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Trade, Economics and Environment

Chevron and the Rise of Arbitral Power: A Comment by Christoph Schreuer

by Christoph Schreuer

[Christoph Schreuer is a Professor at the Department of European, International Law and Comparative Law, University of Vienna] 

Michael Goldhaber’s erudite and well-researched article examines an important aspect of the many-sided relationship between domestic courts and investment tribunals. Other facets of this diverse relationship include the review of arbitral awards by domestic courts, anti-suit injunctions by domestic courts, the need to pursue remedies in domestic courts prior to international arbitration, the division of competences under the label of treaty claims and contract claims, fork in the road provisions, interim measures by domestic courts in support of arbitration and enforcement of awards by domestic courts. This complex relationship of courts and tribunals shows elements of competition, of obstruction, of mutual control and of support. It is startling and paradoxical because it defies any notion of a hierarchy of decision makers.

Goldhaber’s excellent analysis concentrates on two issues: antisuit injunctions by arbitral tribunals and denial of justice by domestic courts. But the potential for infringements of the international rules on investor protection by domestic courts is much wider. Practically each of the typical standards of protection contained in BITs can be violated by domestic courts and each of these violations is subject to the scrutiny of investment tribunals.

From the perspective of international law, an international review of domestic court decisions is neither new nor unusual. International judicial control over State activity has always included courts. The State’s responsibility for all types of the exercise of public authority is uncontested and is reflected in Article 4 of the ILC’s Articles on State responsibility.[1] There are good reasons for not differentiating between the different branches of government when it comes to State responsibility. This lack of differentiation is not merely designed to prevent states from hiding behind ‛independent’ organs. In real life the courts and other elements of the government interact in a way that defies the application of a separation of powers doctrine to questions of State responsibility. For example, court action to the detriment of foreign investors is often mandated by legislation.[2] Decisions of domestic courts are sometimes prompted by executive insinuations.[3]

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Chevron and the Rise of Arbitral Power: An Introduction by Michael D. Goldhaber

by Michael D. Goldhaber

[Michael D. Goldhaber serves as Senior International Correspondent and "The Global Lawyer" columnist for The American Lawyer and the ALM media group. His writes widely on human rights and corporate accountability, international arbitration, and global multiforum disputes. His e-book on Chevron will be published next year by Amazon.]

The ongoing media circus surrounding the Chevron v. Donziger trial in New York federal court makes it easy to forget that the arbitration between Chevron and Ecuador may be the main event in resolving the $19 billion environmental judgment entered against Chevron in Lago Agrio.

The unique willingness of arbitrators to check the power of a foreign judiciary came into sharp relief on Jan. 25, 2012, when the Chevron v. Ecuador tribunal issued interim orders that the Republic (including its courts) take all measures at its disposal to suspend enforcement of the judgment. The very next morning, the U.S. Court of Appeals for the Second Circuit vacated a worldwide injunction against enforcement of that same judgment by the Ecuadorian plaintiffs. In a striking choice of words, the Second Circuit declined to serve as “the definitive international arbiter of the fairness and integrity of the world’s legal systems.”

Early this year, I had the privilege of moderating an NYU Law School panel titled “Arbitrators v. Judges: The Latent Tension of Investor Arbitration Rises to the Surface,” featuring some of the world’s leading arbitrators. Two weeks later I attended a Stanford Law School conference titled “Lessons From Chevron.” The Stanford Journal of Complex Litigation has published a magnificent set of conference papers — including Judith Kimerling on indigenous rights, Stacie Strong on 1782 discovery, Howard Erichson on forum shopping, Manuel Gomez on international enforcement, Chris Whytock on transnational litigation, and Catherine Rogers on global legal ethics. Full text may be found online here.

I was struck at Stanford by how odd arbitration appears to U.S. scholars, who are mostly stunned by powers that arbitrators take as elemental. I was struck at NYU by the lack of a framework, within the arbitration community, to analyze the growing exercise of authority over national courts by investment arbitrators.

