CYIL Vol. 7, 2016

CYIL 7 ȍ2016Ȏ NON ǧ PRECLUDEDMEASURES IN INTERNATIONAL INVESTMENT ARBITRATION 3.3 Continental Casualty – The Street Smart Renegade Against the Stream? Unlike its more constrained predecessors, the arbitral tribunal in the Continental case left existing ways of the interpretation of Article XI of the US – Argentinian BIT behind. The tribunal simply propped up its interpretation of the BIT based necessity unorthodoxly with the WTO approach, expressed in its interpretation of the doctrine of necessity according to the chapeau and all exceptions, which are included in Article XX of the GATT, and form the core of the WTO necessity doctrine. Arbitrators made absolutely no attempt to explain, let alone excuse their methodology, which lacked all the copious nitty gritty of the oratory CIL necessity analysis. 88 As Puig 89 noted, “The tribunal provided little explanation, and simply set out the WTO approach and applied it to the facts of the case.” When addressing the nature of the NPM clause in the US-Argentinian BIT, the tribunal came to the conclusion that Article XI as a safeguard clause “restricts or derogates from the substantial obligations undertaken by the parties to the BIT in so far as the conditions of its invocation are met.” 90 Apparently, as Mitchell and Henckels observed, 91 the WTO oriented tribunal in the Continental case held that “the WTO law was a more appropriate comparator than the customary plea as a source of interpretation of the concept and requirements of necessity in the context of economic measures.” To put it mildly, the tribunal defied the former ICSID awards with using the supporting WTO jurisprudence of the WTO Appellate Body in the Korea-Beef 92 case as well, trying to apply – though with success of mediocre proportions only 93 – the WTO weighing and balancing test of necessity. As startling as it appeared, the tribunal firstly had tried to apply the WTO AB-like review of the objective of measures taken, which was supposed to be later replaced by evaluating an effectiveness of the measure (including its contribution to the objective followed) and its impact on the international trade, before finally trying to assess the availability of alternative measures to Argentina. Virtually, the tribunal held all alternative measures either ineffective, or impractical. 88 Interestingly enough, unlike its predecessors in older cases, the tribunal did not consider the BIT necessity and the CIL necessity as interwoven concepts, but at the same time made no attempt to distance itself from the consideration of the CIL necessity either. See a balanced annotation in REINISCH, A.: Chapter 6: Necessity in Investment Arbitration, op. cit. , p. 151. 89 PUIG, S.: The Merging of International Trade and Investment Law, op. cit , p. 29. 90 Continental Casualty Company v. Argentina , Award, ICSID Case No. ARB/03/9, para 164. 91 HENCKELS, C., MITCHELL, A.D.: Variations on a Theme, op. cit ., p. 114. 92 WTO, Report of the Appellate Body, Korea-Measures Affecting lmports of Fresh, Chilled and Frozen Beef, WTO Doc Nos WT/DS161/AB/R, WT/DS169/AB/R (Dec 11, 2000) (Korea-Beef ). 93 For instance, the tribunal started with application of the first stage of the WTO weighing and balancing test when reviewing decently the legitimate objective of Argentinian measures, but skipped the second suitability stage completely, before rushing to review the availability of alternative measures. Here arbitrators applied the WTO test with amusing confusion of relevant determinants. See more in Continental Casualty Company v. The Argentine Republic, Award, ICSID Case No. ARB/03/9, para 196.

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