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On the Necessity of Necessity Measures: A Response to Alan O. Sykes

Part of: Alan O. Sykes, “Economic ‘Necessity’ in International Law”

Published online by Cambridge University Press:  20 January 2017

Anne van Aaken
Anne van Aaken*
Affiliation:
Legal Theory, Public International Law and European Law, University of St. Gallen
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Applying economic theory to the analysis of economic “necessity” defenses in international law is highly desirable and Alan Sykes does a wonderful job in his editorial comment. As I have argued, the application of contract theory to international investment agreements (IIAs) helps us analyze their commitment and flexibility mechanisms. Sykes uses such an optimal contracting approach to address the problem of necessity in IIAs. I concur in broad terms with his conclusion, but I argue for greater contextualization in the application of the argument. Contract theory, although useful as a basic frame to address necessity claims, does not by itself fully encompass the economic analysis of law. Economic theory is diverse and not always unequivocal in its insights. Contract theory, as applied so far to international law, takes the state as a black box and assumes that the state will behave rationally. I will take a look into the box in order to analyze the incentives of different actors involved, including some of the beneficiaries of Iias—foreign investors.

Type
Symposium on Alan O. Sykes, “Economic ‘Necessity’ in International Law”
Information
AJIL Unbound , Volume 109 , 2015 , pp. 181 - 186
Copyright
Copyright © American Society of International Law 2015

References

1 Sykes, Alan O., Economic “Necessity” in International Law, 109 AJIL 296 (2015)Google Scholar.

2 van Aaken, Anne, International Investment Law Between Commitment and Flexibility: A Contract Theory Analysis, 12 J. Int’l Econ. L. 507 (2009)CrossRefGoogle Scholar.

3 Law No. 25561, Jan. 6, 2002 (Arg.).

4 Draft Articles on the Responsibility of States for Internationally Wrongful Acts, Report of the International Law Commission on the work of its fifty-third session, 19 UN GAOR Suppl. No. 10, at 43, UN Doc. A/56/10 (2001), reprinted in [2001] 2 Y.B. Int’l L. Comm’n 26, UN Doc. A/CN.4/Ser.A/2001/Add. 1.

5 Emergent Order, “Fear the Boom and Bust” a Hayek vs. Keynes Rap Anthem, YouTube (Jan. 23, 2010).

6 Cf. also Sykes, supra note 1, at 319.

7 CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Award, paras. 349 et seqq. (May 12, 2005), 14 ICSID Rep. 158.

8 On file with the author.

9 van Aaken, Anne, Smart Flexibility Clauses in International Investment Treaties and Sustainable Development: A Functional View, 15 J. World Inv. & Trade 827 (2014)CrossRefGoogle Scholar and van Aaken, Anne, Control Mechanisms in International Investment Law, in The Foundations of International Investment Law: Bringing Theory Into Practice 409 (Douglas, Zacharias et al. eds., 2014 Google Scholar).

10 Sykes, supra note 1, at 303.

11 Panel Report, United States—Nicaraguan Trade, para. 5.3, L/6053, Oct. 13 1986. The Panel outlined the self-judging nature clearly:

The Panel concluded that, as it was not authorized to examine the justification for the United States’ invocation of a general ex-ception to the obligations under the General Agreement, it could find the United States neither to be complying with its obligations under the General Agreement nor to be failing to carry out its obligations under that Agreement.

12 2012 U.S. Model Bilateral Investment Treaty.

13 2004 Canadian Model Foreign Investment and Protection Agreement.

14 Kaplow, Louis, An Economic Analysis of Legal Transactions, 99 Harv. L. Rev. 509 (1986)Google Scholar.

15 Sykes, supra note 1, at 316.

16 CMS Gas Transmission Company v. The Arg. Republic, ICSID Case No. ARB/01/8, Award, paras. 69 et seqq. (May 12, 2005), 14 ICSID Rep. 158.

17 CMS Gas Transmission Company v. The Arg. Republic, ICSID Case No. ARB/01/8, Decision of the Tribunal on Objections to Jurisdiction (July 17, 2003), 7 ICSID Rep. 494.

18 Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Award (Nov. 13, 2000), 5 ICSID Rep. 419.

19 See also Sykes, supra note 1, at 302, for the U.S. contract law.

20 Id. at 321.

21 Id. at 312.

22 Id. at 309, 312.

23 Heavily Indebted Poor Country (HIPC) Initiative, The World Bank.