My resulting article — “The Rise of Arbitral Power Over Domestic Courts – will be the subject this week of an Opinio Juris mini-symposium. As geography is no object online, the three distinguished commenters represent three continents and an equally wide range of opinion. Christoph Schreuer of Vienna is an eminent arbitrator, perhaps best known for the Chevron precursor of Saipem v. Bangladesh, and a prolific scholar, perhaps best known for the definitive commentary on the ICSID Convention. Anthea Roberts of Columbia Law School, by way of Australia, is widely hailed as one of the brightest young stars in arbitration scholarship. Muthucumaraswamy Sornarajah of National University of Singapore is among the most eloquent and radical critics of investor-state arbitration. I am honored by their participation…

Book Symposium The Electronic Silk Road: Reply by Anupam Chander

by Anupam Chander

[Anupam Chander is Professor of Law at The University of California, Davis]

I am honored to have such a brilliant and prominent set of interlocutors from across the world discussing my book, The Electronic Silk Road: How the Web Binds the World Together in Commerce. I am grateful for the sharp insights each of my commentators brings, and humbled by the praise they offer. Each of the commentators has selected a different aspect of the book to focus on in his or her remarks, and so I will respond to each in seriatim, chronologically.

Professor Michael Birnhack (Tel-Aviv) focuses on glocalization—the conforming of a global service to the local laws of the countries that it serves. Professor Birnhack is familiar with this phenomenon, having studied it himself in connection with the transfiguration of global copyright as it encounters local norms. Both glocalization and and its limiting principle—harmonization—are highly complicated processes. Professor Birnhack wisely observes that glocalization and harmonization are both subject to power variations across the world. This is an important insight—certain countries, industries, corporations, transnational organizations or interests are likely to hold more sway than others in determining any eventual balance between glocalization and harmonization. That would probably be true even if there were a global plebiscite, a possibility that seems quite remote. But Professor Birnhack notes that these shortcomings in the glocalization and harmonization principles I suggest do not render them unwise, as other alternatives are likely to prove worse along the metric he describes.

The University of Bern’s Mira Burri , editor with Professor Thomas Cottier of an important collection of papers on digital trade governance, elegantly describes the major shifts in international trade made possible by the Internet. Her broad perspective makes her an ideal interlocutor. She strikingly observes that “we are faced with a radically ‘messy’ governance landscape with many and overlapping institutions and actors of state and non-state nature, the effects of whose actions transcend national boundaries and cannot be neatly contained and controlled.” She characterizes the principles proposed in The Electronic Silk Road as follows: “The freeing of trade is matched by a batch of principles of regulating trade that are meant to ensure balance, provide for security and trust in cyberspace.”

I proposed that Opinio Juris invite Professor Paul Stephan (Virginia) because I admire his writing and hoped for a critical voice, and he hasn’t disappointed. (more…)

Book Symposium The Electronic Silk Road: Opportunity and Complexity Along the Electronic Silk Road

by Jake Colvin

[Jake Colvin is Vice President of Global Trade Issues at the National Foreign Trade Council.]

How is global trade different in the digital age? As Anupam Chander makes clear in his new book The Electronic Silk Road, the internet is changing who trades, what is traded, and how we trade, all of which have implications and complications for businesses, consumers and policymakers.

Upfront, his book outlines the great promise of the internet to democratize global trade.  Businesses and entrepreneurs around the world can hang a digital shingle to offer goods and services online to a global audience, and consumers and intermediary businesses have new options for tapping into information, goods and services from far away.  While Chander focuses much of his attention on what he labels net-work – functions like medical services from India and customer service operations from the Philippines that can be done anywhere with increasing ease – to illustrate the effect that the internet is having on who trades and what is traded, it is worth putting a finer point on the role that the internet is having on trade in goods.

Thanks to cloud, logistics, financial and related services that reduce the red tape associated with international transactions, small businesses and entrepreneurs can participate in global markets from an early stage on a broad scale for the first time in history.  Many of them are using the internet to sell physical things.

Take Maryland-based Kavita Shukla, who founded a company called Fenugreen that manufactures a low-cost solution to keeping produce fresh for up to four times longer.  She can connect, market and sell her product around the world thanks to services provided by companies including BigCommerce.com, Google, Intuit and UPS. The online craft marketplace Etsy reports that over 25 percent of its transactions are international.  eBay has produced several studies that quantify extraordinarily high participation of the commercial sellers that operate on its platform in the global marketplace.  The electronic silk road is a critical conduit for physical goods as well as services.

