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International Investment Law and the Host State’s Power to Handle Economic Crises – Comment on the ICSID Decision in LG&E v. Argentina

Argentina is facing several claims under bilateral investment treaties (BITs) relating to its emergency legislation passed to tackle its economic crisis in 2001–2002. This article critically analyzes the second ICSID decision on the merits handed down in this context in LG&E Energy Corp. v. Argentina and compares it to the earlier award in CMS v. Argentina. While the decisions do not differ substantially as to the interpretation of substantive investment law, they diverge significantly on the concept of necessity. Unlike CMS, LG&E in part accepted Argentina’s plea of necessity. The article argues that the award in LG&E misconstrued the burden of proof for limiting elements of necessity, such as the question of Argentina’s contribution to the crisis and the selection of less restrictive means, and questions whether its exclusion of compensation for the investor’s material loss was accurate even if the plea of necessity was operative.