Significant events concerning global trade continue to occur recently this August. They involve a new WTO decision against China concerning export restrictions, a European Court of Human Rights decision against Russia, a Permanent Court of International Arbitration against Russia (both involving Yukos), increased use of antitrust laws by China concerning trade issues, and an appeal to the International Court of Justice by Argentina against the U.S. concerning sovereign debt obligations. To me the upside of all this is that countries are increasingly using international judicial institutions to help resolve trade disputes. This reflects favorably upon the larger governance issue of creating a rules-based global trading system. Here are the particulars:
The recent win by the U.S. against China in the ‘Rare Earth Case’ will help various industries access various minerals for exports. This win is not unexpected. “USTR Announcement and Rare Earth.” USTR News (August 11,2014) and “China Metals Curb Violates Trade, Law.” New York Times (August 8, 2014) and “WTO AB Report.” WTO News (August 7, 2014).
The growing relationship between foreign antitrust law and trade restrictions is highlighted by China’s aggressive action against Microsoft. Has enforcement of such laws become a trade barrier governed by WTO rules even though the WTO does not specifically address competition law? “China’s Enforcement of Antitrust Laws and Trade.” New York Times (August 11, 2014).
Now the Argentine debt comedy gets really interesting. My judgment — Argentina doesn’t stand a chance in the International Court of Justice in the Hague. The notion of ‘restrictive sovereign immunity’ is well known. Argentina has a long history of avoiding its international debt obligations that goes back to the 19th century. It has often been on the wrong side of international law. Besides the U.S. had previously withdrawn its acceptance of the compulsory jurisdiction of the court. It certainly won’t consent to such jurisdiction now.”Argentina Sues in International Court of Justice.” New York Times (August 7, 2014).
Russian counter-sanctions on agriculture imports. What’s next? “Russia’s Counter-Sanctions — Food and Agricultural Restrictions.” New York Times (August 7, 2014).
“India Now Rejects Bali Agreement.” New York Times (August 8, 2014).
Robust institutions and rule of law is still the hallmark of the Western-based global trading system. But bugging International tragic and arbitrary economic sanctions weakens the legitimacy of that basis, so says this editorial. Sounds about right. “Western Rules …” Financial Times (August 1, 2014).
Three days after word arrived that Russia’s handling of OAO Yukos Oil Company would result in the largest arbitration award in history by a factor of 20, the European Court of Human Rights on Thursday announced a judgment thought to be its largest by a factor of over 100. “European Court of Human Rights and Yukos Award.” American Lawyer (July 31, 2014).
International arbitration is an ever-growing aspect of a rules-based global commerce system today. Just look at the largest arbitration award ever. A $50 billion award was just announced by the Permanent Court of Arbitration against Yukos Oil. Combined with the New York Convention on Arbitration domestic actions will now be filed worldwide to enforce this award. Arbitration of global business disputes is often more effective than litigation in global commerce. Unlike arbitration awards court judgments still remain outside of obligatory national enforcement. “Permanent Court of International Arbitration and Yukos Judgment.” New York Times (July 28, 2014).