Law at the End of the Day

Larry Catá Backer's comments on current issues in transnational law and policy. These essays focus on the constitution of regulatory communities (political, economic, and religious) as they manage their constituencies and the conflicts between them. The context is globalization. This is an academic field-free zone: expect to travel "without documents" through the sometimes strongly guarded boundaries of international relations, constitutional, international, comparative, and corporate law.

Thursday, March 07, 2019

Just Published: Joel Slawotsky, "The National Security Exception in US-China FDI and Trade: Lessons from Delaware Corporate Law" The Chinese Journal of Comparative Law 6(2):228–264


It is my great pleasure to pass along the announcement of the publication of Joel Slawotsky's excellent article: "The National Security Exception in US-China FDI and Trade: Lessons from Delaware Corporate Law" which appears in the The Chinese Journal of Comparative Law 6(2):228–264.

In this new era defined by the re-creation of global regional economic blocks--one centered in China, and the other in the United States, the issue of national interest in the areas where the two system may collide becomes critically important.  It is in this context that the issue of the national security exception to foreign direct investment acquires a new and important role in shaping trade.

The abstract and introduction follow.  The full article may be download for free from the link provided below.


The National Security Exception in US-China FDI and Trade: Lessons from Delaware Corporate Law

Joel Slawotsky
The Chinese Journal of Comparative Law 6(2):228–264
https://doi.org/10.1093/cjcl/cxy012
Published:28 December 2018
  • PDF
  • Cite
  • Permissions


Abstract: National security-based measures are increasingly invoked in a variety of contexts such as global trade and national screening of incoming foreign direct investment. While international economic law recognizes that States have discretionary power to act to protect national security, thwarting investment and imposing trade restrictions may implicate various international law obligations. The legal issue is in determining when nations unjustifiably extend that discretion by invoking national security spuriously to cover abuse such as protectionism. Against what benchmark should reviewing bodies evaluate national security inspired measures? It is of critical importance that an appropriate standard be employed when reviewing the use of the national security exception; balancing the rights of States to redress legitimate threats but without stifling international market development and cooperation among States. Too much deference will lead to encouraging the exception’s invocation and overuse. But overly zealous scrutiny will eviscerate the exception. The national security exception is a concept in need of a workable and flexible standard to address concerns in an age of hegemonic rivalry.1 National security is no longer solely relegated to the realm of armed conflict; concerns are now focused on economic and technological security. Moreover, the exception’s conceptual underpinnings, such as the requirement of ‘necessity’, were developed in a prior era and need to be updated. This article seeks to fill a void and promote discussion with respect to a standard that has not been adequately addressed in the literature. Given the complex character of national security, its divergence across States, and its potential abuse, the need for a proper standard becomes stark. Rather than develop the standard in isolation, the national security exception standard should be developed within the larger context of rights and duties as embodied by globalization. This article uses a novel perspective: examining the standards used by Delaware courts in evaluating conduct to protect corporate security is a reasonable template for evaluating national security measures in the context of international economic law. Evaluating the standard in the context of a legal system empowering and simultaneously regulating corporate boards when directors are confronting corporate security issues provides a useful context in examining the issue.

Introduction

The invocation of the national security exception to override international economic obligations is an increasingly important issue. For example, in March 2018, the USA—citing current and potential future risks to national security—announced trade measures in the form of tariffs:2
Because of…the risk that the domestic aluminum industry would become ‘unable to satisfy existing national security needs or respond to a national security emergency that requires a large increase in domestic production’, and taking into account the close relation of the economic welfare of the Nation to our national security…the Secretary concluded that the present quantities and circumstances of aluminum imports threaten to impair the national security.3
In addition to the exception’s relevance in global trade,4 the national security exception is inextricably intertwined with the increasing scrutiny and blocking of foreign investments5 and acquisitions of domestic companies.6 The USA has thwarted takeovers pursuant to the Committee on Foreign Investment in the United States (CFIUS) screening regime based upon alleged risks to national security:7
There is credible evidence that leads me to believe that Broadcom…through exercising control of Qualcomm…a Delaware corporation, might take action that threatens to impair the national security of the United States.’8

The trend towards heightened national security review is not limited to the USA. Western nations are increasingly concerned over foreign investment and trade. From Australia,9 the United Kingdom (UK),10 and the European Union (EU),11 national security is increasingly cited as the legal basis to undertake action restricting trade and foreign investment:

Europe is pushing for more stringent vetting of foreign investments, with an eye on Beijing. Australia has been blocking bids by Chinese buyers for strategic assets. And in Canada, a Chinese takeover of a major contractor faces a national security test.’12

Western nations are concerned that foreign investment and trade policies, particularly from China, are unfair and need to be restricted or revised. These concerns are amplified because most Chinese companies are controlled or dominated by arms of the Chinese State injecting a strong element of potential non-financially motivated investment—that is, the transfer of sensitive information and technology:13
Intelligence agencies in both Canada and the USA have warned that companies owned or partly owned by the Chinese government are not merely profit-seeking operations; they are also prone to passing on information or technology to Beijing and making business decisions that could conflict with Canadian interests but serve the agenda of the authoritarian Communist Party of China.14
In addition, claims of unfairness have arisen based upon perceptions of a lack of reciprocity15 and contentions that State-owned corporations receive advantages and preferential treatment that prejudices foreign competitors.16

However, invoking the national security exception is a complex issue. For example, in the global trade context, the national security exception of ‘Article XXI may also shelter some measures that, although ostensibly imposed for security reasons, may actually be protectionist-oriented’.17 Indeed, China perceives the imposition of restrictive measures as a violation of contractual commitments and as cover for protectionism and discriminatory conduct.18

Last year, when the EU first floated an investment-screening mechanism, China called on the bloc to observe World Trade Organization (WTO) rules and avoid discriminatory investment policies.19

Are the impairment of trade and restrictions on cross-border investment based upon national security a violation of international legal obligations? International law recognizes that States have the inherent right20 to override legal obligations to defend ‘national security’ or ‘essential security interests’.21 However, States can creatively allege simulated, artificial, or, at best, doubtful national security directives. What constitutes a national security interest crisis in a world that has undergone substantial transformations in recent decades and how should defensive conduct taken in reaction to the threat be evaluated? And what can Delaware corporate law inform us about national security in the international economic law context? There are several interrelated and emerging issues.

