Author: Nicholas Song*
Published: August 2009
The dawn of the 21st century did not augur a bright start to the new millennium for Argentina. It found itself mired in yet another economic crisis barely a decade after it had recovered from the previous one. And after it adopted emergency measures to address the crisis, it acquired the dubious honor of being the state with the greatest number of known investment disputes, mostly brought by foreign investors unhappy with these measures. By 2006, the aggregate amount claimed against Argentina in these disputes was estimated at a staggering U.S. $17 billion, almost the entire budget of the Argentine federal government.
Most of these disputes have been brought under the auspices of the International Centre for the Settlement of Investment Disputes (“ICSID”). Final arbitral awards have since been handed down by ICSID tribunals in at least four of these cases: CMS, LG&E, Enron, and Sempra (collectively, the “Quartet of Cases”). In all of them, the measures taken by Argentina in response to the economic crisis were found to have breached the investment protection commitments it had undertaken to foreign investors.
Argentina argued in the Quartet of Cases, inter alia, that it was driven by the desperate nature of its economic crisis to adopt the measures it did in order to preserve social order and protect essential state interests and therefore should be excused from liability even if such measures constituted a breach of its commitments. This argument, based on a plea of necessity, succeeded in only one case: LG&E.
*LL.B. (Hons) (National University of Singapore); LL.M. (NYU); LL.M. (Distinction) (Queen Mary). The author is a member of the International Dispute Resolution practice of Vinson & Elkins LLP in Beijing. This version of this article was prepared as the author’s dissertation in part satisfaction of the LL.M. program in comparative and international dispute resolution at Queen Mary, University of London. The author is grateful to Professor Loukas Mistelis and Ms. Norah Gallagher for their suggestion of this topic for his dissertation and for their insights, and to Mr. James Loftis, partner at Vinson & Elkins LLP, for his encouragement in seeking publication of the dissertation. The views expressed are personal to the author and do not necessarily represent the views of Vinson & Elkins LLP or its clients. Responsibility for any errors or omissions rests solely with the author.