The Argentine Crisis and Foreign Investors: A Glimpse into the Heart of the Investment Regime

José E. Alvarez / Kathryn Khamsi

Columbia Law School

This article re-examines interpretative questions raised in the course of four controversial arbitral decisions issued against Argentina in response to claims brought by four U.S. investors in public utilities in that country.  All these claims arose under the U.S.-Argentina Bilateral Investment Treaty and stem from measures taken by that state to handle that country’s financial crisis in 2001.  In all the cases, Argentina attempted to assert a defense of “necessity,” based on its own national law, customary international law, as well as a clause in the treaty that provides that state parties are not precluded from taking “measures necessary for the maintenance of public order” or to protect its “essential security interests.”  All four of the decisions yielded multimillion dollar judgments against Argentina, although one partly accepted Argentina’s defense of necessity, and a fifth arbitral decision, by an ICSID Annulment Committee, severely criticized but did not annul one of the previous arbitral awards.  This article focuses on the interpretative questions raised by the defense of necessity and uses them to shed light on the nature of the investment regime.



This paper will also be published in The Yearbook on International Investment Law and Policy 2008/2009, Oxford University Press, forthcoming 2009. Available here.