Archive of posts for category

The Media Spotlight on Investor-State Dispute Settlement Just Got a Lot Brighter

by Julian Ku

Buzzfeed’s Chris Hamby is out today with the first installment of a promised four-part investigative report into the system of investor-state dispute settlement (ISDS).  Like all such reports, it needs a spectacular headline and summary to draw clicks, and this one’s a doozy:

The Court That Rules the World

A parallel legal universe, open only to corporations and largely invisible to everyone else, helps executives convicted of crimes escape punishment.

The article itself is much more fair and thorough than this ridiculous headline teaser suggests.  It contains lots of original reporting on three ISDS cases involving Egypt, El Salvador, and Indonesia where Hamby says actual or threatened ISDS actions allowed corporate executives to escape criminal punishment.

I have no reason to doubt the accuracy of Hamby’s reporting on these cases. But I do have two initial somewhat critical reactions:

  • ISDS does give foreign investors leverage with host nations like Egypt or El Salvador that they wouldn’t otherwise have.  But I think Hamby overstates the amount of leverage a real or threatened ISDS claim creates.  Foreign governments don’t immediately comply with all ISDS awards and collecting judgments against foreign sovereigns, even weak ones like Egypt or El Salvador, is no easy task given those states’ sovereign immunity legal defenses and the difficulty of seizing state-owned assets.  Moreover, research shows that ISDS shows that states win more often than investors do, or they at least prevail as often as investors do. (See Footnote 3 to this letter defending ISDS as well as this EU Commission report).  ISDS may have allowed some foreign investors to unjustly avoid liability for their actions, but it is hard to know (and Hamby’s article cannot prove) that such cases represent a majority, or even a meaningful percentage, of overall ISDS actions.
  •  I don’t have a problem with Hamby reporting on these cases where it seems ISDS has been abused.  But I think it is important to keep the larger context of ISDS in mind.  What would be the impact of not having ISDS at all?  Would it make cross-border investment less common?  A lot less common?  Would the elimination of ISDS result in more corruption as foreign investors feel a need to pay protection money to host countries rather than resort to legal means?  Would the elimination of ISDS result in simply more cross-border investment among “rich” countries with well-developed domestic legal systems such as the US and Europe to the exclusion of “poor” countries with developing legal systems?  In other words, ISDS may be bad in many ways, and much abused (although I doubt the abuse is as common as Hamby intimates), but would eliminating ISDS be worse?

I am not an uncritical cheerleader for ISDS. I am doubtful, for instance, that ISDS adds much to the (now pretty much dead) proposed Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US.  And I have questioned the constitutionality under US law of the ICSID Convention’s requirement of automatic enforcement of ISDS awards.   But I do feel ISDS critics should eventually have to answer the question: If not ISDS, then what? And will that non-ISDS future be better or worse? Hopefully, one of Hamby’s remaining three parts will address this important policy issue.

I Sing of MAARS and a Robot

by Chris Borgen

Defense One points to a news story in the Baghdad Post that the Iraqi Security Forces may be preparing to deploy a ground-combat robot:

Loosely dubbed Alrobot — Arabic for robot — it has four cameras, an automatic machine gun, and a launcher for Russian-made Katyusha rockets, and can be operated by laptop and radio link from a kilometer away, the [Baghdad Post] story says.

One point is important to emphasize, the Alrobot is a remotely-controlled four-wheeled drone, it is not an autonomous weapon. By contrast, an autonomous weapon would be, in the words of a recent article from the Institute of Electrical and Electronics Engineers, “capable of selecting and engaging targets without human intervention.”

However, while the Alrobot would not be autonomous, Defense One also notes that it will also not be the first remotely-controlled battlefield weapon deployed in Iraq:

Back in 2007, the U.S. Army deployed three armed ground robots called the Special Weapons Observation Reconnaissance Detection System, or SWORDS, from weapons maker Foster-Miller (now owned by Qinetiq). SWORDS basically consisted of a Foster-Miller TALON robot armed with a machine gun.

