Essential Security Interests Exceptions and the Limits of Self-Judgment: Implications of Riverside Coffee v Nicaragua

In recent years, national security has increasingly served as a justification to deviate from international law obligations. The ICSID award in Riverside Coffee v Nicaragua has added a new layer to the developing case law on the interplay between essential security interests exceptions and the notion of self-judgment in the context of investment arbitration. 

Where treaties seek to accommodate security-related concerns, it is often in the form of essential security interests exceptions. These are frequently combined with ‘self-judging’ language, that is, wording that grants the invoking State particular authority in determining the application of the exception. In the past decade, States have relied on such clauses with increasing frequency, giving rise to a growing body of decisions addressing their interpretation (e.g., Seda v Colombia, discussed here, and by the author on this blog) and renewed scholarly attention to the notion of self-judgment in international law (e.g., here and here).

Against this backdrop, this post begins by briefly setting out the background of the award, which was issued in October 2025. After recounting the development of self-judging provisions before international judicial bodies, it examines the tribunal’s treatment of Nicaragua’s invocation of the ‘self-judging’ essential security interests exception in the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). The post argues that the tribunal’s approach tightens the developing review standard on self-judging security exceptions.

Background: Former Contras and an Avocado Farm

Riverside Coffee LLC (Claimant), a company incorporated in the United States, initiated arbitration proceedings in 2021 against Nicaragua under the DR-CAFTA, a regional free trade agreement that includes a chapter providing for investor-state dispute settlement. The Claimant owned a large plantation located in north-central Nicaragua, called Hacienda Santa Fé, through a local company, incorporated in Nicaragua. The dispute arose out of the invasion and occupation of Hacienda Santa Fé in 2018 during a time of unrest, and the alleged damage caused by the invaders to the Claimant’s avocado and forestry businesses.

Starting in April 2018, Nicaragua experienced widespread unrest, following a reform announcement concerning the domestic social security system. In the view of the tribunal, the nationwide disorder had subsided by the end of July 2018 (para 100). Over the course of the unrest, armed groups occupied numerous farms across the country, including the Hacienda Santa Fé. In June and July 2018, armed individuals invaded the property, removed the investor’s staff, and took possession of the buildings. An interesting sidenote for international lawyers: many of the individuals involved were reportedly former members of the Contras (para 88) – the same resistance group that stood at the centre of the Nicaragua v United States dispute before the ICJ. 

The Nicaraguan government decided not to use force against the invaders but sought to remove them from the property through negotiations. After prolonged negotiations, the last occupants left the property in August 2021. By then, they had caused significant damage to the property resulting in the total destruction of the Claimant’s avocado and forestry business. In 2021, Riverside Coffee brought arbitration proceedings arguing that Nicaragua had violated several guarantees under the DR-CAFTA, including full protection (as part of the minimum standard of treatment), and that the events amounted to an unlawful expropriation.  

Nicaragua accepted that the invasion and occupation of the Hacienda had been against its domestic law (para 87) but denied international responsibility for the acts of the invaders. Instead, it argued that it had taken reasonable steps to remove the invaders from the property while avoiding further violence.

Nicaragua’s Invocation of the Self-Judging Essential Security Interests Provision

Nicaragua advanced several arguments to defend itself against the investor’s claim. Most importantly for present purposes, it invoked the essential security interests exception in Article 21.2(b) of DR-CAFTA, arguing that its ‘measured and de-escalatory strategy … to remove the illegal occupants from Hacienda Santa Fé peacefully’ was necessary for the protection of its essential security interests (Nicaragua’s Claimant Memorial, para 286).

Article 21.2(b) of the DR-CAFTA provides that 

[n]othing in this agreement shall be construed … (b) to preclude a Party from applying measures that it considers necessary for … the protection of its own essential security interests.

The self-judging wording of the clause results from the phrase ‘it considers necessary’. In Nicaragua’s view, because the provision is ‘self-judging by design’, its approach to resolving the occupation of the Hacienda was ‘exempt from review’ (para 204) and ‘thus cannot be a basis for international responsibility’ (para 207). 

