The customary norm of necessity contains several requirements that must be cumulatively met, one of them being that the state invoking the excuse cannot have substantially contributed to the situation of necessity. However, the NAFTA tribunals in S.D. Myers and GAMI recognized that adverse consequences for foreign investors caused by wrong regulatory choices could not be considered as a violation of the minimum standard of treatment. Implicit in this finding is the premise that perfection is not the standard regarding the quality of abstract regulation. If this is so, the question that needs to be answered is how courts and tribunals should evaluate the issue of a crisis prompted by the failure of regulation of this character, when interpreting the customary rule of necessity. The purpose of this article is to draw on the factual richness of Argentina’s 2001 crisis to develop a framework of analysis that permits courts and tribunals to evaluate regulatory failures as contributors to the situation of necessity under customary international law.
Journal of International Arbitration