Argentina's Nationalization of YPF, or How International Economic Law is Interrelated

Abstract

The Argentinean Government nationalized the 51% of YPF in April 2012. YPF was an offshoot of the Spanish company Repsol, which was established in Argentina by means of the Bilateral Investment Treaty (BIT) of October 3rd, 1991. Argentina justified the nationalization by its public utility while it affirmed that it is not discriminatory (Article V), and thus considered the nationalization to be completely legal. However, Spain and Repsol argue that the nationalization does not have any legal basis on the BIT, and decide to respond. Within this context, Repsol had to follow the dispute settlement procedure (Article X) bringing the case to the International Centre for Settlement of Investment Disputes. Repsol’s request for a national action against Argentina was accepted by the Spanish Government, which qualified the Argentinean action as an aggression. However Spain’s options for bilateral reaction were very limited since the main trade relation with Argentina is decided in Brussels, and the BIT avoids the possibility of a diplomatic protection reaction. As a consequence, Spain asked the European Union to act against the Latin-American country in order to expel Argentinean exports from the Generalised System of Preferences and to present a claim in World Trade Organization’s Dispute Settlement System. Was this possible? What was the reaction of Argentina? And how was the relationship between the two countries, and between Argentina and Repsol? This paper will try to answer all these questions.