Investment Disputes after Argentina’s Economic Crisis: Interpreting BIT Non-precluded Measures and the Doctrine of Necessity under Customary International Law

Abstract

Following a major economic crisis in late 2001, Argentina undertook several reforms which led to investment disputes before ICSID. The major issue for the tribunals was to establish in which circumstances the 'state of necessity' doctrine is deemed applicable to a certain situation, which implied looking at the legal grounding of such derogation. Exceptional measures tend to be justified on two grounds. One is the generally accepted principle that customary international law (CIL) exempts states from liability in circumstances of necessity or force majeure according to Article 25 of the ILC Draft Articles on State Responsibility. Alternatively, the state of necessity can be considered in the light of specific treaty provisions - also known as 'non-precluded measures' (NPM) clauses - which ensure that the investment treaty protections 'shall not preclude […] the application of measures necessary for the maintenance of public order, the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests'. The presence of two distinct sources of law for necessity however raised many issues which this paper considers. The issue of NPM provisions was extensively considered in 2007 in an article by Burke-White and von Staden which suggested that states should be left with a certain autonomy - or margin of appreciation - in deciding whether necessity should be invoked. Yet, the argument was formulated while only one of the four decisions rendered at the time had been the object of an annulment procedure, and essentially elaborated on what the tribunals ought to have done, or at least on how future tribunals ought to consider the issue. Since then, however, three other decisions have all been through a similar process and this article adds to the discussion by commenting upon the reasoning of the Annulment Committees which overall seems to confirm the autonomy suggestion.