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Toward a North American Legal
System
Where this book is distributed in the UK, Europe and the rest of the World,
this is by Palgrave Macmillan, a division of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire RG21 6XS.
10 9 8 7 6 5 4 3 2 1
Contents
Introduction 1
James T. McHugh
1 Assessing the Prospects of North American Legal
Harmonization 7
Matthew T. Simpson
2 How to Think About Law in North America 39
H. Patrick Glenn
3 The Constitutional Presence within North America 57
James T. McHugh
4 Legal Integration of NAFTA through Supranational
Adjudication 79
Jay Lawrence Westbrook
5 NAFTA Chapter 11 and the Harmonization of Domestic
Practices 89
Susan L. Karamanian
6 The Strict Subsidiarity Principle under NAFTA Law and
Policy: Implications for North American Tax Policy 125
Arthur J. Cockfield
7 Single Market Governance: Lessons from the European
Experience 149
Michelle Egan
vi ● Contents
Until the last decade of the twentieth century, “North America” was little
more than a geographical expression, and there was even a question as to
which countries fit within the definition. The decision by Canada, Mexico,
and the United States to sign the North American Free Trade Agreement
(NAFTA) in 1992 defined the region’s boundaries and lifted the “North
America idea” beyond geography and economics.
From NAFTA’s inception to the present, virtually all tariff and invest-
ment barriers were gradually eliminated, and a continental market—rivaling
Europe’s or East Asia’s—was created. The more visionary viewed NAFTA as a
first draft of a continental constitution; the more fearful viewed it as a slippery
slope toward the destruction of state sovereignty.
NAFTA gave the region an economic boost. From 1994 to the year 2001,
North America’s share of the world’s gross product grew from 30 to 36 per-
cent, while Europe’s remained constant at 26 percent. Trade among the three
countries tripled and foreign investment quintupled. Intra-regional exports
as a percentage of total exports in North America climbed from 33 percent
in 1980 to 56 percent in 2000, almost reaching the level of integration in
Europe after five decades.1 National firms became North American. At the
same time that businesses forged continental ties, more and more people
of all three countries toured and immigrated to their neighbors. Americans
traveled more to their neighbors than to any other countries, and the same
applied for Mexicans and Canadians. Perhaps, the most profound transforma-
tion, however, stemmed from those who moved permanently. Since 1970, but
intensifying since NAFTA, the number of Mexican-born immigrants living in
the United States increased by a factor of 17—to 12.7 million—representing
about one-third of all immigrants.2 Societies became interwoven.
Integration proceeded at such a fast pace that the governments could not
keep up, and that is the principal continental dilemma today: the continental
x ● Preface
sometimes used its different legal system as a barrier to prevent U.S. influ-
ence, and U.S. administrations sometimes used the federalist system to avoid
international obligations. But NAFTA and other decisions have eroded both
impediments.
For example, Mexico long refused any forms of extradition as a violation
of its sovereignty, but in the past decade, Mexico changed its policy and began
to send hardened criminals to the United States because it understood that
a strict definition of sovereignty would reduce its autonomy and capacity
to fight the drug cartels. Pragmatism replaced ideology, and now, all three
governments are working very closely together on a wide range of judicial
issues. Mexico actually is changing its legal system, adopting an adversarial
process with juries and the opportunity to confront accusers in court. It is
considering abandoning the delaying tactic known as the amparo. As Mexico
makes those changes, the possibility of further harmonization increases.
As the volume of trade testifies, a certain amount of harmonization is
occurring as a result of technology, professional mobility, and increased
investment. It is also clear that there are many different paths to harmo-
nization and cooperation. At the most basic level, legal harmonization could
proceed through decree or mutual recognition. At a second level, the drive to
improve competitiveness might compel different subnational or national enti-
ties to propose a convergence of procedures. In addition, lawyers, businesses,
or governments could proceed by focusing on individual sectors, particularly
those most in need of efficiency. Following areas are judged by legal experts to
be of the highest potential: bankruptcy law, intellectual property and patents,
and criminal law as it applies to major drug-trafficking, money-laundering,
and terrorism.
Already, the United States and Canada are working closely with Mexico
on drug-trafficking-related issues in the different judicial systems. When a
suspect is arraigned, both governments consider extradition or, simply, how
to make the best case. They cooperate in compiling evidence and informing
counsel before and during the trials. This volume offers a long menu of ideas
on how to address the divergent legal systems in a manner that would serve
all three nations. The conclusion is that we have begun to open our minds
to new opportunities, but we have barely begun to establish firm bonds for
legal cooperation among the three countries. We hope that this will be just
the first of a series of books on North America’s potential.
I have been researching, writing, and trying to influence policy in the
three countries on North America since 1978, when as the director of Latin
American Affairs on the National Security Council, I held conversations with
Mexican officials on these and other issues. A decade later, I raised the ideas
of free trade in North America with Mexico’s newly elected president, Carlos
xii ● Preface
Notes
1. For the data and their development, see Robert A. Pastor, The North American
Idea: A Vision of a Continental Future (New York: Oxford University Press, 2011).
2. Pew Hispanic Center, Mexican Immigrants in the United States, 2008 (Washington,
D.C.: Pew Center, 2009).
Introduction
James T. McHugh
T
he adoption of the North American Free Trade Agreement (NAFTA)
in 1994 advanced the cause of greater continental cooperation in
trade and commerce. It also raised the possibility of even greater
cooperation among the three principal countries of the North American con-
tinent: Canada, Mexico, and the United States. Indeed, since the adoption
of NAFTA, indications of greater convergence among the people of these
three countries have grown, including in terms of values, goals, and expec-
tations. This process is not heading in the same direction as the European
Union nor should its institutions seek to emulate that grand and decades-
long supranational development. However, the deepening of North American
cooperation does offer the prospect of institutional features that would
facilitate this evolving relationship and converging identity and advance its
economic goals of increasing prosperity, security, and happiness for all of the
people of this continent and its countries. The relationship between law and
policy is, therefore, unavoidable.
One development that is crucial for this sort of success can be found in
the area of legal harmonization. Agreements that create some level of formal
cooperation among nations (including free trade zones) require equally for-
mal interaction among the member states in order to succeed. This theme has
been a subject of intensive study and application within Europe for more than
a half-century. Even without the sort of supranational agreements that have
been epitomized by the European Union, it has become apparent that any
relationship that crosses borders requires methods for overcoming inevitable
differences in legal language and practice. International law, by itself, sim-
ply does not provide the requisite guidance to achieve a level of cooperation
that is represented by close regional associations. Finding common ground
in relation to domestic institutions and conduct in the law is the true key
to meaningful cooperation among regional neighbors who wish to become
partners as well.
possibility for the foreseeable future. Yet if a unified North American legal
system such as the one that is possessed, and continuing to be developed, by
the European Union is not an imminent prospect, greater cooperation among
Canada, Mexico, and the United States in many areas is likely to continue in
some form. As the practical expression of all policy desires, law provides the
most prominent and likely form.
CHAPTER 1
Introduction
Significant disparities in legal regimes will inevitably lead to an allocation of eco-
nomic resources at least partially based on the identification of the least restrictive
regulatory environment.1
With the implementation of the North American Free Trade Agreement and
the rise of globalization, the countries that make up the continent of North
America—Canada, Mexico, and the United States—are becoming increas-
ingly interdependent on one another, and as a result, marked integration and
harmonization of culture, economies, regulations, and laws can be seen.
In the interest of sketching the parameters of a North American law that
defines the way in which firms do business in North America and possibly
becomes a framework for harmonizing other sets of laws—from transactions
and corporate law through human resources, human rights, and environ-
mental laws—this chapter will begin with a discussion of those factors that
encourage progress toward North American legal harmonization. Chapter 2
will begin with a definition of the term harmonization as it is to be used in this
context. Chapter 3 will discuss historical attempts to harmonize legal regimes
in the Western Hemisphere. Following this, Chapter 4 turns to those factors
that act as impediments to the development of North American law, includ-
ing the civil/common law dichotomy present in the member nations’ legal
traditions and the role federalism plays in shaping those institutions. Next,
Chapter 5 will review those factors that encourage progression toward a North
American law, including the relative success of other regional blocs such as the
European Union, the role the North American Free Trade Agreement plays
in the harmonization of laws among the three countries, and finally the role
of technology and the rise of transnational legal mobility in elevating interna-
tional legal awareness and transnational communication. Chapter 6 will then
consider several areas of potential legal harmonization in North America and
any efforts to achieve such harmonization already under way. Finally, the lit-
erature directly touching on the issue of North American legal harmonization
will be reviewed highlighting any specific North American institutions that
are called for in Chapter 7.
This work is not intended to be exhaustive, but rather serves to provide a
stepping-off point for future analysis of North American legal harmonization.
It is also not intended to be an endorsement of any of the works or ideas
referenced, but rather a broad survey of the many discussions surrounding
legal harmonization without prejudice to the author’s personal view.
Harmonization of Laws
Before any analysis legal harmonization is conducted, it is important to estab-
lish how the term harmonization is used in this context. Stephen Zamora uses
it to connote cooperation and harmonious interaction, as encompassing the
“entire range of influences that may come to bear on neighbouring legal sys-
tems, either consciously through formal government action, or unconsciously
due to the incorporation into one regime of concepts generated by another
legal regime.”2 Likewise, Laura Spitz describes harmonization, not in the neg-
ative sense of sameness and “a rush to the bottom to further facilitate the
globalization of advanced capitalism,”3 but rather as the concept of “different
laws in different jurisdictions aimed at creating a workable/sensible whole.”4
Patrick Glenn distinguishes between formal harmonization—that which
the European Union has undertaken through the establishment of
supranational judicial bodies and legislation—and informal harmonization—
that which is found in existing structures and processes and facilitates rather
than imposes.5 According to Glenn,
incongruence of the common law and civil law traditions) and once by the
Italians.14 On both occasions the United States rejected the invitations.
In 1888, the U.S. Congress passed an act authorizing the president “to
call an International American Conference for the purpose of discussing and
recommending for adoption to the respective governments some plan for
the settlement of disagreements and for considering questions relating to
the improvement of business intercourse and means of direct communica-
tion between the participating countries.”15 There was later a great exchange
between the unofficial U.S. and Argentine representatives at the conference,
during which the U.S. representative argued Congress did not have the
authority to mandate to the states the adoption of a codified set of rules (again
the federalist issue was used defensively) to which the Argentine representa-
tive retorted that “if the states can not make treaties, and if the Federal power
can not, then the United States would be inferior in constitutional capacity
with respect to treaties, to all the countries of the world.”16 Despite the dis-
cord, the governments unanimously agreed to study the resulting Montevideo
Treaties. Following this initial conference, two more conferences were held,
the first resulting in a failure to ratify and the second adopting a convention
for the establishment of an International Commission of Jurists to draft a
Code of Private International Law and a convention on Public International
Law.17 This work was interrupted by the outbreak of World War I.
Following World War I, the American Institute of International Law
(AIIL) commenced the American International Law Project. The AIIL, an
adjunct of the Carnegie Endowment for International Peace, spearheaded an
effort to codify an “American International Law” in the 1920s.18 The institute
appointed a committee for the purpose of creating draft rules of international
private law, and the committee met in Rio de Janeiro in 1927, the first time
the United States was officially represented at a conference on Private Inter-
national Law.19 Following this initial meeting, and the later adoption of the
Bustamante Code,20 the Seventh International Conference of American States
declared in 1933 that the Pan-American Union should “draft projects for the
simplification and uniformity of powers of attorney, and the juridical person-
ality of foreign companies, if such uniformity was possible.”21 Once again,
efforts at legal harmonization were interrupted by world war, and following
the death in 1943 of Dr. James Brown Scott, the founder of the AIIL. The
AIIL collapsed and the endowment showed little interest in continuing the
AIIL’s work on developing a regional American law.
In the early 1960s, an effort to revitalize the AIIL gathered steam, and a
group of experts gathered in Costa Rica to determine the future of the insti-
tute. At the conclusion of the meeting, the decision was made not to restore
Assessing the Prospects of North American Legal Harmonization ● 11
the AIIL, but to create a new institution that would work to further the
integration of the legal systems of the Western Hemisphere primarily through
the promotion of international law in education. The Inter-American Insti-
tute for International Legal Studies (IAIILS) was subsequently formed in
1963 and promised to play an important role in promoting the cause of
regionalism among students of world public order. At the formation of the
institute, “emphasis was put on the problem of teaching, upon the study
and research of scholars free from government direction and influence, whose
work would in time influence governments and make possible more effective
work on the part of official codification agencies.”22 Very little can be found
on the efforts of the IAIILS after the mid-1960s, the role they played in the
encouragement of the study of international law, and any residual effect this
had on the harmonization of laws in the Western Hemisphere.
Stephen Zamora adds to the discussion of the historical efforts to har-
monize law in the Western Hemisphere by attributing the relative lack of
harmonization of laws among the North American neighbors to the influ-
ence of economic, political, and cultural factors.23 According to Zamora,
for Mexico, harmonization was avoided, as “Mexico’s penchant for adopt-
ing authoritarian/centrist legal models dominated Mexican professional and
government elites until the mid-1980’s” and protection was sought from the
harmful effects of U.S. influence.24 For the United States, the “lack of har-
monizing influences from abroad stemmed from a deeply held belief that the
US way of doing things is generally best, and that [they] owe [their] eco-
nomic and military superiority to the fact that [they] invent models, rather
than import other societies’ models.”25 Finally, Canada’s traditional reliance
on Great Britain and France for legal models has limited the impact any
harmonization attempts may have had on the Canadian legal system.26
. . . several entities at the OAS promote and facilitate the coexistence of the
common law and civil law systems in the Americas. For example, there is
the work of the Inter-American Juridical Committee and the activities of the
OAS Secretariat for Legal Affairs. The IAJC, a legal body specifically provided
for in the Charter, is an advisory body on juridical affairs. One of the purposes
of the IAJC, as noted in Article 99 of the OAS Charter is: to promote the pro-
gressive development and the codification of international law[;] and to study
juridical problems related to the integration of the developing countries of the
Hemisphere and, insofar as may appear desirable, the possibility of attaining
uniformity in their legislation.32
member state’s legislation in the areas of public and private international law,
including the legal aspects of regional economic integration. Further, former
Secretary General of the OAS, Cesar Gaviria, reorganized the Secretariat for
Legal Affairs to concentrate the lawyers’ efforts on the development of public
and private international law and on strengthening juridical cooperation with
member states.
Beyond conscious efforts to harmonize civil and common law traditions,
Jorge A. Vargas argues that harmonization has already begun to occur between
Mexico and the United States, as evidenced by the “Americanization of
Mexican law” that resulted from NAFTA. Vargas also posits the reverse is true,
that there is an increased influence of Mexican law on American law, resulting
from the migration of Mexicans in the United States and the increased cross-
border trade and investment that has occurred.33 According to Vargas, “the
more economically affluent Mexican-Americans become due to their better
education and training, the more investment and business transactions are
likely to take place between the United States and Mexico, thus involving
Mexican law.”34 Further, he argues that “the cascade of legislative changes that
the Salinas administration imposed on Mexico at such a rapid pace may have
been motivated by the strong desire of transforming Mexico’s legal system to
put it more in symmetry with NAFTA. In other words, Mexico’s legal system
was Americanized so that NAFTA and its implementation would be gently
eased into place in Mexico through the adoption of those legal changes.”35
Finally, Casey Burgess minimizes the impediment that the common and
civil law dichotomy might pose to North American legal harmonization by
highlighting the successful relationship between common law and civil law
jurisdictions in Canada and the United States.36 Specifically, Burgess identifies
the ability of Louisiana and Québec to maintain their civil law traditions
while existing in a common law nation. It is this ability for common and civil
law traditions to coexist that suggests that while the civil law/common law
dichotomy will invariably add a layer of challenge to the progression of legal
harmonization in North America, the dichotomy in itself should not present
an unassailable barrier.
Federalism
Blacks Law Dictionary defines federalism as “the legal relationship and dis-
tribution of power between the national and regional governments within
a federal system of government.”37 According to H. Patrick Glenn, North
America has 99 private law jurisdictions. “There are 32 in Mexico, count-
ing the Federal District; 51 in the U.S.A., counting both Hawaii and Puerto
Rico; and 13 in Canada, counting the three northern Territories.”38 To these
14 ● Matthew T. Simpson
96, he then adds the three federal jurisdictions, “each of which has a private
law dimension of varying importance.”39 The relative power of the more than
90 subfederal jurisdictions varies by country, with Canada arguably having
the greatest degree of federalism, followed by the United States, and Mexico
being the most centralized of the three countries.40
In the United States, the Supreme Court determined that the signing of
international treaties was within federal jurisdiction in the case of Missouri
v Holland. In Holland, the Court found a treaty between Britain and the
United States regulating the killing and sale of migratory birds was a proper
exercise of the treaty power delegated to the U.S. government by Article 2
of the Constitution. Likewise, in Canada and Mexico, the signing of inter-
national treaties is the jurisdiction of the federal government, despite active
involvement by provincial ministers in Canada.
The issues of federalism as they relate to North American legal harmo-
nization are varied and the opposing sides well entrenched. No two states or
provinces share identical interests, nor do they follow identical legal histories.
Any attempt to develop a common legal system among them will thus battle
inconsistencies and varying interpretations, not to mention a power struggle
between state and federal governments that is front-page news in Canada and
the United States.
most extensive set of substantive domestic law is Chapter 17, which sets
out intellectual property standards and backs them with a dispute resolu-
tion mechanism.43 The agreement does, however, “include important new
rules concerning the formation and application of domestic laws and regula-
tions. In large part, these provisions insure transparency in the rule making
apparatuses of each country, so that, in addition to the citizens of the rule
making country, foreign governments and their citizens can understand and
attempt to provide input in the rule making process.”44 These transparency
measures “represent an attempt towards convergence in the rule-making sys-
tem itself ”45 and “permit foreign interests to comment on the formulation of
domestic laws and regulations.”46
Further, according to Patricia Hansen, in the United States, “Congress has
[sic] limited the ability of domestic courts to consider the United State’s obli-
gations under NAFTA when construing domestic statutes. No NAFTA pro-
vision that is inconsistent with any federal law is to have any effect, and the
federal statute implementing NAFTA may not be construed to amend or
modify any federal law ‘unless specifically provided for’ in the Agreement.”47
Indirect Harmonization
Though NAFTA was designed as a free trade agreement, facilitating the flow
of goods and services across the borders of its member states, and the sub-
stantive legal changes it called for were relatively minor, the agreement’s
impact on North American legal harmonization is much greater than its
few explicitly harmonizing provisions. Since the inception of the agreement,
scholars identified the secondary impact of NAFTA on the legal systems of
the three countries. Several argue that although NAFTA did not create com-
mon legal institutions or did not take many overt steps to integrate the legal
environments of the three countries, the agreement has in fact led to legal
integration.
