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International Law Scholars Refute Alliance for Justice ISDS Letter

Posted April 08, 2015

Last month, the liberal judicial watchdog group Alliance for Justice (AFJ) circulated a letter signed by more than 100 law professors to congressional leaders and the U.S. Trade Representative urging them to “protect the rule of law and the nation’s sovereignty” as trade agreements are negotiated.

Specifically, the professors objected to the inclusion of Investor-State Dispute Settlement (ISDS) provisions in these agreements, which they alleged “threatens domestic sovereignty and weakens the rule of law by giving corporations special legal rights, allowing them to ignore domestic courts, and subjecting the United States to extrajudicial private arbitration.”  ISDS has, they noted, been used by companies challenging health, safety, environmental, and labor laws around the world.

A counter-point to the AFJ letter was released today by the Fortier Chair in International Arbitration & International Commercial Law at McGill University, representing the views of over 40 international law professors that mobilized to “offer accurate information” to the public and to “enable policy makers to make well-informed choices.” The majority of signatories of the AFJ letter were, the group notes “not scholars of international law and may therefore be unfamiliar with the subtleties of international dispute settlement.”

Core aspects from this letter address sovereignty, the rule of law, the procedural protections offered in investment treaty arbitration, and opportunities for transparency and public participation during investment treaty arbitration, including the following key points:

  • It is a hallmark of the rule of law that states must justify their acts and take responsibility for improper conduct. Far from undermining the rule of law, investment treaty arbitration ensures that states honor their obligations, thereby reinforcing the rule of law. Experience to date suggests that bona fide government conduct will pass muster and not generate state liability.
  • All systems of justice, whether national courts or international courts and tribunals, are capable of improvement. It is essential, however, that the current debate be based on accurate information and not focus on perceived, isolated shortcomings that are present in some form in any and every adjudicative body.
  • Both investors and states have won and lost cases, though states have won in a greater proportion than investors. At current rates, states have won roughly three cases for every two cases won by investors.
  • Investment treaty arbitrations are procedurally complex and involve the gathering of evidence, the submission of expert testimony, the making of legal arguments, and the submission of briefs. Awards are subject to review either in national courts or by ad hoc annulment committees composed of representatives drawn from rosters created by states.
  • The United States and Canada have been key proponents of transparency in investor‐state arbitration and have made all documents in their cases readily accessible to the public; other countries have started to follow suit.

The letter concludes by stating that, “Contrary to the assertions contained in the Alliance for Justice letter, investment treaty arbitration does not undermine the rule of law. It ensures that, where a right is given, a remedy is also provided. It permits foreign investors to hold host states to the obligations they have undertaken in their treaties by means of a quasi-judicial process; and it also offers a forum for states to vindicate their policy choices.”

Click here to download the McGill ISDS letter (Word format).