CYIL Vol. 7, 2016

KATARÍNA CHOVANCOVÁ CYIL 7 ȍ2016Ȏ its less outspoken counterpart, as it postulates by its exact wording the definition of the

limit of the arbitrators’ review with respect to non-precluded measures. 71 3. Interpretation of NPM Clauses by Investment Tribunals 3.1 The Prelude to Argentinian ICSID Arbitrations

The latest Argentinian dreadful fiscal and currency crisis at the end of 2001 was an overture that triggered out a lingering torrent of investment arbitrations, initiated on the grounds of expropriation of foreign investments in Argentina. Massive financial amounts awarded by ICSID tribunals, sufficiently capable of causing disruptions in the state’s economy, are a bitter price to pay. It is submitted that Argentina takes some portion of the blame for not being prudent enough when ignoring the global economic recession, which repeatedly led to its sovereign debt skyrocketing, and also for paying too much attention to the IMF advice, 72 when later promoting its investment plan in a haphazard way. While the Argentinian economic chagrin is usually connected with the Public Emergency Law, 73 adopted at the beginning of 2002, causing investors sharp shocks immediately, the setting is not entirely accurate. To trace the origins of the last crisis, it is necessary to dig deeper, beginning with the first out of three escalated economic crises in 1982 with heavy debt as a courtesy of the recent war and a following high devaluation of the national currency, which led to a severe currency exchange crisis. 74 In spite of the looming crisis, several thorough reforms after 1989 stabilized the country through the post-World War II like pegging of the Argentinian peso to the U.S. dollar, with combined particles of the fixed exchange rates system and the gold standard system surviving. 75 Equally, privatization, targeted at the core of national industry has brought its desired fruit with the flood of foreign investments, and investors, being protected against all imaginable risks. However, the policy of fully converting the peso to the US dollar proved to be unsustainable in the long run due to various factors, influencing the global as well as the national Argentinian economy. As a result, the latest economic crises at the beginning of new millennium varied a great deal from the rosy economic view, typical for the 1990s. 76 National currency reserves almost diminished, the foreign 71 For instance Article 10 Section 1 of the US-Armenian BIT 1996: The first paragraph of Article X reserves the right of a Party to take measures it regards as necessary for the maintenance of public order, the fulfilment of its international obligations with respect to international peace and security, or the protection of its own essential security interests. 72 See e.g. SYKES, A.: Economic “Necessity” in International Law, op. cit. , p. 316. 73 The Public Emergency and Exchange Regime Reform Act Nº 25.561 2002 /Executive Order No. 50/2002/. 74 KASENETZ, E.D.: Desperate Times Call for Desperate Measures, op. cit ., p. 712. 75 HERDEGEN, T.: Principles of International Economic Law, OUP, Oxford, 2013, p. 14. 76 STONE SWEET, A.: Investor- State Arbitration: Proportionality’s New Frontier, op. cit., p. 19.

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