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The Right to Development and Archaic Dichotomies in UNCITRAL ISDS Reforms

Published on May 2, 2019        Author: 
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Editor’s Note:  This is the concluding post in this week’s series of several posts critically examining the UNCITRAL ISDS reform process, which held its latest Working Group III meetings in New York on April 2019.  On Monday we featured the introduction from UNCITRAL Academic Forum Chair Malcolm Langford and our Contributing Editor Anthea Roberts, who summarized key points of contention raised by States as to the narrower procedural reforms to ISDS as the mandate of UNCITRAL Working Group III.  Posts on Tuesday (see here and here) from our Contributing Editor Anthea Roberts and her co-author Taylor St. John addressed geopolitical and ideological issues that affect ISDS reforms. On Wednesday, we featured a response post on Costs, from Susan Franck, Academic Forum Member and author of the new 2019 book, Arbitration Costs: Myths and Realities in Investment Treaty Arbitration (OUP, 2019).  EJIL:Talk! Editor Diane Desierto concludes this series, with observations drawn from her own public work today in Geneva, where she is serving as Resource Expert on Institutional Compliance with the Right to Development at the 20th Intergovernmental Working Group Session on the Right to Development, organized by the United Nations Office of the High Commissioner for Human Rights.

It would not have escaped our scrutiny from this week’s excellent posts by Malcolm Langford, Anthea Roberts, Taylor St. John, and Susan Franck that the UNCITRAL ISDS Reform debates of States are taking place with an occluded (if not opaque) understanding of the supposed position(s) of “developing countries”, or indeed, what their respective needs for reform and flexibility in UNCITRAL ISDS reforms are, as each developing country undertakes its desired reform path.  As my colleagues rightly pointed out this week, one cannot approach “developing countries” with a monolithic understanding (or perceived understanding) of a regional, categorical, or group approach. The World Bank dropped the classification of “developing countries” in 2016, given the lack of agreement over the definition of this classification and the deep geographic, topographic, economic, and political diversity even within ‘developing country’ groupings themselves. It is thus entirely obsolete, in today’s international economic system, to even keep assuming that the G77 Non-Aligned Movement of the 1970s would have any degree of settled unanimity today among them as to their respective foreign investment interests, all the more so since there are more capital-exporting States within the “Global South” that are themselves heavily investing across and within the “Global South”.

On the one hand, some “developing countries” have a disproportionately outsized titanic impact on global investment, especially China, which now singularly dominates the writing of the future of the terms of global infrastructure investment through its Belt and Road Initiative (BRI). China’s leading role in global infrastructure investment was on full display at the 2nd Belt and Road Initiative International Forum in Beijing last week, attended by most world leaders, notwithstanding concerns about the new “colonization” seemingly emerging from BRI projects whose terms, as described recently in The Financial Times, are often bilaterally negotiated within an opaque “mish-mash” of   debt-based infrastructure projects affecting about 62% of the world’s population but which still remain non-transparent to all investment affected stakeholders. On the other hand, some ‘developing countries’, such as low-lying island States comprising around 37 States and around 50 million people, face raging existential issues from the climate change onslaught, and continue to face investment treaty claims as respondent host States (e.g. Mauritius has 3 pending, Cabo Verde has 1 pending, Dominican Republic has 6, Barbados has 1, Guyana has 1, Trinidad and Tobago among many others in this UNCTAD list), while the low-lying island States remain just as beholden to take an ISDS system still largely being written by other States contributing to the very phenomenon causing their impending extinction.  

We do not hear much about the economic, political, structural, resource, fiscal, and negotiating power inequalities and asymmetries between and among the “Global South” of “developing countries” in the UNCITRAL ISDS reform debates.  The focus has been on identifying what “developing countries” supposedly think or prefer, rather than taking each State – at whatever stage of development – as they are in evaluating the impacts of the actual distributional decisions they are making today in the ISDS reform process, and particularly whether these decisions are consistent with their commitments to the right to development (and the full range of human rights capabilities encompassed by this right).  Leaving it to States to do this kind of analysis through their respective investment treaty programs, in my view, does not solve any collective action problems arising from the globalization of our ISDS system. Neither does it significantly advance peoples’ right to development when we allocate ISDS reform into ‘procedural’ (for UNCITRAL) and ‘substantive’ (for States in their respective individual investment treaty programs), or characterize individualized State preferences for investment dispute decision-making in shorthand as ‘the West and the Rest’.  The rigor demanded of us in our responsibility to realize the right to development should be an occasion for pause in our use of, and reliance on, all these constructs and dichotomies.

