Make Me a Norm to Imitate

The Syrian refugee crisis calls into question some academic presumptions about European integration.

As Liesbet Hooghe and co-authors write in this working paper, political scientists have long thought that countries join together in transnational institutions when they share a common culture, trade ties or both. Liberals and neo-liberal institutionalists in international relations scholarship tend to see transnationalism as good, while realists tend to think it doesn’t matter.

The Greek crisis showed that there are circumstances when deeper integration both matters and is undesirable. The current refugee crisis shows that even deep integration can be quite patchy – and not based on shared culture.

As Rick Lyman reports,

Europe’s failure to fashion even the beginnings of a unified solution to the migrant crisis is intensifying confusion and desperation all along the multicontinent trail and breeding animosity among nations extending back to the Middle East.

With the volume of people leaving Syria, Afghanistan and other countries showing no signs of ebbing, the lack of governmental leadership has left thousands of individuals and families on their own and reacting day by day to changing circumstances and conflicting messages, most recently on Thursday when crowds that had been trying to enter Hungary through Serbia diverted to Croatia in search of a new route to Germany…

“What we expect from the E.U. is to tell us what the form of good European behavior is,” said Nebojsa Stefanovic, Serbia’s interior minister. “Is it what Germany is doing, where refugees are welcomed with medicine and food? Or is it where they are welcomed with fences, police and tear gas?”

The European Union, Mr. Stefanovic added, “needs to say not just what the law is, but what the European norm is, what the values are that Serbia should share.”

Here is a blatant tragicomic admission that Europe has no shared culture: it’s not much of a norm if you have to ask what it is. For scholars interested in norm diffusion, here is new channel: when social actors demand that a norm be created so that they can start imitating it. Take that mimetic isomorphism!

Europe’s top leadership is responding to the norm vacuum with about the level of tact they used with Greece, as Lyman reports:

All of Slovakia’s top parties, which normally can agree on almost nothing, concurred that the country should not be obligated to accept refugees.

“We have rejected these quotas for two reasons,” said Robert Kalinak, the interior minister. “They don’t solve the situation. It won’t work. The ones who draw Germany in the lottery will be happy, the ones who draw Estonia will be unhappy.”

Western leaders, particularly in Germany, bristled at what they saw as opportunistic selfishness among Eastern nations, who are eager to accept money and help from the West but are not always willing to share a burden.

“The current situation gives the impression that Europe is something people participate in when there is money, and where one disappears into the bushes when it is time to take on responsibility,” said Sigmar Gabriel, head of Germany’s center-left Social Democrats who serves as Chancellor Angela Merkel’s deputy.

While this shaming might play to domestic German anxieties about being taken advantage of, I’d be surprised if it persuaded Eastern European countries to make costly changes.

I see two paths forward. Europe needs an inspirational Lincolnesque figure to demand shared sacrifice, or else European leaders need to be honest with themselves about the economistic bias of Europe thus far, and break out the pocket book and start paying Eastern Europe to do what Western Europe wants.

Money talks, while refugees continue their walk.

UN v. #Griefault

The UN voted yesterday to sideline vulture funds, over US objections.

The UN General Assembly resolution was championed by Argentina, which has endured a long ordeal with holdouts in its bond restructuring.

The text of the resolution includes the following:

