Drawing the Right Lessons from ICSID Jurisprudence on the Doctrine of Necessity

Bilateral investment treaties (BITs) and the International Centre for the Settlement of Investment Disputes (ICSID) have over the years injected an important dynamic into public international law, that is, the replacement of a political remedy (peaceful cooperation amongst nations) by a legal one (settlement of investment disputes). The institution of ICSID and the revision of BITs in line with its rules have opened the way for direct investors’ claims and investor-state arbitration. The obvious implication of a compulsory arbitration provision is that it has made up for many shortcomings of the diplomatic protection mechanism with, “the potential for an individual investor, with or without the approval of its home government, to press a conflict that may ultimately have diplomatic implications and may affect relations between the two countries concerned”. It is however still debated whether such a mechanism guarantees fairness and equity for both investors and host states, or merely advantages one BIT signatory to the detriment of the other. Argentina has had more cases before the ICSID tribunals than any other country. Faced with an economic crisis in 2001–2002, it ran into conflict with foreign investors when it repealed the Convertibility Law on which most of its BITs had been negotiated. Could that action be justified as one taken in times of peril and in dire need, as sanctioned by international law, or was it just an outright breach of Argentina’s own contractual commitments?