International Economic Law and Policy Blog

Guest Post: Make Russia a Trade Pariah: Deny it Normal Trade Relations

This is a guest post from GW professor Susan Ariel Aaronson

Policymakers around the world are searching for ways to punish Russian leaders for their aggression in Ukraine.  Generally, they have relied on economic and financial sanctions, but sanctions are an imperfect tool.  While sanctions can be effective at punishing targeted individuals and activities in Russia, they can also lead to higher prices and limited supplies of various goods and services in the home market.  Moreover, sanctions may not change  Russia’s behavior over time.  But the US and its allies can use trade policy more creatively to alter Russia’s behavior, as it did towards the former Soviet Union in the 1970s. The US and its allies can deny normal trade relations (most-favored nation status) to Russia, as Representatives Lloyd Doggett and Earl Blumenauer have proposed.

At first glance, it may seem unfair to deny Russia its right to be treated fairly in trade. Both Russia and the US are members of the world’s largest most important trade agreement—the 164 member WTO. Under WTO rules, countries cannot discriminate between their trading partners by providing or denying them a benefit (a tariff cut).  Members must treat their fellow members in an equivalent manner.

However, the architects of the WTO and other trade recognized that there are times when nations must breach the rules to achieve essential domestic policy goals or to protect national security. Hence it provided member states with two outs -- temporary waivers or exceptions under the rules.  Should another WTO member view such an action as unfair, it can challenge a member’s use of such waivers or exceptions in a trade dispute.

Ironically, the Russian Federation already uses the national security exception to block Ukrainian trade. In 2014, Russia claimed that Crimea and the Donbas region were Russian territories and in an act of war, seized control.  Soon thereafter, Ukraine asserted that the Russian Federation was blocking the movement of Ukrainian goods that needed to move through Russia to third countries. After consultations with Russia failed, it initiated a trade dispute against Russia at the WTO in 2016. In 2019, the dispute settlement body sided with Russia, noting that only domestic officials could determine what is a national security threat and how to address such a threat.  Hence, if others were to take action against it now, Russia could not argue that denying Russia normal trade relations (most favored nation status) is unfair or extraordinary.

Moreover, the US and its Western allies have a long history of linking trade and human rights, particularly towards Russia.  After the second World War, Soviet officials undermined the human rights of many citizens, denying them freedom of speech, movement, and association.  In 1974, Congress decided that carrots might work better than sticks to change the country’s behavior towards its citizens.  During this period, many Communist countries were not members of the GATT (the precursor to the WTO).  Under the Jackson-Vanik Amendment, Congress required the president to provide or restore nondiscriminatory treatment (trade benefits) if a country allowed its citizens freedom of immigration. Members of Congress used hearings to bring attention to human rights problems in Communist nations.  Jackson Vanik also became a major tool to hold China accountable for its respect for human rights, as it sought to join the WTO.

But after the fall of the Berlin Wall, many once Communist countries including Russia wanted to use trade to grow their economies. They sought to join the WTO.  The WTO requires each member to accord newly acceding members “immediate and unconditional” most-favored-nation status.  The US had to comply.  So legislators  created a new mechanism that could keep Russia on a short leash. In 2012, Congress also passed the Sergei Magnitsky Act in honor of the Russian anticorruption campaigner who died in a Russian prison camp.  It required the President to identify and impose sanctions on any person determined to have been involved in the detention, abuse, or death of Magnitsky and  required the President to identify any person determined to be responsible for gross violations of human rights against individuals who seek to expose corruption or defend and promote “internationally recognized human rights and freedoms” within Russia. In 2017, Congress passed the Global Magnitsky Act, which provided the United States with tools to impose some measure of accountability against foreign perpetrators, particularly when relevant foreign governments are unable or unwilling to do so.

The Magnitsky Act inspired other nations to adopt a similar approach. According to a recent study, by the EU Parliament, these key trading nations have identified human rights concerns in Belarus, Saudi Arabia, Russia, Myanmar and China and enacted sanctions to link trade to human rights.

Denying Russia normal trade relations is not an ideal solution to the ongoing violence.  It will take time to pass legislation in the US, EU, UK and Canada to deny Russia normal trade relations-time in which Russia can continue to wage war in Ukraine. Moreover, as with sanctions, the price of Russian goods will rise in these markets. But we need to use every opportunity to remind Russia’s leader that when you undermine the rule of law, you can’t expect the rule of law in trade. Russia should be a trade pariah.

Congressmen Blumenauer and Doggett Introduce Legislation To "End 'Favored Nation' Trade Relations with Russia, Bar Russia From WTO"

U.S. Representatives Earl Blumenauer and Lloyd Doggett are introducing legislation to "end Permanent Normal Trade Relations (PNTR) with the Russian Federation and to initiate a process to formally deny Russia access to the World Trade Organization (WTO), following its unprovoked invasion of Ukraine."

The legislation is here. Its main provisions are as follows:

SEC. 2. WITHDRAWAL OF NORMAL TRADE RELATIONS TREATMENT WITH THE RUSSIAN FEDERATION.

Notwithstanding the provisions of title I of the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012 (Public Law 112–208; 19 U.S.C. 2434 note) or any other provision of law, effective on the date of the enactment of this Act—

(1) normal trade relations treatment shall not apply pursuant to section 102 of that Act to the products of the Russian Federation; and

(2) normal trade relations treatment may thereafter be extended to the products of the Russian Federation only in accordance with the provisions of chapter 1 of title IV of the Trade Act of 1974 (19 U.S.C. 2431 et seq.), as in effect with respect to the products of the Russian Federation on the day before the effective date of the accession of the Russian Federation to the World Trade Organization.

SEC. 3. COOPERATION WITH UNITED STATES ALLIES AND PARTNERS.

(a) IN GENERAL.—The President shall encourage allies and partners of the United States—

(1) to consider taking similar actions such as the withdrawal of permanent normal trade relations treatment for products of the Russian Federation; and

(2) to condemn the Russian Federation’s recent aggression in Ukraine at the World Trade Organization (WTO).

(b) ACCOUNTABILITY AT THE WTO.—The President shall direct the U.S. Permanent Mission to the World Trade Organization to use the voice, vote, and influence of the United States at the WTO to seek the suspension of the Russian Federation’s membership in the WTO.