A Sovereign State has the right, in the exercise of its discretion, to design its macroeconomic policy, including restructuring its sovereign debt, which should not be frustrated or impeded by any abusive measures…
Sovereign immunity from jurisdiction and execution regarding sovereign debt restructurings is a right of States before foreign domestic courts and exceptions should be restrictively interpreted…
Majority restructuring implies that sovereign debt restructuring agreements that are approved by a qualified majority of the creditors of a State are not to be affected, jeopardized or otherwise impeded by other States or a non-representative minority of creditors, who must respect the decisions adopted by the majority of the creditors. States should be encouraged to include collective action clauses in their sovereign debt to be issued…
This first paragraph makes clear that debt restructuring is a part of standard macroeconomic policy, not some unusual policy tool. The second paragraph is an attempt to rein in the US courts that have pushed Argentina into default, in violation of the spirit if not letter of foreign sovereign immunity law. The final paragraph is a jab at vulture funds, which buy up a minority of bonds and attempt to get much more of the face value that creditors who agreed to restructuring.
The vote passed by a recorded vote of 136 in favor to 6 against (Canada, Germany, Israel, Japan, United Kingdom, United States), with 41 abstentions.
According to the minutes of the debate, the US objected to what it saw as “the implication of a right to debt restructuring and the threat to contractual obligations”. (Editorial note: the Obama administration has publicly objected to US courts’ interpretation on these questions, but now appears to have closed ranks.) The EU wanted to punt this to the International Monetary Fund (which, editorial note, has failed to produce a bankruptcy court for decades).
But, as the vote count makes clear, the US and EU were in the minority, with some developed countries (like Australia) abstaining and others siding openly with the bloc of developing nations:

The representative of the Russian Federation said the conflict between debtors and creditors was becoming a greater threat to global financial stability.  The Russian Federation had always supported improvement in the sovereign debt restructuring process within the United Nations.  The principles adopted today provided the basis for a fair, balanced and effective process for sovereign debt restructuring through a universal legal mechanism that could apply to all forms of external debt.  In that context, his delegation had voted in favour of the text…

Iceland’s delegate said that ad hoc [debt] arrangements had created incoherence and unpredictability…

The speaker from Argentina stated that the adopted resolution was a text in favour of stability.  Debt was responsible for inequality and took advantage of less developed countries.  As a democratic forum where all sovereign countries had a voice, the United Nations was the only body that had passed resolutions that changed the course of history.  Therefore it was wrong to say that the Assembly was not the right forum.  Countries had a right to restructure debt and it was crucial to put an end to the power of vulture funds that fed on the lack of global legislation to take advantage of many poor countries.

Subsequently, virtually every politically important developing country made speeches siding with Argentina.

Collyering all Lawyers

The US House of Representatives can sue the executive branch over the Affordable Care Act (Obamacare), ruled the US District Court for DC.

As Carl Hulse reports:

In a significant defeat for the administration, United States District Court Judge Rosemary M. Collyer found that the House had made a compelling case that suing the White House was the only way to preserve its constitutional power to control federal spending and stop the administration from distributing $136 billion in insurance company subsidies that Republicans say Congress never approved…

She said the merits of the claim would be determined in a later proceeding. But her decision, if it withstands appeal, would mark the first time the House has been able to challenge an administration in court over its spending power.

You can read Collyer’s opinion here.

The Obama administration suggested several avenues by which the House could respond without resorting to a court case. Namely, the House could deprive Obamacare of funding. Collyer writes in response:

The  Secretaries  further  argue  that the House  is not injured by  the lack of an  appropriation because it can remedy or prevent that injury through means outside this lawsuit.  Id.  at 19 – 20.   Chief among those means , they contend, is “the elimination of funding.”   Id. As  the House points out, the Secretaries are  “ apparently oblivious  to the irony ” of their argument . Opp’n at 35.   Eliminating funding for  Section 1402 is  exactly  what the House  tried  to do.   But as  the House argues, Congress cannot  fulfill its constitutional role if it specifically denies funding  and the Executive  simply find s money elsewhere without consequence. Indeed, t he harm alleged  in this case  is particularly insidious  because , if proved, it  would eliminate Congress ’s  role via – a – vis the Executive . T h e political tug of war  anticipated by the Constitution  depends upon Article  I, § 9, cl. 7 having  some  force; otherwise  the purse strings  would be cut.

Editorial comment: But couldn’t the House simply try, try again? True, there is probably some constitutional limit to the amount of budgetary whack-a-mole that the House should have to engage in. But that line was pretty far from being met in this case. Political tug of war is what separation of powers is about.

