International Law Archives – Southern California Law Review

Common Heritage as Public Trust: A Property Law Approach to Managing Resources Beyond National Jurisdiction

October 2024October 2024Christopher Mirasola*

The search for rare minerals is taking us well beyond the bounds of national jurisdiction, and international law is struggling to keep up. In the 1970s states agreed that the deep seabed beyond national jurisdiction was the “common heritage of mankind,” a doctrine that was ultimately codified in the United Nations Convention on the Law of the Sea. The common heritage doctrine has, from the outset, been something of a chimera. And fears over its association with redistributive economic policies led to the failure of an agreement regulating activities on the moon. Yet the doctrine exists as a going concern in international law. Deep seabed mining is on track to begin in 2024. The United Nations is presently considering international rules for asteroid and lunar mining. And efforts to protect marine biodiversity continue to rely on the idea that certain resources are our common heritage. If states are to deal productively with any of these issues, we need a revitalized approach to the common heritage doctrine.

Instead of embodying a static set of legal precepts, I argue for a flexible understanding of the common heritage doctrine rooted in theories of commons property that is sensitive to the peculiarities of specific natural resources. A fruitful exemplar of such an approach is the public trust doctrine of U.S. property law. Sharing with the common heritage doctrine a common foundation in Roman principles of common property, the public trust doctrine recognizes that governments hold certain natural resources in trust for the beneficial use of their citizens. By imposing this duty, and by limiting the purposes for which governments can use these resources, the public trust doctrine is a prototypical example of property as a set of governance rules. Drawing on the public trust doctrine’s rich common law and scholarly history, I propose a four-part framework for a public trust approach to the common heritage doctrine.

To demonstrate the opportunities made available by this approach, I take outer space mining as a case study and I propose steps that states can take to incrementally govern resource extraction in a manner more likely to attract international consensus.

INTRODUCTION

There is an inconvenient truth to our push towards a renewable energy future—it requires a stupendous amount of hard-to-find minerals. The growing fleet of electric vehicles, for example, all need high-capacity batteries that rely on lithium, nickel, cobalt, manganese, and graphite.¹ To be sure, we already mine for these minerals—the Energizer Bunny has been going for quite some time.² But future demand for them is unprecedented. The International Energy Agency has found that, since 2010, the average amount of rare earth minerals required for a unit of generated power increased fifty percent.³ Based on current energy policies, demand for rare earth minerals will double by 2040.⁴ And if we are to meet the goals of the Paris Climate Agreement to stabilize warming below a two-degree Celsius increase, demand will quadruple over the same timeframe.⁵

There are significant geopolitical ramifications to this shift in energy production. Mining for and refining rare earth minerals is, at present, highly concentrated. Sixty-nine percent of cobalt, for example, is produced in the Democratic Republic of Congo.⁶ Fifty-eight percent of the world’s lithium reserves are in Bolivia, Argentina, and Chile, and just over half of all current production is in Australia.⁷ Other rare earth minerals are disproportionately concentrated within China.⁸ All of which has led U.S. policymakers to prioritize diversifying this supply chain by providing substantial financial incentives to locate and develop domestic mineral production.⁹

This race to secure minerals is leading states and private industry to remote locales—areas “beyond national jurisdiction”—and particularly the deep seabed and celestial bodies. Under the law of the sea, areas of the seabed that are, at a minimum, 350 nautical miles from the coast are beyond national jurisdiction.¹⁰ And in outer space law, all celestial bodies, including asteroids and the moon, are not susceptible to sovereign claims.¹¹ In July 2023, the international organization charged with regulating deep seabed mining¹² began accepting applications that may, by 2024, pave the way for the first commercial mining operation beyond national jurisdiction.¹³ In April 2023, the most recent in a string of outer space mining startups launched a satellite to test equipment designed to refine metals mined from asteroids.¹⁴ Another test, into deep space, is scheduled for late 2024.¹⁵ Many states and private entities have near-term plans for human settlements on the moon.¹⁶ Such settlements will necessarily rely on extracting lunar resources.¹⁷ States take these developments seriously. The United Nations Committee on the Peaceful Uses of Outer Space (“UNCOPUOS”) is in the midst of a five-year program to develop more detailed international rules for exploiting outer space resources.¹⁸

These first steps toward mining in areas beyond national jurisdiction are controversial. A coalition of states and non-profits are calling for a moratorium on deep seabed mining to forestall the attendant probable, and likely irreversible, environmental damage.¹⁹ Similarly, there was significant international condemnation when the United States, in 2015, enacted domestic legislation recognizing the property rights of U.S. entities that extract resources from celestial objects.²⁰

All of this supercharges a decades-old debate in international law—who owns the resources available in areas beyond national jurisdiction? One of the key legal innovations of the 1970s was to characterize such resources as the common heritage of mankind (now often referred to as the common heritage of humankind). Part XI of the 1982 United Nations Convention on the Law of the Sea (“UNCLOS”) provides that resources of the seabed beyond national jurisdiction are the common heritage of mankind.²¹ Similarly, the Outer Space Treaty provides that “[t]he exploration and use of outer space . . . shall be carried out for the benefit and in the interests of all countries . . . and shall be the province of all mankind.”²² More controversially, as no spacefaring nations have acceded to it, the Moon Agreement explicitly provides that “the moon and its natural resources are the common heritage of mankind.”²³

What does it mean for a territory or resource to be the common heritage of humankind? Attempts to pin down the concept as a matter of black letter international law are unsatisfying. At a minimum, it appears to mean that the territory is not susceptible to claims of sovereignty or jurisdiction and that the territory may only be used for peaceful purposes. Yet on myriad other fronts—whether the mining must be undertaken in a manner that particularly benefits developing economies, whether an international organization is required to administer access to resources, the terms on which access may be provided, and so forth—states and scholars have fundamentally disagreed for decades.

I propose rethinking the common heritage of humankind by analogizing to the public trust doctrine, a longstanding principle of U.S. property law. I am not the first to draw international resource management lessons from the public trust doctrine. Hope Babcock, for example, has argued that it is a helpful model for establishing an international legal regime for outer space mining.²⁴ I take this proposal one step further, to flesh out a four-part framework that states can use to adopt property rules sensitive to the particularities of disparate natural resources in areas beyond national jurisdiction.

The public trust doctrine is itself a controversial principle of U.S. property law. As I discuss in Part II, it has also been the subject of significant scholarly criticism and debate. In a nutshell, the doctrine provides that there are certain natural resources that, by sovereign right, State governments hold in a kind of public trust for general use and enjoyment. The doctrine was made famous by Illinois Central Railroad Company v. State of Illinois, wherein the Supreme Court found that the Illinois legislature’s decision to completely alienate a portion of Chicago’s waterfront for private development by the Illinois Central Railroad violated the public trust doctrine.²⁵ Although Illinois Central is often the first case discussed when explaining the public trust doctrine, it was not the first U.S. public trust doctrine case. The New Jersey Supreme Court first noted the State’s trust duties with respect to navigable rivers, the coastline, and riverbeds in the early 1800s, drawing on English common law and principles of Roman property law.²⁶ The scope of the doctrine, however, expanded radically over time, impelled importantly by an intervention from Joseph Sax in 1970.²⁷Although slightly different in each State,²⁸ in its most robust form the public trust doctrine provides citizens standing to object to State governments’ decisions about water use and conservation and use of public lands.

Notwithstanding its variation across State lines, the public trust doctrine is a productive foundation from which to reimagine the common heritage of humankind. First, over the past forty years State supreme courts have productively used the doctrine to manage water consumption, particularly in Hawaii and California.²⁹ Second, and more generally, the public trust doctrine orients us to the range of substantive ends that a legal regime concerned with access to commons resources can achieve. Third, it attunes us to the relationships to which we must attend in creating these property law rules. And fourth, it moves us away from the entrenched debates over process and redistribution that have so stymied broader application of the common heritage doctrine.

My argument proceeds in four parts. Part I explains the problem: What is the common heritage of humankind, and why has it failed to meet the aspirations of its original proponents? Part II justifies using a public trust approach to the common heritage doctrine. I begin by setting out the contours of the public trust doctrine and arguing why a commons approach to managing resources in areas beyond national jurisdiction is appropriate. I go on to explain the shared historical roots of the two doctrines in Roman law, as well as what these shared roots should mean for our understanding of a public trust approach to the common heritage of humankind. I demonstrate the striking similarity in how these doctrines revolutionized their respective areas of law in the middle of the twentieth century. I argue that these similarities speak to a deep theoretical continuity between the doctrines and that a significant body of scholarship concerning commons property justifies using the public trust as a model for a modern common heritage doctrine.

Part III sets out the four-part framework for a public trust approach to the common heritage of humankind. This is a framework for institutional design, and accounts for: (1) the tangible objects to which the trust applies (that is, the res); (2) the beneficiary for whom the res is in trust; (3) the means by which the res is conserved and the entity committed to conserving it (that is, the trustee); and (4) the process by which the beneficiary may vindicate the trust if the trustee fails in its duties. Taken together, this framework moves away from particular normative visions for the common heritage of humankind to show the paths that can be taken to manage resources in areas beyond national jurisdiction. In Part IV, I use outer space mining as a case study to demonstrate how a public trust approach to the common heritage doctrine opens up fresh avenues for resource management. I then offer some brief thoughts for future work in conclusion.

I. DEFINING THE COMMON HERITAGE OF HUMANKIND

The common heritage doctrine, in many ways, persists in spite of itself. Notwithstanding its codification in UNCLOS and the Moon Agreement, the only real consensus on its parameters has been that there is no consensus.³⁰ Indeed, prior to widespread adoption of UNCLOS, many disputed that it was a legal, as opposed to a political, proposition.³¹ In this Section I identify three core commitments we can reasonably ascribe to the common heritage doctrine: (1) common heritage territory is not subject to claims of sovereignty; (2) even in some de minimis way, exploitation of common heritage resources should benefit humanity writ large; and (3) common heritage territories may only be used for peaceful purposes. I show why UNCLOS’s tortured ratification history and the failure of the Moon Agreement prevent us from imputing much else to the doctrine. Finally, I identify three areas of confusion, essential for operationalizing the doctrine, that remain: (1) the territories or things to which the common heritage doctrine should apply; (2) the international mechanism, if any, required to implement it; and (3) the beneficiary of the doctrine and the benefit accruing to them.

The Vienna Convention on the Law of Treaties directs that treaty provisions be interpreted “in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose.”³² The Convention provides for an expansive search for a treaty’s context, taking into account all treaty text and any agreements made between all parties regarding the treaty.³³ Further, the Convention directs that treaty interpretation should account for subsequent agreements and state practice in applying the treaty.³⁴

A. Purpose of the Common Heritage Doctrine

There is a strong case that the original object and purpose of the common heritage doctrine was to concretely advance the redistributive economic agenda of the new international economic order. This is evident in what is often credited as the birth of the doctrine, a 1967 speech by Maltese Ambassador Arvid Pardo.³⁵ But even Ambassador Pardo would have admitted that the roots are, in fact, much older. Earlier in 1967, Ambassador Aldo Armando Cocca, in the context of the emerging field of outer space law, argued that “the international community had endowed that new subject of international law—mankind—with the vastest common property (res communis humanitatis) which the human mind could at present conceive of, namely outer space itself, including the Moon and the other celestial bodies.”³⁶ Comments by U.S. officials during the 1960s endorsed a similar view.³⁷ Indeed, in the text of his 1967 speech Pardo noted the work of the 1967 World Peace Through Law Conference,³⁸ which resolved that the General Assembly should issue “[a] proclamation declaring that the non-fishery resources of the high seas, outside the territorial waters of any State, and the bed of the sea beyond the continental shelf, appertain to the United Nations and are subject to its jurisdiction and control.”³⁹

What differentiated these earlier statements from Pardo’s speech, more than anything, was his concern that international law, as it existed, was not sufficient to meet the challenges of decolonization. His speech began by noting in exacting detail the deep seabed’s unrealized commercial potential⁴⁰ and the strategic instability that would result from the unfettered militarization of the seabed.⁴¹ Ambassador Pardo argued that existing international law doctrines concerning territorial acquisition were insufficient to protect newly liberated states.⁴² Specifically, Pardo called for using the “financial benefits . . . derived from the exploitation of the sea-bed and ocean floor for commercial purposes” to assist “poor countries, representing that part of mankind which is most in need of assistance.”⁴³

These concerns were highly resonant of his political environment. The pace of decolonization quickened rapidly in the 1960s, and with it a widespread urgency to restructure basic premises of international politics.⁴⁴ This urgency partly manifested in the “new international economic order,” an important goal of which was to reorient the law of the sea to benefit developing states more directly.⁴⁵ Indeed, a central tenet of the “new international economic order” was to reorient the law of the sea to benefit developing states through the common heritage doctrine.⁴⁶

These overarching objectives continued to inform the doctrine’s earliest textual articulations. General Assembly Resolution 2749, for example, declared that “the sea-bed and ocean floor, and the subsoil thereof, beyond the limits of national jurisdiction . . . as well as the resources of the area, are the common heritage of mankind.”⁴⁷ It went on to provide that this area is not “subject to appropriation by any means” and that “no State shall claim or exercise sovereignty or sovereign rights over any part thereof.”⁴⁸ The resolution also reserved the area “exclusively for peaceful purposes” and noted that resource extraction in the area “be carried out for the benefit of mankind as a whole . . . taking into particular consideration the interests and needs of the developing countries.”⁴⁹

B. Textual Articulations of the Common Heritage Doctrine

We can most vividly see how the common heritage doctrine failed to achieve these redistributive aims in the only two areas of international law in which the doctrine is incorporated into treaty text—the law of the sea and outer space law.

Efforts to codify the law of the sea in treaty form date to the mid-1950s.⁵⁰ We are concerned with the third conference on the law of the sea, which began in 1973 and ended in 1982 with the adoption of UNCLOS.⁵¹ The common heritage doctrine is codified in part XI of UNCLOS, which concerns “the Area”—a region of the seabed beyond a state’s exclusive economic zone and continental shelf.⁵² UNCLOS provides that the “Area and its resources” are the common heritage of mankind.⁵³ It proceeds to track the three commitments noted above. First, activities in the Area must “be carried out for the benefit of mankind as a whole.”⁵⁴ More specifically, hewing closer to the Pardian vision, these benefits must “tak[e] into particular consideration the interests and needs of developing States and of peoples who have not attained full independence.”⁵⁵ Second, part XI prohibits any state from exercising “sovereignty or sovereign rights” over the Area or its resources.⁵⁶ Finally, it provides that the Area may only be used for peaceful purposes.⁵⁷

The treaty then provides, in truly astonishing detail, an international bureaucracy designed to administer the Area for the benefit of humanity, with a particular emphasis on realizing the treaty’s redistributive aims. I will sketch them only in brief. UNCLOS establishes two organizations to realize deep seabed mining—the International Seabed Authority (“the Authority”)⁵⁸ and “the Enterprise.”⁵⁹ While the Authority is charged with generally administering and setting mining regulations, the Enterprise is arranged to operate as an independent mining concern. UNCLOS provides that proceeds from mining approved by the Authority, or undertaken by the Enterprise, be provided to adversely affected land-based mineral producers, geographically disadvantaged states, and developing countries.⁶⁰ To maximize these proceeds, UNCLOS also provides myriad ways in which states must support the Enterprise particularly. Its operating budget comes from fees collected by the Authority,⁶¹ voluntary payments from states parties, and loans.⁶² States and private mining companies are also required to provide any technical support requested by the Enterprise.⁶³ To help the Enterprise identify areas for potential mining operations, UNCLOS establishes a banking system. Each time a state or private entity wants to apply to prospect or mine in the Area, they must provide two locations, one of which is reserved for the Enterprise.⁶⁴ On top of these institutional arrangements are a number of limitations on extraction and required financial distributions to underdeveloped economies. For example, UNCLOS prescribes a detailed mathematical formula for setting production limitations on seabed mining to protect the interests of states that rely on land-based mining.⁶⁵

Developed economies strongly objected to this institutional apparatus.⁶⁶ Although the Nixon Administration had supported characterizing the Area as the common heritage of mankind, prohibiting sovereign claims, and establishing some mechanism for distributing profits “for international community purposes including economic advancement of developing countries,” by the Carter Administration opposition to the regime was solidifying.⁶⁷ By 1983, with President Reagan in office, the United States registered its dissatisfaction with the Authority’s governance structure, perceived preference for developing countries’ interests, production limits, and financial burdens by voting against the convention.⁶⁸ Most other developed economies followed suit.⁶⁹

Recognizing that a deep seabed regime without participation from developed countries would amount to little, and in a moment of renewed interest in neoliberal economics after the fall of the Soviet Union, in 1990 the United Nations began to craft an agreement concerning part XI.⁷⁰ This process culminated in the 1994 Implementation Agreement—in actual fact a rewriting of part XI to convince developed states to join UNCLOS. The changes were significant. They struck out provisions requiring the transfer of technology to the Enterprise.⁷¹ The Enterprise was directed to operate on “sound commercial principles,” deprived of required contributions from states parties, and put in an indefinite “interim” status.⁷² Complex models prescribing the rates that could be charged for mining contracts were replaced with general guidelines requiring “fair” rates comparable to those prevailing in land-based mining.⁷³ Representation on the Authority’s Council was revised to ensure that the United States and other developed countries could stymie any proposed distribution of Authority or Enterprise funds to developing countries.⁷⁴ And the banking system was revised such that the entity applying for a mining permit now had the right of first refusal to enter into a joint venture with the Enterprise.⁷⁵ These changes were effective in getting developed states to adopt UNCLOS. The Convention has been ratified by 165 of 193 UN member states. Yet these changes eviscerated the redistributive aims actualized by the original text of part XI.

The common heritage doctrine’s failure to launch in outer space law draws from these acrimonious UNCLOS debates. There are five international agreements regarding outer space activities: the Outer Space Treaty,⁷⁶ the Rescue and Return Agreement,⁷⁷ the Liability Convention,⁷⁸ the Registration Convention,⁷⁹ and the Moon Agreement.⁸⁰ Of these, the first four have been widely adopted by all spacefaring, and many non-spacefaring, states.⁸¹ The Moon Agreement—the only one with an explicit reference to the common heritage doctrine—has been ratified by eighteen states, none of which have a significant, independent space program.

The Outer Space Treaty provides that the “exploration and use of outer space . . . shall be the province of all mankind.”⁸² There has been much debate as to whether the “province of all mankind” is substantively different from the “common heritage of mankind.”⁸³ But looking to the remaining text of the Outer Space Treaty shows how, regardless of any difference in titles, the “province of all mankind” is strikingly similar to what remains of the common heritage doctrine after the 1994 Implementation Agreement. For example, article I provides that “[o]uter space . . . shall be free for exploration and use by all States without discrimination of any kind.”⁸⁴ Article II similarly establishes that outer space “is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.”⁸⁵ And article IV directs that “[t]he Moon and other celestial bodies shall be used by all States Parties . . . exclusively for peaceful purposes.”⁸⁶

At the same time that debates about the common heritage of mankind were dividing states during UNCLOS negotiations, states similarly turned to debate more detailed questions about the permissible uses of celestial objects. How may states use resources located on celestial bodies? What benefits must accrue to humanity through their use? What duties are incumbent on states when using them? With striking similarity to law of the sea debates, some called for the United Nations (or another, specially designed international agency) to be vested with authority over celestial objects, and granted the ability to provide leases or licenses for resource extraction.⁸⁷ But ultimately, just as in UNCLOS negotiations, intense disagreements over the common heritage doctrine⁸⁸ yielded contradictory text unacceptable to states concerned that they were signing up for an incoherent doctrine likely to develop in directions over which they would have little control.⁸⁹

C. Unanswered Questions

This analysis of treaty text leaves three key doctrinal questions unanswered, each the subject of considerable scholarly debate. First, there is a vast volume of writing on the territories or objects to which the common heritage doctrine should apply (that is, the res of the doctrine). Some have identified a “broad” vision, one that applies to “atmospheric air, biodiversity, forests, drinking water margin[s], [and] cultural and natural heritage.”⁹⁰ Efforts to use the common heritage doctrine to protect the environment⁹¹ and the atmosphere (as a tool to combat climate change) date back at least to the 1980s.⁹² Others have called for using the common heritage doctrine to protect rain forests and food systems,⁹³ fauna and flora of the deep seabed,⁹⁴ biodiversity,⁹⁵ and marine genetic resources.⁹⁶ Nearly all of these attempts have been opposed by, at a minimum, developed states in a variety of international contexts.⁹⁷

Many states and scholars proposing a wider definition of the resources to which the common heritage doctrine applies also envision some formal, international enforcement mechanism (that is, the means by which the international community’s interests may be vindicated). This is particularly true for those states animated by a version of the common heritage doctrine born of the new international economic order movement.⁹⁸ The details of this proposed mechanism vary. One of the more inventive, proposed by Malta and endorsed by Kofi Annan during his time as UN Secretary General, is to repurpose the UN Trusteeship Council to be a forum for protecting common heritage resources.⁹⁹ An independent international body, like the Authority, is another option, though a variety of states, across ideological fault lines, have resisted such an approach. In the early days of the law of the sea conferences, for example, communist bloc states opposed the creation of an international organization like the Authority out of concern that it would not be truly democratic and only exacerbate the gaps between developed and developing economies.¹⁰⁰ Other states and scholars have similarly argued that creating a new international organization would be too unwieldy, instead endorsing a model whereby enforcement is left to individual states.¹⁰¹ Certainly neither approach is fool-proof. The issues with international bureaucracy are evident in the fact that it has taken nearly forty years for the Authority to develop rules for deep seabed mining. And the potential for backsliding without a mechanism for international enforcement is readily apparent in many states’ continued inability to meet emissions targets developed during UN climate change negotiations.¹⁰²

How the benefits of the common heritage should, or must, be distributed is perhaps the most controversial aspect of the doctrine. Stepping back, this is part and parcel of a broader question concerning what duties pertain to states as trustees of humanity’s interests. We saw this in the negotiating history of both UNCLOS and the Moon Agreement. The idea that benefits accruing to common heritage resources be distributed through direct payments that favor developing states¹⁰³ and requirements for technology transfer¹⁰⁴ have been particularly contentious. There has been equally vociferous debate about whether the common heritage doctrine creates a duty to conserve heritage resources.¹⁰⁵ At a more fundamental, if slightly metaphysical, level, scholars have also debated what, in fact, constitutes “humankind”—whether it refers to states, states on behalf of all people, or all people without interposition from any state.¹⁰⁶ Practically, it is difficult to imagine in the current international system any practical version of “humankind” that does not include, at least in a representative fashion, states.

The vision of the common heritage of humankind that first animated its inclusion in international treaty law greatly exceeded what remains of the doctrine in treaty text and actual practice today. We have seen the doctrine’s contentious codification in the law of the sea, and we have witnessed how it foundered in outer space law. Taken together, we are left with a vision of the common heritage doctrine that is at once freighted by historical association with redistributive policies, and yet which, in practice, has few concrete hooks to advance these goals. This contradictory status quo does little to foster doctrinal clarity or productive negotiations about methods for managing resources in areas beyond national jurisdiction. In the remaining sections, I set out to sketch a new path.

II. JUSTIFYING A PUBLIC TRUST APPROACH TO THE COMMON HERITAGE DOCTRINE

If the common heritage doctrine is to become a meaningful proposition in international law, we need a new approach. In this Section, I argue why looking to the public trust doctrine is instructive. First, the doctrines share similar normative impulses, evinced over a long history, that make this analogy particularly apt. Proponents of the public trust and common heritage doctrines, for example, both trace their legal arguments back to the same provisions of Roman law. Moreover, the primary innovators of both doctrines in the 1960s and 1970s had a similarly instrumental vision for the legal framework they set out to establish—a vision more fully realized by the public trust doctrine. Second, the public trust doctrine provides a coherent approach to managing common pool resources in a manner that, at a practical and theoretical level, coheres with general principles of property law. And finally, although the public trust doctrine gained prominence primarily in domestic U.S. property law, it has gained international traction. As I propose to use it, the public trust doctrine provides a generalizable heuristic for devising rules to manage international resources.

This argument builds on a 2019 article by Hope Babcock, which discussed briefly the virtues of the public trust doctrine within a broader discussion of the many domestic property law doctrines that might be used to regulate outer space mining.¹⁰⁷ In particular, Babcock noted the practical benefits to adopting a duty to preserve resources, assure public access, and prevent alienation in the absence of a robust international ruleset for outer space mining.¹⁰⁸ I expand on this argument in three ways. First, I show that the public trust doctrine can inform our approach to the common heritage doctrine writ large, in contexts far beyond outer space. Second, I develop the historical and theoretical reasons why this analogy should be attractive to states looking for a more comprehensive approach to international resource management. Third, I explain in detail what a public trust approach to the common heritage means through a four-part framework, detailed in Part III.

A. Why a Commons Approach to International Resource Management

Anyone advocating that we reinvigorate the common heritage doctrine must first justify why resources beyond the bounds of national jurisdiction should be treated as a commons. Why not, instead, simply divvy them up? This, after all, is the compelling insight proffered by Garrett Hardin in his work on the tragedy of the commons.¹⁰⁹ Hardin posits that, in a world of rational herdsmen, each with equal and unfettered access to a pasture, the “only sensible course for him to pursue is to add another animal to his herd. And another; and another.”¹¹⁰ Inexorably, Hardin tells us, “[r]uin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.”¹¹¹ He was not the first to make this point. Aristotle also observed that “what is common to the greatest number has the least care bestowed upon it. Everyone thinks chiefly of his own, hardly at all of the common interest.”¹¹²

But we know that this simple picture of a tragic commons and complete allocation of rights (whether through allocation of private property rights or government management) is incomplete. Michael Heller, for example, warns of the dangers of too much allocation of private rights in resources. In what he terms a tragedy of the anticommons, real property may be underutilized when too many users are granted the right to exclude others from a scarce resource if no hierarchy of privilege exists between these users.¹¹³ Economic modeling has borne out this analysis,¹¹⁴ though some have argued for a more precise articulation of the game theoretic problem appropriately denominated an anticommons.¹¹⁵ But even this represents an overly narrow view of the practical ways in which resources are managed. Elinor Ostrom, for example, has empirically demonstrated how communities have developed private agreements to manage common pool resources, enforced by a variety of institutional mechanisms that go beyond simple division of property rights or government management.¹¹⁶ Specifically, she notes that achieving Pareto-optimal equilibrium in the market for a particular resource through centralized resource management rests on assumptions that the government has completely accurate information about the resource, sophisticated capability to monitor and sanction compliance, and zero administration costs.¹¹⁷ This does not mean that Ostrom denies any role for the government or an external monitor in managing common pool resources. For example, speaking to those who advocate for privatized rights, Ostrom notes that it can be practically infeasible with respect to nonstationary resources, like water and fisheries.¹¹⁸ Instead, she argues that there is no single solution to resource management.¹¹⁹ Institutional design is difficult, time-consuming, and context dependent. More often than not, some mixture of private and public institutions is needed “to achieve productive outcomes in situations where temptations to free-ride and shirk are ever present.”¹²⁰

A commons approach to international resource management in areas beyond national jurisdiction is particularly appropriate for a number of the reasons outlined above. Although the mineral resources of the deep seabed are certainly stationary, the marine life of the high seas that these operations would disturb do not respect jurisdictional boundaries. On any reasonable assessment of the International Seabed Authority’s track record, its role as a centralized arbiter of resource rights is far from cost free. In outer space, given how little we know about the productive uses of asteroids and other celestial objects, there is a real risk of dividing property rights so finely as to create an anticommons. Moreover, at least at present, there is no centralized authority empowered to penalize free riding, and the likelihood of establishing such an authority seems dim in our current geopolitical environment. Before adopting an entirely new system of property rights, it therefore seems reasonable to find a way to make a commons approach to managing resources beyond national jurisdiction work.

B. Defining the Public Trust Doctrine

Perhaps more than many common law principles in U.S. law, the public trust doctrine varies significantly from State to State. Put most simply, it provides that the State holds title to land under tidal waters in a form of trust for the people of that State, who “have the right to use the land and water for navigation, fishing, and recreational uses.”¹²¹ Two of the most far-reaching applications of the public trust doctrine were rendered by the California and Hawaii Supreme Courts. I will treat them both in turn, as demonstrations of the kind of work that the public trust doctrine does in modern U.S. property law.

In National Audubon Society v. Superior Court, the California Supreme Court addressed whether, and how, the public trust doctrine affected the State’s system for prioritizing access to fresh water, with a particular focus on use of water from Mono Lake, a particularly distressed reservoir for fresh water in the Los Angeles County area.¹²² It found that the public trust doctrine did apply to these water resource decisions, and is an articulation of:

[T]he state’s authority as sovereign to exercise a continuous supervision and control over the navigable waters of the state and the lands underlying those waters. This authority applies to the waters tributary to Mono Lake and bars [the City of Los Angeles Department of Water and Power (“DWP”)] or any other party from claiming a vested right to divert waters once it becomes clear that such diversions harm the interests protected by the public trust.¹²³

This application of the public trust doctrine to California’s system of water rights had significant effects on life in California, where, as the court acknowledged, “[t]he prosperity and habitability of much of the state required the diversion of great quantities of water from its streams for purposes unconnected to any navigation, commerce, fishing, recreation, or ecological use relating to the source stream.”¹²⁴ Nevertheless, the court held that “before state courts and agencies approve water diversions they should consider the effect of such diversions upon interests protected by the public trust, and attempt, so far as feasible, to avoid or minimize any harm to those interests.”¹²⁵ Just as significantly, the supreme court also held that California courts and the DWP have “concurrent jurisdiction” in adjudicating these public trust disputes.¹²⁶

This decision had a significant practical effect on Mono Lake, which had experienced rapidly decreasing water levels since the State authorized DWP to divert flows from source streams in the 1940s.¹²⁷ By 2010, implementation of interim measures adopted in 1994 for lake and stream restoration and a final plan published in 1998 raised the lake’s water level by ten feet.¹²⁸ And these regulatory changes established a system of water rights that ensured consideration of public trust interests when adjudicating private water rights in the State.¹²⁹

The Hawaii Supreme Court in In re Water Use Permit Applications faced a similar dispute about allocation of water rights, here between agricultural producers in the central plains of Oahu, down-stream users on the windward side of the island, and the stream’s ecosystems.¹³⁰ The court held that the public trust doctrine, though having independent roots in common law, was a constitutional doctrine and applied to “all water resources without exception or distinction.”¹³¹ It further found that Hawaiian public trust purposes included resource protection,¹³² domestic use (including drinking),¹³³ and “the exercise of Native Hawaiian and traditional and customary rights.”¹³⁴ The court specifically found that the public trust should not consider interests in “private use for ‘economic development.’ ”¹³⁵ Unsurprisingly, the court found that Hawaii had a continuing obligation to “preserve the rights of present and future generations in the waters of the state,” though the courts did not require a one-size-fits-all prioritization of interests.¹³⁶

Although the public trust doctrine is, in many jurisdictions, of rather limited application, the California and Hawaii examples show how it currently serves as a doctrine for resource management.

C. Shared Roots of the Common Heritage and Public Trust Doctrines

In this Section, indebted to the work of J.B. Ruhl and Thomas McGinn, I unpack what the res communis meant.¹³⁷ I trace in brief how the public trust and common heritage doctrines developed this concept of the res communis. And I show how debates over the contours of the res communis demonstrate the necessary role of state action to preserve access to common resources. I do not, however, want to burden this connection with too much normative force. Particularly in the context of the public trust doctrine, some have relied on this Roman pedigree to justify the doctrine’s place in modern property law.¹³⁸ But as we will see below, the modern common heritage and public trust doctrines advertently moved beyond the idea of common property enshrined in Roman law. So, while the Roman origins of both doctrines does not make a public trust approach to the common heritage doctrine legally or normatively required, it is nonetheless useful to show how the doctrines are united by a higher-level conviction that there are certain resources that should be held in some form of trust for common use in a way that is not readily accommodated by private or government ownership.

1. Origins in Roman Property Law

Before we trace the public trust and common heritage doctrines to their Roman roots, a bit of background on the res communis—the Roman concept of common property to which both doctrines refer. The res communis stood for the proposition that certain things (at a minimum, the sea, seashore, and air) should remain accessible to all, primarily for resource extraction, and this access could be vindicated at law.

To understand the res communis we must begin with the restatement of Roman law provided in the Corpus Juris Civilis, promulgated by Emperor Justinian from 529 to 534 CE.¹³⁹ The Corpus has three main parts: the Institutes (an introductory guide to Roman law),¹⁴⁰ the Digest (a detailed guide for more advanced study),¹⁴¹ and the Codex (a compilation of imperial legislative, judicial, and administrative enactments stretching from the reign of Emperor Hadrian to the Codex’s publication).¹⁴² Of the many ways in which the Roman jurists categorized types of property, the Second Book of the Institutes provides, for our purposes, the most important:

Let us now speak of things, which either are in our patrimony, or not in our patrimony. For some things by the law of nature are common to all [i.e., res communis]; some are public [i.e., res publicae]; some belong to corporate bodies [i.e., res universitatis], and some belong to no one [i.e., res nullius]. Most things are the property of individuals, who acquire them in different ways, as will appear hereafter.¹⁴³

Res communis is property outside our patrimony (i.e., extra patrimonium) and therefore incapable of private ownership.¹⁴⁴ The Institutes provides that the res communis includes, by natural law, “the air, running water, the sea, and consequently the shores of the sea.”¹⁴⁵ The Digest attributes this rule to Marcian, a noted Roman jurist from the third century,¹⁴⁶ though Ruhl and McGinn have identified earlier articulations of the same or similar rule as early as the late republic.¹⁴⁷

It is this definition of the res communis in the Institutes which most courts and scholars identify as the roots of the public trust and common heritage doctrines. Take, for example, Arnold v. Mundy,¹⁴⁸ one of the earliest cases in the United States on the public trust doctrine. Here, the New Jersey Supreme Court of Judicature found against a plaintiff’s claim of trespass concerning oyster beds planted below the low-water line in a navigable river.¹⁴⁹ The Chief Justice reproduced this provision of the Institutes nearly verbatim—both in English and Latin.¹⁵⁰ The Supreme Court, over two decades later confronting nearly the same issue in New Jersey, adopted this reference to the Institutes.¹⁵¹

Closer to the present day, Justice Kennedy in Idaho v. Coeur d’Alene Tribe of Idaho and PPL Montana, LLC v. Montana also attributed the public trust doctrine to this portion of the Institutes, as incorporated into English common law.¹⁵² Scholars of the public trust doctrine make similar, even more frequent reference to the same.¹⁵³

In international law, this Roman inheritance was used most famously by Hugo Grotius to argue that the seas, by their nature, were incapable of appropriation and therefore open to all for trade and fishing.¹⁵⁴ This greater emphasis on the freedom enjoyed at sea, rather than the guarantee of land access to the seas, is reflected in the relatively greater ambivalence taken toward the text by proponents of the common heritage doctrine. For example, as early as the 1830s, noted South American lawyer Andres Bello argued that a distinct legal regime was needed for objects that cannot be owned by any nation without harming others, what he called an “indivisible common patrimony” that was susceptible only to limited, non-exclusive use.¹⁵⁵ French jurist A.L. Pradelle came to a similar conclusion in 1898, arguing that the seas were the “patrimoine commun de l’humanité.”¹⁵⁶ These innovations were noteworthy primarily because they rebutted Grotius’s use of the res communis. Nevertheless, Ambassador Pardo, for example, cites this provision of the Institutes specifically in his proposal to establish the common heritage doctrine.¹⁵⁷ And other seminal works on the law of the sea make similar references to these provisions of Roman property law.¹⁵⁸

But what did it mean to designate the air, flowing water, sea, and shores of the sea as res communis, and how are these rights vindicated? There has been considerable debate on the topic; I will begin by discussing relevant provisions of the Digest and Institutes before turning to their interpretation by scholars.

First, various provisions of the Digest and Institutes note how designating territory as res communis guaranteed access to other resources that could be appropriated. So, for example, Florentinius characterizes the seashore as res communis and notes that “pebbles, gems, and so on which we find on the shore forthwith become ours by natural law.”¹⁵⁹ Similarly, the Institutes provides that “[w]ild beasts, birds, fish, and all animals, which live either in the sea, the air, or on the earth, so soon as they are taken by any one, immediately become by the law of nations the property of the captor; for natural reason gives to the first occupant that which had no previous owner.”¹⁶⁰ The Digest supports this proposition with a number of citations to even earlier legal opinion.¹⁶¹

Yet, as Ruhl and McGinn argue, the res communis appears to be about more than just providing unfettered access to the air, sea, and flowing rivers so that individuals can extract resources.¹⁶² To understand why, we must appreciate longstanding doctrinal confusion about the difference between the res communis and res publicae.

Ulpian describes as res publicae “those things . . . that belong to the Roman people.”¹⁶³ Similarly, Ulpian is quoted as providing that “[w]e do not regard as being ‘public’ those things which are sacred or hallowed or designed for public use but those things which are, as it were, the property of communities.”¹⁶⁴ In this way, it seems we might make a rough distinction between property to which all are guaranteed access regardless of their political community (that is, res communis) and property owned and preserved for the benefit of a particular group of peoples (that is, res publicae).

But this easy distinction is complicated by the many parts of the Digest that characterize flowing waters and the seashore (things considered res communis) as res publicae. First, with respect to flowing waters, the Digest in a number of places notes that rivers are public property.¹⁶⁵ And although the right to use riverbanks is said to be public,¹⁶⁶ there is also an admitted private right to privately own and construct private buildings on them.¹⁶⁷ A similar story can be told about the sea and the seashore. For although the sea is common to all, the Digest recounts that “just as a building erected in the sea becomes private property, so too one which has been overrun by the sea becomes public.”¹⁶⁸ Muddying the waters even more, we are told that

What a man erects on the seashore belongs to him; for shores are public, not in the sense that they belong to the community as such but that they are initially provided by nature and have hitherto become no one’s property. Their state is not dissimilar to that of fish and wild animals which, once caught, undoubtedly become the property of those into whose power they have come.¹⁶⁹

As Ruhl and McGinn demonstrate in detail, this overlap has bedeviled scholars since the middle ages.¹⁷⁰ From the eleventh through fifteenth centuries, for example, scholars reconciled these passages by holding that res communis resources were used, and not owned, by humans and animals, while res publicae resources were used only by humans.¹⁷¹ Scholars in the nineteenth century adopted other methods to make this area of law coherent, again mostly aimed at creating more nuanced distinctions between what should truly be considered res communis.¹⁷² Yet others in the twentieth century attribute the incoherence to revisions made by those compiling ancient sources of law.¹⁷³ And many more recent scholars, focusing on the less rigorously legal aspects of Marcian’s work, have discounted the existence of the res communis entirely.¹⁷⁴ In fact, these critiques of the underlying Roman law sources, and their inconsistent application in English and early American case law, is the basis for many academic critiques of the public trust doctrine.¹⁷⁵

Ruhl and McGinn instead reconcile this tension by focusing on Ulpian’s earlier writings on the res communis. They find textual evidence that, as a practical matter, access to res communis property was protected in the same manner as that provided for the res publicae.¹⁷⁶ For this reason, they argue, the rules applicable to res publicae should be seen as equally applicable to res communis.¹⁷⁷

There are important consequences that stem from this practical connection. As Ruhl and McGinn note, there are rules concerning uses of res publicae resonant of the idea of a public trust.¹⁷⁸ For example, the Digest reports that Scaevola opined that although one could build on the seashore, such construction could not impede public use.¹⁷⁹ Likewise, Ulpian wrote at length about the actions that could be taken against individuals who impede public access to res publicae.¹⁸⁰ In an indirect way, these areas of overlap suggest an early recognition of the necessary role that government must play if any property is to be considered common to all, and not just open to access by a particular political community (that is, res communis). It is unsurprising, then, that UNCLOS established an international organization through which states would preserve the deep seabed under the common heritage doctrine. And it suggests that future applications of the common heritage doctrine will be difficult to enforce without a similar international mechanism, or state duty, for vindicating humanity’s interests.

2. Common Twentieth Century Doctrinal Innovation

The middle of the twentieth century was critical to the modern incarnations of the common heritage and public trust doctrines. In this Section, I show how two protagonists—Ambassador Arvid Pardo and Professor Joseph Sax—expanded upon existing conceptions of common heritage and public trust to achieve their normative ends. They were both unabashedly instrumental—both saw these doctrines as convenient procedural vehicles to curing what they saw as deficiencies in their respective political environments. What emerges is a common appreciation of the flexibility that Elinor Ostrom noted as one of the signal characteristics of commons governance.¹⁸¹

We have already canvassed Ambassador Pardo’s revolutionary vision for the common heritage doctrine in Part I. Joseph Sax laid out a similar vision for the public trust doctrine, at around the same time, from the pages of the Michigan Law Review.¹⁸²

To understand the power of this vision, we must understand the public trust doctrine as it developed prior to Sax’s intervention. Up until Illinois Central, the public trust doctrine was a relatively constrained proposition, used chiefly to manage access to navigable rivers and the stationary resources (for example, oysters) on the riverbed. Chief Justice Taney in Martin v. Waddell’s Lessee may have been among the earliest to use the term “public trust” when, in denying a patent to an oyster fishery bed, he found that the kings of England held navigable waters “as a public trust.”¹⁸³ Importantly, he held that derogating from this right required “clear[] indicat[ion] by appropriate terms; and would not have been left for inference from ambiguous language.”¹⁸⁴ Just over a decade later the Supreme Court reaffirmed this approach in The Volant, finding that soil below the low-water mark “is held by the State, not only subject to, but in some sense in trust for, the enjoyment of certain public rights, among which is the common liberty of taking fish.”¹⁸⁵ Again, for this reason, the Court held that states “may forbid all such acts as would render the public right less valuable, or destroy it altogether.”¹⁸⁶

Justice Field, in Illinois Central, expanded the doctrine by articulating a more robust role for the courts to limit the legislature’s discretion to alienate public trust resources. Specifically, Justice Field found that “[t]he control of the State for the purposes of the trust can never be lost, except as to such parcels as are used in promoting the interests of the public therein, or can be disposed of without any substantial impairment of the public interest in the lands and waters remaining.”¹⁸⁷ This standard was controversial, and did not flow naturally from at least some States’ approaches to the public trust doctrine. In the dissent’s words, “if the State of Illinois has the power, by her legislature, to grant private rights and interests in parcels of soil under her navigable waters, the extent of such a grant and its effect upon the public interests in the lands and waters remaining are matters of legislative discretion.”¹⁸⁸

The extent of this shift is most vividly displayed in Morris v. United States.¹⁸⁹ Here, the Supreme Court rejected a claim to land added to the riverbank by a rapid shifting of the course of the Potomac River.¹⁹⁰ In doing so, the Court applied a straightforward understanding of the Illinois Central test that the public trust could not be entirely alienated for private use.¹⁹¹ Yet, as the Court acknowledged, this flatly contradicted the approach taken by Maryland courts dating back to 1821. For example, in Browne v. Kennedy,¹⁹² Chief Justice of the Maryland Court of Appeals Jeremiah Chase held that the Maryland legislature could sell land “covered by a navigable river” so long as the private use did not “interfer[e] with or affect[] the public or common right[s to] . . . navigation and fishing.”¹⁹³ The Supreme Court’s rather startling response to this contradiction was to note the myriad ways in which the Kennedy Court had misinterpreted prior Maryland case law.

Thereafter, the Court was inconsistent in how aggressively it hewed to Justice Field’s approach in Illinois Central. To name just a few, the Court later affirmed an Alabama statute granting tidewater rights to the city of Mobile,¹⁹⁴ upheld a Chicago ordinance requiring that a railroad dismantle a tunnel built pursuant to an earlier ordinance so that the riverbed could be dredged,¹⁹⁵ and upheld a New York Court of Appeals decision to strike down a statute incorporating a development company that did not provide a mechanism for the State to vindicate public trust rights.¹⁹⁶ Indeed, it was only in 1926 that this inconsistent approach to legislative treatment of trust resources was resolved by the Supreme Court determining that, though “the general principle” of Illinois Central had been “recognized the country over,” in its particulars, the holding was “necessarily a statement of Illinois law.”¹⁹⁷

It was into this commercial understanding of the public trust doctrine, rooted in Roman concerns for open access, that Joseph Sax launched his now famous article on the public trust doctrine. It is beyond dispute that Sax’s article sparked a sea change in the way State courts approached the public trust doctrine. From 1970 to 1985 alone there were nearly one hundred cases concerning the public trust doctrine, many of which cited Sax’s article.¹⁹⁸ And States have taken up Sax’s invitation to unshackle the doctrine from its historical roots in concerns over navigability and fisheries.¹⁹⁹ By the mid-1980s, courts had extended the public trust to include marine law, sand and gravel in water beds, dry sand areas of the beach, rural parklands, battlefields, wildlife generally, archaeological remains, and (in Louisiana) all natural resources, including air and water.²⁰⁰ Sax was similarly influential in identifying the mechanisms that State courts have adopted to enforce this expanded public trust. These include requiring that government action satisfy the public trust’s purpose, mandating that government action be preceded by an assessment of any adverse impact on trust resources, and searching for specific legislative authorization for agency actions that affect trust resources.²⁰¹ While some of these had hooks in early public trust case law, many were relatively novel applications of judicial power.

Sax’s role here is substantially similar to that of Ambassador Pardo and his contemporaries, acting only a few years earlier. Like Ambassador Pardo, Professor Sax makes an unabashedly normative argument, and I do not mean this as a critique. This undermines arguments made by later scholars who criticize Sax’s public trust doctrine as disconnected from English and Roman law sources. Sax states that he is in “search for some broad legal approach which would make the opportunity to obtain effective judicial intervention [for environmental protection] more likely.”²⁰² In particular, he is looking for a doctrine that satisfies three criteria: (1) “some concept of a legal right in the general public” that is (2) “enforceable against the government” and (3) “capable of an interpretation consistent with contemporary concerns for environmental quality.”²⁰³ Indeed, Sax owns up to the state of the law as he found it:

[O]nly the most manipulative of historical readers could extract much binding precedent from what happened a few centuries ago in England. But that the doctrine contains the seeds of ideas whose importance is only beginning to be perceived, and that the doctrine might usefully promote needed legal development, can hardly be doubted.²⁰⁴

Like Ambassador Pardo and his contemporaries, Professor Sax treats with, but advertently moves beyond, the res communis²⁰⁵ to achieve his environmental ends.

The bulk of Sax’s article is a detailed review of the public trust doctrine in the States, noting how particular cases might provide a hook for expanding judicial appetite for protecting environmental interests. So he praises Massachusetts courts for requiring that administrative agencies identify a “specific, overt approval of efforts to invade the public trust”²⁰⁶ and lauds Wisconsin courts for asserting the independent authority to assess whether State actions are consistent with public trust interests.²⁰⁷ These various strategies are united by a common desire to root the public trust doctrine in the protection of majority interests (which are asserted to be consistent with environmental protection) from regulatory capture by a powerful minority.²⁰⁸ And here again there is striking similarly between Ambassador Pardo’s call for using the wealth of the common heritage to advance the interests of newly decolonized states and Sax’s argument that “[p]ublic trust problems are found whenever governmental regulation comes into question, and they occur in a wide range of situations in which diffuse public interests need protection against tightly organized groups with clear and immediate goals.”²⁰⁹

Taken together, what emerges from this history is a tale of two doctrines that have much in common, both in their history and their aims. They both emerged from an understanding, rooted in antiquity, that there are certain resources not amenable to private or government ownership that nevertheless are of communal interest. As such, in their deepest past, both doctrines can trace to a common concern about access to resources. Both doctrines were similarly revolutionized by prominent intellectuals of the twentieth century, who themselves built on a growing wave of change that can be traced to the nineteenth century. Each seeking to address inequities in power, Professor Sax and Ambassador Pardo sketched out an instrumental vision for the public trust and common heritage doctrines that gained widespread popularity on an incredibly short timeline. More than sharing a common history, this Section shows that these doctrines are united by a common concern—managing resources seen as necessary for the public in a manner more accountable and more equitable than had thus far been achieved.

D. The Public Trust Doctrine as a Useful Framework for Resource Management

In this Section, I address the most common critiques of the public trust doctrine to show why it provides an approach to managing common pool resources that coheres with general principles of property law. Namely, I show how its substantive flexibility is consistent with scholarly work arguing that the nature (and indeed changing nature) of property rights can be profitably explained through the social values they produce and reproduce.

1. Criticism of the Public Trust Doctrine

Sax’s redefinition of the public trust doctrine has spawned a seemingly endless academic debate. Distilled to the most salient points, scholars contest three issues: (1) whether the public trust doctrine is a necessary, or constructive, tool for environmental protection;²¹⁰ (2) whether the public trust doctrine is sufficiently well-defined, by reference to its historical roots or modern case law;²¹¹ and (3) whether the public trust doctrine comports with democratic and rule of law principles. I will address the last of these debates, as it is most important for our purposes.

Huffman sees the public trust doctrine as an unprincipled property right that, by relying on shifting judicial notions of the res, confounds public expectations and thereby undermines democratic principles.²¹² He is similarly concerned by the fact that the public trust doctrine, by asserting a right incident to State sovereignty that predates any possible private rights, eviscerates protections afforded by the Takings Clause.²¹³

There have been at least three responses to this critique. One flows from what Sax identified as the role of courts in combating agency and legislative capture by minority interests—in effect, an argument that seemingly democratic processes are, in fact, anything but.²¹⁴ A second argues that changes in the scope of the public trust doctrine is quite normal in a common law system.²¹⁵ And a third points to the fact that courts, even when exercising a form of continuing review of State action, rarely impose a substantive outcome. Instead, they use the power afforded by judicial review to require that State instrumentalities meaningfully take into account public trust interests²¹⁶ (though, of course, there may be significant overlap between requiring a substantive outcome and insisting on a method of agency decision-making).

2. The Public Trust Doctrine as a Coherent Approach to Managing Common Pool Resources

These concerns about the changing scope of the public trust doctrine and its use by courts to invalidate State actions point to broader debates about the role of common property doctrines in U.S. property law. Carol Rose addressed this tension most succinctly when she observed that the public trust doctrine and other common property regimes are radical because of “their seeming defiance of classic economic thinking and the common law doctrines so markedly mirroring that theory.”²¹⁷ She points to a few of the most telling tensions—the prioritization of public access over a right to exclude,²¹⁸ and the wholesale withdrawal of some objects from the possibility of private appropriation.²¹⁹ These moves are not easily reconciled by Demsetz’s economic theory for the emergence of property rights (i.e., a process of privatizing the commons made possible when the benefits of internalizing the externalities of using land exceed the costs).²²⁰

But Rose and others show how the public trust and related doctrines are, in fact, consistent with the greater corpus of property law. Henry Smith, for example, has identified two dimensions of property rights: the “compositional” (i.e., the physical resource that is the object of the rights) and the “organizational” (i.e., the range of activities allowed with respect to the resource).²²¹ Conceived along a spectrum, Smith identifies two methods for communicating this information—(1) straightforward rules of exclusion and (2) more informationally-intensive rules of governance.²²² Seen in this light, one defense of the public trust doctrine is that it represents a form of property that just relies more on governance rules than exclusion.²²³

Even this account, however, does little to defend the changing res as a feature of the public trust doctrine. Here, we can look to work arguing that the nature (and indeed changing nature) of property rights can be profitably explained through the social values they produce and reproduce. Rose again provides a useful starting point. She finds that “service to commerce was a central factor in defining as ‘public’ such properties as roads and waterways” and argues that public use of such properties produced significant (even “akin to infinite”) returns to scale.²²⁴ Expanding the categories of resources subject to a common access property rule, therefore, can be consistent with a benefit-maximizing approach to property law. Indeed, Rose notes how private ownership of resources traditionally considered “inherently public,” such as roadways, create holdout and monopoly if privatization is allowed to run free.²²⁵

But Rose also notes how these common access regimes are consistent with an understanding of property law that goes beyond pure economics. She notes, for example, how eighteenth and nineteenth-century scholars viewed the commercial functions enabled by inherently public property as also serving important socializing functions.²²⁶ Taking this as a starting point, Rose argues that substantive visions for what constitutes a socializing function can, and almost certainly will, change. Therefore, it would be quite natural for the nature of “inherently public property” to also change with time.²²⁷ As Rose notes, this account fits quite well with the changing res of the public trust doctrine, particularly if recreational and environmental interests are understood as serving, in modern times, a socializing function similar to that once seen as inherent to commerce.²²⁸

Rose’s socializing account is consistent with the work of Joseph Singer, who argues that property forms (which, particularly in the domain of real property, are notably few)²²⁹ embody “a set of norms and values that defines the legitimate social relationships that can be recognized in a free and democratic society.”²³⁰ As Singer goes on to argue, “the structure, shape, and definition of . . . bundled rights in the property law system must reflect our considered judgments about the legitimate contours of the social order.”²³¹ This work in turn builds on that of Alexander, who has argued that multiple-owner property (which he calls “governance property”²³²) develops virtues (like community, cooperation, trust, and honesty), which in turn promote human flourishing.²³³

The fact, then, that the public trust res has shifted over time is perfectly consistent with a change in the social values that underpin our system of property rights. Of course, questions of institutional competence remain. But in the international system, this challenge to U.S. courts’ roles in shaping the scope of the public trust doctrine just is not germane. There is no world court of common law jurisdiction capable of unilaterally deciding the scope of what comprehends the common heritage doctrine.

There is much that unites the public trust and common heritage doctrines: common roots in Roman property law, doctrinal innovation in the middle of the twentieth century, and heated disagreements about their scope and wisdom as legal doctrines. By understanding how the public trust doctrine coheres with a broader category of inherently public property and an understanding of property rules as conduits for reinforcing social values, we can begin to build a renewed framework for the common heritage doctrine.

E. Realpolitik and a Public Trust Approach to the Common Heritage Doctrine

Finally, I am not advocating for the international community to adopt a substantive vision of U.S. property law. As will be clear by the end of Part III, a public trust approach to the common heritage doctrine provides a framework for devising property rules by focusing on the values that states wish to foster. It does not itself determine what those values should be. We can see the benefits of this approach in the degree to which non–U.S. jurisdictions have adapted Sax’s vision of the public trust doctrine.²³⁴ These effects have been most direct, and most striking, in India.

The Supreme Court of India, in MC Mehta v. Kamal Nath, struck down a ninety-nine year government lease of protected forest to build a motel and declared as incompatible with the public trust a proposal to redirect an adjoining river to prevent the proposed resort from flooding.²³⁵ In its decision, the Court cited Illinois Central, California’s Mono Lake decision, and Sax’s article to establish the common and natural law roots of the public trust doctrine.²³⁶ Indian courts have reaffirmed and, in interesting ways, expanded the public trust doctrine in the years since this decision.²³⁷ For example, they have extended the public trust to include “ensuring a fair distribution of the revenues produced from publicly owned resources, such as natural gas leases,” and a distribution that “includes concerns for intergenerational equity.”²³⁸ The similarities with Pardo’s redistributive vision for the common heritage doctrine are inescapable. But more to the point, we can see how the public trust doctrine suggests a way of thinking about and a process for protecting the public values we want to achieve by preserving certain resources for public use. This approach need not reflect the particular values of any given U.S. State.

III. A PUBLIC TRUST PERSPECTIVE FOR THE COMMON HERITAGE OF HUMANKIND

I propose a four-part framework for this public trust approach to the common heritage of humankind, informed by the structure of common law trusts.²³⁹ The four lines of inquiry consider: (1) the property held in trust (i.e., the res), (2) the beneficiary of the trust, (3) the trustee and the means by which the trustee may treat the trust, and (4) mechanisms by which the beneficiary may vindicate their interests against the trustee.

A. The Res

The rapid pace with which the res considered subject to the public trust has changed suggests that an approach to the common heritage of humankind that takes as a starting point specific resources largely misses the point. Instead, as Rose and others have demonstrated, we should focus on the theory of the res—that is, the social objectives we are trying to achieve by incorporating specific resources into a legal regime of common access. Put another way, the resource matters less than the reason why we think it should be incorporated into a common access regime, and the purposes for which we think such a regime should exist.

We have already seen how these higher-level concerns dominate debates about the common heritage doctrine. Take, for example, opposition to the Moon Agreement. One of the central concerns of the United States and other space powers was how exactly the doctrine would be meted out under the contradictory principles provided in the Moon Agreement.²⁴⁰ The same can be seen in the law of the sea. Industrialized states only acceded to UNCLOS after extracting concessions in the 1994 Implementation Agreement to concentrate power in the International Seabed Authority’s Council through an allocation of seats that ensured their ability to block regulations that implemented a redistributive vision for the common heritage doctrine.²⁴¹ Securing a consensus at this theoretical level can be incredibly difficult in large-scale international negotiations. But, as a matter of negotiation strategy, sticking with such difficult issues can itself be profitable.²⁴² And as I will show in Part IV, in particular negotiation contexts there can be practical ways to refine the scope of this debate to increase the likelihood of success.

There are four theories of the res that we can most immediately discern from our discussion thus far: (1) an access theory; (2) a socializing theory; (3) an ecological theory; and (4) an intergenerational equity theory. I will address each in turn. Of course, these categories represent ideal types—there certainly may be profitable areas of overlap between them.

1. Access Theory

This theory of the res would incorporate those resources for which we expect the economic benefits of general use to be greater than those gained through individual appropriation.

This is the approach most evident in the underlying Roman sources and early U.S. case law. Here, property is characterized as a common heritage to prevent any one entity from monopolizing access to it. So, as was provided in Morris v. United States, land under tide waters is a “public trust for the benefit of the whole community, to be freely used by all for navigation and fishery, and not as private property, to be parceled out and sold for . . . individual emolument.”²⁴³ Another example of this approach is evident in the Supreme Court’s decision in Shively v. Bowlby, where it found that land under tide waters “are of great value to the public for the purposes of commerce, navigation and fishery. Their improvement by individuals, when permitted, is incidental or subordinate to the public use and right.”²⁴⁴

A similar policy sentiment bears forth in the Roman sources. For example, Ulpian finds that a claim may be brought against the owner of a seaside villa where the villa’s owner, in any way, obstructs the public’s right to fish in the seas.²⁴⁵ This is consistent with Rose’s observation that the common law designated properties as “public” where their use by all-comers yields commercial benefits that could not accrue if their use were restricted to a single owner.²⁴⁶

2. Socializing Theory

We might alternatively call this the Rose theory of the res. Here, we characterize as common those properties the use of which advances interactive, social virtues.²⁴⁷ So, for example, Rose identifies free speech, alongside commerce, “as a socializing practice for our society—a practice with infinite returns to scale, whose necessary locations might be subject to a public trust.”²⁴⁸ She likewise argues that the same is true of recreation.²⁴⁹ So, under this theory, resources considered public (or, in our lexicon, common) might be utility poles on which political fliers are posted,²⁵⁰ or beaches on which the public may learn to get along by coming together for recreation.²⁵¹

As Rose admits, notions of what constitutes a socializing activity are nearly infinitely contestable.²⁵² And particularly in an international and multi-cultural setting, developing a consensus about beneficial social interaction may be even more difficult. Yet this kind of inquiry is not unprecedented in international lawmaking. Take, for example, the Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property.²⁵³ This treaty, ratified by 143 states, identifies eleven categories of cultural property for protection through various export and import controls.²⁵⁴ Notable among the policy purposes for the Convention is the belief that “the interchange of cultural property among nations for scientific, cultural and educational purposes increases the knowledge of the civilization of Man, enriches the cultural life of all peoples and inspires mutual respect and appreciation among nations.”²⁵⁵

3. Ecological Theory

An ecological approach to the common heritage doctrine would prioritize protection of the environment to identify resources that should be incorporated into the res. We see this approach most clearly in the work of Sax, who, as we have discussed, focused in a rather utilitarian fashion on the public trust doctrine because of its promise as a procedural means for environmental protection.²⁵⁶ A similar animating principle emerges from scholarship²⁵⁷ and litigation urging courts to identify the atmosphere as another subject of the public trust.²⁵⁸ And so, for example, youth plaintiffs have urged courts to consider the federal government’s failure to curb air pollution as a violation of a public trust that inheres in the atmosphere.²⁵⁹

In some ways, the vociferous disagreement at the International Seabed Authority concerning regulations for extractive mining is a conflict between two theories of the res—the access theory and the ecological theory.²⁶⁰ Both, in a way, have a hook in UNCLOS. Article 140 provides that the financial proceeds of seabed mining will be provided to developing and other disadvantaged states,²⁶¹ which assumes commercialization of seabed resources. Article 145, on the other hand, provides that measures will be taken to “ensure effective protection for the marine environment from harmful effects which may arise from such activities.”²⁶² Yet even these measures presuppose the existence of extractive activities, which may account for the fact that mining operations are set to begin in 2024 notwithstanding significant environmental concern.

