Author: Aurelia Grigera*

INTRODUCTION

Many times in history, governments of different states have been forced to make decisions to protect their citizens’ economic and social welfare, even at the cost of their foreign investors. Nowadays, a pressing concern is being raised among the states: whether the measures taken amid health emergencies (e.g., the COVID-19 pandemic) or armed conflicts (such as Russia-Ukraine’s war) will be challenged in future investment claims. These proactive measures, which included travel bans, export-import restrictions, and complete lockdown, have adversely impacted the investments of foreign investors. This impact may result in investor claims for breaches of their legitimate expectations to conduct business as assured under the bilateral investment treaties (“BITs”), discrimination between national and foreign companies, infringement of investors’ property rights, and, perhaps most significantly, a fundamental alteration to the existing investor-friendly environment.[1]

In response, states may invoke non-precluded measures (“NPM”) provisions of BITs, which exempt certain state actions taken in response to extraordinary circumstances from the substantive protections of the treaties, or the necessity defense under Article 25 of the International Law Commission’s Draft Articles on State Responsibility (“ILC Draft”) to justify their actions and preclude wrongfulness. Nevertheless, the effectiveness of these defenses is not guaranteed, as was seen in the multiple cases that arose during the Argentina 2001 crisis. As a result, the growth of the international investment law jurisprudence interpreting the potential defenses states might raise has become the need of the hour. This post explores how the problematic analysis by the International Center for the Settlement of Investment Disputes tribunals (“ICSID Tribunals”) regarding the measures taken by states at troubled times has contributed to the legitimacy crisis faced by the ICSID system.

This post begins by briefly analyzing the contradictory jurisprudence of the ICSID Tribunals in four cases against Argentina concerning NPM provisions and the necessity of defense under customary international law. It then describes the understandings reached by the WTO Panel on “Russia: Measures Concerning Traffic in Transit” regarding the justiciability of exception clauses to conclude that treating NPM provision as non-self-judging could mitigate the adverse effects those decisions had in the ICSID system and supply it with more confidence. The tribunals that will decide on the investment claims arising during the pandemic or the aforementioned armed conflict hold the unique opportunity to define the turning point in the history of investment arbitration to read NPM provisions of BITs and Article 25 of the ILC Draft in a more reasonably manner.

CONTRADICTORY CASE LAW IN NPM CLAUSES AND THE NECESSITY DEFENSE

Rewinding twenty years, in the wake of the 21^st century—but in a scenario almost identical to the current one—while many of the developed countries were generating abundant wealth, Argentina was enveloped in one of the worst economic crises in its history. The preventive measures taken by Argentina in response to its massive financial crisis harmed many foreign investors who, as a result, sought legal protection under the BIT regime that Argentina had entered into during the 1980s and 1990s. Argentina defended its measures based on the NPM provisions of its BITs and the customary international law defense of necessity.

On the one hand, the NPM provisions limit the applicability of investor protections under the BITs in exceptional circumstances.[2] These clauses allow states to take measures otherwise inconsistent with the treaty when, for example, the actions are necessary to protect essential security, maintain public order, or respond to a public health emergency. Suppose the host state’s actions are taken in pursuit of one of the permissible objectives specified in the NPM clause. In that case, acts otherwise prohibited by the treaty do not constitute breaches, and states should face no liability under the BIT.[3]

On the other hand, the customary law defense of necessity provides that a state cannot be liable for actions taken to “safeguard an essential interest against a grave and imminent peril.”[4] A successful invocation of the necessity defense precludes the wrongfulness of a state’s action, thereby allowing the state to avoid responsibility and liability.[5] It is generally accepted that Article 25 of the ILC Draft adequately codified the customary international law doctrine of necessity.[6]

As will be seen, the ICSID Tribunals have not consistently recognized the difference between the treaty exception for essential security interests and the customary law defense of necessity.[7] The ICSID Tribunals constituted for the investment claims brought against Argentina first tested the relationship between these two grounds of defense in investor-State arbitration.[8] Unfortunately, it was not addressed with clarity in any case. The facts in CMS v. Argentina,[9] Enron v. Argentina,[10] Sempra v. Argentina,[11] and LG&E v. Argentina[12] were virtually identical, but the reasonings reached by these tribunals were contradictory and legally questionable.

