Thoughts on Surya Deva and Tara Van Ho, "Addressing (In)Equality in Redress: Human Rights-Led Reform of the Investor-State Dispute Settlement Mechanism," The Journal of World Investment and Trade 24 (2023) 398-436

 

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The third decade of the 21st century has (at least) seen the emergence of a vigorous debate about the first principles of economic and political relations, one last seen in this form in the 1980s. Back then, the debate, at least within that hothouse world of academia (with substantial strategic spillover to the political and economic classes that found these battles useful), pitted free market liberal democratic theorists seeking to complete building the vision unveiled by the U.S. as the vanguard state triumphant over the forces of fascism and militarism, against a motley collection of critical theorists allied (loosely) with the much more old timely collectivist  and ideological theorists within the anti-colonialist/imperialist and Marxist Leninist camps.  

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One moved toward technocratic empiricism within which the social sciences flourished, and markets based, risk taking, profit incentive based individual centered collective organization could be deployed to maximize collective activity at any level of organization. It produced tendencies toward technocratic bureaucratization and an emphasis on process with safety nets, but one in which individual choice sat on a throne of glory. Everything and everyone was a unit of production, the value of character of which was to be judged by their contribution to welfare as defined by the orthodox ideology. It encouraged the transformation of education and academic into blue collar factories, at least eventually; universities and think tanks became factories for the production of fact or data based inputs for what became algorithmically modeled realities built on ideological foundations. The modern apotheosis of this manifestation can be seen today in the trajectories and power of data driven governance, of the triumph of AI and big data management (eg smart houses, cities, enterprises and social organs), and more potently in the field of business, human rights, and sustainability, toward a triumph of the accountability and compliance collective (eg here). 

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The other moved toward theoretical revolutionary transformation.  Much of it was naively utopian; some of it was violent; and much of it expressed a desire to remake a world that had been remade around them but about which they remained at the peripheries (see here and here).  This was a space for theory, and the development of ideology that was fashioned against another. It was both a reflection of what it sought to challenge, and a strategy towards remaking--not the world but the perception of the world.  Given the privileged status of many of its theorists--of people playing revolution who had the means and the otium to both become conscious of oppression and to transform a condition of hierarchy into the basis of a transformative ideology that could be scaled to any collective and sourced in any set of historical periods projected forward--it straddled realities perceived almost inevitably from positions of privilege even within subaltern communities. Nonetheless it was powerful: collectivist, grounded in the evolution of a powerful vision of social justice (the contests over the defection of which fractured these critical and revolutionary movements through the 1980s); and saw in empiricism, markets, and governance the strategic vehicles for the realization of their visions.  The modern apotheosis of this manifestation can be seen today in the trajectories and power of social justice orthodoxies (however defined), and in the movements toward a triumph of the precautionary principle (applied through collectives) as a core modality of managing human individual and collective activity; one in which profit is a suspicious category, and one driven by judgments grounded in external impact of action. One understands that manifestation as well in the way in which individual agency is transferred to collective authorities with the power to discipline individual action in the service of collective objectives.

The ideas fueling old wars never die--they just migrate to suit the times.  And they re-emerge with some vigor as the global community appears to be passing from one historical era to another.  It is at moments like that when the old tensions re-emerge and the old battles--nicely decanted in marvelously interesting vessels, re-emerge to both entertain and manage the popular perceptions, as a predicate for allowing ruling groups to act. In the 1980s, the impending fall of the experiment in European Marxist-Leninism and the effective bankruptcy of so-called people's liberation and revolutionary movements both in the first and developing worlds, provided the necessary context.  In the 3rd decade of the 21st century it is the collapse of that vision from the 1980s that has set the stage for re-imagining the way in which it will be required to "see" the world, and thus approach issues of judgment ("good" or "bad") and accountability (alignment of ideological world view with the pragmatics of administrative organization of aggregated political, economic, social, and cultural human collectives).

