application of the Energy Charter Treaty (Article 40), in Leal-Arcas, R. (ed.), Commentary on the Energy Charter Treaty, 2018.

Repousis, O.G., On Territoriality and International Investment Law: Applying China’s Investment Treaties to Hong Kong and Macao, Michigan Journal of International Law, 2015.

Repousis, O.G., The Application of Investment Treaties to Overseas Territories and the Uncertain Provisional Application of the Energy Charter Treaty to Gibraltar, ICSID Review- Foreign Investment Law Journal, 2017, pp. 170–192.

Repousis, O.G., Why Russian investment treaties could apply to Crimea and what would this mean for the ongoing Russo–Ukrainian territorial conflict, Arbitration International, 2016, pp. 459-481.

Tams, C.J., State Succession to Investment Treaties: Mapping the Issues, ICSID Review- Foreign Investment Law Journal, 2016, pp. 314–343.

Tzeng, P., Investment Protection in Disputed Maritime Areas, The Journal of World Investment & Trade, 2018, pp. 828-859.

Wende, K., The Application of Bilateral Investment Treaties in Annexed Territories: Whose BITs Are Applicable in Crimea after Its Annexation, Hague Yearbook of International Law, 2016, pp. 133-170

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