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Chevron and the Rise of Arbitral Power: A Comment by Muthucumaraswamy Sornarajah

[Muthucumaraswamy Sornarajah is the CJ Koh Professor of Law, National University of Singapore and a Visiting Professor, Centre for the Study of Human Rights, London School of Economics.] Michael Goldhaber’s well-argued piece on the extent of the powers that investment arbitration tribunals are arrogating to themselves is evidence of a general malaise that afflicts investment arbitration. The arbitrators have assumed powers far in excess of what states intended them to have when they made investment treaties and created a unilateral power in the investor to arbitrate disputes. Consistent with prevailing ideas generated by the Washington Consensus and its desire to bring about standards of global governance, arbitrators promoting their own self-interest went on a rampage of expansionist interpretation of treaties. Goldhaber highlights one of the most glaring instances of this neoliberal expansionism, the making of interim orders restraining a respondent state from enforcing judgments of their domestic courts made in cases involving third parties. This phenomenon is but an aspect of a project to build up a neoliberal regime of inflexible investment protection. In the aspect of this project that Goldhaber describes, there has been an assiduous effort made by leading members of the “college of international lawyers”, entrusted the task of being bulwarks against injustice, promoting sectional interests of investors to the detriment of other values such as the protection of human rights and the environment. The downsizing of the notion of denial of justice so that it could accommodate lesser standards enabling easy review of domestic judicial orders is a definite project that arbitrators and “highly qualified publicists” embarked upon. Arbitrators, whose legal competence is not tested or uniform, embarked on a course of review of domestic decisions. Golhaber describes these processes with competence. As he points out, while purporting not to act as appellate courts, this is precisely what the tribunals were doing.

Chevron and the Rise of Arbitral Power: A Comment by Anthea Roberts–Arbitral Power Over Domestic Courts or Arbitral Power Dependent on Domestic Courts?

[Anthea Roberts holds a joint appointment as a Professor of Law at Columbia Law School and a Senior Lecturer in Law at the London School of Economics and will be in residence at Columbia Law School from 2013-2015.] Michael Goldhaber has written an interesting and timely article charting the rise of international arbitrators exercising power over and with respect to domestic courts. He gives examples ranging from Chevron to Saipem to White Industries. This is an important and growing phenomenon that has not yet received adequate attention. I believe that the rise of arbitral power over domestic courts that Goldhaber describes is the first stage in what will ultimately become a longer and more contested saga about the respective powers of arbitral tribunals and domestic courts. That is because arbitral tribunals not only exercise power over domestic courts, but their own power is also dependent on domestic courts. The power of arbitral tribunals ultimately comes down to whether their decisions will be enforced by domestic courts. While Goldhaber charts the first stage in the battle between arbitral tribunals and domestic courts where arbitrators are in the position of authority, we are likely to witness a second stage when domestic courts are asked to pass judgment on whether arbitral tribunals have exceeded their jurisdiction or violated public policy by hearing these sorts of cases or ordering certain relief. Arbitral tribunals will sit in judgment of domestic courts and domestic courts will sit in judgment of arbitral tribunals. Neither reigns supreme. BG Group v Argentina represents an early example of this type of phenomenon. The tribunal in that case chose not to enforce the requirement in the treaty that the investor resort to the domestic courts for 18 months prior to bringing an arbitral claim. Many other tribunals adopted the same approach, often painting the issue as one of admissibility rather than jurisdiction or viewing domestic remedies as futile rendering resort to them unnecessary. But when the Court of Appeals for the District Court of Columbia was asked to enforce the resulting award, it refused to do so on the basis that the tribunal had exceeded its jurisdiction because Argentina had only consented to arbitration on certain conditions, one of which was not met.

Chevron and the Rise of Arbitral Power: A Comment 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]

Chevron and the Rise of Arbitral Power: An Introduction 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...