Emergency Exceptions to International Obligations in the Realm of Foreign Investment : The State of Necessity and Force Majeure as Circumstances Precluding Wrongfulness

States can defend themselves in cases alleging that they have violated investment treaty obligations on the grounds that situations of economic crisis required that they take emergency action. Likely defenses are the customary international law doctrines of necessity and force majeure, although a State faces stiff hurdles to establish their availability, as well as exculpatory provisions found in the investment treaties themselves. There is an inescapable tension, of course, between undertaking an obligation, on the one hand, and excusing oneself from complying with it, on the other. At bottom is the question of risk allocation and determining who should bear the burden in situations of unforeseen events or economic crises. The state of necessity defense in particular has an uneasy relationship with the obligations States have undertaken in their investment treaties. By entering into investment treaties, States provide assurances to investors that their investments will be safe notwithstanding the State's inherent power to regulate and legislate in ways adverse to investors' interests. Moreover, a successful invocation of the necessity defense suspends a State's obligations only temporarily, and the State may still be responsible for losses resulting from the measures its has taken during that period, particularly when those damages are economic in nature and readily quantifiable. The limited case law on necessity, and the divergence in those cases that have been decided, suggest a legal doctrine that will develop haltingly. It remains an open question whether the necessity defense has been so stringently limited that its successful invocation is virtually impossible in the context of foreign investment, or whether flexibility in interpretation might yet give it a role to play