Posts by David Beckstead
Is the Australian Model the Future for Investor-State Arbitration?
In January, I posted an entry on the Pac Rim case and arguments concerning the desirability of promoting investor-state arbitration. [1] While investor-state arbitration leads to a situation where a foreign investor sues a sovereign state over the latter’s attempt to create laws which promote public health/utility, I maintained in my post that investor-state arbitration is still an attractive forum for international dispute resolution since it guarantees a degree of impartiality. The current government of Australia has adopted a policy position which rejects the use of investor-state arbitration in future trade deals; this policy stance could create a useful test-case in order to determine whether other countries would be wise to follow Australia’s lead.
Last April, the Australian government adopted the following policy statement:
“The Gillard Government supports the principle of national treatment – that foreign and domestic businesses are treated equally under the law. However, the Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses. Nor will the Government support provisions that would constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses.” [2]
There is some debate as to how expansively the policy statement should be read. [3] Some believe that it means that the Australian government will simply…
Nothing new under the sun: the ICJ renders its judgment in the Jurisdictional Immunities of the State Case
In my previous entry, titled “The Changing Landscape of International Law: Investor-State Arbitration and the Case of Pac Rim Cayman LLC v. El Salvador”, I wrote about how bilateral investment treaties (BITs) have altered the traditional paradigm of public international law. Investor-state arbitration clauses in BITs provide the mechanisms whereby individuals (including corporations), who do not possess international legal personality, are able to sue foreign states. BITs are somewhat exceptional, however, because they explicitly provide the framework under which individuals can sue foreign states; they do not change or replace the general rule of international law concerning sovereign immunity. The International Court of Justice (ICJ) released its decision on February 3rd in the Jurisdictional Immunities of the State Case (Germany v. Italy), reaffirming traditional concepts of sovereign immunity in public international law. [1]
Germany applied to the ICJ for a ruling that certain decisions of Italian courts violated its sovereign immunity. The case before the ICJ arose in reaction to civil actions brought before Italian and Greek courts in which individuals who were persecuted under the Nazi occupation during the Second World War sued the German state. In 2004, the Italian Corte di Cassazione ruled that Germany could not rely on sovereign immunity for acts carried out during the Second World War because the acts in question constituted international crimes. [2] This ruling led to an influx of cases in…
BY David Beckstead
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Arbitration
Constitutional Law
Investment
Public International Law
Sustainable Development
The Changing Landscape of International Law: Investor-State Arbitration and the Case of Pac Rim Cayman LLC v. El Salvador
Traditionally, the only actors in the realm of public international law were sovereign states. In the late 1940s, the group of actors was widened to include international organizations, which were also deemed to possess legal personality by the International Court of Justice’s (ICJ) ruling in the Reparations Case. [1] With the dawn of investor-state arbitration, the number of claimants able to assert rights based on language contained in international treaties has expanded exponentially.
Investor-state disputes present essentially a hybrid between public international law and traditional fields of private law, such as contract and property. Relationships between investors and sovereign states come into existence when two or more states agree to a bilateral (or multilateral) investment treaty (BIT), or the provisions which are normally included in a BIT form part of a free trade agreement (FTA). Chapter eleven of the North American Free Trade Agreement (NAFTA), for instance, contains the relevant provisions concerning investor-state disputes in the context of North American investors operating in another NAFTA state. [2] The provisions in NAFTA essentially allow an investor to sue a sovereign state through the International Centre for Settlement of Investment Disputes (ICSID), a branch of the World Bank based in Washington D.C., in the event that its property was expropriated. BITs are ostensibly beneficial to both investors and the signatory states. Investors gain from the legal certainty which the BIT provides in…
Residency Requirement Upheld for Marijuana Cafes in the Netherlands; Case C-137/09
Last year, the European Court of Justice (“ECJ”) released its decision in Case C-137/09, Josemans v. Burgemeester van Maastricht, concerning restrictions on who is permitted to patronize restaurants and cafes which sell marijuana in the Netherlands.[1] While the Netherlands generally prohibits the possession of marijuana, certain establishments are permitted to sell small amounts of the drug so long as they comply with certain regulations. Title III of the Treaty Establishing the European Community (“EC Treaty”) establishes the fundamental right of the free movement of citizens of each Member State throughout the European Union (“EU”), meaning that the Dutch restaurants and cafes which sell marijuana have become a magnet for those living in states where recreational marijuana use is more strictly prohibited.[2] In order to combat the “public nuisance” caused by an influx drug tourists, the municipal council of Maastricht imposed a requirement that cafes selling marijuana only allow Dutch residents to enter their establishments; Marc Michel Josemans, the owner of “Easy Going” coffee shop, brought a suit against the municipal council, claiming that the requirement violated, inter alia, Articles 12, 18 and 49 of the EC Treaty.