However, the SWORDS unmanned ground vehicles (UGV’s) were never used on patrol. A 2008 Wired article (to which Defense One linked) explained in an addendum:

Senior Army leadership, however, was not comfortable with sending them out to do combat missions due to safety reasons, and they are now placed in fixed positions, said Robert Quinn, vice president of Talon operations at Foster-Miller…

It seems to be a “chicken or the egg” situation for the Army, he said. The tactics, techniques and procedures for using armed ground robots have not been addressed.

But until there is an adequate number of SWORDS to train with, these issues can’t be worked out, he said.

.A successor weapons system, the Modular Advanced Armed Robotic System (MAARS) is currently being developed by QinetiQ. Like its predecessor, MAARS would  not be an autonomous weapon, but a remotely-controlled battlefield robot with humans making the tactical decisions. Consequently, the legal issues here would be less like the many concerns stemming from using artificial intelligence to make targeting and live-fire decisions, but rather would be similar to the legal issues arising from the use of armed unmanned aerial vehicles (UAV’s). Possible questions would include whether the use of the cameras and other sensors on the UGV would allow its operator to adequately discriminate between combatants and noncombatants. Does inserting an remotely-controlled armed robot make one more likely to use force? Under what situations would using such a system be disproportionate?

This may depend, in part, on how such systems are deployed. There could be different legal implications in using a UGV to, for example, “stand post” to guard the perimeter of a platoon that is out on patrol in a remote mountainous region as opposed to using a UGV in an urban combat situation where there are many civilians in close-quarters. The U.S. Marine Corps, for example, is considering when and how the use of weapons like MAARS would be appropriate.

For another recent post on robots and regulations, see my post from earlier this summer.

Senior Teaching Fellow Positions at SOAS

by Kevin Jon Heller

We are looking for two Senior Teaching Fellows. Here is the advertisement:

Salary: £34,336 – £40,448 per annum pro rata inclusive of London Allowance

Fixed term, part time for two years from September 2016

SOAS, University of London is the world’s leading institution for the study of Asia, Africa and the Near and Middle East, offering programmes in arts, humanities, languages, law and social sciences. Inaugurated in June 1916, SOAS has had an international reach since the arrival of its first students in February 1917 and is celebrating its Centenary in this year. As an institution we combine language scholarship, disciplinary expertise and regional focus, and have the largest concentration in Europe of academic staff concerned with these specialisms.

The School of Law invites applications for two year fixed term Senior Teaching Fellow positions available from September 2016.  The vacancies are designed on a 0.5 FTE part-time teaching basis to support postdoctoral individuals who might be seeking to develop an academic career in conjunction with their personal research interests.

You will have academic expertise in an area of the law that is consistent with the SOAS mandate as a specialist institution in the study of Asia, Africa and the Near and Middle East. Ideally, you will also have a PhD in Law.  You will be expected to teach to a high standard undergraduate and postgraduate students in two or more of the following areas of law: Contracts, Property, EU, Human Rights Law and Law and Society in Asia and Africa. You will be expected to engage in teaching-related administration, supervision of Masters dissertations, pastoral care, and administration.

Prospective candidates seeking further information about SOAS and the Department may contact the Head of the School of Law, Professor Carol Tan (ct9 [at] soas [dot] ac [dot] uk).

These are excellent positions. Applications are due August 10. Full information here.

China’s Vice-Minister for Foreign Affairs Casually Slanders the South China Sea Arbitral Tribunal

by Julian Ku

I have been trying to move on from writing about the blockbuster UN Convention on the Law of the Sea arbitral award on the South China Sea.  As our readers know, I have written way too much on this topic lately.  But the Chinese government’s outrageous statements criticizing the award deserve one last post from me before I head out for a South China Sea-free vacation this summer.

