Adjudging the Exceptional at International Law : Security, Public Order and Financial Crisis

This paper examines the impact of international law on the ability of states to mitigate the effects of financial crises. It takes as its subject the invocation of investment treaty disciplines in the aftermath of the 2001-2 Argentine financial crisis. The paper focuses on the adjudication by investor-state arbitral tribunals of Argentina's defence of a state of necessity, under both subject treaties and at customary international law. The outcome in all but one case has been to refuse Argentina's claim to derogation of liability. The paper uncovers three interpretative methods in the jurisprudence on the relationship between the treaty exception and customary plea of necessity. These are termed respectively methodology I (confluence), II (lex specialis) and III (primary-secondary applications). Method I is revealed as the dominant approach in the jurisprudence and the most restrictive of the three readings. The paper argues that this approach is mistaken both on a close textual analysis of the two standards and on a broader historical analysis of the emergence of investment treaty norms. The real choice, it is suggested, lies between methods II and III. The paper reviews these contrasting approaches and argues that method III is the most convincing and coherent reading of the relationship between the two legal standards. The paper concludes by addressing the key interpretative questions surrounding method III being: (i) the identification and scope of the notion of public order and a state's essential security interests; and (ii) the appropriate test to assess the necessity of the chosen means of the regulating state to achieve these purposes