Bowing to the Queen: Rejecting the Margin of Appreciation Doctrine in International Investment Arbitration - Chapter 6 - Investment Treaty Arbitration and International Law - Volume 3
About the Editors:
Ian A. Laird is a Special Legal Consultant in the International Dispute Resolution Group of Crowell & Moring LLP in Washington, DC. His practice is focused in the field of international investment law and arbitration. He is the co-founder and Editor-in-Chief of OUP Investmentclaims.com.
Todd J. Weiler is an independent arbitrator, counsel and expert on the NAFTA and investment treaty arbitration, and an adjunct professor at the University of Western Ontario Faculty of Law. In 1998, Mr. Weiler founded naftaclaims.com; in 2007 he co-founded investmentclaims.com; and in 2009 he was named to a special editorial committee responsible for the OGEMID forum and the Transnational Dispute Settlement web site.
Nina P. Mocheva is an investment policy and promotion specialist at the Investment Climate Department of the World Bank Group. She is also a consultant for IFC’s Alternative Dispute Resolution product development. Before joining the World Bank, she practiced with the International Arbitration and Litigation Groups of White & Case LLP in Washington, DC.
Originally from Investment Treaty Arbitration and International Law - Volume 3
During President Obama’s visit to London for the G-20 Summit in April 2009, both he and the First Lady had the opportunity to visit with Queen Elizabeth II and Prince Philip at Buckingham Palace. In somewhat of a diversion from the heavy task at hand in the G-20 Summit — solving the global economic crisis — news media outlets across the country (and indeed across the globe) enjoyed a somewhat light-hearted story of the meeting between the Queen and America’s new (and extraordinarily popular) First Couple. While the two sides exchanged gifts (the Obamas presented the Queen with an iPod loaded with footage of her last visit to the U.S. and a rare song book autographed by the American composer of the King and I, Richard Rodgers; the Royal Couple, in turn, bestowed the Obamas with autographed self-portraits) much commentary was based on the introductory formalities (or lack thereof) between the famous couples. Specifically, the Obamas did not bow to the Queen.
There are a number of formalities attached to interacting with royalty simply because of their “royal status.” David Williamson, co-editor of Debrett’s (apparently the last word in social etiquette) notes that when encountering royalty, men should bow from their shoulders or neck, while women should curtsey. Another etiquette source provides that “you may not shake the Queen’s hand, only touch it briefly.” And yet the Obamas decided to forego the bows and curtseys, and all of the deferential implications thereto, and instead opted for a “good-old-fashioned” American handshake. From all accounts, the Queen did not take offense.
The First Couple’s actions should be heeded by international investment arbitral tribunals. Although there is no doubt that sovereigns should be treated with due respect, it is unnecessary and indeed improper, to “bow to the sovereign” (i.e. give undue deference) —simply because of its sovereign status — when resolving international investment disputes. Indeed, adopting such a deferential approach would constitute an abdication of the tribunal’s essential task: to scrutinize strictly and objectively all the surrounding facts and circumstances and determine whether the State’s regulatory actions are in conformity with — or violative of — its international legal obligations.
This Chapter considers whether a place exists for a “margin of appreciation” in applying international investment standards, i.e. whether international arbitral tribunals should “bow to the Queen.” It examines the margin of appreciation doctrine (the “Doctrine”), a canon found in both domestic and international law, that involves the application of a deferential standard of review by third-party adjudicators to the regulatory actions of national authorities. The Chapter discusses the Doctrine’s potential transference into the sphere of international investment arbitration. Investor-State arbitrations — by definition — involve a complex balancing of a host State’s right to regulate in the interest of its citizenry and the foreign investor’s right to be free from undue interference with its rights by the State. Without doubt, these countervailing forces are most heightened in the context of national emergencies.
Have ICSID tribunals embraced the Doctrine in this context? This Chapter will analyze the adoption of the Doctrine — either implicitly or explicitly — by arbitral tribunals assessing the legality of Argentina’s regulatory conduct in connection with its economic crisis commencing in 2001. As this analysis will demonstrate, some tribunals have greeted sovereigns with a firm handshake, others have given an intermediate nod, and still others have unreservedly bowed to the sovereign. The Chapter concludes that the importation of the Doctrine into the investment arbitration arena is undesirable and inappropriate for a number of reasons, which emanate from both the inherent shortcomings of the Doctrine and its systemic underpinnings. Simply put, this author advocates that arbitral tribunals should not “bow to the Queen.”