CYIL Vol. 7, 2016

KATARÍNA CHOVANCOVÁ CYIL 7 ȍ2016Ȏ The LG&E case was one of them, the Continental case the second and last, for the time being. For instance, Tomka 80 confirms the importance of the arbitral award in the LG&E case from the viewpoint of “clarifying the law relating to emergency clauses in BITs and the state of necessity within the context of investor claims arising out of financial crises…” Of significance in this respect is not holding Argentina in breach of the FET or a relevant umbrella clause, which is only marginal, but the partial, far from being “tautological” conclusion 81 of the tribunal with respect to the ability of Argentina to rely on Article XI of the US-Argentina BIT, which was accepted by the tribunal. At the same time, the tribunal distinguished between the BIT and CIL necessity defence, recognizing them as different sources of international law, with the treaty based necessity not being subordinated to the CIL necessity doctrine. 82 In addition, the arbitral tribunal incorporated economic necessity into the broader concept of necessity in favour of Argentina, 83 painting a parallel between the Argentinian economic crisis and the military invasion. 84 An attitude of the tribunal was thus undoubtedly favourable and deferential to Argentina, 85 embracing it with the margin of appreciation of its deeds. On the other hand, even this decision went down for criticism for conflating Article XI of the US-Argentina BIT with Article 25 of the ILC Draft Articles by their instantaneous division, 86 replaced by the subsequent application of almost the whole analytical matrix for passing the threshold of CIL necessity, stipulated in Article 25. Disappointed critics notwithstanding, the position taken by the arbitral tribunal in the LG&E case with respect to the interpretation of Article XI is considered as more balanced, and more empathic toward an Argentinian uneasiness with its legal defences in investment arbitrations than the verdicts rendered in the CMS , Sempra and Enron cases, which were later successfully challenged. 87 80 TOMKA, P.: Defences Based on Necessity, op. cit ., p. 478. 81 See critically DESIERTO, D.A.: Necessity and Supplementary Means of Interpretation, op. cit ., p. 849. 82 JUNG, Y., HAN, D.: Sovereign Debt Restructuring, op. cit ., p. 93. 83 REINISCH, A.: Chapter 6: Necessity in Investment Arbitration, op. cit. , p. 145. 84 LG&E Energy Corp and others v. The Argentine Republic , Award, ICSID Case No. ARB/02/1, 25 July 2007, para 237-238. 85 TITI,C.: Are Investment Tribunals Adjudicating Political Disputes?, Journal of International Arbitration , 2015, Vol. 32, No. 3, pp. 261-288. 86 Arbitrators in recognised the US-Argentina BIT as the primary applicable law and a general international law as the secondary applicable law, with the least important being the Argentinian law. 87 See a short summary of the relevant decisions of ICSID ad hoc committees in MOON, J.W.: Essential Security Interests in International Investment Agreements, Journal of International Economic Law , 2012, Vol. 1, pp. 481-507.

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