The Claimant argued that the invocation of Article 21.2(b) of the DR-CAFTA had not occurred in good faith, because there was no plausible link between Nicaragua’s acts and the protection of its essential security interests. 

In recent years, prominent decisions, such as the ICJ in Djibouti v France and WTO panels,  notably in Russia – Traffic in Transit, affirmed that even the invocation of explicitly self-judging security exceptions does not completely exclude judicial review. Rather, such clauses may still be assessed under a standard of good faith. While the precise implications of good faith review remain debated, it has commonly been understood to mean that there must be a plausible link between the measure taken and the aim of the self-judging provision. In Seda v Colombia, this approach was even extended self-judging provision which contained a footnote that appeared, on its face, to exclude any form of review.

Tightening the Screws? Good Faith Review in Riverside Coffee v Nicaragua

Against this background, the tribunal in Riverside Coffee observed that, ‘[i]t is common ground that the Tribunal has the power to review whether the Respondent invoked the national security exception in Article 21.2(b) in good faith’ (para 253). The key question was therefore what such a good faith review entails. 

The tribunal surveyed recent jurisprudence on (self-judging) essential security interests clauses, notably Seda v Colombia, which had understood good faith review, as a plausibility test. It also highlighted the CC/Devas v India award (para 266), which had considered a non-self-judging security exception and had found that its invocation did not necessarily cover acts that had taken place before the invocation (Devas, para 293-5). Apparently drawing inspiration from both of these positions, the tribunal in Riverside Coffee articulated a two-pronged test for assessing whether a self-judging clause has been invoked in good faith. The test comprises:

 (i) a temporal and procedural element: ‘whether the CAFTA Party in question has invoked the provision in due time, in order to put the other CAFTA Parties and their investors on notice of the non-applicability of DR-CAFTA to such measures’; and 

(ii) a substantive element: whether there exists a plausible link between the measures taken and the protection of the State’s essential security interests (para 271).

Applying this test to the facts of the case, the tribunal accepted that Nicaragua could rely on the security exception for measures taken during the height of the nationwide unrest in 2018. An order by President Ortega to the police to stand down in the face of the strife was considered sufficient notice that the State was acting to protect its essential security interests (para 278). 

However, the tribunal concluded that the situation changed once the nationwide unrest subsided after July 2018 (para 278). From that point onwards, Nicaragua could no longer rely on the security exception because the circumstances giving rise to the security concerns had effectively ended.

Despite this partial rejection of Nicaragua’s reliance on the security clause, the tribunal ultimately dismissed the investor’s claims on the merits. It held, in particular, that Nicaragua had exercised sufficient due diligence in responding to the occupation of the property (para 350).

Implications

The tribunal’s reasoning in Riverside Coffee can be read as a further refinement of the emerging approach to explicitly self-judging security exceptions in investment arbitration. In particular, the award introduces a new temporal and procedural dimension to good faith review.

It can be said with some certainty that the ‘plausibility’ requirement of good faith always included a temporal aspect. Concretely, a measure would no longer be plausible if taken long after the relevant circumstances affecting security interests had occurred. However, in Riverside Coffee, the tribunal seems to have gone beyond this temporal aspect inherent to plausibility. It considered the formal invocation of Article 21(2)(b) of the DR-CAFTA to be limited by the factual circumstances giving rise to Nicaragua’s domestic unrest as well as a procedural notification requirement. While some treaties contain explicit notification requirements (eg Article 16(3) of the Japan-Korea BIT), Article 21 of the DR-CAFTA does not. The tribunal’s assessment of the factual circumstances appears especially stringent, given that it denied a good faith invocation of the exception immediately from the time the unrest had ‘subsided’ even though it was acknowledged by the tribunal that the situation ‘remained generally tense’ after that date. While this approach would perhaps be unsurprising in the assessment of a guarantee under an investment agreement, one has to bear in mind that it formed part of the good faith review of the tribunal, which is generally considered to be an ‘extremely lenient standard’. 

It remains to be seen whether other judicial bodies will follow this interpretation. Nevertheless, if one considers the trajectory of jurisprudence on self-judging provisions, Riverside Coffee v Nicaragua can be considered a further step towards entrenching and expanding judicial review of self-judging exceptions.