4. Intergenerational Equity Theory

The new international economic order movement represents one example of how to conceive of common heritage res in a way that prioritizes equity concerns. We can see this in the words of Ambassador Pardo, who argued that the deep seabed should be characterized as a common heritage primarily as a means for redressing disparities between newly decolonized states and developed economies.²⁶³ And it remains alive in the work of scholars like Egede, who identifies the redistributive potential of the Enterprise’s as a necessary component of the common heritage doctrine in the law of the sea.²⁶⁴ As noted previously, this is also the theory of the res that likely faces the most resistance from developed economies, and which was significantly undermined by the 1994 Implementing Agreement.²⁶⁵

B. The Beneficiary Class

There are at least two primary parts to any inquiry into the common heritage doctrine’s beneficiary population. First is whether the population should be defined as that of a specific political community or humanity writ large. The second is whether the population should be defined as only those persons currently alive or also as including future generations. I will address each in turn.

We have already seen how debate over the first dimension can be traced all the way to the Roman law antecedents of the public trust and common heritage doctrines.²⁶⁶ As Ruhl and McGinn posited, as a practical matter, it may be impossible to enforce a res communis regime without acknowledging some role for the government (i.e., in a manner quite similar to the government’s responsibilities regarding res publicae).²⁶⁷ This approach is implicit in nearly every public trust doctrine case. For example, the Supreme Court in McCready v. Virginia found that “the States own the tide-waters themselves, and the fish in them, so far as they are capable of ownership while running. For this purpose the State represents its people, and the ownership is that of the people in their united sovereignty.”²⁶⁸ Justice Washington made this connection equally clear in what appears to be the earliest public trust case to have reached the bench of a Supreme Court justice.²⁶⁹

Contemporary public trust cases have been most direct in identifying that the beneficiary class should be understood to include future generations. For example, the Supreme Court of India in MC Mehta was clear in identifying the public trust doctrine as one that protected natural heritage in the interest of future generations.²⁷⁰ The Supreme Court of Hawaii has been similarly forthright in its attention to future generations, holding that “the public trust relating to water resources [is] the authority and duty ‘to maintain the purity and flow of our waters for future generations and to assure that the waters of our land are put to reasonable and beneficial uses.’ ”²⁷¹ This does not mean, however, that any conception of the common heritage must include consideration of future generations. There appears to be no such stipulation in any of the federal public trust cases in the years before Illinois Central, for example. And the Roman sources are equally silent on the question of future interests.

C. The Trustee and Means of Protection

1. Trustee

There are three distinct considerations to keep in mind here. First, there is deciding whether the beneficiaries should be identified as members of a political community or humans as an aggregated whole. Second, there is identifying a trustee. Finally, there is deciding whether an institutional actor outside the beneficiary class is empowered to ensure that the trustee is acting in the beneficiary class’s interests. In the domestic public trust cases, this has largely centered around debates over the proper role of the courts in reviewing legislative action. We have seen a wide range of models. On one end are some of the earliest cases from Maryland, wherein the courts entirely deferred to the legislature’s decision to alienate trust property.²⁷² On the other end of the spectrum is the California Supreme Court’s assertion of continuous, coequal jurisdiction to impose something akin to a hard-look review of agency action.²⁷³ As we have discussed, it was this potential for a strong judicial role that most attracted Sax to the public trust doctrine as a means for protecting the interests of a silent, disperse majority.²⁷⁴ These are, of course, ideal types, as the Supreme Court’s inconsistent approach to deferring to legislative actions in the wake of Illinois Central makes abundantly clear.²⁷⁵

2. Means of Protection

One could imagine an almost infinitely long list of the ways by which a trustee might protect the res in the interest of the beneficiary. These means would be in significant degree contingent on answers to the questions posited above. So, for example, the theory of active stewardship required by the California Supreme Court can be seen as a necessary product of an ecological theory of the res where the beneficiary class includes future generations. Looking across the case law we have surveyed, three broad categories emerge. Again, these exist along a spectrum from least to most permissive and should only be seen as ideal types.

First, there is the absolute prohibition on alienation or use. This has the least precedent in American public trust case law, as courts almost always recognize some ability for a legislature to divest of, or allow limited use of, trust resources.²⁷⁶ Expanding our notion of the public trust somewhat, this model would be akin to the protection afforded under the Endangered Species Act.²⁷⁷ A second, less robust, means of protection would be a requirement that the trustee be an active steward of the trust resource. The California Supreme Court adopted something analogous to this approach when it held that the public trust “imposes a duty of continuing supervision over the taking and use of [] appropriated water.”²⁷⁸ A third, and by far most common approach in U.S. case law, is to require that use or alienation of the res be consistent with trust principles. As noted previously, this too exists along a spectrum. In this way, the Supreme Court’s more skeptical approach in Illinois Central and the early approach of Maryland courts are all variations of this same model.²⁷⁹

D. Vindicating the Beneficiary’s Interests

Finally, a public trust framework for the common heritage of humankind considers the means by which the beneficiary class can vindicate its interests if the trustee fails in its duties. This is by far the most difficult to analogize across the domestic and international contexts. In U.S. case law, one of the signal virtues of the public trust doctrine, as told by its proponents, is the fact that it provides standing to sue the government for failure to protect trust resources.²⁸⁰ Yet there currently exists no international tribunal by which any citizen might vindicate rights under UNCLOS, for example. UNCLOS provides something of a proxy in the Seabed Disputes Chamber of the International Tribunal for the Law of the Sea.²⁸¹ Yet even here, the chamber’s jurisdiction is limited to disputes between states parties, entities created by UNCLOS concerning seabed mining, and private parties who have entered into mining contracts with the Authority.²⁸² This is, in actuality, quite a robust mechanism for enforcing the duties imposed by UNCLOS. On the other end of the spectrum would be the norm-based enforcement of climate change goals arrived at under the UN Framework Convention on Climate Change.²⁸³

There are a number of benefits to applying the public trust framework to the common heritage of humankind. First, and perhaps most importantly, it provides a more detailed lexicon for articulating what we mean when we debate the common heritage doctrine. Second, it recognizes that social values are at the core of debates about the common heritage of humankind, and it demonstrates the wide range of values that we might seek to advance. And third, it connects this higher-level debate about values to a more practical discussion of particular governance rules.

IV. CASE STUDY: OUTER SPACE MINING

It is particularly appropriate to assess how a public trust approach to the common heritage doctrine might help the international community develop rules for managing outer space mining. There are many existing proposals, often developed after the United States enacted domestic legislation concerning asteroid mining in 2015. Although promising, these proposals are largely a grab-bag of analogies to existing domestic and international legal regimes. Applying a public trust approach to the common heritage doctrine can help us build on these proposals in a way that is incremental and sensitive to geography and changing technology.

A. Existing Proposals

Member states of the UN Committee on the Peaceful Uses of Outer Space (“UNCOPUOS”) have addressed outer space resource extraction every year since 2015.²⁸⁴ Beginning in 2022, UNCOPUOS has embarked on a more rigorous, five-year process for developing international rules for outer space mining. In significant part, this five-year endeavor was born of the plethora of states enacting domestic laws recognizing the property rights of private parties that extract abiotic resources from celestial objects. This list now includes the United States, Luxembourg, Japan, and the United Arab Emirates.²⁸⁵ A 2022 call for views uncovered a few areas of broad agreement. First, most states agreed to exclude discussion of access to orbits and radio frequencies from these debates, since both issues were already addressed in forums like the International Telecommunications Union.²⁸⁶ Many states likewise looked to develop a framework that would ensure predictability, safety, sustainability, and the peaceful uses of outer space.²⁸⁷

The United States has taken the lead in cultivating a group of like-minded states in favor of outer space mining. Executive Order 13914 propelled this initiative by directing that NASA foster international support for outer space resource extraction.²⁸⁸ NASA has primarily executed on this task through a series of identical bilateral agreements with other states called the Artemis Accords—a set of principles established to encourage cooperation in future lunar activities.²⁸⁹ In relevant part for our purposes, the Artemis Accords provide that “the extraction of space resources does not inherently constitute national appropriation under article II of the Outer Space Treaty.”²⁹⁰

The most-cited proposals for managing such resource extraction are provided by the so-called Hague “Building Blocks.” Developed by a group of leading scholars from 2016 through 2020,²⁹¹ these Building Blocks address a wide range of outer space activities. In pertinent part, they recommend establishing a registry-based system for resource extraction “priority rights.”²⁹² Upon registering the geographic scope and period of time for any given prospecting operation, a safety zone around the activity would also be established commensurate with the type of activity that is proposed.²⁹³ The Hague Building Blocks adopt many of the uncontested elements of the common heritage doctrine—resource extraction would be carried out only for peaceful purposes “for the benefit and in the interests of all countries and humankind irrespective of their degree of economic and scientific development.”²⁹⁴ Although the precise contours of this benefit are left largely undefined, the Building Blocks do provide that states should share benefits by promoting “participation in space resource activities by all countries, in particular developing countries.”²⁹⁵ Such promotion might include, for example, assisting in developing space science and technological capacity, cooperation on training and education, providing open access to scientific information, incentivizing joint ventures, exchanging expertise and technology on a mutually agreeable basis, or establishing an international development fund with the proceeds of mining activities. The Building Blocks also advocate ensuring that rights over extracted resources “can lawfully be acquired through domestic legislation, bilateral agreements and/or multilateral agreements.”²⁹⁶

This approach is typical of a wider range of commentary urging states to adopt an outer space mining regime modeled off the International Telecommunication Union’s first-in-time, first-in-right registration system.²⁹⁷ More libertarian versions of this proposal call for the international community to do nothing—relying instead on a rule of first possession and ad hoc recognition of an entity’s on-the-ground mining operations as they develop.²⁹⁸

Another set of proposals suggests establishing some common baseline of resource entitlements. In this vein, some have recommended partitioning the moon geographically between states and allowing each to develop its own system for prioritizing extraction activities within their respective zones.²⁹⁹ A similar variant would adopt the concept of the exclusive economic zone from the law of the sea to achieve a similar end, while also being in less apparent tension with the Outer Space Treaty’s prohibition on sovereign claims.³⁰⁰ Yet others would establish a system of tradable credits, where each state received some baseline allocation of resource rights that could be sold to other states.³⁰¹

A final group of proposals seek to adapt various doctrines of domestic property law. In this way, some have advocated entrusting an international body with all extraterrestrial property rights and granting to private entities a defeasible fee interest for mining operations.³⁰² Similarly, others propose adopting a condominium model, with each state being granted fee simple to particular territories that are subject to a more general management scheme.³⁰³

This is only a flavor of the wide range of schemes proposed by states, scholars, and activists. All have their benefits and drawbacks, depending on your normative views. But, with the possible exception of the Hague Building Blocks, none provide a holistic framework for thinking about outer space mining.

B. The Public Trust Approach

A public trust approach to the common heritage doctrine does not prescribe a particular vision for outer space mining. Instead, it provides a more structured framework for thinking about the values that we seek to advance in using resources on celestial objects. By employing the public trust framework to outer space mining, two key distinctions emerge—the locations on which mining operations will occur and their probable timelines.

1. Defining the Res

To understand why these distinctions matter, we can begin by considering how states might apply a theory of the res to outer space mining. Take, for example, Rose’s socializing theory. This, again, is the idea that we should treat as common those resources the use of which produces some interactive, social virtues.³⁰⁴ Let us imagine that mining operations were to start tomorrow—there are a few categories of objects that, under this theory, should be characterized as a common heritage. The first might be objects of cultural heritage—the first Apollo landing site, for example, or Neil Armstrong and Buzz Aldrin’s footsteps at Tranquility Base. Even with a relatively minimal presence on the moon, preserving such sites would be a reminder of humanity’s shared journey of exploration and our years of shared, peaceful cooperation in civilian space programs. This is by no means a novel idea—the U.S. government has already expressed an interest in preserving these historical artifacts.³⁰⁵ Another might be locations and communication equipment, whether on the moon or in the moon’s orbit, necessary to relay communications from the far side of the moon to Earth.³⁰⁶ These resources are fundamental to communication in the same way that Rose posited utility poles are a cornerstone of political speech.³⁰⁷

These examples just do not apply to asteroid mining. There are no such cultural heritage sites, and if the asteroid is small enough, they are unlikely to ever exist. Asteroids are also unlikely to be so large as to frustrate ready communication with Earth. All of which is to say that location matters. And an approach to outer space mining that is sensitive to these differences in location may more readily lead to consensus on practical rules of the road.

Returning to our thought experiment about mining on the moon, we could imagine significantly different socializing interests at different time horizons. Let us again take the socializing theory as a heuristic. Aside from the cultural objects and communications sites noted above, if mining were to start tomorrow, there are relatively few other resources the use of which might lead to any kind of interaction—there are likely to just be too few people on the moon. But if we cast our minds some decades down the line, when state and private industry plans to have permanent lunar settlements might be realized, the situation is quite different. Like Rose’s public roadways,³⁰⁸ we could imagine there being commonly used routes connecting settlements the private appropriation of which would frustrate socializing settlements to each other. We could also imagine use of the moon’s limited water resources as another locus of important socialization. NASA has found there to be 1/100th of the amount of water in the lunar soil on the sunlit side of the moon as exists in the Sahara.³⁰⁹ To the extent that permanent human settlements need to rely on these water sources, their private use without some general use scheme could well lead to resource conflicts—certainly not a socializing use of water resources. For those who adopt a socializing theory of the res, therefore, it would be useful to adopt now a precautionary approach to using these resources which, in a foreseeable future, are important to incorporate into the commons. Such a precautionary approach might, for example, limit present use of water resources only to what is necessary to sustain human life for research stations, and not stations established just for mining activities.

Once again, these future concerns are less likely to exist on a relatively small asteroid where there is no practical ability to have a human settlement, even in a future where there are more humans who live or operate in outer space. In this case, there may be fewer practical reasons to adopt a precautionary approach to any water resources that might exist on the asteroid—paving the way to more extensive private use.

Finally, choosing between different theories of the res is largely a normative decision. But as this discussion shows, there is a geographic component that is at play. Over any time horizon, the socializing interests implicated in mining an asteroid are significantly fewer than might pertain on the moon. The same would not be true if we adopt an access theory of the res, which prioritizes opening access to outer space resources. While this does not help us choose between theories, it does help us identify those locations on which there is likely to be less disagreement among states. If we imagine a bilateral negotiation between one state that supports an access theory and another that adopts a socializing theory, they should begin their negotiations by developing a legal regime for mining asteroids. There are likely to be fewer areas of disagreement simply because the possible uses of asteroids, now or in the future, are more limited than the possible uses of different parts of the moon.

Distinctions based on location and timeframe are important to considering each of the remaining lines of inquiry for a public trust approach to outer space mining. In the remaining sections, I will briefly demonstrate why.

2. Defining the Beneficiary

As a general matter we can imagine three possible beneficiary classes. The first are those who live near the mining operation (this necessarily requires imagining a future with a permanent human presence, for example, on the moon). Second are those who live on Earth (the only class we could imagine today, for example). And the third would be to combine these two groups. An approach to the common heritage that benefits only those who live near the mining operation would be fundamentally different from one that also considers the interests of those on Earth. For example, if we adopt an ecological theory of the res, there might be significant environmental effects to mining that are purely local. So, operations that eliminate access to lunar groundwater or destroy a particularly attractive landscape simply wouldn’t matter to an earth-bound beneficiary class. Instead, maximizing the benefits that accrue to the mining (so that the proceeds could be redistributed, for example) would be far more important to this class of beneficiaries.

The question of determining the beneficiary class is largely theoretical for the time being. Presently, it is difficult to imagine any beneficiary class other than all of humanity, politically represented by states as the primary subjects of international law. But this thought experiment does suggest that there will be a difficult future task in determining the degree of preference, if any, that these beneficiary groups should enjoy from extracting resources. Difficult, but not unprecedented. Fundamentally, it is no different than the task faced by the Supreme Court in its early public trust cases: Can we impose regulations on oyster fishing in a manner that benefits the citizens of one state over those of another?³¹⁰ And for those who believe in the virtue of including non-Earth-bound beneficiaries into the common heritage of certain extraterrestrial resources, these distinctions would again counsel in favor of adopting a precautionary approach to mining now.

Together with the theory of the res, defining the beneficiary class will also raise questions about what benefits should accrue to the beneficiaries. Much of the debate about sharing technology, information, and financial proceeds from outer space mining has focused on this question. Fundamentally, like all these inquiries, it is normative and defies any necessary legal answer. Taking this public trust approach as a starting point, those advocating for preferences that would accrue to less developed countries should emphasize theories of the res that prioritize an intergenerational, equity-based approach and an understanding of the beneficiary class that extends beyond the political community of the state that engages in mining activities.

3. Trustee and the Means of Protection

As was the case in negotiations concerning the law of the sea, much of the current debate in outer space law concerns whether, and how, to create an international organization to manage mining operations. A public trust approach to the common heritage doctrine, however, suggests that this debate necessarily depends on decisions made about the theory of the res and the beneficiary class. States would do well to think critically about the history of the International Seabed Authority—the mere existence of a detailed international bureaucracy has guaranteed neither redistributive benefits for less-developed countries nor guaranteed swift access to the ocean floor.

We have already canvassed many of the institutional arrangements that states can develop to constitute a trustee and the associated means by which the trust is protected. Again, differences in location and timeframe are important. For locations where future human habitation is possible, some standing adjudicatory body may one day be necessary. But in the interim, proposals for a registry operated by some entity like the International Telecommunications Union³¹¹ appear to be sufficient. The members of such a body can use the forum to develop regulations that ensure non-interference, prioritize resource rights, and develop safety standards. So long as states can agree on the theory of the res before such a model is adopted, the risks of significant future changes in the scope of the common heritage doctrine would also be meaningfully minimized.

To the extent that states are interested in adopting a precautionary approach to mining for any of the reasons discussed above, a few options exist. One would be to limit prospecting for resources indefinitely or for some period of years. These limits could be tailored to specific locations (for example, applying to particular areas of the moon or the moon writ large), types of resources (for example, water), or the purposes for which the resources are used (for example, to sustain life). States could determine these limits in a variety of consultative fora, whether that be UNCOPUOS or some smaller body of concerned states, much like the Arctic Council.

4. Vindicating the Beneficiary’s Interests

The design choices made in Section IV.B.3 significantly determine the ways in which a beneficiary class might vindicate their rights. In the immediate future, there are two choices for how beneficiaries might vindicate their rights.³¹²

At one end, states might create an international tribunal along the lines of the Seabed Disputes Chamber of the International Tribunal of the Law of the Sea. Much like under UNCLOS, such a tribunal could have jurisdiction over states parties and private entities with mining operations and be empowered to enforce agreed-upon regulations. As a practical matter, I am pessimistic about the likelihood of any major spacefaring state acceding to this kind of jurisdiction. There has been enough action to unilaterally assert mining rights, by the United States and Luxembourg particularly, that establishing such a tribunal would likely be seen as a concession with little apparent benefit.

It seems more likely that states would continue using informal conciliation and negotiation to enforce compliance with mining regulations. This would operate in much the same way as states “enforce” the nationally determined emissions targets agreed upon under the UN Framework Convention on Climate Change.³¹³ Such an approach necessarily entails significant potential for backsliding. Some of this risk, however, could be mitigated if states are able to agree on some of the more fundamental questions discussed earlier in this section, and particularly on the theory of the res pertinent to a particular location. By more narrowly defining the problem set and establishing more detailed consensus, there may be less of an incentive for states to backslide on their commitments.

V. CONCLUSION

The common heritage of humankind contains great promise as a framework for understanding and managing resource challenges in areas beyond national jurisdiction. Its potential, however, has been stymied by its close association with the politics and economic disputes of the Cold War. Taking lessons from the development of the public trust doctrine in domestic U.S. law, the common heritage can be liberated from these political battles and applied to a wide range of contemporary problems. Future work, for example, might use this four-part framework to develop a more detailed mechanism to protect and use marine genetic resources or protect marine biodiversity.³¹⁴ Contemporary international politics has, in many ways, returned to a pattern of Cold War alliances and territorial conflict. Our approach to the international law for managing resources in areas beyond national jurisdiction can remain practical and resist a similar turn to the past.

97 S. Cal. L. Rev. 1469

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Christopher Mirasola*

* Assistant Professor, University of Houston Law Center. I am particularly grateful to Molly Brady, who pointed me in the direction of the public trust doctrine in the early stages of this project. I am also very grateful for helpful feedback from William Alford, Haley Anderson, Stephen Cody, Asaf Lubin, Thomas McGinn, Brian Richardson, Melissa Stewart, Andrea Olson, Carol Rose, and Paul Stephan. All errors are, of course, my own.

Oceanic Impunity

July 2024July 2024Stephen Cody*

Ocean protection is essential to avoid climate disaster. Phytoplankton, seaweeds, and sea grasses produce more than half of Earth’s oxygen—exceeding all terrestrial forests and plants combined—and absorb about ninety percent of the heat generated by rising emissions. Yet oceans continue to be sites for brazen environmental law violations, from illegal fishing to toxic dumping. International criminal law has largely ignored these crimes, even when they amount to offshore environmental atrocities. Meanwhile, legal structures for ocean governance tend to focus on regulatory compliance, self-policing, and dispute resolution, all of which have proved inadequate to protect oceans and coastal communities. Without more global enforcement, environmental criminals will continue to operate with impunity at sea, even as their crimes exacerbate existential climate threats.

Mare liberum or freedom of the seas has been a foundational principle of ocean law for centuries, dating back to the writings of Hugo Grotius. But unconditional free seas are no longer defensible in the Anthropocene. The idea of free seas falsely presumes an inexhaustible ocean too vast to govern. Consequently, governance models based solely on the principle of free seas continue to legitimate careless national policies, destructive relations with marine ecosystems, and exploitation of vulnerable ocean environments. Moving forward the international community must defend oceans as the heritage of all humankind and work together to protect seas against serious environmental harms.

This Article develops a blueprint for targeted forms of international criminalization that would deter offshore ecological destruction. It defends international prosecutions for a range of oceanic environmental crimes, including marine pollution, illegal fishing, and seabed destruction caused by illegal trawling or deep-sea mining. Beyond theories of retribution or deterrence, global criminal prosecutions for environmental harms have expressive value during this time of climate crisis. International criminal convictions showcase humanity’s shared concern for ocean life and marine environments. Criminalization of grave ocean harms would signal an ecocentric shift in international criminal law and aid multilateral efforts to protect marine environments and to promote new legal duties to nature.

INTRODUCTION

Violence and insecurity are common at sea.¹ For centuries, seafarers have committed serious crimes and human rights abuses, often with the explicit backing of sovereign governments.² Oceans are also notorious sites for environmental crimes, including toxic dumping, illegal fishing, and unlawful seabed destruction. Notwithstanding this grim history of oceanic impunity, international criminal law has long neglected oceanic offenses.³ Offshore environmental atrocities, when acknowledged at all, have been prosecuted by domestic law enforcement agencies or adjudicated by federal and state administrative bodies.⁴ Accountability gaps persist for grave ocean crimes, especially those that occur beyond national jurisdictional waters.⁵

Oceans have never been entirely lawless places.⁶ For centuries, state leaders have engaged in various kinds of ocean governance with varying degrees of success.⁷ However, offshore environmental crimes present substantial enforcement challenges for national agencies and international courts, and state efforts to hold criminals accountable for environmental offenses at sea have regularly failed for several reasons.⁸

For example, vast open seas and limited ocean patrols often hamper criminal investigations and enforcement.⁹ Sovereignty claims and principles of noninterference create obstacles for criminal prosecutors that target defendants on foreign vessels.¹⁰ Conflicts over maritime boundaries and territorial seas also exacerbate interstate tensions over criminal jurisdictions, particularly within contested territorial waters.¹¹ Additionally, international organizations tasked with ocean protection frequently lack effective enforcement mechanisms or adequate resources to address criminality.¹² Meanwhile, captains flying flags of convenience and corrupt officials at local ports often hide environmental crimes, thereby shielding criminal networks from the monitoring bodies designed to prevent marine pollution and illegal resource exploitation.¹³

Nevertheless, the need for criminal accountability to deter environmental harms and express collective commitments to ocean protection has never been greater. Phytoplankton, seaweeds, and sea grasses produce more than half of the world’s oxygen—more than all forests and plants on land combined—and absorb approximately ninety percent of the heat generated by rising emissions.¹⁴ Without healthy seas, the global community is unlikely to achieve its climate goals or to mitigate ongoing environmental impacts of industrialization. Intense waves and storm surges now regularly devastate coastal communities. Lethal chemicals, sewage, and plastics threaten vital fisheries and marine environments worldwide. The climate crisis and marine deterioration are rapidly transforming ocean governance priorities and underscoring the need for enhanced monitoring and enforcement of environmental protections beyond national jurisdictions.

This Article lays the groundwork for international criminalization of ecological harms at sea. It describes the relational dynamics of oceanic impunity and discusses several options for improving accountability in coastal waters and on the high seas. Most important, international criminal prosecutions should express shared principles and concerns about the climate crisis, underscore global commitments to protect marine environments, and raise awareness about destructive consequences of serious ocean crimes.¹⁵

International criminalization of activities that destroy ocean ecosystems would signal a common awareness of critical threats to marine environments and national leaders’ willingness to situate humanity within the natural world, not above it.¹⁶ In contrast to the dominant anthropocentrism of international criminal law, international criminalization of ocean crimes could establish duties to nature independent of direct human victimization and recast international criminal accountability as including crimes against marine flora and fauna.¹⁷ Such an ecocentric shift holds promise for “greening” various aspects of international criminal law.¹⁸ Recognizing international crimes against nature, for example, could influence financial investment in the investigation of ocean crimes, tailor prosecutorial priorities, or improve case selection decisions to better reflect environmental concerns in communities worldwide.¹⁹

Part I of this Article conceptualizes oceanic impunity as the embodiment of relationships and interactions between criminal perpetrators and enforcement authorities. Drawing on relational sociology, Part I defines oceanic impunity as a series of unfolding processes and interactions rather than as a permanent state of criminality.²⁰ Attempting to circumvent both methodological individualism and methodological nationalism, this Article identifies seven transnational dynamics that perpetuate criminality on the world’s oceans and advances a relational approach to study these dynamics.²¹ By documenting weak transnational and global enforcement practices, relational approaches to oceanic impunity reveal contemporary barriers to criminal accountability, particularly in seas beyond national jurisdictions.

Part II discusses three ocean crimes—ocean pollution, illegal fishing, and seabed destruction—with consequential effects on marine environments. Part II advances the argument that targeted international criminalization can improve criminal enforcement and accountability for each crime category. International law has long sought to address offshore environmental crimes through treaties and regulatory agreements but monitoring and enforcement challenges have regularly undermined these efforts.

Part III makes the case for targeted international criminalization to supplement existing ocean governance frameworks. By individualizing culpability for offshore crimes against nature, international criminalization creates new modalities for deterrence and novel enforcement mechanisms to address environmental crimes perpetrated beyond national jurisdictions. Selective criminalization through multilateral agreements and international courts can outfit global prosecutors with new tools to address oceanic impunity and ensure protection of marine environments.

Part IV discusses the expanded use of suppression conventions and criminal prosecutions at the International Criminal Court (“ICC”) to combat offshore environmental criminality. Amendments and new protocols to incorporate crimes against nature, including the proposed crime of ecocide, can empower international criminal prosecutors to investigate suspected perpetrators of environmental atrocities at sea.

I. OCEANIC IMPUNITY

Relational approaches to “objects” of legal research require a different method of legal analysis. Relational scholars recognize the mutual constitution of law and social relations. Ocean crimes and oceanic impunity, therefore, cannot be studied as distinctive social facts independent of concrete relationships and social problems. Understanding oceanic impunity requires accounting for evolving personal and institutional interactions that shape both community perceptions and participants’ own identities and practices. In other words, perpetrators of ocean crimes do not operate independent of governance regimes and enforcement agencies that prohibit and police their offshore activities. They exist only in relation to each other. The study of ocean criminality requires empirical investigation of relations among lawmakers, ocean offenders, and law enforcement authorities whose entanglements construct criminality in complex social fields transcending maritime boundaries. A relational approach seeks to overcome an ontological model of law as something outside of social relations and to capture the full situation of meaning-making between the observer and the observed.²² Oceanic impunity emerges through historically and geographically contingent transactions between legal regimes, law enforcement officials, and ocean outlaws. Offshore criminality, in this sense, is spontaneous, socially complex, and dynamic. It is rarely, if ever, the outcome of free will, rationality, or deeply considered social actions. Shifting oceanic relations are simultaneously constitutive of both lawlessness and order at sea. Study of oceanic impunity therefore requires reflexive empirical investigations and theoretical revision based on changing social practices within national jurisdictions and on the high seas.²³

Relational sociology also provides an alternative view of criminalization. Ocean crimes are not objective empirical facts to study. They are portals into a diverse set of interpersonal processes created and reproduced by social interactions. As an alternative explanatory framework, relational approaches to criminalization seek to move beyond conceptual antinomies—perpetrators and victims, state and non-state, legal and illegal—to focus analysis on evolving transnational practices, exchanges, and dialogues. Viewing oceanic impunity in this way means that targeted international criminalization does more than establish new crimes or empower prosecutors. It has symbolic effects that can transform social relations. Such expressive power in many cases exceeds the benefits of individualized retributive justice. International environmental criminalization under the right social conditions can encourage greater environmental protection by cultivating new social logics and institutional dynamics better aligned with ecocentrism.

A. Geography

Geography matters for ocean accountability. Oceans are massive, open spaces. They are difficult to navigate and made dangerous by high winds, changing currents, and inclement weather. Consequently, oceans are hard places for law enforcement to monitor vessels and activities aboard them.²⁴ Limited resources for patrols hamper maritime enforcement in territorial waters and on the high seas. Another enforcement challenge created by open water and nautical travel is the limited availability of logistical or medical support for routine maritime operations. Patrol boats may operate as solitary vessels unless they are monitoring shipping lanes, busy harbors, or navigating close to shore. However, while geography certainly matters for oceanic impunity, vast ocean distances cannot completely explain the pervasiveness of offshore criminality.

Advanced satellite imaging and other surveillance technologies, including long-range reconnaissance drones and unmanned submersibles, have increased the visibility of ocean crimes in recent decades. Nonprofit organizations like Global Fishing Watch, Trygg Mat Tracking, and Oceana employ satellite technologies that increasingly make it possible to identify and track particular maritime vessels.²⁵ Vessel tracking technology, big data, algorithms, and artificial intelligence (“AI”) can now be used to estimate apparent fishing efforts and to identify illegal catches in many places.²⁶ While satellite technologies have not yet created an ocean panopticon, they do allow state enforcement agencies to detect a range of ocean crimes, tighten port surveillance, and exercise better control over transitory waterways and commercial shipping channels. New kinds of collaborations between states and nonprofit organizations hold promise for detection of serious ocean crimes. The United States Southern Command (“SOUTHCOM”), for example, has partnered with Global Fishing Watch in recent years to enhance detection of illegal fishing in the Caribbean and the Pacific.²⁷

Several monitoring firms now triangulate public and private data to provide unprecedented real-time surveillance of offshore activities, even across vast geographic areas. Windward, an Israeli based company, uses AI and predictive modeling to create operational profiles of individual vessels, which enables the company to monitor a wider range of private ships. The International Maritime Organization (“IMO”) has registered about 70 thousand maritime vessels worldwide, but Windward tracks more than five times that number using its digitized data.²⁸ The expansion of AI technologies such as these will likely aid maritime law enforcement in identifying suspect vessels and environmentally damaging activities across vast oceans in the coming years.

However, visual detection of criminality alone may not improve enforcement or impact overall levels of oceanic impunity. Ocean perpetrators increasingly avoid aerial surveillance by shifting operations to different kinds of marine vessels or simply turning off automated tracking systems. Private fishing vessels, for example, are frequently used to hide illicit trafficking activities, evade detection by enforcement agencies, and distribute the costs of interdiction.

B. Technology

Transforming technologies are another powerful dynamic that shapes oceanic impunity. While new technologies have enhanced states’ capacity to monitor oceans and sometimes improved interdiction operations in coastal waters, they have also facilitated criminal enterprises.

Criminal syndicates increasingly use technology to conceal their offshore activities.²⁹ For example, vessel cloaking technologies formerly restricted to advanced naval powers have appeared on global black markets.³⁰ These new technologies enable ship captains to jam or modify data showing their navigational positions. The U.N. requires all large maritime ships to operate satellite transponders and transmit their geographic positions in real time.³¹ But ships using cloaking technologies can transmit false location data to avoid detection in contested waters or to violate international sanctions regimes.³²

Global fuel tankers, for example, disguise resupply locations to visit sanctioned oil ports in Venezuela, Iran, or Russia, and large container ships use new navigational cloaking technologies to hide shipments of commodities traveling to or from embargoed countries. In 2022, ocean monitoring groups discovered hundreds of ships manipulating onboard transmissions to camouflage their navigational location. Surveillance technologies can increase detection of environmental crimes and mitigate oceanic impunity in some cases. But emerging technologies can also fortify criminal networks and shadow economies that contribute to it.

C. Sovereignty

The Westphalian system also contributes to oceanic impunity. National maritime jurisdictions established under the 1982 United Nations Convention on the Law of the Sea (“UNCLOS”) prevent the investigation of many offshore environmental crimes.³³ States have criminal jurisdiction over their territorial sea and archipelagic waters, ordinarily the first twelve nautical miles from shore.³⁴ States can further prevent infringements to customs, fiscal, immigration, or sanitary laws and regulations for the next twelve nautical miles where a contiguous zone exists.³⁵ But beyond these waters, state authorities generally lack jurisdiction to investigate or prosecute criminality except on their own flagged vessels or with regard to foreign resource exploitation within their exclusive economic zone.³⁶ Consequently, most of the open ocean lies beyond any national criminal jurisdiction.³⁷

Moreover, even when environmental crimes amount to flagrant violations of domestic criminal law, state authorities routinely fail to enforce criminal laws in their own territorial seas.³⁸

National laws can also facilitate illicit ocean activities. Chinese fishing boats, for example, participate in civilian militia patrols in the South and East China seas. To prevent foreign states and international organizations from tracking these fishing vessels, Chinese national security laws forbid sharing data, including vessel tracking data, with international bodies.³⁹ Under the cover of domestic Chinese law, the fishing vessels go dark in contested waters.

D. Flags of Convenience

Flags of convenience are yet another pervasive dynamic contributing to oceanic impunity. In 1927, the Permanent Court of International Justice (“ICJ”) held all ships subject to the laws of their flag state. Vessels registered to a national territory were required to operate under the domestic laws of that state. UNCLOS later required a vessel owner to have a “genuine link” to its flagged state, though generous interpretations of what constitutes such a link have been commonplace.⁴⁰ Flag state jurisdiction covers criminal enforcement and typically includes oversight of labor and safety standards and international rules as well as maritime law standards.

However, despite its legacy as a foundational principle of maritime law, there is no immediate consequence for a flag state that fails to monitor registered vessel conditions or to prosecute criminal activities aboard. Consequently, flag state enforcement varies considerably.⁴¹ Some states willfully ignore national and international law. Fictitious shell companies linked to the flag country only by a mailing address commonly appear in national vessel registries. Secondary shell companies often are used to further mask vessel ownership. This layered system of corporate ownership means that flag states seeking to enforce criminal codes or regulations may struggle to identify the relevant person or parties, making criminal accountability difficult. Shell companies not only protect secrecy and insulate owners from culpability but also often provide added financial advantages by allowing owners to transfer vessel profits to jurisdictions with lower tax rates. A 2018 study, for example, found that seventy percent of vessels engaged in illegal fishing were flagged in tax haven countries.⁴²

E. Regulation

Reliance on regulatory compliance is another dynamic that contributes to oceanic impunity. Legal scholars have documented the regulatory turn in international law.⁴³ But less attention has been given to how this regulatory turn has undercut criminal accountability for environmental crimes.

Many state officials and environmental groups view ocean protection as a task for administrative agencies, not criminal prosecutors.⁴⁴ Consequently, environmental treaties typically define adjudication procedures for conflicts between parties but seldom include language that explicitly criminalizes treaty violations.⁴⁵ With this regulatory focus, law enforcement tends to respond to ocean crimes retroactively, which makes the collection of evidence challenging and criminal prosecutions less likely.⁴⁶

Further, regulatory approaches tend to place emphasis on guidelines, voluntary codes of conduct, and self-reporting. This often means that international authorities responsible for monitoring compliance shy away from questions of individual criminal culpability for environmental damage. Some fear that insisting on punishments for criminal wrongdoing will threaten regulatory alliances or jeopardize existing conformity to compliance regimes.

Even when domestic laws impose fines for environmental damage or censure offshore activities, authorities often do not seek legal judgments against vessel owners or crew. Individual accountability for environmental harms is rare. Diplomacy and economic policy remain the primary tools state officials use to encourage treaty compliance.

Ocean regulation, while expansive, is also fragmented among countries and within them. National laws governing ocean protection usually involve multiple agencies and complex jurisdictional questions. In the United States, for example, state agencies tend to regulate marine resources in territorial waters, and federal agencies regulate marine resources in the exclusive economic zone (“EEZ”) and continental shelf.⁴⁷ But even these jurisdictional lines are contested. At least twenty-four coastal states, five island territories, and four Native American tribes make claims to jurisdiction over marine resources in the United States’ ocean territories.⁴⁸ Moreover, even when only a single national law applies, management responsibilities for its regulations may involve various subnational and regional regulatory bodies that complicate lines of authority and enforcement efforts.⁴⁹ Regulatory compliance regimes also tend to adopt governance models that focus on specific resources, marine species, or geographic territories. This creates a patchwork of narrow, overlapping, and potentially competing interests and complicates enforcement more than a more wholistic, ecological approach that focuses generally on biodiversity protection and ecological sustainability.

F. Jurisdiction

Conflicts over maritime boundaries are another dynamic of oceanic impunity. Domestic criminal legal systems generally require a nexus between alleged perpetrators’ criminal acts and state claims to maritime jurisdiction. Jurisdictional disputes in contested waters can lead judges to question this nexus and halt criminal investigations and prosecutions. Perpetrators of environmental crimes also purposefully exploit jurisdictional gaps and interstate disputes to avoid obligations under international law.

Although maritime jurisdictions are well defined under UNCLOS, major powers still ignore established maritime limitations. In 2016, for example, the Permanent Court of Arbitration (“PCA”) unanimously rejected China’s claims to historic rights over most of the South China Sea and found that China had violated the Philippines’ sovereign rights by interfering with fishing and resource exploration.⁵⁰ The PCA award, however, did not change Beijing’s territorial claims or dissuade the activities of its military and its civilian maritime militia in the contested waters.⁵¹ In brazen disregard of the PCA, China has continued to claim the disputed seas as its jurisdiction.⁵²

Universal jurisdiction might provide an alternative mechanism to combat serious ocean crimes in the future. Historically, states have relied on universal jurisdiction to prosecute pirates and slave traders as enemies of all humankind.⁵³ However, the international community has yet to apply the principle of universal jurisdiction to environmental crimes.⁵⁴

G. Corruption

Corruption is yet another crucial dynamic that contributes to oceanic impunity. National and coastal economies regularly benefit from oceanic impunity, particularly from fisheries that are unlawfully exploitative.⁵⁵ Intentionally permissive state compliance regimes and local officials who act outside legal boundaries can generate windfall profits for local authorities. State leaders may neglect enforcement in exchange for direct payments. In some cases, they build cottage industries to aid in the illegal collection of certain marine species, such as sharks and whales.⁵⁶ Rewards of such illegal resource exploitation pool with violating states, even as compliant states bear additional costs of attempted criminal enforcement.

Local officials in some countries also partner with organized crime syndicates, which generally diminishes prospects for criminal accountability.⁵⁷ Threats of violence from members of criminal organizations tend to suppress local complaints and severely restrict community cooperation with outside criminal investigations. Environmental crimes perpetrated by organized criminal groups may also be associated with other criminal activities, such as money laundering, trafficking, and forced labor.

II. OCEAN CRIMES

Environmental ocean crimes are not expressly defined under international law.⁵⁸ Despite overwhelming empirical evidence that offshore environmental harms are global problems with impacts far beyond any single national jurisdiction, no global framework defines normative principles or articulates national obligations to combat environmental sea crimes. Instead, criminalizing ocean destruction depends exclusively on national lawmaking and ratification of treaties or environmental agreements.

Several well-established multilateral environmental agreements (“MEAs”) incorporate provisions that criminalize environmental harms at sea.⁵⁹ The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes (“BASEL”), for example, states that “illegal traffic in hazardous wastes or other wastes is criminal.”⁶⁰ The International Convention for the Prevention of Pollution from Ships (“MARPOL”) also authorizes the use of criminal penalties “to discourage violations” of Convention provisions.⁶¹ Countries often impose criminal penalties for trafficked illicit wildlife, including protected marine species, under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”).

These and other MEA criminal provisions are useful in combating oceanic impunity. However, most international environmental agreements still focus on regulatory solutions to specific environmental problems and lack adequate monitoring and enforcement mechanisms. In other words, multilateral agreements may aspire to limit marine pollution, avoid fishery exploitation, or revise shipping regulations, but compliance with these agreements still primarily depends on self-policing and domestic administrative oversight. Even where international agreements contain criminal penalties, states often have wide latitude to interpret their legal obligations and broad discretion in enforcing—or not enforcing—criminal sanctions. Ocean governance continues to rely, ineffectively, on a mosaic of layered customs, treaties, and international environmental agreements that prioritize regulatory solutions and voluntary compliance.⁶²

A. Ocean Pollution

In the Anthropocene, ocean pollution presents unprecedented threats to ocean health. According to the United Nations, ocean pollution constitutes at least eighty-five percent of all marine waste.⁶³ Waste disposal at sea dates to early maritime navigation, but the scale and toxicity of ocean pollution has changed over time. In 2021, for example, maritime enforcement agencies in 67 countries identified 1,600 marine pollution offences worldwide in single month.⁶⁴ Human activities are now responsible for fifty-three percent of petroleum discharges to marine environments.⁶⁵ Illegal oil discharges from commercial vessels are a major source of this ocean pollution.⁶⁶ While several multilateral agreements prohibit ocean dumping, few countries invest significant resources to investigate or prosecute offenders, particularly when dumping occurs beyond national jurisdictions.

States agencies and national militaries also dump harmful waste into oceans. The United States, for example, began to dump radioactive waste into the Pacific Ocean after World War II. Between 1946 and 1970, U.S. vessels discarded more than 55,000 containers of radioactive waste.⁶⁷ The Russian navy adopted similar dumping practices and continued to dispose of nuclear waste in the Sea of Japan until 1993. Even today, countries are actively considering ocean dumping of nuclear waste. Japan, for example, plans to discard about 1.3 million tons of contaminated radioactive water from the Fukushima Daiichi nuclear power plant into the Pacific when storage runs out at the current facility.⁶⁸ Discarded poisons, such as DDT, and toxins leaking from spent military munitions pose similar global ecological and health risks.

Plastics pollution needs greater attention, too.⁶⁹ The rough equivalent of one garbage truck of plastic is dumped into the world’s oceans every minute.⁷⁰ Slow plastic breakdown generates microplastics that ocean currents circulate throughout the world. Scientists now find microplastics in marine life from every kind of ocean habitat, from shallow coral reefs to deep-sea trenches.⁷¹ In May 2019, the Conference of the Parties to the Basel Convention amended Annexes II, VIII, and IX to define plastics as a hazardous waste and outlaw their disposal at sea.⁷² But international governance and oversight remains haphazard and unreliable.⁷³

Ocean dumping is a quintessential global problem. It inevitably impacts waters beyond sovereign territorial boundaries.⁷⁴ Yet few perpetrators are prosecuted for illegal ocean dumping. Without eyewitnesses, investigators often struggle to identify conclusively the precise source of marine pollution. It can also be tricky at trial to prove causality and other elements of criminal offenses, including the perpetrators’ intent or their subjective awareness of the potential for environmental harm. Scientists can detect and measure different types of ocean pollution, but building a case for criminal prosecution generally requires larger-scale investigations by environmental protection and law enforcement agencies.

International law has long struggled to combat toxic pollution. Several international agreements presently prohibit ocean dumping, including the MARPOL and the London Convention.⁷⁵ UNCLOS also requires states to control marine pollution.⁷⁶ Further, several regional agreements ban ocean dumping.⁷⁷ However, enforcement of anti-dumping laws is highly uneven. In some countries, waste disposal is tightly regulated with high penalties for violations of domestic environmental protections. In others, enforcement is non-existent. Reporting and compliance problems also persist at the domestic level, with few options to internationalize enforcement.

Selective international criminalization offers a path forward to hold ocean polluters accountable for harmful dumping on the high seas. Current agreements generally lack powers to punish individual violators, especially when dumping happens beyond a state’s territorial waters. Enforcement depends almost entirely on the actions of domestic officials, who may lack resources or an interest in investigating ocean pollution.

Global courts and international prosecutors often have more autonomy than local officials or state agencies to investigate offshore crimes and bring criminal charges. They can also investigate ocean dumping as a crime of omission and prosecute state inaction to stop ocean dumping. If international investigations document ongoing ocean pollution, prosecutors can either charge polluters or threaten prosecution to encourage compliance with existing international prohibitions. The criminal investigations and option to prosecute, even when international prosecutors elect not to bring criminal charges, also expresses a shared global commitment to ocean protection.

As with other international criminal investigations, state leaders may try to obstruct investigations, a practice that is sometimes effective at impeding the criminal process.⁷⁸ But this should not distract from the expressive power that targeted criminalization gives international prosecutors to bring global attention to serious environmental crimes at sea. The mere public threat of prosecution can deter some kinds of ocean destruction, even when criminal investigations or prosecutions never occur.

B. Illegal, Unreported and Unregulated Fishing

Illegal, unreported, and unregulated (“IUU”) fishing operations are highly-profitable and annually generate between an estimated $10 and $23 billion worldwide.⁷⁹ However, the consequences of IUU fishing can be devastating. IUU fishing depletes fish stocks and inhibits long-term sustainability. It undermines domestic and regional fisheries management and, more universally, ocean conservation. A lack of accountability for IUU fishing can also undercut state governance regimes and disadvantage responsible fishers who abide by existing environmental regulations.⁸⁰

Whales, sharks, turtles, and other protected species have been hunted to near extinction in many regions. IUU fishing tends to target vulnerable marine stocks that are often subject to controls specifically created to prevent fishery collapse. Unreported catches often interfere with essential management plans designed to aid species recovery and to restore the ecological balance, biodiversity, and sustainability of marine environments. IUU fishing also generates food insecurity for coastal communities dependent on local hauls for protein.⁸¹ Absent effective fisheries enforcement, climate change will likely compound these issues.

Prosecuting IUU fishing offenses can be challenging for a variety of reasons. Fishery managers usually have few resources for patrols or boat inspections and depend on fishers’ self-reporting of their catches and fishing methods. At the same time, the absence of high seas patrols makes detection unlikely beyond coastal waters. Illicit operators can hide illegal catches in several ways. Captains can offload catches to bribed port authorities or others complicit with their criminal enterprise. Fish can be processed offshore or relabeled to avoid detection. Crews from vessels employing illicit fishing methods, such as bottom trawling, can mix their catches with fish caught legally before returning to port.

Decentralized IUU fishing operations regularly cross jurisdictional lines, making it difficult to identify or track illegal boats or to target those most responsible for organizing criminal networks.⁸² Migrants and captive fishers may be forced to work on unregistered ghost ships where they engage in various forms of unregulated or illegal fishing. Those who attempt to leave can be shackled, sealed below deck, or even cast overboard.⁸³ State enforcement agencies also regularly ignore IUU fishing practices, which offer short-term benefits to coastal communities or provide supplemental income through patronage networks. Corruption and willful blindness to illegality continues to be a major obstacle to oceanic accountability for IUU fishing.

To be clear, there is no shortage of international agreements on fisheries.⁸⁴ But while UNCLOS and the UN Food and Agriculture Organization (“FAO”) are responsible for investigating IUU fishing, these bodies often hamper criminal accountability for perpetrators. Article 73(3) of UNCLOS, for example, authorizes coastal state penalties for fishing violations in EEZs but explicitly forbids imprisonment of offenders absent a bilateral agreement to the contrary.⁸⁵

State leaders must balance protection of fish stocks under current international and regional fisheries’ agreements against other state interests, including economic growth and national security. Consequently, many state governments take no notice of IUU fishing when other salient national interests are at stake. This partly explains why government IUU prosecutions are exceedingly rare. National law enforcement authorities often tolerate wrongdoing in their own civilian fishing fleets.

Efforts to combat IUU fishing generally focus on regulatory enforcement and treat illegal catches as management problems to be addressed by administrative state agencies rather than free-standing criminal offenses. State prosecutions and official public accounts of IUU fishing frequently attribute criminality to personal greed and rouge captains, even when sophisticated global criminal syndicates are known to run IUU fishing operations.⁸⁶ Targeted international criminalization of IUU fishing can empower international prosecutors to investigate global IUU criminal networks, which often extend beyond any single national jurisdiction.

Some IUU-related crimes, including human trafficking and seafood slavery, are already investigated and prosecuted in national jurisdictions. But international criminalization potentially broadens the scope of criminal culpability to include criminal offenses against the environment. International prosecutors can bypass corrupt port officials and domestic agencies complicit in IUU activities and lead investigations of powerful individuals, including high-ranking corporate financiers, who are involved in global IUU fishing. International criminalization individualizes culpability for serious ecological damages that transgress national jurisdictions. It also facilitates accountability for perpetrators engaged in transnational criminal enterprises that destroy marine environments. Further, following criminal convictions, international courts can order criminal reparations to aid the defense and restoration of depleted fish stocks. Criminalization of grave ocean crimes empowers international courts to serve as sentinels of marine environments.

C. Seabed Destruction

Seabed ecosystems increasingly face threats from illegal trawling and deep-sea mining.⁸⁷ Despite grave and well-documented environmental costs, bottom trawling remains the most common seabed fishing method employed on the high seas.⁸⁸ Deep sea mining exploration and exploitation activities also increasingly threaten seabed environments.⁸⁹

The Clarion-Clipperton Zone (“CCZ”) in the Pacific Ocean is an area roughly the size of Europe, spanning more than 3,000 miles at depths of 12,000 to 18,000 feet.⁹⁰ The CCZ seabed is rich in polymetallic nodules, a potential source of metals needed for lithium-ion batteries and other green energy technologies.⁹¹ Deep-sea mining could begin there in the next few years.⁹² Because the area lies in international waters, the International Seabed Authority (“ISA”) governs mining in the CCZ.⁹³ Companies seeking to mine the area must partner with a UNCLOS member country and apply for authorization from the ISA—a UN agency with fifty employees, a modest annual budget, and a jurisdiction that covers half the world.⁹⁴ As it stands, more than a dozen international companies have exploration contracts for the CCZ.⁹⁵ A 2022 ocean trial conducted by The Metals Company, a Canadian-based mining company that has partnered with Nauru to start mining the CCZ, generated fierce debate and opposition from some UNCLOS member states, including several states that are now seeking a moratorium on deep-sea mining operations.⁹⁶

Understanding the environmental consequences of mining the CCZ is complicated by the depths of mining operations and the current lack of information about deep-sea ecology.⁹⁷ Marine scientists estimate that ninety percent of species living in the region earmarked for mining remain undescribed.⁹⁸ Mining advocates argue that environmental damage from seabed mining is minimal when compared to land-based operations, and underscore the need for manganese, iron, copper, nickel, cobalt, lead, zinc, lithium, and rare earth elements to transition to green energy.⁹⁹ Conservationists strongly disagree with mining advocates about the environmental harms of deep-sea mining. They argue that mining operations will gouge the seabed and cause plumes of sediment to enter the water column and resettle over delicate ecosystems.¹⁰⁰ They seek a moratorium on mining until more environmental assessments can be completed on the impact of mining operations.

Presently, the science on the impact of deep-sea mining is nascent.¹⁰¹ Scientists have limited access to such remote depths and insufficient data on deep-sea species, habitats, and ecosystems. Consequently, deep-sea research has neither produced clear baseline data nor determined how sediment plumes will impact marine life on the sea floor.¹⁰² Scientists continue to identify new marine species during expeditions to the ocean floor but still know little about how mining will impact these species. Many deep-sea species are uniquely adapted living thousands of feet below the surface, where they thrive in near-total blackness and under immense water pressure. At such depths, metabolism and evolution slow, and even minor alterations of the environment can have long-term impacts.

Despite the lack of knowledge about deep-sea species, dozens of countries have started to plan mining operations for the near future. In 2017, Japan was the first country to mine its seabed and chose a location off the coast of Okinawa.¹⁰³ Norway also recently discovered rich seabed deposits and authorized further seabed exploration.¹⁰⁴ Mining companies already have begun prospecting for nodules to assess their size, composition, and economic value.¹⁰⁵ Absent political support for a temporary moratorium on seabed exploitation, large-scale commercial operations will likely begin in the next few years.

In the 1960s, Maltese Ambassador Arvid Pardo declared the seabed “the common heritage of all (hu)mankind.”¹⁰⁶ He advocated for an international governance regime to ensure deep sea resources benefited all of humanity, emphasizing the needs of less developed countries to share in any benefits of seabed exploitation. His advocacy eventually resulted in the Law of Sea Convention and the establishment of the International Seabed Authority. His concern that seabed resources serve our common heritage, in particular, seem prescient today. Technological advances and increased demand for mineral resources have renewed interest in mining the sea floor, especially as land-based mineral deposits decline. But the environmental consequences of such offshore operations are still unknown, and perhaps unknowable in the coming decade.

As demand grows, mining pressures will continue to increase, and more countries will partner with large corporations to exploit the deep sea.¹⁰⁷ Lackluster supervision of deep-sea mining operations and no real threat of criminal prosecution from partner countries creates well-founded fears that mining companies will be able to operate with impunity.¹⁰⁸ Under ISA contractual arrangements, companies are required to undertake baseline studies and conduct annual environmental assessments.¹⁰⁹ The ISA is tasked with judging these environmental assessment plans and determining the likelihood of compliance before they grant mining permits. However, once companies have permits in hand, the system relies on self-policing. Many conservationists believe this lack of mining operations oversight – combined with companies’ profit motive—will inevitably result in a tragedy of the deep-sea commons.¹¹⁰

International prosecutions, however, could help to ensure compliance with ISA regulations and deter companies from intentionally generating severe environmental harms. The possibility of individual criminal punishments for wanton acts of environmental destruction puts company officials on notice.

Further, the reparations processes that follow international criminal prosecutions could provide added resources to coastal communities and oversight agencies if company executives act illegally and conceal their criminal activities. Reparations decisions could also generate funds for the restoration and protection of marine life in the deep sea. Nature is resilient when provided the chance to recover. Criminal prosecutions and post-conviction reparations could help to ensure that environmental damage from mining violations stops with the first bad actor and that damaged sectors have time to recover before other operations can begin.

III. INTERNATIONAL CRIMINALIZATION

No global organization monitors environmental ocean crime or coordinates national enforcement efforts to protect marine environments. As a result, accountability for offshore environmental crimes depends on an incomplete jigsaw puzzle of enforcement regimes. State agencies and international organizations tasked with combatting transnational organized crime or protecting the marine environment from illegal fishing and toxic dumping often lack the capacity to address even the most egregious and visible ocean violations. Few offshore environmental crimes are ever investigated or prosecuted, even when marine scientists and conservation groups document permanent and extensive environmental harms.

Human rights scholars have rightfully criticized the punitive focus of international law, especially when the focus on criminal accountability and retributive punishment eclipses more reparative approaches to human rights and transitional justice. Some scholars argue that the turn to criminal law in international justice distracts from less visible forms of state violence and global efforts to grapple with persistent structures of social inequality.¹¹¹ Under this view, criminalization diverts attention and resources from endeavors to combat poverty, racial discrimination, and enduring forms of colonial domination.

Uncritical criminalization is a disturbing problem, and that is not what I suggest here. However, any serious global effort to address the climate crisis will need enforcement mechanisms to provide greater accountability for environmental harms beyond national jurisdictions. Rapid climate changes and environmental degradation demand innovations to improve ocean governance and ensure ocean protection. Targeted international criminalization of serious ocean crimes can provide critical tools to investigate environmental destruction at sea and to deter future harms.¹¹² Criminalizing environmental atrocities can also reinforce the legal status of oceans as the common heritage of humankind and encourage a shift toward greater ecocentrism in international justice.

International criminalization could also facilitate the investigation and prosecution of transnational criminal networks and other groups acting in concert to circumvent environmental protections even when national officials oppose accountability efforts. Organized criminal syndicates engage in various types of illegal fishing and toxic dumping that pose significant threats to marine environments. International criminalization could enable criminal cases against syndicate members independent of domestic interest or capacity to bring criminal charges.

International criminalization could further authorize criminal charges in cases where state officials fail to undertake obligatory actions to protect marine environments. Willful inaction, at least under certain conditions, amounts to a crime of omission. National environmental laws routinely fail to protect marine environments because state authorities are unwilling to enforce the rule of law. International criminalization could help to outlaw official inaction that results in serious ocean destruction and advance efforts to establish an international environmental duty of care.¹¹³ Even when the international criminal investigation of a state official’s failure to protect the marine environment does not result in criminal charges, it could still encourage greater compliance with existing environmental regulations and improve regional cooperation on ocean governance. International criminalization communicates a global concern for ocean protection that promotes dialogue and cooperation even in the absence of criminal prosecutions. Criminalization of environmental offenses on the high seas could also direct international attention toward invisible ocean harms often neglected by international criminal courts.¹¹⁴

The present incapacity of the international community to hold perpetrators accountable for ocean crimes abandons nearly all maritime enforcement to state and local officials, who often have vested interests in ongoing practices of oceanic impunity. International criminalization, in contrast, offers a potential solution to the problem of state corruption and complicity. Inadequate domestic enforcement of environmental law frequently results in environmental harms that cross borders and warrant international concern. Mare liberum or freedom of the seas has been a foundational principle of ocean law for centuries, dating back to the writings of Hugo Grotius.¹¹⁵ This idea of free seas has remained the backbone of ocean governance. But unconditional free seas are no longer defensible in the Anthropocene. Governance models based solely on the principle of free seas often legitimate careless national policies and encourage exploitation and destruction of vulnerable ocean environments.

Accountability is a primary aim of international justice.¹¹⁶ Yet, no single state institution or solitary judicial body can respond to the complex challenges posed by oceanic impunity. Various organizations, law enforcement agencies, and courts play complementary roles in collective responses to transnational criminality and environmental degradation at sea. International criminalization offers a useful, if limited, means to improve accountability for ocean criminality and better coordinate global responses to offshore environmental destruction.

The following section discusses two options for targeted forms of international criminalization. First, the Article discusses the expanded use of suppression conventions to encourage multilateral criminalization of ocean crimes. Criminalization, under the right conditions, enhances environmental compliance and supports international cooperation. Second, the Article discusses Rome Statute amendments that would allow the ICC to investigate certain oceanic crimes of ecocide. Amending the Rome Statute to include the crime of ecocide could transform the ICC into an environmental court of last resort. However, despite the potential benefits of internationally prosecuting ocean crimes, international criminalization should still be viewed as a limited tool for seeking justice and improving environmental ocean protection.