H. Patrick Glenn argues that “there is an inevitable process of adapta-
tion of local law to the new or emerging circumstances of the common
market and this process accelerates the informal harmonization or accommo-
dation which has already been taking place.”48 Glenn highlights the Mexican
adoption of legislation providing for non-possessory security interests in
moveable property. Pressured by Canada and the United States’ flexible forms
of non-possessory security over many types of movables, the Mexican govern-
ment identified the great disadvantage Mexican enterprises were faced with.
As such, it reformed its legislation, and “all of North America is now cov-
ered by roughly comparable legislation.”49 Glenn also argues that Mexico
has moved away from its traditional adherence to the Calvo Doctrine and
the principle of “strict territoriality in matters of choice of law,” and as such
16 ● Matthew T. Simpson
Mexican Private international law has been brought in line with its northern
neighbors.50 Canada has also changed its approach to private international
law since the inception of NAFTA and its predecessor, the Canada-U.S. Free
Trade Agreement (CUFTA). According to Glenn, when the CUFTA came
into force, the Canadian Supreme Court changed the relative restrictive pol-
icy against foreign judgments and decided that “foreign judgments should be
recognized in Canada” whenever a “real and substantial connection” existed
between the case and the adjudicating court.51
Luis Rubio argues that NAFTA will “require, out of convenience rather
than obligation, important changes in the [Mexican] legal structure and,
in particular, in the importance attributed to legal procedures . . . [T]he dis-
pute resolution mechanism adopted by the contracting parties requires not
only the professionalization of government decision making, but also the
adoption of regulations and laws that are operational without the tradi-
tional level of government discretion.”52 Glenn concurs, and argues that
“National laws have to change, not because NAFTA requires change, but
because NAFTA has changed the context in which national laws function.
To continue to function as they should, in the new environment, they must
be adapted.”53 Likewise, Stephen Zamora argues that the changes in the legal
systems of the member states brought on by NAFTA are more the result of
governments responding to the economic ramifications of NAFTA, rather
than any need to harmonize their laws to be consistent with NAFTA.
According to Andrew Walker, “a judicial decision-making process is a
series of value judgments. The increase in transactions with foreign parties
and foreign components in the wake of NAFTA is having a direct effect on
the legal systems of its member countries because it internationalizes the scope
of the value judgments made by domestic judges. As trade liberalization and
advances in communication and transportation allow market forces to bring
Mexico, the United States, and Canada closer together, legal authorities in
each country must perform more analyses that reconcile their legal systems
with the legal systems of their trading partners.”54
Ultimately, H. Patrick Glenn argues that “above all, NAFTA facili-
tates and multiplies legal exchange, and legal understanding, between the
NAFTA countries . . . The flow of legal transactions in a free trade area will
accentuate the legal convergence already underlying the law of the free trade
area.”55
(5 cases) and Chapter 19 (52 cases) of the CUSFTA.57 The Chapter 1958
(AD-CVD) disputes affected around U.S.$ 7 billion in trade (the lumber dis-
pute accounted for almost U.S.$ 6 billion).59 On average during this period,
the United States and Canada traded U.S.$ 185 billion annually. Disputes
affected less than 4 percent of two-way trade.60 Similarly, under the NAFTA,
between January 1994 and 2007, there were a total of 129 disputes (includ-
ing Mexico) under Chapter 19 (125 cases) and Chapter 20 (4 cases) of the
NAFTA.61 The Chapter 19 dispute cases involving Canada and the United
States between 1994 and 1999 affected U.S.$ 11 billion in trade out of an
average annual trade of over U.S.$ 303 billion—again under 4 percent of
total trade.62
It is important to note that the NAFTA dispute resolution process is lim-
ited to only those types of disputes explicitly proscribed for in NAFTA;
only those disputes where the cause of action is directly accounted for in
NAFTA can be dealt with by the NAFTA dispute resolution process. All
other disputes must progress via domestic routes. “The domestic judicial
institutions of the NAFTA countries have largely been prevented from play-
ing any constructive role in the resolution of interstate disputes arising under
NAFTA.”63
distilling a limited set of issues for a trial, judgments include short opinions
and no dissents or concurrences, the appeal involves no factual deference to
the trial court, and the losing party pays the attorney’s fees. More impor-
tantly, according to Oquendo, the Mexican system “calls for a systematically
integrated procedural code, a series of loosely connected oral and written pro-
ceedings which gradually define the issues, and a decision maker in charge of
moving the process forward.”67
Oquendo thus criticizes NAFTA for imposing an Americanized legal sys-
tem of Mexico. “The process leading to the Agreement did not take the
form of a conversation on bridging the legal distance between the parties,
but rather that of an imposition of legal conformity on the weakest party.
Mexico not only had to Americanize its legal system, but also had to accept a
pre-fabricated legal superstructure based almost entirely on U.S. Law.”68
Julie Mertus and Elizabeth Breier-Sharlow are also critical of NAFTA for
failing to take into account the Mexican Civil law procedures.69 They argue
that including civil law mechanisms such as an active decision maker or flex-
ible process would allow participants in the NAFTA dispute process cope
with the vagaries of national law in an “international forum.”70 They further
argue that common law concepts and procedures familiar to Canadian and
American lawyers and judges “are a barrier to Mexico’s full participation in
the agreement.”71
European Union
The North American Community has much to learn from the European Union—
about both what it should adapt and what it should avoid.72
from any member state court) and hears appeals on legal questions arising out
of cases at the Court of First Instance.84
The European Union, like North America, has to deal with federal or
subsidiarity concerns, and Burley and Mattli highlight the success of the ECJ
in acting as a supranational body while not “stepping on the toes” of the
domestic courts. “The ECJ only ‘interprets’ the relevant provision of com-
munity laws, and leaves it for the national court to apply it to the facts
of the case. In practise, of course, the ECJ frequently offers a virtual tem-
plate for the subsequent lower court decision. But, the all-important fiction
is preserved.”85
Garrett et al., however, suggest that the ECJ is not immune from political
controversy or influence. They specify the conditions under which the ECJ
makes decisions that declare illegal national laws, regulations, or practices;
express how member governments act to those decisions;86 suggest the polit-
ical decisions surrounding a case, the size of the country, and the economics
involved; and suggest that the political power of the country all play a role in
how aggressive the ECJ ruling turns out to be.87
This consideration of the European Union and its institutions is just the
beginning of deeper investigation that is needed for a thorough consideration
of the lessons to be learned from the European experience.
Technology
With constant developments in communications technology, Canadians,
Americans, and Mexicans are growing closer as they more easily and more
frequently experience each other’s culture. This transnational exchange of
culture, facilitated by rapid developments in technology, aligns the interests
of the citizens of the three countries and makes a harmonization of legal
standards more feasible, and more likely. Laura Spitz argues that “recent
technological changes have rapidly provided for enhanced communication
possibilities without regard for national borders.”94 “It is no longer possible
to change a law in British Columbia, for example, without the change and
the reasons for it becoming immediately available to citizens world wide.”95
Insolvency
If globalization does proceed apace, then the pressures for a universal system for
managing the financial crises of multinational companies will prove irresistible:
global bankruptcy for a global market.96
The area of insolvency law is arguably the most developed with respect to
creating a single North American law. There have been several efforts to har-
monize insolvency laws, some dealing specifically with the North American
partners and others with a more global scope. In light of the economic melt-
down of 2008 and 2009, perhaps never before has it been more timely to
consider the extent of harmonization in restructuring and insolvency.
Several organizations have made great efforts to harmonize insolvency
laws. The United Nations Commission on International Trade Law
(UNCITRAL) has created a Model Insolvency Law, which is beginning to
22 ● Matthew T. Simpson
and user-friendly bankruptcy codes and more predictable systems with lower
transaction costs.”106
Jay Westbrook sees promise for the harmonization of North American
bankruptcy laws. According to Westbrook, “The key similarity among the
three countries in debtor-creditor law is that bankruptcy is national law in
all three, while the law of secured credit and other key debtor-creditor laws
are, for the most part, regional.”107 Westbrook then proceeds to survey several
of the international insolvency projects mentioned earlier in this chapter and
concludes that “international issues are beginning to flow into the office of
bankruptcy lawyers all over the United States. They cannot be held back.”108
Criminal Law
William Burke-White presents the argument for regional enforcement of
criminal laws highlighting the importance of possibilities for softer forms
of regionalization within already existing enforcement mechanisms. Accord-
ing to Burke-White, his work is a “call for greater consideration of regional
criminal justice and an argument that a softer form of regionalism, primar-
ily through existing mechanisms, is relatively easy to achieve and could offer
powerful normative benefits.”117 He goes on to discuss the role of permanent
institutions for the enforcement of international criminal law and the bene-
fits of regionalizing criminal law such as less political malleability and reduced
financial costs. Of course, there are serious sovereignty and political concerns
with any notion of a supranational judiciary, and any effort to harmonize
North American criminal enforcement is likely to receive stiff opposition.
Immigration Laws
Frederic Moll calls for the harmonization of American and Canadian immi-
gration laws in the interest of creating a secure North American security
perimeter.123 Moll describes three cases where Canadian citizens were unjustly
detained and held in the United States for illegally entering the country (one
individual was arrested for entering Maine while he was pumping gas; the
pumps were in Maine but the entrance to the station is in Quebec) and argues
that a common security perimeter, a component of which is a harmonized
immigration system, would allow citizens of North America to move freely
across borders while strengthening resistance of a threat from abroad.124
Laura Spitz argues that, in North America, “the problems created by
the unrestricted flow of capital across national borders are hugely exac-
erbated by the corresponding immobility of people.”125 “Elimination or
reform of North American immigration barriers not only advances substan-
tive equality, but may make good economic sense as well . . . the experience
of the European Community shows that restricting human mobility disrupts
market operation.”126
Of course, the issue of immigration, specifically illegal immigration from
Mexico, is front-page news in the United States, and, if anything, all signs
point to a retreat from more fluid mobility for workers across North American
borders. It may be possible to frame the issue of the harmonization of immi-
gration laws in a way that appeals to both sides of the immigration fence, but
26 ● Matthew T. Simpson
Labor
Craig Jackson compares the labor laws in the European Union and North
America in the interest of determining whether the EU’s approach should
act as a model for North American labor law harmonization.127 According to
Jackson, harmonization is a rational way to deal with the problem of capi-
tal and job flight by equalizing costs across borders. Harmonization removes
the incentive to “take the money and run” on the part of companies of one
party.128 Jackson argues that there are three possible means of labor law har-
monization: first, EU-style harmonization with binding standards utilizing
the doctrine of direct effect or requiring implementing legislation, making
such standards self-executing; second, the incorporation of international labor
standards as a common foundation of oversight; and finally, a modification
of the system in place under the North American Agreement on Labour
Cooperation.129
Facilitators of Harmonization
If indeed the harmonization of laws in North America is to be successful, it
will in large part be as a result of support from international organizations.
Some also argue that North American institutions need also be established to
develop and govern harmonization.
International Organizations
Mistelis provides a good overview of the primary actors in global harmoniza-
tion. He discusses international organizations such as the UNCITRAL,130
the International Institute for the Unification of Private Law (UNDROIT),
the Hague Conference on Private International Law, and the World Trade
Organization (WTO), which use both hard and soft law means of har-
monization as discussed earlier in this chapter.131 Regional international
economic integration organizations also contribute to the harmonization
of law including ASEAN, EC, MERCOSUR, OAS, and the Organization
for African Unity (OAU).132 A number of nongovernmental international
mercantile organizations or professional associations also attempt to harmo-
nize commercial law including the ICC, the International Law Association
(ILA), the International Bar Association (IBA), and the Comite Maritime
International (CMI).133 These organizations often “promulgate model laws,
Assessing the Prospects of North American Legal Harmonization ● 27
Gal-Or also calls for an increase in institutions under NAFTA to provide the
private party with greater access to NAFTA mechanisms; she argues that pri-
vate parties currently don’t have access and are therefore subrogated below the
state.142
According to John Fitzpatrick, when discussing legal harmonization in
North America, “three basic institutions with corresponding essential pow-
ers can be identified. These include: a decision-making mechanism created
principally to facilitate legal harmonization and unification; a monitoring
institution which provides surveillance and enforcement; and a judicial organ
which ensures dispute resolution, uniform interpretation, and enforcement of
substantive law.”143 Fitzpatrick defends the need for these institutions: “First,
supranational courts are necessary for the settlement of disputes between con-
tracting states concerning the substantive law of the regional area. Second,
regional courts serve as a mechanism for insuring the uniform interpretation
of regional law. Third, through dispute resolution and interpretation, regional
courts apply and enforce regional norms.”144
Several authors have proposed specific institutions to facilitate harmoniza-
tion of law in North America. Again, it is important to recall that the purpose
of this chapter is to provide a broad overview of the landscape covering the
potential for North American legal harmonization. As with the general con-
cept of legal harmonization, the establishment of supranational institutions is
highly controversial and, for purposes of this chapter, is neither condoned nor
rejected. A selection of these proposed institutions are listed in the following
sections.
from panel decisions pursuant to the various NAFTA and side agreement
dispute resolution mechanisms, would facilitate uniformity and coherence in
the interpretation of regional norms . . . a tribunal of this nature could deliver
binding opinions in the international sense without offending the sovereignty
of national courts.”149 “A NAFTA Appellate Tribunal could also ‘provide an
opinion to a domestic court on the interpretation of particular provisions of
the agreement’ upon request.”150
with each other, rather to expose their citizens and corporations to Mexico
and its unpredictable Ley de Quiebras y Suspension do Pagos (L.Q.S.P.).158
Rather, Dargan believes the Concordat, discussed earlier in this chapter, is a
more pragmatic approach to transnational insolvency in North America and
stands a better chance of acceptance.159
Conclusion
Any discussion of North American legal harmonization exists in a complex
political and cultural environment. One element not discussed in this chapter
is the public perception of North American integration, whether it be legal,
cultural, or economic. Robert Pastor in Towards a North American Community
tackles the challenges of integration and concludes that the public is in fact
on the side of integration and that it is now up to the leaders of the three
countries to lead the way.160 According to Pastor, in North America, “the
underlying basis of a community exists. Provided people are not threatened by
a loss of culture or identity, and incentives for productivity and improvements
for standard of living are evident, the three peoples are ready to listen to ideas
on how to combine in order to accomplish those ends.”161
Although there are certainly obstacles in the path of progress, namely,
the diverse legal traditions and varying federalist sentiment, there is also
evidence that with strong leadership and an honest conveyance of the bene-
fits of harmonization to the people of North America, the obstacles to legal
harmonization may be less imposing.
What cannot be predicted with any degree of accuracy is the answer to
when North American legal harmonization will occur. Some harmonization
will invariably occur on its own, in the next several years, as corporations and
industries act to reduce redundancies and cost-ineffective regulatory environ-
ments. Other sectors will no doubt take much longer. Culturally, the three
countries, though converging, remain polarized on several key topics, and as
such certain “sensitive” areas of the law such as the death penalty, abortion,
and gay marriage might well take much longer to harmonize.
Given the sensitivity of legal harmonization in North America, the intent
of this chapter has been to identify the obvious obstacles and encouragements
of progress toward legal harmonization. Much more literature exists that was
not covered, and indeed much has changed since this effort was originally
undertaken in 2006, but it is the hope of the author that this chapter will pro-
vide those with an interest in analyzing the pros and cons of North American
legal harmonization with a general snapshot of the literature that exists and
the discussion it has generated.
Assessing the Prospects of North American Legal Harmonization ● 31
Notes
1. Frederick M. Abbott, Integration without Institutions: The NAFTA Mutation of
the EC Model and the Future of the GATT Regime, 40 Am. J. of Comp. L. 917
(1992) at 928.
2. Stephen Zamora, NAFTA and the Harmonization of Domestic Legal Systems: The
Side Effects of Free Trade, 12 Ariz. J. Int’l & Comp. L. 401 (1995) at 404.
3. Laura Spitz, The Gift of Enron: An Opportunity to Talk About Capitalism,
Equality, Globalization, and the Promise of a North American Charter of Fun-
damental Rights, 66 Ohio St. L. J. 315 (2005) at 338.
4. Id. at 338.
5. H. Patrick Glenn, Harmony of Laws in the Americas, 34 U. Miami Inter-Am.
L. Rev. 223 (2003) at 232.
6. Id. at 246.
7. Loukas A. Mistelis, Regulatory Aspects: Globalization, Harmonization, Legal
Transplants, and Law Reform—Some Fundamental Observations, 34 Int’l Law.
1055 (2000) at 1061.
8. Id.
9. Id.
10. Andrew J. Walker, Conflict of Laws Analysis for the Era of Free Trade, 20 Am.
U. Int’l L. Rev. 1147 (2005) at n.16.
11. Kurt H. Nadelmann, Ignored State Interests: The Federal Government and Inter-
national Efforts to Unify Rules of Private Law, 102 U. Pa. L. Rev. 323 (1954)
at 323.
12. Id. at 323–24.
13. Id. at 324.
14. Id. at 325.
15. Id. at 329.
16. Id. at 330.
17. Id. at 331–32.
18. Jose A. Cabranes, The Inter-American System: Its Development and Strength-
ening, Oceana Publications, Book Review, 16 Int’l & Comp. L. Qt. 563
(1967).
19. Nadelmann supra note 12 at 335. See Also James Brown Scott, The Gradual and
Progressive Codification of International Law, 21 Am. J. of Int’l L. 417 (1927)
(detailing the evolution of private international law in the Americas).
20. See Enrique Lagos, The Coexistence of Legal Systems in the Americas from
and OAS Perspective, Paper presented at the University of Ottawa, October 20,
2000, during a panel on “Evolution des Systemes Juridiques et Mondialisation.”
(“Antonio S. de Bustamante was a well-respected Cuban jurist who prepared
a code of private international law for the Americas. He did so through the
mechanisms of the Congress of Jurists and the Sixth International Conference
of American States in Havana in 1928. The Congress was composed of two
delegates from each state in the Hemisphere, and can be considered a forerunner
32 ● Matthew T. Simpson
42. Id.
43. Id.
44. Zamora supra note 24 at 410.
45. Id.
46. Zamora supra note 24 at 411.
47. Patricia Isela Hansen, Judicialization and Globalization in the North American
Free Trade Agreement, 38 Tex. Int’l L.J. 489 (2003) at 493.
48. H. Patrick Glenn, North America as a Medieval Legal Construction, 2 Global
Jurist Adv. (2002) at 8.
49. Id. at 9
50. Id.
51. Id. (citing Morguard Investments Ltd. v. De Savoye (1990), 3 S.C.R. 1077, 76
D.L.R. (4th) 256).
52. Luis Rubio, Mas Alla del Tratado, La Jornada (Mexico City), September 26,
1992, at 10 (translation by Stephen Zamora in The Americanization of Mexican
Law: Non-Trade Issues in the North American Free Trade Agreement, 24 Law &
Pol’y Int’l Bus. 391 (1993) at 457.
