What Explains the Low Success Rate of Investor-State Disputes?

The treatment of foreign investment has become the most controversial issue in global governance. At the center of the controversy lies the mechanism of investor-state dispute settlement (ISDS), which allows private firms legal recourse against governments if government interference has degraded their investment. Using newly released data covering 742 investment disputes, I assess some of the central claims about ISDS. I argue that the regime has indeed undergone an important shift: a majority of claims today deal not with direct takings by low-rule-of-law countries, but with regulation in democratic states. Such "indirect expropriation" claims have seen a precipitous decrease in their odds of legal success over the past twenty years. They are also far less likely to result in early settlement. These parallel trends may be a result of a rise in strategic litigation by investors whose aim is not only to obtain compensation but also to deter governments' regulatory ambitions

Does the WTO Need a Permanent Body of Panelists?

There is a longstanding debate over the need for a permanent body of panelists at the World Trade Organization (WTO). Put most starkly by the European Communities (EC), the argument is that only full-time jurists would have the experience needed to render 'better and more consistent rulings' that could stand up under appellate review. India and the African Group, among others, challenge the logic of Europe's proposal and its empirical underpinnings. Our article weighs in on this debate, offering the first statistical test of the EC's hypothesis, that conditional on being appealed, rulings handed down by less-experienced panelists are more likely to be reversed. We find that experience matters, but only with regards to the panel's chair. Indeed, on appeal, panels led by experienced chairs are far less likely to have their rulings reversed by the Appellate Body; the experience of the other panelists, by comparison, is inconsequential. The implication is that rather than constituting a permanent body of panelists, the WTO would be better served by establishing a pool of permanent chairs. As for the timeliness of panel reports, which is Europe's--and the literature's--other outcome of interest, we find no evidence that judicial experience matters in the least. Oxford University Press 2009, all rights reserved, Oxford University Press.

The Politics of Judicial Economy at the World Trade Organization

Abstract International institutions often moderate the legal decisions they render+ World Trade Organization ~WTO! panels do this by exercising judicial economy+ This practice, which is evident in 41 percent of all rulings, involves the decision not to rule on some of the litigants ’ arguments+ The constraint is that it can be appealed+ We argue that panels exercise judicial economy when the wider membership is ambivalent about the future consequences of a broader ruling+ This is proxied by the “mixed” ~that is, nonpartisan! third-party submissions, which are informative because they are costly, jeopardizing a more decisive legal victory that would benefit these governments too+ We empirically test this hypothesis, and find that mixed third-party submissions increase the odds of judicial economy by upwards of 68 percent+ This suggests that panels invoke judicial economy to politically appease the wider WTO membership, and not just to gain the litigants ’ compliance in the case at hand+ International institutions are politically savvy+ Nowhere is this more evident than in reading the legal decisions that they hand down+ Students of the European Court of Justice ~ECJ!, for example, insist that some of the court’s verdicts are tailored to appease member states+ Along these lines, some argue that the ECJ restrains its jurisprudence when a ruling might otherwise run contrary to its members ’ sensibilities+ 1 Smith reasons similarly about the World Trade Organization ~WTO!, insisting that the Appellate Body ~AB! balances the need to render legally consistent rulings, on the one hand, with the objective of gaining compliance, on the other+ 2 Yet, WTO panels engage in politics long before the AB hears a case+ Indeed, in 41 percent of all cases, panels exercise judicial economy, 3 apracticebywhichthey rule not to rule on certain of the litigants ’ legal arguments, deeming these unnecessary to solving the dispute at hand+ This practice is important not only for the litigants, who frequently appeal its use, but for the membership as a whole, since judicial economy limits the scope of the case law that results+ We argue in thi