The Role of Foreign Investment Protection in Ukraine's Economic Recovery

The importance of foreign direct investment (FDI) as a "cornerstone" for the modernisation and reconstruction of the Ukrainian economy cannot be overstated. The investment potential in Ukraine is significant due to its large consumer market, highly competitive workforce, strategic geographic location and abundant natural resources. However, the war has had a significant impact on the investment landscape, requiring innovative solutions to mitigate the risks associated with war and political instability. War risk insurance has emerged as one of the potential tools to attract and protect foreign investment. Several instruments have been created to protect investments at different levels, including the establishment of Ukraine´s Business Ombudsman as an independent institution and the law on insurance of investments in Ukraine against military risks which came into force in 2024. Yet, investment protection under international investment law is still likely to play a more important role in investors' decision-making. Ukraine is a party to 65 bilateral investment treaties (BITs) in force and another 7 signed. They provide a standard set of guarantees for foreign investment. This contribution will explore the effectiveness of Ukraine's institutions, war risk insurance schemes and BITs in attracting foreign direct investment (FDI) for economic reconstruction, while minimising future investment dispute liabilities. To this end, it will adopt a doctrinal-legal analysis combined with a policy impact assessment to evaluate the dual role of protection mechanisms in FDI inflows and dispute risks. Ultimately, the contribution will emphasise that investment disputes arising from BITs could pose a significant challenge to Ukraine's war-torn and potentially post-conflict society in the future, unless the country can offer foreign investors a minimum level of predictability and stability.