53. H. Patrick Glenn, Conflicting Laws in a Common Market? The NAFTA Experi-
ment, 76 Chi.-Kent L. Rev. 1789 (2001) at 1793.
54. Andrew J. Walker, Conflict of Laws Analysis for the Era of Free Trade, 20 Am.
U. Int’l L. Rev. 1147 (2005) at 1148.
55. Glenn supra note 53 at 1795.
56. Cf. Adreas F. Lowenfeld, Binational Dispute Settlement Under Chapter 19
of the Canada-United States Free Trade Agreement: An Interim Appraisal, 24
N.Y.U. J. Int’l & Pol. 269 (1991) (providing an overview of the predecessor
to NAFTA, the Canada-U.S. Free Trade Agreement, and its dispute resolution
mechanisms on which much of the NAFTA was premised).
57. Gary Clyde Hufbauer, Institute for International Economics, Remarks at the
annual policy conference of the Canadian Association for Business Economics,
Washington, D.C., March 30, 2001.
58. See Eric J. Pan, Assessing the NAFTA Chapter 19 Binational Panel System:
An Experiment in International Adjudication, 40 Harv. Int’l L. J. 379 (1999)
(providing an assessment and overview of Chapter 19); Cf. Homer E Moyer,
Chapter 19 of the NAFTA: Binational Panels as the Trade Courts of Last Resort, 27
Int’l Law. 707 (1993) (The constitutionality of the NAFTA dispute resolution
mechanisms, Chapter 19 in particular, has been challenged several times. This
article by Homer Moyer provides a good reflection of the argument that the
chapter presents no constitutional concerns.).
59. Gary Clyde Hufbauer, Institute for International Economics, Remarks at the
annual policy conference of the Canadian Association for Business Economics,
Washington, D.C., March 30, 2001.
60. Id.
61. Id.
62. Id.
34 ● Matthew T. Simpson
63. Patricia Isela Hansen, Judicialization and Globalization in the North American
Free Trade Agreement, 38 Tex. Int’l L.J. 489 (2003) at 493.
64. Angel R. Oquendo, The Comparative and the Critical Perspective in International
Agreements, 15 UCLA Pac. Basin L.J. 205 (1997).
65. Id. at 239.
66. Id. at 240.
67. Id. at 254.
68. Angel R. Oquendo, NAFTA’s Procedural Narrow Mindedness: The Panel Review
of Antidumping and Countervailing Duty Determinations Under Chapter Nine-
teen, 11 Conn. J. Int’l L. 61 (1995) at 62.
69. Julie Mertus and Elizabeth Breier-Sharlow, Power, Legal Transplants and Harmo-
nization, 81 U. Det. Mercy L. Rev. 477 (2004).
70. Id. at 485.
71. Id.
72. Robert A. Pastor, Toward a North American Community, Institute for Interna-
tional Economics (Washington, D.C.: 2001) at 190.
73. Andrew J. Walker, Conflict of Laws Analysis for the Era of Free Trade, 20 Am.
U. Int’l L. Rev. 1147 (2005) at 1152–53.
74. Id. at n. 13. Walker is referencing Noemi Gal-Or, Private Party Direct Access:
A Comparison of the NAFTA and the EU Disciplines, 21 B.C. Int’l & Comp. L.
Rev. 2, 5–8 (1998) (characterizing NAFTA as being “many steps behind the EU
example” because it does not allow private parties direct access to supranational
authorities).
75. John P. Fitzpatrick, The Future of the North American Free Trade Agreement:
A Comparative Analysis of the Role of Regional Economic Institutions and the Har-
monization of Law in North America and Western Europe, 19 Hous. J. Int’l L. 1
(1996) at 8.
76. Supra note 6 at 225–26.
77. Id. at 232.
78. Id. at 232. A deeper discussion of the institutions required to accomplish North
American legal harmonization can be found in part 7 of this review.
79. Id. at 229.
80. United States Department of State, European Union Profile, Fact Sheet: Bureau
of European and Eurasian Affairs, Washington, D.C., May 25, 2006 http://
www.state.gov/p/eur/rls/fs/115211.htm visited 7/1/2006.
81. Id.
82. Id.
83. Id.
84. Id.
85. Anne-Marie Burley and Walter Mattli, Europe Before the Court: A Political
Theory of Regional Integration, 47 Int’l Org. 41 (1993) at 65.
86. Geoffrey Garrett et al., The European Court of Justice, National Governments,
and Legal Integration in the European Union, 52 Int’l Org. 149 (1998) at 150.
87. Id.
Assessing the Prospects of North American Legal Harmonization ● 35
88. Cf. David M. Trubek et al., Global Restructuring and the Law: Studies of the
Internationalization of Legal Fields and the Creation of Transnational Arenas, 44
Case W. Res. L. Rev. 407 (1994) at 410 (arguing the legal profession is a valuable
indicator of the impact of economic integration and global forces: “Forces and
logics that can be observed in the economy, the state, and the international
order are at work within the legal field as well, so that the logic of the legal field
constitutes a ‘homologous microcosm’ of larger social phenomena”).
89. See Glenn 2001 for a discussion of the large firms and how they hire lawyers
from the other two countries in North America.
90. Supra note 6 at 237–38 (citing R. Goode, International Restatements and
National Law, in the Search for Principle [:] Essays in Honour of Lord Goff of
Chievely (W. Swadling & G. Jones ed., Oxford 1999) at 57.
91. Supra note 49 at 8.
92. R. Buxbaum and K. Hopt, Legal Harmonization and the Business Enterprise
(Walter de Gruyter ed., 1988) at 271.
93. Harry W. Arthurs and Robert Kreklewich, Law, Legal Institutions, and the Legal
Profession in the New Economy, 34 Osgoode Hall L. J. 1 (1996).
94. Laura Spitz, At the Intersection of North American Free Trade and Same Sex
Marriage, 9 UCLA J. Int’l L. & Foreign Aff. 163 (2004) at 186.
95. Id. at 188.
96. Jay Lawrence Westbrook, A Global Solution to Multinational Default, 98
Mich. L. Rev. 2276 (2000) at 2238.
97. John Pottow, Procedural Incrementalism: A Model for International Bankruptcy,
45 VAJIL 935 (2006); See also Sandile Khumalo, International Response to
the UNCITRAL Model on Cross-Border Insolvency, International Insolvency
Institute, 2004, www.iiiglobal.org, July 1, 2006.
98. The Concordat was used by a U.S. Bankruptcy Court in In re Everfresh Bever-
ages et al v. Charterhouse Group International, Inc. et al., 238 B.R. 558 (1999).
For more information on the Concordat, see Anne Nielsen et al., The Cross
Border Insolvency Concordat: Principles to Facilitate the Resolution of International
Insolvencies, 70 Am. Bankr. L. J. 533 (1996).
99. International Bar Association, Cross-Border Insolvency Concordat, downloaded
from the International Insolvency Institute, www.iiiglobal.org, June 5,
2006.
100. Leslie A. Burton, Toward an International Bankruptcy Policy in Europe: Four
Decades in Search of a Treaty, 5 Ann. Surv. Int’l & Comp. L. 205 (1999)
at 236.
101. David C. Cook, Prospects for a North American Bankruptcy Agreement, 2 Sw. J.L.
& Trade Am. 81 (1995) at 95.
102. Dean Dargan, COMMENT, The Emergence of Mechanisms for Cross Border
Insolvencies in Canadian Law, 17 Conn. J. Int’l L. 107 (2001) at 5.
103. Michael Traynor, Conflict of Laws, Comparative Law, and the American Law
Institute, 49 Am. J. of Comp. Law 391 (2001) at 402.
104. Federal Judicial Center, International Insolvency, 2001.
36 ● Matthew T. Simpson
105. Emilie Beavers, Note, Bankruptcy Law Harmonization in the NAFTA Countries:
The Case of the United States and Mexico, 2003 Colum. Bus. L. Rev. 9565 (2003)
at 966.
106. Id.
107. Jay Lawrence Westbrook, Creating International Insolvency Law, 70 Am. Bankr.
L.J. 563 (1996) at 565.
108. Id. at 574.
109. National Law Center for Inter-American Free Trade, Transshipment and Other
Threats to the Enforcement of Intellectual Property Rights in Canada and Mexico
(2004). The entire review of this study is taken from the NLCIFT’s website at
http://natlaw.com/pubs/purchase/intellpro.htm, accessed on June 24, 2006.
110. Carolita L. Oliveros and Andre R. Jaglom, International Distribution Issues:
Contract Materials: Options for Developing a Foreign Market, SK068 ALI-
ABA 851, (2005) at 992.
111. Id. at 993.
112. Stephen Zamora, The Americanization of Mexican Law: Non-Trade Issues in the
North American Free Trade Agreement, 24 Law & Pol’y Int’l Bus. 391 (1993) at
416 (quoting Gary C. Hufbauer & Jeffery J. Schott, North American Free Trade:
Issues and Recommendations 185 (1992).
113. Id.
114. Edgardo Buscaglia, Intellectual Property Rights and Business Investment in Less
Developed Countries, Paper presented at “Conference on Vietnam in 2001:
Prospects for Economic and Social Progress,” Washington, D.C., November
16–17, 2001.
115. Id.
116. Ysolde Gendreau, Copyright Harmonization in the European Union and in North
America, 20 Colum.-VLA J. L. & Arts 37 (1995–1996).
117. William W. Burke-White, Regionalization of International Criminal Law
Enforcement: A Preliminary Exploration, 38 Tex. Int’l L.J. 729 (2003) at 731.
118. Michael Wallace Gordon, Economic Integration in North America: An Agreement
of Limited Dimensions but Unlimited Expectations, 56 Mod. L. Rev. 157 (1993)
at 169.
119. Supra note 49 at 7.
120. Id.
121. Supra note 6 at 243.
122. Robert M. Kossick, Jr., Litigation in the United States and Mexico: A Comparative
Overview, 31 U. Miami Inter-Am. L. Rev. 23 (2000) at 24.
123. Frederic J. Moll, The Legal & Technological Advantages of a North American
Perimeter in the War Against Terrorism: How the Implementation of a Schengen-
Type System Will Best Serve the Security Interests of the United States and Canada,
204 Syracuse Sci. & Tech. L. Rep. 2 (2004).
124. Id.
125. Supra note 4 at 370.
Assessing the Prospects of North American Legal Harmonization ● 37
H
ow should we think about law in North America? Even formulat-
ing the question is difficult. Should there be, for example, a comma
after the word law, which would direct our attention to jurispru-
dential reflection about the nature of law that has (perhaps fortuitously)
occurred in North America? There have been distinguished North American
legal philosophers. Or perhaps the question would be better phrased in terms
of how we should think about “North American law.” This would suggest,
though ambiguously, a more unified concept, one of practical and not merely
theoretical interest, and a law that could apply, more or less consistently, from
the high Arctic to the southern borders of Mexico, and Chiapas. In a similar
manner, there is discussion today of “European law.” So the question of how
to think about “law in North America” is, like many questions, already sug-
gestive of an answer, and it is this answer that this chapter defends. We should
be thinking about law in North America in terms of different and varied
manifestations of law, of both state and nonstate origin, which are capable of
nonconflictual coexistence, such that North America, with its many advan-
tages, can play a leading role and constitute a major model in the world, of
mutual legal understanding and the conciliation of different laws.
The question asked by the title of the conference giving rise to this vol-
ume on this subject was, however, different again, in speaking of “A North
American Legal System” and asking “Is It Possible? Desirable?” I have to say
that my answer to both of these questions is “no,” even surtout pas, but in an
attempt to avoid any impression of negativity I add, borrowing from Stanley
Fish, “and it’s a good thing too.”1 There are many reasons for not thinking
The pressure for mobility in Europe has led to a right to practice law any-
where within Europe,41 understandably resisted in the name, at least, of the
relevance of local legal education for local legal practice.
The complexity of legal institutions in North America thus facilitates
transnational dispute resolution and transnational transactions. These are
further facilitated by the convergence of private international law in North
America, which has accelerated with the coming into force of NAFTA.
Conclusion
The need for formal measures of harmonization of laws arises only when
informal measures are inadequate. Europe recognizes this in its principle of
subsidiarity but North America is more accustomed to working with informal
measures. North America is accustomed to working with informal measures,
and this process will and should continue. It can be supplemented by more
vigorous efforts of regional legal education, such as that undertaken by the
North American Consortium on Legal Education,64 and by specific efforts
of North American intergovernmental collaboration in different sectors of
commercial and other activity. If Europe is now turning to “enhanced collab-
oration” in lieu of harmonization, there is room for “enhanced collaboration”
in North America. The 2005 “Security and Prosperity Partnership of North
America” was correct, however, to refer to “our respective legal frameworks” in
envisaging future North American collaboration.65 This is the context within
which such collaboration takes place, and it is a generally supportive con-
text. The need for systemic concepts of law does not presently appear to be
established in North America.
How to Think About Law in North America ● 51
Notes
1. Stanley Fish, There’s No Such Thing as Free Speech: And It’s a Good Thing Too
(New York: Oxford University Press, 1994).
2. For the “essentially contested concept,” Jeremy Waldron, “Is the Rule of Law an
Essentially Contested Concept (in Florida?)” (2002) 21 L. & Phil.137, notably
at 148 ff., with refs; William E Connolly, The Terms of Political Discourse, 2nd ed.
(Princeton, NJ: Princeton University Press, 1983, notably at 22–23 (essentially
contested concepts typically appraisive, designation acts both to describe and to
ascribe a value; to describe is always to characterize a situation from the vantage
point of certain interests, purposes, or standards).
3. H. L. A. Hart, The Concept of Law, 2nd ed. (Oxford: Clarendon Press, 1994)
at 24; and see Joseph Raz, The Authority of Law [:] Essays on Law and Morality
(Oxford: Clarendon Press, 1979) at 119 (all legal systems incompatible at least
to a certain extent, all claiming to be supreme).
4. These would be entirely present constructions, “cognitively open” though iden-
tifiable as law through “operative closure.” Niklas Luhmann, Law as a Social
System (Oxford: Oxford University Press, 2004), notably Gunther Teubner, Law
as an Autopoietic System (Oxford/Cambridge, MA: Blackwell, 1993), notably
at 72 (“no binding force”), 80 (closure not isolation) and 131 (“created anew
from moment to moment”); Gunther Teubner, Law as an Autopoietic System
(Oxford/Cambridge, MA: Blackwell, 1993).
5. Michel van de Kerchove and François Ost, Le système juridique entre ordre et
desordre (Paris: Presses universitaires de France, 1988) at 10.
6. Sally F. Moore, “History and the Redefinition of Custom on Kilimanjaro” in June
Starr and Jane Collier, History and Power in the Study of Law: New Directions in
Legal Anthropology (Ithaca, NY/London: Cornell University Press, 1989), 277 at
287–288.
7. In mathematics, see Ivar Ekeland, Mathematics and the Unexpected (Chicago:
University of Chicago Press, 1988) at 88–90, 106.
8. Roger Cotterell, “The Concept of Legal Culture” in David Nelken (ed.), Com-
paring Legal Cultures (Aldershot/Brookfield, VT/Singapore/Sydney: Darmouth,
1997) 13 at 20; and for the variety of concepts of legal systems, Neil
MacCormick, Questioning Sovereignty [:] Law, State and Nation in the European
Commonwealth (Oxford: Oxford University Press, 1999) at 11 (“There is no
single uniquely correct reconstruction of the raw material of law into a single
canonical form of Alegal system”).
9. Stephen Zamora et al., Mexican Law (New York: Oxford University Press, 2004)
at 214.
10. The Economist, February 3, 2007, p. 55; and see Marlene Wind, “The European
Union as a polycentric polity: Returning to a neo-medieval Europe” in J. Weiler
and Marlene Wind, European Constitutionalism Beyond the State (Cambridge:
Cambridge University Press, 2003) 103, notably at 123 (“enhanced coopera-
tion” as a “means of organizing diversity in an increasingly heterogeneous Europe,
while at the same time preserving an integration dynamic”).
52 ● H. Patrick Glenn
11. Allan Gotlieb, The Washington Diaries 1981–1989 (Toronto: McClelland &
Steward, 2006) at 132, 133; and for Mexican adoption of the same methods
in the 1990s, Robert Pastor, Toward a North American Community (Washington,
D.C.: Institute for International Economics, 2001) at 153.
12. See notably Robert O. Keohane and Joseph S. Nye, Jr., “Transgovernmental Rela-
tions and International Organizations” (1974) 39 World Politics 27; Anne-Marie
Slaughter, A New World Order (Princeton: Princeton University Press, 2004).
13. Generally to this effect in contemporary world relations, Mireille Delmas-Marty,
“Le pluralisme ordonné et les interactions entre ensembles juridiques,” Dalloz
(2006) at 951 (illusory closure of systems, utopia of juridical unity, rather
“multiples interactions,” need to privilege dynamic rather than static approaches,
movement over models).
14. For amplification, H. Patrick Glenn, “Conflicting Laws in a Common Mar-
ket: The NAFTA Experiment” (2001) 76 Chicago-Kent L. Rev. 1789, at 1791;
H. Patrick Glenn, “Reconciling Legal Regimes: Legal Relations of States and
Provinces in North America” (1998) 15 Arizona J. Int’l. & Comp. L. 255.
15. For the great variety of structures of free trade arrangements in the world,
and their path dependency, or adherence to existing institutions and legal tra-
ditions in the region, see the multi-jurisdictional study of Francesco Duina,
The Social Construction of Free Trade: The European Union, NAFTA and
Mercosur (Princeton: Princeton University Press, 2006), notably at 3 (continu-
ity between the shape of RTAs and preexisting local realities), 28 (standardizing
and minimalist approaches), 52 (path dependency), 67 ff. (for NAFTA’s min-
imalist approach documented through a study of definitional and normative
notions in the NAFTA texts), 71 (NAFTA officials have avoided the cogni-
tive standardization of the world . . . been rather explicit about their desire not
to codify the world (emphasis in original), 74 (EU 18 times greater cognitive
production).
16. On “network structures” as the most promising contemporary form of gover-
nance, Beate Kohler-Koch, “The Strength of Weakness: The Transformation of
Governance in the EU” in Sverker Gustavsson and Leif Lewin, The Future of the
Nation State (London/New York: Routledge, 1996) 169, notably at 190, “This
new notion of governance respects the autonomy of societal actors and contrary
to conventional thinking does not consider the successful reduction of complexity
a prerequisite to effective government” and, citing Kickert, “[d]ifficult complex
relations and strategic drastic changes are no longer considered as problems and
difficulties which have to be mastered, but rather as sources of innovation . . .
Management of complex networks is then not the maintenance of sensitive
intricate balances, but the deliberate use of imbalances for the sake of renewal.”