Some old timely things remain vibrant--though repurposed--for example the state. Yet even here, the state has become a notion that is meant to fit in a new vessel--its police power is certainly useful--as are their bureaucracies.  But the state must also be bent to the service of the apex global collective (and thus the current conflicts about the nature, role, and precedence of international "law" in the control of human collectives). Others organs and principles must be questioned, judged, and to some extent either transformed or abandoned--for example notions of risk, nature and purpose of markets, the hierarchy of human collective authority arranged around categories of function (political, economic, social, cultural) or identity (caste, race, religion, ethnicity, gender and gender identities, age) or history (for example, ethno-historical, religio--ideological-deteminism, colonial-imperialist anti- or pro-hegemonic, and migratory-chauvinistic).  In their place, new orthodoxies of perception--social justice, equality, non-discrimination, and remedy--ought to be applied with equal vigor to natural and abstract individuals.

This has had particular application through the lens of the human rights and sustainability impacts of economic activity (and the irony far less so with respect to the human rights and sustainability impacts of political, cultural or social activity). It is in this light that one ought to welcome the marvelous article recently published by Surya Deva and Tara Van Ho, "Addressing (In)Equality in Redress: Human Rights-Led Reform of the Investor-State Dispute Settlement Mechanism,"  The Journal of World Investment and Trade 24 (2023) 398-436. The abstract suggests the perspective from which the authors seek to engage in the re-emerging debate about first principles:

In the context of ongoing debates concerning the reform of the investor-State dispute settlement (ISDS) mechanism, this article critiques the widely-accepted approach that seeks to fit international human rights law (IHRL) into the existing structure of ISDS and argues that IHRL should at least be treated as ‘primus inter pares’ vis-à-vis international investment law. Testing ISDS on the touchstone of the human rights to equality, non-discrimination, and an effective remedy, the authors demonstrate that ISDS is incompatible with IHRL. Considering various structural and systemic problems, abolishing ISDS is perhaps the only normatively sound solution to address this incompatibility with IHRL. However, as this may not be politically feasible in the near future, this article articulates eight principles for a human-rights compatible international dispute settlement mechanism. We argue that these principles should inform the current efforts to reform the ISDS mechanism to avoid the risk of making only cosmetic changes. (Deva & Van Ho, supra).

 

Pix Credit: The burning of the throne of Louis Philippe during Revolution of 1848 here

The goal is simple--abolish an important manifestation of the post-1980s orthodoxies of liberal democracy and markets privileged organization of human social relations--and replace it with another. This one adopts the discursive language of human rights but is meant to transform the values basis of social relations and from that to transform  those relations to something closer, perhaps, to the imaginaries put forward in the 1950s-70s (but in contemporary form). The path is more complicated. Finding it impossible to effect this transformation immediately (dethroning one set of discursive orthodoxies for another is a complicated business and will produce resistance) they propose  the application of an ancient though sometimes successful strategy--using the discursive trajectories of contemporary orthodoxy against itself  and in that way inducing the current orthodoxy to reject its own core values in small and well managed stages.  To that end eight principles for a human-rights compatible international dispute settlement mechanism. Bravo. The fight over first principles is now much more out in the open--and much more unavoidable for those who now must be put in the uncomfortable position of choosing sides.

Given the quite ambitious objectives of this intervention that argument and those principles are worth some additional consideration.  Those follow below.  

Otium, Catulle, tibi molestum est; [Leisure, Catullus, is a troublesome thing to you:]
Otio exsultas nimiumque gestis; [In leisure you revel and delight exceedingly:]
Otium et reges prius et beatas [Leisure in the past has been the downfall of kings and]
      perdidit urbes. [prosperous cities] (Catullus)  L 51.13–16 (Catullus: The Complete Poems for American Readers (NY: Dutton Paperback, 1970), p. 60).

We are all. it seems, now in a version of Fellini's Satyricon. It remains only to be seen what role the director has in store for each of us. 

