Foundations of International Economic Law Summary
Week 1: Introduction to the Field
Lëila Choukroune & James J. Nedumpara:
International Economic Law (IEL) = law of economic relations with the state as the primary subject and actor.
Encompasses topics like trade, investment, finance,
development and aid.
Trade routes as from the third millennium → Europe started to dominate trade and its conceptualisation and
legitimation.
- Mercantilism in Europe emerged to promote regulation of the economy and as a tool to expand its
power.
o Appeared at the time of absolutism.
o Appeared at the conquest of The New World.
Beginning of a systemized and theorized colonization.
o Lead to protectionism and offensive policies.
- Having a favorable balance of trade was to only way to gain wealth.
↔ Specialisation (Adam Smith): division of labour and absolute advantage.
Countries can benefit by specialising in industries at which they excel and trading or exchanging those goods
with others that specialise in other industries.
→ Comparative advantage (David Ricardo):
Countries will specialize in production of a good in which it has a comparative advantage – that is, where there
is labour to produce relatively efficiently, with low opportunity cost.
→ Factor proportions theory: it focuses on labour and capital and emphasises the interplay between the
proportion in which these factors are available in different countries and used in the same.
- Trade goods that are intensive in the factor they have in abundance (labour or capital).
- Advantage in production arises from relative factor abundance.
Trade and globalization are not advantageable for all (Stiglitz):
1. Benefits of globalization might be smaller than advertised.
Possibly offset by the costs.
2. Disillusionment is proportional to the initial craze for globalization.
3. Income and wealth have not been equally shared.
4. Governance of globalization is unfair.
Some countries exercise actual powers over institutions.
5. Multinational corporations are the real decision makers.
6. Distribution of power is affected negatively.
7. Does not support the interests of all.
8. Reduces the ability of governments to deal with real issues.
Legal theories have played a role in the development of IEL.
- Positivism.
Originated because of Leviathan (Thomas Hobbes).
o Based on the idea of sovereign powers.
The sovereign had law making authority: the state.
However, with International Law:
No sovereign ↔ large variety of actors and influences.
o Legal positivism aims to identify law as it is.
o Contemporary positivists:
Also consider soft law or moral and political considerations.
- Realism.
o Politics matters first and foremost.
o National interest dominates states’ strategies.
Their engagement in international relations depends on preservation and growth of
their national interest.
- Globalization.
, Stresses both universalism and fragmentation.
o Universal relevance of ideas regardless of culture, race, religion, nationality etc.
Can be found in trade law: Nation Treatment (NT) and Most Favoured Nation
Treatment (MFN).
o Fragmentation because of pluralistic and integrative visions of international law.
Then maybe interpretation could be the solution.
No regime is self-contained.
Domestic regimes cannot by artificially separated from international law.
General law provides background
General law comes to operate if the special regime fails to function
properly.
- Critical approaches.
Law is politics.
o Denial of legal neutrality: product of a given history.
o Deconstructs the law.
Denounces the objectivity of knowledge.
o Questions the autonomy of the individual and their ability to make free decisions that are not
determined by their environment.
Subjects and sources of IEL.
- Subjects, actors or participants.
o The state is the primary subject of international law.
It is a political construct.
Questions arise about what the definition is of a state.
Permanent population.
Defined territory.
Capacity to enter into relations with other states.
Sovereignty in the relations between states signifies independence.
The right to exercise, to the exclusion of any other state, the functions of
that state.
All states are also equal.
Regardless of their size or power, states have the same rights and duties.
o International Organisations are the instruments of a stat’s international policies endowed
with international legal personality.
More limited competence and range of action (Legality of the `threat or Use of
Nuclear Weapons).
Only exists on the basis of a state’s will.
Demonstrate the possibility to exercise their functions.
Enjoy a form of autonomy from their member states.
o Sui Generis Entities (i.e., seat of the Catholic church).
Have acquired the status of subject because of historical reasons.
Do not have a territory.
Enjoy limited international personality.
o Insurgents.
Rebellious parties who dissent against a given state.
When they come to acquire effective control → belligerents.
Recognition relies on other states.
o National Liberation Movements.
Have acquired some parts of territory in which they are fighting.
Relatively close to insurgents ↔ prepare their operation from the outside and are
hosted in another country.
Existence en legitimisation is based on principle of self-determination.
o Individuals.
For many, individuals are not subjects but participants in the international community.
