A. Notion
1 State of necessity reflects an international customary rule according to which a factual situation of grave and imminent peril for the essential interests of a State would legally justify a breach of an international obligation by such State as the only means to safeguard such essential interests.
2 The institution under consideration pertains to the body of ‘secondary rules’ of State responsibility, as a circumstance precluding wrongfulness (Circumstances Precluding Wrongfulness). Scholarly debate arose as to the possibility of identifying, besides force majeure and distress, a further exception to the unlawfulness of conduct in breach of an international obligation, similarly based on a factual situation of necessity lato sensu. The prevailing view is that, on the one hand, state of necessity differs from force majeure—which applies to involuntary or coerced conduct—insofar as an element of free choice remains for the State organ—including of a collective nature—consciously acting in violation of international law under a situation of danger for the State as a whole, or its population; on the other hand, while distress may be invoked only where there exists a special and direct relationship between the State organ acting in violation of an international obligation and the person whose life is in peril, state of necessity applies to more general situations of emergency, such as humanitarian situations, or cases in which the vital interests of the State as a whole are at stake, or in which its population is in danger.
B. Historical Development and Context
2. International Practice and Case Law
4 International practice and case law provide substantial authority in support of the existence of necessity as an autonomous circumstance precluding wrongfulness under general international law (General International Law [Principles, Rules and Standards]; General Principles of Law). In March 1967, the British government decided to bomb the Liberian oil tanker Torrey Canyon, which was spilling large amounts of oil off the English coastline, with a view to mitigating major environmental damage to British soil and sea. Even if the British government did not advance any articulated legal justification for its conduct, it stressed the existence of a situation of extreme danger and claimed that the decision to bomb the ship had been taken only after all the other means had failed, which, as shall be seen, corresponds to a customary precondition for justification under the rule at issue (Torrey Canyon, The). In the 1990 Rainbow Warrior arbitration the Tribunal, while emphasizing its controversial nature, referred to state of necessity under international law as a ‘situation of grave and imminent danger to the State as such and to its vital interests’ (Rainbow Warrior, The).
5 An important confirmation of the customary nature of the rule in question has been provided in 1997 by the International Court of Justice (ICJ) in the Gabčíkovo-Nagymaros Case (Hungary/Slovakia). The ICJ admitted that ecological damage could justify an invocation of necessity, observing that ‘the state of necessity is a ground recognized by customary international law’ (at 40), although it found that under the circumstances of the case necessity would not apply in the sense of justifying the claimed wrongfulness.
6 In 1999 the International Tribunal for the Law of the Sea (ITLOS) had to consider whether the otherwise wrongful application by Guinea of its custom laws to the exclusive economic zone could be justified under general international law by Guinea’s appeal to state of necessity. Even though it concluded in the negative, it confirmed the statement by the ICJ in the Gabčíkovo-Nagymaros Case to the effect that state of necessity, as a circumstance precluding wrongfulness, belongs to customary international law (M/V ‘SAIGA’ [No 2] [Saint Vincent and the Grenadines v Guinea] [Merits]; Saiga Cases).
7 In its Israeli Wall Advisory Opinion (Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory) the ICJ, having rejected the argument according to which the construction of the wall could be justified on the basis of self-defence under Art. 51 United Nations Charter, turned to consider whether a ground for justification could be found under the state of necessity. Whilst it found the institution of the state of necessity to be ‘recognized in customary international law’ as precluding wrongfulness, here, again, the Court concluded that it could not display its permissive function with regard to the circumstances of the case ([2004] ICJ Rep 136 paras 141–42).
8 State of necessity has been frequently relied upon in international investment arbitration. In particular, it has represented a key defence raised by Argentina in the numerous investment disputes which arose in connection with its financial crisis of 2001–02 (Argentine Debt Crisis). Counsel for Argentina repeatedly argued that, even if the restrictive financial measures adopted by its authorities in an attempt to stabilize the extreme economic situation violated its international obligations vis-à-vis foreign investors, the wrongfulness of those measures would have been precluded on the ground of necessity as recognized in customary international law. The case law in question, mostly under the US-Argentina Bilateral Investment Treaty (‘US-Argentina BIT’; Investments, Bilateral Treaties), has been unanimous in recognizing the state of necessity as an established rule under customary international law. In practice, in the overwhelming majority of cases, arbitration tribunals have considered the circumstances invoked by Argentina to fall short of the requirements under the rule in point for it to preclude the wrongfulness of the conduct complained of by claimants.
9 The International Centre for Settlement of Investment Disputes (ICSID) Tribunal (Arbitration: International Centre for Settlement of Investment Disputes [ICSID]) in the 2005 CMS Gas Transmission Co v Republic of Argentina Case, while holding that the requirements of necessity under customary international law had not been met, observed that:
The El Paso Tribunal observed that Art. 25 ARSIWA codified a general principle of law to be used to fill in the gaps of the international legal order and, therefore, found that the ‘principle in question may be used, under Article 31 (3) of the Vienna Convention, to ascertain the meaning of Article XI of the Argentina-US BIT’ (El Paso Energy International Company v The Argentine Republic para. 624).
