The Argentine Crisis and Foreign Investors
José E Alvarez, Kathryn Khamsi
- Foreign Direct Investment — Official interpretations by the parties — Host state law
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.