As to the administration’s argument that the House could simply repeal regulatory authority for Obamacare, Collyer writes that this would amount to a violation of the executive branch’s constitutional authority. This, the House cannot do.

Editorial comment: I don’t see how she gets this. Surely, repealing a certain regulatory authority does not amount to repeal of regulatory authority in general.

To close off her analysis, Collyer distinguishes between the court’s jurisdiction and the justiciability of the case. Citing case law, she wrote that “Jurisdiction  governs  a court’s  authority to hear a case ; justiciability  pertains to  the advisability of hearing the case”. Despite the questionable wisdom of allowing the case to proceed, Collyer compared the executive branch’s action to “constitutional trespass”, which deprived the House of its constitutional appropriations authority. She writes that her ruling…

falls within the traditional role accorded to courts to interpret the law, and does not  involve a ‘lack of respect due [a] coordinate [branch] of government,’ nor does it involve ‘an  initial policy determination of a kind clearly for nonjudicial discretion.’ ”) (quoting Baker , 369  U.S. at 217) . In short,  centuries of precedent demonstrate the  Judiciary’s ability to  adjudicate the Secretaries’ compliance with  the Constitution.

As to the question of whether her opinion violates separation of powers doctrine, she suggests that courts have always had the power to do what she now does. They have not had occasion to because the political branches have voluntarily (though unnecessarily, in her assessment) refrained from suing each other.

The systemic implications of this lawsuit have not gone unnoticed. As Hulse reports:

Speaker John A. Boehner had pressed the lawsuit both as a way to attack the health care law and to underscore what congressional Republicans say is a pattern by the Obama administration of exceeding its authority on a range of issues including health care, immigration and pollution controls…

“This decision would be a radical expansion of the role of unelected judges to resolve disputes that are essentially political,” said Walter Dellinger, who served as acting solicitor general in the Clinton administration.

Collyer’s opinion could end up being little more than a curiosity. Hulse reports that legal watchdogs see the Supreme Court as likely to reverse her.

Nonetheless, her opinion is in line with a broader social shift towards court power. Karen Alter, for instance, has written about international judges’ creeping power over administrative, constitutional, criminal and dispute settlement matters. Such judicialization seems to have a link to domestic inequality, as I have written here.

Judicialization poses a challenge to talking about government actions as to whether or not they advance the “rule of law”. (The Obama administration hinted at as much in its argument that the House should not be able to sue simply to “vindicate the rule of law”.) If it means that judges are the ones making the important decisions, it might be better described as “rule by lawyers”.

Not so conflicted

British investors have hit back against Argentina’s petition to set aside an investment treaty award.

As I wrote about Argentina’s initial petition to US courts last month in the AWG Group v. Argentina case…

In the US court filings, Argentina is arguing that one of the three arbitrators had a conflict of interest. Gabrielle Kauffman-Kohler, a Swiss arbitrator, was appointed by the investors at the start of the case in 2003. During the course of the proceedings, she was separately appointed to the executive board of UBS – a major Swiss bank that happened to be the top shareholder in one of investor complainants.

According to Slater and Toweill, the arbitrator received over $300,000 in annual compensation for serving on the board. Half of this came in the form of UBS shares that gave her a direct financial stake in the company’s profitability in Argentina (and elsewhere). For comparison, her compensation for the arbitration case was $3,000 per day. Unless she worked 50 days a year over the course of the case (a doubtful proposition for one of the busiest arbitrators in the business), her UBS stake was probably greater.

Lawyers for AWG Group have dropped the, err, inconvenient fact that Kaufmann-Kohler was only on the UBS Board for a few months, and had resigned before rendering merits awards in the case. (I got AWG’s filings through Pacer – I don’t think it is publicly linkable anywhere.)

