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Trade, Economics and Environment

Crunch Issues in Paris

by Daniel Bodansky

[Dan Bodansky is the Foundation Professor of Law and Faculty Co-Director of the Center for Law and Global Affairs at the Sandra Day O’Connor College of Law at Arizona State University. He is in Paris for the climate change negotiations. This is the third in a series of updates both from the U.S. and from Paris. Professor Bodansky has consulted for the government of Switzerland and the Center for Climate and Energy Solutions (C2ES) in relation to the Paris Summit. However, he is writing in his personal capacity and the views expressed do not necessarily represent those of the Swiss government or C2ES.]

In an earlier post, I expressed cautious optimism that the Paris conference will succeed in adopting a legal agreement that requires countries to formulate and submit emission reduction plans, provides for international transparency and review, and establishes a process for countries to periodically ratchet up their efforts. But although the broad outlines of the agreement have been apparent for several years, a number of important issues remain to be resolved, on which the conference could still founder.

Here’s a brief summary of the “crunch” issues:

• How to reflect the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC)?

The issue of differentiation has been one of the most controversial since the inception of the UN climate change regime, and plays out across all of the different elements of the Paris agreement: mitigation, adaptation, finance, and transparency. It’s clear that the Paris agreement will move away from the rigid differentiation between Annex I and non-Annex I countries found in the Kyoto Protocol, towards a more global approach. But will any vestige of the Annex I/non-Annex I dichotomy remain?

Developed countries mostly argue that the concept of nationally determined contributions (NDCs) implies self-differentiation and that this self-differentiation is sufficient. But many developing countries would like some continuation of the categorical, annex-based approach found in the UNFCCC and the Kyoto Protocol. The 2014 US-China joint announcement added the phrase “in light of different national circumstances” to the principle of CBDR-RC, apparently to give it a more dynamic quality. This formulation was included in the Lima Call for Action (.pdf), and will almost certainly find its way into the Paris Agreement. But a general reference to CBDR-RC will likely not be enough to satisfy developing countries, so expect to see some additional language on differentiation in particular articles, for example, those on mitigation and transparency.

I don’t see the US and other developed countries accepting a reference in the Paris agreement to the UNFCCC annexes, which they view as outmoded, but my guess is that negotiators will find some language to bridge the gap – for example, in the context of mitigation, a principle of progression, which provides that countries that have previously pledged absolute economy-wide targets should continue to do so and that all countries should aim to do so over time. This formulation, in effect, differentiates between Annex I countries (which all pledged absolute, economy wide emissions targets in Copenhagen) and non-Annex I countries, without any explicit reference to the annexes, and thus might be acceptable to both sides.

• Whether to include a long-term decarbonization goal?

In Copenhagen, states agreed to a goal of limiting climate change to no more than 2° C. There is considerable – but not universal – support for supplementing this goal with a long-term decarbonization goal, like that included in the G-8 Leaders Statement last June, to provide a signal to business and investors. Many countries would like to include a decarbonization goal in the Paris agreement itself, but if consensus cannot be reached to do so, a possible fallback would be to include the goal in the Conference of the Parties (COP) decision that adopts the Paris agreement, which would give the goal a slightly lesser political status.

• Whether to include a commitment that parties implement their nationally determined contributions (NDCs)?

A central issue in the negotiations has been what commitments to include with respect to NDCs. There is broad agreement to include procedural commitments – for example, to formulate, submit, and periodically update NDCs. And even countries that seek to make NDCs legally binding seem to accept that the agreement will not commit countries to achieve their NDCs (thus distinguishing the Paris agreement from the Kyoto Protocol). But the European Union and some developing countries wish to include a commitment relating to implementation of NDCs.

