(By PANAGIOTIS DELIMATSIS)

Abstract

The fragmentation of general international law is not a new phenomenon. Nevertheless, it is a sign of our era and essentially results from the legal pluralism that characterizes it. Increasing adjudication also makes the study of this concept even more fascinating. The phenomenon of fragmentation manifests itself with particular tension in international trade law. Private interests and commercial transactions can be irreversibly affected by the absence of legal security or, worse, by the existence of contradictory rulings delivered by adjudicating bodies, which constantly compete for increasing jurisdiction and thus influence. This article reviews the discussion of fragmentation of international law and critically analyzes the problem of absence of coherence in regulating trade. By focusing on adjudication, permissible sources of law, and interpretation, it argues for more openness towards non-trade law when interpreting trade rules.

1 Introductory Remarks

The fragmentation of general international law is a topic of great interest for international lawyers, but also for economists and political scientists. It is the outcome of the ever-increasing scope of international law and a growingly diversified international legal order where several international regulatory institutions or rule-systems with overlapping authority and ambiguous boundaries have emerged. Fragmentation of international law is related to the fact that international law develops through issue-oriented fields of law-making driven by ‘specialized and relatively autonomous spheres of social action and structure’. Fragmentation can be understood in substantive terms in that it is caused by fragmentation of substantive norms but also as the result of fragmented authority at an international level. In the latter case, fragmentation problems can be viewed as institutional challenges associated with the allocation of jurisdiction along horizontal, vertical and functional dimensions. Such a constellation is akin to the subsidiarity analysis which is regarded as one of the organizing principles of the EU edifice.

Undeniably, the polycentric legal systems that exist at the global, regional or bilateral level are systemically integrated, i.e. they form part of the international system. However, these systems have created issue-driven, overlapping governance regimes which lack a common governance body coordinating them. As Shany puts it, ‘being essentially an inter-subjective system without central authoritative law-creating and law-applying organs, international law inherently enjoys low levels of coherence’. Thus, normative conflict is a phenomenon that has shaped international law and influenced its evolution through the years.

This paper aims to critically review the fragmented nature of international trade law and propose some handy solutions which may be preferable from a fairness or international law viewpoint, but may actually increase rather than decrease fragmentation of international trade law. As one can infer, a vantage point for this paper is that, under certain circumstances, fragmentation may be the optimal solution to a given issue.

The current proliferation of preferential trade agreements (PTAs) and the growing number of international legal instruments impinging on trade flows accentuate fragmentation. Identifying jurisdiction or the applicable law in a given inter-state conflict requires a multifaceted analysis which rarely leads to safe conclusions. Section 2 reviews the discussion on the fragmentation of general international law, while the phenomenon of fragmentation of international trade law is scrutinized in Section 3. Building on Section 3, Section 4 discusses some observations that derive from WTO case-law and a careful, critical analysis of the current interpretation of the WTO agreements. Section 5 concludes.

2 The fragmentation phenomenon in general international law

The post-war propensity towards accelerated cooperation has led to intensive inter-state treaty-making and the emergence of autonomous legal orders beyond the Nation-State model, which dominated international law for centuries. Nevertheless, the consensus-based post-war approach towards international relations led to a sort of sclerosis depicted by erratic transnational legal regimes attempting to deal with diverse facets of international relations and competing for influence in areas that may overlap. Typically, such regimes have their own preferred idiom, special ethos and structural bias.8 They also have an obfuscating effect, notably because they keep away from attempting to address the possibility of conflict with other regimes. Thus, it is the absence of any clear relationship among these regimes that creates concerns about the fragmentation of international law.