First, the long-term ramifications of improper conduct—that is, promoting improper objectives under the ruse of national security—are far more serious in an interconnected world dependent on free trade, supply chains, and foreign direct investment (FDI) as pillars of the global governance architecture.22 Indeed, in a globalized world with inter-dependent and integrated economies, conduct based upon the national security exception may impact regional and/or global order and stability, and a trade war is risky and could spiral out of control.23

Second, the classic understanding of military attack as constituting ‘the’ threat to national security is no longer valid. Cyber-threats, social stability, economic warfare, environmental threats, and terrorism impinge on national security as much as (or more than) open military conflict. Indeed, what may, at one time, have been an improper motive might currently be a valid national security threat. Furthermore, national security is not only military preparedness; national security encompasses a wide range of important bulwarks in defence of the good of the nation such as peace, prosperity, and stability. New technology inspired dual-use civilian/military product applications and the fact that important sources of defence components may be manufactured offshore rather than domestically may also increasingly cross into the realm of legitimate national security.

Third, the rivalry between the USA and China adds a dimension of double-edged complexity to the mix. The 2017 US National Security Strategy document demonstrates that China is increasingly viewed as a strategic and economic competitor and rival,24 which leads to anxieties over the true motivation for investment. Specifically, but not exclusively, Chinese State-owned enterprises (SOEs) are also perceived as inherently more threatening to national security due to their governmental links.25 But while Chinese takeovers and investment may potentially be motivated by mixed political-motives, national security based measures taken to thwart Chinese investment may also possibly contain such motives.

Fourth, while the essential security exception is found in virtually all international economic agreements—as important as the exception is—the exception has a dearth of rulings,26 and several are conflicting.27 The objective of this article is to suggest examining Delaware law as a proxy for analysing national security. Prior rulings concerning ‘security’ relied primarily upon the understanding of ‘necessity’ in customary international law. However, as will be detailed below, conceptualizing the security exception as an exemplar of necessity will be much too limiting to States and will serve to render the exception impractical. The conceptualizations of national security benchmarks such as ‘necessity’ were appropriate for an age that dealt with a more limited and military-oriented perception of security. Today, legitimate threats may literally be virtual as opposed to physical. Moreover, necessity in international law requires an imminent threat and the nation enacting the measure must establish that the measure was ‘the only way’—that is, it was not possible to defend its interest in a less burdensome manner. As will be explained below, these (and other) requirements would eviscerate the ability of States to defend security if States were held to these requirements.

Determining the proper balance in a world in transition and risk is crucial inasmuch as the national security exception has a real potential of becoming weaponized. Given the above-referenced emerging issues, and the increasing invocation of the exception, finding the proper standard to utilize to ascertain whether the measure violates an international law obligation is vital. This article seeks to fill a void and promote discussion with respect to a standard that ‘has not been adequately addressed by scholarly attention’.28 Indeed, a ‘relatively under-explored issue is the extent to which BIT/FTA exceptions on “essential security,” “national security,” and “public order” may be successfully raised by host/recipient States in complaints raised by SWFs and SOEs’.29

Preliminarily, in discussing national security it should be noted that the exception comes in various contexts: WTO trade rules, domestic screening mechanisms, free trade agreements (FTAs), and bilateral investment treaties (BITs). The exception may also be found in agreements that provide for the invoking State to ‘self-judge’ whether circumstances satisfy utilizing the exception. While it is beyond the scope of this article to discuss the implications of any ‘self-judging’ terms in a particular setting, ‘self-judging’ is a grey area with no clear rulings,30 and, in fact, there is an argument that empowering States to ‘self-judge’ does not prevent a subsequent review of that determination.31 However, the purpose of this article is not to discuss whether the exception is reviewable in specific contexts but to proffer a potential standard when the exception is, indeed, being evaluated by a reviewing body.32

Various questions arise, such as, who should have the initial burden of proving their side? Should all national security decisions be presumed to be proper and thus the party claiming unfair conduct bears the burden of proving the exception is misplaced? Should the standard lean towards a lenient and/or subjective evaluation in deference to national sovereignty? Alternatively, should the initial burden be placed on the State invoking the defence to demonstrate that a credible threat existed on an objective basis? What are the contours of the defence? Are other nations ‘stakeholders’ to the extent that their interests need to be taken into account when declaring a national security exception?

This article proposes a standard by comparing the invocation of the exception with the stewardship of Delaware directors in a publicly traded US corporation when faced with a threat to corporate security and the board’s enactment of defensive measures to thwart the threat. Corporate directors—when faced with a threat to corporate control—will often engage in conduct that proactively seeks to stem threats to corporate control and/or attempts to thwart the takeover, and in doing so, conflicts of interest may potentially cloud the decision. This is a close parallel to governments creating barriers to foreign investment, trade tariffs, and/or boycotts and the blocking of foreign takeovers of domestic companies. While legitimate threats may exist, the possibility also exists that the threats are not reasonable and the exception merely serves as a rationale to engage in politically motivated protectionism or for some other improper motive.

In the comparative law context, is examining the issue through the lens of Delaware law a fit?:33
The choice of legal systems for comparative law purposes stands at the core of any comparative law methodology and must consequently be aligned with the goals of the comparative law project. In fact, the choice of suitable legal systems is crucial for attaining those goals and thus for the success of a comparative law project.34
Analysing the issues through the lens of how Delaware courts evaluate the decisions of directors when faced with a takeover is a novel means of examining the topic. The choice of comparison is crucially important since the foundation of comparative analysis will depend on comparing common problems.35 In salient ways, as discussed immediately below, a comparison of national security decisions in international economic law with Delaware director responsibilities makes sense.36

Directors are charged with doing their best to promote the welfare of the corporation and the shareholders in much the same way that governments are responsible for creating a stable and prosperous national economy benefiting the citizens. In this manner, shareholders are similar to constituents—the citizens. Delaware directors are elected by voters who are responsible for steering the enterprise for the voters’ (shareholders) benefit. This is similar to government officials elected to benefit the voters (citizens). Yet directors (as elected political representatives) are relatively independent and shareholders cannot directly compel the board to take any particular action or initiate major transactions or defensive conduct, and the directors cannot easily be removed until the next term.37 Essentially, directors are very similar to elected political officials; both are essentially intermediaries between the voters (shareholders or citizens) and third parties and both are charged with acting in the benefit of the ‘enterprise’ and its constituents.

