IIL阅读笔记1

二月 13, 2016 国际法

Chapter 8: Schill (Merits and limits of comparativism: NT in IIL and WTO), in International Investment Law and Comparative Public Law, OUP, 2010

The chapter concludes by identifying useful juridical mechanism in WTO law that might be productively used to guide future arbitral tribunal.

Question 1: Part I - Methodology

Which external legal regimes should be our subjects in a comparative inquiry devoted to guiding application of national treatment under international investment law.

• Schill: national treatimetn in WTO, in particular GATT art. III

Starting point: the relative standards of national and MFN treatment are the only substantive legal norms shared across both WTO and investment treaties.
The same measures can fall within the jurisdiction reach of both system as a potential breach of national treatment and may even be adjudicated simultaneously.
- Mexican tax on high-fructose corn syrup that triggered national treatment claims both by the US as a state party in the WTO and by a range of US investors under Chapter 11 of NAFTA.
(provocative) it is almost impossible to read critically the investor-state arbitral jurisprudence on national treatment without a grasp of the key parts of the law of GATT/WTO.
- Some early case law reviewed extensively the jurisprudence of GATT article III before crafting individual juridical approaches,
- eg SD Myers Inc v Canada UNCITRAL/NAFTA, Partial Award, 13 November 2000, paras 244–250; Pope & Talbot Inc v Canada UNCITRAL/NAFTA, Award on the Merits of Phase 2, 10 April 2001, paras 45–79.
- While others may define their entire reading in opposition to perceptions of the breadth or limitation of NT in the law of GATT-WTO.

Three key interpretative questions:

Is competition a necessary condition of a foreign and domestic investor standing ‘in like circumstances’?
What will constitute ‘less favourable treatment’ of a foreign investor, especially in cases involving an origin- neutral measure?
Is protectionist purpose on the part of the regulating state required as a condition of breach and if so, what indicia should be used to evidence or construct such purpose?

PART II NT Across WTO and IIL

A. WTO: GATT Art III

Definition:

GATT Article III(4) provides:
The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

The GATT treaty obligation requires a WTO member to treat foreign products no less favourably than ‘like’ domestic products, when regulating in the domestic sphere.
The drafter of GATT provided specific direction as to the purpose of NT when applied to trade in goods.

GATT Article III(1) provides:
The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.

Art. III(1) indicates clearly that the purpose of Art. III is to prevent protectionism in the use of domestic taxes and regulations. It prevents a state from circumventing its tariff reduction commitments by substituting domestic (tax or regulatory) restrictions that discriminate against foreign goods.
The obligation ultimately ensures that conditions of competition within the state are not modified by government intervention so as to advantage a domestic product over its foreign competitors.

WTO cases law on GATT Art. III (4) has consistently emphasised that for foreign and domestic products to be regarded as ‘like’, they must stand in a competitive relationship (measured, in large part, by consumer preference).

European Communities—Measures Affecting Asbestos and Asbestos-Containing Products WT/DS135/AB/R, Report of the Appellate Body, 12 March 2001, para 99: ‘a determination of “likeness” under Article III:4 is, fundamentally, a determination about the nature and extent of a competitive relationship between and among products’.

More difficult: isolating the appropriate test for determining whether or not a domestic tax or regulation is in fact protectionist under WTO law.

It is clear that part of the reason for the complexity of the traversed WTO jurisprudence is the different textual inter-relation between the articulation of the goal of the norm (Art. III(1)) and the separate obligations to accord national treatment on internal tax measures (through 1st, 2nd sentences of Art. III(2)) and regulation (Art. III (4)).

EC- Asbestos : First GATT Art. III (4)
[a French law banning the sale of construction material containing asbestos. Canada had claimed that the French law breached GATT Art. III(4) because, certain French ‘like products’ - asbestos-free construction materials- could continue to be sold in the French market, while Canadian asbestos construction materials had been banned.]
• AB ruled that the term ‘like’ in Art. III(4) cannot have coverage wider than the combined coverage of the term ‘like’ (in GATT art III(2), 1st sentence) and ‘directly competitive or substitutable’ (in GATT art III(2), 2nd sentence). [Asbestos, paras 98-100]

B. National Treatment in IIL

• Example: NAFTA Art. 1102(1)

• ‘Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.’

