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This article discusses in detail how the essential security exception issue was dealt with in five Argentina arbitral decisions. It argues that Argentina's defence of necessity in those cases ‘raises a number of interpretive questions that go to the heart of the … investment regime.’ After discussing the interpretive questions extensively, it is shown that the ‘measures-not-precluded’ clause of the Argentina-US bilateral investment treaty (BIT) was not meant to be ‘self-judging’, that it should be interpreted in light of the customary defence of necessity, and that, even if properly invoked, it does not excuse the obligation to compensate. Although the article suggests that many of the concerns about the legitimacy of the investment regime are overblown, it concludes that addressing the regime’s genuine legitimacy problems may require changes to the substantive law.

In several cases that arose out of Argentina’s economic crisis 2001–2002 tribunals have provided divergent interpretations of the relationship between the ‘essential security’ exception contained in Article XI of the US-Argentina bilateral investment treaty and the customary international law defence of necessity. The tribunal in Continental Casualty v Argentina provided a new understanding that is guided by the WTO’s approach under GATT Article XX. This chapter considers the justification advanced by the tribunal for this approach and the legal and systemic issues it raises. It finds the turn to WTO law for purposes of interpreting the ‘essential security’ clause to be deeply flawed for textual, teleological, and systemic reasons. Alternative legal methodologies that the arbitrators should have considered instead are suggested.