CYIL vol. 8 (2017)

KATARÍNA CHOVANCOVÁ CYIL 8 ȍ2017Ȏ a violation of investment obligations of Mexico under Chapter 11, its wrongfulness would be precluded anyway 82 by its character of being a legitimate countermeasure against the US 83 because of two important reasons. 84 First, not only had the US restricted imports of Mexican sugar, otherwise secured for Mexico through NAFTA Chapter III, but had also for several years obstructed all Mexican efforts 85 to proceed with NAFTA Chapter 20 arbitration to solve this issue by regular means. At this point, the defendant’s legal counsels acquired what can be only called “ a true caveman mentality ” with the following argument: “ And because the United States of America had done wrong (or two wrongs) to Mexico, the substantive remedies under Chapter Eleven of the Nafta would not be available to CPI or the other claimants .” 86 An even more onerous argument of the defendant’s legal team followed, this time really piling up the legal casualties: “ Since a legally adopted countermeasure by a Party precludes wrongfulness, and thus exempts any responsibility, it would be absurd for a person of the Party against which the countermeasure is taken to successfully challenge it .” 87 Nevertheless, with regard to suspended investment obligations under Chapter 11 the tribunal in Corn Products held that these obligations were owed by Mexico to the CPI and they were indeed separate from all other obligations owed by Mexico to the US under NAFTA. Consequently, “the CPI was a third party to countermeasures taken by Mexico against the United States and thus CPI’s rights could not be denied on the basis of a countermeasures claim.” 88 Apparently, the point is that arbitrators excluded the CIL invocation of countermeasures against investors by interpreting the legal theory of countermeasures itself, this time being interpreted properly and without the host state twisting it on purpose. When it comes to deciding on the nature of the US investors’ rights, unlike the arbitrators in the Corn Products dispute, the tribunal in the Cargill case did not express clearly that it granted investors both procedural and substantive rights, dwelling on the legal concept under which investors held just “ rights ” under NAFTA Chapter 11. 89 In all other aspects, the Cargill award was fully compatible with the Corn Products award, stressing that the rights of investors in investment arbitration cannot be impaired by countermeasures, regardless of the fact that they were adopted in arbitration by the defendant, being the investor’s host state. As the Cargill tribunal concluded, “ the Tribunal holds that Respondent’s argument that its actions were countermeasures cannot have the effect of precluding the wrongfulness of those actions in respect of a claim asserted under Chapter 11 by national of the allegedly offending state.” 90 82 ROBERTS, A., Triangular Treaties: The Extent and Limits of Investment Treaty Rights, op. cit., p. 385. 83 See Draft Articles, op. cit , see art. 49, para. 1. 84 Naturally, the occurrence of these events is no excuse for the deeds of Mexico, but at least it shows that it did not try to proceed in investment arbitration as an impertinent snooker player, but submitted the defence with reason. 85 See in detail e.g. LOWENFELD, A., Countermeasures, Diplomatic Protection, and Investor-State Arbitration, op. cit., p. 747. 88 VAN ZIMMEREN, E., MCRAE, D., Chapter 35: Countermeasures and Investment Arbitration, op. cit., p. 499. In addition, the tribunal held that CPI was definitely enforcing its own rights, not the rights of its home state, which could probably pass for surrealistic diplomatic protection, invoked in reverse. 89 Cargill, Incorporated v. United Mexican States , op.cit., para. 427, p. 124. 90 Ibid , para. 429, p. 125. 86 Ibid , p. 748. 87 Ibid , p. 748.

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