CYIL Vol. 7, 2016

CYIL 7 ȍ2016Ȏ NON ǧ PRECLUDEDMEASURES IN INTERNATIONAL INVESTMENT ARBITRATION necessity, existing side by side in customary international law and in treaty-based regimes, including the regime within the frame of international investment law. Starting with the customary international law, the threshold for the successful plea of necessity under Article 25 of the ILC Draft Articles is almost insurmountably high. When it is being passed, an unlawful measure taken by the state while infringing on its international obligation in order to protect its own essential interests against grave and imminent danger in exigent circumstances will be excused against otherwise sufficiently grounded claim of those afflicted by it. 32 Quite apart from the grave intricacies of the CIL necessity doctrine, the concept of necessity expressed in BITs has a positive meaning – at least for the state, taking a necessary measure under the NPM clause, being permitted to do what needs to be done without overdramatizing an event by need for excuse. Consequently, it is submitted that the dynamic concept of necessity in a treaty regime must be perceived from different angles, instead of that of the CIL necessity doctrine’s shadowy permutation. The real issue is that a discomforting aspect of the treaty based necessity has arisen due to a haunting effect of embellishing the nexus requirement of necessity in BITs and the CIL necessity concept in international investment arbitration. The very fact that the interpretation of the nexus seems to be a conundrum in several ICSID cases does not mean that ICSID arbitral tribunals did not attempt to solve it many times. However, as Jung and Han 33 observed, all they came up with were “conflicting interpretations and applications of the law concerning the treaty state of necessity defence, especially vis-à-vis the meaning of what constitutes necessary in the context of ISD.” Virtually, three modes of interpretation were created about the concept of necessity defence in BITs. The first mode of interpretation with subtle variances was invented in CMS , Sempra and Enron arbitrations 34 against Argentina. According to their interpretation of the doctrine of necessity, enacted in NPM clause in Article XI of the US-Argentina BIT, 35 the treaty based necessity is similar to the CIL necessity, which means that interpreting the Article XI, based on Articles 31 and 32 VCLT 36 may be comfortably dispensed with, and the primacy of the treaty may be flagrantly disregarded. 37 32 For detailed explanation see HENCKELS, C., MITCHELL, A.D.: Variations on a Theme, op. cit ., p. 97. 33 JUNG, Y., HAN, D.: Sovereign Debt Restructuring under the Investor-State Dispute Regime, Journal of International Arbitration , 2014, Vol. 31, No. 1, p. 91. 34 See e.g. KASENETZ, E.D.: Desperate Times Call for Desperate Measures, op. cit ., p. 730. 35 US-Argentina Bilateral Investment Treaty 1994. Under Article XI, “This treaty shall not preclude the application by either Party 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 essential security interests.” 36 The Vienna Convention on the Law of the Treaties 1969. 37 See e.g. STONE SWEET, A.: Investor- State Arbitration: Proportionality’s New Frontier, Faculty Scholarship Series , Yale Law School, 2010, Paper 69, p. 21.

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