Judging judges: From 'principal-agent theory' to 'constitutional justice' in multilevel 'judicial governance' of economic cooperation among citizens

Journal of International Economic Law

Volumn 11, Issue 4, 2008, Pages 827-884

  Petersmann, Ernst Ulrich ^a,b  

^a Department of International and European Law ^*

^b EUROPEAN UNIVERSITY INSTITUTE   (Italy)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 57149114975     PISSN: 13693034     EISSN: 14643758     Source Type: Journal    
DOI: 10.1093/jiel/jgn030     Document Type: Article

References (204)

1. Report of the Special Representative J. Ruggie of the Secretary-General on the issue of Human Rights and Transnational Corporations and other Business Enterprises, Protect, Respect and Remedy: a Framework for Business and Human Rights, UN doc. A/HRC/8/5 of 7 April 2008, para 3.
2. J. Rawls, A Theory of Justice (1973), at 3.
3. On the dialectic developments of constitutional rights and principles of justice restraining the instrumental 'governance by law',
4. see Aristotle, The Politics and the Constitution of Athens (ed. S.Everson), Book III, para 16 (1996), 1287a-b. For a recent historical survey see Lord Bingham of Cornhill, The Rule of Law, Lectio Magistralis on the occasion of the h.c. degree conferred by the Faculty of Law, University of Roma Tre, 14 March 2008.
5. Plato, The Republic (ed. D. Lee, 2003) 331e.
6. On 'rule of men' as domination, and 'rule of law' as non-domination, see P. Pettit, Republicanism: A Theory of Freedom and Government (1997).
7. The historical division between common law and equity law in England, where the Court of Chancery provided additional remedies in certain situations if the common law courts failed to do so, illustrates the long-standing claim by theories of justice
8. [e.g. Aristotle, Nicomachean Ethics (ed. M. Ostwald, 1999), 1137b-1138a] that equitable and reasonable interpretation and application of the law may require judges to address particular circumstances of the dispute justifying particular interpretations
9. (e.g. of 'rules of reason' and 'rules of recognition' in the sense of H. L. A. Hart). For modern examples of changing legal and judicial interpretations
10. see UN doc. A/HRC/8/5 of 7 April 2008, above n 1, para 19: 'Experts disagree on whether international law requires home States to help prevent human rights abuses abroad by corporations based within their territory. There is greater consensus that those States are not prohibited from doing so where a recognized basis of jurisdiction exists, and the actions of the home State meet an overall reasonableness test, which includes non-intervention in the internal affairs of other States.'
11. According to F. A. Hayek, The Constitution of Liberty (1960), it is 'because the lawgiver does not know the particular cases to which his rules will apply, and it is because the judge who applies them has no choice in drawing the conclusions that follow from the existing body of rules and the particular facts of the case, that it can be said that laws and not men rule' (at 153). Rule of law differs from 'rule by law' and 'rule by men' in terms of constitutional safeguards such as judicial enforcement of law vis-à-vis private persons and public audiorities and judicial protection of human rights and other principles of justice.
12. Contrary to the claim by a few American authors (e.g. R.Bhala/K.Kennedy, World Trade Law (1998), at 43) that Article 23 DSU prevents domestic courts from determining violations of WTO rules, the text and drafting history of the WTO Agreement confirm that Article 23 establishes an exclusive jurisdiction only for intergovernmental disputes over violation of WTO rules or nullification of WTO benefits; the numerous WTO guarantees of individual access to domestic courts confirm the citizen-oriented functions of the 'dispute settlement system of the WTO' and of its objective of 'providing security and predictability to the multilateral trading system' (Article 3 DSU). The International Law Association, which represents national law associations from all over the world, has rightly emphasized the crucial role of 'consistent interpretation' of WTO law by national and international courts (cf. ILA Resolution No.2/ 2000 on 'The Rule of Law in International Trade', ILA Report of the 69th Conference 2000, at 18-25) as well as that 'WTO members and bodies are legally required to interpret and apply WTO rules in conformity with the human rights obligations of WTO members under international law' (ILA Resolution 5/2008, ILA Report of the 73rd Conference 2008, forthcoming). Hence, Article 23 DSU does not prevent domestic courts from finding that domestic governmental measures are inconsistent with WTO law.
13. Cf. E. W. Thomas, The Judicial Process. Realism, Pragmatism, Practical Reasoning and Principles (2008).
14. Cf. Thomas, above n 9, at 3 ff: 'Judges make law - endlessly'... 'The belief that judges do not make law is hopelessly out of date'... 'Judges also make policy regularly'... 'Legal theorists who condemn legal policy-making as an aberrant departure from the true judicial interpretative function also ignore this reality'... 'Once it is recognised that in the course of making law judges move beyond any sensible concept of interpretation and formulate policy, it becomes important that they have some familiarity with legal theory in order to define their judicial role' (at 7). On the inevitably law-creating dimensions of judicial interpretation and clarification of indeterminate rules,
15. see also T. Ginsburg, 'Bounded Discretion in International Judicial Lawmaking' 45 Virginia Journal of International Law (2005), at 631-72.
16. Even inside the United States, there is-as explained by R. Dworkin, Is Democracy Possible Here? (2006)-pervasive disagreement among conservatives and democrats on human rights and democracy. Dworkin's proposal - i.e. to base constitutionalism on two basic principles of human dignity (i.e. first, that each human life is intrinsically and equally valuable and, second, that each person has an inalienable personal responsibility for realizing her unique potential and human values in her own life)-illustrates how limited reasonable constitutional consensus on substantive justice might be even inside one of the most stable constitutional democracies.
17. Cf. S. Hampshire, Justice is Conflict (2001).
18. Aristotle, Nicomachean Ethics, above n 6, at 262 (1169a).
19. Aristotle, above n 13, at 1131a: 'all men agree that what is just in distribution must be according to merit in some sense, though they do not all specify the same sort of merit.'