Article 12 of the EC Treaty (now Article 18 of the Treaty on the Functioning of the European Union) outlines the general prohibition on Member States enacting laws which discriminate on the basis of nationality. The ECJ has interpreted the non-discrimination provisions of…
Trade v. Health; on Tobacco, Caffeine, and Turkey Tails
Governments around the world often struggle to find an appropriate policy balance between removing barriers to trade while simultaneously ensuring that they enact laws which protect the health of their citizenry. The tension between these two policy goals can often be averted; clarity as to policy objectives will enable a better determination of appropriate legal mechanisms to achieving a government’s goals. A few recent trade law developments highlight the challenges of regulation aimed at promoting health concerns in light of the World Trade Organization (WTO) obligations.
In Australia, the Tobacco Plain Packaging Act 2011 is an innovative piece of legislation which aims at discouraging the use of tobacco products by requiring uniform plainness in packaging.[1] The act would require cigarettes to be sold in packaging which would not allow tobacco companies to use their own labels, and consequentially constrain their ability to market their brand image. The government’s stated goal is to reduce tobacco consumption, particularly among young individuals.
Members of the WTO’s Technical Barriers to Trade (TBT) Committee discussed this piece of legislation at a meeting earlier this month, with over a dozen members voicing formal objections to the act.[2] The objecting states argue that Australia’s evidence of the effectiveness of the proposed act is suspect, and thus unnecessarily restricts trade.[3] It is important to note that many of the objecting states do not export tobacco to Australia, and…
U.S. Senate Passes Counter-Productive Countervailing Duties Bill
Last month, the U.S. Senate passed Bill S. 1619, the Currency Exchange Rate Oversight Reform Act of 2011 (“the Act”), which is aimed at penalizing foreign producers in favour of their U.S. domestic counterparts.1 The Act has been introduced but has not yet passed through the House of Representatives. Section 4 of the Act outlines the method by which the Secretary of the Treasury will determine if a foreign currency is “fundamentally misaligned”, and if it makes that determination, sections 10 and 11 provide the mechanism by which the government would be able to impose countervailing duties (CVDs). In general terms, CVDs are a tool, permissible in international trade law, whereby a government is able to impose a duty on imported goods when the exporting country’s government has provided the exporter a subsidy.
China is the obvious target of the Act. Populist politicians in the U.S. in recent years have relied on criticizing China in the hopes of appealing to citizens who believe that the primary cause of high unemployment rates in the U.S. is the migration of manufacturing jobs overseas.2 The problem with the Act, however, is that it fails to comply with the U.S.’s WTO obligations, and will most likely be successfully challenged by China if it ever becomes law. The Act attempts to classify an undervalued currency as a “subsidy” to exporters. The Agreement on Subsidies…
Russia joins The Hague Convention on the Civil Aspects of International Child Abduction
On October 1st, the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction came into force in Russia, making it the 86th Contracting State to the Convention. The Hague Convention provides the procedural mechanisms for courts in Contracting States to return children to the state of their habitual residence when they have been unlawfully removed or retained by a parent or guardian. The purposes of the Hague Convention are to ensure both the prompt return of abducted children and to create a deterrent for individuals who may otherwise consider abducting their child.
In signing on to the Convention, Russia joins the likes of Canada, the United States, Australia, New Zealand, and most European states. There are still a large number of states which are not signatories to the Convention however, with notable examples including China, India, Japan, and South Korea. As the number of Contracting States to the Convention expands, the degree of legal certainty which it provides concurrently increases. The Hague Convention is an instrument of private international law which is designed to harmonize jurisdictional conflicts; the greater the number of Contracting States, the deeper legal harmonization becomes in this particular area of law.
Still, there is some scepticism as to whether Russian courts will comply with the spirit of the Convention.[1] The Convention requires the return of children who have been unlawfully removed…
