As a wet-behind-the-ears lawyer in the U.S. Justice Department’s Environmental Enforcement Section, I tried two cases to judgment in my first three years of practice. During fifteen years at the DOJ thereafter, almost every case I touched – including some during a brief stint as an appellate lawyer – settled. So this succinctly-titled article immediately caught my eye.
In Environmental Settlements and Administrative Law, Courtney McVean and Justin Pidot focus not on enforcement litigation but on how the federal government settles cases in which agencies are sued for allegedly violating environmental statutes. McVean (a 2014 graduate of the University of Denver Sturm College of Law) and Pidot (a former DOJ attorney who was then an Assistant Professor at Denver) consider the persistent criticism that the Executive Branch’s settlement practices make policy in ways that violate administrative law norms. Their careful analysis concludes that most environmental settlements are consistent with the procedural constraints of administrative law and that existing judicial review mechanisms are adequate to correct the occasional settlements that overreach.
To make sense of a large number of settlements of claims brought under diverse federal statutes, McVean and Pidot divide settlements into three categories based on the commitments agencies make to resolve cases: resource allocations settlements, procedural settlements, and substantive settlements. As the authors acknowledge, this typology is not entirely new; it tweaks a classification scheme proposed by Jeffrey Gaba more than thirty years ago. The tweak, though small, is important: McVean and Pidot rename as “resource allocation settlements” the class that Gaba called “scheduling agreements.” “Resource allocation” is a more comprehensive label; as McVean and Pidot show, agreeing to a specific timetable is not the only way that settling agencies commit to devote resources to the particular administrative action for which a plaintiff sued. More important, “resource allocation” focuses on the effect that a settlement of this type has on the agency that agrees to it, which is where the emphasis should be in assessing whether such settlements run afoul of legal constraints on agency behavior.
Using a handful of recently or currently controversial settlements, McVean and Pidot systematically evaluate whether each of several common criticisms validly applies to each category of settlement. No, resource allocation settlements do not offend judicially-enforced administrative law norms, because agency choices about resource allocation (absent Congressional earmarking) are quintessentially discretionary and typically insulated from judicial review. Therefore, an agency’s binding agreement to make a final decision on some issue by a specified date is no different from a choice the agency could have made on its own, without any public involvement or judicial second-guessing, even in the absence of a suit seeking to compel a decision. No, process settlements do not violate public participation requirements because the Administrative Procedure Act exempts procedural rules from notice-and-comment, and courts give agencies wide latitude in making procedural choices so long as the statutory minima are satisfied. Finally, no, even substantive settlements do not improperly skirt public participation and other administrative law obligations, provided that the settlement itself is subject to notice-and-comment procedures or the action that the agency agrees to take is itself subject to judicial review that can include review of the propriety of the agency’s commitment to the action in the settlement.
McVean and Pidot acknowledge that substantive settlements, in which agencies commit not only to act but to act in a particular way, pose a risk of circumventing administrative law. They express special concern about deregulatory decisions embodied in settlements, although their example of an improper substantive settlement involves an agency’s agreement to limit environmentally harmful activities by persons who were not party to the litigation being settled. They use this example to support their contention that courts can police substantive settlements using existing law, either on collateral attack or by direct review of the settlements themselves.
Direct review of substantive settlements, McVean and Pidot assert, is not functionally different from arbitrary-and-capricious review of regulatory decisions made outside the settlement context. Perhaps my reaction to this assertion is colored by my experience entering environmental enforcement consent decrees with their “double layer of swaddling,” but to my mind this claim, which the authors support, but thinly, is one of the article’s few points that is open to question. It would be good to see future work rigorously comparing judicial review of substantive regulatory settlements to judicial review outside the settlement context, notwithstanding the difficulty of making that comparison in light of courts’ very malleable application of the arbitrary-and-capricious standard.
The legal analysis in Environmental Settlements and Administrative Law also suggests other opportunities for future scholarship aimed more directly at agency incentives and behavior. In today’s political milieu, the criticism of environmental settlements comes from the right, alleging that agencies implicitly invite lawsuits from their environmentalist friends and cut sweetheart deals to achieve their environmentalist ends. But the lawsuits allege that agencies have not done enough to protect the environment. In deadline suits, the negotiated timetable inevitably requires agency action well after the deadline imposed by statute. Why would eager-beaver regulators prefer a strategy of missed deadlines, lawsuits, and settlements to a strategy of meeting regulatory deadlines in the first place? Because McVean and Pidot show that “to evade the requirements of administrative law” is not the answer, the underlying premise of the agencies’ critics seems doubtful. Study of agencies’ actual dynamic response to being sued could be very enlightening.
Overall, McVean and Pidot persuasively demolish the argument that environmental settlements subvert administrative law’s imperatives. Their analysis, as they conclude, exposes criticism of environmental settlements “for what it is: a war of words relying on emotionally charged rhetoric to score political points.” (P. 239.) To put that conclusion slightly differently, Environmental Settlements and Administrative Law shows that the current complaints about the process of settling environmental lawsuits are stalking horses for disagreements with the substance of the current administration’s environmental policies.
Quite fairly, McVean and Pidot acknowledge that the source of criticism of environmental settlements has varied with the political winds. The same arguments now made by Republican legislators and business-oriented interest groups were made, during the George W. Bush Administration, by Democratic legislators and environmentally oriented interest groups. Environmental Settlements and Administrative Law thus also demonstrates that environmental law, which since the 1970’s has been thoroughly entwined with administrative law, is again illustrating an administrative law truism: when thinking about imposing procedural burdens on agencies, be careful what you wish for, because the process you love today may be the process you hate after the next presidential election. McVean and Pidot have contributed a powerful defense of the need to maintain environmental agencies’ flexibility to settle cases brought against them.
In the concentration camps of the Holocaust, a pink triangle marked gay men’s uniforms to indicate why they had been singled out for imprisonment and death. Beginning in the 1970s, LGBT activists reclaimed the pink triangle, transforming it into a symbol of pride and a demand for respect. Like the Nazi use of the pink triangle, the US Supreme Court’s 1903 decision in Lone Wolf v. Hitchcock represents some of the worst oppression of tribal nations in the United States. Rejecting a challenge to involuntary allotment of tribal lands, Lone Wolf declared that the United States had “plenary power” over Indian tribes, and this power was a “political one, not subject to be controlled by the judicial department of the government.” The case was immediately decried as the Dred Scott for Indians, but unlike Dred Scott, much of Lone Wolf remains good law.
In her provocative new paper, Plenary Power, Political Questions, and Sovereignty in Indian Tribes, Michalyn Steele argues for a partial reclaiming of the plenary power and political question doctrines announced in Lone Wolf and other cases. As Steele notes, the doctrines have been “roundly, and rightly” criticized as leaving tribes “vulnerable to unchecked political whim.” In the limited form Steele proposes, however, the doctrines may be a useful check to what she calls the “heads I win, tails you lose” bind tribes face in the courts today.
Steele begins with the observation that the plenary power doctrine appears to be here to stay. Post-Lone Wolf cases establish that Indian affairs legislation is subject to constitutional review, but the constitutional tests are often less stringent in the tribal context. In practice, as Steele writes, “Congress has had a free hand to legislate and regulate with regard to Indian affairs.” Interpretive rules provided one check on this broad power, as cases both before and after Lone Wolf established that courts will interpret federal legislation as removing tribal property or sovereignty rights only if the intent to do so was clear.