A. Suppression Conventions and Voluntary Instruments

Suppression conventions are an alternative mechanism for targeted international criminalization. Suppression conventions are multilateral agreements that require signatories to criminalize certain kinds of activities.¹¹⁷ The threshold for criminalization depends upon the objectives of the sovereign states signing the agreement, but the promise of criminalization signals a mutual commitment to transnational enforcement. Suppression conventions, therefore, help coordinate law enforcement responses by defining substantive legal prohibitions, establishing jurisdictional boundaries, and authorizing procedures for cooperation and investigative methods. Historically, suppression conventions have addressed a range of criminal activities from slavery and human trafficking to serious violations of international and customary law.

Suppression conventions that criminalize environmental harms are particularly salient in the context of oceanic impunity because of shortfalls in environmental monitoring and enforcement in EEZs and on the high seas. The freedom of the seas principle generally sanctions unencumbered maritime navigation and unrestricted resource exploitation beyond national jurisdictions, which disincentivizes the monitoring of oceanic harms and often precludes enforcement actions.

Suppression conventions provide two distinct paths for international criminalization. First, state officials can negotiate new stand-alone suppression conventions. These novel agreements could address a broad range of ocean crimes or be tailored to address a specific category of offshore criminality. For example, like-minded states could establish a suppression convention to address biodiversity loss in designated marine protected areas and as part of the convention members states could collectively criminalize specific activities that result in species or habitat destruction. Alternatively, states concerned about protecting migratory routes for pelagic species could negotiate a suppression convention to criminalize fisheries exploitation near migratory seamounts or agree to collectively police important migratory territories.

Because suppression conventions generally require the incorporation of crimes into national criminal codes, the enactment of suppression conventions could also improve monitoring and enforcement within national jurisdictions, thus improving accountability for oceanic impunity in domestic waters. The domestication of environmental crimes in suppression conventions in some instances could also permit investigations and prosecutions of corporate actors, thereby extending corporate liability for offshore environmental crimes. The utility of these stand-alone suppression conventions would be illustrated if and when a smaller group of interested states developed independent suppression conventions and thereby encouraged a larger community of states to recognize specific ocean crimes.

The second path that suppression conventions offer for international criminalization is that lawmakers already bound by an existing convention could seek to amend it or to enact new protocols that expand its scope. For example, States’ parties to the United Nations Convention against Transnational Organized Crime (“UNTOC”) could file a resolution at the UNTOC Conference of the Parties to categorize certain ocean crimes as serious crimes under the existing framework agreement and, thereby, establish mutual obligations to investigate and prosecute those ocean crimes. States’ parties could also otherwise develop a new protocol outside of the existing framework to supplement the UNTOC. Supplemental protocols have the advantage of cultivating new forms of cooperation among treaty members while also preserving general procedural rules and provisions.

Amendments or additional protocols that incorporate new ocean crimes or binding enforcement provisions could strengthen a range of existing international conventions without scrapping or undermining established agreements. For example, the International Convention for the Regulation of Whaling requires member states to take appropriate measures to punish violators of the convention.¹¹⁸ Present provisions, however, do not include any criminal penalties. Likewise, the Convention for the Prevention of Marine Pollution from Land-Based Sources requires member states to ensure compliance and to punish conduct that contravenes the agreement. But again, the present provisions do not explicitly authorize any criminal punishments. Amendments or additional protocols to established conventions could strengthen enforcement regimes by authorizing some criminal punishments.

Voluntary instruments are an alternative to suppression conventions for criminalization of environmentally destructive activities at sea. They generally operate independent of binding commitments negotiated by participating states. These voluntary instruments, for example, might be simple declarations that define a new ocean crime or articulate a shared commitment to investigate and prosecute a specific environmental harm. While such non-binding instruments often depend on implementation agreements and generally function more as regulatory compliance regimes, they can still accelerate multilateral enforcement coordination and legal harmonization in ocean governance. The adoption of voluntary instruments can further express states’ shared commitment to environmental conservation and communicate a more ecocentric approach to international law.

Suppression conventions and voluntary instruments are no panacea for oceanic impunity. However, they are adaptable instruments of multilateralism and, as such, provide alternative pathways for states concerned with ongoing environmental crimes to strengthen environmental monitoring and enforcement at sea.

B. International Criminal Courts

International criminal courts are possible mechanisms to investigate and prosecute oceanic impunity. International criminal law has long acknowledged environmental destruction—from aerial bombing campaigns during the Second World War to Agent Orange defoliation programs in the Vietnam War. However, international prosecutors have not traditionally focused on environmental harms in case selection or charging decisions.¹¹⁹ Most acts that cause serious environmental damage are not defined as international crimes whether perpetrated on land or at sea.

1. Rome Statute

As ratified, only one article in the Rome Statute, the ICC’s legal foundation, addresses environmental crimes. Article 8(2)(b)(iv) defines “war crimes” to include the following:

Intentionally launching an attack in the knowledge that such attack will cause incidental loss of life or injury to civilians or damage to civilian objects or widespread, long-term and severe damage to the natural environment which would be clearly excessive in relation to the concrete and direct overall military advantage anticipated.¹²⁰

Article 8(2)(b)(iv) creates possibilities for environmental war crime prosecutions and expands individualized criminal accountability for environmental offenses committed during armed conflicts.¹²¹ The Article also recognizes environmental damage as a stand-alone offense that need not relate directly to human injuries. In this way, Article 8(2)(b)(iv) moves away from traditional anthropocentrism in international criminal law and closer to an ecocentric vision of international justice.¹²²

However, Article 8(2)(b)(iv) has significant limitations. The definition of environmental destruction requires that harms be “widespread, long-term and severe” but these terms are undefined. As a result, the ICC Office of the Prosecutor (“OTP”) has wide discretion to interpret the language and to decide what kinds of environmental damage fall under the Article’s purview. The exercise of such discretion can irregularly prioritize environmental crimes and raise questions about both fair notice and equitable enforcement.

Article 8(2)(b)(iv) also includes a proportionality requirement that restricts its applicability during armed conflict.¹²³ Acts causing environmental damage must be “clearly excessive” in relation to any anticipated military advantage.¹²⁴ This threshold for disproportionate violations gives military officials significant leeway to defend strategic strikes, even when military actions result in severe environmental harms.¹²⁵ Further, to satisfy the mens rea requirement for the offense international prosecutors must establish the defendant’s subjective knowledge of the attack’s disproportionality, which creates a high threshold that must be crossed to secure convictions for environmental destruction.

Finally, and most concerning, Article 8(2)(b)(iv) only covers environmental damage inflicted during armed conflict.¹²⁶ Environmental crimes that happen in times of peace, therefore, fall outside the scope of the Article.

2. Ecocide

The crime of ecocide could provide a pathway to prosecute serious ocean crimes perpetrated outside of armed conflicts. Campaigns to criminalize ecocide as an international crime began in the 1970s but for decades failed to gain widespread public support.¹²⁷ But growing awareness about environmental degradation and the climate crisis have resurrected past ecocide debates. In February, the European Union Parliament became the first international body to criminalize serious environmental damage as “cases comparable to ecocide.”¹²⁸ Advocates for criminalization now include a range of world leaders from environmentalist Greta Thunberg to Pope Francis.¹²⁹ Viewed amid their concerns about accelerating environmental degradation, supporters emphasize ecocide’s moral force and expressive power.¹³⁰ They argue that ecocide prosecutions would raise the global profile of environmental crimes, which are too often treated as second order crimes.

In 2021, an independent panel of international criminal law experts published a definition of “ecocide” for consideration as an amendment to the Rome Statute.¹³¹ Subsequent debate on the definition evidences burgeoning interest in the criminalization of ecocide.¹³² The panel definition reads: “‘[E]cocide’ means unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts.”¹³³

The proposed definition would significantly broaden the scope of criminal culpability for environmental destruction and clarifies some critical statutory terms. As described above, although ICC prosecutors must establish that international crimes are “severe,” “widespread,” and “long-term,” the Rome Statute does not explicitly define these essential terms.¹³⁴ This lack of statutory clarity would make it difficult for OTP to determine whether specific environmental harms would satisfy the legal threshold for ecocide. The new draft definition solves this problem by clarifying the terms as follows:

“Severe” means damage which involves very serious adverse changes, disruption or harm to any element of the environment, including grave impacts on human life or natural, cultural or economic resources;

“Widespread” means damage which extends beyond a limited geographic area, crosses state boundaries, or is suffered by an entire ecosystem or species or a large number of human beings;

“Long-term” means damage which is irreversible or which cannot be redressed through natural recovery within a reasonable period of time.¹³⁵

In addition to clarification of the legal elements, the independent panel definition enables crimes to be prosecuted during peacetime, discarding the previous requirement to show a nexus between the environmental harm and an armed international conflict. This change recognizes that environmental atrocities frequently happen outside of war. The new definition also criminalizes acts irrespective of their connection to a civilian population or the boundaries of state territories. Individuals can be prosecuted for ecocide even when environmental damage does no harm to people. This change potentially brings corporate officials under the scope of criminal culpability if they engage in unlawful or wanton acts when they are aware of the substantial likelihood of severe and long-term environmental damage.

The proposed definition of ecocide further criminalizes acts of omission under some circumstances. With environmental harms, the failure to act—whether to prevent damage or to stop its continuance—can be as devastating as affirmative acts of destruction. Under the draft definition, global prosecutors would have the ability to investigate perpetrators responsible for serious and ongoing environmental dumping, illegal fishing, or unlawful mining operations. In some cases, even gross failures to prevent greenhouse gas emissions could result in potential criminal liability. Expanded international criminal culpability could help to safeguard domestic environmental protections and encourage criminal investigations of state officials complicit in serious oceanic crimes or other significant crimes against nature. Enlarging the scope of criminal culpability could also improve state compliance with environmental treaties, conventions, and voluntary instruments if the threat of international criminal investigation deters violations by state officials and corporate leaders.¹³⁶

Support for a more ecocentric approach to international criminal justice has not been limited to forces outside the ICC. In recent years, the OTP has gestured toward greater engagement with environmental concerns. In 2016, the OTP issued new guidance requiring international prosecutors to consider environmental consequences in evaluating the gravity of crimes and giving particular weight to crimes that result in environmental destruction, illegal exploitation of natural resources, or illegal dispossession of land.¹³⁷ New guidelines also explicitly recognize environmental destruction as a factor in decisions to launch preliminary investigations and select cases for prosecution.¹³⁸ The OTP customarily selects investigations and prosecutions based on the gravity of alleged crimes and on the degree of responsibility of the alleged perpetrators. In the gravity analysis, prosecutors normally consider the scale, nature, manner of commission, and impact of the alleged crimes on human victims.¹³⁹ Harms to the environment are now also weighed as significant factors in the gravity analysis.

ICC member states have also started to lobby for the crime of ecocide and requested investigations into serious environmental crimes. In 2019, for example, several island nations, including Vanuatu and the Maldives, called for ICC member states to consider the addition of ecocide as a core crime at the annual Assembly of States’ Parties Conference. The ICC has also received at least five formal complaints alleging serious environmental crimes in the Brazilian Amazon, opening a preliminary evaluation of its jurisdiction in one of the cases in 2020.¹⁴⁰ In June 2023, Ukraine officials accused Russia of committing environmental war crimes and ecocide by destroying the Kakhovka dam, which caused severe flooding and environmental damage.¹⁴¹ In February 2024, the ICC Chief Prosecutor, Mr. Karim A.A. Khan KC, announced a new policy initiative to advance accountability for environmental crimes. He stated:

“Damage to the environment poses an existential threat to all life on the planet. For that reason, I am firmly committed to ensuring that my Office systematically addresses environmental crimes in all stages of its work, from preliminary examinations to prosecutions. This latest policy initiative is another commitment to this necessary objective.”¹⁴²

3. Ecocide and Oceanic Impunity

Amending the Rome Statute to include ecocide as a core international crime would likely advance efforts to combat oceanic impunity for several reasons.¹⁴³ Ecocide prosecutions would facilitate ICC investigations of environmental violations committed in the territorial seas of ICC member states and also violations committed by member state nationals. The ICC could claim jurisdiction over ocean crimes committed on ships sailing under member state flags, even when law enforcement authorities in those member states are unwilling or unable to investigate the crimes. While ICC jurisdiction in the EEZs of member states and on the high seas remains in question, ICC investigations would likely avoid some jurisdictional challenges associated with flags of convenience as the most notorious flag states, including Panama and Liberia, are current parties to the Rome Statute.¹⁴⁴

Making ecocide an international crime could also empower international prosecutors to take on a larger role in environmental protection at sea.¹⁴⁵ The ICC operates as an independent judicial institution authorized by the Rome Statute to investigate international crimes and seek accountability even when state officials are complicit in the criminal acts or oppose ICC investigations. As a permanent court of last resort, the ICC has the legal authority to prosecute international crimes when state agencies are unable or unwilling to do so.¹⁴⁶ Arguably, a global court insulated from domestic political pressures and interest groups could more effectively monitor criminality at sea and perhaps intervene before severe and long-term ocean violations arise, thereby preventing future environmental harms.¹⁴⁷

Amending the Rome Statute to include the crime of ecocide could lead to major institutional changes for the ICC.¹⁴⁸ The new crime would broaden the scope of criminal liability to include a range of environmental harms and promote a more ecocentric approach to international justice. For the first time in the history of international criminal law, serious crimes against nature could be prosecuted during peacetime independent of injuries to human beings. Ecocide investigations could also explore forms of “slow violence” that impact the environment.¹⁴⁹ Tasked with a duty to protect nature, the ICC could consider scientific indicators of environmental decline and climate impacts in the gravity analysis of alleged crimes. Ecocide prosecutions might also contribute to public dialogues about justice and accountability for coastal communities impacted by extreme environmental changes.¹⁵⁰ The ICC Chief Prosecutor could take a leading role in shaping the field of international environmental law and global sustainability through preliminary investigations and case selection. Meanwhile, ICC judges could contribute to the development of jurisprudence on international environmental crimes.

Ecocide also potentially expands the significance of the ICC Chief Prosecutor’s proprio motu power and encourages individual informants and nongovernmental sources to report serious environmental crimes directly to the OTP. Under the Rome Statute, ICC inquiries start in one of three ways: member states can refer a situation to the ICC; the UN Security Council, acting under its Chapter VII powers, can refer a situation to the ICC; or the ICC Chief Prosecutor can exercise proprio motu power and independently start an investigation.¹⁵¹ Because the ICC Chief Prosecutor has the power to initiate criminal investigations independent of states, informants with information or evidence about serious environmental crimes would have a direct channel to provide information to the court without involving state officials or domestic law enforcement. Informants might likewise report information about global criminal syndicates to the ICC even when they fear retaliation from syndicate members or domestic authorities. The ICC Chief Prosecutor might also properly exercise proprio motu power to express shared normative commitments to environmental protection.¹⁵²

Ecocide prosecutions over time might also establish ocean crimes as jus cogens offenses and thereby prevent state derogations from obligations to protect the marine environment in future international agreements. International state practice continues to evolve rapidly in response to divergent forms of ocean criminality. Customary law will also need to adapt to new priorities in ocean governance and environmental protection.¹⁵³

International ecocide prosecutions would signal an ecocentric shift in international criminal justice. Ecocide would be the first international crime to address non-human violations outside of armed conflict. In contrast to previous international crimes, a criminal conviction for ecocide would be possible without any evidence of human injury or suffering. By holding out crimes against nature as the moral equivalents of other atrocity crimes, ecocide prosecutions could advance a vision of international justice that recognizes both our ecological interdependence and the intrinsic value of nature.¹⁵⁴ The activities of humanity at sea will likely accelerate in the coming decades and continue to impact climate change.¹⁵⁵ If empowered by the global community to prosecute environmental crimes, the ICC could help to moderate offshore environmental harms by prosecuting those people most responsible for illegal destruction of marine environments and expressing a global commitment to ocean protection.¹⁵⁶

The idea of an environmentalist ICC presently seems utopian. But the climate crisis will transform priorities for criminal accountability and international criminal justice in the next decade. In the meantime, the international community can no longer afford to abdicate responsibility for ocean governance to national authorities. The next generation of international prosecutors must merge international environmental law and international criminal law to respond to the urgent and existential environmental threats to oceans and the planet.¹⁵⁷

CONCLUSION

This Article advances a relational approach to the study of oceanic impunity. Building on scholarship in international criminal law, marine ecology, and relational sociology, the Article proposes targeted international criminalization to increase offshore accountability for severe environmental harms.

National law enforcement has mostly failed to protect marine environments or to combat widespread oceanic impunity. State agencies tasked with investigating offshore criminality routinely have insufficient resources to patrol waters under their jurisdiction. Beyond national jurisdictions, no single organization monitors environmental ocean crimes or coordinates law enforcement efforts.

This Article describes three critical ocean crimes—ocean pollution, illegal fishing, and seabed destruction—and suggests two international options for improving accountability at sea. First, suppression conventions could establish compulsory obligations to criminalize certain ocean crimes and encourage the development of multilateral enforcement regimes. Second, international criminal courts could investigate and prosecute serious environmental crimes. Amending the Rome Statute to include ecocide, for example, could empower ICC prosecutors to investigate serious ocean crimes and allow the ICC to operate as an environmental court of last resort. Targeted forms of international criminalization could also help to harmonize definitions of environmental ocean crimes and improve intelligence sharing and evidence gathering in criminal investigations and prosecutions.

In the Anthropocene, international cooperation to end oceanic impunity is essential to confront the climate crisis. Beyond theories of criminal retribution or deterrence, international criminalization and the investigation of serious environmental harms has expressive value. Environmental prosecutions signal an ecocentric shift in international criminal justice and promote a shared global commitment to ocean protection. Recognizing our inextricable relations with nature, ecocentrism presents an ontological challenge to the traditional anthropocentrism of international criminal law.¹⁵⁸

Healthy oceans and seas will ultimately depend on more than criminalization, however. International criminal prosecutions are insufficient instruments to achieve comprehensive ocean governance, and criminal punishments alone cannot address the most pressing problems facing oceans or coastal communities. Combatting oceanic impunity and ecological disaster requires deeper commitments to international cooperation. In addition to targeted criminalization, state lawmakers must make oceans a priority and collaborate to protect marine biodiversity beyond national jurisdictions, fund international organizations tasked with ocean governance, and establish more marine protected areas.

97 S. Cal. L. Rev. 637

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Stephen Cody*

* Associate Professor of Law, Suffolk University Law School. Thanks to Amanda Beck, Sarah Burstein, Kevin Davis, William Dodge, Andrew Van Duyn, Laurel Fletcher, Maryam Jamshidi, Chimène Keitner, Steve Koh, Cody Corliss, Katerina Linos, Xander Meise, Saira Mohammed, Sharmila Murthy, Julie O’Sullivan, Dan Richman, Wadie Said, Guillermo Garcia Sanchez, Shayak Sarkar, Daimeon Shanks, David Sloss, Melissa Stewart, Pierre-Hughes Verdier, Joshua Weishart, and participants in the Faculty Workshop on Global Criminal Justice at Boston College, the Northern California International Law Scholarship Workshop at Berkeley Law, and the Junior International Law Faculty Workshop at Boston University. All errors are mine.

Cannon Fodder, or a Soldier’s Right to Life

February 2023February 2023Saira Mohamed*

In recent years, hundreds of American service members have died in training exercises and routine non-combat operations, aboard American warships, tactical vehicles, and fighter planes. They have died in incidents that military investigations and congressional hearings and journalists deem preventable, incidents stemming from the U.S. government delaying maintenance of deteriorating equipment or staffing vessels with crews that are too small or sending soldiers and sailors and marines on missions with inadequate training. After someone dies, high-level officials sign off on investigations, declare that those lost will not be forgotten, and occasionally institute changes in training or maintenance. Meanwhile, the law and legal scholarship say nothing about the government’s failures to train and equip service members, reflecting and reinforcing the notion that soldiers offer illimitable service to the state but cannot ask for even the most basic legal protections in return.

These deaths, and the government failures that precede them, have been absent from legal scholarship, but this Article surfaces them and centers them. While U.S. law offers no way to reckon with the lapses in leadership at the heart of such incidents, international human rights law has provided an architecture for understanding government accountability for failures to adequately train or equip service members. And yet, these events continue to go unnoticed.

This Article documents the human rights community’s neglect of these events and of the opportunity to give legal significance to the U.S. government’s failure to protect its own service members, and it situates this neglect in the broader, long-standing conception of soldiers as mere instruments of the state. The corpus of human rights law thus provides a set of categories and doctrines to name and classify the government’s conduct, and it also offers, through its recognition of the legitimacy of a soldier’s claims upon their government, a necessary corrective to a culture of treating American service members as volunteering for unquestioning sacrifice.

Introduction

The term “cannon fodder” is conventionally traced to Shakespeare’s Henry IV, Part 1. The play depicts a process of reconciliation between father and son; King Henry IV must quell a rebellion, and Prince Hal transforms from wayward youth into a valiant fighter. Along the way, Prince Hal’s friend Falstaff, technically a nobleman but penniless and disreputable, contributes to the war effort by taking bribes from “good householders, yeoman’s sons” who can pay to avoid going to war, while gathering up instead a motley crew of men “as ragged as Lazarus” to send to battle.[1] When Hal encounters this band of would-be warriors, he derides them as “pitiful rascals,” but Falstaff—a comic figure who betrays both his heartlessness and his willingness to name the exploitation in which he himself participates—protests that they are fit to serve their purpose: “Tut, tut; good enough to toss; food for powder, food for powder; they’ll fill a pit as well as better.”[2]

Much has changed since the days of Shakespeare. The singsong “food for powder” mutated, first emerging in German as kanonenfutter, before jumping back to English in the current form we now know.[3] War, too, has transformed. Today, war is no longer recognized as a legitimate instrument of foreign policy.[4] Today, a robust body of law governs both the resort to armed force and the conduct of hostilities.[5] Today, the term “cannon fodder” is no longer played for laughs.[6]

And yet, the status of military service members remains murky. We might shift uncomfortably in our seats when Falstaff jokes about the disposable nature of these warriors, but what does it mean to respect the lives of soldiers?[7] In the United States, the answer to this question usually relates to how we treat service members when they return home. We offer them thanks for their service, proper medical care and mental health support, access to education and jobs.[8] On the floor of the House of Representatives, during a debate on a military appropriations bill, Representative Bob Filner embraced these practices as an American tradition, one with roots all the way back to the founding: “General Washington said over 220 years ago,” declared Filner, “The single most important factor in the morale of our fighting troops is a sense of how they’re going to be treated when they come home.”[9]

We say less, however, about what happens to service members while they are serving. When they are fighting wars, yes, we “support the troops”—that much is a “fixed point[] of American politics.”[10] But there is little public discourse, and hardly any legal scholarship, on the U.S. government’s obligations to adequately protect soldiers—despite an urgent need for it. War is of course a dangerous business, one that—in what might be described at the same time as a deal with the devil and a simple reflection of state interests—international law has continued to allow, even with the advent of the corpus of human rights law.[11] But service members are dying and suffering severe injuries not only at the hands of the enemy on the battlefield, but also in incidents deemed “unacceptable” and “preventable” even by military leaders. In the early days of the Iraq War, for example, a secret study by the U.S. Department of Defense found that some eighty percent of marines who died from upper-body wounds could have survived if they had extra body armor—armor that was available but that the Pentagon decided not to provide.[12] These failures of prevention and protection are not limited to combat. In the last fifteen years, hundreds of American service members have died during training exercises and routine non-combat operations, aboard American warships and tactical vehicles and fighter planes.[13] They are given deteriorating equipment or crews that are too small or inadequate training. After someone dies, high-level officials sign off on investigations, declare that those lost will not be forgotten, and occasionally institute changes in training or maintenance.[14]

Meanwhile, the law nearly completely ignores these events. When congressional hearings are convened in the aftermath of these events, their focus is on military readiness, overshadowing questions of the legal obligations of the government or the legal rights of service members.[15] Legal scholarship, despite robust engagement on crucial questions of human rights in wartime,[16] generally focuses on protections for civilians and enemy soldiers, neglecting discussion of what a government owes its service members in proper training, well-maintained equipment, or sufficiently staffed crews.[17] In the pages of U.S. law reviews, the main focus of any analysis of government accountability to service members is the Feres doctrine, which prevents civil suits against the government for injuries sustained incident to military service.[18] But entirely overlooked are the deaths and injuries that stem from inadequate training and shoddy equipment, from putting lives at risk in order to speed operational tempo or rush into deployment. Their absence from the literature suggests that they are seen as routine, part of the job, part of the unquestioning sacrifice for which these individuals have willingly volunteered. Soldiers are expected to give of themselves completely; because they accept the possibility of death on the battlefield on account of their military service, it seems, they must accept the possibility of death outside of it, too. Even if no longer cannon fodder, in the national socio-legal imaginary[19] they have been endowed with a different kind of inhumanity, as individuals whose service is seemingly illimitable, who give their lives but are permitted to ask almost nothing from the governments they serve.[20]

Across the Atlantic, international human rights law paints a starkly different picture. In 2013, the United Kingdom Supreme Court held in Smith v. Ministry of Defence that the British government has an affirmative obligation under human rights law to protect the lives of service members.[21] The suit was initiated by the families of three British soldiers who had been killed in Iraq by roadside bombs when they were traveling in Snatch Land Rovers, vehicles that the government had initially developed in the 1990s to grab suspects off the street in Northern Ireland. As dozens more soldiers died in those vehicles, the Snatch Rovers came to be known in the wars in Iraq and Afghanistan as “mobile coffins”—a far cry from the level of protection that was needed, said the soldiers, their families, and, as would be later revealed, the government itself.[22] The Court held not only that the government’s obligations under the European Convention on Human Rights extends to military service members deployed overseas, but also that the government’s decision to use vehicles that would not adequately protect those individuals could be a violation of its Convention obligations.[23] In the vision of human rights law, the soldier is not expected to sacrifice everything for the state. Instead, the government is expected to fulfill a duty toward the soldier, just as it is expected to protect any other person under its care.

This Article takes as its starting point the juxtaposition of these two vastly contrasting approaches—on the one hand, the expectation of complete sacrifice by a soldier, and on the other, the expectation that the government owes a duty of care to the soldier even while the soldier takes on the significant risks inevitably imposed by the position. From this foundation, it makes two contributions. First, the Article documents the absence of engagement by scholars and practitioners of human rights with the question of U.S. government failures to adequately train and equip military service members. Even though human rights instruments applicable to the United States—including the International Covenant on Civil and Political Rights (“ICCPR”) and the American Declaration on the Rights and Duties of Man—could provide the basis for interpretations similar to Smith in the European system, scholars and advocates have entirely neglected any exploration of whether or how the many failures of the U.S. government leading to service member injuries and deaths may constitute violations of its human rights obligations.[24] This Article fills that gap. Second, the Article situates this neglect within the law’s broader failure to recognize the soldier as an individual endowed with human rights, and it analyzes the consequences of conceiving of soldiers as rights-bearers. Debating the government’s obligation to train and equip service members through the language and legal framework of rights emphasizes that soldiers are agents, not mere instruments of the state who can be disposed of however the government chooses. In so doing, recognition of the soldier’s human rights can chip away at the expectations of unquestioning sacrifice that pervade social and legal treatment of service members.

This Article intervenes in a burgeoning literature on the applicability of international human rights in armed conflict and specifically on the meaning of the right to life in armed conflict. As bodies such as the International Court of Justice and the Human Rights Committee have articulated the scope and application of particular human rights in armed conflict,[25] some scholars have considered how and whether obligations of the law of war, such as the principle of distinction and the requirement of proportionality in attack, should be interpreted to incorporate the human rights protection against arbitrary deprivation of life.[26] Others, meanwhile, have argued that the criminalization of aggression should be understood as rooted in the protection of the right to life in armed conflict.[27] Overlooked in this literature, however, have been the deaths of service members described by journalists and members of Congress and official government investigations as “preventable”[28]: deaths that are traced to failures to properly maintain ships and aircraft and land vehicles and their treads and navigation systems and propellor blades; deaths that stem from failures to adequately train service members to use the equipment they are responsible for;[29] deaths that—like those of Phillip Hewett and Lance Ellis, the British soldiers whose deaths gave rise to Smith—can be traced to decisions on the part of the state to underequip soldiers for combat.[30]

It is these deaths that the Smith case and its underlying principles speak to but that human rights law and scholarship have not yet adequately considered. And it is these deaths to which this Article turns its attention, not only explaining the relevance of human rights law in identifying the U.S. government’s responsibility for training and equipping its service members, but also offering a normative argument for why rendering these deaths a matter of human rights law should form a part of the larger human rights project of subjecting war to its regulation.[31] In short, this Article hopes to do these soldiers justice.

This Article proceeds in three parts. To situate the arguments of this Article in recent events, Part I presents an account of two collisions of Navy destroyers that caused the deaths of seventeen sailors in 2017. The goal of this Part is primarily descriptive, as these are events that have clear parallels with the facts underlying Smith and that have clear legal implications, and despite that, they have received no dedicated attention in legal scholarship.[32] These collisions, replete with high-level leaders’ preventable errors and even negligence, offer representative examples that ground Part II, which explains the legal characterizations that are available to describe these deaths under the frameworks available both in U.S. law and in international human rights law. Part III documents how and analyzes why situations like these collisions remain overlooked. It first explains how the human rights approach discussed in Part II could be used to seek accountability for the U.S. government’s failures with respect to incidents like the McCain and Fitzgerald collisions, and so many more. It then turns to detailing and explaining the absence of any such efforts in human rights law and to analyzing the significance of a human rights framing of situations like the Navy collisions. Bringing human rights law to bear on the U.S. government’s failures to adequately equip and train its troops not only makes clear that war is no longer off-limits to human rights as a general matter, but it also declares with the authority of law that soldiers are not to be sacrificed unquestioningly to the cause of war. By bringing service members’ lives more squarely into its realm, human rights law rejects the notion that soldiers are mere cannon fodder to be disposed of however the state pleases.

[1]. William Shakespeare, Henry IV, Part 1 act 4, sc. 2, ll. 2382, 2392.

[2]. Id. ll. 2433–35.

[3]. Charles Edelman, Shakespeare’s Military Language: A Dictionary 132–33 (2000).

[4]. See U.N. Charter art. 2 (prohibiting non-defensive use or threat of armed force by states); Mary Ellen O’Connell, The power and Purpose of International Law: Insights from the Theory & Practice of Enforcement 180 (2008); see also Saira Mohamed, Restructuring the Debate on Unauthorized Humanitarian Intervention, 88 N.C. L. Rev. 1275, 1317–21 (2010) (discussing the nature of military force as a community instrument under the U.N. Charter system). See generally Oona A. Hathaway & Scott J. Shapiro, The Internationalists: How a Radical Plan to Outlaw War Remade the World (2017).

[5]. E.g., Jakob Kellenberger, Foreword to Jean-Marie Henckaerts & Louise Doswald-Beck, Customary International Humanitarian Law, Volume 1: Rules xv, xv–xvii (2009).

[6]. See David Ellis, Falstaff and the Problems of Comedy, 34 Cambridge Q. 95, 99–100 (2005).

[7]. This Article uses “soldier” in the colloquial sense, that is, to describe a person who serves in the military. The term thus includes not only those in a state’s army, but also services such as the air force or navy. See Soldier, Merriam-Webster’s Collegiate Dictionary (11th ed. 2012).

[8]. E.g., Phillip Carter, What America Owes Its Veterans: A Better System of Care and Support, Foreign Affs., Sept./Oct. 2017, at 115.

[9]. 154 Cong. Rec. 9238 (2008) (statement of Rep. Bob Filner); see also, e.g., Loretta Sanchez, What We Owe Our Troops, Hill (May 20, 2015, 8:35 PM), https://thehill.com/special-reports/
tommorrows-troops-may-21-2015/242772-what-we-owe-our-troops [https://perma.cc/PY73-FPPV].

[10]. Cheyney Ryan, Democratic Duty and the Moral Dilemmas of Soldiers, 122 Ethics 10, 18–19 (2011).

[11]. See Karima Bennoune, Toward a Human Rights Approach to Armed Conflict: Iraq 2003, 11 U.C. Davis J. Int’l L. & Pol’y 171, 174–75 (2004); Frédéric Mégret, What Is the Specific Evil of Aggression, in The Crime of Aggression: A Commentary 1398, 1432 (Claus Kreß & Stefan Barriga eds., 2017); Thomas W. Smith, Can Human Rights Build a Better War?, 9 J. Hum. Rts. 24, 24 (2010).

[12]. Michael Moss, Pentagon Study Links Fatalities to Body Armor, N.Y. Times (Jan.
7, 2006), https://www.nytimes.com/2006/01/07/politics/pentagon-study-links-fatalities-to-body-armor.
html [https://perma.cc/JF67-55P9].

[13]. See, e.g., Nat’l Comm’n on Mil. Aviation Safety, Report to the President and the Congress of the United States 1 (2020) [hereinafter NCMAS Report]; Nat’l Transp. Safety Bd., NTSB/MAR-19/01 PB2019-100970, Marine Accident Report: Collision Between US Navy Destroyer John S McCain and Tanker Alnic MC, Singapore Strait, 5 Miles Northeast of Horsburgh Lighthouse, August 21, 2017, at 21 (2019) [hereinafter NTSB Report].

[14]. See, e.g., Hearing to Receive Testimony on the United States Indo-Pacific Command and United States Forces Korea in Review of the Defense Authorization Request for Fiscal Year 2020 and the Future Years Defense Program: Hearing Before the S. Comm. on Armed Servs., 116th Cong. 82 (2019) [hereinafter Indo-Pacific Command Hearing] (statement of Admiral Philip S. Davidson) (explaining that he “produced a 170-page report with 58 recommendations” after the two Naval collisions of 2017 and that “the Navy has been moving out on those recommendations to provide the kind of unit personnel training, to provide advice and resources to the type commanders, the fleet commanders, the Naval Systems Command, all with recommendations to improve [the] situation”).

[15]. See, e.g., Navy Readiness—Underlying Problems Associated with the USS Fitzgerald and USS John S. McCain: Hearing Before the Subcomm. on Readiness & Subcomm. on Seapower and Projection Forces of the H. Comm. on Armed Servs., 115th Cong. 21 (2017) [hereinafter Joint Subcommittees 2017 Hearing]; Recent United States Navy Incidents at Sea: Hearing Before the S. Comm. on Armed Servs., 115th Cong. 6 (2017) [hereinafter SASC September 2017 Hearing]. During the Senate Armed Services Committee Hearing, Senator John McCain emphasized obligation during his opening remarks, when he noted “our sacred obligation to look after the young people who . . . serve in [our] military.” SASC September 2017 Hearing, supra, at 3.

[16]. See, e.g., International Humanitarian Law and International Human Rights Law (Orna Ben-Naftali ed., 2011) (collecting essays on interaction between international humanitarian law and human rights law); Theoretical Boundaries of Armed Conflict and Human Rights (Jens David Ohlin ed., 2016) (same).

[17]. See infra notes 205–07 and accompanying text (discussing limited scholarship on these questions); Saira Mohamed, Abuse by Authority: The Hidden Harm of Illegal Orders, 107 Iowa L. Rev. 2183, 2212–17 (2022) (discussing international law obligations of a state toward its own soldiers).

[18]. See Feres v. United States, 340 U.S. 135, 146 (1950); infra Section II.A (discussing the Feres doctrine).

[19]. See Charles Taylor, Modern Social Imaginaries 23–26 (2003) (explaining the idea of the “social imaginary,” on which the concepts of the legal imaginary and sociolegal imaginary draw, as “the ways people imagine their social existence, how they fit together with others, how things go on between them and their fellows, the expectations that are normally met, and the deeper normative notions and images that underlie these expectations”); see also Cornelius Castoriadis, The Imaginary Institution of Society 145 (Kathleen Blamey trans., 1987) (describing the social imaginary as that “which gives a specific orientation to every institutional system, . . . the source of that which presents itself in every instance as an indisputable and undisputed meaning, the basis for articulating what does matter and what does not”).

[20]. See infra Section III.A.2.

[21]. See Smith v. Ministry of Defence [2013] UKSC 41.

[22]. James Sturcke, SAS Commander Quits in Snatch Land Rover Row, Guardian (Nov. 1, 2008, 5:17 AM), https://www.theguardian.com/uk/2008/nov/01/sas-commander-quits-afghanistan [https://
perma.cc/5926-2JJ8]; Comm. of Privy Couns., 11 The Report of the Iraq Inquiry 23–24 (2016) [hereinafter Chilcot Report].

[23]. See infra Section II.B.

[24]. See infra Section III.A.

[25]. See, e.g., Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, 1996 I.C.J. 226 (July 8); Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, 2004 I.C.J. 136 (July 9); Armed Activities on the Territory of the Congo (Dem. Rep. of the Congo v. Uganda), Judgment, 2005 I.C.J. 168 (Dec. 19); Hum. Rts. Comm., General Comment No. 36 (2018) on Article 6 of the International Covenant on Civil and Political Rights, on the Right to Life, ¶¶ 64, 69–70, U.N. Doc. CCPR/C/GC/36 (Oct. 30, 2018) [hereinafter General Comment 36].

[26]. See, e.g., Michael Newton & Larry May, Proportionality in International Law 121–54 (2014); Evan J. Criddle, Proportionality in Counterinsurgency: Reconciling Human Rights and Humanitarian Law, in Counterinsurgency law: New Directions in Asymmetric Warfare 24, 34 (William Banks ed., 2013).

[27]. See Tom Dannenbaum, The Crime of Aggression, Humanity, and the Soldier 13 (2018); Mégret, supra note 11, at 1428, 1440–44; see also Eliav Lieblich, The Humanization of Jus ad Bellum: Prospects and Perils, 32 Eur. J. Int’l L. 579, 581 (2021).

[28]. E.g., Update on Navy and Marine Corps Readiness in the Pacific in the Aftermath of Recent Mishaps, Hearing Before the Subcomm. on Seapower and Projection Forces & the Subcomm. on Readiness of the H. Comm. on Armed Serv., 116th Cong. 2 (2020) (statement of Hon. Robert J. Wittman, Ranking Member, Subcomm. on Seapower and Projection Forces) (describing “loss of life associated with Navy surface forces and Marine Corps aviation forces” as “preventable”); id. at 4 (statement of Hon. John Garamendi, Chair, Subcomm. on Readiness) (describing sailors and marines’ deaths in surface ship and aviation incidents as “preventable”); U.S. Gov’t Accountability Off., GAO-21-361, Military Vehicles: Army and Marine Corps Should Take Additional Actions to Mitigate and Prevent Training Accidents 26 (2021); see also U.S. Dep’t of the Navy, Report on the Collision Between USS Fitzgerald (DDG 62) and Motor Vessel ACX Crystal and Report on the Collision Between USS John S. McCain (DDG 56) and Motor Vessel ALNIC MC 20, 59 (2017), https://s3.document
cloud.org/documents/4165320/USS-Fitzgerald-and-USS-John-S-McCain-Collision.pdf [https://perma.
cc/5D5U-L52T] [hereinafter Navy Reports on Fitzgerald and McCain] (describing collisions as “avoidable”); Alex Horton & Gina Harkins, Military’s Effort to Reduce Deadly Vehicle Accidents Deemed Inadequate, Wash. Post (July 14, 2021, 4:55 PM), https://www.washingtonpost.com/national-
security/2021/07/14/military-rollover-deaths-gao-report [https://perma.cc/NWT9-9DWG] (discussing findings of a Government Accountability Office report on noncombat tactical vehicle accidents that the “military didn’t take sufficient action to reduce . . . grievous, preventable incidents” causing the deaths of more than 120 service members in a decade).

[29]. See infra Part I.

[30]. See 11 Chilcot Report, supra note 22, at 23–24.

[31]. This Article focuses on the U.S. military, but these concerns are not unique to the United States. The Smith case of course deals with the United Kingdom’s involvement in Iraq, but the same concerns have been raised with respect to its military actions in Afghanistan, and the Italian government, too, has been accused of not adequately equipping its soldiers. Cecilia Åse, Monica Quirico & Maria Wendt, Gendered Grief: Mourners Politicisation of Military Death, in Gendering Military Sacrifice: A Feminist Comparative Analysis 145, 155 (Cecilia Åse & Maria Wendt eds., 2019). Similar questions could be raised regarding the lack of proper training and equipment of Israeli soldiers in the 2006 Lebanon War. See Press Release, PM Received the Final Winograd Report (Jan. 30, 2008), https://www.
gov.il/en/Departments/news/spokewinog300108 [https://perma.cc/S443-6R8C]; see also Anthony H. Cordesman with George Sullivan & William D. Sullivan, Ctr. for Strategic & Int’l Stud., Lessons of the 2006 Israeli-Hezbollah War 57–59, 92, 95–98 (2007).

[32]. As of July 2021, these events appear in a total of five articles in Westlaw’s Law Reviews and Periodicals database, and in those five, their mention is limited to a few lines at most and is ancillary to arguments unrelated to government obligations to protect soldiers. See Michael C.M. Louis, Dixie Mission II: The Legality of a Proposed U.S. Military Observer Group to Taiwan, 22 Asian-Pac. L. & Pol’y J. 75, 112 (2021) (using the crashes as examples of the customary international law principle that “any foreign vessel in distress has a right of entry to any port”); Tod Duncan, Air & Liquid Systems Corporation v. DeVries: Barely Afloat, 97 Denv. L. Rev. 621, 638 (2020) (noting a brief, in discussion of the doctrine of “special solicitude” afforded to sailors, that mentions the collisions as evidence for the assertion that “today’s maritime work is precarious”); Justin (Gus) Hurwitz, Designing a Pattern, Darkly, 22 N.C. J.L. & Tech. 57, 79 (2020) (using the McCain’s touch-screen failures as “example[s] of the complexity and stakes of design decisions”); Arctic L. & Pol’y Inst., Arctic Law & Policy Year in Review: 2017, 8 Wash. J. Env’t. L. & Pol’y 106, 220 (2018) (listing collisions in section on marine casualties and noting that they and other collisions “provide new insight into the risks posed by vessel traffic in the Arctic”); Erich D. Grome, Spectres of the Sea: The United States Navy’s Autonomous Ghost Fleet, Its Capabilities and Impacts, and the Legal Ethical Issues That Surround, 49 J. Mar. L. & Com. 31, 43–44 (2018) (mentioning the McCain and Fitzgerald collisions to support an argument in favor of a “ghost fleet” that could avoid dangers posed to ships in the South China Sea region).

* Professor of Law, University of California, Berkeley, School of Law. For helpful comments and conversations, I am grateful to Nels Bangerter, Lori Damrosch, Laurel Fletcher, Monica Hakimi, Julian Jonker, Eliav Lieblich, Christina Parajon Skinner, David Zaring, and participants in the Columbia Law School International Criminal Law Colloquium and the Wharton Legal Studies and Business Ethics Faculty Seminar. I thank the editors of the Southern California Law Review for their contributions. Toni Mendicino, Jennifer Chung, Anthony Ghaly, Dara Gray, Diana Lee, and Jenni Martines provided invaluable research assistance.

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Closing International Law’s Innocence Gap

May 2022May 2022Brandon L. Garrett*, Laurence R. Helfer†, Jayne C. Huckerby‡

Over the last decade, a growing number of countries have adopted new laws and other mechanisms to address a gap in national criminal legal systems: the absence of meaningful procedures to raise post-conviction claims of factual innocence. These legal and policy reforms have responded to a global surge of exonerations facilitated by the growth of national innocence organizations that increasingly collaborate across borders. It is striking that these developments have occurred with little direct help from international law. Although many treaties recognize extensive fair trial and appeal rights, no international human rights instrument—in its text, existing interpretation, or implementation—explicitly and fully recognizes the right to assert a claim of factual innocence. We label this omission international law’s innocence gap. The gap appears increasingly anomalous given how foundational innocence protection has become at the national level, as well as international law’s longstanding commitment to the presumption of innocence, fair trial, and other criminal process guarantees. We argue the time has come to close this innocence gap by recognizing a new international human right to assert post-trial claims of factual innocence.

* L. Neil Williams, Jr., Professor of Law, Duke University School of Law and Director, Wilson Center for Science and Justice, Duke University School of Law. bgarrett@law.duke.edu.

† Harry R. Chadwick, Sr. Professor of Law, Duke University School of Law and Permanent Visiting Professor, iCourts: Centre of Excellence for International Courts, University of Copenhagen. helfer@law.duke.edu.

‡ Clinical Professor of Law, Director, International Human Rights Clinic, Duke University School of Law. huckerby@law.duke.edu.

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Extraterritorial Enforcement of the Foreign Corrupt Practices Act: Asserting U.S. Interest or Foreign Intrusion?

April 2020April 2024Evan Forbes

Postscript | International Law
Extraterritorial Enforcement of the Foreign Corrupt Practices Act: Asserting U.S. Interest or Foreign Intrusion?
by Evan Forbes*

Vol. 93, Postscript (April 2020)
93 S. Cal. L. Rev. Postscript 109 (2020)

Keywords: International Law, FCPA

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INTRODUCTION

United States enforcement of the Foreign Corrupt Practice Act’s (“FCPA”) anti-bribery statutes has been scrutinized since Jimmy Carter signed it into law in 1977. The FCPA has an extraterritorial jurisdictional reach, meaning its provisions can apply to individuals outside of the United States. But how far did Congress intend to expand the FCPA’s jurisdiction? How far should we extend extraterritorial jurisdiction of our anti-bribery statutes? What is the proper boundary between enforcing American law and respecting foreign sovereignty?

Part II will argue that, as a matter of statutory interpretation and policy, the government should be allowed to prosecute accomplices to FCPA violations, even when they are beyond the extraterritorial reach of the FCPA’s principal liability. Section II.A will argue that the Hoskins Court misapplied the Gebardi principle and the presumption against extraterritoriality and that, as a matter of statutory interpretation, accomplice liability’s extraterritorial reach extends beyond those who can substantively violate the FCPA. Section II.B will argue that principles of international law allow the U.S. government to prosecute Hoskins. Section II.C will argue that expanded accomplice liability is necessary as a matter of policy. The conclusion will recommend that the Supreme Court take action and hold that accomplice liability is extended to foreign nationals that conspire with principal offenders of the FCPA, even if they cannot be held liable as principal offenders. It will also recommend that, in the absence of a Supreme Court decision, Congress should explicitly expand accomplice liability’s extraterritorial reach beyond the FCPA’s principal liability.

I. LEGAL BACKGROUND

A. The Foreign Corrupt Practices Act: History, Content, And Amendments

1. Origins of the Foreign Corrupt Practices Act

The United States began to acknowledge the problem of foreign bribery after Watergate.[1] As part of the Watergate investigation, the Special Prosecutor’s office investigated illegal domestic election payments made by corporations.[2] In doing so, they discovered that many corporations used slush funds outside of their normal financial accountability systems to bribe foreign government officials.[3] This prompted the SEC to investigate the scope of foreign bribery, which resulted in over 400 companies disclosing that they had spent over $300 million bribing foreign officials.[4] Congress expanded on the SEC’s work through the “Church Committee,” a select committee formed in part to investigate the foreign bribery problem.[5] After months of hearings, the Committee concluded that foreign bribery was a serious and complex problem that administrative agencies lacked the power to address.[6]

At this time, many in Congress called for a ban on foreign bribery.[7] Their policy justifications varied. Some argued that foreign bribery had profound consequences on U.S. foreign policy and foreign reception of U.S. enterprise.[8] Others argued that foreign bribery created a risk of corroding the free-enterprise system itself.[9] And still others argued that an anti-bribery bill would “set a standard of honesty and integrity in our business dealings not only at home but also abroad.”[10] But many in Congress remained skeptical. They argued that foreign bribery was a worldwide problem, and unilaterally prohibiting it would disadvantage American corporations in their dealings abroad.[11] But the voices calling for a foreign bribery prohibition prevailed, and Congress passed the Foreign Corrupt Practices Act, which President Carter signed into law in 1977.[12] At the time, it was the “first law in the world governing domestic business conduct with foreign government officials in foreign market[s].”[13]

2. The FCPA of 1977

The FCPA’s anti-bribery statute prohibited (1) corruptly paying, offering to pay, promising to pay, or authorizing the payment of money, a gift, or anything of value; (2) to a foreign official; (3) in order to obtain or retain business.[14] Compared to today’s FCPA, the 1977 version contained a narrow jurisdictional reach. Under the original framework, Congress limited the FCPA’s jurisdiction to two groups: (1) “issuers,” a foreign or domestic company that is publicly listed on U.S. stock exchanges or that is required to register with the SEC pursuant to other provisions of the Securities Exchange Act of 1934;[15] and (2) individuals and corporations that were a “domestic concern,”[16] which was limited to citizens and U.S. nationals and corporations owned by U.S. citizens or nationals that had a principal place of business in the U.S. or its territories.[17]

3. The OECD Anti-Bribery Convention

Although the enactment of the FCPA was a historic step in anti-bribery legislation, politicians and corporations continued to criticize the FCPA for placing U.S. firms at a competitive disadvantage internationally.[18] As the only country in the world with a foreign bribery ban, American entities played on a “lopsided playing field,” competing for government contracts with foreign companies not bound by anti-bribery laws.[19]

To solve this problem, in 1988 Congress asked the President to pursue an international anti-corruption agreement with member nations of the Organization of Economic Cooperation and Economic Development (“OECD”).[20] After seven years of investigation, the OECD member countries concluded that “it [was] necessary to criminalise the bribery of foreign public officials in an effective and co-ordinated manner.”[21] That year, the OECD Committee on International Investment and Multinational Enterprises (“CIME”) created a report with recommended provisions to combat bribery.[22] After some technical amendments, the OECD agreed to the recommendations, and on December 18, 1997, the OECD members adopted the recommendations as the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“Anti-Bribery Convention”).[23]

The Anti-Bribery Convention signatories agreed to enact legislation that would make bribery of foreign officials a criminal offense and take measures to ban bribery of foreign public officials to gain an “improper advantage in the conduct of international business.”[24] Regarding jurisdiction, the Anti-Bribery Convention called upon signatories to “establish its jurisdiction over the bribery of a foreign public official when the offence is committed in whole or in part in its territory.”[25] It also called on countries to “[interpret jurisdiction] broadly so that an extensive physical connection to the bribery act is not required.”[26] Further, when two signatories had jurisdiction over the same wrongful act, the Convention called on the signatories to “consult with a view to determining the most appropriate jurisdiction for prosecution.”[27] The Clinton Administration hailed the Anti-Bribery Convention as a “victory for good government, fair competition and open trade,”[28] and the Senate unanimously approved the Anti-Bribery Convention on July 31, 1998.[29]

4. 1998 Amendments to The FCPA

Although much of the Anti-Bribery Convention was modeled after the FCPA,[30] Congress had to modify the FCPA to comply with the Anti-Bribery Convention. Particularly, Congress had to expand the FCPA’s jurisdictional reach. To meet the Anti-Bribery Convention’s guidelines, Congress expanded criminal liability to two groups: first, to foreign nationals who used “any means or instrumentality of interstate commerce” or acted in furtherance of an FCPA violation;[31] second, to U.S. nationals who violated the FCPA while outside of the United States.[32] In doing so, “Congress abandoned its previous reticence and instead broadly asserted U.S. jurisdiction over foreign nationals, even those who may not have been physically present in the United States.”[33] However, despite these changes, Congress reaffirmed that the government should assert jurisdiction only “when consistent with national legal and constitutional principles.”[34]

5. Current FCPA Enforcement

Today, U.S. enforcement of the FCPA is controversial. Some commentators fear that U.S. prosecutors interpret the FCPA’s extraterritorial reach too liberally.[35] And because prosecutors resolve almost all FCPA charges without the courts (via settlements and plea agreements), they are free to interpret the FCPA largely unchecked.[36] Critics worry that by expanding extraterritorial reach and arresting too many foreign nationals, the international community may perceive the FCPA “as a culturally arrogant encroachment on their ability to govern activities exclusively within their own borders, in accordance with international law principles on territorial sovereignty.”[37]

B. Accomplice Liability and The Gebardi Principle

Critics argue that the DOJ prosecuted the defendant in Hoskins by expanding FCPA jurisdiction with an overly liberal theory of liability.[38] To understand the government’s theory of liability, we must first understand accomplice liability and its exceptions.

1. Accomplice Liability: The Basics

Accomplice liability is a fundamental principle in criminal law. Under 18 U.S.C. § 2, a person who “aids, abets, counsels, commands, induces or procures” the commission of a crime is punishable to the same extent as the person who committed the crime (the “principal”).[39] Accomplice liability applies to “all federal criminal offenses,”[40] which means that the government can hold a person liable for any crime if (1) they committed the crime or (2) they served as an accomplice to the crime. For the purposes of criminal liability, the federal government treats both equally.[41] Accomplice liability is a powerful tool because prosecutors can charge a person as an accomplice even if they are “incapable of committing the substantive offense.”[42]

2. The Gebardi Principle

Although the accomplice liability statute applies to all criminal offenses, there are a few narrow exceptions to blanket accomplice liability. One such exception is a rule of statutory construction known as the “Gebardi principle.” The Gebardi principle seeks to shield individuals from accomplice liability when Congress, through statutory language, shows an affirmative intent to shelter them from criminal liability.[43] The principle originates from Gebardi v. United States, a 1932 Supreme Court case in which two defendants, a man and woman, were charged with violating the Mann Act.[44] The Mann Act proscribed knowingly transporting “any woman or girl” in interstate commerce “for the purpose of prostitution, debauchery, or for any other immoral purpose.”[45] In Gebardi, a female voluntarily followed a male across state lines to engage in adultery with him.[46] Both were arrested.[47] The male defendant was charged with violating the Mann Act by transporting the female across state lines for an immoral purpose (adultery).[48] The woman, however, could not be charged as a principal under the Mann Act, because she had not transported a woman or girl. To circumvent this problem, the government charged her by using accomplice liability, arguing that she had aided the man in transporting herself across state lines by voluntarily going.[49] Both were convicted, and the female defendant appealed.[50]

The Supreme Court reversed the female defendant’s conviction and articulated a rule of statutory construction that serves as an exception to blanket accomplice liability.[51] The Court held that when a statute proscribes a criminal conspiracy that must involve two classes of individuals, and the statute does not assign principle liability to one of those classes, the government cannot punish the other class via accomplice liability.[52] For example, every “Mann Act conspiracy” involves two classes of individuals: (1) the woman being transported and (2) the person transporting her. By assigning principal liability to one class of individual (the person transporting the woman) and not the other (the woman being transported), Congress showed an affirmative intent not to punish the woman being transported; using accomplice liability to punish her would frustrate congressional intent.[53]

Some circuit courts have broadened the Gebardi principle.[54] Whereas the Gebardi principle initially operated as a rule of statutory construction (meaning the statute’s construction itself had to show a legislative intent), some courts now delve into legislative history and congressional records to intuit a policy for or against prosecutorial immunity from accomplice liability.[55] The Second Circuit case United States v. Amen provides an example of this broadened interpretation.[56] In Amen, the court faced a Gebardi question regarding “drug kingpin statutes,” special statutes that give heavy penalties to organizers, supervisors, or managers of a continuing criminal enterprise engaged in a series of felony narcotics violations when they are conducted with five or more persons.[57] One of the defendants assisted a kingpin in communicating with his subordinates and performed tasks for the kingpin.[58] Prosecutors sought to charge him with aiding and abetting the kingpin.[59] The Second Circuit, however, held that the man could not be charged with accomplice liability.[60] But instead of relying strictly on the statute’s text to infer Congress’s intent, the Second Circuit relied on legislative history to conclude that Congress did not intend to hold “lower level individuals” criminally liable under the drug kingpin statutes.[61]

C. Presumption Against Extraterritoriality

Understanding Hoskins also requires an understanding of the presumption against extraterritoriality. Although Congress has the authority to apply its law outside of the United States, courts have long presumed that U.S. laws apply only to U.S. states and territories unless Congress clearly indicates otherwise.[62] In the past twenty years, the most famous assertion of the principle comes from Morrison v. National Australia Bank, which states that “[w]hen a statute gives no clear indication of an extraterritorial application, it has none.”[63] However, in the past, courts have generally ruled that when a statute has an extraterritorial reach, accomplice liability can cover extraterritorial conduct even when that conduct would not fall under the statue’s principal liability.[64]

D. United States v. Hoskins

The FCPA, the Gebardi principle, and the presumption against extraterritoriality came together in Hoskins.[65] Hoskins centered around Alstom S.A. (“Alstom”), a multinational company headquartered in France with subsidiaries across the world.[66] The defendant, Lawrence Hoskins, was employed by Alstom’s United Kingdom subsidiary and was working in France at the time of the events at issue.[67] The Department of Justice (“DOJ”) alleged that, while working in France, Hoskins selected two consultants in the Alstom U.S. subsidiary and authorized them to bribe Indonesian officials.[68] Hoskins himself never worked for Alstom’s U.S. subsidiary in a direct capacity,[69] and although Hoskins emailed and called the U.S.–based consultants, he did not travel to the U.S. during the scheme.[70] Because of this, he could not be charged with principally violating the FCPA.[71] So the DOJ turned to accomplice liability and charged him with aiding and abetting the U.S. consultants’ FCPA violations.[72] Hoskins sought dismissal of this charge,[73] and the Second Circuit agreed, rejecting the DOJ’s use of accomplice liability and holding that, for the purposes of the FCPA, accomplice liability’s extraterritorial reach cannot extend beyond the extraterritorial reach of principal FCPA offenses.[74] The court provided multiple justifications for this holding.

First, it relied on the Gebardi principle. The court argued that Congress, through text, structure, and legislative history of the FCPA, affirmatively intended not to extend accomplice liability beyond the parties included within the FCPA’s principal liability.[75] It argued that because Congress assigned principal liability under the FCPA with “surgical precision,” under the backdrop of the presumption against extraterritoriality, Congress intended to limit the extraterritorial application of accomplice liability to the same extent that it limited principal liability.[76] To support this reading of the FCPA, the court pointed to legislative history that suggested that Congress wanted to limit the extraterritorial application of the FCPA.[77]

The court also held that, even if Congress did not show an affirmative intent to exclude foreigners such as Hoskins under the Gebardi principle, the presumption against extraterritoriality barred prosecuting Hoskins.[78] It argued that because the FCPA limited the extraterritorial application of substantive liability to a select group, and the presumption against extraterritoriality operates to limit the provisions to their terms, accomplice liability’s extraterritorial reach was limited to FCPA’s principal liability.[79]

II. Argument

A. The FCPA Allows For Jurisdiction Over Hoskins

1. The Text and Legislative History Do Not Show an Affirmative Intent to Immunize Foreign Nationals from Accomplice Liability

To show an affirmative congressional intent to limit accomplice liability, the court argued that Congress listed the parties it intended to hold liable with “surgical precision.”[80] This “surgical precision,” when “read against the backdrop” of the presumption against extraterritoriality, “persuade[d] [the court] that Congress did not intend for persons outside of the statute’s carefully delimited categories to be subject to conspiracy or complicity liability.”[81] But this analysis ignores the generally accepted principles that (1) even if an individual cannot be held liable as a principal offender, he or she can still be held criminally liable under accomplice liability,[82] and (2) in a statute with an extraterritorial reach, the extraterritorial reach of accomplice liability extends beyond the statute’s principal liability.[83] Congress knew these principles when it wrote the FCPA, and it knew they would apply to the FCPA. Thus, Congress’s choice to limit principal liability does not show that it affirmatively intended to limit accomplice liability. The court implicitly admitted this, but found that the FCPA’s legislative history showed an affirmative intent to limit accomplice liability.[84]

In its analysis of the legislative history, the court emphasized a major shift in the FCPA during drafting. In the Senate’s first draft, individual liability for bribery was chargeable only through accomplice liability statutes.[85] But in March 1977, the Carter Administration expressed concern that relying solely on accomplice liability to charge individuals would create confusion as to who could be held liable.[86] In response, the Senate wrote a bill that carefully delimited individual principal liability.[87] The court argued that this decision to clearly define principal liability showed an affirmative intent by Congress to limit accomplice liability to those who can be charged as principals under the FCPA.[88]

But the legislative history of the House bill reveals a more complicated story. In September 1977, several months after the Carter Administration requested a bill with carefully delimited individual liability, the House completed an amended version of its bill. The bill included carefully delimited individual liability,[89] as the Carter Administration requested, but specifically noted that “[t]he concepts of aiding and abetting and joint participation would apply to a violation under this bill in the same manner in which those concepts have always applied in both SEC civil actions and in implied private actions brought under the securities laws generally.”[90] Given that extending accomplice liability beyond those who can be charged for as principal offender is a well-established principle, the House clearly expected accomplice liability to extend beyond potential principal offenders of the FCPA, even in a bill that included carefully delimited individual liability. The court pointed out that this was not the final bill,[91] but it failed to show any legislative history for the final bill that even discusses accomplice liability.[92] As such, there is no reason to believe that Congress changed its mind about accomplice liability between the House bill and the final bill, which means Congress did not show an affirmative intent to change the well-established principle that accomplice liability could expand beyond those charged as a principal.

