Salmond in his well known work of Jurisprudence,1 while discussing the nature of law had raised a question, "whether or not International law is really a law?" He argued that in Austin's view2 international law does not qualify being a law as to be unified into a system.
He further pleaded that though International law is law in Oppenheim's sense, yet not in Austin's perspective. And in his view emerging shortcomings in international law for being treated as a law among other things, included, sovereign's command, sanctions and basic rule of recognition.
In the legal philosophy it still remains an unresolved problem. Recent developments in the field of bilateral treaties, arbitral tribunals and rules of recognition for arbitral decisions have brought the field of international investment law to the status of constitutionalism. This paper thus seeks to probe this longstanding question of the status of International law.
A new body of law is being created by the Investment Tribunals that trumps domestic constitutional law within the state's own territory, as lex specialis applicable to foreign investors.3 This means that since investment treaties delegate jurisdiction of constitutional character to arbitral tribunals, constitutional jurisdiction no longer resides exclusively in the hands of the domestic higher judiciary.4
In Walter's view, domestic constitutional law loses its claim to regulate comprehensively the exercise of public authority within the territorial limits of the state.5 It also establishes this fact, in Cottier and Hertig's words, that:
"...The constitution itself can no longer pretend anymore to provide a comprehensive regulatory framework of the state on its own..., the National Constitution today and in the future is to be considered a partial constitution, which is completed by the other levels of governance..."6 For insisting upon the notion that the BIT generation is a global constitutional phenomenon, there are five reasons:
First, Investment treatise's key substantive provisions constitute a clear limit to the state's police powers within their own territory.7 This represents an external redefinition of the domestic equilibrium and boundaries between property rights and regulatory powers. In the context of Bruce Ackerinan's nomenclature, this redefinition has a functional status of higher law making, because it transcends ordinary politics.8 It would not be an exaggeration to, in this sense, say that investment treaties create a new 'economic constitution' favouring a relevant set of actors, as is the case with foreign investors in developing countries.9
The second reason - the characteristics and the elements of direct effect, supremacy and juridical review, are present in Investment treaty law.10 In fact investment treaties possess direct effect and confer causes of action to foreign investors, which are prevalent over domestic law and in the case of conflict and charges arbitral tribunals with the function of reviewing state action and inaction.11
Third, for approaching certain types of political and legal problems, constitutional law is also a methodology. In defending the idea of constitutional law and constitutionalisation in the supranational context, Weiler is of the view: "... Constitutionalism is also a prism through which we can observe a landscape in a certain way, an academic artifact with which one can organise the milestone and landmarks within the landscape (indeed, determine what is a landmark or milestone), an intellectual construct by which one can assign meaning to, or even constitute, that which is observed.12
Fourth, domestic public law remedies are being replaced with international law remedies through investment treaties. The legal architecture of public law remedies at the domestic level - a combination of judicial review and state liability - is clearly a matter of constitutional law. Operatively and procedurally, it reflects sensitive considerations about the proper balance of power between the judicial, executive and legislative.13 By providing foreign investors with a completely new toolkit of remedies - which incidentally in the Eastern Sugar Tribunal's words, are the most essential provisions of Bilateral Investment Treaties14 - investment treaty law can be characterised as global constitutional law.
Fifth, from a structural perspective, the standards of review adopted by an arbitral panel directly reflect - or more precisely define - the distribution of powers that must inevitably, exist between those tribunals and the national bodies under control. This structural issue is a classic constitutional topic, demarcating the boundary between the political and judicial branches of government.15
The aforesaid five factors build a case for conceptualising Investment treaty law as a form of Global Constitutional Law and establish the fact that in the presence of arbitration rules and the binding effect of bilateral treaties, the necessary ingredients of law are being accepted and applied through different rules of recognition and this form of International Law has attained the status of law.
1. P.J. Fitzgerald, Slamond on Jurisprudence, (1966).
2. Austin, Province of Jurisprudence Determined, 141-142, 201.
3. See David Schneiderman, Constitutionalizing Economic Globalisation, Investment Rules and Democracy's Promise (New York, CUP, 2008) 3 (commenting that 'the investment rules regime can be seen as disciplining and reshaping the constitutional law of various states across the globe').
