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Home Archive for category "EJIL"

Social Capital and the Limits of Network Analysis

Published on September 29, 2014        Author: 

I want to start by thanking each of the commentators for their kind, forgiving and thought-provoking comments on my article, and by recognizing that the work of DaphaMichael and Tom set the foundations and served as the inspiration for this work. I will organize my responses into three different clusters:  methodology, extensions and other, more general comments.

Methodology

I will first address Tom’s comments on the record of appointment as a proxy for displayed preferences. Can we ignore the fact that an appointment does not necessarily indicate that the arbitrator was the appointer’s first choice? I like to think of this question as a job offer to a candidate who decides not to accept an offer. The truth may be that certain candidates are in high demand and that many companies are offering jobs to the same well-qualified candidates.  Hence it is possible that parties who nominate arbitrators and may be trying to enlarge the diversity of the pool of arbitrators in ICSID may be somewhat restricted by the broader market of arbitration professionals.  This is true especially where, as Michael points out (and as confirmed by arbitrators during my interviews), the compensation provided by ICSID is lower than that of other arbitration opportunities and venues.   This is a limitation of the assumptions that can be made from the ICSID appointments. We are left with only the record of appointments as a second-best proxy.

A second point raised by Tom as to why the mid-2000s witnessed the first appointments of today’s power-brokers is also relevant. We must take into consideration that these years saw a boom of investor-state cases and, hence, more appointments. It is also true that this is when we started seeing more awards discussed publically.  Although I did not report these statistics in this paper, measures that reflect the connectivity of the network start stabilizing and changing in less intense ways during this period.  Thus I’m not surprised that the network acquired self-organizing qualities during this time.  One plausible hypothesis for future exploration is how the development of transparency rules may have helped cement public knowledge of decisions and with that, some of the insights that come with understanding the decision-making philosophy of arbitrators.

On the methodology of determining the average compensation per arbitration of US$200,000, I admit that the number is not incredibly precise. However, it is the best approximation I could divine. I followed a complex, yet not foolproof strategy to arrive at what I consider a very rough average. First, I computed the amount in 2010 dollars from roughly 70 awards that provided information on compensation in my sample of ICSID and ICSID Additional Facility awards. I divided this amount by the months of duration of each case and averaged the result. Using the dollars per month estimate, I calculated the possible amount paid to an arbitrator on settled or dismissed cases based on an average duration of the case. I confirmed that this rough estimate was in the right ballpark with one scholar who has done extensive empirical work with ICSID data as well as through my interviews with arbitrators. It is not an exact appraisal, but what is relevant for the purpose of the article is whether ICSID’s rate completely changes the incentives to accept an appointment and hence whether the distribution of ICSID appointments is completely different from that of other institutions. We cannot know the answer to this question for certain, but with a grain of salt, my educated guess (taking into account what I gleaned from working at ICSID) is that it does not. Most appointments are accepted and most rejections occur when a conflict exists. In my experience it was only in very few cases that, for other reasons (such as being too busy) an arbitrator decided not to accept an appointment. Read the rest of this entry…

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ICSID Arbitrators: The Ultimate Social Network?

Published on September 25, 2014        Author: 

waibelMichael Waibel is a University Lecturer at the University of Cambridge.

Sergio Puig’s article offers a refreshingly new, thought-provoking analysis of the links between investment arbitrators. Who the parties appoint as arbitrators matters for how the investment treaty regime operates. Criticism of the appointment process in investment arbitration is widespread, yet rigorous empirical work on this important aspect of the investment treaty regime remains rare. Relying on the theoretical frame of social network analysis, Sergio sheds light on the interactions among ICSID arbitrators. His analysis suggests that a core group of 25 arbitrators enjoys disproportionate influence on the development of the investment treaty regime. To understand what animates the regime, it may suffice to analyse the preferences and political philosophy of these 25 ‘power-brokers’.

