Developments in International Trade Law
The Crisis Brewing in the WTO’s Dispute Settlement Mechanism
In August 2018, the United States blocked the reappointment of Shree Baboo Chekitan Servansing, one of the World Trade Organization’s four remaining Appellate Body members, leaving the WTO Appellate Body in crisis. The United States has expressed a number of concerns as grounds for continuing to block the appointment or reappointment of members to the Appellate Body.
Among these concerns are that the Appellate Body has acted inconsistently with the Dispute Settlement Understanding by reviewing and even reversing panel fact-finding; treating the meaning of municipal law as a matter of WTO law, rather than of fact; departing from intended outcomes in its interpretation of trade defense provisions; failing to meet required deadlines; and making findings not necessary to the resolution of a dispute.
With only three members, the Appellate Body is no longer able to rotate its members to sit on different appeals, in apparent inconsistency with its founding statute. The crisis is expected to deepen in December 2019, when the terms of two of the remaining three members of the Appellate Body will conclude. Should one of those members not be reappointed or replaced, the number of members will fall below the required quorum (three) for functioning appeals.
Negotiating a New Free Trade Agreement between the US, Mexico and Canada
In October 2018, after more than a year of negotiations, the United States Trade Representative published the text of a new free trade agreement signed between the United States, Mexico and Canada, named the USMCA. The new accord seeks to replace the North America Free Trade Agreement, which has been in effect for almost 25 years.
Among its numerous novelties, the USMCA incorporates heightened protection of intellectual property rights, modifies rules of origin (notably in the automotive industry) and governs modern sectors such as digital commerce and financial services. In addition, the USMCA sets forth new chapters addressing important subjects such as anti-corruption and environmental protection. The treaty also overhauls the investor-state system for settlement of investment disputes, while maintaining other adjudicatory systems, such as the binational panel review of antidumping measures.
The USMCA is not yet in force. The treaty has now passed to national legislatures for ratification. Its future is not guaranteed, especially in the United States, where debate is anticipated in the newly constituted Congress following the 2018 midterm elections.
Developments at the International Court of Justice
The Qatari Blockade and Provisional Measures at the International Court of Justice
In 2017, the United Arab Emirates joined Saudi Arabia, Bahrain and Egypt in instituting measures against Qatar, alleging that Qatar was financing, supporting and sheltering terrorists, including members of the Muslim Brotherhood, Islamic State and Houthi rebels fighting in Yemen. In (partial) response, Qatar brought a complaint before the International Court of Justice in 2018, alleging that certain measures by the UAE constituted discriminatory measures under the Convention on the Elimination of All Forms of Racial Discrimination, as they are directed at Qatari citizens on the basis of their nationality.
On July 23, 2018, by eight votes to seven, the ICJ granted a number of Qatar’s request for provisional measures, finding that the UAE must ensure that: (1) families that include a Qatari that were separated by the UAE’s measures are reunited; (2) Qatari students affected by the UAE’s measures are given the opportunity to complete their education in the UAE or elsewhere; and (3) Qataris affected by the UAE’s measures are allowed access to tribunals and other judicial organs of the UAE.
Through its indication of provisional measures, the court provided additional guidance on the meaning of national origin in CERD, finding that discrimination based on national origin could include discrimination based on nationality. Notwithstanding its decision to grant provisional measures, it remains to be seen whether or not the ICJ will conclude that the UAE’s actions constitute a breach on the merits of key provisions of the CERD.
Palestine’s Application at the International Court of Justice
In May 2018, the United States officially moved its embassy in Israel from Tel Aviv to Jerusalem. In response, Palestine filed an application at the International Court of Justice against the United States, alleging that this move to Jerusalem violated the Vienna Convention on Diplomatic Relations, or VCDR, to which Palestine acceded in 2014, emphasizing Jerusalem’s status as a city of “special character.”
Palestine’s application faces significant hurdles to adjudication, most notably, the issue of Palestinian statehood. The ICJ can only be accessed by states in contentious proceedings. As a non-state party to the ICJ’s statute, Palestine will have to convince the court that its application under Article 35(2) of the court’s statute, whereby Palestine declared its acceptance of jurisdiction of the court, is sufficient basis for accessing the court. Furthermore, the ICJ’s Monetary Gold principle prevents the court from adjudicating a case when a “necessary and indispensable party” is absent, or fails to give its consent.
Palestine will thus have to convince the court that Israel’s notable absence from the proceedings should not prevent the court from adjudicating this dispute. Recently, the ICJ fixed deadlines for Palestine and the U.S.’s first pleadings, which are limited to issues regarding admissibility and jurisdiction.
Developments in International Environmental Law
Damage to the Environment Compensable Under International Law
Early this year, in Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v. Nicaragua), the International Court of Justice ruled on environmental damages. Costa Rica instituted proceedings against Nicaragua due to an alleged “incursion into, occupation of and use by Nicaragua’s army of Costa Rican territory as well as [alleged] breaches of Nicaragua’s obligations towards Costa Rica.”
The ICJ ultimately determined that Nicaragua’s breaches resulted in damage to the environment and, for the first time, found this damage compensable under international law. The court determined that environmental damage could be calculated by reference to the cost of environmental restoration as well as the impairment or loss of environmental goods and services prior to recovery.
The court held that, as a result of the unlawful activities of Nicaragua in a 6.19 hectare area, Costa Rica was entitled to $120,000 for the impairment or loss of environmental goods and services, in addition to compensation for the costs and expenses Costa Rica incurred, ultimately resulting in an award of $378,890.59.
The Transboundary Environmental Effects of Major Infrastructure Projects
In February, the Inter-American Court of Human Rights issued Advisory Opinion 23/17 on the Environment and Human Rights, an unprecedented pronouncement on state obligations concerning environmental protection “arising out of the obligations to respect and ensure human rights.” Colombia had requested the court’s opinion on three questions that arose in the context of major infrastructure projects that could have transboundary environmental impact.