Have given certain rights that also come with obligations:
, Investor-state dispute settlement.
Human rights violations.
Rise of civil society organisations and non-governmental organizations (NGOs).
- Sources (art. 38 ICJ).
o International Custom (Lotus).
A form of implicit understanding between world nations.
Usages generally accepted as expressing principles of law (Asylum).
General practice.
Acceptance by states that this practice is law (opinio juris).
Sometimes: opinio necessitates (required by social or political forces).
Instances of state conduct inconsistent with the custom rule should have been treated
as breaches of that rule (Nicaragua).
When the state calls for the exception.
o International Treaties.
Number has been inclining because of codification.
Interpretation issues → VCLT.
The textual principle (art. 31).
Supplementary means (art. 32).
o Preparatory work.
o Issue of the language (art. 33): equally authoritative in each
language.
o Judicial Decisions and Scholarship.
Subsidiary means for determination of the rules of law ↔ have no binding effect
except between the parties and in respect of the case under consideration (art. 59).
o International and Domestic Law: the case of the WTO
WTO Agreement mandates all members to ensure conformity of their laws,
regulations and administrative procedures.
It is up to each member state to implement the Agreement.
o General Principles of International Law.
Have been recognised as subsidiary source of international law.
There is no hierarchy of norms.
Law is void if its conflicts with jus cogens (peremptory norm of general international law).
Joel P. Trachtman:
Economic law as umbrella definition for (i) private international law, (ii) international business law and (iii)
public international law:
1. Economics includes and dominates business.
Public policy science that evaluates the design of institutions for the organization of economic activity.
→ The free market is a social construct.
2. Private international law is not separate from public international law.
Important underlying issue is that there are at least two kinds of persons subject to law: (i) private
persons and (ii) states.
3. The term international law must be revisited.
It has both states and individuals as its subjects and objects.
→ Should include outward- and inward-regarding domestic law because this affects relations between
countries.
4. International economic law and public international law are not separate categories.
→ International economic law refers to a type of public international law that has economic goals.
International economic law revolution is mostly a revolution in international law: transformation of society
that draws from and contributes to increasing possibilities for institutionalization of these relations.
This process is driven by:
i. Domestic legal systems and regulatory structures.
o Have an intended or unintended effect on other states.
, Externalities.
Competition.
ii. Intensification of economic relations.
o Relations can be facilitated or made more efficient.
By increased regulatory transactions between states in the area of international trade
law and business regulation.
Take form of agreements regarding issues labelled as trade barriers.
Can take place in the market for public goods where states enter into spot
transactions for regulatory cooperation.
o Development of institutions.
Allow greater communication; wider scope for exchange; increased binding power;
enforcement possibilities.
International economic law is a better term because everything is based on economics and transactional law.
Slobodian:
Globalization has been more criticized.
- Discontent with the legal framework like trade treaties.
o Supposed to constrain national sovereignty.
TPP; NAFTA: GATT; WTO.
- Reflects a broader critique of globalizations.
o Not as freeing markets ↔ but as their legal encasement or protections.
The world has come under the oversight of law.
Moving from national government oversight → multilevel governance and
regulation.
Neoliberalism is not necessarily about liberation from regulation ↔ about the encasement or protection of
markets through legal frameworks (Geneva School).
Ordoglobalism describes the global application of
neoliberal legal principles: it emphasizes importance of
strong legal framework to protect markets.
→ The Rule of Law (governments are also bound by rules) is seen as essential for maintaining the global
economic order since this protects the market from political interference.
After WWII → International Economic Law has developed in the context of stabilizing and governing the
global economy through legal means.
a. Forming frameworks like GATT (General Agreement on Tariffs and Trade).
b. Establishing institutions like WTO.
Has also become more prominent as part of reaction
against demands of the Global South for a New
International Economic Order which sought more
equitable global trade arrangement.
Development of international economic institutions have been influenced by neoliberals (i.e., Friedrich Hayek):
1. Rule of Law as a foundation for freedom.
o Ensures that individuals and businesses can operate without arbitrary interference.
2. Distinction between market-conforming and non-market-conforming measures.
o Market conforming: support functioning without destroying competition or creating
inequalities through favouritism or interventions.
o Non-conforming: disrupt the market by imposing regulations or policies that skew
competition.
3. Legal frameworks to support market operation.
o Markets do not operate in a vacuum.
They need a legal framework to function.
Property rights; contract enforcement; competition laws.