But even if Congress did not want the original FCPA’s accomplice liability to extend beyond principal liability, the 1998 Amendments show that Congress wanted accomplice liability to extend beyond principal liability. The legislative history says that:

Although this section limits jurisdiction over foreign nationals and companies to instances in which the foreign national or company takes some action while physically present within the territory of the United States, Congress does not thereby intend to place a similar limit on the exercise of U.S. criminal jurisdiction over foreign nationals and companies under any other statute or regulation.[93]

Given the context of the quote (a discussion about jurisdiction), and that accomplice liability is covered in another statute,[94] Congress was clearly expressing that accomplice liability should not be limited to the extraterritorial reach of the FCPA’s principal offenders. Thus, Congress certainly did not affirmatively intend to limit accomplice liability, meaning that the Gebardi exception does not apply here.

2. The Presumption Against Extraterritoriality Does Not Limit Accomplice Liability in This Situation

The court concluded that because the FCPA limits the extraterritorial reach of principal liability, it also limits the extraterritorial reach of accomplice liability. But this is incompatible with general principles of accomplice liability. Many cases have held that when Congress writes a statute with extraterritorial reach, accomplice liability can expand beyond the extraterritorial reach of the statute’s principal liability.[95] The court argued that the FCPA differs from these cases because those cases “considered statutes prohibiting illegal importation of various items—statutes that certainly contemplated the punishment of extraterritorial action of precisely the kind that the defendants in the cases were convicted.”[96]

But this argument has no textual support. Nothing in the “drug importation” statutes upon which these cases were based suggest that Congress contemplated expanding extraterritorial liability for accomplice liability.[97] For example, in United States v. MacAllister, a Canadian man bought cocaine over the phone (while in Canada) from an undercover DEA agent.[98] He was arrested for conspiring to violate 21 U.S.C. § 953, which proscribes “export[ing] [narcotics] from the United States.”[99] The text of the statute includes a territorial limit: one must export narcotics “from the United States” to be charged under the statute. However, because the statute had an extraterritorial reach, the court allowed the prosecution even though the defendant had no territorial or citizenship-based connections to the U.S.[100] Given this principle, it is clear that the presumption against extraterritoriality does not limit the FCPA prosecutions of individuals and foreign individuals like Hoskins, who conspired with Americans to violate the FCPA.

B. International Laws and Norms Support Such Prosecutions

1. The Effects Doctrine Supports Prosecution

Because the court ruled that the FCPA does not allow the government to prosecute Hoskins, it did not continue its analysis. However, as we now know, the FCPA does not limit the extraterritorial application of accomplice liability. This means that the government can prosecute Hoskins if the federal courts have jurisdiction over him. “Principles of international law and United States precedent counsel, however, that . . . jurisdiction only be invoked when U.S. interests are directly involved and when the assertion of U.S. jurisdiction is a reasonable exercise of U.S. sovereignty” under international law and norms.[101] To determine whether jurisdiction is reasonable, U.S. courts have created a test known as the “effects doctrine,”[102] which asks the court to determine whether the defendant’s conduct directly and substantially harmed U.S. interests.[103]

In this case, the effects doctrine emphatically supports jurisdiction over Hoskins. Given that only issuers, domestic concerns, and those who use means or instrumentalities of American interstate commerce to bribe an official can principally violate the FCPA’s anti-bribery statutes, people who aid principal violators of the FCPA directly and substantially harm American interests. For example, by ordering U.S. citizens to violate the FCPA within U.S. borders, Hoskins directly harmed the American interest in preventing foreign bribery.[104] Courts have ruled that such acts fall under the effects doctrine many times.[105] Therefore, jurisdiction is not an issue here, as charging defendants such as Hoskins would not violate international law or norms.

2. The OECD Anti-Bribery Convention and the Charming Betsy Doctrine do Not Oppose This Type of Prosecution

The prosecution would also need to survive the Charming Betsy Doctrine. The Charming Betsy Doctrine is a canon of statutory construction which states that, when courts interpret American law, they should presume that Congress did not intend to violate international norms.[106] However, since prosecution of international corruption is a fairly new endeavor, international norms regarding prosecution of corruption are also limited.[107] Accordingly, this Section will look to treaties to determine international corruption norms.

This Section specifically turns to jurisdiction limitations in the OECD Anti-Bribery Convention. Yet, the Convention does not provide jurisdictional limits; rather, it asks states to create anti-bribery laws that cover (1) when the offense is committed in whole or in part in a country’s territory and (2) when the country has established through its own laws jurisdiction to prosecute its own nationals abroad.[108] Further, the Convention notes that when two countries’ laws assert jurisdiction over the same individual, those countries will consult to determine the proper jurisdiction.[109]

Given that Hoskins can be prosecuted under U.S. jurisdictional principles (the effects doctrine), the Anti-Bribery Convention allows for this extraterritorial prosecution. Further, the consultation requirement in Article Four of the Anti-Bribery Convention implies that the Anti-Bribery Convention allows the DOJ to prosecute Hoskins because it shows that the Anti-Bribery Convention clearly planned for jurisdictional overlaps. Thus, it seems clear that the OECD Convention, at the very least, permits holding foreigners liable under conspiratorial liability. As such, extending accomplice liability to Hoskins faces no Charming Betsy problems.

C. Expanding Conspiratorial Liability As a Matter of Policy.

Although outside the court’s purview, this Section discusses policy issues related to expanding accomplice liability if a congressional solution is needed. Accomplices like Hoskins deliberately undermine American law. So why, as a matter of policy, do some feel that the United States should not prosecute him? Most critics point to one issue: international hostility.[110] They fear that when the United States expands the FCPA’s extraterritorial reach, it engages in moral and economic imperialism that will anger the international community.[111] And indeed, extraterritorial application of laws can create international hostility; foreign countries have criticized the United States for the extraterritorial reach of its antitrust laws.[112] Indeed, most critics of FCPA enforcement rely on international hostility toward antitrust laws to justify their skepticism toward extraterritorial application of the FCPA.[113]

But analogizing anti-bribery enforcement to antitrust enforcement is misleading: unlike antitrust enforcement, expanding the extraterritorial application of the FCPA does not create a major risk of international hostility. In the last twenty years, “not one meaningful diplomatic rift can be attributed to the enforcement of [the FCPA]” and “no empirical evidence supports the conclusion that anti-bribery laws seriously offend host countries.”[114] There are several reasons for this. Unlike antitrust law, in which international attitudes vary widely,[115] every country in the world has condemned and criminalized bribery.[116] As a result, unlike antitrust laws, the U.S. cannot engage in moral imperialism regarding the general concept of anti-bribery enforcement because the entire world agrees that it is wrong.

Additionally, expanding accomplice liability under the FCPA would cause less international backlash because expanded accomplice liability under the FCPA would not reach nearly as far as antitrust laws. American antitrust law extends principal liability to anyone whose conduct meets the effects doctrine.[117] This allows antitrust legislation to reach conspiracies in which none of the principal offenders of U.S. law have a territorial or nationality–based connection to the United States.[118] Expanding extraterritorial application of accomplice liability under the FCPA would not have the same result. Accomplices could be charged only if they act in concert with a principal offender. Given that principal offenders of the FCPA must be connected to the United States through citizenship or territoriality,[119] accomplice liability would naturally limit itself to accomplices who take part in conspiracies that either directly involve U.S. citizens or take place on U.S. territory. Thus, expanding extraterritorial application of accomplice liability under the FCPA would not create a risk of runaway jurisdiction and would not trigger international hostility.

Conclusion

The Hoskins decision creates an incoherent FCPA enforcement scheme. After the Hoskins decision, the U.S. government can charge foreigners who act as a mere agent to a U.S. criminal conspiracy from outside of the United States, but cannot charge foreigners who organize and lead a U.S. criminal conspiracy from outside of the United States.[120] This obviously incoherent scheme leaves U.S. officials unable to police corporations’ upper management. And this hole in enforcement is important. According to the OECD, two-thirds of foreign bribery conspiracies involve “top corporation officials,” and virtually all foreign bribery conspiracies involve corporation management.[121] Limiting extraterritorial application of accomplice liability will leave prosecutors unable to police the group that creates and facilitates most foreign bribery.

To avoid this problem, this Note proposes two solutions. First, Congress should pass a law to expand the extraterritorial reach of accomplice liability under the FCPA to the limits of U.S. courts’ jurisdiction under the effects test. Unfortunately, this kind of legislation is unlikely for the time being, given that President Trump does not support the FCPA or statutes fighting foreign bribery.[122] However, given the Democratic Party’s recent focus on anti-corruption,[123] a change in party power might make such a bill possible.

Second, the Supreme Court could hold that the extraterritorial reach of accomplice liability is not limited to the extraterritorial reach of the FCPA’s principal liability. This would probably require the DOJ to force a circuit split, which would be easy to accomplish. The Seventh Circuit currently takes a much narrower interpretation of the Gebardi principle that would likely not apply to the FCPA.[124] However, this issue would take years to work its way through the courts, meaning that for the time being, the DOJ’s ability to combat foreign corruption will remain weakened and damaged by its inability to enforce the FCPA against those who seek to undermine it.

[*] *.. Senior Editor, Southern California Law Review, Volume 93; J.D. Candidate 2020, University of Southern California Gould School of Law; B.M. Vocal Performance, Indiana University. Thank you to my parents, Pat and Susan, for all their encouragement and support, and thank you to the Southern California Law Review editors for their excellent work.

[1]. See Mike Koehler, The Story of the Foreign Corrupt Practices Act, 73 Ohio St. L.J. 929, 932 (2012).

[2]. Id. at 932, 934–35.

[3]. Id.

[4]. H.R. Rep. No. 95-640, at 4 (1977).

[5]. Koehler, supra note 1, at 932.

[6]. Id. at 971–80.

[7]. See, e.g., id. at 949 (quoting S. Rep. No. 94-1031, at 4 (1976)).

[8]. Id. at 93843

[9]. Id. at 947.

[10]. The Activities of American Multinational Corporations Abroad: Hearings Before the Subcomm. on Int’l Econ. Policy of the H. Comm. on Int’l Relations, 94th Cong. 5 (1975) (statement of Rep. Stephen J. Solarz, Member, Subcomm. on Int’l Econ. Policy, H. Comm. on Int’l Relations).

[11]. Koehler, supra note 1, at 975.

[12]. Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, secs. 102–04, §§ 13(b), 30A, 32(a), 32(c), 91 Stat. 1494, 1494–98 (codified as amended at 15 U.S.C. §§ 78m(b), 78dd-1 to 78dd-3 (2018)).

[13]. Koehler, supra note 1, at 930 (emphasis omitted).

[14]. 15 U.S.C. §§ 78m(b), 78dd-1, 78dd-2, 78dd-3 (2018).

[15]. Id. § 78dd-1.

[16]. Id. § 78dd-2.

[17]. S. Rep. No. 95-114, at 17 (1977).

[18]. See, e.g., Impact of Foreign Corrupt Practices Act on U.S. Business, [1981 Transfer Binder] Fed. Sec. L. Rep. (CCH), ¶ 82,841 (1981).

[19]. Steven R. Salbu, Bribery in the Global Market: A Critical Analysis of the Foreign Corrupt Practices Act, 54 Wash. & Lee L. Rev. 229, 255 (1997).

[20]. Foreign Corrupt Practices Act Amendments of 1988, Pub. L. No. 100-418, § 5003(d), 102 Stat. 1107, 1424.

[21]. Organization of Economic Cooperation and Economic Development [OECD], Review of the 1994 Recommendation on Bribery in International Business Transactions, Including Proposals to Facilitate the Criminalization of Bribery of Foreign Officials, at 6, OCDE/GD(97)131 (1997).

[22]. Organization of Economic Cooperation and Economic Development, Council Revised Recommendation on Combating Bribery in International Business Transactions, 36 I.L.M. 1016, 1018–19 (1997).

[23]. Argentina-Brazil-Bulgaria-Chile-Slovak Republic-Organization for Economic Cooperation and Development: Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, 37 I.L.M. 1, 4 (1998) [hereinafter Convention].

[24]. Id. at 4.

[25]. Id. at 5.

[26]. Id. at 10.

[27]. Id. at 5.

[28]. Press Release, Dep’t of State, Statement of Secretary of State Madeline K. Albright at the Organization for Economic Cooperation and Development Signing Ceremony of the Anti-Bribery and Corruption Convention (Dec. 17, 1997), https://1997-2001.state.gov/statements/971217b.html [https://perma.cc/LM7Q-DGPR].

[29]. Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Dec. 17, 1997, S. Treaty Doc. No. 105-43 (resolution of advice and consent to ratification agreed to in Senate July 31, 1998).

[30]. See Barbara Crutchfield George, Kathleen A. Lacey & Jutta Birmele, The 1998 OECD Convention: An Impetus for Worldwide Changes in Attitudes Toward Corruption in Business Transactions, 37 Am. Bus. L.J. 485, 486 (2000) (“An important component of the Convention is its emulation of the corporate accountability approach of the Foreign Corrupt Practices Act (FCPA) to detect corrupt payments.” (footnote omitted)).

[31]. 15 U.S.C. § 78dd-3(a) (2018).

[32]. Id. §§ 78dd-1(g)(1), 78dd-2(i)(1).

[33]. H. Lowell Brown, Extraterritorial Jurisdiction Under the 1998 Amendments to the Foreign Corrupt Practices Act: Does the Government’s Reach Now Exceed its Grasp?, 26 N.C. J. Int’l L. & Com. Reg. 239, 292 (2001).

[34]. S. Rep. No. 105-277, at 3 (1988).

[35]. See What the SEC and DOJ Resource Guide to the FCPA Means for Multi-National Companies, Am. Bar Ass’n (July 31, 2013), https://www.americanbar.org/groups/business_law/
publications/blt/2013/07/02_murphy [https://perma.cc/RX29-3XNH] (arguing that the DOJ’s FCPA guide “confirms that the DOJ and SEC read the FCPA broadly”); see also District Court Rules FCPA Jurisdiction Has Limits, Jones Day (Mar. 2013), https://www.jonesday.com/District_Court_Rules [https://perma.cc/7DWT-6Q3P] (“[T]he boundaries of [FCPA jurisdiction] have seemed to move farther and farther outward with each successive case.”).

[36]. For a discussion of this phenomena, see generally Mike Koehler, The Façade of FCPA Enforcement, 41 Geo. J. Int’l L. 907 (2010).

[37]. Steven R. Salbu, The Foreign Corrupt Practices Act as a Threat to Global Harmony, 20 Mich. J. Int’l L. 419, 447 (1999) (quoting Kenneth U. Surjadinata, Comment, Revisiting Corrupt Practices from a Market Perspective, 12 Emory Int’l L. Rev. 1021, 1026 (1998)).

[38]. See, e.g., Jodi Avergun & Joseph Moreno, The Implications of the Second Circuit’s Ruling in Hoskins, Global Investigations Rev. (Aug. 30, 2018), https://globalinvestigationsreview.com/ article/jac/1173589/the-implications-of-the-second-circuit%E2%80%99s-ruling-in-hoskins [https://per
ma.cc/87BW-X26L] (arguing that the DOJ used its theory of liability to “effectively circumvent the jurisdictional language of the Foreign Corrupt Practices Act”).

[39]. 18 U.S.C. § 2 (2018).

[40]. Cent. Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164, 181 (1994) (citation omitted).

[41]. See, e.g., United States Court of Appeals for the Third Circuit, Model Criminal Jury Instructions § 7.02, http://www.ca3.uscourts.gov/sites/ca3/files/Chap%207%20July%202014%20Rev.
pdf [https://perma.cc/YXJ2-M3TX] (“A person may be guilty of an offense(s) because (he) (she) personally committed the offense(s) (himself) (herself) or because (he) (she) aided and abetted another person in committing the offense.”).

[42]. See, e.g., Salinas v. United States, 522 U.S. 52, 64 (1997).

[43]. Gebardi v. United States, 287 U.S. 112, 123 (1932).

[44]. Id. at 115–16.

[45]. White-Slave Traffic (Mann) Act, ch. 395, § 2, 36 Stat. 825, 825 (1910) (codified as amended at 18 U.S.C. § 2421 (2018)).

[46]. Gebardi, 287 U.S. at 115–16.

[47]. Id.

[48]. Id.

[49]. Id.

[50]. Id.

[51]. Id. at 123.

[52]. Id.

[53]. Id.

[54]. For a discussion about different applications of the Gebardi principle, see generally Shu-en Wee, Note, The Gebardi “Principles”, 117 Colum. L. Rev. 115 (2017).

[55]. Id. at 131.

[56]. United States v. Amen, 831 F.2d 373, 382 (2d Cir. 1986).

[57]. See id. at 380–82.

[58]. Id. at 376–77.

[59]. Id. at 381.

[60]. Id. at 382.

[61]. See id. (“[The legislative history] makes it clear that the purpose of making [the drug kingpin statute] a new offense rather than leaving it as sentence enhancement was not to catch in the [drug kingpin statute] net those who aided and abetted the supervisors’ activities . . . .”).

[62]. William S. Dodge, Understanding the Presumption Against Extraterritoriality, 16 Berkeley J. Int’l Law 85, 85 (1998).

[63]. See Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 255(2010).

[64]. See Ford v. United States, 273 U.S. 593 (1927); United States v. Inco Bank & Tr. Corp., 845 F.2d 919 (11th Cir. 1988); United States v. Winter, 509 F.2d 975 (5th Cir. 1975); United States v. Lawson, 507 F.2d 433 (7th Cir. 1974); Rivard v. United States, 375 F.2d 882 (5th Cir. 1967).

[65]. United States v. Hoskins, 902 F.3d 69 (2d Cir. 2018).

[66]. Id. at 72.

[67]. Id.

[68]. Id.

[69]. Id.

[70]. Id.

[71]. Section 78dd-3 liability is limited to American companies and citizens, and their agents, employees, officers, directors, and shareholders, as well as foreign persons acting on American soil. 15 U.S.C. § 78dd-3 (2018).

[72]. Id. at 73.

[73]. Id. (citing United States v. Hoskins, 123 F. Supp. 3d 316 (D. Conn. 2015)).

[74]. Hoskins, 902 F.3d at 97.

[75]. Id. at 83–95.

[76]. Id. at 83–85.

[77]. See id. at 85–95.

[78]. See id. at 96.

[79]. Id. at 96–97.

[80]. Id. at 84.

[81]. Id. at 83–84.

[82]. United States v. Applins, 637 F.3d 59, 76 (2d Cir. 2011) (citing United States v. Viola, 35 F.3d 37, 43 (2d Cir. 1994)); United States v. Weisscredit Banca Commerciale E D’Investimenti, 325 F. Supp. 1384, 1396 (S.D.N.Y. 1971) (“A person may be convicted of conspiracy to commit an offense which he lacks the capacity to commit himself.”).

[83]. See supra Section I.C.

[84]. Compare Hoskins, 902 F.3d at 85 (noting, immediately after its discussion of text and structure, that “[t]he question thus becomes whether there is ‘something more,’ a policy basis for Congress to exclude Hoskins’s category of defendants from criminal liability”), with id. at 93 (“The strands of the legislative history demonstrate, in several ways, the affirmative policy described above . . . .”).

[85]. Id. at 86

[86]. Id.

[87]. Id.

[88]. See id. at 87–88.

[89]. H.R. Rep No. 95-640, at 4 (1977) (“Section 2 also applies to any officer, director, employee, or agent . . . .”).

[90]. Id. at 8 (emphasis added).

[91]. See Hoskins, 902 F.3d at 89 (“The final version of the FCPA, agreed to in conference, demonstrated a compromise between the House and Senate versions.”).

[92]. Id. at 90 (“The Conference Report made no mention of conspiracy or aiding-and-abetting theories of liability).

[93]. S. Rep. No. 105-277, at 6 (1988) (emphasis added).

[94]. See supra Section I.B.1.

[95]. See, e.g., Ford v. United States, 273 U.S. 593 (1927); United States v. Inco Bank & Tr. Corp., 845 F.2d 919 (11th Cir. 1988); United States v. Winter, 509 F.2d 975 (5th Cir. 1975); United States v. Lawson, 507 F.2d 433 (7th Cir. 1974); Rivard v. United States, 375 F.2d 882 (5th Cir. 1967); United States v. MacAllister, 160 F.3d 1304 (11th Cir. 1998).

[96]. Hoskins, 902 F.3d at 97.

[97]. See 21 U.S.C. § 952.

[98]. MacAllister, 160 F.3d at 1305–06.

[99]. 21 U.S.C. § 953 (2018).

[100]. MacAllister, 160 F.3d at 1307–08; see also Winter, 509 F.2d at 982 n.24 (“A different question might be presented had these foreign nationals been charged with the substantive offense of unlawful importation or attempt to import. In that event, the Court, in the absence of a showing of agency, aider or abettor, etc., would likely have to determine whether Congress intended the statute in issue to have an extraterritorial effect.”).

[101]. Brown, supra note 33, at 320.

[102]. Id. at 328–35.

[103]. Tamari v. Bache & Co. S.A.L., 730 F.2d 1103, 1108 (7th Cir. 1984).

[104]. Hoskins, 902 F.3d at 103.

[105]. The courts have often recognized the effects doctrine as justifying jurisdiction over extraterritorial conspiracies. These often involve conspiracies to violate the contraband laws of the United States. See United States v. Orozco-Prada, 732 F.2d 1076, 1087–88 (2d Cir. 1984); Mow v. United States, 730 F.2d 1308, 1312 (9th Cir. 1984); United States v. Arra, 630 F.2d 836, 840 (1st Cir. 1980); United States v. Ricardo, 619 F.2d 1124, 1128–29 (5th Cir. 1980).

[106]. Murray v. Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804).

[107]. Evan J. Criddle & Evan Fox-Decent, A Fiduciary Theory of Jus Cogens, 34 Yale J. Int’l L. 331, 333 (2009) (noting that although corruption is frowned upon, a norm against corruption is not recognized as jus cogens).

[108]. Convention, supra note 23, at 5.

[109]. See supra Section I.A.3.

[110]. See generally Salbu, supra note 37 (arguing that extraterritorial enforcement of the FCPA threatens global harmony).

[111]. See id. at 430 (noting that countries with differing cultural standards will make “[d]rawing lines distinguishing acceptable and unacceptable behavior . . . precarious and may even threaten unjust results at the cut-off point”).

[112]. See Gary E. Dyal, Comment, The Canada-United States Memorandum of Understanding Regarding Application of National Antitrust Law: New Guidelines for Resolution of Multinational Antitrust Enforcement Disputes, 6 Nw. J. Int’l L. & Bus. 1065, 1065 (1984–1985) (“The extraterritorial enforcement of United States antitrust law against Canadian businesses has been a source of continual conflict between the two nations.”).

[113]. Most empirical studies of American law and foreign relations law focus on antitrust law. Many of these papers attempt to conflate antitrust law and anti-bribery law. See Penny Zagalis, Note, Hartford Fire Insurance Company v. California: Reassessing the Application of the McCarran-Ferguson Act to Foreign Reinsurers, 27 Cornell Int’l L.J. 241, 267 n.192 (1994) (discussing British legislation blocking U.S. antitrust laws); see also Barry E. Hawk, International Antitrust Policy and the 1982 Acts: The Continuing Need for Reassessment, 51 Fordham L. Rev. 201, 237–39 (1982) (discussing reactions to extraterritorial application of U.S. antitrust laws); Douglas Michael Ely, Note, The Noerr-Pennington Doctrine and the Petitioning of Foreign Governments, 84 Colum. L. Rev. 1343, 1357 & nn.71–72 (1984) (discussing reaction of foreign governments to being involved in U.S. antitrust litigation); Note, Extraterritorial Application of the Export Administration Act of 1979 Under International and American Law, 81 Mich. L. Rev. 1308, 1318 n.58 (1983) (discussing blocking legislation aimed at extraterritorial application of U.S. antitrust law). Indeed, scholar Philip M. Nichols notes Salbu’s article is “[t]he most extensive argument to date claiming that anti-bribery laws constitute an extraterritorial intrusion that will be resented by host countries.” Phillip M. Nichols, The Myth of Anti-Bribery Laws as Transnational Intrusion, 33 Cornell Int’l L.J. 627, 647 (2000) (referencing Salbu, supra note 37). And while Salbu’s article cites thirteen sources, none of them discuss anti-bribery laws directly. Further, while it cites ten scholarly works, nearly all of them deal with extraterritorial application of antitrust laws. See generally Salbu, supra note 37.

[114]. Nichols, supra note 113, at 645–46.

[115]. For differences between U.S. and foreign antitrust laws, see generally Carl A. Cira, Jr., The Challenge of Foreign Laws to Block American Antitrust Actions, 18 Stan. J. Int’l L. 247 (1982); Antitrust Laws Around the World, Global Compliance News, https://globalcompliancenews.com/ antitrust-and-competition/antitrust-laws-around-the-world [https://perma.cc/T34W-AN4B] (providing map that shows many countries in the world have no antitrust or competition laws).

[116]. Fritz F. Heimann, Combatting International Corruption: The Role of the Business Community, in Corruption and the Global Economy 147, 149 (1997) (“[S]o-called respect for cultural diversity is usually an excuse for continuing corruption [and] there is no country in the world where bribery is legally or morally acceptable.”).

[117]. See Roger P. Alford, The Extraterritorial Application of Antitrust Laws: The United States and European Community Approaches, 33 Va. J. Int’l L. 1, 6–16 (1992) (discussing liability under the Sherman Act and the Clayton Act, and the evolution of the effects doctrine to determine the limit of extraterritorial liability under these acts).

[118]. For example, in the famous Amax Potash Ltd. v. Saskatchewan case from the Supreme Court of Canada, United States regulators sought an injunction against Saskatchewan residents who were price fixing a deposit of potash in their region. This type of principle liability based on vague effects on the United States, without a territorial or nationality basis the action, received condemnation from Saskatchewan officials. Robert Trumbull, Canadians Score U.S. Tie of Saskatchewan to Potash Price Fixing, N.Y. Times, Aug. 31, 1976, at 37.

[119]. See 15 U.S.C. §§ 78dd-1 to 78dd-3 (2018).

[120]. See United States v. Hoskins, 902 F.3d 69, 102 (2d Cir. 2018) (Lynch, J., concurring).

[121]. Org. for Econ. Co-operation and Dev., OECD Business and Finance Outlook 2017 101 (2017).

[122]. Jim Zarroli, Trump Used to Disparage an Anti-Bribery Law; Will He Enforce It Now?, Nat’l Pub. Radio (Nov. 8, 2017), https://www.npr.org/2017/11/08/561059555/trump-used-to-disparage-an-anti-bribery-law-will-he-enforce-it-now [https://perma.cc/3TXH-SG67] (noting that President Donald Trump has called the FCPA “ridiculous” and “a horrible law”).

[123]. Catie Edmondson, House Democrats Will Vote on Sweeping Anti-Corruption Legislation. Here’s What’s in It., N.Y. Times (Mar. 7, 2019), https://www.nytimes.com/2019/03/07/us/politics/house-democrats-anti-corruption-bill.html [https://perma.cc/7N8F-UCJ4] (noting that Democrats have made anti-corruption legislation a high priority in their party platform).

[124]. For a discussion on the Seventh Circuit’s interpretation of the Gebardi principal, see Wee, supra note 54, at 125–29.

Extraterritorial Enforcement of the Foreign Corrupt Practices Act: Asserting U.S. Interest or Foreign Intrusion?

Evan Forbes

This Article examines these questions through the lens of United States v. Hoskins, a recent Second Circuit case. Part I will provide background: Section I.A will discuss the circumstances that compelled Congress to pass the original FCPA, the FCPA’s subsequent amendments, and the controversy surrounding U.S. enforcement of the FCPA. Section I.B will provide a basic background of accomplice liability, the Gebardi principle, and subsequent interpretations of the Gebardi principle. Section I.C will briefly explain the presumption against extraterritoriality. Section I.D will provide a synopsis of Hoskins. Part II will argue that, as a matter of statutory interpretation and policy, the government should be allowed to prosecute accomplices to FCPA violations, even when they are beyond the extraterritorial reach of the FCPA’s principal liability. Section II.A will argue that the Hoskins Court misapplied the Gebardi principle and the presumption against extraterritoriality and that, as a matter of statutory interpretation, accomplice liability’s extraterritorial reach extends beyond those who can substantively violate the FCPA. Section II.B will argue that principles of international law allow the U.S. government to prosecute Hoskins. Section II.C will argue that expanded accomplice liability is necessary as a matter of policy. The conclusion will recommend that the Supreme Court take action and hold that accomplice liability is extended to foreign nationals that conspire with principal offenders of the FCPA, even if they cannot be held liable as principal offenders. It will also recommend that, in the absence of a Supreme Court decision, Congress should explicitly expand accomplice liability’s extraterritorial reach beyond the FCPA’s principal liability.

Judicial Overreach or a Necessary Check on Executive Power? The Implications of Trump v. Hawai’i and the Resulting Push Against Nationwide Injunctions

Christine Cheung

This Note will explain the constitutionality and legal scope of the executive order as a political tool of the president. It will then discuss the rise of nationwide injunctions and the judicial system’s changing attitudes toward such injunctions as a viable judicial tool. Next, it will explain the series of executive orders passed by President Donald Trump—which together constituted the Muslim ban—and the nationwide injunctions issued by district courts in response to these orders, culminating in the Trump v. Hawai’i Supreme Court decision. Finally, it will discuss the legislation for which Trump v. Hawai’i paved the way: The Injunctive Authority Clarification Act of 2018, which sought to prohibit courts from issuing nationwide injunctions.

Ultimately, this Note will argue that Trump v. Hawai’i was decided correctly, but that the consequences of the decision as they relate to expanding executive power and the case’s procedural history have serious implications for the future of judicial lawmaking. This Note will critically analyze arguments on both sides of the issue of whether nationwide injunctions should be prohibited. Additionally, this Note argues that while nationwide injunctions have positive effects, those effects are outweighed by the incentives they create for forum shopping and the judicial territorial clashes they create that undermine judicial decisionmaking. Finally, this Note argues that prohibiting nationwide injunctions entirely, as the Injunctive Authority Clarification Act would have done, is not the proper solution. Instead, nationwide injunctions should be limited in some way, such as allowing only district- or circuit-wide injunctions.

Prosecution or Forced Transport: Manhattan Beach’s Unconstitutional Banishment of the Homeless

Jared Osborne

This paper argues that doing so would unconstitutionally force individuals to choose between criminal prosecution or banishment. Part I of this paper will briefly provide an overview of homelessness in the United States, particularly in California, and place the Manhattan Beach ordinance within the various laws and practices localities have implemented in response to the rise of homelessness. Part II will examine the use of banishment in criminal law and explore various challenges to such conditions. Finally, Part III will demonstrate that Manhattan Beach’s ordinance and planned enforcement constitute banishment and are invalid for many of the same reasons courts have used to invalidate conditions of banishment imposed in criminal law.

The Limits of the Interstate Commerce Power: How to Decide the Close Cases – Postscript by R. George Wright

R. George Wright

Below, this Article introduces the relevant case law by examining the recent case of United States v. Hill, a federal Hate Crimes Prevention Act prosecution of a battery committed on a gay fellow-employee at an Amazon Fulfillment Center. There follows a brief tour of the most crucially relevant Supreme Court Commerce Clause jurisprudence, with an emphasis on current doctrine.

In light of these materials, this Article then highlights a number of largely unsolvable problems in trying to delimit the scope of the Commerce Clause power. There is, merely to begin, the problem of the vagueness of legal language in general and of the key terms embodied in the Commerce Clause more specifically. The vagueness problem impairs attempts to clarify the meaning and bounds of the language of the Commerce Clause.

The Climate Crisis Is a Human Security, Not a National Security, Issue

Maryam Jamshidi

This Article articulates the downsides to treating climate change as a national security issue and demonstrates how the U.N.-mandated concept of “human security” provides a more effective framework. Human security realizes the benefits of securitization while lessening its costs. It does so by focusing on people, rather than the state, and emphasizing sustainable development policies necessary to mitigate, rather than just acclimate to, climate change. While explored here in detail, these arguments are part of a larger, ongoing project examining how the human security paradigm can generate more effective legal solutions than a national security framework for global challenges, like climate change.

Part I of this Article briefly examines calls to treat climate change as a national security issue, specifically from within the grassroots climate change movement, and canvasses the benefits of doing so. Part II explores the downsides to securitizing climate change and demonstrates how a human security approach resolves these concerns. Overall, this Article accepts the view that a security-oriented attitude towards climate change is vital to meaningful action on the issue. It takes the position, however, that this approach must both align with liberal democratic values and facilitate solutions for mitigating the climate crisis. These changes to the prevailing security paradigm are unlikely to come from the state itself, which is invested in maintaining a state-centered view of security. It must, instead, be led by civil society—particularly the climate change movement, which has the most incentive to take action on these issues.

An Uneasy Dance with Data: Racial Bias in Criminal Law

Joseph A. Avery

Businesses and organizations expect their managers to use data science to improve and even optimize decisionmaking. Yet when it comes to some criminal justice institutions, such as prosecutors’ offices, there is an aversion to applying cognitive computing to high-stakes decisions. This aversion reflects extra-institutional forces, as activists and scholars are militating against the use of predictive analytics in criminal justice. The aversion also reflects prosecutors’ unease with the practice, as many prefer that decisional weight be placed on attorneys’ experience and intuition, even though experience and intuition have contributed to more than a century of criminal justice disparities.

Instead of viewing historical data and data-hungry academic researchers as liabilities, prosecutors and scholars should treat them as assets in the struggle to achieve outcome fairness. Cutting-edge research on fairness in machine learning is being conducted by computer scientists, applied mathematicians, and social scientists, and this research forms a foundation for the most promising path towards racial equality in criminal justice: suggestive modeling that creates baselines to guide prosecutorial decisionmaking.

Technology-Enabled Coin Flips for Judging Partisan Gerrymandering

Wendy K. Tam Cho

Akin to every other legal issue that comes before the Court, reconciling the state’s discretion and the Supreme Court’s role in judicial review requires a judicially manageable standard that allows the Court to determine when a legislature has overstepped its bounds. Without a judicially discoverable and manageable standard, the Court is unable to develop clear and coherent principles to form its judgments, and challenges to partisan gerrymandering would thus be non-justiciable.

In the partisan gerrymandering context, such a standard needs to discern between garden-variety and excessive use of partisanship. The Court has stated that partisanship may be used in redistricting, but it may not be used “excessively.” In Vieth v. Jubelirer, Justice Scalia clarified, “Justice Stevens says we ‘er[r] in assuming that politics is ‘an ordinary and lawful motive’ in districting,’ but all he brings forward to contest that is the argument that an excessive injection of politics is unlawful. So it is, and so does our opinion assume.” Justice Souter, in a dissent joined by Justice Ginsburg, expressed a similar idea: courts must intervene, he says, when “partisan competition has reached an extremity of unfairness.”

At oral argument in Rucho, attorney Emmet Bondurant argued that “[t]his case involves the most extreme partisan gerrymander to rig congressional elections that has been presented to this Court since the one-person/one-vote case.” Justice Kavanaugh replied, “when you use the word ‘extreme,’ that implies a baseline. Extreme compared to what?”

Herein lies the issue that the Court has been grappling with in partisan gerrymandering claims. What is the proper baseline against which to judge whether partisanship has been used excessively? And how can this baseline be incorporated into a judicially manageable standard?

The Undesirability of Mandatory Time-Based Sunsets in Dual Class Share Structures: A Reply to Bebchuck and Kastiel

Bernard S. Sharfman

In a 2017 Virginia Law Review article, The Untenable Case for Perpetual Dual-Class Stock, Professors Lucian Bebchuk and Kobi Kastiel argued that time-based sunset provisions (the forced unification of shares into one share structure with equal voting rights after a certain period of time) should be a mandatory feature of dual class share structures (classes of common stock with unequal voting rights). This article has recently been used as authority by the Council of Institutional Investors (“CII”) to petition to the NASDAQ Stock Market (“NASDAQ”) and the New York Stock Exchange (“NYSE”) to amend their listing standards. The requested amendments would require companies seeking to go public with dual class shares to include in their certificates of incorporation a time-based sunset provision that would go into effect no more than seven years after the initial public offering (“IPO”) unless minority shareholders vote to extend it up to an additional seven years. This delayed unification based on a shareholder vote is incorporated in Bebchuk and Kastiel’s argument.

This Article, which is based on comment letters I sent in response to the CII’s petitions, argues that such a mandatory provision would be extremely unwise and harmful to our most important public companies and their shareholders, current as well as future. As a creation of private ordering, the absence of time-based sunset provisions in dual class share structures serves a significant value enhancing purpose. It prevents the risk that a premature and therefore sub-optimal unification of shares may occur. This risk has so far been ignored by those advocating for the implementation of a mandatory time-based sunset provision. As subsequently discussed, this risk has been ignored because their analysis lacks an appreciation for how the positive skewness in stock market returns negatively impacts the value of mandatory time-based sunset provisions.

In Defense of International Comity – Article by Samuel Estreicher & Thomas H. Lee

January 2020March 2020Southern California Law Review Admin

Article | International Law
In Defense of International Comity
by Samuel Estreicher* & Thomas H. Lee^†

From Vol. 93, No. 2 (January 2020)
93 S. Cal. L. Rev. 169 (2020)

Keywords: International Comity, Federal Common Law, Republic of Argentina v. NML Capital

Abstract

A chorus of critics, led by the late Justice Scalia, have condemned the practice of federal courts’ refraining from hearing cases over which they have subject-matter jurisdiction because of international comity—respect for the governmental interests of other nations. They assail the practice as unprincipled abandonment of judicial duty and unnecessary given statutes and settled judicial doctrines that amply protect foreign governmental interests and guide the lower courts. But existing statutes and doctrines do not give adequate answers to the myriad cases in which such interests are implicated given the scope of present-day globalization and features of the U.S. legal system that attract foreign litigants. The problem is ubiquitous. For instance, four cases decided in the Supreme Court’s 2017 October Term raised international comity concerns and illustrate the Court’s difficulty grappling with these issues.

This Article cuts against prevailing academic commentary (endorsed, to some extent, by the newly-minted Restatement (Fourth) of the Foreign Relations Law of the United States) and presents the first sustained defense of the widespread practice of international comity abstention in the lower federal courts—a practice the Supreme Court has not yet passed on but will almost certainly decide soon. At the same time, we acknowledge that the critics are right to assert that the way lower courts currently implement international comity—through a multi-factored interest analysis—is too manipulable and invites judicial shirking. Consequently, we propose a new federal common law framework for international comity based in part on historical practice from the Founding to the early twentieth century when federal courts frequently dealt with cases implicating foreign governmental interests with scant congressional or executive guidance, primarily in the maritime context. That old law is newly relevant. What is called for is forthright recognition of a federal common law doctrine of international comity that enables courts to exercise principled discretion in dealing with asserted foreign governmental interests and clears up conceptual confusion between prescriptive and adjudicative manifestations of international comity.

*. Dwight D. Opperman Professor of Law & Codirector, Institute for Judicial Administration, New York University School of Law.

^†. Leitner Family Professor of Law, Fordham University School of Law.

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93_2_LeeEs_169

What’s in a Claim? Challenging Criminal Prosecutions Under the FTAIA’s Domestic Effects Exception – Note by Jay Kemper Simmons

November 2018January 2019Southern California Law Review Admin

From Volume 92, Number 1 (November 2018)
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What’s in a Claim? Challenging Criminal Prosecutions Under the FTAIA’s Domestic Effects Exception

Jay Kemper Simmons [*]

TABLE OF CONTENTS

Introduction

I. Legal Background

A. Historical Foundations of Extraterritoriality
in U.S. Competition Law

1. Extraterritorial Criminal Liability Under the
Sherman Act: Exploring the Shift from
Territoriality to Effects

2. Principles of International Comity and Fairness

B. The FTAIA’s Domestic Effects Exception

C. Hui Hsiung, Motorola Mobility, and Beyond

II. The FTAIA Does Not Authorize Extraterritorial Criminal Prosecutions

A. Textualism Foundationally Supports a Narrow Construction of the Domestic Effects Exception’s
“Claim” Language

B. Narrow Interpretation of the FTAIA Comports with International Comity Principles and Applicable
Canons of Construction

C. Distinct Remedies Reflect Distinct Treatment
of Civil and Criminal Actions Under the FTAIA

III. Implications for an Interconnected Global Political Economy

Conclusion

Introduction

O be some other name!

What’s in a name? That which we call a rose

By any other word would smell as sweet . . . .

— William Shakespeare, Romeo and Juliet act 2, sc. 2

Americans recently awoke to a startling revelation: “Our country is getting ripped off.”[1] Indeed, the purportedly deleterious effects of international trade on the United States domestic economy have claimed top billing in President Donald Trump’s nascent “America First” agenda.[2] As the White House publicly excoriates international free trade for the first time in recent memory, global trade deals and domestic tariffs are cast in stark relief.[3] China and Mexico, along these lines, are cast as chief culprits in a system of international exchange allegedly designed to subjugate American workers to nefarious foreign interests.[4] Overall, recent politics underscore the practical importance of, and interdependence between, competition and cooperation in international economic regulation.[5]

In the arena of hard-nosed international competition, it’s all fun and games––until somebody starts a trade war.[6] But beyond the scope of trade deals and tariffs, sovereign states’ domestic antitrust laws are also critical regulatory levers. Americans at the Antitrust Division of the Department of Justice and the Federal Trade Commission have the power to influence incentives in markets across the globe. For example, although domestic by nature, U.S. antitrust laws do not exclusively apply to conduct in domestic markets—the Sherman Act may extend far beyond American shores to activities conceived and executed abroad.[7]

Although it is understood that extraterritorial antitrust liability may exist with respect to certain foreign conduct, courts, businesses, and practitioners have struggled to concretely define the contours of this liability in practice.[8] Judicial construction of the Sherman Act’s “charter of freedom”[9] currently permits civil actions and criminal prosecutions against foreign anticompetitive conduct based solely on American domestic law. In the United States, liability may attach to foreign conduct even if the allegedly anticompetitive acts occur entirely beyond the territory over which the United States exerts sovereign control.[10]

Moreover, given its impact on the interests of market participants and sovereign states, extraterritorial application of the Sherman Act remains highly controversial in academic and professional legal circles.[11] In part due to the emergence of modern global supply chains, which often span several sovereign jurisdictions,[12] debate about extraterritoriality in U.S. competition policy has reached a fever pitch.[13]

Enter the Foreign Trade Antitrust Improvements Act of 1982 (“FTAIA” or “the Act”).[14] In 1982, Congress passed the FTAIA, putatively in order to clarify the limits of the Sherman Act in reaching certain foreign and export activities.[15] In early 2015, however, the United States Court of Appeals for the Ninth Circuit upheld the convictions of a Taiwanese electronics-manufacturing firm, AU Optronics, and its executives for criminal price fixing, in part based on the FTAIA’s so-called “domestic effects” exception.[16] In a decision assessing several independent challenges to the defendants’ extraterritorial criminal convictions, the panel ruled that an “effects” theory was independently sufficient to support criminal price-fixing charges under the FTAIA, absent an allegation that any acts in furtherance of the conspiracy occurred in the United States:

The defendants . . . urge that . . . the nexus to United States commerce was insufficient under the Sherman Act as amended by the Foreign Trade Antitrust Improvements Act of 1982 . . . . The defendants’ efforts to place their conduct beyond the reach of United States law and to escape culpability under the rubric of extraterritoriality are unavailing. . . . The verdict may . . . be sustained under the FTAIA’s domestic effects provision because the conduct had a “direct, substantial, and reasonably foreseeable effect on United States commerce.”[17]

From one perspective, the defendants’ foreign collusive activities were fairly traceable to U.S. markets, and thus fully within the purview of American antitrust laws, based on its direct connection to some qualifying “effect” on nonimport domestic commerce.[18] This rationale rendered the defendants in United States v. Hui Hsiung subject to the weight of criminal antitrust penalties under the Sherman Act, although the entirety of the defendants’ underlying conduct occurred overseas. The court suggested that this criminal punishment was only fair, as the defendants’ wholly foreign anticompetitive activities entailed some “direct, substantial, and reasonably foreseeable effect on United States commerce,”[19] which was legally cognizable through overcharges paid by Americans for electronic goods that had incorporated the defendants’ price-fixed LCD-panel component parts.[20]

Regrettably, however, the final panel decision affirmed the defendants’ criminal convictions without substantively evaluating a critical merits inquiry [21]: whether the FTAIA’s “domestic effects” exception even authorizes the underlying extraterritorial criminal prosecution as a “claim” under the Sherman Act.[22] This Note posits, contrary to the Ninth Circuit’s amended decision in Hui Hsiung, that the FTAIA’s domestic effects exception does not authorize American regulators to prosecute wholly foreign conduct under the Sherman Act. In the three years since Hui Hsuing, both the Supreme Court and Congress have failed to meaningfully address how to properly read the FTAIA.[23]

This Note builds on published legal decisions, practitioner resources, and academic commentaries to paint a fuller picture of the FTAIA’s domestic effects exception and, in particular, its proper scope in the context of extraterritorial criminal prosecutions.[24] Part I explores the historical development of extraterritorial antitrust jurisprudence in the United States, the FTAIA’s substantive requirements, and recent cases evaluating extraterritorial enforcement under the Act. Part II evaluates the prevailing approach under Hui Hsiung and makes the case that the FTAIA does not independently authorize extraterritorial criminal antitrust prosecutions. Part III discusses criminal liability implications under Hui Hsiung and related antitrust jurisprudence for international businesses and their agents. In sum, through discussion of the FTAIA’s history, text, and teleological aspects, this Note aims to clarify the proper scope of extraterritorial criminal antitrust actions under the Sherman Act, as amended by the Foreign Trade Antitrust Improvements Act of 1982.[25]

I. Legal Background

A. Historical Foundations of Extraterritoriality in U.S. Competition Law

Before diving into the current state of criminal prosecutions under the FTAIA’s domestic effects exception, it is first critical to trace the development of American criminal antitrust prosecutions beyond the territorial borders of the United States. Prior to passage of the FTAIA (and arguably even after its codification),[26] courts—rather than legislators—primarily defined the extraterritorial contours of the Sherman Act. The following sections trace a series of seminal decisions regarding the proper scope of the Sherman Act in international commerce prior to and following the passage of the FTAIA. This historical foundation informs a narrow interpretation of the FTAIA’s domestic effects exception in criminal prosecutions.[27]

1. Extraterritorial Criminal Liability Under the Sherman Act: Exploring the Shift from Territoriality to Effects [28]

The Sherman Act prohibits monopolization and unlawful restraints on “commerce . . . with foreign nations.”[29] Thus, the statute unambiguously applies to conduct with foreign actors and opens the possibility of government prosecutions for “bad apples” in the high-stakes game of global competition. Historically, however, federal courts hesitated to apply the Sherman Act’s provisions—along with related laws, such as the Clayton Act and the Federal Trade Commission Act—to conduct that occurred beyond the territorial boundaries of the United States.

Traditional notions of sovereignty largely informed the dominant, territorial conception of American courts’ narrow jurisdiction over foreign anticompetitive conduct. The territorial location of the underlying conduct, rather than the site of its fairly traceable effects, served as the relevant standard for determining jurisdiction over foreign anticompetitive conduct. Justice Holmes’ decision in American Banana Co. v. United Fruit Co., for example, reflects the historic presumption against extraterritorial application of the Sherman Act:

Words having universal scope, such as ‘every contract in restraint of trade,’ ‘every person who shall monopolize,’ etc., will be taken, as a matter of course, to mean only everyone subject to such legislation, not all that the legislator subsequently may be able to catch. In the case of the present statute, the improbability of the United States attempting to make acts done in Panama or Costa Rica criminal is obvious, yet the law begins by making criminal the acts for which it gives a right to sue. We think it entirely plain that what the defendant did in Panama or Costa Rica is not within the scope of the statute so far as the present suit is concerned.[30]

Although this prima facie territorial presumption applied seemingly to “all legislation” passed by Congress under Justice Holmes’ view, the jurisprudential tide steadily shifted to embrace the imposition of antitrust liability for conduct conceived or executed beyond U.S. borders.[31] Over time, the Supreme Court came to stray from a strict territoriality standard and adopted a much broader standard that granted courts antitrust jurisdiction over activities with certain “effects on competition in the United States.”[32]

Judge Learned Hand’s approach in United States v. Aluminum Co. of America (“Alcoa”) definitively established that foreign anticompetitive acts involving import commerce could be criminally prosecuted in American courts.[33] A unanimous panel of the United States Court of Appeals for the Second Circuit found a Canadian corporation to be in violation of Sherman Act section based on its agreement with European aluminum producers not to compete in the American market for virgin ingot.[34] The decision marked a notable shift in extraterritorial interpretation of the Sherman Act; Hand’s majority opinion not only served as the final decision in lieu of Supreme Court review,[35] but also significantly expanded the global reach of American antitrust laws to include activities with effects on import commerce.[36]

Rather than territoriality, the touchstone of extraterritorial antitrust liability shifted decidedly toward the tangible effects of foreign anticompetitive conduct on domestic markets. With respect to such effects, Judge Hand candidly noted, “[a]lmost any limitation of the supply of goods in Europe, . . . or in South America, may have repercussions in the United States if there is trade between the two.”[37] Shifting to an effects standard required reasonable limits; otherwise, American courts would adjudicate seemingly every global competition dispute.[38] Although the court in Alcoa embraced an effects test for extraterritorial Sherman Act violations, it also warned, “[w]e should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States.”[39] Despite concerning only conduct directly involving import commerce, Alcoa’s non-territorial, effects-centered rationale has been generally incorporated into criminal antitrust precedents after passage of the FTAIA.[40]

Thus, courts historically hesitated to apply domestic law to activity beyond U.S. territorial borders, which traditionally delineated the outer bounds of American sovereignty. After Alcoa, however, courts’ antitrust jurisdiction would expand considerably to encompass criminal penalties for anticompetitive conduct involving direct import trade and commerce.[41]

2. Principles of International Comity and Fairness

Another judicial innovation concerns the doctrine of international comity.[42] Despite finding sufficient anticompetitive effects targeting domestic commerce to support domestic jurisdiction, courts may nevertheless decline to apply U.S. law to foreign conduct under the judicial constructs of “international comity and fairness.”[43] To determine the propriety of invoking comity to bar an antitrust action, courts widely consider several factors, including: (1) the parties’ nationality, allegiance, or principal locations; (2) the relative importance of domestic and foreign conduct in the allegations; (3) the relative effects on all countries involved; (4) the clarity of foreseeability of a purpose to affect or harm domestic commerce; (5) foreign law or policy and degree of conflict with American policy or law; and (6) compliance issues.[44]

For example, in Timberlane Lumber Co. v. Bank of America, international comity factors suggested that the court “should refuse to exercise jurisdiction,” in part because “[t]he potential for conflict with Honduran economic policy and commercial law [was] great,” and “[t]he effect on the foreign commerce of the United States [was] minimal.”[45] The “jurisdictional rule of reason” embodied in the Timberlane opinion attempted to balance domestic concerns with the interests of foreign states in adjudicating legal disputes. Thus, in American antitrust law, the comity doctrine adds greater nuance to courts’ treatment of the domestic effects that stem from foreign anticompetitive conduct.[46]

The comity doctrine reinforces a norm of reasonableness when applying domestic laws to foreign actors—agents who, in many cases, may not be fair targets for enforcement actions under the Sherman Act. In that vein, the third Restatement on Foreign Relations Law of the United States characterizes comity as a “principle of reasonableness” that applies to a court’s authority to adjudicate disputes and enforce remedies.[47] The comity doctrine has historically empowered federal courts with a measure of discretionary authority over how far domestic authorities can reach abroad to target foreign defendants, as well as how far private plaintiffs can project domestic claims across national borders. These considerations remain critical even after passage of the FTAIA.[48] Without considering fairness and foreign sovereignty in applying domestic laws, U.S. courts would risk dangerously overreaching into the affairs of international partners, as well as upsetting the constitutionally ingrained separation of powers between judicial, legislative, and executive branches of government.[49]

The Timberlane test has been widely embraced by courts in extraterritorial antitrust actions.[50] The Ninth Circuit’s analysis built a compelling case for declining to extend domestic antitrust laws to a foreign transaction in which an American corporation, Bank of America, allegedly manipulated the Honduran national government to prevent its competitor, Timberlane, from exporting lumber into the United States.[51] Beyond the facts of Timberlane, however, Hartford Fire Insurance Co. v. California suggests an alternative approach.[52]

In Hartford Fire, the Supreme Court—without deciding whether federal courts may ever decline to exercise subject matter jurisdiction over Sherman Act claims concerning foreign conduct—determined that principles of international comity are not relevant in the absence of a “true conflict” between domestic and foreign law.[53] The petitioners in Hartford Fire claimed error based on the district court’s failure to decline to exercise antitrust jurisdiction under the principle of international comity.[54] As the petitioners did not allege that British law mandated that they act in violation of the Sherman Act, however, the Court found no direct conflict of law and therefore quickly concluded that there was “no need . . . to address other considerations that might inform a decision to refrain from the exercise of jurisdiction on grounds of international comity.”[55]

The Court further ruled that the plaintiffs’ civil antitrust action could proceed, despite concerns regarding the application of domestic laws to the defendants’ foreign acts, so long as such foreign acts “[were] meant to produce and did in fact produce some substantial effect in the United States.”[56] It remains unclear to what degree the rule in Hartford Fire governs comity decisions in extraterritorial criminal prosecutions under the Sherman Act. In the absence of clear guidance on this aspect of international comity in federal courts, principles of comity and fairness continue to play integral roles in extraterritorial antitrust analysis under either the Hartford Fire or Timberlane standards.

B. The FTAIA’s Domestic Effects Exception

Although it remains unclear whether the FTAIA “amend[ed] existing law or merely codifie[d] it,”[57] courts have construed the statute to comport with the Sherman Act’s historical scope. The statute operates along with case law concerning how far plaintiffs may extend federal courts’ extraterritorial antitrust jurisdiction.[58] Prior to assessing the efficacy of the prevailing construction of the FTAIA’s “claim” language, however, it is helpful to discuss the language of the domestic effects exception, the intended purposes of the provision, and the early cases that largely ignored the statute in extraterritorial antitrust analysis.

The FTAIA facially excludes most foreign conduct from the scope of the Sherman Act. Two narrow exceptions bring wholly foreign activity back within the scope of domestic antitrust law.[59] Under the FTAIA’s “domestic effects” exception, the Sherman Act “shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations,” unless: (1) “such conduct has a direct, substantial, and reasonably foreseeable effect” on domestic trade or commerce, and that effect (2) “gives rise to a claim” under the Sherman Act.[60] Courts have clarified that conduct involving direct “import trade or import commerce” unambiguously falls within the scope of the Sherman Act under the FTAIA.[61]

In practice, the FTAIA applies when anticompetitive conduct is foreign in nature.[62] Courts have consistently noted since its passage, however, that lawmakers passed the Act primarily to “facilitat[e] the export of domestic goods by exempting export transactions that did not injure the United States economy from the Sherman Act and thereby reliev[e] exporters from a competitive disadvantage in foreign trade.”[63] Ironically, then, the FTAIA aimed to clarify when foreign anticompetitive conduct gives rise to domestic antitrust liability primarily in order to clarify that American firms can behave anticompetitively—so long as they only target foreign markets.[64] The notion that the FTAIA enables criminal prosecutions to remedy competitive harms in U.S. markets is notably absent in congressional findings related to the Act’s purpose, although the legislative history does broadly mention “Department of Justice enforcement.”[65]

The Act was further designed to provide appropriate “legislative clarification” of the antitrust laws, which presented “an unnecessarily complicating factor in a fluid environment” of international exchange, and allegedly caused many “possible transaction[s] [to] die on the drawing board.”[66] Despite endorsing the “situs” of effects standard authoritatively articulated in Alcoa, the legislative history uncovers debate concerning the “precise legal standard to be employed” for assessing the requisite “effects” on domestic or import trade or commerce.[67] Lawmakers generally acknowledged, “it has been relatively clear that it is the situs of the effects as opposed to the conduct, that determines whether United States antitrust law applies.”[68] In line with judicial precedents, Congress intended to “enact[] . . . a single, objective test—the ‘direct, substantial, and reasonably foreseeable effect’ test” to clarify precisely which effects trigger extraterritorial antitrust liability for “businessmen, attorneys and judges as well as foreign trading partners.”[69]

The legislative history suggests primary consideration of domestic commercial interests in export markets—interests that were increasingly complicated by the extraterritorial application of the Sherman Act.[70] Yet the statute has by no means proven simple and straightforward for antitrust practitioners. In that vein, prevailing academic commentary strongly suggests that the Act, falling just short of an outright failure worthy of repeal,[71] has demanded more from the federal courts—tribunals that must now apply the complicated statute in tandem with an expansive terrain of Sherman Act precedents.[72]

The Supreme Court first tackled the FTAIA in Hartford Fire. The majority declined to apply the statute in an analysis of civil claims under the Sherman Act.[73] The Court declined to rest its section 1 ruling on the FTAIA’s effects language, and instead relied entirely on Sherman Act precedents.[74] Nevertheless, the effects-centered rationale imbued in the FTAIA’s legislative history and prior precedents carried into decisions rendered after passage of the Act, as in United States v. Nippon Paper Industries and F. Hoffman-La Roche, Limited v. Empagran S.A. Although Hartford Fire only addressed the limited role of the FTAIA in civil antitrust proceedings, these later decisions grappled with the thornier issue of how to interpret the FTAIA and Sherman Act in the context of criminal prosecutions.

The district court in Nippon Paper (Nippon I) reviewed the defendants’ motions to dismiss a criminal antitrust indictment.[75] The indictment targeted a Japanese fax paper manufacturer for participating in meetings, agreements, and monitoring activities that took place entirely in Japan.[76] Notably, the court “disagree[d] with [the U.S. government’s] suggested equating of the Sherman Act’s civil and criminal application” with respect to wholly foreign conduct.[77] Given a “strong presumption against extraterritorial application of federal statutes” in criminal matters, the district court reasoned that “the line of cases permitting extraterritorial reach in civil actions is not controlling” in determining whether the Sherman Act’s criminal provisions can reach wholly foreign conduct.[78]

Citing prior judicial treatment of the language of the Sherman Act, academic commentary on its extraterritorial reach, policies underlying antitrust and criminal law, and relevant legislative history, the court concluded that the “criminal provisions of the Sherman Act do not apply to conspiratorial conduct in which none of the overt acts . . . take place in the United States.”[79] Thus, on first impression, the court in Nippon I differentiated between the requirements of an extraterritorial civil claim and an extraterritorial criminal prosecution under the FTAIA.