A duty to implement, as compared to a duty to achieve, is an obligation of conduct rather than result. But if the Paris agreement contained a straightforward obligation on parties to implement their NDCs, then the difference between the two approaches appears small, since, arguably, the test of whether a state has implemented its NDC is whether it has achieved its NDC. This has led to a search for softer formulations of the commitment to implement: for example, a commitment to adopt measures “aimed” or “intended” to implement a country’s NDC, or a commitment to adopt implementing measures “related to” a country’s NDC. The trick is to find some formulation that (more…)

State Department Confirms that Senators Rubio and Cotton were Right, Professors Ackerman and Golove were Wrong

by Julian Ku

I can’t resist one final post to complete an earlier discussion between myself and professors Bruce Ackerman and David Golove on the legal status of the Joint Comprehensive Plan of Action (JCPOA), also known as the Iran Nuclear Deal.  As several others in the blogosphere have noted, the U.S. State Department has confirmed, in a letter to Congress, the following:

The Joint Comprehensive Plan of Action (JCPOA) is not a treaty or an executive agreement, and is not a signed document. The JPCOA reflects political commitments between Iran and the P5+1 (the United States, the United Kingdom, France, Germany, Russia, China) and the European Union. As you know, the United States has a long-standing practice of addressing sensitive problems in negotiations that culminate in political commitments.

(Thanks to Michael Ramsey at the Originalism Blog and Matthew Weybrecht at Lawfare for noting and posting this letter).

This letter confirms that, contra the argument advanced by Professors Ackerman and Golove in the Atlantic and on this blog, the JCPOA is NOT a congressional-executive agreement authorized by Congress when it passed the Iran Review Act last spring.  Rather, the entire JCPOA is a “political commitment.”

As Professor Ramsey correctly notes, this means that Senator Marco Rubio was quite right in saying that, if elected President, he could withdraw the JCPOA without violating U.S. or international law.  It also means that Senator Tom Cotton was quite right, as a practical matter, in his famous open letter saying that the next US president could withdraw the agreement.  And it means (less importantly in the grand scheme of things but important for me), that I was right in saying that the JCPOA is not a congressional-executive agreement.

The larger issue is this: If the President is going to go around making political commitments, that’s fine.  But he should be clear that this is what he is doing so that smart people like Professors Ackerman and Golove don’t get confused into thinking he is making a binding agreement..  As Dan Bodansky explains, the U.S. is going to make the Paris Agreement a political commitment (at least with regards to emissions reductions).  As I’ve been arguing here and elsewhere, the U.S. should be clear about what it is doing in Paris, and what it is not.

What Would Constitute Success in Paris?

by Daniel Bodansky

[Dan Bodansky is the Foundation Professor of Law and Faculty Co-Director of the Center for Law and Global Affairs at the Sandra Day O’Connor College of Law at Arizona State University. He will be in Paris for the climate change negotiations. This is the first in a series of updates both from the U.S. and from Paris. Professor Bodansky has consulted for the government of Switzerland and the Center for Climate and Energy Solutions (C2ES) in relation to the Paris Summit. However, he is writing in his personal capacity and the views expressed do not necessarily represent those of the Swiss government or C2ES.]

The latest episode of the long-running drama known as the UN climate change negotiations begins this week in Paris. Commentators are touting the Paris conference as “historic”, “pivotal,” the “last chance” for the world to address the climate change problem. So what would constitute success?

For the past couple of decades, political scientists and international lawyers have debated how to measure the effectiveness of international environmental regimes. The gold standard of effectiveness is whether an agreement solves the problem that it seeks to address. That would require the Paris conference to prevent “dangerous anthropogenic climate change” – the explicit objective of the UN Framework Convention on Climate Change. No one is exactly sure how much global warming would be compatible with this objective; to the extent severe weather events like the 2003 Paris heat wave (.pdf) or Hurricane Sandy can be attributed to global warming, then perhaps we are already in the dangerous zone. At the Copenhagen Conference, the international community defined the goal less stringently, as warming of less than 2° C above pre-industrial levels. But some think that 2° itself would be too much, arguing for limits of 1.5° or even .

So far, the world has warmed by about 1°, according to the latest data from the UK Met Office. This might suggest that we’ve still got some headroom, measured against the 2° temperature. But the climate system has tremendous inertia, so the effects of past emissions have been only partially realized. Even if we stopped emitting completely right now, the world would still warm by another half degree or more before leveling off. And, of course, global emissions continue to go up rather than down, and peak emissions, let alone zero emissions, are still more than a decade away.