The Core-Periphery Divide and Underrepresentation

The core of the arbitration network is composed of 25 arbitrators. Members of this elite group are on average connected to 11.75 other arbitrators. The core’s cultural and legal homogeneity is striking: 14 Europeans, 4 Latin Americans, 3 Canadians, 1 New Zealander and only 1 US arbitrator. Similarly, among the top ten countries of origin of ICSID arbitrators overall, five are Euro-Atlantic states (US, France, UK, Canada and Switzerland) and five Latin American. By contrast, African and Asian arbitrators have rarely been appointed to ICSID tribunals, despite significant inward- and outward flows of foreign investment to and from Asia in particular. In such data-intensive work, minor errors are bound to creep in. For instance, in Figure 4, Vaughan Lowe appears as a US, rather than a UK national, and the 26th arbitrator in the core between Jonny Veeder and Jan Paulsson remains nameless.

The formal bond of nationality may be only a crude measure of arbitrator behaviour. As Sergio rightly highlights (p. 405), many arbitrators with nationalities of developing countries have received at least part of their legal education in developed countries (chiefly the UK, the US and France). Indeed, if one focuses on arbitrators who have spent most or all of their adult lives in a developing country and have not worked or received part of their educated in developed countries, the voice of developing countries in even less represented among ICSID arbitrators than the formal link of nationality would suggest.

Other demographics are also underrepresented among ICSID arbitrators, most notably women. 93 percent of all ICSID appointments were male arbitrators (p. 404). Given that Brigitte Stern has accumulated the highest number of appointments of any ICSID arbitrator, the share of female arbitrators is even lower at 5 percent (p. 405). Two female super arbitrators apart, women are at the periphery of the arbitration network. This gender imbalance mirrors the general characteristics of the entire arbitration network (p. 411).

Yanhui Wu and I have recently assembled data on a control group composed of more than 700 potential ICSID arbitrators, i.e. individuals with similar characteristics and qualifications to those who have already been appointed to at least one ICSID tribunal. Our control group includes current and former ICJ and WTO Appellate Body (AB) Members who, unlike some of their judicial colleagues, have yet to be appointed to an ICSID tribunal, and partners at leading arbitration practices in the same position. Ten former AB members and 18 current and former ICJ judges since 1990 have never been appointed. The following table compares some characteristics of the treatment and control groups. Read the rest of this entry…

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Social Capital and Arbitral Decision Making

Published on September 24, 2014        Author: 

DDaphnaaphna Kapeliuk is a Senior Lecturer at Radzyner Law School, IDC Herzliya. Her research interest focuses on international arbitration in general and on arbitral behavior in particular and on private international law.

In his brilliant article “Social Capital in the Arbitration Market”, Sergio Puig seeks to map the social arrangements that result from interactions among ICSID arbitrators, as part of the social dynamics of international arbitration. Using data of all appointments of ICSID arbitrators made between 1972 and 2014 and applying a social network analysis methodology, Sergio sets out to understand the role of social capital in investment arbitration by relying upon proxy measures for social connectivity.

The sophisticated maps of the interactions among ICSID arbitrators represent a picture of the social landscape of the arbitration market. These maps are of great importance, especially since ICSID tribunals are composed of three arbitrators, and the dynamics between the arbitrators within the panels are important to understand the outcome of disputes. Sergio’s article joins prior scholarship that has claimed that ICSID arbitrations are handled by a closed group of arbitrators, sometimes referred to as “grand old men”, or “blue chip men”, who are being repeatedly appointed to decide large scale investment disputes. He argues that the network analysis of ICSID arbitrators “provides important evidence of a dense network”, in which a limited number of prestigious arbitrators increase in prestige, while the others remain in the periphery.

