The Evolving Role of the Human Rights Factor within the State of Necessity Test in Investment Arbitration

  •  Dmitry V. Krasikov    


The discussion on increasing the legitimacy of international investment law largely overlooks the potential of the state of necessity, as a circumstance precluding wrongfulness of States’ conduct under general international law, for the protection of human rights. The present article deals with the practice of international investment arbitration in cases involving Argentina in connection with its economic crisis of 1998–2001, in which it raised the necessity defense and appealed, inter alia, to human rights. The article concludes that, as a rule, the human rights factor did not play a noticeable role for resolving the relevant disputes. The human rights discourse either had no adequate place within the merits of the disputes, or the tribunals did not take the relevant arguments seriously. The human rights argumentation tried itself within different parts of the Argentina’s defense, including various elements of the necessity test, but without meaningful effect. The Award in the case of Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic has demonstrated the perspective of recognizing the significance of the human rights factor in the context of “the only way” element of the necessity test: this element can unleash the potential of human rights in the disputes involving the necessity-based defense and provide the tribunals with tools capable of taking human rights more seriously in the context of investment disputes concerning emergencies. The Urbaser Tribunal position is an evidence of the evolving and expanding role of the human rights factor within the necessity test but substantial clarification of this test at the doctrinal, practical and political level is still needed to increase the legitimacy of international investment dispute resolution system.

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