The domestic law aspect of this new legislation seems pretty straightforward. If this law is enacted, permanent normal trade relations for Russia will end and we will go back to a requirement of regular confirmation of Russia's normal trade relations status. Given Russia's invasion of Ukraine, it's safe to assume that normal trade relations would not be granted at least until that conflict is resolved.

The international part of the legislation is more complicated. It first says that the President shall "encourage allies and partners of the United States" to do two things: 1) do the equivalent of withdrawing permanent normal trade relations themselves; 2) condemn Russia's Ukraine aggression at the WTO.

The process for kicking Russia out of normal MFN treatment will depend on each country's domestic legal system. I wonder how many countries would be willing to do that. Possibly many, but certainly not all.

With regard to condemning Russia at the WTO, maybe a few countries will agree to this, but I can imagine many countries arguing that the WTO is not the right forum for this.

As to the last point about "seek the suspension" of Russia's WTO membership, I'm not sure exactly what they have in mind here. Former WTO Secretariat official Peter Ungphakorn tweeted about these issues yesterday, and I'm not sure I have anything more to add. I feel like this would be difficult to accomplish, and just focusing on the practical issue of excluding Russia from normal trade treatment would be the easier route.

One other point about Russia and the WTO is the impact of all this on ongoing disputes involving Russia. There are several of these, and two of them are just getting going: The EU requested consultations on Russian wood export measure in January (and just submitted a revised request); and a panel was just composed in the Russian Federation - Certain Measures Concerning Domestic and Foreign Products and Services (DS604) case brought by the EU. I assume these disputes will be put on hold.

Call for Papers from PEPA/SIEL

This is from PEPA/SIEL:

We are pleased to announce that the 2022 PEPA/SIEL Conference will be held at Birmingham Law School, University of Birmingham in hybrid form on 8-10 June 2022. SIEL’s Postgraduate and Early Professionals/Academics Network (PEPA/SIEL) is interested in fostering collaboration and mentoring opportunities for emerging academics and professionals in international economic law. We warmly encourage them to submit their abstract in accordance with the conditions stated in the Call for Papers by 15 March 2022.

More details here: https://www.sielnet.org/11th-conference-of-the-postgraduate-and-early-professionals-academics-network-of-the-society-of-international-economic-law-pepa-siel-university-of-birmingham-8-10-june-2022/

Non-Discrimination under Section 301: Canadian Digital Services Taxes

This is from a USTR submission to the Canadian government on a proposed Canadian digital services tax:

Thank you to the Government of Canada for this opportunity to comment. The United States has serious concerns about the Canadian Government’s plan to enact a Digital Services Tax (DST).

The Canadian Government’s legislative proposal for a DST, as described in its Notice of Ways and Means Motion to introduce an Act to implement a Digital Services Tax, would implement a three-percent DST on revenue from certain digital services. The tax would apply to businesses with gross revenues of at least EUR 750 million (at least USD 850 million) and at least CAD 20 million (more than USD 15 million) of certain in-scope Canadian revenues. If implemented, the proposed DST would be payable with respect to revenues retroactively to January 1, 2022, despite the proposed entry into force date of “not earlier than January 1, 2024”.

...

As Canada is fully aware, the United States has serious concerns about measures that single out American firms for taxation while effectively excluding national firms engaged in similar lines of business. Based on previous communications from the Canadian Government and its officials, the United States understands that the Canadian DST proposal will duplicate most aspects of the DSTs adopted in France, Italy, Spain, Turkey, and the United Kingdom. The United States found these DSTs (and others) to be actionable under Section 301 of the United States Trade Act of 1974 and concluded that these DSTs are discriminatory and burden U.S. commerce. Any tax adopted by Canada would be assessed against the same standard.

The United States urges Canada to abandon any plans for a unilateral measure and instead redouble its commitment to the rapid implementation of Pillar One of the October 8 OECD/G20 agreement and the completion of a multilateral convention in 2022. We look forward to continued cooperation in our OECD/G20 efforts.

Based on this submission, it seems as though USTR is saying that the existence of a disparate impact on foreign companies is enough to violate the principle of non-discrimination under Section 301. The intent of the measure -- that is, whether it was taken for protectionist purposes -- doesn't seem to be part of this USTR analysis.

However, in past Section 301 cases on these same issues, USTR's reasoning did look at intent. For example, on the French digital services tax, USTR found:

The evidence collected in this investigation, including witness testimony, written comments, news reports, and expert commentary, indicates that the French DST is intended to, and by its structure and operation does, discriminate against U.S. digital companies. First, statements of French officials show that the DST is intended to target certain U.S. digital companies and not French companies. Second, the selection of the services covered by the tax, including carve-outs in the definition of such services, targets U.S. companies and not French companies. The DST’s revenue thresholds likewise target U.S. companies as opposed to French ones. Finally, the DST’s relationship to other taxes discriminates against U.S. companies.

Presumably, then, if USTR were to undertake a Section 301 investigation on the Canadian measure, it would try to present some evidence on intent (subjective or objective). I'm not sure what they would find in this regard, and it will be interesting to see what Canadian officials have been saying about the measure.

In addition, I would expect the Canadians to push back and explain that there is a clear non-protectionist purpose behind this measure and the target is not U.S. companies but rather large companies (or whatever the target is).

It's also worth noting in this regard that in the WTO context, USTR has argued that disparate impact is not enough. 

Guest Post: Does EU’s Anti-coercion Instrument violate Art. 23 of the DSU?

This is a guest post from Dr. iur. Cornelia Furculita, Postdoctoral Research Fellow at the Chair of Public Law,  European Law and Public International Law, German University of Administrative Sciences Speyer

Under its Trade Policy Review of 2021, the EU engaged to strengthen its toolbox to protect itself from unfair trading practices, including through the preparation of an anti-coercion instrument (ACI). In December 2021 the Commission published the proposal for the ACI.[1]

The ACI proposal is set to deal with measures of economic coercion, namely measures which comply with two conditions: when 1) a third country applies or threatens to apply measures affecting trade or investment; and 2) it does so with the aim ‘to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a Member State’, ‘interfering in the sovereign choices of the Union or a Member State’. Additionally, the proposal provides in Art. 2 (2) several aspects that should be taken into consideration when determining whether the conditions for economic coercion are met, such as the intensity, severity, frequency, duration, breadth, magnitude of the measure, the presence of a pattern of interference, and whether the third country tried to settle the matter through coordination or adjudication. According to the proposed ACI, in case the Commission determines that there is a measure of economic coercion, the third country should be notified, requested to cease it and where appropriate, to repair the injury caused (Art. 4, para. 3). The Commission should then engage with the third country pursuing the end of the coercion, via such means as negotiations, mediation, conciliation, good offices, international adjudication (Art. 5, para. 1). While, the Regulation clearly favours encouraging the cessation of the coercion through other means, as a last resort, the Commission would impose countermeasures (Art. 7). Annex I to the proposal contains a list of potential future countermeasures, among them being the ‘suspension of tariff concessions […] and the imposition of new or increased customs duties, including […] beyond the most favoured-nation level’, and the ‘introduction or increase of restrictions on the importation or exportation of goods’. Accordingly, Annex I lists countermeasures that could violate substantive WTO rules. Although Art. 1 (2) of the ACI proposal requires that actions taken under it be consistent with international obligations, the Commission considers them justified under customary rules on countermeasures.