Moreover, the central issue is very similar in nature. Corporate security focuses on protecting the business as national security is invoked to protect the nation. When corporate directors act to defend ‘corporate security’ this involves rights and duties of the directors. Directors are obligated to protect the ‘corporate bastion’—corporate security—from threats either immediate or forthcoming. However, in protecting corporate security, Delaware directors are charged with demonstrating that the board’s measures to protect corporate security are reasonable and are not disproportionate in addressing those threats. Directors are charged with balancing the need to address evolving threats to corporate security while ensuring that such measures are not abusive to their duties of care to the corporation—as well as corporate stakeholders—imposing reasonable limits on corporate directors.38

For the reasons discussed above, the analogy to Delaware is comparatively significant to the vital question of finding an appropriate standard. While this article recognizes that director conduct in protecting corporate security is not perfectly identical with government officials engaged in conduct to protect national security, demanding an exact alignment of systems would render comparative law ‘little more than socio-legal tourism’.39 At a minimum, examining the national security standard via ‘comparison [with Delaware law] can open up our eyes to alternative solutions’.40 The reasons in favour of using Delaware law are more extensively detailed later in this article.


Footnotes
1
While standards for the exception (or similar exceptions) exist, they have rarely been the subject of decisions. See Julien Chaisse, ’Demystifying Public Security Exception and Limitations on Capital Movement’ (2015) 37 U Penn J Intl L 583, 601 (dearth of rulings on the exception). Moreover, for reasons outlined below, this article argues that looking at Delaware law offers a more advantageous benchmark than for example the concept of ‘necessity’ used in arbitral decisions and the International Court of Justice (ICJ).
2
National security based conduct is understood as encompassing proactive measures, since waiting for the threat to actualize and endanger the nation may prove too late for an effective response. See Raj Bhala, ’National Security and International Trade Law: What the GATT Says, and what the United States Does Symposium on Linkage as Phenomenon: An Interdisciplinary Approach’ (1998) 19 U Penn J Intl L 263, 275 (‘[i]f a sanctioning member had to wait until a hostile power acquires nuclear weapons, a destabilizing number or type of non-nuclear arms, or a physical invasion, then it would be too late for trade sanctions to have any protective effect’).
3
See Presidential Proclamation on Adjusting Imports of Aluminum into the United States (8 March 2018) (emphasis added) <https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-aluminum-united-states/> accessed 31 August 2018; see also Ted Kemp, ‘US Launches Investigation into Automobile Imports on a “National Security” Basis’ (23 May 2108) <https://www.cnbc.com/2018/05/23/president-trump-asks-for-national-security-investigation-of-automobile-imports.html> accessed 31 August 2018 (‘The U.S. Department of Commerce started an investigation into automobile imports to determine whether they “threaten to impair the national security” of the United States’).
4
See Thomas Biesheuvel and others, ‘Trade as National Security Issue? Here’s What the U.S. Law Says’ Bloomberg (24 May 2018) <https://www.bloomberg.com/news/articles/2018-05-24/trade-as-national-security-issue-here-s-the-u-s-law-quicktake> accessed 31 August 2018 (discussing the imposition of tariffs based on national security).
5
See ‘Australia’s New Foreign Minister Marise Payne Supports Blocking Chinese Telcos from 5G Network, Citing National Security’ (27 August 2018) <https://www.scmp.com/news/asia/australasia/article/2161522/australias-new-foreign-minister-marise-payne-supports-blocking> (discussing the blocking of Chinese companies from Australian 5G network based upon national security concerns).
6
See Locknie Hsu, ‘The Role and Future of Sovereign Wealth Funds: A Trade and Investment Perspective’ (2017) 52 Wake Forest L Rev 837, 843–4.
7
The Committee on Foreign Investment in the United States (CFIUS) is ostensibly empowered with unfettered discretion to decide national security based reviews. However, even here, there may be options for review. See Anne W Salladin and Amelia J Schmidt, ‘CFIUS Post-Ralls: Ramifications for Sovereign Wealth Funds’ (2015) 4 Intl Rev L 1, <https://doi.org/10.5339/irl.2015.swf.4> accessed 30 August 2018 (discussing Ralls litigation in US courts wherein a Chinese buyer filed a claim over a lack of due process in the CFIUS mechanism). Moreover, blocking transactions may potentially implicate internal investment agreements (IIAs) and may give rise to claims either at the ICJ State–State venue or International Centre for Settlement of Investment Disputes (ICSID) investor–State arbitration. See Hsu (n 6) 847.
8
Presidential Order Regarding the Proposed Takeover of Qualcomm Incorporated by Broadcom Limited (12 March 2018)<https://www.whitehouse.gov/presidential-actions/presidential-order-regarding-proposed-takeover-qualcomm-incorporated-broadcom-limited/> accessed 31 August 2018 (emphasis added).
9
See ‘National Security Risk? Australia Bans Multibillion-dollar Chinese Investment in Power Grid’ Australasia (11 August 2016) <http://www.scmp.com/news/asia/australasia/article/2002313/deal-australia-ban-chinese-investment-power-grid> accessed 31 August 2018 (blocking Chinese bidders).
10
See Enterprise Act 2002: Guidance on Changes to the Turnover and Share of Supply Tests for Mergers (11 June 2018) <https://www.gov.uk/government/publications/enterprise-act-2002-guidance-on-changes-to-the-turnover-and-share-of-supply-tests-for-mergers> accessed 31 August 2018 (additional national security scrutiny on national security; new rules apply to businesses developing military and dual-use technology, computing hardware and quantum technology).
11
See Birgit Jennen and Rainer Buergin, ‘For Merkel, Some China Investments Are More Welcome Than Others’ Bloomberg (27 February 2018) <https://www.bloomberg.com/news/articles/2018-02-27/merkel-fixes-sights-on-china-as-chinese-investors-target-germany> accessed 31 August 2018 (‘Chinese investment is increasing in very strategic sectors. … The problem is going to be if there is only interest to have technology flow from Germany to China, and of course if there are security questions’); Lyubov Pronina, John Follain and Slav Okov, ‘EU Is Ready to Fight Back against China’s Growing Trade Dominance’ Bloomberg (3 May 2018) <https://www.bloomberg.com/news/articles/2018-05-03/europe-embarks-on-a-china-strategy-with-a-majority-for-screening> accessed 31 August 2018 (‘Europe is set to tighten controls over foreign investment, a sign of growing wariness of China’s efforts to use its $11 trillion economy to become a dominant global power’).
12
See Liz Alderman, ‘Wary of China, Europe and Others Push Back on Foreign Takeovers’ New York Times (15 March 2018) <https://www.nytimes.com/2018/03/15/business/china-europe-canada-australia-deals.html> accessed 31 August 2018; see also Josh Wingrove, ‘Canada Blocks Chinese Takeover of Aecon on Security Concerns’ Bloomberg (24 May 2018) <https://www.bloomberg.com/news/articles/2018-05-23/trudeau-blocks-chinese-takeover-of-aecon-on-security-grounds> accessed 31 August 2018 (‘The Canadian government blocked a proposed takeover of construction firm Aecon Group Inc. by a unit of China Communications Construction Co. in the latest move by Western nations weighing national security concerns associated with Chinese investment’).
13
See ‘Why the US Fears a Chinese Bid for Westinghouse Electric’ New York Times (7 April 2017) <https://www.nytimes.com/2017/04/07/business/us-china-toshiba-westinghouse.html?_r=0> accessed 31 August 2018 (describing claims that Westinghouse technology is the target of Chinese espionage causing national security concerns within the USA).
14
See Robert Fife and Steven Chase, ‘Trudeau Cabinet Blocks Chinese Takeover of Aecon over National Security Concerns’ (23 May 2018) <https://www.theglobeandmail.com/politics/article-ottawa-blocks-chinese-takeover-of-aecon-over-national-security/> accessed 31 August 2018 (emphasis added).
15
See Adam S Chilton, Helen Milner and Dustin Tingley, ‘Reciprocity and Public Opposition to Foreign Direct Investment’ (30 May 2017) <http://scholar.harvard.edu/files/dtingley/files/cmt-mergers.pdf?m=1465167375> accessed 31 August 2018 (discussing how perceptions of unfairness is building resentment and protectionism).
16
See ‘Chinese State-Owned and State-Controlled Enterprises: Policy Options for Addressing Chinese State-Owned Enterprises’ (2012) <https://www.uscc.gov/sites/default/files/2.15.12drake_testimony.pdf> accessed 31 August 2018 (‘China’s aggressive support policies create an unfair advantage for Chinese SOEs in the Chinese home market, in the U.S. market, and in third country markets. The scope of the problem requires a comprehensive U.S. response, one that combines elements of trade policy, investment policy, and domestic competition policy’).
