Public versus Private Enforcement of International Economic Law: Standing and Remedy

Abstract

This paper develops a theory of the rules regarding standing and remedy in international trade and investment agreements. Regarding investment agreements, the paper argues that a credible government-to-firm commitment (or signal) that the capital importer will not engage in expropriation or related practices is required and that a private right of action for money damages is the best way to make such a commitment. In trade agreements, by contrast, importing nations have commitments that are best viewed as government to government rather than government to firm. The parties to trade agreements can enhance their mutual political welfare by declining to enforce commitments that benefit politically inefficacious exporters and can most cheaply do so by reserving to themselves the standing to initiate dispute proceedings—a right to act as a political filter. The paper also suggests why governments may prefer to utilize trade sanctions rather than money damages as the penalty for breach of a trade agreement.

Private Litigants and the New International Courts

“…Sykes identifies political economy incentives to allow private judicial access to enforce bilateral investment treaties compared to trade treaties-treaties that may or may not be enforced through ICs. Sykes provides a potential explanation of states' preferences for private access (to domestic or ICs), but he is focused exclusively on investor agreements (Sykes, 2005).…”

The Dispute Settlement Mechanism of the WTO: A Brief History and an Evaluation from Economic, Contractarian and Legal Perspectives

“…Apparently, African members have already proposed monetary compensation and Mexico has gone on to suggest that retaliation rights be subject to auction 25 . (See Sykes, 2005, for a discussion why it is that monetary compensation is part of international investment agreements, but not in trade agreements, and why this might be rational. )…”

“…In Levy and Srinivasan (1996), there is a formal analysis of why this would be harmful. Sykes (2005) cites writings on the deleterious consequences of private investor rights in the North American Free Trade Agreement (NAFTA), in particular that the NAFTA judges by awarding a large compensation to a private investor for its being denied an environmental permit, have expanded ‘takings doctrine’ far beyond US domestic law. He further notes that the USA was in favour of the DSM panels receiving and considering amicus briefs.…”

“…A DSM such as that of the WTO, as an adjudicative body, has to specify who has standing to bring complaints before it, and if formal sanctions are to be imposed for breach of obligations, also specify what type of penalty is to be imposed and how its magnitude is to be calibrated (Sykes, 2005). An important issue is whether private individuals have standing in the sense of having the right to petition the relevant body of the DSM if they have a stake in a dispute.…”

Enforcement and Escape in theAndean Community: Why theAndean Community of Nations is Not a Replica of theEuropean Union

“…It is true that long after the EU (strictly, the EEC) was founded in 1958, and indeed long after the European legal order was substantially institutionalized, an amendment to the EU's infringement procedure in the 1993 Maastricht Treaty provided the ECJ with the power to impose fines on the EU Member States . However, the imposition of monetary fines is not widely considered to be an effective substitute for enforcement through inter‐state trade sanctions because a target state must actively co‐operate in the payment of fines, whereas a complaining state can impose inter‐state countermeasures even if the target state does not co‐operate in the accepting the penalty (for example, Sykes, , pp. 660–1).…”