20. Cf. C. Perelman, The Idea of Justice and the Problem of Argument (ed. J. Petrie, 1963), who distinguishes (at 7) the following six 'most current conceptions of justice': (1) to each the same thing; (2) to each according to his merits; (3) to each according to his works; (4) to each according to his needs; (5) to each according to his rank; and (6) to each according to his legal entitlement. Perelman defines 'formal justice' as 'a principle of action in accordance with which beings of one and the same essential category must be treated in the same way' (at 16). Yet, there is no agreement on how to define the 'essential characteristic' justifying equal or different treatment in the administration of justice.
21. Cf. E. U. Petersmann, 'Justice as Conflict Resolution: Proliferation, Fragmentation and Decentralization of Dispute Settlement in International Trade Law', 27 University of Pennsylvania Journal of International Economic Law (2006), at 273-366.
22. Rawls, above n 2.
23. Rawls, above n 2, defined his two principles of justice in the following way (at 60): 'First: each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others. Second: social and economic inequalities are to be arranged so that they are both (a) reasonably expected to be to everyone's advantage, and (b) attached to positions and offices open to all.' These two principles were described as a special case of a more general conception of justice that Rawls expressed as follows (at 62): 'All social values -liberty and opportunity, income and wealth, and the bases of self-respect - are to be distributed equally unless an unequal distribution of any, or all, of these values is to everyone's advantage. Injustice, then, is simply inequalities that are not to the benefit of all.'
24. J. Rawls, Political Liberalism (1993), at 231 ff.
25. Rawls, above n 19, at 48 ff, distinguishes the reasonable and the rational as distinct, albeit complementary ideas: 'Reasonable persons ... desire ... a social world in which they, as free and equal, can cooperate with others on terms all can accept. They insist that reciprocity should hold within that world so that each benefits along with others'. 'The rational ... applies to a single, unified agent (either an individual or corporate person) with the powers of judgment and deliberation in seeking ends and interests peculiarly its own' (at 50). Another basic difference between the reasonable and the rational is 'that the reasonable is public in a way the rational is not' (at 53). The 'two moral powers' of individuals (defined as fundamental interests and capacities for a sense of social justice and for rationally pursuing one's individual conception for a good life) may conflict with the third fundamental interest of free citizens in a democratic social order, i.e. to be successful in terms of the particular conception of the good they have chosen.
26. Cf. Rawls, above n 19, at 363 ff.
27. J. Rawls, The Law of Peoples (1999). For my criticism of Rawls' international theory of justice see: E. U. Petersmann, International Trade Law, Human Rights and Theories of Justice, in
28. S. Charnovitz et al. (eds), Law in the Service of Humanity. Essays in Honour of F. Feliciano (2005), 44-57. On the normalcy and morality of conflicts, and the 'paradox of reasonable disagreement' (i.e. rule of law as a necessary response to disagreement and conflicts of interests depends on legal respect for reasonable disagreement and on dialogue and cooperation among legal institutions),
29. see also S. Besson, The Morality of Conflict. Reasonable Disagreement and the Law (2005).
30. Cf. F. Francioni, (ed.), Access to Justice as a Human Right (2007).
31. Cf. J. Pauwelyn, Optimal Protection of International Law (2008), who analyses the WTO arbitral awards and legal literature on whether the ultimate objectives of 'compensation and suspension of concessions' (Article 22 DSU) are to rebalance the original bargain, to compensate the victim, to induce compliance with WTO obligations and/or to punish the violator, and compares these DSU rules with other WTO rules on suspension of concessions (e.g. pursuant to GATT Articles XIX and XXVIII).
32. US - Byrd Amendment, WT/DS217, 234/ARB, para 6.4.
33. These models are discussed by L. B. Solum, 'Procedural Justice', University of San Diego Legal Working Paper Series 2004.
34. Also T. Ralli, 'Justice through Legal Dispute', European University doctoral thesis 2008, focuses on private law disputes and contract law adjudication.
35. WT/DS141/AB/R, para 55, adopted in March 2001. This interpretation of the 'fair comparison' requirement, which was subsequently confirmed by the Appellate Body in five additional rulings, had been rejected by an earlier GATT panel report (EC - Audio Cassettes, ADP/136 of 28 April 1995, not adopted) on the basis of the argument mat 'if the existence and extent of dumping and the imposition of duties had been conducted on a transaction-to-transaction basis, the EC would have been entitled to impose a duty with respect to dumped transactions, where injury existed, irrespective of the prices at which other un-dumped transactions occurred' (para 356). Such narrow, textual interpretations of rules without regard to their underlying principles (such as the requirement of a 'fair comparison' in the inevitable aggregation and averaging of multiple price comparisons) was characteristic of many 'bureaucratic interpretations' of GATT 1947 and the 1979 Tokyo Round Agreements at the insistence of GATT diplomats and GATT officials who, even after the establishment of a GATT Legal Division in 1983, often continued to prevent GATT panellists from receiving independent legal advice.
36. WT/DS264/AB/RW, paras 138-10, adopted in September 2006.
37. Korea-Beef, WT/DS161, 169/AB/R, para 164, adopted in January 2001.
38. On the controversial relationship between the 'Charming Betsy doctrine' of consistent interpretation and the 'Chevron doctrine' of judicial deference in US law
39. see A. Davies, 'Connecting or Compartmentalizing the WTO and United States Legal Systems? The Role of the Charming Betsy Canon', 10 JIEL (2007), at 117-49.
40. Whereas US courts often exercise judicial deference without regard to the WTO obligations of the United States and to WTO dispute settlement findings on US trade regulations, a recent NAFTA Article 1904 panel reviewing US anti-dumping calculations concluded diat 'zeroing seems inconsistent ... with both the underlying principle of the Charming Betsy canon and the United States' Uruguay Round negotiating goal of obtaining an effective dispute-resolution system' (In the matter of Carbon and Certain Alloy Steel Wire Rod from Canada 2006, 1904-4, 28 November 2007, at 38). The EC's legal advocates claim long since that European courts should not apply the 'WTO law in the books' as ratified by parliaments, but the 'WTO law in action' as determined by trade diplomats,
41. see P. J. Kuijper, 'WTO Law in the European Court of Justice', 42 Common Market Law Review 1313 (2005), at 1332-34.