4. In strict terms, domestic constitutional law remains intact. The constitutional nature of the delegation of jurisdiction is only 'philosophical', not of a domestic law character. International investment law presents an alternative forum for foreign investors, that is, a substitute for domestic constitutional (and administrative) law. To the extent that these are indeed substitutes, and given what it is a stake in the decision of these disputes - for the reasons provided below - they share the same basic 'constitutional' nature.
5. Christian Walter, 'Constitutionalising (Inter) national Governance Possibilities for and Limits to the Development of an International Constitutional Law' (2001) 44 German Yearbook of International Law 170, 194.
6. Thomas Cottier and Maya Hertig, 'The Prospects of 21st Century Constitutionalism' (2003) 7 Max Planck Yearbook of United Nations Law 261, 303-4.
7. See Schneiderman, Constitutionalising Economic Globalisation, Investment Rules and Democracy's Promise (New York, CUP, 2008) 3, (noting that, 'at bottom, the investment rule regime represents a form of constitutional pre-commitment binding across generations that unreasonably constrains the capacity of self-government').
8. See Bruce Ackerman, 1 We the People (Cambridge, Mass, Belknap Press of Harvard University Press, 1991). I state that this global law carries the 'functional status' of higher law because it does not fulfil the normative elements that Ackerman requires of constitutional moments in a well-ordered dualist society.
9. See Stephan W Schill, Fair and Equitable Treatment under Investment Treaties as an Embodiment of the Rule of Law, IILJ Working Paper 2006/6. Global Administrative Law Series4 (2006) (noting that the FET standard plays 'a quasi-constitutional function that serves as, 1 yardstick for the exercise of host states' administrative, judicial or legislative activity vis-a-vis foreign investors').
10. See eg Alec Stone Sweet, The Judicial Construction of Europe (OUP, Oxford 2004) 65, who explains constitutionalisation in the EU context in the following terms: 'The constitutionalisation of the EC refers to the process by which the Rome Treaty evolved from a set of legal arrangements binding upon sovereign states into a vertically integrated legal regime confer ring judicially enforceable rights and obligations on legal persons and entities, public and private, within EC territory. The phrase thus captures the transformation of an intergovernmental organisation governed by international law into a multi-tiered system of governance founded on higher-law constitutionalism'.
11. Following the classification proposed by Neil Walker, 'Beyond Boundary Disputes and Basic Grids: Mapping the Global Disorder of Normative Orders' (2008) 6 International Journal of Constitutional Law 373, 379, investment treaty arbitration seems to fit the category of 'institutional incorporation', the closest 'institutional embrace' in his framework, whereby 'the host normative order makes general provision for the normative decisions of an external agency to be incorporated and, to that extent, to be treated as authoritative within the host normative order'.
12. JHH Weiler, 'Introduction: The Reformation of European Constitutionalism', in JHH Weiler, The Constitution of Europe (New York, CUP, 1999) 221, 223.
13. For example, in the UK, the impact of EU law has led Harlow, n 29, 62, to assert that 'liability is, after all, a highly intrusive remedy, with considerable impact on national constitution'.
14. Eastern Sugar BV v The Czech Republic, UNCITRAL Ad-Hoc Arbitration (Karrer, Volterra, Gaillard), Partial Award (27 March 2007), ¶ 165. See also Gas Natural SDG, SA v Argentine, ICSID Case No ARB/03/10 (Lowenfeld, Alvarez, Nikken), Decision on Jurisdiction (17 June 2005), f 29.
15. 'See Cottier and Hertig, The Prospects of 21st Century Constitutionalism, (2003) 7 Max Planck Yearbook of United Nations Law 261, 303-4 (stating that 'in a multilayered system, defining the relationship and the boundaries between the different levels of governance are essential constitutional functions'). See also, Deborah Z Cass, 'The 'Constitutionalization' of International Trade Law: Judicial Norm-Generation as the Engine of Constitutional Development in International Trade' (2001) 12 European Journal of International Law 39, 42. Standard of review issues have been the focus of attention by WTO commentators, but not by investment treaty ones; see eg Matthias Oesch, Standards of Review in WTO Dispute Resolution (New York, OUP, 2003), and Steven P Croley and John H Jackson, 'WTO Disputes Procedures, Standards of Review, and Deference to National Governments' (1996) 90 AJIL 193.
(The writer is an advocate and is currently working as an associate with Azim ud Din Law Associates)