While a recent IELP blog post[2] generally analysed whether the ACI proposal violates WTO provisions ‘as such’ by applying the mandatory/discretionary distinction to it, the present post takes a distinct approach and deals specifically with the question of ACI’s conformity with Art. 23 of the DSU. The proposal’s origins lie in the process of amending the Trade Enforcement Regulation, during which the Committee on International Trade proposed that the Regulation include the possibility to respond with immediate countermeasures in case of a ‘clear breach of international law or a clear violation of trade obligations’, which clearly violated Art. 23 of the DSU.[3] Thus, it is interesting to see whether the ACI proposal has better chances to pass the legality test of Art. 23.

The Commission argues the legality of the proposal in light of the international customary rules on countermeasures. Art. 2 (1) read in light of the preamble of the proposal indicates that the Regulation assumes that in case of coercive measures which meet the established conditions, the principle of non-interference would be breached by the coercive third country in any case, irrespective of whether those measures would in and of themselves violate other international rules. Thus, the EU’s countermeasures will allegedly address violations of the non-interference principle of international law under Art. 49 of the ILC Draft Articles on State Responsibility. However, since DSU rules are lex specialis to general rules on countermeasures, if the first are applicable, the more general rules will be displaced. Art. 23.1 of the DSU mandates the use of the WTO dispute settlement to the exclusion of the customary rules on unilateral self-help codified in the ILC Draft Articles. Nevertheless, it does so only when WTO Members ‘seek the redress of a violation […] under the covered agreements’. The panel in US – Certain EC Products expressly stated that ‘the criterion for determining whether Article 23 is applicable is whether the Member that imposed the measure was "seeking the redress of" a WTO violation’ (para. 6.21). This approach was also confirmed in the EC – Commercial Vessels case where the panel said that ‘the phrase "seek the redress of a violation …" covers any act of a Member in response to what it considers to be a violation of a WTO obligation by another Member’ (emphasis added) (para. 7.196). The ACI proposal, however, does not necessarily deal with cases related to alleged WTO violations. In fact, the proposal’s declared purpose is to deal with measures of economic coercion, which, as mentioned, presumably violate customary international law rules, namely the principle of non-interference, regardless of whether these measures simultaneously violate WTO, FTA, or BIT rules. Accordingly, in case of countermeasures imposed under the ACI, the EU’s legal claim would not be based on WTO rules. Hence, the lex specialis, in the form of Art. 23 of the DSU, requiring the use of the WTO dispute settlement for disputes on WTO law, might not be considered applicable to the ACI dealing with breaches of customary international law. Similarly, there seems to be an agreement that when FTAs contain their own rules on dispute settlement rules, Art. 23.1 of the DSU is not considered violated even when the legal basis for the dispute at issue is an FTA norm replicating a WTO norm, due to the fact that the basis is still different.[4] Since Art. 23 of the DSU does not seem applicable to the ACI, the customary rules on countermeasures would not be displaced. The question whether the conditions under customary rules are met, such as whether the principle of non-interference is breached in case of economic coercion, lies outside the scope of this post.

Even though the ACI does not seem to be currently covered by Art. 23 of the DSU, the panel could find other evidence that would overturn this conclusion. Besides the statutory language, the panel could also take into consideration other aspects in the analysis under Art. 23 of the DSU, as it did in US – Section 301 case (paras. 7.110-7.130), i.e. administrative act accompanying the legislation, US statements before the panel, and US practice. While presently there is little evidence to reverse the conclusion reached above, in time if, for example, there is extensive practice showing that the EU is regularly using the instrument to adopt countermeasures before it challenges the same measures within WTO dispute settlement, or if other pertinent evidence emerges, the conclusion could be different.

Furthermore, the assessment could be different when considering ACI’s application in individual instances. Thus, Art. 23 of the DSU could be applicable to EU’s response measures adopted under the ACI Proposal, if a WTO panel determines that the evidence shows the measure at issue to actually seek the redress of a WTO violation. For example, in US – Certain EC Products (paras. 6.25-6.34), the panel established that there was ‘ample evidence’, consisting of the USTR Press Release announcing the measure, the request from USTR to the US Customs Service, memoranda of US Customs Service officials, and a press conference by the Deputy USTR, demonstrating that the measure at issue was seeking redress for a perceived WTO violation within the meaning of Article 23.1 of the DSU. Hence, although measures taken under the ACI should theoretically address violations of customary law, the WTO panel could analyse whether that particular measure is not in fact seeking the redress of a WTO violation. In case a coercive measure is simultaneously challenged by the EU within WTO proceedings, as it recently happened in the EU’s conflict with China in relation to restrictions taken against Lithuania, it might be more difficult for the EU to argue that its countermeasure is not taken against a WTO violation. In case there will be sufficient evidence, the panel could conclude that EU’s measure seeks redress against a WTO breach, rendering applicable the special WTO rules. Hence, the conformity of a specific countermeasure adopted under the ACI with Art. 23 of the DSU will depend on the specific facts of the case, especially the available evidence, such as the text of the measure or official statements. If Art. 23 of the DSU is applicable to a specific anti-coercion measure taken before obtaining the authorisation of the DSB in accordance with Art. 22 procedures, Art. 23 would be clearly violated. Therefore, specific unilateral response measures taken under the ACI, might be found illegal under Art. 23 of the DSU.

Although, Art. 1 (2) of the ACI proposal requires that actions taken under it be consistent with international obligations, in the Impact Assessment Report, the Commission itself stated that there can be cases in which the coercive measures are simultaneously in breach of WTO obligations, and that in these cases the EU would continue to also initiate WTO proceedings.[5] Therefore, the EU intends to make use of countermeasures under the ACI even though the situations the measures address amount to breaches of WTO law. 