17. In the U.S., 15 U.S.C.A Appendix, and Canada, S.C. 1991, c. 13; for discus-
sion and references, Eugene Scoles, Peter Hay, Patrick Borchers and Symeon
Symeonides, Conflict of Laws, 3rd ed. (St. Paul: West, 2000) at 900 ff.
18. Convention on the Recognition and Enforcement of Foreign Arbitral Awards 21
U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 3 and reproduced in Thomas
Carbonneau, Cases and Materials on International Litigation and Arbitration
(St. Paul: Thomson/West, 2005) at 424.
How to Think About Law in North America ● 53
19. See generally Diego P. Fernández Arroyo, “L’influence des conventions interna-
tionales sur l’actualisation du droit international privé: Le cas latino-américain”
in Swiss Institute of Comparative Law, The Responsiveness of Legal Systems to
Foreign Influences (Zurich: Schulthess, 1992) 217; and for texts of the Conven-
tions, Leonel Pereznieto Castro & Jorge Alberto Silva Silva, Derecho Internacional
Privado: Parte Especial (Mexico City: Oxford University Press, 2000). For the
place of this work in harmonization of laws in the Americas, H. Patrick Glenn,
“Harmony of Laws in the Americas” (2003) 34 U. Miami Inter-Am. L. Rev. 223.
20. See International Institute for the Unification of Private Law, Principles of Inter-
national Commercial Contracts (Rome: Unidroit, 1996); and Michael Bonell,
An International Restatement of Contract Law, 2nd ed. (Irvington-on-Hudson,
NY: Transnational Publishers, 1997); Michael Bonell, “The UNIDROIT Prin-
ciples of International Commercial Contracts: Why? What? How?” (1995) 69
Tulane L. Rev. 1121; Boris Kozolchyk, “The UNIDROIT Principles as a Model
for the Unification of the Best Contractual Practices in the Americas” (1998) 46
Am. J. Comp. L. 151.
21. H. Patrick Glenn, “The ALI/UNIDROIT Principles of Transnational Civil Pro-
cedure as Global Standards for Adjudication?” (2004) 19 Uniform L. Rev. 829,
with refs.
22. On this maxim of Talmudic law, and similar conciliatory techniques in other
laws, H. Patrick Glenn, On Common Laws (Oxford: Oxford University Press,
2005) at 131 ff.
23. In Canada the leading case is Calder v. British Columbia (A.G.) [1973] S.C.R.
313, 34 D.L.R. (3d) 145.
24. For the pervasive and complex character of this process, Christelle Landheer-
Cieslak, La religion devant les juges français et québécois de droit civil (forthcom-
ing, Yvon Blais/Bruylant); and in U.S. law, Ann Estin, “Embracing Tradition:
Pluralism in American Family Law” (2004) 63 Maryland L. Rev. 540, notably
at 541–2 (U.S. judges developing multicultural family law, making “space for
traditions to flourish”).
25. Alison D. Renteln, The Cultural Defense (New York: Oxford University Press,
2003).
26. For the United States, where the large state of California has a Civil Code, see
notably Peter Stein, “The Attraction of the Civil Law in Post-Revolutionary
America” (1966) 52 Va L. Rev. 403; W. Hamilton Brison, “The Use of Roman
Law in Virginia Courts” (1984) 28 Am. J Legal Hist. 135; Michael H. Hoeflich,
Roman and Civil Law and the Development of Anglo-American Jurisprudence in
the Nineteenth Century (Athens, GA: University of Georgia Press, 1997); Mathias
Reimann (ed.), The Reception of Continental Ideas in the Common Law World
(Berlin: Duncker & Humblot, 1993); Stefan Riesenfeld, “The Influence of
German Legal Theory on American Law: The Heritage of Savigny and His Dis-
ciples” (1989) 37 Am. J. Comp. Law 1 (notably on reception of highly abstract
concept of “secured transactions,” alien to prior common law thinking, in the
U.C.C.).
27. For the complex nature of controls on states and provinces in Canada and
the United States, Glenn, “Reconciling Regimes,” supra note 14, distinguishing
54 ● H. Patrick Glenn
between simple control of unilateralism, on the one hand, and more integra-
tive forms of bilateral institutions, norms or accords which preclude, a priori,
unilateral measures.
28. Morgan v. A. G. for Prince Edward Island (1975) 55 D.L.R. (3d) 527 (S.C.C.).
29. Worthington Corp. c. Atlas Turner inc. [2004] R.J.Q. 2376.
30. For the United States, In re Griffiths, 413 U.S. 717; for Canada Law Society of
British Columbia v. Andrews [1989] 56 D.L.R. (4th) 1. For Mexico, through indi-
vidual use of amparo proceedings, though not giving rise to precedential effect,
Sydney M. Cone III, International Trade in Legal Services (1996) 6.2; and for pro-
gressive elimination of the legislative requirement of citizenship, Zamora, supra
note 9, at 63.
31. James A. Sweeney, “Margins of Appreciation: Cultural Relativity and the
European Court of Human Rights in the Post-Cold War Era” (2005) 54 I.C.L.Q.
459 (with refs), notably at 467 (“ethical de-centralisation or subsidiarity”).
32. Shelley v. Kraemer 334 U.S. 1 (1948).
33. Zamora, supra note 9, at 215.
34. H. Patrick Glenn, “Divided Justice? Judicial Structures in Federal and Confederal
States” (1995) 46 S. C. L. Rev. 819.
35. Glenn, “Conflicting Laws”, supra note 14 at 1810.
36. Council on Foreign Relations, “Building a North American Community: Report
of an Independent Task Force” (New York: 2005) at 22, accessible at http://www.
cfr.org/publication/8102. Cf. Gotlieb, supra note 11, at 491 (with ad hoc panels
you get less bureaucracy and better people).
37. Leone Niglia, “Taking Comparative Law Seriously: Europe’s Private Law and the
Poverty of the Orthodoxy” (2006) 54 Am. J. Comp. L. 401 at 417 ff; Leone
Niglia, “The Non-Europeanisation of Private Law” (2001) 4 Eur. Rev. Pr. L. 575;
and for the process of “de-harmonization” resulting from the creation of two legal
orders within each state, Walter van Gerven, “A Common Law for Europe: The
Future Meeting the Past” (2001) 4 Eur. Rev. Pr. L. 485 at 491.
38. This results from the refusal of the U.S. government to give precedential effect to
decisions of U.S. Circuit Courts of Appeal (the Otero formula transposed to the
U.S.). See generally Samuel Estreicher and Richard Revesz, “Nonacquiescence
by Federal Administrative Agencies” (1989) 98 Yale L.J. 679; Matthew Diller
and Nancy Morawetz, “Intracircuit Nonacquiescence and the Breakdown of the
Rule of Law: A Response to Estreicher and Revesz” (1990) 99 Yale L.J. 801;
Samuel Estreicher and Richard Revesz, “The Uneasy Case Against Intracircuit
Nonacquiescence: A Reply” (1990), 99 Yale L.J. 831. The attitude of the U.S.
government, within the United States, has been characterized as that of “passive
aggressivity.”
39. Glenn, “Conflicting Laws,” supra note 14, at 1796 ff; H. Patrick Glenn, “Com-
parative Law and Legal Practice: On Removing the Borders” (2001) 75 Tulane
L. Rev. 977.
40. For elimination of the citizenship requirement in North America, supra
note 30.
How to Think About Law in North America ● 55
41. Council Directive 98/5 EC, 1998 O.J. (L 77) 36 (aiming “to facilitate practice of
the profession of lawyer on a permanent basis in a Member State other than that
in which the qualification was obtained”).
42. See Héctor Fix-Fierro and Sergio López Ayllón, “The Impact of Globalization
on the Reform of the State and the Law in Latin America” (1997) 19 Houston
J. Int’l. L. 785 at 791 (“To a closed economy corresponded a ‘closed’ legal sys-
tem. Since economic exchange was limited, the room for interaction between the
domestic and the international legal systems was limited”).
43. J. A. Vargas, “Enforcement of Judgments in Mexico: The 1988 Rules of the
Federal Code of Civil Procedure” (1994) 14 Nw. J Int’l. L. & Bus. 376; and
for arbitration, Claus von Wobeser, “Enforcement of Arbitration Agreements in
Latin America: Mexico” in B. M. Cremades (ed.), Enforcement of Arbitration
Agreements in Latin America (Alphen aan den Rijn: Kluwer Law International,
1999) 55.
44. For recognition of arbitration in Quebec, John E. C. Brierley, “Canadian Accep-
tance of International Commercial Arbitration” (1988) 40 Maine. L. Rev. 287.
45. Shaffer v. Heitner, 433 U.S. 186 (1977).
46. Art. 3148, C.C.Q.
47. Art. 3158, C.C.Q.
48. Morguard Investments Ltd. v. De Savoye [1990] 3 S.C.R.1077; and see more
recently, for the possibility of recognizing equitable orders and decrees, for
purposes of transborder enforcement, Pro Swing Inc. v. Elta Golf Inc. 2006
SCC 52.
49. For the texts, see Vargas, supra note 43, at 398, 400.
50. See supra note 29.
51. H. Patrick Glenn, “A North American Transformative Judgment?” (2002) 81
Can. Bar Rev. 469.
52. For the strict lex loci delicti rule recently adopted by the Supreme Court of
Canada, Jensen v. Tolofson (1994) 120 D.L.R. (4th) 289; and for the divergent
approaches in the U.S., S. Symeonides, The American Choice-of-Law Revolution
in the Courts: Today and Tomorrow (2002) 298 Recueil des Cours.
53. H. Patrick Glenn, “Conciliation of Laws in the NAFTA Countries” (2000) 60
Louisiana L. Rev. 1103–1112.
54. See Bagnell v. Bagnell (1991) 108 N.S.R. (2d) 428 (Nova Scotia Family Court
judge telephoning to Senior Judge of Orange County, California, Superior Court
on California law and state of proceedings in applying Hague Convention on the
Civil Aspects of International Child Abduction).
55. See for example, Olympia & York Developments Ltd. v. Royal Trust Co. (1993)
20 C.B.R. (3d) 165 (Ont. C.J.) and generally Bruce E. Leonard, “Developments
and Trends in International Restructurings and Insolvencies” (1999) 3 Can. Int’l.
Lawyer 140 at 145.
56. Leonard, supra note 63, at 145.
57. See L. Silberman, “Cooperative Efforts in Private International Law on Behalf of
Children” (2006) 323 Recueil des Cours 261.
56 ● H. Patrick Glenn
Introduction
International agreements that create cooperative associations of one form
or another, including free trade areas, require voluntary interaction among
the member states in order to succeed. Many factors can influence that suc-
cess, but a relatively neglected consideration is the difference in institutional
structure among these governments. Neo-institutional theories suggest that
different governmental structures can affect rational choice decisions regard-
ing policies, both domestic and international.1 The fact that Canada differs
from the other two members of NAFTA (Mexico and the United States) by
having a parliamentary system may be significant in this respect, particularly
during periods of majority government.
The separation of powers that exists within the other two North American
political systems may contribute to obstacles and other delays regarding deci-
sive adoption, implementation, and compliance. This distinction, while only
one of many factors, may contribute to some of the long-term difficulties that
might be experienced if the three countries attempt to evolve this relation-
ship from a free trade zone to a customs union or some other arrangement.
It also suggests that the features of the Canadian parliamentary system that
make it so potentially decisive in recommending and pursuing this sort of
policy (such as the concept of prime ministerial dominance within the con-
text of strict party discipline) has served (in terms of the decision to base
NAFTA upon an “agreement,” rather than a “treaty”), and may continue to
serve, as an inspiration for independent executive action in this area within
the presidential systems of Mexico and the United States.
Canada
The institutional influence of Britain, France, and the United States has
produced political institutions within Canada that have been varied and
dynamic. Nonetheless, other themes that resonate within this political system
have had an even greater influence upon its politics, both domestic and inter-
national. Such crucial themes of the Canadian political system have included
the bilingual heritage of the country. Grounded upon its history of European
colonization and conflict and the lingering heritage of the indigenous peo-
ple who were present long before the arrival of the Europeans, bilingualism
is a symbol of a defining cleavage of Canadian politics and national identity.
After unsuccessful attempts during the eighteenth and nineteenth centuries
to assimilate the French-speaking population that was derived from what
originally had been New France, accommodation of the two largest linguist
groups became an enduring part of the calculation in creating and maintain-
ing Canada as a viable political system. Indeed, that consideration provided
an added impetus for the adoption of a federal system when the country was
The Constitutional Presence within North America ● 59
Mexico
The Mexican political system has been influenced by dominant themes that
revolve around its historical cycle of struggles between populist and elite-
dominated governments. That cycle has produced a legacy of revolution
that formerly culminated with the Revolution of 1910 but that continues
to impose its presence over the national imagination. The Mexican Constitu-
tion of 1917 was the culmination of that process of transforming the nation
by restoring democratic government. It has been notable for the way in which
it has sought to define the relationship between a sovereign people and its
government.
Mexico has been the subject of historical class divisions that have been par-
ticularly stratified and exacerbated by ethnic identities. Indigenous peoples
(including Aztec, Toltec, and Mayan cultures) have been the most oppressed.
At the apex of the system had been people of European ancestry, partic-
ularly, during the colonial period, persons who came directly from Spain,
known as peninsulares, and people of European ancestry who are native to
Mexico, known as crioillos. Between these extremes have been the people
of mixed European and indigenous ancestry, known as the mestizos. This
last group has become symbolic of the larger search for a Mexican national
identity on behalf of “la raza.”8 Mexico’s law and politics have reflected this
political theme, especially in terms of addressing historical exploitation with
populist appeals. Therefore, using the political and legal system to advance
those interests and combat perceived inequalities has been an overriding
theme that has dominated aspects of Mexican politics and remains a factor
The Constitutional Presence within North America ● 61
secular theme has consequences for the way in which Mexico deals with its
secular neighbors, especially as all three countries have experienced profound
religious influences.13
These themes have influenced, and continue to influence, Mexico’s
approach to its neighbors. They have had a historical effect upon its relation-
ship with the United States as well as other countries. The policy implications
of this legacy can be profound, especially in relation to fostering continental
cooperation
United States
The American political system also was a product of a revolution. However,
the initial revolutionary impetus behind the emergence of an independent
American republic has been more persistent and, arguably, consistent than
its Mexican counterpart. The principle of constitutional entrenchment that
this country introduced has reinforced themes of republican government
(including the concept of a separation of powers) that has been domestically
challenged but relatively enduring.14 Although much of its political and legal
orientation has been influenced by other historical developments (including
continental expansion and the eventual achievement of “superpower” status),
certain constitutional themes continue to exert an influence upon that coun-
try. That influence, in turn, has actual and potential consequences for the
country’s approach to diplomacy and its continental neighbors.
The separation of powers is a particularly significant theme within the
American constitutional order, not just for institutional reasons but also
because it reflects other influences upon its political and legal development.
Both a libertarian suspicion of government and a civic republican emphasis
upon virtual representation of major constituencies (such as property own-
ers and the states, themselves) motivated the introduction of this theme into
the American constitutional system. Therefore, it also reflects considerations
that led to the creation and fostering of the American federal system, which
has significant consequences for the ratification of treaties by the U.S. Sen-
ate (based upon a principle of equal representation for each state), potential
regional objections to international negotiations (especially for matters that
affect trade and commerce), and potential resistance to the implementation
of such agreements.15
Constitutional vagueness regarding the assignment of delegated author-
ity in foreign relations has proven to be a particularly significant theme of
American politics. Arguably, that vagueness was a deliberate result of the con-
flicting political desires and expectations that necessitated so much of the
initial constitutional compromise that created the American political and
The Constitutional Presence within North America ● 63
Canada
Canada differs most markedly from its two continental neighbors in having a
parliamentary system. This presence, alone, ensures different procedures from
its continental neighbors in approaching the formal process of pursuing coop-
eration with them. A parliamentary structure provides potential advantages in
terms of diplomatic efficiency and effectiveness. It also provides, potentially,
greater decisiveness in relation to a Canadian government’s approach to nego-
tiation and policy development—provided, of course, that the political vision
and will exist in that respect. That institutional factor could be significant in
terms of Canada taking the lead and being more decisive in future efforts
relating to the fostering of North American cooperation.
A parliamentary system represents a principle of “responsible govern-
ment.” It is a system of government in which dominance of the legislature
is essential to obtaining political control. As a necessary condition of this sys-
tem, members of the same political party almost invariably vote the same
way (at least outside of the internal debates that it might conduct in cau-
cus or elsewhere) on all major issues (a necessary condition known as “party
discipline”), thus making the process more predictable and the status of the
government leader (in the Canadian case, the prime minister), stable.19 With-
out this arrangement, government could not function, effectively. The prime
minister must have both the support of the legislature and be a member
of that body in order to assume office. As a “responsible” government, the
Canadian parliamentary system is based upon the expectation that a govern-
ment controls the political process, sufficiently, to guarantee that all of its
legislative goals will be achieved. Failure to achieve those substantive goals
The Constitutional Presence within North America ● 65
demonstrates a lack of control over the legislature and, thus, indicates that
the government has “fallen” and is no longer able to govern, effectively.20
A government that is determined to pursue foreign negotiations, includ-
ing with continental neighbors, is provided more latitude under this system.
Of course, other political considerations will affect that efficiency. Nonethe-
less, confirmation of foreign policy decisions and ratification of treaties can
be assured within this system, provided that the prime minister’s political
party controls a clear majority of the seats in the lower house of the legisla-
ture.21 In that respect, Canada can be more decisive in its approach to these
negotiations, more clear in expressing its policy objectives, and better able to
control the domestic outcome of that process, including in terms of legislative
ratification. It is an institutional advantage that can influence its role within
the larger scope of continental cooperation. However, it is far from the only
institutional factor that can affect these political and legal goals.
Mexico
Mexico’s presidential system was created in formal imitation of many of the
principal features of the American system of government. However, the his-
torical nature of its party system, emerging particularly from the Revolution
of 1910, has provided a significant difference in terms of the way in which
those institutions have functioned in actuality. Nonetheless, the central fea-
tures and principles of a presidential system of government are very relevant
to the institutional approaches and constraints that Mexico has experienced
and will, potentially, experience in relation to the process of pursuing greater
cooperation with its North American neighbors.
Within a presidential system of government, the role of the executive
(such as the Mexican president) is both prominent and distinct from other
political institutions, especially the legislature. The Mexican president fulfills
the role of both head of state and chief executive of government, which is
both a consequence and emblematic of this relative dominance. The con-
cept of a “separation of powers” (as already noted as a theme of American
constitutional government) is a popular feature of this system.22
This system of government is categorized as “non-responsible.” It provides
for an administration of government that remains in power for a prede-
termined period of time (defined by the fixed election cycle) regardless of
whether or not it succeeds in achieving any part of its legislative agenda. The
“responsibility” that is invoked by this term refers to the fact that a govern-
ment is not held “responsible,” in terms of remaining in office, for failures
to secure a particular policy or legislative agenda. Therefore, no immediate
impetus exists for legislative approval of any policy decisions by the president,
66 ● James T. McHugh
United States
The presidential system that was created by the United States Constitu-
tion has produced a government that is both stable but, also, deliber-
ately inefficient. Indeed, the difficulty of gaining congressional approval for
NAFTA motivated the American president to seek an agreement among the
The Constitutional Presence within North America ● 67
continental partners, rather than a treaty that would have required ratification
by the Senate.