But the filing sheds further light on the relatively weak oversight mechanisms of investment arbitration. As Elliot Friedman (AWG’s lawyer) writes:

The tribunal’s Award is entitled to great deference under the FAA and decades of consistent Supreme Court jurisprudence. The FAA [US federal arbitration act] establishes an “emphatic federal policy in favor of arbitral dispute resolution,” which “applies with special force in the field of international commerce.”… Proceedings to confirm awards are “intended to be summary,”

Friedman further details the fact that Kaufmann-Kohler’s two fellow arbitrators were asked to – and ruled against – her disqualification:

Under the parties’ agreed procedures, the challenge was resolved by the two unchallenged arbitrators—including Argentina’s appointee, Professor Pedro Nikken, an eminent Venezuelan lawyer and former President of the Inter-American Court of Human Rights. The two unchallenged arbitrators found no connection at all between Professor Kaufmann-Kohler and Respondent AWG, and a trivial and immaterial connection between Professor Kaufmann-Kohler and AWG’s co-claimants. In a comprehensively reasoned decision, the unchallenged arbitrators ruled that Professor Kaufmann-Kohler’s service as an independent director of UBS in no way impaired her independence or impartiality…

The Petition asks this Court to review de novo, and then reverse, the Tribunal’s decision on the second challenge to Professor Kaufmann-Kohler. Such far-reaching review would, however, contravene the deference owed an arbitral tribunal’s decisions under the FAA.

It is undisputed that the unchallenged members of the Tribunal had jurisdiction over Argentina’s challenges to Professor Kaufmann-Kohler. Accordingly, the resolution of the second challenge—like that of all other matters within the Tribunal’s jurisdiction—is entitled to considerable deference…

Argentina cannot show “evident partiality” in this case. Reasonable persons, including distinguished arbitrators appointed by Argentina itself, have already rejected the allegations of partiality made against Professor Kaufmann-Kohler.22 The Tribunal’s decision on the second challenge thus demonstrates that not all reasonable persons “would have to conclude” that Professor Kaufmann-Kohler’s affiliation with UBS rendered her incapable of judging impartially. Id. Argentina’s argument must fail on that basis alone.

Friedman is probably correct on the law. Indeed, he makes multiple cites to the recent US Supreme Court case that reaffirmed US courts’ practice of deference to investment arbitrators.

However, I question how easy it would be for “reasonable” co-arbitrators to rule that one of their colleagues should be removed from the case. There is the social connection that they would risk severing after months of working together. And because arbitrators lack tenure, and rely on their co-arbitrators to recommend them for further work, the incentives are against disqualifying one of your own. If US courts were to “pierce the veil” of how arbitrators police each other, they might find it lacking.

Would US appellate courts be more likely to review a lower court case, if the deciding lower court judge had failed to recuse themselves from a case with a conflict? It seems like that is the roughly analogous issue, after making adjustments for the procedural differences in three-member ad hoc tribunals.

In any case, if Friedman’s facts are backed up, AWG Group would likely prevail. But US courts could do a service if they reasoned through the case carefully.

US: Not Always a Tool of Wall Street

I’ve been on a self-imposed blackout of following trade law developments while writing my dissertation, after a decade of doing almost nothing but.

But I’m here at the American Political Science Association meetings, where a few colleagues have presented papers on recent World Trade Organization (WTO) disputes, rekindling my interest. If you have a chance to check out work by Cosette Creamer and Tonya Putnam, I highly recommend them.

Anyways, one of the last cases I tracked at all was a WTO case brought by Panama against Argentina’s anti-tax haven legislation. Though launched in 2012, there has still been no final panel ruling. Nonetheless, the US Trade Representative’s office has disclosed some of its own thinking on the case.

While the US did not unambiguously take Argentina’s side, the Obama administration did offer some words of support.

