European Yearbook of International Economic Law 2021

The United States (US) began blocking members’ appointment and reappointments to the World Trade Organization’s (WTO) Appellate Body (AB) in 2011, causing creeping paralysis of this institution. Currently, the AB has no members and is inactive. The prospects for resurrecting the AB in its pre-crisis form currently appear dim, moreover, though the present crisis may prompt fresh thinking about world trade governance and dispute settlement. The likelihood of an enduring dispute settlement solution replicating the heavily legalised AB system is debatable, given the political and legal dynamics that have led to the present impasse.

Blame for the current predicament of the Appellate Body is often cast on recent US administrations, with Barack Obama beginning a practice of blocking specific appointments, a strategy that evolved under Donald Trump, and to date appears to remain in place under the Biden administration. Given that the US was one of the principal architects of the AB and the WTO regime more generally, the central role of these administrations in undoing the AB is remarkable. To understand how international trade law and dispute settlement are to move forward, we accordingly need to understand how we reached the present situation.

To this end, we examine US attitudes and behaviour towards the WTO, focusing on the AB specifically and international trade governance more generally, set in the context of broader developments in US domestic and external policy. Our survey extends from the WTO’s creation under the Clinton administration to the collapse of the Appellate Body under the Trump administration, using official sources and additional primary and secondary materials to trace US attitudes and conduct. We explore both continuity and change in American attitudes through this examination and outline how we reached the present situation, highlighting in turn potential systemic and institutional changes that may conceivably overcome this impasse. In general, we find that US behaviour over time is not as perplexing as it may appear. Rather, the Trump administration’s actions and attitudes can be understood as reflective of longstanding US preferences and concerns, with successive administrations having been unable to address these within the WTO/AB framework as set up in 1995.

This chapter introduces a novel way of conceiving the international intellectual property system and it contends that the system can be conceptualised as consisting of three spaces i.e. the global space, the glocal space, and the local space. The focus of this chapter is on the glocal space. The glocal space is the space available to states to experiment and adjust global rules to suit their local needs. The glocal space is thus an important space in the international intellectual property system. Building on the work of sociologists with regard to the concept of glocalisation, this chapter makes two key contributions. First, it critically explores how viewing glocalisation as an autonomous concept can be applied in the context of international intellectual property law and, in this regard, it contends that the World Trade Organisation’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) should not be conceptualised as simply a global agreement but as an agreement that contains both global and glocal spaces. Secondly, the chapter critically analyses the role that the WTO’s Appellate Body has played in preserving the glocal space in international intellectual property law.

The World Trade Organisation (WTO) has often referred to its dispute resolution system as the “crown jewel” of the world trading system. However, the current crisis on the lack of a quorum in the Appellate Body is slowing down the dispute resolution process at the WTO considerably. Notwithstanding, African countries have an alternative dispute resolution mechanism available under the soon to be operationalized African Continental Free Trade Area Agreement (AfCFTA Agreement). This paper aims to highlight the efficiency of the AfCFTA dispute resolution mechanism as compared to that of the WTO. To this end, it is divided into four parts. Section 1 sets the background to this paper by expounding dispute settlement at both the WTO and AfCFTA. Section 2 focuses on the concept of concurrent jurisdiction between the two systems. It intends to find out whether recourse to one system automatically bars a state party from seeking a remedy in the other dispute resolution system. Section 3 concentrates on the similarities between the two systems. Section 4 highlights the lessons that AfCFTA may draw from other dispute settlement mechanisms (DSM) on the African continent and recommends changes to the AfCFTA dispute resolution system.

The World Trade Organisation (WTO) is the foremost international organisation regulating the conduct of international trade law. It provides political and legal mechanisms through which Member-States’ rights and obligations regarding international trade law are negotiated, agreed upon, clarified, and enforced. As the primary means through which these rights and obligations are clarified and preserved, and as the last avenue of appeal in the WTO’s dispute settlement system, the Appellate Body is the ‘crown jewel’ of that system. However, the crown jewel has been ‘stolen’, and the Appellate Body hamstrung by the United States’ refusal to approve the appointment of Appellate Body members and satisfy its quorum—causing an ‘Appellate Body crisis’.

This chapter contributes to the debate on resolving this crisis by analysing just one of the possible solutions—the Multiparty Interim Appeal Arbitration Arrangement (MPIA), an alternative appeal arrangement under Article 25 of the Dispute Settlement Understanding (DSU). The chapter argues that the crisis currently facing the Appellate Body is one of legitimacy, and the MPIA is not the correct forum for addressing questions about the identity of the WTO. For that reason, this chapter asserts that the MPIA is not a permanent solution to the Appellate Body crisis and explains why that is the case. Furthermore, it explains that—although not a solution—the MPIA offers important lessons which should be considered during any future reforms seeking to address the legitimacy crisis.