The typical features of a presidential system of government apply to the
specific example of the United States. This fact is not surprising because it
was the United States Constitution that first established this institutional
political system. The principle of a separation of powers was a deliberate
attempt to ensure limited government and widespread participation in gov-
ernment. It was not clear, however, whether the model for that principle
was derived from John Locke and his liberal emphasis upon the two “politi-
cal” branches of the executive and legislature or upon Montesquieu’s broader
civic republican vision that provided for a distinct judicial role within that
governmental structure.26 Nonetheless, the underlying motive of dividing
government against itself as a means to satisfy basic sovereign concerns and
ideals provides an institutional consideration for a government (especially the
executive branch) to consider as part of the pursuit of foreign policy objec-
tives, including trade and continental cooperation with the country’s North
American neighbors.27
One aspect of the American presidential system that has proven to be par-
ticularly prominent has been the role of the judiciary. Originally, there was
no constitutional consensus regarding whether its judicial provisions were
intended merely to guarantee the independence of courts from the compet-
itive political process of the executive and legislative branches or to establish
the courts as a definitive branch of government with special responsibility for
providing and imposing constitutional interpretation and arbitration. In this
case, this presidential system of government has been deemed to be struc-
tured in a way that permits the judicial branch of government to invalidate
laws or other government actions that are interpreted as being inconsistent
with constitutional norms and principles. That factor can be relevant to pres-
idents in establishing policies and negotiating agreements and treaties and the
legislature in the approval, ratification, and enactment of such policy prefer-
ences, including in the area of continental cooperation and relations with the
country’s immediate neighbors.28
One other interesting consideration that emanates from this institutional
scheme is the idea of bureaucratic elements constituting a de facto “fourth
branch” of government. Of course, civil administration is a strong and influ-
ential presence within almost all governmental systems, even though their
role is intended to be politically neutral. But the competition over controlling
authority regarding the American bureaucracy between the legislative branch
that authorizes administrative agencies and the executive branch that directs
them in the course of implementing policy has placed it in a particularly influ-
ential position in this respect.29 In fact, some of the criticism of NAFTA and
68 ● James T. McHugh
Federalism
All three of the principal North American countries have a federal system of
government. This feature has had a profound effect, not only upon the inter-
nal development of each country but, also, upon the manner in which they
negotiate and interact with each other. The primary distinctions among these
three federal systems may be identified in terms of two broad, yet distinct,
characterizations: (1) the relative institutional and political strength of the
federal system, itself; (2) the relative degree of centralization or decentraliza-
tion of sovereign authority within the federal system. A strongly centralized
federal system (such as found within Mexico and the United States) can facil-
itate the negotiation and imposition of new legal arrangements that will
provide for further economic and political cooperation. However, a more
strongly decentralized system (such as found within Canada) could, poten-
tially, provide the impetus for more effective implementation of these legal
agreements as well as potentially, among regions and local communities,
foster a greater sense of acceptance and involvement in a broader North
American community.
Canada
Canada has a federal system that is institutionally strong. Compared to its
continental neighbors, it also has a relatively decentralized federal system.
One of the keys to understanding the federal relationship within Canada is
section 92 of the Constitution Act of 1867. Among the sovereign powers that
it delegated to the provincial level was authority over resources. The signif-
icance of that arrangement would not be fully appreciated for decades but
its significance in terms of providing greater economic strength for provin-
cial governments in their relationships with the central government would
be, arguably, the single most significant factor in shifting the balance of
federal relationships in a more decentralized direction. Nonetheless, other
powers of the provincial governments in the area of civil law, property rights,
and administrative responsibility regarding criminal law and other matters of
general enforcement, regardless of jurisdiction, assisted this tendency.31
The Constitutional Presence within North America ● 69
Historically, the federal system within Canada was, during its initial phase
of the mid-to-late nineteenth century, highly centralized. This trend was the
result of the relative strength of early Canadian administrations in asserting
their dominance over political and economic matters, as well as the ten-
dency of the judicial system to uphold federal claims to this preeminence
in matters involving disputes of jurisdictional authority. However, by the end
of the nineteenth century, the trend toward greater decentralization of the
Canadian federal system had begun. In particular, constitutional rulings on
federal power were, increasingly, appealed to the Judicial Committee of the
Privy Council in London, which served as the final authority on such matters
and which, overwhelmingly, interpreted the British North America Act in a
manner that favored the sovereign claims of the provinces. The federal gov-
ernment in Canada was able to reassert its dominance as a result of the two
World Wars and recourse to the War Measures Act of 1914 and the estab-
lishment of a federal income tax—measures that were, generally, accepted as
being necessary under the circumstances. During World War II, in particular,
practical federal jurisdiction was extended to various social services, including
unemployment insurance.32 Nonetheless, by the end of the war, overall coop-
eration between the two sovereign levels had increased, mainly as a result of
the expansion of the welfare state and the need for this sort of collaboration
in order to implement these policies.33 During the 1950s, this cooperation
was institutionalized through the adoption of First Ministers’ Meetings, in
which formal and informal arrangements in this area were reached, though
with inconsistent and, at times, diminishing success.34
The ultimate result has been a federal system in which intergovernmental
cooperation, including in terms of ongoing institutional relationships (most
conspicuously represented by First Ministers meetings among the various
federal and provincial chief executives), is a necessary element of funda-
mental political and economic initiatives that affect the country as a whole,
though much of that interaction occurs within the central government. This
“intrastate” activity of making institutions within the federal government
responsive to provincial concerns and goals can both facilitate and frustrate
the legal process at the national level, including in terms of implementing the
laws that are mandated by international agreements.35
Canada’s more decentralized federal system may find a relevant parallel
in this respect within the European Union’s adaptation of the principle of
subsidiarity. The context is, of course, completely different because North
American merely seeks greater cooperation among its principal states while
Europe has pursued supranational or, even, confederal union. But even under
the more modest North American objective, subsidiarity may be a use-
ful model because it has guided the political legal cooperation of Europe.
It directs that the implementation of all policies and their translation into law
70 ● James T. McHugh
Mexico
Mexico has a federal system that has been, historically, both highly centralized
and relatively weak in institutional terms, particularly in respect to the prac-
tical protection of sovereign authority at the sub-unit level. Some authorities
have claimed that the establishment of a federal system was a contradictory act
that belied the true nature of the new country’s political system and establish-
ment and may, in fact, have served to facilitate this consolidation, especially
among large landowners (especially of the haciendas) and other powerful
Mexican elites.39
The Revolution of 1910 reestablished an earlier federal principle within
Constitution of 1917. However, the results of that revolution and consti-
tutional establishment also reaffirmed the historical tendency toward strong
executive and centralized government, both of which tend to undermine the
effectiveness of federalism. It has been suggested that the popular associa-
tion of federalism with democracy among much of the Mexican population
made the inclusion of the federal system necessary, even if only in a symbolic
sense. A lack of constitutional rigor for that federal system appears as a sys-
tem of true shared sovereignty appears to have been undermined, though, by
specific constitutional clauses and political conditions.40
Articles 40 and 41 of the Constitution of 1917 do establish, though some-
what vaguely, the federal principle. But the constitutional powers that are
specifically delegated to the Mexican federal government are considerable.
Those powers include the authority over labor law and policy and the social
security infrastructure of the country as established within article 123 of the
The Constitutional Presence within North America ● 71
United States
The United States has a federal system that also has become fairly central-
ized in practice. Nonetheless, the institutions of that federal system are well
entrenched and the sovereign power of its sub-units are fairly well protected.
Federalism was not only the central issue that dominated the creation of the
United States but shortcomings in resolving the precise nature and parameters
of that federal union were responsible for the sectarian strife that eventually
resulted in the American Civil War. Three distinct phases of American fed-
eral development have been commonly identified among scholars: “dual,”
cooperative, and the “new” federalism. The first phase reflected the initially
decentralized intent of American federalism. Given the fundamental eco-
nomic differences between the northern and southern states (which included
the uneasy compromise that permitted the continuation of slavery in the
South), the scope of federal powers were kept, deliberately, limited. Nonethe-
less, due to the implications of the “interstate commerce clause” found within
article one, section eight of the United States Constitution, the involvement
of the federal government gradually began to expand into the economic affairs
of the various states, even as the scope of federal civil rights remained nar-
row, particularly because the very definition of national citizenship had been
reserved to the states upon the basis of the “reserve powers” guaranteed by the
constitutional Tenth Amendment.43
Constitutional changes following the American Civil War (including the
adoption of the 13th, 14th, and 15th Amendments) provided part of the
72 ● James T. McHugh
Conclusion
Like its European counterpart, the process of fostering a greater continental
cooperation (if not the development of a continental identity) has been influ-
enced by the differences, as well as the similarities, found among the principal
countries of North America. Institutional differences provide a potentially
interesting way of understanding and predicting political behavior, including
in response to the adoption and development of public policy, diplomatic
negotiation among countries, and the implementation of policies and agree-
ments. A rational choice model indicates that the pursuit of policy objective
will be influenced, like a mouse pursuing cheese in a maze, by the institu-
tional path that stands between that objective and the political agents who
pursue it. The more difficult the institutional obstacles are, the less likely that
the “mouse” will persist in pursuing the goal. Likewise, governments will be
less inclined to seek a broad policy objective such as greater continental coop-
eration if the institutional means of approving and implementing it are too
daunting. However, if one of those governments feels less constrained, institu-
tionally, in initiating that action and more confident in being able to achieve
its ultimate purpose, it can prompt its potential partners into a more decisive
and, even, optimistic attitude and approach toward pursuing negotiations.
Of the three principal North American countries, Canada may have
an institutional structure that is most conducive toward both leading and
implementing a movement toward greater continental cooperation. The con-
stitutional system of Canada, particularly in terms of both its parliamentary
and federal systems, offers certain advantageous features. Decisive and effi-
cient action can be taken, under such a system, in pursuit of policies that
enjoy definitive government support. Negotiations can be made with relative
confidence of legislative support (including in terms of ensuring the ratifica-
tion of agreements and treaties) that will translate settlements into enabling
legislation. Its institutional strong federal system provides the basis for effec-
tive implementation of those policies at the regional and local, as well as
the national, level. Furthermore, the fact that this federal system is relatively
74 ● James T. McHugh
more decentralized than the federal systems of its neighbors also potentially
aids this process. As the experience of Germany within the European Union
demonstrates, the need to consult federal sub-units may frustrate the abil-
ity to impose a unilateral decision but it also promotes greater cooperation
in implementation, especially at a level at which varying local conditions
need to be taken into account if ultimate implementation is to be affected,
successfully.
Neo-institutional theories suggest that domestic political and legal insti-
tutions matter, even in terms of the way that countries interact with each
other.47 They may provide only a small factor in the overall considerations
that guide future continental cooperation within North America. Nonethe-
less, it remains a potential factor that, combined with other factors, ought
to be taken into account in addressing this important and ongoing trend.
Canada may offer a better institutional model for promoting this process but
both Mexico and the United States offer strong institutional bases from which
their role in these negotiations and policy pursuits also can be initiated. North
America is fortunate in having three principal countries that have sound lib-
eral democratic political and legal systems; that fact may prove to be the most
important asset for the future of the continent.
Notes
1. Dan B. Wood, “Federalism and Policy Responsiveness: The Clean Air Case,”
Journal of Politics 53, no. 3 (August 1991), 851–859.
2. Richard James Joy, Canada’s Official Languages: The Progress of Bilingualism
(Toronto: University of Toronto Press, 1992).
3. Graeme S. Mount and Edelgard E. Mahant, “Review of Recent Literature on
Canadian-Latin American Relations,” Journal of Inter-American Studies and World
Affairs 27, no. 2 (Summer 1985): 127–151 at 145–146.
4. Alain-G Gagnon, Au Dela de la revolution tranquille (Montréal: VLB, 1992).
5. Robert Bothwell, Canada and Quebec: One Country, Two Histories (Vancouver:
University of British Columbia Press, 1998).
6. John F. Helliwell, “Do National Borders Matter for Quebec’s Trade,” Canadian
Journal of Economics 29, no. 3 (August 1996), 507–522.
7. John Berry, “Official Multiculturalism,” in Language in Canada, ed. John
Edwards (Cambridge: Cambridge University Press, 1998) at 84–102.
8. Robert Ryal Miller, Mexico: A History (Norman: University of Oklahoma Press,
1989) at 139–140.
9. Michael C. Meyer, William L. Sherman, and Susan M. Deeds, The Course of
Mexican History (New York: Oxford University Press, 2006) at 614–624.
10. Daniel C. Levy and Kathleen Bruhn, Mexico: The Struggle for Democratic
Development (Berkeley: University of California Press, 2006) at 149–179.
The Constitutional Presence within North America ● 75
11. Roderic Ai Camp, Politics in Mexico: The Democratic Consolidation (New York:
Oxford University Press, 2006) at 153–157.
12. Ronald H. Schmidt and William C. Gruben, “Ejido Reform and the NAFTA,”
Federal Reserve Bank of San Francisco Economic Letter (October 1992).
13. Stephen D. Morris, “Reforming the Nation: Mexican Nationalism in Context,”
Journal of Latin American Studies 33, no. 2 (May 1999), 363–397 at 382–383.
14. James T. McHugh, Comparative Constitutional Traditions (New York: Peter Lang,
2003) at 33–34.
15. Jessica Korn, The Power of Separation: American Constitutionalism and the Myth of
the Legislative Veto (Princeton, NJ: Princeton University Press, 1996) at 14–26.
16. Daniel S. Cheever and H. Field Haviland, Jr. American Foreign Policy and the
Separation of Powers (Cambridge, MA: Harvard University Press, 1962).
17. Patricia Lucie, “The Enduring Significance of the Civil War Constitutional
Amendments,” in Legacy of Disunion: The Enduring Significance of the American
Civil War, eds. Susan-Mary Grant and Peter J. Parish (Baton Rouge: Louisiana
State University Press, 2003) at 171–187.
18. Anders Stephanson, Manifest Destiny: American Expansionism and the Empire of
Right (New York: Hill and Wang, 1995).
19. Arend Lijphart, Parliamentary versus Presidential Government (Oxford: Oxford
University Press, 1992) at 159–160.
20. Patrick Malcolmson and Richard Myers, The Canadian Regime (Toronto: Uni-
versity of Toronto Press, 2005) at 61–75.
21. Michael J. Ireland and Scott Sigmund Gartner, “Time to Fight: Government
Type and Conflict Initiation in Parliamentary Systems,” Journal of Conflict
Resolution 45, no. 5 (October 2001), 547–568 at 550–552.
22. Giovanni Sartori, “Neither Presidentialism nor Parliamentarianism,” in The Fail-
ure of Presidential Democracy, eds. Juan J. Linz and Arturo Valenzuela (Baltimore:
Johns Hopkins University Press, 1994) at 108–109.
23. Supra note 10 at 176–192.
24. Joseph L. Klessner, “Electoral Competition and the New Party System in
Mexico,” Latin American Politics and Society 47, no. 2 (Summer 2005), 103–142.
25. Manuel Pastor Jr. and Carol Wise, “The Lost Sexenio: Vicente Fox and the New
Politics of Economic Reform in Mexico,” Latin American Politics and Society 47,
no. 4 (Winter 2005), 135–160.
26. Conrad Joyner, “A Liberal Dilemma: Presidential Power and the Separation of
Powers,” Western Political Quarterly 27, no. 4 (December 1974), 593–596.
27. Richard M. Pious and Christopher H. Pyle, The President, Congress, and the Con-
stitution: Power and Legitimacy in American Politics (Mankato, MN: The Free
Press, 1984) at 223–285.
28. Keith E. Whittington, Political Foundations of Judicial Supremacy: The Presidency,
the Supreme Court, and Constitutional Leadership in U.S. History (Princeton, NJ:
Princeton University Press, 2007) at 161–229.
29. Francis E. Rourke, “Bureaucracy in the American Political Order,” Political
Science Quarterly 102, no. 2 (Summer 1987), 217–232.
76 ● James T. McHugh
30. Jerome R. Corsi, The Late, Great, USA: NAFTA, the North American Union, and
the Threat of a Coming Merger with Mexico and Canada (New York: Threshold
Editions, 2009) at 85–101.
31. Peter W. Hogg, Canadian Constitutional Law (Toronto: Carswell, 1992) at
108–112.
32. D. C. Rowat, “Recent Developments in Canadian Federalism,” Canadian Journal
of Economics and Political Science 18, no. 1 (1952), 1–9.
33. J. A. Corry, “Constitutional Trends and Federalism,” in Evolving Canadian
Federalism, ed. A. R. M. Lower (Durham, NC: Duke University Press, 1958)
at 106–110.
34. Alan C. Cairns, “The Governments and Societies of Canadian Federalism,”
Canadian Journal of Political Science 10, no. 4 (Summer 1977), 696–699.
35. Ivo D. Duff, ed., Subsidiarity within the European Community (London: Federal
Trust, 1993) at 29–30.
36. Id.
37. Antonio Estella, The EU Principle of Subsidiarity and Its Critique (Oxford: Oxford
University Press, 2005) at 1–35 and Denis J. Edwards, “Fearing Federalism’s Fail-
ure: Subsidiarity in the European Union,” American Journal of Comparative Law
44, no. 4 (1996), 38–79.
38. Thomas C. Kohler, “Lessons from the Social Charter: State, Corporation, and
the Meaning of Subsidiarity,” University of Toronto Law Review 43, no. 3 (1993),
613–615 and Guenther Schaefer, “Institutional Choices: The Rise and Fall of
Subsidiarity,” Futures 23, (1991), 681–687.
39. Miguel Acosta Romero, “Mexican Federalism: Conception and Reality,” Public
Administration Review 42, no. 5 (1982), 399–404.
40. John Bailey, “Centralism and Political Change in Mexico: The Case of National
Solidarity,” in Transforming State-Society Relations in Mexico: The National Sol-
idarity Strategy, eds. Wayne Cornelius, Ann Craig, and Jonathan Fox (La Jolia,
CA: Center for US-Mexican Studies, 1994) at 97–119.
41. Supra note 37 at 339–404. An analysis of the practical consequences of this
constitutional arrangement is provided in Danielle Homant, “Mexico: Consti-
tutional and Political Implications of the 1995 Natural Gas Regulations,” Tulsa
Journal of Comparative and International Law 4, (1997), 233–274. This aspect of
federalism is addressed in McHugh, supra note 13 at 105–112.
