CYIL Vol. 7, 2016

CYIL 7 ȍ2016Ȏ NON ǧ PRECLUDEDMEASURES IN INTERNATIONAL INVESTMENT ARBITRATION As for an almost habitual application of the CIL necessity instead of considering the NPM clause, arbitrators have emerged more papist than the Pope. Indeed, an approach of ICSID tribunals in the Sempra , Enron and CMS cases, which installed the dominant position of the CIL necessity, 45 while pushing the importance of the treaty based necessity back to obscurity, may be compared by metaphor with that of the sworn Catholics in the pre-Elizabethan era – when it comes to an object of their true religious belief, they had consciously found nothing to replace it. In addition, as Burke 46 noted, except for ignoring the basic bargain between investor protection and the state’s own space to manoeuvre, elbowed in the BIT, ICSID tribunals also have prevented Argentina from responding “to exceptional situations, such as financial crisis, in ways that may threaten the long-term willingness of states to participate in investor-state arbitration, and perhaps, the legitimacy of that system itself.” It is notable that, except for posing these problems, the controversy between arbitral awards with regard to the wicked circle of interpretation of NPM clause in Article XI of the US-Argentina BIT and the CIL necessity concerned an issue of compensation too. Commentaries, convincingly approving of exclusion of the state’s compensation obligation when the state has availed itself of necessary measures under the NPM clause (an exclusion of the compensation obligation under Article 27 including), 47 are abundant. 48 For instance, an annulment committee in the Sempra case opined that an applicability of Article XI excludes not only the compensation obligation, while the state of necessity lasts, but also the state’s responsibility: “If the requirements under Article XI are met, there is no breach of the BIT” . 49 Opaquely, any measure without the coverage by the NPM clause in Article XI would be reviewed under Article 25 and 27 of the ILC Draft Articles, constituting only “an excuse to exempt a state from liability once a breach of an obligation is established but would not eradicate the idea that the state was deemed liable in the first place for the breach of its treaty commitments”. 50 Of significance in this respect are occasional opinions, which have gone to the other side, with protesting authors, accentuating 45 REINISCH, A.: Chapter 6: Necessity in Investment Arbitration, op. cit. , p. 156. 46 BURKE-WHITE W.: Part IV Chapter 17: The Argentine Financial Crisis: State Liability under BITs and the Legitimacy of the ICSID System in WAIBEL, M., KAUSHAL, A. et al. (eds): The Backlash against Investment Arbitration , Kluwer Law International, The Hague, 2010, p. 415 (pp. 407-432) . 47 PAPARINSKINS, M.: Investment Treaty Arbitration and the (New) Law of State Responsibility, op. cit ., p. 637. The author doubts the meaning of Article 27 (b) of the ILC Draft Articles, arguing that the reasonableness of its “without prejudice” clause might have become at least questionable, if the absence of prejudice does not remove the compensation obligation at all. 48 See e.g. BURKE-WHITE W., VON STADEN A.: Investment Protection in Extraordinary Times, op. cit ., p. 388. 49 Sempra Energy International v. The Argentine Republic, Decision on the Argentine Republic’s Application for Annulment of the Award, sec. 115, 118. 50 MARTIN, A.: Investment Disputes after Argentina’s Economic Crisis, op. cit ., p. 57.

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