This argument is conducted in four parts. Section 2 provides background and context to the legitimacy crisis—it explains the Appellate Body’s role and importance within the WTO, how the current crisis arose, and how this impacts the Appellate Body’s function. Section 3 outlines the theoretical framework upon which this chapter relies. Section 4 then uses a mix of interpretive techniques and contextual analysis to analyse the MPIA, make predictions as to its likely implementation, and assesses the MPIA’s effectiveness at addressing the criticisms of the Appellate Body that spurred the current crisis. Finally, Sect. 5 explores the chapter’s conclusion that, while the MPIA is not a permanent solution to the crisis, it provides guidance as how best to pursue reform(s) going forward.

This article argues in favour of including summary procedures for the dismissal of frivolous counterclaims in arbitral rules and investment treaties. Arbitral tribunals and commentators have consistently recognised the contribution of rules on summary procedures towards screening out unmeritorious claims and enhancing the overall efficiency of investor-state dispute settlement (ISDS). However, various explicit and implicit restrictions in existing rules bar claimants from seeking early dismissal of frivolous counterclaims. Given the emerging practice of including investors’ obligations in investment treaties and the increasing frequency with which counterclaims are litigated in ISDS proceedings, precluding investors from challenging frivolous counterclaims runs against the current. The article highlights that the rationale for summary dismissal procedures is equally relevant to the adjudication of counterclaims and proposes possible rules in this regard.

In light of increasing criticism against Investor-State Dispute Settlement, States have in recent years engaged in considerable reform of existing international investment agreements (IIAs). Reforms have often aimed at providing States greater discretion with respect to the measures they undertake vis-à-vis foreign investors to avoid breaching IIAs. In international dispute settlement, such discretion is most famously associated with the “margin of appreciation” (MOA) in the case law of the European Court of Human Rights (ECtHR).

The chapter analyses such treaty reforms and examines developments of the MOA in the ECtHR. It shows that the MOA there may be evolving from a “thin” version, which mainly involves discretion, into a “thick” version, involving subsidiarity and the relationship between the ECtHR and national bodies. The chapter then analyses practice of arbitral tribunals under IIAs where the tribunals have applied, or rejected, MOA-like reasoning. It concludes that while there are many examples of awards in which tribunals have afforded discretion, resembling a “thin” version of the MOA, there are few if any examples of the “thick” version.

The “thin” version may often be compatible with the wording of specific IIAs. However, tribunals should ensure that their reasoning is based on the applicable treaty rather than borrowed concepts, which may not always be fully understood, whether by advocates, arbitrators or their audiences.

Historically, State counterclaims in investor-State dispute settlement (ISDS) have generally failed. ISDS’s procedural and substantive asymmetry, by which investors enjoy unilateral rights to initiate arbitration against States and enjoy protections without reciprocal obligations, has greatly limited States’ ability to pursue counterclaims against investors under investment treaties. State counterclaims’ lack of success has been identified as a factor contributing to the so-called “legitimacy crisis” of ISDS, giving rise to a myriad of concerns, including concerns about regulatory chill, inconsistent decisions, and even pro-investor bias. In the last decade, some tribunals have shown greater openness towards States’ counterclaims. This article focuses on six such cases—Roussalis v. Romania, Goetz v. Burundi, Burlington v. Ecuador, Urbaser v. Argentina, Perenco v. Ecuador, and Aven v. Costa Rica—which exemplify a more permissive interpretation of the jurisdictional requirements for counterclaims and a novel approach to the imposition of substantive obligations on investors. If future arbitral awards adopt and expand these cases’ openness towards counterclaims, they could trigger a trend of increased receptiveness to and success of State counterclaims, potentially mitigating some of the concerns that fuel the backlash against ISDS. Through the lens of these cases, this article evaluates counterclaims’ potential to address the legitimacy crisis. This article suggests that increased access to and greater success of counterclaims can reduce concerns about the system’s asymmetry, but at the same time may give rise to new concerns that might be best addressed through other mechanisms, such as treaty drafting and binding interpretations.

The Achmea ruling marked the end of treaty-based intra-EU arbitration. Apart from an increasing recourse to state courts, the extinction of the BIT system within the EU could lead to a revival of arbitration clauses in investor-state contracts. This begs the question of whether the arguments brought forward by the ECJ translate to contract-based arbitration.

ISDS clauses in investor-state contracts neither violate the principle of mutual trust nor the principle of non-discrimination foreseen in Article 18(1) TFEU. Concerns arise with regard to Articles 267 and 344 TFEU, as well as the autonomy of EU law. Intra-EU investment arbitral proceedings are typically governed by EU law, even if initiated on a contractual basis. Nevertheless, the arbitral tribunals do not have the power to refer questions for a preliminary ruling, while dealing with disputes which, according to the vision of the European Treaties, fall within the jurisdiction of state courts.