17
Wesley A Cann, Jr, ‘Creating Standards and Accountability for the Use of the WTO Security Exception: Reducing the Role of Power-Based Relations and Establishing a New Balance between Sovereignty and Multilateralism’ (2001) 26 Yale J Intl L 414, n 3 <http://digitalcommons.law.yale.edu/yjil/vol26/iss2/7> accessed 31 August 2018.
18
China may also perceive that these measures are brought in the context of the USA–China rivalry. See Larry Catá Backer, ‘Encircling China or Embedding It?’ Law at the End of the Day (8 November 2010) <http://lcbackerblog.blogspot.com/2010/11/encircling-china.html> accessed 31 August 2018 (‘For a considerable period of time, Chinese officials have been focusing on the possibility that the United States intends to surround it to prevent it from more forcefully asserting its own interests in the region…[T]he Chinese suggest that American policy has been to engage China economically while creating an effective military encirclement that would enhance the American position in the event of conflict’).
19
Lyubov Pronina, John Follain and Slav Okov, ‘EU is Ready to Fight Back against China’s Growing Trade Dominance’ Bloomberg (3 May 2018) <https://www.bloomberg.com/news/articles/2018-05-03/europe-embarks-on-a-china-strategy-with-a-majority-for-screening> accessed 31 August 2018.
20
See Chaisse (n 1) 599 (GATT advances opening markets liberalization by imposing obligations while allowing sovereigns to make exceptions when there is a legitimate need).
21
In some contexts, the exception is ‘self-judging’, thereby permitting each state to decide for itself whether circumstances require the invocation of ‘national interest’, although this aspect has not been definitively decided and remains a grey area.
22
See Ji Yeong Yoo and Dukgeun Ahn, ‘Security Exceptions in the WTO System: Bridge or Bottle-Neck for Trade and Security?’ (2016) 19 J Intl Economic L 417, 428 (‘security objectives no longer absolutely overrule trade policies. In contrast to what could be called security and trade relations under which security concerns prevail over trade interests, matters have evolved to trade and security relations which further require more rational and balanced considerations of trade interests’).
23
See Payman Yazdani, ‘US–China Trade War? Not Likely’ Modern Diplomacy (9 April 2018) <https://moderndiplomacy.eu/2018/04/09/us-china-trade-war-not-likely> accessed 31 August 2018 (‘[t]rade wars are particularly dangerous in contemporary politics.’ Backer notes that trade wars would adversely affect developing nations and states with economic challenges by increasing unemployment, political instability and widespread migration into wealthier states. Moreover, trade wars would negatively affect ‘the political orders in the United States and China [which] depend in large part on the fulfillment of a promise of a baseline economic prosperity. Where that disappears then both states might well be subject to the vagaries of populism which, though it might not overthrow either’s system in a formal sense, would substantially corrupt them’).
24
See Josh Rogin, ‘Trump’s National Security Strategy Marks a Hawkish Turn on China’ Washington Post (18 December 2017) <https://www.washingtonpost.com/news/josh-rogin/wp/2017/12/18/trumps-national-security-strategy-marks-a-hawkish-turn-on-china/?noredirect=on&utm_term=.62bf3e4ca2e0> accessed 31 August 2018 (discussing the US view that China is a strategic rival ‘across the political, economic, military and informational domains in ways probably not duplicated by our other competitors’).
25
Joel Slawotsky, ‘Sovereign Wealth Funds as Emerging Financial Superstars: How U.S. Regulators Should Respond’ (2009) 40 Geo J Intl L 1239 (Western nations are concerned that sovereign wealth funds (SWFs) and State-owned enterprises (SOEs) may attempt to invest for strategic reasons).
26
See Chaisse (n 1) 601 (‘the WTO has not clarified the scope of the national security exception. [And], there is inadequate case law to illustrate the correct use of the exception, to what extent, and to which service sectors the exception is applicable’).
27
See Sarah F. Hill, ‘The “Necessity Defense” and the Emerging Arbitral Conflict in Its Application to the U.S.-Argentina Bilateral Investment Treaty’ (2007) 13 Law & Bus Rev Ams 547, 551.
28
Tsai-fang Chen, ‘To Judge the “Self-Judging” Security Exception under the Gatt 1994: A Systematic Approach’ (2017) 12 Asian J WTO & Intl Health L & Policy 311, 315.
29
Locknie Hsu (n 6) 837.
30
See Chen (n 28) 311, 317 (arguing ‘the term “self-judging” is a misleading one’); see also William W Burke-White and Andreas von Staden, ’Investment Protection in Extraordinary Times: The Interpretation and Application of Non-Precluded Measures Provisions in Bilateral Investment Treaties’ (2008) 48 Va J Intl L 307, 376–86 (regardless of whether self-judging—a reviewing body should employ a good-faith benchmark to determine whether invoking the exception was proper).
31
See World Trade Organization, Report by the Panel, United States: Trade Measures Affecting Nicaragua (13 October 1986) para 5.17 L/6053 (‘[i]f it were accepted that the interpretation of Article XXI was reserved entirely to the contracting party invoking it, how could the Contracting Parties ensure that this general exception to all obligations under the General Agreement is not invoked excessively or for purposes other than those set out in this provision? If the Contracting Parties give a panel the task of examining a case involving an Article XXI invocation without authorizing it to examine the justification of that invocation, will they limit the adversely affected contracting party’s right to have its complaint investigated in accordance with Article XXIII:2?); see also Bhala (n 2) 278–9 (‘regardless of the self-judging aspect, it does not prevent an affected state from pursuing a damages claim although from a practical matter bodies may be reluctant to decide and parties may not wish to file claims’).
32
The problem with self-judging is that States can define their national security interests wholly in their own image, and thereby limit external restraints on those interests.
33
The choice of a specific legal regime for comparative purposes ‘stands at the core of any comparative law methodology and is therefore critical for the methodological viability of any comparative study.’ See Christopher Bruner, ‘Power and Purpose in the “Anglo-American” Corporation’ (2010) 50 Virginia J Intl L 579, 589–92 (discussing the debate between ‘contextulaists’ and ‘functionislists’ in the context of comparative corporate governance. It is acknowledged that differences in jurisdictions limit the comparison to various degrees but this is correct in every comparative study).
34
See Lutz-Christian Wolff, ‘Comparing Chinese Law…But with Which Legal Systems?’ (2018) 6(2) CJCL 151–73.
35
See also Bruner (n 33) 589 (‘[t]he validity and utility of conclusions drawn from such comparative studies, then, will depend critically on accurate identification of a true common problem, and this determination is where functionalism encounters a substantial challenge’).
36
See Wolff (n 34) (noting that the vertical comparative approach is ‘often a useful to benchmark national systems against international systems which represent cross-jurisdictional state-of-the-art legislation and can thus serve as role models’).
37
Bruner (n 33) 594–5.
38
As detailed below, the standard suggested does involve concepts such as ‘reasonableness’ and as such this could raise legitimate concerns over the concept of negligence. See eg the landmark ruling in Van Gorkom (n 158), which specifically used the ‘gross negligence’ standard in finding the director conduct failing to meet the care requited to invoke the business judgment rule. However, more recent cases such as Kahn (n 158) rely more on the ‘no rational basis’ standard. While the ‘no rational basis’ standard is somewhat tort-like, it can also be applicable in other contexts such as contractual interpretation. Moreover, while applying a tort-like duty of care as a standard of reasonableness in evaluating national security might be subject to criticism courts use reasonableness as a standard in most contexts and is a concept that goes beyond tort. Reliance on the reasonable corporate director/board standard and its duty of care is unavoidable. Moreover, the concept is embedded in international economic law and tribunals reviewing investment agreements will often rely upon reasonableness.
39
See Russell A Miller, ‘Comparative Law and Germany’s Militant Democracy’ in Russell A Miller (ed), US National Security, Intelligence and Democracy: From the Church Committee to the War on Terror (Routledge Russell A. Miller ed., 2008) 243.
40
See R Michaels, ‘The Functional Method of Comparative Law’ in M Reimann and R Zimmermann (eds), The Oxford Handbook of Comparative Law (OUP 2006) 342, 379–80.
Posted by Larry Catá Backer at 3/07/2019 11:09:00 PM
Email ThisBlogThis!Share to TwitterShare to FacebookShare to Pinterest
Labels: China, globalization, International law, Law and Culture, markets, Regional Trade Associations