Since 1978, however, the Supreme Court has violated the clear congressional intent principle in cases involving tribal jurisdiction. In a series of decisions, the Court has held that tribes lack all criminal jurisdiction over non-Indians, and retain civil and regulatory jurisdiction over non-Indians only in narrow circumstances. None of these decisions are based on express or even implicit statutory prohibitions, but rather on vague, often inaccurate judicial musings on history and federal policy. All of the decisions, moreover, run counter to congressional policy, which has, since the mid-1970s, focused on encouraging and protecting tribal self-government.
This free-ranging judicial intrusion on tribal sovereign authority, Steele argues, should be barred by the political question doctrine. Steele focuses on three of the factors Baker v. Carr announced would determine whether an issue is nonjusticiable: (i) judicial manageability of the standards, (ii) textual commitment to a coordinate branch, and (iii) policy determinations of a kind clearly of nonjudicial discretion. Pointing to the vague tests the Court has announced for when tribes will lack inherent authority (the internal/external relations test, the necessary to protect self-government test, and the inconsistent with dependent status test), and to the divergent and inconsistent results under these tests, Steele argues that there is no judicially manageable standard for divesting tribes of inherent authority. On the textual commitment to a coordinate branch factor, she points to the constitutional commitment of Indian affairs to Congress in the Commerce Clause, and its similarity to the foreign affairs power, which is the most frequent subject of the political question doctrine. Similarly, as to the clearly nonjudicial discretion factor, she argues that the extent of tribal sovereign authority in dealing with non-Indians is at the heart of congressional and executive policymaking, and is an area in which courts should not intrude absent congressional guidance.
Steele’s political question proposal has some support in recent Supreme Court decisions. Nebraska v. Parker 136 S. Ct. 1072 (2016), Michigan v. Bay Mills Indian Community, 134 S. Ct. 2024 (2014), and United States v. Lara, 541 U.S. 193 (2004) (most of the very few cases tribal interests have won in recent years) all endorsed the supremacy of Congress and the limited role for the judiciary in limiting tribal authority. Steele’s proposal also accords with recent cases requiring clear evidence that Congress intended to intrude on either foreign or state sovereignty. See Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010) (foreign authority); Bond v. United States, 134 S. Ct. 2077 (2014) (state authority).
Steele notes possible objections to her proposal. In particular, we should condemn any doctrine that would remove from tribal nations, or any group, the protections of judicial review. But invoking political question in this limited context does not unjustly interfere with judicial review. It does not say that the Court may not act to determine whether congressional action violates the Constitution, or whether executive action violates statutory law. It instead puts a stop to a new threat to tribal sovereignty: judicial intrusion untethered from guidance from the branches constitutionally entrusted with making federal Indian policy. One branch of government—Congress—already has plenary power. The judiciary cannot claim its own authority to remove tribal sovereignty as well.
Cite as: Bethany Berger, Reclaiming Lone Wolf?
(August 9, 2016) (reviewing Review of Michalyn Steele, Plenary Power, Political Questions, and Sovereignty in Indian Tribes
, 63 UCLA L. Rev.
666 (2016)), http://lex.jotwell.com/reclaiming-lone-wolf/
Rebecca Dresser’s A Fate Worse than Death? article raises profound questions. Scientists have known for some time that certain biomarkers (specifically, elevated tau and beta-amyloid levels) correlate with elevated risks for Alzheimer’s disease. Soon, patients may learn about their own increased probabilities for developing this deadly and dehumanizing disease. This knowledge might cause these patients to adopt advance directives that reject spoon-feeding upon the arrival of advanced dementia. Some preemptive suicides may result. Dresser considers whether we should endorse or recoil from these responses.
Dresser’s analysis anticipates a time when biomarker information relative to Alzheimer’s disease risks is routinely made available to asymptomatic patients. Whether to disclose Alzheimer’s disease biomarker results is still controversial. The tests are imperfect. Dresser examines a study of 311 participants that revealed an eleven to twenty-six percent chance of developing Alzheimer’s disease within five years based on elevated tau and beta-amyloid levels. Many individuals with biomarkers for Alzheimer’s never develop Alzheimer’s (perhaps due to mortality from other causes, perhaps due to other protective factors). Scientists still lack a clear understanding of the relationship between neuropathological patterns and the clinical occurrence of Alzheimer’s disease. Because the tests for pre-symptomatic Alzheimer’s remain unproven, some experts assert that the tests should be deployed only in a research context. With patient demand, however, more and more people are likely to learn their biomarker results in the years to come. Their likely responses lead us to critical legal questions.
Individuals may respond to news of any terminal illness by making more extreme advance directive selections. Some may even consider self-destruction. But a diagnosis of Alzheimer’s disease gives rise to unique considerations. A person with cancer can defer serious thoughts of suicide until the disease overtakes her. An individual with Alzheimer’s disease (or other similar neurological decay) might conclude that she cannot afford a wait and see approach. “Suicide takes relatively sophisticated planning, as well as a strong commitment,” Dresser explains. (P. 658.) As Alzheimer’s progresses, cognition is compromised. The capacity for self-destruction may itself be destroyed, or the individual “may lose interest in doing so.” (Id.) Therefore, persons with an Alzheimer’s diagnosis or a biomarkers prediction are more likely to consider preemptive suicide.
Policymakers should discourage suicide based on Alzheimer’s disease biomarker predictors, Dresser asserts. As a legal matter, it’s an uncontroversial assertion: The great majority of states still criminalize assisted suicide. Those that permit it carefully constrain its availability to narrow sets of circumstances and impose significant government oversight.
Dresser’s more stilling query is whether we should permit competent individuals with positive Alzheimer’s disease biomarkers greater authority over their future care than the law currently recognizes. Advance directives derive from the basic right to refuse unwanted invasive medical treatment. Advance directives instruct care providers, in advance of a later incapacity, to withdraw life-sustaining treatment in the event of a vegetative or terminal condition. An advance directive becomes operative at a point in time when the patient is unable to make or communicate a healthcare decision. (Prior to that time, the patient retains autonomy over her own healthcare decisions by simply communicating her preferences, idiosyncratic or not, to her doctors.)
The varieties of artificial means of life support that are typically addressed in an advance directive (and authorized by the Uniform Health-Care Decisions Act) include antibiotics, chemotherapy, and mechanical respiration. An advance directive can also document an individual’s refusal of nutrition delivered intravenously (“tube feeding”). Tube feeding is a kind of medical treatment. Typically, it is delivered through the abdomen. State laws often clarify that tube feeding may not be withdrawn (even if the pre-incapacitated patient directed) when withdrawal would cause discomfort. Palliative care is one exception to the breadth of advance directives recognized by state law.
Aside from comfort concern limitations, state laws honor the advance refusal of tube feeding. Dresser considers whether an advance refusal of assisted feeding should also be recognized. In some instances, withholding food and water is medically appropriate because the patient has difficulty swallowing, chokes, or experiences discomfort when eating. No court or state legislature has yet considered advance refusal of sustenance by oral feeding. With the projected increasing ability of individuals to assess their own likelihood of experiencing the cognitive decay associated with Alzheimer’s disease via biomarker tests, more and more patients may include assisted spoon-feeding among the treatments they refuse in the text of an advance directive.
Because spoon-feeding is not as invasive as other medical procedures, it is unlikely that a court would find it to be a constitutional liberty interest. Cruzan v. Missouri (U.S. 1990) recognized an incapacitated person’s liberty interest in a pre-incapacity refusal of medical treatment. Government “invasions into the body” are repugnant to substantive due process, emphasized Justice O’Connor, concurring. Spoon-feeding cannot be characterized as a bodily invasion, so there would seem to be no constitutional imperative to give effect to an advance refusal of oral feeding assistance. Recognition would have to come in the form of expansions to state advance directive statutes.