Amid this opportunity, Chander deftly highlights and makes sense of a number of issues that businesses and governments are confronting as they dig into the complexities of engaging in global trade in the digital age, (more…)

Book Symposium The Electronic Silk Road: New Trade Rules for Cross-Border Flows of Information?

by Joost Pauwelyn

[Joost Pauwelyn is Professor of International Law at the Graduate Institute of International and Development Studies in Geneva]

The Electronic Silk Road is a fantastic read, literally bridging Bangalore with Silicon Valley, showing us how the activity of trade has dramatically changed and how these changes require us to think about “Trade 2.0” rules.  Prof. Chander discusses both private and public law issues, domestic and international rules.

I want to focus my comments on international trade law rules, of the WTO type, that is, the rules imposed by treaty on governments, which generally prevent governments from doing certain things (e.g. prevent them from restricting trade or enacting domestic laws that discriminate against foreigners). When discussing “rules” and the internet, internet companies get nervous: they assume that the rules will limit them and thereby limit innovation.  The rules I am talking about here are limiting what governments can do and, in general, are there to protect or enable (not restrict) internet-reliant companies.  Although Silk Road describes in detail what has changed and sets out basic principles as to how rules could respond to these changes, I was, at times, missing a level of detail allowing us to make progress on the ground.

I see two main types of governmental actions that need curtailing by trade rules. First, governments restricting the flow or storage of data across/outside their territorial borders (e.g. a country requiring that Google or Citibank store all of its data within the country, or a country stopping or censoring the flow of information/network connection coming from/going abroad).  Second, governments taking, or eavesdropping on, information stored or transferred by companies or individuals in (or even outside) their territory (e.g. a country forcing Facebook to hand over certain data or “spying” on data transferred over the internet).

Are today’s WTO rules able to reign in these two types of government interventions with the toolbox of either rules on “trade in goods” or “trade in services”? (more…)

Book Symposium The Electronic Silk Road: The Unexpected Alliance of Trade and Human Rights

by Molly Land

[Molly Land is Professor of Law at the University of Connecticut School of Law]

I’m delighted to be able to take part in this online symposium dedicated to Anupam Chander’s new book, The Electronic Silk Road: How the Web Binds the World Together in Commerce. Chander’s book masterfully brings together a set of debates about technology, privacy, and human rights to consider the pitfalls and promise of regulating Internet trade. In an accessible and engaging way, Chander reorients our thinking about the Internet by locating it firmly in the trajectory of global commerce. While attending carefully to the unique challenges posed by both digitization and networks, he persuasively demonstrates the continued vitality of established doctrines in conflict of laws, trade, and international human rights with respect to some of the most pressing problems we face today in Internet regulation.

To my mind, one of the book’s most interesting and compelling contributions is its discussion of the relationship between trade in services and human rights. Chander rightly notes that trade in goods and human rights have long been in tension with one another, as liberalization of trade is often associated with labor rights violations and other human rights abuses. Trade in services, however, might be an unexpected ally of human rights causes. Information and communication technology companies are providing services, and liberalizing the flow of those services across borders promotes human rights both directly (in the form of freedom of expression) and indirectly (in the form of greater political liberalization). Chander argues that given this relationship, the General Agreement on Trade in Services (GATS) might be considered a human rights document.

Trade law can be an ally of human rights causes in two ways, Chander argues. First, the principle of national treatment limits the extent to which states can discriminate against foreign service providers, including information services. Second, the transparency provisions of GATS could be used to require states to disclose how they are regulating information goods. I think the second of these—the transparency argument—could be incredibly powerful in challenging repressive policies because it will enable advocacy and organizing. It is especially difficult for citizens to hold states accountable for their policies in the area of information and communication technology because such regulation is often invisible. To the extent trade law can be used to make some of this regulation more transparent, that would be a significant gain. This is particularly the case with respect to governments like China that use vague censorship restrictions to incentivize Internet service providers to overblock.

I was also intrigued by the argument that national treatment could be employed in service of human rights. (more…)

Book Symposium The Electronic Silk Road: Comment by Paul Stephan

by Paul Stephan

[Paul B. Stephan is the John C. Jeffries, Jr., Distinguished Professor of Law and David H. Ibbeken '71 Research Professor at the University of Virginia School of Law.]

I applaud Anupam Chander for picking a great subject for his book. New communications technologies have transformed the way we deliver services by radically lowering the cost of dematerialized, long-distance transactions. The resulting explosive growth of cross-border sales of services is one of the most significant aspects of the modern global economy. There are, of course, a host of books about the Web, some silly cheerleading and some exceptionally good (my favorite is Who Controls the Internet? by my sometimes colleagues Jack Goldsmith and Tim Wu). What Chander seeks to do is bring international law, and especially international economic law, into the mix. He explores how a body of rules developed three decades ago in a pre-Web world (the General Agreement on Trade in Services started in the Uruguay Round, born in 1986) can be brought to bear in the new, radically changed environment.