The bottom line is that there is no prospect that the Paris conference will, in itself, put us on a pathway to meeting the below-2° limit. The emission reduction goals that countries have submitted as part of the Paris process (known in climate change argot as “intended nationally determined contributions” or INDCs) instead put the world on a pathway to global warming of around 3° or 3.5°. So if we take problem-solving effectiveness as our measure of success, then we are bound to be disappointed.

But few public policies fully solve the problem that they address; by that standard, virtually every public policy falls short. In my view, the more reasonable test is whether the Paris conference results in a significant improvement over what would have happened otherwise. And by this measure, the Paris conference is likely to be successful.

How should we assess whether Paris is moving us in the right direction? I would suggest four elements:

• First, is the Paris agreement global in its coverage?
• Second, have countries pledged to make significant reductions in their emissions?
• Third, does the agreement establish mechanisms to promote transparency and accountability, so that we will know whether countries do what they say?
• Fourth, does the agreement provide a process to to ratchet up its level of ambition over time?

On the first element, the Paris process can already be counted a success. More than 150 countries, representing more than 85% of global emissions, have come forward with INDCs – that is pledges of what they’re going to do to reduce emissions. Compared to the Kyoto Protocol, which even in its prime covered only about 25% of global emissions, this a major step forward.

Second, the INDCs that countries have submitted represent a significant improvement over current policy. According to a recent analysis by the UN Climate Change Secretariat, they would reduce emissions by about 3 gigatons (GT) CO2e in 2025 and 4 GT in 2030, as compared to the business-as-usual trajectory. Although this falls well short of putting the world on a below-2° pathway, global warming of 3° C would still be better than 3.5°, and 3.5° better than 4°, and 4° better than 5°. So if Paris moves us down the scale of likely warming, then this represents progress.

Third, countries seem likely to agree to a relatively robust system of reporting and review. While transparency in itself does not ensure that countries will comply, at least it would allow the international community to assess whether countries are living up to their pledges, and to exert peer pressure if they don’t.

Finally, countries also look likely to agree to come back every five years to take stock of what’s been achieved and how that compares to the 2° goal, and to put forward new, more ambitious emission reduction plans.

So I am cautiously optimistic about the Paris conference. Of course, one shouldn’t underestimate the capacity of the UN climate change process to seize defeat from the jaws of victory. And the victory would, in any event, be only partial. But if Paris establishes a durable framework that is global in scope, provides for transparency, and pushes to strengthen ambition over time, then, for me, that would be a significant achievement and would constitute success.

International Law Does Not Prohibit Commercial Asteroid Mining. Nor Should It.

by Julian Ku

Last week, the U.S. Congress passed the US Commercial Space Launch Competitiveness Act of 2015 (or the “Space Act”), which will authorize private U.S. companies to own and sell resources they extract from objects in space. Supporters (and detractors) are calling this historic, because it is the first time the U.S. government has plainly authorized commercial exploitation of outer space resources.  Here is some key language from the bill, which President Obama is expected to sign.

§ 51303. Asteroid resource and space resource rights

“A United States citizen engaged in commercial recovery of an asteroid resource or a space resource under this chapter shall be entitled to any asteroid resource or space resource obtained, including to possess, own, transport, use, and sell the asteroid resource or space resource obtained in accordance with applicable law, including the international obligations of the United States.”.

This provision has been criticized as violating U.S. obligations under the Outer Space Treaty of 1967.  Chief among those obligations is Article I of that treaty:

The exploration and use of outer space, including the moon and other celestial bodies, shall be carried out for the benefit and in the interests of all countries, irrespective of their degree of economic or scientific development, and shall be the province of all mankind.

There is also Article II, which seems to restrict claims of sovereignty in outer space.

Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.
The Space Act of 2015 tries to avoid this potential conflict by limiting itself to authorizing private citizen (as opposed to “national”) exploitation, and subjecting that exploitation to “international obligations of the United States.”  The Act also goes on to “disclaim” extraterritorial sovereignty (shouldn’t that be “extraterrestrial” by the way?)