The district court’s holding remained intact for 165 days. The United States Court of Appeals for the First Circuit swiftly reversed the judgment, holding in Nippon II that, under Hartford Fire, the defendants could be criminally liable for agreeing to employ retail price maintenance strategies with various firms that distributed paper in the United States (notwithstanding the FTAIA’s terms).[80] The court sidestepped Hartford Fire’s civil posture by emphasizing that “in both criminal and civil cases, the claim that Section One applies extraterritorially is based on the same language in the same section of the same statute.”[81]

Despite pausing to note the “inelegantly phrased” FTAIA, the panel’s decision nevertheless declined to “place any weight on it,” following Hartford Fire.[82] The majority also reasoned that, without meaningful distinction in the Sherman Act’s treatment of civil and criminal liability, “it would be disingenuous . . . to pretend that the words had lost their clarity simply because this is a criminal proceeding.”[83] The decision explained how

Hartford Fire definitively establishe[d] that Section One of the Sherman Act applies to wholly foreign conduct which has an intended and substantial effect in the United States. We are bound to accept that holding. Under settled principles of statutory construction, we also are bound to apply it by interpreting Section One the same way in a criminal case. The combined force of these commitments requires that we accept the government’s . . . argument, reverse the order of the district court, reinstate the indictment, and remand for further proceedings.[84]

In addition, despite ultimately arriving at the same conclusion regarding the applicability of the Sherman Act’s criminal provisions to wholly foreign conduct, the detailed concurrence in Nippon II provided greater historical context for courts’ broad “interpretive responsibility” in adjudicating Sherman Act claims:

The task of construing [the Sherman Act in a criminal context] is not the usual one of determining congressional intent by parsing the language or legislative history of the statute. The broad, general language of the federal antitrust laws and their unilluminating legislative history place a special interpretive responsibility upon the judiciary. The Supreme Court has called the Sherman Act a “charter of freedom” for the courts, with “a generality and adaptability comparable to that found . . . in constitutional provisions.”[85]

Thus, by the turn of the century, the FTAIA’s substantive provisions were manifested as mere legislative gloss on prevailing judicial principles. Both the district court and the appellate court in Nippon Paper declined to find the FTAIA dispositive of extraterritorial criminal antitrust prosecutions, instead falling back to traditional conceptions of liability under the Sherman Act.

Nevertheless, the notable contrast in the district court’s and the appellate court’s treatments of the Sherman Act’s extraterritorial criminal provisions underscores a key development in extraterritorial antitrust jurisprudence. Although Nippon II stands for the proposition that wholly foreign conduct may give rise to criminal liability under the Sherman Act based on the plain language of the statute and its “common sense” application,[86] reasonable minds differ with respect to the proper extraterritorial limits on the antitrust jurisdiction of federal courts. For example, the district court’s reasoning in Nippon I stands against the dominant, casual assumption that indictments are interchangeable with civil “claims” when anticompetitive conduct occurs beyond U.S. borders, based on reasonable application of similar tools of statutory interpretation as the court in Nippon II. The fact that the appellate panel declined to endorse the district court’s handiwork, and instead crafted its own interpretive edifice with its preferred tools, is by no means dispositive of the merits of the district court’s reasoning.[87]

In 2004, the Supreme Court finally weighed in on the FTAIA’s domestic effects exception in F. Hoffman-La Roch, Ltd. v. Empagran. Two decades after the passage of the Act, the Court reasoned that its “claim” language refers directly to the “plaintiff’s claim, or the claim at issue.”[88] In Empagran, the Court held that foreign purchasers of vitamins could not recover under the FTAIA based merely on allegations that their own foreign harms from international price-fixing activity coincided with some domestic injury.[89] Thus, foreign purchaser plaintiffs in a civil antitrust action must now prove that the alleged anticompetitive effect on domestic trade or commerce itself gives rise directly and proximately to their own foreign injuries.[90] Foreign plaintiffs cannot “piggyback” on an indirect domestic effect to get into American courts on antitrust claims under the FTAIA. Following Empagran, the requisite domestic effect must proximately cause an antitrust plaintiff’s claimed injuries [91]—and it is the plaintiff’s burden of proof and persuasion to demonstrate proximate causation with respect to a domestic effect and his or her “claim.”

C. Hui Hsiung, Motorola Mobility, and Beyond

Recent circuit court judgments in United States v. Hui Hsiung [92] and Motorola Mobility, LLC v. AU Optronics Corp.[93] endorse criminal prosecution of foreign anticompetitive conduct based on the FTAIA’s domestic effects prong. Further, in denying certiorari for these conspiracy cases,[94] the Supreme Court let the final circuit decisions lie undisturbed, even in light of potential analytical deficiencies.[95] Careful consideration of both decisions sets the stage for analysis of the FTAIA’s “claim” language.[96]

Hui Hsiung and Motorola Mobility stem from the same conspiracy to fix prices for liquid crystal display (“LCD”) panels,[97] component parts incorporated into electronics products sold in the United States and elsewhere.[98] Specifically, between 2001 and 2006, “representatives from six leading [LCD] manufacturers,” including defendant AU Optronics, met in Taiwan for a “series of meetings” that “came to be known as the ‘Crystal Meetings.’”[99] The Ninth Circuit explained that after these meetings,

participating companies produced “Crystal Meeting Reports.” These reports provided pricing targets for TFT–LCD sales, which, in turn, were used by retail branches of the companies as price benchmarks for selling panels to wholesale customers. More specifically, [AU Optronics Corporation of America] used the Crystal Meeting Reports that [AU Optronics] provided to negotiate prices for the sale of TFT–LCDs to United States customers including HP, Compaq, ViewSonic, Dell, and Apple.[100]

The government alleged that the foreign conspiracy constituted a textbook example of a concerted agreement among direct competitors to restrain trade: “[s]pecifically, the indictment charged that ‘the substantial terms’ of the conspiracy were an agreement ‘to fix the prices of TFT–LCDs for use in notebook computers, desktop monitors, and televisions in the United States and elsewhere.’”[101] From 2001 to 2006, the United States constituted “one-third of the global market for personal computers incorporating [LCD panels],” and sales by conspirators into the U.S. market generated “over $600 million in revenue.”[102]

After being indicted in the Northern District of California for price fixing under section 1 of the Sherman Act, the defendants twice unsuccessfully attempted to dismiss the charges before proceeding to trial.[103] The panel suggests that “the reach of the Sherman Act to conduct occurring outside of the United States” marked “a contentious subject” in pretrial proceedings.[104] The district court instructed the jury that it may uphold the charges upon finding that the government proved “beyond a reasonable doubt . . . that the conspiracy had a substantial and intended effect in the United States,” even without a single action taken by a single member of the conspiracy in furtherance of the conspiracy within the United States.[105] The district court also instructed that the jury could uphold the charge separately upon finding that the government proved beyond a reasonable doubt “that at least one member of the conspiracy took at least one action in furtherance of the conspiracy within the United States.”[106] Ultimately, the jury convicted the defendants and determined that combined gains derived from the conspiracy were in excess of $500 million.[107] Individual and corporate defendants appealed their convictions, and AU Optronics appealed imposition of a $500 million fine.[108]

On appeal, the Ninth Circuit initially declined to determine whether the government had satisfied its burden to convict based on the domestic effects prong, instead concluding narrowly that “the FTAIA did not bar the prosecution because the government sufficiently proved that the defendants engaged in import trade.”[109] The panel subsequently amended their initial opinion (“amended opinion”) and noted that whenever a case involves nonimport trade with foreign nations, the Sherman Act presumptively does not apply—unless the FTAIA’s domestic effects prong applies.[110]

But the panel’s amended analysis did not stop there. The decision independently sustained the defendants’ convictions based on “domestic effects.”[111] Despite a dearth of meaningful discourse regarding the FTAIA’s “claim” language,[112] the panel independently authorized criminal penalties amounting to $500 million against AU Optronics (matching “the largest fine imposed against a company for violating U.S. antitrust laws”), individual fines totaling $400,000, and a total of six years in federal prison.[113] In this sense, the amended opinion reasoned to the same conclusion as the initial opinion, but with considerably broader precedential scope.

The Ninth Circuit aimed to include within the scope of the Sherman Act only those acts that actually have a direct and proximate “effect” on domestic markets. The panel explains in great length that an effect must be “direct, substantial, and reasonably foreseeable” to trigger Sherman Act jurisdiction on the basis of alleged “domestic effects.”[114] Yet despite noting that the FTAIA presents additional substantive elements for a Sherman Act prosecution involving international commerce with domestic effects,[115] the panel declined to warrant its conclusion that the government proved an essential element of its case beyond a reasonable doubt––that AU Optronics’ conduct “[gave] rise” to the government’s so-called “claim” under the antitrust laws.[116]

A subtle aspect of the Ninth Circuit’s amended opinion underscores an important development in post-FTAIA extraterritorial antitrust jurisprudence: “[t]o allege a nonimport trade claim under the Sherman Act, the claim must encompass the domestic effects elements.”[117] Under the domestic effects exception, the government must now prove the existence of (1) a domestic effect that (2) “gives rise to” a “claim” as substantive elements of a criminal charge. Hui Hsiung reinforces the dominant interpretation of the FTAIA as providing additional substantive requirements of antitrust claims in the extraterritorial context, concomitantly placing additional burdens on all plaintiffs in such actions.[118] Viewing the FTAIA’s elements as substantive, rather than jurisdictional, requires that government plaintiffs’ allegations and, ultimately, direct proof must satisfy each of the “domestic effects” elements in cases not involving direct import commerce.[119]

In Motorola Mobility, the Seventh Circuit reviewed a judgment entered in a suit brought by Motorola, along with “its ten foreign subsidiaries,” which purchased liquid-crystal display panels and incorporated them into cellphones.[120] The panel first briefly explained the nature of the disputed panel sales in the civil action:

[a]bout 1 percent of the panels sold by the defendants to Motorola and its subsidiaries were bought by, and delivered to, Motorola in the United States for assembly here into cellphones; to the extent that the prices of the panels sold to Motorola had been elevated by collusive pricing by the manufacturers, Motorola has a solid claim under section 1 of the Sherman Act. The other 99 percent of the cartelized components, however, were bought and paid for by, and delivered to, foreign subsidiaries (mainly Chinese and Singaporean) of Motorola. Forty-two percent of the panels were bought by the subsidiaries and incorporated by them into cellphones that the subsidiaries then sold to and shipped to Motorola for resale in the United States. Motorola did none of the manufacturing or assembly of these phones. The sale of the panels to these subsidiaries is the focus of this appeal.[121]

Ultimately, the court concluded that Motorola’s “derivative” competitive claims were barred under the indirect-purchaser doctrine.[122] AU Optronics and related conspirators were therefore immunized from civil antitrust liability to indirect customers, like Motorola and its customers, although its subsidiaries could still pursue independent civil claims overseas.

The court stated that under the FTAIA’s “domestic effects” exception “[t]he first requirement, if proved, establishes that there is an antitrust violation; the second determines who may bring a suit based on it.”[123] Implicitly, the panel reasoned that Motorola—a party directly affected on its balance sheet by overcharges from the panel sales, despite integrating these technologies into final consumer products through foreign subsidiaries—was, unlike the United States government, not among the select few “who may bring a suit” involving foreign commerce under the Sherman Act.

The decision concluded by suggesting, “[i]f price fixing by the component manufacturers had the requisite statutory effect on cellphone prices in the United States, the Act would not block the Department of Justice from seeking criminal . . . remedies.”[124] Although this statement stands as non-binding dicta with respect to the FTAIA’s domestic effects prong, its implications are straightforward: federal criminal prosecutions are “claims” under the domestic effects exception and may support a conviction under the antitrust laws if the government can satisfy proof beyond a reasonable doubt. Obtusely, however, the court barred civil recovery for an American corporation harmed directly by the conspiracy, reasoning that Motorola could better pursue such claims through its subsidiaries’ “direct” claims in foreign jurisdictions.[125]

The final circuit opinions include analytical deficiencies, particularly with respect to the threshold requirements for invoking “domestic effects.”[126] Neither decision identifies a clear reason for concluding that the “domestic effects” test supports criminal prosecutions under the Sherman Act, as both leave untouched the question of whether a criminal action may ever “give rise to” a “claim” under the antitrust laws. In that vein, Part II posits that the FTAIA’s “claim” language should be narrowly interpreted in line with its original meaning, which did not authorize international criminal prosecutions.

II. The FTAIA Does Not Authorize Extraterritorial Criminal Prosecutions

Congress passed the FTAIA to limit the criminal justice authority of American antitrust authorities over nonimport foreign commerce—not to expand it. Part II argues the case for narrow construction of the FTAIA’s “claim” language with respect to extraterritorial criminal prosecutions. After presenting a case for departure from the approach laid out in Hui Hsiung, Part III considers various implications of the current state of the law on international businesses, multinational corporate executives, and their agents.

A. Textualism Foundationally Supports a Narrow Construction of the Domestic Effects Exception’s “Claim” Language

Courts frequently begin an assessment of apparent ambiguities in statutory meaning based on “pure textual reliance.”[127] In some cases, American courts divine the “meaning of a statute . . . entirely from the words used in the law under consideration.”[128] The plain statutory language, authoritative definitions of terms in secondary source materials, and the ordinary or common usage of terms or phrases in the statute, as well as related sections of the law, may illuminate statutory meaning in the absence of clear legislative intent.[129] These engrained methods suggest that the FTAIA’s domestic effects prong does not support criminal prosecutions.

The Act ought to be interpreted in line with its unambiguous terms. Fortunately, the words “claim” and “prosecution” are terms with distinct meanings in the legal lexicon. At the outset, it is useful to note that the more general term “action” may encompass civil and criminal redress under the Sherman Act. By contrast, at least in the American legal system, plaintiffs asserting a “claim” under a given statute ordinarily would do so only with respect to the civil aspects of the statute––as where a civil plaintiff alleges “claims” against a civil defendant in adversary legal proceeding. This textual distinction is not accidental; it is reflective of fundamental underlying differences between civil and criminal actions under the FTAIA. The courts should treat it as such.

The Act does not expressly define the term “claim,” however. Thus, legal practitioners and jurists should typically import the plain or ordinary meaning of the term, as defined in secondary source materials. One source commonly relied upon is an authoritative definition in a legal dictionary. According to Black’s Law Dictionary, a “claim” may entail the “assertion of an existing right,” a “right to payment or to an equitable remedy,” or a “demand for money, property, or a legal remedy to which one asserts a right, esp[ecially] the part of a complaint in a civil action specifying what relief the plaintiff asks for.”[130] By contrast, criminal “prosecutions” ordinarily entail “criminal proceeding[s] in which an accused person is tried.”[131] From a textual standpoint, then, these terms entail distinct proceedings in statutory parlance. This observation strongly suggests that it would be erroneous to casually equate the term “claim” with any “criminal proceeding.”

Moreover, the sharp contrast between authoritative legal definitions of the terms “claim” and “prosecution” is accentuated by ingrained uses for the terms in distinct legal proceedings. In ordinary use, surely, the word “claim” would not be used to describe highly specialized terms in criminal procedure, such as “prosecution,” and “indictment,” and “plea.” Broad usage of “claim” would, in fact, more likely lead to greater confusion than clarity in the course of criminal proceedings. In other words, loosely speaking, the government may allege “claims” against alleged perpetrators in criminal proceedings. However, stretching the term “claim” so far as to encompass the government’s entire “prosecution” against the defendant would appear facially obtuse in most contexts—in large part based on the ordinary usage of the terms in distinct legal settings.

Such judgments about “plain meaning” and “ordinary usage” are naturally disputed. Yet the foregoing discussion rapidly approaches an alternative conclusion from that rendered by the panel in Hui Hsiung: the plain terms of the FTAIA’s domestic effects exception are unambiguous, but they authorize only civil “claims” under the Sherman Act. And, turning beyond the black letter of the statute, ordinary usage of the words “claim” and “prosecution” lends further credence to this view. Thus, claims and prosecutions can and should be understood to entail distinct legal meanings; criminal “prosecutions” do not fall within “claims” based on a textualist analysis of the FTAIA’s domestic effects prong.

To the extent that the Act’s terms are subject to multiple reasonable meanings, however, other interpretive canons suggest that its domestic effects prong does not extend to criminal actions under the Sherman Act where wholly foreign acts are concerned. The remainder of this Part evaluates arguments for and against extending the FTAIA to authorize extraterritorial criminal prosecutions based in non-textual interpretive canons, including: (1) extraterritoriality principles of comity and fairness; (2) applicable canons of statutory construction; and (3) consideration of the varied remedy schemes for criminal and civil Sherman Act violations.

B. Narrow Interpretation of the FTAIA Comports with International Comity Principles and Applicable Canons of Construction

Extraterritoriality principles further counsel departure from the prevailing interpretation of the FTAIA’s domestic effects prong. Notions of comity and fairness undergird extraterritorial antitrust jurisprudence. These adjudicatory principles also clarify U.S. competition policy for foreign governments and firms, as courts share legal authority with the executive and legislative branches where extraterritorial liability is involved. This discussion reflects that adherence to these principles would be best advanced by interpreting the FTAIA to presumptively prohibit domestic criminal prosecutions of wholly foreign conduct under the domestic effects prong.

The international comity doctrine historically served a central role in limiting the extraterritorial jurisdiction of federal courts. And today, even under the far narrower “direct conflict” standard set forth in Hartford Fire,[132] American courts regularly invoke “reasons of international comity” while describing the FTAIA as limiting “the extraterritorial application of U.S. antitrust law.”[133] Judge Posner’s statement is characteristic:

[A]re we to presume the inadequacy of the antitrust laws of our foreign allies? Would such a presumption be consistent with international comity, or more concretely with good relations with allied nations in a world in turmoil? . . . “Why should American law supplant, for example, Canada’s or Great Britain’s or Japan’s own determination about how best to protect Canadian or British or Japanese customers from anticompetitive conduct engaged in significant part by Canadian or British or Japanese or other foreign companies?”[134]

Comity similarly counsels courts in criminal matters under the FTAIA. American laws should not presumptively supplant foreign governments’ judgments concerning criminal liability, particularly in an interconnected global marketplace. Application of criminal punishment thus warrants hesitation upon consideration of “good relations with allied nations in a world in turmoil.”[135] The principles of fairness and reasonableness help to outline a doctrinally consistent conception of the FTAIA’s domestic effects prong, as these principles have historically aided federal courts in crafting remedies and resolving international conflicts.[136]

Alternatively, however, comity may counsel in favor of enabling criminal remedies for extraterritorial antitrust violations. For example, leading antitrust commentator Robert Connolly notes, “there is a difference between actions brought by the DOJ and private class action damages,” particularly with respect to the extent to which government and private plaintiffs consider “comity considerations.”[137] Arguing that “[n]o nation has objected to the DOJ’s successful prosecution of foreign companies and even citizens of that country in the LCD panel investigation,” and that “the DOJ seriously considers the views of foreign nations before bringing cases,” Connolly, an experienced practitioner with decades of experience at the Antitrust Division of the Department of Justice, projects confidence that past practice makes perfect.[138] This conception of the comity doctrine clearly influenced the court’s decision in Motorola Mobility:

[T]he . . . court should reach a decision that preserves the ability of the DOJ to protect American consumers and continue to lead the way in prosecuting international cartels—including appropriate component cartels. The court could also acknowledge the comity concerns of foreign nations and find application of [the indirect purchaser doctrine] a bar to foreign component civil damage cases.[139]

This view of comity appears highly limited, however, when cast against the principles underlying the doctrine and the weighty penalties associated with criminal antitrust actions under the Sherman Act. Neither the opinion in Motorola Mobility nor Connolly’s commentary acknowledge the limited nature of justifying the extension of American criminal penalties abroad based upon foreign states’ as-of-yet unstated approval of a single case arising from a single foreign conspiracy involving only several nations.

Under this view, to defend extraterritorial prosecutions beyond the Crystal Meetings conspiracy, something affirmative or principled is needed—something more than silence from foreign governments in the face of American action. Although coordination with foreign governments provides prima facie evidence that prosecutors can avoid chafing foreign sovereigns while applying the Sherman Act to wholly foreign conduct, the mere acquiescence of foreign states to such conduct should not temper characterization of American prosecutions as potential overreaching.[140] A more reasonable standard would presumptively limit the criminal domain of American prosecutors to domestic markets. This would encourage enhanced criminal enforcement activity by foreign governments, whose interests and authority are often more directly implicated in cases involving disputed extraterritorial conduct.

Fortunately, this is not a new concept. International comity already reflects an ingrained presumption against extraterritorial prosecutions under the Sherman Act. Generally, criminal law reflects social judgments regarding the proper magnitude of punishment acceptable for given violations in market competition and to consumer welfare. Different sovereign jurisdictions may make different judgments regarding whether to criminalize the same putatively anticompetitive conduct.[141] Moreover, different states punish offenders in different ways for the same crimes.[142] Variation in criminal punishment among developed nations reflects concomitant variation in social judgments regarding individual moral culpability and foundational precepts to systems of criminal justice. In this vein, from one dominant theoretical perspective, criminal liability confers a judgment of community condemnation of moral culpability.[143]

Amidst political uncertainty regarding norms of free trade and global economic cooperation,[144] American competition law should privilege the principles of reason and fairness imbued in the comity doctrine. Fairness lies at the heart of American criminal law––particularly when applied in the extraterritorial and criminal contexts.[145] Historical weighing of domestic and foreign sovereignty, which generally informs courts’ extraterritorial jurisdiction, should be imported into analysis of the FTAIA’s “claim” language in the context of criminal penalties. Certainly, the antitrust laws should not apply extraterritorially in criminal contexts when: (1) the parties are wholly foreign and foreign conduct constitutes the basis for the allegations; (2) direct effects are principally centered abroad; (3) there is a lack of foreseeable purpose to affect or harm domestic commerce; (4) foreign laws and policies conflict with American laws and policies to a high degree; and (5) simultaneous compliance with U.S. and foreign law is impossible.[146] The FTAIA’s “claim” language therefore naturally compliments the historically entrenched comity doctrine by barring criminal enforcement of the Sherman Act against foreign acts with effects on nonimport domestic commerce.[147]

Moreover, the strong presumption against extraterritorial application of federal law clearly applies in the case of criminal actions under the FTAIA. Courts presume that federal statutes do not apply extraterritorially in the absence of express legislative intent to the contrary.[148] To avoid this presumption against extraterritorial application of U.S. law, a plaintiff typically must bring a significant showing before the court of some “clear” expression of legislative intent to invoke the law beyond U.S. sovereign control.[149]

Relatedly, Morrison v. National Australia Bank Ltd. provides that the test of territoriality must look to the “focus” of a federal statute in determining the scope of a law.[150] In Morrison, for example, the Court held the territorial connections related to a statute’s “focus” may overcome the statutory presumption against territoriality.[151] Here, similarly, the focus of the FTAIA should guide federal courts in divining the extraterritorial scope of the statute’s criminal dimensions. Moreover, United States v. Bowman held that ambiguous criminal statutes generally should not apply extraterritorially, at least absent an extraterritorial intent clearly inferred from the nature of the offense itself.[152] Overall, these canons of construction reinforce comity considerations and counsel against interpreting the FTAIA to independently authorize criminal actions.

C. Distinct Remedies Reflect Distinct Treatment of Civil and Criminal Actions Under the FTAIA

A final consideration concerns the distinct remedies that the overall statutory scheme envisions for civil and criminal antitrust violations. According to regulators’ conception of the Sherman Act and its penalties, violations “may be prosecuted as civil or criminal offenses,” and punishments for civil and criminal offenses vary.[153] For example, available relief under the law encompasses penalties and custodial sentences for criminal offenses, whereas civil plaintiffs may “obtain injunctive and treble damage relief for violations of the Sherman Act.”[154] Regulators also recognize that the law envisions distinct means of enforcing criminal and civil offenses under the Sherman Act. For example, the DOJ retains the “sole responsibility for the criminal enforcement” of criminal offenses and “criminally prosecutes traditional per se offenses of the law.”[155] In civil proceedings, private plaintiffs and the federal government may seek equitable relief and treble damage relief for Sherman Act violations.[156]

These recognized remedial distinctions matter when assessing the FTAIA’s meaning. Along with the interpretive argument that the Sherman Act’s various provisions ought to be enforced in a way that is internally consistent, practical assessment of the varied remedies and parties that may pursue such remedies reinforces a narrow conception of the FTAIA’s language. The weighty power to seek imprisonment of offenders critically distinguishes criminal and civil remedies under the Sherman Act. The federal government alone retains such authority, predicated on principles of legality and sovereignty. For many reasons, it remains reasonable to permit civil redress—encompassing the full range of injunctive and damage relief—in extraterritorial proceedings under the Sherman Act. Aggrieved consumers and competitors targeted in American markets by foreign activities can sue for injunctive and treble damage relief under the Sherman Act’s civil provisions. Notably, the FTAIA permits as much by its own terms, at least where substantive elements under the Act are satisfied with respect to the requisite effect on domestic or direct import commerce.

In this sense, American law maintains a strong deterrent to foreign actors through a robust system of civil, as opposed to criminal, redress. Extraterritorial competitive injuries are left to the civil sphere under the FTAIA. Such civil remedies are more than sufficient to advance the objectives of the American competition regime abroad—namely, to prevent through legal means artificial distortions on the price and output of goods and services. American courts play a major role in the adjudication of disputes spanning distinct sovereign jurisdictions; that role is best maintained through established civil remedies. But criminal remedies—being reserved to the sovereign alone—should not extend extraterritorially. The remedial distinctions under the Sherman Act reflect the aims of criminal and civil competition law—criminally, to vindicate public wrongs, and civilly, to remedy private injuries.

Criminal antitrust remedies are logically limited in the context of foreign sovereign jurisdiction. By contrast, the Sherman Act’s civil remedies provide injunctive and damage relief that may compensate victims despite traditional notions of foreign sovereign authority. Far from one sovereign intervening in the backyard of another, a civil action enables individually aggrieved parties to receive compensation from an antitrust offender. This is an intuitive remedial extension of basic principles of legality and sovereignty. Thus, far from the government’s current position—that the FTAIA’s “claim” prong empowers prosecutors to independently seek criminal remedies for extraterritorial antitrust offenses—the overall remedy scheme for antitrust offenses reinforces a limited conception of criminal redress, particularly where the FTAIA provides the basis for government action.

The preceding discussion substantiates a narrow interpretation of the FTAIA as cabining the extraterritorial criminal antitrust jurisdiction of federal courts. Based on the factors cited––along with substantial historical evaluation of the Sherman Act and FTAIA––this interpretation is consistent with the plain letter of the Act, engrained legal norms, and applicable canons of construction. The current state of U.S. antitrust law tacitly endorses potential executive overreach into criminal judgments of co-equal sovereigns, which is questionable even under consensual arrangements with such governments.[157] Such sovereigns’ domestic political and legal processes properly decide criminal judgments, absent American influence or legal process. In light of growing economic globalization, Part III briefly considers various implications of the prevailing construction of the FTAIA as independently supporting criminal prosecutions of foreign anticompetitive conduct.

III. Implications for an Interconnected Global Political Economy

The foregoing analysis makes clear that the FTAIA was never intended to apply to criminal activity. Its drafters did not design the Act to reinforce American hegemony in the political economy of global competition policy. Rather, the statute provides express legislative guidance regarding the extraterritorial limits on criminal liability under the Sherman Act.

To date, the Supreme Court remains notably silent on the issue. In the meantime, Hui Hsiung and Motorola Mobility suggest that international businesses that participate in certain anticompetitive acts anywhere in the world should beware potential criminal redress in American courts. The chief implication of the “Crystal Meetings” cases is that anticompetitive conduct presents a massive criminal liability risk that may attach to commercial transactions that in many ways appear removed from American sovereignty. In particular, firms with foreign headquarters that deal significantly in American domestic commerce while operating abroad should consider the wide range of criminal remedies available to American prosecutors under the FTAIA.

In that vein, contractual agreements among segments of global supply chain networks should be drafted to avoid traditional areas of American criminal antitrust enforcement, such as price-fixing and bid rigging, territorial allocation mechanisms, and other “naked” collusive activities. Given that—at least in recent times—U.S. criminal enforcement actions are far more likely to stem from agreements between firms, rather than agreements enacted within a single entity, international businesses should factor antitrust enforcement concerns into assessing the relative risk of commercial dealings with partners. Owning subsidiaries, rather than dealing with others, may be a preferable alternative.[158]

Although vertical integration may shield firms from horizontal liabilities under section 1 of the Sherman Act, section 2 proscribes certain single-firm activities. Section 2 prohibitions include bans on attempted monopolization and the illegal maintenance or acquisition of monopoly power.[159] There are tensions inherent between self-dealing and dealing with others under U.S. antitrust law. Ironically, foreign firms may feel paralyzed by the vast scope of American antitrust law under courts’ expansive reading of the FTAIA in the criminal context—thus the Act may in fact fuel the type of commercial chilling effect bemoaned by legislators before its passage.[160]

Whereas the petitioners in Hui Hsiung failed to raise challenges to the criminal application of the domestic effects prong based on the FTAIA’s plain language and related arguments, future businesses and individuals targeted by criminal indictments should put the government to the test.[161] Multinational businesses play a major role in addressing the current conception of the FTAIA’s criminal dimensions—most notably by challenging the U.S. government to prove the Act should apply to extraterritorial criminal acts. The plain text of the statute should give new life to extraterritoriality jurisprudence by reasonably limiting the domain of American authorities. This development is only possible, however, if foreign defendants raise facial challenges to the Act’s extraterritorial criminal application.

In the meantime, beyond reflecting the risk of criminal antitrust liability in international business transactions, multinational businesses should consider the panoply of behavioral and structural remedies available to federal prosecutors. In particular, behavioral remedies encompass fines, penalties, and potential prison time, as well as long-term monitoring and compliance regimes.[162] Foreign firms like AU Optronics, if caught in the crosshairs of a criminal prosecution, could lose control of certain areas of corporate governance altogether, in order to ensure such firms continuing compliance with American law.[163]

The range of behavioral remedies available to American competition authorities underscores the importance of avoiding criminal liability altogether by embracing a culture of prospective caution regarding potentially collusive conduct.[164] Foreign executives intending to maintain full control of corporate affairs and eschew long-term compliance monitors should craft deals as though American competition law operates globally, or otherwise entirely avoid collusive activities that could reasonably wash up on American shores.[165] Given the depth of consumer demand in American markets, caution appears to be the best policy at present for the vast majority of major global businesses.

Conclusion

The foregoing discussion indicates that domestic antitrust laws play a major role in modern global trade regulation. Arguably more than any time since the passage of the FTAIA, today the international dimensions of competition policy warrant careful consideration by lawmakers, businesses, and legal practitioners. Markets are increasingly global, and the application of domestic competition law to international business has necessarily become more complex.

Although global trade can unlock market efficiencies and enhance consumer welfare, it must be managed diligently among co-equal sovereign collaborators.[166] The FTAIA clarifies that U.S. antitrust law plays a limited role in managing foreign anticompetitive activities. Moving forward, the FTAIA’s “effects exception” should therefore not be permitted to independently support extraterritorial criminal prosecutions under the Sherman Act. The plain language of the FTAIA, in tandem with other traditional tools of statutory interpretation, suggests a limited range of legal redress for competitive harms stemming from wholly foreign acts. Such activities are cabined to the domain of civil redress and should not be subject to criminal prosecution under the FTAIA.

An interpretation of the FTAIA that would reduce reliance on American criminal law enforcement in favor of civil redress and enhanced criminal action by foreign governments in the competition sphere would be preferable, as this approach would reduce the risk of impolitic prosecutorial overreach. Spirited arguments can be made for rigorous domestic criminal enforcement where Americans face competitive injuries, but these arguments become less clear‑cut in the global marketplace. Yet one thing is clear: The FTAIA—a pronouncement designed by Congress to clarify the limited range of extraterritorial claims under the Sherman Act—did not speak clearly enough for federal courts. Absent judicial action, Congress should enunciate that criminal penalties are in fact authorized by the FTAIA’s plain terms.

In the meantime, American competition authorities are prepared to exercise every ounce of extraterritorial authority meted out by the federal judiciary.[167] This portends potential conflict where rigorous international competition is involved. Although the litigants in Hui Hsiung failed to fully raise arguments challenging a Sherman Act criminal prosecution under the FTAIA, the decision remains instructive. Criminal penalties under the Sherman Act are currently available to American prosecutors under a domestic effects theory.[168] Sherman Act remedies are structural and behavioral. Thus, international businesses and their agents may face U.S. competition remedies that directly interfere with corporate governance structures, including, but not limited to, compliance monitors, deferred-prosecution agreements, and non-prosecution agreements.[169]

This portends trouble in a world already plagued by political uncertainty surrounding global trade.[170] Businesses and individuals facing the current legal regime should challenge criminal enforcement of the Sherman Act under the FTAIA’s domestic effects exception. Given a lack of a clear controlling precedent, a domestic effects theory should not permit U.S. authorities to pursue criminal sanctions against wholly foreign activities, which fall more reasonably within the domain of foreign governments’ competition authorities.[171] By challenging the law in this way, businesses might topple the edifice of judicial inference that has resulted in uniform treatment of civil claims and criminal actions under the Sherman Act’s extraterritorial dimensions.

Given the proliferation of domestic competition laws worldwide in recent decades,[172] in particular, the Sherman Act should not be elevated to the status of global doctrine.[173] Nor should American jurists desire it to be treated as such.[174] The application of domestic criminal law to foreign activities demands propriety, which, in the immediate context, is best achieved by presumptively tempering domestic executive authority. To the extent short-term underdeterrence follows from respecting foreign governments’ criminal antitrust regimes, American law offers a robust range of civil redress.[175]

Trade talk has shifted from an overall cooperative tenor to a chorus of conflict.[176] The amended “panel” decisions will stand as good law for the time being. However, presumptive equivocal treatment of the civil and criminal provisions of the Sherman Act after the FTAIA demands meaningful justification from U.S. courts in the immediate future. For although American antitrust laws play a significant role in the contemporaneous global political economy, words matter: “A rose by any other name may smell as sweet,”[177] but an indictment does not a claim make.

[*] *.. Executive Senior Editor, Southern California Law Review, Volume 92; J.D. Candidate 2019, University of Southern California Gould School of Law; B.S., summa cum laude, Political Science and Economics 2016, Bradley University. I thank my mother, Barbara J. Simmons, for her steadfast support and dedication to the memory of my father, Brian S. Simmons. I also thank USC Professors Brian Peck and Jonathan Barnett for sparking my interest in transnational competition law. Lastly, I thank the Law Review staff and editors for their thoughtful work. All errors are my own.

[1]. See Jason Margolis, Trump’s Trade Policies Worry Economists, USA Today (July 25, 2016, 10:57 AM), https://www.usatoday.com/story/news/world/2016/07/25/donald-trump-trade-policies-china
–mexico/87521852. In one of many regrettable juxtapositions in American history since June 16, 2015—the day Donald Trump announced his presidential candidacy—Mr. Margolis’s article portended calamitous results relatively well. See also David J. Lynch et al., U.S. Levies Tariffs on $34 Billion Worth of Chinese Imports, Wash. Post (July 6, 2018), https://wapo.st/2lTv5qz?tid=ss_tw-bottom&utm_term=.b5b9bb69b3be (“The conflict over U.S.-China trade has been brewing for years but has intensified rapidly in 2018. On April 3, the United States released a list of targets for proposed tariffs on $50 billion worth of Chinese imports, taking aim at high-tech and industrial goods. On April 4, China fired back.”). Entering October 2018, the United States and China, two leading jurisdictions in terms of the international sale of goods, have engaged in a disturbing series of retributory tariffs. Anna Fifield, China Thinks the Trade War Isn’t Really About Trade, Wash. Post (Sept. 24, 2018), https://wapo.st/2OMNyC7?tid=ss_tw&utm_term=.35afb21f7722 (reporting, in wake of announcement that China will “retaliate with tariffs on $60 billion of U.S. goods” in response to U.S. decision to “slap tariffs on an additional $200 billion worth of Chinese goods,” that Chinese officials view combative trade policy as part of a larger geopolitical threat from the United States); see also Robyn Dixon, China Accuses the U.S. of Holding a Knife to Its Neck and Rules Out New Talks to Resolve the Trade War, L.A. Times (Sept. 25, 2018), http://www.latimes.com/world/la-fg-china-trade-war-09-25-18-story.html (reporting Chinese officials considered “U.S. tariffs on $200 billion in Chinese goods . . . so massive that it made trade talks impossible”); Donald J. Trump (@realDonaldTrump), Twitter (Jul. 24, 2018, 8:29 AM), https://twitter.com/realdonaldtrump/status/1021719098265362432 (“Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that – and everybody’s talking! Remember, [the United States is] the ‘piggy bank’ that’s being robbed. All will be Great!”).

[2]. Margolis, supra note 1; see also Dixon, supra note 1. See generally Issues: Foreign Policy, WhiteHouse.gov, https://www.whitehouse.gov/america-first-foreign-policy (last visited Nov. 28, 2018) (“The promise of a better future will come in part from reasserting American sovereignty and the right of all nations to determine their own futures.”).

[3]. Remarks by President Trump to the World Economic Forum, WhiteHouse.gov (Jan. 26, 2018), https://www.whitehouse.gov/briefings-statements/remarks-president-trump-world-economic-forum (“We cannot have free and open trade if some countries exploit the system at the expense of others. We support free trade, but it needs to be fair and it needs to be reciprocal. Because, in the end, unfair trade undermines us all.”); see also Donald J. Trump (@realDonaldTrump), Twitter (Mar. 4, 2018, 4:10 PM), https://twitter.com/realDonaldTrump/status/970451373681790978 (“We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our . . . industries are dead. Sorry, it’s time for a change!”); Donald J. Trump (@realDonaldTrump), Twitter (Mar. 2, 2018, 2:50 AM), https://twitter.com/realdonaldtrump
/status/969525362580484098 (suggesting, in light of U.S. trade deficit of billions of dollars, “trade wars are good, and easy to win” (emphasis added)).

[4]. See Margolis, supra note 1 (“Trump’s major policy positions [on trade] are primarily focused on two countries: China and Mexico.”); see also Phil Levy, Dumping, Cheating and Illegality: Trump Misleads the Public on Steel Tariffs, Forbes (Mar. 12, 2018, 2:59 PM), https://www.forbes.com
/sites/phillevy/2018/03/12/dumping-cheating-and-illegality-trump-misleads-the-public-on-steel-tariffs; accord Donald J. Trump (@realDonaldTrump), Twitter (Jun. 10, 2018, 6:17 PM), https://twitter.com
/realDonaldTrump/status/1005982266496094209 (“Why should [the United States] allow countries to continue to make Massive Trade Surpluses, as they have for decades, while our Farmers, Workers & Taxpayers have such a big and unfair price to pay? Not fair to the PEOPLE of America!”); Donald J. Trump (@realDonaldTrump), Twitter (Jun. 2, 2018, 2:23 PM), https://twitter.com/realDonaldTrump
/status/1003024268756733952 (“The U.S. has been ripped off by other countries for years on Trade, time to get smart!”); Donald J. Trump (@realDonaldTrump), Twitter (Mar. 5, 2018, 7:47 AM), https://twitter.com/realdonaldtrump/status/970626966004162560 (“We have large trade deficits with Mexico and Canada.”).

[5]. Pankaj Ghemawat, Globalization in the Age of Trump, Harv. Bus. Rev., July–Aug. 2017, https://hbr.org/2017/07/globalization-in-the-age-of-trump (“The myth of a borderless world has come crashing down. Traditional pillars of open markets—the United States and the UK—are wobbling, and China is positioning itself as globalization’s staunchest defender.”); see also Josh Zumbrun & Bob Davis, Trade Tensions Intensify as Allies Rebuke U.S., Testing Trump Ahead of G-7, Wall St. J. (June 3, 2018, 8:02 PM), https://www.wsj.com/articles/global-trade-tensions-intensify-1528070538; cf. Gao Shangquan, U.N. Comm. for Dev. Policy, U.N. Doc. ST/ESA/2000/CDP/1, Economic Globalization: Trends, Risks, and Risk Prevention 1–4 (2000), http://www.un.org/en
/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf (asserting economic globalization trends are “irreversible,” and forecasting developmental risks posed by economic globalization).

[6]. Lynch et al., supra note 1; cf. Donald J. Trump (@realDonaldTrump), Twitter (June 2, 2018, 2:23 PM), https://twitter.com/realDonaldTrump/status/1003024268756733952 (“When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!”).

[7]. See Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (2018); see also Ian Simmons et al., Where to Draw the Line: Should the FTAIA’s Domestic Effects Test Apply in Criminal Prosecutions?, 29 Antitrust 42, 42–46 (2015) (evaluating debate over extraterritorial contours of Sherman Act in criminal context).

[8]. See, e.g., Melinda F. Levitt & Howard W. Fogt, International Trade and Antitrust: Clarity Put on Hold as FTAIA Conflict/Confusion Continues, Foley (July 30, 2015), https://www.foley.com
/international-trade-and-antitrust–clarity-put-on-hold-as-ftaia–conflictconfusion-continues (“Maybe the ball is back in Congress’s court. . . . However, given the present level of functionality with the United States Congress, I don’t think we are going to see that in the near future, unfortunately. And so, anybody who treads in these waters needs to continue to be very careful and monitor the situation as we go forward.”) (Melinda F. Levitt, at 1:01:12–1:01:48). But see Simmons et al., supra note 7, at 46 (suggesting plain language and clear legislative intent permit only civil liability for foreign actors under the FTAIA’s “domestic effects” exception).

[9]. Appalachian Coals, Inc. v. United States, 288 U.S. 344, 359–60 (1933) (“As a charter of freedom, the act has a generality and adaptability comparable to that found to be desirable in constitutional provisions.”); see also Directorate for Fin. & Enter. Affairs Competition Com., Roundtable on the Extraterritorial Reach of Competition Remedies – Note by the United States 3–4 (Dec. 4–5, 2017), https://www.ftc.gov/system/files/attachments/us-submissions-oecd-other-international-competition-fora/et_remedies_united_states.pdf (“[The Antitrust Division and DOJ] require relief sufficient to eliminate identified anticompetitive harm that has the requisite connection to U.S. commerce and consumers, even if this means reaching assets or conduct in a foreign jurisdiction.” (footnote omitted)).

[10]. See, e.g., United States v. Hui Hsiung, 778 F.3d 738, 758–59 (9th Cir. 2015), cert. denied, 135 S. Ct. 2837 (2015) (upholding criminal sentence under FTAIA for foreign price-fixing conspiracy with “effect” on United States).

[11]. Cf. Levitt & Fogt, supra note 8 (detailing ongoing debate over extraterritoriality in American antitrust jurisprudence after FTAIA).

[12]. Concerns surrounding extraterritoriality in U.S. competition policy are heightened in light of businesses’ widespread embrace of lean methodology and global supply-chain management strategies, which increasingly distribute goods and services throughout a single firm’s transnational network to maximize profit and minimize waste. See generally Michael H. Hugos, Essentials of Supply Chain Management (3d ed. 2011). Specifically, the emergence of global supply chain networks has unleashed a variety of associated complications with respect to commercial regulations. Cf. U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidelines for International Enforcement and Cooperation 16–25 (2017), https://www.justice.gov/opa/press-release/file/926481/download [hereinafter International Guidelines] (describing agencies’ extraterritorial prerogatives under the FTAIA); Joseph P. Bauer, The Foreign Trade Antitrust Improvements Act: Do We Really Want to Return to American Banana?, 65 Me. L. Rev. 3, 5 (2012).

While there is extensive disagreement about the specifics with respect to what behavior and structure the antitrust laws should seek to prohibit or permit, there is broad, general consensus on the goals of the antitrust laws. . . . [E]nhancement of consumer welfare, the promotion of competition, and compensation of the victims of antitrust violations. . . . [T]he FTAIA has significantly undermined the achievement of these goals.

Bauer, supra, at 5.

[13]. Phillip Areeda et al., Antitrust Analysis: Problems, Text, and Cases ¶¶ 168–69 (7th ed. 2013) (“With ever-expanding globalization, instances of conflicting—as well of complementary—interests among jurisdictions involving multinational business activity will become increasingly frequent. . . . [I]n many individual cases an anticompetitive practice may well benefit some jurisdictions . . . [however,] the reciprocal nature of foreign trade suggests the existence of opportunities for mutual gain.”); see also Jennifer B. Patterson & Terri A. Mazur, Kaye Scholer, Recent Developments in the Extraterritorial Reach of the U.S. Antitrust Laws (2014), https://www.arnoldporter.com/-/media/files/ks-imported/20140813_r
_pattersonmazurinsidecounselarticleaugust132014pdf; Levitt & Fogt, supra note 8.

[14]. Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a (2018). The statute’s language is overly formalistic and consequently complicated. Accord United States v. Nippon Paper Indus. (Nippon II), 109 F.3d 1, 4 (1st Cir. 1997) (describing the FTAIA as “inelegantly phrased”). In effect, its terms cabin the Sherman Act’s scope to activity beyond U.S. borders, providing that such conduct gives rise to domestic antitrust liability only if it: (1) involves “import commerce;” or (2) has a “direct, substantial, and reasonably foreseeable effect” on domestic trade or commerce, which “gives rise to a claim” under the Sherman Act. See 15 U.S.C. § 6a (emphasis added).

[15]. F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 169 (2004) (“[T]he FTAIA’s language and history suggest that Congress designed the FTAIA to clarify, perhaps to limit, but not to expand in any significant way, the Sherman Act’s scope as applied to foreign commerce.”).

[16]. See United States v. Hui Hsiung, 778 F.3d 738, 738, 756–60 (9th Cir. 2015).

[17]. Id. at 743 (quoting 15 U.S.C. § 6a).

[18]. See id.

[19]. Id. at 743, 748, 750–53, 756–60 (providing the required test under the first prong of the “domestic effects” exception, as articulated under the FTAIA).

[20]. See, e.g., id. at 743 (“Crystal Meeting participants stood to make enormous profits from TFT–LCD sales to United States technology retailers. . . . [T]he United States comprised approximately one-third of the global market for personal computers incorporating TFT–LCDs, and sales . . . generated over $600 million in revenue.”). For example, the conspiracy targeted commercial electronics retailers, like Motorola and Apple, which incorporated the price-fixed panel technologies in overseas production processes earlier in the supply chain. See id.

[21]. See id. at 751–53 (“The FTAIA . . . provides substantive elements under the Sherman Act in cases involving nonimport trade with foreign nations.” (emphasis added)). See generally 15 U.S.C. § 6a(2) (“[S]uch effect gives rise to a claim under the provisions of [the Sherman Act] . . . .” (emphasis added)).

[22]. The court’s final analysis lacks any substantive discussion of whether a criminal indictment may give rise to a domestic antitrust “claim” within the meaning of the FTAIA’s domestic effects prong, while concluding that the question of “what conduct [the FTAIA] prohibits is a merits question, not a jurisdictional one.” Hui Hsiung, 778 F.3d at 752 (internal quotation marks omitted). Colorable arguments exist to support a broad interpretation of the FTAIA as authorizing both civil and criminal “claims” if wholly foreign conduct has a “direct, substantial, and reasonably foreseeable” effect on nonimport domestic commerce, see, for example, infra text accompanying notes 67–72, but the panel decision offers none. See, e.g., Simmons et al., supra note 7, at 42 (“[T]he amended opinion upheld the convictions . . . without any significant discussion of whether [the “domestic effects” prong] can independently support a criminal prosecution [under the Sherman Act].”). At the very least, the panel owed the public a legal justification for its implicit ruling that a criminal indictment constitutes a “claim” under the “domestic effects” exception. In reality, a more efficacious reading of the FTAIA’s exception would limit the reach of the Sherman Act to only civil claims, at least where nonimport “domestic effects” form the basis of an extraterritorial competition “claim.” See, e.g., infra Part II (arguing that the FTAIA facially prohibits extraterritorial criminal prosecutions on the independent “domestic effects” theory, in part because neither prosecutions nor indictments actually amount to “claims” within the plain meaning of the “domestic effects” exception).

[23]. Accord Levitt & Fogt, supra note 8.

[24]. See generally supra notes 7–23 (reviewing FTAIA’s “domestic effects” exception and Hui Hsiung).

[25]. Moreover, in light of the proliferation of highly integrated global supply chain networks, see generally Hugos, supra note 12, as well as the emergence of a tense global political economy surrounding free trade and international competition, see supra notes 1–5, this subject appears increasingly relevant to federal courts, legal practitioners, and the tens of thousands of firms doing business in America.

[26]. See, e.g., Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 n.23 (1993) (noting disagreement regarding whether the FTAIA’s “direct, substantial, and reasonably foreseeable effect” standard amends existing law or merely codifies it, but declining to take up the issue).

[27]. See infra Part II.

[28]. For rich academic discussion of foreign commerce and the complex relationships forged between foreign commerce and domestic antitrust laws, see generally Wilbur L. Fugate & Lee H. Simowitz, Foreign Commerce and the Antitrust Laws (5th ed. 1996 & Supp. 2018). Sections I.A.1–2 are designed to provide useful historical context for the FTAIA’s substantive provisions and recent judicial decisions; they are not intended to provide exhaustive review of the Sherman Act in international commerce.

[29]. 15 U.S.C. §§ 1–2 (2018) (criminal antitrust violations). See also Areeda et al., supra note 13, ¶ 168 n.101 (discussing definitions of “commerce” and the extraterritorial reach of various antitrust provisions, including sections 1, 2, and 7 of the Sherman Act, as well as the Clayton Act, and the Federal Trade Commission Act).

[30]. Am. Banana Co. v. United Fruit Co., 213 U.S. 347, 357 (1909) (Holmes, J.) (holding the Sherman Act does not apply to acts taken in Panama and Costa Rica, which fall beyond territorial borders of United States); see also Edward D. Cavanagh, The FTAIA and Claims by Foreign Plaintiffs Under State Law, 26 Antitrust L.J. 43, 43–44 (2011) [hereinafter Cavanagh, The FTAIA]; Edward D. Cavanagh, The FTAIA and Subject Matter Jurisdiction over Foreign Transactions Under the Antitrust Laws: The New Frontier in Antitrust Litigation, 56 SMU L. Rev. 2151, 2153–56 (2003) [hereinafter Cavanagh, The New Frontier].

[31]. See United States v. Aluminum Co. of Am. (Alcoa), 148 F.2d 416, 440–45 (2d Cir. 1945) (Hand, J.) (“[A]ny state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends.”); Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 705 (1962) (approving of the Second Circuit decision in Alcoa and finding jurisdiction where foreign defendants’ conduct abroad had an “impact within the United States and upon its foreign trade”).

[32]. Bauer, supra note 12, at 8.

[33]. Alcoa, 148 F.2d at 443–44. The panel noted, “[b]oth agreements would clearly have been unlawful, had they been made within the United States; and it follows from what we have just said that both were unlawful, though made abroad, if they were intended to affect imports and did affect them.” Id. at 444. Although the case is famous for its domestic implications and market share analysis, the decision also marks a key moment in extraterritorial antitrust jurisprudence. Under the panel’s view, criminal liability under the antitrust laws historically attached to wholly foreign conduct involving imports; foreign conduct that affected nonimport domestic commerce was historically only subject to civil liability, not criminal prosecution. Alcoa therefore provides only limited authority for extraterritorial criminal liability in nonimport contexts, as when foreign actors are prosecuted on the basis of downstream effects on domestic commerce.

[34]. Id. at 443–44.

[35]. An interesting aspect of the Alcoa case was simply its procedural posture. In 1944, the Supreme Court announced that it would not have a quorum to hear the case. Congress subsequently designated the case to the Second Circuit through a special act that stands to this day. See generally Act of June 9, 1944, 28 U.S.C. § 2109 (2018).

[36]. See, e.g., Areeda et al., supra note 13, ¶ 168.

[37]. Alcoa, 148 F.2d at 443.

[38]. Cf. id. This inference appears reasonable given federal courts’ position as legal custodians in the United States, one of the foremost consumer markets in the developed world. Cf. United States v. Hui Hsiung, 778 F.3d 738, 743 (9th Cir. 2015) (noting “Crystal Meetings” conspiracy targeted leading firms in American consumer electronics market); Shangquan, supra note 5.

[39]. Alcoa, 148 F.2d at 443 (emphasis added).

[40]. See, e.g., United States v. Nippon Paper Indus., 109 F.3d 1, 2, 4–5 (1st Cir. 1997). Indeed, this widely-adopted standard for extraterritorial antitrust analysis has been referred to as the “effects doctrine” or “effects test” in civil and criminal actions. See John W. Head, Global Business Law: Principles and Practice of International Commerce and Investment 643 (3d ed. 2012); Developments in the Law: Extraterritoriality, 124 Harv. L. Rev. 1226, 1269–74 (2011).

[41]. See, e.g., Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796 (1993) (adopting Alcoa effects test following passage of FTAIA where it could be shown that conduct “was meant to produce and did in fact produce some substantial effect in the United States”); accord Filetech S.A. v. Fr. Telecom, S.A., 157 F.3d 922, 931 (2d Cir. 1998) (following Hartford Fire’s construction of the prevailing Alcoa effects test).

[42]. See generally Harold G. Maier, Extraterritorial Jurisdiction at a Crossroads: An Intersection Between Public and Private International Law, 76 Am. J. Int’l L. 280 (1982) (describing role of the comity doctrine in extraterritorial application of domestic laws). The Supreme Court recently clarified the doctrine of “international comity” with respect to a foreign government’s official statement concerning the meaning of its own domestic law. See generally Animal Sci. Prods., Inc. v. Hebei Welcome Pharm. Co., 138 S. Ct. 1865 (2018), vacating and remanding In re Vitamin C Antitrust Litig., 837 F.3d 175 (2d Cir. 2016). The Court suggested American courts are “not bound to accord conclusive effect to the foreign government’s statements,” in such instances, but declined to undertake the analysis itself and instead remanded the case for further consideration consistent with its opinion. Animal Science, 138 S. Ct. at 1869, 1875 (“The correct interpretation of Chinese law is not before this Court, and we take no position on it.”).

[43]. See, e.g., Timberlane Lumber Co. v. Bank of Am. N.T. & S.A., 549 F.2d 597, 613 (9th Cir. 1977) (court may refrain from asserting “extraterritorial authority,” despite finding of some actual or intended effect, upon presence of factors implicating international comity concerns in rendering judgment), superseded by statute, 15 U.S.C. § 6a (2018), as recognized in McGlinchy v. Shell Chem. Co., 845 F. 2d 802, 813 n.8 (9th Cir. 1988).

[44]. Areeda et al., supra note 13, ¶ 168(b) (citing Timberlane Lumber Co. v. Bank of Am. N.T. & S.A., 749 F.2d 1378 (9th Cir. 1984), cert. denied, 472 U.S. 1032 (1985)). The Timberlane court ultimately dismissed the plaintiff’s claim based on the legitimacy of the defendant’s foreign acts under Honduran law, as well as the meager effects on competition within the United States. Timberlane, 749 F.2d at 1384–86.

[45]. Timberlane, 749 F.2d at 1386.

[46]. Cavanagh, The New Frontier, supra note 30, at 2154. But see id. (“While one cannot fault these courts for attempting to develop comprehensive jurisdictional standards, it is undeniable that infusing the issue of comity into the jurisdictional analysis has generated more confusion than certainty and has created significant unpredictability in the law.” (emphasis added)).

[47]. Restatement (Third) on Foreign Relations Law of the United States §§ 402–03, § 403 cmt. a (Am. Law Inst. 1987) [hereinafter Restatement].

[48]. See, e.g., F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 165–69 (2004) (discussing prescriptive comity considerations in connection with FTAIA’s domestic effects exception and concluding that the Act did not apply given Congress’s adherence to principles of comity in international commercial relations).

[49]. See Joel R. Paul, The Transformation of International Comity, 71 Law & Contemp. Probs. 19, 36, 38 (2008) (noting that courts’ application of comity doctrine reflects concerns for separation of powers, historical experience, and respect for foreign sovereignty in context of extraterritorial antitrust disputes).

[50]. See McGlinchy v. Shell Chem. Co., 845 F.2d 802, 813 n.8 (9th Cir. 1988) (adopting Timberlane standard and noting that the FTAIA “did not change the ability of courts to exercise principles of international comity” in antitrust actions); see also Mannington Mills v. Congoleum Corp., 595 F.2d 1287, 1297–98 (3d Cir. 1979) (affirming Timberlane and listing ten comity factors relevant to “balancing process”); Pillar Corp. v. Enercon Indus. Corp., 694 F. Supp. 1353, 1360–61 (E.D. Wis. 1988) (discussing “concerns raised” by Mannington Mills and Timberlane courts); Dominicus Americana Bohio v. Gulf & W. Indus., 473 F. Supp. 680, 687 (S.D.N.Y. 1979) (following Mannington Mills analysis of ten factors relevant to comity analysis). But see Hartford Fire, Ins. Co. v. California, 509 U.S. 764, 796–99 (1993) (principles of international comity are only raised upon a “true conflict” between U.S. and foreign law).

[51]. Timberlane v. Bank of Am. N.T.& S.A., 749 F.2d 1378, 1384–86 (9th Cir. 1984).

[52]. Hartford Fire, 509 U.S. at 796–99.

[53]. Id. at 798–99.

[54]. Id. at 797.

[55]. Id. at 799.

[56]. Id. at 796.

[57]. See id. at 796 n.23.

[58]. However, it is essential to note at the onset of this discussion that, despite judicial treatment of the Act’s thornier components, compelling commentary has called for repeal of the FTAIA altogether. See generally Robert E. Connolly, Repeal the FTAIA! (Or at Least Consider It as Coextensive with Hartford Fire), CPI Antitrust Chron. (Sept. 2014), https://www.competitionpolicyinternational.com/assets/Uploads/ConnollySEP-141.pdf [hereinafter Connolly, Repeal the FTAIA!] (noting “[a] primary motivation behind the FTAIA was to give immunity to American exporters to engage in anticompetitive conduct—as long as it negatively affected only foreign consumers,” and arguing the FTAIA should not govern the extraterritorial reach of the Sherman Act). Connolly reiterates and extends portions of his argument in a companion article. Robert E. Connolly, Motorola Mobility and the FTAIA, CartelCapers (Sept. 30, 2014), http://cartelcapers.com/blog/motorola-mobility-ftaia.

[59]. See 15 U.S.C. § 6a (2018).

[60]. Id. (emphasis added).

[61]. See id.; accord United States v. Hui Hsiung, 778 F.3d 738, 750–51 (9th Cir. 2015); Carpet Grp. Int’l v. Oriental Rug Imps. Ass’n, 227 F.3d 62, 71 (3d Cir. 2000) (citing Eskofot A/S v. E.I. Du Pont Nemours & Co., 872 F. Supp. 81, 85 (S.D.N.Y. 1995)) (noting the implication that the Sherman Act applies to “import trade and import commerce is unmistakable”). The import commerce prong likely applies where a defendant sells a finished product directly to American consumers in the United States. See Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 855 (7th Cir. 2012) (en banc), cert. denied, 570 U.S. 935 (2013).

[62]. F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 163 (2004).

[63]. See Carpet Grp. Int’l, 227 F.3d at 71.

[64]. See Connolly, Repeal the FTAIA!, supra note 58.

[65]. H.R. Rep. No. 97–686, at 2–3 (1982), as reprinted in 1982 U.S.C.C.A.N. 2487, 2491; see also 15 U.S.C. § 4001 (2018) (“It is the purpose of this chapter to increase United States exports of products and services by encouraging more efficient provision of export trade services to United States producers and suppliers, in particular by . . . modifying the application of antitrust laws to certain export trade.”).

[66]. H.R. Rep. No. 97–686, at 6 (1982).

[67]. Id. at 5.

[68]. Id. (emphasis added) (citing Cont’l Ore Co. v. Union Carbide, 370 U.S. 690, 704–05 (1962) and Steele v. Bulova Watch Co., 344 U.S. 280, 286 (1952)).

[69]. H.R. Rep. No. 97–686, at 2–3 (1982).

[70]. Of critical importance to subsequent analysis in this Note—an unstated desire to protect U.S. commercial interests also pervades modern judicial interpretations of the FTAIA, at least with respect to civil actions. See, e.g., Bauer, supra note 12, at 24 (“Arguably, the courts are seeking to protect the interests of American companies doing business abroad and of foreign companies doing business in the United States, with the unstated assumption that somehow this will result in a net benefit to the American economy.”).