Much of the book describes the new face of international services. These accounts are apt and vivid. As a legal academic, however, I want more. In general I expect a careful study of a complex set of social relations either to propose a positive theory that links legal developments to social conditions with more or less rigor, or a normative vision of the world that will inspire us to correct unseen problems and cash out unrealized opportunities. I realize these categories are messy. The development of a positive analysis rests on certain normative choices, beginning with the decision to concentrate on one set of phenomena rather than another. A normative vision is incomplete without at least a rudimentary account of how we might get from here to there. But they provide a start.

I take Chander’s project to be at its heart more normative than positive. He reports on the fascinating growth of the information sector in the global economy, but he does not have a more general story about what explains this growth or how one might predict the next transformation. Rather, he wants to manage the transformation, to promote human flourishing, to expand the range of choices people can freely make, to respect local diversity, and to fight tyranny. (more…)

Book Symposium The Electronic Silk Road: Connecting dots in a world of bits

by Mira Burri

[Mira Burri is a  senior fellow and lecturer in law at the University of Bern, Switzerland.]

In early October this year the World Trade Organization (WTO) held its annual Public Forum typically devoted to topics that are key to the world trading system and particularly high on the agenda of the community of the WTO’s 159 Members. The theme of this year’s edition was uniquely framed under ‘Expanding Trade through Innovation and the Digital Economy’. To some observers, the topic appeared somewhat detached from the WTO’s core mandate and daily business and distant from burning concerns, such as financial crisis responses, poverty or other development-oriented actions that demand the concerted effort of the global community.

Yet, the casual observer may be mistaken – at least in two aspects. The first is more evident and has to do with the deep impact that digital technologies, and specifically the Internet, have had and continue to have upon numerous facets of societal life. The associated transformations range from the trivial to the momentous – from online shopping, through the emergence of global value chains, to the very ways we work and write, create, distribute and access information − bringing distant geographical locations within instantaneous reach, millions of people organized within hours, encyclopaedias and virtual libraries produced on a collaborative basis. The world of brick-and-mortar trade, of freighter shipments, border inspections, duties and stamps, has also been thereby profoundly changed. For the first time is trade in services unleashed on a global scale, and this definitively goes beyond the classic ‘the world is flat’ example of outsourcing call-centres to India.

The second aspect is more illusive and possibly escapes a clear-cut answer. It has to do with the regulation, or to put it more broadly – with the governance, of the so emerged world of cyber-trade. Who, if anyone, is in charge of it? Does jurisdiction matter and if yes, how does it matter? And then also and more fundamentally, is this cyber-trade, as an extreme and sweeping expression of globalization, something that we should cherish and foster, or rather restrain in order to preserve non-economic and possibly more critical interests, such as national security, freedom of speech, and privacy – both in the online and in the offline spaces?

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Book Symposium: Comments on Anupam Chander’s The Electronic Silk Road

by Michael Birnhack

[Michael Birnhack is a Professor of Law at Tel Aviv University]

Anupam Chander’s new book, The Electronic Silk Road is an admirable scholarly achievement. Chander draws our—the global community of cyberspace users—attention to the increasing globalization of information-based services. He discusses the pros and cons of what he calls cybertrade or Trade 2.0, or more specifically, net-work, with much clarity, drawing on a wide array of examples, ranging from North to South. The book provides a rich description and timely observations, as well as a sound and coherent set of principles to address the new challenges. The book is a highly important contribution to the discussion about international trade, globalization studies, and to the on-going debate about the role of the law in a dynamic technological setting. In fact, Chander paves a new path in these discourses.

The trigger is the observation that alongside global trade of products, we increasingly experience net-work, which is (p. 2) “information services delivered remotely through electronic communications systems.” Importantly, these services are provided in both directions of the North-South global division. Net-work raises a regulatory challenge: which law should govern? Chander examines various options—should it be the law of the country that exports the services or the law of the importing country? His judgment favors the latter: “importing of services should not require us to import law as well” (p. 6). In other words, he would require global service providers to conform to the local law at the country of destination. This is the principle of glocalization, as applied to cybertrade, which he elaborates in Chapter 8. Glocalization’s role is to curtail the race to a deregulated bottom: under a legal regime that allows global service providers to apply their own law, i.e., the law of origin, they are likely to choose and operate from the most convenient regime, to their benefit, at the expense of the global consumers. Glocalization does not allow this race. Importantly, Chander insists that glocalization should be consistent with international norms and is supplemented by harmonization, where possible.

