International Centre For The Settlement Of Investment Disputes Research Articles

Introductory Note

It is a pleasure for us to have been invited to serve as the Guest Editors of the third special focus issue of the ICSID Review—Foreign Investment Law Journal this year, which marks the thirtieth anniversary of the ICSID Review and the fiftieth anniversary of the International Centre for the Settlement of Investment Disputes (ICSID). This special focus issue explores procedural issues in investment treaty arbitration. It has been remarked that procedural issues are as important as substantive issues, 3 and yet are often overlooked. As one eminent international lawyer has observed, ‘no matter how many solid rules of substantive law you may know, unless you know how to make them work, your knowledge of the law cannot be fully exploited’. 4 Parties and their counsel, therefore, need to be aware of the procedural tools at their disposal and be prepared to make full use of them. Given the significance of procedural issues in investment treaty arbitration—as in all forms of international adjudication—we welcomed the idea of dedicating this third special focus issue to questions of procedure.

Preface

When we began the exercise of planning the focus of the special issues that would appropriately mark the thirtieth anniversary of the ICSID Review and the fiftieth jubilee of the International Centre for the Settlement of Investment Disputes (ICSID), it was at once clear that one such topic had to be the intersection of investment arbitration and public international law. International law may not be the only relevant legal system applicable in ICSID arbitration. Party autonomy and host State law also play important roles. But the framers of the ICSID Convention recognized from the outset a distinctive place for public international law within the arbitration system that they created. The explosive growth in recent years of investment arbitration pursuant to treaty has served to focus unprecedented attention on the diverse ways in which these specialized treaty regimes intersect with general public international law. Determining the precise contours of that intersection has not always been easy. Indeed, arbitrators and scholars have sometimes differed profoundly as to the influence to be accorded to doctrines of general international law in investment disputes. Nevertheless, the simple fact that investment treaties are themselves creatures of international law provides an important point of departure that makes the task of charting the relationship between the special and the general inescapable. No overarching issue of applicable law could be more fitting for a broad-ranging reassessment at the 30-year mark. It is therefore a particular delight that 11 distinguished scholars and practitioners have accepted our invitation to contribute articles to the present issue that critically examine and appraise the role of general public international law within investment arbitration. The articles explore five aspects of the larger

The Protection of Foreign Direct Investment in Latin America: Where Do We Stand on International Arbitration?

The article explores the current implications of regional and bilateral investment treaties in Latin America, underlying the latest developments and challenges concerning international arbitration. The main argument advanced is that despite criticisms arising out of investment litigation, Latin American countries have moved away from the Calvo doctrine and continue to embrace international arbitration to settle state-investor disputes. In order to support this argument, the article presents a systematic study of the legal framework and the flow of cases brought against Latin American states before the International Centre for the Settlement of Investment Disputes (ICSID) and under the United Nations Commission on International Trade Law (UNCITRAL) Rules.

Predictability versus Flexibility: Secrecy in International Investment Arbitration

Transparency can have a large impact on whether the work of international legal institutions such as tribunals is seen as legitimate as well as the ability of governments to manage the domestic audience costs of adjusting to international norms. International investment arbitration offers a special opportunity to study transparency because nearly always the parties to international investment disputes have the choice of whether to reveal the final results of arbitration to the public. Working with a new statistical database of disputes at the world’s largest investor-state arbitral institution — the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) — this paper examines the incentives of individual firms as well as governments to keep the details of their disputes secret. Secrecy prevails in cases where the incentives for privacy are strongest: over investments that have long time horizons where costly compromises by investors and the host state are essential to keeping the project financially viable and when any party has reason to expect ex ante that it will lose. This research has sobering implications for scholarship that has identified transparency as an essential condition for institutional legitimacy and effectiveness because the public is least informed about arbitral outcomes in precisely those cases where broad public interests are likely to be most affected.

The Rule of Law or the Perception of the Beholder? Why Investment Arbitrators are Under Fire and Trade Adjudicators are Not: A Response to Joost Pauwelyn

In his thought-provoking and timely article, Pauwelyn asks how it can be “that today’s perception of two parallel processes involving the legalization of world politics, and on two closely related subjects of global economic affairs—cross-border trade and cross-border investment—differs so much?” He focuses on one explanation: the individuals deciding World Trade Organization (WTO) versus International Centre for the Settlement of Investment Disputes (ICSID) disputes.