42. Cf. A. Stone Sweet, 'Constitutional Courts and Parliamentary Democracy', 25 West European Politics (2002), at 77-100. On the tensions between 'constitutional democracy', 'parliamentary democracy' and 'presidential democracy' in the United States see B. Ackerman, The Failure of the Founding Fathers: Marshall and the Rise of Presidential Democracy (2005).
43. While many political scientists continue to describe 'monarchical paradigms' of 'foreign policy management' as being 'realistic', some-like K. J. Alter, 'Delegation to International Courts and the Limits of Re-Contracting Power', in Hawkins, Lake, Nielson and Tierney (eds), Delegation and Agency in International Organizations (2006), at 312 ff - admit that 'starting from PA theory to understand judicial behaviour may be simply unhelpful' (at 337). Alter's description of international courts as 'trustee agents' whose independent decision-making powers help governments to limit their collective action problems, corresponds to constitutional conceptions of international law (as discussed subsequently).
44. US - Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R of 30 April 2008, paras 160-161.
45. Cf. WT/DS344/AB/R, note 288;
46. WT/DS322/AB/R, para. 169;
47. WT/DS264/AB/R, para. 146.
48. H. L. A. Hart, The Concept of Law (1961), ch. 7.
49. Article 17.6 (ii), states, inter alia: 'Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.' In the United States, the Chevron doctrine continues to be criticized as a 'caunter-Marbury for the administrative state' that unduly favors agency autonomy over independent judicial review, e.g. of 'consistent' interpretation of domestic law in conformity with constitutional law and international legal obligations. International courts have not recognized judicial deference standards similar to those of the Chevron preference for political rather than judicial accountability of administrative agencies. Yet, the EC Court often reviews compliance of state measures with EC law more strictly than compliance of EC measures with EC law.
50. Cf. M. Oesch, Standards of Review in WTO Dispute Settlement (2006);
51. S. P. Croley and J. Jackson, 'WTO Dispute Panel Deference to National Government Decisions. The Misplaced Analogy to the US Chevron Standard-of-Review Doctrine', in E. U. Petersmann (ed.), International Trade Law and the GATT/WTO Dispute Settlement System (1997) 203 ff.
52. Cf. S. J. Shapiro, 'The "Hart-Dworkin" Debate: A Short Guide for the Perplexed', Michigan Public Law and Legal Theory Working Paper No. 77 (2007).
53. Cf. The Result of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts (GATT 1994), at 453.
54. On the incomplete WTO rules on standard of review, the 'irrelevance of domestic standard-of-review concepts', the Appellate Body case law on full de novo judicial review of legal interpretations, and the absence of any WTO dispute settlement findings of 'two permissible interpretations' (in the sense of Article 17.6 Anti-Dumping Agreement),
55. see Oesch, above, n 36. On 'judicial balancing',
56. see A. Stone Sweet and J. Mathews, 'Proportionality Balancing and Global Constitutionalism', 47 Columbia Journal of Transnational Law 47 (2008) (forthcoming).
57. Cf. R. Dworkin, Taking Rights Seriously (1978);
58. A Matter of Principle (1985);
59. Law's Empire (1986). According to Dworkin, 'rules' are applicable in an all-or-nothing fashion ('if, men') and require the judge to decide a case in the way dictated by an applicable rule. 'Principles' (defined as rights) and policies (defined as goals) have the dimension of weight or importance, providing one reason for deciding a case in a particular way that has to be weighed against other reasons and principles. Judges have no discretion; they must find the right judicial decision that fits best with the legal rules, institutions, legal principles and policies, treating citizens as equals on the basis of principles of justice, fairness, procedural due process and 'law as integrity'.
60. On Alexy's theory of legal argumentation, see R. Alexy, A Theory of Constitutional Rights (2002), at 369 ff.
61. In many WTO disputes over GATS commitments (such as Mexico - Telecoms, WT/DS204, adopted 1 June 2004, US - Gambling, WT/DS285/AB/R, adopted 20 April 2005), WTO dispute settlement bodies confirmed GATS commitments on the basis of Secretariat Guidelines for the scheduling of GATS Commitments notwithstanding claims by the defendant countries that they had never intended to make such GATS commitments.
62. The widespread distrust among WTO delegates vis-à-vis the WTO Secretariat's 'Rules Division' in charge of anti-dumping rules was reflected in the criticism in the WTO Appellate Body Report of 30 April 2008 (WT/DS344/AB/R) that panel reports (drafted by the 'Rules Division') continued 'to depart from well-established Appellate Body jurisprudence clarifying the interpretation of the same legal issues' (i.e. the illegality of the use of 'zeroing' during reviews of anti-dumping orders). The Appellate Body corrected the Panel's 'misguided understanding of the legal provisions at issue' and affirmed, for the third time, that zeroing during reviews is illegal; it also emphasized (in paras 160-161) that - even if 'Appellate Body reports are not binding, except with respect to resolving the particular dispute between the parties' - 'the legal interpretation embodied in adopted panel and Appellate Body reports becomes part and parcel of the acquis of the WTO dispute setdement system', cf. above, n 33, and the related text above.
63. On the continuing ineffectiveness of parliamentary control of WTO rule-making, see the European Parliament documents on The Parliamentary Dimension of the WTO (2006);
64. Role of Parliaments in Scrutinising and Influencing Trade Policy (2005).
65. See J. H. Jackson, The World Trade Organisation: Constitution and Jurisprudence (1998).
66. See D. Z. Cass, 'The Constitutionalization of International Trade Law: Judicial Norm-Generation as the Engine of Constitutionalization', 11 European Journal of International Law (2001), at 39-75.
