•  
  •  
 

Abstract

International economic law binds states in the interest of liberalizing markets, including in cross-border trade in goods and services (trade) and capital (investment). The treaty regimes for both trade and investment do this by disciplining states through legal rules, while preserving a modicum of governmental authority over domestic policy. The preservation of policy space in these regimes usually involves a process of exceptions-based justification – through formal exceptions clauses in most trade treaties and some investment agreements, and also through informal exceptions-style reasoning by adjudicators in the investment treaty regime more generally. This “exceptions paradigm” of justification has worked well in the trade regime, especially in the WTO where it has been key to securing a justifiable and legitimate balance between market disciplines and regulatory autonomy. But ex post justification has been less successful at striking a tolerable balance in the investment regime, even when formally codified in an exceptions clause. This article seeks to explain why that is, by focusing on the institutions within which exceptionsbased justification is embedded. Key institutional differences between these regimes help explain the varied success of the exceptions paradigm in trade and investment, in particular: the right of action (private vs public); the degree of judicial centralization (ad hoc arbitration vs court system); and the available remedies (retrospective compensation vs prospective injunctive relief). I argue that it is trade law’s public-oriented institutions that have made the exceptions clause workable – not the other way around. By contrast, investment law’s private-oriented institutions make that system particularly inhospitable to exceptions-style justification.

Download

Share

COinS