International Economic Law and Policy Blog

Cecilia Malmstrom on ISDS in the TTIP: Part 2 (Exceptions)

Here's more from EU Trade Commissioner Cecilia Malmstrom: 

For all these reasons, I believe the question about putting investment in TTIP is not whether we should do it but how we can do it right. Can we design a new form of investment arbitration that keeps the benefits but avoids the negatives? I believe the answer is yes. And that with CETA as a baseline, the four sets of further reforms I'm suggesting today will be an excellent way of doing so. But let me stress again: these are preliminary ideas, the start of a discussion, not our final answer.

First, the most substantive concern expressed by respondents to the survey is that investment arbitration in TTIP will be a barrier to Europe's noble tradition of high quality regulation. Some worry that existing ISDS arrangements give companies too much leeway to attack regulation they deem is not in their interests. Others worry that the mere existence of a possibility of cases chills regulators' activities. These are real concerns that any new investment arbitration system will need to address.

Our idea is that this could be done in two ways. We would like to include a full article in the text that makes clear that governments are free to pursue public policy objectives and they can choose the level of protection that they deem appropriate.

I'm not sure exactly what she has in mind here, but I've written before about a general exceptions clause in investment obligations.  If there were an exceptions provision that allowed for measures related to legitimate public policy goals, subject to some kind of "arbitrary and unjustifiable" discrimination clause, that might be sufficient to alleviate the concerns of some critics.  But note that it has to be an exception from all provisions, not just non-discrimination, where it isn't even needed (in my view) if non-discrimination is interpreted properly.  (Even simpler, of course, would be to take the "minimum standard of treatment"/"fair and equitable treatment" parts out completely -- that's where the bulk of the concern lies.)

Cecilia Malmstrom on ISDS in the TTIP: Part 1 (FET and State-State)

This is from a recent speech by EU Trade Commissioner Cecilia Malmstrom:

Let me start by stating what is perhaps obvious. The Commission's assessment is that we need to negotiate rules on investment protection and ISDS in TTIP. I know that some members of this house believe otherwise, for various reasons.

But my view is that we should, and for the following reasons:

First, there are issues to be addressed in the US specifically.

Some believe that there is no problem in the US that ISDS can solve. "The US has a fully functioning legal system," they say. "So what are we worried about?"

It is true that the risks of expropriation and discrimination are much lower in the US than in other parts of the world. But the fact remains that no US law prohibits discrimination against foreign investors. Putting investment in the deal would close that gap, but only if the commitments are enforceable.

ISDS is the only way to enforce them effectively:

- International law cannot be invoked in US courts.

- And state-to-state dispute settlement would effectively cut off small companies from the system, since the EU will only be able to pursue a limited number of very big cases, as happens in the WTO today.

A couple thoughts:

-- It's interesting that she focuses on the possibility of discrimination against foreigners in the U.S.  As I like to point out, if that were all investment obligations prohibited, ISDS would not be making headlines.  It's the broader provisions such as "fair and equitable" treatment that are the main source of controversy.

-- My sense of the EU's approach to WTO dispute settlement is that it is willing to take on cases for a variety of reasons, and cases get brought even where there is not a big corporation lobbying for them.  So, I'm not sure why state-state processes would cut off small companies.  I would think the folks at the European Commission could use their discretion to focus on the cases where the EU investors had been treated the most unfairly, even if the company was a small one.  Thus, as talked about here, I think state-state dispute settlement would work fine for investment obligations in the TTIP.

The Peru - Agricultural Duties Appeal: Lots of International Law

For all you international law lovers out there, here are some excerpts from the notice of appeal in Peru - Agricultural Products, filed last week:

I. The Panel Erred in Law by Failing to Find that Guatemala Acted Inconsistently with Its Good Faith Obligations under DSU Articles 3.7 and 3.10

3. Peru seeks review by the Appellate Body of the Panel's findings and conclusions that there was "no evidence that Guatemala brought these proceedings in a manner contrary to good faith" within the meaning of DSU Articles 3.7 and 3.10, and its concomitant conclusion that "there is therefore no reason for the Panel to refrain from assessing the claims put forward by Guatemala".2

4. The Panel's errors of law and legal interpretation include its assumption that the legal status of the Peru-Guatemala Free Trade Agreement ("FTA") was dispositive to its ruling on good faith. The status of the FTA has no bearing on the issue of whether Guatemala acted contrary to its good faith obligations under DSU Article 3.7 and 3.10. The Panel's interpretation of the requirements of DSU Articles 3.7 and 3.10 was thus fundamentally flawed.

... 

II. The Panel Erred in Law by Finding that Peru Acted Inconsistently with Article 4.2 of the Agreement on Agriculture

6. Peru seeks review of the Panel's findings and conclusions that the duties resulting from the Price Range System ("PRS") constitute variable import levies or share sufficient characteristics with variable import levies to be considered a border measure similar to a variable import levy, within the meaning of footnote 1 to the Agreement on Agriculture3 , and that by maintaining such measures Peru is acting inconsistently with its obligations under Article 4.2 of the Agreement on Agriculture.4

7. The Panel's errors of law and legal interpretation include:

• The Panel erred in its interpretation of Article 4.2 of the Agreement on Agriculture by failing to take into account the FTA as a relevant rule of international law within the meaning of Article 31(3)(c) of the Vienna Convention on the Law of Treaties ("Vienna Convention")5 ;

• The Panel erred in its interpretation of Article 4.2 of the Agreement on Agriculture by failing to take into account Articles 20 and 45 of the International Law Commission (ILC) Draft Articles on Responsibility of States for Internationally Wrongful Acts ("ILC Articles") as relevant rules of international law within the meaning of Article 31(3)(c) of the Vienna Convention;

• The Panel erred in its interpretation of Article 4.2 of the Agreement on Agriculture by failing to take into account the FTA as a "subsequent agreement between the parties" within the meaning of Article 31(3)(a) of the Vienna Convention; and ...

... 

III. The Panel Erred in Law by Finding that Peru Acted Inconsistently with Article II:1(b) of the GATT 1994

9. Peru seeks review of the Panel's findings and conclusions that the additional duties resulting from the PRS constitute "other duties or charges … imposed on or in connection with the importation", within the meaning of the second sentence of GATT Article II:1(b), and that in applying measures, Peru acted inconsistently with its obligations under the second sentence of Article II:1(b) of the GATT 1994.7

10. The Panel's errors of law and legal interpretation include:

• The Panel erred in its interpretation of the second sentence of GATT Article II:1(b) by failing to take into account the FTA as a relevant rule of international law within the meaning of Article 31(3)(c) of the Vienna Convention8 ;

• The Panel erred in its interpretation of the second sentence of GATT Article II:1(b) by failing to take into account Articles 20 and 45 of the ILC Articles as relevant rules of international law within the meaning of Article 31(3)(c) of the Vienna Convention;

• The Panel erred in its interpretation of the second sentence of GATT Article II:1(b) by failing to take into account the FTA as a "subsequent agreement between the parties" within the meaning of Article 31(3)(a) of the Vienna Convention; and ...

The Appellate Body will have lots of opportunities to opine on the role of international law in WTO law.  Whether it takes up those opportunities remains to be seen.

"Don't Use Facebook" as a Measure

This is from the Guardian:

The European Commission has warned EU citizens that they should close their Facebook accounts if they want to keep information private from US security services, finding that current Safe Harbour legislation does not protect citizen’s data.

The comments were made by EC attorney Bernhard Schima in a case brought by privacy campaigner Maximilian Schrems, looking at whether the data of EU citizens should be considered safe if sent to the US in a post-Snowden revelation landscape.

“You might consider closing your Facebook account, if you have one,” Schima told attorney general Yves Bot in a hearing of the case at the European court of justice in Luxembourg.

There are all kinds of substantive issues that could arise here:  What category of service Facebook supplies, whether the EU has made commitments in that sector, and whether there is a violation of any GATS obligation, among others.  But putting all that aside, here's my question:  Is a statement such as this one, from a government official, a "measure" that can be challenged in WTO dispute settlement?

State-State as an Alternative to Investor-State

Getting back to academic discussions, here's more from Freya Baetans on ISDS:

Four possible alternatives to the inclusion of ISDS in TTIP are frequently mentioned. The first would be to opt for state-to-state arbitration. However, such an option would hardly be preferable, as it will invariably politicise a dispute and blow it far out of proportion, potentially influencing the international relations between states as a whole. As these cases are not actually located at the inter-state level, they should not be framed as disputes between states. In order for such cases to proceed to the inter-state level, investors would need to rely upon diplomatic protection, which is sporadic, arbitrary in its incidence and prone to politicisation, as there is no control over the process or any form of remedy for the individual whose claim is espoused. Furthermore, the decision whether to espouse a claim is often not taken on legal grounds but is rather dependent upon other factors such as the relative size of a state and potential need for foreign aid. As such, espousal of claims has rightly been superseded by investment protection and human rights law.

With regard to whether the state-state rules would polticize disputes, I talked about this in an op-ed here:

This politicization argument is not convincing. First of all, it is hard to imagine that any politicization that occurs with state-to-state dispute settlement would be worse than what is going on now with ISDS. The nature of the existing system has politicized trade agreements so much that it is questionable whether some of them can even be concluded.

In addition, the trade dispute process has thrived with state-to-state dispute settlement. Disputes do get political at times, but the number of disputes filed makes clear that governments have not been deterred from asserting their rights when faced with protectionism. Moreover, it is worth noting that state-to-state dispute settlement at the WTO contains some rules on trade in services that cover investment, and the system has not been overwhelmed with politicization.