It is the sense of Congress that by the enactment of this Act, the United States does not thereby assert sovereignty or sovereign or exclusive rights or jurisdiction over, or the ownership of, any celestial body.

I think the law’s backers are correct that it does not violate US treaty obligations. All it does is allow private US citizens to “possess, own, transport, use, and sell” extraterrestrial resources without violating U.S. law.

On the other hand, it is also true that other spacefaring countries could allow their citizens to do the same.  Indeed, I think their government space agencies could probably also do so, als long as they are not “claiming sovereignty.”  Without an explicit international treaty regulating commercial space resource exploitation, it will ultimately be a question of each country’s domestic regulations.   Can the U.S. live with that result?

I think it can.  In my view, the UN Law of the Sea created a complicated bureaucracy for handling management of the international seabed, way before any commercial exploitation of that seabed was even possible.  We don’t know yet what types of exploitation are feasible, and we might as well let this process evolve on its own before demanding a worldwide international treaty on the subject.  There will be plenty of time for that.

A Treaty or Not a Treaty? My Senate Testimony About the Paris Climate Change Agreement

by Julian Ku

I had the honor and pleasure of testifying today before the U.S. Senate’s Environment and Public Works Committee.  The topic of the hearing was “Examining International Climate Negotiations” and the upcoming conference in Paris. My own contribution argued that an agreement with legally binding emissions reduction obligations should be submitted to the Senate as a treaty rather than as a sole executive agreement.  I further argued that the Senate should require to the State Department to clarify which parts of a climate change agreement are legally binding, and which ones are merely non-binding political commitments.

You can watch the oral testimony and the questions below on C-SPAN (my testimony starts around the 11’40” mark. Almost all of the testimony has to do with the substantive merits of such an agreement (about which I express no opinion), as opposed to the legal aspects. So I will go ahead and declare victory for my argument by default.

The ICC Gets Its New Headquarters — and They Are Amazing

by Kevin Jon Heller

A couple of years ago, I praised the winning design for the ICC’s permanent home but acknowledged that I preferred a different one. I’m happy to report that I was wrong, at least aesthetically: the Court’s new headquarters are absolutely beautiful. Here are a few photos:

International-Criminal-Court_Hague_Schmidt-Hammer-Lassen-Architects_dezeen_1568_3

International-Criminal-Court_Hague_Schmidt-Hammer-Lassen-Architects_dezeen_936_8

International-Criminal-Court_Hague_Schmidt-Hammer-Lassen-Architects_dezeen_936_6

You can tell the Court’s staff is eager to move into their new home, because there is a large sign in the current building’s foyer that is actually counting down the time. And I don’t blame them — the complex really is an architectural masterpiece.

That said, I confess that I still find the move a bit troubling, both because of the cost — approximately €190,000,000, though the ICC website dedicated to the project is strangely silent about finances — and because the grandeur of the new headquarters far surpasses the Court’s accomplishments to date. We can only hope that the Court grows into its new home — I would hate to see such magnificence wasted on rebels like Ongwen and deposed leaders like Gbagbo. This is the kind of dock suitable for the Bushes and Blairs of the world.

PS: On Facebook, my friend and SOAS colleague Stephen Hopgood — author of the must-read The Endtimes of Human Rights — criticises the “distant, imperious and abstract concept of justice” this kind of minimalist High Modernist architecture “symbolise[s] for the peoples of the whole, diverse world.” I think that’s an excellent point.

Can You Be Pro-Free Trade and Anti-Investor State Dispute Settlement?

by Julian Ku

Simon Lester of Worldtradelaw.net and the Cato Institute offered a very interesting pro-free trade argument against the inclusion of investor-state dispute settlement (ISDS) in trade agreements like the TransPacific Partnership or the Transatlantic Trade and Investment Partnership.  I disagree and we discussed and debated the issue today in a lively conversation hosted by Columbia University’s Center for Sustainable Investment.