No comments:

Post a Comment

Newer Post Older Post Home
Subscribe to: Post Comments (Atom)

Emancipating the Mind in the New Era: The CPE Bulletin

Emancipating the Mind in the New Era: The CPE Bulletin
Volume 15 Issue 2 (2020) (COVID-19 and Int'l Affairs) ) NOW AVAILABLE ONLINE

ASCE Conference 4-6 January 2021

ASCE Conference 4-6 January 2021

Okó kiiko isé sile. Àdá kiiskunrun, Ajá nf'orí ja'gbo wa sisé Èrú ijà kii b'Agbo

A hoe never fails to work. A cutlass is never sick. A dog gets to work relentlessly. A ram fears no opposition [Ìdí-Ìretè]

WEBINAR: Conference/Roundtable: Coronavirus and International Affairs

WEBINAR: Conference/Roundtable: Coronavirus and International Affairs
17 April 2020; Video Recording Now Available

Event Video available available now

Event Video available available now
Cuba From the Castros to COVID: An ASCE Virtual Conference August 13-15, 202

NEW: Commentary on th 2019 Draft Legally Binding Instrument on Business and Human Rights

NEW: Commentary on th 2019 Draft Legally Binding Instrument on Business and Human Rights
Analysis of Provisions

Y por si fueres pícaro

"Y por si fueres pícaro, lector, advierte que en cocinas y caballerizas pican con un alfiler o doblando los azares, para conocerlos por lo hendido. . . . Y fuéme peor, pues nunca mejora su estado quien muda solamente de lugar y no de vida y custumbres." Francisco de Quevedo, "Vida del Buscón; Ejemplo de vagamundos y espejo de tacañas (1626)