Is the difference between intravenous feeding and assisted feeding only a matter of degree? Perhaps the difference represents a fundamental matter of personal autonomy – where moral considerations shift from the pre-incapacity articulated preferences of an individual to what the majority sees as being in that individual’s best interests. Perhaps not. Perhaps we should consider measures that give effect to individuals’ pre-dementia directions regarding spoon-feeding. Dresser, a Professor of Law as well as a Professor of Ethics in Medicine at Washington University in St. Louis, believes that “[t]he availability of [Alzheimer’s disease] biomarker tests could increase public support for such measures.” (Pp. 666-67.) Professor Dresser’s short article raises important questions that we will likely face with increasing frequency in the near future. “How to die” may become the next fundamental debate in elder law.
Today’s electricity sector has little in common with the industry’s humble origins in the late 1800s, when small power plants located every ten blocks or so served nearby customers through a local grid. Nor does it share many commonalities with the heavily regulated, largely monopolized electricity sector of the 1930s, whose interstate grid prompted passage of the 1935 Federal Power Act. And yet, this more than eighty-year-old statute continues to define the requirements and scope of federal and, indirectly, state regulatory authority over today’s electricity sector. As deregulation and competitive markets, the rise of renewable energy, smart metering, and demand response transform the way electricity is generated, traded, transmitted, and used, regulators and courts are struggling to apply the Federal Power Act to a changing industry.
Earlier this year, the Supreme Court offered its views when, in Federal Energy Regulatory Commission v. Electric Power Supply Association, the Court recognized federal authority to regulate wholesale market operators’ compensation of demand response—temporary reductions in electricity consumption by end-users at times of peak demand. In his thoughtful article FERC’s Expansive Authority to Transform the Electric Grid, Professor Joel B. Eisen places FERC v. EPSA in historical context, proposes a set of principles to guide FERC’s regulation of rules and practices that affect rates in wholesale power markets, and applies these principles to a hypothetical carbon price added to fossil-fueled electricity.
In FERC v. EPSA, a 6-2 majority of the Supreme Court reversed the D.C. Circuit’s vacatur of FERC’s Order No. 745 regarding demand response compensation in wholesale power markets, holding that the order was within FERC’s authority under the Federal Power Act to ensure that rules and practices directly affecting wholesale rates are just and reasonable. EPSA and other critics had previously argued that the Federal Power Act could not be stretched to apply to wholesale market compensation for demand response—a concept clearly not contemplated during the Act’s drafting over eighty years ago.
Professor Eisen’s article offers an in-depth historical analysis that contextualizes and, ultimately, supports the Supreme Court’s expansive reading of FERC’s authority under the Federal Power Act. Starting with railroad regulation in the early 1900s—the origin of the Federal Power Act’s “practices affecting rates” language—continuing with regulation of the electric utility industry from the Act’s 1935 passage to the beginning of deregulation in the 1980s, and culminating with regulation of today’s increasingly market-based electricity sector, Eisen examines the regulatory regime’s evolution across two industries and one century. In the process, he identifies “a distinctive arc, featuring flexibility about conduct being regulated” that FERC v. EPSA continues.
But Professor Eisen’s article offers more than historical context and validation for the Supreme Court’s interpretation of the Federal Power Act. Policymakers, regulators, courts, and practitioners will appreciate the four-factor framework that Eisen proposes to guide future application of the Act’s “practices affecting rates” standard for FERC authority. First, to be jurisdictional an activity must involve “FERC regulation of market rules or other aspects of direct participation by jurisdictional entities.” Second, FERC may offer incentives to adjust inputs to markets under its supervision in order to maintain system reliability—even if these input adjustments impact the states. Third, the notion of practices under the Federal Power Act has evolved from firm-specific to market-wide practices, allowing (and, possibly, requiring) FERC to regulate the structure and operation of wholesale electricity markets. Fourth and finally, the activity in question must have “direct and significant impacts on wholesale rates,” that is, “without the actions of an intervening decision maker.” To illustrate the import of his proposed framework, Professor Eisen applies the above factors to a hypothetical FERC-mandated carbon adder for fossil-fueled electricity traded on wholesale power markets, which he suggests could be reconciled with FERC v. EPSA, assuming a proper finding of discrimination.
With FERC’s Expansive Authority to Transform the Electric Grid, Professor Eisen adds to the growing literature on (clean) energy federalism an unprecedented historical analysis of FERC’s authority under the 1935 Federal Power Act and a practical guide for its application to today’s electricity industry. Demand response is but one of many drivers of the grid’s ongoing transformation, with others, such as electricity storage, already waiting in the wings. FERC v. EPSA and Professor Eisen’s fine article suggest that the Federal Power Act is still very much alive and up to the task of guiding the transition to a bright energy future.
International human rights are often described as universal rights. The universality of this legal regime leads many people to view it as an appropriate resource for addressing the plight of undocumented migrants. Yet the legal protections provided within the international human rights regime are often unavailable to undocumented migrants, or the rights that are most important to them are not protected. International and immigration law scholars rarely acknowledge these limitations, which makes Professor Jaya Ramji-Nogales’ article such an important contribution. “The Right to Have Rights”: Undocumented Migrants and State Protection provides an excellent analysis of the limits of international human rights law in protecting undocumented migrants.
Two of the central challenges that undocumented migrants face are vulnerability within their states of residence due to their limited “recourse against exploitation due to fear of deportation” and “the rupture of family and community ties through deportation.” (P. 1050.) The rights to territorial security (by which Ramji-Nogales means the right to remain in one’s state of residence), family unity, and the absence of discrimination due to immigration status are important rights for addressing undocumented migrants’ central challenges.
To examine the ability of international human rights law to address these challenges, Ramji-Nogales uses Hannah Arendt’s critique of human rights law in The Origins of Totalitarianism as a template. Accordingly, Ramji-Nogales explores (1) the fact that sovereign states decide what rights will be protected and how; (2) the idea that certain groups’ rights are exceptional and protected outside of the domestic legal order; and (3) that individuals’ dependence on sovereign states to protect their individual rights limits the ability of international human rights law to protect undocumented migrants. Arendt found these factors hindered protecting the rights of minorities and stateless individuals, and Ramji-Nogales finds the same for undocumented migrants.
First, while international human rights are conceptualized as universal rights, they actually exclude the rights that are the most important to undocumented migrants. International human rights treaties are state-created instruments, and as a result, “sovereignty interests are deeply embedded in these treaties.” (P. 1060.)
Second, undocumented migrants are exceptional and outside of the international human rights regime. In a number of critical ways, international human rights treaties exclude undocumented migrants from protection. For example, no international human rights treaty supports a narrow right to territorial security. The United Nations Human Rights Committee (“HRC”) is the body responsible for interpreting the International Covenant on Civil and Political Rights (“ICCPR”). The HRC has noted that the ICCPR “does not recognize the rights of aliens to … reside in the territory of a State party.” (P. 1051.) The International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families “states in no uncertain terms that it does not offer any right to ‘regularization’ for undocumented migrants or their families.” (Id.) The universal claims of the international human rights framework are only plausible if undocumented migrants are understood as being legitimately outside of the system.
Finally, human rights protection depends on state enforcement, and undocumented migrants “have no political voice, and are largely excluded from legal protections in their host states.” (P. 1061.) In order for the international human rights regime to be useful for undocumented migrants, the state protection gap has to be addressed. In a state-created system, state interests significantly shape what substantive rights will be protected and how. Additionally, the enforcement of protected rights depends on having a state act on one’s behalf.