[71]. See, e.g., Connolly, Repeal the FTAIA!, supra note 58 (proposing outright repeal of the Act).

[72]. See, e.g., Cavanagh, The New Frontier, supra note 30, at 2159 (“It has therefore fallen to the courts to determine the precise meaning and scope of the FTAIA.”). Indeed, given prolonged legislative inaction on the subject, federal courts arguably must define the scope of the FTAIA to yield some measure of clarity for litigants. See Levitt & Fogt, supra note 8 (suggesting legislative revision of FTAIA is unlikely but may be necessary).

[73]. Hartford Fire Ins. Co. v. California, 509 U.S. 764, 796–97, 796 n.23 (1993); see also supra Section I.A.2 (discussing comity concerns in Hartford Fire).

[74]. Hartford Fire, 509 U.S. at 796–97.

[75]. United States v. Nippon Paper Indus. (Nippon I), 944 F. Supp. 55, 57–58 (D. Mass. 1996) (dismissing criminal antitrust indictment for lack of jurisdiction under Sherman Act).

[76]. See id. at 58. The thrilling basis for the government’s prosecution stemmed from Nippon Paper Industries’ corporate predecessor, “Jujo Paper,” allegedly agreeing with unnamed Japanese firms to “fix prices of jumbo roll thermal facsimile paper (‘fax paper’) sold in the United States,” in violation of section 1 of the Sherman Act. Id.

[77]. Id. at 64.

[78]. Id. at 65 (emphasis added) (construing United States v. Bowman, 260 U.S. 94, 97–98 (1922) as holding the presumption against extraterritorial application of federal law “carries even more weight when applied to criminal statutes”).

[79]. See id. at 64–66.

[80]. United States v. Nippon Paper Indus. (Nippon II), 109 F.3d 1, 2–3 (1st Cir. 1997) (detailing the essential “Fax” underlying the panel’s decision); Raymond Krauze & John Mulcahy, Antitrust Violations, 40 Am. Crim. L. Rev. 241, 278–79 (2003) (“[T]he First Circuit reinstated the indictment of a foreign-based defendant for conduct occurring wholly outside of the United States, and the case looks to be a harbinger of the Antitrust Division’s growing ability to combat international price-fixing.”); see also 15 U.S.C. §§ 1–2 (2018) (criminal antitrust violations for horizontal restraints of trade and monopolization practices).

[81]. Nippon II, 109 F.3d at 5 (emphasis added).

[82]. Id. at 4.

[83]. Id. at 6. The panel further noted that although Nippon and its expert witnesses argued that this was “the first criminal case in which the United States endeavor[ed] to extend Section One to wholly foreign conduct,” an “absence of earlier criminal actions is probably more a demonstration of the increasingly global nature of our economy than proof that Section One cannot cover wholly foreign conduct in the criminal milieu.” Id. In the court’s view, the mere lack of precedent imposing criminal liability to wholly foreign conduct did not bar prosecutors from bringing charges under section 1. Id. Critically, in the view of the court, the language of the FTAIA itself also did not impact the ability of U.S. authorities to bring criminal prosecutions against solely extraterritorial conduct. See id. at 4–6.

[84]. Id. at 9 (emphasis added).

[85]. Id. at 9 (Lynch, J., concurring) (emphasis added) (quoting Appalachian Coals, Inc. v. United States, 288 U.S. 344, 359–60 (1933)).

[86]. Id. at 4–6.

[87]. Rather, along with the language and history of the FTAIA, Nippon I provides a helpful interpretive model for understanding the boundaries of U.S. law in the extraterritorial criminal context. In many ways, Nippon I challenges convention, as many courts have inferred substantially similar treatment of the Sherman Act’s criminal and civil provisions after Hartford Fire—a case in which only civil antitrust claims were at issue.

[88]. F. Hoffman-La Roche, Ltd. v. Empagran S.A., 542 U.S. 155, 174–75 (2004) (internal quotation marks omitted) (quoting 15 U.S.C. § 6a(2) (2018)).

[89]. Id.

[90]. Id. at 173–75 (“Respondents concede that this claim is not their own claim; it is someone else’s claim. . . . “[T]hat is, the conduct’s domestic effects did not help to bring about that foreign injury.”); see also Empagran S.A. v. F. Hoffman-La Roche, Ltd., 417 F.3d 1267, 1270–71 (D.C. Cir. 2005) (noting on remand that the FTAIA codifies a proximate cause standard for Sherman Act claims involving foreign trade or commerce).

[91]. See Empagran, 417 F.3d at 1270–71.

[92]. United States v. Hui Hsiung, 778 F.3d 738, 750–51 (9th Cir. 2015).

[93]. Motorola Mobility, LLC v. AU Optronics Corp., 775 F.3d 816, 824 (7th Cir. 2014), cert. denied, 135 S. Ct. 2837 (2015).

[94]. Motorola Mobility, 135 S. Ct. at 2837 (denying petitions for certiorari in Motorola Mobility and Hui Hsiung). However, independent state-law actions have proceeded parallel to federal litigation surrounding the “Crystal Meeting” conspiracy. For example, consumer plaintiffs in the State of Washington will receive a total of $41.1 million in “overcharge” damages stemming from the conspiracy’s agreement to manipulate the supply of LCD panels to artificially increase prices. See Press Release, Wash. State Office of the Attorney Gen., More Than $41M Headed to Consumers in AG Ferguson’s LCD Price-Fixing Case (Sept. 14, 2017), http://www.atg.wa.gov/news/news-releases/more-41m-headed-consumers-ag-ferguson-s-lcd-price-fixing-case.

[95]. But see Robert E. Connolly, Why the Supreme Court Refused to Hear the FTAIA Appeals, Law360 (June 16, 2015, 10:22 AM), https://www.law360.com/articles/668031/why-the-supreme-court-refused-to-hear-the-ftaia-appeals (arguing that Hui Hsiung and Motorola Mobility were correctly decided and that the cases were sufficiently factually dissimilar to avoid facial contradiction between the final Circuit opinions).

[96]. See infra Part II.

[97]. LCD panels sold above competitive prices were incorporated in laptops, desktops, and television screens purchased by American consumers. See Brandon Garrett, Too Big to Jail: How Prosecutors Compromise with Corporations 235–36 (2014) (describing “Crystal Meetings” conspiracy, harms to American consumers, and federal prosecution). One definition of “LCD” describes the technology as “an electronic display (as of the time in a digital watch) that consists of segments of a liquid crystal whose reflectivity varies according to the voltage applied to them.” LCD, Merriam-Webster’s Collegiate Dictionary (11th ed. 2017). LCD panels are increasingly incorporated into handheld technologies, such as smartphones, watches, telephonic displays, as well as computer screens and televisions, among many other products. See generally Joseph A. Castellano, Liquid Gold: The Story of Liquid Crystal Displays and the Creation of an Industry (2005) (tracing history of LCD panel technology and modern applications of technology).

[98]. See Hui Hsiung, 778 F.3d at 743 (outlining “Crystal Meetings” conspiracy). The final judgment notes that affected panels were purchased by market leaders, including “Dell, Hewlett Packard (‘HP’), Compaq, Apple, and Motorola for use in consumer electronics.” Id.

[99]. Id.

[100]. Id.; accord Brent Snyder, U.S. Dep’t of Justice, Antitrust Div. Individual Accountability for Antitrust Crimes 6 (2016), https://www.justice.gov/opa/file/826721
/download (“High-level executives were also prosecuted in the . . . LCD investigations, including two chairmen/CEOs, four presidents, more than 20 vice presidents, and a number of managers and directors. Among these were the president and executive vice president of the third largest LCD maker in the world. . . . [A] jury convicted these two, and they are currently serving 36-month jail terms—the longest sentences ever imposed on foreign-national defendants for antitrust offenses.”); Dep’t of Justice, Antitrust Div., Antitrust Primer for Federal Law Enforcement Personnel 4 (2018) [hereinafter Antitrust Primer], https://www.justice.gov/atr/page/file/1091651/download (discussing LCD-panel price-fixing conspiracy proceedings in U.S. federal courts).

[101]. Hui Hsiung, 778 F.3d at 757.

[102]. Id. at 743.

[103]. Id. at 744.

[104]. Id.

[105]. Id.

[106]. Id.

[107]. Id. at 745; accord Snyder, supra note 100, at 6; Antitrust Primer, supra note 100, at 4 (noting final fines in the LCD antitrust investigation and prosecutions “led to criminal fines totaling more than $1.39 billion and charges against 22 executives,” the majority of whom pleaded guilty or were convicted at trial before U.S. tribunals).

[108]. H ui Hsiung, 778 F.3d at 745.

[109]. United States v. Hui Hsiung, 758 F.3d 1074, 1095 (9th Cir. 2014), amended by United States v. Hui Hsiung, 778 F.3d 738 (2015).

[110]. Hui Hsiung, 778 F.3d at 743, 751, 756.

[111]. Id. at 743, 751, 760.

[112]. See, e.g., supra notes 21–22.

[113]. Press Release No. 12-1140, Dep’t of Justice Office of Pub. Affairs, Antitrust Div., Taiwan-Based AU Optronics Corp. Sentenced to Pay $500 Million Criminal Fine for Role in LCD Price-Fixing Conspiracy (Sept. 20, 2012), https://www.justice.gov/opa/pr/taiwan-based-au-optronics-corporation-sentenced-pay-500-million-criminal-fine-role-lcd-price. In total, the Department of Justice (“DOJ”) reported that “eight companies have been convicted of charges arising out of the . . . ongoing investigation” into the LCD-panel price-fixing conspiracy, which “have been sentenced to pay criminal fines totaling $1.39 billion.” Id. (emphasis added). As of September 2012, the DOJ boasted that twenty-two executives had been charged in the foreign conspiracy; twelve had been convicted and “sentenced to serve a combined total of 4,871 days in prison” in the United States. Id. (emphasis added). These weighty penalties associated with criminal antitrust prosecutions particularly warrant heightened judicial scrutiny of the FTAIA’s language, purpose, and scope in the criminal context. Accord Antitrust Primer, supra note 100, at 3–4 (summarizing total fines and penalties in LCD-panel cases).

[114]. Hui Hsiung, 778 F.3d at 758–60 (evaluating defendants’ sufficiency of evidence challenges to government’s alleged “direct, substantial, and reasonably foreseeable” effect on U.S. nonimport trade or commerce).

[115]. Id. at 752–53.

[116]. See id. at 756–60. The court notes that “even disregarding the domestic effects exception, the evidence that the defendants engaged in import trade was overwhelming” and demonstrated that the defendants participated in direct import commerce under 15 U.S.C. § 6a, and that this “import trade theory alone was sufficient to convict the defendants of price-fixing.” Id. at 760. However, the court’s discussion notably lacks any analysis of the second substantive element of the FTAIA’s domestic effects prong. See id. at 756–60.

[117]. Id. at 757.

[118]. See Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 851–52 (7th Cir. 2012); see also Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462, 466–69 (3d Cir. 2011). The dilemma of whether the FTAIA presents additional merits or jurisdictional elements for extraterritorial Sherman Act claims is contentious, with different lower courts adopting different rules since the 1990s. See Hui Hsiung, 778 F.3d at 751–52, 752 n.7, 753 (holding that the FTAIA is “not a subject-matter jurisdiction limitation on the power of the federal courts but a component of the merits of a Sherman Act claim involving nonimport trade or commerce with foreign nations,” and reviewing cases adopting and rejecting this rule); see also Edward Valdespino, Note, Shifting Viewpoints: The Foreign Trade Antitrust Improvements Act, a Substantive or Jurisdictional Approach, 45 Tex. Int’l L.J. 457, 457 (2009) (noting a shift from jurisdictional to substantive view). The source of contention is the burden-shifting effect of viewing the FTAIA’s terms as substantive elements: the “[e]xpense and shifting burdens of proof greatly increases settlement pressure.” Levitt & Fogt, supra note 8. Rather than being challengeable on the pleadings through a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, see Fed. R. Civ. P. 12(b)(1), a merits question requires courts to evaluate evidence and legal arguments, see Levitt & Fogt, supra note 8. Thus, viewing the FTAIA as a matter of “substantive liability” requires “resolution through motion[s] for summary judgment after . . . discovery or trial,” which may be extremely expensive in the context of extraterritorial antitrust actions. Levitt & Fogt, supra note 8. With that in mind, the trend in recent years is decidedly in favor of viewing the FTAIA as additional substantive elements. See id.

[119]. See Hui Hsiung, 778 F.3d at 752.

[120]. Motorola Mobility, LLC v. AU Optronics Corp., 775 F.3d 816, 817–18 (7th Cir. 2014) (describing procedural posture and factual basis of case). The panel decision, penned by economist and now-retired Judge Richard Posner, noted the criminal convictions entered in Hui Hsiung at the onset of its analysis. Id. (“We’ll drop ‘allegedly’ and ‘alleged,’ for simplicity, and assume that the panels were indeed price-fixed—a plausible assumption since defendant AU Optronics has been convicted of participating in a criminal conspiracy to fix the price of panel components of the cellphones manufactured by Motorola’s foreign subsidiaries.”).

[121]. Id. (emphasis added).

[122]. Id. at 821–25. Under the indirect-purchaser doctrine, only direct purchasers harmed by overcharging have cognizable antitrust claims under federal law. See Ill. Brick Co. v. Illinois, 431 U.S. 720, 723–26 (1977). Thus, the panel noted, “Motorola’s subsidiaries were the direct purchasers of the price-fixed LCD panels” whereas “Motorola and its customers [were the] indirect purchasers of the panels.” Motorola Mobility, 775 F.3d at 821 (emphasis added).

[123]. Id. at 818 (emphasis added).

[124]. Id. at 825 (emphasis added). Interestingly, the Seventh Circuit’s final opinion noted that the FTAIA has historically been interpreted to limit the extraterritorial application of domestic antitrust laws, in line with considerations of international comity, id. at 818, yet impliedly concluded that the Act’s “claim” language should be broadly construed to encompass civil claims and criminal indictments, see id. at 825.

[125]. Id. at 824–25 (“The foreign subsidiaries can sue under foreign law—are we to presume the inadequacy of the antitrust laws of our foreign allies? Would such a presumption be consistent with international comity, or more concretely with good relations with allied nations in a world in turmoil?”). In response to Judge Posner—it seems readily discernible that American antitrust law does in fact presume the inadequacy of the competition laws of foreign collaborators, at least insofar as American prosecutors increasingly pursue criminal enforcement prosecutions involving foreign commerce. Moreover, in the wider array of international transactional regulation, the United States frequently dispatches with consideration of “good relations with allied nations” in pursuit of national economic objectives. See generally Head, supra note 40 (broadly surveying the role of U.S. law in regulation of international trade and investment).

[126]. Notably, here, no petitioner raised this “claim” of error in Hui Hsiung or Motorola Mobility. Nevertheless, particularly if the FTAIA is to be construed as a series of additional substantive, non-jurisdictional requirements for Sherman Act claims, a full analysis of both parts of the two-part conjunctive domestic effects test is certainly warranted.

[127]. Frank B. Cross, The Significance of Statutory Interpretive Methodologies, 82 Notre Dame L. Rev. 1971, 1971 (2013) (citing Jonathan R. Siegel, The Polymorphic Principle and the Judicial Role in Statutory Interpretation, 84 Tex. L. Rev. 339, 339 (2005)). For authoritative discussions of the interaction between textualism and other recognized statutory interpretive methodologies in American judicial opinions, see generally Cross, supra and Stephen Breyer, On the Uses of Legislative History in Interpreting Statutes, 65 S. Cal. L. Rev. 845 (1992). Part II begins from a textualist foundation and in subsequent sections, see infra Sections II.B–D, also considers alternative rationales for strictly interpreting the domestic effects exception to not authorize extraterritorial criminal prosecutions. Cross briefly notes that “[d]escriptive statistics reveal that textualism and legislative intent are [the] most common [interpretive methodologies], but all the approaches find material use in Court opinions.” See Cross, supra, at 1972; cf. id. at 1973–74 (“Textualism is broadly accepted as an interpretive methodology, the controversy is over its exclusivism. . . . Critics argue that there are many cases in which the plain meaning of the text does not offer a clear resolution and these difficult cases are . . . most likely to be taken by the . . . Supreme Court.” (citing Breyer, supra, at 862)).

[128]. Cross, supra note 127, at 1972 (citing John F. Manning, Textualism and Legislative Intent, 91 Va. L. Rev. 419, 434 (2005)).

[129]. See id. at 1972–74.

[130]. Claim, Black’s Law Dictionary (10th ed. 2014).

[131]. Prosecution, Black’s Law Dictionary (10th ed. 2014).

[132]. Hartford Fire Ins. Co. v. California, 509 U.S. 764, 799 (1993).

[133]. See, e.g., Motorola Mobility, LLC v. AU Optronics Corp., 775 F.3d 816, 818 (7th Cir. 2014) (citing Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 273(c)(2) (3d ed. 2006)).

[134]. Id. at 825 (quoting F. Hoffman-La Roche, Ltd. v. Empagran, S.A., 542 U.S. 155, 165 (2004)). Of course, the court in Motorola Mobility dealt with civil claims. Comity holds the same, if not greater, weight in criminal prosecutions, where judgments of community condemnation and moral culpability are implicated to far greater degrees than in civil actions. Accord International Guidelines, supra note 12, at 49–51 (highlighting “Special Considerations” in connection with criminal investigations and prosecutions undertaken against international price-fixing cartels).

[135]. Motorola Mobility, 775 F.3d at 825 (emphasis added).

[136]. See Restatement, supra note 47 §§ 402–03, § 403 cmt. a.

[137]. Connolly, Repeal the FTAIA!, supra note 58, at 3. Connolly seems to suggest that American federal prosecutors will always have a greater concern for international relations, foreign sovereignty concerns, and other attendant comity considerations, than will civil plaintiffs. See id.

[138]. See id. at 4.

[139]. Id. at 7. Notably, Judge Posner cited Connolly’s article at length in the final opinion, including the relevant portion cited herein. See Motorola Mobility, 775 F.3d at 826–27 (citing Connolly, Repeal the FTAIA!, supra note 58). This suggests that Connolly’s colorable conception of comity had at least a persuasive impact on the panel’s reasoning with respect to the domestic effects prong.

[140]. Connolly relies in part on the fact that, as DOJ prosecutors noted in their Motorola Mobility briefs, before commencing with a case, the DOJ contemplates the views of foreign nations, whereas, in his view, “the comity considerations with private plaintiffs are quite different.” Connolly, Repeal the FTAIA!, supra note 58, at 4. For example, Connolly contends that private individuals seeking civil damage remedies may fail to exercise the “degree of self-restraint and consideration of foreign governmental sensibilities generally exercised by the U.S. Government.” Id. at 4–5 (emphasis added) (citing F. Hoffman-La Roche, Ltd. v. Empagran S.A., 542 U.S. 155, 171 (2004)). In defense of Connolly and the Court in Empagran, this praise of “self-restraint” and “consideration of foreign government sensibilities” in the American executive branch came prior to January 2017.

[141]. In fact, “substantial differences . . . exist among various countries in respect of competition laws.” Head, supra note 40, at 643–45; see also id. at 634–54 (outlining American, Japanese, and EU competition regimes, multilateral competition policy efforts, and bilateral and regional competition policy efforts). In sharp contrast to imposition of criminal penalties for violations of competition policy, most countries of the world do agree on near-universal condemnation of “core international crimes,” such as “war crimes, crimes against the peace or aggression, crimes against humanity, and genocide.” Beth Van Schaack & Ronald C. Slye, International Criminal Law and Its Enforcement 205 (3rd ed. 2015). See id. at 205–581 (describing internationally recognized mechanisms for condemnation of war crimes, crimes against the peace, crimes against humanity, genocide).

[142]. For instance, recent research suggests that criminal punishment in the United States is increasingly “harsh,” relative to peer nations. See generally James Q. Whitman, Harsh Justice: Criminal Punishment and the Widening Divide Between America and Europe (2003).

[143]. See Paul H. Robinson, The Criminal-Civil Distinction and Dangerous Blameless Offenders, 83 J. Crim. L. & Criminology 693, 693–95, 698–710 (1993) (discussing interdependence between civil and criminal law, contrasting reasons for civil and criminal commitment, and arguing that “the distinctiveness of criminal law is its focus on moral blameworthiness”); Robert Cooter & Thomas Ulen, An Economic Theory of Crime and Punishment, in Law and Economics 454–84 (6th ed. 2016) (contrasting “traditional,” retributivist justifications for criminal punishment with utility-based “economic” approaches). Robinson traces first principles surrounding civil and criminal commitment to provide a robust take on the association between community values and the type of culpability associated with criminal condemnation. See Robinson, supra, at 693–95. Ultimately Robinson arrives at the conclusion that “it would be better to expand civil commitment to include seriously dangerous offenders who are excluded from criminal liability as blameless for any reason,” in part because American laws frequently set high standards for criminal commitment based upon offenders’ mental states and associated blameworthiness, as opposed to dangerousness. Id. at 716–17.

[144]. See supra notes 1–6 and accompanying text (discussing the currently fractious political economy of international trade and international economic cooperation).

[145]. See, e.g., EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991).

[146]. Cf. Timberlane Lumber Co. v. Bank of Am. N.T. & S.A., 749 F.2d 1378, 1384–86 (9th Cir. 1984) (noting international comity factors traditionally applied by federal courts to assess propriety of exercising jurisdiction). But see Hartford Fire Ins. Co. v. California, 509 U.S. 764, 798–99 (1993) (suggesting comity factors only relevant in assessing jurisdiction upon finding of “direct” conflict between American law and foreign law).

[147]. See Hilton v. Guyot, 159 U.S. 113, 164 (1895) (noting comity reflects “the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation”).

[148]. See Arabian Am. Oil Co., 499 U.S. at 248, 252 (“We assume that Congress legislates against the backdrop of the presumption against extraterritoriality. . . . [U]nless there is ‘the affirmative intention of the Congress clearly expressed,’ we must presume it ‘is primarily concerned with domestic conditions.’” (citations omitted)); see also Morrison v. Nat’l Austl. Bank, Ltd., 561 U.S. 247, 255 (2010) (quoting Arabian Am. Oil Co., 499 U.S. at 248) (“It is a ‘longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.’” (citations omitted)); Small v. United States, 544 U.S. 385, 388–89 (2005) (noting the “legal presumption that Congress ordinarily intends its statutes to have domestic, not extraterritorial, application” (emphasis added)); Sale v. Haitian Ctrs. Council, Inc., 509 U.S. 155, 173 (1993); Smith v. United States, 507 U.S. 197, 203 (1993); cf. The Antelope, 23 U.S. 66, 123 (1825) (“The Courts of no country execute the penal laws of another.”); United States v. Ballestas, 795 F.3d 138, 143–44 (D.C. Cir. 2015) (quoting Morrison, 561 U.S. at 255).

[149]. See Labor Union of Pico Korea, Ltd. v. Pico Prods., Inc., 968 F.2d 191, 194 (2d Cir. 1992), cert. denied, 506 U.S. 985 (1992) (suggesting burden of overcoming presumption against extraterritorial application of U.S. law lies with the party asserting application of U.S. law to events that occurred abroad); United States v. Gatlin, 216 F.3d 207, 211–12 (2d Cir. 2000) (discussing burden on party seeking extraterritorial application vis-à-vis legislative intent). But see United States v. Bowman, 260 U.S. 94, 101–03 (1922) (suggesting there is no presumption against extraterritoriality when dealing with statutes prohibiting crimes against the U.S. government); Kollias v. D & G Marine Maint., 29 F.3d 67, 71 (2d Cir. 1994), cert. denied, 513 U.S. 1146 (1995) (holding Bowman should be read narrowly to only apply to “criminal statutes . . . and . . . only those relating to the government’s power to prosecute wrongs committed against it” and exempt such actions “from the presumption [against extraterritoriality]”).

[150]. See Morrison, 561 U.S. at 266–67 (citing Arabian Am. Oil Co., 499 U.S. at 255 and Foley Bros. v. Filardo, 336 U.S. 281, 283, 285–86 (1949)) (suggesting the mode of analysis the Court applied concerned the “‘focus’ of congressional concern”).

[151]. Id. at 266–67 (holding that the “focus of the Exchange Act is not upon the place where the deception originated, but upon purchases and sales of securities in the United States,” so section 10(b) of the Exchange Act only regulates “domestic transactions in other securities”); cf. Zachary D. Clopton, Bowman Lives: The Extraterritorial Application of U.S. Criminal Law After Morrison v. National Australia Bank, 67 N.Y.U. Ann. Surv. of Am. L. 137, 159–60 (2011) (noting, in the civil context, “cases like [Arabian Am. Oil Co.] have made it harder to overcome the presumption,” and “Morrison seems to have made it harder to avoid the presumption with claims of territoriality”).

[152]. Bowman, 260 U.S. at 97–98; see also Clopton, supra note 151, at 161 (“Bowman and its progeny do not question the power of Congress to enact extraterritorial criminal laws. Instead, these cases ask whether a court should apply an ambiguous criminal statute extraterritorially. For centuries, the answer . . . was flatly ‘no.’” (emphasis added)). But see Clopton, supra note 151, at 166 (suggesting lower courts have interpreted Bowman as “merely restat[ing] the American Banana rule that statutes are presumed to apply territorially unless Congress has indicated otherwise,” while other courts have “suggested that Bowman created a limited exception to the presumption” (footnotes omitted)).

[153]. International Guidelines, supra note 12, at 5.

[154]. Id.

[155]. Id.

[156]. Id.

[157]. There is a wide divergence in the “substance and enforcement” of competition law among leading jurisdictions—including the United States, Japan, and the European Union (“EU”). See Head, supra note 40, at 648–49. Leading commentary suggests that the values undergirding competition policy in the EU and United States “differ significantly,” in that the EU does not follow the United States’ unilateral “focus on ensuring competitive markets through limitations on abusive business practices.” Jerold A. Friedland, Understanding International Business and Financial Transactions 295–96 (4th ed. 2014). Moreover, Japanese law “does not begin with the premise of U.S. law that private agreements to regulate trade are injurious,” and, for many decades “cartels of the largest Japanese businesses were encouraged to stabilize the economy through practices that prevented unemployment and focused private economic activity on public goals.” Id. at 296.

[158]. Nevertheless, the DOJ may maintain a focus on “individual accountability” in criminal antitrust enforcement, even in extraterritorial cases. Snyder, supra note 100, at 3–5.

[159]. See 15 U.S.C. § 2 (2018).

[160]. See, e.g., H.R. Rep. No. 97–686, at 6 (1982) (noting how extraterritorial application of the Sherman Act prior to the FTAIA caused many international business transactions to “die on the drawing board”).

[161]. The government’s emphasis on “individual accountability” is underscored in the LCD investigation and eventual prosecutions. See Snyder, supra note 100, at 3–5; Antitrust Primer, supra note 100, at 4.

[162]. Snyder, supra note 100, at 6 (“AU Optronics . . . pa[id] a then-record fine of $500 million and accept[ed] a compliance monitor, after the same jury convicted it.”). The former Deputy Assistant Attorney General’s remarks reinforce the importance of compliance monitors to maintain a long-term culture of antitrust enforcement—even cases involving foreign companies and extraterritorial application of criminal antitrust law. Id.

Corporate accountability is important as well because it incentivizes compliance with our laws. The Antitrust Division emphasizes that compliance with antitrust laws must be ingrained in a corporation’s culture—one that is established from the top down. And we insist on probation and corporate monitors in criminal resolutions, where corporate offenders fail to demonstrate serious compliance efforts.

Id. at 1–2.

[163]. Id. at 6.

[164]. See generally id. The fact that leaders among the DOJ antitrust enforcement community view compliance monitors and cultures of corporate compliance as essential to the U.S. criminal antitrust regime generally reinforces this point.

[165]. Regrettably, this response arguably both reflects and reinforces American hegemony in competition policy.

[166]. At least at present, the prospects for a truly global competition regime appear scant. See Head, supra note 40, at 641–54 (discussing regimes regulating anticompetitive conduct beyond domestic laws). Since the 1990s, nearly 150 sovereign states have enacted competition regimes; these are predominately molded from American common law principles. See Levitt & Fogt, supra note 8. States, rather than intergovernmental organizations or non-governmental actors, simply retain principal authority over this aspect of international trade policy. Thus, efforts toward effective transnational regulatory frameworks should proceed from principles of collaborative management between coequal sovereigns. Accord id.

[167]. See, e.g., International Guidelines, supra note 12, at 16–19 (broadly interpreting domestic effects standard based on cited precedents).

[168]. Although in both cases the courts applied the direct import commerce prong as an independent basis for their respective decisions, each also noted that the domestic effects prong—if independently relied upon—would support the same outcome. These results are just as analytically problematic, albeit in a more attenuated sense, as a decision rendered solely upon application of the domestic effects prong.

[169]. For example, in the case of AU Optronics, a criminal remedy included a long-term compliance monitor, on site at the company, to tackle a perceived culture of criminal corruption at the firm. See Antitrust Sanctions 2.0 – Evolving Views on Behavioral Remedies, Allen & Overy LLP, http://www.allenovery.com/publications/en-gb/lrrfs/us/Pages/Antitrust-sanctions-2.0-%E2%80%93-evolving-views-on-behavioral-remedies.aspx (last visited Dec. 4, 2018). Behavioral obligations for foreign individuals may be the next phase of the Antitrust Division’s shift toward behavioral remedies, as at least one major international law firm currently advises. Id. Given remedies available to prosecutors, foreign individual defendants may be more inclined to settle with U.S. authorities directly, in order to craft personally tailored monitoring remedies in lieu of more punitive mechanisms, such as a custodial sentence in the federal prison system. Id.

[170]. See, e.g., supra notes 1–8, 12.

[171]. Notably, Judge Posner substantively agreed with this observation in Motorola Mobility, drawing upon the seminal Empagran decision to suggest that it would be highly improper for courts to “presume the inadequacy of the antitrust laws of our foreign allies” and that doing so may constitute “unjustified interference with the right of foreign nations to regulate their own economies.” Motorola Mobility, LLC v. AU Optronics Corp., 775 F.3d 816, 824–25 (7th Cir. 2014) (citing F. Hoffmann-La Roche, Ltd. v. Empagran, S.A., 542 U.S. 155, 165 (2004)). Certainly, this logic should be imported into the criminal antitrust analysis to prevent interference with the rights of foreign sovereigns.

[172]. International Guidelines, supra note 12, at 28 (“[M]ore jurisdictions have adopted and enforce antitrust laws that are compatible with those of the United States . . . .”).

[173]. But see Developments in the Law: Extraterritoriality, supra note 40, at 1279. In the alternative, extensive criminal enforcement under the Sherman Act may be viewed as a positive, given

[t]he decrease in civil jurisdiction and the increase in criminal prosecution do more than cancel out each other’s downsides: the beneficial synergies between them can further the purposes of antitrust law. When viewed as a single trend instead of two, this shift involves the courts’ deferring to institutional competence and disengaging from foreign relations, more optimal deterrence attained by encouraging the preferred types of enforcement, and more international cooperation achieved without damaging reciprocity-based trade and foreign relations interests. . . . [I]t may represent a more coherent development in the law.

Id. Yet this proposed interpretation ignores the facial incongruence in “cutting back on protections afforded by the antitrust laws” in the civil context, see, for example, Bauer, supra note 12, at 26, while casually endorsing enhanced extraterritorial criminal enforcement under the FTAIA, see Developments in the Law: Extraterritoriality, supra note 40, at 1274–78 (describing increased criminal prosecutions of extraterritorial conduct under the Sherman Act in recent years).

[174]. International Guidelines, supra note 12, at 16–19 (broadly interpreting domestic effects standard based on cited precedents) (citations omitted).

[175]. As previously outlined, criminal laws and remedies canonically apply to delinquency that, within a given community, is adjudged morally deserving of condemnation. Cf. Robinson, supra note 143 (discussing justifications for punishment). This is not the case with respect to competition violations, at least in most instances.

[176]. See, e.g., supra notes 1–7.

[177]. William Shakespeare, Romeo and Juliet act 2, sc. 2.

Why the “Demolition Derby” That Seeks to Destroy Investor-State Arbitration? – Article by Judge Charles N. Brower & Jawad Ahmad

September 2018October 2018Southern California Law Review Admin

From Volume 91, Number 6 (September 2018)
DOWNLOAD PDF

Why The “Demolition Derby” That Seeks To Destroy Investor-State Arbitration?[*]

Judge Charles N. Brower [† ]and Jawad Ahmad [‡]

TABLE OF CONTENTS

Introduction

I. Why Do The Strongest Rule-of-Law States
Insist On Destroying The Rule Of Law Protecting Their Nationals Investing Abroad?

A. Pope & Talbot Inc. v. Canada

B. Anti-ISDS Activities Around the World

C. The 2012 United States Model BIT

D. The European Union and Canada

II. Cutting off the nose to spite the face

A. Statistics Show that States Win a Majority of
ISDS Cases

B. Overreacting to Cases

III. Leading International arbitration actors Encourage This “Demolition Derby”

IV. The Future

A. The European Union and Its Battle Against ISDS

B. The United States’ Place in the ISDS Debate

C. The Permanent Investment Court Will Hamper
Investment

Introduction

For nearly six decades, States have entered into approximately 3,000 bilateral investment promotion and protection treaties (“BITs”) and some multilateral treaties (“MITs”), which possess the same dual purposes as the North American Free Trade Agreement (“NAFTA”) and the Energy Charter Treaty (“ECT”). They have been signed, ratified, and entered into force for mutual benefit: investment in the States party to the BIT or MIT is mutually encouraged, in good part by each State party guaranteeing the other State party’s investors an acceptable level of legal protection, usually consisting of “fair and equitable treatment” (“FET”), “full protection and security” (“FPS”), specific rules governing compensation for expropriation, and, via a “most-favored-nation clause” (“MFN”), the same overall level of legal protection as is accorded to nationals of other States with whom the respondent State party to the BIT or MIT has similar treaties in force.

Key to the nationals of each State party who invest in the other State is the mechanism for enforcing those protections, which is known as investor-State arbitration, or investor-State dispute settlement (“ISDS”). As most treaty parties do not wish their nationals investing abroad to be compelled to dispute with the host State over whether the involved treaty has been breached decided by a national court of the host State, the parties agree in the BIT or the MIT that any dispute between a national of one party investing in the other party will be decided by, typically, a three-person arbitral tribunal, to which each party to the dispute—the investor and the host State—appoints one arbitrator. The third person, who is to chair the arbitration, is appointed by the other two arbitrators, or by the parties to the dispute, or—failing success in that effort for a stated period of time—by an agreed “appointing authority.” All three members of the arbitral tribunal are required and pledge to be independent and impartial to the arbitrating parties.

“Demolition Derby”[1]takes several forms:

States, particularly those which have lost ISDS arbitrations or are appalled at the notion that the host States’ national policies can be judged by foreigners even though the host States are acting pursuant to a treaty in force between them and the States of foreign investors, in recent years have:

(1) “Interpreted” a MIT in a way that effectively removed an essential protection and was decried “as an attempted amendment” by a former President of the International Court of Justice (bilateral “interpretations” of BITs are also pursued);[2]

(2) Denounced the Washington Convention, which established a World Bank International Centre for Settlement of Investment Disputes (“ICSID”) as a special regime for ISDS to which 162 States are today Signatory and Contracting Parties [3] and is written into many BITs and some MITs;[4]

(3) Denounced BITs and MITs to which they have been parties;[5]

(4) Offered and negotiated new BITs and MITs that went so far as to eliminate FET or reduce the scope of its protection to the presumably lesser level of protection afforded to aliens by customary international law; eliminate MFN; limit FPS to physical protection, thus excluding “legal” protection; or eliminate ISDS altogether;[6] and

(5) Reserved to the host State the ability to prevent implementation of ISDS even where it is included in a BIT and allowed the two States to abort the process where an arbitral tribunal has already been constituted.[7]

I. Why Do The Strongest Rule-of-Law States Insist On Destroying The Rule Of Law Protecting Their Nationals Investing Abroad?

A. Pope & Talbot Inc. v. Canada

Perhaps what opened the eyes of the international arbitration community the earliest was what happened in the NAFTA case of Pope & Talbot Inc. v. Canada. The American Claimant commenced arbitration against Canada, claiming that Canada had violated the NAFTA Chapter 11 requirement that investment in Canada be given “fair and equitable treatment.”[8] Actually, as Professor Kenneth J. Vandevelde, a former attorney in the Legal Adviser’s Office of the U.S. Department of State who was much involved in negotiating treaties on behalf of the United States, has stated in his book, U.S. International Investment Agreements,

Full protection and security had been identified as an element of customary international law since the interwar FCNs, [that is, treaties of Friendship, Commerce and Navigation] though it was then called “most constant protection and security.” During the 1950s, with the concept of an international minimum standard under attack, the United States had moved away from references to customary law in its FCNs and sought to establish new standards of a requirement of fair and equitable treatment and a prohibition on arbitrary and discriminatory treatment to complement the most constant protection and security standard.[9]

However, the Canadian Government argued to the Pope & Talbot Tribunal that, as written in NAFTA, FET could mean no more than the lower level of treatment accorded to alien investors under customary international law.[10] The Tribunal, deciding whether or not Canada had breached its NAFTA obligation to accord Pope & Talbot “fair and equitable treatment,” ruled unanimously for the Claimant, expressly rejecting Canada’s argument as “patently absurd.”[11] Just over three months later, that “patently absurd” interpretation was adopted by the three NAFTA State parties as an official interpretation binding under NAFTA [12] pursuant to Articles 2001 and 1131, which promptly was denounced by Judge Sir Robert Jennings, then recently President of the International Court of Justice, “as an attempted amendment that has no binding effect.”[13]

In the end, very little, if anything, was achieved by the NAFTA State parties adopting the official interpretation prompted by the Pope & Talbot case. Both “fair and equitable treatment” and “customary international law” are what Professor W. Michael Reisman has described as “‘evaluation rules,’ . . . . [which] establish a goal that is expressed at some level of generality.”[14] Evaluation rules are contrasted with “[v]erification rules:”

[B]inary, “either-or rules.” Beyond that binary information, the factual and normative universe to which the person charged with applying the rules may turn is strictly confined to a few explicit variables, none of which includes general evaluative concepts such as fairness, equity, justice, minimum order, efficiency, or even common sense.[15]

Professor Reisman further concluded that “[b]ecause each instance of application of evaluation rules such as FET and MST [that is, minimum standard of treatment] re-instantiates them in different contexts, they can scarcely avoid evolving, a fortiori, as social, economic, technological, moral, and ethical variables change.”[16] In other words, the community of States is constantly making and remaking customary international law. Subsequent NAFTA ISDS tribunals have felt bound to pay official lip service to the so-called “interpretation.”[17] But as was said later in Mondev v. United States by Professor James Crawford, Judge Stephen Schwebel, and The Right Honourable Sir Ninian Stephen—an unusually distinguished Tribunal—customary international law evolves:

The Respondent noted that there was some common ground between the parties to the present arbitration in respect of the FCT’s [sic] interpretations, namely, “that the standard adopted in Article 1105 was that as it existed in 1994, the international standard of treatment, as it had developed to that time . . . like all customary international law, the international minimum standard has evolved and can evolve . . . the sets of standards which make up the international law minimum standard, including principles of full protection and security, apply to investments.” Moreover in their written submissions, summarised in paras. 107–108 above, both Canada and Mexico expressly accepted this point. . . .

The Tribunal agrees. For the purposes of this Award, the Tribunal need not pass upon all the issues debated before it as to the FTC’s interpretations of 31 July 2001. But in its view, there can be no doubt that, by interpreting Article 1105(1) to prescribe the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to investments of investors of another Party under NAFTA, the term “customary international law” refers to customary international law as it stood no earlier than the time at which NAFTA came into force. It is not limited to the international law of the 19th century or even of the first half of the 20th century, although decisions from that period remain relevant. In holding that Article 1105(1) refers to customary international law, the FTC interpretations incorporate current international law, whose content is shaped by the conclusion of more than two thousand bilateral investment treaties and many treaties of friendship and commerce. Those treaties largely and concordantly provide for “fair and equitable” treatment of, and for “full protection and security” for, the foreign investor and his investments. Correspondingly the investments of investors under NAFTA are entitled, under the customary international law which NAFTA Parties interpret Article 1105(1) to comprehend, to fair and equitable treatment and to full protection and security.[18]

In fact, as will be seen, Canada, the United States, and the European Union (“EU”) are the chief sponsors today of the ISDS “Demolition Derby.”

B. Anti-ISDS Activities Around the World

First, however, there are further examples of various other States’ contributions to the ISDS “Demolition Derby.”

In Bolivia, the Evo Morales government rejected investor-State dispute settlement at its core, and in 2007, Bolivia became the first State to withdraw from the ICSID Convention.[19] In 2009, language was introduced into the country’s Constitution authorizing the denunciation of all international treaties contrary to the constitutional text within a four-year period.[20] And, as promised, by 2013, all twenty-one of Bolivia’s BITs had either expired or been denounced.[21]

Venezuela, the second most frequent Respondent State in ISDS cases [22] since the rise of the Hugo Chávez (now Maduro) regime, denounced the ICSID Convention on January 24, 2012.[23] Prior to that, it denounced its BIT with the Netherlands on November 1, 2008.[24]

In 2017, Argentina, Brazil, Paraguay, and Uruguay, as Mercosur members, signed a Protocol on Investment Cooperation and Facilitation, which contains no ISDS provision, leaving their foreign investors to the tender mercies of the host States’ national courts, State-to-State negotiations or, ultimately, State espousal of their nationals’ claims in State-to-State arbitration.[25] For the first time in 15 years, Argentina has negotiated a new BIT, however, with Qatar, which, while providing for ISDS,[26] expressly restricts FET and FPS to the customary international law standard of such protection.[27]

Australia has eschewed the inclusion of ISDS in its Free Trade Agreements (“FTA”) with Japan,[28] Malaysia,[29] and the United States,[30] but has included it in BITs with both China [31] and Korea.[32] Moreover, a case has been reported of a U.S. investor requesting the Government of Australia to agree to ad hoc arbitration, despite the absence of ISDS provisions in the U.S.-Australia FTA.[33]

Brazil, which has a long history of never entering into BITs, has started to negotiate Cooperation and Facilitation Agreements that do not provide ISDS.[34] It recently negotiated one BIT with India that eliminates FET and MFN.[35]

In contrast, Indonesia has remained a Contracting Party to the ICSID Convention but publicly announced in 2014 that it would terminate or renegotiate its investment treaties.[36] To date, Indonesia has terminated or let expire twenty-nine of its eighty-three BITs.[37]

Ecuador, perhaps the most extreme case, denounced the ICSID Convention in 2009.[38] In addition, it has denounced twenty-six BITs.[39] Its most recent wave of BIT denunciations was based on a 668-page report the Ecuadorian government had requested on the subject from the Ecuadorian Citizens’ Commission for a Comprehensive Audit of Investment Protection Treaties and of the International Arbitration System on Investments (“CAITISA”), a “‘citizens’ commission’ established by President Correa in 2013 to perform an audit of the country’s BITs.”[40] The CAITISA report recommended the termination of all of Ecuador’s BITs. The report noted that Ecuador has not benefited from the BIT regime and has been held liable to pay investors billions of dollars in damages. The BITs in their current form, according to the report, were biased toward investors. The report also recommended the exclusion of ISDS from new treaties, creation of a permanent investment court, exclusion of FET, FPS, and MFN from new treaties, and the inclusion of substantive obligations of investors to respect international human rights and social rights.[41]

CAITISA’s findings may be questioned, especially considering that at least two members of the commission are renowned critics of ISDS.[42] The commission was chaired by none other than Cecelia Olivet, a non-Ecuadorian who co-authored Profiting from Injustice (a 2012 anti-ISDS diatribe of Dutch and Belgium non-governmental organizations). Another member of CAITISA, Professor Muthucumaraswamy Sornarajah, is an Australian national, a notoriously anti-ISDS academic, and the C. J. Koh Professor at the National University of Singapore.[43]

Ecuador’s recent move to terminate its BITs “does not, of course, sweep away pending arbitration claims against the government.”[44]

Commentators have criticized the legal justifications behind Ecuador’s recent move to terminate its BITs. In 2008, Ecuador enacted a new Constitution that included Article 422: “Treaties or international instruments where the Ecuadorian State yields its sovereign jurisdiction to international arbitration, in contractual or commercial disputes, between the State and natural persons or legal entities cannot be entered into . . . .”[45]

Ecuador’s new constitution and local law require both a binding favorable opinion of Ecuador’s Constitutional Court and approval by the State’s National Assembly in order for Ecuador to denounce certain treaties.[46] According to Jaramillo and Muriel-Bedoya, “[t]his process was followed and the Constitutional Court considered that all the BITs were incompatible with article 422, a flawed conclusion that would apparently legitimize the termination proceedings.”[47] Article 422 forbade Ecuador from entering into international treaties that relinquished jurisdiction to international arbitration, but only with respect to “contractual or commercial disputes.”[48] Thus, according to Jaramillo and Muriel-Bedoya:

[T]he Constitutional Court did not consider that international investment arbitration is a very different animal from international commercial or contractual arbitration. In general terms, the former addresses breaches of international law, particularly of international standards protected by a BIT (e.g. fair and equitable treatment, full protection and security, most-favored-nation treatment, etc.), while the latter focuses on contractual breaches of a commercial nature, which do not necessarily derive in breach of international law. Tribunals have historically pointed out these differences in several awards.

. . . .

The National Assembly replicated the Constitutional Court’s unconstitutionality argument without distinguishing that the Constitution does not forbid international investment arbitration. Likewise, the National Assembly considered that the 2008 Constitution represents a fundamental change of circumstances and, misunderstanding article 62 of the Vienna Convention on the Law of Treaties, it also justiﬁed the termination of the BITs under that provision.[49]

Jaramillo and Muriel-Bedoya note that, contrary to the National Assembly, local Ecuadorian law “does not entirely replace the international obligations that a treaty protects, even if similar standards are conceived.”[50] Furthermore, they argue that “a neutral dispute resolution mechanism is of utmost importance for foreign investors and, when it comes to Ecuadorian courts, unfortunately they are not particularly known for their celerity, and neither for not being politicized or interventionist.”[51]

There are signs that Ecuador now is backpedaling. Ecuador’s new Minister for Foreign Trade, Pablo Campana, has said: “[i]n order to secure private direct investment, we must have BITs.”[52] Thus, Ecuador has sent a proposal to fifteen countries inviting them to renegotiate the cancelled bilateral investment treaties “and urging them to accept a new model BIT that requires resolution of disputes by arbitration in the region.”[53] Also, Ecuador launched a website that highlights the damages it has avoided in every arbitration since 2008:[54] “[f]rom 2008 to date, the state says it has avoided 83% of the total amount claimed against it – a total of US$14.7 billion.”[55] The extent to which Ecuador will reverse its investment protection policy remains to be seen.

India reacted quickly to its loss in White Industries Australia Limited v. Republic of India, which determined that the Indian judicial system had not afforded the Australian coal mining claimant “effective means” for enforcing an approximately US$6 million award from an International Chamber of Commerce (“ICC”) arbitral tribunal.[56] Most recently, a slew of claims concerning retroactive tax measures have garnered much attention.[57] India is currently defending twenty-four investment cases as respondent.[58]

India sent “notices of termination” to fifty-eight countries with which it has BITs and proposed to twenty-five other State Parties with which it also has BITs that they issue a “joint interpretation” of those BITs so as to align them with a new Indian Model BIT formulated in 2015.[59] The Indian Model BIT eliminates FET, applies instead the customary international law standard of treatment of aliens, limits FPS to physical protection (not legal security), and permits ISDS only if local remedies are exhausted and produced no result within five years.[60] To date, twenty-two Indian BITs have been effectively terminated.[61]

India’s move to terminate its network of BITs arguably conflicts with the current administration’s campaign to attract foreign investment. India’s Prime Minister, Narendra Modi, announced his “Make in India” campaign in September 2014, which was pitched as “a new major national programme designed to transform India into a global manufacturing hub.”[62]

South Africa, a respondent in only two ISDS proceedings,[63] has denounced nine BITs [64] with Western European countries while looking to revise its policy regarding such treaties. In December 2015, the South African President approved the Protection of Investments Act, 2015 (No. 22) as part of its new policy regarding foreign investments,[65] raising parallels with the ongoing European debate concerning the Transatlantic Trade and Investment Partnership (“TTIP”).

While South Africa has moved to terminate its BITs with Western European countries, such actions should not necessarily be interpreted as a broader revolt against investor-State arbitration. Thus far, no termination policy has been adopted in respect of South Africa’s BITs currently in force with other African States including the South Africa-Zimbabwe BIT,[66] the South Africa-Mauritius BIT,[67] the South Africa-Nigeria BIT,[68] the South Africa-Senegal BIT,[69] and the SADC Investment Protocol.[70] There are also a number of South African BITs signed with other African countries that at present have not entered into force.[71] The South African Government has not, to date, announced a negative position regarding these BITs either.

Because South Africa is a heavy capital-exporter to neighboring countries,[72] its Government may conclude that its investors in the African region should have the right to investor-State arbitration. These considerations may not be the same with respect to the Western European treaties it terminated because it may have feared being on the receiving end of an investment treaty claim. In this regard, the South African Government’s behavior does not differ from some of the historically strongest capital-exporting States that have made an “about-face” and are now abandoning the investment legal system they always supported prior to themselves becoming respondents in investor-State arbitrations. This shift exemplifies a larger Zeitgeist with States across the macroeconomic spectrum now adopting a “bunker” mentality and denouncing the entire notion of international dispute resolution solely to ward off potential liability.[73]

EU Member States also have retreated from their dispute settlement obligations under investment promotion and protection treaties. In May 2015, the Italian Government announced its withdrawal from the ECT effective January 1, 2016.[74] Italy’s withdrawal coincided with an increasing wave of ISDS claims against Italy under the ECT challenging modifications to Italy’s solar energy programs.[75] In February 2016, Poland, which has sixty BITs in force [76] and was at the time involved in eleven reported ISDS arbitrations with claims against it totaling as much as US$2.3 billion,[77] announced that it was seeking to cancel its BITs with other EU Member States on the ground that such treaties drive up legal costs.[78] In March 2016, Denmark, which has forty-seven BITs in force [79] and which is not involved in any reported arbitrations, proposed mutual termination to its European BIT counterparties.[80] News reports indicate that Denmark is motivated by fear of future cases against it and that the Danish business community does not, to a large extent, depend on BITs for its foreign investments.[81] So far, both Estonia and Slovenia have indicated that in principle they are agreeable to mutual termination of their BITs with Denmark.[82]

C. The 2012 United States Model BIT

Going back to the chief villains in this “Demolition Derby,” we have already mentioned the egregious action of the United States, Canada, and Mexico in issuing the famous “interpretation” calculated to bind NAFTA tribunals to apply the interpretation of FET that was unanimously rejected as “patently absurd” by the Pope & Talbot Tribunal.

The United States also produced a new Model BIT in 2012 notwithstanding the fact that it has never (thus far) lost a NAFTA arbitration.[83] Annex B, titled “Expropriation,”[84] covers an entire page and defines “direct expropriation,”[85] “indirect expropriation,”[86] and what “cannot constitute an expropriation.”[87] Moreover, while Article 21(2) titled, “Taxation,” provides that “Article 6 [Expropriation] shall apply to all taxation measures,”[88] claimants alleging that a taxation measure constitutes expropriation are barred from arbitrating their claim unless they first submit the dispute to the two State parties’ respective “competent . . . . authorities”[89] (in the case of the United States, the Assistant Secretary of the Treasury (Tax Policy)), and those authorities fail to “agree that the taxation measure is not an expropriation” within 180 days.[90] In other words, if the two States agree within 180 days that the claimant has not been subject to expropriation, that is the end of the claim and the claimant is wholly deprived of impartial and independent third-party arbitration of its claim.

Furthermore, Article 14 invites each State Party to list in Annexes I, II, and III any existing measures in that State that do not conform to the BIT’s requirements of most-favored-nation treatment and national treatment, its prohibition of certain performance requirements, and its prohibition of certain interferences with senior management and boards of directors.[91] Those listed measures then are exempted from application of the BIT. Worse still, Article 31, labeled “Interpretation of Annexes,”[92] provides that a tribunal “shall, on the request of the respondent, request the interpretation of the Parties on the issue” whenever “a respondent asserts as a defense that the measure alleged to be a breach is within the scope of an entry set out in Annex I, II or III.”[93] The Article further provides that the Parties “shall submit in writing any joint decision declaring their interpretation to the tribunal within 90 days”[94] and that any such joint decision “shall be binding on the tribunal”[95] whose “decision or award . . . must be consistent”[96] with it. Thus, once more, the power of decision is returned to the States. Finally, Article 30(3) allows the States party to the BIT to issue a “joint decision” through each State’s respective representative “declaring their interpretation of a provision of this Treaty [that] shall be binding on a tribunal, and [which] decision or award issued by a tribunal must be consistent with that joint decision.”[97] And those are only three of the more egregious anti-investor provisions in that Model BIT.[98]

D. The European Union and Canada

Canada and the EU are responsible for giving life to the proposed Investment Court System employing fifteen “Judges,” all to be appointed by the States party to the Comprehensive Economic and Trade Agreement (“CETA”)—so far, other than Canada, only Vietnam has agreed to this type of court with the EU. Of the fifteen Judges, five must be from Canada, five from EU Member States, and five from other States. Moreover, only those five from other States are eligible to serve as President and Vice President. The Investment Court System would include a tribunal of first instance whose decisions on the law and the facts would be subject to review by an appeals tribunal. The tribunal of first instance would consist of three Judges, all selected by the President of the Tribunal—not by the litigants—from the roster of fifteen Judges. There would be increasingly strict requirements for those arbitrators selected to serve on the roster—including a requirement that candidates refrain from participating in other arbitrations in most capacities—and additional third-party rights, including the right to intervene through amicus curiae submissions.[99]

Not all Canadians believe that this entirely State-appointed Court is a good idea. Investors have preferred ISDS for decades because they have an equal voice with the Respondent State in composing the tribunal that will decide their claim. As the Honorable Marc Lalonde, holder successively of four Ministerial portfolios in the Cabinet of Prime Minister Pierre Elliott Trudeau (who is the father of Canada’s current Prime Minister Justin Trudeau), declared in 2015,

Canada, which is very keen to achieve a major trade agreement between the EU and Canada before the U.S.—TTIP. And Canada caved in before the EU demands for structural reforms in the decision-making process regarding foreign investors’ claims under investment treaties. . . . For Canada, trade trumped investments.[100]

Not all States are enchanted by a permanent court either. For example, according to a Factsheet published by the European Commission on July 10, 2017, the United Nations Commission on International Trade Law (“UNCITRAL”) “has agreed to initiate work on possible multilateral reform of investment dispute settlement including the possible establishment of a multilateral investment court.”[101] In an unofficial report of the Fiftieth Session of the UNCITRAL on July 10, 2017 in Vienna, Nikos Lavranos reported that the United States “and in particular Japan, strongly questioned the need for such urgent work on reforming the ISDS in such a radical manner.”[102] Japan views the proposed permanent court as “a ‘world legislator’ being in a position to decide highly sensitive and important issues without any accountability.”[103] Besides the United States and Japan, there were a handful of States “that, while not openly opposing the mandate, were lukewarm—at least at this point in time—about the idea of moving towards a MIC [Multilateral Investment Court].”[104] These States were “China, Russia, Singapore, South Korea, Thailand, Vietnam, New Zealand and Australia,” and they “all stress[ed] that the outcome of the efforts of the UNICTRAL [sic] Working Group should not be prejudged towards the MIC and that all options should be considered.”[105] Russia and South Korea cautioned against throwing away years of ISDS experience, only to replace it with “something which may create new problems.”[106] The United Kingdom (“U.K.”), while not opposing the new UNCITRAL mandate, “was considerably more cautious towards moving forward the reform efforts compared to the other EU member states.”[107]

It should be pointed out that the selection of international judges by States or a combination of States is an intensely political affair. In the EU’s overall concept of an International Investment Court, as reflected in CETA, the EU appoints five judges, its treaty partner appoints five, and together they appoint five from other countries. In CETA itself, with ten Provinces in Canada, from the Maritimes to the intensely francophone Québec, through Ontario to the prairie Provinces, all the way to Vancouver, the jockeying for “one’s own” to be appointed, the political trade-offs potentially involved, and the incidental connections that may propel a candidate of little suitability for the appointment to the fore, all bespeak a highly political process. How much more so when the EU’s twenty-seven (after Brexit is complete) Member States compete for five seats on the Court? And the rest of the world, namely, all the countries that are neither Member States of the EU nor its treaty partner? Where will those judges come from? The fact that only the five appointees from outside the EU Member States and the EU’s treaty partner can serve as President or Vice-President of the Court or preside over the three-member tribunals of first instance, gives to such countries a powerful hand within the Investment Court. Make no mistake about it: if you are an investor, you prefer your traditionally equal role in the formation of the tribunal that will judge your case, and do not want your case decided by the retired national judges, retired civil servants, out-of-office politicians, and their friends, who, in the authors’ considered view, are the persons most likely to be selected by States at the end of the process.

II. Cutting off the nose to spite the face

On May 31, 2017, in the British Virgin Islands, John Beechey, a former Secretary-General of the International Chamber of Commerce’s International Court of Arbitration, described the efforts by himself and Lord Goldsmith QC—representative of the London Court of International Arbitration (“LCIA”) and the Chartered Institute of Arbitrators, as well as a former Attorney General of the United Kingdom—to persuade the EU institutions to give consideration to the arbitral community’s views on ISDS. Paraphrasing Lord Goldsmith QC’s remarks, Beechey said,

a “depressing feature” of the debate was that “no one at the European Commission or at the European parliament was even prepared to give the arbitral community a hearing. Their minds were closed. Any solution was weighted in favour of the clamour of an anti-arbitration lobby long on inflammatory rhetoric and emotion and very short on fact and substance.”[108]

So why is all of this happening? Why are States selling out their own nationals desirous of traditional legal protections when they invest abroad? The answer is that this is a populist trend inspired by fear, by some countries’ and their citizens’ objections to a rule of law that is not “home-grown,” and determinedly by left-wing intellectuals and allied non-governmental organizations who are proceeding in the face of the established facts.

There is also much ado about “fake news” of late that exacerbates certain issues. To be accurate, one must define their terms if they expect to be understood with precision. So-called “fake news” is a label attached to an undeniable truth by a person who refuses to accept that truth. There is also “genuinely fake news” that aims to distract the public as well as legislators and treaty negotiators from the real truth by advancing myths and fairy tales that all too frequently plague the ISDS reform dialogue. Before addressing those tall tales, however, what are the established facts?

A. Statistics Show that States Win a Majority of ISDS Cases

From 1987 through 2017, 548 ISDS cases were concluded.[109] Of those cases, 37% were decided in favor of the State (the claims were dismissed either for lack of jurisdiction or on the merits) and 28% were decided in favor of the investor.[110] Furthermore, 23% of the 548 cases were settled, 10% were discontinued, and in 2% of the cases there was a finding of liability, but no damages were awarded.[111]

Statistics from ICSID based on cases it administered in the half-century from the first case it registered in 1972 until June 30, 2017 reveal a similar result. Of all of the disputes submitted to ICSID under the ICSID Convention and Additional Facility Rules, claims were upheld in part or in full in 30.6%, all claims were dismissed on the merits in 17%, jurisdiction was declined in 16.2%, the claims were found to be manifestly without legal merit in 0.6%, the parties settled by way of an agreement which was embodied in an award in 5%, the proceedings were discontinued at the request of both parties in 16.8%, the proceedings were discontinued at the request of one party in 9.1%, the proceedings were discontinued for lack of payment of the required advances in 3.2%, the proceedings were discontinued at the initiative of the Tribunal in 0.2%, and 1.3% of the cases were discontinued for failure of the parties to act.[112] Thus States came away scot-free in 33.8% of the cases, claimants succeeded (wholly or partially) in 31.3% of cases, while the remaining 35.6% of the cases submitted either resulted in settlements (5%) or were discontinued (30.6%) (which in some cases may have reflected a settlement).