Reevaluating the Role of Foreign Investment in Economic Development: Investment Protection and the Subordinate Role of Developing Countriess Interests in Investor-State Arbitration

Neo-liberal economic thought underpins Developing Countries’ future economic development on their robust capacity to attract foreign investment, given the many economic benefits associated with foreign investment. This often ignores that such foreign investment migrates to Developing Countries only with the condition of a stable legal system conducive to foreign investment protection. To address such concerns, foreign investors have been able to lobby their governments to create several mechanisms to reduce the uncertainties associated with investing overseas by providing assurances and security to foreign investments, namely investor-state arbitration and its concomitant bilateral investment treaties (BITs) and denationalized tribunals such as the international centre for the settlement of investment disputes (ICSID). However, with the international investment regimes predisposition to foreign investment protection and the consequent disregard for the socio-economic welfare of host-States, a pertinent issue, which has not been discussed in sufficient detail, is whether foreign investment is the panacea to overcoming economic underdevelopment in Developing Countries as some seem to think. Capital-exporting States' BIT practice reveals that these instruments are designed primarily to achieve investment protection. ICSID, the primary institution for resolving investor-state disputes is merely carrying on the neoliberal agenda of the World Bank of investment protection. Criticism particularly target investor-State arbitration practices. This include the manner in which tribunals interpret and apply international investment law, to promote foreign investment protection and fail to pay equal attention to the interests of Developing Countries. This include: the increasingly expanding interpretation of foreign investment, by international tribunals, which is evolving to capture new forms of investment–an anathema to the notion that only FDI are captured by customary international law; the phenomenon of internationalization of disputes which is unfounded in law; tribunals increasing expansion of the rules relating to expropriation of foreign property; and the application of an international standard of compensation to Developing Countries despite the fact that that it has no grounding in international law. Together this reveals that investor-state arbitration is predisposed to investment protection. Only secondary consideration is accorded to States’ socio-economic responsibilities, such as it obligation to continuously improve the lives of its citizens and augment it development. To this extent it must be argued that foreign investment is not the panacea to economic development in the Developing World.

Abuse of the Right to Access ICSID Arbitration

In the last decade, the Tribunals of the International Centre for the Settlement of Investment Disputes (ICSID) have discussed the adoption of a new standard in assessing the jurisdictional requirements of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, in order to preserve the integrity of their own process, by introducing the general principle of the abuse of rights into the initiation of the ICSID arbitration process. This well-known principle of international law, along with other similar concepts such as good faith and abuse of process, has begun to play an important role at the jurisdictional stage of ICSID proceedings, largely due to the widely adopted practice of treaty shopping by investors who restructure their investments in order to gain access to the jurisdiction of ICSID tribunals. Although the exact parameters of the principle are not yet established, the practices of ICSID tribunals provide a useful road map for future cases.

International Centre for the Settlement of Investment Disputes & Its Role in Alternative Dispute Resolution

The World Bank formed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington Convention) which came into force on October 14, 1966. The Washington Convention of March 18, 1965 established the International Centre for the Settlement of Investment Disputes (ICSID) which has jurisdiction over legal disputes arising from investments between a Contracting State and a national of another Contracting State. ICSID provides facilities for conciliation and arbitration of international investment disputes between member countries and individual investors. While international commercial arbitration focuses on dispute settlement between private parties and inter-state arbitration involves only States, ICSID arbitration oscillates between international commercial arbitration and inter-state arbitration. The Washington Convention has been ratified by over 140 countries.

To What Extent can the U.S. BIT Model ( 2012 ) Approach Resolve Business Disputes ?

Bilateral Investment Treaty ( BIT ) | Foreign Direct Investment ( FDI ) | Trade-Related Investment Measures ( TRIMS ) | International Center for the Settlement of Investment Disputes ( ICSID ) | Investor-state Dispute Settlement ( ISDS ) | United Nations Conference on Trade and Development ( UNCTAD ) | Association of South-East Asian Nations ( ASEAN ) | Trans-Pacific Partnership (TPP) and Umbrella Clauses

The Appeal of Appeal Mechanisms in International Arbitration: Fairness over Finality?

