International Investment Agreements between Developed and Developing Countries: Dancing with the Devil Case Comment on the Vivendi, Sempra and Enron Awards

Abstract

International investment agreements can have detrimental effects for developing countries: they can limit a government's ability to regulate in the public interest where this interest runs counter to that of foreign investors; they can severely restrict a country's ability to enact measures responding to financial, social, and economic crises; and they can impede legitimate democratic processes. Three recent arbitral decisions at the International Centre for Settlement of Investment Disputes - Compania de Aguas del Aconquija S.A. v. Argentina, Sempra Energy International v. Argentina, and Enron v. Argentina - demonstrate these risks. This comment examines how these tribunals have negatively impacted Argentina through their interpretations of expropriation law, the fair and equitable treatment principle, and equitable defences such as necessity, as well as through the tribunals' willingness to interpret Argentine law. The author proposes that future international investment tribunals apply a sustainable development analysis to avoid similar outcomes. Such an analysis would consider promoting investment not as an end in itself, but as part of a country's approach to important social issues, including promoting human rights, protecting the environment, and improving social welfare. In advancing this proposal, the author explores the legal and equitable basis for applying sustainable development law when interpreting international investment agreements.

Keywords: international investment agreements, developing countries, fair and equitable treatment, expropriation, necessity, sustainable development