42. James F. Smith, “Confronting Differences in the United States and Mexican Legal
Systems in the Era of NAFTA,” United States-Mexico Law Journal 1 (1993),
94–97.
43. Donald B. Rosenthal and James M. Hoefler, “Competing Approaches to the
Study of American Federalism and Intergovernmental Relations,” Publius 19,
no. 1 (1989), 1–23.
44. Daniel Elazar, “Civil War and the Preservation of American Federalism,” Publius
1, no. 1 (1971), 39–58.
45. Joseph F. Zimmerman, Contemporary American Federalism: The Growth of
National Power (New York: Praeger, 1992) at 102–134.
The Constitutional Presence within North America ● 77
46. James T. McHugh, “North American Federalism and Its Legal Implications,”
Nortéamerica 3, no. 1 (June 2009), 55–83.
47. Hudson Meadwell, “Institutions and Political Rationality,” in New Institutionalism:
Theory and Reality, ed. André Lecours (Toronto: University of Toronto Press,
2005) at 80–98.
CHAPTER 4
Introduction
There is a continuing debate about the importance of law to economic
development.1 I have come away from that debate with the belief that law
is not among the primary factors in development, but does have a material
impact. It is even more plausible that law might matter to the evolution of a
regional economic union. At the least, most observers would agree that the
legal institutions of the European Union have become important in its devel-
opment. The direction of the causality arrow as between economic and legal
integration is fairly debatable, but it is probably an interactive relationship,
each element feeding the growth of the other.
Thus, there is some importance in considering how truly supranational
law might develop within NAFTA. By supranational law, I mean legal
rules and procedures that are authoritatively interpreted by institutions that
exist outside of the legal and political structures of the sovereign states that
establish those institutions.2 These rules are frequently classifiable as public
international law, but are capable of creating and enforcing private rights.3
When I refer to legal rules, I mean rules that are generally followed and may
be subject to coercive enforcement.
Of course, there are many avenues through which supranational law might
grow within NAFTA.4 Most obviously, the state parties might amend the
treaty or add additional treaties or side agreements, adopt parallel legislation,
or otherwise legislate legal rules and create legal institutions binding through-
out NAFTA. Others are much better equipped than I to consider how and
why such political developments might arise. My focus is instead on how such
An Extrapolation
Against this brief description of the current state of NAFTA adjudication, we
can take advantage of the intellectual freedom the organizers have given us
to extrapolate, perhaps to the limits of plausibility, how supranational rules
might evolve to govern certain aspects of commercial law. I choose as my
example multinational bankruptcy law, because that field is the one where
I have done much of my work and because it is a likely candidate for cross-
border regulation and agreement.
One reason that bankruptcy has been a focus of international reform is
that general default by a multinational corporation often implicates the inter-
ests of a number of nations. These interests are not only financial, but relate
to employment, export trade, and other economic and social interests. For
example, the somewhat chaotic collapse of Swiss Air not only created seri-
ous economic problems, but was also a deeply felt embarrassment to a nation
justly proud of its business acumen and success. The airline’s general default
84 ● Jay Lawrence Westbrook
Conclusion
The developments and potential developments discussed in this chapter
illustrate that NAFTA is both less developed and more developed than is
generally appreciated. They also reflect the mixed feelings shared by all
three NAFTA members as to the extent of economic, political, and legal
86 ● Jay Lawrence Westbrook
Notes
∗
Benno C. Schmidt Chair of Business Law, The University of Texas School of Law.
I am grateful for research help from Jaaron Sanderson, Texas’ 13.
1. See, for example, Michael Trebilcock and Jing Leng, The Role of Formal Con-
tract Law and Enforcement in Economic Development, 92 Va. L. Rev. 1517
(2006).
2. See generally, Laurence R. Helfer and Anne-Marie Slaughter, Toward a Theory of
Effective Supranational Adjudication, 107 Yale L.J. 273 (1997).
3. Traditionally, of course, the key categories were public and private international
law, the former referring to the law binding on states and the latter to choice of
domestic law. That terminology has largely broken down, so supranational law is
a useful transitional term.
4. There is an on-going confusion about the use of “NAFTA” to refer, inter alia, to
the regional grouping, to the agreement creating the regional grouping, and to
the institutions constituting that grouping. In this short chapter I do not attempt
to be very precise in that usage.
5. A fuller discussion of this subject might include an extensive review of EU
jurisprudence and institutional evolution, but here I want to focus on the North
American experience.
6. North American Free Trade Agreement (NAFTA), December 8, 1993, 107 Stat.
2057, 32 I.L.M. 289.
7. 32 I.L.M. 605 at 693 (1993).
8. See generally, Ralph H. Folsom, et al., NAFTA: A Problem-Oriented Casebook
460–96 (2000).
9. NAFTA supra note at art. 1904.
10. NAFTA supra note at annex 1901.2. There is also a provision for review of a
panel’s decision in “extraordinary” cases. Id. at annex 1904.13.
11. NAFTA, supra note 6 at 639.
12. See, for example, David A. Gantz, The Evolution of FTA Investment Provisions:
From NAFTA to the United States-Chile Free Trade Agreement, 19 Am. U. Int.
L. Rev. 679, 724–27 (2004).Guillermo Aguilar Alvarez, The New Face of Invest-
ment Arbitration: NAFTA Chapter 11, 28 Yale J. Int’l L. 365 (Summer 2003)
and Ari Afilalo, Meaning, Ambiguity and Legitimacy: Judicial (Re-)Construction of
NAFTA Chapter 11, 25 Nw. J. Int’l L. & Bus. 279 (Winter 2005).
13. Id.
14. Convention on the Settlement of Investment Disputes between States and
Nationals of Other States, Mar. 18, 1965, 17 U.S.T. 1270; 575 U.N.T.S. 159
(October 14, 1966) (hereinafter ICSID Convention).
Legal Integration of NAFTA through Supranational Adjudication ● 87
31. See ALI Principles, supra note 30; U.N. Comm’n On Int’l Trade Law, Model
Law on Cross-Border Insolvency with Guide to Enactment, art. 1, U.N. Sales
No. E.99.V.3 (year) (hereinafter Model Law); U.N. TDBOR Comm’n on Int’l
Trade Law, 30th Sess., art. 2(d), at 67–73, U.N. Doc. A/CN.9/442 (1997); U.N.
Comm’n On Int’l Trade Law, Legislative Guide on Insolvency Lawleg guide,
European Regulation Sales No. E.05.V.10 (2005) (hereinafter Legislative Guide).
32. The example I have chosen has the advantage of being relatively accessible by
a nonspecialist. The tradeoff is that it is more like a typical litigation problem
(resolution of a past dispute) than the kind of dispute that requires swift cross-
border coordination as described earlier in the text.
33. Say with assets of $50 million.
34. 11 U.S.C. §1101 et seq.
35. See ALI, International Statement of Canadian Insolvency Law 116 (2003);
International Statement of Mexican Insolvency Law 32 (2003); International
Statement of United States Insolvency Law 13 (2003).
36. I hope it goes without saying that I am simplifying the example. I ask those with
a sophisticated understanding of bankruptcy law to be charitable when I ignore
the details and the possible twists.
37. If the company was solvent, it would be usual for the creditors to receive at least
some of the shares, while the owners got the rest.
38. This situation was presented in Loewen.
39. This claim might or might not be enough to satisfy the Loewen requirement of
exhaustion of local remedies. Loewen, 207–217.
40. Most countries in the world require a showing of insolvency as a precondition
for filing bankruptcy, even reorganization bankruptcy. See Legislative Guide,
supra note 31, at 45–47. I should note in that regard that in most of the
world a bankruptcy proceeding involving a corporation is called in English
an “insolvency” proceeding. See, for example, Jay L. Westbrook, Multinational
Enterprises in General Default: Chapter 15, The ALI Principles, and The EU
Insolvency Regulation, 76 Am. Bankr. L. J 1, 5 at n. 16 (2002).
41. See, for example, The World Bank Principles for Effective Insolvency and
Creditor Rights Systems 2 (Revised 2005).
CHAPTER 5
Introduction
Chapter 11 of the North American Free Trade Agreement (NAFTA),1 which
authorizes arbitral tribunals to resolve investor-state disputes arising under
the NAFTA,2 is shaping international investment law. It has the potential to
influence, as well, the conduct of key state actors within the United States,
Canada, and Mexico. Chapter 11 arbitral tribunals enforce the NAFTA state
parties’ promise to protect certain foreign investment and, in some cases,
the investors.3 Tribunal awards have helped establish the contours of the
substantive investment obligations.4 In assessing domestic conduct and prac-
tices, the awards have also struck at matters essential to each NAFTA state’s
sovereignty. For example, the decisions of courts and government agencies
of the NAFTA states, whether at the local or federal level, have been and
continue to remain the subject of tribunal review in hotly contested matters.5
The arbitrators who critique domestic practices and render awards based
on them are not judges from the NAFTA state parties, and they face chal-
lenges to their legitimacy from domestic constituencies.6 The arbitrators
are academics, private lawyers, and former government officials, includ-
ing judges, whom the disputing parties—the investor and the state—have
selected to resolve their differences. By examining and, at times, relying on or
distinguishing prior arbitral awards, the NAFTA Chapter 11 tribunals have
assumed some features of a credible legal system. Also, the process has fos-
tered some predictability and consistency, thereby enabling the tribunals to
send clearer signals to states about their NAFTA obligations.7 Yet problems
remain with the arbitral process, particularly due to the absence of formal
rules regarding the effect to be given to prior arbitral awards and the lack of
clarity concerning the investment protections.
This chapter builds on the author’s previous works that focus on
NAFTA Article 1105(1), which affords a minimum standard of treatment
to covered investments.8 It argues that the filing of the cases and the work of
the arbitral tribunals with regard to Article 1105(1) should be considered in a
positive light. The arbitral cases and decisions expose problems with domestic
processes, ones that sometimes run afoul of basic principles of fairness. Tri-
bunal decisions, while affording protection to foreign investment, help align
domestic practices of the NAFTA state parties with international due process
and fairness standards. The result is true even when the tribunal does not issue
a judgment adverse to the host state. The arbitral process itself, particularly
when it results in a published award that contains an extensive review of the
host state’s conduct, elaborates on and helps define relevant legal standards
and puts them in a meaningful context.
scope of the protections although the legal soundness of certain awards has
been questioned.15
Under NAFTA Article 1105(1), Mexico, Canada, and the United States
agreed to treat investments of investors of other NAFTA state parties “in
accordance with international law, including fair and equitable treatment
and full protection and security.”16 The Article 1105(1) promise is the min-
imum afforded the covered investment, and it is in addition to the states’
commitment to afford the investment and investors the better of national
treatment17 or most-favored-nation treatment.18 Further, the obligation is
separate from the obligation not to expropriate or take measures tantamount
to expropriation subject to compensation and other conditions.19
Article 1105(1) has generated considerable confusion. Professor Susan
Franck has documented how the NAFTA Chapter 11 tribunals in S.D. Myers,
Inc. v. Canada, Metalclad Corp. v. Mexico, and Pope & Talbot, Inc. v. Canada
provided different and possibly inconsistent meanings of Article 1105(1)’s fair
and equitable requirement.20 The awards provide no consistent and coherent
meaning to Article 1105(1).21 According to Professor Franck, “conflicting
awards based upon identical facts and/or identically worded investment treaty
provisions will be a threat to the international legal order and the contin-
ued existence of investment treaties.”22 Obviously, inconsistency undermines
predictability and stability, essential to attracting foreign investment and
promoting important NAFTA objectives
Also, a plausible reading of Article 1105(1) could give rise to an investor’s
claim based on any state action alleged to be “unfair” or “inequitable.” In an
early NAFTA Chapter 11 case, Metalclad Corp. v. Mexico,23 the tribunal
interpreted Article 1105(1) to provide broad protection. In the case, the
U.S. investor had purchased a Mexican company and, per the latter’s federal
permit, started building a hazardous waste landfill. Federal and local author-
ities gave assurances to the investor. Local authorities repeatedly inspected
the work. At some point, however, the local government halted the work
due to the lack of a local permit. The investor restarted construction after
the Mexican federal government indicated that everything was in order and
that the municipality would issue the permit. Upon the project’s completion,
the investor was advised its request for a municipal permit, pending for 13
months, was denied. The landfill was rendered useless. The investor then
raised various claims under NAFTA Chapter 11.
Mexico was found to have violated Article 1105(1) by not treating the
U.S. investor “fairly or equitably.”24 According to the tribunal, Mexico’s
investment regime fell fall short of being reliable:
. . . “fair and equitable treatment” includes the obligation not to deny justice in
criminal, civil, or administrative adjudicatory proceedings in accordance with
the principle of due process embodied in the principal legal systems of the
world;45
The U.S. Model BIT uses “includes”; denial of justice is thus an element of
the minimum standard of treatment. In addition, “full protection and secu-
rity” requires a party “to provide the level of police protection required under
customary international law.”46 As to the NAFTA state parties and parties
94 ● Susan L. Karamanian
lands did not share the developed world’s values.52 As the late Professor Sir
Robert Jennings noted:
That so-called “minimum” standard for the treatment of “aliens” was the
product of the European and North American States wishing to demand a
standard for the treatment of their nationals in foreign countries, which they
called “minimum,” but was nevertheless thought to be higher than the local
national standard in some defendant countries, and which national standard
those countries claimed sufficed for the purposes of international law.53
by the judiciary, which denies to the alien that protection and lawful treat-
ment to which is duly entitled.”62 In the broad sense, any state action, not
just that of judicial bodies, which courts do not address, could be reviewed
under the standard of denial of justice.
Beyond the issue of what state entity owes the duty is the more vexing
question of the obligation itself. The United States has recognized the applica-
tion of “due process principles embodied in the principal legal systems of the
world.”63 This phrase is not well advanced beyond Elihu Root’s description of
the minimum standard in 1910 with its focus on a simple and fundamental
standard of justice generally accepted by the world’s civilized nations. Some
aspects of denial of justice are well established, such as refusal to enforce, pun-
ishment without trial, and unwarranted severe sanctions,64 yet others are not
clear. For example, are bond requirements in excess of the judgment, which
deprive a party from appealing the judgment, denial of access to courts? Is the
lack of an open and transparent court or administrative system the denial of
justice?
The decisions of the United States–Mexico General Claims Commission
in the early twentieth century helped refine denial of justice, yet the cases
are old and did not concern foreign investment.65 Jan Paulsson and Georgios
Petrochilos have also argued that the often-cited Neer case, which reviewed
Mexico’s failure to investigate the murder of a U.S. national by private parties,
is of limited import to the broader notion of the customary international law
minimum standard.66 The Commission in Neer pronounced a relatively high
standard for denial of justice amounting to “outrage, to bad faith, to willful
neglect of duty, or to an insufficiency of governmental action so far short
of international standards that every reasonable and impartial man would
readily recognize its insufficiency.”67 That standard, according to Paulsson
and Petrochilos, is arguably “relevant only in cases of failure to arrest and
punish private actors of crimes against aliens.”68
Yet, as discussed later in this chapter, Neer has become part of the Article
1105(1) dialogue, in large part due to the NAFTA state parties’ acceptance
of it as defining the minimum standard. And it is not at all apparent why
a standard based on “outrage,” “bad faith,” or “willful neglect of duty” or
to conduct the insufficiency of which “every reasonable and impartial man
would readily recognize” should not apply to any state conduct as to a cov-
ered investment. In fact, the jurisprudence of the NAFTA tribunals, while in
certain instances purporting to shy away from Neer, appears to embrace it.69
qualified investor. Each NAFTA state has been and continues to remain
embroiled in disputes under Article 1105(1). The disputes have ranged
from Metalclad, referenced earlier in this chapter, which resulted in a
$16.685 million award against Mexico70 to a Canadian investor’s claim for
$970 million against the United States arising from California’s restrictions
on methyl tertiary-butyl ether (MTBE) in gasoline, which the investor argued
discriminated against it and was thereby unfair and inequitable.71
Disputes against the United States that involve Article 1105(1) claims
have taken aim at federal and California regulations on open-pit metallic
mining,72 the laws of certain states of the United States that require certain
tobacco manufacturers to submit funds into state escrow accounts,73 U.S.
procurement laws, the Buy America program and regulations implementing
that program,74 and the courts of Mississippi75 and Massachusetts.76
Cases against Canada involving Article 1105(1) include a number filed
by U.S. investors concerning environmental protection. For example, a U.S.
investor has claimed that environmental assessments on a proposed quarry
and marine terminal by the government of Canada and the Province of
Nova Scotia and other conditions imposed on the projects were unfair, arbi-
trary, and discriminatory and did not provide full protection and security.77
In another case, the investor alleged that the government of Canada discrim-
inated against the investor in favor of other competitors and to the investor’s
detriment in banning the investor’s pesticides in Canada.78 In a third case, the
investor claimed that the Province of Quebec’s ban on certain pesticides vio-
lated Article 1105(1) obligations, including “basic due process, transparency,
good faith, and natural justice.”79
A number of NAFTA Chapter 11 cases against Mexico allege claims under
article 1105(1). The cases include those challenging government actions
under waste concession contracts (e.g., Azinian v. Mexico; Waste Manage-
ment, Inc. v. Mexico), Mexico’s regulation of gambling devices, and Mexico’s
regulation of the sugar industry, all resulting in no award against Mexico.80
Two recent cases filed against the United States have the potential to
push tribunals deep into thorny issues of domestic governance.81 An adverse
decision against the United States in either case, while unlikely for reasons
discussed later in this chapter, could have broad social, health, and economic
implications for U.S. citizens. The cases involve the process under the Hatch-
Waxman Act for a generic drug manufacturer to obtain FDA approval of the
bioequivalent of a listed FDA drug.82 As the listed drug is likely patented,
in the FDA application, the generic company must certify that it does not
intend to market the drug until after expiration of the patent, or it can certify
the patent is invalid or that the generic drug does not infringe the patent.83
If the generic manufacturer certifies invalidity/non-infringement, the patent
holder can then sue for infringement based on the filing.84 The infringement
98 ● Susan L. Karamanian
action typically stays any FDA decision for 30 months.85 The successful
generic filer is granted a six-month exclusivity period to market the drug.86
For applications filed before 2003, the period runs from the earlier of a court
finding of invalidity or non-infringement of the patent or the commercial
marketing of the generic drug.87 Exclusivity is critical as the generic company
that first reaches the market after a holding of invalidity or non-infringement
of the brand manufacturer’s patent could reap substantial market share.88
The Hatch-Waxman Act encourages the manufacturing of generic drugs
by allowing generic manufacturers to receive FDA approval for drugs already
subject to patents and giving them exclusive limited market access once the
patents expired or were held by a court not to be infringed or valid.89 Litiga-
tion appears part of the process. First, the brand manufacturer, to protect its
patent, may sue for infringement. Second, a triggering event for exclusivity
for applications filed before 2003 was a court decision on patent validity or
infringement. The generic and brand manufacturers, however, have an incen-
tive to settle any invalidity/infringement lawsuit, particularly given the brand
manufacturer’s aversion to a finding of patent invalidity.90 The settlement has
implications beyond the two parties. It could be used to trigger the exclusivity
period and thus be considered as running afoul of U.S. antitrust law, particu-
larly if it were to prevent the FDA from granting rights to additional generic
companies.91
Within this relatively fluid and complex regulatory context, Apotex, Inc.,
a Canadian generic manufacturer, had filed an abbreviated new drug appli-
cation (ANDA) with the FDA for a generic heart medication patented by
Bristol Myers Squibb92 and another ANDA for an antidepressant upon which
Pfizer Inc. holds the patent.93 Bristol Myers did not sue Apotex for infringe-
ment; the latter then sought a court declaration of non-infringement.94
The federal district court dismissed the case based on the parties’ stipula-
tion in which Bristol Squibb admitted it did not intend to sue Apotex for
infringement and that the case should be dismissed for lack of subject matter
jurisdiction.95 Based on the dismissal, the FDA recognized that Apotex was
entitled to 180-day exclusivity, but the federal court of appeals reversed the
FDA on the grounds that the FDA decision was arbitrary and capricious due
to lack of explanation for its conclusion that the court dismissal was a proper
triggering event.96
On remand, the FDA held that the exclusivity period had not been trig-
gered, even though, according to Apotex, the federal court of appeals had held
in a case filed by another generic company that a similar order of dismissal
triggered the period.97 Apotex did not succeed in its court challenges to the
second FDA decision.98 In its NAFTA Chapter 11 case, Apotex alleges that
the decisions of the FDA and U.S. federal courts were “manifestly unjust”
NAFTA and Harmonization of Domestic Practices ● 99
due to their alleged misapplication of the law and they were unlawful, arbi-
trary, and capricious in multiple respects.99 In the Pfizer case, Apotex filed a
declaratory judgment against Pfizer on patent validity and the federal district
court dismissed the case for lack of subject matter jurisdiction.100 Accord-
ing to Apotex, the dismissal prevented it from getting its product to market
under the Hatch-Waxman Act.101 Again, Apotex argues that the district
court dismissal and subsequent judicial review were unlawful, arbitrary, and
capricious.102
The Apotex cases ask the NAFTA Chapter 11 tribunal to second-guess the
FDA and U.S. courts as to matters of U.S. law. The underlying administrative
decisions and cases involve a delicate and complex balance of administrative
law concerning access to generic drugs, the protection of brand drugs under
the patent regime, and the promotion of competition under antitrust laws.
