European Yearbook of International Economic Law 2018

This chapter examines the role of Sustainable Development as a concept of Natural Resources Law. After a brief introduction, on the significance of natural resource management for Sustainable Development, and some definitional remarks, it first outlines Sustainable Development as a political objective. Subsequently, the study identifies and portrays the core conceptual contents of Sustainable Development as a norm of international law, its corresponding legal effects as well as its specific relationship with Natural Resources Law. Moreover, it enters the realms of the debate on the legal status of Sustainable Development in international law before assessing its quality to operate as a regulatory objective in- and outside treaty regimes. The final section of this chapter is dedicated to the question whether Sustainable Development could be regarded as the ultimate object and purpose of Natural Resources Law and what benefits, from the perspective of legal doctrine, such a perception would entail.

This article aims at explaining China’s vulnerability to WTO raw materials disputes. After considering the peculiar features of China’s regime of mineral export restraints (namely, its pervasiveness and the magnitude of its economic effects due to China’s dominant position in the international markets), it focuses on the scope and reach of China’s WTO obligations on the export side, as interpreted in the two recent cases China – Raw Materials and China – Rare Earths. It discusses their implications with respect to China’s policy space to maintain export restrictions for sustainable economic development needs provides some general conclusions on the likelihood of new WTO disputes on (mineral) export restraints involving China.

This contribution seeks to analyse and compare WTO Accession Protocols, particularly the interpretations given relevant commitments made in them regarding energy and fossil fuels. After first providing an outline of the accession process and its importance for the natural resources and energy sector, the chapter proceeds with discussing relevant sections of Accession Protocols of major energy producing, exporting and/or transporting WTO Members that have joined the Organization since 1995. This exercise demonstrates that energy and fossil fuels have gradually developed as prominent topics in Members’ accession negotiations, resulting in an increasing amount of commitments on transit and export duties on raw materials and fossil fuels.

This chapter assesses schemes regulating gold, diamonds and minerals stemming from zones of conflict and reviews the compatibility of these regulatory frameworks with the global trading system epitomized by the World Trade Organization (WTO). In particular, the chapter considers whether the Kimberly Process Certification Scheme could—and should—serve as a model for deeper integration of human rights considerations into the WTO system. After reviewing how conflict minerals became a concept and gained the international community’s attention, the chapter sets out the framework of the Kimberley Process Certification System as an early response to the conflict minerals problem. The chapter analyses the principles of WTO law that make regulation of supply chains legally problematic for WTO Members. Turning to gold, the chapter describes the processes underway to eliminate “dirty” gold from the legitimate international supply chains. To conclude, the chapter discusses the likelihood of a “Kimberley Process for gold” and suggests that the international community may be moving beyond worrying about WTO rules when trying to address how most effectively to resolve human rights violations in supply chains.

The essay examines the legal protection of foreign investment in the natural resources sector, keeping in mind the pivotal role the sector may play in the economic development of the host State as well as the need to strike a balance between the private and public interests at stake. After elaborating on the notions of permanent sovereignty over natural resources and sustainable development, it discusses the main questions related to the exercise of regulatory powers by the host State, the protection of social values, and the promotion of good governance. It finally attempts to identify the sources of tension and possibly conflict with a view of reconciling the competing rights and interests of stakeholders.

A wave of commercial investments in the natural resource sectors has rekindled debates about the place of contracts in the interface between economic governance and control over natural resources. Contracts between investors and states have provided the legal basis for many natural resource projects. They have also formed the object of renegotiations and disputes. Meanwhile, community-investor agreements have emerged as a strategy to promote local support for the business or advance local claims to natural resources. This chapter interrogates the fundamental parameters on which resource-related contracting rests. It first examines, based on positive law, the foundations of natural resource contracts, focusing on the notions of sovereignty, ownership and consent. This conceptual exploration highlights that, while consent underpins the contract, the legal construction of (state) sovereignty and (resource) ownership sets parameters for the expression of consent—namely, the actors whose consent is required, the processes through which consent is formed and manifested, and the bounds within which consent can lawfully operate. The chapter then distils some practical implications for natural resource contracts, focusing on illustrative issues relating both to the substantive and procedural dimensions of investor-state contracts, and to reframing the contracting process around a wider range of resource right holders and affected actors. The findings provide pointers for piecing together the diverse and possibly conflicting commercial and non-commercial interests that are at stake in natural resource contracts.