Glocalization is the meeting point of the global and the local. (more…)

Book Symposium: The Electronic Silk Road by Anupam Chander

by An Hertogen

This week, we are pleased to host a symposium on The Electronic Silk Road (Yale University Press) by Anupam Chander (UC Davis). The publisher’s description is:

On the ancient Silk Road, treasure-laden caravans made their arduous way through deserts and mountain passes, establishing trade between Asia and the civilizations of Europe and the Mediterranean. Today’s electronic Silk Roads ferry information across continents, enabling individuals and corporations anywhere to provide or receive services without obtaining a visa. But the legal infrastructure for such trade is yet rudimentary and uncertain. If an event in cyberspace occurs at once everywhere and nowhere, what law applies? How can consumers be protected when engaging with companies across the world? In this accessible book, cyber-law expert Anupam Chander provides the first thorough discussion of the law that relates to global Internet commerce. Addressing up-to-the-minute examples, such as Google’s struggles with China, the Pirate Bay’s skirmishes with Hollywood, and the outsourcing of services to India, the author insightfully analyzes the difficulties of regulating Internet trade. Chander then lays out a framework for future policies, showing how countries can dismantle barriers while still protecting consumer interests.

Commentators will be Michael Birnhack (Tel Aviv University), Paul Stephan (Virginia), Molly Land (UConn), Mira Burri (World Trade Institute), Joost Pauwelyn (Graduate Institute) and Jake Colvin (National Foreign Trade Council), and hopefully also you as our readers!

 

Legally Distinct Corporate Entities and Agency Theory in Bauman v. Daimler AG and Kiobel

by Kenneth Anderson

Guest commentary here at OJ by Adam N. Steinman (Seton Hall) on the Supreme Court’s oral argument in Daimler AG v. Bauman, along with earlier comments on the case by John Bellinger at Lawfare, have been helpful to me – no expert in civil procedure, certainly – in understanding issues of jurisdiction in Daimler, Kiobel, and other such cases.  As Professor Steinman notes, although Daimler is an ATS case, the question for SCOTUS argument is much broader than merely the ATS statute alone.  The Court’s question runs to the kinds of contacts necessary to sustain jurisdiction not just across borders, but across legally distinct (though, through share ownership, economically interlinked) corporate entities that make up the contemporary multinational enterprise:

“[W]hether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant in the forum State.”

This is a different question from that presented in Kiobel, which addresses so-called “foreign-cubed” ATS cases. It is instead to ask when it is proper for a US court to find jurisdiction over a foreign corporate entity on the basis of of a US corporate subsidiary.  Chief Justice Roberts flagged the importance of this further question at the very end of his Kiobel opinion, which relied upon the presumption against extraterritoriality; for something to “touch and concern” the United States, he said, sufficient to satisfy jurisdictional requirements under the ATS, contacts would have to be more than mere corporate presence.  Corporations are often

present in many countries, and it would reach too far to say that mere corporate presence suffices … a statute more specific than the ATS would be required.

Daimler offers a case premised on this issue.  What contacts, activities, and relationships across legally distinct corporate entities suffice?  What is merely “mere” and doesn’t? The Ninth Circuit’s ruling in favor of jurisdiction over Daimler AG (a foreign corporation – not its US, Delaware-chartered corporate subsidiary) relied upon an agency theory that had the effect, with respect to jurisdiction at least, of disregarding the separation of distinct corporate legal entities in favor of treating the multinational enterprise as a unitary enterprise.  The agency theory permitted the Ninth Circuit to find, in turn, “general jurisdiction” over Daimler AG.

Professor Steinman gives a much more nuanced account of this, but at a crude level, it’s a two-step process using agency theory to disregard the legal walls between corporate entities, and then a “general jurisdiction” assertion over the whole enterprise.  This means, however, that if the Court is inclined (as observers widely think it is) to rule for Daimler, it has a variety of ways and places where it could fault the Ninth Circuit’s steps to general jurisdiction, some broader than others.