The obligation controls for ‘less favourable’ treatment of a foreign investor that stands ‘in like circumstances’ with domestic investor. [superficial similarity with GATT art. III(4)]
[reason for lack of an interpretative guide in IIL]: the dominant climate at play in the inception of the system in the immediate post-war period and its replication with minimal iterations in later periods. It was the strategic desire of capital-exporting states to protect their investors against hostile expropriatory behaviour and to counter changes in customary law being advanced by newly independent states emerging from decolonisation process.
Therefore, the role of relative standards of treatment had a marginal role in the strategy of fixing absolute protections especially on guarantees of full compensation in the event of expropriation.
It is also reflected by the absence of exceptions that might operate to allow states to exempt themselves from the criticism of investment treaty protections.

PART III Comparing Legal Norms and Systems

· Schill proposed four observations of an interpretative methodology from the WTO approach when adjudicating on NT under a IIA.

1.Attention must be paid to textual differences between NT as formulated and applied across these legal system (WTO/GATT/IIL).

Not as simple as the difference between ‘like product’ in GATT Art III and ‘like circumstances’ in IIAs.
• The ordinary and context-independent meaning of ‘like product’ cannot be convincingly interpreted as having a competitive relationship. However, put it into the context provided to that term by the rest of Art. III and the other provisions of the GATT, a competitive relationship between foreign and domestic products is required, because it is meaningless to protect a domestic products against a foreign products if the two are not in competition. [GATT Art II(1) is especially critical as it defines the purpose of NT as a discipline on protectionism.]
There is no such direction in IIAs. -> open complex interpretative questions : how to understand the very objective of NT in the IIAs?
To solve this: examine the political economy of investment restrictions to assess whether there is a similar risk of protectionism (as those WTO tries to restrain) in that setting.
• If the political economy of investment policy reveals a risk of capture by domestic interests in the regulatory process of the host state, this would provide a strong justification for reading NT in IIAs as a constraint on protectionism.
○ A distinct tendency to commence with heuristic of foreign imports as ‘bad’ and foreign capital as good from the perspective of domestic regulator. [flaws with this reasoining:]
§ (1) it might be true for certain forms of foreign capital, such as FDI as a positive input boosting industrial development and job creation.
§ (2) IIAs scope extends far beyond FDI, such as debt or portfolio investment.
• The political economy of investment may be similar to the trade context, which might in turn offer justification for reading NT in IIL as a limit on protectionism.

2. Attention must be paid to key contextual differences across the two systems.

[example: the absence of a GATT art. XX in the IIL regime]

GATT XX has influenced the jurisprudence on NT treatment in the GATT as well as claims of how GATT Art. III should be read.
• eg M Trebilcock, ‘International Trade and International Labour Standards: Choosing Objectives, Instruments, and Institutions’ in S Griller (ed), International Economic Governance and Non-Economic Concerns: New Challenges for the International Legal Order (2003) 289, 305, arguing for an ‘economic definition of like products as the Appellate Body did in Asbestos’ and remitting justifications to Art XX.
But the IIAs have no such exemption and potential fail-safe to correct for legal error. -> the stake are higher in this discipline of IEL, when it comes to constructing a sensible reading of NT

The level of systemic difference across the two system.

The dispute settlement within WTO is inter-state, whereas IIAs confer sanding on foreign investors against a host state. –>questions of informational asymmetry –> questions of burden and standard of proof.
WTO member to bring compliance action against another member state is subject to various factors:
• The extent of economic impact of the measure in question
• The lobbying efforts of well-organised export industry
• The costs of initiating actions
○ Unwillingness to disrupt the broader political relationships between parties
○ The potential for reciprocity of action by the targeted state
Consequence of the political and legal demisions: a filter against the improper or incautious invocation of legal rights.
Investment arbitration regime has no such filter. And that explains the dramatic, explosive growth in invocation of investor-state arbitration in the last decade.
• Informational asymmetry is significant (compared to WTO member states).
• Not all foreign investors are large, multinational economic actors.
○ The smaller foreign actors may be those at the highest risk of discriminatory conduct or other form or rent seeking.
○ They face the greatest disadvantage in their ability to fund proceedings and collate the factual evidence necessary to bring a claim.
§ Some part of the factual records may even be subject to forms of privilege and cabinet confidence and thus exist solely within the provinc of a respondent state.
○ This informational asymmetry may trigger the thinking how to fairly and properly to allocate both the burden of production (the responsibility to adduce evidence before an adjudicator) and the requisite burden of persuasion (the type and quantum of evidence necessary to persuade an adjudicator) on particular substantive questions, including national treatment.

4. Mention should be made of the difference in remedy structures across the two legal systems and how this may impact on our assessment of particular interpretative questions.

