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The Concept of the Rule of Law and Global Economic Governance: Theoretical Remarks
Published online by Cambridge University Press: 31 May 2024
Abstract
This article offers some general thoughts on the rule of law in international economic law. It begins by briefly defining the rule of law and indicating the legal sources on which it is based. It then shows that the TFEU, confirmed by the case law of the Court of Justice, requires the rule of law to be respected in the conduct of the Union’s commercial policy. However, although the rule of law may be favourable to international trade and investment, it is not indispensable to them. The rule of law is conducive, but not essential, to trade and investment. For businesses, the risks associated with a weak respect for the rule of law represent a cost, which they take into account when setting the price of their products. Finally, it should be remembered that the principles of the rule of law do not apply in the same way in the domestic sphere as in international law. This article is intended as a panoramic introduction to the relationship between the rule of law and international economic law. More specialised studies are published later in this issue, including analyses focusing on trade or investment or national perspectives, such as that of China.
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References
1 Nicolas de Sadeleer and Ivana Damjanovic, “Introduction,” this issue.
2 Ming Du and Qingjiang Kong, “Explaining the Limits of the WTO in Shaping the Rule of Law in China” (2020) JIEL 885, 888; Simon Chesterman, “Rule of Law,” Max Planck Encyclopaedia of Public International Law (2007) 13. See also Simon Chesterman, ‘An International Rule of Law?’ (2008) American Journal of Comparative Law 331.
3 Chesterman, “Rule of Law” (n 2) 3–9. Elements of comparison can also be found in Nadia E Nedzel, “The International Rule of Law and Economic Development” (2018) Washington University Global Studies Law Review 447.
4 See also Jeremy Waldron, “Are Sovereigns Entitled to the Benefit of the International Rule of Law?” (2011) JIEL 315, 316.
5 EU Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, “2020 Rule of Law Report – The rule of law situation in the European Union,” COM (2020) 580 final, 30 September 2020, p 1. A founding document for the definition of the rule of law is the “Rule of law checklist” drawn up by the European Commission for Democracy through Law (Venice Commission) in March 2016 and endorsed by the Parliamentary Assembly of the Council of Europe in October 2017 (https://www.venice.coe.int/webforms/documents/?pdf=CDL-AD(2016)007-e). See also UN Security Council, The rule of law and transitional justice in conflict and post-conflict societies – Report of the Secretary-General, S/2004/616, 23 August 2004.
6 Nicolas de Sadeleer, Manuel de droit institutionnel et de contentieux européen (Bruylant 2021) 104, 115.
7 Chesterman, “Rule of Law” (n 2) 10–11.
8 See Nedzel (n 3) 447–502.
9 See Chesterman, “An International Rule of Law?” (n 2) 346–347.
10 Ronald Dworkin, Taking Rights Seriously (Duckworth, 1977).
11 See Art. 21(1) TEU.
12 On the place and role of values in the TEU, see de Sadeleer (n 6) 98 et seq.
13 Statute of the Council of Europe, signed in London on 5 May 1949, Art 3: “Every member of the Council of Europe must accept the principles of the rule of law […] .”
14 The Charter of Paris for a New Europe, signed in Paris on 21 November 1990 contains many references to the rule of law, and makes an explicit link with democracy. Among others: “The free will of the individual, exercised in democracy and protected by the rule of law, forms the necessary basis for successful economic and social development”; “we will cooperate to strengthen democratic institutions and to promote the application of the rule of law.”
15 See also Art 47 of the (European) Charter of Fundamental Rights.
16 See the contribution on international environmental law by Nicolas de Sadeleer in this issue.
17 Opinion 2/15 (2017) ECLI:EU:C:2017:376.
18 Art 9.5 of the Partnership Agreement between the European Union and its Member States, of the one part, and the Members of the Organisation of the African, Caribbean and Pacific States, of the other part, 8372/1/23 REV 1.
19 See Philippe Coppens, “La fonction du droit dans une économie globalisée” (2012) Revue internationale de droit économique 269, 276, 285.