 

[1] https://trade.ec.europa.eu/doclib/docs/2021/december/tradoc_159958.pdf

[2] https://ielp.worldtradelaw.net/2021/12/applying-the-mandatorydiscretionary-distinction-to-the-eus-anti-coercion-instrument.html

[3] For a detailed analysis see Wolfgang Weiß, Cornelia Furculita, ‘The EU in Search for Stronger Enforcement Rules: Assessing the Proposed Amendments to Trade Enforcement Regulation 654/2014’ 23 (2020) Journal of International Economic Law 1-20, https://academic.oup.com/jiel/article-abstract/23/4/865/5996541.

[4] Pamela Apaza Lanyi, Armin Steinbach, ‘Limiting jurisdictional fragmentation in international trade disputes’, (2014) 5 Journal of International Dispute Settlement, pp. 372–405, p. 397; James Flett, ‘Referring PTA disputes to the WTO dispute settlement system’, in A. Dür and M. Elsig (eds) Trade Cooperation: The Purpose, Design and Effects of Preferential Trade Agreements. World Trade Forum (New York: Cambridge University Press, 2015), pp. 557–558.

[5] https://trade.ec.europa.eu/doclib/docs/2021/december/tradoc_159963.pdf

What's Going on With the Delays in Circulating Panel Reports in Two U.S. WTO Disputes?

There are two WTO disputes involving the United States (one offensive, one defensive) where the parties have been requesting the postponement of the public circulation or the issuance of the panel report for quite a while now. For one of them the final report has definitely been issued to the parties; for the other, the interim report may have been issued to the parties, but I'm not sure.

The first is U.S. - Fish Fillets from Viet Nam (DS536). In June 2020, the Panel announced that the final report had been issued to the parties, but the parties had requested a delay in public circulation of the report because they were trying to negotiate a solution:

... The Panel issued its final report to the parties on 7 February 2020. Public circulation of the report was originally scheduled for 17 March 2020.

However, due to the COVID pandemic the report has not yet been circulated, as to date the Secretariat has not been in a position to produce and distribute paper copies of the report per the requirements of the decision in WT/DSB/6. Nor have delegations had access to the premises to collect any such physical copies.

On 2 June 2020 the United States and Viet Nam jointly informed the Panel that they were engaged in discussions with respect to the resolution of this dispute. In that context, they requested that the Panel postpone the circulation of the final report for three months, until 31 August 2020.

The circulation of the final report has therefore been postponed until 31 August 2020.

On September 2, 2020, the panel announced that:

On 28 August 2020 the United States and Viet Nam jointly informed the Panel that they remained engaged in discussions with respect to the resolution of this dispute. In that context, they requested that the Panel further postpone the circulation of the final report until 12 October 2020.

The circulation of the final report has therefore been postponed until 12 October 2020.

And then it just kept making similar communications: here, here, here, here, here, here and here. The latest communication, from February 16, 2022, says: "The circulation of the final report has therefore been postponed until 18 May 2022. "

The second dispute is the Article 21.5 proceeding in India - Agricultural Products (DS430). In that case, the panel announced a delay on May 22, 2018 as follows:

On 23 November 2017, the Panel informed the DSB that, due to the complexity of the issues in dispute, it expected to issue its final report to the parties by the end of May 2018.

The Panel now wishes to inform the DSB that the parties have jointly requested the Panel to delay the issuance of its Report. The Panel has accepted the parties' request, and accordingly now expects to issue its Final Report in September 2018.

Based on the dates provided, with a May 22 announcement that the panel expected to issue its final report by the end of May, it seems likely that an interim report had already been issued, although the panel did not say anything about that. Subsequently, the panel made similar communications: here, here, here, here, here, here, here, here, here, here, here, here and here. The latest communication, from January 7, 2022, says: "The Panel has accepted this request, and accordingly wishes to inform the DSB that it now expects to issue its Final Report by the end of May 2022."

For both disputes, the delays and negotiations have lasted quite a long time. I haven't checked to see if these disputes have set a record for most delay announcements, but they must be near the top of the list anyway. 

There's nothing wrong with engaging in these negotiations after a report is issued, but it seems a bit odd that the negotiations keep dragging on like this and the WTO disputes continue on in this way. It is not clear what the negotiations involve and when there will be a resolution. It kind of seems like there is a new U.S. strategy to negotiate rather than litigate trade disputes, and maybe this is part of it. Given that both India and Viet Nam are in the "Indo Pacific" region, I wonder if these disputes are being folded into the broader Indo Pacific Economic Framework, and that a resolution will be part of some kind of negotiating package in that context. That's just speculation though.

2021-2022 SIEL/JIEL/OUP Essay Prize

This is from the SIEL/JIEL/OUP: "The deadline for entering the 2021-2022 SIEL/JIEL/OUP Essay Prize competition is fast approaching, and authors meeting the stated conditions are warmly encouraged to send their submission by 28 FEBRUARY 2022." Further details here: https://academic.oup.com/jiel/pages/siel_jiel_oup_essay_prize

The 2021-2022 Essay Prize is now open for submissions with a deadline of 28th February 2022. 

The Society of International Economic Law, the Journal of International Economic Law, and Oxford University Press have jointly established the SIEL/JIEL/OUP Essay Prize to award the best essay submitted on any topic in any field of international economic law.

The competition is open annually to all current undergraduate and graduate students of any university or other tertiary education institution, and those who have graduated from a university or other tertiary education institution no earlier than five years before the submission deadline (this can include five years from PhD graduation). Co-authorship is permitted provided all authors meet the stated conditions. Members of the SIEL Executive Council may not submit entries. The essay must not have been previously published. Submissions shall not exceed 10,000 words and shall follow the JIEL style sheet.

The essay prize comprises three parts. The prize consists of £200, as well as £400 of Oxford University Press book vouchers and a three year subscription to the Journal of International Economic Law. The winner will receive free entry to the Graduate Institute/IIEL Annual Conference on WTO Law, and where circumstances permit, he/she will be also given the opportunity to present on a Panel or poster presentation at the conference. The winning essay may be submitted to the Journal of International Economic Law for publication, subject to the standard review and decision procedures.

The prize is awarded by the SIEL Executive Council on the recommendation of a Prize Committee drawn from its members and the Editorial Board of the Journal of International Economic Law. Any queries should be addressed by email to Dr Gracia Marin Duran (University College London) at [email protected].

