In a timely article, Jason Yackee proposes a pair of important, attractive, and politically plausible reforms to the international investment law (IIL) system. Because his proposals offer real promise as a way to bolster the regime’s credibility and efficacy, this response will engage both the particulars proposed and the theory that informs them. I hope to suggest that, even for those who may not share Yackee’s theoretical framework or his normative reservations about the IIL regime, his proposals offer an attractive response to the slow-burn crisis of legitimacy that has dogged the regime for more than a decade.
More information is available about the panelists at: https://harvardilj.org/symposium/about/panelists/
“The Design of the Investment Arbitration System: Consistency and Precedent” addressed current design flaws in the investment arbitration system. Panelists focused on the consistency of judgments and enforcement, and potential fixes to the system.
The first speaker, Prof. Pieter Bekker, explored the roles of various participants in the arbitration tribunal and how to ensure that the regime continues to meet its constituents’ expectations. Citing an essay by the panel’s moderator, Prof. Jeswald Salacuse, that was published in a recent book, Prof. Bekker noted that challenges to the regime may foil states’ expectations and therefore undermine the regime. But “it is the regime’s users that constitute the greatest threat,” Prof. Bekker said, and he went on to map the responsibilities of various users.
Parties must appoint knowledgeable and impartial arbitrators, and, when arbitral institutions make appointments, they should choose arbitrators who do not have a reputation for preferring common or civil law. Arbitrators themselves should pay more attention to the formal sources of international law, including Article 38 of the Statute of the International Court of Justice and Article 31 of the Vienna Convention on the Law of Treaties. These are both pillars of the public international legal structure, but rarely cited in arbitral opinions. Counsel, finally, should be mindful of transnational ethical obligations imposed by their bar. In summary, Prof. Bekker suggested that there was “room for improvement” in the way that constituents approach the “intricacies and sensitivities inherent in the hybrid and developing regime of investment treaty arbitration.”
The next speaker, Caroline Richard, noted that, while the vast majority of investment awards are fully paid and settled, investor-state arbitration presents unique enforcement risks. States have immunities not available to individuals or companies, which can make the enforcement of awards against State assets more difficult, particularly when (i) the State in question has few commercial assets outside its borders (by design or by circumstance), and (ii) the prospect of enforcing the award before the State’s own courts is unappealing or unrealistic.
She further noted that in those exceptional cases where States have failed to comply with ICSID awards – notably, the case of Argentina – investors have resorted to using the political leverage of their home states, such as lobbying for trade sanctions, to pressure States into complying with awards. But this development puts politics back into a regime that had been designed to de-politicize investor-state disputes, raising the possibility of political fallout and leaving investors at the mercy of their home states.
Another panelist, Jeremy Sharpe, discussed trends in recent BITs. Many modern BITs clarify that investor protection cannot come at the expense of other important values, such as protecting public health and the environment. These BITs often define the substantive protections much more precisely, and some tie certain important protections, such as fair and equitable treatment, to customary international law. Many new BITs also define more precisely how claims may be brought and presented, offering detailed provisions on consent to arbitration, consolidation of claims, the conduct of proceedings, and so forth. The arbitration process, for its part, has tended toward more transparency, with more participation by non-disputing treaty parties and acceptance of amicus briefs, for example.
Harvard Law School’s own Professor Mark Wu—filling in on short notice for a couple of speakers who were absent because of the day’s snowstorm—expressed skepticism that the design flaws in the international arbitral system will be resolved. He identified two broad categories of inconsistency problems affecting the investment arbitration process. First, the arbitration process does not include a process to ensure consistent rulings on specific points of law. Second, arbitration does not seem to treat all legal actors equally, at least to constituents of the system—states, in particular, perceive their treatment as disparate. Noting that solutions to both problems have been proposed and debated for decades, but that the realpolitik of powerful states with vested interests preclude any significant design fix, Professor Wu predicted that these inconsistencies are here to stay, and are unlikely to lead to the replacement of the current investment arbitration system.
Finally, Professor Salacuse, the panel’s moderator, asked the panelists whether investment arbitration processes should make greater use of alternative dispute resolution (ADR), given its success and prominence in the United States. Ms. Richard noted that while investors often prefer alternative dispute resolution methods such as mediation, states do not. They find that settlement is politically costly and they prefer to obtain the political cover that comes from being bound by arbitrators’ decisions.
Conceptualizing the Shapeshifting Nature of Investment Law(yers)
Within international law, international investment law (IIL) has become one of the topics that is en vogue. This follows on the heels of two interrelated developments. First, the proliferation of international investment agreements (IIA), most in the form of bilateral investment treaties (BITs), others forming part of more encompassing trade and investment agreements. Second, following this increase in investment protection for investors, there has been a surge of cases that have been adjudicated before international investment tribunals.