67. See J. O. McGinnis and M. L. Movsesian, 'The World Trade Constitution', 114 Harvard Law Review (2000), at 511-605;
68. P. M. Gerhart, 'The Two Constitutional Visions of the World Trade Organisation', 24 University of Pennsylvania Journal of International Economic Law (2003), at 1-75, contrasts the 'inward-looking, economic vision of the WTO' in helping member countries addressing internal political failures with the 'external, participatory vision of the WTO' helping WTO members to address concerns raised by policy decisions in other countries.
69. See, for example, P. M. Gerhart, 'The WTO and Participatory Democracy: The Historical Evidence', 37 Vanderbilt Journal of Transnational Law (2004), at 897-934.
70. See J. O. McGinnis, 'The WTO as a Structure of Liberty', 28 Harvard Journal of Law and Public Policy (2004), at 81-8.
71. J. Trachtman, 'The WTO Constitution: Toward Tertiary Rules', 17 European Journal of International Law (2006).
72. Cf. E. U. Petersmann, Constitutional Functions and Constitutional Problems of International Economic Law (1991);
73. N. Walker, 'The EU and the WTO: Constitutionalism in a New Key', in G. de Burea and J. Scott (eds), The EU and the WTO: Legal and Constitutional Issues (2001);
74. T. Cottier and M. Hertig, 'The Prospects of 21st Century Constitutionalism', 7 Max Planck Yearbook of United Nations Law (2003), at 261.
75. Cf. L. Fuller, The Morality of Law (2nd edn, 1969), who identifies (in chapter 2) eight moral requirements as being constitutive of 'rule of law' (i.e. generality, clarity, promulgation, stability, consistency of rules and social behavior, non-retroactivity and non-contradictory nature of rules which must also not require the impossible). WTO law seems to meet all these requirements as well as additional requirements (such as judicial independence, judicial review, fair hearings)
76. stipulated by J. Raz, The Authority of Law (1979), at 214 ff.
77. On the priority of justice, liberty and rights over ethical conceptions of the good life in theories of justice from Kant to Rawls,
78. see Rawls, above n 2, at 31 ff, 243 ff;
79. Rawls, above n 19, at 294 ff.
80. The WTO World Trade Report 2007 offers an excellent summary and systematization of economic, political and 'constitutional conceptions' of the WTO legal system (at 35-110). On the more general argument that collective supply of international public goods (including an open, rules-based world trading system) requires multilevel constitutional restraints of multilevel governance, see E. U. Petersmann, 'Multilevel Trade Governance Requires Multilevel Constitutionalism', in C. Joerges and E. U. Petersmann (eds), Constitutionalism, Multilevel Trade Governance and Social Regulation (2006) 5-57.
81. See, e.g. A. Stone Sweet, Governing with Judges. Constitutional Politics in Europe (2000), who describes how much third-party dispute resolution and judicial rule-making have become privileged mechanisms of adapting national and intergovernmental rule systems to the needs of citizens and their constitutional rights.
82. For example, the wide-ranging guarantees of economic regulation and legally enforceable social rights in Germany's 1919 Constitution for the 'Weimar Republic' had led to ever more restrictive government interventions into labor markets, capital markets, interest rates, as well as to expropriations 'in the general interest' which-during the Nazi dictatorship from 1933 to 1945 - led to systemic political abuses of these regulatory powers.
83. Cf. M. Emberland, The Human Rights of Companies. Exploring the Structure of ECHR Protection (2006). The protection of this collective dimension of human rights (e.g. of legal persons that are composed of natural persons) has prompted the ECtHR to protect procedural human rights (e.g. under Articles 6, 13 and 34 ECHR) as well as substantive human rights of companies (e.g. under Articles 8, 10 and 11 ECHR, Protocol 1) in conformity with the national constitutional traditions in many European states as well as inside the EC (e.g. the EC guarantees of market freedoms and other economic and social rights of companies).
84. See 'Ireland v. United Kingdom' 2 European Human Rights Reports (1979), at 25.
85. See the judgment of the ECtHR in Loizidou v Turkey (preliminary objections) of 23 March 1995, para 75, referring to the status of human rights in Europe.
86. L. Wildhaber, 'A Constitutional Future for the European Court of Human Rights?'23 Human Rights Law Journal (2002), 161 ff.
87. See Wildhaber, above n 60, at 161.
88. Ibid, at 164-5.
89. Cf. A. Riza Coban, Protection of Property Rights within the European Convention on Human Rights (2004). The Court's review of governmental limitations of, and interferences with, property rights is based on 'substantive due process' standards that go far beyond the 'procedural due process' standards applied by the US Supreme Court since the 1930s. The ECtHR never found so far that a foreigner had been expropriated in the sense of Article 1 of Protocol No.1 of the ECHR. But many interferences with property rights of foreign investors were held to be 'other interferences' requiring less than full compensation. In a few cases challenging government interferences with property rights of foreigners, investors opted for parallel proceedings before arbitral tribunals and the ECtHR, cf. U. Kriebaum, 'Is the European Court of Human Rights an Alternative to Investor-State Arbitration?' in F. Francioni and E. U. Petersmann (eds), Human Rights, International Investment Law and Investor-State Arbitration (forthcoming in 2009).
90. OJ EC 1994, L 1/3.
91. V. Skouris, 'The ECJ and the EFTA Court under the EEA Agreement: A Paradigm for International Cooperation between Judicial Institutions', in C. Baudenbacher, P. Tresselt, and T. Orlygsson (eds), The EFTA Court. Ten Years On (2005) 123, 124.