Ramji-Nogales proposes three responses to the state protection gap. First, undocumented migrants could utilize a social movement approach in which they build networks, exchange information, publicize issues that are important to them, and engage in protests. This approach would allow undocumented migrants to “openly challenge the political determinations that define the scope of international human rights law” without relying on the state (P. 1063).
Second, migrant-sending states could demand better treatment of their nationals in receiving states. Undocumented migrants’ home states would discuss the harms their nationals face and work to have receiving states recognize as rights the issues important to undocumented migrants.
Finally, Ramji-Nogales discusses a multilateral approach in which a number of migrant-sending states create a “permanent institution to contextualize the situation of undocumented migrants and advocate for equal treatment.” (P. 1064.) This strategy would differ from current multilateral approaches to coordinate state migration action because it would “aim to radically restructure discussion around the undocumented.” (Id.)
Ramji-Nogales acknowledges the challenges and shortcomings for each of these responses: the coordination challenges involved in organizing a social movement; the comparative power differential between social movements and states; the limited political power of migrant-sending states vis-à-vis receiving states; and the conflicting interests that sending states may have because they simultaneously may be both sending and receiving states.
While none of these responses to the state protection gap offer a guaranteed solution, they begin an important conversation for immigration and international human rights law scholars. Until recently there has been little acknowledgement of the very limited role that international human rights law has been able to play in addressing the needs of undocumented migrants. By identifying specific substantive and institutional challenges, Ramji-Nogales provides a framework that immigration and international human rights scholars and advocates can use to reimagine an international legal regime that is truly universal.
The division between law and equity has a long and important history in Anglo-American jurisprudence, and one whose effects continue to resonate in American courts to this day. Indeed, whenever I teach remedies, I tell my students that this is an area of law where history still matters—that if they want to understand the difference between legal and equitable remedies, and to know the types of remedies that their clients might be entitled to in a given case, they need to be at least somewhat familiar with the history of the contest between the English courts of law and the Court of Chancery, which was responsible for developing and administering the rules of equity. Why? Because it was the battle over jurisdictional turf that took place between these courts hundreds of years ago that gave rise to a rule (i.e., the irreparable injury rule) that still operates whenever judges are called upon to decide whether an aggrieved party is entitled to an equitable remedy. Specifically, the irreparable injury rule requires that an aggrieved party seeking an equitable remedy (e.g., specific performance of a contract) must show that there is no adequate legal remedy (e.g., money damages) to put it in the position it would have occupied had the wrongdoer not committed its wrong (e.g., breach of contract).
Apart from this history, however, one wonders whether the irreparable injury rule (specifically), or the division between legal and equitable remedies (more generally), can be justified along more functional lines. Many commentators believe that it cannot. Professor Douglas Laycock, for instance, in strong and colorful language, has argued that “[a] rule designed to preserve the jurisdictional boundaries between two courts that have long been merged should die unless it serves some modern purpose.” In fact, Laycock has even claimed that the rule is largely dead, being more honored in the breach than in the observance. But if this is true, one may ask (as my students sometimes do), why do professors still teach the irreparable injury rule, and why do courts still invoke it whenever a plaintiff seeks an equitable remedy? And, perhaps more importantly, since courts of law and equity have long been merged in most jurisdictions, what justification (outside of tradition) can there be for continuing to distinguish between legal and equitable remedies in such a manner? It is in providing an answer to these tough and persistent questions that Samuel Bray’s article, The System of Equitable Remedies, makes an important contribution to the field.
Professor Bray argues that conventional wisdom—which maintains that “the distinction between legal and equitable remedies is outmoded and serves no purpose”—is wrong (P. 530), and that there are good reasons (though rarely articulated by courts) for continuing to distinguish between legal and equitable remedies (P. 533). Specifically, Bray argues that equitable remedies, far from operating as an antiquated counterpart to legal remedies, should be understood as an integrated system made up of three distinct but “logically connected” (P. 534) components: (1) the equitable remedies themselves (e.g., injunctions, constructive trusts), (2) the equitable managerial devices for administering these remedies (e.g., allowing courts to enforce injunctions via the contempt power or to modify and/or dissolve them to reflect changing circumstances), and (3) the equitable constraints to prevent such remedies from being abused (e.g., by allowing the purported wrongdoer to assert such equitable defenses as estoppel or laches).
Although it might seem difficult to justify the jurisdictional boundary between legal and equitable remedies when we are considering only the first-order problem of deciding what remedy to award an aggrieved party—after all, why should an injured party be required to satisfy the irreparable injury rule to get specific performance if that remedy would best protect the party’s expectation?—Bray makes a strong case for doing so when we also take into account “the second-order policy problems that arise from solving the first-order ones: i.e., the additional need to manage compliance and constrain abuse.” (P. 534.) This is largely because courts cannot always afford complete relief to an aggrieved party by simply forcing the wrongdoer to perform a simple and clear-cut act (such as awarding a legal remedy like requiring a wrongdoer to pay money damages or return stolen property). Instead, courts sometimes must require the wrongdoer to perform (or refrain from performing) a more complex action that must be monitored and enforced over time if it is to be effective. Where this is so, courts must not only be given the power to select the most appropriate remedy for a given situation (component #1), but, for this remedy to be effective, courts must also be given the ability to select the most appropriate tools for monitoring the wrongdoer’s compliance with the remedy (component #2) while preventing the aggrieved party from abusing these remedies (component #3). (P. 562.)
For instance, imagine a wrongdoer (“W”) has inadvertently built a retaining wall trespassing on victim’s (“V”) property. Turning to the first component identified by Bray, it seems clear that there would be a number of instances in which it would be more appropriate to enforce V’s rights with an equitable remedy like an injunction (forcing W to remove the retaining wall) instead of a legal remedy like money damages (forcing W to pay for the value of the land taken), in part because it seems inappropriate to force V to involuntarily sell part of his land to W, and in part because we don’t know how much V would have charged W for the land in a voluntary transaction. This much is obvious.
Where Bray’s article really shines is in showing us that, for the court’s injunction to be effective, the court must be able to draw upon the equitable managerial devices (component #2) to effectively police W’s behavior, due to the fact that a lot can go wrong between the time the order is issued and complied with. For instance, W might misunderstand the court’s injunction as requiring him to remove only the retaining wall (but not the footings), or perhaps W might inadvertently destroy an original wall on V’s property while removing the retaining wall. In either case, the equitable remedy can be effective only if the court retains the ability to manage W’s compliance (e.g., through the power of contempt, or by making adjustments to the language of the injunction). Finally, turning to Bray’s third component, it is important for the court to ensure that these remedies—which are extremely powerful, in no small part because they are enforced by the power of contempt—are not abused and “exploited by a wily litigant” (P. 572) seeking to use them in an inequitable fashion.
For instance, suppose V sat by and observed as W inadvertently built the retaining wall on V’s property, and that the wall, once built, turned out to be very costly to remove. Despite W’s wrong, wouldn’t we want courts to take into account V’s knowledge of W’s action (component #3) before deciding upon the most appropriate remedy (component #1), especially since W may be found in contempt for failing to comply with a court order requiring W to remove the retaining wall (component #2)? In short, Bray convincingly shows that each component in the equitable system operates together, and must be considered together, if the equitable remedy awarded by the court is to be effective and just. As pithily summed up by Professor Bray, “the equitable remedies need the managerial devices; the equitable remedies and managerial devices need the constraints.” (P. 534.)