At the same time, however, the implementation organs of most of these regimes claim jurisdiction and legitimacy which is superior to other regimes10 whenever jurisdictional conflict is nascent, thereby nourishing concerns about conflicting jurisprudence and forum shopping. This institutional aspect of fragmentation raises manifold concerns. International law, because it lacks a centralized structure, does not provide for an integrated judicial system operating an orderly division of labour among a number of tribunals, where certain aspects or components of jurisdiction as a power could be centralized or vested in one of them but not the others. Nor is authority integration a feasible option for the time being. Then, every tribunal is a self-contained system which jeopardizes the systemic coherence of international law. Tribunals become the missionaries conveying the message of autonomy of such regimes which typically tend to apply a presumption in favour of complete and exhaustive regulation in the respective regime. This can be due to several reasons, including the fear that integration of substantive norms from other regimes requires complex authority integrating solutions, some of which may lead to a loss of authority. Due to this presumption, resorting to rules outside the given regime is highly unlikely, as the purported completeness of the regime should in principle suffice to fill the gaps. The EU system, while sui generis, equally lends support to this observation. The ECJ, for instance, will fill gaps either by drawing parallels with other rules within the system or by having recourse to general principles inherent in the legal orders of the EU Member States, before – if at all – falling back to international law.

Globalization has also favoured this rise of more and more fragments of international law. Worse, in certain fields, such as environmental protection, contemporary needs have led to the creation of a ‘balkanized system’ of international environmental agreements with very fluid boundaries between them. At the same time, sovereignty gradually vanishes or, in any event, is no longer considered as absolute. As noted by the International Criminal Tribunal for the International Trade (Oxford University Press, 2000), 239. Former Yugoslavia (ICTY) in Tadic, ‘_d_ating back to a period when sovereignty stood as a sacrosanct and unassailable attribute of statehood, this concept recently has suffered progressive erosion at the hands of the more liberal forces at work in the democratic societies’. The difficulties arising from these developments are growing bigger if one also considers the erosion of normative hierarchy in international law. Here reference is to be had not only to the problem of choice of law among conflicting norms of equivalent status resulting from the myriad of regimes, but also to the fact that doubts are casted in practice even over the superiority of peremptory norms (jus cogens). The relative weakness of peremptory norms of formerly enhanced normativity25 to prevail over rules of theoretically lower rank is exemplified in two cases: the Al-Adsani case decided before the European Court of Human Rights (ECtHR) relating to the relative value of the prohibition of torture, and the Congo v. Ruanda case before the International Court of Justice (ICJ) relating to the prohibition of genocide.

This picture of blurring normative hierarchy is exacerbated by the proliferation of non-state actors seeking to regulate their private affairs through self-regulation and soft-law rules that have a transnational effect.28 The dramatic progress of technological advances and transnational markets brings about cross-border regulatory challenges which require transborder resolution and cooperation and thus impinge on the previous regulatory monopoly of states. Initiated by public or private actors, through institutions or networks, processes of ‘global governance’ occur, responding to societal needs or driven by trans-national opportunities. Although they use international law to secure normatively their own highly refined sphere logics and thus adopt a peculiar state-like behaviour, these features do not fit anymore in the traditional Westphalian system of loosely coexisting sovereign nation-states.

This unexpected competition between private and public authority derives from the acknowledgement that, in an increasingly complex and diversified world with an inconceivable pace of technological advance, the traditional state does not have the resources nor the savvy to regulate efficiently in all areas. Therefore, it concedes part of its powers to other actors that can act and re-act more efficiently and swiftly. Modern states have become sufficiently open-minded to appreciate the advantages of alternative forms of regulation. It is commonplace by now that monopolies of all types usually harm aggregate welfare. Cooperation and delegation are two utterly important concepts in the vocabulary of the modern state when it comes to its relations with private actors. The concomitant collapse of the previously rigid public versus private divide brings about a redistribution of power and influence. These private societal fragments operate autonomously both at the domestic and global levels and create their own substantive law. More worrisome is the fact that they have recourse to their own legal sources which go beyond spheres of national law-making and international treaties. Such delegation of regulatory power to private actors and the rise of private government and transnational networks are not unproblematic from an international law viewpoint, as traditional inter-state rules may not be able to capture these activities. In addition, the issue of whether and under what conditions rules created within these transnational networks can prevail over national or international laws adopted by States or at least be relied upon remains to be answered.

