CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ COUNTERMEASURES AND THEIR ȍINȎCOMPARABLE CONGRUENCE … arbitration, 78 an apposite transportation of the WTO remedies – and especially the WTO countermeasures into international investment arbitration would be a heroic failure in trenches right from the start. Briefly put, specific and complex WTO countermeasures operate inside the distinct WTO dispute settlement mechanism (“the WTO DSM”), applicable within the separate legal regime adopted in the WTO Dispute Settlement Understanding (“the DSU”). 79 Besides, their nature, range and object or the congruence of their use in the WTO DSM is almost incomparable with the nature, range and object of the remedies in international investment arbitration. This article consists of four parts, including this introduction and description of basic characteristics. Part II briefly examines the conclusions in the Corn Product, Cargill and the ADM arbitral awards with regard to applicability of the CIL countermeasures in international investment treaty arbitration. Part III describes in turn the specific WTO DSU countermeasures and explains why these remedies – although being generally evaluated as effective and satisfactory – may be neither wholly, nor in small portions installed into the investment arbitration regime. Ultimately, this article postulates a progressive and detailed regulation of the CIL countermeasures in investment treaties, while at the same time suggests their non-use in investment arbitration as better, rather than their deceptive application to the detriment of the foreign investor, as such application has its own potential to contribute to erosion of the pillars of international investment arbitration and, if forcibly used on a regular basis, might also help to slowly transform its basic theory into a sad piece of Hemingway’s rotten legal poetry, which is certainly intriguing but today slightly over the hill. Countermeasures in International Investment Arbitration /The “Corn Product” & “Cargill” Awards – Sandwiching the “ADM” with 2:1/ Arbitrators in the Corn Products, Cargill and ADM awards accepted the claims of US investors, holding that a Mexican twenty-percent “soft drink” tax was a clear infringement on the NT standard guaranteed to investors in NAFTA Chapter 11. 80 However, arbitral tribunals, as quasi-judicial bodies with limited jurisdiction, faced not only the US investors’ difficulties with enforcing the claim, but also their own jurisdictional challenges, having found themselves in the uneasy situation “ when a countermeasure defense does not simply involve the suspension of the reacting State’s reciprocal obligation, but instead involves the suspension of a non- reciprocal obligation to the target State.” 81 Logically, the aforementioned “non-reciprocal” obligation was the investment obligation of Mexico under Chapter 11, suspended by Mexico via imposition of an excessive tax on account of the alleged violations of the US of its own investment obligations. Mexico defended its suspension, claiming that the tax was a justified countermeasure, taken in response to the US’ violations of NAFTA against Mexico. Even if the tax amounted to 78 See e.g. CHOVANCOVÁ, K., The WTO Necessity Doctrine and Its Applicability in the International Investment Arbitration, Slovak Yearbook of International Law, 2016, Vol. 6, pp. 95-116. 79 Annex 2 to the 1994 Agreement Establishing the WTO („the Marrakesh Agreement“). See in detail CHOVANCOVÁ, K., WTO Enforcement Procedures: Featuring Arbitration: A Technical Perfection, Transnational Dispute Management, 2013, Vol. 10, No. 4, pp. 28 80 VAN ZIMMEREN, E., MCRAE, D., Chapter 35: Countermeasures and Investment Arbitration, op. cit., p. 497. 81 CALAMITA, N. L., Countermeasures and Jurisdiction, op. cit ., p. 249. 2.

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