In suggesting that we think about equitable remedies as part of a single system made up of these three logically related components, Professor Bray has not only provided a rational justification for the current system, but has helped explain why, even long after the merger between courts of law and courts of equity, the distinction between legal and equitable remedies remains alive and well. I, for one, have never thought about equitable remedies in quite this way before, and look forward to exploring this insight with my remedies students over the next semester.
Editor’s note: for another review of The System of Equitable Remedies please see Caprice Roberts, Staying Power of Equity, also published today.
Let equity lure you with its sirens. Equity, first developed by the Court of Chancery, is vital to the law of remedies. It affects a range of rights, remedies, and defenses from public to private disputes. It cannot be forgotten, ignored, or fully merged. The trend, however, is to streamline equity. For example, Douglas Laycock has argued we should move beyond the law-equity divide, and Doug Rendleman has advocated fusion and functionalism for reasons that I separately have acknowledged: equity generates friction and confusion, especially regarding restitution and unjust enrichment. Sam Bray’s The System of Equitable Remedies refutes this movement. Bray instead argues that equity remains distinct from law and comprises its own system that is pervasive, rational, and useful.
I agree: equity is alive and well in America. It is not simply federal and state constitutional rights to jury trials keeping the divide relevant. Federal and state courts keep equity in play in statutory and common-law cases—from ERISA to contracts, environmental law to trade secrets, and beyond. Equity soldiers on, despite law schools’ dropping the Equity course and despite the merger of law and equity in almost all courts and the Rules of Civil Procedure. Complete merger remains elusive. Where law fails or falls short, the pull of equity is greatest. Equitable remedies are key where money substitutes provide inadequate protection. Bray bluntly states the need: “There must be some way for courts to compel action or non-action.” Overall, Bray’s work requires readers to stop and think before dismantling the distinct system of equity.
Equity raises fear in the minds of many. At worst, equity connotes unbridled, whimsical, illogical discretion that lingers too long with vast consequences to parties and nonparties. At its best, equity fosters fairness; the risk, however, is palm-tree justice. Equity also requires judicial oversight, which may be costly and challenging. Further, complete merger might streamline complex, arcane, and unnecessary barriers to equitable devices. But equitable discretion is vital to rights and remedies. Principled discretion is indispensable to the continued survival and success of equity. As to the fear of unbridled discretion, Rendleman articulates a path for judicial restraint in applying equity: “[a] judge’s discretionary decisionmaking ought to yield to her attention to rules, precedents, and standards keeping her pragmatic eye on consequences.”
Despite equity’s pitfalls, Bray persuasively shows that equity is an interlocking system and, more importantly, a rational, useful one. He maintains that the “very act” of classifying remedies as legal or equitable “helps maintain the system of equitable remedies.” Weaknesses, however, range from functional to substantive: equity maintains a divide that increasingly eludes modern understanding and potentially blocks relevant equitable doctrines and remedies from actions at law and vice versa. Henry Smith argues for equity to play a limited role guarding the formal rule of law against opportunism. Bray maintains that law-equity divide has “presumptive rationality” though rebuttable, as the utility of equitable concepts crossing the divide “is always open to argument.” He rejects Laycock’s characterization of the divide as “a dysfunctional proxy for a series of functional choices”; instead he sees a “good proxy.” Bray emphasizes equity’s essential function: “how judicial institutions help put a wronged plaintiff back in his rightful position.”
It is this fundamental thrust that (i) answers why full merger of equitable remedies is unsolvable given constitutional jury trial rights; (ii) provides a presumptive justification for a controversial line of Supreme Court cases that reinforce the distinction solely by appeal to tradition—what Bray provocatively explores elsewhere; and (iii) offers a fresh angle on the inadequacy-of-law prerequisite for equitable remedies, which despite Laycock’s declaration of its death, Bray sees as “well established in judicial practice,” reinforcing a “habit of classification” that aids the preservation of the system of equitable remedies.
Equity lives on in multiple dimensions: in the Supreme Court’s original jurisdiction and certiorari docket, from fiduciary duties to intellectual property, and throughout state and lower federal courts. Bray’s work focuses on courts’ continued use and categorization of equitable remedies, including injunctions, specific performance, quiet title, constructive trusts, accounting for profits, and more. As Bray reminds readers, the interconnectedness of equitable doctrines causes equitable remedies to work more effectively. The system provides limits through “equitable managerial devices,” such as contempt tools and devices to handle unexpected complexities, as well as “equitable constraints” that “guide the responsible exercise of judicial power.” Still, as Bray foresees, skeptics wonder: if these equitable tools and restraints work so well, why not extend them to legal remedies? Isn’t this especially apt now, because in a merged system, the judge will have knowledge of equitable doctrines that might aid a jury’s application of legal remedies? Bray’s defense of the imprecise line as “good proxy” is fair enough. But requiring a better rule is less compelling because the divide may fall through natural degradation, continued fusion, and increasing confusion. True, though the common law is not designed to effectuate dramatic change, we would be wise to bolster student, lawyer, and judicial understanding of equity’s power and constraints.
Bray also forecasts a confusion critique for using the label “equity” but opts again to stick with what we’ve got. In the same vein, the Restatement (Third) of Restitution and Unjust Enrichment maintains use of the misunderstood word “restitution.” It remains unclear if continued efforts to educate and clarify such concepts as equity and restitution can carry the water we hope. Still, in my opinion, both equity and restitution (its equitable and legal components) have staying power.
Bray helpfully details how equitable remedies remain distinct from legal remedies such as damages, mandamus, habeas, replevin, and some restitutionary relief. According to Bray, nonmonetary legal remedies that mimic equitable orders are not equitable because they are narrow, not open-ended or indeterminate. As Bray shows, courts cling to the distinction and numerous consequences flow. Equitable remedies remain the most powerful weapons for halting violative behavior, ordering corrective behavior, and deterring opportunism. To do so, judges need flexibility to “achieve the plaintiff’s rightful position,” as Bray aptly notes. With flexibility comes equity’s potential for imperfect correlation between right and remedy. Though it will not satisfy tight doctrinal tracking, Bray sees bounding in the “habit and range of motion that is conducive to managing the parties.” Either way, Bray helpfully defends why equitable range exists and remains necessary. Scholars should keep a close eye on principled reasoning to justify flexible expansions so the equitable remedy is sufficiently tethered to the right even if not precisely correlative.
Equity warrants deeper study. All combined, “the remedies and the remedy-related rules” constitute a system of equity in American law. Whether Bray convinces readers to reinforce the law-equity divide, he reminds us that such a distinct system of equity remains and convincingly demonstrates that if we forget the doctrines, lessons, and tools of equity, something meaningful will be lost.
Editor’s note: for another review of The System of Equitable Remedies please see Marco Jimenez, Justifying the Law-Equity Divide, also published today.
I admit it. I’m a data geek. Not that I produce any of it myself—regression analysis makes my hair stand on end—but I am really good at admiring the work of people who are really good with data. And the data I really like (lots) sheds light on issues we all really care about. Presumptuous of me, you might think, to think I know what you care about. But don’t you care about lawyers?
You will, if you don’t, after you read Ingrid Eagly and Steven Shafer’s A National Study of Access to Counsel in Immigration Court. Before delving into it, recall Judge Richard Posner’s less-than-oblique critique of the immigration bar in 2015:
There are some first-rate immigration lawyers, especially at law schools that have clinical programs in immigration law, but on the whole the bar that defends immigrants in deportation proceedings … is weak—inevitably, because most such immigrants are impecunious and there is no government funding for their lawyers.
