Book Symposium Investment Law: Comments on Gleider I. Hernandez

Book Symposium Investment Law: Comments on Gleider I. Hernandez

[William W. Burke-White is Deputy Dean and Professor of Law at University of Pennsylvania Law School.]

I am delighted to have this opportunity to engage with the excellent chapter by Gleider Hernandez on the interaction between investment law and the law of armed conflict. The chapter makes an important contribution to an under-studied area of law, namely the interplay of international investment law and other specialized subfields, particularly international humanitarian law. I am hopeful that this chapter will open a broader discussion in this space, which is of both significant jurisprudential and practical consequence.

Let me say at the start that I agree with Gleider’s overall approach. Both international investment law and international humanitarian law are specialized sub-fields of public international law, both fields frequently reference public international law generally, and both should be treated as part of the broader system of public international law. Perhaps as a consequence of the growing depth of particular subfields of international law or the nature of issue-specific scholarly inquiry today, all too often fields such as these are studied in isolation. As a result, their interactions are often overlooked and possibilities for mutual synergy (or conflict) are neglected. I credit Gleider (and the editors and contributors of the volume as a whole) for taking on these interactions directly and examining closely the way these fields overlap and interact.

Turning to the substantive question, however, I would take a somewhat different approach. Namely, any potential conflict can, in most circumstances be avoided either through the terms of a bilateral investment treaty (BIT) or based on background norms of public international law. Many BITs contain a non-precluded measures provision that is expressly intended to deal with conflicts such as that presented between humanitarian law and investment law. Gleider recognizes this and notes on page 23 that such “security exceptions” will “not be addressed here, as the case law on such provisions has generally been applied in situations of ‘financial necessity.’” While it is certainly true that Argentina, particularly, invoked a similar provision given the financial crisis of 2001 and 2002, these non-precluded measures provisions are even more directly applicable in cases of armed conflict.

Andreas von Staden and I have documented the frequency of these provisions and analyzed their interpretation extensively elsewhere. For example, Article XI of the US-Argentina BIT provides that: “This Treaty shall not preclude the application of measures necessary for the maintenance of public order, the fulfillment of its obligations with respect to the maintenance or restoration of international peace and security, or the Protection of its own essential security interests.” Similarly, Article 18 of the 2012 US Model BIT provides: “Nothing in this treaty shall be construed…to preclude a party from applying measures that it considers necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace and security, of the protection of its own essential security interests.”

I contend that these provisions will often allow a state to take actions in compliance with international humanitarian law that conflict with BIT obligations without either responsibility or liability. While the interpretation and applicability of such clauses has been debated by, for example, the CMS and LG&E Tribunals and the CMS Annulment Committee, even under the most restrictive interpretations, it seems that the armed conflict necessary for the applicability of most international humanitarian law would trigger the non-precluded measures provision of the relevant BIT. Compliance with international humanitarian law can fairly easily be interpreted as necessary for the maintenance of international peace and security (though that is usually a reference to UN Security Council Resolutions) or as necessary for the protection of a state’s essential security interests. Given that such non-precluded measures provisions are quite widespread in BITs, they will often provide a state with a means of compliance with international humanitarian law even where those actions would violate a BIT.

Even where the BIT in question does not contain an NPM provision, the background defenses of Distress and Necessity found in Articles 24 and 25 of the Draft Articles on the Responsibility of States for Internationally Wrongful Acts would potentially be applicable. Where compliance with international humanitarian law was necessary to save lives “entrusted to the [state’s] care,” the state breaching the BIT for that reason could well invoke duress. If compliance with international humanitarian law was necessary to safeguard an essential interest of the state and the BIT violation did not imperil an essential interest of the treaty partner, the necessity defense could well apply. While jurisprudence in this area is in need of development, the purposes of international humanitarian law, certainly make such claims plausible at the very least.

Even beyond non-precluded measures provisions or potential defenses, there is a structural reason to think that conflict between international humanitarian law and investment law can be avoided. Gleider rightly points out that both fields arelex specialis, namely they apply in specific subject-matter areas of the law. There is, however, a further argument that humanitarian law may be an even more narrowly tailored lex specialis that would result in the prioritization of humanitarian law over investment law. International humanitarian law is lex specialis both in terms of its subject matter and based on certain geographic and temporal triggers – the existence and scope of an armed conflict. It is at least worth considering whether, once those requirements are met and humanitarian law triggered, it would displace investment law. Obviously, there are some dangerous consequences to such an approach. Investments may be most in need of protection and the very moment that humanitarian law is triggered. Moreover, if humanitarian law displaces investment law does it also displace other subfields of law such as human rights law? Derek Jinks, among others, has argued compellingly against just such a conclusion. Ultimately, these questions merit further consideration than this brief response can allow.

Finally, again as Andreas von Staden and I have argued elsewhere, there is reason to think that, in certain circumstances, particularly where public law or quasi-constitutional rights are at stake, investment tribunals should apply a more relaxed standard of review, giving greater deference to the regulatory choices of national governments. A state’s decision that international humanitarian law is applicable and trumps – for a limited time – BIT protections, could well be one of those circumstances. Such an approach would give stronger deference to a state’s decision to comply with international humanitarian law and avoid or at least mitigate conflicts between humanitarian and investment law. Again, this is an issue that needs far more analysis than this forum allows.

In conclusion, I thank Gleider for opening up this conversation and I hope that this can be the beginning of a robust debate in this space.

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Derek is correct.  See response to Gleider’s post.