Sergio’s major contribution to understanding the interconnections among these arbitrators is presented in figures 4 and 6. Figure 4 focuses on the inside and outside of core ties and common cases of the 25 most central arbitrators, and figure 6 represents a sociogram of appointments of arbitrators (as presiding arbitrators) by other arbitrators to the same panels. These figures clearly show the strong ties between the central arbitrators within arbitration panels.
While the main objective of the article is to map the social dynamics of ICSID arbitrators, Sergio argues that the network analysis provides evidence that the dense network of arbitrators “reinforces prevailing norms and behavior and insulates its most important members from outside influence”. Although the social landscape presented in the article supports the claim that the core of the prominent ICSID arbitrators is small, that the article does not analyze how this network might reinforce prevailing norms and behavior. It does not define or analyze these terms. The remainder of this comment offers one possible mechanism for how the social structure might lead to the postulated outcome.
There is no doubt that the entry barriers to the investment arbitration market are extremely high. An arbitrator who wishes to be admitted to the core of the prestigious network, and thus repeatedly appointed, must establish a reputation that justifies a “membership” in the “club”. It is through his connections, behavior and decision making that he can establish such reputation. Sergio’s article focuses on the interconnections among arbitrators, but not on their behavior or decision making. Read the rest of this entry…

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Comments on Sergio Puig’s ‘Social Capital in the Arbitration Market’

Published on September 23, 2014        Author: 

Tom SchultzThomas Schultz is a Reader in Commercial Law in the Dickson Poon School of Law at King’s College London and a Swiss National Science Foundation Research Professor in the International Law Department at the Graduate Institute of International and Development Studies, Geneva. He is also the Editor-in-Chief of the Journal of International Dispute Settlement (Oxford University Press).

Professor Puig’s article ‘Social Capital in the Arbitration Market’ is a quite wonderful contribution to a number of things: our understanding of the dynamics of investment arbitration, the literature on arbitrator appointments, the methodological diversification of studies in international law, and certainly a few more. And it brings us rather convincing evidence, in a field where claims and representations (not to speak of copious discussions of what other people happen to have said) are more readily found than data and studies to substantiate claims. It is, in other words, intellectually edifying. The experimental design is well done, the plan well executed and the findings credible. In this, it is intellectually responsive to developments in the social sciences and the humanities. We don’t even need a mood-elevating metaphor to set great store by this sort of works, and this work in particular. (Incidentally, the study is also a formidable ‘who’s who in investment arbitration’, which undoubtedly will make for welcome entertainment in certain circles.)

A few small methodological points would probably deserve more discussion. (I said ‘would deserve’, not ‘would have deserved’: the article is long enough as it is and this is a law journal after all.) For instance, the author says that ‘The network analysis advanced in this article relies upon displayed preferences by the appointing entity (litigation parties, arbitrators, and the institution) to provide a larger picture of the network’s aggregate topology.’ But how do we know the preferences of the appointing entity? Right, by looking at appointments. But do effective appointments really tell us what the preferences are? What if individuals, who are the preferred choices of the appointing entity, refuse an appointment, and the appointing entity has to turn to their second or third choice? Never happens. Well… Actually, could such situations be statistically relevant?

Another methodological point: Figure 8 is puzzling. Not puzzling as in ‘probably wrong’. Puzzling as in ‘how come’? Here’s the author’s accompanying notes: “Figure 8 shows how, despite the fact that most ICSID cases were registered in the last 10 years, most ‘power-brokers’ or those arbitrators at the top of the profession entered the network in or prior to 2004.” In other words, the mid-2000s is the moment when you see the network effects. Why? Why did the network stabilise at that point in time? The network seems to have acquired self-organisational elements at that point in time, but, again, why then? Any hypothesis? Just happenstance? Just puzzling.

Beyond methodological considerations, we may also wonder–and perhaps the author wants to elaborate on this–why, in fact, it is a bad thing that a small number of arbitrators decide a great number of cases. Read the rest of this entry…

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Social Capital in the Arbitration Market

Published on September 22, 2014        Author: 

sergio puig-picDr. Sergio Puig is an Associate Professor of Law at the University of Arizona James E. Rogers College of Law.