Was Cancelling the Keystone XL Pipeline on Inauguration Day Arbitrary?

Investment Arbitration Reporter has the USMCA Chapter 14/NAFTA Chapter 11 legacy claim Notice of Intent filed by the province of Alberta against the United States in relation to the Biden administration's cancellation of the Keystone XL pipeline. (The notice of intent will probably be available publicly soon, but for now IAReporter is the only place I can access it).

One interesting issue in this case will be that an ISDS claim is being brought by a sub-national government against a national government. I don't have anything to say about that at the moment though.

What did interest me was the allegation that the Biden administration's decision to cancel the pipeline was political. This is from the Notice of Intent:

4. This NAFTA claim is the unfortunate result of numerous factors to be elaborated in the forthcoming arbitration, but the simplest explanation is that it arises from a breakdown in the Canada-U.S. relationship driven by interests of a political rather than principled character. ...

...

7. That the 20 January 2021 Revocation of the KXL Presidential Permit may have successfully served short-term political expediency, by providing the appearance of governmental action, is obvious. Equally obvious, however, is the fact that this measure was adopted in a manner contrary to the rule of international law. Virtually the first act of the new Administration was to make the KXL pipeline impossible to complete. It is thus manifest that the new Administration, with President Biden being inaugurated the very morning of the Permit Revocation, provided no formal notice or opportunity to engage in meaningful consultation to either Alberta, APMC or TransCanada Keystone Pipeline, L.P. (“TransCanada LP”), the permit holder in which APMC had so heavily invested. The Revocation cannot be understood as anything other than a rash and arbitrary measure adopted for a political purpose and unmoored from fundamental concepts of due process.

...

37. The measure according less favourable treatment to KXL, which was also adopted without any notice or any form of due process – and in a manner that was arbitrary and disproportionate to the alleged policy objective of addressing climate change – has also denied Alberta, APMC and KXL the benefit of fair and equitable treatment as required by NAFTA Article 1105. This is because the measure appears to have been adopted as a matter of political expediency, realized through an act of performative policymaking rather than as the manifestation of a reasoned and proportionate policy agenda. The real reason behind the arbitrary adoption of the measure is reflected in the fact that officials from two prior Administrations, who had previously been tasked with reviewing KXL Permit requests, consistently concluded that granting and maintaining a permit would not contribute detrimentally to climate change.

It's certainly true that the Keystone XL decision came quickly. It only took a few hours after the inauguration for Biden to decide! What kind of analysis was done during the presidential transition that can show this was a reasoned decision?

I'm curious whether the Biden administration will respond with an argument along these lines: "It was actually the Trump administration that was political and arbitrary when it approved the pipeline, and our reversal of its decision was therefore fully compliant with NAFTA obligations. In fact, if we had maintained the Trump administration's policies, that would have been political and arbitrary. Many people in the Biden administration were involved in the original decision to reject the permit during the Obama presidency; we studied this issue carefully throughout the Trump presidency; and during the presidential transition we went over everything thoroughly and came to a reasoned and proportionate conclusion that was ready to be issued on inauguration day."

As to what an investment tribunal will think of that argument, I have no idea! It could depend on what evidence the U.S. presents in support.

ANU Press Early Career Researcher Legal Scholarship Prize Looking for Proposals on International Trade and Investment Law

The ANU College of Law has instituted the ANU Press Early Career Researcher legal scholarship prize. It is an annual prize awarded to the most outstanding and insightful manuscript submitted to ANU Press in any area of law and legal studies. It consists of a cash prize of AUD 2500 and the costs to publish an open access book with ANU Press (more details here: https://press.anu.edu.au/news-events/call-book-proposals-ecr-prize).

The call extends to all areas of law, but they tell me they are very interested in book proposals on international trade and investment law, so I'm passing this information along to this blog's readers.

Can Congress Block a Return to the Iran Deal by the Biden Administration?

With Ted Cruz in the lead, a group of Republican Senators has sent a letter to the Biden Administration threatening that the Senate, or Congress, could block a return to the JCPOA. 

Within the next days or weeks, there may be a consensus in the Vienna talks between the original JCPOA partners on the steps needed to revive the 2015 deal, which was ripped up by Donald Trump in 2019.     

The first argument of the Senators is a complete non-starter, legally. They suggest that, because a restored JCPOA would have impacts on US national security, the President is compelled to submit it to the Senate as a treaty.  There is simply no basis in constitutional law or political practice for such an obligation.  In fact, the original JCPOA was never put to the Senate as a treaty, and the fact that Congress passed a bill  establishing a different kind of process for Congressional control, a joint resolution of both Houses, indicates that the legislative branch itself understood that there is no expectation that this kind of agreement be dealt with as a treaty.

But the Senators' second contention has more plausibility, precisely because it is based in the law that Congress passed in 2015 to provide for review of the JCPOA:

the Iran Nuclear Agreement Review Act of2015 ("INARA", 42 USC § 2160e) mandates that your administration submit to Congress for evaluation, within 5 days after it is reached, any agreement related to the nuclear program with Iran, as well as all related documents and side deals. The submission of such materials then triggers a statutorily-defined review process, and includes the possibility of Congress blocking implementation of the agreement.    

Under the INARA, the route by which Congress might block implementation is through a resolution of disapproval passed by both Houses. In such a case, the INARA provides that the President would be severely constrained in providing sanctions relief to Iran. 

But are arrangements negotiated in Vienna to facilitate the restoration of the original JCPOA an "agreement" within the meaning of the relevant provisions of the INARA?

A Congressional research report of about a year ago provides a sensible analysis of this issue:

Although INARA is not clear on this point, it would seem reasonable for the Administration, if rejoining the JCPOA as it is currently written, to conclude that it is not “reaching an agreement” within the meaning of INARA and, thus, is not obligated to meet the initial transmittal and review requirements. This, in turn, would not trigger the congressional review period and its corresponding restrictions on implementation. On the other hand, it is conceivable that rejoining the agreement may entail a separate agreement of some sort with the remaining parties of the JCPOA that could constitute an agreement under INARA’s definition, in which case transmittal of that agreement may be necessary. In any event, the Administration would be required to keep the appropriate committees apprised of negotiations toward rejoining the JCPOA.