Poulsen, Bonnitcha, and Yackee say something similar (p. 15).

To add one more thing: The U.S.-Australia FTA has only state-state, and I can't recall any politicization there.

As for the human rights law analogy (which Baetans refers to), as I understand it, what we are talking about here is regional human rights treaties, such as the ECHR.  To me, that's fundamentally different than a global human rights regime where direct claims could be brought in an international tribunal (which does not exist).  Within a particular region, shared values make this possible, and direct individual rights claims can work in that context.  But that can't be translated easily to a non-regional international arrangement.  And if you were going to translate it, giving protections only to foreign investors seems like a strange place to start.

As a middle ground approach, you could have ISDS but with the state having the ability to step in.  Here's something from economist Simon Johnson and Rep. Sander Levin, writing about what they would like to see for ISDS in the TPP:  

One of several important changes would be to ensure that, in the event of a dispute, both governments involved — the host and the home country for the company — can jointly agree that a case is inappropriate and should be dismissed. 

Levin says more on this here: 

... U.S. FTAs have included a diplomatic screening mechanism of sorts, but only for tax measures. This mechanism should be extended more broadly so that it covers other public interest issues, such as environmental and public health measures.

Specifically, the two governments (the government of the claimant/investor and the government respondent in an ISDS case) could agree that a particular claim is not a claim for which an award in favor of the claimant may be granted. In other words, a dispute would not be subject to ISDS if both governments agree that a claim should be dismissed.

In this regard, Baetans refers to this idea:

A second option would be for the home state to be able to block any claims brought by investors. Some of the problems of this second approach could be mitigated by allowing the home state to be a third-party intervener – which is perhaps a route that could still be explored.

Are there any existing agreements that use this approach?  I'm not sure.  The decision-making process for a government faced with such an issue would be fascinating, for political scientists and others.

The Leaked TPP Investment Chapter: Minimum Standard of Treatment Issues

Here's the minimum standard of treatment provision in the leaked TPP investment chapter (which is basically the same as the U.S. model BIT):

Article II.6: Minimum Standard of Treatment¹⁴

1. Each Party shall accord to covered investments treatment in accordance with applicable customary international law principles, including fair and equitable treatment and full protection and security.

2. For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the standard of treatment to be afforded to covered investments. The concepts of “fair and equitable treatment” and “full protection and security” do not require treatment in addition to or beyond that which is required by that standard, and do not create additional substantive rights. The obligations in paragraph 1 to provide:

(a) “Fair and equitable treatment” includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world; and

(b) “Full protection and security” requires each Party to provide the level of police protection required under customary international law.

3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.

--------------------------------------

14 Article II.6 (Minimum Standard of Treatment) shall be interpreted in accordance with Annex II-A (Customary International Law).

And here's Annex II-A:

Annex II-A

Customary International Law

The Parties confirm their shared understanding that “customary international law” generally and as specifically referenced in Article II.6 (Minimum Standard of Treatment) results from a general and consistent practice of States that they follow from a sense of legal obligation. The customary international law minimum standard of treatment of aliens refers to all customary international law principles that protect the investments of aliens.

I think a lot of people would like to see more clarity about what exactly the standard here is.  Is it about "arbitrary" government conduct?  Or is it about "outrageous" government conduct?  Or something in between? The language above seems to give tribunals discretion to take different approaches, and thus I'm not sure exactly what governments are agreeing to when they adopt such language.  It would probably be helpful to specify more clearly what is meant.  Of course, that might make it impossible to reach agreement!

The Leaked TPP Investment Chapter: National Treatment Issues

WikiLeaks has posted the Jan 20, 2015 version of the TPP investment chapter. The NY Times reports here.  I'm going to do two short posts, one on national treatment and one on the minimum standard of treatment.  Here's the national treatment provision:

Article II.4: National Treatment¹²

1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.

2. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

3. For greater certainty, the treatment to be accorded by a Party under paragraphs 1 and 2 means, with respect to a regional level of government, treatment no less favorable than the most favorable treatment accorded, in like circumstances, by that regional level of government to investors, and to investments of investors, of the Party of which it forms a part.

---------------------------------- 

 12 [For greater certainty, whether treatment is accorded in “like circumstances” depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare objectives.] 

I have long been frustrated with efforts to put substantive considerations relating to the effect or intent of a measure into likeness.  At the WTO, I feel like that approach is on the way out (although you never know when it might pop up again).  But in investment law, it seems to live on, and, here, it is used very clearly in the footnote. To accomplish the same thing, but with greater clarity, I'd incorporate the same concept, but rely on different language.  I would say the following in the footnote:

"whether treatment accorded to non-nationals is less favorable depends on the totality of the circumstances, including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare objectives."

In this way, the objectives of the measure can be evaluated: Are they being used for nationality-based discrimination, or are they being used for legitimate objectives?

The CAFTA Labor Panel: Due Process Issues

In the U.S. - Guatemala CAFTA labor case, there's also a really interesting issue about the use of witness statements as evidence.  Here are some excerpts from a panel ruling issued on Feb 26:

9. However, Guatemala’s letter to the panel of that same day raised new issues. It drew the panel’s attention to “the fact the United States redacted important information from 135 of its exhibits and, as of today, the United States has neither provided Guatemala nor the Panel with non-redacted versions of such exhibits.” 1 Guatemala took the position that “[b]y redacting information from these exhibits, the United States is acting in a manner contrary to the Model Rules of Procedure (“MRP”) and violated Guatemala’s due process rights, including its right to have an adequate opportunity to prepare its case and to respond to adverse evidence.” 2 Guatemala noted that “the information redacted from the exhibits includes the identity of the person providing the statements, the name of the judges participating the labor legal proceedings, the names of the inspectors form the General Inspection Directorate (GLI) in charge of inspections in the cases identified by the Untied States and the case number of certain domestic proceedings.” 3

10. The letter went on to request that the Panel instruct the United States to provide the Panel and Guatemala, without delay, a complete set of non-redacted and legible exhibits; that in the meantime, the panel treat the United States’ initial written submission as not properly submitted; or that in the alternative the panel strike the redacted exhibits from the record of these proceedings.

...

29. Guatemala also suggests in its November 20 letter that its rights to adequately prepare its defence and to see and respond to evidence put forward against it require disclosure of the identity of any witnesses providing evidence against it in these proceedings. Guatemala notes that both U.S. and Guatemalan labour statutes require disclosure of the identity of witnesses providing evidence in tribunal proceedings.11 It points to Rule 35 of the International Centre for Settlement of Investment Disputes (ICSID) Rules of Procedure for Arbitration Proceedings, which gives parties the right to examine witnesses and experts.12 Guatemala argues that it is impossible to exercise such rights unless the identity of witnesses is disclosed to the examining party. Guatemala notes in addition that Article 6.3 of the European Convention on Human Rights gives persons the right to examine or have examined witnesses testifying against him or her, and argues that this right applies in both civil and criminal proceedings.13 Finally, Guatemala cites the Contador Velasco decision of the Court of Arbitration for Sport noting that admitting anonymous evidence potentially infringes the right of a party to be heard and to a fair trial.14 Guatemala notes that the confidentiality provisions of the Rules would prevent disclosure of the identities of the workers in question and submits that the purpose of the redactions is simply to obstruct the preparation of its defence.

If I understand all this correctly, the U.S. submitted evidence in the form of witnesses who alleged labor law violations in Guatemala, but redacted the names.  Guatemala said that it could not defend itself without information on these people.

The Panel ruled as follows:

41. A Party to dispute settlement proceedings under Chapter 20 of the DR-CAFTA has a prerogative to submit such evidence as it sees fit in support of its position. A corollary to this proposition is that a Party may choose not to submit particular evidence. In other words, a Party may choose which evidence to submit and which evidence not to submit. The first issue before us is as follows: when a Party submits evidence in the form of witness declarations, do the Rules require that it also submit personal identifier or other information related to such declarations?

42. The answer is no. The Rules do not preclude a Party from submitting evidence in the form of anonymous witness declarations. Nor do they require a Party to supplement the submission of witness declarations by providing personal identifier or other information that could help to put such declarations in context. In fact, the Rules impose no affirmative obligation on CAFTA disputing Parties to assist the fact-finding process. In this regard, the CAFTA Rules differ from the WTO Dispute Settlement Understanding, of which the CAFTA Parties unquestionably were aware when they drafted the Rules. The WTO DSU contains, in its Article 13, a duty of collaboration whereby a disputing Party may have an obligation to produce certain information upon request by a dispute settlement panel even if the Party had not chosen to submit such information in the first instance. 28 The DR-CAFTA Rules contain no corresponding provision.

...

44. The United States has provided to the panel and to Guatemala all information designated as confidential in its initial written submission. The redaction of information from documents presented to both the panel and the other disputing Party is not a subject addressed by these Rules. The Rules therefore provide the panel with no authority to instruct the United States to provide the panel and Guatemala with unredacted copies of the exhibits submitted in support of its initial written submission. Nor do the Rules provide any basis upon which the panel could declare that the initial written submission of the United States was not properly submitted simply because it contains exhibits from which the United States has redacted information.

...

70. We therefore cannot conclude that all or any of the redactions to documents submitted by the United States with its initial written submission deprive Guatemala of an adequate opportunity to respond to the evidence of the United States or to defend itself. We therefore decline to instruct the United States to produce unredacted copies of those documents or to strike them from the record. We also conclude that there is no basis for an extension of time in addition to the extension that we discuss in section 2 of this statement of reasons, below.

