Failing the Hague Stress Test

On 25 October 2018, the President of the International Court of Justice, Judge Abdulqawi A. Yusuf, made an apparently ordinary announcement in his speech to the United Nations General Assembly. In light of the increasing workload of the Court, Judge Yusuf reported towards the end of his speech, “[m]embers of the Court have come to the decision, last month, that they will not normally accept to participate in international arbitration.” This decision appeared on its face simply to add clarity to the mandate set out in the Statute of the Court that judges may not “engage in any other occupation of a professional nature.” But Judge Yusuf went on with his remarks to specify that “[i]n particular, [members of the Court] will not participate in investor-State arbitration or in commercial arbitration.” Neatly separated from this withdrawal, Judge Yusuf confirmed that the Court will “if the circumstances so warrant, authorize its Members to participate in inter-State arbitration cases.”

Here was the signal international legal observers had been waiting for. The reaction on social media belied the apparently ordinary nature of the statement. The Court had taken a stance on one of the partisan issues of international legal politics – the hot potato of investor-State arbitration.

The events surrounding Judge Sir Christopher Greenwood’s re-election bid to the Court brought that hot potato to the Court’s doorstep. Days after Judge Greenwood conceded defeat in his re-election bid to the Court, a think tank associated with opposition to investor-state arbitration, published a study that called out “moonlighting” by ICJ judges in investor-state arbitrations. One of the judges the think tank focused upon was Judge Greenwood. Its reporting more than implied that Judge Greenwood’s work as arbitrator was a further reason speaking against his re-election. One can only imagine that with the political opposition to investor-State arbitration in Europe and elsewhere, this implication landed with rather a loud thud at the Court. The context thus may have been one of judicial acquiescence to the political headwinds rather than one that was purely a question of workload. After all, while resigning politicians do certainly like to spend more time with their families, this desire is hardly if ever the whole story behind their departure. So, too, the Court’s reasoning appears a little too casual when viewed in context. In fact, this topic was one of the most hotly debated issues at the recent Oxford Investment Claims Summer Academy convened by the Oxford University Press at Kellogg College this July.

The recent decision by the Court in Obligation to Negotiate Access to the Pacific Ocean adds more fuel for speculation why Judge Yusuf made sure to mention that members of the Court would “in particular” no longer participate in investor-State arbitrations. The case did not, of course, facially concern an issue of investment protection. Instead, it concerned the question whether Chile was under an obligation to negotiate in good faith access to the Pacific Ocean with Bolivia. Bolivia, itself a frequent critic of the investor-State system, invoked the jurisprudence of investor-state tribunals in order to establish that it had a legitimate expectation of such negotiations even if it had failed to prove detrimental reliance and thus had failed to make out an estoppel. Dr. Martins Paparinskis in a tweet noted accurately that the Court’s rejection of this argument dripped with palpable contempt. The Court’s strong reaction was somewhat surprising given the Court’s other decisions which had previously dispensed with the requirement of actual detrimental reliance when making out a claim sounding in the international law of good faith. (p. 331) Putting both statements together suggests that the Court intended to send a message to its political stakeholders: we will retreat from investor-State arbitration.

It would certainly be politically fashionable to join in the applause for the Court’s decision as a wise move to avoid any appearance of impropriety on the part of its members. Some tweets have hailed it as instructive for discussions of who else should refrain from sitting as arbitrator in investor-State arbitrations. Some of the delegates at the Investment Claims Summer Academy are sure to laud it as a more straight-forward reading of the Court’s Statute and a return to its common-sense interpretation.

But one would be remiss not to note the sad implications that shine through both decisions. Much like the politician resigning to spend time with his or her family, this retreat by the Court will fairly be seen as bowing to mounting pressure.   In other words, it would suggest that international arbitration, and “in particular” investor-State arbitration is questionable, illegitimate, and so seedy that the Court can bear no longer to participate in it. The Court is doing its best to cast out investor-State arbitration in both settings as not truly forming part of international law dispute resolution. In the stress test that is the political pressure brought to bear against investor-State arbitration, international justice thus has failed to stand with one its own.

One should worry that the attack on investor-State arbitration is just such a stress test – the beginning of a broader onslaught on international justice and international access to justice. If political pressure can be brought to bear to delegitimize investor-State arbitration, who is to say that State-to-State arbitration could not be placed in the crosshairs next? The temptation to try in light of the South China Sea award is certainly present. And if State-to-State arbitration is problematic, who is to say that international courts like the International Criminal Court could not be targeted next. The U.S. government for one has certainly made auspicious noises.

Perhaps the Court is steeling itself for this broader onslaught. One may hope that the Court in its wisdom decided to sound a strategic retreat. Because – and this the Summer Academy, too, confirmed – rising nationalism and disdain for rule of law will only raise the stakes. For international lawyers, the fight of a lifetime may well have begun. Next time, I hope we are ready to dig in.