The court held that the right to a healthy environment is an “autonomous right” protected under Article 26 of the American Convention on Human Rights. In response to Colombia’s first question regarding jurisdiction, the court concluded that when assessing a state’s compliance with its environmental obligations, an individual may be subject to that state’s jurisdiction on an extraterritorial basis, given that “[s]tates have an obligation to avoid transboundary environmental damage that may affect the human rights of persons outside their territory.”
Developments in Business and Human Rights
Key Draft Texts on Business and Human Rights: Treaties and Arbitral Rules
After four years of tortoise-paced talks in Geneva, the Ecuadorian chair of the United Nations Intergovernmental Working Group aiming to draft a “legally binding instrument” on business and human rights published the first draft of a proposed treaty in July, and the first draft of an optional protocol in August.
However, the working group session in October was marked by the absence of key states, such as the United States, Australia and Canada; a statement by the European Union that it was not prepared to engage on substance; and active participation by relatively few states. Although a revised draft and working group session are scheduled in 2019, the future of the project is highly uncertain.
Under international trade and investment treaties, foreign companies regularly sue states before international arbitration panels for violating the rights of investors. Although these cases may affect human rights, neither the state nor its citizens generally have the right to initiate arbitration against the companies. In November, a drafting committee, chaired by former International Court of Justice Judge Bruno Simma, published for consultation the “elements” of the Hague Rules on Business and Human Rights Arbitration. Among other innovations, the resulting rules could be used to allow persons whose human rights are allegedly violated to initiate arbitration proceedings against companies.
Developments in Investor-State Dispute Settlement
Reform of Investor-State Dispute Settlement
In April 2018, representatives and observers from over 70 countries met in New York at the 35th session of the United Nations Commission on International Trade Law, or UNCITRAL, Working Group III. The working group is tasked with (1) identifying and considering concerns regarding investor-state dispute settlement, or ISDS; (2) considering whether reform is desirable in light of any identified concerns; and (3) developing any relevant solutions to be recommended to UNCITRAL should the working group consider reform desirable.
At the 35th session, the working group tackled the first part of its mandate and identified concerns, inter alia, with the legitimacy and (lack of) diversity of arbitral appointments, costs of arbitration, third party funding, counterclaims, and the consistency, predictability and correctness of awards. Having identified these areas of concern, the working group met again in late October and early November 2018 in Vienna, to move to the second part of its mandate: to consider whether reform was desirable.
At the working group's 36th session, states decided by overwhelming consensus that developing reforms with respect to ISDS is desirable. The next step in the process now is for states to put forward proposals for a work plan to identify what reforms to consider and the parameters for considering them.
The U.S. Supreme Court and Foreign Law
Animal Science Products Inc. v. Hebei Welcome Pharmaceuticals Co. Ltd.
On June 14, 2018, the United States Supreme Court decided the case of Animal Science Products Inc. v. Hebei Welcome Pharmaceuticals Co. Ltd. That case involved an antitrust suit for price and quantity brought by U.S. purchasers of vitamin C against four Chinese manufacturers and exporters.
As a defense, the Chinese defendants claimed that Chinese law required them to fix the price and quantity of such exports. The Ministry of Commerce of the People’s Republic of China filed an amicus brief support of this position. The Supreme Court took the case to decide the degree of deference that should be accorded such filings by foreign governments regarding their own laws.
The court ultimately held that U.S. federal courts “should carefully consider a foreign state’s views about the meaning of its own laws,” but are “neither bound to adopt the foreign government’s characterization nor required to ignore other relevant materials.” In particular, the court explained that “[w]hen a foreign government makes conflicting statements ... or ... offers an account in the context of litigation, there may be cause for caution in evaluating the foreign government’s submission.” The court’s decision definitively ended the position of some federal courts, including those in New York and California, that they are “bound to defer” to foreign states’ interpretations of their own laws.
Developments in International Criminal Law
The Acquittal of Jean-Pierre Bemba Gombo
On June 8, 2018, the Appeals Chamber of the International Criminal Court overturned the 2016 conviction of Jean-Pierre Bemba Gombo, the former vice-president of the Democratic Republic of Congo, for war crimes and crimes against humanity in respect of murder, rape and pillaging committed by troops under his command in the Central African Republic in 2002 and 2003.
The decision has been heavily criticized, not only because it comes as a huge blow to the survivors of the atrocities, but also because the Appeals Chamber departed from the widely held view that a prosecutor should be afforded discretion in formulating and amending charges throughout a trial, instead finding that charges against Bemba were not adequately specified at the pretrial confirmation stage, and that the Trial Chamber had therefore erred in convicting him of acts which did not fall within the facts described in the charges.
Convictions at the Extraordinary Chambers in the Courts of Cambodia
In November 2018, the Extraordinary Chambers in the Courts of Cambodia sentenced Nuon Chea and Khieu Samphan, who had both been senior officials in the Communist Party of Kampuchea (the ruling party of the brutal Khmer Rouge regime, headed by Pol Pot), to life imprisonment for genocide and crimes against humanity carried out between 1977 and 1979. This is historic, as it is the first time that the Chambers has made a finding of genocide.
Commentators have praised the verdict for sending a strong message that perpetrators can and will be held accountable for crimes including genocide, even decades after they were committed. However, the future of the Chambers remains uncertain, with critics saying that the tribunals are slow and expensive (indeed, Pol Pot died before he could be tried), and that the symbolic importance of securing convictions and the political interference of the current government — members of which were part of the regime before defecting — result in trials being conducted unfairly.
This article was originally published in Law 360.