Namely, USTR writes that:

Members may apply different regulations to different types of financial entity, and limit the types of services that each such entity may supply. It may be the case that one Member allows supply of a particular financial service by a type of entity that does not exist under a second Member’s regulatory regime. If there were a WTO dispute regarding the second Member’s treatment of the first Member’s distinct type of entity, it might be the case that the second Member’s regulatory system recognized no type of entity “like” the first Member’s entity. The panel would need to consider the possibility that there were accordingly no like services for comparison purposes.
While this may not mean much to the casual reader, it’s actually a quite pro-regulatory statement. As I wrote here, the Reagan and Bush I administrations had maintained that WTO rules did not threaten US firewalls between commercial and investment banking (i.e. Glass Steagall). To paraphrase USTR, if commercial-banking-by-deposit-taking-banks doesn’t exist in a country, it may not matter for WTO discrimination purposes… even if commercial-banking-by-investment-banks does exist.
USTR also pronounced on the prudential measures defense for financial regulations:
By its terms, and unlike other provisions in GATS and GATT, the exception establishes no other standard or qualification on a Member’s ability to take measures for prudential reasons, such as requiring a “rational” relationship between the measure and the prudential reason, or a showing that the measure is “reasonable” or “necessary” to achieve a purpose.
I wrote about this measure here, and made the argument that it actually is more anti-regulatory than what the US now claims. It’s good to see USTR publicly pronounce differently (even if I think they are wrong as a matter of treaty text).
These are both useful clarifications. It will be interesting to see if WTO adjudicators back up the US position.

Bulltrump

Is Donald Trump a “bullshitter”?

As Evan Osnos writes in his profile of Trump in the New Yorker,

In New Hampshire, where voters pride themselves on being unimpressed, Fred Rice, a Republican state representative, arrived at a Trump rally in the beach town of Hampton on an August evening, and found people waiting patiently in a two-hour line that stretched a quarter of a mile down the street. “Never seen that at a political event before,” he said. Other Republicans offer “canned bullshit,” Rice went on. “People have got so terribly annoyed and disenchanted and disenfranchised, really, by candidates who get up there, and all their stump speeches promise everything to everyone.” By the night’s end, Rice was sold. “I heard echoes of Ronald Reagan,” he told me, adding, “If I had to vote today, I would vote for Trump.”

Although perhaps not “canned”, doesn’t Trump offer much of the same goodie bag? To return to Osnos:

[At a border press conference in Texas, Trump] was asked, “You keep saying that there’s a danger, but crime along the border is down. What danger are you talking about?”

Trump gave a tight, concerned nod. “There’s great danger with the illegals, and we were just discussing that. But we have a tremendous danger along the border, with the illegals coming in.”

“Have you seen any evidence here to confirm your fears about Mexico sending its criminals across the border?”

Another grave nod. “Yes, I have, and I’ve heard it, and I’ve heard it from a lot of different people.”

“What evidence, specifically, have you seen?”

“We’ll be showing you the evidence.”

“When?”

He let that one pass.

“What do you say to the people on the radio this morning who called you a racist?”

“Well, you know, we just landed, and there were a lot of people at the airport, and they were all waving American flags, and they were all in favor of Trump and what I’m doing.” He shrugged—an epic, arms-splayed shrug.

“They were chanting against you.”

“No, they were chanting for me.”

“What would you do with the eleven million undocumented immigrants who are already here?”

“The first thing we have to do is strengthen our borders, and after that we’re going to have plenty of time to talk about that.”

Trump’s speech – it not deliberately untruthful – is rhetorically whiplashing. From the messaging dictum “answer and transition to message”, Trump makes the leap to don’t answer and transition to message.