Freedom of Navigation Operations and the South China Sea

by Chris Borgen

The BBC charts the latest back-and-forth between China, the U.S. over the Spratly Islands and, especially, navigation in the South China Sea. Much of the discussion of this issue has focused on the increased pace of China construction and land reclamation on series of islands and reefs, changing the “facts on the ground” to bolster its territorial and maritime claims. Other countries have also built on various islands and reefs, positioning for their own claims. But the scope of China’s activities had brought the issue back to the forefront.

The current flurry has been about the U.S.’s reaction and, in particular, whether the U.S. will use of “freedom of navigation” (FON) operations (previously discussed by Julian, here) in the midst of all this activity in the Spratlys.

According to the BBC, Hua Chunying, a spokesperson for China’s Foreign Ministry stated:

“We will never allow any country to violate China’s territorial waters and airspace in the Spratly Islands, in the name of protecting freedom of navigation and overflight.”

On Tuesday, US Defence Secretary Ash Carter expressed “strong concerns” over island-building, and defended Washington’s plans.

“Make no mistake, the United States will fly, sail and operate wherever international law allows, as we do around the world, and the South China Sea will not be an exception,” he said at a news conference with the Australian foreign and defence ministers.

“We will do that in the time and places of our choosing,” he added, according to Reuters news agency.

According to the U.S. Department of State, the U.S. has undertaken such freedom of navigation (FON) operations since 1983 to “exercise and assert its navigation and overflight rights and freedoms on a worldwide basis in a manner that is consistent with the balance of interests reflected in the Law of the Sea (LOS) Convention.” This is a topic where one can see the U.S. refer explicitly and repeatedly to international law:

The FON Program since 1979 has highlighted the navigation provisions of the LOS Convention to further the recognition of the vital national need to protect maritime rights throughout the world. The FON Program operates on a triple track, involving not only diplomatic representations and operational assertions by U.S. military units, but also bilateral and multilateral consultations with other governments in an effort to promote maritime stability and consistency with international law, stressing the need for and obligation of all States to adhere to the customary international law rules and practices reflected in the LOS Convention.

Emphases added.

A year-by-year summary of Freedom of Navigation operations by the U.S. can be found on the U.S. Department of Defense website, here.

However, the BBC notes that:

The US might have mounted sea patrols in this area, but not for several years, our analyst says – and not since China began its massive building programme in the South China Sea.

A US military plane that flew near one of the islands in May was warned off – eight times.

The US now has to decide whether to send in its ships and risk confrontation, or back down and look weak, our analyst says.

How the situation evolves from here will depend in part on the reactions of other states that border the South China Sea or use its sea lanes.  Stay tuned…

Under the New “Investor-State Arbitration” in the Trans Pacific Partnership, Claimants May Have to Pay Attorneys’ Fees

by Julian Ku

The U.S. and eleven other Pacific Rim countries announced they have reached agreement on the Trans Pacific Partnership trade agreement, which will more tightly integrate 40% of the world’s economy into a single regional bloc. There will be a huge fight in Congress over the TPP by progressive Democrats in the U.S. Even presidential candidate Hillary Clinton has already announced her opposition (sort of).

One area of ire for critics will certainly be the TPP’s provisions for investor-state dispute resolution (See Sen. Elizabeth Warren’s attack on this area here).  The TPP negotiators seem to have recognized that those provisions needed modifications and they seem to have focused on providing more transparency in arbitral proceedings.  But I was particularly struck by the U.S. Trade Representative’s official summary of the agreement’s provisions on investor state arbitration below.

The chapter also provides for neutral and transparent international arbitration of investment disputes, with strong safeguards to prevent abusive and frivolous claims and ensure the right of governments to regulate in the public interest, including on health, safety, and environmental protection.  The procedural safeguards include:  transparent arbitral proceedings, amicus curiae submissions, non-disputing Party submissions; expedited review of frivolous claims and possible award of attorneys’ fees; review procedure for an interim award; binding joint interpretations by TPP Parties; time limits on bringing a claim; and rules to prevent a claimant pursuing the same claim in parallel proceedings.

I find this provision on attorneys’ fees fascinating. I presume this will allow state-respondents to actually recover attorneys’ fees from investor-claimants if those claims were somehow deemed frivolous.  I didn’t realize frivolous claims were actually a huge problem in investor-state dispute resolution.  I am not aware of data showing lots of weak claims being filed with state-respondents just settling to avoid the costs of arbitration.