WTO’s remedies are prospective (focus on the future)
• A losing state must (1) withdraw or modify an offending measure within a ‘reasonable period of time’.
• (2) If a state failed to do so, unilateral countermeasures are available under WTO system.
This sequenced approach can allow for free riding by offenders give the time it takes for a dispute to wind this way through the system while it enables risk-averse (不愿承担风险) government to experiment with options that push the WTO boundaries as their sole responsibility is to remove the measure if there is a violation.
Remedies in investor-state arbitration take the form of damages and are retrospective.
• It would significantly cut down the space for experimental regulations, especially for developing states, given the potential impact of large compensation awards on budgetary reserves.
The systemic difference highlights the importance of constructing a reading that offers an appropriate balance between legal constraint (on discrimination) and necessary flexibility (on the part of a regulating state).
It may also point out a reading that gives a respondent state a chance to defend itself against a claim of breach by adducing a legitimate, non-protectionist purpose of the measure in question.

PART IV INTERPRETATIVE QUESTIONS & CASES

· Schill: this part turns to the actual manner in which investment arbitral tribunals have relied on the WTO law and jurisprudence to control interpretation of the NT norms in the investment treaty setting.

**three key questions **

(1) Is competition a necessary condition of a foreign and domestic investor standing in ‘like circumstances’?

(2) What will constitute ‘less favourable treatment’ of a foreign investor, especially in case involving an origin-neutral measure?

(3) Is protectionist purpose on the part of the regulating state required as a condition of breach and if so, what indicia should be used to evidence such purpose?

A. Competition as a necessary condition of likeness

#####１. SD Myers v Canada (2000)

the first substantive analysis of the NT obligation in investment arbitration. - Now nearly 10 cases. (could be more since this book is published in 2010)
The early cases such as SD Myers and Talbot v Canada endorsed some form of competition as a condition of likeness in NT inquiry.

○ eg SD Myers v Canada (n 8 above) paras 248–250; Pope & Talbot v Canada (n 8 above) para 78.
Occidental v Ecuador and Methanex v US disrupted this jurisprudential line by opposing a competition-based reading of NT.

２. Occidental v Ecuador

their analytical sequence rests on a misconception of the limitation or breadth of competition applied to NT in GATT-WTO. (according to Schill)
This is the first arbitral case to clearly reject a role of competitive interaction in a NT inquiry.
- Ecuador denied the breach of the US-Ecuador BIT given that Petroecuador (as Occidental’s competitor in the export of oil) had also been denied VAT refunds (like Occidental did).
- The tribunal supported Occidental by a strange analysis on the teleology of the NT formed the initial foundation for this expansive interpretative:
  ○ ‘In fact, “in like situations” cannot be interpreted in the narrow sense advanced by Ecuador as the purpose of national treatment is to protect investors as compared to local producers, and this cannot be done by addressing exclusively the sector in which the particular activity is undertaken.’ (para. 173) -this claim tells little of what particular risks of operation faced by foreign actors are to be countered by individual treaty standards. This general ‘protection’ claim offers no real guidance of why competition is or is not a relevant factor in a national treatment inquiry.
- The tribunal then offer a selective and misleading account of NT juriprudence in GATT-WTO.
  ○ It claimed that the term ‘like products’ in the law of the WTO ‘has to be interpreted narrowly and that like products are related to the concept of directly competitive or substitutable products’ .(para. 174) [very problematic]
  ○ Occidental Tribunal 用了WTO里面的Japan-Alcohol Appellate Body’s finding did rule that the term ‘like product’ is to be construed narrowly where it appears in GATT Article III(2) first sentence.
  ○ However, the AB’s finding there is driven by the complex relationship between the first and second sentences of GATT Art. III(2). The presence of a comparator in III(2) second sentence (‘directly competitive or substitutable products’) required that the comparator in III (2) first sentence (‘like product’) to be interpreted narrowly.(Japan-Alcohol 19-20)
  ○ Yet, most investment treaties have no such complex textual make-up in NT treatments and no obligation to be unduly influenced by the AB’s jurisprudential approach.
- The Occidental tribunal offered useless or misleading comparison with selective parts of WTO law. (according to Schill)