The exploitation of natural resources such as oil, coal, and gas that are contained in the soil of the territory of States is generally considered to be subject only to the domestic regulation of the State in question. Due to the permanent sovereignty over natural resources, states are free to determine whether and how they wish to exploit these resources. The role of international law is limited, but only to the extent that concerns of foreign investors are not negatively affected. This contribution assesses the relationship between certain sub-sections of international economic law, investment law and trade law, and answers the question whether the case of shale gas extraction by means of fracking is merely another example of the tension between the rules that govern international economic relations and domestic policy considerations, or whether it represents a potential turning point in the way the international community perceives these constraints on domestic policy making. This is done by considering the Lone Pine Inc. investment arbitration against Canada. This arbitration takes place against a background of increasing public discontent with investor-state dispute settlement and a reconsideration of this concept by several states.

This article unfolds the concept of a genuine European natural resources law. Against the background of the global commodity markets and the commodity dependence of the EU, it argues that the academic debate should focus on safety, sustainability and efficiency in the supply as key principles of European natural resources law. This new field of law, thus, has to be located between environmental and economic law. Although the Lisbon Treaty brought significant changes that help to shape a new academic discipline ‘European natural resources law’ this article pleads for new legal rules or a coherent framework that can be built on recent initiatives and policy approaches of the European commission.

Deep seabed mining beyond national jurisdiction may soon become a commercial reality. The deep seabed covers almost three-quarters of the entire surface area of our oceans, and it boasts an array of valuable mineral resources, including metals and rare earth elements. This article will evaluate the international legal regime, which applies to mining activities in this area. Acting under UNCLOS, the International Seabed Authority is responsible for regulating the deep seabed and granting mining contracts to allow investors to explore for and exploit deep seabed minerals. After assessing the types of mineral resources present in the deep seabed, this article will consider the key parameters of the UNCLOS deep seabed regime, including its licensing process and the extent to which actors are undertaking mining activities within the regime at present.

The Arctic is not governed by any particular rules of international law. Over the past two decades, through the Arctic Council, the five Arctic Ocean coastal States, together with Finland, Iceland and Sweden, have been playing a decisive and innovative role in the management of Arctic affairs. The Arctic is inhabited by four million people, with indigenous communities estimated at about one-tenth of the total population. The international legal regime of the various regions of the Arctic varies, depending on whether the regime applies to land covered by ice or to frozen waters that can be regulated by the international regimes of the various maritime spaces provided for by the International Law of the Sea. Although the exploitation of natural resources in the Arctic is still, in many cases, merely potential, the possibility of this happening in the near future is a consequence of climate change. Probably the most obvious facet of the consequences of climate change in the Arctic has been the increased navigation routes in the region. The natural resources that can be economically exploited in the Arctic can be divided into two categories: living natural resources (fish) and non-living natural resources (includes non-renewable resources such as oil, natural gas, minerals, and aggregates). The economic exploitation of natural resources in the Arctic is currently heavily constrained by rules of environmental law, both the domestic laws of the Arctic States and also as a result of the application of the existing international law in this field.

The Eurasian Economic Union was established on May 29, 2014. The members of the union are the Russian Federation, Kazakhstan, Belarus, Armenia and the Kyrgyz Republic. Energy dialogue forms an important part of this union. Currently, the parties aim to conclude the formation of the common energy market by 2025, however there are a number of hurdles blocking the successful achievement of this goal. This article argues that formation of common energy market is hindered through the lack of trust between the members, monopolization of the energy sectors, non-coordination of national energy policies, lack of fair competition in the energy market and dependence on single source of energy, mainly fossil fuel in overall energy mix.