71. The panel will assess what effects the redactions have, if any, on the probative value of the exhibits submitted by the United States in the course of dealing with the dispute on its merits. The panel will keep under review the question of the treatment of evidence from anonymous sources and may revisit the question of the admissibility of such evidence at a later stage of the proceedings. In the event that Guatemala does challenge allegations of fact made by the United States that are supported by anonymous evidence, it will be appropriate at that point for the panel to consider whether to adopt a procedure to investigate allegations by the United States contained in anonymous declarations that are disputed by Guatemala, whether to exclude anonymous evidence, or what weight, if any, should attach to anonymous evidence in the fact-finding process. As discussed above, the Rules do not contemplate the examination of witnesses; the right to examine witnesses is not necessarily required for due process in these proceedings, provided that unexamined evidence going to a material question of fact can be discounted or excluded from the record where appropriate; and in any event the panel has no power to compel the disclosure of information that a disputing Party chooses to withhold from it. By extension, the panel has no power to compel the attendance of a witness at a panel hearing. The question potentially raised by the anonymity of witness statements is therefore simply how the panel should treat such evidence, and in particular whether the panel should seek the cooperation of the disputing Parties to examine it, exclude it from the record, discount the weight attached to it, or simply treat it with caution. That question would have to be considered in light of the particular disputed questions of fact and evidence before the panel.

This issue was further discussed in the U.S. rebuttal submission, and subsequently, on March 19, Guatemala raised a number of due process concerns in a letter, where it said:

The United States has argued that the information that it has redacted from the exhibits submitted to the Panel and to Guatemala - information that forms the fundamental basis of its claims - cannot be disclosed to Guatemala or even to this Panel. Yet, in its rebuttal submission, the United States acknowledges providing the non-redacted versions of the Exhibits to the Secretary General of ICSID and her staff. The ICSID Secretary-General and her staff are members of the general public for purposes of this dispute.1 By voluntarily disclosing this information to members of the general public, the United States should be precluded from continuing to assert its claim of confidentiality before this Panel. There is now absolutely no basis for the United States to continue to refuse to provide the information to this Panel and to Guatemala.

Not the kind of issue trade disputes usually face, but very interesting nonetheless.

The U.S. Rebuttal Submission in the CAFTA Labor Case: In a Manner Affecting Trade

The U.S. - Guatemala CAFTA labor case is heating up.  I'm going to raise the "in a manner affecting trade" issue once again.

Recall that CAFTA Article 16.2.1(a) says:

A Party shall not fail to effectively enforce its labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement.

This is from the U.S. rebuttal submission: 

125. As set out above in section III.D, the United States need not demonstrate actual trade effects to demonstrate that Guatemala’s labor law enforcement failure has occurred in a manner affecting trade. Furthermore, the United States need not show that each individual company’s non-compliance is affecting trade, but rather that Guatemala’s failure to effectively enforce its labor laws has occurred in a manner affecting trade. As described above, this obligation does not require an econometric analysis of actual trade effects on specific products or companies. Rather, it is sufficient to show that the companies or sectors in which Guatemala has failed to effectively enforce its labor laws are engaged in cross-border trade between the CAFTA-DR Parties, through either export or export-related activities or competition with imported goods from these Parties. In this case, all the companies or sectors cited by the United States fall into one of these two categories.

...

132. In sum, as the United States has demonstrated previously, a complaining party need not demonstrate actual trade effects to demonstrate that a responding party’s actions have occurred in a manner affecting trade. Nonetheless, in this case, the United States has amply demonstrated that these companies participate in trade in the CAFTA-DR region, either through exports or export-related activities, or through competition between these companies and imports from other CAFTA-DR Parties. Guatemala’s failure to effectively enforce its labor laws allows these companies to artificially reduce their key production cost of labor, and thereby gain a competitive advantage in the CAFTA-DR market. This unfair advantage thus affects trade between the CAFTA-DR Parties in the relevant products. One company’s impunity incentivizes other companies in the sector to follow suit, which unfairly depresses labor costs for noncompliant companies that compete with exports from other CAFTA-DR Parties.

(See also paras. 56-69)

The U.S. view seems to be the following.  If the product sectors where the labor laws are not enforced engage in either exporting or importing with CAFTA-DR parties, then the failure to enforce has occurred in a manner affecting trade.

Here are some questions that occur to me:

• Is it really the case that a failure to enforce labor laws will always occur in a manner affecting trade, just because trade exists in the sectors at issue?  Could it possibly occur in a manner not affecting trade?

• What if the trade is not actually occurring, but there is the potential for such trade?

• What if there is no trade with the complaining party, i.e., trade is only with other CAFTA-DR parties?

• And does it matter how the failure to enforce affects trade?  For example, what if a labor law made it more difficult for unions to operate, like with a right to work law.  If a government failed to enforce a right to work law, and this made imports easier and exports harder, would this be covered?

I'm not sure I have any good answers at this point.  I'm just raising annoying questions.

Even Stricter Seal Products Bans

From the CBC (via Lawrence Friedman):

A woman from Corner Brook is learning about the high cost of fashion after she was fined US $250 on Monday for trying to cross the border with a sealskin purse. 

In early March, Nora Fitzgerald and her friend decided to drive across the border at Bridgewater, Maine, to do some shopping. She was carrying a purse made out of sealskin -- a gift from her mother.

While at the border, Fitzgerald says a U.S. customs agent noticed her purse and asked her if it was made of real fur. When she told him it was sealskin, she and her friend were asked to park at the side of the building and bring her purse inside. 

"I really didn't know what to think,” Fitzgerald tells As It Happenshost Carol Off. "I thought at first that it was a little bit of a joke, then I realized he was quite serious. I was shocked."

After showing her passport and filling out some forms, Fitzgerald was told her purse would be confiscated under the U.S. Marine Mammal Protection Act. Under the legislation, passed in 1972, sealskin products are prohibited from being taken into the United States. 

More from the Draft Indian Model BIT: Exceptions

Here's one more provision from that draft Indian model BIT:

Chapter V – Exceptions

Article 16: General Exceptions

16.1 Nothing in this Treaty precludes the Host State from taking actions or measures of general applicability which it considers necessary with respect to the following, including:

(i) protecting public morals or maintaining public order;

(ii) ensuring the integrity and stability of its financial system, banks and financial institutions;

(iii) remedying serious balance-of-payments problems, exchange rate difficulties and external financial difficulties or threat thereof;

(iv) ensuring public health and safety;

(v) protecting and conserving the environment including all living and non-living natural resources;

(vi) improving working conditions;

(vii) securing compliance with the Law for the prevention of deceptive and fraudulent practices or to deal with the effects of a default on a contract;

(viii) protecting privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or

(ix) protecting national treasures or monuments of artistic, cultural, historic or archaeological value.

Note the word "considers," which, as we know, makes this provision "self-judging," and thus quite broad.

Indian Reforms to Minimum Standard of Treatment and National Treatment

The draft Indian model BIT (PDF is here), which I just heard about (from Mona Pinchis), has some new language on minimum standard of treatment:

Chapter II: Obligations of Parties

Article 3: Standard of Treatment

3.1 Each Party shall not subject Investments of Investors of the other Party to Measures which constitute:

(i) Denial of justice under customary international law1

(ii) Un-remedied and egregious violations of due process; or

(iii) Manifestly abusive treatment involving continuous, unjustified and outrageous coercion or harassment.

3.2 A determination that there has been a breach of another provision of this Treaty, or of a separate international agreement, does not establish that there has been a breach of this Article.

1 For greater certainty, it is clarified that “customary international law” only results from a general and consistent practice of States that they follow from a sense of legal obligation.

Does this satisfy ISDS critics (like me, for example!), by reining in MST?  Maybe.  I'll have to think about it.  I still think we need some evidence of what exactly the problematic government behavior is.  Without that, I'm not sure what the problem is that we are trying to fix.

They also have the following language on national treatment:

Article 4: National Treatment

4.1 Each Party shall not apply to Investments, Measures that accord less favourable treatment than that it accords, in like circumstances,2 to domestic investments with respect to the management, conduct, operation, sale or other disposition of Investments in its territory.

4.2 A breach of Article 4.1 will only occur if the challenged Measure constitutes intentional and unlawful discrimination against the Investment on the basis of nationality

2 The requirement of “like circumstances” recognizes that States may have various legitimate reasons for distinguishing between investments including, but not limited to, (a) the goods or services consumed or produced by the Investment; (b) the actual and potential impact of the Investment on third persons, the local community, or the environment, (c) whether the Investment is public, private, or state-owned or controlled, and (d) the practical challenges of regulating the Investment. The factors and determinations used by the Host State to distinguish between Investors and Investments are to be given substantial deference by any tribunal constituted under Article 14.5 or Article 15.2.

That language, I think, is helpful, although it's not clear to me what "unlawful" means here -- unlawful under domestic law?

There are other provisions, too, but I haven't gone through them all.  They are asking for comments, due by April 10.

ACWL Job Opening

This is a great opportunity to work on WTO disputes, in Geneva, with a really good group of people:

The Advisory Centre on WTO Law (ACWL) is seeking to fill a vacancy for one of our positions of Counsel.   We are looking for a lawyer with approximately one to three years experience in WTO law who has a good understanding of the economic issues underlying WTO law; excellent drafting, communication and presentation skills; ability to manage, organise, plan and deliver work assignments in a timely manner and the ability to work independently and cooperate with others in a diverse international setting.  Applicants should also have a commitment to international public service and an interest in the advancement of developing countries. Applicants must be fluent in English. Experience in representing parties in international dispute settlement proceedings and the ability to work in French or Spanish would be distinct advantages.  The vacancy note as posted on our website is available here: http://www.acwl.ch/e/news/news-000102.html.

