419 / 536
405
CYIL 7 ȍ2016Ȏ NON ǧ PRECLUDEDMEASURES IN INTERNATIONAL INVESTMENT ARBITRATION
debt ballooned and Argentinians – with most of the nation unemployed – lived
just one step above the poverty line. Riots followed, as well as an insane swirl of five
presidents in three weeks.
The Public Emergency Law subsequently made a swift end to the doom – at least up
to certain extent, by enacting three drastic reforms. Firstly, the new law effectively eroded
any habitually expected periodic adjustments of tariffs in concession contracts that
foreign investors might have by freezing of tariff rates and bank accounts.
77
Secondly,
the financially exhausting convertibility mechanism blew up instantaneously with
the significant devaluation of the Argentinian peso against the US dollar.
The market had firstly seen the financial value of the peso falling sharply. From
the one-to-one rate, the peso finally levelled off at the three-to-one rate to the
detriment of the dollar because of the simultaneous pesification of Argentinian
financial commitments toward all foreign investors without discrimination. Indeed,
the pesification in the process of consolidation of the Argentinian economy was the
last straw from the viewpoint of investors. Their revenues decreased considerably,
because they were able to bill their customers in Argentina only at the previous one-
to-one rate.
78
Undoubtedly, the aimbehind the Public Emergency Lawwas a gradual consolidation
of the national economy. However, the heydays of multinational corporations in
Argentina were over, and the patience of foreign investors evaporated. Several dozens
of claims have been filed hitherto in various ICSID arbitrations against Argentina with
the prospects of facing up to ten billions of US dollars worthy liability. As for the
current chances of recovery of the Argentinian economy, notwithstanding occasional
circumventions and obstructions of the verdicts of ICSID tribunals, they are not
particularly optimistic.
3.2 CMS, Sempra, Enron and LG&E –Two Peas in a Pod Created
by Accident
Argentina has built its defences in ICSID arbitrations basically on two arguments.
An invocation of the BIT necessity, expressed in the NPM clause was followed by the
second argument, excusing broad economic reforms on the grounds of preclusion of
their wrongfulness under the CIL necessity doctrine.
79
As mentioned earlier in this
article, ICSID tribunals in five notoriously famous cases came up with three modes
of mixed interpretation of the NPM clause’s applicability, while either rejecting or
partially accepting the arguments put forward by Argentinian legal counsels.
77
BURKE-WHITE W.: Part IV Chapter 17: The Argentine Financial Crisis,
op. cit
., p. 410.
78
They might charge only one peso for one dollar, instead of three pesos.
79
BURKE-WHITE W.: Part IV Chapter 17: The Argentine Financial Crisis,
op. cit
., p. 411.