HILJ Online Symposium: On the Love of Hybrids and Technicalities
[Martins Paparinskis, DPhil (Oxon), is a Lecturer in Law at the University College London.]
This post is part of the HILJ Online Symposium: Volumes 54(2) & 55(1). Other posts in this series can be found in the related posts below.
I am grateful to the UCL LLM class of International Law of Foreign Investment for clarifying my thinking on some of these matters.
A natural reaction to such an elegant and erudite article is to offer unqualified praise to its author. While not easily, this reaction should be resisted, as likely to lead to an uninspiring symposium contribution. Therefore, while fully acknowledging the great merit of the argument, I will focus instead on three points where I find the article less than entirely persuasive: (1) the analytical perspective of hybrid theory; (2) the application of law of State responsibility in investment arbitration, as per Italy v Cuba; and (3) the operation of inter-State investment arbitration, as per Ecuador v US. (It is only fair to say that there are very few points on which I actually disagree with Anthea Roberts, therefore I will be mostly clutching at exaggerated straw-mannish arguments.)
I. Depoliticisation, fictions, hybrids, and banks of fog
I will start with a trite, but hopefully not an entirely irrelevant observation. Contemporary international lawyers, unlike the lawyers of previous generations, are in possession of a reasonably complete set of rules and vocabulary on sources and responsibility in international law, which should not easily be thought to be inadequate for articulating and addressing our concerns. The different concepts and perspectives that are sometimes introduced into the legal arguments instead may be helpful, but they can also be superfluous or misleading. In investment arbitration, one example of what I have in mind is ‘depoliticisation’: a concept that (at its best) means everything for everybody, with little independent analytical value, but at its worst may be significantly misleading, erroneously suggesting with significant persuasive force that certain positive rules have or have not been created, or certain legal solutions would or would not fit the existing regime (I have contributed my two pennies here, and it seems to me that Roberts would agree, see pp 11-6). Another example, also referred to in the article (pp 32-3, 38-9), is ‘fiction’ (as ‘the fiction of diplomatic protection’). It may be that I am missing something here, but (even after rereading the leading article on the issue by Annemarieke Vermeer-Künzli) it is not obvious to me that the dutiful citations to ancient writers and cases add much to the most basic of propositions: States can create primary obligations and secondary rules of admissibility with any content whatsoever, that is precisely what they have done with (respectively) rules addressing treatment of their nationals and diplomatic protection, and there is little more to it.
This brings me, if in a terribly roundabout manner, to my first real point: I wonder whether ‘hybrid theory’ necessarily belongs to a different category from the concepts considered above. Is there anything that the hybrid theory adds to our understanding of the manner of creation of international law, of the resolution of conflicts between rules, of the distinction between primary and secondary rules, and (above all) of the the openness of the international legal order to the plurality of invocation of responsibility? Ten years ago, Charles Leben cautioned against an excessive love of hybrids and their perspectives, noting the openness of international legal order to protection and claims of investors, (2004) 50 AFDI 683, 691-5 (translated (Hart 2010) Ch 2, pp 54-9; the first part of the title of this post is taken from Leben). The general thrust of his argument seems just as valid today. Indeed, one might go further than Leben did – even if investment law is significantly different from other regimes of international law, should that call for anything else than the application of ordinary methods of legal analysis to a technically complex but conceptually uncontroversial subject-matter? This may be a question better directed at an earlier article by Roberts, but I do wonder about the added value of the hybrid theory for the analysis of investment law. Almost every regime in international law is a hybrid between something and something else. To put the question in the most uncharitable terms imaginable: if everything is a hybrid – if everybody is a platypus – is there any added value for adopting their perspective in the discussion, or is that just another bank of fog to be dispelled by ordinary methods of legal analysis, (1982) 53 BYBIL 197, 197?
II. Investment arbitration and State responsibility
The proper fit of the law of State responsibility and investment protection law raises many interesting questions. Anthea Roberts has chosen to address perhaps the most complex of them all: how is the right of a State to invoke responsibility for the breach of primary (treaty) obligations regarding the treatment of their nationals and their investment affected by investor-State arbitration (pp 30-52)? I will first summarise my own position on the issue, (2008) 79 BYBIL 264, 279-97, and then consider whether it differs from Roberts’.
The starting point of my analysis is that a breach of a primary obligation, bilateral in form or bilateralisable in substance, prima facie injures the other party to the obligation, therefore an additional legal argument has to be introduced to demonstrate why the normal consequences of the right to invoke and implement responsibility do not follow. One might make this argument in a number of ways. There might be special treaty rules that suspend diplomatic protection (as art 27(1) of the ICSID Convention) or waive it, or there might be ad hoc suspensions or waivers. There is also no reason in principle why a customary rule of suspension or waiver could not be generated, but treaty practice is clearly insufficient for that, even without tackling the vexed question of investment treaties and opinio juris. Zac Douglas has asserted that a breach of an investment treaty does not even injure the home State in the first place, (2003) 74 BYBIL 151, 184-94, but the general openness of the law of responsibility to plurality of invocation by different injured or interested actors (2001 ILC Articles arts 46, 48; 2011 ILC Articles arts 47, 49) cautions against such inevitable carve-outs (perhaps rather providing an example of how hybrid perspectives lead to unjustified isolation from general rules). The 2006 ILC Articles on Diplomatic Protection appear to presuppose that a conflict necessarily exists between investor-State arbitration and diplomatic protection, to be resolved in favour of the former (art 17), but that is either an unjustifiable generalization from the ICSID Convention, or a questionable denial of the general openness of international law to plurality of invocation of responsibility my multiple actors (art 16). Subsequent to my article, two arbitral awards in the Italy v Cuba arbitration have been published, suggesting in passing that the principle of art 27(1) of the ICSID Convention could be applied by analogy more broadly. The Tribunal wore its learning lightly, so there might be something more to the argument than catches the eye, but prima facie the reasoning is not an easy one to follow: (1) if ‘analogy‘ refers to the relationship of treaty and custom, then the argument stands and falls – and fall it does – by reference to the traditional criteria of codification, crystallization, and development; (2) if it suggests that a valid right under customary law might be lost not by an operation of a legal rule but by an (extra-legal) analogy, it seems to be moving beyond the traditional scheme of sources.