Bilcon NAFTA Chapter 11 Award: FET Issues

Some people are surprised that I am so obsessed with concerned about ISDS.  I've tried explaining it in various ways, but I've had trouble getting my point across.  I think the Bilcon decision from last week can help me clarify.  (Investment Arbitration Reporter explains the case here, here and here -- those links are subscription only, but I think they offer free trials, so feel free to contact them).

The substantive aspect of international investment obligations that is most problematic, in my view, is the "minimum standard of treatment" (although when you interpret national treatment like this, that worries me too).  This is how the Bilcon majority described this standard:

442. The formulation of the “general standard for Article 1105” by the Waste Management Tribunal is particularly influential, and a number of other tribunals have applied its formulation of the international minimum standard based on its reading of NAFTA authorities:

Taken together, the S.D. Myers, Mondev, ADF and Loewen cases suggest that the minimum standard of treatment of fair and equitable treatment is infringed by conduct attributable to the State and harmful to the claimant if the conduct is arbitrary, grossly unfair, unjust or idiosyncratic, is discriminatory and exposes the claimant to sectional or racial prejudice, or involves a lack of due process leading to an outcome which offends judicial propriety - as might be the case with a manifest failure of natural justice in judicial proceedings or a complete lack of transparency and candour in an administrative process. In applying this standard it is relevant that the treatment is in breach of representations made by the host State which were reasonably relied on by the claimant.

Evidently the standard is to some extent a flexible one which must be adapted to the circumstances of each case.635

443. While no single arbitral formulation can definitively and exhaustively capture the meaning of Article 1105, the Tribunal finds this quote from Waste Management to be a particularly apt one. Acts or omissions constituting a breach must be of a serious nature. The Waste Management formulation applies intensifying adjectives to certain items—but by no means all of them—in its list of categories of potentially nonconforming conduct. The formulation includes “grossly” unfair, “manifest” failure of natural justice and “complete” lack of transparency.

444. The list conveys that there is a high threshold for the conduct of a host state to rise to the level of a NAFTA Article 1105 breach, but that there is no requirement in all cases that the challenged conduct reaches the level of shocking or outrageous behaviour. The formulation also recognises the requirement for tribunals to be sensitive to the facts of each case, the potential relevance of reasonably relied-on representations by a host state, and a recognition that injustice in either procedures or outcomes can constitute a breach. 

My sense is that words such as "arbitrary, grossly unfair, unjust or idiosyncratic" convince many people that most government action is basically immune from review under this standard. With such a "high threshold," findings of violation will be extremely rare, some people might say.  

I have a different impression of how this standard would apply to government actions in the real world, which is why I'm concerned about all this.  In my view, using the standard described in Bilcon, you could make a non-frivolous claim on a significant percentage of all government legislation and regulation.  As a result, there are loads of potential claims, and plenty of possible violations.

It would be great if it were possible to quantify the exact likelihood of a violation under this standard.  Unfortunately, I have no data on this, just instincts.  My view on this is probably shaped by my experience running a business, where the absurdity of government behavior becomes apparent.

The facts of the Bilcon case make me think I'm right to be worried.  Read the case for yourself (paras. 446-604), and make up your own mind, but my take on it was that this seems like pretty typical government behavior.  It may have been "arbitrary" or "unjust," to some extent, but it also strikes me as quite common.

I'm not sure how exactly you study this issue, but one of you data-analyzing political science folks out there would probably know what to do.  I suspect that if you found a way to characterize what happened to Bilcon, and looked around for that kind of behavior, the answer would be that it happens quite frequently.  

It's worth noting that the vast majority of such government actions are against domestic actors.  A handful of foreign investors here and there also experience this treatment, but this is mainly a domestic issue.  

But of course, it happens to foreign investors too, so if that's the standard we are using, and ISDS tribunals find violations in these circumstances, the ISDS litigation business is going to be booming for a long time.

China's Market Economy Status in 2016

From trade lawyer Bernard O'Connor:

So, as Shakespeare might have said, to conclude this little tale:

1) China agreed in 2001 when it joined the WTO that it was not a market economy.

2) There is nothing in Article 15 giving China the status of a market economy in 2016.

3) Rather, paragraph (d) of Article 15 shows that China must establish, according to EU rules, that it is a market economy if it is to benefit from market economy price comparison methodologies.

4) A gap in WTO law opens up after December 2016 as to what to do when producers from China under investigation in individual anti-dumping investigations cannot show that market economy conditions prevail in their industry.

5) This gap will need to be filled in those investigations. The AB allows investigating authorities to choose methodologies where no particular methodology is imposed by the GATT or the WTO Anti-Dumping Agreement so long as it is unbiased and objectively applied.

6) Thus the emergence of a gap in Article 15 does not remove the legal basis for the use of methodologies other than market economy methodologies.

7) The basic EU anti-dumping Regulation gives the EU Commission sufficient legal basis to chose appropriate methodologies when producers cannot show market economy conditions prevail in their industry.

8) No legislative change is therefore necessary (unless there is a need to introduce a system to evaluate the prevailing conditions in a particular industry) as a consequence of the expiry of sub section (a)(ii) of Article 15 of China’s WTO Accession Protocol.

The full paper is here.  WTO litigation on these issues is almost guaranteed.

The Bilcon Decision: The Environment, Local Politics and the Rule of Law

Simon Lester already blogged this morning about the NAFTA investor-state award in Bilcon v. Canada, focusing on one particular issue concerning National Treatment.  The award is interesting on a number of fronts, including the issue of the minimum standard of treatment (Fair and Equitable Treatment) in relation to customary international law,  the place of public policy concerns in the determination of a violation of National Treatment, and the application of the ILC Articles on State Responsibility to attribution of conduct to a state in an investor-state arbitration. For purposes of disclosure, in this case, I was an outside consultant to the investor's legal team, led by veteran NAFTA litigator (and scholar) Barry Appleton.  The tribunal was presided by Judge Bruno Simma, a former judge of the International Court of Justice, the other arbitrators are Professor Bryan Schwartz and Professor Donald McRae both of whom are Canadian jurists.  Professor McRae wrote a dissent.  Both the majority award and the dissent are linked in Simon's post this morning.

Briefly the majority found for Bilcon, holding that Canada had violated both the Fair and Equitable Treatment and National Treatment provisions of NAFTA.  In this post, I'm not going to go into depth on any one point in the awards, but rather try to give a general sense of why they are significant jurisprudentially, and also to the current debate over ISDS, for example in the TTIP context.

The Web of Politics

Bilcon, the American investment, sought to expand its quarrying activities on the East Coast of Canada.  While, as the majority found, Bilcon was initially encouraged by the provincial government in its plans, and led to believe that the project was an appropriate one for the location it had chosen, its proposal became entangled in a complex, changing, and eventually quite rancorous web of local politics in Nova Scotia.   The investment encountered various, quite unusual and unanticipated roadblocks from both provincial and federal authorities; because of its interpretation of a time bar in the NAFTA, the tribunal focused on events in 2005, when the investor's project was subject to a joint federal-provincial environmental review panel (JRP).  The panel did not dispose of the investor's proposal on the basis of an environmental analysis but rather on the motive that it was against "community values", a concept not part of the relevant legal and regulatory framework; as the majority award held, the investor had no advance notice about the employment of this extralegal analytic or any opportunity to confront it.  Another unprecedented element was that the JRP advised the government that the investor should not be given the possibility of addressing any concerns through mitigation measures.  Ultimately, both the Nova Scotia and Federal Governmen's chose to take on board the JRP's recommendation that the project be killed; the investor failed in obtaining an opportunity to voice its concerns about what happened at the JRP to the Federal authorities. 

Fair and Equitable Treatment and Customary International Law

In its approach to the standard of treatment in customary international law, the majority explicitly and categorically rejected the Glamis Gold tribunal's notion that customary law is identical to that recognized in the 1926 Neer case, despite the multiple legal, economic and political developments since that time.  Instead, giving a great deal of play to the Waste Management approach, the majority articulated the notion that to engage international responsibility the improprieties or irregularities in question must be "serious", even if they need not be "shocking" in the manner evoked by the Neer ruling.  Perhaps most significantly,   the majority clearly in its own approach to ascertaining custom dispensed with the anachronistic notion in Glamis that a party relying on a rule of customary international must prove it through the traditional means of surveying state practice and opinio juris (which, ironically, didn't happen in Neer itself-the gold standard for custom according to the Glamis tribunal to make a rather lame pun).  The dissent did not so much object to this legal approach of the majority as question whether the particular facts  justified an international tribunal second-guessing domestic legal and policy processes.  Since, as I mentioned, I  was involved in this dispute on behalf of Bilcon, I have to leave it to other followers of this blog to debate whether, under a treaty like NAFTA, a decision fatal to the investment that is on grounds other than those provided by law, and without prior notice of those grounds, is a matter of sufficient seriousness to be of international concern.  Indeed, thinking of the ELSI case I wonder in fact whether the majority might have decided the same way, even it had thought that the customary standard was the one that existed in 1926.

