Is investor state dispute settlement a form of overseas development assistance?

Would objections to the Investor State Dispute Settlement provisions in the proposed Trans-Pacific Partnership wilt away if the adjudicating body was the International Court of Justice? The left-wing opponents of investor state dispute settlement genuflect at the very mention of the International Court of Justice and international law generally (unless it is international economic law).

Disputes over the provisions of European union treaties are adjudicated by the European Court of Justice. The judgements of that court brought by individuals against member states so annoy the British that it is a leading reason for many British wanting to leave the European Union and replace the Human Rights Act 1998 with a British Bill Of Rights policed by British courts rather than by the European Court of Justice and European human rights law.

It is routine for any treaty to have some provision for arbitration of disputes. This includes trade and investment treaties.

The World Trade Organisation treaty includes a dispute settlement provision with arbitrators based in Geneva. Some of the more than 400 cases heard have been motivated by discrimination against imports on the basis of a breached environmental protection policies of the importing country.

A number of countries want to ban imports that are produced in ways that upset them. Others want to include labour and environmental standards in trade agreements to impose developed country standards on developing countries in what is a new form of colonialism.

I have previously said that investor State Dispute Settlement provisions have no place in trade and investment treaties between democracies. I must now admit there are good reasons to have arbitration clauses in treaties between democracies.

The puzzle is why refer these trade and investment disputes to a little-known arbitration body adjunct to the World Bank rather than the far more prestigious International Court of Justice.

Perhaps the reason is both sides want an arbitrator who is not too strong and not too credible. It would look very bad if the International Court of Justice was to rule against you.

William Landes and Richard Posner contended that judicial independence maximises the value of legislative deals with interest groups by enhancing the durability of those deals.

Why no International Court of Commercial Law? When deciding what type in judiciary to enforce international trade bargains, the signatories may prefer a less credible adjudication and enforcement mechanism in case they want to opt out of it or chip around the decision.

The jurisdiction of the International Court of Justice is to settle, in accordance with international law, legal disputes submitted to it by special agreement and matters specifically provided for in treaties and conventions in force.

UN member states are the parties to any litigation but that doesn’t stop them raising cases on behalf of individuals. That said, organizations, private enterprises, and individuals cannot have their cases taken to the International Court, such as to appeal a national supreme court’s ruling. Only the states can bring the cases and become the defendants of the cases.

The International Court of Justice is different from the European Court of Justice because individuals cannot easily bring complaints before it. One of the causes of action before  the European Court of Adjusters is under European competition law over member states providing financial aid to industries.

Democratic countries with high levels of economic and  social integration, such as the  European union, do find it in advantage to set up a European wide Court to adjudicate disputes over rights under European law.

Why then would a democracy sign up to an investment protection treaty with a developing country? One reason is overseas development assistance.

Developing countries with corrupt and incompetent courts, politicians and bureaucracies sign international treaties as a way of assuring foreign investors and trading partners of some degree of security of their property rights and their ability to enforce contracts with suppliers and buyers.

By folding these assurances into trade treaties, the developing country has a stronger incentive to honour its promises. There will be domestic constituencies wanting to retain reciprocal export market access who will lobby for the honouring of the promises of legal protection to investors and businesses in their home country.

New Zealand signing up to the Trans-Pacific Partnership is an example of this form of overseas development assistance. Exporters and investors from the developing country who export and invest in New Zealand have another reason to support more secure property rights and better enforcement of contracts in their home country as a way of securing their treaty rights to export and invest in New Zealand.

The Left of the political spectrum should be keen on this form of overseas development considering their general belief in greatly increasing the amount spent on overseas development assistance. Rather than pay cash to the development country, the payment is in kind as reciprocal legal promises.

Trade treaties that include investor state dispute settlement are forms of governance assistance to developing countries. The reciprocal exchange of promises about investor protection and the enforcement of contracts and property rights improves the quality of governance in the developing country.