Eagly and Shafer begin where Judge Posner left off—with the story of the momentum toward establishing a first-rate public defender system for poor immigrants facing deportation. Judge Robert Katzmann, Peter Markowitz, Stacy Caplow, and Claudia Slovinsky led the most prominent of these efforts, which culminated in the New York Immigrant Family Unity Project. That project provides detained New Yorkers with representation in removal proceedings at state expense. And what convinced the New York state legislature to support such a scheme, aside from Judge Katzmann’s gravitas and Stacy Caplow and Peter Markowitz’s irresistible charm?
The Study Group on Immigrant Representation that Judge Katzmann convened (and on which sat some of the law school clinicians that Judge Posner excepted from his critique) found that 60 percent of New York’s detained immigrants did not have legal representation. Of that unrepresented 60 percent, only three percent won in court, in contrast with a 74 percent success rate for the non-detained represented population. That data was critical to convincing the New York state legislature that it was worth ponying up the $500,000 for a pilot program to provide appointed counsel for New Yorkers in removal proceedings.
The program and the data, however, are confined to New York. The debate about appointing defense counsel for immigrants is national. The cost-benefit analysis of whether to institute government-appointed removal counsel has been heavy on the cost side (lawyers are not cheap), and light to helium on the benefit side (do lawyers increase accuracy and efficiency in immigration cases?).
There is no shortage of information about the cost of erroneous outcomes in immigration court—the social and economic costs of unnecessary detention and erroneous removal include the rending apart of families, etc. versus the cost to society of erroneously granting immigration relief.
But there has been a scarcity of national information about the benefits of government-provided deportation defense counsel. In other words, if noncitizens already can obtain affordable counsel, or are able to obtain accurate outcomes without lawyers, then the debate is merely sound and fury. Until now, we have had no way to know.
Eagly and Shaffer fill this cavernous ignorance. Theirs is the first national study of the difference that immigration lawyers make, and it’s powerful medicine. They examined (with the help, I can only assume, of everyone they know) over 1.2 million deportation cases decided between 2007 and 2012. Two percent (2%) of the studied noncitizens obtained pro bono representation. Thirty-seven percent (37%) overall obtained a lawyer. What was the difference that a lawyer makes? Not obvious to a layperson (especially one unversed in the complexities of U.S. immigration law) is that the most salient issue in immigration cases is not whether a deportability ground applies. Instead, most cases rise and fall on relief from an applicable deportability ground. And if you don’t ask for relief, odds are that good that you won’t get it.
Representation makes a difference, it turns out. Noncitizens with representation were fifteen times more likely to seek relief in immigration court, as compared to those without counsel. And the odds were five and a half times greater that immigrants with counsel, as opposed to those without, obtained relief from removal.
That’s great for the individual noncitizens, and their friends and family and anyone else who would have had to (a) exist, and (b) support them in order for their bid for relief to be successful. But what’s in it for everyone else, like U.S. taxpayers?
For one thing, representation is efficient. Here’s what they found:
[I]nvolvement of counsel was associated with certain gains in court efficiency: represented respondents brought fewer unmeritorious claims, were more likely to be released from custody, and, once released, were more likely to appear at their future deportation hearings.
But Eagly and Shaffer don’t stop there. They were curious about what factors affect the level of representation and what barriers might exist. There are three: detention, geography, and nationality.
The nationality figures are striking. We knew that Mexicans were by far the largest nationality group in removal proceedings. We might have suspected that they were also the least likely to be represented by counsel. But check out this disparity: Only 21% of the 574,448 Mexicans in removal proceedings had an attorney. “In sharp comparison,” say our authors, “the 40,397 Chinese placed in removal proceedings were represented in 92% of the cases.” And those are just the Mexicans who had access to immigration court, rather than experiencing administrative removal.
Recall that 37% national representation rate? That number drops to 14% for detained immigrants. Consider the fact that almost one-third of detained cases are adjudicated where most detention centers are located, in rural areas and small cities where immigration attorneys are in short supply, and you end up with facts like these:
The highest detained representation rate of 22% was in El Paso. The lowest—a shocking .002% over the entire six-year period of our study—occurred in Tucson, Arizona. We investigated further and learned that immigration judges in Tucson utilize a “quick court” in which expedited hearings are held in Border Patrol detention stations and judges’ chambers. The end result is the lowest representation rate in the country and lightning-fast processing times (97% of detained cases in Tucson were processed in one day).
Even Dr. Who couldn’t prepare for a removal hearing in that nick of time.
Here’s my one beef with this piece: the authors are a bit too mellow about the significance of their work. They state: “This research provides an essential data-driven understanding of immigration representation that should inform discussions of expanding access to counsel.”
That statement is not wrong. It’s just incomplete. The rest of it should read “and therefore our study should be airdropped on Congress and every state legislature in the country.” Some of them will like it. Lots.
Over the past few months, the world has been transfixed by the flows of Syrian refugees pouring into Europe. These mass movements were, of course, preceded by much larger populations fleeing Syria for neighboring countries such as Jordan, Lebanon, and Turkey; at last count, four million Syrians resided in these three states. Though international law mandates protection against refoulement, or return to Syria, for those who fit the definition of a refugee, the UN Refugee Convention says nothing about who should bear the costs of protecting these refugees. This is the gap that Tendayi Achiume seeks to fill in her forthcoming article, Syria, Cost-sharing, and the Responsibility to Protect Refugees.
The question of global cost-sharing for refugees is ground well-trod, perhaps most famously by Prof. Peter Schuck in his 1997 article, Refugee Burden-Sharing: A Modest Proposal. That controversial piece has since framed the debate around the topic. Prof. Achiume steps into this arena with a novel and provocative proposal: to leverage the international legal doctrine known as the Responsibility to Protect (RtoP) in order to frame international coordination around and equitable cost-sharing for refugees. Perhaps best known as the doctrine that enabled humanitarian intervention in Libya, RtoP is not without its critics, as Prof. Achiume readily acknowledges. Her article suggests using RtoP as a tool to address the free rider problem in responding to mass refugee flows while at the same time viewing the situation of Syrian refugees as a tool to rethink potential uses of RtoP on the world stage. Making this case is not a task for the faint of heart; Prof. Achiume’s combination of boldness and fine-grained attention to each layer of her complex argument will manage to convince even the most skeptical of readers to rethink their views of refugee cost-sharing and RtoP.
Prof. Achiume frames the situation in Syria as a problem of inequitable distribution of resources rather than a lack of resources. The primary responsibility for supporting Syrian refugees has fallen on its neighbors, who simply cannot bear the burden alone. Lebanon, which has been the hardest hit by the Syrian situation, now hosts approximately one million Syrians, a full quarter of its population. Yet donor countries have failed to provide adequate assistance; as of May 2015, the UN High Commissioner for Refugees’ Syrian Regional Refugee Response Plan, focused on assistance to Egypt, Iraq, Jordan, Lebanon, and Turkey was only 20% funded – one explanation for the large secondary flows of Syrians into Europe last summer. Prof. Achiume suggests that international law should frame international assistance for these refugees as obligatory rather than charitable in order to encourage the more equitable distribution of resources.
That law is of course nowhere to be found in the UN Refugee Convention, which studiously avoids the topic of mass influxes of refugees, let alone resources for addressing such flows. Rather than resuscitating the overused and threadbare argument that the Refugee Convention should be amended or otherwise updated to include such obligations, Prof. Achiume offers a novel insight: the situation of refugees is governed by multiple legal regimes. We can therefore locate elsewhere in existing international legal structures the obligation to equitably distribute resources to protect refugees.