In an essay on Kiobel for the most recent Cato Supreme Court Review, I remarked that it might turn out the real work of the Chief Justice’s Kiobel opinion might be done, less by the presumption against extraterritoriality, than by the answer to final, dangling question: how much “corporate presence” is enough?

In earlier days, ATS plaintiffs didn’t see themselves having to worry about questions contacts with the forum, jurisdiction over persons or the territorial locus of activities.  Jurisdiction was satisfied by having (only) a foreign plaintiff and a violation of the law of nations or a treaty of the United States. Sosa v. Alvarez-Machain put some (delphic) limits on the nature of the “law of nations” violations that had to be at issue, but those were in terms of subject matter, not where the alleged violations took place or by what kind of a defendant. Kiobel made territory, contacts, presence, nationality of defendants an issue running beyond beyond Sosa‘s subject matter constraints.  I added in my Cato essay, comparing Kiobel to Daimler:

[T]he questions [in Daimler] are not the same as an acknowledged “foreign-cubed” case [Kiobel] because at issue is whether and what contact are sufficient to establish perosnal jurisdiction.  Bauman [v. Daimler AG] is really an attempt by the plaintiffs to turn a foreign-cubed case into one by which agency theory provides a path to finding personal jurisdiction – and thus is no longer entirely “foreign” or premised purely on “universal” considerations.

Analysis and discussion of these ATS cases has mostly been in terms of cross-border jurisdiction. I’m pretty sure corporation law scholars have not taken note; I teach both Business Associations and International Business Transactions and don’t see stirrings among scholars of business organizations.  It’s tangential to corporate law, at one level, of course. Still, just under the surface of the jurisdiction issues is a question about the robustness of corporate form. (Note: Since posting this, I’ve been reading more extensively through the amicus briefs – the corporate questions were thoroughly discussed there, and they do show up throughout the oral argument; I’ve added one quotation from Justice Breyer in the oral argument, below.)

How much legal separation (that is, legal insulation) does legally distinct corporate existence confer, whether for purposes of jurisdiction or liability? Seen from within corporation law doctrines, the question is one of piercing the corporate veil, at least to get at other corporations that have links to each other through share ownership, even if not to get to ultimate shareholder-investors. The opening questions from Justice Scalia to the Daimler AG counsel ask, after all, about the legal effects of the “corporate form” (not corporate forum, as the initial oral argument transcript puts it). Late in the argument, Justice Breyer says to counsel to Bauman (the Argentine plaintiffs in the underlying ATS suit):

You’re seeing it through the lens of jurisdiction. I’m not. I’m seeing it through the lens of corporate law. Five shareholders get together from outside California and they set up a corporation in California. Why? To insulate themselves from liability, particularly lawsuits. Now, instead of those five shareholders, everything is the same, but now it’s a German corporation and suddenly, they can’t insulate themselves from the lawsuits in California. I think it unlikely that California would have such a corporate law, whether it goes by the name of jurisdiction or some other name. But that’s a State law question. So what am I supposed to do?

As I remarked in my Kiobel essay, Daimler AG is an attempt by plaintiffs to

sidestep the formal doctrine of legal separation of corporate entities; it asserts a view that multinational corporate enterprises are to be treated as essentially one economic entity.  This is, indeed, a plausible view of their globally unitary economic substance, but by arguing for economic substance over legal form, it renders impossible any real legal principle for why any particular national court should or should not hear a case.

Not to mention (as I forgot to do in that essay) that this agency theory would seem to be equally fatal to any legal form over economic substance basis for respecting corporate forms in US domestic settings as well – and that does not seem likely to be a result embraced by US courts any time soon. Justice Sotomayor asks why this case shouldn’t be settled on the economic substance over legal form argument of tax cases dealing with attribution of income; the response – correct, in my view – is that tax cases have consistently been viewed very differently from personal jurisdiction cases.  But the oral argument in this case leaves me wondering whether the next rounds of cases in the ATS and cross-border jurisdiction areas might be less about jurisdiction as such, and more about the strength of the walls that separate corporate entities across borders – at least as an essential underlying predicate to the jurisdictional issues as such.  How much will the corporate form be respected in establishing jurisdiction in cross border cases?

