José E. Alvarez and Tegan BrinkRead PDFRead PDF
A series of recent ICSID decisions have dealt with claims against Argentina arising out of that country’s economic crisis in 2001-2002. Several of these cases have involved U.S. investors’ claims under the US-Argentina bilateral investment treaty (BIT). Divergent interpretations of the relationship between “essential security” exceptions contained in Art. XI of that treaty and the customary international law defense of necessity have attracted considerable scholarly attention and have raised broader concerns about the legitimacy of the international investment regime. A recent ICSID decision, Continental Casualty v. Argentina, interpreted Art. XI of the treaty in a manner notably different from preceding decisions on point. That tribunal, led by an arbitrator who had previously served on the WTO Appellate Body, was guided by the WTO’s approach under GATT Art. XX. This paper considers the justification for this approach advanced by the tribunal and the legal and systemic issues it raises. It critiques this aspect of the Continental Casualty decision, finding its approach deeply flawed. Focusing on the textual discrepancies between the BIT and WTO rules, as well as the different object and purpose of the two regimes, the paper argues that it was an interpretative error to extrapolate from the GATT on this question. More generally, this paper finds that while the inclination towards undertaking “systemic integration” of the trade and investment regimes is understandable, there are limits on the extent that WTO jurisprudence can be legitimately brought into investment treaty arbitration, at least if both trade and investment arbitrators are seeking to adhere to the fundamental rules that truly unite these disparate legal regimes, namely the traditional interpretative rules of treaty interpretation that both sets of adjudicators are supposed to apply. While our criticisms of Continental Casualty do not necessarily mean that the arbitrators reached an erroneous result in that case, we believe that how investment arbitrators reach their conclusions is as (or even more) important to the legitimacy of their decisions (and the regime). The paper concludes with suggestions about alternative legal methodologies that the arbitrators should have considered that would have done considerable less harm to the principles of treaty interpretation.