Abstract
The discussion on increasing the legitimacy of international investment law largely overlooks the potential of the state of necessity, as a circumstance precluding wrongfulness of States’ conduct under general international law, for the protection of human rights. The present article deals with the practice of international investment arbitration in cases involving Argentina in connection with its economic crisis of 1998–2001, in which it raised the necessity defense and appealed, inter alia, to human rights. The article concludes that, as a rule, the human rights factor did not play a noticeable role for resolving the relevant disputes. The human rights discourse either had no adequate place within the merits of the disputes, or the tribunals did not take the relevant arguments seriously. The human rights argumentation tried itself within different parts of the Argentina’s defense, including various elements of the necessity test, but without meaningful effect. The Award in the case of Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic has demonstrated the perspective of recognizing the significance of the human rights factor in the context of “the only way” element of the necessity test: this element can unleash the potential of human rights in the disputes involving the necessity-based defense and provide the tribunals with tools capable of taking human rights more seriously in the context of investment disputes concerning emergencies. The Urbaser Tribunal position is an evidence of the evolving and expanding role of the human rights factor within the necessity test but substantial clarification of this test at the doctrinal, practical and political level is still needed to increase the legitimacy of international investment dispute resolution system.
Highlights
The issues of legitimacy of international investment law and its dispute settlement system stand among the highly debated topics in international law and politics
This paper argues that it is not the stringency of the necessity test that prevents human rights to play an influential role in the investment cases concerning emergency circumstances, but the lack of a proper place for the human rights-related arguments within this test due to its uncertainty and absence of a clear and reasonable methodology of its application
An analysis of practice shows that the significance of the human rights factor is evolving within the necessity defense: it started its way from an indistinct place within the framework of applicable law in the CMS, moved on to the context of necessity in the National Grid and the Suez within the “essential interest” element of the necessity test, reached the criterion of Art. 25(2)(a) of the ILC Articles in the Suez and eventually got to the condition of “the only way” in the Urbaser
Summary
The issues of legitimacy of international investment law and its dispute settlement system stand among the highly debated topics in international law and politics. The power of international arbitrators to interfere within the internal political space of sovereign States and the limits of this power are being questioned from the standpoint of democracy, rule of law, States’ sovereignty and self-determination (Choudhury, 2008; Giest, 2017; Arato, 2019) To overcome these problems, experts propose incorporating human rights and environmental standards into the fabric of international investment law as well as reforming its dispute settlement system as regards the possibility for public interests to play a meaningful role (Giest, 2017; Arcuri & Montanaro, 2018; Laryea, 2018; Schill & Djanic, 2018). International law provides States with a possibility to escape international jpl.ccsenet.org
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