I am also not aware of any other kind of international dispute resolution, public or private, which has this kind of arrangement. It is worth the wait to see the details, but it is sign the TPP negotiators are getting ready to take fire on this area from folks like Sen. Warren, and have added a little armor ahead of time.

The Pre-Trial Chamber’s Dangerous Comoros Review Decision

by Kevin Jon Heller

In late 2014, the Office of the Prosecutor rejected a request by Comoros to open a formal investigation into Israel’s attack on the Mavi Marmara. To my great surprise, the Pre-Trial Chamber (Judge Kovacs dissenting) has now ordered the OTP to reconsider its decision. The order does not require the OTP to open a formal investigation, because the declination was based on gravity, not on the interests of justice — a critical distinction under Art. 53 of the Rome Statute, as I explain here. But the PTC’s decision leaves little doubt that it expects the OTP to open one. Moreover, the PTC’s decision appears designed to push the OTP to decline to formally investigate a second time (assuming it doesn’t change its mind about the Comoros situation) on the basis of the interests of justice, which would then give the PTC the right to demand the OTP investigate.

To put it simply, this is a deeply problematic and extremely dangerous decision — nothing less than a frontal assault on the OTP’s prosecutorial discretion, despite the PTC’s claims to the contrary. I will explain why in this (very long) post.

At the outset, it is important to emphasise that we are dealing here with situational gravity, not case gravity. In other words, the question is not whether the OTP should have opened a case against specific members of the IDF who were responsible for crimes on the Mavi Marmara, but whether the OTP should have opened a situation into the Comoros situation as a whole. The Rome Statute is notoriously vague about the difference between situational gravity and case gravity, even though it formally adopts the distinction in Art. 53. But it is a critical distinction, because the OTP obviously cannot assess the gravity of an entire situation in the same way that it assesses the gravity of a specific crime within a situation.

The PTC disagrees with nearly every aspect of the OTP’s gravity analysis. It begins by rejecting the OTP’s insistence (in ¶ 62 of its response to Comoro’s request for review) that the gravity of the Comoros situation is limited by the fact that there is no “reasonable basis to believe that ‘senior IDF commanders and Israeli leaders’ were responsible as perpetrators or planners of the apparent war crimes’.” Here is how the PTC responds to that claim:

23. The Chamber is of the view that the Prosecutor erred in the Decision Not to Investigate by failing to consider whether the persons likely to be the object of the investigation into the situation would include those who bear the greatest responsibility for the identified crimes. Contrary to the Prosecutor’s argument at paragraph 62 of her Response, the conclusion in the Decision Not to Investigate that there was not a reasonable basis to believe that “senior IDF commanders and Israeli leaders” were responsible as perpetrators or planners of the identified crimes does not answer the question at issue, which relates to the Prosecutor’s ability to investigate and prosecute those being the most responsible for the crimes under consideration and not as such to the seniority or hierarchical position of those who may be responsible for such crimes.

These are fundamentally irreconcilable conceptions of “potential perpetrator” gravity. The OTP is taking the traditional ICTY/ICTR approach, asking whether the Israeli perpetrators of the crimes on the Mavi Marmara are militarily or politically important enough to justify the time and expense of a formal investigation. The PTC, by contrast, does not care about the relative importance of the perpetrators; it simply wants to know whether the OTP can prosecute the individuals who are most responsible for committing the crimes in question.

To see the difference between the two approaches — and to see why the OTP’s approach is far better — consider a hypothetical situation involving only one crime: a group of the lowest-ranking soldiers from State X executes, against the stated wishes of their commanders, 10 civilians from State Y. The OTP would conclude that the “potential perpetrator” gravity factor militates against opening a formal investigation in State Y, because the crime in question, though terrible, did not involve militarily important perpetrators. The PTC, by contrast, would reach precisely the opposite conclusion concerning gravity, deeming the soldiers “most responsible” for the crime by virtue of the fact that they acted against orders. After all, no one else was responsible for the decision to execute the civilians.