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Observations on Costs: A Response and Implications for UNCITRAL and ISDS Reforms

Published on May 1, 2019        Author: 
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Editor’s Note:  This week, we will be featuring several posts critically examining the UNCITRAL ISDS reform process, which held its latest Working Group III meetings in New York on April 2019.  Monday’s introduction from our Contributing Editor Anthea Roberts and UNCITRAL Academic Forum Chair Malcolm Langford summarized key points of contention raised by States as to the narrower procedural reforms to ISDS as the mandate of UNCITRAL Working Group III.  In Tuesday morning’s post and Tuesday afternoon’s post, Contributing Editor Anthea Roberts and her co-author Taylor St. John address geopolitical and ideological issues that affect ISDS reforms. Today we feature a response post from Academic Forum Member Susan Franck, author of the new 2019 book, Arbitration Costs: Myths and Realities in Investment Treaty Arbitration (OUP, 2019).

We are in the midst of a unique political, legal, and psychological moment. UNCITRAL Working Group III’s effort will have a legacy that affects discourse about international economic dispute settlement for decades to come. It was, therefore, with great interest, that I read the Academic Forum’s submission on EJILTalk! on costs, as costs are at the forefront of the debate.

International arbitration costs are part of what motivated my own research agenda. Whether it was my 2005 article, Legitimacy Crisis in Investment Treaty Arbitration, where I made claims about the costs of investment treaty arbitration (ITA) with a limited set of anecdotal information, or my later articles, Empirically Evaluating Claims and Rationalizing Costs, where I confronted the cold reality that I had not systematically tested my earlier assertions and instead corrected my error by offering data.

As my most recent book, Arbitration Costs, explains that ITA costs are “the dull knife that cuts both ways,” I found the framing of the cost-related mandate to be somewhat unfortunate, namely an exploration of “Excessive Costs and Insufficient Recoverability of Cost Awards.” Students of psychology know that the framing of questions affects the information sought, the processing of derivative information, and subsequent decisions. Rather than focusing on costs and cost recoverability generally—which are important concerns that should be of interest to all stakeholders—the evocative framing creates challenges for balanced and holistic analysis. As Chapter 2 of Arbitration Costs explores cognitive illusions, that likely influence debates about ITA and that my previous experiment with Anne van Aaken and others demonstrated affect arbitrator decision-making, it is vital to acknowledge that illusions of framing, negativity, and confirmation bias, among others could skew both the conversations and derivative choices at a critical inflection point. 

There are undoubtedly many thoughtful aspects of the post.  The most valuable relate to focusing on: (1) raw descriptive arbitration costs, (2) factors tribunals should consider in making cost assessments, and (3) highlighting the importance of security for costs. The observations nevertheless require a degree of caution and may benefit from rebalancing, lest policy reform presumably designed to be helpful nevertheless generate negative externalities.

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UNCITRAL and ISDS Reforms: The Divided West and the Battle by and for the Rest

Published on April 30, 2019        Author:  and
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Editor’s Note:  This week, we will be featuring several posts critically examining the UNCITRAL ISDS reform process, which held its latest Working Group III meetings in New York on April 2019.  Yesterday’s introduction from our Contributing Editor Anthea Roberts and UNCITRAL Academic Forum Chair Malcolm Langford summarized key points of contention raised by States as to the narrower procedural reforms to ISDS as the mandate of UNCITRAL Working Group III.  The next series of posts this week focus on broader issues and substantive questions that suffuse the reform process. Today, Contributing Editor Anthea Roberts and her co-author Taylor St. John address geopolitical issues that inevitably affect ISDS reforms. Anthea Roberts attends UNCITRAL Working Group III as part of the Australian delegation but she acts and writes in her independent academic capacity. Taylor St John attends UNCITRAL as an observer from PluriCourts, University of Oslo.

The UNCITRAL debates over ISDS reforms can serve as a real-world laboratory for observing changes in the national interests and policies of different countries, as well as shifts in their geopolitical weight and alignments. As part of a commitment to transparency, UNCITRAL decided to allow a wide range of observers in the room and to make recordings of the debates available. Such transparency gives non-state actors a chance to analyse these dynamics in real time and to consider not only what they mean for ISDS reforms but how they reflect and reinforce broader shifts in international economic governance. During the latest Working Group III meeting in April in New York, we observed a divided West and an emerging battle by and for the Rest.