Even on a scenario, though, where the Administration felt compelled, pursuant to the INARA,  to submit  to Congress the concrete arrangements worked out in Vienna for the restoration of the original JCPOA, this would not delay the lifting of nuclear-related sanctions.   S. 135 (c) (2) (C) of INARA permits "action involving any measure of statutory sanctions relief by the United States pursuant to ... the Joint Plan of Action... if, following the period for review..., there is not enacted any ... joint resolution [disapproving the JCPOA]." (Emphasis added.)

In other words, in 2015, by failing to pass a joint resolution  disapproving the JCPOA, Congress indicated its acceptance  (subject to other existing laws) of any sanctions relief that the President might provide "pursuant to the Joint Plan of Action."   Sanctions relief "pursuant to the Joint Plan of Action" includes, obviously, those sanctions listed in Annex II of the JCPOA itself. But the JCPOA prohibits the introduction of any new "nuclear related sanctions." (Article 26) This means that, regardless of what elements negotiated in Vienna might need to be transmitted to Congress as an "agreement" separate from the JCPOA,  President Biden has the ongoing authority to lift any JCPOA-related sanctions, without any further consideration or approval by Congress.  This includes new "nuclear-related" sanctions imposed by Trump as these are prohibited "pursuant to the Joint Plan of Action."

Of course, this analysis would not apply so simply if the Biden Administration were to agree in Vienna to lift other sanctions not covered by or pursuant to the 2015 JCPOA.  But, as the chief U.S. negotiator  Rob Malley indicated in a recent MSNBC interview this is not the case.  The Administration is only prepared to lift sanctions that are inconsistent with the original deal.

 Some might speculate it is no coincidence the outer limits of sanctions relief that the U.S. is prepared to offer Iran coincide with the INARA limits of what the President  can do without risking Congressional obstruction.   

 

 

 

   

 

CfP: EYIEL 2022 Climate Change and International Economic Law

This is from the editors of the European Yearbook for International Economic Law:

The editors of the European Yearbook for International Economic Law (EYIEL) welcome abstracts from scholars and practitioners at all stages of their career for the focus section of the EYIEL 2022. This year’s focus will be on the impact of climate change on international economic law.

Abstracts may cover any topic relating to dispute settlement in the field of international economic law, though preference is given to topics focusing on the perspective from public and private international or EU law. We particularly welcome contributions addressing the following aspects:

-Climate change in WTO and international trade law
-Impact of investment protection treaties on energy transformation
-Reform of the Energy Charter Treaty
-Financial and monetary law aspects of climate change
-Relationship between UNFCCC and Glasgow Climate Pact and international economic law
-Climate change litigation in domestic and international courts
-Liability for climate change in private (international) law

Abstracts should not exceed 500 words. They should be concise and clearly outline the significance of the proposed contribution. Abstracts may be submitted until 28 February 2022 via e-mail to [email protected]

Successful applicants will be notified by 1 April 2022 that their proposal has been accepted. They are expected to send in their final contribution by 30 June 2022.

For more details, see here. 

Virtual Conference on Dispute Settlement in International Trade Agreements: Prospective Pathways

This is from the Centre for Trade and Investment Law (CTIL), New Delhi and the Rajiv Gandhi National University of Law (RGNUL), Punjab, India:

We are pleased to inform you that a virtual conference on Dispute Settlement in International Trade Agreements: Prospective Pathways scheduled to be held on 10-11 February 2022. The conference is being organised by CTIL, an Indian government think-tank and advisory centre on trade and investment laws, in collaboration with RGNUL, Punjab, one of the leading national law schools in India.

We have a distinguished list of speakers for sessions on dispute settlement in regional trade agreements (RTAs) and for special addresses, including former WTO Appellate Body chairpersons, world-renowned professors of trade law and investment law, senior government officials and experienced trade law practitioners. 

They will speak on dispute settlement in North American, Asia-Pacific and European Union trade agreements and emerging trends in ISDS in the investment chapters of trade agreements. There are two discussions scheduled at the conference, with one focused on designing the architecture of dispute settlement in trade agreements from an Indian perspective and the other focused on introspection on lessons learnt from the past in dispute settlement in international trade law. 

We also have special addresses to be delivered by:

• Peter Van den Bossche, Director of Studies, World Trade Institute (WTI), Bern; Former Member and Chairman, Appellate Body, World Trade Organization (WTO), Geneva, Switzerland
• Raj Bhala,Distinguished Professor, University of Kansas, School of Law, Lawrence, Kansas, United States; Senior Advisor, Dentons, Kansas City, Missouri, United States; On Point Columnist, Bloomberg Quint, Mumbai, India
• Giorgio Sacerdoti, Emeritus Professor of International Law and European Law, Bocconi University, Milan, Italy; Former Member and Chairman of Appellate Body of WTO
• Dennis Shea, Executive Director, J. Ronald Terwilliger Center for Housing Policy, Washington, D.C., United States; Former Deputy U.S. Trade Representative and U.S. Ambassador to the WTO
• Ujal Singh Bhatia,Former Chairman of Appellate Body and Ambassador of India to the WTO; Honorary Professor at NLU Delhi, India

Registration Link for Day 1

Registration Link for Day 2

We look forward to your participation. 

The full program is here.

ITC Roundtables, Symposium, and Hearing on Distributional Effects of Trade and Trade Policy on U.S. Workers

As I mentioned here a couple months ago, the ITC will be carrying out a study requested by USTR on "the potential distributional effects of goods and services trade and trade policy on U.S. workers by skill, wage and salary level, gender, race/ethnicity, age, and income level, especially as they affect underrepresented and underserved communities." The ITC recently announced its schedule for the investigation. See the details at the link and below.

I think this could be a useful exercise and I hope that some pro-trade folks take the time to participate. I can see how some people might think the whole thing has been set up with a particular outcome in mind, and prefer to steer clear of it. But the request doesn't just ask about the distributional effects of trade agreements, so it doesn't have to be about putting trade liberalization on trial. Instead, it asks about the distributional effects of "goods and services trade and trade policy." That leaves room for studying the negative distributional effects of various different kinds of tariffs, Buy America procurement, the Jones Act and other protectionist policies in general, and the negative effects on under-represented and under-served communities in particular. It also leaves room for studying the positive distributional effects of trade in goods and services.

If I were still at a think tank, I would make this a priority project and dive right in. But I'm busy with other things at the moment, so I'm going to have to sit this out, but I hope others can participate!