The merger between the customary defense of necessity into the NPM provisions

For investors harmed by Argentina’s response to the economic crisis, the possibility of direct arbitration against the state for breaches of BITs offered a promising means to recoup losses suffered during the crisis.[13] In CMS v. Argentina, Enron v. Argentina, and Sempra v. Argentina, the respondent invoked the emergency clause under Article XI of the U.S.-Argentina BIT and the necessity defense under Article 25 of the ILC Draft.[14]

In the respondent’s view, Article XI was the lex specialis governing the emergency actions implemented to maintain public order, protect its essential security interests, and re-establish its connections with the international economic system. In the alternative, Argentina argued that if the tribunal found a breach of the U.S.-Argentina BIT, it should have been exempted from liability in light of a state of necessity. According to the respondent’s argument, a state of necessity based on the 2001 crisis excluded any wrongfulness of the measures adopted by the government and, in particular, ruled out compensation.[15] Argentina contended that it met the criteria set out in Article 25 of the ILC Draft since the state was not only facing grave and imminent peril affecting an essential interest, but it did not contribute to the creation of the state of necessity in a substantive way.[16]

The CMS Tribunal read the requirements of the customary international law defense of necessity into the NPM clause of the treaty, testing Argentina’s invocation of the NPM clause against the requirements of the necessity defense in customary international law.[17] After concluding that the essential security provision was non-self-judging, the tribunal did not proceed to examine whether the measures could have been justified under that clause, considering that the substantive examination of the customary law defense of necessity already covered this.[18] Importing the customary law requirements of necessity involved a far more rigorous standard to the “necessity” requirement under the NPM clause. It required Argentina to show that its actions were the only ones available to respond to the crisis.[19]

The Enron Tribunal and the Sempra Tribunal concluded in the same way. The Enron Tribunal observed that “[b]ecause there is no specific guidance” as to the interpretation of the NPM clause “under the treaty (…) [it is] necessary to rely on the requirements of the state of necessity under customary law”.[20] Thus, it found that Article XI does not set out conditions that are different from customary law. In Sempra v. Argentina, the tribunal followed the steps of the tribunals in CMS v. Argentina and Enron v. Argentina to treat Article XI as an emergency clause operating alongside—and subject to the same conditions as—the customary law necessity defense.[21] The Sempra Tribunal specifically stated: “[t]he Treaty provision is inseparable from the customary law standard.”[22]

In other words, for the tribunals in CMS v. Argentina, Sempra v. Argentina and Enron v. Argentina, the NPM clause appears merely a textual restatement of the pre-existing customary defense of necessity without independence. As such, these tribunals considered inseparable the “nexus” requirement provided for in the U.S.-Argentina BIT and the necessity defense under customary international law. Accordingly, these tribunals set a very high bar to prove that measures taken by Argentina in the economic crisis would be considered exceptions under the BIT.[23]

The understandings reached by these tribunals are so narrow that they make the customary law doctrine of necessity essentially unavailable to any state. If this line of jurisprudence is followed, a state responding to any crisis cannot successfully invoke the defense, and liability will attach to whatever policy the state chooses to respond to.[24]

State of necessity and NPM clauses: two different defenses

In the LG&E case, Argentina pleaded its necessity defense under Argentine law, Article XI of the U.S.-Argentina BIT, and customary international law. The LG&E Tribunal considered Article XI and the customary international law necessity defense independently, not imposing the requirements of customary international law on Argentina’s invocation of the treaty-based NPM clause. The LG&E Tribunal noted: “[w]hile the Tribunal considers that the protections afforded by Article XI have been triggered in this case, and are sufficient to excuse Argentina’s liability, the Tribunal recognizes that satisfaction of the state of necessity standard as it exists in international law (reflected in [Article 25 of the ILC Draft]) supports the Tribunal’s conclusion”.[25]

This understanding leaves greater freedom of action to a state facing a severe crisis and allows it to react flexibly and effectively by choosing among several “necessary and legitimate” measures. As Schill explains, “[e]ssentially this results in recognizing that the host [S]tate has a certain range of non-reviewable policy choices at its disposal in this context.”[26] The LG&E Tribunal concluded that the exception applied to some of the measures taken by Argentina because they were “necessary and legitimate.”[27]