The Divided West

The ISDS reform debates reached UNCITRAL despite a division within ‘the West.’ For multiple reasons, most notably that ad hoc investor-state arbitration had become politically toxic within Europe as a form of ‘private justice,’ the European Union proposed the creation of a multilateral investment court. Although initially reluctant to bring these issues to UNCITRAL, the European Union and Canada ultimately supported these reform debates going forward within a multilateral UN body. Other significant powers, including the United States and Japan, were opposed to both the creation of a court and these reform debates going forward in UNCITRAL. Read the rest of this entry…

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UNCITRAL and ISDS Reforms: Hastening slowly

Published on April 29, 2019        Author:  and
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Editor’s Note:  This week, we will be featuring several posts critically examining the UNCITRAL ISDS reform process, which held its latest Working Group III meetings in New York on April 2019.  We begin with today’s introduction from Anthea Roberts and Malcolm Langford.  Malcolm Langford attends UNCITRAL Working Group III as Chair of the ISDS Academic Forum and a representative of Pluricourts, University of Oslo. He writes here in his independent academic capacity.Anthea Roberts attends UNCITRAL Working Group III as part of the Australian delegation but she acts and writes in her independent academic capacity. 

UNCITRAL’s Working Group III on investor-state dispute settlement (ISDS) reform continues to attract substantial and growing interest. In the first week of April 2019, a record number of states and observers descended on New York to clarify the final list of concerns and establish a work plan for moving forward on concrete reforms. This session continued the earlier trend of hastening slowly. A recognition of the need for reform amongst states is clear but the tempo remains modest given the reticence of some and the panoply of reform options being considered. This blog post sums up the four main takeaways of the week and will be followed by three reflective analytical posts on the West/Rest politics underlying the process, the role of academics in international politics, debates around naming and framing (“we are all systemic reformers now”) together with a concluding post. Read the rest of this entry…

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Afghanistan and the ‘interests of justice’; an unwise exercise?

Published on April 26, 2019        Author: 
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It has been more than a week now that a reference to the ‘interests of justice’ has highjacked the international criminal law blogosphere. The recent decision by the International Criminal Court’s Pre-Trial Chamber (PTC) to reject the Office of the Prosecutor (OTP)’s request for authorization to open an investigation in the Afghanistan situation, solely on the basis of interests of justice, not only has triggered ‘outcry’, but it has also united various scholars and experts from very different backgrounds. Characteristically enough, this decision has been described as problematic for the legitimacy of the Court, especially in a period in which the Court needs a credibility boosting (see Vasiliev), as legally wrong, either due to the PTC’s review without prior invocation of interests of justice by the Prosecutor (see Jacobs ) or due to its de novo review (see Heller ), and as dangerous for the entire feasibility of the project, given the message it conveys in cases of no cooperation. In simple words, there is a striking consensus that this is a very bad decision (see De Vos and Kersten).

Several legal aspects of the decision have been already addressed by a series of commentators (see Jacobs and Akande and Labuda) and in the interests of  justice for the readers, I will refrain from repeating them. I have also suggested in the past the revision of the very narrow OTP policy paper (see JICJ) and recommended the consideration of the interests of justice via the angle of a fairness based theory of prosecutorial legitimacy (see EJIL). However, for the purposes of this very short intervention I would like solely to question the judicial wisdom, or mainly the lack thereof, to utilize this controversial tool in this particular moment of time.  In other words, was the invocation by the judges of this concept for the very first time a wise exercise of their judgment or not?  

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Life Without the WTO – Part II: Looking to the Everyday

Published on April 26, 2019        Author: 
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Editors’ Note: This is the second post of a two part series by EJIL:Talk Contributing Editor Michael Fakhri. Part I can be found here.

In this second post I want to provide two examples of how life might look like without the WTO. One could do this in a myriad of ways and my purpose is to encourage more thinking along these terms and not to define that debate (well, not yet at least). Let’s see what the world looks like when we highlight the everyday practices of procuring food and doing business:

If a central tenet of the WTO is trade liberalization, the Agreement of Agriculture has always been a failure no matter what your definition of liberalization is. Developing countries had, either through the coercion of IMF structural adjustment programs or unilaterally with the aid of World Bank programs, already implemented a small revolution and liberalized their agricultural sectors before 1994. By the late 1980s, they were export-oriented and did little to protect (i.e. support) domestic agricultural production. So, developing countries did not need the WTO to liberalize their agricultural markets.