10 The award in the CMS case was then subject to annulment proceedings. The ad hoc Annulment Committee, although it did not annul the award, peculiarly criticized it for equalizing the customary defence in point with the emergency clause under Art. XI US-Argentina BIT (CMS Gas Transmission Company v Argentine Republic [Decision on Annulment of 25 September 2007] para. 134) (Annulment: International Centre for Settlement of Investment Disputes [ICSID]). Two awards—Sempra and Enron—were annulled in 2010. The Tribunal in Sempra was found to have engaged in a ‘manifest excess of powers’, due to its failure to apply Art. XI US-Argentina BIT while applying Art. 25 ARSIWA instead (Sempra Energy International v Argentine Republic [Decision on Annulment of 29 June 2010] paras 212 and 213). It bears noting how the Annulment Committee in Enron also annulled the Award—which had reached conclusions similar to those of the Tribunal in Sempra—but for ‘failure to state reasons’ (Enron Corporation and Ponderosa Assets LP v Argentine Republic [Decision on Annulment of 30 July 2010] paras 377 and 378).
11 One ICSID award, however, has ruled that Argentina was excused from liability for breaches of the US-Argentina BIT due to its restrictive financial measures, even though for a limited period of time only, under the ‘emergency’ clause contained in Art. XI US-Argentina BIT—as a written specification of the custom at issue—which entitled a party to take measures necessary for the maintenance of public order or the protection of its own essential security interests. The awards in point found that the preconditions for the application of the state of necessity had been met by the existence of ‘a period of crisis during which it was necessary to enact measures to maintain public order and protect its essential security interests’. Such a conclusion has been corroborated by stressing that the contents of the rule in point reflected the customary law on the matter as codified in Art. 25 ARSIWA (LG & E Energy Corp, LG & E Capital Corp and LG & E International Inc v Argentine Republic paras 229 and 245).
12 Other ICSID awards have considered the necessity defence in cases where the applicable BIT did not include an emergency clause similar to Art. XI US-Argentina BIT. In all such cases the tribunals have dismissed the plea of necessity on the ground that not all the requirements under Art. 25 ARSIWA have been met (Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA v Argentine Republic; Impregilo Spa v Argentine Republic; Total SA v Argentine Republic). Some United Nations Commission on International Trade Law (UNCITRAL) awards in cases involving Argentina on quite the same facts have reached the same conclusions on the point at issue (BG Group plc v Argentine Republic; National Grid plc v Argentine Republic). One may argue that the closest international investment arbitration has been to recognizing the necessity defence has been within the framework of state of emergency clauses rather than under Art. 25 ARSIWA.
C. Conditions and Limits
13 International practice and case law as well as legal literature support the view that the legal operation of necessity should be confined only to exceptional circumstances. Indeed, the ILC codified the rule in point restrictively by phrasing it in the negative in Art. 25 ARSIWA, to the effect that:
Otherwise, the rule in point would lend itself to serious abuses whereby any State could invoke necessity to elude its international obligations, which would certainly be contrary to the stability and predictability of the law. According to the ICJ in the Gabčíkovo-Nagymaros Case, state of necessity ‘can only be accepted on an exceptional basis’ and ‘can only be invoked under certain strictly defined conditions which must be cumulatively satisfied’ (at 40).
14 As to the requirement that the measure subject to justification must not seriously impair an interest of the State or States vis-à-vis which the breached obligation exists, it has been upheld by the ICJ in the Israeli Wall Advisory Opinion. On the basis of such considerations, the Court rejected the argument advanced by Israel that the construction of the wall was based on the need to protect the life of its citizens as an essential interest of the State (at para. 141). The CMS Gas Transmission Case, quoted above, corroborates this restrictive approach in relation to the interpretation of Art. XI US-Argentina BIT, precluding the wrongfulness of measures adopted by a State Party which are necessary for the maintenance of public order. The ICSID Tribunal observed that, even if the protection of the investors having the nationality of the parties is the main object of the US-Argentina BIT, thus protecting an important interest of the State of the investors,
15 The requirement is also provided that the measure which has been adopted on the basis of necessity must not seriously impair an interest of the international community as a whole. This reflects the more general rule—codified under Art. 26 ARSIWA—that no circumstance may preclude wrongfulness of conduct at variance with a peremptory norm of general international law (Ius Cogens). The case concerning the Legality of Use of Force between Serbia and Montenegro and Belgium decided by the ICJ in 2004 corroborates this point with specific regard to the necessity defence. In the course of the proceedings, the Belgian government made a statement expressing the view that ‘a state of necessity is the cause which justifies the violation of a binding rule in order to safeguard, in face of grave and imminent peril, values which are higher than those protected by the rule which has been breached’ (Verbatim Record 1999/15 at 13).