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1. The their introduction, Deva and Van Ho clearly identify their target, investor-State dispute settlement (ISDS)--the core mechanism for ensuring the operation of the markets privileging system of global economic activity. Yet that is hardly the target. It is, instead, as they will suggest in the article, merely the disciplinary mechanism for a system of economic activity that, for them, is in need of a substantial re-purposing. One is immersed, then, almost immediately, in a discursive space in which ISDS serves as a factotum for a much bigger target: the system of principles on which markets driven economic activity is grounded. 

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Largo al factotum della città. Presto a bottega che l'alba è già. Ah, che bel vivere, che bel piacere per un barbiere di qualità! [I'm the factotum of all the town, make way! Quick now to business, morning hath shown, 'tis day. Oh, 'tis a charming life, brimful of pleasure, that of a barber, used to high life] (Cesare Sterbini, Libretto, Il barbiere di Siviglia (1816), music by Gioachino Rossini; Aria Cavatina Largo al factotum).

And, indeed, it is hard to get away from the imaginaries of the factotum in the description of ISDS as a protean mechanism that is a lawless space for lawful operationatization of a particular approach to the valuation and performance of economic activity at a point where the public and private spheres intersect.  This makes for great opera buffa, but as Deva and Van Ho remind us, the structuring of the global economic system ought not to be reduced to its buffa elements. 

2. Echoing selected literature, Deva and Van Ho list what is suggested as four specific deficiencies of ISDS with respect to issues touching on human rights and the environment. "

First, ISDS provides a level of protection for foreign investors that privileges their interests over the rights and interests of others, including local communities affected by investment-related projects. Second, ISDS tribunals often fail to address or seriously consider the respon- dent State’s international human rights law (IHRL) obligations. . .Third, investment treaties rarely impose direct human rights obligations or firm responsibilities on investors. . . Finally, these factors - together with the system’s structural inconsistency and jurisprudence incohérente of ISDS awards – produce such a level of uncertainty for States that the mere threat of an ISDS claim can prevent a State from adopting or implementing necessary measures to protect human rights. (Deva and Van Ho, supra, pp. 401-402.

To meet these deficiencies, those who embrace the analysis and its values, proffer resolution of what appears to be a fundamental rift between international invest law (IIL) n the one hand and international human rights  law (IHL) on the other.  That in itself presumes the superiority, and applicability of either or both within the domestic legal orders of states; AND that such applicability is capable of harmonization among the legal systems and political ideologies that fuel them across the globe.  That is less clear than it might appear. (Ibid.).

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3. The problem with the offers of harmonization are essentially something that might be termed human rights disrespect.  Academics like to use the terminology of privilege.  Others more attuned to interpretive filtration of that term by the masses might invoke the imagery of street respect.  That, too implies both hierarchy and deference.  Here, Deva and Van Ho suggest, the polarities of respect are reversed from what tey ought to be.  In their more elegant language:   

These solutions  focus on fitting IHRL into the existing structures of ISDS. Neither supporters nor critics of ISDS have considered what it would entail to adopt instead a human rights-centred approach into which ISDS must fit. In this article, we flip the traditional debate over the relationship between IHRL and ISDS. (Ibid., pp. 402-403).

Of course what sounds delectably simple masks the revolutionary consequences of this essentially Nietzschean transvaluation of values ("Change of values—that is a change of creators. Whoever must be a creator always annihilates." Friedrich Nietzsche, Thus Spoke Zarathustra (in The Portable Nietzsche (Walter Kaufmann trans; p. 170) ) (On the Thousand and One Goals). 