The PTC’s approach to “potential perpetrator” gravity is simply bizarre….

Whale Wars Seeks a New Forum: The U.S. Supreme Court

by Julian Ku

Sea Shepherd, the activist group that has been aggressively protesting Japanese whaling practices, has filed a very interesting petition for certiorari with the U.S. Supreme Court.  Readers may recall that Sea Shepherd was sued by a group representing Japanese whalers under the Alien Tort Statute (ATS).  The Court of Appeals for the Ninth Circuit held that Sea Shepherd’s actions of boarding the Japanese whalers and obstructing them could fall within the definition of “piracy” for the purposes of jurisdiction under the ATS.

The best argument for Sea Shepherd is that the definition of piracy adopted by the Ninth Circuit cannot meet the Supreme Court’s “Sosa” standard for requiring ATS claims to be “universal” and “specific” under international law.  I think there is some force to this argument, although I find their disparagement of the UN Convention of the Law of the Sea’s definition of piracy a little odd.  In any event, the question may turn on the definition of “private ends” that UNCLOS requires as an element of piracy.  I don’t have a strong view on this, but I refer our readers to Kevin’s critique of the Ninth Circuit conclusion that private ends can include political activism, and Eugene Kontorovich’s contrary view in support of the Ninth Circuit. The petition for certiorari smartly frames this as a “Sosa” issue, which would ordinarily mean that the uncertainty as to the applicability of “private ends” here should defeat ATS jurisdiction.  I am not sure the petitioners will get much traction, given the unusual and narrow facts of this case, but no doubt this case is worth watching.

Does Investor-State Arbitration “Weaken[] the Rule of Law”? Judith Resnik and Larry Tribe Seem to Think So

by Julian Ku

I have not been surprised by the swelling opposition in the U.S. (mostly from the progressive left) against proposed trade agreements with Pacific and European nations (TPP and TTIP).  But I am mildly surprised by the way in which TPP and TTIP opponents have zeroed in on the inclusion of investor-state arbitration mechanisms as a rallying point for their opposition.  Not only has former Harvard lawprof (and now U.S. Senator) Elizabeth Warren come out against the inclusion of investor-state dispute settlement (or ISDS), but yesterday, Yale law prof Judith Resnik and Harvard lawprof Lawrence Tribe, along with Nobel Laureate Joseph Stiglitz and a few others released a letter outlining their concerns with (really, their opposition to)  ISDS.  This letter is much more sophisticated and persuasive than an earlier lawprof letter Roger criticized here.  Indeed, its critique is far broader and echoes “sovereigntist” critiques that many on the political right have often applied to international tribunals.  Here is one snippet of their argument.

ISDS weakens the rule of law by removing the procedural protections of the legal system and using a system of adjudication with limited accountability and review. It is antithetical to the fair, public, and effective legal system that all Americans expect and deserve.

The letter valorizes U.S. courts and Article III judges, as well as the importance of democracy, and contrasts those institutions and values with the secretive ISDS process.  The main complaint, which is quite true, is that ISDS gives foreign investors a “separate legal system” to which others, including US citizens and corporations, cannot access. ISDS is not subject to any serious review by either courts or other arbitral tribunals.

None of the statements in the letter are inaccurate or incorrect. But they do leave out the basic assumption and rationale behind ISDS provisions. Foreign investors are presumed to be more likely to face disadvantages in a foreign legal system, which is why they are presumed to need “extra” protections from ISDS.  I think the rationale for ISDS is weaker for trade agreements between the US and Europe or the US and other developed industrialized countries.  But it is still probably true that there is a greater risk of discrimination against foreigners from a local legal system than against local companies.

I am not convinced of the necessity of ISDS in these trade agreements, but I don’t think it is necessarily a bad thing to include them either. I do recognize that these systems of dispute settlement do create non-trivial tensions with the domestic legal systems of member countries. In other contexts (law of the sea, ICJ/death penalty, etc), raising concerns about these tensions has been associated with the political right. So it is interesting to see progressives borrow sovereigntist arguments in their campaign against ISDS.