20 Ibid 285.
21 John H Jackson, “The case of the World Trade Organization” (2008) International Affairs 437.
22 Ernst-Ulrich Petersmann, “How to Promote the International Rule of Law? Contributions by the World Trade Organization Appellate Review System” (1998) JIEL 25.
23 Petersmann, “How to Promote the International Rule of Law? Contributions by the World Trade Organization Appellate Review System” (n 22) 33–40; Ernst-Ulrich Petersmann, “Multilevel Judicial Governance of International Trade Requires a Common Conception of Rule of Law and Justice” (2007) JIEL 529.
24 China is a good example: despite protests from businesses and WTO member states (particularly the United States) related to rule of law issues, China has become and remains one of the main players in international trade (see Du and Kong (n 2) 885–905).
25 See “How China, Russia and Iran are forging closer ties” The Economist 18 March 2024.
26 Lauge N Skovgaard Poulsen, “From pledges to neglect: treaties and the rule of law promise” (2024) JIEL 192.
27 This is a conception based on economic rationality rather than on a relational, reasonable, approach, as is more common among lawyers (Coppens (n 19) 282).
28 Giulia Giardi, “Tricks under Trade: How International Trade Both Facilitates and is Facilitated by Corporate Environmental Crime in the Waste and Hydrocarbon Sectors,” this issue.
29 See Gabrielle Marceau (ed.), A History of Law and Lawyers in the GATT/WTO. The Development of the Rule of Law in the Multilateral Trading System (CUP 2015); William J Davey, “John Jackson and the Rule of Law” (2016) JIEL 333.
30 Petersmann, “How to Promote the International Rule of Law? Contributions by the World Trade Organization Appellate Review System” (n 22); Thomas Cottier, ‘The Rule of Law in International Economic Relations’ (2022) Zeitschrift für Europarechtliche Studien 3.
31 Isabelle Van Damme, “25 Years of Law and Practice at the WTO: Did the Appellate Body Dig its Own Grave?” (2023) JIEL 124.
32 Cottier (n 30) 9–10.
33 Joined Cases C-120/06P and C-121/06P FIAMM, Fedon v Council of the European Union and Commission of the European Communities (2008) ECLI:EU:C:2008:476.
34 Without comprehensively citing the abundant doctrine and case law on this subject, see for example Eric Pickett and Michael Lux, “The Status and Effect of WTO Law Before EU Courts” (2016) Global Trade and Customs Law 408; Kristiyan Stoyanov, “Three Decades of the Nakajima Doctrine in EU Law: Where Are We Now?” (2021) JIEL 724.
35 Junsok Yang, “The Effect of International Trade on Rule of Law” (2013) Journal of East Asian Economic Integration 27.
36 For such an endeavour, see Robert McCorquodale, “Defining the International Rule of Law: Defying Gravity?” (2016) ICLQ 277.
37 Waldron (n 4) 323.
38 See Chesterman, “Rule of Law” (n 2) 27.
39 Denise Wohlwend, The International Rule of Law. Scope, Subjects, Requirements (Edward Elgar 2021) 2.
40 For a discussion of the consequences of the absence of sovereigns in international law, see Waldron (n 4) 317 et seq.
41 See Ivana Damjanovic, “The Reform of International Investment Law: Whose Rule of Law?,” this issue.
42 See Waldron (n 4) 327–342.
43 Chesterman, “Rule of Law” (n 2) 16–26. For a more general view of how and why treaties promote the rule of law, see Chesterman, “An International Rule of Law?” (n 2) 343–350.
44 For other examples, see Petersmann, “How to Promote the International Rule of Law? Contributions by the World Trade Organization Appellate Review System” (n 22) 34–35.
45 Du and Kong (n 2) 885–905. For a much more enthusiastic presentation, Liao Li and Yu Minyou, “Impact of the WTO on China’s Rule of Law in Trade: Twentieth Anniversary of the WTO” (2015) Journal of World Trade 837.
46 Du and Kong (n 2) 900–901.
47 Contrary to most other FTAs concluded by the EU, the preamble of CETA explicitly recognises “the importance” of the rule of law.
48 Opinion 1/17 (2019) ECLI:EU:C:2019:341, paras 189–190.