4. To move closer to the objectives of transvaluation of values, Deva and Van ho offer what they term four contributions (Deva and Van Ho, supra, 403). The first includes justification for the transvaluation of values from ISDS (and its ruling ideologies) to those of IHRL as they understand it or as it ought to be understood. The second follows; transvaluation is inevitable because is inconsistent with emerging orthodoxies of human rights to equality, nondiscrimination and re-imagined remedy.  That inevitably also leads to a necessary program of action--the abolition of ISDS. The Pagan temples (of the market and privatized economic activity) must be destroyed to make way for the new Catholic architecture in fourth century Rome.  And so on. Having destroyed the pagen temples, it is then necessary to build on their rubble a new temple.  It is with this that Deva and Van Ho offer "eight principles for a human-rights compatible international dispute settlement mechanism. We note where cur- rent efforts to reform the system offer some promise but determine that the current efforts largely fall short of the demands of IHRL." (Ibid, p. 403).

5. The Section, "Centering Human Rights (Ibid., pp. 404-418) provides an extending indictment of current orthodoxy incarnated in the ISDS and offers up a justification for its replacement by IHRL regimes.  In the process the quite well crafted arguments suggest the arc of principles from which a new world order is to be built.  There are echoes, of course, to the last time this was attempted as a political and theoretical exercise--as the New International Economic Order (NIEO), but with contemporary characteristics.  A generation ago the post-colonial world and the Soviet Marxist Leninist imperial territories looked out on the world and offered a new vision for its organization that centered development, reparation, the supremacy of the collective over the individual, and the supremacy of political management to economic determinism (see, e.g., here). In its modern form this appears, reshaped and re-purposed, through the language and ideological sensibilities of a specific orthodox vision of IHRL. The rationalizations are powerful (and thus important because it comprises the catechism for many influential people). At the same time it is powerfully tied to a quite specific way of understanding the world and the factors that go into making judgments of good and bad. 

Thus the reasons: (1) "human rights feature heavily in the UN Charter;" (2) "unlike investment protection, the realisation of human rights is considered a central function of the State and is a clear part of international public policy;" (3) "the normative justifications of investment law, and of specific rights and protections for foreign investors, often draw on IHRL." (Ibid., pp. 404-406).  It is possible, of course, to suggest the reverse: that international trade and investment feature heavily in the architecture of international institutions that were created  and serve as essential elements of the international order established after 1945, and that one part cannot be understood without the other; there are states (and ideologies) in which human rights are realized through economic development including investment, and not the other way around;, and that the fundamental human right is that of collective prosperity and security; and lastly that human rights law has drawn heavily from the structures of international trade and investment law to foster the development and the context in which and through which human rights may be incorporated into the larger framework of trade, investment and economic activity.  This is not to suggest that one or the other is correct or better--I leave that to those engaging in political work; it is to suggest that where  orthodoxies battles, it is necessary as a discursive predicate to ensure that the rhetoric of incompatible binary be developed. That, however, does not aid analysis. It merely advances an objectives based discourse. 

6. Section 3, entitled "Examining Special Protection of Foreign Investors" (Deva and Van Ho, supra, pp. 418-428) then makes plain what the prior section intimated. That is, that in the face of incompatibility with IHRL (understood now as an aggregated cocktail of now broadly understood principles of equality, nondiscrimination and remedial rights) --and affirming the supremacy of a specific variation in IHRL orthodoxy--ISDS must either be abolished, or its temples converted to the new faith. The argument for abolition is the more powerful of the two.  Deva and Van Ho focus on the  privileged justice for foreign investors that provide greater access to justice but also to a justice that locks national courts out of the picture at times. They suggest the pragmatics of this privileging by noting differences in awards rendered under ISDS and IHRL (Ibid., 422). Lastly they note that states can sometimes be significantly burdened by the obligations to which they have been attached via the terms of IIL treaties facilitated through the mechanisms of ISDS (Ibid., 423). This sets the stage for an analysis that concludes that "ISDS fails to meet the criteria for a legiti- mate differentiation under IHRL" (Ibid., p. 426) as elaborated by IHRL treaty bodies. The justifications for treaty based differentiation are rejected (Ibid., pp. 426-428). One wonders, though, whether it might have been worth examining these justifications more closely--not necessarily to approve them, but certainly to consider alternatives that might be responsive to historically based concerns.  This, for example, one might enthusiastically embrace the position that states ought to be free to expropriate the property fo foreigners (and their own citizens) as they like in accordance with their ideological frameworks, sometimes resulting in no compensation. At the same time, such a principle will have effects on the way in which enterprises gauge the risk of operation.  It may be, in that context, that one might develop schemes in which such risks are borne by the home rather than the host state.  These and others are not considered.  