A final comment about the the Fair and Equitable Treatment analysis in this award and regulatory democracy.  The claimants in Bilcon, as the majority noted, were not challenging any environmental law or regulation of Canada or the province of Nova Scotia. The claimants merely insisted that they were entitled to a decision on their project that was based on the expectation that the law in force as written and customarily interpreted would be applied to their proposal.  On some views of democracy, a government should be able to reject a project just based on its unacceptability to some politically salient part of the community in which it is sited, regardless of environmental, health or other policy-rational concerns.  So if, contrary to the actual situation in this case, Canada's environmental law instead had a clause that allowed or empowered a JRP to override environmental analysis and make a determination of rejection for a project based on its judgment that the views of politically salient parts of the community were highly adverse regardless of established environmental risks, and the investor had been on notice about that, would this tribunal have found a violation of NAFTA?  Some awards suggest that an investor is entitled to a legal and regulatory framework that is intrinsically stable or rational, and is insulated from political vicissitudes (at least of the NIMBY kind). There is language in Tecmed along these lines.  Some may find in the tone and substance of the majority's award a view that is more accommodating of what could be called "deep democracy"; certainly, there is emphasis on the specific expectations of the claimant that the laws and regulations valid at the time would be applied to it in the normal way, as opposed to the view that FET requires as such that the substance of the law must ensure that objective criteria rather than elements of popular sentiment carry the day. (On the facts of Bilcon, it wasn't clear, by the way, that the community as a whole were negative; but those with the ear of the politicians seemed to be). 

National Treatment

I want to raise a different aspect of the National Treatment analysis than that blogged by Simon earlier today.  NAFTA investor-state tribunals have been understandably concerned that the National Treatment obligation in NAFTA, unlike that in the GATT and certain other WTO Agreements, for instance, is not qualified by a general public policy exceptions clause, for measures justified on legitimate health, environmental or other grounds. They have struggled with how to take account of legitimate public policy, often leading to rather incoherent or obscure readings of concepts such as "like circumstances" and "treatment no less favorable."   In Bilcon, the approach taken is reminiscent for me of that which the WTO Appellate Body adopted in the recent TBT trilogy, faced with the analogous challenge that, unlike the GATT the Technical Barriers to Trade Agreement has no general public policy exceptions provision.  The Bilcon majority allows that detrimental treatment may nevertheless not be a violation of National Treatment where the respondent state can demonstrate adequately that there is a rational nexus of the detrimental treatment to a legitimate public policy.  This seems a lot like the "legitimate regulatory distinction" test applied in the TBT cases by the WTO Appellate Body, although it also has a good basis in a rather early NAFTA award, Feldman v. Mexico.  

Attribution of Conduct to the State and the ILC Articles on State Responsibility

On attribution, Canada had argued that the JRP, because it was composed of outside experts and only advised the governments on the disposition of the project rather than taking the actual decision, was not part of the government.  The tribunal unanimously rejected that; the majority noted in its reasons that the JRP was fully embedded in the Canadian legal and regulatory framework and had no function autonomous from its role in governmental decision-making.  This distinguished the JRP from the kind of bodies that may have both a public and a commercial function, and made it a de jure organ of Canada.      There is also a very interesting dictum: the majority suggested that even if the JRP were not an organ, the governments had adopted its conduct within the meaning of ILC Article 11, as they had  accepting the recommendations of the JRP, including its "community values" approach, without additional, separate analysis supporting the decision in question. 

Remedying Administrative Injustice: Domestic Courts vs. International Tribunals and the Debate over the Future of ISDS

Finally, the axis of (very respectful) divergence between the majority and dissent seems somehow to connect to a deep policy or normative question of whether one thinks that an international tribunal could have some legitimate or useful function in remedying miscarriages of administrative justice, i.e. as opposed to a domestic court in the host state.  The dissent apparently doesn't see international judicial review as appropriate, where what is at issue is departure from a state's own laws and requirements of due process.  According to the majority, by contrast, "Third-party adjudicators may have their own advantages including independence and detachment from domestic pressures." (Para. 439)    Of course, both the majority and the dissent agreed that the NAFTA tribunal properly had jurisdiction in this case as a matter of law; but the difference of perspectives obviously has relevance to the policy debate going on right now about the fate of ISDS in the TTIP.

Clayton/Bilcon NAFTA Chapter 11 Award: National Treatment Issues

Today's big ISDS news is the NAFTA Chapter 11 award in the Clayton/Bilcon case (award here, dissent here). The tribunal found violations of Article 1105 (minimum standard of treatment) and Article 1102 (national treatment).  The dissenter focused his reasoning on Article 1105, but dissented from both findings.

Others might have more to say, but I just wanted to mention one aspect of the majority's reasoning on national treatment.

Canada argued:

(c) Nationality-Based Discrimination

653. According to the Respondent, even if the Investors were to demonstrate that the treatment they were accorded was objectively less favorable than that accorded to other domestic or foreign investors, they have failed to demonstrate that they were accorded this treatment because of their nationality as required by Articles 1102 and 1103. The Respondent rejects the Investors’ interpretation of Articles 1102 and 1103 that, it argues, require the contracting parties to provide the “‘best’ treatment, i.e. treatment no less favorable than every single domestic investor”.

As I read it, the tribunal approached this aspect of the claim as follows (see paras. 685-725).  Rather than compare the treatment of all domestic investors to that of all foreign investors in like circumstances, it compared the treatment of one foreign investor (Clayton/Bilcon) to several domestic investors who were in like circumstances.  Because the treatment of the one foreign investor was worse than that of the domestic investors (and all of the other elements were also satisfied), the tribunal found a violation of national treatment.  It did not directly address the "best treatment" point, but implicitly seems to have rejected Canada's view.

It's a long decision with complicated facts, and I've only given it a quick read, but that's how it appeared to me.

As I've said before, I'm skeptical of an approach to national treatment that does not look at the entire group of investors (or products).  Here's an example to illustrate why, from the trade context.  Let's say there was a U.S. automobile regulation that affected the imported Volkswagen Passat more negatively than it affected the domestically-made Ford Focus.  Should that regulation violate the national treatment obligation based on this different treatment of products of different nationalities?  To me, the answer is clearly no.  You need to look at the entire range of "like" domestic and imported products.  Of course, it's noteworthy that one imported product is treated worse than one domestic product, but all that evidence does is make me want to do a more comprehensive comparison to see if nationality-based discrimination actually exists.  Selectively looking at evidence from just a few products or investors is not sufficient.

Arwel Davies has a new paper on this issue here.  I've only gotten part way through his paper, but I think he might have a somewhat different view than mine in the investment context.

ISDS as a Way to Avoid Unfair Domestic Courts

This is from Freya Baetans, writing in response to Poulsen, Bonnitcha, and Yackee:

one type of risk that is certainly present in several EU member states relates to the possibility of not being granted a fair trial before a domestic court. According to a recent country ranking of ‘judicial independence’ performed by the World Economic Forum, some EU countries are among the best in the world (Finland and Denmark are in the top five), but others perform rather poorly (Slovakia ranks at 130 out of 140, Bulgaria at 126) – at place 30, the US is still below countries with which ISDS is planned to be concluded, such as Canada (place 9) or Singapore (at 20), or with which it can be expected to be concluded, such as Uruguay (at 21) or Saudi Arabia (at 26).

The rankings are here.  If you select "judicial independence" as a category (1.06), you may be surprised by some of the rankings, so I'm not sure how much stock should be placed in them.

But putting that aside, I wonder whether ISDS is the answer to concerns of this sort about domestic courts.  If there are general problems with the independence of a country's judiciary, aren't that countries' citizens and corporations affected most?  No doubt foreign investors will also be affected, but to a much lesser degree.  So, to the extent this is a problem, isn't the solution to improve the domestic courts generally, for the benefit of all?  ISDS just leaves the domestic system in place for most people, while giving foreign investors a special international judicial remedy (and note that there are criticisms of ISDS tribunals as not offering fairness themselves).

Will Plain Packaging Spread to Other Products?

This is from Inside U.S. Trade:

Indonesia’s Ambassador to the World Trade Organization Iman Pambagyo last week signaled that a win for an Australian law requiring plain packaging of cigarettes as an anti-smoking measure could lead his country to introduce a similar measure for alcoholic beverages.

...

No law on plain packaging for alcoholic products is currently being developed because of Indonesia's challenge in the DSB, according to Pambagyo.

But he said a WTO win for Australia on this issue would leave the door open for the Indonesian government to expand plain packaging to alcoholic products without needing to justify that the law would advance the legitimate objective of protecting against moral hazards.

I'm more convinced than ever that there is a market for "Plain Package" brand products.  Every item would have a single color on the package, with very simple font.  Think of all the money you'd save on printing and design costs!  And the phrase "plain package" is in the news so often, everyone would be familiar with it.

italaw.com Looking for Editors

From Andrew Newcombe:

Dear Colleagues
 
In the coming days you will see that italaw.com has been redesigned.   In addition to a more contemporary look, over the coming months I am planning to expand site content to include different types of international investment law cases.  With the support of Investor-State Law Guide (ISLG) to cover basic operating costs, italaw.com will continue to provide free, public and comprehensive access to international investment law jurisprudence.
 
I am seeking expressions of interests from lawyers and academics with a knowledge of international investment law who would like to serve as Associate Editors withitalaw.com.  Associate editors will work with me to add content to italaw.com and contribute to the goal of making italaw.com a comprehensive database of international investment law jurisprudence.  Associate Editors positions are unpaid, but your work as an Associate Editor will be recognized on italaw.com. There is also an opportunity to provide a contribution to ISLG, which will be expanding its editorial staff in conjunction with content expansion.   At this point, I am seeking three to six Associate Editors to work with me, each of whom would be willing commit to working on the site for two years.
 