Distributional Effects of Trade and Trade Policy on U.S. Workers

SUMMARY: The Commission has established a schedule and procedure, set forth below, for conducting roundtables, an academic symposium, and a hearing in connection with this investigation. The Commission will hold seven roundtable discussions between March 1 and April 1, 2022, an academic symposium on April 5-6, 2022, and a hearing on April 19, 2022. The roundtables, academic symposium, and hearing will focus on the potential distributional effects of goods and services trade and trade policy on U.S. workers by skill, wage and salary level, gender, race/ethnicity, age, and income level, especially as they affect underrepresented and underserved communities. The roundtables and hearing will afford an opportunity for interested persons to present information and views relating to the investigation, and the academic symposium will afford an opportunity for researchers and data experts to present work relevant to the investigation. The Commission instituted the investigation under section 332(g) of the Tariff Act of 1930 following receipt, on October 14, 2021, of a request from the U.S. Trade Representative.

Commission events:

March 1: Roundtable on Race and Ethnicity I (virtual)
March 8: Impacts on Underserved Communities (in-person/virtual hybrid; from Fresno, CA)
March 10: Roundtable on Race and Ethnicity II (virtual)
March 14: Roundtable on Gender and Orientation (virtual)
March 22: Roundtable on Disability, Age, and Education (virtual)
March 30: Impacts on Underserved Communities (in-person/virtual hybrid; from Detroit, MI)
April 1: Roundtable on Local Economic Impacts on Underserved Communities (virtual)
April 5-6 Academic Symposium (virtual)
April 19: Hearing (virtual)

Filing deadlines relating to the roundtables:

February 15: Deadline for filing requests to appear at Roundtable on Race and Ethnicity I
February 22: Deadline for filing requests to appear at Roundtable on Impacts on Underserved Communities – Fresno, CA
February 24: Deadline for filing requests to appear at Roundtable on Race and Ethnicity II
February 28: Deadline for filing requests to appear at Roundtable on Gender and Orientation
March 8: Deadline for filing requests to appear at Roundtable on Disability, Age, and Education
March 16: Deadline for filing requests to appear at Roundtable on Impacts on Underserved Communities – Detroit, MI
March 18: Deadline for filing requests to appear at Roundtable on Local Economic Impacts on Underserved Communities

Filing deadlines relating to the academic symposium:

February 11: Deadline for submitting requests to appear and a copy of abstract and CV
March 1: Deadline for submitting papers

Filing deadlines relating to the hearing:

April 1: Deadline for filing requests to appear
April 5: Deadline for filing prehearing briefs and statements
April 12: Deadline for filing electronic copies of oral hearing statements
May 6: Deadline for filing posthearing briefs and statements
May 17: Deadline for filing all other written submissions

Guest Post: Case C 638/19 P, European Commission v. Micula et al. Does the Court of Justice of the EU misunderstand investment law and investment treaty arbitration?

This is a guest post from Dr. Szilárd Gáspár-Szilágyi, Birmingham University and Dr. Maxim Usynin, Copenhagen University

1. The Context

Those following the interaction between International Investment Law and EU Law have noticed that the past couple of years have produced a growing number of cases in which the Court of Justice of the EU takes a hostile attitude towards investment treaty arbitration (ITA). In its 2018 Achmea judgment (here and for commentaries here and here) the Court of Justice concluded that investor-state arbitration clauses found in international agreements concluded between EU Member States, ’such as’ the ones in the Netherlands-Slovakia BIT, were precluded by Articles 344 and 267 TFEU (we use this very specific language from the original judgment, as the Court in European Commission v. Micula phrases its holdings in Achmea more broadly, see para. 138, [here]).

Things have then picked up in late 2021, the Court delivering its judgments in Komstroy (here) and PL Holdings (here). In Komstroy, the Court of Justice held obiter dicta that the Energy Charter Treaty was also incompatible with EU law in an intra-EU setting, even though the referring national court did not raise any questions concerning compatibility and the original arbitration was not an intra-EU arbitration (for commentaries here). Then, in PL Holdings, the Court held that national legislation, which would permit the circumvention of Achmea, by allowing a Member State to conclude with an investor an ad hoc arbitration agreement that is identical in terms to an arbitration clause in an intra-EU BIT, is also precluded by Articles 267 and 344 TFEU.

This was then followed by the 25^th of January 2022 judgment in the European Commission v. Micula et al appeal (here), in which the Court of Justice set aside the judgment of the General Court of the EU and referred the case back to the lower court to adjudicate on several pleas and arguments. This much awaited judgment is part of a seemingly never-ending string of enforcement cases that followed the 2013 ICSID Award in the Micula v. Romania cases [here].

In short, Romania, prior to its accession to the EU in 2007 had given certain tax incentives for a period of 10 years to two Swedish citizen investors, who invested in an economically deprived area of the country. Before its accession to the EU, Romania had to bring its laws in line with EU law and decided to revoke the tax advantages given to the two investors, for those advantages would be considered illegal state aid under EU law. The investors commenced an ICSID arbitration in 2005 and in 2013 the arbitral tribunal held that Romania had breached the Fair and Equitable Treatment (FET) standard of the Sweden-Romania BIT of 2002. Romania then began to repay part of the award, but the EU Commission issued Decision 2015/1470 in which it held that repayment of the damages awarded by the arbitral tribunal constitute illegal state aid under EU law. This Decision was challenged by the investors under Article 263 TFEU (annulment proceedings) before the General Court of the EU, which annulled the Decision [here]. This led to the appeal that we currently analyse.

This of course is not the end of the story, because in the meantime the investors tried enforcing the ICSID award in the USA [here], Belgium [here], Sweden [here], the UK [here], and Romania [here], some of the cases having been won by them and others lost. These cases raise a myriad of legal issues, but in this short blogpost we will focus only on the recent judgment of the Court of Justice in European Commission v Micula, and even within that judgment we are only interested in para. 144 (below). This paragraph leads us to believe that the Court of Justice’s antagonistic attitude towards investment treaty arbitration might also be because the Court misunderstands the role of investment law and the objectives of investment treaty arbitration.