ASCE 2021

ASCE 2021
SAVE THE DATE 4-6 January 2021

ASCE 2019

ASCE 2019
Videos and Papers Now Available

VideoRecording of China Panel Now Available

VideoRecording of China Panel Now Available
Marxist-Leninism 2.0: Theory and Practice of Emerging Socialist Democracy in China and Cuba

Now Available! ISBN: 978-1-949943-00-9 (pbk); 978-1-949943-01-6 (ebk)

Now Available! ISBN:  978-1-949943-00-9 (pbk); 978-1-949943-01-6 (ebk)
Cuba's Caribbean Marxism: Essays on Ideology, Government, Society, and Economy in the Post Fidel Castro Era

Porgrama Internacional de Certificación de Inglés para Abogados

Porgrama Internacional de Certificación de Inglés para Abogados
julio de 2019

Search This Blog

Translate

At the end of the day

Ihrem Ende eilen sie zu, die so stark im Bestehen sich wähnen. Fast schäm’ ich mich, mit ihnen zu schaffen [They end up rushing to their doom, they who think themselves so powerful. I am almost ashamed to deal with them.] Loge; Richard Wagner, Das Rheingold

At the end of the day, law?

. . . . Emperors and kings
Are but obeyed in their several provinces,
Nor can they raise the wind or rend the clouds;
But his domain that exceeds in this
Stretcheth as far as doth the mind of man.
A sound magician is a mighty god.
* * *
Cut is the branch that might have grown full straight,
And burned is Apollo's laurel bough,
That sometimes grew within this learned man.
Faustus is gone; regard his hellish fall,
Whose fiendful fortune may exhort the wise
Only to wonder at unlawful things,
Whose deepness doth entice such forward wits
To practise more than heavenly power permits.

Christopher Marlowe, "Dr. Faustus" (before 1593)

ORCID

ORCID iD iconorcid.org/0000-0002-7492-4527

ORCHID QR Code

ORCHID QR Code

Subscribe To

Posts
Atom
Posts
Comments
Atom
Comments

Caminante, no hay camino

Caminante, son tus huellas
el camino, y nada más;
caminante, no hay camino:
se hace camino al andar.
(Caminante, no Hay Camino, 1912 Antonio Machado) [Wanderer, your footsteps are the road, and nothing else; Wayfarer, there is no route: one makes a path by going.]

ACI

ACI profile for Larry Catá Backer

A Top 100 Blog--Online Schools.org

"Law at the End of the Day" named one of the 100 Best Blogs for Law School Students by Online Schools.org,

Follow by Email

PRINTING INDIVIDUAL POSTS

Individual postings may now be more easily printed. To print, FIRST, click on the title of the essay you want to print, THEN scroll down to the "Labels" line near the end of the essay and CLICK on "print this article."

Cluster Maps

Locations of visitors to this page

Copyright; Citation and Attribution:

All essays are (c) Larry Catá Backer except where otherwise noted. All rights reserved.
The essays may be cited and quoted with appropriate reference. Suggested reference as follows:
Larry Catá Backer, [Essay Title], Law at the End of the Day, ([Essay Posting Date]) available at [http address]
.

The author holds a faculty appointment at Pennsylvania State University. Notice is hereby given that irrespective of that appointment, this blog serves as a purely personal enterprise created to serve as an independent site focusing on issues of general concern to the public. The views and opinions expressed here are those of its author. This site is neither affiliated with nor does it in any way state, reflect, or represent the views of Pennsylvania State University or any of its entities, units or affiliates.

Ravitch and Backer's Law and Religion: Cases, Materials, and Readings

Ravitch and Backer's Law and Religion: Cases, Materials, and Readings
3rd Edition 2015

Broekman and Backer, Signs in Law

Broekman and Backer, Signs in Law
Springer 2014

BACKERINLAW--PERSONAL WEBSITE

BACKERINLAW--PERSONAL WEBSITE
Here you can find my published work, manuscripts, presentations, and more!

Globalization Law and Policy Series from Ashgate Publishing

About the Series:

Globalization: Law and Policy will include an integrated body
of scholarship that critically addresses key issues and theoretical debates in comparative and transnational law. Volumes in the series will focus on the consequential effects of globalization, including emerging frameworks and processes for the internationalization, legal harmonization, juridification and democratization of law among increasingly connected political, economic, religious, cultural, ethnic and other functionally differentiated governance communities. This series is intended as a resource for scholars, students, policy makers and civil society actors, and will include a balance of theoretical and policy studies in single-authored volumes and collections of original essays.

An interview with the Series Editor


Queries and book proposals may be directed to
:

Larry Catá Backer
W. Richard and Mary Eshelman Faculty Scholar
and Professor of Law, Professor of International Affairs
Pennsylvania State University
239 Lewis Katz Building
University Park, PA 16802
email: lcb911@gmail.com

or

Alison Kirk, Publisher
Ashgate Publishing Limited
Wey Court East
Union Road
Farnham
Surrey
GU9 7PT, United Kingdom
Telephone: +44 (0)1252 736600
Fax: +44 (0)1252 736736
email: akirk@ashgatepublishing.com


