In international law, countermeasures are measures taken by a State in response to the internationally wrongful act of another State and aimed at inducing the latter State to comply with its legal obligations.1 As explained by the ICJ in the Gabcíkovo-Nagymaros Project case, countermeasures might justify otherwise unlawful conduct “taken in response to a previous international wrongful act of another State and [...] directed against that State.”2 This is also reflected in Article 22 of the ILC Articles on State Responsibility, which stipulates that “[t]he wrongfulness of an act of a State not in conformity with an international obligation towards another State is precluded if and to the extent that the act constitutes a countermeasure taken against the latter State […].”3
The conditions of lawful countermeasures under customary international law are codified in the ILC Articles on State Responsibility. In particular, Article 49 provides:
“1. An injured State may only take countermeasures against a State which is responsible for an internationally wrongful act in order to induce that State to comply with its obligations […]
2. Countermeasures are limited to the non-performance for the time being of international obligations of the State taking the measures towards the responsible State.
Countermeasures are rarely mentioned in investment treaties or dealt with in investment treaty cases.7 In the rare cases in which host States tried to rely on countermeasures, they purported to do so in light of customary international law and as a reaction to an alleged wrongdoing of the State of nationality of the investor, and not to the conduct of the investor.8 This raises the controversial question whether a host State can rely on a countermeasure defence based upon the alleged wrongdoing not of the investor but of the latter’s State of nationality, which is not a party to the arbitration proceedings.
Archer Daniels Midland and Tate & Lyle Ingredients Americas, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/04/5, Award, 21 November 2007, para. 110; Cargill, Incorporated v. United Mexican States, ICSID Case No. ARB(AF)/05/2, Award, 18 September 2009, paras. 388-393; Corn Products International, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/04/1, Decision on Responsibility, 15 January 2008, para. 150; Paparinskis, M., Investment Arbitration and the Law of Countermeasures, 79 British Yearbook of International Law, 2008, pp. 335-336.
In Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. The United Mexican States case,9 the tribunal had to decide whether a tax enacted by Mexico “in order to induce”10 the United States to comply with its NAFTA obligations can be considered a countermeasure precluding the wrongfulness of Mexico’s otherwise wrongful conduct. The tribunal held that although the defence of countermeasures is in principle applicable in international investment treaty arbitration, Mexico’s tax was not a legitimate countermeasure.11 In contrast, in the Corn Products International Inc v. Mexico case,12 which concerned similar facts, the tribunal held the investors enjoy substantive rights, which are separate and distinct from those of their State of nationality, and therefore the host States cannot deprive the investors of their rights even in order to induce their state of nationality to comply with its international legal obligations.13 This conclusion was also reached by the tribunal in the case of Cargill v. Mexico.14
Paddeu, F., Countermeasures, Max Planck Encyclopedia of Public International Law, 2015.
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