92. Opinion 1/91, EEA Agreement, ECR 1991 I-6079, para 28.
93. Case E-1/94, EFTA Court Reports 1994-95, 15.
94. Case E 1/01 EFTA Court Reports 2002, 1.
95. Case E 7/97 EFTA Courts Reports 1998, 95.
96. Case E 4/01 EFTA Court Reports 2002, 240 (para 28).
97. Cf. E. U. Petersmann, The GATT/WTO Dispute Settlement System (1997) 19 ff.
98. US Court of Appeals for the Federal Circuit, judgment of 21 January 2005 (Corus Staal), available at http://www.fedcir.gov/opinions/04-1107.pdf.
99. On the recognition and enforcement of investor-state arbitration awards in domestic courts, see R. D. Bishop, J. Crawford and M. Reisman, Foreign Investment Disputes (2005) 1515 ff.
100. Cf. F. C. Mayer, 'The European Constitution and the Courts', in A. v. Bogdandy and J. Bast (eds), Principles of European Constitutional Law (2006) 281-334.
101. BVerfGE 37, 327.
102. The ECJ's judicial protection of human rights continues to dynamically evolve since 1969 (Case 29/69, Stauder v City of Ulm, ECR 1969, 419;
103. Case 11/70 Internationale Handelsgesellschaft, ECR 1970, 1125).
104. BVerfGE 73, 339, at 375.
105. BVerfGE 89, 115.
106. BVerfGE 102, 147.
107. BVerfGE 113, 273.
108. Cf. A. Rosas, 'Fundamental Rights in the Luxembourg and Strasbourg Courts', in C. Baudenbacher, P. Tresselt and T. Orlygsson, above n 65, at 163, 169.
109. Case 1/58, Storck v High Authority, ECR 1959, 43.
110. Cf, above n 76.
111. See, e.g. Opinion 2/1994 on the ECHR, ECR 1996 I-1759, para 33.
112. Joined Cases 46/87 and 222/88, Hoechst, ECR 1989, 2859, para13.
113. Cf. Case 13/94, P v S, ECR 1996 1-2143, paralo.
114. Cf. Case C-112/00, Schmidberger, ECR 2003 1-5659. The judicial balancing by the ECJ refutes the claim that the ECJ gives priority to economic freedoms at the expense of other human rights.
115. In Case C-94/00, Roquette Frères, ECR 2002 1-9011, para 29, for example, the ECJ referred explicitly to new case law of the ECtHR on the protection of the right to privacy of commercial enterprises in order to explain why - despite having suggested the opposite in the ECJ's earlier judgment in Hoechst - such enterprises may benefit from Article 8 ECHR.
116. Cf., e.g. the ECJ cases listed in above n 76.
117. Cf., e.g. the Omega Case C-36/02, ECR 2004 1-9609, in which the ECJ acknowledged that the restriction of market freedoms could be necessary for the protection of human dignity despite the fact that the German conception of protecting human dignity as a human right was not shared by all other EC Member States.
118. In Case C-438/05, Viking Line, judgment of 11 December 2007 (nyr), the ECJ confirmed that trade unions - in exercising their social rights to strike (e.g. in order to prevent relocation of the shipping line Viking to another EC Member State) - are legally bound by the EC's common market freedoms that have to be reconciled and 'balanced' with social and labour rights.
119. Case T-315/01, ECR 2005, 11-3649.
120. Case C-112/00, above n 87, para 73.
121. Case C-402/05 Kadi, Opinion of 16 January 2008 (nyr) and judgment of 3 September 2008 (nyr).
122. Case C-140/97, Rechberger, ECR 1999 I-3499, para 39.
123. Case C-452/01, ECR 2003 I-9743, para 29.
124. Cf. the EFTA Court President C. Baudenbacher, 'The EFTA Court Ten Years On', in Baudenbacher et al., above n 65, 13; and H. P. Graver, (ibid), 79, at 97: 'Direct effect of primary law, state liability and the duty of the courts to interpret national law in the light of EEA obligations have been clearly and firmly accepted in national law by Norwegian courts.'
125. Goodwin v United Kingdom, judgment of 11 July 2002, Reports of Judgments and Decisions 2002-VI, paras 58 and 100.
126. SA Dangeville v France judgment of 16 April 2002, Reports of Judgments and Decisions 2002-III, paras 31 ff.
127. Waite and Kennedy v Germany, judgment of 18 February 1999, Reports of Judgments and Decisions 1999-I, para 67.
128. Case of Bosphorus Hava Yollari Turizm v Ireland, judgment of 30 June 2005, European Human Rights Reports 42 (2006) at 1, paras 153 ff.
129. Case of Bosphorus Hava Yollari Turizm v Ireland, above n 103, paras 165, 166.
130. Cf. T. McDorman, 'Access to Information under Article 9 OSPAR Convention (Ireland v UK), Final Award', 98 American Journal of International Law (2004), at 330 ff.
131. Cf. Y. Shany, 'The First MOX Plant Award: The Need to Harmonize Competing Environmental Regimes and Dispute Settlement Procedures', 17 Leiden Journal of International Law (2004), at 815 ff.
132. ECJ Case C-459/2003, Commission v Ireland ECR 2006 I-4635, paras 84, 121, 128.
133. ECR (2006) I-4635, para 133.
134. Cf. N. Lavranos, 'The MOX Plant and IJzeren Rijn Disputes: Which Court is the Supreme Arbiter?' 19 Leiden Journal of International Law (2006), at 1-24.
135. Cf. L. Helfer, 'Forum Shopping for Human Rights', 148 University of Pennsylvania Law Review (1995), at 285 ff.
136. In two WTO non-compliance panel reports (under Article 21:5 DSU) of 7 April and 19 May 2008, the WTO confirmed, once again, that the EC restrictions on importation, sale and distribution of bananas continue to violate Articles I and XIII GATT (WT/DS27). These two reports had been preceded by about a dozen of previous GATT and WTO dispute settlement findings since 1993 on legal inconsistencies of the import restrictions by the EC and EC Member States on bananas.