vlex

vlex.es
Constitutions
Case Law
Legal Books & Journals
U.S. Code

Blog Archive

  • ►  2021 (68)
    • ►  April (5)
    • ►  March (21)
    • ►  February (19)
    • ►  January (23)
  • ►  2020 (261)
    • ►  December (16)
    • ►  November (16)
    • ►  October (18)
    • ►  September (26)
    • ►  August (19)
    • ►  July (24)
    • ►  June (18)
    • ►  May (21)
    • ►  April (32)
    • ►  March (32)
    • ►  February (19)
    • ►  January (20)
  • ▼  2019 (255)
    • ►  December (18)
    • ►  November (15)
    • ►  October (17)
    • ►  September (23)
    • ►  August (32)
    • ►  July (26)
    • ►  June (19)
    • ►  May (18)
    • ►  April (24)
    • ▼  March (25)
      • Call for Sessions and Papers; 8th UN Forum for Bus...
      • Part 12: What is the (Cuban idea of) Revolution? D...
      • At the ASIL 2019 Annual Meeting: Matthew Erie on t...
      • Brief Thoughts on the 2019 Grotius Lecture at the ...
      • "In the Shadow of Empires—Latin American Perceptio...
      • First Principles for a Business and Human Rights C...
      • ASIL 2019: Minorities in International Law Interes...
      • "The Sort of Democracy Worth Preserving and Safegu...
      • Panel on Democracy, Voting Rights, and the Courts:...
      • Dr. Sascha Dov Bachmann: The UK Response to Hybrid...
      • Part 11: In Search of an Ideology of Popular Affir...
      • Part 10: Communist Party and Asamblea Nacional--Po...
      • Norges Bank excludes Halcyon Agri Corp. Ltd From P...
      • Part 9: The Referendum in the Shadow of Cuban Soci...
      • Part 8: Plebiscites, the "No" Vote, and the Leader...
      • Council on Ethics for the Norwegian Pension Fund G...
      • New Paper Posted: The 'Cri de Jessup' Sixty Years ...
      • 4th National People of Color Legal Scholarship Con...
      • Just Published: Joel Slawotsky, "The National Secu...
      • It's All About the Narrative: American Style Textb...
      • Dr. Omar Everleny Perez Villanueva, “Los retos eco...
      • The Cuba-Venezuela-U.S. Axis: Warfare on the Finan...
      • The Externalization of Brazilian Law-Politics: The...
      • Strengthening the Spiritual Backbone of Communism:...
      • Mexico's New Guardia Nacional and Human Rights Tra...
    • ►  February (18)
    • ►  January (20)
  • ►  2018 (261)
    • ►  December (25)
    • ►  November (40)
    • ►  October (15)
    • ►  September (20)
    • ►  August (16)
    • ►  July (22)
    • ►  June (19)
    • ►  May (17)
    • ►  April (19)
    • ►  March (25)
    • ►  February (24)
    • ►  January (19)
  • ►  2017 (275)
    • ►  December (19)
    • ►  November (28)
    • ►  October (30)
    • ►  September (26)
    • ►  August (17)
    • ►  July (15)
    • ►  June (17)
    • ►  May (22)
    • ►  April (20)
    • ►  March (29)
    • ►  February (34)
    • ►  January (18)
  • ►  2016 (233)
    • ►  December (18)
    • ►  November (18)
    • ►  October (19)
    • ►  September (25)
    • ►  August (23)
    • ►  July (10)
    • ►  June (19)
    • ►  May (20)
    • ►  April (20)
    • ►  March (29)
    • ►  February (21)
    • ►  January (11)
  • ►  2015 (226)
    • ►  December (15)
    • ►  November (16)
    • ►  October (8)
    • ►  September (33)
    • ►  August (15)
    • ►  July (18)
    • ►  June (18)
    • ►  May (19)
    • ►  April (24)
    • ►  March (36)
    • ►  February (6)
    • ►  January (18)
  • ►  2014 (168)
    • ►  December (13)
    • ►  November (16)
    • ►  October (8)
    • ►  September (12)
    • ►  August (13)
    • ►  July (13)
    • ►  June (11)
    • ►  May (11)
    • ►  April (13)
    • ►  March (21)
    • ►  February (25)
    • ►  January (12)
  • ►  2013 (168)
    • ►  December (10)
    • ►  November (17)
    • ►  October (14)
    • ►  September (17)
    • ►  August (13)
    • ►  July (15)
    • ►  June (6)
    • ►  May (9)
    • ►  April (13)
    • ►  March (13)
    • ►  February (28)
    • ►  January (13)
  • ►  2012 (152)
    • ►  December (10)
    • ►  November (7)
    • ►  October (7)
    • ►  September (11)
    • ►  August (11)
    • ►  July (12)
    • ►  June (16)
    • ►  May (14)
    • ►  April (13)
    • ►  March (17)
    • ►  February (23)
    • ►  January (11)
  • ►  2011 (150)
    • ►  December (12)
    • ►  November (15)
    • ►  October (5)
    • ►  September (10)
    • ►  August (12)
    • ►  July (13)
    • ►  June (16)
    • ►  May (6)
    • ►  April (12)
    • ►  March (10)
    • ►  February (28)
    • ►  January (11)
  • ►  2010 (144)
    • ►  December (10)
    • ►  November (8)
    • ►  October (12)
    • ►  September (9)
    • ►  August (14)
    • ►  July (14)
    • ►  June (10)
    • ►  May (7)
    • ►  April (13)
    • ►  March (9)
    • ►  February (27)
    • ►  January (11)
  • ►  2009 (137)
    • ►  December (6)
    • ►  November (8)
    • ►  October (11)
    • ►  September (10)
    • ►  August (12)
    • ►  July (12)
    • ►  June (13)
    • ►  May (7)
    • ►  April (13)
    • ►  March (8)
    • ►  February (28)
    • ►  January (9)
  • ►  2008 (116)
    • ►  December (8)
    • ►  November (11)
    • ►  October (13)
    • ►  September (10)
    • ►  August (7)
    • ►  July (10)
    • ►  June (13)
    • ►  May (11)
    • ►  April (7)
    • ►  March (9)
    • ►  February (9)
    • ►  January (8)
  • ►  2007 (88)
    • ►  December (10)
    • ►  November (8)
    • ►  October (6)
    • ►  September (10)
    • ►  August (9)
    • ►  July (13)
    • ►  June (9)
    • ►  May (4)
    • ►  April (5)
    • ►  March (4)
    • ►  February (5)
    • ►  January (5)
  • ►  2006 (84)
    • ►  December (9)
    • ►  November (7)
    • ►  October (5)
    • ►  September (7)
    • ►  August (10)
    • ►  July (12)
    • ►  June (13)
    • ►  May (10)
    • ►  April (9)
    • ►  March (2)