Some scholars see the growing complexity of international law as an indicator for the social richness of a globalizing world, of the international system’s liveliness and dynamics. Fragmentation can also constitute a positive demonstration of the responsiveness of legal imagination to social change. It can even be regarded as a sign of international law having reached a certain level of maturity. Whereas each regime has its own epistemic community with its own institutions developing and applying the relevant law and tribunals or courts enforcing it, they nevertheless contribute to satisfy a growing need for more detailed rules in specific areas. Such systems are more densely integrated and more technically coherent. Then, in theory at least, such sub-systems of law can function as laboratories and boosters for further progressive development of international law.

Others see fragmentation of law as an epiphenomenon of the real-world multidimensional fragmentation of world society.38 All law is associated with a sectoral system dedicated to maximise a particular rationality. Functional delimitations have overshadowed the national differentiation of law. Legal fragmentation can, however, be somehow remedied through rules which may allow for weak normative compatibility of the relevant fragments.

An intriguing alternative, political-science viewpoint would suggest that fragmentation is the desired outcome of powerful states and their internal constituencies so that they continue to dominate the international scene. Fragmentation entails the necessary tools for this: first, it makes it more strenuous for weaker states to create coalitions; and, second, it increases the transaction costs which are required to rationalise the system. In addition, fragmentation allows for sufficient flexibility, as the existence of multiple competing institutions undermines the need for powerful states to commit themselves to any such institution or system. Because of their bargaining power, they also have the ability to demoralise certain regimes by opting for alternatives, which, from a global viewpoint can be deemed suboptimal.

By the same token, the pursuit of individualistic strategies by collective actors, including international organisations or regulatory regimes, without reference to a common interest can also result in policy conflicts and thus fragmentation. Such conflicts represent a prisonerdilemma- type of situations, but solutions to such situations do not seem to be handy overall. In more general terms, it would be safe to argue that fragmentation ‘may be an emancipating device for challenging the distribution of power as much as it can be complicit in maintaining it’.

Within this setting, international courts and tribunals have a decisive role to play, notably if account is taken of the contemporary ever-increasing willingness of states to settle their disputes through adjudication. International tribunals do communicate with each other even if only in an uncoordinated manner. Indeed, it appears that tribunals are aware of the rulings of other tribunals in similar or relevant matters. International courts essentially avoid contradicting each other and thus there are no major challenges to the coherence of international law to report. Diverse courts around the globe refer to similar sources of law and in several instances cross-refer, explicitly or implicitly, to decisions of other international fora46 notably when the case-law is more robust in these other fora (typically because of their specialized subject-matter). In addition, and quite importantly, reference, application and elaboration of case-law of other international courts enhance the legitimacy of a given judgment. Such legitimacy is also strengthened through reference, as a last resort, to general international law. At the very least, fragmentation of the international legal order presupposes an affirmation of its systemic building blocks, including general international law.

Even if the principle of comity cannot yet be regarded as a well-established principle of international procedural law, in some cases an international court can exercise judicial restraint if an act which was adopted by an international organization that provides an equivalent standard of protection was brought before it. For instance, in M. & Co, the ECtHR was ready to adopt a deferential stance in the case of an act adopted by an organization that is considered to protect fundamental rights, as regards both the substantive guarantees offered and the mechanisms controlling their observance in a manner that is at least equivalent to that for which the European Convention on Human Rights (ECHR) provides. In Bosphorus, the ECtHR clearly ruled that if an international organization provides such an equivalent protection (in casu, the European Union), then it is rebuttably presumed that a state which is member to that organization respects its obligations deriving from the ECHR when it complies with its obligations under that international organization. Crucially, the ECtHR contented itself with scrutinizing the substantive guarantees and procedural mechanisms enshrined in the Community system and the stance of the ECJ vis-à-vis human rights.