Prof. Achiume steers the reader towards a particular structure: RtoP. This international legal doctrine, endorsed by UN member states and the UN Security Council, consists of three pillars. Pillar One focuses on a state’s obligations to its population; Pillar Two on the commitment of the international community to help states meet their Pillar One responsibilities, largely through international assistance and capacity-building; and the infamous Pillar three, which lays out the international community’s commitment to respond when a state “manifestly fails” to fulfill its responsibilities under Pillar One, first using pacific and, if those fail, coercive measures. The article focuses on Pillar Two and the role it could play in addressing the situation of Syrian refugees.
As Prof. Achiume recognizes, an RtoP approach is both less and more protective than an approach grounded in international refugee law. RtoP protects populations against only four relevant crimes: genocide, crimes against humanity, war crimes, and ethnic cleansing. While refugees fleeing Syria will be covered by this definition, in other scenarios, refugees who fall within the scope of the UN Refugee Convention definition will not be protected. But RtoP holds tantalizing promise, as Pillar Two is not territorially limited: it protects populations without regard to their geographic location. As long as they face a risk of RtoP crimes, refugees fall within the scope of RtoP wherever they are. Thus RtoP offers space for a nose under the tent of sovereign territoriality, a move that is all too rare when it comes to the movement of people under international law.
Prof. Achiume ends the paper with specific suggestions for implementing an RtoP approach, leveraging theoretical critiques of RtoP to design routes around the political roadblocks. She suggests that the UN Security Council could use its Chapter VII mandate to “maintain or restore international peace and security” to mandate compliance with a Comprehensive Plan of Action designed by the United Nations High Commissioner for Refugees. This is a creative approach, but the paper only gets more interesting from here. Taking on board the arguments of critical and realist skeptics, Prof. Achiume recognizes that both northern and southern states must support an RtoP approach for it to succeed. This is where refugee cost-sharing can revive RtoP – by prioritizing non-coercive measures, the doctrine could win the support of middle powers and southern states. This move also puts northern states in a double-bind; after supporting coercive action in Libya, they are hard pressed to reject non-coercive action. If they do, it will be clear that RtoP is simply, in Prof. Achiume’s words, “a Trojan horse for coercive foreign intervention.” In other words, this approach serves an information-forcing function that is useful regardless of the outcome. Substantively, northern states might also view the benefits to regional and international security as well as migration management from such an approach as in their self-interest.
Prof. Achiume’s article pushes the envelope in numerous exciting directions, not least by describing a mechanism for progressive development of international refugee law that does not require the drafting of a new treaty. While readers may quibble with some of its most ambitious proposals, the piece pushes the engaged reader to re-think deeply-held beliefs about refugee law and RtoP. This is exactly what the best scholarship should do.
The trouble with the amiable practice of collections of essays in honor of admired scholars is that they are so often published in a stand-alone volume rather than in journals of record, with the result that they may be lost to all but initiates who happen to know of its existence. In the just-published Festschrift for Professor Ahmed Kosheri, the preeminent Egyptian international lawyer of his generation, this pearl of an essay deserves a better fate. It addresses fundamental issues with respect to the degree of legal stability to which a foreign investment is entitled from a host state in light of the instruments applicable to its entry, and suggests broad guidelines to resolve the hesitations of the caselaw to date.
The authors are a father-son team of French authors, each exceptionally erudite and polyglot. Florian, the son, holds degrees from three major law faculties (Paris, Humboldt, and Cambridge). In 2007, he presented a thesis for joint recognition by Paris (Panthéon-Assas) and Humboldt which is of direct relevance to this joint contribution, entitled La protection de l’attente légitime des parties au contrat – Étude de droit international des investissements à la lumière du droit comparé. Pierre-Marie has for long been one of the bright stars on the firmament of international legal scholars and prominent among the lawyers who practice before the International Court of Justice. He has also served as arbitrator on tribunals deciding important disputes between states and foreign investors arising under bilateral investment treaties and thus applying the law referred to in their title.
This is precisely the kind of writing that attracts those of us who like to spend our lives indolently ruminating on fundamental (and thus never-resolved) questions, criticizing legislators and judges who stumble around in the land of Ad Hoc, and leaving our more industrious colleagues to “analyze,” “synthesize” and “restate” the indigestible torrent of rules produced by our rulers.
The central basic questions here asked by the Dupuys is whether a “subjective hope” could ever be a legally enforceable right. Is it nothing but a possibly relevant criterion for examining the performance of an obligation to act in good faith? Is the expression at all useful?
As a matter of legal philosophy, legitimate expectations can be seen as the ultimate fundament of law. A morally neutral legal system can be of significant value to its subjects; an amoral but predictable dictator may be preferable to chaos. And so the respect for legitimate expectations may be a requirement for a rule of decision to qualify under a conception of law, but this is not the authors’ subject, which is at one level lower of abstraction: are we looking at a meaningful rule of decision? If not, it can only lead to confusion.
International arbitrations involving claims brought by foreign investors under treaties is a phenomenon of recent vintage — its origin less than three decades in the past. The cases often involve the tension between a state’s insistence on its authority to adapt its rules to the public interest and an investor’s insistence on a right to rely on a regime which induced it to invest (and was perhaps specifically implemented to have that effect).
As the authors say, one should eschew the use of the expression in a tautological sense; to say that an investor has a legitimate expectation to “fair and equitable treatment” is as useless as saying that all citizens have such an expectation to the performance of contracts. One is already explicitly articulated in a treaty, the other in national law. “The doctrine of ‘legitimate expectations’ is about what the investor is concretely entitled to expect from the host state under the specific circumstances of a case, not about reiterating the state’s general obligations flowing from the terms of the applicable treaty.” (P. 275.)
If the reasonableness of expectations are given weight in the application of a rule of decision, it must be because it is derived from a “social environment.” The diamond market in Antwep, one reasonably supposes, is different from the souk in Casablanca. More broadly, general commercial usages may differ depending on the institutional maturity and orderliness of any national community. Do shared expectations exist in a field as broad as that of the “community” of actors who have a stake in the network of several thousand investment treaties? Or does each treaty constitute its own environment?
Looking first at comparative law (a discipline with which the Dupuys are well conversant, notwithstanding the primary association of their name with international law), the authors note that the need for limits on the revocability of administrative acts have been broadly recognized, often in ways that parallel the notion familiar to the common law principle of estoppel; the expectation must have been generated by a public authority, the change in policy must have been unpredictable, there must have been detrimental reliance, and the expectations must not compromise a compelling public interest (this last qualification being true for all areas of law but most directly in the center of debates about acts of public administration).
Some national legal systems have developed complex (and more or less useful) conceptual frameworks for the state’s liability for particular detrimental consequences of regulatory change on economic actors, designed in the French expression to achieve an approximation of l’égalité devant les charges publiques. Compared to the body of law and scholarship that have emerged from generations of struggles with the intricate tensions that emerge from the infinite variety of acts of administration, the corresponding state of the “international investment law” referred to in the authors’ title, the latter may seem embarrassingly rudimentary. That should be not be surprising, and not only so because it is in statu nascendi; it is inconceivable that an international consensus would coalesce around detailed solutions derived by one system of national law.
Moreover, we have no world parliament to draft planetary federal regulations. Treaties tend to be expressed in general terms. It is exceedingly rare for the ICJ to be seized of an investor/state dispute à la Barcelona Traction. We must look to the reasoning and the outcomes produced by international arbitral tribunals. The first generation of awards was a mixed bag, as the Dupuys show.