The Hatch-Waxman process has undergone statutory amendments in an
effort to address problems and ambiguities. The volume of academic and pro-
fessional literature on the topic is substantial and evidences that any generic
manufacturing company that applies for an ANDA is venturing into a legal
landscape plagued by litigation and, with it, the resulting uncertainty.
appellate jurisdiction. This is not true generally and it is not true for NAFTA.
What must be shown is that the court decision itself constitutes a violation of the
treaty.105
According to the tribunal, “the Claimants must show either a denial of justice,
or a pretense of form to achieve an internationally unlawful end.”106 A claim
of denial of justice, if alleged, would have been recognized “if the relevant
courts refuse to entertain a suit, if they subject it to undue delay, or if they
administer justice in a seriously inadequate way.”107 While the Azinian tri-
bunal perhaps needlessly addressed denial of justice, its cautionary words set
the stage for later decisions.
After Azinian, several NAFTA tribunals entered the Article 1105(1) debate
and took it down a different path. As noted earlier in the chapter, Metalclad
pronounced that Article 1105(1) required the host state to “ensure a trans-
parent and predictable framework” for the investor’s “business planning and
investment.”108 A “lack of orderly process and timely disposition” of decisions
undermines the investor’s expectation of fair and just treatment.109 A few
months before the issuance of the interpretation, the tribunal in Pope & Talbot
Inc. v. Canada announced a broad standard for Article 1105(1) as follows:
. . . the Tribunal interprets Article 1105 to require that covered investors and
investments receive the benefits of the fairness elements under ordinary stan-
dards applied in the NAFTA countries, without any threshold limitation that
the conduct complained of be “egregious,” “outrageous” or “shocking” or
otherwise extraordinary.110
the standard is not set in stone; it “has evolved and can evolve.”115 Further,
the NAFTA interpretation expressly incorporated international law, “whose
content is shaped by the conclusion of more than two thousand bilateral
investment treaties of friendship and commerce.”116 With these rulings, the
tribunal cut off the NAFTA nations’ argument that the standard of Neer was
the only governing one.
Yet the tribunal was evidently concerned about second-guessing a state
court’s application of state law, and it effectively established a high, Neer-
like, threshold for denial of justice.117 It cited the pre-1994 decision of the
International Court of Justice Chamber in ELSI that “willful disregard of due
process of law, . . . which shocks, or at least surprises a sense of judicial propri-
ety”118 is actionable arbitrary conduct, even though, as the tribunal in Mondev
acknowledged, ELSI dealt with a treaty obligation that did not involve the
minimum standard. The tribunal then pronounced what it admitted is an
“open-ended standard” under Article 1105(1):
offends a sense of judicial propriety.”134 Yet the state court trial was one
aspect of the judicial process. Responsibility for denial of justice required
the claimants to have exhausted effective, adequate, and reasonably available
remedies under municipal law.135 As the claimants had settled before doing
so, the system had not denied them justice.136 Paulsson would later observe
that “finality is thus a substantive element of the international delict.”137
The heightened standard for establishing a claim under the minimum
standard, as reflected in Mondev and ADF, was reaffirmed and crystallized
in Waste Management, Inc. v. Mexico.138 A U.S. investor through a Mexican
subsidiary had entered into an exclusive waste services concession agreement
with the City of Acapulco. The company had also agreed to build and oper-
ate a solid waste landfill for Acapulco. A bank provided a standby letter of
credit to secure partial payment to the investor. The concession agreement
provided for arbitration of disputes in Acapulco under the rules of an arbitra-
tion center in Mexico City. The company–city relationship became marred.
The bank did not pay the company’s demand under the letter of credit, so the
company sued the bank in the Mexican federal court for non-performance,
but the claim and appeals were dismissed.139 Further, the company sought to
arbitrate the concession dispute, but the arbitration was discontinued when
the city refused to pay an amount as a condition for the arbitration to proceed
and the company refused to pay the city’s arbitration fee to at least keep the
case alive.140
In the NAFTA arbitration, the company alleged breach of the mini-
mum standard, including denial of justice, arising from the acts of the city,
state, and bank. After reviewing the awards on Article 1105(1), the tribunal
announced the following standard that once again purported to retreat from
the Neer standard:
The tribunal dismissed the claim of denial of justice as to the courts’ deci-
sions as they “were not, either ex facie or on closer examination, evidently
arbitrary, unjust or idiosyncratic. There is no trace of discrimination on
account of the foreign ownership of [the investor], and no evident failure
of due process.”142 The fact that arbitration was not pursued did not give
rise to a claim under Article 1105(1), as the decision not to proceed with the
104 ● Susan L. Karamanian
. . . acts that would give rise to a breach of the minimum standard prescribed
by the NAFTA and customary international law [are] those that, weighed
against the given factual context, amount to a gross denial of justice or manifest
arbitrariness falling below acceptable international standards.152
The investor presented evidence and was heard before the Administrative
Hearing.153 The 31-page order from the hearing was “adequately detailed and
reasoned.” The proceedings before the Secretaria had “certain irregularities,”
but these were not “grave enough to shock a sense of judicial propriety.”154
Of note, the tribunal acknowledged the standard for administrative due pro-
cess is lower than that of judicial process although it provided no authority for
this statement.155 Further, the tribunal took comfort in that the Secretaria’s
proceedings, including the resolution, were subject to judicial review.156
NAFTA and Harmonization of Domestic Practices ● 105
The fundamentals of the Neer standard thus still apply today . . . an act must
be sufficiently egregious and shocking—a gross denial of justice, manifest
arbitrariness, blatant unfairness, a complete lack of due process, evident dis-
crimination, or a manifest lack of reasons—so as to fall below accepted
international standards and constitute a breach of Article 1105(1).180
Bad faith is not required to establish a breach of the minimum standard, but
its presence is conclusive evidence of it.181
The claims were then dismissed with a detailed analysis of each. The
award’s reasoning, like previous awards, recognizes that a NAFTA state party’s
errors in application of domestic law are subject to domestic review standards
and do not typically give rise to a breach of the minimum standard unless
an element of egregiousness is present.182 For example, the solicitor’s opin-
ion on the project, while reversing prior law, was well reasoned and fully
developed and tackled contentious issues in an objective, nondiscriminatory
manner.183 The opinion was not “manifestly arbitrary” or “blatantly unfair,”
nor did it evidence a complete lack of due process or discrimination or a lack
of reasons.184
An interesting aspect of the decision involves the investor’s argument that
it was entitled to have its reasonable and justifiable expectations met, and
these included swift project approval and non-interference by the federal
and California governments. Yet, according to the tribunal, the investor’s
expectations are relevant only if the investor had at least a quasi-contractual
relationship with the state so that the state had “purposely and specifically
induced the investment.”185 This standard effectively cut off many of the
investor’s claims as there was no evidence that either the federal government
or the State of California had promised the investor that it would not take
the referenced action.
The Glamis Gold award is full of analysis of other state action, for exam-
ple, failure to have public comment on an opinion that created a new denial
authority in the federal government, delay in the issuance of federal agency
decisions, allegedly deficient public hearings in the federal government, and
state environmental legislation that arguably does not meet its intended
objective. In each instance, the challenged conduct was held not to rise to
the high standard although in certain instances a few twists of the facts could
have given the tribunal more reason to pause. Also, the collective claim, that
all of the acts of the U.S. government and the State of California violated the
minimum standard, was quickly dismissed as the tribunal noted the absence
of any evidence that both levels of government intended to halt the investor’s
project.186
108 ● Susan L. Karamanian
One phrase in Glamis Gold, “a manifest lack of reasons,” does not appear to
have a clear counterpart in the test set out in Waste Management, although
the phrase could be considered as corresponding to unjustness, unfairness, or
arbitrariness, all of which are found in the Waste Management definition. The
tribunal in Glamis Gold reviewed other NAFTA Chapter 11 awards to sup-
port its definition. For example, it cited International Thunderbird in drawing
on phrases “gross denial of justice” and “manifest arbitrariness,” and it looked
to S.D. Myers to support “unjust” or “arbitrary” conduct.190
A close review of the text establishes that the differences between Glamis
Gold and Waste Management tests are not substantial. As the tribunal in
Mondev noted, the standard is not subject to a bright-line test; it is “some-
what open-ended” and “in practice no more precise formula can be offered
to cover the range of possibilities.”191
The reference to a number of broad factors, each involving an ele-
ment of subjectivity, likely means that more claims under Article 1105(1)
will be raised as investors attempt to deal with adverse decisions ema-
nating from state conduct. While the bar for raising legitimate claims is
high, with the NAFTA Chapter 11 arbitral awards, there is a sense that
arbitrators are playing the function of ensuring that nations are adhering
to the international customary law minimum standard. The NAFTA state
parties, in turn, should be focused on the awards and address their respec-
tive judicial, administrative, and legislative processes in light of the awards.
Although arbitral decisions adverse to any of the NAFTA states have been
few, all of the NAFTA Chapter 11 arbitral awards establish relevant and
discernible legal standards, and they reflect reasoned assessments about state
practices.
110 ● Susan L. Karamanian
its recognition that the minimum standard is an evolving one that is indeed
disciplined. In fact, the tribunal in Glamis Gold felt comfortable in relying on
Neer as its definitional point for the customary international law minimum
standard. As noted earlier in text, Neer did not purport to look at the mini-
mum standard except in a narrow sense of denial of justice, and even in that
sense, only when it involved the alleged failure of the state to take corrective
measures as to private actors. Neer does not refer to a treaty that imposed the
customary international law minimum standard on Mexico which ultimately
served as the basis of the Commission’s review and award. Glamis Gold had
no problem embracing Neer and that is because, by its own admission, the
NAFTA State Parties had cited it to the tribunal.
Glamis Gold has now recognized a reasonable duty on the arbitrators to
address precedent and explain why it is not being followed when a tribunal
is deviating from an established trend. It has also attempted to establish a
hierarchy of precedent, well advanced and beyond that employed by ear-
lier tribunals. These developments evidence a maturing of the investor-state
arbitration process into a more rules-based system.
Conclusion
More than 15 years have passed since the NAFTA came into effect. During
these years, the Chapter 11 arbitral process has generated some clarity regard-
ing the investment protection obligations of NAFTA State Parties. This is
particularly true regarding the duties under broadly worded Article 1105(1).
The arbitral decisions involving Article 1105(1), when coupled with the
Commission Interpretation, have led to defined parameters that are under-
standable, relatively ascertainable, and reasonable. General principles have
emerged and the tribunals are regularly following and implementing them.
The customary international law minimum standard has set a relatively high
threshold regarding the treatment owed a covered investment. The thresh-
old, however, is not so far removed to be of irrelevance to the NAFTA State
Parties. The arbitral process itself will likely continue to tackle contract and
regulatory matters, and some of the issues will have broad public importance
even beyond the individual NAFTA State.
Notes
1. North American Free Trade Agreement, December 17, 1992, Can.-Mex.-U.S.,
ch. 11, 32 I.L.M. 289, 639 (hereinafter NAFTA Chapter 11).
2. Id. arts. 1115–38.
NAFTA and Harmonization of Domestic Practices ● 113
35. The Commission, cabinet-level officials or their designees, “shall . . . (c) resolve
disputes that may arise regarding [the NAFTA’s] interpretation or application.”
NAFTA, supra note 11, art. 2001(1), (2)(c).
36. NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11
Provisions (July 31, 2001), http://www.dfait-maeci.gc.ca/tna-nac/NAFTA-
Interpr-e.asp [Interpretation].
37. NAFTA Chapter 11, supra note 1, art. 1131(2).
38. Interpretation, supra note 36, § B.1.
39. Id. § B.2.
40. Id. § B.3. The Interpretation also recognized the NAFTA does not impose a
general duty of confidentiality on Chapter 11 arbitrations. Id. § A.1, 2.a. Public
access to documents submitted to or issued by the tribunal is in order except in
limited circumstances. Id. § A.1, 2.a,b.
41. See, e.g., Treaty Between the Government of the United States of America
and the Government of [Country] Concerning the Encouragement and Recip-
rocal Protection of Investment, http://www.state.gov/documents/organization/
117601.pdf [hereinafter U.S. Model BIT]; U.S.-Chile Free Trade Agreement,
June 6, 2003, http://www.ustr.gov/trade-agreements/free-trade-agreements/
chile-fta/final-text [hereinafter U.S.-Chile FTA]; Uruguay Treaty Concern-
ing the Encouragement and Reciprocal Protection of Investments, 44 I.L.M.
268 [hereinafter U.S.-Uruguay BIT]. Since the completion of this chapter,
the United States has released the 2012 Model BIT, which did not make
any changes to Article 5. For a discussion of the minimum standard in the
NAFTA and FTAs, see David A. Gantz, The Evolution of FTA Investment Pro-
visions: From NAFTA to the United States-Chile Free Trade Agreement, 19 Am.
U. Int’l L. Rev. 679 (2004).
42. See, e.g., U.S. Model BIT, supra note 41, art. 5(1); U.S.-Chile FTA, supra note
41, art. 10.4(1); U.S.-Uruguay BIT, supra note 41, art. 5(1).
43. See, e.g., U.S. Model BIT, supra note 41, Annex A Customary International
Law; U.S-Chile FTA, supra note 41, Annex A Customary International Law;
U.S.-Uruguay BIT, supra note 41, Annex A Customary International Law.
44. See, e.g., U.S. Model BIT, supra note 41, Annex A Customary International
Law; U.S-Chile FTA, supra note 41, Annex A Customary International Law;
U.S.-Uruguay BIT, supra note 41, Annex A Customary International Law.
45. U.S.-Uruguay BIT, supra note 41, art. 5.2(a). The language mirrors article
5.2(a) of the U.S. Model BIT. See U.S. Model BIT, supra note 41, art. 5.2(a).
46. U.S.-Uruguay BIT, supra note 41, art. 5.2(b). See also U.S. Model BIT, supra
note 41, art. 5.2(b).
47. According to Professor David Gantz, “[e]ven if everyone agrees that ‘fair and
equitable treatment’ in Article 1105 means the standard required by ‘customary
international law’, it still needs to be determined exactly what that means.”
David A. Gantz, International Decision: Pope & Talbot, Inc. v. Canada, 97 Am.
J. Int’l L. 937, 949–50 (2003).
48. Elihu Root, President’s Address, ASIL Pro. 21 (April 28–30, 1910).
116 ● Susan L. Karamanian
49. Ian Brownlie, Principles of Public International Law 502–05 (6th ed. 2003). See
also Gus Van Harten, Investment Treaty Arbitration and Public Law 87 (2008)
(noting that “the minimum standard is stated in ambiguous terms” and that
“the meaning of terms like ‘unfair’ and ‘inequitable’ in the acts and decisions of
governments does not exactly leap from the page”).
50. Richard B. Lillich, The Current Status of the Law of State Responsibility for Injuries
to Aliens in International Law of State Responsibility for Injuries to Aliens 2–3
(Richard B. Lillich ed., 1983).
51. See id. at 4; Brownlie, supra note 49, at 497; Frank Griffith Dawson & Ivan
L. Head, International Law National Tribunals and the Rights of Aliens 2–3
(1971).
52. See, e.g., M. Sornarajah, The Settlement of Foreign Investment Disputes
138–46 (2000).
53. Methanex Corp. v. United States, Second Opinion of Professor Sir Robert
Jennings, 1–2, http://naftaclaims.com/Disputes/USA/Methanex/Methanex
ResubAmendStateClaimAppend.pdf (emphasis in original).
54. Dawson, supra note 51, at 5 (quoting F. Dunn, The Protection of Nationals 54
(1932)).
55. See, e.g., Jan Paulsson, Denial of Justice in International Law 15 (2005).
56. James Crawford, The International Law Commission’s Articles on State
Responsibility: Introduction, Text and Commentaries 14–15 (2002) (noting
that the ILC Articles on State Responsibility concern secondary rules of state
responsibility, “the framework law of State responsibility . . . without going into
the content of these obligations”).
57. Louis B. Sohn & R.R. Baxter, Convention on the International Responsibility of
States for Injuries to Aliens in F.V. Garcia-Amador, Louis B. Sohn & R.R. Baxter,
Recent Codification of the Law of State Responsibility for Injuries to Aliens 133
(1974).