But even in light of these similarities, there might be a reason to assess contract-based investment arbitration differently from treaty-based arbitration and, in fact, subject it to the standard applied to commercial arbitration: the fact that ISDS clauses in investor-state contracts do not represent a system solution.

The paper focuses on an underdeveloped area of jurisprudence in international economic law, that of the remit of sovereign discretion on cultural and religious grounds when it intersects with investor protections under international law. This aspect of public policy that relates to culture and religion contains issues frequently left unexplored by investment tribunal jurisprudence. An investigation on the limits of sovereign discretion on issues of religion and culture is the next frontier in debates on investor-state dispute settlement (ISDS). The paper explores options in investment arbitration for foreign investors affected by changes brought about by sovereign decisions based on religious and cultural grounds, shedding light in this politically and emotionally charged corner of international economic law. This investigation therefore revisits the jurisprudence of international investment tribunals on expropriation, the meaning of fair and equitable treatment, exclusions from protection based on public policy, or on grounds of national security. The paper initiates this discussion by investigating the possibility that the Switzerland-Turkey Bilateral Investment Treaty (BIT) of 1988 may offer bases for compensation to SICPA, the—until recently—operator of the Hagia Sophia museum in Istanbul, a world heritage site of global religious and cultural significance transformed again into an operational place of worship in 2020.

This chapter aims to provide a general background and overview of the so-called International Commercial Courts (ICCs) recently established in various states in Europe, the Middle East and Asia. In essence, ICCs are specialised English-speaking commercial courts that focus on international commercial dispute resolution. ICCs are as such often in direct competition with international commercial arbitration, yet the line between them has become increasingly blurred in some aspects.

Over the past decades, the phenomenon of the “judicialization” and “proliferation of international courts and tribunals” has dominated international legal scholarship. This trend has also affected international economic law, and scholarship continues to pay significant attention to the continued proliferation of dispute settlement mechanisms, primarily in the investment and trade sectors. It is questionable, however, whether every third-party dispute resolution means should be deemed judicial. New dispute resolution mechanisms in the investment and trade sectors face constraints on their powers, for instance regarding the regulation of procedure, the determination of standing to be sued, and the interpretation of the applicable law. This chapter inquires whether the promotion of such constrains impairs the judicial character of these dispute settlement bodies. The chapter first reviews several basic notions behind the judicial character, namely the settlement of disputes, clarification and development of the law, independence, impartiality, and adversariality. It then assesses the promoted limits on the powers of courts and tribunals in the investment and trade sectors. The chapter concludes that the advancement of certain constraints on judicial powers in the field of international economic law marks a departure from the promotion of the judicial towards more administrative dispute settlement means.

If a dispute on the interpretation of the Withdrawal Agreement arises and no solution can be reached following political consultation within the Joint Committee, either the EU or the UK may resort to arbitration. The dispute shall be heard by a five-member tribunal and shall be administered by the Permanent Court of Arbitration. The particulars of the arbitration clause embodied in the Withdrawal Agreement would not give much reason for discussion. However, the arbitration panel is not the exclusive arbiter for disputes between the EU and UK under the Withdrawal Agreement. As a dispute under the Withdrawal Agreement may give rise to questions on the interpretation of Union law, a reference mechanism is built into the Withdrawal Agreement. The arbitration panel shall not decide on issues of Union law. Rather, it must request the Court of Justice of the EU to give a ruling on the respective Union law issues; the CJEU’s ruling shall then be binding on the arbitration panel. Direct judicial dialogue between two international judicial fora in the form of a reference mechanism is a rare feature in international treaties and mostly untested where it exists. The present chapter reflects on reference mechanisms in dispute resolution clauses, placing a specific focus on the arbitration clause in the Withdrawal Agreement.

In August 2021, the International Monetary Fund (IMF) created and allocated to its 190 members the equivalent of about USD 650 billion in Special Drawing Rights (SDRs), a reserve asset designed to supplement members’ reserves. This general allocation of SDRs is a historic event—both for the IMF and its membership. It is only the fourth general allocation since the SDR was created in 1969, and it is the largest allocation by far, bringing the total SDRs created by the Fund till date to about USD 1 trillion. Responding to the pressures the Covid-19 crisis has placed on official reserves, the SDR allocation provides IMF member countries with an unprecedented level of unconditional liquidity for urgent spending needs or as reserve buffer. Despite extensive writings on the SDR by the media and academics, for many, the SDR remains difficult to understand. This paper thus provides an overview of the background and use of the SDR, the requirements to effect a general allocation, and concludes by explaining some of the challenges and outlook to the implementation of the 2021 general allocation of SDRs. This paper is intended for a broad audience, offering a brief glimpse into the dynamics of a rules-based international organization and multilateral cooperation in a time of crisis.