In rare cases, courts can also apply broadly ‘defragmentation’ mechanisms enshrined in the relevant treaty to ensure coherence domestically. A case to the point is the ECJ and its recent rulings on bilateral investment treaties that several Member States (MS) concluded before joining the European Union. Article 351 of the Treaty for the Functioning of the European Union (TFEU) (ex-Article 307 ECT) provides that MS ‘shall take appropriate steps to eliminate the incompatibilities established’ between pre-accession bilateral treaties and the EU treaties. On this score the ECJ found that such incompatibilities are revealed ‘where, first, the agreement does not contain a provision allowing the Member State concerned to exercise its rights and fulfil its obligations as a member of the Community and, second, there is also no international-law mechanism which makes that possible.’ In addition, the ECJ ruled that Article 351 also requires positive actions and good-faith efforts to eliminate such incompatibilities. In this case, the ECJ appears determined to protect the superiority of the EU treaty and acts as the ultimate guardian of the idea that MS activities should not undermine efforts at the European level to regulate issues nor the EU negotiating position in the field of investment, notably in the aftermath of the adoption of the Lisbon Treaty. However, such rulings are the exception rather than the rule in the international arena and are largely due to the peculiar nature of the EU as a supranational organism.

Nevertheless, in other cases, the confirmation of the superiority of domestic law buttresses fragmentation. In Kadi case, for instance, at issue was a challenge by an individual against the implementation by the EU of UN Security Council Resolutions which identified him as being associated with Usama bin Laden, Al-Qaeda or the Taleban and mandated that his assets be frozen.56 The Court of First Instance (CFI) initially adopted a monist approach stating that it was bound, through the EC Treaty, by the obligations imposed by the UN Charter on MS. It also found that the Community Courts, had in principle no jurisdiction to review the internal lawfulness of the challenged regulation which was based on the relevant Security Council Resolutions. This approach is premised on the recognition of the systemic unity of the international legal system and the regional EU order, as well as on hierarchy of legal authority within this relatively integrated system.

On appeal, the ECJ overturned the CFI’s rulings. First, it stated that no international obligation of MS can be invoked to essentially prejudice the constitutional principles of the EC Treaty, which include the principle that all Community acts must respect fundamental rights. Respecting such rights is a conditio sine qua non for upholding the lawfulness of any Community act. Previously, the ECJ unequivocally defended its autonomy and its right to judicial review of any Community act: ‘an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the Community legal system, observance of which is ensured by the Court by virtue of the exclusive jurisdiction conferred on it by Article 220 EC, jurisdiction that the Court has, moreover, already held to form part of the very foundations of the Community’. Even if the United Nations Charter (which, by the way, is regarded by the EU an ordinary international agreement falling under Article 300 ECT) prevails over secondary Community law acts, primary Community law, in particular general principles of which fundamental rights form part, cannot be affected. The ECJ’s right to judicial review of the validity of any Community act in the light of fundamental rights is yet another ‘expression, in a community based on the rule of law, of a constitutional guarantee stemming from the EC Treaty as an autonomous legal system which may not be prejudiced by an international agreement.’ After reviewing and rejecting the efficacy of the review mechanism before the Sanctions Committee of the Security Council, the ECJ found that several fundamental rights of the affected individuals were violated. The ECJ went on to underscore that the review of lawfulness undertaken by the Community courts does not affect the validity or the primacy of the Security Council Resolutions under general international law.

This expression of a clearly dualist approach is not unique; the ECJ follows a similar stance when it comes to the attribution of direct effect to the WTO agreements. In the United States, the recent Medellin case decided by the Supreme Court also exemplifies the adoption by courts of a stance putting an emphasis on separateness, autonomy and constitutional priority of domestic rules over international law.

(Edited by: China West Lawyer)