In particular, I wanted to turn our readers’ focus to statements such as those made by China’s Vice-Minister for Foreign Affairs, Liu Zhenmin, shortly after the award was released.  In his remarks denigrating the arbitral tribunal, Liu implied that the arbitrators may have been bribed to adopt the views of the Philippines in the award.  Below is an excerpt of a transcript of his remarks:

Besides, who supported the Arbitral Tribunal? The arbitrators are paid by certain parties, but who? Maybe by the Philippines or other countries. This system is completely different from the ICJ or the ITLOS.

Judges of the ICJ or the ITLOS receive salaries from the UN for the sake of independence and impartiality. But these five judges of the Arbitral Tribunal are doing it for a profit, and their payments come from the Philippines and probably others, too. We are unsure about the details but they do provide paid services.

These comments are outrageous on so many levels.   Liu knows, or should know, that the arbitrators were paid by the government of the Philippines.  The tribunal announced publicly in its Rules of Procedure Article 31-33 that it was exercising its treaty powers under Article 7 of Annex VII to UNCLOS to require payment from both parties. But Liu also knows that the only reason the arbitrators received all of their compensation from the Phillippines government is because China refused to participate and refused to pay its share. If China had actually showed up, it would have been obligated under Article 7 of UNCLOS Annex VII to pay half of the fees.  There is no evidence, and Liu cites none, that any government other than the Philippines paid the arbitrators.  Liu also conveniently fails to mention his own government’s failure to pay its fair share.

Such payments are almost always made in advance of the award being issued, or even before the proceedings begin.  In other words, the payments could not influence the award’s contents because the Philippines did not know the content of the award before they made their payments.

This manner of compensating arbitrators is so standard and unremarkable that China’s own leading commercial arbitration organization, CIETAC, allows in Rule III.C.1 for one party to pay fees for the entire arbitration even if the other party does not show up and refuses to pay its own share.   This is essentially the situation that the Philippines found itself in.  It could continue to demand that the Tribunal seek money from China for its share of the expenses, or it could pay up. It chose to pay China’s share as well, and (as a reward) is now being lambasted by China for doing so.

Vice-Minister Liu is not a party hack who doesn’t know anything about arbitration.  He is, in fact, on the roster of arbitrators available for appointment by the Permanent Court of Arbitration and he is a arbitrator of the aforementioned CIETAC.  In other words, Liu knows exactly how arbitration works, and he is feigning ignorance in order to defame the character of the UNCLOS arbitrators.

In the same press conference, Liu also claimed that UNCLOS arbitration is some sort of aberration that has never happened before, unlike the more established ICJ or ITLOS systems.  On this point, Liu is flatly incorrect. In fact, there have already been seven UNCLOS arbitrations convened under the exact same rules that were applied to the Philippines/China arbitration.  In fact, as Liu well knows, the Chinese government freely chose arbitration instead of the ICJ or ITLOS for any dispute settlement under UNCLOS.

When acceding to UNCLOS, China could have chosen under Article 287 to specify the ICJ or ITLOS as its preferred forum for dispute settlement.  It did not do so, thereby forcing any dispute involving China to be sent to UNCLOS arbitration pursuant to Article 287(5).  In other words, the Chinese government made a conscious choice to avoid the ICJ and ITLOS for disputes arising under UNCLOS.  It is astounding for one of China’s leading diplomats to denigrate the integrity of a system of dispute settlement that China freely chose and in fact demanded.

Liu’s borderline defamatory remarks matter even if China and the Philippines eventually work out a settlement of their dispute.  Liu has knowingly denigrated the integrity of five arbitrators – three of whom continue to sit on the International Tribunal for the Law of the Sea – using facts he almost certainly knows are false. As the esteemed Professor Jerome Cohen of NYU has noted, in many jurisdictions, this could be enough to constitute defamation or slander.  Since Liu would have immunity for his remarks, perhaps the softer sanctions could be imposed, such as demanding his resignation from the PCA’s roster of arbitrators or perhaps his removal from the position as an Associate Member of UNIDROIT.  At the very least, this sort of casual character assassination should not be forgotten nor forgiven.

