States’ Defenses against Foreign Investors in Times of Political and Economic Crisis

During periods of economic and political crises, investors become more vulnerable
\nbecause States usually adopt quick measures like protective policies and measures of public
\ninterest, which frequently come into conflict with international investment law: Foreign
\ninvestors may resort to arbitration under investment treaties and file complaints usually
\narguing that changes and measures taken by the State violate the protections offered in
\nthese treaties. Legal defenses of States in times of crises are on the other hand very limited
\nand constrained by strict conditions. Host States can invoke their right to modify rules to
\npreserve public order under the customary principle of police powers. States may also rely
\non certain treaty provisions called non-precluded measures provisions if they exist and / or
\nthe exception of necessity under customary international law codified in article 25 of the
\nInternational Law Commission (ILC) Articles on State Responsibility for Internationally
\nWrongful Acts to exclude from wrongfulness measures and acts adopted in a crisis situation.
\nArbitral jurisprudence provided clarifications on how to interpret non-precluded measures
\nclauses in investment treaties in relation to the necessity plea under customary law. It has
\noften addressed the question of whether the necessity defense is self-judging and also has
\ntaken different approaches to the determination of damages in cases involving the successful
\nor unsuccessful use of necessity and non-precluded measures clauses