The merger of these two concepts, which operate at separate stages, was severely criticized by the Annulment Committee in CMS v. Argentina. In response to the CMS award, Argentina requested annulment under Rule 52 of the ICSID Convention. The CMS Annulment Committee found that the tribunal had erred in its treatment of the relationship between the NPM clause of the U.S.-Argentina BIT and the necessity of defense under customary law. The Annulment Committee observed that Article XI and the customary law defense of necessity were two separate and distinct legal standards: “[t]he two texts having a different operation and content, it was necessary for the tribunal to take a position on their relationship and decide whether they were both applicable in the present case. The tribunal did not enter into such an analysis, simply assuming that Article XI and Article 25 are on the same footing. In doing so, the tribunal made another error of law”.[28]

According to the Annulment Committee, the tribunal failed to appreciate the conceptual difference between Article XI, an express exception to a treaty obligation, and necessity. This defense precludes wrongfulness or liability. As set out by the Annulment Committee: “Article XI is a threshold requirement: if it applies, the substantive obligations under the treaty do not apply. By contrast, Article 25 is an excuse only relevant once it has been decided that there has otherwise been a breach of those substantive obligations”.[29] In other words, the Annulment Committee emphasized the difference, noting that an exemption (Article XI) could not operate at the same time as the customary law necessity defense precisely because if Article XI applied, there could be no breach capable of being excused by the necessity defense.[30]

Consequently, the Annulment Committee considered as an error of law the CMS Tribunal’s failure to examine whether the conditions set out in Article XI were fulfilled and whether, therefore, the measures taken by Argentina could constitute, even prima facie, a breach of the BIT. Despite finding clear legal errors in the CMS award that presumably impacted the outcome, the Annulment Committee noted that it lacked the jurisdiction to overturn the award and did not annul this point.[31]

Burke-White explains that the distinction between the state of necessity defense and the NPM provisions under BITs is far more appropriate as a legal and policy matter. Legally, reading the customary law defense of necessity into the NPM clause violates the Vienna Convention rules of lex specialis and that each treaty provision must be given effect. As a matter of policy, the incorporation of the necessity defense into the NPM clause fails to recognize the actual understanding of the U.S. and Argentina, whereby, in exchange for granting investors greater protections than would have been available in customary law, the states also sought to preserve for themselves greater freedom of action through the NPM clause than would have been available in customary international law.[32] In fact, the misapplication of Article XI also led to the annulment of the Sempra and Enron awards on this specific point.[33]

JUSTICIABILITY OF THE NPM CLAUSES: AN UNCONFLICTED TERRAIN

NPM clauses can be either self-judging or non-self-judging.[34] While the four tribunals that issued awards in the Argentina cases reached different substantive outcomes and approaches to the function of NPM clauses, they agreed that NPM clauses are non-self-judging when they lack the explicit language to understand them in that way.[35]

Argentina argued that Article XI should be interpreted as self-judging, asserting that the parties of the U.S.-Argentina BIT should be deemed the sole judges of whether measures could be taken under that clause that would otherwise be derogations of the treaty. However, the tribunals unanimously rejected this claim and applied a substantive review to Argentina’s invocation of the clause rather than a less strict good faith test.[36] The tribunals justified this common approach of the NPM clause as non-self-judging based on a textual comparison of the U.S.-Argentina NPM clause with other instruments, such as GATT’s Article XXI and the International Court of Justice’s treatment of similar language in the Nicaragua Case.[37] The tribunals also based this interpretation on the supposed parties’ understandings when the U.S.-Argentina BIT was concluded.^[38]

On April 19, 2019, a WTO Panel ruled for the first time on the nature of the GATT national security exception in a landmark decision concerning Ukraine’s complaint against Russia’s transit restrictions.[39] In “Russia: Measures Concerning Traffic in Transit,” the WTO Panel took the view that the invocation of the exception is justiciable and subject to its scrutiny, even when the GATT provision contains the specific language used by states to argue the self-judging nature of the security exception in their WTO disputes.[40] This is contrary to the position, long held by the U.S. and Russia, that the exception is totally self-judging. That is, a WTO Member can unilaterally invoke it without the possibility of further scrutiny.

