Shadow Courts. Haley Sweetland Edwards

terms of the U.S.-Argentina bilateral investment. In that agreement, Argentina had very clearly promised to “maintain a stable investment environment” and to “observe any obligation it may have entered into with regard to investments.” As a result, the gas companies demanded hundreds of millions of dollars in compensation for lost profits. By the end of 2004, they were pretty confident they’d win.

      Guglielmino’s team wasn’t so sure. To them, the gas companies’ claims seemed groundless. Breaking a contract was not the same as violating an international investment treaty, they argued. And even if it was, the Argentine government had acted well within its rights as a sovereign nation to protect its people and the security of its state during a period of extraordinary political tumult. Guglielmino argued that thousands of investment treaties worldwide, including the U.S.-Argentina agreement, were riddled with exceptions designed precisely for these kinds of scenarios—to allow governments to react to a crisis as they saw fit. If the tribunals decided against Argentina, those rulings would have huge implications for how nations all over the world, including the U.S. and the United Kingdom, might be able to react to crises of their own. The international community wouldn’t stand for that, Guglielmino reasoned.

      To him, the situation seemed clear. The 2002 financial crisis had been horrible. Everyone had suffered losses, and none more so than the Argentine people. In the midst of that collapse, the government had acted to protect the interests of its constituents and the security of its state. The idea that Argentine taxpayers would now be responsible for compensating foreign companies for their lost profits seemed legally untenable, set up a problematic precedent for rich, Western nations, and was morally offensive. Surely, he thought, Argentina could not lose.