Harry Frankfurt, a philosopher at Princeton University, wrote an essay a few years back that attempts to define what constitutes “bullshit”. He works through a comparative method, contrasting bullshit with “humbug”, deliberate misrepresentation, misrepresentation of one’s own thoughts, lying, mindless sloppiness, bull sessions, bluffing, “trivial, insincere, or untruthful talk or writing; nonsense.” He settles on the following provisional definition:

Both [the bullshitter] and the liar represent themselves falsely as endeavoring to communicate the truth. The success of each depends upon deceiving us about that. But the fact about himself that the liar hides is that he is attempting to lead us away from a correct apprehension of reality; we are not to know that he wants us to believe something he supposes to be false. The fact about himself that the bullshitter hides, on the other hand, is that the truth-values of his statements are of no central interest to him; what we are not to understand is that his intention is neither to report the truth nor to conceal it…
The contemporary proliferation of bullshit… has deeper sources, in various forms of skepticism which deny that we can have any reliable access to an objective reality and which therefore reject the possibility of knowing how things truly are. These “anti-realist” doctrines undermine confidence in the value of disinterested efforts to determine what is true and what is false, and even in the intelligibility of the notion of objective inquiry. One response to this loss of confidence has been a retreat from the discipline required by dedication to the ideal of correctness to a quite different sort of discipline, which is imposed by pursuit of an alternative ideal of sincerity.
Rather than seeking primarily to arrive at accurate representations of a common world, the individual turns toward trying to provide honest representations of himself. Convinced that reality has no inherent nature, which he might hope to identify as the truth about things, he devotes himself to being true to his own nature. It is as though he decides that since it makes no sense to try to be true to the facts, he must therefore try instead to be true to himself…
In short, usage varies on “bullshit”. When Iowa politician Fred Rice says that the other GOP candidates are offering “canned bullshit”, he is making a judgment of the desirability of their policy proposals (low), and also a statement about whether they themselves believe them (they do not). In contrast, Trump is a “bullshitter” by Frankfurt’s tentative definition. People are drawn to him regardless of whether he or his audience believes his statements are true, because they seem to emanate from a speaker whose only calculation is about a lurch towards authenticity.

Old/new reflections on NGO staff unions

Over a decade ago, I was active in organizing staff unions at social movement organizations and non-profits.

A friend recently asked me for some advice on the topic. To be honest, it’s not something I have given a lot of thought to in recent years.

In an effort to jog my memory, I tried to dredge up an old article I wrote for the National Organizers Alliance. I didn’t have the paper file, and it wasn’t online. Until… I went to the WayBack Machine.

I think the article – “My Job is to Save the Environment, Not Save My Job” is a pretty good distillation of what I knew and how I thought about those things at the time.

I would make a few addendums, with the benefit of hindsight and the skepticism of the intervening years.

First, even if you are lucky enough to get a union recognized, it is hard keeping the momentum going. Staff turnover leads to loss of bargaining unit knowledge, and the local or national union staff aren’t well equipped to keep the specific spirit of the organizing drive alive as the original organizers move on. (Not really their job, anyway.) Also, in small orgs, talented staff get promoted, until they are (actually or might as well be) management.

Second, for social movement organizations, there is a fear that unionization leads to (over)professionalization. That’s a legitimate worry, but once you have hired staff, the horse has already left the barn. At that point, it is not worth keeping up the pretense of non-professionalization on the backs of your lowest paid, least empowered staff. Very dated, but my thinking on this is informed by a great compendium on the life cycle of social movements by Aldon D. Morris and Carol McClurg Mueller.

Third, while a union can help improve a workplace if there is enough staff motivation, it cannot alone change a fundamentally broken workplace culture with high levels of institutionalized mistrust. In that environment (and there are many many examples), a very sophisticated union campaign coupled with extensive management retraining may be called for. I like this book by Daniel Goleman et al for how to think about the leadership side of that equation. In these settings, as Albert Hirschman reminded us long ago, staff may need to consider other options.

Fourth, I probably did not emphasize wage concerns enough in the “My Job is to Save the Environment” piece. It was easy for me as an idealistic twenty-something with not a lot of financial needs to downplay the importance of wages. As an older person with a mortgage, I feel differently. Moreover, if mostly white non-profits are going to increase their race and class diversity, having not only liveable but competitive wages is a must. Some of this “non-wage” framing was also driven by the audience – the very low resourced organizations that made up NOA at the time.

