CYIL Vol. 7, 2016

KATARÍNA CHOVANCOVÁ CYIL 7 ȍ2016Ȏ In particular, without supporting its bold arguments with any legal authority, the arbitral tribunal in Sempra case swiftly mixed the concept of treaty necessity with the CIL necessity into one homogenous omelette, after enlightened arbitrators had not located an accurate definition of the BIT necessity in Article XI – it was invisible, so it certainly could not have existed, nor be relied on. Similarly, the tribunal in the CMS award accepted the concept of economic emergencies in the NPM clause in Article XI, but only after diligently analysing the CIL necessity. 38 In the end, arbitrators held that Argentina was not in a state of necessity during its otherwise severe economic crisis. As a result, a preclusion of the wrongful Argentinean acts could not be justified under the CIL necessity doctrine. Moreover, there was “no case of grave and imminent peril” , as required by Article 25 of the ILC Draft Articles, nor were all safeguard measures adopted by Argentina taken while fighting off the crisis “the only way” to advert it. 39 Equally, when considering the compensation obligation, arbitrators again stubbornly stuck to applying its concept under Article 27 of the ILC Draft Articles. 40 The second, more balanced position vis a vis an interpretation of Article XI was taken up by the arbitral tribunal in the LG&E case. 41 At first, arbitrators had distinguished the treaty based necessity defence from the CIL necessity defence. Nevertheless, they supported 42 their reasoning by referring to Article 25, while considering the gravity of Argentinean crisis and accepting the necessity defence, because the threshold of Article 25(1) was met. 43 This position was later deviated from in the Continental case with another ICSID tribunal, turning all of a sudden to the WTO doctrine of necessity, drawing on the rich WTO jurisprudence and – what seemed to be unforgivingly scandalous 44 – the WTO weighing and balancing test of necessity. To the deep disappointment of pundits, condemning an importation of the WTO law into investment arbitration, an ad hoc ICSID committee opined differently and held that the tribunal applied the correct law without any error. Briefly put, an available jurisprudence of ICSID tribunals with respect to the treaty based necessity defence enacted in NPM clauses is controversial. 38 See ROSSEL, J.: Investment Treaty Arbitration and the (New) Law of State Responsibility, European Journal of International Law , 2013, Vol. 24, No. 2, pp. 617-647. 39 CMS Gas Transmission Company v. The Argentine Republic, Award, ICSID Case No. ARB/01/8, 12 May 2005, sec. 321, 322. 40 All three awards were later successfully challenged in ICSID annulment procedures. 41 JUNG, Y., HAN, D.: Sovereign Debt Restructuring, op. cit ., p. 93. 42 LOEWENFELD, A.: International Economic Law , op. cit ., p. 581. 43 Protecting “an essential interest against grave and imminent peril” and “the only way” criterion. 44 See the fierce criticism in DESIERTO, D. A.: Necessity and Supplementary Means of Interpretation, op. cit ., p. 874.

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