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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.