Two Postdocs at Melbourne Law School with Adrienne Stone

by Kevin Jon Heller

Are you a new PhD or about to finish your PhD? Do you focus on comparative constitutional law? If so, you will definitely want to apply for one of the two postdocs at Melbourne Law School that Adrienne Stone, now a Laureate Fellow, is offering:

About the role

Professor Adrienne Stone’s Kathleen Fitzpatrick ARC Laureate Fellowship Program aims to address a problem for liberal democracies: the need to reconcile the tensions between the pursuit of diversity and the promotion of social cohesion. The critical problem is becoming increasingly urgent as nations grapple with the challenges of highly diverse multi-cultural societies. The team working on the Fellowship will draw on the experiences of constitutionalism throughout the world to investigate how Constitutions, in their design and in their application, can serve as a unifying force while still nurturing the diversity appropriate for a complex, modern society.

About you

Applicants must have graduated or have met the requirements to graduate with a PhD in Law, or a related field by 1 December 2016. Applicants must provide evidence of the award of their PhD, including date of award. Applicants must be able to commence employment between 1 December 2016 and no later than 1 December 2017.

Melbourne is a great place to live and work — and there is quite simply no one better to work with than Adrienne. She is not only one of the world’s leading comparative constitutional law scholars, she is an extraordinarily wonderful person. She was one of my favourite colleagues at Melbourne, and she remains one of my dearest friends.

Deadline to apply is August 12.

Sarah Kay on What Brexit Means to Her

by Kevin Jon Heller

My brilliant friend Sarah Kay, a prominent human-rights lawyer in the UK and Europe born in Dublin and raised in Belfast, posted the following statement on Facebook about what Brexit means to her. We’ve had some legal and political analysis of Brexit on the blog, but Brexit is also, and perhaps even fundamentally, personal — if it happens, it will have a lasting effect on people’s lives and, as Sarah explains, sense of identity. My thanks to Sarah for letting me re-post her statement.

I am a Cold War kid. I still refer to anything east of Bremen as “the east”; I still have to blink rapidly when the u-Bahn in Berlin stops at friedrichstrasse; I have a vivid memory of sirens howling at noon on an overcast day of primary school for an exercise in surviving a nuclear bomb attack.

I am a Troubles kid; anything east of Belfast Central is foreign to me. Taking the train from Dublin, I inform friends of my arrival by letting them know I have crossed the Border. My phones have all capitalised the fault line, and so does my brain. When exiting Europa station, I always look up and am surprised for a second to see the hotel still standing.

I am a Yugoslavia kid. I always need a map to remember the exact frontier between Bosnia and Serbia; every deployment of blue helmets dries my mouth, as if helplessness was rooted in that very despair. I have never used the phrase “brick and mortar” because mortar has a much different meaning for me.

In a way, I am also a WW2 kid. My grandfather was an Operation Dragoon veteran; I keep a photo of my grandmother with my infant uncle in her arms, after she birthed and nursed him on her own in a military base in Tunisia. My mother told stories of food ration tickets in the mid-1960s. I have kept my grandfather’s uniform and ceremonial sword.

I was too young to vote for the Maastricht referendum; but I came along to the polling booths, and was allowed to place the “yes” bulletin in the envelope, and then ceremonially place it in the box. Exiting the polling place, I was handed a tiny EU flag. I ran around with it all day, and waived it as I watch the results be announced.

I was in law school during the switch to the common currency. I remember my first 2 euro coin, looking at which flag was on the flip side, wondering who used it first, which country it had been forged in. I still do it with all my Euro change. I remember being small in Italy and paying for bread in thousands of lira. The euro changed that; I remember I loved that wherever I went, I could use it.

