Essential Security Interests in International Investment Agreements

Abstract

Embedded in a significant number of international investment agreements are provisions that allow states to invoke essential security interests at times of necessity to limit the application of substantive treaty agreements. These provisions, which are largely devoid of express signatory intent, have caused an intensified debate over their scope and meaning in light of recent investor-state arbitration proceedings against Argentina. This article investigates the historical origins and state usage of security provisions found in international economic agreements and argues an essential security defense may be raised only in circumstances involving national security interests. While states ought to be given a margin of appreciation on what constitutes a threat to their own national security interests, the burden falls on the signatory states to diverge from the shared linguistic expectations attached to the ordinary usage of treaty terms. This approach injects a degree of predictability into the meaning of otherwise silent terms, reducing the detrimental reliance problem introduced by treaties that are designed to induce good faith investment by third-party beneficiaries. The Author 2012. Published by Oxford University Press. All rights reserved., Oxford University Press.