With the help of student research assistants, the current plan is to expand italaw.com’s coverage in summer 2015 to include all ICSID cases, including cases arising under contracts and foreign investment laws.  The next priority will be to add the most commonly cited investment-related jurisprudence of other international tribunals including the International Court of Justice, the Iran–United Claims Tribunal, Claims Commissions and institutional and ad hoc international arbitration tribunals.  In addition, new data fields are being added for outcome, amount of damages, economic sector and counsel.
 
If you are interested in working as an Associate Editor with italaw.com, please email me at[email protected] to express your interest, attaching a copy of your resume.
 
There are still a few bugs to be worked out as the transition occurs to the new platform.  Some of the existing case data still needs to be migrated to the new site.  I hope this process will be complete within two weeks.  If you have any suggestions for improvements to italaw.com or encounter any problems, please let me know by email at [email protected].
 
Yours sincerely
 

 
Andrew Newcombe

Tie Votes at the ITC

One of the claims in the the latest WTO complaint, brought by Indonesia against a U.S. AD/CVD measure, is the following: 

The United States' imposition of anti-dumping and countervailing duty orders appears to be inconsistent with at least the following provisions of WTO law:

...

With respect to 19 U.S.C. § 1677(11)(B)'s requirement that a tie vote in a threat of injury determination must be treated as an affirmative USITC determination, Article 3.8 of the AD Agreement and Article 15.8 of the SCM Agreement, inter alia, because the law does not consider or exercise "special care."

The statute at issue states: 

(11) Affirmative determinations by divided Commission

If the Commissioners voting on a determination by the Commission, including a determination under section 1675 of this title, are evenly divided as to whether the determination should be affirmative or negative, the Commission shall be deemed to have made an affirmative determination. For the purpose of applying this paragraph when the issue before the Commission is to determine whether there is—

 

(A) material injury to an industry in the United States,

(B) threat of material injury to such an industry, or

(C) material retardation of the establishment of an industry in the United States,

 

by reason of imports of the merchandise, an affirmative vote on any of the issues shall be treated as a vote that the determination should be affirmative.

In a nutshell, if the ITC Commissioners vote on a determination, and the vote is a tie, the tie vote is deemed to be an affirmative determination.  Just to illustrate, where the issue is whether material injury exists, if there are 4 votes that material injury exists (and 2 that it does not), this leads to an affirmative determination; if there are only 2 votes that material injury exists (and 4 that it does not), this leads to a negative determination; and if the vote is split 3-3, this leads to an affirmative determination that material injury exists.  (That was probably clear without my illustration!)

I have long wondered whether this provision would be challenged at the WTO.  In this case, only threat of material injury was at issue, so (B) is the only provision of the statute that is being challenged.  The claims are under AD Agreement Article 3.8 and SCM Agreement Article 15.8.  Article 3.8 says:

With respect to cases where injury is threatened by dumped imports, the application of anti-dumping measures shall be considered and decided with special care.

SCM Agreement Article 15.8 is similar.

I'm not sure how they plan to argue the claim, but presumably they are thinking that the "special care" required under these obligations means that a tie vote cannot be deemed an affirmative determination in the case of a threat of injury allegation.  "Special care" means you need something more for threat cases.  I wonder whether there is a more general provision that could be used to make the same argument more broadly.

International Investment Obligations in Domestic Law

Here's more from the ISDS in TTIP debate between Lauge Poulsen, Jonathan Bonnitcha, Jason Yackee, on one side, and Freya Baetans, on the other. Poulsen, Bonnitcha, and Yackee say the following:

While the high quality of the US judicial system (and US laws) concerning foreign investors is beyond debate, we have heard concerns from some European parties that without ISDS, EU investors will not be able to enforce their TTIP rights in US courts. This argument is not particularly convincing. It makes sense only insofar as there is an underlying justification for including enforceable investment protection provisions in TTIP. Our analysis in this paper suggests that such a justification is lacking.

Even assuming, for the purposes of argument, that there were a coherent policy rationale for ensuring that TTIP provides EU investors in the US with a set of enforceable investment protections that go beyond what they would otherwise be entitled to under US law, the inclusion of ISDS in TTIP would be unnecessary. It is true that, under the US Supreme Court’s Medellin case law (which raises a number of subtleties regarding so-called ‘non-self-executing treaties’ that we do not delve into here), some US treaties may indeed be difficult or impossible for private parties to enforce in US court. However, access to US courts can be assured either by clearly indicating in TTIP that the US considers the treaty to be ‘self-executing’, or by having the US pass appropriate implementing legislation. In other words, if one believed that was a problem of domestic-court enforceability of TTIP rights in the US, the appropriate response by the EU would be to insist in its negotiations that the US pass implementing legislation securing a right to access US courts for certain TTIP violations, not to include ISDS in TTIP.

Baetans responds with this:

To state that domestic courts should ‘suffice’ for the handling of investment claims overlooks the fact that many domestic courts are not allowed – meaning that it is not within their legal scope of jurisdictional competence – to apply public international law, such as BITs, directly. Moreover, US courts that are in theory allowed to do so have a track record of nevertheless not accepting any claims of individuals based on any form of international law.9 (Indeed, the same is true in Europe.10 For example, on 13 January 2015, the Grand Chamber of the European Court of Justice held, inter alia, that the NGO Stichting Natuur en Milieu was not entitled to invoke the Aarhus Convention of 1998 on access to information, public participation, and access to justice in environmental matters, in spite of an explicit reference in the EU regulation implementing this Convention.11 Importantly, this was decided upon at the request of the European Commission, Council and Parliament – some members of which are now arguing that investment protection standards in international treaties should be enforced by domestic and EU courts. Why would private investors be allowed to rely upon international treaties before such courts, while NGOs are not?)

Hence stating that “the appropriate response by the EU would be to insist in its negotiations that the US pass implementing legislation securing a right to access US courts for certain TTIP violations”, as Poulsen, Bonnitcha and Yackee do, shows a lack of knowledge about US negotiation policy and the actual practice of domestic courts. Looking at US practice concerning domestic enforcement of individual rights under international treaties,12 it is highly unlikely that the US would ever agree to pass legislation that would make substantive treaty standards domestically enforceable. For example, the US only ratified the International Covenant on Civil and Political Rights on the condition that its standards would not be enforceable before US courts.13 In practice, if substantive protection for investors is included in TTIP, the only option of redress for violations of such standards would be through some form of international dispute settlement mechanism.

On the surface, they seem to be debating whether TTIP investment obligations could be enforceable directly in U.S. courts.  In other words, perhaps a foreign investor could go to U.S. court and argue that a U.S. governmental entity had violated its international obligations. 

I'm not sure this is a live issue, though.  I don't think Poulsen, Bonnitcha, and Yackee are actually advocating this; rather, they are just saying that if you wanted TTIP investment obligations to be directly enforceable (which they think is unnecessary), they could, in theory, be enforced directly without ISDS, by relying on domestic law.

But it is an interesting idea to have international investment obligations incorporated into domestic law. For some countries, this might actually be a possibility.  Almost certainly not in the U.S. or EU, though.

What I would want to see, rather than international investment obligations being invoked in domestic courts, is domestic law obligations that reflect, within a somewhat broad discretionary range, principles related to expropriation, due process, etc., as found in many countries' domestic laws (and also in investment obligations).

ISDS as Good Governance

There's a good back and forth on ISDS in TTIP between Lauge Poulsen, Jonathan Bonnitcha, Jason Yackee, on one side, and Freya Baetans, on the other.  I'm going to get 4 or 5 blog posts out of all this!

I'll start with something from Poulsen, Bonnitcha, and Yackee:

One of the most contentious issues in existing legal and academic debates about investment treaties is whether the constraints they impose on the exercise of government powers should be understood as ‘costs’ or, rather, as standards of ’good governance’ that it would be in the interest of every state to meet, even in the absence of investment treaties (Bonnitcha, 2014, sec. 2.4.3). This debate raises complex and contested questions about the manner and extent in which governments should intervene in their economies. In this paper we do not propose an overarching theory of desirable and undesirable forms of government regulation. All the member states of the EU are democracies. We suggest that, in a democracy, the appropriate benchmark for valuing the cost associated with any restriction on policy space is the government of the day’s own assessment of the public interest. Accordingly, the impact of TTIP’s investment protection provisions on EU policy space can be understood as the extent to which the treaty prevents the EU and the EU member states from adopting or applying policies that the relevant government would have preferred to apply in the absence of the treaty.

Good governance as an issue for international law is a relatively hot topic these days in legal academia, but there are no easy answers.  International oversight of domestic governance, through ISDS or otherwise, is a complex issue. People have very different perspectives on these matters.  One person might say that a particular government action was good governance; another might say it was bad governance.

To take one example, you may have heard of the issue of flame retardant chemicals in furniture and kids' clothing.  This is something certain governments started requiring many years ago, purportedly for fire safety reasons.  As the Chicago Tribune described it, however, such laws resulted from lobbying by cigarette companies and chemical companies, and the health risk from exposure to the chemicals far exceeded any fire prevention benefits.

So what does "good governance" look like on the issue of a government pursuing "safety" in this way?  It's easy to imagine how foreign investors would be affected, either by the decision to adopt such measures or recent attempts to pull them back, so it's the kind of issue where an ISDS claim is certainly possible.  If such measures were reviewed by an ISDS tribunal, would the tribunal be able to decide whether the measures constituted "good governance", in the sense of complying with a general standard such as "fair and equitable treatment"?  Should flame retardant chemicals have been required for safety reasons?  Should they have been prohibited for health reasons?  What is the appropriate "governance" here, and can investment treaties get us to it?