I also remember Ireland’s No to Lisbon in 2009. I remember wondering why, where my country had it so wrong. I read about Luxembourg, I read about Frankfurt, I read about austerity, I read about Ireland’s lone highway and how we were “the third world of Europe”. I remember reading about opt-outs; I remember thinking that our economically weak but politically strong identity had to fit in somewhere….

Symposium on Mann, Humanity at Sea

by Kevin Jon Heller

I’m delighted to call readers attention to a symposium next week on my friend Itamar Mann’s new book, Humanity at Sea: Maritime Migration and the Foundations of International Law, which was just published by Cambridge University Press. Here is the 411:

This interdisciplinary study engages law, history, and political theory in a first attempt to crystallize the lessons the global ‘refugee crisis’ can teach us about the nature of international law. It connects the dots between the actions of Jewish migrants to Palestine after WWII, Vietnamese ‘boatpeople’, Haitian refugees seeking to reach Florida, Middle Eastern migrants and refugees bound to Australia, and Syrian refugees currently crossing the Mediterranean, and then legal responses by states and international organizations to these movements. Through its account of maritime migration, the book proposes a theory of human rights modelled around an encounter between individuals in which one of the parties is at great risk. It weaves together primary sources, insights from the work of twentieth-century thinkers such as Hannah Arendt and Emmanuel Levinas, and other legal materials to form a rich account of an issue of increasing global concern.

Author: Dr Itamar Mann (Senior Lecturer, University of Haifa, Faculty of Law)

Chair: Professor Panos Koutrakos (Professor of Eurpean Union Law, Jean Monnet Professor of European Law, City Law School, City University London)

Discussants: Professor Guy S. Goodwin-Gill (Emeritus Fellow, All Souls College, Emeritus Professor of International Refugee Law, University of Oxford); Dr Hagar Kotef (Senior Lecturer of Political Theory and Comparative Politics, SOAS, University of London); Dr Ioannis Kalpouzos (Lecturer in Law, City Law School, City University London).

The symposium is next Wednesday, the 27th, from 6:00-7:30 at City University. Full information here. I will be out of town, unfortunately, but it should be a great event. Attend!

Assessing the Fallout from the South China Sea Award

by Julian Ku

In addition to my posts here (see below), I have several  pieces over the last week discussing different aspects of the South China Sea award up at various outlets across the web universe (I know, I know, I need to stop writing about this topic, but indulge me just a little longer).  To briefly recap my various takes, here is a quick summary:

As a legal matter, China lost every substantive issue before the South China Sea arbitral tribunal.  I argued here at Lawfare that the award “dramatically widens” the scope of future more aggressive U.S. freedom of navigation operations by, for instance, eliminating any legal basis for a Chinese territorial sea around its artificial island on Mischief Reef.  Since that reef is also within the Philippines’ exclusive economic zone, the U.S. Navy has (as a legal matter) carte blanche to sail or fly within 500 meters of what is now an artificial island in clear violation of Philippines’ rights under UNCLOS.

On the other hand, I warned here in The National Interest that the arbitral award does not require China to leave the South China Sea or the Spratlys in particular.  The award leaves open the legal possibility for China to claim a series of 12 nautical mile territorial seas around various rocks in the island group. This means that even in China complied with the award, it would have the legal right to maintain a robust presence there.

Taking a step back, I also blamed China’s government (in this piece for Quartz) for exacerbating the negative impact of the award by refusing the participate in the proceedings and then starting a global media war against it.  This drew much more attention to the award than would have otherwise been the case.

Finally, over at Foreign Policy, I offered a very tough critique of the role of Chinese international law scholars in bolstering the Chinese government’s claim that it can legally ignore the arbitration.  It is not so much that Chinese international legal scholars were wrong, but that their unanimity weakens their long-term credibility on the global stage.  I contrast the unanimity within China’s academic community with the much-divided U.S. academic reaction to the U.S. government’s refusal to comply with the ICJ’s Nicaragua judgment in 1986.

