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Dr Leonardo Carpentieri

Counsel in International Arbitration - LMS Legal LLP

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Necessity as a defence

I. Definition

1.

The doctrine of necessity is a well-grounded concept in customary international law and has been codified into Article 25 of the International Law Commission (ILC)’s Draft Articles on State Responsibility (ILC Articles).1

2.

Necessity is invoked by respondent States primarily in times of crisis, as an excuse for the breach of an international law obligation, as part of litigation or arbitration proceedings.2 As the defence of force majeure, if successfully asserted by the State, necessity may lead to precluding the wrongfulness of the State’s conduct.3

3.

The acts covered by the doctrine of necessity must be of an exceptional nature in order for this defence to be successful. Although it has been invoked numerous times by respondent States, arbitral tribunals have very rarely upheld it. In light of recent events affecting the MENA region in particular, but other parts of the world too, it may be however argued that tribunals may be less strict when ruling on governmental acts in times of crisis or conflict.4

4.

It is also essential to consider the wording of Article 27 of the ILC Articles in relation to compensation, indicating that “the invocation of a circumstance precluding wrongfulness in accordance with this chapter is without prejudice to: (a) compliance with the obligation in question, if and to the extent that the circumstance precluding wrongfulness no longer exists; (b) the question of compensation for any material loss caused by the act in question”. In sum, even if a State is precluded from wrongfulness during a period of necessity, a successful Article 25 defence does not necessarily prevent that State from having to pay compensation for damage occurred during the period of necessity.

5.

It is worth noting that the same underlying events could give rise to both the defense of necessity and force majeure. In some pending investor-State proceedings, including as part of claims brought against the State of Libya, both defences are being pleaded alternatively by respondent States. It bears noting that while force majeure relates to involuntary or coerced conduct,5 necessity usually involves a voluntary act on the part of the State.6

II. The applicability of the necessity doctrine

6.

The requirements for necessity as defined in Article 25 of the ILC Articles are as follows: (i) the state’s act is to safeguard an essential interest against a peril;7 8 (ii) the peril shall be grave and imminent;9 (iii) the course of action followed shall be the only way available;10 and (iv) no other essential interest shall be seriously impaired as a result of the breach.

III. The necessity exceptions

7.

There are two exceptions where the defence of necessity may not be invoked: where the State has renounced the defences so as to exclude the possibility of invoking necessity, or where the State has contributed to the situation of necessity.11 Contribution to necessity can be the result of well-intended but ill-conceived policies.12

IV. Necessity in the context of military, economic, environmental and health crisis

8.

Necessity has been successfully invoked in cases of military and environmental crisis.13 It has also recently been considered by tribunals deciding on claims deriving from the Arab Spring events of 2011.14 Historically, necessity has been invoked in times of economic crisis, and most significantly in the Argentina crises cases.

9.

Necessity was invoked successfully in the Continental Casualty and LG&E cases. In these cases, the tribunal found that necessity was only justified when measures are essential for safeguarding essential public interests, and in light of the aggregate of devastating economic, political and social conditions, that requirement was satisfied.15

10.

Both decisions were rendered under the US-Argentina Bilateral Investment Treaty. Although both tribunals upheld necessity, it is worth noting that in Continental Casualty, the tribunal made a distinction between its reasoning under the BIT and the customary international law notion of necessity. These decisions contradict many other decisions made on comparatively identical grounds.16

11.

In light of the current pandemic situation, it is also reasonable to wonder whether Covid-19 would constitute a basis for a necessity defence.17

Bibliography

Agius, M., The Invocation of Necessity in International Law, Netherlands International Law Review, 2009, pp. 95-135.

Al-Rashid, M., Bardyn, U. and Golendukhin, L., Investment Claims Amid Civil Unrest: Questions of Attribution and Responsibility, Bahrain Chamber for Dispute Resolution International Arbitration Review, pp. 182-218.

L. Bento, L. and Chen, J., Investment Treaty Claims in Pandemic Times: Potential Claims and Defenses, Kluwer Arbitration Blog, 2020.

Boed, R., State of Necessity as a Justification for Internationally Wrongful Conduct, Yale Human Rights and Development Law Journal, 2000, pp. 1-44.

Burke-White, W.W. and von Staden, A., Investment Protection in Extraordinary Times: The Interpretation and Application of Non-Precluded Measures Provisions in Bilateral Investment Treaties, Virginia Journal of International Law, 2008, pp. 307-356.

Dellinger, M.F., Rethinking Force Majeure in Public International Law, Pace Law Review, 2017, pp. 455-506.

Ismailov, O., Necessity Revisited: Interpreting the Non-Precluded Measures Clause of the U.S.-Argentina BIT under Systemic Integration Approach, Transnational Dispute Management, 2016.

Jones, D., Investor-State Arbitration in Times of Crisis, National Law School of India Review, 2013, pp. 34-37.

Kasenetz, E.D., Desperate Times Call for Desperate Measures: the Aftermath of Argentina’s State of Necessity and the Current Fight in the ICSID, The George Washington International Law Review, 2010, p. 709.

Martinez, A., Invoking States Defenses in Investment Treaty Arbitration, in Waibel, M., Kaushal, A., Chung, K., Balchin, C. (eds.), The Backlash against Investment Arbitration: Perceptions and Reality, 2010, pp. 315-337.

Newcombe, A. and Paradell, L., Law and Practice of Investment Treaties: Standards of Treatment, 2009, p. 314.

Paddeu, F.I., A Genealogy of Force Majeure in International Law, British Yearbook International Law, 2012, p. 381.

Schreuer, C., The Protection of Investments in Armed Conflicts, in Baetens, F. (ed.), Investment Law within International Law: Integrationist Perspectives, 2011, pp. 3-20.

Mansour, A.B., Menard, M., Thouvenin, J., Lesaffre, H., Szurek, S. and Heathcote, S., Circumstances Precluding Wrongfulness in the ILC Articles on State Responsibility, in Crawford, J., Pellet, A. and Olleson S., The Law of International Responsibility, 2010, p. 475.

Zrilič, J., Armed Conflict as Force Majeure in International Investment Law, Manchester Journal of International Economic Law, 2019.

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