The broad agency theory embraced by the Ninth Circuit in Daimler will be swept away – I can’t imagine that it won’t – but there can much more nuanced approaches to it. The federalism issues of Daimler are complicated, certainly, and might mix up easy predictions about how justices will view the issues, certainly; they touch not just federal jurisdiction issues but also questions about state corporation law (including state-to-state issues, given that the US subsidiary is incorporated in Delaware).

Though I happen to think that there might be circumstances in which corporate form should not necessarily be treated the same in domestic situations as cross-border ones, I’m think the Court should not shift the understanding of the corporate form or increase – in the context of global investment and business activities – uncertainties surrounding its legal protections.  Certainly, judging by the amicus briefs, the United States’ trading partners abroad do not want to see increases in uncertainty over the separation of entities, whether in jurisdiction or liability.  On whatever ground the Court rules, however, broad or narrow, I’m pretty sure John Bellinger is right to say that the Court would not have accepted the case unless …

it plans to reverse the Ninth Circuit.  Conservative justices are loathe to miss an opportunity to try to curb the Ninth Circuit’s consistent efforts to be a world court, and the more liberal justices may have wanted to demonstrate (as Justice Breyer argued in his concurrence in Kiobel) that the extraterritorial reach of the Alien Tort Statute can be limited by other jurisdictional restrictions.

Book Symposium Investment Law: “Investment Lawyers are from Mars, Human Rights Lawyers are from Venus” – Comments on Hirsch

by Andreas Ziegler

[Andreas Ziegler is Professor at the University of Lausanne and Counsel at Blum & Grob Attorneys-at-law in Zurich.]

The reference to John Gray’s bestselling “Men Are from Mars, Women Are from Venus” which states that most of common relationship problems between men and women are a result of fundamental psychological differences between the genders certainly oversimplifies Moshe Hirsch’s argument in his Chapter. And yet a recurring idea in his contribution is that human rights lawyers refer differently to human rights treaties than investment lawyers because of their socialization. What he describes as the sociological perspective can be summed as the explanation of these different attitudes by the different career paths of those involved in investment cases and those involved in human rights cases. He holds “[w]hile most human rights lawyers work in legal divisions of NGOs of academia, foreign investment lawyers (and arbitrators) are predominantly senior lawyers/practitioners, legal scholars of former judges affiliated with major international firms.” (p. 90 in fine).

This is not the only argument in his contribution but I would like to focus on it as I find it particularly intriguing and worthwhile to be developed in more detail. There is certainly some truth in this statement. When it comes to the application of investment treaties we are traditionally confronted with lawyers who take a certain interest in the global economy and especially the role of investors (normally multinational enterprises). These were for a long time mostly civil servants negotiating such treaties and (national) business associations interested in the conclusion of such treaties with specific partner countries. More recently when these treaties (or chapters thereof – most prominently Chapter 11 NAFTA) were discovered for their practical use by practicing lawyers we got used to their arguments being heard by investment tribunals.

When it comes, however, to the arbitrators one must say that originally and still to a large extent today we see small group of specialists in international commercial arbitration being appointed to the respective arbitration tribunals. But there is an increasing number of arbitrators being appointed who are not specialized in international commercial law but come from public international law – not only international economic law. Some may remember the very early appointment of René-Jean Dupuy as sole arbitrator in Texaco Overseas Petroleum Company and California Asiatic Oil Company v. The Government of the Libyan Arab Republic (1977). It is certainly still true that it is more often the State appointing a specialist in public international law than the investor involved in a case. This is not surprising as the investor is focusing on his individual commercial interests and the State often invokes some public policy concern or constraint for his action. Also commercial law firms actively search for appointment by multinational firms and have traditional links to commercial lawyers they have worked with in the past. Yet, one can no longer claim that there would not be an increasing number of arbitrators appointed who do not have a commercial arbitration background. Among the academics being appointed there is an increasing number of academics who have a broader view of the applicable law and are open to consider the relevance of human rights treaties or other norms of public international law that should be taken into account when settling a dispute. This is also true for the other participants in the proceedings where Parties have normally the possibility to involve experts from other fields and NGOs are increasingly making contributions – be it officially in amicus curiae briefs or using the public domain. The same is obviously true for academia where non-investment specialists have only recently discovered the relevance of investor-State arbitral awards but now contribute considerably to the debate on how investment treaties should be interpreted- and more importantly negotiated in the future. (see my forthcoming volume “Towards Better BITs”)

A particularly interesting situation results from the case law of tribunals when their character as a human rights or an investment tribunal is not so clear. (more…)