Labels

  • 19thCCPCongress (18)
  • 2019 Hong Kong Situation (44)
  • Africa (12)
  • ASCE 2021 (11)
  • ASCE 2021. cuba (9)
  • ASCE Interviews (5)
  • ASCE2019 (4)
  • ASCE2020 (9)
  • Belt Road Initiative (29)
  • Benefit Corporations (11)
  • BHR_Treaty_Draft_2019 (30)
  • BHR_Treaty_Dtaft_2020 (3)
  • BkCaribbeanMarxism (21)
  • Brazil (64)
  • BRI (34)
  • Business andHuman Rights (887)
  • CCP Const Ideology Series (92)
  • CECC (6)
  • China (760)
  • CoalitionforPeace&Ethics(CPE) (89)
  • Constitutional law (683)
  • corporate governance (580)
  • corporate law (261)
  • COVID-19 (96)
  • CPE EmpireSeries (48)
  • CSR (30)
  • cuba (395)
  • Cuba Sonic Weapons Affair (40)
  • CubaConstitution (51)
  • Data Governance (44)
  • Democracy (116)
  • E.U. Law (151)
  • elements of law Series (46)
  • globalization (1460)
  • Hague Arbitration Rules (1)
  • HagueRulesArbitration (1)
  • international crime (173)
  • International law (517)
  • international relations (799)
  • Internatonal law (288)
  • IntrotoUSLawBook (31)
  • iran (9)
  • Judiciary (174)
  • jurisprudence (1045)
  • Law and Culture (1504)
  • Law and Religion (204)
  • Legal Education (357)
  • Little Sir Press (3)
  • Malaysia (26)
  • markets (1009)
  • media (377)
  • MNEs-TNCs (24)
  • New Era Theory (11)
  • nternational crime (4)
  • OECD (33)
  • Palo (2)
  • Panama-PSUIntroUSLaw2019 (8)
  • PhilosophySelf (51)
  • Regional Trade Associations (232)
  • Ruminations Series (122)
  • San Hui Fang Workshop (28)
  • securities regulation (54)
  • Social Credit (56)
  • Social Self (14)
  • SOEs (3)
  • Spain (30)
  • StatesasPrivateActors SovereignWealthFunds (197)
  • Supra-national organizations (594)
  • sustainability-climatechange (11)
  • transparency (339)
  • ZeroDraft (41)
  • Zhiwei Tong (童之伟) Series (39)

Useful Research Links

  • Annotated Justinian Code
  • Australasian Legal Information Institute
  • Blog Catalog
  • Business and Human Rights in Law
  • CASS Institute Int'l Law
  • China Economist Research Papers
  • China in Africa Podcasts
  • China Military Online
  • China Social Credit System
  • Coalition for Peace & Ethics
  • Commonwealth Human Rights Initiative
  • Critical Theory
  • Cuba Counterpoints
  • Cuba On Line
  • Digital Commons Network
  • EasyBourse
  • Europa
  • Federal Supreme Court Brazil
  • Foreign Law Translations
  • FreedomInfo.org
  • German Law Journal
  • Google News
  • Hanover Historical Texts
  • Institute for Human Rights and BUsiness
  • International Judicial Monitor
  • Inventario -- Cuba
  • Islamic Law Portal
  • Journal of Contemporary Russian Law
  • Justicia constitucional en Iberoámerica
  • La revue géopolitique
  • Legal Information Institute of India (LIIofIndia)
  • Legal Scholarship Events
  • Open Culture eBooks
  • Organization for Economic Development and Cooperation (OECD)
  • Oxford International Review
  • Portal José Martí
  • PRC Foreign Ministry
  • Project Gutenberg
  • Rue 89
  • Semioticon
  • Sovereign Wealth Fund Institute
  • Supreme Court of the United States
  • The Holy See
  • The Internet Archive
  • The Sinocism China Newsletter
  • U.S.-Cuba Trade and Economic Council, Inc.
  • Union of International Associations
  • United Nations
  • United Nations Treaty Collection
  • Univ Chicago Foreign Law Research Links
  • Unrepresented Nations and Peoples Organization (UNPO)
  • World Justice Project
  • World Legal Information Institute
  • WWW Virtual Library

Blog Sites of Note

  • Delaware Corporate and Commercial Litigation Blog
    4 hours ago
  • USNI Blog
    12 hours ago
  • Chris Navin
    14 hours ago
  • Understanding Society
    1 day ago
  • DERECHO MERCANTIL
    1 day ago
  • SCOTUSblog
    2 days ago
  • JURIS DIVERSITAS
    2 days ago
  • LAW AND RELIGION FORUM
    2 days ago
  • EU Law Analysis
    2 days ago
  • Dui Hua Human Rights Journal
    3 days ago
  • The Cuban Economy - La Economía Cubana
    1 week ago
  • Monitoring University Governance
    1 week ago
  • Hidden Harmonies China Blog
    2 weeks ago
  • Leyes y Empresas
    2 weeks ago
  • Corporate Social Responsibility and the Law
    2 weeks ago
  • Inventario
    4 weeks ago
  • China Social Credit System
    2 months ago
  • Coulisses de Bruxelles, UE
    2 months ago
  • orgtheory.net
    3 months ago
  • Forgotten Archipelagoes
    4 months ago
  • Two Weeks Notice: A Latin American Politics Blog
    5 months ago
  • Dani Rodrik's weblog
    9 months ago
  • macroblog
    1 year ago
  • The FCPA Blog
    1 year ago
  • Reflecciones de La Carraca
    2 years ago
  • Thought
    2 years ago
  • Installing (Social) Order
    2 years ago
  • Business and Human Rights
    2 years ago
  • Chinese politics from the provinces
    3 years ago
  • Brussels Blog
    3 years ago
  • Direito & Economia
    4 years ago
  • China Media Project
    4 years ago
  • theRacetotheBottom - Headline News
  • David A. Westbrook - Home
  • libertyzw.fyfz.cn/

About Me

My photo
Larry Catá Backer
State College, Pennsylvania, United States
I hope you enjoy these essays. Each treats aspects of the relationship between law, broadly understood, and human organization. My essays are about government and governance, based on the following assumptions: Humans organize themselves in all sorts of ways. We bind ourselves to organization by all sorts of instruments. Law has been deployed to elaborate differences between economic organizations (principally corporations, partnerships and other entities), political organization (the state, supra-national, international, and non-governmental organizations), religious, ethnic and family organization. I am not convinced that these separations, now sometimes blindly embraced, are particularly useful. This skepticism serves as the foundation of the essays here. My thanks to Arianna Backer for research assistance.
View my complete profile

My Papers

My Papers
Download copies of current research
lawyers

Facebook Badge

Larry Catá Backer

Create Your Badge

Follow

Blog Directory - Blogged
(c) Larry Catá Backer, all worldwide rights reserved. Travel theme. Powered by Blogger.