Prudential exception in the case “Argentina-Financial Services”

Abstract

This article discusses the conclusions of the World Trade Organization Dispute Settlement Body (WTO DSB) on the case “Argentina – Financial Services” pertaining to interpretation of the Paragraph 2 (a) of the Annex on Financial Services to the General Agreement on Trade in Services (GATS), which contains a prudential exception that allows the countries, regardless of their obligations in accordance with GATS, taking measures on the national level that are aimed at maintaining stability in the domestic financial market. The need for studying the approaches applied due to interpretation of this norm, is substantiated by the ambiguous wording of the Paragraph 2 (a) of the Annex on Financial Services, which raises questions on its proper application. The author attempts to give assessment to the decisions of the Arbitration Group on the interpretation of prudential exception, as well as shed light on the instances of its application. This article is the first work within the Russian legal science dedicated to examination of the peculiarities of application of prudential exception. Having analyzed the corresponding provision of GATS, as well as the decisions of the Arbitration Group on the case “Argentina – Financial Services”, the author concludes that virtually any measure introduced by the government on the national level, which serves the purpose of risk prevention that may create a threat to the stability and integrity of the financial market of the country and normal activity of the participant of the financial services market, can fall under Paragraph 2 (a). At the same time, the key and practically the only obstacle for abuse such norm consists in the need to adhere to the principle of good faith in the context of implementation of the corresponding prudential measures.