The countries most likely to be subject to investor state dispute settlement are those with weaker governance. Even in the European Union, the member states most likely to be sued are former communist countries. The most common course of action was the cancellation of a licence or permit.

Investor state dispute settlement clauses are no different from any other international treaty include environmental and human rights treaties. All these treaties require countries to give up part of their sovereignty.

Democracies give up their sovereignty in investor state dispute settlement in the hope that developing country partners to the treaty will improve the development potential of their country through better governance and more secure property rights.

That is an overseas development aid objective the Left of the political spectrum should support, but it does not. The Left of the political spectrum is happy to use trade agreements to impose developed country labour and environmental standards on poor countries desperate for access to rich country markets, but is not willing to give up anything in return.


Murray Rothbard on war and statesmanship


The Democracy Deficit of International Law

via The Volokh Conspiracy – The Effort to Ban “Defamation of Religion” and the Democracy Deficit of International Law:.

Obama is doing a Clinton on climate change agreements

Last week, I planned to write a blog about how Obama might do a Clinton: safe in the knowledge that Congress will never approve any of his climate change agreements, he will run round the world signing up to all sorts of ambitious carbon emission reduction goals.

The agreement Obama just signed today with the Chinese after the secret talks over the congressional election period is an example. This secret agreement goes to show that the Obama administration can actually keep a secret.

The agreement with China and any other futures similar agreements will win Obama brownie points with the Left of his party, but not bother anyone else in particular because they know they’ll never get through Congress.

The moment Bush took office in 2001, the Democrats started asking why wouldn’t Bush submit the Kyoto protocol to the Senate for ratification.

Bill Clinton had 801 days left in his administration after he signed the Kyoto protocol in December 1997 to submit it for Senate ratification. He did not lift a finger.

Clinton was safe in the knowledge that prior to the signing of the Kyoto protocol, the Senate voted 95 to nil  in July 1997 to not ratify any treaty on climate change that did not impose mandatory obligations on Russia, China and other major developing countries.

President Clinton approved and signed into law appropriations bills for fiscal years 1999, 2000, and 2001 that included language prohibiting the Environmental Protection Agency from using its funds to “issue rules, regulations, decrees, or orders for the purpose of implementation, or in preparation for implementation, of the Kyoto Protocol” until the Protocol is ratified by the Senate and entered into force under the terms of the treaty.

The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. These amount to an average of five per cent reduction against 1990 levels over the five-year period 2008-2012.


Developing countries, including China and India, weren’t mandated to reduce emissions, given that they’d contributed a relatively small share of the current century-plus build-up of CO2.

The Europeans were happy to sign the Kyoto Protocol after the Americans pulled out because the emissions trading price in any such protocol would be very low because no American companies would have to buy emission credits.

U.S. and China Reach Climate Deal After Secret Negotiations – where are the protesters? Where is the hypocrisy?!

The United States and China have unveiled a secretly negotiated deal to reduce their greenhouse gas output, with China agreeing to cap emissions for the first time and the US committing to deep reductions by 2025. Jointly announced in Beijing by President Obama and President Xi Jinping, includes new targets for carbon emissions reductions by the United States and a first-ever commitment by China to stop its emissions from growing by 2030.

Will protestors take to streets about the secrecy that proceeded the negotiation of this international agreement?

  • 10,000 protesters took to the streets of New Zealand at the weekend against the secrecy surrounding the Trans-Pacific partnership trade and investment talks. The air was thick with conspiracy theories and the demand for transparency in international diplomacy.
  • Why were these treaty negotiations with China over carbon emissions kept from the watchful eye of the American public before the recent congressional elections?