For any Chinese-language readers out there, I have been engaging in a debate (thanks to the fabulous translation work of my student Weitao Chen) at the Financial Times (Chinese edition) with Professor Liu Haiyang on China’s obligation under UNCLOS Article 288(4) to accept the arbitral tribunal’s determination of its own jurisdiction. Here was my initial essay, here is Prof. Liu’s response, and here is my rebuttal.  Annoyingly, it appears my initial essay has been censored in China, which must mean I am making good arguments!

I am not done with discussing this award, but I do need to get a life at some point. I am also trying to incorporate all of this into a larger project on China’s overall relationship with international law.  Certainly, this whole dispute will be a significant chapter in my book!

Call for Submissions: International Law Weekend New Scholars and Practitioners Panel

by Chris Borgen

The American Branch of the International Law Association has sent us the following call for submissions for an “Emerging Voices Panel” that they have added to this October’s International Law Weekend. (Not to be confused with Opinio Juris‘ Fourth Annual Emerging Voices Symposium, which will be starting later this month).

ILW is an excellent conference and I am sure this will be a great addition:

International Law Weekend 2016: International Law 5.0

Call for Proposals for Emerging Voices Panel


International Law Weekend 2016 (ILW 2016) calls on scholars and practitioners to address the accelerating nature of change in international law. From technological advances to environmental transformations, international lawyers are forced to confront emerging forces and new scenarios. Even settled principles of law are no longer settled. These tectonic shifts have been felt throughout the geography of international law. Legal professionals at every level – local, national, regional, and international – must change their practice to meet a changing world. Innovation will become necessary for survival.

Emerging Voices Submissions

ABILA invites the submission of abstracts from emerging scholars and practitioners in the field of international law.  We will select several abstracts for presentation at ILW 2016 as part of a panel of new professionals. The abstracts may be based upon ongoing work. While all submissions are welcome, preference will be given to papers not already published. Eligibility is restricted to applicants working in the field of international law for five years or less. Applicants should be ABILA members at the time of the conference.  (To join ABILA, please visit:

 Submission Guidelines

Applicants must submit: (1) a 500-700 word abstract of their paper; (2) a cover letter describing their professional development; and (3) a curriculum vitae. The submission deadline is July 31, 2016. Submissions should be sent to conferences [at] ilsa [dot] org with the subject line “Emerging Voices – ILW 2016.” Questions may also be submitted to: conferences [at] ilsa [dot] org.

Submissions will be competitively selected in a peer review process.  Applicants will be notified by August 31, 2016.

ILW 2016 is scheduled for October 27-29, 2016 in New York City and will be held at Fordham Law School. Accepted applicants will be invited to present their papers at the Emerging Voices panel, which will be chaired by a senior scholar or practitioner. Accepted applicants will be required to pay for their own travel and lodging. However, their registration fees for ILW 2016 will be waived.

Dear Taiwan: The PCA Ruling Does Not Threaten Your Control Over Taiping Island

by Julian Ku

Itu Aba Island, also known as Taiping Island, is one of many disputed islands in the South China Sea. The island is administered and occupied by the Republic of China, but other countries, including Vietnam, the Philippines and the People’s Republic of China, also claim sovereignty. The site for the naval frigate terminal will likely be the area of the existing harbor, which is notably the only section with shipping access to the island through the coral reef.Much to many observers’ surprise, the first country to take aggressive action in response to the UN Convention for the Law of the Sea tribunal’s award this week was Taiwan.  New Taiwanese President Tsai Ing-wen’s government issued a blistering statement stating that the arbitral award was unacceptable and that it has no “legally binding force on the ROC.” It noted that the tribunal ruled that Taiping Island and other Spratly land features were rocks rather than islands.   “This decision severely jeopardizes the legal status of the South China Sea Islands, over which the ROC exercises sovereignty, and their relevant maritime rights.”