I am grateful to Professor Weiler, the editors of EJIL and the organizers of EJIL: Talk! for hosting the discussion of my article. I am privileged to have Daphna Kapeliuk, Michael Waibel, and Thomas Schultz as collaborators in this endeavor.  This is a great opportunity to engage with wonderful scholars in the field of international law, all of whom have produced very interesting and inspiring empirically-based research in the field. Below I summarize the methodology and main arguments of this piece.

In this modest contribution, I try to bring together different scholarly traditions. In framing the question, I note that scholars with different academic traditions have provided diverse and, at points, conflicting explanations regarding why arbitration professionals are such a seemingly small and homogenous group in terms of gender, national origin and educational background. In this article, I seek to empirically assess this observation and to explore why this may be happening. Given the limited access to the record of appointments under most arbitration facilities, I used the data of the International Centre for Settlement of Investment Disputes (ICSID). In spite of critiques regarding ICSID’s practices with respect to transparency, it is the sole arbitration institution to publicize its entire record of appointments.

By surveying the list of ICSID appointments, I seek to operationalize the basic characteristics of the social structure of international arbitrators.  Anticipating some reactions, I must admit that this is an imperfect alternative. Ideally we would have more information about international arbitration appointments generally. But given the shared characteristics between general international arbitration and the more specific field of investor-state arbitration, I argue that ICSID’s record of appointment can imperfectly inform this scholarly debate. So, while the article focuses on ICSID arbitrators–a group that has not escaped controversy in recent years–my point is more general and tries to speak to a broader scholarly debate.

Applying network analytics (and some basic statistical analysis) to ICSID’s record of appointment, I confirm what we already knew: a few, socially prominent actors are dominant in the field. But not all arbitrators are equal; hence there are different sources of social capital. Read the rest of this entry…

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Discussion of Sergio Puig’s “Social Capital in the Arbitration Market”

Published on September 22, 2014        Author: 

Over the next few days, we will be hosting a discussion of Sergio Puig’s article Social Capital in the Arbitration Market, which was published in volume 25, no. 2 of the European Journal of International Law (2014). Sergio is an Associate Professor of Law at the University of Arizona James E. Rogers College of Law.  The commentaries on his article will be by Daphna Kapeliuk (Radzyner Law School, IDC Herzliya), Thomas Schultz (King’s College London), and Michael Waibel (Cambridge). We are grateful to all of them for participating in the discussion.

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New Issue of EJIL (Vol. 25: No. 2) Published

Published on August 1, 2014        Author: 

The latest issue of the European Journal of International Law (Vol. 25, No. 2) is out today. As usual, the table of contents of the new issue is available at EJIL’s own website, where readers can also access those articles that are freely available without subscription. The free access article in this issue is Sergio Puig’s Social Capital in the Arbitration Market. Next week, we will continue this issue’s EJIL:Debate! with a rejoinder by László Blutman to Guzman and Hsiang’s reply to his essay Conceptual Confusion and Methodological Deficiencies: Some Ways That Theories on Customary International Law Fail. In September, we will hold a discussion of Puig’s article. Subscribers have full access to the latest issue of the journal at EJIL’s Oxford University Press site. Apart from articles published in the last 12 months, EJIL articles are freely available on the EJIL website.

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Fateful Elections? Investing in the Future of Europe

Published on July 31, 2014        Author: 

In an earlier Editorial I speculated on the potential transformative effect that the 2014 elections to the European Parliament might have on the democratic fortunes of Europe. I spoke of promise and risk. So now the results are out. How should we evaluate them?

I will address the three most conspicuous features of the recent elections – the anti-European vote, the continued phenomenon of absenteeism, and the innovation of the Spitzenkandidaten.

The Anti-European Vote and the I-don’t-Care-About-Europe Vote

The fathers have eaten sour grapes and the children’s teeth shall be set on edge.