I know what I think of the flame retardant chemical issue, but these can be very difficult judgements to make.  (And there are lots of them out there.  This is not an isolated case, although it may be an extreme one.)  What role should there be for ISDS (and other international courts) to make these judgements?  ISDS tribunals are already doing this, so we really need to talk about it, but it doesn't seem like it has become part of the policy debate (as opposed to the legal academic discussion) on ISDS yet, at least not in a clear and coherent way.  There's lots of vague talk about "policy space," but good governance requirements go beyond the issue of carving out certain policies from international economic law rules, as they apply to any and all policies.

Can ISDS Serve as an International Antitrust Court?

This is from three well-known labor economists, writing in support of the TPP:

If passed, the TPP also would create a powerful template for future trade deals, including with China, which would move the U.S. closer to resolving conflicts the WTO has been unable to handle. Consider, for example, the case of Qualcomm, a highly successful San Diego-based maker of chipsets for wireless communications that earns half of its global revenues in China. The company’s substantial share of the Chinese chip market attracted the attention of the Chinese government, which proceeded to extract $1 billion in fines for alleged anti-competitive practices. In the U.S., where Qualcomm also sells its chipsets, the company has faced no such anti-trust penalties.

Under current trade law, Qualcomm has little recourse to appeal its treatment by the Chinese government. Under a trade agreement with China like the TPP, however, Qualcomm and other U.S. companies would have access to an investor-state dispute settlement mechanism. Contrary to criticism from Sen. Elizabeth Warren (D-Mass.), this mechanism would protect U.S. firms against predatory regulatory interventions by member governments. Anti-competitive asymmetries in the world trade system disproportionately harm U.S. firms at present. Enactment of the TPP would establish protections against these asymmetries for U.S. companies.

I've asked around, and I can't get any answers from people as to whether the Chinese action against Qualcomm was a reasonable antitrust action or a "predatory regulatory intervention."  If anyone has a view, feel free to express it in the comments!

The suggestion that ISDS could be used against antitrust/competition policy actions was something I hadn't thought of before.  Would this mean that, in the future, Microsoft or Google could use ISDS in the TTIP -- if that happens -- to challenge the various European actions taken against them?  And could a foreign investor bring an ISDS claim based on an action not taken against one of its competitors?

A New Structure for Appellate Body Reports

The Appellate Body has announced a change related to how it approaches summaries of parties' arguments in its reports:

The Appellate Body intends to continue the practice of asking participants in appeals to submit executive summaries of their written submissions. The deadlines for filing such summaries will also remain unchanged, namely, the same deadline as for the written submissions themselves. Nevertheless, the Appellate Body is introducing two new aspects to this practice. First, the Appellate Body will request not only the participants but also each third participant that elects to file a written submission in an appeal to submit an executive summary of such written submission at the same time. Second, rather than using the executive summaries to assist in drafting its own description of the arguments of the participants, the Appellate Body will instead annex to each of its reports the executive summaries submitted by the participants and third participants in the relevant appellate proceedings. A similar practice has been followed with success by WTO dispute settlement panels for some time. This change will enable Members to ensure that their own positions and requests to the Appellate Body are accurately reflected, in their own words, in Appellate Body reports. It will also enable the Appellate Body to make optimal use of its limited resources, and to re-direct resources formerly used to summarize the arguments of the participants and third participants to other areas of appeal work.

The Appellate Body intends to implement this approach on a trial basis, as from the next appeal. At present, two panel reports have been circulated and may be subject to appeal. The parties in these two disputes (Peru – Agricultural Products (WT/DS457) and China – HP-SSST (Japan) / China – HP-SSST (EU) (WT/DS454 / WT/DS460)) have been informed of how the Appellate Body intends to treat their executive summaries in the event of an appeal. ...

(emphasis added)  So, instead of the Appellate Body offering its own summaries of the parties' arguments at the front of the report, it will just attach the parties' summaries to the back.

In terms of efficiency, this makes a lot of sense.  My one minor concern is that the parties will only offer sanitized versions of the arguments, while the Appellate Body, now and then, includes an important insight or two as part of its own summaries (for example, something said during the oral hearing).

Of course, none of this is a substitute for the full written submissions, which some governments post on their web sites.  Of particular interest to me, at the panel stage, have always been the answers to the panel questions, which USTR usually posts (I'm not sure anyone else does this).

More on a TPP Secretariat

Continuing with the theme of issues I think are interesting, but few people are talking about, let me raise again the question of whether there should be a TPP Secretariat.  This is from Deborah Elms:

The TPP requires a robust Secretariat to ensure the long-term health and success of this trade agreement.

This is not a topic that excites very many people.  Everyone is much more interested in discussing what is or is not included in the agreement, getting the deal done, and discussing the timing of it all. Yet if the right framework is not chosen for the TPP as a whole, the entire agreement will swiftly fade into irrelevance.  More than 5 years worth of hard bargaining could be lost along with most of the promises of future benefits.

...

The option currently on the table in the TPP consists of a set of standing committees, similar to what has been used in different bilateral trade agreements in the past. 

Yet anyone who has ever worked in a large business or volunteer organization immediately grasps the problem of leaving important tasks to a committee.  Not all committees are hopeless, of course.  But the success of many committees relies on finding committed and determined individuals who have (or create) the time to focus relentlessly on committee tasks.

...

Under most trade agreements, changes and monitoring are set to take place in various committees—for goods, services, etc. as well as an overall coordinating committee group.  But even in most regular deals, the committee structure rarely works as promised.  The groups do not meet as originally planned.  National level trade desk officers in charge of attending the committees do not really have time to pay attention to the agreement in between review periods at all.   

The reality is that very little change ever happens in the review sessions.  To even get members in a bilateral agreement to make a change often requires parties to agree on a protocol of amendment in the first place.   No good bureaucrat is likely to argue for drafting a new protocol of amendment unless the issue under discussion is extremely critical.

So existing agreements quickly get out of date.  This is not supposed to happen in the TPP, because it is meant to be a “living agreement.” (More on this idea in a future post.)  But without a dedicated group of people monitoring the deal, it is not at all likely that the TPP will actually be amended as necessary over time. 

For these reasons alone, the TPP needs a standing Secretariat to keep track of the agreement. 

But the argument for a specialized set of experts to manage the agreement gets even more compelling when you realize the TPP is supposed to expand again in the near-term.  The current teams of negotiators are likely to be disbanded as soon as the TPP agreement is concluded.  Many of these folks will be heading off to a well-earned retirement or new careers entirely after five grueling years of continual travel and hard bargaining.

There are already a number of countries like South Korea, Taiwan, Columbia and the Philippines that have expressed interest in joining the TPP as soon as possible.  By 2018, the TPP could have 19 countries working together to craft accession terms and market access commitments.  Managing all these diverse interests will require a dedicated Secretariat.

...

It seems clear that the TPP requires a dedicated Secretariat.  Current negotiating members are not enthusiastic about this idea, as it requires deciding on budgets, staffing and the identification of a suitable host.  But in the absence of a Secretariat, it is likely that many of the benefits of the TPP will be lost or will not be fully exploited.  It would be a shame to finally get a deep, broad and important agreement completed and watch it crumble for want of a decent institutional framework.

I don't hear anyone else talking about this, and I haven't seen any leaks about discussions of this issue, so I suspect it won't happen.  But I think she is right about the need for a permanent institution to manage the TPP.  I suggested having the WTO Secretariat do it, or linking the two secretariats somehow, because I worry about the effect of competing secretariats.  But regardless of which approach to a secretariat that you take, I agree that it would be useful to have something in place if you want the TPP to have a real impact.

More on That Interesting Debate

In the comments on that last post, Marc Benitah asked why I thought this was such an important debate. I had been planning to explain this anyway, so I'm glad he asked.

I think the distinction between "protectionism" and "terms of trade manipulation," as possible objectives of trade rules, is important because of the scope each one sets for the trade regime.  With anti-protectionism as its goal, the system can use traditional and familiar provisions such as GATT Article III and TBT Agreement Article 2.1 to identify and prohibit protectionist measures.  I see this approach as widely accepted and legitimate, and the core of the trade regime.  (Of course, we can argue all day about what exactly Article III means and what protectionism is.  Is it about intent or effect?  What exactly do we do with likeness?  We'll never agree completely, but there are a range of meanings that are easy enough to understand, and they make the system work pretty well, in my view).

By contrast, with terms of trade manipulation, the scope of the system is a lot less clear to me.  Keep in mind, the optimal tariff, I'm pretty sure, is not the only measure the proponents of this view have in mind.  They also envision that domestic laws and regulations could be used for terms of trade manipulation.  So how would the trading system address such measures through specific legal obligations?  How would the Seal Products measure, or the Tuna-Dolphin measure, or plain packaging laws be examined if the issue was whether they constitute terms of trade manipulation?  I'm not sure, and that's what worries me about this approach.  If they want to use the exact same provisions we have now, and interpret them all in the exact same way, then I guess there's no difference.  But I'm not completely sure this is the case.  

Johnathan Dingel raises (on twitter) another issue:  There are actually some additional theories (pp. 319-341) about the purpose of trade agreements.  There's the domestic commitment theory (a trade agreement "can serve as a commitment device for a government to close the door to domestic lobbies"), and several new theories:  "“firm-delocation” externalities in the presence of free entry, (ii) “profit-shifting” externalities, and (iii) trade-volume externalities when prices are determined by bilateral bargaining.