One of the main reasons why parties choose arbitration is the principle of finality, that international arbitral awards cannot be appealed on the merits. While the vast majority of national arbitration legislation and the rules of major arbitral institutions provide for the finality of arbitral awards, there are some exceptions to the rule. This article seeks to review the various appeal mechanisms that exist in international arbitration and to assess, both theoretically and practically, their impact on the principle of finality. It begins by examining the right of appeal to the courts on a question of law under section 69 of the English Arbitration Act 1996. It then explores the emerging trend amongst some international arbitration service providers to amend their rules to provide internal appeal mechanisms in their arbitral procedure, reflecting the perceived need by some users for an alternative to the strict finality provided for in the rules of major institutions. Outside the realm of international commercial arbitration, the International Centre for the Settlement of Investment Disputes (ICSID) annulment regime and the Appeals Division of the Court of Arbitration for Sport (CAS) both provide internal review structures but with contrasting approaches to the finality of awards. It appears that the attraction of any appeal mechanism lies in the way it balances the competing notions of fairness and finality. Ultimately, the author argues that, consistent with party autonomy, appeal mechanisms should not be considered controversial as long as the parties agree on the procedure of any such appeal. Where parties agree to prioritize correctness or fairness over finality, this does not necessarily detract from the principle of finality, but rather conforms with the spirit of arbitration.

Consistently Inconsistent: The Need for Predictability in Awarding Costs and Fees in Investment Treaty Arbitrations

In investment treaty arbitrations, the stakes are high. It is not uncommon for claims to be asserted for hundreds of millions of dollars, and for the costs to resolve such disputes to run into the millions of dollars. Despite the substantial sums involved in resolving such disputes, there exists no uniform practice on awarding costs and fees in investment treaty arbitrations. As a result, some tribunals have ordered each party to bear its own legal fees and share equally the costs of the tribunal, while others have required the losing party to bear the costs and fees of the prevailing party. Tribunals also are inconsistent in allocating costs and fees when they decide such awards are appropriate. The lack of predictability is problematic because it hinders the parties’ ability to evaluate the economic cost of pursuing or defending an action and ultimately their ability to settle actions. Arbitrary awards of costs and fees also undermines the legitimacy of the dispute resolution system. This article examines the practice of awarding costs and fees investment treaty arbitrations, particularly those resolved under the auspices of the International Centre for the Settlement of Investment Disputes (ICSID). It proposes that ICISD adopt a uniform approach on the awarding of costs and fees, by amending its rules to provide for a permissive presumption for allocating costs and fees under either the pay your own way principle or the costs follow the event approach. It argues that it is more important to adopt a uniform approach than to try to determine which is the better rule. It also proposes that, in the event that ICSID adopts the costs follow the event approach, tribunals should employ more extensive procedures for awarding costs and fees. These procedures could include separate briefings and perhaps a separate hearing on issues of costs and fees, and opinions that are transparent in their awards of costs and fees. Adopting a clearer rule on the awarding of costs and fees would bring much need predictability to the awarding of costs and fees in investment treaty arbitrations and would result in a more efficient and fair system for resolving disputes.

Case law

France Administrative Court of Appeal of Lyon, 19 June 2012, Judgements Nos. 12LY00233 and 12LY00290 regarding EDF’s permit to construct a waste conditioning and storage facility (ICEDA) in the town of Saint-Vulbas Germany Request for arbitration against Germany at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) because of Germany’s legislation leading to the phase-out of nuclear energy India Cases related to the Kudankulam Nuclear Power Project (KKNPP) Switzerland Judgement of the Federal Administrative Court in the matter of Balmer-Schafroth a.o.v. BKW FMB Energy Inc. on the revocation of the operating licence for the Mühleberg nuclear power plant United States Judgement of the Court of Appeals for the D.C. Circuit vacating the NRC’s 2010 Waste Confidence Decision and Rule Update

When Investment Arbitration Curbs Domestic Regulatory Space: Consistent Solutions through Amicus Curiae Submissions by Regional Organisations

AbstractTo date, African states have been called before 62 tribunals of the International Centre for the Settlement of Investment Disputes (ICSID); 26 cases are pending. Recently, foreign investors have invoked Bilateral Investment Treaty provisions to challenge legislation aimed at addressing historical inequalities in the distribution of natural resources in Southern Africa (

Contingent Credibility: The Impact of Investment Treaty Violations on Foreign Direct Investment