4. The role of the state in market economy.
Week 1: Introduction to the Field
Lëila Choukroune & James J. Nedumpara:
International Economic Law (IEL) = law of economic relations with the state as the primary subject and actor.
Encompasses topics like trade, investment, finance,
development and aid.
Trade routes as from the third millennium → Europe started to dominate trade and its conceptualisation and
legitimation.
- Mercantilism in Europe emerged to promote regulation of the economy and as a tool to expand its
power.
o Appeared at the time of absolutism.
o Appeared at the conquest of The New World.
Beginning of a systemized and theorized colonization.
o Lead to protectionism and offensive policies.
- Having a favorable balance of trade was to only way to gain wealth.
↔ Specialisation (Adam Smith): division of labour and absolute advantage.
Countries can benefit by specialising in industries at which they excel and trading or exchanging those goods
with others that specialise in other industries.
→ Comparative advantage (David Ricardo):
Countries will specialize in production of a good in which it has a comparative advantage – that is, where there
is labour to produce relatively efficiently, with low opportunity cost.
→ Factor proportions theory: it focuses on labour and capital and emphasises the interplay between the
proportion in which these factors are available in different countries and used in the same.
- Trade goods that are intensive in the factor they have in abundance (labour or capital).
- Advantage in production arises from relative factor abundance.
Trade and globalization are not advantageable for all (Stiglitz):
1. Benefits of globalization might be smaller than advertised.
Possibly offset by the costs.
2. Disillusionment is proportional to the initial craze for globalization.
3. Income and wealth have not been equally shared.
4. Governance of globalization is unfair.
Some countries exercise actual powers over institutions.
5. Multinational corporations are the real decision makers.
6. Distribution of power is affected negatively.
7. Does not support the interests of all.
8. Reduces the ability of governments to deal with real issues.
Legal theories have played a role in the development of IEL.
- Positivism.
Originated because of Leviathan (Thomas Hobbes).
o Based on the idea of sovereign powers.
The sovereign had law making authority: the state.
However, with International Law:
No sovereign ↔ large variety of actors and influences.
o Legal positivism aims to identify law as it is.
o Contemporary positivists:
Also consider soft law or moral and political considerations.
- Realism.
o Politics matters first and foremost.
o National interest dominates states’ strategies.
Their engagement in international relations depends on preservation and growth of
their national interest.
- Globalization.
, Stresses both universalism and fragmentation.
o Universal relevance of ideas regardless of culture, race, religion, nationality etc.
Can be found in trade law: Nation Treatment (NT) and Most Favoured Nation
Treatment (MFN).
o Fragmentation because of pluralistic and integrative visions of international law.
Then maybe interpretation could be the solution.
No regime is self-contained.
Domestic regimes cannot by artificially separated from international law.
General law provides background
General law comes to operate if the special regime fails to function
properly.
- Critical approaches.
Law is politics.
o Denial of legal neutrality: product of a given history.
o Deconstructs the law.
Denounces the objectivity of knowledge.
o Questions the autonomy of the individual and their ability to make free decisions that are not
determined by their environment.
Subjects and sources of IEL.
- Subjects, actors or participants.
o The state is the primary subject of international law.
It is a political construct.
Questions arise about what the definition is of a state.
Permanent population.
Defined territory.
Capacity to enter into relations with other states.
Sovereignty in the relations between states signifies independence.
The right to exercise, to the exclusion of any other state, the functions of
that state.
All states are also equal.
Regardless of their size or power, states have the same rights and duties.
o International Organisations are the instruments of a stat’s international policies endowed
with international legal personality.
More limited competence and range of action (Legality of the `threat or Use of
Nuclear Weapons).
Only exists on the basis of a state’s will.
Demonstrate the possibility to exercise their functions.
Enjoy a form of autonomy from their member states.
o Sui Generis Entities (i.e., seat of the Catholic church).
Have acquired the status of subject because of historical reasons.
Do not have a territory.
Enjoy limited international personality.
o Insurgents.
Rebellious parties who dissent against a given state.
When they come to acquire effective control → belligerents.
Recognition relies on other states.
o National Liberation Movements.
Have acquired some parts of territory in which they are fighting.
Relatively close to insurgents ↔ prepare their operation from the outside and are
hosted in another country.
Existence en legitimisation is based on principle of self-determination.
o Individuals.
For many, individuals are not subjects but participants in the international community.
Have given certain rights that also come with obligations:
, Investor-state dispute settlement.