More significantly, President Tsai moved up the departure date of an ROC naval ship that was scheduled to conduct a patrol in that region.  In a speech made before the departure of the ship, she announced that the frigate was being dispatched to display Taiwan’s resolve in defending its national interests.  She further warned that the arbitral award had “gravely harmed” Taiwan’s rights in the South China Sea.

Tsai’s remarks were disappointing for those looking for the new president to moderate Taiwan’s expansive South China Sea claims. In fact, her statement was usefully trumpeted by the Chinese government and media as a sign of cross-strait Chinese solidarity.

I have never understood the Taiwanese government’s obsession with maintaining its expansive claims in the South China Sea.  It is a waste of government resources to protect a fishing industry that doesn’t really deserve so much protection.  I am particularly surprised that the current Taiwan president is acting so aggressively to protect Taiping Island’s status as an “island” under UNCLOS entitled to an exclusive economic zone.  As far as I understand it, Taiwan has not actually tried to enforce an EEZ around Taiping Island, nor has it tried to exploit any hydrocarbons or minerals in the EEZ.  So as a practical matter, the award will not require the Taiwanese government to change its policy much at all.  There is no “grave harm” to Taiwan’s national interests here.  In fact, the award should have almost no meaningful practical effect on Taiwan at all.

So why the big fuss? It is possible that Tsai is using the South China Sea issue to build a little goodwill in China.  It is also possible that Tsai is feeling pressure from legislators in Taiwan who have been accusing her of failing to adequately protect Taiwan’s interests in the South China Sea.  One former legislature even accused her of planning to lease Taiping Island to the U.S.

All of this is a missed opportunity.  Tsai could have issued a statement saying that Taiwan “respects” the ruling even though Taiwan is not bound by it. She could have then said that Taiwan will act in conformity with the award.  This would have required Taiwan to do nothing new, give up nothing at all. It would have curried favor for Taiwan in the international community, a place it desperately wants to be part of and needs the support of. Being the only country (?) in the world that sides unequivocally with China on this award is not a good look for Taiwan.  One hopes the Tsai government will re-think its approach.

Will Today’s Blockbuster South China Sea Award Save or Destroy UNCLOS Dispute Settlement?

by Julian Ku

I have been mildly obsessed with the dispute between the Philippines and China for over three years now. It touches on so many areas of my research interest: international courts, China, and the UN Convention of the Law of the Sea. So I am almost sad that the dispute, at least for legal purposes, finally ended today with the arbitral tribunal’s sweeping award in favor of the Philippines.

Since the beginning of the arbitration process, I have wondered what the impact of China’s boycott would be on the future viability of the UNCLOS system of dispute settlement. For the first two years of the dispute, I was skeptical that China would suffer any meaningful damage from defying the UNCLOS arbitral system. Thus, I wondered if, combined with Russia’s almost cavalier defiance of an ITLOS proceeding involving Greenpeace, the end result in this process would be a toothless UNCLOS dispute settlement process of little value or significance. This was one of the reasons I sharply criticized the Philippines for adopting a fruitless “lawfare” strategy.

Time will tell, but early reviews point to me being wrong. China is much more vulnerable to “shamefare” than I had imagined. The evidence for China’s vulnerability lies, I think, in the extraordinary over-the-top global public relations campaign to denigrate and delegitimize the award before it was even issued. If China thought the award would have little impact, it would not have dragooned its diplomatic service, its state-run media, and even its civil society into a huge, sometimes nasty PR effort against the award.

Still, the game must run its course. The key is how other nations not named the Philippines or the U.S. react to the award. If most key nations, including China’s regional neighbors, follow the line set out by the U.S. and call upon China to comply with the award, then China’s isolation on this issue will be significant.   The G-7 is expected to follow this path, and it is possible that Vietnam, Malaysia, Singapore, and Indonesia will do so as well. If South Korea, Australia, and India can also be brought on board, then China will have suffered a diplomatic as well as a legal defeat. Why? Because any aggressive Chinese action to respond to the award, such as by militarizing its artificial islands or even building new ones, will be framed as a further violation of China’s international obligations. China will have its own mini-Crimea crisis, and it will be hard for it to gain legitimacy for its actions.