16 Necessity may only be invoked to safeguard an ‘essential interest’ from a grave and imminent peril. The ILC specifies that the extent to which a given interest is ‘essential’ depends on all the circumstances of any given case (Commentary 15 to Art. 25 ARSIWA at 83). On this point, ICSID tribunals have argued that economic and social stability, and the provision of essential services, in time of economic crisis amount to an ‘essential interest’ under Art. 25 (LG & E Energy Corp, LG & E Capital Corp and LG & E International Inc v Argentine Republic para. 257; Suez, Sociedad General para. 260; Total SA v The Argentine Republic paras 345 and 484; Impregilo SpA v Argentine Republic, para. 346). On the contrary, the protection of a political party putatively threatened by the claimant has not been considered as an essential interest, insofar as a threat to the existence of that party is not a threat to the State itself (Von Pezold v Zimbabwe para. 631). In addition to being grave, the peril has to be imminent in the sense of being proximate. On this point the ICJ in the Gabčíkovo-Nagymaros Case specified that ‘a peril appearing in the long term might be held to be “imminent” as soon as it is established, at the relevant point in time, that the realization of that peril, however far off it might be, is not thereby any less certain and inevitable’ (at para. 54).
17 The plea of necessity is excluded if there are lawful means available to protect an essential interest of the State under grave and imminent peril, which are alternative to those in breach of an international obligation, even if the former may be more costly or less convenient. In its Israeli Wall Advisory Opinion, the ICJ held that it was
Unfortunately the ICJ did not indicate such ‘other means available’.
18 Reliance on necessity is also precluded if the State invoking the defence under consideration has in some way contributed to the situation which it invokes to excuse its conduct, or if the international obligation in question excludes the possibility of invoking necessity (Art. 25 (2) ARSIWA). As to the former, the abundant case law concerning the Argentine crisis has not shed light on the threshold of contribution sufficient to reject a defence of necessity. In fact, the CMS, Enron, Sempra, Suez, and EDF tribunals have considered that external factors contributed to the Argentine crisis, but have not addressed the issue of the Argentine contribution (CMS Gas Transmission para. 329; Enron para. 311; Sempra para 353; Suez, Sociedad General para. 264; EDF International SA, SAUR International SA and León Participaciones Argentinas SA v Argentine Republic paras 1173–76). As to this preclusion, the ILC makes reference by way of example to international conventions that expressly exclude reliance on necessity, such as certain humanitarian conventions applicable to armed conflicts that exclude the plea of military necessity. The ILC adds that the non-availability of the plea of necessity could also derive implicitly from the interpretation of the object and purpose of the convention (Commentary to Art. 25 ARSIWA at 83, 84; Treaties, Object and Purpose). The Gabčíkovo-Nagymaros Case is, again, illustrative of the point at issue. The ICJ clearly observed that even if it were established that, at a given point in time, there was a state of necessity
19 Finally, reliance on necessity is without prejudice to the obligation of compliance once the factual circumstance precluding wrongfulness has ceased to exist, as well as to issues of compensation for any loss caused by the act in question (Art. 27 ARSIWA; see also Reparations).
D. Evaluation
20 The customary rule of state of necessity as a circumstance precluding wrongfulness can be said to reflect and specify a rule of reason, as well as the general principle of good faith (bona fide), which are at the heart of any legal system. On the one hand, it reasonably mitigates the legal force of international legal obligations in those exceptional circumstances in which compliance with the law would put an essential interest of the State under grave and imminent peril. On the other hand, the rule in point has evolved and has been codified in sufficiently restrictive terms, so as to avoid lending itself to abuses on the part of the States invoking it. Such abuses could undermine the legal force of any international obligation whenever a State found that compliance with it would be in contrast with its own immediate interests. This is the reason why the legal literature has raised concerns over the risk of ‘softening’ the threshold of necessity (Sloane 502).
21 The application of the rule under review has been highly controversial in both diplomatic practice and case law. However, this does not detract from its customary legal force, since there was never any controversy concerning the very existence of the rule in point, but only concerning the question whether the invoked factual situation would justify conduct which would otherwise be wrongful. Given the lack of compulsory third-party dispute settlement procedures in international law, in case of such a dispute—and unless the latter would fall under the scope of a previously agreed dispute settlement procedure—it would be settled only through agreement between the State invoking the state of necessity as a justification for breach of an international obligation and the State to which that obligation is owed. Such an agreement could be either on the very assessment of the operation of the rule in point, or on the referral of such a disputed assessment to a third-party procedure (Compromis).
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