Human rights violations.
Rise of civil society organisations and non-governmental organizations (NGOs).
- Sources (art. 38 ICJ).
o International Custom (Lotus).
A form of implicit understanding between world nations.
Usages generally accepted as expressing principles of law (Asylum).
General practice.
Acceptance by states that this practice is law (opinio juris).
Sometimes: opinio necessitates (required by social or political forces).
Instances of state conduct inconsistent with the custom rule should have been treated
as breaches of that rule (Nicaragua).
When the state calls for the exception.
o International Treaties.
Number has been inclining because of codification.
Interpretation issues → VCLT.
The textual principle (art. 31).
Supplementary means (art. 32).
o Preparatory work.
o Issue of the language (art. 33): equally authoritative in each
language.
o Judicial Decisions and Scholarship.
Subsidiary means for determination of the rules of law ↔ have no binding effect
except between the parties and in respect of the case under consideration (art. 59).
o International and Domestic Law: the case of the WTO
WTO Agreement mandates all members to ensure conformity of their laws,
regulations and administrative procedures.
It is up to each member state to implement the Agreement.
o General Principles of International Law.
Have been recognised as subsidiary source of international law.
There is no hierarchy of norms.
Law is void if its conflicts with jus cogens (peremptory norm of general international law).
Joel P. Trachtman:
Economic law as umbrella definition for (i) private international law, (ii) international business law and (iii)
public international law:
1. Economics includes and dominates business.
Public policy science that evaluates the design of institutions for the organization of economic activity.
→ The free market is a social construct.
2. Private international law is not separate from public international law.
Important underlying issue is that there are at least two kinds of persons subject to law: (i) private
persons and (ii) states.
3. The term international law must be revisited.
It has both states and individuals as its subjects and objects.
→ Should include outward- and inward-regarding domestic law because this affects relations between
countries.
4. International economic law and public international law are not separate categories.
→ International economic law refers to a type of public international law that has economic goals.
International economic law revolution is mostly a revolution in international law: transformation of society
that draws from and contributes to increasing possibilities for institutionalization of these relations.
This process is driven by:
i. Domestic legal systems and regulatory structures.
o Have an intended or unintended effect on other states.
, Externalities.
Competition.
ii. Intensification of economic relations.
o Relations can be facilitated or made more efficient.
By increased regulatory transactions between states in the area of international trade
law and business regulation.
Take form of agreements regarding issues labelled as trade barriers.
Can take place in the market for public goods where states enter into spot
transactions for regulatory cooperation.
o Development of institutions.
Allow greater communication; wider scope for exchange; increased binding power;
enforcement possibilities.
International economic law is a better term because everything is based on economics and transactional law.
Slobodian:
Globalization has been more criticized.
- Discontent with the legal framework like trade treaties.
o Supposed to constrain national sovereignty.
TPP; NAFTA: GATT; WTO.
- Reflects a broader critique of globalizations.
o Not as freeing markets ↔ but as their legal encasement or protections.
The world has come under the oversight of law.
Moving from national government oversight → multilevel governance and
regulation.
Neoliberalism is not necessarily about liberation from regulation ↔ about the encasement or protection of
markets through legal frameworks (Geneva School).
Ordoglobalism describes the global application of
neoliberal legal principles: it emphasizes importance of
strong legal framework to protect markets.
→ The Rule of Law (governments are also bound by rules) is seen as essential for maintaining the global
economic order since this protects the market from political interference.
After WWII → International Economic Law has developed in the context of stabilizing and governing the
global economy through legal means.
a. Forming frameworks like GATT (General Agreement on Tariffs and Trade).
b. Establishing institutions like WTO.
Has also become more prominent as part of reaction
against demands of the Global South for a New
International Economic Order which sought more
equitable global trade arrangement.
Development of international economic institutions have been influenced by neoliberals (i.e., Friedrich Hayek):
1. Rule of Law as a foundation for freedom.
o Ensures that individuals and businesses can operate without arbitrary interference.
2. Distinction between market-conforming and non-market-conforming measures.
o Market conforming: support functioning without destroying competition or creating
inequalities through favouritism or interventions.
o Non-conforming: disrupt the market by imposing regulations or policies that skew
competition.
3. Legal frameworks to support market operation.
o Markets do not operate in a vacuum.
They need a legal framework to function.
Property rights; contract enforcement; competition laws.
4. The role of the state in market economy.