On the other hand, no matter how many government press releases denounce China, it is hard to imagine China ever complying with the award. It can’t, even if it wanted to, since it has locked itself into a rigid public position against the award in front of the world and its own people. So the arbitral award will go unenforced and unimplemented for the foreseeable future. No matter how you slice it, an unenforced award is not a sign of a strong and effective legal system. UNCLOS dispute settlement can be ignored, not without cost, but certainly it can be ignored.

On balance, however, the UNCLOS system seems to have been strengthened by today’s ruling. The U.S. and other key countries seem to have rallied in support of it, and the tribunal’s findings seem to carry a fair amount of credibility with most governments. Indeed, the U.S. now seems to endorse the UNCLOS dispute settlement system with more vigor than one might expect for a non-party. It seems that UNCLOS dispute settlement will survive in a post-Philippines v. China world after all.

The NY Times on Bitcoins and China

by Chris Borgen

William Gibson, repurposing a Gertrude Stein quip, said about cyberspace “there’s no there, there” capturing the ethos of the internet as a place beyond the physical world of borders and jurisdiction.  Bitcoin melded cryptography and networked processing to attempt to make a currency that was not based in or controlled by any state.

But the internet is based on servers and fiber-optic cable and telecom switching stations that are firmly rooted in the physical world.  The cloud is made out of metal and plastic and glass. And as for Bitcoin, there increasingly is a there, there. And “there” is China. (For a quick background on Bitcoin, see this video, which explains how Bitcoin builds a payment system that replaces trust and personal allegiance with “mathematical confidence” or  this article.)

The New York Times reports how Chinese companies have come to dominate the production of Bitcoins:

In its early conception, Bitcoin was to exist beyond the control of any single government or country. It would be based everywhere and nowhere.

Yet despite the talk of a borderless currency, a handful of Chinese companies have effectively assumed majority control of the Bitcoin network. They have done so through canny investments and vast farms of computer servers dispersed around the country. The American delegation flew to Beijing because that was where much of the Bitcoin power was concentrated…

…But China’s clout is raising worries about Bitcoin’s independence and decentralization, which was supposed to give the technology freedom from the sort of government crackdowns and interventions that are commonplace in the Chinese financial world.

“The concentration in a single jurisdiction does not bode well,” said Emin Gun Sirer, a professor at Cornell and a Bitcoin researcher. “We need to pay attention to these things if we want decentralization to be a meaningful thing.”

What follows is a story considering the possible factors that contributed to Bitcoin’s popularity in China (including attempts to avoid government financial regulators and the popularity of online gambling) which, in turn, incentivized large investments in Bitcoin businesses, leading to the situation where “over 70 percent of the transactions on the Bitcoin network were going through just four Chinese companies…”

And, through it all, there is the question as to whether these and other Chinese companies even want to exercise leadership over Bitcoin at all. There is an interesting question of the psychology of power. The frame of the NY Times story is a meeting that took place in China between US and Chinese corporate leaders. The Americans flew to China because, as the Times put it, “that was where much of the Bitcoin power was concentrated.” They tried to persuade Chinese leadership to make certain changes to Bitcoin but were unable to do so. They also expressed frustration at the reluctance of the Chinese companies to exercise leadership in the industry. But then consider this description by one of the Chinese CEO of the same meeting:

“It was almost like imperialistic Westerners coming to China and telling us what to do… There has been a history on this. The Chinese people have long memories.”

Same room; completely different views of the dynamics of the meeting.

So, before we deploy too much post-modern, post-Westphalian, post-everything analysis to cryptocurrencies like Bitcoin or to the internet more generally, perhaps we need to  give jurisdiction, territory, memory, and psychology a second look. There is a there, there.