VJIL Symposium: Stephan W. Schill Answers to Anthea Roberts and Jürgen Kurtz

[Stephan W. Schill is a Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law.]

This post is part of the Virginia Journal of International Law Symposium, Volume 52, Issues 1 and 2. Other posts in this series can be found in the related posts below.

I face the difficult task of responding, in limited space, to two very thoughtful and thought-provoking comments by Anthea Roberts and Jürgen Kurtz – many thanks to them for taking the time and trouble! Instead of an exhaustive answer, I want to clarify my concept of public law that arguably should inform our thinking about international investment law. This answers many points Anthea and Jürgen raise.

My concept of public law can be circumscribed as global public law. This merits clarification on several accounts. First, I view international investment law as a system of global public law. Despite numerous differences among bilateral investment treaties (BITs) and despite the one-off nature of arbitration, I see considerable convergence in investment law in light of common principles, an emerging jurisprudence constante, and a common doctrinal reconstruction. All in all, international investment law is one system because there is an epistemic community that treats it as such. This is also not thwarted by recent changes in investment treaty practice, such as that of the U.S. and elsewhere. Certainly, we see recalibration and rebalancing, but little fundamental contestation or complete remodeling. In my view, the network of BITs is not deeply heterogeneous, as Jürgen suggests, but based on sufficient commonalities. I see differences, but do not think they are formative for the functioning of the system.

Second, let me re-emphasize the importance of viewing investment law as global public law. Only sensitivity for how deeply investment law penetrates domestic public law unveils why the regime is so potent and controversial. Neither traditional public international law nor commercial arbitration can analyze this dimension, nor answer to concomitant legitimacy concerns as they embody a horizontal ordering paradigm where power is coordinated among equals. Only a public law approach can address how public authority should be exercised. Notwithstanding, my public law approach is not incompatible with public international law or commercial arbitration, but complementary in pointing to the specificities of investment arbitration that need more attention. It helps adjust the system, not kill it as other proponents of public law approaches to investment law demand.

Third, a global public law perspective rejects viewing investment law through a purely domestic public law lens (which would indeed kill international investment law). For me, states are embedded in an international community where controlling and legitimizing public authority is not limited to domestic public law. Instead, I support a cosmopolitan vision that encompasses public law at both the domestic and the international level, thus constituting one global public law space filled by both international treaties and investor-state contracts. I do not, by contrast, advocate a re-nationalization of international investment law, or prioritize domestic law over international law, as Jürgen claims. Instead, my integrated vision of comparative public law focuses on the core question of public law, that is how to restrict and legitimize the exercise of public authority, without making a principled difference between domestic and international law. The only reason why domestic comparative public law seems more prominent is that it is domestic law that primarily deals with the relations between public authority and private individuals. But international law is essential in a comparative public law exercise, for example when standards of review and the relation between investment tribunals and states are concerned. What we still need to develop, however, is a clearer understanding of the interaction between different levels so as to avoid the pick and choose Anthea fears.

Fourth, I confess to have great confidence in the potential of comparative public law. Certainly, I am not so naïve to think that all domestic and international public law systems converge in the outcome on specific issues. But, I am convinced that a functional approach to comparative public law that focuses on the strictures lying on the exercise of public authority more generally will find a sufficiently stable and broad common core of public law principles that can inform the application of international investment law. This common core centers on principles like the concept of the rule of law, legal certainty, balancing of private rights and public interests, etc. There are many differences in detail, certainly also in Australian law, but not with regards to the very principles in question. Even the recent recalibration of investment treaties confirms this. The 2004 U.S. Model BIT, for example, links fair and equitable treatment (FET) to denial of justice understood “in accordance with the principle of due process embodied in the principal legal systems of the world.” This presupposes that a common core of public law values exists.

Finally, my concept of global public law is universalistic. Thus, comparative public law cannot be Western-centered or limited to Western legal orders, as Anthea rightly cautions. Instead, my approach is based on a universal vision of public law values and suggests a broad comparative law basis that goes beyond Western systems. Also these systems, as I view them, reproduce core public law values, such as the concept of the rule of law, requirements of due process, reason-giving, etc. and are not quintessentially different from Western systems. This, in turn, does not mean, as Anthea wonders, that democratic states would enjoy special privileges, nor that non-democratic states should be prejudiced. Government actions everywhere should be subject to scrutiny in investment arbitration as the core danger that minorities, such as foreign investors, are prejudiced by those in power is a universal concern.