The goal of international investment law consists of fostering and protecting foreign investments through a reciprocal arrangement of rights and obligations between host States and foreign investors. International arbitral tribunals provide fora for the resolution of Investor-State disputes to which the investors may turn in order to obtain relief for the breach of their rights under international invesment law. Due to the nature of State measures taken in emergency situations, there is a substantial possibility of breaches of State obligations owed to foreign investors.
The following thesis provides an analysis of some of the legal mechanisms under general international law and international investment law which are available to respondent States before international arbitral tribunals in cases arising out of emergency situations. It will be shown that the array of defenses available to States is relatively limited. Investment treaties usually contain two relevant types of clauses, the ‘general exceptions’ and the compensation-for-losses clauses. In addition to the treaty-based defenses, States may also rely on circumstances precluding wrongfulness under customary international law, such as necessity.
The arbitral practice that hitherto dealt with these institutes is relatively inconsistent, which presents a problem for all parties involved. The lack of clear guidelines on the permissible State action in emergency situations is primarily reflected in the lack of stability of the legal environment.
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