Towards a Convergence of Trade and Investment Law? A Right to Take Prudential Measures for the Preservation of Financial Stability

[...]in holding that a measure taken for prudential reasons required a prudential cause, the Panel could easily reject Panama's assertion that "prudential measures should be transitional, provisional or short-term in nature". Instead, the panel found that the time factor was to be read in light of the causes justifying the measures and thus concluded that measures taken for prudential reasons "can remain in place . . . for as long as the factual circumstances that justified their adoption continue to exist. In December 2016, the tribunal in Urbaser v. Argentina also dealt with the issue of necessity, but the award made no mention of "Non-Precluded Measures" clauses and essentially focused on the Customary Law-based and necessity-based argument. [...]without providing any legal analysis, the award rather matter-of-factly acknowledged that a state of necessity can have priority over investment considerations before concluding that Argentina did not have a choice in taking its measures. More specifically, the tribunal first focused on section 2 of Article 25 ILC and commented on the idea that necessity exceptions cannot be invoked where the state is responsible for the duress situation at stake. [...]it became even more difficult for the banks to meet the regulatory capital requirements than it had been before due to the bad loan problem". On the other hand, it nonetheless insisted that the "tightening the regulatory regime" had to be seen as part of a larger European Accession process and concluded that the host's financial policy was not a breach of the treaty standards. Another relevant case is Fireman's Fund Insurance, which had the potential to provide important interpretive guidance but did not engage in any legal reasoning on the issue. Gourgourinis, in particular, notes that in various cases falling under the jurisdiction of the Court of Justice of the European Free Trade Association (EFTA) and of the Permanent Court of International Justice, financial crisis - particularly the recent Greek crisis - could be considered as force majeure and preclude wrongfulness. [...]the margin of appreciation doctrine might in the future be considered by investment tribunals either through necessity or force majeure, with the latter perhaps providing a more flexible exception in that the role played by the host state in creating the crisis would not be given the same weight.