CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ COUNTERMEASURES AND THEIR ȍINȎCOMPARABLE CONGRUENCE … Secondly, arbitrators in the later Air Services Agreement arbitration 34 authorized a more sophisticated method of evaluation of the countermeasures’ legitimacy. To give them their due, they also formulated the limits of proportionality of countermeasures in a positive way, giving a red light only to clearly disproportionate countermeasures and proved to be neither brittle, nor opposed to escalation – quite the opposite in fact. As Bederman 35 noted, “ the real insight of the Air Service Agreement award was that there had to be a permissible level of escalation in response to illegal acts, or else the malefactor would simply not regard the threats made by the injured state as credible.” Thirdly, as hinted above, the judges of the ICJ in the Gabčíkovo- Nagymaros Project case dealt with an issue of countermeasures as well, but while citing the Air Services Agreement award, they cunningly reversed the borders of proportionality of countermeasures, as postulated by arbitrators in a positive way by putting their own determinate inhibitors into an acting state’s free space for action, formerly rather generously fenced by arbitrators. With a bit of irony, it may be thought that the aforementioned freedom of action had become – although not a complete crumbling to dust – at least a sort of missing guest of honor, because what a countermeasure “ should not be ” was replaced here by the ICJ judges’ impeccable sense of punctuality with what the countermeasures’ effect “ must be ,” while their qualification also toughened, turning unequivocally from the unacceptable “ clear disproportionality ” into an obligatory 36 “ commensurability .” 37 In practice, it is clear that an application of countermeasures in international investment arbitration between investors and their host states varies a great deal from the use of countermeasures in international public law in general because of their quintessential confinement to the state-to-state relationship. As a result, the significance of countermeasures in investment arbitrations, conducted at the investor-host state level, is according to McRae and Van Zimmeren, 38 at minimum, “ not immediately obvious .” The real issue is, that unlike in the distant past, when imposition of the countermeasures in foreign investment disputes was natural under the classic international legal order, today – when being juxtaposed against investment arbitration – it nicely depicts a stark contrast between the classic and modern perception of international investment law. 39 Obviously, what struck both scholars and practitioners most is the disturbing question of an attempt of the host state to preclude wrongfulness of its act that has violated an investment treaty, relying suddenly on that act’s classification as a countermeasure against the foreign investor’s 34 With regard to the possibility of imposition of countermeasures by the reacting state against a targeted state in a situation, where both states are parties to the international agreement, that contains an arbitration clause, the arbitral tribunal concluded that inclusion of the arbitration clause in the international agreement does not preclude an imposition of countermeasures between the parties as long as the arbitral tribunal has not been appointed. 35 BEDERMANN, D., Counterintuiting Countermeasures, op. cit., p. 820. 36 Gabcikovo-Nagymaros Project (Hungary/Slovakia) , Judgment of 25. September 1997, I. C. J. Reports 1997, p. 55, para. 85 37 Suffice it to say, coming across with the countermeasures as an alternative second-rate argument in the Gabčíkovo- Nagymaros Project case was a failure of Slovakia anyway, as it did not satisfy the required proportionality condition. See a critical overview of the countermeasures argument in FITZGERALD, E., Helping States Help Themselves, op. cit ., p. 76. 38 VAN ZIMMEREN, E., MCRAE, D., Chapter 35: Countermeasures and Investment Arbitration, op. cit., p. 495. 39 PAPARINSKIS, M., Investment Arbitration and the Law of Countermeasures, op. cit ., p. 266.

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