137. Such challenges in the WTO by EC Member States of EC acts violating WTO law have never occurred so far and would violate the EC duty to cooperate pursuant to Article 10 EC. Community lawyers (like Lavranos, above n 107, at 10-11) argue that not only from the point of view of Community law, but also 'from the point of view of international law, the supremacy of Community law within the EC and its member states must be accepted'. Yet, it is arguable even from the point of view of Community law that the duty of loyalty (Article 10 EC) applies only 'as long as' the ECJ offers effective judicial remedies against obvious violations by EC institutions of their obligations (e.g. under Articles 220, 300 EC) to respect the rule of law and protect EC Member States from international legal responsibility for EC majority decisions violating mixed agreements.
138. ECJ Opinion 1/91, EEA Draft Agreement ECR 1991 I-6079.
139. Case C-125/2004, Denuit/Cordenier v Transorient, ECR 2005 I-923.
140. Case E-1/94, EFTA Court Reports 1994-95, at 15.
141. Cf. Y. Shany, Regulating Jurisdictional Relations Between National and International Courts (2007), 166 ff.
142. Cf. N. Lavranos, 'Towards a Solange-Method between International Courts and Tribunals?' in T. Broude and Y. Shany (eds), The Allocation of Authority in International Law. Essays in Honour of Prof. R.Lapidoth (2008), at 217-234: 'if the Solange-method would be applied by all international courts and tribunals in case of jurisdictional overlap, the risk of diverging or conflicting judgments could be effectively minimized, thus reducing the danger of a fragmentation of the international legal order... One could argue that the Solange-method, and for that matter judicial comity in general, is part
143. Cf. WT/DS58/AB/R, US-Import Prohibition of certain Shrimp and Shrimp Products, adopted 6 November 1998.
144. Cf. Panel Report, EC - Measures affecting the Approval and Marketing of Biotech Products, WT/DS/291-293/R, adopted in November 2006, paras 7, 65 ff
145. Cf. WT/DS308/AB/R, Mexico - Tax Measures on Soft Drinks, adopted 24 March 2006. The Appellate Body upheld (in paras. 79,80,85) the Panel finding that Mexico's measures, which sought to secure compliance by the United States with its obligations under the NAFTA, did not constitute measures 'to secure compliance with laws or regulations' within the meaning of Article XX(d) GATT.
146. Cf.. WT/DS308/AB/R, above n 118, para 56.
147. Ibid, para 69.
148. WT/DS193/1, Chile-Measures Affecting the Transit and Importation of Swordfish, Request for consultations by the EC, 26 April 2000 (the WTO complaint by the EC, and the related Chilean complaint against the EC in the International Tribunal for the Law of the Sea, were suspended).
149. Cf. C. Brown, A Common Law of International Adjudication (2007); Shany, above n 114.
150. WT/DS332/AB/R, adopted in February 2008.
151. Cf. R. Dworkin, Taking Rights Seriously (1977) xxi: 'judicial decisions based on arguments of principle are compatible with democratic principles'. According to Alexy, above n 41, at 47 ff, principles are norms of relatively high generality and 'optimization requirements' which require something be realized to the greatest extent possible given the legal and factual possibilities; in contrast, rules are norms which are either fulfilled or not ('a conflict between rules can only be resolved in that either an appropriate exception is read into one of the rules, or at least one of the rules is declared invalid'). Dworkin's 'absolutist' concept of rights as 'trumps', and Alexy's more relativistic concept of rights, entail different methods for the balancing of competing rights, principles and policy goals. Judicial interpretations of 'proportionality balancing' also tend to be influenced by the respective legal cultures and contexts. The EC Court, for example, applies a 'manifestly inappropriate' standard for reviewing whether EC measures are consistent with fundamental freedoms, but a more stringent 'necessity' and 'less restrictive alternative' test for its judicial review of the compatibility of national restrictions of fundamental freedoms with EC law.
152. Dworkin, above n 124, at 31-9, 68-71.
153. R. Dworkin, Law's Empire (1986) 225, 243.
154. Cf. Shany, above n 114.
155. Cf. A. M. Bickel, The Least Dangerous Branch: The Supreme Court at the Barr of Politics (2nd edn. 1986) 16ff, 23.
156. L. Hand, The Bill of Rights (1958) 73.
157. Cf. M. J. Perry, The Constitution, the Courts and Human Rights: An Inquiry into the Legitimacy of Constitutional Policymaking by the Judiciary (1982).
158. Cf. A. S. Rosenbaum (ed.), Constitutionalism: The Philosophical Dimension (1988) 4: 'A "democratic" constitution embodies a conception of the fundamental rights and obligations of citizens and establishes a judicial process by which rights claims may be litigated.'
159. B. Ackerman, We the People: Foundations (1991) 262: 'If the Court is right in finding that these politicians/statesmen have moved beyond their mandate, it is furthering Democracy, not frustrating it, in revealing our representatives as mere "stand-ins" for the People, whose word is not to be confused with the collective judgment of the People themselves.'
160. Cf. R. Dworkin, Freedom's Law: The Moral Reading of the American Constitution (1996) 21 ff, 344: 'Individual citizens can in fact exercise the moral responsibilities of citizenship better when final decisions involving constitutional values are removed from ordinary politics and assigned to courts, whose decisions are meant to turn on principle, not on the weight of numbers or the balance of political influence.'
161. See Rawls, above n 19, at 231 ff.
162. Cf. J. Habermas, Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy (1996) 279: 'if one understands the constitution as an interpretation and elaboration of a system of rights in which private and public autonomy are internally related (and must be simultaneously enhanced), then a rather bold constitutional adjudication is even required in cases that concern the implementation of democratic procedure and the deliberative form of political opinion- and will-formation'.