Lastly, I am ashamed of how little we got done despite years of work. We had a lot of good ideas of where we were going to take the organizing drive. I blame this in part on marrying my co-organizer, which was great but a bit demobilizing in the best possible way. Also, the first thing I singled out above: I got promoted to where I had too much responsibility to also spend time improving workplaces. Nonetheless, I still feel it is very soul nourishing to try to change your own life and workplace for the better (rather than focus only on the welfare of others, your clients, constituents, target group, etc.). It also improves your own organizing chops!

Conflicted

Can US courts rein in “private judges”? Argentina is testing this proposition in a recent court filing against an investor-state dispute settlement award.

Matthew Slater and Teale Toweill are lawyers for the South American country. Back in July, they filed a petition with the US District Court for DC that asked for an arbitration award against Argentina to be vacated.

The initial arbitration claim was brought in 2003 by a consortium of British, Spanish, and French investors in Buenos Aires’ privatized water utility. After lengthy proceedings at the World Bank’s arbitration arm (ICSID), a trio of arbitrators ruled in April 2015 that Argentina owed the four complaining corporations over $404 million for violations of three different investment treaties.

In the US court filings, Argentina is arguing that one of the three arbitrators had a conflict of interest. Gabrielle Kauffman-Kohler, a Swiss arbitrator, was appointed by the investors at the start of the case in 2003. During the course of the proceedings, she was separately appointed to the executive board of UBS – a major Swiss bank that happened to be the top shareholder in one of investor complainants.

According to Slater and Toweill, the arbitrator received over $300,000 in annual compensation for serving on the board. Half of this came in the form of UBS shares that gave her a direct financial stake in the company’s profitability in Argentina (and elsewhere). For comparison, her compensation for the arbitration case was $3,000 per day. Unless she worked 50 days a year over the course of the case (a doubtful proposition for one of the busiest arbitrators in the business), her UBS stake was probably greater.

The US court claim will be a major test of the willingness of US courts to second guess private arbitrators. Argentina and the investors designated Washington, DC as the “seat of arbitration”, which meant that any subsequent legal appeals would be heard in US courts.

Under the US Federal Arbitration Act, judges are expected to defer to private arbitrators’ reasoning. Yet Argentina is charging that Kaufmann-Kohler had “evident partiality or corruption”, which can be the basis for a judge to set aside the award under FAA rules. While US courts have set aside some private arbitration awards on this basis, I know of no comparable instance under an investment treaty award.

Although national courts have tended to allow this unusual system of private adjudication to go unregulated, two factors may go in Argentina’s favor.

First, the World Bank has been stepping up its disqualification of arbitrators.* Under the Obama-appointed Jim Yong Kim presidency, obvious conflicts of interest can get an arbitrator pushed aside. US judges may take some comfort in being part of a general disciplinary trend.

Second, Kaufmann-Kohler was the tie-breaking vote in the key decisions in the case. Pedro Nikken – a Venezuelan arbitrator appointed by Argentina – dissented at both the jurisdiction and merits stages. This left a two-to-one split, with Kaufmann-Kohler and chairman Jeswald Salacuse against Nikken. Even a marginal conflict of interest could have swung the case.

But some factors go against Argentina. Despite sky-high levels of controversy over “investor-state dispute settlement”, the US Supreme Court announced as recently as last year that it still expects courts to defer to arbitrators – even when they make highly questionable decisions.

The investors have up until September 1 to file their response to Argentina’s petition. Stay tuned for further developments.

* For technical reasons, Argentina is only challenging the portion of the award (nearly $21 million) rendered in favor of the AWG Group – a Cambridgeshire investor. The option of appeal to US courts was only available vis a vis the UK investor. In contrast, Argentina could ask the World Bank for annulment of the portion of the award pertaining to the French and Spanish investors.