My own theory, for which I don't have a name yet and which is probably an oversimplification, is that trade agreements are only about economics to a limited extent.  If economists were running things, we all would have eliminated protectionist measures long ago.  But while economists have a little input on trade (enough to prevent protectionism from spiralling out of control), trade policy is mostly made by voters and the politicians they elect.  As a result, the main force in trade policy is not economics but plain old nationalism: "us" versus "them."  For example, people support "Buy America" provisions not because they make Americans better off (although a small number of people may think they do), but because they have the word "America" in them.  (How can you vote against America?!?!).  And they get fired up about currency manipulation by China, not because they are worried about the Chinese government's build-up of foreign currency reserves, but because they hear the word "China."  The only way we can keep this nationalism in check and convince anyone ("us" or "them") to support trade agreements is if we all agree to be less protectionist at the same time.  Most people believe "they" are cheating and "we" are not, so trade agreements serve to reassure us that "they" have promised not to cheat and therefore we can relax our nationalist impulses a bit.  Thus, trade agreements are as much about international relations and psychology/sociology as they are about economics, although hopefully they do incorporate some good economics (not always the case -- I'm looking at you, anti-dumping!).

The Most Interesting Trade Debate You've Probably Never Heard Of

There's a great debate that has been going on slowly and sporadically, over a period of years, about the purpose of trade agreements.  On one side are Don Regan of Michigan Law School and economist Bill Ethier; on the other side are economists Kyle Bagwell and Rob Staiger, and several others (I'm not sure I know the names of all the people who would identify themselves as being on this side of the debate, so I'll leave it at that).  However, when I mention the issue to most people, they have absolutely no idea what I'm talking about.  They haven't heard a thing about it.  But it's fascinating, and gets at the core purpose of trade agreements, so I'd love to see it talked about more. Regan has a new article (ungated version here) out on it, following up on a 2006 JIEL article. 

The basic issue is this:  What is the core purpose of trade agreements?  Regan explains that "in the [trade] practitioners’ story, governments make trade agreements to reduce protectionism."  That is the story most people are familiar with, and take for granted.  We've all heard of protectionism; we all have a sense of what it is, although definitions may vary.

By contrast, he says, there is another view: "in the Bagwell-Staiger/Grossman-Helpman model, trade agreements will never reduce protectionism as we normally understand it."  Rather, "[t]he sole function of trade agreements in the Bagwell-Staiger/Grossman-Helpman model is to eliminate terms-of-trade manipulation, unilateral trade policy that aims at improving the home country’s terms of trade. Terms-of-trade manipulation is a completely distinct phenomenon from protectionism, reflecting a different governmental motivation."  

Right now, many of you are probably thinking, "terms of trade manipulation" sounds familiar, but I can't quite recall what it means.  Here's an example described in the article:

Imagine two similar-sized countries, trading two goods, with national income-maximizing governments. Each country can benefit from imposing an appropriately chosen “optimum tariff”. The tariff reduces the country’s imports, and hence brings about a lower world price for those imports (it improves the country’s terms-of-trade); the country in effect collects some tariff revenue from foreign exporters (which I shall refer to as the “terms-of-trade tariff revenue”). The tariff will cause some deadweight loss in the local economy, but if the tariff is properly chosen, this loss will be outweighed by the terms-of-trade tariff revenue. So, both countries will impose optimum tariffs.

In this view, a trade agreement comes about when both countries agree to give up their optimal tariffs.

So, on the one side, you have trade agreements as a way to rein in protectionism; and on the other, trade agreements as a way to rein in terms of trade manipulation, such as optimal tariffs.  (Of crucial importance, these are not the same thing at all, which I won't elaborate on here, but we can discuss in the comments).

I have a few thoughts on all this.

First, as much as I would like the debate to be a simple choice between these two alternatives, I wonder how newer "global governance" type issues, such as IP protection and labor standards, fit within these competing views?  Is it still possible to describe a single purpose to the trade regime, or does it pursue multiple policy objectives that need to be discussed separately?  Trade agreement provisions extending copyright terms, for example, may need to be debated on their own terms, rather than in the protectionism/optimal tariffs framework.

Second, one key distinction I see between the two views is that protectionism seems like it doesn't have to be all that precise.  If you think this sort of thing helps domestic producers (which I don't!), a 10% or a 20% or a 30% tariff would all help to some degree, no matter what the circumstances (size of country, etc.).  By contrast, an optimal tariff seems like a more delicate exercise, where you have to get the rate just right; and often I hear that it only works for countries with large markets.  As a result, perhaps, one of the criticisms of the "terms of trade manipulation" theory is that such a practice does not exist in the real world (Regan says, "[t]he evidence suggests that countries do not, and would not, engage in terms-of-trade manipulation").

Third, in response to the suggestion that terms of trade manipulation does not exist, the defenders of this idea say the following (as explained by Regan):

Bagwell and Staiger acknowledge that practitioners do not talk about terms-of-trade manipulation, and that this casts doubt on the practical relevance of their model. In response, they point out that practitioners talk a great deal about market access. So, to defend the relevance of their model, Bagwell and Staiger argue that “we may interpret [. . .] ‘terms-of-trade gain’ and ‘market-access restriction’ as [. . . ] phrases that describe the single economic experience that occurs when the domestic government raises its import tariff and restricts foreign access to its market.”

On this point, Regan says that although "market access" and "terms-of-trade gain" may be regarded as equivalent in many contexts, they are not equivalent in the context that matters to the question of whether countries manipulate their terms of trade, namely, how unilateral tariffs are motivated.  As for me, I've said before that I think "market access" is a term that has multiple meanings, and therefore may not be all that useful for trade law.  From a business standpoint, of course, the term is clear:  Producers simply want better access to a foreign market.  The means that are used to achieve this do not matter much to them.  But for describing policies and legal principles, I'm not sure market access is very helpful.  The principles used to obtain market access can vary considerably.  Market access might mean reducing tariffs; or it might mean repealing non-discriminatory regulations because they are not based on science; or it might mean repealing regulations where a less trade restrictive alternative exists. There are vastly different implications from these different forms of market access, and thus grouping everything under the general notion of "market access" misses important distinctions.

Anyway, I think it's an important debate, and I'd love to see more people actually debating it. Maybe this blog post will generate some interest.

State Subsidy Competition Is Bad

From a new paper by economist Ralph Ossa:

U.S. cities, counties, and states spend substantial resources on subsidies trying to attract firms. According to a New York Times database which I describe in detail later on, expenditures for such subsidies range from $33.4 million per year in Nevada to $19.1 billion per year in Texas and total $80.4 billion per year nationwide. This amounts to $12 per citizen per year in Nevada, $759 per citizen per year in Texas, and $254 per citizen per year nationwide. Regional governments provide these subsidies using a variety of policy instruments including tax abatements, cash grants, loans, and so on.

What motivates regional governments to subsidize firm relocations and what are the implications of the subsidy competition among them? In this paper, I address these questions using a quantitative economic geography model which I calibrate to U.S. states. I show that states have strong incentives to subsidize firm relocations in order to gain at the expense of other states. I also show that subsidy competition creates large distortions so that there is much to gain from a cooperative approach. Overall, I find that manufacturing real income can be up to 3.9 percent higher if states stop competing over firms.

We all know that subsidy competition is bad for overall economic welfare.  This paper tries to quantify just how bad it is in the context of U.S. states competing for firms.  It has lots of equations I can't follow, but unless somebody comes up with an alternative calculation, I'm going to rely on these figures. (I haven't seen figures relating to similar competition by national governments.)

The real challenge, of course, is not the calculations, but the politics: trying to convince governments to end this competition.

Fifteen Fully Funded PhD Positions in Dispute Resolution in International Law

From the International Max Planck Research School for Successful Dispute Resolution in International Law:

Fifteen fully funded PhD positions in International Law, starting in 2015 and 2016, are currently open at the International Max Planck Research School for Successful Dispute Resolution (IMPRS-SDR), a doctoral school established in Heidelberg (Germany) and Luxembourg.

The participating institutions are:

- the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law

- Heidelberg University

- The University of Luxembourg

- The Max Planck Foundation for International Peace and the Rule of Law (Heidelberg); and

- The Max Planck Institute for Comparative Public Law and International Law (Heidelberg).

Additionally, in cooperation with the Permanent Court of Arbitration in The Hague, the IMPRS-SDR runs a funded internship program in international arbitration for doctoral students.

The Research School

Founded in 2009, the Research School aims to examine and analyse different mechanisms for solving international disputes. Research projects may concern a number of topics related to international dispute resolution, including international arbitration, international economic law, and inter-state dispute resolution.

The IMPRS-SDR examines and compares international dispute settlement procedures primarily from a legal perspective, while also considering wider political, sociological and psychological aspects. In light of the possible EU-US Transatlantic Trade and Investment Partnership (TTIP), the efficiency and fragmentation of international dispute resolution has become even more relevant. Matters relating to this topic will continue to be a significant focus of the Research School.

Applications

Ten successful applicants will be taken up for fully funded PhD positions starting 1 June 2015; an additional five fully funded PhD positions will be available on 1 January 2016. Successful candidates will hold a research contract, which covers all the costs of the PhD programme itself as well as a competitive stipend, compatible with the costs of living in the cities where the doctoral candidate is based.

Applications may be sent, by specific form available at the MPI webpage, until 1 April 2015. Successful applicants will start their PhD under the supervision of one of the participating Professors, in Luxembourg or Heidelberg, depending on their research topic and the appointed supervisor. Funded PhD students will be required to live in Heidelberg or Luxembourg for the period of their PhD. Ideally, students finish their PhD theses within three years.