Global Public Interest in International Investment Law (Cambridge Studies in International and Comparative Law, Series Number 90)

"The strengths of international investment law - above all, a strong focus on investor interests and an effective adjudication and enforcement system - also entail its weaknesses: it runs the danger of impeding or even sanctioning the host states' legitimate regulatory interests and ignoring other fields of public international law. How does it cope with public interest concerns such as human rights, the environment, or the fight against corruption? At the heart of this book lies a fresh approach towards a general theory of such global public interest considerations in the investment realm. Delineating how and why those considerations matter, and why the current system does not accommodate them properly, Andreas Kulick fleshes out general principles and customary international law as defences the host state may raise against alleged investor rights infringements, and promotes proportionality as the appropriate balancing mechanism"--Page [i] Global Public Interest in International Investment Law Series Page Title Copyright Dedication Contents Foreword Acknowledgments Table of Cases Table of Treaties and Other Documents 1: Introduction Part I: Towards the Global Public Interest theory 2: The “internationalization” of international investment law A. A first glance at Article 42(1) ICSID “Article 42 1. Context: general principle of Article 42 ICSID is freedom of choice 2. Possible cases in which international law may be applicable under Article 42 ICSID 3. International law as applicable even in case of an exclusive choice of domestic law according to Article 42(1) first sentence ICSID B. Drafting history of Article 42(1) second sentence ICSID C. The role of BITs in international investment law 1. BITs as a recent phenomenon 2. Codification and promotion of international law through BITs D. The relationship of domestic law and international law 1. Preliminary remarks 2. The Klöckner-Amco doctrine39 (a) Case law under ICSID (i) “Supplemental and corrective functions” of international law (ii) Domestic law as the primary source (iii) Conclusion (b) Approaches in scholarly writing (i) Scholarly writing promoting the Klöckner-Amco doctrine (ii) Critique of the Klöckner-Amco doctrine (iii) Reisman: Corrective function only when collision with fundamental norms of international law 3. The dissolution of the Klöckner-Amco doctrine (a) First doubts: the Amco resubmitted case award (b) The advent of BITs (c) The growing role of international law 4. A new doctrine: Wena (a) The Wena decision93 (b) The first years after Wena: some ambiguities (c) Confirmation and interpretation of the Wena doctrine 5. The Argentine crisis Tribunals and beyond118 (a) International and domestic law as comprehensive legal orders (b) International law as ultimately supreme E. The changing face of international investment law 1. Six preliminary observations 2. “Prominent role”: The “internationalization” of international investment law 3. The “integration” of international investment law162 4. Outlook: The public interest challenge 5. Consequences of the above findings: Three hypotheticals (a) Environment (b) Human rights (c) Corruption 3: Public interest and international economic law – current approaches A. Scholarly approaches towards international legal obligations of MNEs 1. A scholarly attempt to shape the practice: The Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights 2. Scholarly approaches towards an international legal personality of MNEs (a) Strict positivist view: only States as subjects of international law (b) Different approaches endorsing an international legal personality of MNEs (c) Conclusion B. Public interest considerations in recent BIT practice 1. Prelude: The principle of good faith and Article XX GATT (a) Introductory remarks on Article XX GATT (b) Transferability to international investment law? 2. Public interest considerations in BITs50 “Article 12: Investment and Environment “Article 10 General Exceptions 4: The Global Public Interest theory A. Setting the stage: International investment law as Global Public Law 1. The Global Administrative Law face of international investment law (a) Global Administrative Law as a concept5 (b) International investment law as Global Administrative Law? (i) Four characteristics of international investment arbitration (ii) Conclusion 2. Constitutional elements in international investment law (a) Constitutionalization in public international law theory (b) Incremental development from a State-centric to a value-based system of public international law (c) Constitutional features of international investment law 3. International investment law as Global Public Law B. Comparative insights 1. Recall the seven observations on international investment law 2. The European law system (a) Characteristic features of the European law system (i) Supremacy and direct effect (ii) European Exceptionalism: An autonomous legal order (iii) Relationship of the State and non-State actors (iv) Creation of Union legal norms (v) Conclusion (b) International investment law system vs. the European law system: Five comparators (i) The hierarchy of norms (ii) The participation of non-State actors (iii) The relationship of the State and non-State actors (iv) The types of legal norms, including their creation, which play a role in the respective systems (v) The institutional and treaty setting in the respective systems 3. The European Convention on Human Rights system (a) Institutional and treaty setting (b) Hierarchy of norms (c) Constitutional traits (d) Degree of “internationalization” (e) Participation of non-State actors C. The Global Public Interest theory 1. Two examples of public interest considerations in international investment case law (a) International public policy: Inceysa and Fraport (b) The state of necessity: the Argentine crisis awards (i) Summary of the crisis and the background facts (ii) Necessity or not? The Tribunals’ differing decisions “Necessity “Consequences of invoking a circumstance precluding wrongfulness (iii) Conclusion 2. Lessons learned from the comparative insights 3. The State as the agent of public interest 4. Lessons learned from international investment law as Global Public Law (a) Equilibrium between the individual and the public interest (b) Why the public interest is global 5. The legal translation of Global Public Interest (a) The emergence of customary international law (b) The emergence of general principles (c) General principles and customary international law as legal