By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, October 19, 2026. Article no 3215
Foreign investors whose businesses suffer looting, arson or other damage during riots may obtain compensation under international investment law. However, violence alone does not establish state responsibility. Protection depends on the applicable treaty, whether the investor and investment qualify, and whether the host state breached an obligation causing the loss. Investment treaties are not comprehensive political-risk insurance policies.
The principal protection is usually the full protection and security standard. Special compensation-for-losses clauses may provide additional rights during riots, civil disturbances or armed conflict. Arbitral decisions distinguish these obligations, making treaty wording central to any claim.
Many states have agreed in international treaties to provide “full protection and security” (FPS) to foreign investments, even in times of unrest.
Full Protection and Security: A Duty of Reasonable Protection
Many bilateral investment treaties (BIT) require host states to provide full protection and security, often abbreviated FPS. Its traditional function is to protect investments against physical violence, including attacks by private groups. States may need to take preventive measures and respond effectively when violence occurs.
The obligation generally requires due diligence, not guaranteed safety. In Asian Agricultural Products Ltd. v. Sri Lanka, ICSID Case No. ARB/87/3, Award of 27 June 1990, a shrimp-farming investment was destroyed during counterinsurgency operations. The tribunal rejected strict liability but found responsibility because reasonable precautions had not been taken.
The lesson for riot-related claims is practical: tribunals examine what authorities knew, what protective measures were reasonably available and whether their response met the applicable standard—not simply whether property was damaged.
Police Inaction Can Establish Liability
Wena Hotels Ltd. v. Egypt, ICSID Case No. ARB/98/4, Award of 8 December 2000, illustrates liability for failing to prevent or remedy violence. Employees of a state-owned company forcibly seized two hotels. Egyptian authorities knew about the intended seizures but failed to prevent them, promptly restore control or impose substantial sanctions.
The tribunal found breaches of FPS and fair and equitable treatment. Although the dispute was not a nationwide riot, it demonstrates why official inaction can matter even when central-government officials do not directly participate in an attack.
For an investor facing foreseeable unrest, unanswered police requests and ignored warnings may therefore be important evidence. They must still be assessed against the circumstances and the treaty obligation.
States Are Not Automatically Liable for Overwhelming Unrest
The contrasting authority is Pantechniki S.A. Contractors & Engineers v. Albania, ICSID Case No. ARB/07/21, Award of 30 July 2009. The claim concerned losses during Albania’s 1997 disorder. The arbitrator rejected the FPS claim, assessing the authorities’ response against the scale of the emergency and Albania’s available resources.
This contextual approach does not eliminate the duty of protection. It recognizes that reasonable diligence differs from an obligation to prevent every injury. A state overwhelmed by exceptional violence is not necessarily responsible merely because police failed to stop particular looting.
Riot-Loss Clauses: Equal Treatment or Guaranteed Compensation?
Treaties frequently address losses arising from war, revolution, insurrection or riots. Ordinary loss clauses usually require treatment no less favourable than that given to domestic investors or third-country investors regarding restitution or compensation. They do not necessarily require payment where nobody receives compensation.
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Extended clauses may impose stronger obligations when state forces requisition property or destroy it outside combat or without military necessity. Their precise conditions matter. In AAPL, the investor failed under the extended war-loss provision but succeeded under the broader protection standard.
American Manufacturing & Trading, Inc. v. Zaire, ICSID Case No. ARB/93/1, Award of 21 February 1997, concerned looting by soldiers and resulted in state liability. Its expansive treatment of the ordinary loss clause remains controversial; scholarship cautions against reading a nondiscrimination provision as automatic compensation insurance.
What Legal Doctrine Adds
Christoph Schreuer’s “Full Protection and Security,” Journal of International Dispute Settlement, volume 1, issue 2 (2010), pages 353–369, explains the standard as requiring active protection while generally rejecting absolute liability. His analysis distinguishes private violence from state interference and examines authorities’ preventive and remedial responsibilities.
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The doctrinal debate also highlights the relationship between FPS and special loss clauses: investors should examine both rather than assume one replaces the other.
Personal Injuries Require a Separate Analysis
“Investor injury” often means economic harm to an investment. Bodily injury to an owner or employee does not automatically become a treaty claim: provisions protecting investments must not be confused with universal personal-security guarantees. Their scope depends on the relevant instrument.
The decisive question is therefore not whether riots occurred, but whether an applicable obligation was breached and caused compensable loss. The awards provide useful principles, not automatic outcomes. This article offers general information, not advice on a particular dispute.
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Foreign investors whose shops, hotels, warehouses or other assets were damaged during the October unrest in France may have several routes to compensation: insurance, French state liability and, in qualifying cases, investment-treaty arbitration. The riots do not automatically establish a claim against France. Each investor must identify the applicable legal protection, prove its losses and connect them to the relevant incident.
Reports published on October 18 primarily describe damage inflicted during massive riots on October 17. They should not be treated as proof that every reported loss occurred over two days. The Fédération du commerce et de la distribution initially estimated that approximately 1,500 businesses were affected, but described the financial assessment as preliminary.
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© Copyright 2026 – Eurasia Business News. Article no. 3215