2. The Problematic Statements

The Court of Justice in essence held that the General Court erred in its judgment when it concluced that the EU Commission had no competence to decide on state aid. The Court then relied on Achmea, Komstroy and PL Holdings to argue that Romania’s consent to arbitrate ’lacks any force’ from the moment it entered the EU (para. 145). According to the problematic paragraph:

„Such consent [under a BIT], unlike that which would have been given in commercial arbitration proceedings, does not originate in a specific agreement reflecting the freely expressed wishes of the parties concerned, but derives from a treaty concluded between two States in the context of which they have, generally and in advance, agreed to exclude from the jurisdiction of their own courts disputes which may concern the interpretation or application of EU law in favour of arbitration proceedings.” [emphasis added]

We believe that this paragraph contains two misunderstandings about how investor-state arbitration and BITs work; the first concerns the nature of consent to arbitrate under an investment agreement and the second the purpose of investor-state dispute settlement (ISDS).

2.a. The Nature of Consent

Consent to arbitrate under an investment treaty is a long-standing issue in investment treaty arbitration and it goes back to the initial cases, such as SPP v. Egypt for domestic investment laws and AAPL v. Sri Lanka for investment treaties, which established that the arbitration agreement is formed in a more peculiar way compared to commercial arbitration. Masterfully described by Jan Paulsson in his ‘Arbitration without privity’ article [here], this development became a ‘silent revolution’ [here] of the then-nascent legal field. After nearly three decades, this revolution is now accepted as standard practice. According to it, the State’s consent in the treaty to submit the dispute to arbitration is a standing offer to arbitrate, which is accepted by the investor when they decide to bring an arbitral claim against the State. When the Court of Justice argues that this type of consent “does not originate in a specific agreement reflecting the freely expressed wishes of the parties concerned”, the Court basically questions the standard practice under investment treaty arbitration. However, is the Court of Justice right in doing so?

Firstly, to say that the wishes of the parties concerned were not ‘freely’ expressed is simply factually incorrect. States willingly sign investment treaties for various reasons, but they are not coerced to do so. The treaties are only void if state consent was coerced by the threat or use of force (Article 52 VCLT), which is ‘generally held’ to refer solely to armed force [here]. An investor also willingly brings arbitral claims against the host State. Therefore, both parties to the dispute have without a doubt freely expressed their wishes.

Secondly, what does the court mean by ‘specific agreement’? Would it have to be a separate, written arbitral agreement, as opposed to the accepted practice of a standing offer made by the host State in the treaty which is accepted by the investor when it brings a claim? If so, many commercial arbitration agreements would also not meet this standard. Some are included as arbitration clauses at the end of contracts (or as a reference to some general terms and conditions), others are concluded separately as compromis after the dispute has arisen, while others can be included in an exchange of emails or other forms of electronic messages. At the end of the day, an agreement is the acceptance by one party of an offer made by another. If this is the standard definition of an ‘agreement’, then the standard practice in ITA meets this definition. In other words, the Court of Justice seems to (whether wilfully or not) mischaracterize the nature and even the existence of an agreement to arbitrate if the offer is contained in a treaty and the offer is accepted when the claimant initiates arbitration. To take it one step further, what about those situations when ISDS provisions in treaties provide for ‘arbitration under any other rules of arbitration agreed upon by the parties’ and not just ‘standard’ venues such as ICSID or ad hoc UNCITRAL arbitration? If the parties (the investor and the host State) can agree to any arbitral rules, then they also have to agree to arbitrate.

Thirdly, playing devil’s advocate, if we agree that consent in ITA is its Achilles’ heel, because it is based on an accepted legal construct and it is not expressly stated in investment treaties, then the same is true for the ‘autonomy of EU law’. This nebulous term is used by the Court to substantiate its recent decisions against ITA in an intra-EU setting [here], but at the root of it, it rests on the Court’s holding in the seminal Van Gend en Loos case that the EU Treaties have created a ‘new legal order of international law’ [here], a statement which to this day has not been included in the EU Treaties.

2.b. The Purpose of ISDS and ITA

The second issue is a clear case of the Court of Justice mischaracterising or misunderstanding the purpose of investment treaties and ITA. According to the Court, EU Member States had “agreed to exclude from the jurisdiction of their own courts disputes […] in favour of arbitration proceedings”. For the sake of this argument, it is not relevant whether EU law would be interpreted by a non-EU tribunal (one of the main concerns of the Court in such cases; yet, it should be noted, in passing, that the claimed monopoly of interpretation threatens the Court of Justice’s coexistence with virtually any other international court) [here].

This passage indicates that the Court does not fully understand ISDS and the purpose of BITs. BITs are meant to promote investments (there is a long-standing discussion whether they actually do) and to protect them. Protection in turn is ensured by the inclusion of international standards of protection (national treatment, MFN treatment, FET, etc) and the presence of ISDS. However, ISDS provisions are not uniform, and they are not restricted to ITA. Some investment treaties do not provide for international arbitration, others provide for a choice between domestic courts, alternative methods such as conciliation and mediation, and/or treaty-based arbitration. Then there are also fork-in-the road and no-U turns clauses [here].

Whilst investment treaty arbitration has received most of the criticisms and legitimacy challenges in the last decade or so, as we can see, ISDS provisions in investment treaties are not confined to ITA and include several other venues, including domestic courts, which as one of us has shown [here], foreign investors do use even when ITA is a possibility. Furthermore, nowhere do BITs mention that their objective is to remove cases from domestic courts. In other words, the Court’s argument clearly shows a misunderstanding of how BITs and ISDS work, and how ITA is only one way of settling investor-State disputes under a treaty.

3. Why this is important

Why should all of this matter, one might ask. It should matter because it shows that when a court which is foreign to a system and uses the features of that system to obtain its own goals, the chances that the foreign system will be misunderstood and mischaracterised can be very high. In this case the Court of Justice’s animosity towards ITA has resulted in protracted enforcement cases, disgruntled investors that cannot enforce their awards in the EU, EU Member States which do not know whether they should abide by their international or EU obligations, foreign courts which do not understand EU law, and arbitral tribunals which have become increasingly hostile towards EU law [here]. Sensing increasing legal instability, Lavranos expects a broader avoidance of the EU as a seat of arbitration or enforcement, which will likely favour other venues with more arbitration-friendly regimes [here]. Moreover, there are the non-legal issues, such as the negative message the EU sends to foreign investors, corporate restructuring to take advantage of non-intra-EU investment treaties, and the possibility that some EU States when they get into financial difficulties will not be able to raise capital on the international markets or from the IMF, until their ICSID debts are not settled, as the case of Argentina illustrates [here]. Lastly, the argument which ties compliance with international legal obligations, as manifested in enforceable arbitration awards, with the social identity of democratic states deserves merit in EU cases as well [here].