Some tribunals yielded to the impulse to demonstrate their mastery of the obvious, for example in stating that a remedy will not be provided for the “mere frustration of hopes.” But then when does treaty protection of foreign investment begin? The cases include such unhelpful pronouncements as the notion that what is required is the “active inducement of a quasi-contractual expectation.” This suffers from the double flaw of mysteriousness and incoherence with the fundamental idea of investment-protection treaties: (i) “quasi-contract” is not a term known to international law, nor indeed to many national legal systems, and (ii) the very notion of requiring a contractual foundation for causes of actions seems to be a reversion to a past epoch when international tribunals competent to deal with investor claims were, apart from instances of home-State espousal of claims via diplomatic protection, those arising under “state contracts” directly concluded between State and the few private investors who had the wherewithal to enter into a bilateral relationship at that level.
The authors have little difficulty demonstrating that the early decisions included some awards which had more bark than bite, as though arbitrators first settled on concrete outcomes which may have been perfectly justifiable, but then yielded to the temptation of adorning them with unreliably over-broad general pronouncements, e.g. suggesting without qualification that the stability of the legal regime prior to the entry of a foreign investment is an essential component of the familiar treaty promise of “fair and equitable treatment.” This in turn encouraged some investors to make over-ambitious claims, and some states to tremble that they would succeed. But soon enough the mirage of such obiter dicta was dissolved by proper holdings which made clear that the stability of the investment regime, though a legitimate and important objective, was not necessarily decisive in establishing obligations under the treaty; the countervailing interest of the respondent state to make adaptations in the public interest may prevail.
And so investors failed, for example, to convince arbitrators that a respondent state was without more liable for (a) for changes in caselaw, (b) failing to freeze specific laws and regulations affecting investments, and even (c) enacting fundamental reforms provided they are not “arbitrary or grossly unfair or discriminatory.”
The starting point for anyone coming new to these debates and wishing quickly to separate the intellectual wheat from the chaff will do well to press “fast forward” and take as a starting point the decision handed down in 2008 by a unanimous tribunal headed by Sir Arthur Watts QC (who served as a legal adviser in the British Legal Office from 1956 to 1991 — ending up as its chief — and among whose weighty scholarly contributions was his co-authorship with Sir Robert Jennings, a former President of the ICJ, of the ninth edition of Oppenheim’s International Law) in the case brought by the Nomura banking group in response to the Czech Republic’s treatment of its investment in that country’s third largest bank. The award was in favor of Nomura (more precisely its investment vehicle, named Saluka) in the circumstances of the case, and led to a substantial payment by the State without the need for measures of compulsory execution, but its general account of relevant principles were measured and cautious, as in this prominent passage quoted by the Dupuys:
“No investor may reasonably expect that the circumstances prevailing at the time the investment is made remain totally unchanged. In order to determine whether frustration of the foreign investor’s expectations was justified and reasonable the host State’s legitimate right subsequently to regulate domestic matters in the public interest must be taken into consideration as well.” [Saluka Investments B.V. v. Czech Republic, ¶ 305, UNCITRAL Award (2006). Disclosure: the present author was, alongside Professor James Crawford SC, now a judge at the ICJ, one of Saluka’s advocates.]
In the wake of this decision, as the authors show, further cases have made established that BITs do not prevent their signatories from amending legislation to adapt to change in the “normal exercise” of their prerogatives.
Where does this leave the balance, since the preceding sentence obviously does not have the effect of rendering thousands of BITs so many words writ on water? The proposition that expectations of stability are “protected to the extent that the investor has been led to believe that specific regulations would remain unchanged for a certain period of time” (p.291) leaves many questions unresolved by the body of decided cases. In particular, can states “create legitimate expectations without explicit promises”? Who bears the risk of ambiguities in the wording of governmental declarations which may have created expectations in the minds of investors? Must such representations have been made directly to the claimant? Is a claimant’s own conduct relevant to the assessment of the legitimacy of its expectations?
The authors suggest three criteria as critical in weighing the consequences of expectations of stability: the presence of explicit commitments to stable rules, the severity of the imperatives of public policy which motivate subsequent regulatory change, and the degree of alteration of the relevant legal framework thereby caused.
They suggest a number of important “grey areas” that will continue to pose challenges. For example, while there can be no expectation of the absolute stability of the legal framework, and investors may held to a level of understanding and due diligence with respect to the prospects of legislative change in a given environment, there comes a point where the magnitude of the particular detriment caused to the investor makes it intolerable for the change to the imposed without compensation.
Similarly, the nature of implicit representations made to the investor may be “considered equivalent to a promise in the light of the circumstances”; consistency in the conduct of state organs is “an important element of the protection of legitimate expectations” (p. 293). Thus, in the case of Arif v Moldova, ICISD Case No. ARB/11/23, Award (2013), the invalidation of a lease to operate an airport duty-free concession was considered to have been unfair given that the lease had been concluded and approved by competent administrative authorities and the investor was allowed for a significant period of time to make the necessary investments and thereafter to operate the shops. And in Gold Reserve Inc. v Venezuela, ICSID Case No. ARB/04/01, Award (2014), in which the tribunal, on which Pierre-Marie Dupuy served as the Respondent’s nominee, awarded some $740m to the investor, the grant of a series of certificates of compliance and the continued failure to object to the investor’s activities were held to be incompatible with the sudden withdrawal of mining rights on the purely formal ground of a long-past failure to comply with time limits under the mining law.
The degree of clarity of the state’s representations is also a matter with respect to which it is difficult to generalize. If such representations were made in the context of incomplete information given by the investor, the latter is likely to have only itself to blame. But consider the award in Ioan Micula et al v Romania, ICSID Case No. ARB/05/20, Award (2013), where a number of incentives were retracted on the grounds that they were contrary to EU state aid law notwithstanding so-called permanent investor certificates that inter alia authorized those incentives for a stated duration. As might be expected, the difficult issue (with respect to which the arbitrators were divided, though not as to the outcome of the case) was whether a general tax incentive scheme was transformed into a commitment to the particular investor by dint of the certificate.
Finally, the potential significance of a lack of diligence on the part of the investor was illustrated by MTD Equity Sdn. Bhd. et al v Chile, ICSID Case No. ARB/01/7, Award (2004), where although the Government investment authority had triggered the government’s liability by authorizing a project which later was annulled because the land selected for the investment was zoned exclusively for agricultural use, the Tribunal reduced recovery by 50% on account of the investor’s failure to have conducted any investigations of its own.
All of this leads to a general conclusion that the notion of legitimate expectations, while not susceptible of serving as the basis of an autonomous cause of action, remains of great significance as a means of assessing compliance with the standard of fair and equitable treatment.
In this concise contribution, the Dupuys have exhorted us to organize our thinking and suggested a conceptual roadmap. Their essay does not so much inform us as it makes us reflect on the prospects of a more granular international consensus. Meanwhile, we might reflect that arbitrators earn their keep precisely by the quality of their reflection, and have no reason to follow unpersuasive precedents.
Cite as: Jan Paulsson, Can “Legitimate Expectations” Ever be “Rights”?
(April 19, 2016) (reviewing Florian Dupuy & Pierre-Marie Dupuy, What to Expect from Legitimate Expectations? A Critical Appraisal and Look into the Future of the ‘Legitimate Expectations’ Doctrine in International Investment Law
, in Festschrift Ahmed Sadek El-Kosheri: From the Arab World to the Globalization of International Law
273-298 (Mohamed Abdel Raouf, Philippe Leboulanger, & Nassib G. Ziadé eds., Kluwer 2015)), http://lex.jotwell.com/can-legitimate-expectations-ever-be-rights/