Factual ground and arguments of the parties

The dispute concerns Ukraine’s challenge to measures Russia imposes on transporting certain goods by road and rail through Russian territory.[41] Ukraine argued that the Russian measures breached GATT’s Article V (freedom of transit), Article X (publication and administration of trade regulations), and related commitments in Russia’s WTO Accession Protocol.[42] Russia’s response was principally that it considered the measures in question necessary to protect its essential security interests within the meaning of GATT’s Article XXI. It argued that adopting these measures was in response to the “emergency in international relations that occurred in 2014 that presented threats to the Russian Federation’s essential security interests”. Russia further claimed that the security exception is totally self-judging, and, as a result, the WTO Panel should limit its findings to a statement that Russia has invoked the provision without further engaging on the substance of Ukraine’s claims.[43]

Ukraine and the nine intervening Members, including the E.U., argued that Russia’s invocation of Article XXI is justifiable and, therefore, capable of findings by the WTO Panel. The only Member who took the (unsurprisingly) opposite position was the U.S., which has long argued that the Article XXI exception is non-justiciable.[44]

WTO Panel’s findings on the justiciability of Article XXI

The WTO Panel dismissed Russia’s claim that Article XXI is totally self-judging, even when this article expressly stipulates that “[n]othing in this Agreement shall be construed [. . .] to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests” (emphasis added).[45] The WTO Panel started its analysis by recognizing that the formula “which it considers” could be read as self-judging, allowing the invoking WTO Member to subjectively determine if the circumstances described in the subparagraphs of the provision are met. However, the Panel concluded that a better interpretation mandates an objective review to ensure the satisfaction of these requirements.[46]

To reach its conclusion, the WTO Panel stated that, given the logical structure of Article XXI, the function of the three subparagraphs is to limit the discretion accorded to the WTO Member in invoking the exception to the three circumstances described therein. Leaving the invoking state exclusive discretion in determining whether these requirements are satisfied would deprive those clauses of practical effect.[47] Interpreting Article XXI as a totally self-judging provision, would mean any Member could unilaterally suspend its WTO obligations by invoking this provision, leaving the affected Members unprotected and breaking the fundamental purpose of the WTO law regime.[48]

Finally, the position that Article XXI is not totally self-judging was also confirmed by the negotiating history of the provision.[49] When the WTO dispute settlement system was established in the 1980s and 1990s, WTO Members could have expressly excluded the security exception from the scope of the WTO Dispute Settlement Body. The fact that they did not do so implicitly confirms that they intended the invocation of this provision to be subject to the jurisdiction of the WTO DSB[50]. As a result, the WTO Panel analyzed whether the measures adopted by Russia were covered by subparagraph (iii) of Article XXI, i.e., whether they were taken in times of war or other emergency in international relations, and ultimately concluded that Russia’s invocation of the exception was justified.

In several other WTO disputes, states relied on the self-judging nature of the GATT’s security exception to justify measures taken in times of crisis. Surprisingly, they subsequently requested the WTO Panels to suspend their proceedings until further notice.[51] While these requests were attributed to the disruptions in the WTO Panels’ work caused by the COVID-19 pandemic, as stated in their submissions, the unspoken reason behind them may be linked to the decision taken by the WTO Panel in “Russia: Measures Concerning Traffic in Transit.”

The implications of the ruling reached by the WTO Panel in “Russia: Measures Concerning Traffic in Transit” may not only have impacted the position of the states in their ongoing WTO disputes, which they may now need to revisit, but it may also influence future decisions of the ICSID tribunals constituted to review cases where NPM provisions are now invoked. The interpretation provided by the WTO Panel could significantly contribute to the legitimacy of the ICSID system.

CAN THE NEW APPROACH RESOLVE THE LEGITIMACY CRISIS?

The legitimacy problem arises from the contradictory holdings of the ICSID Tribunals that decided the Argentine cases. In each case, Argentina presented the same arguments, very similar evidence, and expert testimony. Still, the tribunals reached diametrically opposite conclusions based on different interpretations of the treaty’s NPM terms and the necessity of defense in customary international law. Although no doctrine of stare decisis exists in international law, in general, and investment arbitration, in particular, the fact that the four tribunals reached contradictory holdings is sufficient to call into question the legitimacy and viability of the ICSID arbitral system.[52] Contradicting awards create insecurity about the proper state of the law, particularly where divergences occur in interpreting the same BIT based on almost identical facts.[53]

These opinions are reinforced by the narrow interpretation of the NPM clause and the tribunals’ highly restrictive reading of the necessity defense that limited states’ freedom to respond to emergencies. By limiting the possibility of any of these exemptions to remove wrongfulness and liability, despite the manifest intent of the states parties of the U.S.-Argentina BIT to include an NPM provision and maintain the customary law defense of necessity, the tribunals turned the BIT into a far more robust instrument of investor protection than likely intended.[54] Should the affected states perceive that investor-State arbitration fails to respect their rights and those of investors, they may choose to exit from the ICSID system—as demonstrated in the case of Bolivia—thereby exposing the system to the risk of collapse.