translations of the Global Public Interest (d) The non-State actor caveat 5: How to balance the conflicting interests A. Doctrinal avenues of proportionality analysis in international investment law B. Some skepticism regarding proportionality analysis C. Comparative insights 1. The German pedigree of proportionality analysis and its reception in other domestic constitutional orders 2. Proportionality analysis in the European legal order - ECJ jurisprudence 3. Proportionality in the jurisprudence of international Tribunals 4. A glimpse into investment arbitration jurisprudence vis-à-vis proportionality D. Elements of proportionality analysis 1. Suitability 2. Necessity 3. Proportionality stricto sensu E. Principles relevant in proportionality analysis 1. Standards of review (Kontrolldichte), margin of appreciation and standards of scrutiny 2. “Praktische Konkordanz” 3. Limits to the balancing test (ius cogens) F. Operationalizing proportionality analysis in international investment law 1. Why proportionality analysis? 2. Doctrinal structure: Three-tier analysis 3. “Obligations” vs. “defenses” 4. Factors to be considered while balancing on the proportionality stricto sensu level (a) Gravity of the infringement (b) Legitimate expectations (c) Importance of the Global Public Interest (d) Seriousness (in pursuit) of the Global Public Interest (camouflage) (e) Importance of the investor right (f) Particular public interest in reduced compensation (g) Involvement of the host State (h) Intentional or incidental infringement? 5. Some doctrinal challenges (a) Balancing “customary international law” and “general principles” against “treaty law”? The dilemma with Article 38(1) ICJ Statute (b) Proportionality analysis and expropriation (c) Proportionality analysis and the fair and equitable treatment standard 6. Consequence: Reduced amount of compensation and damages G. Potential safeguards against abuse 1. Substantive safeguards: Recap 2. Procedural safeguards: Provisional measures H. What this means: Completing the three hypotheticals 1. Environment 2. Human rights 3. Corruption Part II: Global Public Interest in international investment case law 6: International investment law and the environment A. Principles of international environmental law 1. The polluter pays principle 2. The principle of preventive action 3. The precautionary principle 4. Common but differentiated responsibility principle B. Do international environmental law treaties bear any relevance for the analysis at hand? C. International investment disputes involving environmental issues 1. Santa Elena v. Costa Rica (a) Facts and issues (b) The public purpose does not affect the duty to pay compensation (c) A conservative decision 2. Metalclad v. Mexico (a) Facts and issues (b) Transparency as part of FET? (c) A controversial award 3. S. D. Myers v. Canada (a) Facts and issues (b) Generally open for environmental considerations, but distrusting Canada in the case at hand (c) A progressive award 4. Tecmed v. Mexico (a) Facts and issues (b) A reference to the European Court of Human Rights (c) A dubious take on challenging Santa Elena 5. Waste Management v. Mexico (a) Facts and issues (b) Public interest having an impact on the Tribunals finding 6. Methanex v. United States (a) Facts and issues (b) A right to regulate? 7. Biwater v. Tanzania (a) Facts and issues (b) Amicable towards environmental issues 8. Chemtura v. Canada (a) Facts and issues (b) A chutzpah not rewarded D. Analysis of the case law 1. Preliminary conclusions (a) Hesitancy to refer to international environmental law instruments (b) Global Public Interest concerns (c) Elements of proportionality 2. The case law on environment in the light of the Global Public Interest theory 7: Human rights and investment - friends or foes? A. Doctrinal approaches in a nutshell B. Human rights issues in investment disputes 1. Alleged violations of the investors human rights 2. Alleged violations of human rights by the investor (a) General human rights cases (i) Siemens v. Argentina (1) Facts, issues and the Tribunals findings (2) Half-effort and full skepticism (ii) Sempra v. Argentina (1) Facts, issues and the Tribunals findings (2) Skepticism continued (iii) Glamis v. US69 (1) Facts, issues and the Tribunals findings (2) A clandestine role of human rights? (iv) Piero Foresti, Laura de Carli and others v. South Africa (1) Facts and issues (2) A very touchy issue (b) Specific case study: The right to water (i) Compañia de Aguas de Aconquija v. Argentina (“the Vivendi story”) (1) Facts and issues (2) The awards (3) No camouflage permitted (ii) Aguas del Tunari v. Bolivia (iii) Azurix v. Argentina (1) Facts, issues and the Tribunals decision (2) Concealed relevance again (iv) Biwater v. Tanzania C. Analysis of the case law 1. Whats wrong with human rights? 2. Through the back door 3. Growing role of third parties 4. The case law on human rights in the light of the Global Public Interest theory 8: Corruption and other irregularities A. How bad is corruption? B. Forms of corruption, definitions and international instruments 1. “Hard corruption” and “influence peddling” 2. International instruments (a) OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (b) Criminal Law Convention on Corruption of the Council of Europe (c) BIT provisions relevant in corruption cases C. Corruption disputes in international investment law 1. Distinguish two different types of corruption disputes 2. International investment case law pertaining to corruption and other irregularities (a) Wena v. Egypt and SGS v. Pakistan (b) World Duty Free v. Republic of Kenya (i) Facts and issues (ii) Commercial arbitration rationales in investment arbitration? (iii) Why the Tribunal got it wrong (c) Inceysa v. El Salvador (i) Facts and issues (ii) The Tribunal declines jurisdiction (iii) Setting a bad precedent (d) Fraport v. Philippines (i) Facts and issues (ii) Again declining jurisdiction (iii) Following a bad precedent (e) Kardassopoulos v. Georgia (i) Facts and issues (ii) The host State is responsible for the actions of its organs (iii) Avoiding World Duty Frees mistake D. Analysis of the case law 1. Preliminary conclusions 2. Alternative approaches (a) Modification or adaptation of the main contract (b) Balancing with the investors rights on the merits stage (i) Challenges: Consent of the host State, definition of investment in the BIT and nullity of the investment contract (ii) Arguments in favor of a balanced approach (iii) Integrating the balanced approach into international investment case law according to the Global Public Interest theory 9: Concluding remarks Bibliography Index