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Joost Pauwelyn, “The Rule of Law Without the Rule of Lawyers? Why Investment Arbitrators are from Mars, Trade Adjudicators are from Venus”
Contents
Symposium on Joost Pauwelyn, “The Rule of Law Without the Rule of Lawyers? Why Investment Arbitrators are from Mars, Trade Adjudicators are from Venus”
I must state from the outset that I am not convinced that an analysis like the one conducted by Joost Pauwelyn, though valuable from a statistical and quantitative point of view, is really apt to explain the different functioning of legal institutions, their efficiency in term of results achieved in relation to objectives, the satisfaction of the various group of users and the reasons for their being subjected to criticism. The different architecture of the trade and investment systems reflects different constituencies, objectives and needs. Praise and criticism come from different groups of users and nonusers, and they change over time due to changing perceptions, objectives, and interests.
In this short response, we offer some additional context to the appointment of government officials as World Trade Organization (WTO) panelists, some information on the role of the Secretariat and areas of cross-fertilization.
The Involvement of Panel Members Working for Government
Pauwelyn emphasizes that a significant proportion of WTO panel members have a substantial government background. His numbers indicate that for the period 1995-2014, 88 percent of WTO panelists had worked a minimum of “three years in government as diplomats, negotiators, bureaucrats, ministers and so on.” However, if we look at whether the panelists are employed by governments, either as diplomats or trade specialists, at the time of their appointment as WTO panelists, the figure changes dramatically: only about 50 percent of WTO panelists are employed in government at the time of their nomination. In accordance with Article 8.9 of the Dispute Settlement Understanding (DSU), the procedural rules applicable to WTO dispute settlement proceedings, panelists serve in their individual capacities and not as government representatives.
In his thoughtful article, Joost Pauwelyn poses a perplexing question: How can it be that trade and investment are converging in their substantive “legal orders,” but diverging in terms of perceived legitimacy? Investor-State Dispute Settlement (ISDS), he argues, is in a “state of crisis” whereas World Trade Organization (WTO) dispute settlement is generally regarded as “successful.” Pauwelyn’s provocative and counter-intuitive explanation for this paradox focuses on the apparent differences between the pool of decision-makers in each regime: WTO disputes are resolved by nameless, faceless, panel-inexperienced bureaucrats who often lack legal training, whereas “investment arbitrators are typically high-powered, elite jurists” with more expertise and experience than their WTO counterparts.
In his thought-provoking and timely article, Pauwelyn asks how it can be “that today’s perception of two parallel processes involving the legalization of world politics, and on two closely related subjects of global economic affairs—cross-border trade and cross-border investment—differs so much?” He focuses on one explanation: the individuals deciding World Trade Organization (WTO) versus International Centre for the Settlement of Investment Disputes (ICSID) disputes.
Late last year, the European Commission unveiled an ambitious and complex proposal to replace investor-state arbitration with a transnational court, including an appellate instance, which has now been incorporated into its new bilateral agreements with Vietnam and Canada (CETA). The Commission was responding to strong public resistance to including investor protections in the Transatlantic Trade and Investment Partnership (TTIP), the trade and investment agreement being negotiated between the European Union and the United States. This resistance reflects a remarkable shift in emphasis from the World Trade Organization (WTO) to the investment regime in what could be called loosely the antineoliberal globalization movement. The overarching concern is that international decision-makers with a neoliberal or procorporate bias will limit the policy space of sovereign states, especially in sensitive areas such as public services, the environment, health, and safety. While it is arguable that few of the actual outcomes in investor-state disputes can properly be understood in this way, the pursuit by Philip Morris of its attack on tobacco regulation through the investment regime has certainly provided a very obvious example for the activists. (The defeat of that challenge on jurisdictional grounds doesn’t really provide assurance about the substantive norms at issue and their consistency with policy space.)
I am extremely grateful, and humbled, by the wealth of comments received on my AJIL article through this AJIL Unbound Symposium. One of the many points I take away from these reactions is, indeed, that my analysis offers a snapshot and that many of the critiques now leveled against Investor-State Dispute Settlement (ISDS) are, in Catherine Rogers’s words, “effectively recycled versions of criticisms that were originally leveled against the WTO and its decision-makers.” (Freya Baetens makes a similar point.)
In this rejoinder, I would only like to make two points. Firstly, many commentators seem to think that in this article I took the normative position that World Trade Organization (WTO) dispute settlement is “better” than ISDS. Although I did point to the current discrepancy in public perception of the respective regimes, I purposefully avoided expressing any personal, normative position on one being “better” than the other (but apparently not explicitly enough).