163. Due to the diversity of national constitutional traditions, domestic implementation of international rules is likely to remain always diverse. For example, should fundamental rights be interpreted and applied by way of balancing (as 'optimization precepts' as proposed by R. Alexy) or should they be considered as 'trumps' (R. Dworkin) and definitive rules which cannot be overruled in certain situations by public policies and public goods? Are individual 'market freedoms' and other fundamental freedoms necessary consequences of respect for human liberty (as recognized in EU law), or are they 'Kitsch' (M. Koskenniemi) that should be replaced by more flexible utilitarianism? On the diversity of domestic legislation and adjudication implementing international economic rules, see M. Hilf and E. U. Petersmann (eds), National Constitutions and International Economic Law (1993).
164. On the diverse conceptions of constitutional rights, see M. Kumm, 'Political Liberalism and the Structures of Rights', in G. Pavlakos (ed.), Law, Rights and Discourse (2007) 131-65.
165. Cf, Aristotle, above n 13, at 1130b.
166. Cf. R. Post, The Social Domains of Constitutional Law - Democracy, Community and Management (1995).
167. J. Rawls' Theory of Justice (revised edn., 1999), at 8, 216, distinguishes between 'ideal theory' (e.g. based on the assumption of 'strict compliance') and 'non-ideal theories' (e.g. elaborating principles for meeting injustices and responding to only 'partial compliance', for example by 'compensatory justice principles').
168. The literal meaning of the Latin word 'justificare'-i.e. to make just-underlines the importance of judicial justifications for the administration of justice. The WTO Appellate Body report on US - Stainless Steel (Mexico), above n 33, rightly emphasized (in paras 160, 161) the obligation of courts and of WTO panels to treat like cases alike and, hence, promote coherent interpretation and application of the law in order to meet the legitimate expectations of governments and individuals in rule of law.
169. Cf. UN doc. A/HRC/8/5, above n 1, para 37.
170. In Biloune v Ghana (95 ILR 184), for example, the tribunal concluded that its jurisdiction was limited to the alleged expropriation and did not extend to additional claims of violation of human rights. On state duties to protect citizens against human rights abuses by third parties (including business), the corporate responsibility to respect human rights, and the need for more effective access to judicial remedies, see UN doc. A/HRC/8/5, above n 1.
171. In Mondev v USA (42 ILM 85), the tribunal referred to human rights guarantees of access to courts in interpreting the minimum standard clause of Article 1105(1) NAFTA.
172. In Tecmed v Mexico (43 ILM 133), the tribunal cited a judgment of the ECtHR to the effect that, 'as regards a taking of property in the context of a social reform, there may well be good grounds for drawing a distinction between nationals and non-nationals as far as compensation is concerned'.
173. For empirical analyses of the increasing tendency in the legal reasoning of ICSID tribunals to interpret investment law in conformity with other areas of international law, see O. K. Fauchald, 'The Legal Reasoning of ICSID Tribunals - An Empirical Analysis', 19 EJIL (2008), at 301-64.
174. On the duties of host states to take state action in the form of legislation, regulation, monitoring and enforcement to ensure that domestic and foreign company activities do not negatively impact die enjoyment of human rights, see UN doc. A/HRC/8/5, above n 1; the report also emphasizes (e.g. in para 56) the responsibilities of companies to become aware of, prevent and address adverse human rights impacts.
175. AdA v Argentine Republic, ICSID Case No. ARB/97/3;
176. Azurix Corporation v Argentine Republic, ICSID Case No. ARB/01/12 (the tribunal mentioned that it failed to understand the relevance for this case of Argentina's argument that conflicts between a BIT and human rights treaties must be resolved in favor of human rights);
177. Aguas del Tunari SA v Republic of Bolivia, ICSID Case No. ARB/02/3.
178. UN document E/C. 12/2002/11.
179. Cf. R. Eibe and P. Rothen (eds), The Right to Water (2006).
180. Aguas Argentinas SA v Argentina, ICSID Case No. ARB/03/19.
181. Para 19 of Aguas Argentinas SA v Argentina, above n 145, Order of 19 May 2005 in response to a Petition for Transparency and Participation as Amicus Curiae.
182. This order was cited with approval in subsequent investor-state arbitrations like Biwater Gauff v Tanzania, ICSID Case No. ARB/05/22, Procedural Order of 2 February 2007, noting that the amicus curiae can submit arguments addressing broad policy issues concerning sustainable development, environment, human rights and governmental policy (paras 52, 64).
183. Tecmed SA v United Mexican States, Case No. ARB/00/2, Award of 29 May 2003, ILM 43 (2004) 133.
184. In response to the criticism that the diverse commercial, national, transnational and international jurisdictions for investment disputes, their often confidential proceedings and reports contribute to a lack of coherence of investment jurisprudence, a recent ICSID arbitration award of 21 March 2007 emphasized that the tribunal 'must pay due consideration to earlier decisions of international tribunals. It believes that, subject to compelling contrary grounds, it has a duty to adopt solutions established in a series of consistent cases. It also believes that, subject to the specifics of a given treaty and of the circumstances of the actual case, it has a duty to seek to contribute to the harmonious development of investment law and thereby to meet the legitimate expectations of the community of States and investors towards certainty of the rule of law', ICSID Case No. ARB/05/07, Saipem SpA v Bangladesh, ICSID IIC 280 (2007), at 20, para 67. The recent trend of submitting investor-state arbitration to the stricter confidentiality requirements in UNCITRAL arbitration (compared with ICSID arbitration) raises issues of government accountability and democratic rights to basic information about government conduct affecting public interests.
185. Cf. UN doc. A/HRC/8/5, above n 1, para 2.
186. Cf. Case T-315/01, Kadi v Council and Commission, [2005] ECR II 3649. On appeal, the Advocate-General and the ECJ convincingly argued for the jurisdiction of Community courts to review-so long as the United Nations do not provide for a mechanism of independent judicial review that guarantees compliance of decisions taken by the Security Council and its Sanctions Committee with fundamental rights-whether EC regulations implementing those UN decisions are in conformity with fundamental rights as recognized in the EC legal order, cf. Opinion of 16 January 2008 concerning Case C-402/05P, ECJ Judgment of 3 September 2008 (nyr) in Joined cases C-402/05 P (Kadi) and C-415/05 P (Al Barahaat).
