NON-DISCRIMINATION IN INTERNATIONAL LAW AND SOVEREIGN EQUALITY OF STATES: AN HISTORICAL PERSPECTIVE.

Author:Risvas, Michail
 
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Abstract

The interpretation of non-discrimination clauses lies at the epicenter of the practice of international courts and tribunals. In today's world, an important part of the jurisprudence interpreting non-discriminatory standards, such as the national treatment standard and the most-favorable nation treatment, is in fact "economic." The reason lies with the ever-expanding fields of international investment law and international trade law, that have brought about the creation of a large body of investor-state arbitration awards, WTO Panel Reports and WTO Appellate Body Reports, all interpreting and applying economic non-discriminatory standards. At the same time, the principle of Sovereign Equality of States, the cardinal organizational and constitutional principle of international relations is constantly the focus of legal and political debates in the international scene. Despite the prominence and prevalence of both concepts, little attention or no attention has been paid to the history of their interrelationship. The present article offers a detailed historical analysis of the relationship between the principles of non-discrimination and Sovereign Equality of States, which is instrumental in the better understanding of both concepts.

ABSTRACT I. INTRODUCTION II. CONNECTING ECONOMIC NON-DISCRIMINATION AND SOVEREIGN EQUALITY OF STATES: THE HISTORICAL PERSPECTIVE A. Non-Discrimination in International Economic Law and Sovereign Equality of States in the Era of Colonialism B. Non-Discrimination in International Economic Law, Sovereign Equality of States, and the Cold War III. ECONOMIC NON-DISCRIMINATION AND SOVEREIGN EQUALITY OF STATES IN CONTEXT: INTERNATIONAL INVESTMENT AND TRADE LAW IV. CONCLUSION: EXPLAINING THE DISCREPANCY OF THE LEGAL AND HISTORICAL PERSPECTIVES I. INTRODUCTION

The interpretation of non-discrimination clauses lies at the epicenter of the practice of international courts and tribunals. (1) In today's world, an important part of the jurisprudence interpreting non-discriminatory standards is in fact "economic." The reason lies with the ever-expanding fields of international investment law and international trade law that led to the creation of a large body of investor-state arbitration awards, WTO Panel Reports and WTO Appellate Body Reports, all of which interpret and apply economic non-discriminatory standards. Although non-discrimination in economic affairs may seem distant from the principle of Sovereign Equality of States, a closer look at these notions reveals that--historically--they were connected. Economic non-discrimination clauses such as the National Treatment standard and the most-favored nation (MFN) treatment, (2) have an extensive pedigree and originate from ancient times. (3) The pivotal role that non-discrimination clauses play in contemporary international trade and investment law, however, traces back to the 19th and 20th century when intensified international treaty practice made such clauses prevalent. (4) At the same time, the single most important historical phenomenon for the development of international law and the conceptualization of the principle of Sovereign Equality of States was colonialism and the process of decolonization. (5) In other words, economic non-discrimination preceded the development of Sovereign Equality of States and, as this article shows, also played a crucial role in the development of the latter notion.

Setting out from the above premise, this article explores the historical relationship between Sovereign Equality and economic non-discrimination. Montesquieu declared in the 18th century that "[w]e need to clarify history through [the study of] laws and laws through history." (6) Indeed, the study of history is essential for comprehending international law. (7) The understanding of international legal norms cannot (and should not) occur in clinical isolation from their historical context and roots. For example, Todd Weiler, a scholar who emphasizes the importance of historical analysis in international investment law, accurately observed in relation to the international minimum standard of treatment--another legal standard encountered in recent investment treaties--that "any international rules being enforced by such coercive means would eventually come to be inextricably identified with them." (8) Such is the case with the concept of the international minimum standard that was initially imposed unilaterally "by means of military coercion or applied military force" and eventually transformed into a reciprocal standard. (9) In other words, the focus is on the origins and common roots. In addition, such examination also has important practical repercussions, as it can lead to the alleviation of misunderstandings and misinterpretations when interpreting economic non-discriminatory standards. (10)

Taking the above introductory remarks into consideration, this article explores the relation between non-discrimination and Sovereign Equality in four parts, including this introduction and a relatively short conclusion. Part II deals with the historical connection between the principle of Sovereign Equality of States and non-discrimination in international economic relations. In particular, Part II focuses on economic non-discrimination in the colonial and Cold War context. Part III analyzes non-discrimination in international trade and investment law from a purely legal perspective. Part IV concludes and offers an exegesis of the discrepancy between the history and present legal construction of Sovereign Equality in relation to economic non-discrimination.