Before that happens, jurisprudence of investor-State arbitration with a new approach is urgently needed. In an increasingly globalized world in which exceptional circumstances such as financial crises, terrorist threats, and public health emergencies are all too familiar, the ability of states to take effective policy responses becomes ever more critical. The proposal is that tribunals deciding investment claims arising from the COVID-19 pandemic or the Ukraine-Russia armed conflict should adopt the reasonings of the WTO Panel. This will mitigate abusive interpretations of NPM provisions by self-judging states—who consider them self-judging—and curtail their discretion in determining whether the measures taken were intended to protect their essential interests.

Tribunals will not be limited to a good faith analysis under Article 26 of the Vienna Convention. Yet the state’s invocation of a security exception would empower them to conduct a more extensive analysis under the WTO Panels approach. Even under this approach, states have recognized their regulatory powers at troubled times and have been precluded from the wrongfulness of their acts, as demonstrated by WTO jurisprudence in “Russia: Measures Concerning Traffic in Transit.”

In other words, the alternative to relying on Article 25 of the ILC Draft necessity defense would be to draw interpretive guidance on the meaning of ‘necessary’ under an essential security clause from international trade law jurisprudence. This conclusion is reinforced when considering that some IIA general and security exceptions are typically modeled very closely on the wording used in international trade agreements, such as GATT’s Article XXI.[55] All of this strengthens the idea that we are facing an unbeatable opportunity to perfect this mechanism, which, despite its weaknesses, continues to be a valuable alternative for resolving investor-State disputes.

CONCLUSION

Investment arbitration plays a crucial role in settling investment disputes and is a mechanism to attract new investments. With the wave of new arbitrations that states will face due to measures taken in response to the latest global crises, the ICSID system faces a challenge and an opportunity to interpret the necessity provisions from BITs in a clear and defined way.

As described in this paper, the ICSID jurisprudence interpreting the preventive measures taken by Argentina during its 2001 crisis, revealed the dilemma of how to best balance investment protection with regulatory autonomy in exceptional circumstances. The new perspective proposes interpreting the NPM clauses as non-self-judging, allowing states the flexibility to respond to extraordinary situations and the freedom of action they thought they had agreed to in their BITs. In consequence, tribunals will have to give effect to the NPM provisions. Should the state’s actions pass the test under this new perception, they would not constitute a breach of any BIT, and the state would be exempt from liability.

The proposed reasoning will boost the predictability and legitimacy of the ICSID system by striking a balance. It seeks to ensure that states honor their commitments while giving them the needed flexibility to exercise sovereignty in determining the best interests of their nation. This will also contribute to the growth and evolution of a more sophisticated doctrine of necessity. As a result, the system will not be dynamized from the inside out.

*Aurelia Grigera is an LLB graduate with honors from the Universidad de Buenos Aires (Argentina). She maintains a distinguished track record in investment and commercial arbitration moots, for which she now serves as a coach. She currently works in the Litigation & Arbitration team at the Marval O’Farrell Mairal law firm, with particular interest in international commercial and investment arbitration.

[1] See International Centre for Settlement of Investment Disputes (ICSID), ICSID Caseload -Statistics, Issues 2021-1, 2022-1, https://icsid.worldbank.org/resources/publications/icsid-caseload-statistics. The report shows that, in the first six months of 2020, 40 claims were brought before the ICSID arbitral system, and the most demanded countries were Colombia and Peru. By the end of 2020, the COVID-19’s year, the historical record of ICSID claims was broken, with 58 claims registered in a single year. One year later, in 2021, 66 claims were registered; See also Freshfields Bruckhaus Deringer LLP, Main trends in a changing world, International Arbitration in 2023 (2023), https://www.freshfields.com/ (“No new investment arbitrations have yet been publicly reported against Russia related to its invasion of Ukraine in 2022 or the countersanctions it implemented after the invasion. We estimate that this will change in 2023”).