AbstractDuring the past few decades governments have signed nearly 2,700 bilateral investment treaties (BITs) with one another in an attempt to attract greater levels of foreign direct investment (FDI). By signing BITs, which contain strong enforcement provisions, investment-seeking governments are thought to more credibly commit to protecting whatever FDI they receive, which in turn should lead to increased confidence among investors and ultimately greater FDI inflows. Our unique argument is that the ability of BITs to increase FDI is contingent on the subsequent good behavior of the governments who sign them. BITs should increase FDI only if governments actually follow through on their BIT commitments; that is, if they comply with the treaties. BITs allow investors to pursue alleged treaty violations through arbitration venues like the International Centre for the Settlement of Investment Disputes (ICSID), a heavily utilized and widely observed arbitral institution that is part of the World Bank. Being taken before ICSID, then, conveys negative information about a host country's behavior to the broader investment community, which could result in a sizeable loss of future FDI into that country. We test these contingent effects of BITs using cross-sectional, time-series analyses on all non-OECD countries during a period spanning 1984–2007. We find that BITs do increase FDI into countries that sign them, but only if those countries are not subsequently challenged before ICSID. On the other hand, governments suffer notable losses of FDI when they are taken before ICSID and suffer even greater losses when they lose an ICSID dispute.

Investor-State Arbitration: Proportionality's New Frontier

The arbitral world is at a crucial point in its historical development, poised between two conflicting conceptions of its nature, purpose, and political legitimacy. Formally, the arbitrator is an agent of the contracting parties in dispute, a creature of a discrete contract gone wrong. Yet, increasingly, arbitrators are treated as agents of a larger global community, and arbitration houses concern themselves with the general and prospective impact of important awards. In this paper, I address these questions, first, from the standpoint of delegation theory. In Part I, I introduce the basic “Principal-Agent" framework [P-A] used by social scientists to explain why actors create new institutions, and then briefly discuss how P-A has been applied to the study of courts. Part II uses delegation theory to frame discussion of arbitration as a mode of governance for transnational business and investment. In Part III, I argue that the International Center for the Settlement of Investment Disputes (ICSID) is presently in the throes of judicialization, indicators of which include the enhanced use of precedent-based argumentation and justification, the acceptance of third-party briefs, and a flirtation with proportionality balancing. Part IV focuses on the first wave of awards rendered by ICSID tribunals pursuant to Argentina's response to the crushing economic crisis of 2000-02, wherein proportionality emerged, adapted from the jurisprudence of the Appellate Body of the World Trade Organization.

Delegating Differences: Bilateral Investment Treaties and Bargaining Over Dispute Resolution Provisions

Bilateral investment treaties (BITs) have become the dominant source of rules on foreign direct investment (FDI), yet these treaties vary significantly in at least one important respect: whether they allow investment disputes to be settled through the International Centre for the Settlement of Investment Disputes (ICSID). Through the compilation and careful coding of the text of nearly 1,500 treaties, we identify systematic variation in “legal delegation” to ICSID across BITs and explain this important variation by drawing upon a bargaining framework. Home governments prefer and typically obtain ICSID clauses in their BITs, particularly when internal forces push strongly for such provisions and when they have significantly greater bargaining power than the other signatory. Yet some home governments are less likely to insist upon ICSID clauses if they have historical or military ties with the other government. On the other hand, although host governments are often hostile toward ICSID clauses, particularly when sovereignty costs are high, they are more likely to consent to such clauses when they are heavily constrained by their dependence on the global economy. Our findings have significant implications for those interested in FDI, legalization, international institutions, and interstate bargaining.

Attorneys' Fees Agonistes: The Implications of Inconsistency in the Awarding of Fees and Costs in International Arbitrations

