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International trade law and international investment law are often treated as separate legal regimes, even though they have many overlapping aspects. Will there be a coming convergence of these legal regimes? Does the present dichotomy result in the potential for conflict and unnecessary complexity? These are some of the questions discussed in the panel moderated by Andrew Mitchell (Melbourne Law School). The panelists were Mélida Hodgson (Foley Hoag LLP), Joost Pauwelyn (Graduate Institute of International and Development Studies), Debra Steger (University of Ottawa), and Juan Millan (Office of the U.S. Trade Representative).
Mélida Hodgson took the view that the legal systems were not converging. Among other things, she noted that there was no commonality of legal obligations and a separation in the powers of tribunals from one regime to decide disputes in the other regime.
Joost Pauwelyn described the historical interaction between international trade law and international investment law and took the position that we were in the midst of another era of convergence. Up until the late nineteenth century, international trade law and international investment law were “bound at the hip.” The legal systems began to part ways when the international trade regime became codified in bilateral and then multilateral treaties, while the international investment regime remained largely based on custom and only much later on bilateral investment treaties. In the mid-1990s until the present, the legal regimes began converging again, as evidenced by incorporation of investment protection into trade agreements (NAFTA) and the incorporation of trade-related issues into investment agreements (Energy Charter Treaty).
Debra Steger similarly advanced the position that the regimes are becoming more integrated. Like Pauwelyn, Steger thought that we are coming back into a period where trade and investment are being negotiated together again after being negotiated separately for a while. As such, Steger considers that it would be more appropriate to speak of a broader field of international economic law, rather than distinguishing between international trade and investment. She further noted that the distinction between trade and investment is one that is recognized by lawyers, but not necessarily businesses, policy makers, and economists.
On the potential for complexity and conflict, Juan Millan noted that there was clearly a substantial degree of cross-fertilization between trade and investment. That being said, Millan thought it was unclear as to whether trade and investment would become more simple and efficient through a unification of these regimes. He also reasoned that if coherence between the two regimes were so important, states and their negotiators would be pushing harder for this coherence and integration.
None of the other panelists evinced a strong concern about the potential for conflict and inconsistency. Hodgson did not foresee WTO jurisprudence being influenced by the awards of investment treaty tribunals. She noted that a number of developing states have strong misgivings about investment treaty arbitration and would be resistant to seeing its increased influence in trade disputes. For her part, Steger expressed greater concerns about the current conflicts and incoherencies within each regime, rather than those that may exist between the regimes.
Hansel T. Pham is a Partner in the Washington, D.C. office of White & Case LLP specializing in international arbitration and litigation.