The Left over Left picks and chooses the international law that it champion:

  • International law on both human rights and the environment are both an addendum to the 10 Commandments and must be followed, come hell or high water. Even better if the UN is somehow involved –  moral status is then beyond question.
  • International trade and investment laws are the spawn of Satan. The fact that these trade and investment treaties are freely negotiated between sovereign states adds nothing to their moral standing and much to their conspiratorial origins.
  • International criminal courts, the European Court of Justice and the World Court are all superior to national courts. International trade and investment dispute tribunals are the lackeys of multinationals.

The deliberate intermingling of civilians and combatants is a breach of the Law of International Armed Conflict


John Rawls and war and peace and temporary doves

John Rawls’ Law of Peoples had as its key point that the fundamental division is not between democratic and non-democratic peoples or liberal and non-liberal, but decent and non-decent or outlaw peoples. Decent peoples allow toleration and subscribe to eight principles:

  1. Peoples are free and independent, and their freedom and independence are to be respected by other peoples.

  2. Peoples are to observe treaties and undertakings.

  3. Peoples are equal and are parties to the agreements that bind them.

  4. Peoples are to observe a duty of non-intervention.

  5. Peoples have the right of self-defence but no right to instigate war for reasons other than self-defence.

  6. Peoples are to honour human rights.

  7. Peoples are to observe certain specified restrictions in the conduct of war.

  8. Peoples have a duty to assist other peoples living under unfavourable conditions that prevent their having a just or decent political and social regime.

Libertarians such as Murray Rothbard define a just war thus:

· A just war exists when a people tries to ward off the threat of coercive domination by another people, or to overthrow an already-existing domination; and

· A war is unjust, when a people try to impose domination on another people, or try to retain an already existing coercive rule over them.

A condition for a just war is force may be used only after all peaceful and viable alternatives have been seriously tried and exhausted or are clearly not practical.

Most of all, save me from self-styled anti-war activists what Matt Welch called temporary doves. Temporary doves spit bile at those that support the wars they oppose – denouncing them as moral pigmies. The temporary doves then make exceptions for the wars they support and spite bile once again at those that question the whimsical nature and application of their values about just and unjust wars and the just conduct of wars.

The wars championed by the temporary doves can be equally or more bloody in civilian casualties as the wars they oppose either because of the reasons they were started or because of how these wars are conducted – civilian casualties In Iraq and Afghanistan.

Civilian casualties are put forward by the temporary doves as a moral trump card against the Iraq and Afghan wars and the atomic bombings. Many of the architects and champions of the NATO bombings in the Kosovo war opposed Gulf War II. Slobodan Milosevic, like Saddam Hussein, was described as a modern-day Hitler, eager to practice genocide against minorities and menace peaceful neighbours.

Is Bill Clinton a war criminal because he bombed Iraq and Sudan, but a human rights hero because he bombed Serbia? All of these bombings resulted in civilian deaths.

The supporters of both wars frequently invoked the Munich Agreement of 1938 and sought regime change. Perhaps less bloody but certainly slower social and political emancipation from oppression and mass murder is OK for the temporary doves for Iraq and Afghanistan but not for Kosovo. Temporary doves are just as prepared to wade up to their armpits in civilian casualties as the next warmonger, but they then put themselves forward as free of sin when they call for war crimes trials and citizen’s arrests of those that supported and conducted equally bloody wars.

Edward Luttwick argued that the Kosovo war proved that precision modern air bombardments can be effective as humanitarian interventions only in unique circumstances:

• An enemy sufficiently economically developed to offer targets worth bombing, and
• sufficiently democratic to respond to the inconvenience thereby inflicted on civilians at large; and
• yet sufficiently primitive and authoritarian to become the target of a humanitarian bombing campaign in the first place.

In most cases, from the Taliban’s Afghanistan to Zaire and from Rwanda to Sierra Leone, there were no identifiable, high-value, and relevant targets. In Bosnia, the post-heroic behaviour of almost all peacekeeping troops in UN service ranged from doing little or nothing to protect civilians while engaging in every possible form of misconduct, from black-market trafficking to cowardly passivity in the face of mass murder.

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