[2] Dilini Pathirana & Mark McLaughlin, Non-precluded Measures Clauses: Regime, Trends, and Practice, in Handbook of International Investment Law and Policy 483, 486 (Julien Chaisse, Leïla Choukroune & Sufian Jusoh, eds., 2019).

[3] See William W. Burke-White, The Argentine Financial Crisis: state Liability Under BITs and the Legitimacy of the ICSID System, Penn Carey Law: Legal Scholarship Repository, 2008, at 6; See also Kenneth J. Vandevelde, Scope, in Bilateral Investment Treaties: History, Policy, and Interpretation 121, 155 (Oxford University Press, 2010).

[4] International Law Commission, Draft Articles on Responsibility of states for Internationally Wrongful Acts, with Commentaries, at art. 25, U.N. Doc. A/56/10 (2001) [hereinafter ILC Draft].

[5] Burke-White, supra note 3, at 9; ILC Draft, supra note 4, at 75.

[6] Vandevelde, supra note 3, at 155; James Crawford, Circumstances precluding wrongfulness, in state Responsibility: The General Part 274, 314 (Cambridge University Press, 2013); Burke-White, supra note 3, at 18; Andrew Newcombe & Lluís Paradell, Chapter 10 – Defences, VI. Fundamental Change of Circumstances (Rebus Sic Stantibus / Imprévision), in Law and Practice of Investment Treaties: Standards of Treatment 481, 516 (Kluwer Law International, 2009).

[7] Vandevelde, supra note 3, at 155.

[8] Burke-White, supra note 3, at 10.

[9] CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8, Award, ¶¶ 59-67 (May 12, 2005).

[10] Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Award, ¶¶ 53-67 (May 22, 2007).

[11] Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16, Decision on Liability, ¶¶ 76-87 (September 28, 2007).

[12] LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc. v. Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability, at 10-22 (July 3, 2006).

[13] Burke-White, supra note 3, at 5.

[14] See CMS v. Argentina, supra note 9, at ¶¶ 344-354; Enron v. Argentina, supra note 10, at ¶¶ 324-326; Sempra v. Argentina, supra note 11, at ¶ 98.

[15] CMS v. Argentina, supra note 9, at ¶¶ 304-306.

[16] CMS v. Argentina, supra note 9, at ¶¶ 311-312.

[17] See CMS v. Argentina, supra note 9, at ¶¶ 357.

[18] Newcombe & Paradell, supra note 6, at 495.

[19] Burke-White, supra note 3, at 14.

[20] Enron v. Argentina, supra note 10, at ¶ 333.

[21] See Jorge E. Viñuales, Defence Arguments in Investment Arbitration, in 18 ICSID Reports 9, 26 (Cambridge University Press, 2021); Sempra v. Argentina, supra note 11 at ¶ 346.

[22] Sempra v. Argentina, supra note 11, at ¶ 376.

[23] Pathirana & McLaughlin, supra note 2, at 495.

[24] Burke & White, supra note 3, at 22.

[25] LG&E v. Argentina, supra note 12, at ¶ 245.

[26] Stephan W. Schill, International Investment Law and the Host state’s Power to Handle Economic Crises. Comment on the ICSID Decision in LG&E v. Argentina, in 24 Journal of International Arbitration, 2007, at 280.

[27] See Vandevelde, supra note 3, at 155.

[28] CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8, Decision of the ad hoc Committee on the Application for Annulment of the Argentine Republic, ¶¶ 131-132 (September 25, 2007); See also William W. Burke-White & Andreas von Staden, Investment Protection in Extraordinary Times: The Interpretation and Application of Non-Precluded Measures Provisions in Bilateral Investment Treaties, in 146 Penn Carey Law: Legal Scholarship Repository, 2008, at 321 (“NPM provisions are distinct from these customary defences in terms of their substantive content, their theoretical justification, their source of legal authority, and their scope of applicability”).

[29] CMS Annulment, supra note 28, at ¶ 129.

[30] See CMS Annulment, supra note 28, at ¶ 129; See also Viñuales supra note 22, at 27, and Newcombe & Paradell, supra note 6, at 481 (“If there is an applicable exception, no IIA obligation exists with respect to a measure within the scope of the exception”).

[31] See CMS Annulment, supra note 28, at ¶¶ 135-136.