This chapter introduces readers to Caribbean integration law, through an examination of both the Caribbean Community (CARICOM) and its regional court, the Caribbean Court of Justice (CCJ). After briefly situating CARICOM in its historical and economic context, the chapter reviews the CCJ’s development of regional integration law through its original jurisdiction (treaty-interpreting) jurisprudence. Most of the seminal original jurisdiction cases of the Court are briefly, but critically assessed, in a roughly chronological order. The chapter concludes by drawing comparisons between some of the Caribbean developments, on the one hand, and their parallels in the European Union, on the other. The chapter concludes by offering some final observations on what may appear to be a recent, ‘cooling off’ period for the court.

In 2016 and 2017, states continued their engagement with international investment law. A small minority of states displayed scepticism or tried to disengage themselves from their investment law obligations. This chapter addresses select institutional developments in international investment law in 2016 and in the first three quarters (Q1–3) of 2017. Section 1 discusses negotiations of investment treaties, ratifications, and terminations. In Sect. 2, the chapter considers developments specific to megaregionals. Section 3 provides a discussion of the European Union’s proposal for the establishment of an international investment court and the multilateral reform of investment dispute settlement. Section 4 studies ‘alternatives’ to investor-state dispute settlement (ISDS) introduced in new investment instruments. Finally, Sect. 5 focuses on the continuing issues affecting the fate of intra-EU investment treaties. The chapter does not intend to be exhaustive; rather, its ambition is to highlight some recent developments that weigh in the design and future of international investment law, with a focus on developments in the European Union.

In 2015, the IMF found that the Renminbi met the criteria for inclusion in the SDR basket and the Renminbi became the fifth SDR basket currency with effect from October 1, 2016. This paper reflects on the change from the IMF’s institutional perspective, providing relevant background and insight into the legal aspects of the decision. The addition of the Renminbi to the SDR currency basket by the IMF is the most significant change to the SDR basket in over four decades and may have a lasting impact on the international monetary system.

This article presents an overview of the World Trade Organization (WTO) disputes resolved in 2016. As common in WTO dispute settlement, a large proportion of the case law concerns trade remedies, in particular anti-dumping measures. In that category of disputes, 2016 saw decisions in the US – Washing Machines and US – Anti-Dumping Methodologies disputes, which concerned in particular the controversial “targeted dumping” methodology under Article 2.4.2 of the Anti-Dumping Agreement, including the use of the controversial “zeroing” methodology; EU – Biodiesel, which concerned a controversial cost calculation methodology, variations of which will likely re-appear before WTO dispute settlement panels in the future, because this methodology targets in particular China; the compliance (Article 21.5 DSU) panel in EC – Fasteners (21.5); and the panel report in EU – Fatty Alcohols, at whose core were questions concerning the treatment of payments between related parties.

Beyond trade remedies, 2016 saw the Appellate Body Report in Argentina – Financial Services, a long-awaited addition to the still disappointingly slim body of jurisprudence under the General Agreement on Trade in Services (GATS); the Appellate Body Report in Colombia – Textiles, a dispute brought by Panama against its larger neighbor; the panel report in Russia – Tariff Treatment, the first adopted panel report with findings of violation by Russia, which was not appealed; the panel and Appellate Body Reports in India – Solar Panels, a dispute that concerned manifestly WTO-inconsistent local content requirements measures by India, but that addressed for the first time a hitherto obscure sub-paragraph of Article XX of the GATT 1994; the panel report in Russia – Pigs, an SPS dispute that featured, among other things, interesting findings on the regionalization obligation under Article 6 of the SPS Agreement and that was largely upheld by the Appellate Body on appeal in 2017; two panel reports in the on-going civil aircraft subsidization saga between the EU and the US, EC – Aircraft (21.5) and US – Tax Incentives (DS487) both of which were appealed (the appeal in US – Tax Incentives was issued in September 2017, the appeal in EC – Aircraft (21.5) is expected to be released in 2018); and the panel report in the Indonesia – Import Licensing Regimes, a dispute brought by the United States and New Zealand against a broad array of Indonesian measures on horticultural products.