The statistics are even more favorable for EU Member States. Of all of the disputes submitted to ICSID under the ICSID Convention and Additional Facility Rules involving an EU Member State as of April 30, 2017, the tribunal dismissed all claims in 36.6%, the tribunal upheld claims in part or in full in 24.4%, the tribunal declined jurisdiction in 17.1%, the proceedings were discontinued at the request of both parties in 7.3%, the proceedings were discontinued at the request of one party in 2.4%, a settlement agreement was embodied in an award at the parties’ request in 4.9%, the proceedings were discontinued for lack of payment of the required advances in 4.9%, and in 2.4% of disputes the proceedings were discontinued for failure of the parties to act. In other words, in 53.7% of disputes the respondent-EU State succeeded in persuading the tribunal either to decline jurisdiction or to dismiss the claims on their merits, whereas claimants succeeded in less than half that number of cases (24.4%), while 21.9% were either settled (4.9%) or discontinued (17%) (which in some cases also may have reflected a settlement).[113]

B. Overreacting to Cases

Despite these statistics confirming that States win in a majority of investment cases, there frequently is an overreaction whenever a State is sued under an investment agreement. One example of such an overreaction was the first NAFTA arbitration under Chapter 11 against Canada, Ethyl Corporation v. Government of Canada. That case involved a bill that was introduced in the Canadian Parliament in May of 1995 and was enacted as the Methylcyclopentadienyl Manganese Tricarbonyl (“MMT”) Act on April 25, 1997. It prohibited the commercial importation of, and interprovincial trade in, MMT, a fuel additive. Ethyl commenced NAFTA arbitration proceedings in April 1997, arguing that the measure was illegitimate and discriminatory. Canada argued that while MMT was designed to increase octane in gasoline, it affected emission control on automobiles, thereby presenting an environmental hazard due to manganese becoming airborne.[114]

The arbitration was short-lived. Following the Tribunal’s unanimous ruling in June 1998 confirming its jurisdiction,[115] the case was settled for US$13 million.[116] The decision confirming the Tribunal’s jurisdiction came less than two weeks after a domestic Canadian panel convened under Canada’s Agreement on Internal Trade (“AIT”) (concluded by the national Government with its Provinces and Territories) undermined Canada’s position in defending the Ethyl case. The Government of Alberta had commenced proceedings under the AIT alleging that the MMT Act failed to comply with Canada’s obligations under the AIT. The Governments of Québec, Nova Scotia, and Saskatchewan intervened as complainants in support of Alberta. A majority of the AIT panel hearing the case ruled that the MMT Act was inconsistent with certain provisions of the AIT and recommended that Canada remove the inconsistencies and, pending such removal, “that [Canada] suspend the operation of the Act with respect to interprovincial trade.”[117] Canada was left without a leg on which to stand vis-à-vis Ethyl. Hence, it entered the US$13 million settlement.

Despite that fact that it was the AIT panel’s preceding decision adverse to the Canadian Government that made the case effectively indefensible, the Ethyl case attracted widespread media attention and evoked a vociferous public backlash at the time. The Financial Post described the reactions of the supporters of the MMT Act as follows:

Ethyl’s opponents in the auto sector were more forthcoming. The NAFTA claim is “a bullying tactic,” said Mark Nantais, president of the Motor Vehicle Manufacturers’ Association. “It’s an attempt [by Ethyl] to intimidate the cabinet of Canada.”[118]

The Globe and Mail wrote in 2001 in How Free Trade Threatens Democracy,

[t]hey’re going to be marching on the streets at Quebec City’s Summit of the Americas within a couple of weeks because, among other things, they oppose “investor-state rights.” To free-trade critics, nothing more starkly illustrates the imbalance of power that transnational corporations have acquired over democratically elected governments.

The investor-state rights provision, Chapter 11, of the North American free-trade agreement, permits corporations to challenge governments’ sovereignty to make policy regarding public health, the environment, labour standards and other public services.

. . . .

Here is how Chapter 11 works:

The U.S. Ethyl Corp. sued the Canadian government for $250-million (U.S.) and obtained, in 1998, a settlement of $13-million for the government’s ban on the gasoline additive MMT, labelled a known nerve toxin by reputed scientists. The ban was reversed.[119]

In another article in The Globe and Mail, NAFTA Chapter 11 proceedings were blamed for the settlement:

The chapter has also been used by Virginia-based Ethyl Corp. to force Canada to overturn a ban on gasoline additive MMT that had been motivated by environmental concerns. The Canadian government also paid Ethyl $13-million in an out-of-court settlement.[120]

At the time, the media maintained that NAFTA Chapter 11 proceedings constituted a “regulatory chill” restricting Canada’s sovereignty, as demonstrated by the settlement with Ethyl and the repealing of the MMT Act. Contrary to this widespread misconception, Canada was motivated to settle the Ethyl case because the MMT Act was inconsistent with the AIT. The complaint against the MMT Act was maintained by four provinces. Faced with the AIT’s decision scuttling the MMT Act, Canada had no alternative but to settle with Ethyl. This is confirmed by Canada’s official governmental website in which it describes the outcome of the Ethyl case as follows:

Settlement of the claim

Further to a challenge launched by three Canadian provinces under the Agreement on Internal Trade, a Canadian federal-provincial dispute settlement panel found that the federal measure was inconsistent with certain provisions of that Agreement. Following this decision, Canada and Ethyl settled all outstanding matters, including the Chapter Eleven claim.[121]

Despite the Canadian Government’s straightforward explanation as to why it settled the Ethyl case, local politicians have continued, even decades later, to “remember” the ordeal differently. Elizabeth May, leader of the Green Party of Canada and MP for Saanich-Gulf Islands, held a press conference in September 2012 in which she warned against the adoption of the Canada-China Foreign Investment Promotion and Protection Agreement.[122] During the press conference, she highlighted the controversy that the Ethyl case had caused in Canada:

We know the experience of Chapter 11 of NAFTA. Everyone believed and including all the groups fighting NAFTA, that Chapter 11 was innocuous. It was never raised in the fight over NAFTA and yet the investor-State provisions of NAFTA have proven to be the most corrosive of democracy, the most undermining of Canadian laws. It’s only under Chapter 11 of NAFTA that a U.S. corporation had the right to claim damages against Canada and cause our Governments to repeal laws passed in our Parliament. It was bad enough when it was a US multinational, like Ethyl Corporation of Richmond, Virginia, getting laws against its toxic gasoline additive MMT cancelled. But how much worse is it to imagine that the Communist Chinese Government out of Beijing through its various tentacles of Sinopec and PetroChina and CNOOC will be able to trump Canadian law through complaints in this process that set out in this agreement.[123]

Despite Elizabeth May’s efforts, the Canada-China Foreign Investment Promotion and Protection Agreement retained an ISDS provision, and was signed and entered into force on October 1, 2014.[124]

As explained above, Canada settled the Ethyl case because of the AIT decision. “Genuinely fake news” about the Ethyl case nonetheless has persisted, twenty years after the event, in a report published by the Canadian Centre for Policy Alternatives (“CCPA”) in January 2018 in which it revived the same mythical hue and cry against NAFTA that followed the Ethyl case.[125] The report warns against the “chilling effect” NAFTA’s ISDS has on public policy and regulation,[126] describes Canada’s 1998 settlement with Ethyl Corporation as “regrettable”[127]and dispenses the following misinformation to buttress its outlandish claims:

In one of the starkest examples, the Canadian government repealed its ban on the import and interprovincial trade of the gasoline additive MMT (a suspected neurotoxin) after being sued by the Ethyl Corporation. After a preliminary NAFTA tribunal judgment sided with the company, the Canadian government reversed the MMT ban, paid Ethyl $19.5 million to settle the case and formally apologized.[128]

As laid out above, this description of Ethyl is fatally incomplete, incorrect, and grossly misleading. It is simply baffling that the same truly fake news continues to be regurgitated and circulated two decades later.

Importantly, no ISDS tribunal has ever found that a legitimate environmental or health law or regulation of a State breached a BIT or a MIT. We of course know why the Ethyl case was settled. In SD Myers, Inc. v. Government of Canada, Canada issued an order banning the export of polychlorinated biphenyl (“PCB”), and of substances containing PCBs, an environmentally hazardous chemical compound. The American company, S.D. Myers, Inc.—which engaged in the disposal of PCBs found in other substances—commenced NAFTA proceedings in October 1998 against Canada. The Tribunal ruled that Canada had breached Article 1102 (“National Treatment”) and Article 1105 (“Minimum Standard of Treatment”) of NAFTA, concluding that Canada’s prohibition of PCB exports was motivated not by environmental considerations, but rather to protect the then-budding Canadian PCB disposal industry from its more experienced U.S. competitors:

193. Having reviewed all the documentary and testimonial evidence before it, the Tribunal is satisfied that the Interim Order and the Final Order favoured Canadian nationals over non-nationals. The Tribunal is satisfied further that the practical effect of the Orders was that SDMI and its investment were prevented from carrying out the business they planned to undertake, which was a clear disadvantage in comparison to its Canadian competitors.

194. Insofar as intent is concerned, the documentary record as a whole clearly indicates that the Interim Order and the Final Order were intended primarily to protect the Canadian PCB disposal industry from U.S. competition. CANADA produced no convincing witness testimony to rebut the thrust of the documentary evidence.

195. The Tribunal finds that there was no legitimate environmental reason for introducing the ban. Insofar as there was an indirect environmental objective—to keep the Canadian industry strong in order to assure a continued disposal capability—it could have been achieved by other measures.[129]

Further comfort that legitimate environmental measures of States are respected by ISDS tribunals can be found in Chemtura Corporation v. Government of Canada, in which a unanimous NAFTA Tribunal composed of Cambridge University Professor James Crawford, now a titular Judge of the International Court of Justice, Professor Gabrielle Kaufmann-Kohler of Switzerland (as Presiding Arbitrator), and a co-author of this Article (Judge Brower) ruled that Canada had in no respect breached any provision of NAFTA when it banned the pesticide lindane from use in respect of canola.[130]

The results of the tobacco labeling cases—Philip Morris Brands Sàrl v. Oriental Republic of Uruguay and Philip Morris Asia Limited v. Commonwealth of Australia—further confirm that no health-protection legislation or regulation has been found by any ISDS tribunal to have breached any provision of any investment treaty. The tobacco cases have attracted particular attention from critics of investor-State arbitration despite the fact that both States—Australia and Uruguay—won those cases. Even when cases come out in favor of States, the critics disregard the result and emphasize the alleged bias toward investors in the ISDS system. When a majority of the tribunal in Philip Morris Brands Sàrl v. Oriental Republic of Uruguay found in favor of the State, rather than recognize that ISDS works, the critics turned their attention to the hefty fees collected by ISDS lawyers and how the case should not have been brought in the first place.[131] They look right past the unchallengeable fact, as illustrated by the NAFTA cases cited above and the tobacco cases, that States’ “policy space” universally has been preserved by ISDS tribunals.

Nevertheless, prominent people and publications have spoken out emphatically against ISDS.[132] The EU itself has not been honest about the situation. In June 2013, EU Member States formally mandated that the EU Trade Delegation include investment protections and ISDS in TTIP.[133] All the while, however, opposition to ISDS was gaining ground. By January 2014, the outgoing EU Trade Commissioner Karel De Gucht responded to this growing opposition by deciding to “pause” the TTIP negotiations concerning ISDS in order to prepare a public consultation on the issue.[134] In presenting the results of the consultation approximately one year later, the EU Trade Commissioner Cecilia Malmström asserted that “[t]he consultation clearly shows that there is a huge skepticism against the ISDS instrument.”[135] That “consultation,” however, could hardly be called representative. It was accurately described to Reuters by two EU officials as follows:

[O]ver 95 percent [of the almost 150,000 responses] were from supporters of a small group of organisations hostile to a deal with Washington and who submitted identical or very similar responses . . . . [This was a] hijacking of the online consultation . . . . Many responses to the EU survey appeared to be automated or generated by forms filled in on campaign websites, encouraging EU citizens to reject arbitration policy in [TTIP].[136]

III. Leading International arbitration actors Encourage This “Demolition Derby”

What is doubly baffling is that prominent international arbitrators who have led the field for years appear to encourage this “Demolition Derby” and currently do so in league with the UNCITRAL Commission, whose Working Group III considered the pros and cons of a permanent investment court at its session in Vienna from November 27 to December 1, 2017. According to the UNCITRAL Commission Report on the Fiftieth Session in July 2017, Working Group III was entrusted to consider ISDS reform “so as not to burden Working Group II unduly while it continued to fulfil its mandate [of its work on the enforcement of settlement agreements resulting from international commercial conciliation].”[137] It is curious that this task has been assigned by UNCITRAL to Working Group III—which previously has dealt with international legislation on shipping, transport law, and, only most recently, online dispute resolution—and not to Working Group II, which for decades has dealt extensively with arbitration, conciliation, and dispute settlement, and in which, inter alia, the 2010 UNCITRAL Arbitration Rules and the 1985 UNCITRAL Model Arbitration Law were incubated. Furthermore, the Commission emphasized that delegations to Working Group III should be government representatives, not the technicians and professionals traditionally attending Working Group meetings, which are largely charged with technical work.[138] One asks: What is the reason that the UNCITRAL Commission has assigned consideration of the EU-inspired International Investment Court proposal, not to the Working Group with by far the most extensive experience with international arbitration, but rather to one whose exposure to the field has been limited to online arbitration, along with shipping and transport law? Why is it charged to have predominately government delegations? Are the dice being loaded?

It would appear so, as a close look at the relevant UNCITRAL Commission report reveals. The UNCITRAL Commission report of its Fiftieth Session held in July 2017 states:

While a few suggested that Working Group II should be tasked with investor-State dispute settlement reform upon completion of its work on the enforcement of settlement agreements resulting from international commercial conciliation, it was generally felt that it would be preferable to assign that work to another working group so as not to burden Working Group II unduly while it continued to fulfil its mandate.[139]

Working Group II, however, at that moment was on the verge of completing that mandate at its session held in February 2018. Thus, the UNCITRAL Commission proudly has announced the following:

Working Group II (Dispute Settlement) completed its work on the preparation of a draft convention and a draft amended Model Law on international settlement agreements resulting from mediation. Both draft instruments will be considered for finalization by the Commission at its upcoming session in New York (25 June–13 July 2018).[140]

So, what was the rush? Why did the UNCITRAL Commission “support for work to be undertaken with priority in 2017”?[141]

Indeed, Working Group III’s Vienna session from November 27 to December 1, 2017 revealed a telling picture that the work now is political rather than technical—the traditional domain of Working Groups. In two of the five days, the meeting attendees fought over who should chair the meeting, an issue hitherto always resolved by consensus.[142] Incredibly, the many EU Member State Delegations present carried the day for the election of a senior official of Canada,[143] who by definition is bound to CETA, and hence to the EU International Investment Court imbedded in CETA. There can be no doubt that the dice, in fact, have been loaded. Nevertheless, reluctant delegates grappled with the monumental task of reforming ISDS, and Part I of the Working Group III Report from that session emphasized concerns of some States over the cost and duration of the proceedings.[144] Several of the more sober-minded participants in the session argued that deliberations relating to duration and cost should be fact-based.[145] Working Group III ultimately settled on a compromise, recording that perceptions are also relevant in maintaining the “legitimacy” of ISDS, the ubiquitous buzzword that Professor Christoph Schreuer recently decried as “one of those Humpty Dumpty words designed to arouse pleasurable emotions without conveying meaning” in his keynote address at the Investment Treaty Arbitration Conference in Prague on October 26, 2017.[146] Some less radical reforms, including those clarifying a tribunal’s powers of cost apportionment and to order claimants to post security for costs in certain scenarios, were also discussed,[147] mirroring recommendations by Professor Schreuer in his speech.[148]

The proposal to eliminate ISDS arbitration, which gives investors an equal voice with host States in forming a tribunal to decide their treaty dispute, began with Professor Jan Paulsson, a former President of both the London Court of International Arbitration and the International Council on Commercial Arbitration. In his Inaugural Lecture as holder of the Michael R. Klein Distinguished Scholar Chair at the University of Miami School of Law in April 2010, he proposed the abolition of party-appointments of co-arbitrators (and, at least inferentially, abolition of investors’ and host States’ equal roles in the appointment of tribunal chairpersons). Subsequently, he published his article titled Moral Hazard in International Dispute Resolution [149] (the “Moral Hazard article”) based on that lecture. Professor Paulsson’s arguments were addressed in the article titled The Death of the Two-Headed Nightingale: Why the Paulsson-van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded [150] (the “Nightingale article”) that was co-authored by one of the authors of this Article, Judge Brower, and his former law clerk, Charles B. Rosenberg. In a public discussion of an earlier draft of the Nightingale article under the auspices of the Institute for Transnational Arbitration, Professor Paulsson commented on the article. The Global Arbitration Review report of the event revealed Professor Paulsson retreating from his original position:

Paulsson also said that he does not dispute the right of parties to agree to appoint arbitrators if they so choose. His primary suggestion, he explained, is that the existing LCIA rules should be emulated across the board “to the effect that if the parties stipulate unilateral appointments that is what they get, but otherwise the default rules [sic] is that all three are chosen by the LCIA”.[151]

Since then, Professor Paulsson published his book titled The Idea of Arbitration in 2013 [152] and recently delivered two lectures further fanning the flames of the debate over unilateral appointments by arbitrating parties and the investors’ equal role in selecting a tribunal chairperson.[153]

Professor Paulsson’s latest example of why unilateral appointments are undesirable concerns the dissenting opinion of the arbitrator appointed by the claimant in Supervisión y Control, S.A. v. Republic of Costa Rica, Joseph P. Klock, Jr., who was sitting in his first ICSID arbitration ever. The dissenter took issue with the ICSID party-appointment procedure, apparently citing his own sensation as a first-timer at ICSID, that party-appointed arbitrators face an awkward tension in distancing themselves from the party that appointed them. The relevant parts of his dissent are set out below:

[A]s far as the impartiality of the panel is concerned, I believe that ICSID should more carefully consider the issue of panel selection. . . . [T]he arrangement whereby two of the panel members are selected by the parties to the agreement creates an uncomfortable aura of conflict which permeates, in my view, the proceedings. It creates a true ethical burden on these other two parties [that is, “panel members”] to separate themselves from the interest of those who have selected them to serve. I know that I have worked hard to neutralize this factor as I am sure my esteemed colleague [co-arbitrator] has done.

However, the dignity and integrity of an ICSID proceeding would be much better served by the selection of panelists from lists where the selection is made wholly by ICSID and where careful screening is done to make sure that any selected panelists do not have conflicts, not only real conflicts which should be identified in the screening process done, but perceived conflicts as well, either by issue or relationship. It ill-behooves ICSID to have anyone unfairly suggest that it is a club where the result can be influenced by relationships that exist by those who serve variously as advocates or arbitrators.

Composition Of The Panel. This panel was assembled in accordance with the terms of the agreement between the parties, with one panelist appointed by each of the parties and the third, by the Chair of ICSID. To the extent that ICSID has the ability to direct the composition of panels that are to arbitrate its claims, I believe that it should consider prohibiting this arrangement. Of the three of us, the only panelist who did not have an inherent conflict was [the Tribunal President], and I know that both of the remaining two of us were honored to serve under his chairmanship. He also was the only panelist who did not labor under any type of conflict burden.

However, as someone who has served on a number of arbitral panels, I find an appointment by a party of a judge to rule on the party’s claim creates an unnecessary barrier to pure objectivity, except in situations where a high degree of technical or scientific skill and knowledge of a discipline is needed. That clearly is not the case in terms of a contract dispute. If the desire is to have three judges decide an issue, then there should be three completely impartial judges appointed, judges who are no [sic] related to the parties or to their counsel. Those procedures were not in effect in this case, and if they were, perhaps the painful process of reviewing conflict could have been avoided.[154]

Professor Paulsson finds that the arbitral community should take the dissenter’s comments “to heart, recognize [them] as not being an isolated phenomenon, and take [them] as a compelling reason to consider ways in which this kind of unease can be alleviated.”[155] It would seem more pertinent to conclude that the dissenting arbitrator should have resigned from that Tribunal as soon as he became uncertain as to whether he could, fully and without reservation, comply with the mandate laid on him by Articles 14 and 40 of the ICSID Convention [156] and Rule 6 of the ICSID Arbitration Rules, which required him to “be relied upon to exercise independent judgment.”[157] Considering that the dissenter had, as he wrote, “served on a number of arbitral panels,” presumably commercial ones formed in the same way as ICSID tribunals, he should have stopped accepting party-appointments as co-arbitrator long before he accepted appointment to the ICSID Tribunal.

Despite Professor Paulsson’s continued push, “[s]even years on, arbitration users have responded to Professor Paulsson’s call for the practice of unilateral appointments to be removed with a resounding no: far from being removed, the practice of unilateral appointments remains standard practice in international arbitrations,”[158] as the arbitral community continues to regard the unilateral right of appointment as the preferred method of appointment. The 2012 International Arbitration Survey by Queen Mary University of London revealed that, for three-member tribunals, 76% of those responding to the survey (consisting of arbitrators, private practitioners, and in-house counsel) preferred the “selection of two co-arbitrators by each party unilaterally. This method of selection was favoured by all three categories of respondents, but more by private practitioners (83%) than by in-house counsel (71%) and arbitrators (66%).”[159] The same survey was conducted in 2015, in which respondents were asked “[w]hat are the three most valuable characteristics of international arbitration?” in response to which “‘enforceability of awards’ and ‘avoiding specific legal systems/national courts’ were most frequently chosen, followed by ‘flexibility’ and ‘selection of arbitrators’.”[160] The support for the right of party-appointment was affirmed in the 2017 Berwin Leighton Paisner survey of 151 participants consisting of “arbitrators, corporate counsel, external lawyers, academics, users of arbitration and those working at arbitral institutions.”[161] 66% of the participants found the “retention of party appointments to be desirable”[162] and 59% of the participants “believed that not all institutions can be trusted to maintain an inclusive and well-qualified list of arbitrators from whom all appointments to the tribunal can be made.”[163]

All the signs point to the value of the unilateral right of appointment. So “how then can it be said that this practice undermines the legitimacy of the arbitral process or its outcome?”[164] Maintaining the unilateral right of appointment allows “all parties to enter international arbitration with an equal sense of confidence in the neutrality of the system.”[165] Arbitration has become truly international to the extent that no arbitral institution, no group of governments, and no international organization could ever fully appreciate the intricate cultural, societal, and political sensitivities that go into the selection of arbitrators. It is thus artificial to imagine a single list of arbitrators from which all appointments would be made that would be acceptable to all arbitral disputants. This is especially so for those parties who have no knowledge of or familiarity with those on the list.[166]

In fact, there has been serious opposition to the ICC’s recent incorporation into its Arbitration Rules of Expedited Procedure Provisions effective as of March 1, 2017 of a new provision enabling the ICC to override the parties’ agreement on appointments to the tribunal.[167] These procedures shorten the deadlines for the filing of submissions and the scheduling of hearings, apply to arbitration agreements concluded after March 1, 2017,[168] and apply automatically to disputes involving US$2 million or less.[169]

The new Article 2(1) of Appendix VI of the ICC Arbitration Rules permits the ICC Court to override the parties’ agreement on the number of arbitrators: “The Court may, notwithstanding any contrary provision of the arbitration agreement, appoint a sole arbitrator.”[170]Such expedited procedures have become “the flavor of the year” with other arbitral institutions worldwide.[171]

Fabian Bonke, for example, opines that the ICC’s reform “took a step too far when empowering the ICC Court to override a contrary agreement between the parties in expedited proceedings.”[172] Overriding party agreement may prompt set-aside proceedings that risk prolonging the final resolution of the dispute, which defeats the purpose behind expedited procedures.[173] This exemplifies—as does the 59% of participants distrusting institutions’ ability “to maintain an inclusive and well-qualified list of arbitrators” in the 2017 Berwin Leighton Paisner survey discussed above—Professor Paulsson’s “Kryptonite,” which he describes as follows:

[T]he one argument [that] will defeat me every time . . . . [Y]ou look me in the eye and say “I don’t trust the institution, and so long as I can name one of the arbitrators I feel that I will reduce the risk of a runaway tribunal doing something crazy—but unappealable.”[174]

Ancillary to the assault of Professor Paulsson on unilateral appointments, Professor Albert Jan van den Berg, likewise a past President of the International Council on Commercial Arbitration and General Editor for many years of its Annual Yearbook, has called on “party-appointed arbitrators [to] observe the principle: nemine dissentiente.”[175] Professor Van den Berg maintains this view on the ground that in the 22 of 150 published awards and decisions in investment arbitration cases he surveyed in which a dissenting opinion had been issued, it almost invariably had been issued by the arbitrator appointed by the losing Party. He concluded that “dissenting opinions [in investment arbitration] barely serve a legitimate purpose in a system with unilateral appointments”[176] and that “investment arbitration would function better and be more credible if party-appointed arbitrators observe the principle: nemine dissentiente.”[177] Professor Van den Berg believes that dissents should be “reserved for those cases where serious procedural misconduct or a violation of fundamental principles occurs; for example, where an arbitrator commits fraud.”[178]

The Nightingale article, which was published three years later in 2013, responded to Professor Van den Berg’s observations on dissenting opinions.[179] Two years later, in 2015, Van den Berg published his réplique titled Charles Brower’s Problem with 100 Per Cent—Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration.[180]

While Professor Van den Berg took issue with a variety of the arguments in the Nightingale article, his key response is that the Nightingale article has been “unable to give a convincing explanation for the fact that 100 per cent [sic] of the separate opinions issued in investment arbitrations by party-appointed arbitrators have been rendered by the arbitrator appointed by the losing party.”[181]

Essentially, our response has been “so what?” As the Nightingale article explained, 78% of the approximately 150 cases reviewed by Van den Berg resulted in no dissenting opinions at all, thus “[t]his figure alone serves to minimize any concerns regarding dissenting opinions in investment arbitration.”[182]

The newest and most directly serious threat to ISDS as presently known and favored overwhelmingly by its users, however, comes in the form of a 115-page “research paper . . . prepared for . . . UNCITRAL [at its request] within the framework of a project of the Geneva Center of International Dispute Settlement (“CIDS”)”[183] (“CIDS Report”) by Professor Gabrielle Kaufmann-Kohler, the Center’s Co-Director, and Dr. Michele Potestà, a Senior Researcher at the Center. The CIDS Report was presented to the UNCITRAL Commission on May 24, 2016,[184] and was discussed extensively at the UNCITRAL Commission’s Fiftieth Session in Vienna, held July 3–21, 2017 [185] following the holding of an “UNCITRAL-CIDS Government Expert Meeting” in Geneva March 2–3, 2017.[186] Doubtless it will continue to provide a critical frame of reference for the meetings of UNCITRAL’s Working Group III, to which the subject of “Investor-State Dispute Settlement Reform” only very recently has been assigned. The first sessions, following receipt of the Commission’s mandate, was held from November 27 to December 1, 2017.[187]

The opening paragraph of the Executive Summary of this “research paper” summarizes its mission as follows:

This research paper seeks to analyze whether the Mauritius Convention on Transparency could provide a useful model for broader reform of the investor-State arbitration framework. To this end, it proposes a possible roadmap that could be followed if States were to decide to pursue a reform initiative aimed at replacing or supplementing the existing investor-State arbitration regime in international investment agreements (IIAs) with a permanent investment tribunal and/or an appeal mechanism for investor-State arbitral awards.[188]

Notwithstanding the “research” character of the CIDS Report commissioned by UNCITRAL, it appears to lend considerable support in substance to the “Demolition Derby” threatening ISDS as it presently exists and to point toward the EU’s goal of establishing an Investment Court System, otherwise termed a fifteen-Judge International Investment Court.[189] Specifically, the CIDS Report focuses primarily on whether an award by a hypothetical permanent court could be enforced under the New mentions awards by “permanent arbitral bodies.”[190] By considering the travaux préparatoires of “permanent arbitral bodies” under Article I of the N.Y. Convention, the Iran-United States Claims Tribunal (“IUSCT”) and sports-based “arbitral” institutions, the CIDS Report opines that awards by such institutions may be enforced under the N.Y. Convention despite the fact that those bodies were not formed by appointments of the respective nationals who presented the vast bulk of the claims subject to the IUSCT’s jurisdiction and of athletes whose complaints are subjected to the jurisdiction of special sport-based arbitral institutions.[191]

Turning, then, from what had been posed as an enforcement issue, the CIDS Report concludes that because the IUSCT is an example of “arbitration” in which the U.S. claimants had no say in the appointment of the arbitrators deciding their cases,[192] it justifies more broadly the envisaged International Investment Court. Enforcement of IUSCT awards did not raise issues “about the fact that [the Tribunal’s] composition did not reflect traditional methods of appointment in international arbitration.”[193] Rather, it was debated whether the IUSCT awards were rendered under the Dutch lex arbitri or were “a-national” and whether there was an arbitration agreement in writing.[194] The CIDS Report notes that

[i]f anything, the nature of the Iran-U.S. Claims Tribunal as true arbitration could have been disputed—and has indeed been disputed—in connection with the element of compulsion it entailed, as American claimants had no other choice than to pursue their claims before the Tribunal and were barred from initiating or continuing actions in U.S. courts. But the Tribunal’s arbitral nature was never disputed for reasons linked to its composition.[195]

This leap from enforceability to per se justification of investor-State arbitration as presently known (not being changed by its replacement by an International Investment Court), however, wholly disregards the fact that the IUSCT was established through negotiations to solve a major international crisis that began only in early November 1980 and ended just two and a half months later with the conclusion of the Algiers Accords on January 19, 1981. The negotiations were conducted via Algeria (as intermediary) and involved English, French, Arabic, and Farsi languages—the principal object of the negotiations was the release of fifty-two American hostages who were held captive for 444 days and all but two of whom were U.S. diplomatic or consular officers.[196] Iran’s seizure of the hostages had resulted in two United Nations Security Council Resolutions,[197] an order of the International Court of Justice [198] compelling the hostages’ release but ignored by Iran, and a failed U.S. Army Delta Force raid at Desert One in Iran which had been mounted to free the hostages.[199] This hostage seizure triggered the severance of diplomatic relations between the two countries. To rely on such a hurried solution of a serious international crisis as a model for normal investor-State arbitration is beyond reason.

It is equally true that neither the American merchant shipowners whose vessels were sunk by Confederate States’ armed raiders during the Civil War, in particular by the CSS Alabama, nor the American cargo owners whose goods were thereby lost, were allowed to appoint any of the arbitrators in the post-Civil War “Alabama Arbitration” between the United States and the United Kingdom. That arbitration forestalled incipient hostilities between the two countries provoked by the United Kingdom’s having allowed those raiders to be built in England in patent violation of the laws of neutrality—the United Kingdom having declared itself neutral in the Civil War.[200] Similar to the IUSCT, the United States and the United Kingdom appointed one arbitrator each and agreed that three others would be appointed from Brazil, Italy, and Switzerland.[201] It is simply illogical and unreasonable to cite a tribunal formed to resolve an ongoing international crisis between two nations at daggers’ points to justify the deprivation of arbitrating parties’ historic enjoyment of the right to appoint arbitrators and collaboration in the selection of a tribunal chairperson.

No less inapposite is the CIDS Report’s reliance on certain rules that “provide for the institution’s sole power to appoint the arbitrators, without any input from the parties.”[202] As examples, however, the CIDS study cites only [203] the Court of Arbitration for Sport (“CAS”) Arbitration Rules for the Olympic Games, which state that the President of the ad hoc Division will appoint one or three arbitrators from a preselected list without the disputing parties’ input [204] and the Arbitration Rules of the Basketball Arbitral Tribunal (“BAT”), which provide that “all disputes before the BAT will be decided by a single Arbitrator appointed by the BAT President on a rotational basis from the published list of BAT arbitrators.”[205] The CIDS Report states that

[a]lthough the parties have no say in the composition of the panels either before the CAS ad hoc division or before the BAT, it is undisputed that these mechanisms are in the nature of arbitration, which was actually confirmed by the Swiss Federal Tribunal, which is competent to review their awards as a consequence of their seat being in Switzerland.[206]

With respect, these are regulatory and disciplinary bodies whose authority the athletes involved necessarily accept as a condition of competing in the relevant sporting events. They are much like the national or regional authorities regulating the conduct of lawyers, physicians and other professionals. Obtaining a professional license or entering into a competitive sporting event subject to the regulation of CAS or BAT, brings with it automatic subjection of oneself to the relevant regulatory authority. Those subject to CAS or BAT have no more expectation of enjoying the benefits of ISDS as presently known than does a member of the Bar of any country to be able to appoint someone to the disciplinary authority that exists for the profession when that body considers a grievance lodged against that professional. All in all, the CIDS Report dwells principally on what can be termed “arbitration,” rather than on the distinctions of genesis, character, and subject matter of the various fora.[207]

Within the context of enforcement under the N.Y. Convention, the CIDS Report concludes that the unilateral right of appointment is not as important as the parties’ consensual submission to arbitration.[208] There is no denying that party freedom is paramount and if parties choose to do away with their right of appointment, that is their prerogative. But the CIDS Report’s conclusion in relation to enforceability does nothing to undermine the long-established right of unilateral appointment, which is a fundamental—if not crucial—feature of arbitration, especially of investor-State arbitration.

The CIDS Report also draws its conclusions within the confines of the N.Y. Convention, which is an important treaty in the history of arbitration but cannot be representative of all that is regarded as “arbitration.” There are a litany of treaties and rules demonstrating the value of the unilateral right of appointment. The N.Y. Convention’s scope being limited to the recognition and enforcement of arbitral awards and arbitration agreements, it “does not provide for any obligation to be met by the parties as to the number of arbitrators or the method of their appointment.”[209] Facilitating the recognition and enforcement of arbitral awards and arbitration agreements is undoubtedly vital if arbitration is to have teeth. What constitutes “arbitration” and how the tribunal is to be constituted are, however, equivalently important. These were intentionally left open in the N.Y. Convention. To go from awards by “permanent arbitral bodies” being enforceable under the N.Y. Convention, to concluding that party-appointment is not an essential feature of arbitration goes too far. The party-appointment procedure—let alone other features of the arbitral process—were simply not in the contemplation of the drafters of the N.Y. Convention.

This is supported by the drafting history of the N.Y. Convention. The Secretary-General of the United Nations Economic and Social Council (“ECOSOC”) recognized that the N.Y. Convention was only one aspect of international arbitration and more work had to be done on arbitration procedures:

It should be noted, however, that the recognition and enforcement of foreign arbitral awards is but an aspect of international commercial arbitration. It has long been recognized that progress in the development of arbitration as a means to settle international commercial disputes between persons has been hampered mainly by the existing differences in the legislation of the various countries on the subject of arbitration procedures and the effect of arbitration, the lack of uniformity in the rules of arbitral tribunals, and the complications deriving from conflict of laws in this area. Thus, in addition to dealing with the recognition and enforcement of foreign arbitral awards, several public and private organizations interested in the increased use of arbitration in international trade have been actively engaged in promoting the unification of arbitration laws, encouraging the conclusion of arbitration treaties and advocating the standardization or at least the co-ordination of the rules and procedures of existing arbitral bodies.[210]

The N.Y. Convention was one initiative amongst others spearheaded by the ECOSOC and others. “The evolution of an effective and trustworthy private international arbitration system over the last half a century has had three major strands,”[211] of which the N.Y. Convention was but one. The 1976 (and 2010) UNCITRAL Arbitration Rules and the 1985 Model Law on International Commercial Arbitration were the others,[212] and both expressly provide for the unilateral right of appointment by disputing arbitrants.[213]

To its credit, the CIDS Report recognizes the fact that appointment of judges to an International Investment Court solely by States or the EU alone necessarily raises justified doubts on the part of investors as to the true impartiality of such judges, and, therefore, emphasizes that the process should not be politicized. They query whether it is desirable that only States participate in the election process or whether the investors should also have a say:

Starting with the election of the members of the ITI, several considerations must come into play. First, speaking of a multilateral tribunal, it is important to provide for an election procedure acceptable to the greatest number of States while preserving the workability of the ITI. In other words, while every State will not have “its” member on the ITI, the composition should nevertheless be acceptable to all States joining the system. One could thus contemplate entrusting the election to a body that is representative of the international community as a whole, so in particular the U.N. General Assembly. In that sense the election would then resemble that of the ICJ judges.

This said, one should mention in this respect the risk that such an election system may become affected by political considerations. This would constitute a step back from the often-praised depoliticization of investment arbitration, one facet of which is the decision-makers’ distance from politics. In this connection, it would also seem important that the selection process be transparent and susceptible of being clearly monitored by the various constituencies. Keeping in mind the criticism towards the alleged democratic and transparency deficit of investor-State arbitration, solutions avoiding to the greatest extent possible any opacities in the selection process should be favored. Indeed, transparency in the process would also reduce the risks for politicization.

Furthermore, one can ask whether it is desirable that only States participate in the election process or whether investors should also have a say. Without reintroducing the system of party appointment of arbitrators, which is currently considered objectionable, a consultation of business organizations, i.e. organizations representative of investor interests, may have its advantages. Indeed, it would mitigate the risk of shifting from the current model that resembles commercial arbitration to the other extreme, that is to an interstate paradigm. This shift would neglect the fact that investor-State dispute settlement is asymmetric, i.e. the disputes are between an investor and a State and not between two States.

Such a solution would also strengthen the view that the dispute settlement body meets the characteristics of arbitration and must be treated as such especially for purposes of enforcement.[214]

With respect, the CIDS Report wrongly presumes that the United Nations General Assembly or any other international organization, including the EU, will act utterly devoid of political considerations, in contrast to States themselves making the appointments to an International Investment Court.

One of the co-authors of this Article, apart from experience in the U.S. Senate, the U.S. Department of State, and the White House, has for decades, in The Hague and at the United Nations in New York City, been observing elections to the International Court of Justice (“ICJ”), which in fact are highly political and, hence, do involve tradeoffs and “deals.” From its establishment as the judicial branch of the United Nations in 1946 until the 2017 elections, it was an unbroken practice that each of the five Permanent Members of the Court would have a seat on it. In the last election, however, even that sacred (if unwritten) rule was broken, with the failure of the sitting U.K. Judge to be re-elected.[215] Thus it is, now more than ever, an illusion to think that the process can be de-politicized.

It is equally misguided to think that “a consultation of business organizations, i.e., organizations representative of investor interests,” will have a significant influence that will reduce the political character of such appointments. There is no obligation on States to follow any recommendation by such organizations on the composition of the hypothetical permanent investment court. It is further presumptuous to think that these organizations would give any consideration to the issue in the first place. Arbitral disputes are not at the top of these organizations’ agendas vis-à-vis their respective governments and any international organizations—let alone individual investors. Disputes may not even transpire until many years later, and there is nothing to suggest that any of the recommendations of business organizations now would be representative of the putative investor that may end up before the permanent investment court in the future. While investors themselves may have a degree of influence, it is not worth much. A right to be consulted is equivalent to a ballot paper with a disclaimer that the vote may not be counted.

In November 2017, the authors of the CIDS Report published a Supplemental Report (“Supplemental Report”). The authors of the Supplemental Report augment their initial paper by providing further analysis of the composition of a hypothetical permanent court.[216] In their Supplemental Report, the authors explain that their proposal in their initial CIDS Report “presuppose[s] the creation of multilateral permanent adjudicatory bodies, the ITI [i.e., International Tribunal for Investments] and/or the AM [i.e., Appeals Mechanism], whereby the former would provide an alternative to the current ad hoc system of investor-State arbitration and the latter would supplement it.”[217]

The Supplemental Report identifies three consequences of transitioning from the current “ad hoc system”—which is understood to refer to a dispute resolution body constituted on a case-by-case basis for a single dispute [218]—to a permanent or semi-permanent body on the arbitrator-selection process. Of those three, the first is relevant for our purposes. The Supplemental Report acknowledges that the unilateral right of party-appointment would be eliminated if the appointing power rests on exclusively on States:

The first consequence is the transition from a disputing party framework to a treaty or contracting party framework. Transitioning from an ad hoc system that allows virtually complete control over composition by the disputing parties to a permanent or semi-permanent system necessarily reduces the role for disputing parties and conversely increases that of treaty parties. As the dispute resolution body must exist before the investment dispute arises, it must necessarily be established ex ante by the treaty parties. This entails moving beyond the “historical keystone” of arbitration, namely disputing party appointment, to a different selection method placed entirely or predominantly in the hands of the parties to the instrument establishing the new adjudicatory bodies. Such dilution of powers concerns all disputing parties, including respondent States who lose the “right” to influence the composition of the body as disputing parties. However, in practice, it will be perceived as affecting the investor-party more heavily, as States will be able to contribute to the composition of the body in their capacity of treaty parties.[219]

The Supplemental Report acknowledges that the tilting of the scales in favor of States is in no way diminished by the fact that the respondent-State in an investment dispute is also deprived of the opportunity to select an arbitrator once the dispute is afoot.

Furthermore, the Supplemental Report seems to acknowledge more clearly the particular hurdles involved in a “selection” process of this type and magnitude:

The guarantees for judicial independence in existing courts provide helpful starting points in this respect. However, they may not be sufficient or at least not entirely transposable as such to investor-State dispute settlement, in which the asymmetric nature is such that only one type of the future disputing parties controls the selection process. Designing an appropriate selection process that, inter alia, ensures the requisite independence of the adjudicators thus appears to be of even greater concern in a setting of this kind.

As the practice at existing permanent international courts and tribunals shows, the involvement of States (and, within the State apparatus, in particular of State governments) may lead to risks of politicization of the selection process. . . . Appointment on the basis of political considerations rather than competence and merit may undermine the quality of the decisions and, ultimately, the perception of the adjudicatory body’s independence, credibility and legitimacy.[220]

Ensuring that the “selection” process is multi-layered, open to all stakeholders, and transparent sounds good in theory, until one realizes that in substance what is being proposed is that States constitute an advisory panel to sign off on the qualifications of potential candidates and “consult[] . . . national parliaments” to “reinforce the democratic element in the process.”[221]

IV. The Future

A. The European Union and Its Battle Against ISDS

The “Demolition Derby” targeting ISDS is flourishing, doubtless confident of victory thanks to the UNCITRAL Commission’s welcoming attitude toward the EU’s relentless campaign to sell to the world its Investment Court System. In our view, however, it is questionable whether this “Demolition Derby” will result in a successful International Investment Court. As Nikos Lavranos’s unofficial report of the Fiftieth Session of the UNCITRAL Commission of last July 2017 confirmed, the proposal to replace the current ISDS regime with a permanent investment court has not to date received the glowing endorsement of all States as the EU and Canada have hoped.[222]

On September 13, 2017, the Council of the EU “authorised [sic] [the European Commission] to open negotiations, on behalf of the [EU], for a Convention establishing a multilateral court for the settlement of investment disputes.”[223] Recent developments, however, suggest that there may be some insurmountable obstacles ahead for the EU Commission.

For example, the European Commission experienced a setback in respect to the EU-Singapore Free Trade Agreement (“FTA”). As initially with CETA, the European Commission was confident that the EU-Singapore FTA and all future EU trade and investment treaties would fall within its exclusive competence (Article 207 of the Treaty of the European Union (“TFEU”)). This appears no longer to be the case in light of an opinion of the Court of Justice of the European Union (“CJEU”) that issued in May 2017. The issue before the CJEU was “whether the envisaged agreement [that is, the EU-Singapore FTA] [could] be signed and concluded by the European Union alone or whether, to the contrary, it will have to be signed and concluded both by the European Union and by each of its Member States (a ‘mixed’ agreement).”[224] The CJEU “handed a significant victory to the European Union” insofar as it found that the EU had “exclusive competence over almost all aspects of the EU-Singapore FTA, which paves the way for them to enter into such agreements without requiring the approval of all of the Member States.”[225] The CJEU, however, carved out two notable exceptions: First, the EU has exclusive competence over direct foreign investment, but not over indirect investments, which are investments undertaken without the intention to influence the management of a company.[226] Second, and most significantly, the EU and its Member States share competence of, inter alia, Section B (Investor-State Dispute Settlement) of Chapter 9 of the EU-Singapore FTA.[227] The CJEU noted that the ISDS regime removes disputes from the jurisdiction of the national courts of the Member States and thus is not “of a purely ancillary nature . . . and cannot, therefore, be established without the Member States’ consent.”[228] The outcome of the opinion, in the view of one commentator, makes “[o]ne thing . . . clear: the European Commission did not obtain the full exclusive competence [for] which it was hoping.”[229] The ruling means that EU free trade treaties containing provisions for an International Investment Court “must now be ratified not only by the national parliaments of the 28 EU Member States, but also by nearly a dozen regional parliaments.”[230]

On July 6, 2017, the EU and Japan signed an agreement in principle on the main elements of the Japan-EU Economic Partnership Agreement (known as “JEEPA”), which was finalized on December 8, 2017.[231] The agreement in principle excludes investment,[232] noting that no agreement has been reached on the whole chapter and that ISDS remains fully open.[233] The agreement in principle notes that the EU has tabled its permanent investment court proposal in its negotiations with Japan and that “[t]he EU continues to insist that there can be no return to old-style ISDS. Under no conditions can old-style ISDS provisions be included in the agreement.”[234] In a factsheet published on July 1, 2017 by the EU, it added “[f]or the EU ISDS is dead.”[235]

Such rhetoric by the European Commission should be taken with a pinch of salt. Japan has included conventional ISDS in its investment agreements. For example, in 2016 Japan signed BITs with Kenya [236] and the Islamic Republic of Iran [237] and, on January 23, 2018, following negotiations in Tokyo, Japan announced its agreement with ten countries for the Comprehensive and Progressive Agreement for Transpacific Partnership (“CPTPP”).[238] Moreover, Japan may be reluctant to pay for the European Commission’s permanent investment court, which may set a precedent for future treaties whereby State-appointed judges may rule on claims by Chinese or Korean investors against Japan.[239] Japan, thus, may not be easily persuaded to sign up to the European Commission’s proposal in its current form.

We can expect more from the EU’s existential crisis on ISDS. On September 6, 2017, Belgium formally asked the CJEU to assess the compatibility of the CETA’s “Investment Court System” with EU law. Specifically, Belgium has asked whether the “Investment Court System” is compatible with EU citizens’ right of access to courts, the “general principle of equality,” and the CJEU’s exclusive competence over EU law and how the proposed court would affect the “right to an independent and impartial judiciary.”[240]

After a little more than two weeks following Belgium’s formal request to the CJEU, the EU Advocate General Melchior Wathelet rendered a non-binding (but persuasive) opinion in a parallel proceeding that likely will weigh heavily in the disposition of Belgium’s request. The Advocate General’s opinion was rendered with respect to a request for a preliminary ruling brought by the German Federal Court of Justice in May 2016 before the CJEU concerning the Netherlands-Slovakia BIT.[241] The German court had referred a series of questions concerning the compatibility of intra-EU BITs with EU law. The German court’s questions arose in the context of an application by the Slovak Republic to annul an arbitral award issued in favor of Achmea (formerly Eureko), a Dutch investor, under the Netherlands-Slovakia BIT.[242]

The Advocate General opined that the ISDS provision in the Netherlands-Slovakia BIT was compatible with EU law,[243] which, if confirmed by the CJEU, could have implications for numerous intra-EU BITs.[244] The intriguing features of the opinion, however, were the Advocate General’s observations on the European Commission’s and some EU Member States’ contradictory ISDS practices.

First, the Advocate General noted that several EU Member States intervened in the proceedings and made both oral and written submissions. He noted that the intervening EU Member States could be divided into two groups. The first group consists of States that “are essentially countries of origin of the investors and therefore never or rarely respondents in arbitral proceedings launched by investors.”[245] These States are the Federal Republic of Germany, the French Republic, the Kingdom of the Netherlands, the Republic of Austria, and the Republic of Finland. The second group consists of States that “have all been respondents in a number of arbitral proceedings relating to intra-EU investments.”[246] These States are the Czech Republic, the Republic of Estonia, the Hellenic Republic, the Kingdom of Spain, the Italian Republic, the Republic of Cyprus, the Republic of Latvia, Hungary, the Republic of Poland, Romania, and the Slovak Republic.

The Advocate General noted that it was “hardly surprising” that the second group of EU Member States “intervened in support of the argument put forward by the Slovak Republic, which is itself the respondent to the investment arbitration at issue in the present case.”[247] Yet he found it “surprising” that the same States, with the exception of Italy, had not moved to terminate their respective intra-EU BITs, which, thus, remained in force in whole or in part.[248] When Slovakia was asked at the hearing why it had not terminated its other BITs with the States in the second group, Slovakia admitted “that its objective was to ensure that its own investors would not be the victims of discrimination by comparison with investors from other Member States in the Member States with which it would no longer have BITs.”[249]

Second, the Advocate General noted the European Commission’s inconsistent position on ISDS. He noted that “the argument of the EU institutions, including the Commission, was that, far from being incompatible with EU law, BITs were instruments necessary to prepare for the accession to the Union of the countries of Central and Eastern Europe.”[250] The Advocate General was unmoved by the European Commission’s attempt to explain its inconsistent position at the hearing:

At the hearing, the Commission attempted to explain that change in its position on the incompatibility of BITs with the EU and FEU [i.e., Treaties on the Functioning of the European Union] Treaties, maintaining that the agreements in question were necessary in order to prepare for the accession of the candidate countries. However, if those BITs were justified only during the association period and each party was aware that they would become incompatible with the EU and FEU Treaties as soon as the third State concerned had become a member of the Union, why did the accession treaties not provide for the termination of those agreements, thus leaving them in uncertainty which has lasted more than 30 years in the case of some Member States and 13 years in the case of many others?[251]

Third, the Advocate General opined that “the systemic risk” that, according to the European Commission, “intra-EU BITs represent to the uniformity and effectiveness of EU law is greatly exaggerated.”[252] For support, the Advocate General referred to UNCTAD statistics that revealed “that out of 62 intra-EU arbitral proceedings which, over a period of several decades, have been closed, the investors have been successful in only 10 cases.”[253] Moreover, the Advocate General also noted that the EU Member States in the second group and the European Commission could only name a single example “which resulted in an arbitral award that was allegedly incompatible with EU law,”[254] namely, the Ioan Micula v. Romania ICSID matter, which is still ongoing. The Advocate General noted that “the fact that there is only a single example reinforces [his] opinion that the fear expressed by certain Member States and the Commission of a systemic risk created by intra-EU BITs is greatly exaggerated.”[255]

Yet, the Advocate General’s opinion fell on deaf ears as the CJEU ruled on March 6, 2018 that ISDS provisions in intra-EU BITs are incompatible with EU law.[256] The decision prompted the Netherlands—one of the States falling under Advocate General Wathelet’s first group [257]—to announce reluctantly its decision to terminate all twelve of its intra-EU BITs.[258]

The full implications of the CJEU’s opinion in Achmea are unclear, but it could be viewed as the CJEU forcing EU investors in other EU Member States to accept the EU Commission’s proposal to resolve all investment disputes through the permanent investment court. Other EU actors may have heard the rallying cry because their efforts to establish the permanent court were amped up following the Achmea decision.

Two weeks after the Achmea decision, the Council of the EU issued a negotiating directive for establishing a permanent investment court for the settlement of investment disputes with the EU Commission designated as the authorized representative.[259] All analysis and discussion concerning the proposal, according to the directive, “should be conducted under the auspices of the United Nations Commission on International Trade Law (UNCITRAL).”[260]

Less than a month later, the EU Commission presented a final text of its agreement with Singapore to the Council of the EU as well as a new FTA, the latter of which displaces the previously agreed ISDS provision with the Investment Court System promoted by the EU and adopted in CETA.[261] The Council of the EU will now adopt and sign the agreements before obtaining the EU Parliament’s consent.[262] While the FTA will take effect in 2019, the investment protection agreement will take effect following the ratification by each EU Member State [263]—a move necessary in light of the CJEU’s ruling concerning the EU-Singapore FTA discussed earlier.

On the heels of announcing the final EU-Singapore agreements, the EU and Mexico unveiled an “agreement in principle” in which the Contracting Parties agreed to establish a permanent investment court to resolve investment disputes.[264]

It may be wrong to presume that the CJEU is a promoter of the EU Commission’s permanent investment court. As discussed earlier, the CJEU has yet to issue an opinion on the compatibility of the CETA’s “Investment Court System” with EU law. Thus, it remains to be seen whether the CJEU truly joins its fellow EU institutions in preferring the EU-proposed permanent court.

Moreover, the TTIP talks between the EU and the United States are currently on hold pending further clarity from the new U.S. administration on the position of Washington’s trade policy priorities.[265]

B. The United States’ Place in the ISDS Debate

The United States’ efforts to renegotiate NAFTA may well result in the removal of ISDS from the treaty. Despite early indications from the current administration that ISDS is here to stay,[266] doubts among affected businesses have grown, and on August 8, 2017, a score of associations “representing millions of small, medium and large companies across every major sector of the U.S. economy employing tens of millions of U.S. workers” wrote to the Administration urging it to retain ISDS.[267] Moreover, minor attacks on ISDS in NAFTA have been intensifying in frequency as renegotiation talks concluded their penultimate round in late January 2018. In addition to the CCPA report debunked above, 230 Professors and six U.S. Senators have added themselves to the phalanx against ISDS. Specifically, on October 25, 2017, 230 law and economics professors sent a letter to President Trump urging him to remove ISDS from NAFTA.[268] Their plea was shared and advanced by six U.S. Senators in a February 2, 2018 letter to President Trump in which they stated the “[ISDS] system and the foreign investor protections it enforces . . . must be eliminated.”[269]

The above letter reveals an alarming collective nationalistic bias to bring investment in-house without considering its consequences. The professors suggest that American investors “purchase risk insurance or look for safer jurisdictions” when investing abroad.[270] Not only does this stunt international growth and development by restricting available venues, it embraces elitism by ensuring that only the financially best endowed corporations can afford to invest in high-risk territories while simultaneously shutting the front door to foreign investment for certain developing countries. The Senators’ stilted argument similarly wobbles under closer scrutiny. The crux of their argument against ISDS in NAFTA is stated as follows:

The investor outsourcing protectionism at the heart of NAFTA incentivizes companies to relocate production to low wage venues by locking in preferential treatment. These terms empower multinational corporations to sue governments before tribunals of three private-sector lawyers who can award the corporations unlimited sums to be paid by America’s taxpayers, including for the loss of expected future profits, when corporations claim that our environmental and health policies undermine their NAFTA privileges. Already multinational corporations have extracted hundreds of millions from North American taxpayers using the ISDS regime.[271]

Treaties such as NAFTA reduce investment risk by protecting investment abroad. There is no preferential treatment as the same level protection is afforded equally to all covered foreign investors and investments. Furthermore, NAFTA does not restrict the tribunal’s composition to “private-sector lawyers.” Public figures, in so far as they satisfy the good character and expertise requirements necessary of arbitrator, are welcome to sit on the bench. Notably, Respondent States consent to all or the majority of any uneven number of appointed arbitrators.[272] Moreover, it is plainly preposterous that a tribunal could award “unlimited sums,” as awards of damages adhere to party agreement or basic principles of international law.[273] Furthermore, insofar as the United States is concerned, it is flatly untrue that “multinational corporations have extracted hundreds of millions from North American taxpayers under the ISDS regime,” as not one NAFTA arbitration case against the country has been lost.[274] As stated earlier, too, no ISDS tribunal has ever found a legitimate environmental or health law or regulation of a State to breach an international investment agreement. Accordingly, NAFTA does not grant “privileges” to corporations.

Amusingly, one of the six U.S. Senators mentioned above, Senator Elizabeth Warren, has directly benefited from ISDS, earning in the neighborhood of US$90,000, while acting as an Expert Witness on bankruptcy law for the U.S. Government in the Loewen v. United States NAFTA case.[275]

More alarming is the effect these attacks may be having on NAFTA ISDS renegotiations. In advance of the November 2017 round, the United States uncharacteristically introduced a second set of objectives on ISDS,[276] which promoted an enhanced skeptical view toward ISDS, including a proposal to introduce an “opt-in” system and a culling of the substantive standards of protection.[277] Following this fifth round of negotiations, Mexico proposed a permanent investment court mirroring the one found in CETA. Mexican Economy Minister Ildefonso Guajardo explained that Mexico is “considering alternatives by putting the European model on the table to see if it works in North America.”[278] Canadian foreign minister Chrystia Freeland similarly acknowledged differences between Canada and the United States on a number of key chapters and stated Canada’s position is to “hope for the best and prepare for the worst.”[279]

In advance of the sixth round of negotiations in Montreal during January 23–29, 2018, President Donald Trump called NAFTA a “bad joke”[280] on his Twitter account and stated to the media that “if [NAFTA] doesn’t work out, we’ll terminate it.”[281] In turn, Mexico strengthened its position by becoming the 162nd country to sign the 1965 ICSID Convention [282] and Canada signaled that NAFTA was not an exclusive source for trade protection, making public its December 2017 World Trade Organization complaint aimed at the United States’ use of anti-dumping and anti-subsidy duties.[283] The political charges against inclusion of ISDS in NAFTA have reached a critical point, and Canada is set to propose its elimination, with the expectation that the United States will echo this pitch.[284]

Despite this NAFTA ISDS renegotiation rollercoaster, Mexico and Canada are now flirting with the notion of excluding the uncooperative United States from their own ISDS arrangement,[285] and Canada has demonstrated its willingness to move forward without the United States when it concluded the CPTPP on January 23, 2018, just one year after the United States withdrew its participation in the negotiations of the mega-regional treaty.[286]

C. The Permanent Investment Court Will Hamper Investment

Even if the proposal for a permanent court were to become an opt-in institution along the lines of the Mauritius Convention on Transparency, it is possible that not many States would opt in.[287]

In any event, a permanent court to replace the current ISDS regime would be unlikely to succeed, as major investors would reject it. They would find other ways to protect themselves when negotiating foreign investments. They would return to the days of the 1960s and ‘70s, even to earlier days, negotiating contracts that would provide satisfactory dispute resolution mechanisms. Or they would not make any investments at all, or would make them at a higher price to the host country in order to cover the risk involved, all to the disadvantage of host States. It is only smaller investors who, lacking the negotiating strength to conclude contracts with host States containing the protection of conventional ISDS clauses, would be materially disadvantaged by their potential subjection to their fate being decided by an International Investment Court composed solely of State-appointed judges. Like so many radical movements devoid of a proper understanding of just how the world really works, the EU’s permanent investment court, if it comes about, will not affect the wealthy investors, but will work hardship on “the little guys,” who under conventional ISDS are given the treaty right of direct access to international arbitration before tribunals that they have an equal right to constitute. Why does anyone think this is just?

[*]*. This Article is an extended and updated version of the Annual Justice Lester W. Roth Lecture given by Judge Brower at the University of Southern California Gould School of Law on October 12, 2017. It also includes portions of Judge Brower’s Keynote Address delivered at the Twelfth Annual Fordham International Arbitration Conference on November 17, 2017. . The authors express deep appreciation to A. Devin Bray, Milena Tona, and Ivaylo Dimitrov for their contributions to this Article .

[† ] †.. Judge ad hoc, International Court of Justice; Judge, Iran-United States Claims Tribunal; Member, 20 Essex Street Chambers, London; and former Judge ad hoc, Inter-American Court of Human Rights.

[‡] ‡.. Associate of Mayer Brown International LLP in London. Previously, he was a private law clerk for Judge Charles N. Brower, 20 Essex Street Chambers, London, and was physically based in Washington, D.C., where he acted as a tribunal assistant in both investor-State and commercial arbitrations. He was previously Judge Brower’s Legal Adviser at the Iran-U.S. Claims Tribunal in The Hague, where he worked on State-to-State arbitrations. He is an Associate Editor of the Kluwer Arbitration Blog and an Editor of Arbitration International. He co-authored this Article prior to joining Mayer Brown International LLP. The opinions expressed in this Article are those of the co-author, and they do not reflect in any way that of the law firm with which he is affiliated. Any errors remain those of the co-authors.