Instead, the Agreement of Agriculture, took what was an exception under GATT, and turned it into the norm through things like the Green Box (defined in Annex 2 of the Agriculture Agreement). The most popular way that rich countries made exceptions within GATT for their agricultural policy was under GATT Article XII which allowed for quantitative restrictions to be temporarily employed in order to avoid a fiscal crisis caused by a serious balance of payment deficit. In 1955, this temporary exception became the permanent rule when a very generous waiver was granted to the US (BISD 3S/34-5) and a more conditional ‘Hard Core Waiver’ (BISD 3S/39) for the rest of the world but which primarily favored the then EEC. The result was that the GATT now granted countries permission to impose quantitative restrictions for trade in agriculture. The waivers became the rule and were in effect until 1994. With the WTO’s Agreement of Agriculture, the world’s largest markets continued to be closed off to developing countries. Read the rest of this entry…

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Life Without the WTO – Part I: Stop all this Crisis-Talk

Published on April 25, 2019        Author: 
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Editors’ Note: This is the first part of two posts by EJIL:Talk! Contributing Editor Michael Fakhri.

We hear a lot today about the WTO being in crisis. Some people have focused on institutional changes are imagining life without the DSU if it is not reformed. Others are proposing that the WTO consider life without the US. I think, however, we’re at a moment when it’s worth imagining life without the WTO (or at least radically reimagining the WTO). It is actually not too difficult a task if you look at one place the WTO should not have gotten into in the first place – agriculture – and one place where people conduct cross-border business and the WTO is nowhere in sight – the informal economy. I’ll address those in my second blog post.

But first, all this new talk of a WTO crisis is overblown. The WTO was born into a crisis. In light of the Marrakesh Agreement’s 25th birthday this month, it is worth recounting some living memory surrounding the WTO. In the final years of the Uruguay round, farmers in India argued with each other in the streets and in the newspapers over whether they would benefit from a freer market. Environmentalists around the world re-energized their protest efforts having learned some lessons in trade law from the GATT Tuna-Dolphin cases. And labor unions worried about a regulatory race to the bottom. The food sovereignty movement was galvanized by the advent of the WTO and continues strong to this day. Read the rest of this entry…

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The ICC and US Retaliatory Visa Measures: Can the UN Do More to Support the Privileges & Immunities of the Prosecutor?

Published on April 23, 2019        Author:  and
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On 12 April 2019, the ICC Pre-Trial Chamber II decided to reject the Prosecutor’s request to open an investigation into the situation in Afghanistan on the grounds that an investigation would not be “in the interests of justice,” though it found that the case otherwise satisfied the requirements of jurisdiction and admissibility set forth in the Rome Statute (see recent posts here). The ruling came on the heels of the US revocation on 5 April of ICC Prosecutor Fatou Bensouda’s visa for entry to the US, and prior US threats to take action against the ICC for examining the situations in Afghanistan and Palestine.

While the Pre-Trial Chamber (PTC) made no direct mention of recent US hostility towards the ICC, it appears to have implied, and others have suggested (here, here, and here), that such pressure played a role in the decision. As the PTC noted, “subsequent changes within the relevant political landscape both in Afghanistan and in key States (both Parties and non-Parties to the Statute), coupled with the complexity and volatility of the political climate still surrounding the Afghan scenario, make it extremely difficult to gauge the prospects of securing meaningful cooperation from relevant authorities for the future […]” (para. 94).

Senior US officials were quick to claim victory and take credit for the development, ostensibly linking US pressure to the outcome. Alluding to a potential appeal of the PTC decision, as well as the Prosecutor’s preliminary examination into the situation in Palestine, President Trump menaced that US actions against the ICC could continue: “any attempt to target American, Israeli or allied personnel for prosecution will be met with a swift and vigorous response.”