  1. CONNECTING ECONOMIC NON-DISCRIMINATION AND SOVEREIGN EQUALITY OF STATES: THE HISTORICAL PERSPECTIVE

    During the Cold War, both the International Law Commission (11) and Soviet international legal scholarship linked non-discrimination in international economic relations and the principle of Sovereign Equality of States together. (12) However, such link was more broadly recognized. In his 1968 monograph on the subject, Khursid observed:

    [t]he term discrimination in international law, no matter in what context it is used, cannot be considered apart from the principle of equality inasmuch as it invariably suggests unequal treatment. Trade discrimination in international law should be examined against the general background of the principle of equality of states to determine whether or not it sets up a compulsory standard of equality of treatment in commercial matters. (13) The discarded Japanese proposal during the discussion for the 1919 Covenant of the League of Nations expressed the same idea:

    [t]he equality of nations being a basic principle of the League of Nations, the High Contracting Parties agree to accord as soon as possible to all aliens [who are] nationals of state members of the League equal and just treatment in every respect making no distinction either in law or fact on account of their race or nationality. (14) This idea seems to have survived in various forms to this day. (15)

    Instead of providing a comprehensive treatment of the subject, the historical perspective will be developed in fragments, focusing on distinct episodes and using historical snapshots. Connecting MFN and National Treatment obligations with the principle of Sovereign Equality can be largely attributed to distinct historical experiences. The first relates to the Colonial era (Section A). (16) In this context, the experiences include: (i) non-discrimination under the Calvo Doctrine; (ii) the notorious "unequal treaties" signed between the Great Powers on the one part and semi-independent, quasi-colonized states on the other; (17) (iii) the League of Nations mandates; and (iv) the U.S. Nationals in Morocco case, representing distinct episodes or historical snapshots that are worth analyzing. The second historical experience relates back to antagonism in international affairs between capitalist States and socialist States during the Cold War (Section B). (18)

    1. Non-Discrimination in International Economic Law and Sovereign Equality of States in the Era of Colonialism

      Before the UN Charter and the wave of Decolonization, (19) "full" Sovereign Equality was recognized as a constitutional principle within the homogeneous and closed group of Western nations to the exclusion of other non-Western States. (20) As R.P. Anand critically observes:

      several Asian States got eliminated from the orbit of the family of nations under the impact of colonialism. But even those which survived, such as Turkey, Persia, Siam, China and Japan, were treated as being outside the family of nations, especially after the Congress of Vienna in 1815. The so-called "family of nations" was restricted to a small selective European-Christian community with a provincial outlook. (21) Independent or quasi-independent non-Western States, such as Japan, China, Persia, and the Ottoman Empire, were part of the international system, as evidenced by their participation, for example, in the Hague Conferences of 1899 and 1907. And yet, the international system fell "short of recognizing their voices as of equal importance with those of the European and American powers." (22) Koskenniemi insightfully summarizes the paradoxical nature of the relationships between Western and non-Western States in the Colonial era: "[i]n order to attain equality, the non-European community must accept Europe as its master --but to accept a master was proof that one was not equal." (23)

      The impact that colonialism had on constructing the European identity (or identities) and the formation of international law cannot be overstated. Naturally, the subject cannot be fully explored herein; rather, the focus will center on how the experience of Colonialism shaped the perception of sovereignty and influenced the development of non-discrimination rules in international economic law. The two above-mentioned examples, however, clearly indicate that historical experience...

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