The increasing practical importance of IIL has been accompanied by a (still) growing number of academic contributions. Adding to this literature is Jason Yackee’s Controlling the International Investment Law Agency, which makes an important contribution to this field—while steering clear of the controversy over whether the system is overly friendly towards investors. This brief comment will first outline the main arguments of Yackee’s article (I.) and then critique some of the arguments it makes, specifically around whether there is indeed a functional IIL agency and Yackee’s comparative analysis with domestic administrative agencies (II.), before offering some concluding remarks (III.).
WTO Jurisprudence & Its Critiques
In a time of financial crisis and rising demand for economic protectionism, the World Trade Organization, promoting free trade and economic growth, has never been more important. Enforcement of the WTO’s provisions has grown increasingly contentious and high-stakes, and the Appellate Body empowered to rule on violations of the treaty has received harsh criticism. Three elements of WTO jurisprudence, in particular, stand out. First, the court’s excessive use of narrow textualist argument tends to lead to short-sighted decisions that give little guidance to member states. Second, the court’s decisions have increasingly interfered with sensitive democratic processes in sovereign countries. Third, the opinions handed down by the court have led countries to adopt trade-restrictive, rather than trade-liberalizing, measures. These criticisms of WTO jurisprudence present serious challenges to the very raison d’être of the WTO. This jurisprudence cannot be explained without reference to the AB’s history as an institution awkwardly positioned somewhere between the realm of diplomacy and law. This Article will argue that the WTO’s jurisprudence can be usefully understood as a kind of resistance to constitutionalization in international trade law. The narrow textualism of the AB was intended to reduce the amount of contestation and politics at the WTO, but, paradoxically, the AB’s resistance to constitutionalization has actually created the very controversy and division that it seeks to avoid.
APEC Leaders discuss economic growth during financial crisis
Last weekend, the Leaders of the Asia-Pacific Economic Cooperation (APEC) met to discuss economic growth in the Asia-Pacific region in light of the worldwide financial crisis.
The conversation focused on developing balanced, inclusive, and sustainable growth. To achieve this end, the Leaders are looking to foster structural reforms in areas like infrastructure development and social security. They aim to allocate the benefits of growth across the population by promoting small businesses, job creation, and women’s education through income supplements and short-term social safety nets. In making these reforms, the leaders will take into account sustainability and work to make green technologies available.
The Leaders have maintained their definitive rejection of protectionism and are working to eliminate trade barriers. They are hoping for a successful conclusion to the WTO’s Doha Development Agenda by early 2010. Exploration continues on the prospect of a Free Trade Area of the Asia Pacific (FTAAP), and APEC hopes to achieve regional trade integration by working on liberalization “at,” “behind,” and “across” the border, particularly in areas like supply chain connectivity and intellectual property rights.
The Leaders will also work to ensure human security and governmental transparency. In terms of security, they are particularly concerned with protecting the food supply from terrorist interference and stopping the spread of H1N1 and other global pandemics like AIDS. With regard to transparency, they are asking governments to ratify the UN Convention against Corruption.
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WTO's Doha negotiations continue in Geneva
Pascal Lamy, Director-General of the World Trade Organization, recently released a statement describing the progress of the Doha Round and outlining plans for the continued negotiations in Geneva. Overall, Lamy reports that while the negotiations remain committed to their ambitions, there has been little tangible progress in the past week. He also emphasizes that ambitions will be best served in the future through multilateral text-based negotiations.
In the area of Agriculture, members are discussing market access issues with regard to tariff caps and tariff-rate quotas, while also developing a template for scheduling commitments. Non-Agricultural Market Access (NAMA) deliberations are occurring in several different formats, with both text-based debate and open-ended discussion over non-tariff barriers (NTBs) to trade.
Services discussions will now focus on domestic regulation through intensified text-based negotiations. Meanwhile, the Rules Group is honing in on anti-dumping and subsidies guidelines as well as regional trade agreements (RTAs). Deliberation on geographic identifications (GIs) for wine and spirits will also be more focused as members address four specific questions posed by the chair to encourage progress.
A new trade facilitation agreement is under formulation as members work to consolidate General Agreement on Tariffs and Trade (GATT) Articles for further negotiation. Additionally, the Committee on Trade and Environment Special Session (CTESS) has allowed members to discuss environmental goods and services during a September workshop and is now encouraging members to highlight environmental goods of interest.
Small Group negotiations will continue on the Monitoring Mechanism for Special and Differential Treatment, occasionally requiring open-ended meetings for group debriefing. The Dispute Settlement Body (DSB) will now discuss post-retaliation and compliance, having addresses transparency, amicus briefs and remand earlier this year.
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