187. Cf. US Supreme Court justice S. Breyer, Active Liberty: Interpreting Our Democratic Constitution (2005). For a criticism by another US federal judge, see M. W. McConnell, 'Active Liberty: A Progressive Alternative to Textualism and Originalism?' 119 Harvard Law Review (2006), at 2387 ff.
188. On the rational Kantian, contractarian Rawlsian and discursive Habermasian mediodological approaches to identifying just rules see, e.g. C. S. Nino, 'Can there be Law-abiding Judges?' in M. Troper and L. Jaume (eds), 1789 et l'invention de la constitution (1994) 275, 286 ff.
189. Self-government in constitutional democracies should therefore be conceived dynamically as a 'continuous process of tacit legislation, as has been pointed out by thinkers like Hobbes who said: "the legislator is he, not by whose authority the laws were first made, but by whose authority they now continue to be laws'", Nino, above n 152, at 293.
190. See Rawls, above n 19, at 154 ff.
191. Many politicians assert that international courts can only be effective in areas which do not affect the security and existence of states. The essence of 'political disputes' is related to claims that the relevant legal rules should not be applied and cannot be effectively enforced by courts (e.g. in revolutionary situations challenging the legal foundations of existing law, neither the French courts in 1789 nor the Permanent Court of International Justice in 1938 could adjudicate the real issues in dispute). International commercial arbitration has, however, become an effective system of transnational dispute resolution and domestic legal enforcement, cf. V. Gessner and A. C. Budak (eds), Emerging Legal Certainty: Empirical Studies on the Globalization of Law (1998);
192. T. Carbonneau, Lex Mercatoria and Arbitration: A Discussion of the New Law Merchant (1998). The ever larger number of international criminal courts prosecuting international war crimes, aircraft hijacking and crimes against humanity is another illustration that 'political question doctrines' often reflect 'constitutional failures' of disregard for international law as an indispensable instrument for the collective supply of international public goods demanded by citizens.
193. Cf. Joerges and Petersmann, above n 54, at 5-57.
194. Cf. E. U. Petersmann, 'State Sovereignty, Popular Sovereignty and Individual Sovereignty: From Constitutional Nationalism to Multilevel Constitutionalism in International Economic Law?' in W. Shan, P. Simons and D. Singh (eds), Redefining Sovereignty in International Economic Law (2008) 27-60.
195. See E. Posner and J. C. Yoo, 'Judicial Independence in International Tribunals', 93 California Law Review 1 (2005), at 6, who define the function of international tribunals as providing states with neutral information about the facts and the law in a particular dispute. For the liberal criticism of the 'billiard ball model of public international law among egoist states' underlying such power-oriented and utilitarian approaches to international law, see, from political as well as legal perspectives: R. O. Keohane, A. Moravcsik and A. M. Slaugther, 'Legalized Dispute Resolution: Interstate and Transnational', 54 International Organization (2000), at 457 ff.
196. See the advice by the EC's legal advocate P. J. Kuijper, above n 30. Since the 1972 International Fruit Company case concerning GATT 1947, the EC courts justify their refusal to review the legality of EC restrictions on the basis of precise and unconditional GATT/ WTO obligations of the EC and of all EC Member States (including legally binding GATT/ WTO dispute settlement rulings) by relying on misleading interpretations of GATT/WTO rules suggested by the EC Commission (cf. most recently the Opinion by Advocate-General Poiares Maduro of 20 February 2008, Joint Cases C-120/06 P and C-121/06P, paras 47, 52, who misinterprets Art. 22 DSU regarding counter-measures as protecting a 'freedom' of the EC to lawfully disregard WTO dispute settlement rulings requiring termination of EC violations of WTO obligations). As the 'Fediol-' and 'Nakajima'-exceptions to this WTO case law have never been applied by the EC Court, this 'political question doctrine' undermines the rule of law and judicial remedies both in the WTO and inside the EC by condoning the EC's longstanding GATT and WTO violations (e.g. the more than a dozen of GATT/WTO dispute settlement findings, since 1993, confirming the illegality of the EC's import restrictions on bananas). The lack of legal and judicial remedies of EC citizens and EC Member States against welfare-reducing EC restrictions that obviously and persistently violate GATT/WTO law runs counter also to the rule of law inside the EC (cf. Art. 300:7 EC).
197. G. Van Harten, Investment Treaty Arbitration and Public Law (2007) 152-53.
198. The proposals for establishing international appeals mechanisms for international investment disputes seem to have led, so far, only to changes in the recent practice of BITs concluded by the United States, cf. K. P. Sauvant (ed.), Appeals Mechanisms in International Investment Disputes (2008).
199. The revised ICSID arbitration rules that went into effect on 1 April 2006, and the new model BITs by Canada and the United States, allow in principle written submissions by a person that is not a party to the dispute, yet subject to various conditions. Rule 37 of the revised ICSID arbitration rules seems to recognize only a right to file a petition requesting that a brief may be submitted, without any broader right to disclosure of documents and information.
200. See Van Harten, above n 160, at 174.
201. The VCLT's explicit requirements of treaty interpretation 'in conformity with principles of justice' and human rights may be construed in the sense of Dworkin's theory that judicial decisions must not only 'fit' the ongoing practice of the law (e.g. by taking into account precedents and consistency); they must also justify that practice as the best interpretation of the principles of justice underlying the judicial practice (cf. Dworkin, above n 128, ch 7).
202. Cf. A. M. Slaugther, 'A Global Community of Courts', 44 Harvard International Law Journal at 191 ff.
203. Cf. C. J. Ikenberry and A. M. Slaugther (co-directors), Forging a World of Liberty Under Law. US National Security in the 21st Century (Princeton University 2006).
204. Cf. A More Secure World: Our Shared Responsibility, Report of the UN High Level Panel (UN 2004).