[1]. “Demolition Derby” is defined as “a motorsport . . . . [typically consisting] of five or more drivers competing by deliberately ramming their vehicles into one another. The last driver whose vehicle is still operational is awarded the victory.” Demolition Derby, Wikipedia, https://en.wikipedia.org
/wiki/Demolition_derby (last updated Sept. 14, 2018, 1:41 AM) (footnotes omitted).

[2]. See Second Opinion of Professor Sir Robert Jennings, Q.C. at 6, Methanex Corp. v. United States, (NAFTA Ch. 11 Arb. Trib. Sept. 10, 2001); NAFTA Free Trade Comm’n, North American Free Trade Agreement: Notes of Interpretation of Certain Chapter 11 Provisions, SICE Foreign Trade Info. Sys. (July 31, 2001), http://sice.oas.org/tpd/nafta/Commission/CH11understanding_e.asp (“The concepts of ‘fair and equitable treatment’ and ‘full protection and security’ do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens.”); infra Section I.A.

[3]. Database of ICSID Member States, Int’l Ctr. for Settlement Inv. Disps., https://icsid.worldbank.org/en/Pages/about/Database-of-Member-States.aspx (last visited Sept. 20, 2018).

[4]. See Energy Charter Treaty, art. 26(4), Dec. 17, 1994, 34 I.L.M. 381; North American Free Trade Agreement, Can.-Mex.-U.S., art. 1120(1), Dec. 17, 1993, 32 I.L.M. 289; infra Section I.B.

[5]. See infra Section I.B.

[6]. See infra Section I.B.

[7]. See infra Section I.C.

[8]. Pope & Talbot Inc. v. Canada, Award on the Merits of Phase 2, ¶ 105 (Apr. 10, 2001), 7 ICSID Rep. 102 (2001).

[9]. Kenneth J. Vandevelde, U.S. International Investment Agreements 263 (2009). See also Todd Weiler, The Interpretation of International Investment Law: Equality, Discrimination and Minimum Standards of Treatment in Historical Context 250–75, 129–240 (2013).

[10]. Pope & Talbot Inc., 7 ICSID Rep. ¶¶ 108–09.

[11]. Id. ¶ 118.

[12]. NAFTA Free Trade Comm’n, supra note 2.

[13]. Second Opinion of Professor Sir Robert Jennings, Q.C. at 4, Methanex Corp. v. United States, (NAFTA Ch. 11 Arb. Trib. Sept. 10, 2001).

[14]. W. Michael Reisman, Canute Confronts the Tide: States vs. Tribunals and the Evolution of the Minimum Standard in Customary International Law, 109 Am. Soc. of Int’l L. Ann. Meeting Procs. 125, 125 (2015).

[15]. Id.

[16]. Id. at 127.

[17]. See, e.g., ADF Grp. Inc. v. United States, ICSID Case No. ARB(AF)/00/1, Award, ¶ 178, (Jan. 9, 2003), 6 ICSID Rep. 470 (2003); Grand River Enters. Six Nations, Ltd. V. United States, Award, ¶¶ 175–76, (Jan. 12, 2011), https://www.state.gov/documents/organization/156820.pdf; Apotex Holdings Inc. v. United States, ICSID Case No. ARB(AF)/12/1, Award, ¶¶ 9.3–9.4 (Aug. 25, 2014), IIC 661 (2014).

[18]. Mondev Int’l Ltd. v. United States, ICSID Case No. ARB(AF)/99/2, Award, ¶¶ 124–25 (Oct. 11, 2002), 6 ICSID Rep. 192 (2004) (footnotes omitted).

[19]. Damon Vis-Dunbar, Luke Eric Peterson & Fernando Cabrera Diaz, Bolivia Notifies World Bank of Withdrawal from ICSID, Pursues BIT Revisions, bilaterals.org (May 9, 2007), https://bilaterals.org/?bolivia-notifies-world-bank-of&lang=fr.

[20]. Constitución Política del Estado Feb. 7, 2009, transitory provision IX (Bol.) (“The international treaties existing prior to the Constitution, which do not contradict it, shall be maintained in the internal legal order with the rank of law. Within the period of four years after the election of the new Executive Organ, the Executive shall renounce and, in that case, renegotiate the international treaties that may be contrary to the Constitution.”), translated in Constitute: Bolivia (Plurinacional State of)’s Constitution of 2009, Constitute Project (Jan. 17, 2018, 3:49 PM), https://www.constituteproject.org
/constitution/Bolivia_2009.pdf?lang=en.

[21]. Aldo Orellana López, Network for Just. Global Inv., Bolivia Denounces Its Bilateral Investment Treaties and Attempts to Put an End to the Power of Corporations to Sue the Country in International Tribunals 6 (2014), http://justinvestment.org/wp-content
/uploads/2014/07/Bolivia-denounces-its-Bilateral-Investment-Treaties-and-attempts-to-put-an-end-to-the-Power-of-Corporations-to-sue-the-country-in-International-Tribunals1.pdf.

[22]. UNCTAD, Investment Dispute Settlement Navigator, Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/ISDS/FilterByCountry (last visited Sept. 21, 2018). As of August 2018, Venezuela has appeared as the respondent in forty-four cases, exceeded only by Argentina, which has appeared as the respondent in sixty cases. Id.

[23]. Vera De Brito de Gyarfas & Alberto F. Ravell, Venezuela’s Exit from the ICSID Convention Casts a Shadow on Foreign Investment, Lexology (Sept. 1, 2012), https://lexology.com/library
/detail.aspx?g=5ed0fd84-f857-4935-ab6f-d011b7eb8a93.

[24]. UNCTAD, Netherlands – Venezuela, Bolivarian Republic of BIT (1991), Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/IIA/mostRecent/treaty/2668 (last visited Sept. 21, 2018).

[25]. Damien Charlotin & Luke Eric Peterson, Analysis: In New Mercosur Investment Protocol, Brazil, Uruguay, Paraguay and Argentina Radically Pare Back Protections, and Exclude Investor-State Arbitration, Inv. Arb. Rep. (May 4, 2017), https://iareporter.com/articles/analysis-in-new-mercosur-investment-protocol-brazil-uruguay-paraguay-and-argentina-radically-pare-back-protections-and-exclude-investor-state-arbitration.

[26]. The Reciprocal Promotion and Protection of Investments Between the Argentine Republic and the State of Qatar, Arg.-Qatar, art. 14, Nov. 6, 2016, http://investmentpolicyhub.unctad.org
/Download/TreatyFile/5383.

[27]. Id. art. 3(4)–(5).

[28]. Japan-Australia Economic Partnership Agreement, Austl.-Japan, July 8, 2014, https://dfat.gov.au/trade/agreements/in-force/jaepa/full-text/Documents/jaepa-chapters-1-to-20.pdf.

[29]. Malaysia-Australia Free Trade Agreement, Austl.-Malay., May 22, 2012, https://dfat.gov.au
/trade/agreements/in-force/mafta/Documents/Malaysia-Australia-Free-Trade-Agreement.pdf.

[30]. Australia-United States Free Trade Agreement, Austl.-U.S., May 18, 2004, https://ustr.gov/sites/default/files/uploads/agreements/fta/australia/asset_upload_file148_5168.pdf.

[31]. Free Trade Agreement Between the Government of Australia and the Government of the People’s Republic of China, Austl.-China, art. 9, June 17, 2015, https://dfat.gov.au/trade/agreements/in-force/chafta/official-documents/Documents/chafta-agreement-text.pdf.

[32]. Korea-Australia Free Trade Agreement, Austl.-S. Kor., ch. 11, Apr. 8, 2014, https://dfat.gov.au/trade/agreements/in-force/kafta/official-documents/Documents/KAFTA-chapter-11.pdf.

[33]. Douglas Thomson, Florida Investor to Ask Australia to Arbitrate, Global Arb. Rev. (Oct. 6, 2016), http://globalarbitrationreview.com/article/1069026/florida-investor-to-ask-australia-to-arbitrate.

[34]. Paulo Macedo Garcia Neto, Investment Arbitration in Brazil: The Landscape of Investment Arbitration in Brazil and Why Brazil Should Become a More Important Player in the Investment Arbitration Arena, in Investment Protection in Brazil 3, 4–8 (Daniel de Andrade Levy et al. eds., 2013).

[35]. Joel Dahlquist, Brazil and India Conclude Bilateral Investment Treaty, Inv. Arb. Rep. (Nov. 28, 2016), https://iareporter.com/articles/brazil-and-india-conclude-bilateral-investment-treaty.

[36]. Ben Bland & Shawn Donnan, Indonesia to Terminate More than 60 Bilateral Investment Treaties, Fin. Times (Mar. 26, 2014), https://ft.com/content/3755c1b2-b4e2-11e3-af92-00144feabdc0.

[37]. UNCTAD, Indonesia: Bilateral Investment Treaties (BITs), Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/IIA/CountryBits/97 (last visited Sept. 21, 2018). Indonesia is, however, revising its model BIT and has maintained several negotiations for bilateral and multilateral economic agreements. See Int’l Trade Admin., U.S. Dep’t of Trade, Indonesia – 2-Bilateral Investment Agreements, export.gov (Aug. 1, 2017), https://export.gov/article?id=Indonesia-bilateral-investment-agreements.

[38]. Tom Jones, Ecuador Bids Goodbye to BITs, Global Arb. Rev. (May 17, 2017), http://globalarbitrationreview.com/article/1141801/ecuadorbidsgoodbyetobits [hereinafter Jones, Bids Goodbye].

[39]. See id. In 2008, Ecuador “terminated BITs with Romania and eight Latin American and Caribbean states.” Id. On May 16, 2017, Rafael Correa, the former President of Ecuador, signed a series of decrees that terminated sixteen BITs with Argentina, Bolivia, Canada, Chile, China, France, Germany, Italy, the Netherlands, Peru, Spain, Sweden, Switzerland, the United Kingdom, the United States and Venezuela. Id. Correa had also previously terminated a BIT with Finland in 2013. Id. See also Javier Jaramillo & Camilo Muriel-Bedoya, Ecuadorian BITs’ Termination Revisited: Behind the Scenes, Kluwer Arb. Blog (May 26, 2017), http://kluwerarbitrationblog.com/2017/05/26/ecuadorian-bits-termination-revisited-behind-scenes.

[40]. Jones, Bids Goodbye, supra note 38.

[41]. Id.

[42]. Id.

[43]. For examples of Olivet’s and Sornarajah’s anti-ISDS views, see generally Pia Eberhardt & Cecelia Olivet, Profiting from Injustice (Helen Burley ed., Nov. 2012) and Muthucumaraswamy Sornarajah, The Case Against a Regime for International Investment Law, in Regionalism in International Investment Law 275 (Leon E. Trakman & Nicola W. Ranieri eds., 2013).

[44]. Zoe Williams, Ecuador Round-up: As Remaining Bilateral Investment Treaties Are Terminated, New Developments Come to Light in ICSID and UNCITRAL Cases, Inv. Arb. Rep. (May 22, 2017), https://iareporter.com/articles/27453.

[45]. Jaramillo & Muriel-Bedoya, supra note 39.

[46]. Id.

[47]. Id.

[48]. Id. (emphasis in original).

[49]. Id.

[50]. Id.

[51]. Id.

[52]. Tom Jones, Ecuador in Treaty U-turn‎ Under New Leader?, Global Arb. Rev. (Oct. 17, 2017), https://globalarbitrationreview.com/article/1149016/ecuador-in-treaty-u-turn%E2%80%8E-under-new-leader [hereinafter Jones, U-turn].

[53]. Tom Jones, Ecuador Begins Talks Over New BITs, Global Arb. Rev. (Feb. 23, 2018), https://globalarbitrationreview.com/article/1159285/ecuador-begins-talks-over-new-bits [hereinafter Jones, Begins Talks].

[54]. Procesos Internacionales: Arbitrajes de Inversión; Comerciales y Juicios Internacionales, Procuraduría General del Estado, http://www.pge.gob.ec/index.php/2014-10-01-02-32-39/cifras-relevantes-2 (last visited Sept. 21, 2018).

[55]. Id.; Jones, Begins Talks, supra note 53.

[56]. White Indus. Austl. Ltd. v. Republic of India, IIC 529 (2011), Final Award, ¶¶ 11.4.19–20, 16.1.1(a) (Nov. 30, 2011).

[57]. Alison Ross, India’s Termination of BITs to Begin, Global Arb. Rev. (Mar. 22, 2017), http://globalarbitrationreview.com/article/1138510/indias-termination-of-bits-to-begin.

[58]. UNCTAD, supra note 22.

[59]. Ross, supra note 57.

[60]. Id.; Gov’t of India Ministry of Fin. Dep’t of Econ. Aff. Inv. Div., Office Memorandum (Feb. 8, 2016), http://indiainbusiness.nic.in/newdesign/upload/Consolidated_Interpretive-Statement.pdf; Joel Dahlquist & Luke Eric Peterson, Analysis: In Final Version of Its New Model Investment Treaty, India Dials Back Ambition of Earlier Proposals—But Still Favors Some Big Changes, Inv. Arb. Rep. (Jan. 3, 2016), https://iareporter.com/articles/analysis-in-final-version-of-its-new-model-investment-treaty-india
-dials-back-ambition-of-earlier-proposals-but-still-favors-some-big-changes.

[61]. UNCTAD, India: Bilateral Investment Treaties (BITs), Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/IIA/CountryBits/96 (last visited Sept. 24, 2018).

[62]. Modi’s “Make in India”: Bold Policy or a Mere Rebranding?, Economist: Intelligence Unit (Oct. 31, 2014), http://country.eiu.com/article.aspx?articleid=1862448770&Country=India
&topic=Economy&subtopic=Forecast (internal quotation marks omitted). See also Nicholas Peacock & Nihal Joseph, Mixed Messages to Investors as India Quietly Terminates Bilateral Investment Treaties with 58 Countries, HSF PIL Notes (Mar. 16, 2017), http://hsfnotes.com/publicinternationallaw/2017
/03/16/mixed-messages-to-investors-as-india-quietly-terminates-bilateral-investment-treaties-with-58-countries.

[63]. Engela C. Schlemmer, An Overview of South Africa’s Bilateral Investment Treaties and Investment Policy, 31 ICSID Rev. 167, 188–89 & n.108 (2016) (identifying these proceedings as a confidential arbitration in terms of the Switzerland–South Africa BIT, terminated 31 August 2014, and Foresti v. Republic of South Africa, ICSID Case No. ARB(AF)/07/01, Award (August 4, 2010), http://icsidfiles.worldbank.org/icsid/ICSIDBLOBS/OnlineAwards/C90/DC1651_En.pdf)

[64]. UNCTAD, South Africa: Bilateral Investment Treaties (BITs), Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/IIA/CountryBits/195 (last visited Sept. 24, 2018). Africa terminated BITs with Austria on Oct. 31, 2014, with Belgium-Luxembourg on Mar. 13, 2013, with Denmark on Aug. 31, 2014, with France on Oct. 31, 2014, with Germany on Oct. 31, 2014, with the Netherlands on Apr. 30, 2014, with Spain on Dec. 22, 2013, with Switzerland on Oct. 31, 2014, and with United Kingdom on Oct. 31, 2014.

[65]. UNCTAD, Protection of Investment Act Approved, Inv. Pol’y Hub (Dec. 13, 2015), http://investmentpolicyhub.unctad.org/IPM/MeasureDetails?id=2828&rgn=&grp=&t=&s=&pg=&c=&dt=&df=&isSearch=false.

[66]. UNCTAD, South Africa, supra note 64 (entered into force on Sept. 15, 2010).

[67]. Id. (entered into force on Oct. 23, 1998).

[68]. Id. (entered into force on July 27, 2005).

[69]. Id. (entered into force on Dec. 29, 2010).

[70]. UNCTAD, South Africa: Treaties with Investment Provisions (TIPs), Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/IIA/CountryOtherIias/195#iiaInnerMenu (last visited Sept. 24, 2018) (entered into force on Apr. 16, 2010).

[71]. UNCTAD, South Africa, Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/iia
/countrybits/195#iiainnermenu (last visited Sept. 24, 2018). South Africa has signed BITs that have not yet entered into force with Mozambique, Sudan, Yemen, Ethiopia, Guinea, Madagascar, Congo, United Republic of Tanzania, Gabon, Angola, Democratic Republic of Congo, Equatorial Guinea, Libya, Tunisia, Rwanda, Algeria, Uganda, Egypt, and Ghana. Id.

[72]. GAR Know-How: Investment Treaty Arbitration 2016 South Africa, Global Arb. Rev. § 11, http://globalarbitrationreview.com/jurisdiction/2000154/south-africa (last visited June 26, 2018).

The termination process will likely follow a regional pattern, starting with BITs with EU States. BITs with Austria, Denmark, France, the UK, Belgium/Luxembourg, Spain, Germany, the Netherlands and Switzerland have recently been terminated and terminations of other EU BITs are expected. There is, however, uncertainty over the fate of South Africa’s BITs with other African States as South Africa is a capital exporter to Africa. A political decision on its African BITs has not yet been made.

Id.

[73]. See generally Charles N. Brower & Sarah Melikian, “We Have Met the Enemy and He Is Us!” Is the Industrialized North “Going South” on Investor-State Arbitration?, 31 Arb. Int’l 1 (2015) for the proposition that the current atmosphere of fear and hysteria recalls the New International Economic Order movement, which caught hold but then quickly dissipated over forty years ago.

[74]. Gaetano Iorio Fiorelli, Italy Withdraws from Energy Charter Treaty, Global Arb. News (May 6, 2015), http://globalarbitrationnews.com/italy-withdraws-from-energy-charter-treaty-20150507; Italy No Longer Member of Energy Charter Treaty, Hopes to Avoid More Arbitrations, Global Inv. Protection (June 1, 2016), http://www.globalinvestmentprotection.com/index.php/italy-no-longer-member-of-energy-charter-treaty-hopes-to-avoid-more-arbitrations.

[75]. Fiorelli, supra note 74.

[76]. UNCTAD, International Investment Agreement Navigator, Inv. Pol’y Hub, http://investmentpolicyhub.unctad.org/IIA/IiasByCountry#iiaInnerMenu (last visited Aug. 24, 2018).

[77]. Marta Waldoch & Maciej Onoszko, Poland Plans to Cancel Bilateral Investment Treaties with EU, Bloomberg (Feb. 25, 2016), https://www.bloomberg.com/news/articles/2016-02-25/poland-seeks-to-end-bilateral-investment-deals-with-eu-members.

[78]. Id.

[79]. UNCTAD, International Investment Agreement Navigator, supra note 76.

[80]. Joel Dahlquist & Luke Eric Peterson, Investigation: Denmark Proposes Mutual Termination of Its Nine BITS with Fellow EU Member States, Against Spectre of Infringement Cases, Inv. Arb. Rep. (May 2, 2016), https://www.iareporter.com/articles/investigation-denmark-proposes-mutual-termination
-of-its-nine-bits-with-fellow-eu-member-states-against-spectre-of-infringement-cases.

[81]. Id.

[82]. Id.

[83]. See generally Office of the U.S. Trade Representative, Exec. Office of the President, 2012 U.S. Model Bilateral Investment Treaty (2012).

[84]. Id. Annex B.

[85]. Id. Annex B, para. 3.

[86]. Id. Annex B, para. 4.

[87]. Id. Annex B, para. 2.

[88]. Id. art. 21(2).

[89]. Id. art. 21(2)(a).

[90]. Id. art. 21(2)(b).

[91]. Id. art. 14.

[92]. Id. art. 31.

[93]. Id. art. 31(1).

[94]. Id.

[95]. Id. art. 31(2).

[96]. Id.

[97]. Id. art. 30(3).

[98]. See generally Brower & Melikian, supra note 73.

[99]. Press Release, European Commission, Commission Proposes New Investment Court System for TTIP and Other EU Trade and Investment Negotiations (Sept. 16, 2015), http://europa.eu
/rapid/press-release_IP-15-5651_en.htm.

[100]. Marc Lalonde, Address at the American Society of International Law Annual Meeting: Arbitrating the Public Interest, (Mar. 30–Apr. 2, 2016), https://www.asil.org/resources/audio/2016-annual-meeting.

[101]. European Comm’n, Factsheet 1 (2017), http://trade.ec.europa.eu/doclib/docs/2017/July
/tradoc_155744.pdf. See also Douglas Thomson, UNCITRAL to Examine Further Reforms of ISDS, Global Arb. Rev. (July 12, 2017), http://globalarbitrationreview.com/article/1144340/uncitral-to-examine-further-reforms-of-isds.

[102]. Nikos Lavranos, The Outcome of the UNCITRAL July 2017 Meeting: The First Steps Towards a Multilateral Investment Court (MIC), Wöss & Partners Newsletter (Wöss & Partners, Washington, D.C.) Aug. 7, 2017, at 5.

[103]. Id. at 6.

[104]. Id.

[105]. Id.

[106]. Id.

[107]. Id. at 7.

[108]. Dark and Light Mood Music, Global Arb. Rev. (June 20, 2017), https://globalarbitrationreview.com/article/1143291/dark-and-light-mood-music.

[109]. UNCTAD, Investor-State Dispute Settlement: Review of Developments in 2017, at 5 (2018), http://unctad.org/en/PublicationsLibrary/diaepcbinf2018d2_en.pdf.

[110]. Id. at 6.

[111]. Id.

[112]. Int’l Ctr. for Settlement Inv. Disp., The ICSID Caseload – Statistics: Issue 2018-2, at 14 (2018), https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202018-2%20(English).pdf.

[113]. Int’l Ctr. for Settlement Inv. Disp., The ICSID Caseload – Statistics, Special Focus –European Union: April 2017, at 14 (2017), https://icsid.worldbank.org/en/Documents/resources
/ICSID%20Web%20Stats%20EU(English)April%202017.pdf.

[114]. Luke Eric Peterson & Kendra Magraw, Looking Back: Ethyl v. Canada Case Drew Early Public Attention to Previously Obscure Arbitration Process, and Settled After Tribunal’s Jurisdiction Ruling, Inv. Arb. Rep. (Mar. 21, 2017), https://www.iareporter.com/articles/looking-back-ethyl-v-canada-case-drew-early-public-attention-to-previously-obscure-arbitration-process-and-settled-after-tribunals-jurisdiction-ruling. See also John Geddes, Ethyl Sues Ottawa for US$200M over MMT Ban, Fin. Post, Sept. 11, 1996, at 6.

[115]. See generally Ethyl Corp. v. Gov’t of Canada, Award on Jurisdiction (June 24, 1998), 7 ICSID Rep. 12 (1998) (affirming jurisdiction over Canada’s objections).

[116]. Michael Valpy, How Free Trade Threatens Democracy, Globe and Mail (Apr. 9, 2001), https://www.theglobeandmail.com/opinion/how-free-trade-threatens-democracy/article760604.

[117]. Agreement on Internal Trade: Report of the Article 1704 Panel Concerning the Dispute Between Alberta and Canada Regarding the Manganese-Based Fuel Additives Act 13 (1998) [hereinafter Agreement on Internal Trade], https://www.cfta-alec.ca/wp-content/pdfs/English/DisputeResolution/PanelReports/8_eng.pdf (emphasis in original).

[118]. Geddes, supra note 114.

[119]. Valpy, supra note 116.

[120]. Mark Mackinnon, NAFTA Members to Talk Reform, Globe and Mail (Apr. 9, 2001), https://www.theglobeandmail.com/report-on-business/nafta-members-to-talk-reform/article1179774.

[121]. NAFTA – Chapter 11 – Investment: Cases Filed Against the Government of Canada, Ethyl Corporation v. Government of Canada, Global Aff. Can., http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/ethyl.aspx?lang=eng#archived (last visited Sept. 24, 2018). The authors note that the official Canadian Government website describing the Ethyl Corp. v. Government of Canada case identifies “three Canadian provinces.” But according to the AIT Panel decision, four provinces were Complainants:

The Government of Alberta (the Complainant) contends that the Act fails to comply with Canada’s (the Respondent) obligations under the Agreement on Internal Trade (the Agreement), and that the inconsistencies cannot be justified by reference to the Agreement’s provisions for measures associated with legitimate objectives. The Complainant contends that the Act has impaired internal trade, caused injury to Alberta refiners, and is inconsistent with general and specific provisions of the Agreement. The Governments of Québec, Nova Scotia and Saskatchewan (also Complainants) intervened in support of Alberta. The Government of Nova Scotia did not file a written submission or present oral arguments.

Agreement on Internal Trade, supra note 117, at 1 (emphasis in the original and added).

[122]. Since Elizabeth May’s statement, the treaty entered into force on Oct. 1, 2014 and retained an investor-State arbitration provision. See Trade and Investment Agreements, Global Aff. Can., https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/index
.aspx?lang=eng&country_pays=China&menu_id=147 (last visited Sept. 24, 2018).

[123]. Green Party of Canada, Elizabeth May: Red Carpet for China (Press Conference Q and A), YouTube (Sept. 27, 2012), https://www.youtube.com/watch?v=SjwjBe8tlAo. The authors have transcribed the block quotation manually by listening to the YouTube clip. Thus, the block quotation is not an official transcription.

[124]. Trade and Investment Agreements, supra note 122.

[125]. Scott Sinclair, Canada’s Track Record Under NAFTA Chapter 11: North American Investor-State Disputes to January 2018, at 11 (2018), http://res.cloudinary.com
/lbresearch/image/upload/v1516620972/nafta_dispute_table_report_2018_220118_1137.pdf; Lacey Yong, NAFTA Claims Have Cost Canada More Than US$300 Million, Says Report, Global Arb. Rev. (Jan. 22, 2018), https://globalarbitrationreview.com/article/1152937/nafta-claims-have-cost-canada-more-than-ususd300-million-says-report.

[126]. Sinclair, supra note 125, at 8–10.

[127]. Id. at 10.

[128]. Id. at 11.

[129]. SD Myers, Inc. v. Government of Canada, NAFTA/UNCITRAL, Partial Award, ¶¶ 193–95 (Nov. 13, 2000), http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs
/disp-diff/myers-18.pdf (footnote omitted).

[130]. Chemtura Corp. v. Government of Canada, NAFTA/UNCITRAL, Award, pt. V (Aug. 20, 2010), http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/disp-diff
/chemtura-14.pdf.

[131]. See Cecilia Olivet & Alberto Villareal, Who Really Won the Legal Battle Between Philip Morris and Uruguay?, Guardian (July 28, 2016), https://www.theguardian.com/global-development/2016/jul/28/who-really-won-legal-battle-philip-morris-uruguay-cigarette-adverts.

[132]. See Behind Closed Doors, Economist (Apr. 23, 2009), http://www.economist.com
/node/13527961; Elizabeth Warren, The Trans-Pacific Partnership Clause Everyone Should Oppose, Wash. Post (Feb. 25, 2015), http://wapo.st/1BwJA7H?tid=ss_tw-bottom&utm_term=.2dad5c8d1898; Bill Moyers, Trading Democracy: A Bill Moyers Special, PBS (Feb. 1, 2012), http://www.pbs.org
/now/transcript/transcript_tdfull.html (“Today, foreign companies are exploiting Chapter 11 to attack public laws that protect our health—and our environment—even to attack the American judicial system.”).

[133]. Council of the European Union, Directives for the Negotiation on the Transatlantic Trade and Investment Partnership Between the European Union and the United States of America ¶¶ 22–23 (2013), https://www.laquadrature.net/files/TAFTA%20_
%20Mandate%20_%2020130617.pdf.

[134]. Press Release, European Comm’n, Improving ISDS to Prevent Abuse – Statement by EU Trade Commissioner Karel De Gucht on the Launch of a Public Consultation on Investment Protection in TTIP (Mar. 27, 2014), http://europa.eu/rapid/press-release_STATEMENT-14-85_en.htm.

[135]. Press Release, European Comm’n, Report Presented Today: Consultation on Investment Protections in EU-US Trade Talks (Jan. 13, 2015), http://trade.ec.europa.eu/doclib/press/index.cfm
?id=1234.

[136]. Robin Emmott & Philip Blenkinsop, Online Protest Delays EU Plan to Resolve U.S. Trade Row, Reuters (Nov. 26, 2014), https://reuters.com/article/us-eu-usa-trade/exclusive-online-protest-delays-eu-plan-to-resolve-u-s-trade-row-idUSKCN0JA0YA20141126.

[137]. United Nations, Gen. Assembly, Report of the United Nations Commission on International Trade Law: Fiftieth Session (3-21 July 2017) ¶ 260 (2017), http://www.uncitral.org/pdf/english/commissionsessions/unc-50/A-72-17-E.pdf.

[138]. Id. ¶¶ 250–51, 264.

[139]. Id. ¶ 260.

[140]. New Instruments on Settlement Agreements from an UNCITRAL Working Group, UNCITRAL (Feb. 14, 2018), http://uncitralrcap.org/en/new-instruments-settlement-agreements-uncitral-working-group/?ckattempt=1.

[141]. United Nations, Gen. Assembly, supra note 137, ¶ 261.

[142]. Anthea Roberts, UNCITRAL and ISDS Reform: Not Business as Usual, EJIL: Talk! (Dec. 11, 2017), https://www.ejiltalk.org/uncitral-and-isds-reform-not-business-as-usual (“In the whole history of UNCITRAL [established in 1966], only one issue had ever been put to the vote and that was the decision [by the Commission, not by a Working Group] on whether to move the headquarters of UNCITRAL to Vienna [from New York City]. The premium placed on consensus meant that voting enjoyed somewhat of a mystical taboo. That was, at least, until this meeting when the spell was broken for a second time.”).

[143]. United Nations, Gen. Assembly, Report of Working Group III (Investor-State Dispute Settlement Reform) on the Work of Its Thirty-Fourth Session (Vienna, 27 November–1 December 2017) ¶ 14 (2017), https://documents-dds-ny.un.org/doc/UNDOC/GEN/V18
/029/83/PDF/V1802983.pdf?OpenElement.

[144]. Id. ¶¶ 30–48.

[145]. Id. ¶ 35.

[146]. Marie Talašová et al., There’s “No Alternative” to Investment Arbitration, Says Schreuer, Global Arb. Rev. (Dec. 22, 2017), https://globalarbitrationreview.com/article/1151619/theres-no-alternative-to-investment-arbitration-says-schreuer.

[147]. United Nations, Gen. Assembly, Report of Working Group III, supra note 143, ¶¶ 46–48, 59–60.

[148]. Talašová et al., supra note 146.

[149]. Jan Paulsson, Moral Hazard in International Dispute Resolution, 25 ICSID Rev. 339, 339 (2010).

[150]. Charles N. Brower & Charles B. Rosenberg, The Death of the Two-Headed Nightingale: Why the Paulsson-van den Berg Presumption that Party-Appointed Arbitrators Are Untrustworthy Is Wrongheaded, 29 Arb. Int’l 7, 7 (2013).

[151]. Alison Ross, Paulsson and van den Berg Presume Wrong, Says Brower, Global Arb. Rev. (Feb. 6, 2012), http://globalarbitrationreview.com/article/1030954/paulsson-and-van-den-berg-wrong-says-brower (emphasis added).

[152]. Jan Paulsson, The Idea of Arbitration (2013).

[153]. On March 2, 2017, Professor Paulsson delivered a lecture at the Annual Meeting of the CPR Institute at the Baltimore Hotel, Coral Gables, Florida, titled Shall We Have an Adult Conversation About Legitimacy? Soon afterward, on March 17, 2017, he delivered a lecture titled Sore Losers and What to Do About Them at the Second Annual ADR Symposium, University of Southern California Gould School of Law, Los Angeles, California. The authors received notes on the latter lecture, which is unpublished, from Professor Paulsson. Professor Paulsson’s arguments in his book and lectures are largely repetitive of his original points contained in Moral Hazard in International Dispute Resolution (the “Moral Hazard article”). Many of these points have been addressed in The Death of the Two-Headed Nightingale: Why the Paulsson-van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded (the “Nightingale article”) and there remain few that deserve a response. The points he makes in his book and lectures overlap somewhat, but they are not identical and cover different grounds.

[154]. Supervisión y Control, S.A. v. Republic of Costa Rica, ICSID Case No. ARB/12/4, Dissenting Opinion of Joseph P. Klock Jr. 13–15 (Jan. 18, 2017), https://www.italaw.com/sites/default
/files/case-documents/italaw8231.pdf (emphasis in original and added).

[155]. Jan Paulsson, Shall We Have an Adult Conversation About Legitimacy? CPR Speaks (Mar. 15, 2017), https://blog.cpradr.org/2017/03/15/shall-we-have-an-adult-conversation-about-legitimacy.

[156]. Int’l Ctr. for Settlement of Inv. Disputes, ICSID Convention, Regulations, and Rules 15, 23 https://icsid.worldbank.org/en/Documents/icsiddocs/ICSID%20Convention%20English
.pdf.

[157]. Id. at 78.

[158]. Andrew Battisson & Cheryl Teo, The Call to Remove Unilateral Appointments: Seven Years On, Kluwer Arb. Blog (July 3, 2017), http://kluwerarbitrationblog.com/2017/07/03/call-remove-unilateral-appointments-seven-years.

[159]. Queen Mary Univ. of London, 2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process 5 (2012), http://www.arbitration.qmul.ac.uk
/media/arbitration/docs/2012_International_Arbitration_Survey.pdf.

[160]. Queen Mary Univ. of London, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration 6 (Oct. 6, 2015), https://www.whitecase.com/sites/whitecase/files/files/download/publications/qmul-international-arbitration-survey-2015_0.pdf.

[161]. Berwin Leighton Paisner, International Arbitration Survey: Party Appointed Arbitrators – Does Fortune Favour the Brave? 4 (2018), https://res.cloudinary.com/lbresearch
/image/upload/v1515581879/BLP_Survey_xasu5i.pdf.

[162]. Id. at 6.

[163]. Id.

[164]. Battisson & Teo, supra note 158.

[165]. Alfonso Gómez-Acebo, Party-Appointed Arbitrators in International Commercial Arbitration 43–44 (2016).

[166]. Id. (“The parties with no acquaintances on the list would probably find it more difficult to choose someone they trust.”).

[167]. Int’l Chamber of Commerce, Expedited Procedure Provisions, https://iccwbo.org/dispute-resolution-services/arbitration/expedited-procedure-provisions (last visited Sept. 24, 2018).

[168]. International Chamber of Commerce Arbitration Rules art. 30(3)(a).

[169]. Id. art. 30(2)(a), Appendix VI 1(2).

[170]. Arbitration Rules: Appendix VI – Expedited Procedure Rules, ICC, https://iccwbo.org/dispute
-resolution-services/arbitration/rules-of-arbitration/#article_expeditedprocedure2 (last visited Sept. 24, 2018).

[171]. See Singapore International Arbitration Centre, SIAC Rules 2010, http://www.siac.org.sg/our
-rules/rules/siac-rules-2010 (last visited Sept. 24, 2018); Hong Kong International Arbitration Centre, Expedited HKIAC Arbitration, http://www.hkiac.org/arbitration/process/expedited-hkiac-arbitration (last visited Sept. 24, 2018).

[172]. Fabian Bonke, Overriding an Explicit Agreement on the Number of Arbitrators – One Step Too Far under the New ICC Expedited Procedure Rules?, Kluwer Arb. Blog (May 22, 2017), http://kluwerarbitrationblog.com/2017/05/22/overriding-an-explicit-agreement-on-the-number-of-arbitrators-one-step-too-far-under-the-new-icc-expedited-procedure-rules.

[173]. Id.

[174]. Paulsson, supra note 155 (emphasis in original).

[175]. Albert Jan van den Berg, Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration, in Looking to the Future: Essays on International Law in Honor of W. Michael Reisman 821, 834 (Mahnoush H. Arsanjani et al. eds., 2010).

[176]. Id. at 831.

[177]. Id. at 834.

[178]. Id. at 831.

[179]. See generally Brower & Rosenberg, supra note 150.

[180]. Albert Jan van den Berg, Charles Brower’s Problem with 100 Per Cent—Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration, 31 Arb. Int’l 381 (2015).

[181]. Id. at 383.

[182]. Brower & Rosenberg, supra note 150, at 28, 32. Moreover, the Nightingale article rhetorically asked:

[D]oes not the 78% non-dissent rate in van den Berg’s survey amply suggest that, contrary to his assumption that party-appointed arbitrators are not neutral, the vast majority demonstrably are, by his own definition? Given these facts, it would seem that dissenting opinions by party-appointed arbitrators should more properly be viewed as ‘the reflection of their shared outlook with the party who appointed them, rather than dependency or fear to alienate such party’.

Id. (footnotes omitted). Van den Berg responded:

It is also argued in the Nightingale article that ‘[t]his figure alone serves to minimize any concerns regarding dissenting opinions in investment arbitration’. My survey of approximately 150 awards and decisions showed that in thirty-four cases the party-appointed arbitrator of the party that had lost the case had issued a separate opinion. That is, 22% of the surveyed investment cases. In the Nightingale article, this figure is presented differently: ‘78% of the approximately 150 cases reviewed by van den Berg produced no dissenting opinions whatsoever.’ This manner of presenting overlooks the fact that 22% compares badly with commercial arbitration, where the percentage is around 8%. It also overlooks the increase of the percentage in investment arbitration, as compared with a decrease in commercial arbitration. The trend in investment arbitration is particularly worrying as it seems to lead to ‘mandatory dissents’.

. . .

The ‘shared outlook’ may be an explanation for a number of dissenting opinions, but is it an explanation for the 100% score? From that perspective, the expression ‘shared outlook’ becomes a doubtful euphemism.

Van den Berg, supra note 180, at 384–86.

[183]. Gabrielle Kaufmann-Kohler & Michele Potestà, Geneva Ctr. for Int’l Dispute Settlement, Can the Mauritius Convention Serve as a Model for the Reform of Investor-State Arbitration in Connection with the Introduction of a Permanent Investment Tribunal or an Appeal Mechanism? Analysis and Roadmap 5 (2016).

[184]. Note by the Secretariat, Settlement of Commercial Disputes: Presentation of a Research Paper on the Mauritius Convention on Transparency in Treaty-Based Investor-State Arbitration as a Possible Model for Further Reforms of Investor-State Dispute Settlement ¶¶ 3–5, U.N. Doc. A/CN.9/890 (May 24, 2016).

[185]. United Nations, Gen. Assembly, supra note 137, ¶¶ 240–65; Lavranos, supra note 102.

[186]. Geneva Ctr. for Int’l Dispute Settlement, UNCITRAL-CIDS Government Expert Meeting (May 2, 2017), https://www.cids.ch/events/uncitral-cids-government-experts-meeting.

[187]. United Nations, Gen. Assembly, supra note 137, ¶ 260; Lavranos, supra note 102.

[188]. Kaufmann-Kohler & Potestà, supra note 183, at 4.

[189]. Id. ¶ 93.

[190]. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, art. I (New York, June 10, 1958) [hereinafter N.Y. Convention] (emphasis added) provides,

1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.

2. The term “arbitral awards” shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.

There is an open query as to whether the IUSCT is a “permanent arbitral bod[y]” under Article I(2) of the N.Y. Convention. The Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the U.S. of America and the Government of the Islamic Republic of Iran (“Claims Settlement Declaration”) sets a deadline for filing claims with the IUSCT both by nationals of the U.S. against Iran and nationals of Iran against the U.S., as well as by claims by either of the two States Party to that Declaration against the other based on contracts for the purchase and sale of goods and services. See Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the U.S. of America and the Government of the Islamic Republic of Iran, in Claims Settlement Declaration 9, 9–12 (1981). Article III(4) of the Claims Settlement Declaration states:

No claim may be filed with the Tribunal more than one year after the entry into force of this Agreement or six months after the date the President is appointed, whichever is later. These deadlines do not apply to the procedures contemplated by Paragraphs 16 and 17 of the Declaration of the Government of Algeria of January 19, 1981.

Id. at 10.

Since the President was appointed on June 4, 1981, the last day on which the noted claims could be filed was January 19, 1982. See Refusal to Accept the Claim of Mr. Victor E. Pereira, Decision No. DEC 2-Ref 5-2 (10 Mar. 1982), reprinted in 21 Iran-U.S. Cl. Trib. Rep. 3, 3; Charles N. Brower & Jason D. Brueschke, The Iran-United States Claims Tribunal 95 (1998).

The exception to the January 19, 1982, deadlines are interpretive disputes (or “A” claims) between the United States and Iran (see paragraphs 16 and 17 of the Declaration of the Government of the Democratic and Popular Republic of Algeria dated January 19, 1981 (“General Declaration”)).

[191]. Kaufmann-Kohler & Potestà, supra note 183, ¶¶ 95–96, 148–54.

[192]. Id. ¶ 94.

[193]. Id. ¶ 95.

[194]. Id.

[195]. Id.

[196]. Charles N. Brower & Jason D. Brueschke, The Iran-United States Claims Tribunal 4–5 (1998).

[197]. See S.C. Res. 457 (Dec. 4, 1979); S.C. Res. 461 (Dec. 31, 1979).

[198]. Case concerning United States Diplomatic and Consular Staff in Tehran (U.S. v. Iran), Order on Provisional Measures, 1979 I.C.J. Rep. (Dec. 15, 1979); Case concerning United States Diplomatic and Consular Staff in Tehran (U.S. v. Iran), Judgment, 1980 I.C.J. Rep. (May. 24, 1980).

[199]. Mark Bowden, The Desert One Debacle, Atlantic (July 2006), https://www.theatlantic.com
/magazine/archive/2006/05/the-desert-one-debacle/304803.

[200]. The Alabama Claims, 1862–1872, Off. of the Historian, https://history.state.gov
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[201]. V.V. Veeder, Essex Court Chambers, The Historical Keystone to International Arbitration: The Party-Appointed Arbitrator – From Miami to Geneva, Inaugural Charles N. Brower Lecture on International Dispute Resolution at 391 (Apr. 5, 2013), in 107 Am. Soc’y Int’l Proc. 387, 391 (2013).

[202]. Kaufmann-Kohler & Potestà, supra note 183, ¶ 96.

[203]. Id. ¶¶ 97–98.

[204]. CAS Arbitration Rules for the Olympic Games, art 11.

[205]. Basketball Arbitral Tribunal, Arbitration Rules (2014), art. 8.

[206]. Kaufmann-Kohler & Potestà, supra note 183, ¶ 96

[207]. Given the large number of doping-related disputes in sport arbitrations, one commentator has even queried whether such disputes fall under the N.Y. Convention given their non-commercial nature. Roger Alford, Are CAS Arbitrations Governed by the New York Convention? (Mar. 8, 2009) http://kluwerarbitrationblog.com/2009/03/08/are-cas-arbitrations-governed-by-the-new-york-convention/?_ga=2.156422331.1237221282.1499359155-1066329609.1481846792. This may explain, according to another commentator, how enforcement under the N.Y. Convention of sports-based arbitral awards is not as important as for commercial-based arbitral awards “because the sport governing bodies have internal enforcement mechanisms that are highly effective.” Daniel Girsberger & Nathalie Voser, International Arbitration: Comparative and Swiss Perspectives ¶ 1875 (3rd ed. 2016). The Swiss Supreme Court criticized “the lack of transparency of who nominated the arbitrators for their position on the list.” Id. ¶ 1942. Commentators have described the lack of arbitrators “that represent athletes’ interests, but without transparency, an athlete has no way of knowing who those arbitrators are.” Id. This only adds more credence to the significance of unilateral appointments.

[208]. Kaufmann-Kohler & Potestà, supra note 183, ¶¶ 97–98.

[209]. Gómez-Acebo, supra note 165, ¶ 2-40.

[210]. U.N. Econ. and Soc. Council, Memorandum by the Secretary-General, Recognition and Enforcement of Foreign Arbitral Awards ¶ 5 (1956), http://daccess-ods.un.org/access.nsf/Get?OpenAgent&DS=e/2840&Lang=E (emphasis added) (footnotes omitted) (The Secretary-General prepared a memorandum for the ECOSOC on the draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards and whether a conference should be called to address the topic).

[211]. David D. Caron & Lee M. Caplan, The UNCITRAL Arbitration Rules: A Commentary 1–2 (2nd ed. 2013).

[212]. Id.

[213]. 2010 UNCITRAL Arbitration Rules, art. 9(1) (“If three arbitrators are to be appointed, each party shall appoint one arbitrator. The two arbitrators thus appointed shall choose the third arbitrator who will act as the presiding arbitrator of the arbitral tribunal.”) (emphasis added); 1985 UNCITRAL Model Law on International Commercial Arbitration, art. 11(3)(s) (“Failing such agreement, (a) in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the appointment shall be made, upon request of a party, by the court or other authority specified in article 6.”) (emphasis added); 1976 UNCITRAL Arbitration Rules, art. 7(1) (“If three arbitrators are to be appointed, each party shall appoint one arbitrator. The two arbitrators thus appointed shall choose the third arbitrator who will act as the presiding arbitrator of the tribunal.”) (emphasis added).

[214]. Kaufmann-Kohler & Potestà, supra note 183, ¶¶ 166–69 (emphasis added).

[215]. Owen Bowcott, No British Judge on World Court for First Time in Its 71-Year History, Guardian (Nov. 20, 2017), https://www.theguardian.com/law/2017/nov/20/no-british-judge-on-world-court-for-first-time-in-its-71-year-history.

[216]. Gabrielle Kaufmann-Kohler & Michele Potestà, Geneva Ctr. for Int’l Dispute Settlement, The Composition of a Multilateral Investment Court and of an Appeal Mechanism for Investment Awards: CIDS Supplemental Report ¶ 2 (Nov. 15, 2017), http://www.uncitral.org/pdf/english/workinggroups/wg_3/CIDS_Supplemental_Report.pdf.

[217]. Id. ¶ 6.

[218]. Id. ¶ 7.

[219]. Id. ¶ 14 (emphasis added).

[220]. Id. ¶¶ 107–08 (emphasis added).

[221]. Id. ¶¶ 111–16.

[222]. Lavranos, supra note 102.

[223]. European Comm’n, Council Decision: Authorizing the Opening of Negotiations for a Convention Establishing a Multilateral Court for the Settlement of Investment Disputes, art. 1, 8 (2017) http://ec.europa.eu/transparency/regdoc/rep/1/2017/EN/COM-2017-493-F1-EN-MAIN-PART-1.PDF. See also Lacey Yong, European Commission Seeks Leave to Begin Negotiations for Multilateral Court, Global Arb. Rev. (Sept. 13, 2017), http://globalarbitrationreview.com/article/1147314/eu-to-begin-negotiations-for-multilateral-investment
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[224]. Opinion 2/15 of the Court (Full Court), Opinion Pursuant to Article 218(11) TFEU ¶ 29, EU:C:2017:376 (May 16, 2017), http://curia.europa.eu/juris/document/document.jsf?text=&docid
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[225]. Anthea Roberts, A Turning of the Tide Against ISDS?, EJIL: Talk! (May 19, 2017), https://www.ejiltalk.org/a-turning-of-the-tide-against-isds.

[226]. Opinion 2/15, supra note 224.

[227]. Id. ¶¶ 227, 305.

[228]. Id. ¶ 292.

[229]. Nikos Lavranos, The CJEU’s Opinion on EU-SING FTA: More Confusion Than Clarity, Kluwer Arb. Blog (May 30, 2017), http://kluwerarbitrationblog.com/2017/05/30/cjeus-opinion-eu-sing-fta-confusion-clarity.

[230]. Douglas Thomson, ECJ Says Member States Must Sign Off on ISDS, Global Arb. Rev. (May 16, 2017), http://globalarbitrationreview.com/article/1141765/ecj-says-member-states-must-sign-off-on-isds.

[231]. In Focus – EU-Japan Economic Partnership Agreement, European Comm’n: Trade, http://ec.europa.eu/trade/policy/in-focus/eu-japan-economic-partnership-agreement (last visited Sept. 25, 2018).

[232]. EU-Japan EPA – The Agreement in Principle 1 (2017), http://trade.ec.europa.eu/doclib
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[233]. Id.

[234]. Id.

[235]. EU-Japan Economic Partnership Agreement: A New EU Trade Agreement with Japan 6 (2017), http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155684.pdf.

[236]. Japan-Kenya Bilateral Investment Treaty, Japan-Kenya, art. 15 (June 28, 2016), http://investmentpolicyhub.unctad.org/Download/TreatyFile/5374.

[237]. Islamic Republic of Iran-Japan Bilateral Investment Treaty, Islamic Republic of Iran-Japan, art. 18 (signed February 5, 2016), http://investmentpolicyhub.unctad.org/Download/TreatyFile/3578.

[238]. Ceremonial signing of the CPTPP is scheduled for March 2018. Transpacific Partnership Agreement, ch. 9 (February 4, 2016), http://investmentpolicyhub.unctad.org/Download/TreatyFile
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[239]. A New Trade Deal Between the EU and Japan, Economist (July 8, 2017), https://www.economist.com/news/finance-and-economics/21724830-besides-slashing-tariffs-cheese-and-cars-it-sends-message-donald-trump.

[240]. Douglas Thomson, ECJ to Rule on CETA Investment Court, Global Arb. News (Sept. 6, 2017), http://globalarbitrationreview.com/article/1147140/ecj-to-rule-on-ceta-investment-court. See also Damien Charlotin, Analysis: EU’s Highest Court Is Asked Once More to Weigh in on International Investment Law Questions—This Time by Belgium in Relation to CETA’s “Investment Court System”, Inv. Arb. Rep. (Sept. 6, 2017), https://www.iareporter.com/articles/analysis-eus-highest-court-is-asked-once-more-to-weigh-in-on-international-investment-law-questions-this-time-by-belgium-in-relation-to-cetas-investment-court-system.

[241]. Slovak Republic v. Achmea BV, Case C-284/16, Opinion of Advocate General Wathelet (Sept. 19, 2017), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62016CC0284.

[242]. Advocate General of EU Court of Justice Rejects Contentions That Intra-EU Bilateral Investment Treaty is Incompatible with EU Law, Inv. Arb. Rep. (Sept. 19, 2017), https://www.iareporter.com/articles/28492.

[243]. Slovak Republic, Opinion of Advocate General Wathelet ¶ 273:

Articles 18, 267 and 344 TFEU must be interpreted as not precluding the application of an investor/State dispute settlement mechanism established by means of a bilateral investment agreement concluded before the accession of one of the Contracting States to the European Union and providing that an investor from one Contracting State may, in the case of a dispute relating to investments in the other Contracting State, bring proceedings against the latter State before an arbitral tribunal.

[244]. Sebastian Perry, ECJ Adviser Gives Thumbs-up to Intra-EU BITs, Global Arb. Rev. (Sept. 19, 2017), http ://globalarbitrationreview.com/article/1147460/ecj-adviser-gives-thumbs-up-to-intra-eu-bits.

[245]. Slovak Republic, Opinion of Advocate General Wathelet ¶ 34.

[246]. Id.

[247]. Id. ¶ 36.

[248]. Id. ¶ 37. The Advocate General did, however, note that Italy was the only EU Member State falling within the second group that had moved to terminate its intra-EU BITs, with exception of the Italy-Malta BIT. Id.

[249]. Id. ¶ 38.

[250]. Id. ¶ 40.

[251]. Id. ¶ 41 (emphasis added).

[252]. Id. ¶ 44.

[253]. Id.

[254]. Id. ¶ 45.

[255]. Id.

[256]. See Slovak Republic v. Achmea BV, Case C-284/16, Judgment, ¶ 56 (2018), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62016CJ0284 (ruling that such arbitration clauses are incompatible with EU law because they, inter alia, threaten the “full effectiveness of EU law”).

[257]. Slovak Republic, Opinion of Advocate General Wathelet ¶ 34.

[258]. Letter of Sigrid A.M. Kaag, Dutch Foreign Affairs Minister (Apr. 26, 2018). See Lacey Yong, Netherlands to Terminate BIT with Slovakia in Wake of Achmea, Global Arb. Rev. (May 2, 2018), https://globalarbitrationreview.com/article/1168905/netherlands-to-terminate-bit-with-slovakia-in-wake-of-achmea.

[259]. Note from the General Secretariat of the Council for the European Union to Delegations, Negotiating Directives for a Convention Establishing a Multilateral Court for the Settlement of Investment Disputes, 12981/17 ADD 1 DCL 1 (Mar. 20, 2018) [hereinafter Negotiating Directives]; Sebastian Perry, EU Council Gives Go-Ahead for Talks on Multilateral Court, Global Arb. Rev. (Mar. 21, 2018), https://globalarbitrationreview.com/article/1167071/eu-council-gives-go-ahead-for-talks-on-multilateral-court.

[260]. Negotiating Directives, supra note 259, ¶ 4.

[261]. See EU-Singapore Trade and Investment Agreements (Authentic Texts as of April 2018), European Comm’n (Apr. 18, 2018), http://trade.ec.europa.eu/doclib/press/index.cfm?id=961; Lacey Yong, EU Unveils New Investment Agreements with Singapore, Global Arb. Rev. (Apr. 19, 2018), https://globalarbitrationreview.com/article/1168166/eu-unveils-new-investment-agreement-with-singapore.

[262]. Lacey Yong, supra note 261.

[263]. Id.

[264]. See New EU-Mexico Agreement: The Agreement in Principle and Its Texts, European Comm’n (Apr. 26, 2018), http://trade.ec.europa.eu/doclib/press/index.cfm?id=1833.

[265]. EU’s Malmström Makes Global Investment Court Pitch to Stakeholders, Int’l. Ctr. for Trade & Sustainable Dev.: Bridges (Mar. 2, 2017), https://www.ictsd.org/bridges-news/bridges/news/eus-malmstr%C3%B6m-makes-global-investment-court-pitch-to-stakeholders.

[266]. Benjamin Button-Stephens, NAFTA Negotiations: US Signals Will Keep ISDS, Global Arb. Rev. (July 18, 2017), http://globalarbitrationreview.com/article/1144686/nafta-negotiations-us-signals-will-keep-isds.

[267]. Tom Jones, US Business Leaders Warn Trump to Keep ISDS, Global Arb. Rev. (Aug. 9, 2017), http://globalarbitrationreview.com/article/1145444/us-business-leaders-warn-trump-to-keep-isds. The open letter is accessible at http://documents.nam.org/COMM/Business-Letter-on-ISDS-in-NAFTA-2017-08-08.pdf?_ga=2.252476620.411711523.1502215933-340315665.1502215933.

[268]. Letter from Law and Economics Professors to President Trump (Oct. 25, 2017), https://www.citizen.org/system/files/case_documents/isds-law-economics-professors-letter-oct-2017_2.pdf.

[269]. Letter from U.S. Senators to U.S. President 2 (Feb. 2, 2018), https://www.sanders.senate.gov
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[270]. Letter from Law and Economics Professors to President Trump, supra note 268, at 3.

[271]. Letter from U.S. Senators to U.S. President, supra note 269, at 2.

[272]. ICSID Arbitration Rules, art. 37(2).

[273]. See generally, e.g., Case Concerning the Factory at Chorzów, 1928, P.C.I.J. (ser. A.17) No. 13 (Germany versus Poland).

[274]. William Mauldin, Canada, Mexico Reject Proposal to Rework Nafta Corporate Arbitration System, Wall St. J. (Jan. 28, 2018), https://www.wsj.com/articles/canada-mexico-reject-proposal-to-rework-nafta-corporate-arbitration-system-1517179473.

[275]. Edward-Isaac Dovere & Doug Palmer, Warren Was Paid up to $90,000 as Witness in 2000 Trade Case, Politico (May 21, 2015), https://politico.com/story/2015/05/warren-was-paid-up-to-90000-as-witness-in-2000-trade-case-118199.

[276]. Off. of the U.S. Trade Rep., Summary of Objectives for the NAFTA Renegotiation, (2017), https://ustr.gov/sites/default/files/files/Press/Releases/Nov%20Objectives%20Update.pdf.

[277]. Tom Jones, NAFTA Talks Make Little Headway as US Updates Objectives for ISDS Reform, Global Arb. Rev. (Nov. 22, 2017), https://globalarbitrationreview.com/article/1150788/nafta-talks-make-little-headway-as-us-updates-objectives-for-isds-reform.

[278]. Cosmo Sanderson, Mexico Proposes Permanent Dispute Resolution Body for NAFTA, Global Arb. Rev. (Nov. 30, 2017), https://globalarbitrationreview.com/print_article/gar/article
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[279]. John Paul Tasker, Canada ‘Prepared for the Worst’ Amid Squabbles over NAFTA, Freeland Says, CBC News (Nov. 21, 2017), http://cbc.ca/news/politics/freeland-nafta-fifth-round-prepare-for-worst-1.4412673.

[280]. Donald J. Trump (@realDonaldTrump), Twitter (Jan. 18, 2018, 3:25 AM), https://twitter.com/realdonaldtrump/status/953951365532876800?lang=en. See also Kevin Cirilli, Trump Says NAFTA Is a ‘Bad Joke!’, Bloomberg (Jan. 18, 2018), https://bloomberg.com/news/videos
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[281]. David Ljunggren & Anthony Esposito, NAFTA Negotiators Open Key Round of Talks Amid Upbeat Signs, Reuters (Jan. 23, 2018), https://reuters.com/article/us-trade-nafta/nafta-negotiators-open-key-round-of-talks-amid-upbeat-signs-idUSKBN1FC242.

[282]. Alison Ross & Tom Jones, Mexico Signs ICSID Convention, Global Arb. Rev. (Jan. 12, 2018), https://globalarbitrationreview.com/article/1152707/mexico-signs-icsid-convention.

[283]. Id.

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INTRODUCTION

I. DEFINING THE COMMON HERITAGE OF HUMANKIND

A. Purpose of the Common Heritage Doctrine

B. Textual Articulations of the Common Heritage Doctrine

C. Unanswered Questions

II. JUSTIFYING A PUBLIC TRUST APPROACH TO THE COMMON HERITAGE DOCTRINE

A. Why a Commons Approach to International Resource Management

B. Defining the Public Trust Doctrine

C. Shared Roots of the Common Heritage and Public Trust Doctrines

1. Origins in Roman Property Law

2. Common Twentieth Century Doctrinal Innovation

D. The Public Trust Doctrine as a Useful Framework for Resource Management

1. Criticism of the Public Trust Doctrine

2. The Public Trust Doctrine as a Coherent Approach to Managing Common Pool Resources

E. Realpolitik and a Public Trust Approach to the Common Heritage Doctrine

III. A PUBLIC TRUST PERSPECTIVE FOR THE COMMON HERITAGE OF HUMANKIND

A. The Res

1. Access Theory

2. Socializing Theory

3. Ecological Theory

4. Intergenerational Equity Theory

B. The Beneficiary Class

C. The Trustee and Means of Protection

1. Trustee

2. Means of Protection

D. Vindicating the Beneficiary’s Interests

IV. CASE STUDY: OUTER SPACE MINING

A. Existing Proposals

B. The Public Trust Approach

1. Defining the Res

2. Defining the Beneficiary

3. Trustee and the Means of Protection

4. Vindicating the Beneficiary’s Interests

V. CONCLUSION

97 S. Cal. L. Rev. 1469

INTRODUCTION

I. OCEANIC IMPUNITY

A. Geography

B. Technology

C. Sovereignty

D. Flags of Convenience

E. Regulation

F. Jurisdiction

G. Corruption

II. OCEAN CRIMES

A. Ocean Pollution

B. Illegal, Unreported and Unregulated Fishing

C. Seabed Destruction

III. INTERNATIONAL CRIMINALIZATION

A. Suppression Conventions and Voluntary Instruments

B. International Criminal Courts

1. Rome Statute

2. Ecocide

3. Ecocide and Oceanic Impunity

CONCLUSION

97 S. Cal. L. Rev. 637

From Volume 92, Number 1 (November 2018) DOWNLOAD PDF

From Volume 91, Number 6 (September 2018) DOWNLOAD PDF

From Volume 92, Number 1 (November 2018)
DOWNLOAD PDF

From Volume 91, Number 6 (September 2018)
DOWNLOAD PDF