This remarkable book by Manjiao Chi represents an important contribution to our understanding of the major shortcomings of contemporary IIAs. It conceptualizes the lack of sustainable development concerns by convincingly drawing insights from the perspective of global governance.

Corporate (re)structuring occurs for various reasons, one of which may be to gain access to more favourable jurisdiction under a certain nationality than under a previous one. Baumgartner identifies areas of concern, corporate motives, and advantages of nationality planning. The author then examines the practice of treaty shopping in international investment law in an attempt to delimit legitimate nationality planning from treaty abuse, scrutinising closely the legal approaches taken by arbitral tribunals and analysing them systematically. Especially interesting with regard to jurisdiction is the author’s analysis on jurisdiction ratione temporis in the context of nationality planning and treaty shopping. The author also makes suggestions de lege ferenda to reform international investment agreements so as to contain treaty shopping. The role of the principle of good faith is discussed in a separate chapter. In the last part of the book, an annex lists the most important arbitral decisions on the subject sorted according to their key legal statements.

A World of Struggle by David Kennedy is a timely exploration on the nature of expertise and the role, influence, and, struggle of and between, experts, especially given the current supposed ‘backlash’ against expertise in the United State and elsewhere. The central point in A World of Struggle, that the stories we tell ‘can let people off the hook’ if we perceive the world to be at the mercy of the forces of globalisation, is worth retelling and restating. The value of Kennedy’s book is that he offers, in a simple way, the tools to reverse, as he calls it, the naturalised outcomes of earlier debates, but what might otherwise be thought of as deconstructing, demystifying, and understanding the background assumptions of legal concepts or ideas such as ‘market efficiency’ and highlighting the contingency of facts. A World of Struggle is a current and relevant book with many plausible arguments. For those in the field of international economic law it will prove an enlightening read, as it explores the role of experts and nature of the struggle of those who are typically seen to work in the background. The value in Kennedy’s work overall is in his ability to spot trends in international law that few observe, and in his ability to write accessibly, both of which are on display in this book.

We are confronted today with new services and new forms of services trade that did not exist when, some thirty years ago, the General Agreement on Trade in Services (GATS) introduced services trade regulation at the multilateral level. Most prominently, traditional services trade regulation does not comprehensively deal with aspects of services trade related with the Internet, energy, automation, and more recently the emergence of the so-called sharing economy. While services contribute substantially to GDP per capita across the world, overall shares in global services trade remain unequally distributed between industrialised countries and the rest of the world. In conjunction with demographic considerations, aspects related to services trade such as the movement of natural service providers across nation borders or the role of services in fostering economic growth in developing countries increasingly gain attention. The most recent trade negotiations both at the plurilateral and at the regional or bilateral level aim to tackle some of the regulatory and economic aspects of services trade highlighted above. However, efforts are not based on multilateral consensus, whereas implications of a first mover advantage for other trade negotiations remain unclear. Therefore, the comprehensive Research Handbook on Trade in Services, edited by Pierre Sauvé and Martin Roy, comes at a particularly interesting moment in the history of services trade regulation. It takes stock of the lessons learned to date and explores a range of policy questions. The multi-disciplinary perspectives on services trade combined in this Handbook offer insights into a wide array of critical aspects of services trade regulation today, and provide useful guidance for research priorities, and for new approaches to holistic services policies and negotiations.

This chapter reviews the book ‘Charting the Water Regulatory Future: Issues, Challenges and Directions’, edited by Julien Chaisse. In this timely work, several contributors engage with the manifold challenges facing governments, private companies, international organisations, and citizens through an interdisciplinary prism. The book points toward some possible future directions in water regulation and management, discussing three major issues: the challenges that water services pose to public international law frameworks, the protection and promotion of the much-discussed human right to water, and the economic determinants of global water markets. All authors take on the challenge of formulating proposals and offering valuable recommendations for action at the national and international level.

This chapter reviews two recent books addressing the legal regime governing aspects of marine exploitation—one focusing on deep seabed mining, the other bio-prospecting. The main claims made by the authors are situated and assessed, and the respective approaches contrasted.