[32] Burke-White, supra note 3, at 14.

[33] Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16, Decision of the ad hoc Committee on the Application for Annulment of the Argentine Republic, ¶223 (June 29, 2010); Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Decision of the ad hoc Committee on the Application for Annulment of the Argentine Republic, ¶¶ 406-408 (July 30, 2010).

[34] Pathirana & McLaughlin, supra note 2, at p. 498.

[35] See CMS v. Argentina, supra note 9, at ¶ 370; Enron v. Argentina, supra note 10, at ¶ 327; LG&E v. Argentina, supra note 12, at ¶ 214.

[36] Burke-White, supra note 3, at 13.

[37] See CMS v. Argentina, supra note 9 at ¶ 370; Enron v. Argentina, supra note 10, at ¶ 327; Sempra v. Argentina, supra note 11, at ¶ 384; Military and Paramilitary Activities in and Against Nicaragua (Nicar. v. U.S.), Judgment, 1986 I.C.J. Rep. 14, ¶ 282 (June 27).

[38] See LG&E v. Argentina, supra note 12, at ¶¶ 226, 266.

[39] See World Trade Organization, Russia – Measures Concerning Traffic in Transit – Panel report, WT/DS512 (adopted Apr. 5, 2019); See also Newcombe & Paradell, supra note 6, at 492 (“No GATT or WTO panel had made a definitive interpretation of the Article XXI, GATT, and there was disagreement amongst commentators over whether the application of the exception was completely self-judging – and thus within the unilateral, subjective determination of the state – or whether the exception also has an objective content because essential security interests are defined in paras(i) to (iii) making the invocation of the exception subject to objective limits”).

[40] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶¶ 7.102-7.104.

[41] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶¶ 7.5-7.19.

[42] See World Trade Organization, Russia – Measures Concerning Traffic in Transit – Request for the Establishment of a Panel by Ukraine, WT/DS512 (adopted Feb. 10, 2017), at 3-6.

[43] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶ 7.4.

[44] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶¶ 7.31-7.52.

[45] General Agreement on Tariffs and Trade, Oct. 30, 1947, art. XXI: Security Exceptions.

[46] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶¶ 7.63-7.66.

[47] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶ 7.67.

[48] See General Agreement on Tariffs and Trade, Oct. 30, 1947, art. II (“Objectives: Basic purpose of the regime: ‘promote the security and predictability of the reciprocal and mutually advantageous agreements and the substantial reduction of tariffs and other barriers to trade’”).

[49] See Russia – Measures Concerning Traffic in Transit, supra note 39, ¶¶ 7.83-7.100.

[50] Lode Van Den Hende, Eric White & Lukas Maly, Landmark ruling on the WTO national security exception, Herbert Smith Freehills (Jun. 7, 2019).

[51] See World Trade Organization, United Arab Emirates: Measures Relating to Trade in Goods and Services -Communication from the Panel, WT/DS526/3 (adopted Jan. 19, 2021), and World Trade Organization, United states: Certain Measures on Steel and Aluminium Products – Communication from the Panel, WT/DS548/19 (adopted Jan. 21, 2022). See also World Trade Organization, Ukraine: Measures relating to Trade in Goods and Services – Dispute Settlement, DS499 (adopted May 19, 2017) where the question mark is whether Russia will ultimately request formal proceedings given that the WTO Panel would likely rule in favor of Ukraine for the same reasons it found for Russia in “Russia: Measures Concerning Traffic in Transit”. The latter is still at a consultation stage, since May 19, 2017, and there are no signals that the procedure will move forward in the near future.

[52] Burke-White, supra note 3, at 11; Pathirana & McLaughlin, supra note 2, at 485; Schill, supra note 26, at 278.

[53] Schill, supra note 26, at 278; Michael Waibel, Two Worlds of Necessity in ICSID Arbitration: CMS and LG&E, 24 Journal of International Arbitration, 2007, at 11 (“[I]s even more disturbing given that ICJ Judge Francisco Rezek served as Argentina-appointed arbitrator in [CMS vs. Argentina and LG&E vs. Argentina]” and “[t]he same experts also submitted opinions on necessity, including José Alvarez, Ann-Marie Slaughter with William Burke-White and Nouriel Roubini”).

[54] See Burke-White, supra note 3, at 25.

[55] See Newcombe & Paradell, supra note 6, at 500.