Author’s Response by: Dr. Sergio Puig, Associate Professor and Co-Director of the International Trade and Business Law Program at the James E. Rogers College of Law, University of Arizona, and author of The Merging of International Trade and Investment Law in the Berkeley Journal of International Law.
This comment and response series features three short pieces by international law professors commenting on the recent BJIL article, The Merging of International Trade and Investment Law by Sergio Puig, and a response by the author. The article discusses the merging of international trade and investment law as resulting from the dynamics of the treaty-making process and the strategies employed by litigation parties at the time of the enforcement of treaty rules.
Let me start by thanking the commentators for the careful reading of my piece and the provocative, thoughtful, and sharp comments. In the interest of economy, I will devote only a few lines to each of the commentators’ main points, but I look forward to continuing the stimulating debate on the many issues raised in the article (and comments) that are far from settled.
I agree with Professor Pauwelyn that “the private enforcement is not uniformly socially bad, the same way that public enforcement is not uniformly socially optimal.” In fact, I do not take a position to the contrary. I simply suggest that the potential for excessive enforcement in trade law and the fact that trade tribunals can invalidate laws and regulations—as opposed to investor-state dispute settlement (ISDS) tribunals that can only award damages—merit taking some pause against granting private rights of standing in trade. To be sure, my claim in this article is not that trade or investment enforcement are sub-optimal, but that without the proper coordination mechanism, a system of separate enforcement of trade and investment may continue to be subject to some abuses. Like Professor Pauwelyn, I agree that this is not the most problematic aspect of today’s economic law enforcement, neither are abuses so prevalent, but fears only need the blessing of a given consensus to undermine legitimacy. In fact, the political backlash resulting from the Plain Packaging Tobacco claims against Australia shows how perceived abuses may erode the support of international dispute settlement and free trade, as evidenced by the current debates about Transatlantic Trade and Investment Partnership (TTIP) and Transpacific Partnership (TPP) in the United States and Europe.
I also thank Professor Bjorklund for her elegant comments, and more fundamentally for starting this complex dialogue some years ago. Although in this article I take a less critical position than her early work, I concur with her that “minilateral and multilateral governance regimes offer the potential for intersecting and overlapping obligations and fora in which entities can seek relief.” What I have tried to illustrate by building on her work is that the ways in which the two regimes intersect has particular boundaries and, at some level, is predetermined, in spite of the blurring lines between private and public enforcement. By understanding such boundaries, policy-makers can decide how much flexibility to allow for experimentation and what strategic action by private actors they seek to constrain. To be sure, the system and more specific ISDS will (and perhaps should) maintain some degree of flexibility. The language of certain obligations such as fair and equitable treatment shows that—hence its frequent use in international investment. While I maintain that states will continue to leave some important aspects unresolved (and let the adjudicatory decision-making process take care of them), systemic changes to minimize concerns about the opportunistic use of treaties will continue to come in the form of procedural design features.
Finally, I appreciate Professor Dalhuisen’s sharp criticism and concur with him that there are more fundamental “game-changing dynamics” of globalization that are “critical to understanding the new realities of trade and investment.” In this article with a more limited scope, I have tried to address one aspect of it: the enforcement of trade and investment law. To be sure, this is not disconnected from the trends of economic integration that involved finance, technological changes, harmonization and private law-making and political integration. Professor Brummer has done a superb job at looking at the forest, and not just the trees, as I tried to do here. In trying to problematize the current discontent with socially excessive litigation in international law, I am not advocating for a centralized system in the form of a court (a more conventional thinking) but to embrace complexity and dissect its limits. In that sense, I agree with Professor Dalhuisen and we are probably in the same boat with Steven Ratner and Paul Berman with respect to their love of fragmentation. At the end, as a recent Supreme Court decision in the United States has established: love is love!