How does that my argument fit with that made in the article? We are partly in agreement: by implication, the article dismisses the idea that a breach of a BIT does not injure the home State, and also seems to prefer ILC’s general pluralism in invocation of responsibility over its conflict-focused reading of investment law (pp 35-6; the article may be understating the strength of conviction by the ILC that investment law is special vis-à-vis diplomatic protection, unlike the parallelism of diplomatic protection and human rights protection, 27-30). We part our ways – although perhaps more in terms of reasoning than the conclusion (p 43) – when the article makes an argument for interdependence of investor’s and State’s rights, with the first claim against the respondent State (whoever of the two it might be brought by) precluding the second one, along the lines of the ICSID Convention (pp 43-9).
The first objection is that this argument cannot be based on the principle underlying the rule of the ICSID Convention: article 27(1) does not waive or preclude diplomatic protection, but only suspends it during investor-State arbitration, leaving entirely unaffected the exercise of diplomatic protection over the original breach after the suspension is lifted, (2008) 79 BYBIL 264, 309-12. Secondly, the openness of international law to the plurality of invocation suggests that one should not easily infer development of rules coordinating invocation at the level of rights of invocation, and rather consider other possible responses first. For example, the prohibition of punitive reparations would limit compensation by reference to the scope of breach, rather than to the number of invoking entities, and thus preclude double recovery. Repetitive claims might be addressed by admissibility objections on the basis of abuse of process and pragmatic rules on shifting of costs. Finally, if one were pushed to articulate a sequencing rule, then a systemically appealing version of it, with some support in State practice, would preclude further claims by reference to the presence of a binding award regarding the same breach by the same conduct with the same remedies ((2008) 79 BYBIL 264, 309).
III. Inter-State investment arbitration
The article is quite critical of the reported decision of the majority of the Ecuador v US Tribunal to reject the claim on jurisdictional grounds because, in the absence of positive opposition by the US to claims by Ecuador, there could be no dispute (pp 54-8). Anecdotal experience and common sense support the author’s position – those who have observed dinner-time conversations between (a)theists and agnostics will know that the lack of a position by the latter does not necessarily guarantee a peaceful dessert. Still, it may be better to suspend one’s critical wrath until the award is published. These are complex matters, and even the recent case law of the International Court of Justice provides examples where one might respectfully wonder whether the Court has not been either excessively generous or excessively strict in the determination of a dispute.
The article makes a very interesting argument regarding the effect of decisions in inter-State arbitrations on investor-State arbitrations (pp 59-68). I wonder, in the Brownlie-esque spirit of my comment, whether the small-print perspective of res judicata and its accepted effects on different parties and subject-matters in international dispute settlement would not provide a better way of engagement with the issue than the macro-perspective of interdependent rights, but I would have to consider the issue more carefully before providing a proper response. I would, however, suggest that there might be another interesting question lurking in the Ecuador v US case. With apologies for the colloquial expression: can the US lose on the roundabouts what it has won on the swings? — Is there any legal cost to be paid for the success of the unusual argument that a State holds no views regarding the content of its treaty obligations? One might imagine a number of responses. It may be that it could have an effect on the attitude of the legislative bodies towards international law and future treaty practice: it would take a charitable and generous legislator to approve the imposition of new obligations on a State that is formally agnostic towards the content of its existing obligations.
In international law terms, the lack of an opinion about the content of a rule is probably not a breach of that (or another) rule per se, unless the primary rule itself requires providing information about the content of the rule (as in two cases lost by the US), or if compliance with the obligation under the rule necessarily requires an opinion about the content of the rule. I will not consider the applicability of these propositions to particular obligations in investment treaties and implications for formalised dispute settlement. However, the Ecuador-US non-dispute could also be presented as an interpretative argument. It has been suggested that the failure of a treaty party to protest against acts clearly asserting interpretation of the treaty amounts to acquiescence (MacGibbon (1954) 31 BYBIL 143, 146).
If this is a correct statement of the contemporary law of treaties, one might argue that the failure of the US to protest the clear assertion by Ecuador, while winning the arbitral case on the swings (with the silence precluding a dispute), has prospectively lost the interpretative case on the roundabouts (with the silence contributing to subsequent practice that reflects the content of Ecuador’s position). Again, I will not pursue this argument and its implications further. My modest and hopefully uncontroversial concluding point is that a systemic balance in investment law and arbitration has to be established by taking into account both dispute settlement and State responsibility perspectives on the one hand, and the interpretative perspective on the other hand. Anthea Roberts has, of course, masterfully addressed the latter point in her earlier writings, thus making her very well qualified for explaining the operation of this fascinating regime of international law.