Constitutional Slavery

Was emancipation constitutional? While the US prides itself on its property protections, the end of slavery wiped out as much as $10 trillion of private wealth. This would seem to go against Fifth Amendment protections against uncompensated expropriations.

Lincoln did not appear to be overly troubled by the constitutional issues. In the 1863 proclamation text, he cited war powers as authority to abolish slavery in the Confederacy, declaring the act an “act of justice, warranted by the Constitution, upon military necessity” and pleaded for “the considerate judgment of mankind, and the gracious favor of Almighty God.” (Notably, the proclamation did not abolish slavery in the Union – which would have to wait until the Thirteenth Amendment.)

Law professor Sanford Levison lays out three lines of thought:

(1) It was constitutional, but only because it was in fact so limited in its reach. Had Lincoln been more ambitious and ordered emancipation in any territories controlled by the Union army, let alone any of the nonseceding slave states, or, perhaps, had he ordered emancipation earlier in his term of office, when Generals Fremont and Hunter were engaging in their own efforts, he would have violated his oath of office and, perhaps, merited impeachment rather than a Memorial.

(2) It was constitutional, because he indeed had basically unlimited power to do whatever he deemed instrumentally effective in waging a successful war to save the Union. Had he determined that nationwide emancipation would be efficacious to the goal, then he could have issued a far more sweeping Proclamation. After all, as Whiting noted, “the United States have in former times sanctioned the liberation of slaves even of loyal citizens, by military commanders, in time of war, without compensation …. “‘ Indeed, had he determined that simply confiscating slave owner land and redistributing it to slaves who had, say, joined the Union forces, that would have been perfectly proper as well. This means, that the limited reach of the Proclamation that was issued is a sign not of constitutional fidelity, but, rather, of political will. Perhaps an equal way of putting this is to say that this notion completely collapses the notion of “law” into that of “prudence.”

(3) It was, alas, unconstitutional; though, at the end of the day, “no harm, no foul,” because of the proposal by Congress, ratified by the States in 1865, to abolish slavery in the Thirteenth Amendment. As important, under this analysis, is Section Four of the Fourteenth Amendment, added to the Constitution in 1868, which explicitly states that “neither the United States nor any state shall assume or pay.., any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. ‘ In the absence of such language, a careful lawyer imbued with respect for the Takings Clause of the Fifth Amendment might suggest that the United States would indeed have a duty to compensate at least some slave owners for the loss of their property, such as those who had remained loyal to the Union even while living in Confederate states. Indeed, whether for reasons of politics or constitutional fidelity, Lincoln had coupled proposals for emancipation and compensation until the Proclamation itself. Invocation of the Fourteenth Amendment raises other questions altogether relevant to our inquiry this afternoon, which is whether the process by which it was added to the Constitution was in fact constitutionally legitimate, and, of course, whether we care in the least how we answer this question.

In the 1863-65 period, Lincoln’s supporters seemed to favor the second, international law-based interpretation. As Levison writes:

The most widely discussed defense of Lincoln’s powers appears to have been offered by William Whiting, the Solicitor of the War Department, in a book on presidential war powers that went through no fewer than forty-three editions in eight years. He devoted a full chapter to explaining why the President, as commander-in-chief, possessed the power “to emancipate the slaves of any belligerent section of the country, if such a measure becomes necessary to save the government from destruction.. ..””

An important part of Whiting’s argument was drawn from international law concerning the rights of belligerent parties. Indeed, Whiting argued:

It is only the law of nations that can decide this question, because the constitution, having given authority to government to make war, has placed no limit whatever to the war powers. no legal control over the war powers except the law of nations, and no moral control except the usage of modern civilized belligerents.’

Thus, once the President decides that a measure is “necessary and proper,” so to speak, to achieve victory, he can order it, period.

As Levison goes on to note, the legality of the Emancipation Proclamation thus hinges on whether the Civil War was seen as a domestic insurrection or international conflict. If the former, the Constitution would still apply. If the latter, perhaps not.