The awarding of arbitration costs and attorneys’ fees in international arbitrations is often arbitrary and unpredictable. In one recent investment arbitration where the tribunal deciding a case under the auspices of the international Centre for the Settlement of Investment Disputes (ICSID) had broad discretion to award costs and fees, the tribunal allocated arbitration costs evenly amongst the claimant and respondent and required each party to bear its own fees and expenses, even though the claimant prevailed. In another case where the claimant was successful on its substantive claim, the ICSID tribunal ordered the respondent to pay the claimant US$6 million for legal fees, but required the parties to bear the costs of the arbitration equally. And in still another recent investment arbitration the unsuccessful respondent was ordered to pay the costs of the arbitration, but each party was responsible for its own legal fees. These results are not unique to investment arbitrations; they can also be found in international commercial arbitrations. The lack of uniformity in the awarding of costs and fees poses two major problems. First, arbitrary awards undermine the legitimacy of the dispute resolution system. Second, the lack of predictability may hinder parties from being able to settle the dispute and could rob arbitration of its efficiency. These problems are exacerbated in the international context because the costs and fees in transnational disputes can run into the millions of dollars. Indeed, in one recent celebrated arbitration, the costs and fees totaled over US$21 million. This article examines the awarding of costs and fees in international commercial arbitrations and transnational investment disputes. My study finds that awards of costs and fees are arbitrary and unpredictable under both systems. To remedy these problems, I propose two different approaches: one for ICSID tribunals and another for international commercial arbitrations. In the case of ICSID arbitrations, the parties should share equally the costs of the arbitration and bear their own legal expenses. In essence, I propose that ICSID adopt what has become known as the American Rule with respect to the awarding of costs and fees. This approach is needed to bring predictability to the field, provide greater administrative efficiency, and reduce the overall costs. In the case of international commercial arbitrations, I argue that parties should be free to select the method for resolving claims for costs and fees, including authorizing the tribunal to resolve such claims pursuant to the principle of “costs follow the event” or the “loser pays” rule. In this context, the adoption of the American Rule would not achieve the same administrative and economic benefits, and the principle of party autonomy calls for this different approach.

International Arbitration in Times of Change: Fairness and Transparency in Investor-State Disputes

ABSTRACT The ability of foreign investors to choose international arbitration as a dispute resolution mechanism can create significant problems. Lack of coherence and discrimination regarding regulation can arise from the resolution of substantive issues, whereas concerns about transparency and fairness to third parties derive from the arbitral proceedings when compared with rights recognized to them in domestic law. However, possible solutions might be equally troublesome. THE BACKGROUND: FOREIGN INVESTMENT DISPUTE RESOLUTION Since the 1965 Washington Convention, a trend toward recognition of foreign investors' right to bring action directly against foreign host states has emerged. This multilateral treaty allowed investors to refer disputes with a state party directly to arbitration or conciliation procedures under the International Centre for the Settlement of Investment Disputes (ICSID), if the consent of both parties was obtained in writing. Blanket consent to the jurisdiction of ICSID or to ad hoc arbitration under United Nations Commission on International Trade Law (UNCITRAL) rules became common in the 1970s, and bilateral investment treaties (BITs) containing these provisions increased dramatically in the 1980s and 1990s. Nowadays, virtually all modern treaties provide for a mechanism to settle investment disputes by reference to institutional or other arbitration rules. BITs are treaties between two states, by which each one promises, on a reciprocal basis, to observe the standards of treatment laid down by the treaty in its dealings with investors from the other contracting state) Since the 1959 Germany-Pakistan BIT, BITs have been made not only between a developed country and a developing country, but also between two developed countries or between two developing countries. BITs are a common feature in free-trade agreements as an investment chapter (e.g., NAFTA's Chapter 11). Basic features of BITs usually include the scope and definition of foreign investment, most-favored-nation (MFN) status, national treatment, fair and equitable treatment, guarantees and compensation in respect of expropriation, warranties of free transfer of funds, capital and profits, subrogation on insurance claims and, notably, dispute settlement provisions. (2) According to the latter, disputes which have not been settled amicably, may, at the investor's choice, be submitted either to the domestic courts of the host state or to international arbitration, mainly to ICSID or using ad hoc arbitration rules such as UNCITRAL Arbitration or International Chamber of Commerce (ICC). Local courts are often not used by foreign investors to address disputes regarding foreign investment, and this happens for different reasons: investor interest in having a non-biased tribunal, an expeditious process, a judgment under a system or language they can understand, or a state's interest in promoting foreign investment or even international accountability. These treaties allow a state to make credible promises to potential foreign investors. As a result, the country is more attractive and probably will receive a larger volume of investment that it would have without the ability to make such arrangements. Therefore, such disputes are usually handled through international arbitration as established in BITs. These choices are not harmless. A selection of an arbitral forum made by a foreign investor can produce a different set of laws applicable to the same type of domestic economic activity, creating lack of uniformity in substantive issues. In addition, the ability of foreign investors to choose the forum in which they will submit an investment dispute has a significant effect not only for the investor itself, but also for third parties directly or indirectly affected by the outcome of that procedure. ONE SUBSTANTIVE ISSUE: ARBITRATORS AS REGULATORS BITs' arbitral tribunals have settled several disputes exercising powers that traditionally belong to the host state as regulator, such as the issuance and operation of radio broadcasting licenses in Ukraine, the annulment of permits to construct an industrial plant in Peru in a protected wetland, the validity of Argentinean legislation after the economic crisis of 2001-2002, the ban on the export of hazardous wastes by Canada, and the creation of an ecological park by a Mexican state. …

