Unión Fenosa Gas v Egypt: The Necessity Defense: Much Ado about Nothing?

Abstract

In an award dated 31 August 2018 (Award), the Tribunal in the case Unión Fenosa Gas vEgypt found that Egypt violated its obligations towards an investor under the fair and equitable treatment (FET) standard of the bilateral investment treaty (BIT) concluded between Spain and Egypt, on the basis of the breach of the Claimant’s legitimate expectations in regard to an undertaking of the Respondent in a letter from its Ministry of Petroleum. The Tribunal granted compensation for the damage caused to the Claimant. In recognizing Egypt’s liability under the BIT, the Tribunal dismissed its submission based on the customary necessity defense as codified by the International Law Commission (ILC). The conditions of implementation of this circumstance precluding wrongfulness have been extensively examined in recent years by several tribunals3 that have reached very different positions. The reasoning in the Award, at times rather unclear, may not in the end...