In trying to explain the large anti-European vote (winners in France and the UK as well as some smaller Member States of the Union), much has been made of the effect of the economic crisis. Sure, it has been an important factor but it should not be used as an excuse for Europe to stick its head in the sand, ostrich-like, once more. The writing has been on the wall for a while.

In 2005 the constitutional project came to a screeching halt when it was rejected in a French referendum by a margin of 55% to 45% on a turnout of 69%. The Dutch rejected the Constitution by a margin of 61% to 39% on a turnout of 62%. (The Spanish referendum which approved the Constitution by 76% to 24% had a turnout of a mere 43%, way below normal electoral practice in Spain – hardly a sign of great enthusiasm.) I think it is widely accepted that had there been more referenda (rather than Ceausescian majority votes in national parliaments) there would have been more rejections, especially if the French and Dutch peoples had spoken at the beginning of the process.

It is also widely accepted that the French and Dutch rejections and the more widespread sentiment for which they were merely the clamorous expression were ‘a-specific’: they did not reflect dissatisfaction with any concrete feature of the ‘Constitution’ but expressed a more generic, inchoate, inarticulate unease, lack of enthusiasm not only for ‘more Europe’ but for Europe as it had become.

This early and less pathological ‘anti-European’ manifestation could not be explained away as a reaction to ‘the crisis’ – it occurred at a moment of prosperity and reasonably high employment. Europe was also riding high in the world, a promising contrast with America at its post-Iraq worst. Xenophobia was less à la mode and the immigrant issue less galvanizing – the supposed ‘invasion from the East’ was not a real issue. Europe was not ‘blamed’ for anything in particular, but it was clear that it had largely lost its mobilizing force. Read the rest of this entry…

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Masthead Changes

Published on July 30, 2014        Author: 

The time has come to renew our Board of Editors and Scientific Advisory Board. We thank Iain Scobbie for his valuable service to the Journal, particularly as blog master for EJIL: Talk!, and we welcome Jean d’Aspremont and Jan Klabbers to the SAB. Dapo Akande and Anthea Roberts will now join the Board of Editors, whilst Francesco Francioni, after a number of years on the Editorial Board, will return to the SAB. We thank him for his committed and extraordinarily constructive contribution to the Journal.

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EJIL Volume 25:2–In This Issue

Published on July 29, 2014        Author: 

We are pleased to open this issue with a second entry under our new rubric, EJIL: Keynote. In this lightly revised text of her lecture to the 5th European Society of International Law Research Forum, Anne Orford traces, with characteristic elegance and insight, the changing notions of science and scientific method that have shaped the international legal profession over the past century. Her account suggests important lessons for contemporary debates regarding the profession’s relevance and ability to respond to world problems.

The next three articles in the issue illustrate the growing toolkit of methodologies for the study of international law. Sergio Puig’s study of the social structure of investor-state arbitration makes innovative use of network analytics. Sharing some of the same methodological inclinations, Grégoire Mallard provides an extraordinarily rich historical-sociological account of the formation of the nuclear non-proliferation ‘regime complex’. And Tilmann Altwicker and Oliver Diggelmann adopt a broadly social constructivist approach to analyse the techniques used to create progress narratives in international law.

This issue includes a selection of papers from the Second Annual Junior Faculty Forum for International Law, held at the University of Nottingham in May 2013. Surveying the discourse and practice of minority language rights, Moria Paz analyses the striking disparity between the rhetoric of maximal diversity-protection found in human rights treaties and the writings of scholars, on the one hand, and the much more attenuated rights that are actually recognized in the jurisprudence and practice of international human rights adjudicatory bodies, on the other. Arnulf Becker Lorca recounts a ‘pre-history’ of self-determination that highlights the role of semi-peripheral élites in converting that political concept into an international legal right. We hope to publish one or two more papers from the Second Annual Junior Faculty Forum in future issues of the Journal.

In Roaming Charges, we feature a photograph of Places of Social and Financial Crisis: Dublin 2014. Read the rest of this entry…

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