CYIL vol. 7 (2016)

399

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,

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

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),

are abundant.

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”

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”.

Of significance in this respect are occasional

opinions, which have gone to the other side, with protesting authors, accentuating

REINISCH, A.: Chapter 6: Necessity in Investment Arbitration,

op. cit.

, p. 156.

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) .

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.

See e.g. BURKE-WHITE W., VON STADEN A.: Investment Protection in Extraordinary Times,

op. cit

., p. 388.

Sempra Energy International v. The Argentine Republic,

Decision on the Argentine Republic’s

Application for Annulment of the Award, sec. 115, 118.

MARTIN, A.: Investment Disputes after Argentina’s Economic Crisis,

op. cit

., p. 57.