7. The arguments in Section 3 also serve as an important argument in the sense that it forces  one to understand quite completely what, exactly, it is that one is going to have to transform to move from a liberal democratic, markets privileging global regimes fashioned by the vanguard elements of the victorious allied states after the defeat of fascism to one founded on quite distinct centering principles. What can be excavated from the discussion are a set of first principles that are meant ot be aligned with and which transpose into operational form the IHRL high principles of equality, non- discrimination, and an effective remedy. The first is that economic activity cannot be measured by its internal costs, nor incentivized by internal value creation (profit). Rather measures of equality, nondiscrimination, and remedy suggest an impacts measurement that is grounded in the effect of such activity on the collective--as measured by and organized through the state.  As important, underlying the analysis is what appears to be a principle  of vertical coupled hierarchy. That is, one senses a set of principles that suggest a hierarchy in which the political is superior to the economic (in the sense that economic activity and its sphere is a tool of and a means of achieving purely political objectives); and that the international is superior to the national. In that context, the distinction between law and norm; between institutional authority granted through law and exercises of administrative discretion, and the like, are reduced--perhaps to a convenient insignificance in the service of the higher purposes to which all of this is directed.  That is perfectly reasonable--but the effects on the contemporary systems of rule of law and the like will also be profound.  Lastly, one must consider the subterranean principle of risk that lurks within much of the discussion.  Though not mentioned as prominently as it might, the centrality of an ideology of risk never wanders far from that analysis in this sense: that the essence of IHRL is the centrality of a core precautionary principle that is itself the expression of a risk averse  fundamental obligation of social relations in the spheres to which IHRL (and environmental sustainability concerns, less often mentioned here) applies.  Which is everywhere and in all things. It is that notion of risk that fuels remedial principles, and one that then is used to develop the notion of ISDS incompatibility with IHRL orthodoxy. It is, in the business and human rights field, of course, the central element of discussion within the battles over the nature and role of Environmental, Social, and Governance factors in economic activity.  And it is likely to become more important in the coming years. 

8. The excellent article ends with the practical--a variation of the problemmatique at the heart of Leninist analysis--"What is to be Done?" Deva and Van Ho offer  alternatives.  The first is necessarily consequential--the entire edifice of IIL must be abandoned and one starts with the dismantling of ISDS. (Ibid., pp. 428-430). I do not share the view of the authors that the result could be well managed and would avoid substantial disruption.  This is revolution and I am always reminded of what has now been the clichéd insight of Mao Zedong: "A revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous. A revolution is an insurrection, an act of violence by which one class overthrows another. " (“Report on an Investigation of the Peasant Movement in Hunan” (March 1927), Selected Works, Vol. I, p. 28). Still, this is a necessary discursive trope in the service of fundamentally transformative objectives; so no fault here. Nonetheless, one might approach the assessments with caution. The alternative mechanism that is offered is worthy of further study and its bare bones are sketched in the article (Ibid., 430-434): it is a mechanism built on and operated through principles of equality, accessibility, participation, independence, diversity, coherence, transparency, and reviewability. All are worthy objectives.  And no doubt several are already the subjects of ISDS reform, though for purposes of this article that is beside the point--or better, pointless. But as the drafters of the international instrument that is purported to produce something lie a treaty on business and human rights already well know--the road from principle and objective to legally sustainable language is a long, rocky and, dare I say it, risky one. That, though, is no reason to avoid the effort. All in all, a remarkable job, and one that ought to elicit an equally thoughtful response.