TABLE OF CONTENTS
II. THE ICSID CONVENTION AND ITS REQUIREMENT TO "ABIDE BY
AND COMPLY WITH" ICSID AWARDS
III. ARGENTINA'S PURPORTED FAILURE TO COMPLY WITH ICSID
IV. MEANS OF SECURING COMPLIANCE WITH ICSID AWARDS
A. The Two Extremes
B. A Middle Path: Suspending Trade Benefits
C. Leveraging Argentina
D. Future Uses of Trade Benefits to Leverage Compliance with
The term "international law" is vague and encompasses a multitude of fields, including international arbitration, international business transactions, international project finance, international tax, and international trade. Although mostly taught in law schools as distinct seminars and organized within law firms as separate practice groups, these fields do not always operate in separate vacuums. Rather, in practice they often overlap. This Article examines a recent example of the intersection of the two related fields of international trade and international arbitration: the suspension of preferential trade benefits to secure compliance with arbitral awards.
On May 28, 2012, the United States suspended Argentina's preferential trade status under the Generalized System of Preferences (GSP), (1) a program that provides duty-free treatment to imports from certain developing states. (2) The suspension was in response to Argentina's purported failure to comply (3) with the International Centre for Settlement of Investment Disputes (ICSID or Centre) arbitral awards (4) in Azurix (5) and CMS Gas (6) in favor of U.S. investors. Furthermore, it was a novel attempt to use international trade to secure compliance with international arbitral awards; indeed, it was the first time in the history of the GSP that the United States has suspended a state's preferential trade status for failing to pay an arbitral award. (7)
This Article examines the United States' decision to suspend international trade benefits to secure compliance with international arbitral awards, in particular investment arbitration awards rendered under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). Section II briefly describes the ICSID Convention and then discusses the Convention's requirement in Article 53 that parties shall "abide by and comply with" ICSID awards. (8) While states normally comply with ICSID awards, investors have complained that a handful of states, including Argentina, have failed to do so. In light of Argentina's significant caseload at the Centre, Section III examines Argentina's interpretation of the ICSID Convention that, according to Argentina, confirms that it has not failed to "abide by and comply with" ICSID awards. Section IV discusses the spectrum of means to secure compliance with ICSID awards, with a focus on the United States' suspension of Argentina's preferential trade status under the GSP. Section V concludes by endorsing the United States' novel decision, as it would seem to strengthen the legitimacy of international arbitration, particularly ICSID arbitration, as a meaningful form of alternative dispute resolution.
II. THE ICSID CONVENTION AND ITS REQUIREMENT TO "ABIDE BY AND COMPLY WITH" ICSID AWARDS
The ICSID Convention is a multilateral treaty that was formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). (9) The Convention offers a detailed framework for the settlement of international investment disputes by creating the Centre, (10) which provides facilities and procedural rules for the arbitration of international investment disputes between Contracting States and nationals of other Contracting States. (11) ICSID Convention jurisdiction is limited to "any legal dispute arising directly out of an investment, between a Contracting State ... and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. …