The 'Necessity Defense' and the Emerging Arbitral Conflict in its Application to the U.S.-Argentina Bilateral Investment Treaty

AT the turn of the twenty-first century, while the Internet boom was generating incredible wealth in developed countries, Argentina experienced one of the worst economic and fiscal crises in its history. Between 2001 and 2002, output fell 20 percent over three years, inflation reignited, the government defaulted on its debt, the banking system was largely paralyzed, and the Argentine peso reached lows of 3.90 pesos per U.S. dollar. In the context of other regional economic troubles, such as the Asian crisis of 1997-1998, the Brazilian devaluation in early 1999 and the steady appreciation of the dollar from 1998 to 2001, the overvaluation of the Argentine peso led to a structural crisis. Although there are recurring themes in the analyses of the events leading up to the crisis, blame cannot be assigned to any one individual or entity. The government of Argentina is ultimately responsible for its own fiscal policies, including, among others, the privatization of public utilities. In retrospect, the International Monetary Fund (IMF) concluded that “the crisis . . . . was the result of economic forces that were difficult to reverse in the context of Argentina's existing vulnerabilities,” including unmanageable public debt, the fixed currency board, and structural weaknesses that had built up during the 1990s. By 2001, the IMF concluded almost no strategy would have succeeded absent sovereign debt restructuring of Argentina's public debt burden. The IMF is not blameless either, having made mistakes both before and during the crisis. Although it expressed reservations at various times, the IMF backed Argentina throughout the 1990s, and in 1998, the IMF went so far as to say that Argentina's economic policy was ‘the best in the world,’ despite its deep depression. During the crisis, the IMF delayed its support, heightening foreign investors' perception of risk. The international financial community also shares some of the blame. The favorable financial expectations promoted by institutions like the IMF created a tremendous flow of foreign capital into Argentina; its subsequent flight was one of the biggest contributing factors to the crisis. The United States was particularly indifferent to the crisis. The administration of President George W. Bush imposed high tariffs on Argentine exports and refused to adjust the tariffs during the crisis yet at the same time provided tremendous support to the government of Turkey, which was in a similar crisis but was strategically more important for the United States' own economic and political interests. The crisis broke with the flight of private investment, which fell by more than $3.6 billion in the last two days of November 2001. On January 3, 2002, President Eduardo Duhalde, the fifth president in three weeks, confirmed a moratorium on Argentina's debts and announced he would negotiate with private creditors. Three days later, the government enacted the Public Emergency and Exchange Regime Reform Act (Reform Act), declaring a state of public emergency and delegating social, economic, administrative, and financial and exchange powers to the Executive. The Reform Act provided for the renegotiation of government contracts and established a commission to monitor the actions taken by the executive in accordance with the Act. The Reform Act resulted in a flood of requests for arbitration at the International Centre for the Settlement of Investment Disputes (ICSID) at the World Bank in Washington, D.C. These requests were filed by foreign corporations seeking to recover for breach of contract under their respective country's bilateral investment treaty with Argentina. As of December 8, 2006, there were thirty-four cases currently pending against Argentina in ICSID. Eight have been resolved. Argentina invoked the controversial defense of necessity in two cases brought by United States corporations; one arbitral panel accepted the defense, and one did not. This article analyzes the cases to determine which panel was correct within the context of established customary law and state practice regarding the necessity defense or necessity doctrine.

The Argentine Financial Crisis: State Liability Under BITs and the Legitimacy of the ICSID System

This essay examines the jurisprudence of the International Center for the Settlement of Investment Disputes (ICSID) arbitral tribunals in a series of cases brought against the Republic of Argentina in the wake of the 2001-2002 Argentine financial collapse. The essay considers the ICSID tribunals' treatment of non-precluded measures provisions in Argentina's bilateral investment treaties (BITs) and the customary law defense of necessity and argues that the ICSID tribunals have sought to radically narrow the opportunities available to states to craft policy responses to emergency situations while strengthening investor protections beyond the intent of the states parties to the BITs under which these cases have been brought. The essay critiques this line of jurisprudence and suggests that the September 2007 Report of the Annulment Committee in the case of CMS v. Argentina may be read as an effort from within the ICSID system itself to question the legitimacy and structure of current investor-state arbitration.