This post considers how the United Nations can—and may be obliged to—play a bigger role in helping to protect the Prosecutor and her team from one form of this US hostility towards the Court: visa restrictions. Despite US obligations under the US-UN Headquarters Agreement to allow the transit of individuals conducting business at UN Headquarters, some ambiguity surrounds the question of when and under what conditions the US will allow the Prosecutor access to Headquarters now that her visa has been revoked. Read the rest of this entry…

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The Murder of Jamal Khashoggi: Immunities, Inviolability and the Human Right to Life – Part V: Conclusion

Published on April 18, 2019        Author: 
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The murder of Jamal Khashoggi is in many respects a truly extraordinary case. But it is by no means unique – authoritarian states assassinate journalists and political dissidents with some frequency. The use of consular premises as the scene of the killing is, of course, one special feature of this affair. And while diplomatic and consular privileges and immunities are abused all the time, this is not normally done in so spectacular a fashion.

What makes Khashoggi’s killing so fascinating from the standpoint of an international legal analysis is the interplay between the human right to life and the rules of diplomatic and consular law. However, as I have explained, most of the possible norm conflicts between immunities and the right to life could have been avoided in Khashoggi’s case. This is primarily because Khashoggi was killed on the premises of a consulate and not those of a diplomatic mission, and because consular privileges and immunities are significantly weaker than diplomatic ones.

It is therefore unclear why Turkey acted as if international law laid such obstacles in front of it, when in doing so it actually exposed itself to legal liability under IHRL for failing to effectively investigate Khashoggi’s death. There are several possible explanations. First, Turkey could have genuinely misunderstood the legal position, failing to appreciate the attenuated nature of consular immunities. The confusion of consular privileges and immunities with the more expansive diplomatic versions has certainly been pervasive in the coverage of the Khashoggi affair. In fact, in a speech in parliament President Erdogan lamented the fact that the ‘Vienna Convention’ – he did not specify which – inhibited the investigation through the ‘diplomatic immunity’ it provided for, commenting that it may need to be reviewed or revised.

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The Murder of Jamal Khashoggi: Immunities, Inviolability and the Human Right to Life – Part IV: After the Attack

Published on April 17, 2019        Author: 
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Prior posts in this series examined the legal situation before and during the attack on Khashoggi; this one examines its aftermath. After Khashoggi’s death, the substantive negative and positive obligations were extinguished, but the positive procedural obligation to investigate his death was triggered for both Saudi Arabia and Turkey. Khashoggi was subject to the jurisdiction of both states at the moment of his death. Like the substantive positive obligation to protect life, the procedural obligation to investigate is also one of due diligence, i.e. it does not require the state to do the impossible, but only what could reasonably be expected of it in the circumstances. In other words, it is inherently flexible. Investigations into allegations of violation of the right to life must always be independent, impartial, prompt, thorough, effective, credible and transparent, and in the event that a violation is found, full reparation must be provided.

It is manifest that Saudi Arabia is in violation of its procedural obligation to investigate Khashoggi’s death, on multiple grounds. Its agents covered up the evidence of the murder and actively obstructed Turkish efforts to investigate it. Its own internal investigation has lacked any transparency. It is obvious that Saudi law enforcement authorities have no real independence from the executive, the conduct of which they are supposed to be investigating, particularly with regard to the question of whether the crown prince ordered Khashoggi’s killing or knew that the operation would take place. It is equally obvious that the outcome of the Saudi trial of 11 unnamed individuals charged with Khashoggi’s death, which is shrouded in secrecy, is going to be determined by whatever the Saudi royals want the judges to say rather than by any kind of genuine pursuit for the truth.

In short, there is simply no doubt that Saudi Arabia is in violation of the procedural limb of the right to life. The position of Turkey is, of course, very different. As a general matter Turkish authorities have demonstrated willingness to effectively investigate Khashoggi’s death, and indeed much of what we know of his killing is directly the product of their investigative efforts. Had Turkey wanted to be complicit in the Saudi cover-up of the murder, it easily could have been, but it chose differently.

That said, the work of the Turkish investigators has also been subject to considerations of high politics. In particular, it has been limited and will be limited by whatever goals President Erdogan – no huge champion of the freedom of the press or human rights more generally – wishes to achieve in his management of the Khashoggi affair. And there are a number of specific decisions made by Turkish authorities that are at the very least arguably inconsistent with Turkey’s obligation under the ECHR and the ICCPR to effectively investigate Khashoggi’s death: (1) allowing the members of the Saudi hit-team to leave Turkey; (2) allowing the Saudi consul-general to leave Turkey; (3) delaying the search of the premises of the consulate; (4) delaying the search of the residence of the consul-general; (5) possible issues with searches of the consulate’s vehicles.

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