３. Methanex v US (method is reverse of Occidental)

also opposes a role for competition in a likeness inquiry and does so based on a misreading of NT in the WTO-GATT.
The Methanex tribunal reversely concerned that: competition (and its reflection in WTO law) is now regarded as unduly broadening the scope of operation of the NT obligation.
Mathanex claim: a competitive relationship between foreign and domestic investors is a necessary condition of their standing ‘in like circumstances’.
US argue: the function of NT is to address discrimination based purely on the national of ownership of investment.
The tribunal applies a test closer to the US preferred approach. It ruled that it would be ‘perverse’ to ignore ‘idential comparator’ where they exist given the task of disciplining nationality-based discrimination.
Thus, as the Californian ban had the same effect on these domestic actors as the foreign methanol producer (Methanex), the tribunal ruled that there was no breach of the NT obligation.
[Schill] The Methanex approach is an exceedingly narrow reading that will fail to fully capture typical embodiment of nationality-based discrimination.
○ On the Methanex test, there will be no breach of NT merely because ‘identical’ comparators (domestic and foreign methanol producers) have been treated in precisely the same fashion. [Yet, this may be an archetypal/most typical case of protectionism.]
The Methanex tribunal justifies its narrow ruling with two comparisons of NT as applied in the GATT-WTO:

(1) it relies on a series of simple textual differentiations.

§ E.g. it notes that the provisions of NAFTA art. 1102 ‘do not use the term of art in international trade law, “like products” which appears in and play a critical role in the application of GATT art III.’ Such absence of language in NAFTA evidences that the NAFTA framer intended to create ‘distinct regime for trade and investment.’
§ This justification can be easily discounted - the foreign and domestic products must stand in a competitive relationship in the GATT context doesn’t automatically flow solely from the term of ‘like product’. It is justified by the overall context of the use of this term including the rest of Art. III, in particular III(1).

(2) a more substantive justification provided by the Methanex tribunal concerns with the manner in which competition has been interpreted in WTO jurisprudence on GATT art. III. The concerns is now reversed; the WTO approach was said to ‘rather precise criteria [allowing] the importing or receiving state relatively little discretionary scope with respect to the goods entitled to NT.’

§ The Methanex tribunal may perceive the WTO law may be that competition and adverse effects are sufficient conditions for breach of GATT art III. [which is not correct]

§ It is not a reading reflected in recent WTO jurisprudence, which has increasingly affirmed the role of protectionist purpose as a critical requirement of breach. [current reflections]

§ The WTO AB has consistently examined the effect and purpose of a tax or regulatory measure because breach exists only if the measure is applied ‘so as to afford protection to domestic production’, according to GATT art. III(1).

□ In Chile-Alcohol, the AB ruled on GATT Art. III(2) second sentence, that ‘a measure’s purposes objectively manifested in the design, architecture and structure of the measure, are intensely pertinent to the task of evaluating whether or not that measure is applied so as to afford protection to domestic production.’ [this is not say that WTO jurisprudence has proceeded uniformly in this direction.]

□ However, it is difficult to account for the AB’s ruling on GATT Art. III(4) in EC- Asbestos simply on these terms.
The Methanex tribunal seems to have recognised the weak normative foundation for it asserted ‘identical comparator’ test. That is to say, the tribunal tries to show that the claim would fail even on the investor’s preferred approach. [the narrow test by using the notion of initial function alone which is a poor and artificial indicator of the presence of a competitive relationship between foreign and domestic producers.]
[Schill] A broader but more accurate indictator of competition is the extent to which consumers treat products as substitutable (as well as the extent to which they are functionally interchangeable as end products).

[Schill] a test based on competition could require the foreign investor to present evidence that its output is in an appreciable (not a de minimis) competitive relationship with the output of a domestic producer. In other words, the tribunal could have come to the same conclusion even on the start point of a competition-based test and would have done so in a far more convincing fashion.
The Tribunal’s concern of breadth of a competition-based approach has perhaps more to do with a textual absence in NAFTA (of a binding environmental exception as in the form of GATT Art. XX(b) or (g) ) than its simple reflection in GATT Art. III jurisprudence.

４. The question concerned is the delineation between investment treaty disciplines and regulatory freedom.

[Schill] the strategic approach in earlier stages of investment treaty jurisprudence was to require a state to adduce a legitimate, non-protectionist reason for its differentiation between foreign and domestic competitors.

○ eg SD Myers v Canada (n 8 above) para 250; Pope & Talbot v Canada (n 8 above) para 79.

５. The problematic implications of the Methanex approach:

The Methanes tribunal has imply elected to constrain the scope of the obligation on the first-order question of likeness without ever really offering the opportunity for the state in question to present its compelling and objective reasons for electing the ban the use of MTBE.
The artificial and formalist Methanex test of searching for domestic and foreign actors that are ‘identical’ runs a serious risk of excluding watches of discriminatory conduct from the scope of national treatment protection.

[To be continued…]