58. Mondev Award, supra note 4, at 96.
59. See, e.g., Alwyn v. Freeman, The International Responsibility of States for
Denial of Justice 52–57 (1970) (discussing the practice of allowing “an
individual who was wronged in a strange land and who had there been
unable to obtain reparation for this injury from the local sovereign” to
“initiate forceful measures to obtain that justice which had been refused
him”).
60. Paulsson, supra note 55, at 14.
61. See supra note 41 and accompanying text.
62. Edwin Borchard, The Diplomatic Protection of Citizens Abroad 330
(1915).
63. See supra note 41 and accompanying text.
64. Paulsson, supra note 55, at 205–06.
65. Mondev Award, supra note 4, at 115 (noting that “the Neer case, and other sim-
ilar cases which were cited, concerned not the treatment of foreign investment
as such but the physical security of the alien”).
NAFTA and Harmonization of Domestic Practices ● 117
66. Jan Paulsson & Georgios Petrochilos, Neer-ly Misled ?, 22 ICSID Rev. 242
(2007). See also Mondev Award, supra note 4, at 115 (recognizing that “[i]n
general, the State is not responsible for the acts of private parties, and only in
special circumstances will it become internationally responsible for a failure in
the conduct of the subsequent investigation”).
67. United States (L.F. Neer) v. Mexico (U.S.-Mex. General Claims Comm’n Octo-
ber 15, 1926), 4 R.I.A.A. 60, 3 ILR 213 (1927). See also Government of
Canada Counter-Memorial (Phase 2), Pope & Talbot, Inc. v. Canada (Octo-
ber 10, 2000) at 212, 238, 266, 309, http://www.dfait-maeci.gc.ca/tna-nac/
documents/B-2.pdf; Mondev Award, supra note 4, at 114.
68. Paulsson & Petrochilos, supra note 66, at 247.
69. See, e.g., Mondev Award, supra note 4, at 115, 127; Waste Management Inc.
v. Mexico, Award at 93, 98 (April 20, 2004), 43 I.L.M. 967 (hereinafter Waste
Management Award).
70. Metalclad Award, supra note 5, at 99–101, 131 (holding Mexico liable
because “Metalclad was not treated fairly or equitably”). The Supreme
Court of British Columbia set aside the award in Metalclad as to this
article 1105(1) finding. See Mexico v. Metalclad. 2001 B.C.S.C. 664,
available at http://www.investmentclaims.com/decisions/Metalclad-Mexico-
BCSCReview-2May2001.pdf.
71. Methanex Corp. v. United States, Second Amended Statement of Claim
(November 5, 2002), http://www.state.gov/documents/organization/15035.
pdf. The tribunal in Methanex denied relief to the Canadian investor. See infra
notes 144–47 and accompanying text.
72. Glamis Gold Ltd. v. United States, Notice of Arbitration (December 9, 2003),
www.state.gov/documents/organization/27320.pdf. The tribunal in Glamis
Gold denied relief to the Canadian investor. See infra notes 165–86 and
accompanying text.
73. Grand River Enterprises Six Nations, Ltd. v. United States, Notice of Arbi-
tration (March 10, 2004), www.state.gov/documents/organization/30961.pdf.
The case was decided in favor of the United States after this chapter was written.
74. ADF Group, Inc. v. United States, Notice of Arbitration (July 19, 2000), at www.
state.gov/documents/organization/3351.pdf. The tribunal in ADF denied relief
to the Canadian investor. See infra notes 124–29 and accompanying text.
75. Loewen Award, supra note 5 (denying relief to the Canadian investor).
76. Mondev Award, supra note 4 (denying relief to the Canadian investor).
77. Clayton v. Canada, Notice of Arbitration (January 30, 2009), http://www.
international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/Bilcon
NoticeofArbitration.pdf.
78. Compton Corp. v. Canada, Notice of Arbitration (October 17, 2002), http://
www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/
CromptonCorpdoc4.pdf. Chemtura Corp, which purchased Compton Corp.
after the filing of the notice of arbitration, pursued the case. On August 2,
2010, an award was issued denying relief to the investor on all claims.
118 ● Susan L. Karamanian
79. Dow Agrosciences LLC v. Canada, Notice of Arbitration (August 25, 2008),
http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/
pdfs/DowAgroSciencesLLC-2.pdf. The case settled.
80. See infra Section II.B.3.
81. Apotex Inc. v. United States, Notice of Arbitration (June 4, 2009), http://www.
state.gov/documents/organization/125291.pdf (herein Apotex-Bristol Myers);
Apotex Inc. v. United States, Notice of Arbitration (December 10,
2008), http://www.state.gov/documents/organization/115447.pdf (hereinafter
Apotex-Pfizer).
82. 21 U.S.C. §§ 301 et seq.
83. Id. § 355(j)(2)(A)(vii).
84. Id. § 355(j)(2)(B), (j)(5)(B)(iii).
85. Id. § 355(j)(5)(B)(iii).
86. Id. § 355(j)(5)(B)(iv).
87. Id.
88. Martin A. Voet, The Generic Challenge 61–79 (2005).
89. David E. Korn, et al., A New History and Discussion of the 180-Day Exclusivity,
64 Food Drug L. J. 335, 335 (2009).
90. Bruce R. Genderson, Settlements in Hatch-Waxman Act Patent Litigations:
Resolving Conflicting Intellectual Property and Antitrust Concerns, 3 Sedona Conf.
J. 43, 46–47 (2009).
91. Id.
92. Apotex-Bristol Myers, supra note 81.
93. Apotex-Pfizer, supra note 81.
94. Apotex-Bristol Myers, supra note 81, at 51–53.
95. Id. at 55; Apotex, Inc. v. FDA, 449 F.3d 1249, 1251 (D.C. Cir. 2006).
96. Apotex, 449 F.3d at 1251.
97. Id.
98. Id. at 1243–54.
99. Apotex-Bristol Myers, supra note 81, at 71–73.
100. Apotex, Inc. v. Pfizer Inc., 385 F. Supp.2d 187 (S.D.N.Y. 2005).
101. Apotex-Pfizer, supra note 81, at 48.
102. Id. at 61–63. The U.S. Court of Appeals for the Federal Circuit and the U.S.
Supreme Court refused to grant relief to Apotex. Id. at 51–55.
103. See, e.g., NAFTA Chapter 11, supra note 1, art. 1136(1) (stating that “[a]n
award made by a Tribunal shall have no binding force except between the dis-
puting parties and in respect of the particular case”). See also infra at section
IV (discussing a system of de facto precedent in the NAFTA Chapter 11
cases).
104. 39 I.L.M. 537 (2000) (hereinafter Azinian Award).
105. Id. at 99 (emphasis in original). Jan Paulsson, the author of the recent definitive
work on denial justice, was president of the tribunal in Azinian. Id.
106. Id.
NAFTA and Harmonization of Domestic Practices ● 119
107. Id. at 102. The decision also refers to a “fourth type of denial of justice,” which
is the “clear and malicious misapplication of the law.” Id. at 103. The opinion’s
reference to “fourth type” is confusing as it appears to authorize a violation of
international law for misapplication of domestic law. Cf. infra notes 123, 128
and accompanying text. The line between domestic and international conduct
thus may not be so clear.
108. Metalclad Award, supra note 5, at 99.
109. Id. As noted, the Supreme Court of British Columbia set aside, in part, the
Metalclad award. See supra note 70.
110. Pope & Talbot Inc. v. Canada, Award on the Merits of Phase 2
(April 10, 2001), http://www.investmentclaims.com/decisions/Pope-Canada-
Award-10Apr2001.pdf. After the award was issued, and after issuance of the
Interpretation, the tribunal issued a separate opinion on damages. Applying
the Interpretation, which the tribunal assumed set a high standard amount-
ing to “shock and outrage,” it awarded substantial relief to the investor. The
conduct concerned Canada Softwood Lumber Division’s “threats and misrepre-
sentations.” See Pope & Talbot Inc v. Canada, Award in Respect of Damages
(May 31, 2002), http://www.investmentclaims.com/decisions/Pope-Canada-
Damages-31May2002.pdf.
111. Mondev Award, supra note 5.
112. Id. at 1. The Massachusetts Supreme Court had affirmed the lower court. Id.
113. Id.
114. Id. at 126.
115. Id. at 124–25.
116. Id. at 125.
117. Id. at 126 (noting that “[i]t is one thing to deal with unremedied acts of the
local constabulary and another to second-guess the reasoned decisions of the
highest courts of a State”).
118. Id. at 127 (quoting Elettronica Sicula S.p.A. (ELSI) (United States v. Italy), ICJ
Reports 1989, 15, 76).
119. Id.
120. Id. at 135.
121. Id. at 136.
122. Id.
123. Paulsson, supra note 55, at 7.
124. ADF Group, Inc. v. United States, Award, ICSID Case No. ARB(AF)/00/1 (Jan-
uary 9, 2003), www.state.gov/documents/organization/16586.pdf (hereinafter
ADF Award).
125. Id. at 189.
126. Id.
127. Id. at 190.
128. Id. (emphasis in original). As the tribunal further noted, “[w]e do not sit as a
court with appellate jurisdiction with respect to the U.S. measures.” Id.
120 ● Susan L. Karamanian
129. Id.
130. Loewen Award, supra note 5.
131. A Loewen family member later claimed the opinion was incorrect as he is
Canadian. The panel held its earlier dismissal included a dismissal on the
merits as to the family member and his claim. See Loewen Group, Inc. v. United
States, ICSID Case No. ARB(AF)/98/3, Decision on Respondent’s Request for
a Supplementary Decision issued September 13, 2004, http://www.state.gov/
documents/organization/36260.pdf.
132. Loewen Award, supra note 5, at 119.
133. Id. at 137.
134. Id. at 132.
135. Id. at 168, 217.
136. Id. at 217.
137. Paulsson, supra note 55, at 100.
138. Waste Management Inc. v. Mexico, Award (April 20, 2004), 43 I.L.M. 967
(hereinafter Waste Management Award).
139. Id. at 70.
140. Id at 70, 122. The city also objected to the arbitration on the ground that the
contract, as a public contract, was subject to the jurisdiction of administrative
courts, and it had sought to stop the arbitration. Id.at 120–21.
141. Id. at 98 (emphasis added). The tribunal cited Mondev and ADF with favor and
noted that these awards “rejected any suggestion that the standard of treatment
of a foreign investment set by NAFTA is confined to the kind of outrageous
treatment referred to in the Neer case.” Id. at 93.
142. Id. at 130.
143. Id. at 123.
144. Award (May 23, 2005), 44 I.L.M. 1345.
145. Id. Part IV-Chapter C Article 1105 NAFTA at 14, 16 (noting that Article
1105(1), even pre-Interpretation, does not address discrimination and “it would
be wrong for a tribunal to pretend that” the NAFTA parties incorporated a
non-discrimination provision).
146. Id. at 25.
147. Id. at 26. The opinion noted the tribunal in Waste Management referred to
“discriminatory” conduct but required that it be coupled with an exposure “to
sectional or racial prejudice.” Id. The tribunal in Methanex did not tackle the
more challenging issue, e.g., Waste Management award’s inclusion of discrimina-
tory conduct as violating the customary international law minimum standard,
as it had held there was no discriminatory conduct. Id.
148. International Thunderbird Gaming Corp. v. Mexico, Award (January 26, 2006),
http://www.investmentclaims.com/decisions/Thunderbird-Mexico-
Award.pdf (hereinafter Thunderbird Award).
149. Id. at 50–78.
150. Id. at 73.
151. Id. at 80.
NAFTA and Harmonization of Domestic Practices ● 121
“ ‘precedent has been recognised de facto in the reasoning style of tribunals, but
can also be formally inferred from Art. 1131(1) of the NAFTA.’ ” Id. (quoting
International Thunderbird Award, supra note 148, at 129).
205. Id. at 8 n.7.
206. Id.
CHAPTER 6
Introduction
Canada, the United States, and Mexico formed the North American Free
Trade Agreement (NAFTA) to promote their economic interests by reducing
barriers to international trade and investment. A concern exists that differ-
ent national tax systems can inhibit these cross-border flows. Yet NAFTA is
almost silent with respect to tax measures: as will be explored, the tax treat-
ment of cross-border transactions and investments is generally governed by
bilateral tax treaties negotiated between each NAFTA country.
The North American governments took care not to restrict their tax poli-
cies via NAFTA because these policies are thought to play an important role
in pursuing distinct social and economic policy agendas. Thus the govern-
ments chose to “carve out” tax measures from NAFTA to preserve their
sovereign right to maintain tax differences—despite the growing economic
cost of doing so. This chapter discusses why these governments should bor-
row and modify a European Union concept—the subsidiarity principle—to
encourage more cross-border cooperation to reduce the harmful impacts
of tax and other differences on cross-border economic interests, while still
preserving each country’s control over tax policy.
According to the subsidiarity principle enshrined within the European
Union’s (EU) Treaty of Rome since 1992, the EU may enact only those
laws where its member states agree that action of individual countries is
that could not be taken by the EU countries themselves or that were unlikely
to be generated by market forces.9 A result of this change was a revitalized
Commission with an active political role in moving forward the integration
agenda.
Moreover and as mentioned, the Treaty of Rome sets as a goal the har-
monization of laws directly affecting the establishment or functioning of the
single market. This goal was the impetus for a number of substantial har-
monization efforts including the development of common EU value-added
taxes (Canada and Mexico maintain different value-added taxes, while the
United States does not maintain a federal consumption tax). In contrast,
NAFTA goals are more modest and focus on the progressive elimination
of tariff and non-tariff barriers to trade in goods and the establishment of
reciprocal national treatment obligations with respect to trade in services and
investment. Although there are certain provisions that deal with approximat-
ing regulations for health and technical standards (e.g., sanitary and phy-
tosanitary measures), NAFTA does not create any obligation to harmonize
and does not give power to any institution to mandate harmonization.
effects on the economies of its neighbors. Yet both Canada and Mexico are
very sensitive to any measures that would be viewed as impinging on their
cultural identity and perceived political distinctiveness.
In contrast, although Canada and Mexico are, respectively, the first and
second most important trade partners of the United States, their needs are
generally subordinate to the domestic or international agenda of the United
States. Moreover, there is a certain “go it alone” sentiment within certain U.S.
political circles that is less apparent in the other two NAFTA countries, which
are more likely to believe their standards of living are tied to export strategies.
Finally, since 9/11, an emphasis on border security as well as fears over
international terrorism has led to policies that have increased barriers to cross-
border flows of goods, services, and other resources. Consider the impact of
different national legal regimes governing the private sector collection, use
and disclosure of personal information. Each NAFTA country maintains a
very different approach to regulating personal information collected by indus-
try: Mexico has minimal legislation in place, the United States regulates at the
federal level on a sectoral basis (e.g., financial and health information), while
Canada introduced comprehensive legislation in this area through the Per-
sonal Information Protection and Electronic Documents Act (PIPEDA) that
came into full effect in 2001.13
Since 9/11, a concern has been expressed that personal information
involving Canadians transferred across the border to U.S. businesses may
be accessed by U.S. authorities under new antiterrorism laws such as the
Patriot Act: this action would violate PIPEDA, which requires an individ-
ual’s consent before personal information can be disclosed (or requires due
process protections, unavailable when state agents access this information
without the need to inform the data subject).14 As a result, the interaction
of the different legal regimes coupled with the new antiterrorism laws may
inhibit cross-border flows of personal information to the extent that this legal
issue remains unresolved (as subsequently touched on, resolving the prob-
lem through harmonized privacy laws is not feasible in the North American
context).
In summary and consistent with the views of other observers, the reality
of current political dynamics within North America suggests that the North
American governments will pursue only modest and incremental changes to
their trade and investment agreement.15 The question remains how should
the deal move forward to better achieve its objectives for freer trade and
investment within North America? Pastor suggests that potential changes
should be guided by three factors: (1) “pragmatism” that focuses on problem-
solving instead of grand constitutional changes; (2) “market and rules,” where
proposed changes should respect the ability of markets to drive efficient
The Strict Subsidiarity Principle under NAFTA Law and Policy ● 131
NAFTA country, but only to the extent that market forces or the unilateral
actions of each member state cannot effectively achieve the core objectives.
Unlike the situation within the EU, NAFTA’s institutional and legal
framework implicitly sides with the race to the top perspective due to the
absence of any bureaucracies at the supranational level that would seek to
thwart the more harmful aspects of regulatory competition. In other words,
NAFTA defers to market forces to generate efficient policy outcomes to
a greater extent than the EU model. As discussed elsewhere, in a three-
party game with one big player with asymmetrical bargaining power (the
United States constitutes almost 90 percent of North American GDP), it
may be more rational and cost-effective for the big player to lead and for
the two smaller players to follow this lead through a process called regulatory
emulation.26 This emulation behavior and the corresponding lower costs of
governance make sense in the North American context, in contrast to the EU,
where 27 players have far more symmetry in terms of economic power.
Nevertheless, the development of more effective institutions could be sup-
ported by the two different perspectives on whether regulatory competition
promotes optimal or suboptimal economic and social policy. The thinking
that supports more intrusive government efforts to inhibit the more harmful
effects of this competition (such as adverse spillover effects through pollution
migrating across borders) would most certainly call for the development of
more effective institutions. Perhaps less obviously, the other perspective—that
regulatory and tax competition leads to a so-called race to the top—would
also seem to support a more robust institutional framework under NAFTA.
Since its inception over 15 years ago, a view has emerged that NAFTA’s
institutional framework, including its dispute resolution processes, has not
been as effective at ensuring that relevant players (e.g., the private sector)
follow the rules of the game set out within the NAFTA agreement. A pri-
vate sector actor, for example, may decide to devote resources to lobbying
its government for preferential treatment to the extent it feels that it can
game the system without a real risk that the NAFTA rules will be enforced
against its interests. This sort of scenario leads to situations that undermine
the core objectives of NAFTA to reduce trade and investment distortions that
inhibit regional economic integration. The latter perspective is also closely
related to a more recent view that competition among national regulation
and harmonization should be seen as complementary rather than alternatives:
some unification of legal rules, practices, or policies may be needed to permit
efficient competition to take place.27
The question that remains is whether the formation of new NAFTA insti-
tutions that emphasize advisory mechanisms over implementing binding
rules can effectively move forward the integration agenda set out within
NAFTA. There are at least some encouraging signs that progress can be made
through resort to “soft law” or “soft institutions,” which are said to be more
134 ● Arthur J. Cockfield
surrounding the maintenance of these different tax regimes, and then reviews
the current way of dealing with these challenges via NAFTA and bilateral tax
treaties negotiated between each NAFTA country. In the tax area, the strict
subsidiarity principle supports heightened multilateral coordination efforts
among the NAFTA countries, including the development of a NAFTA Tax
Working Group, the harmonization of certain tax treaty provisions directed at
cross-border investment flows, binding arbitration for transfer pricing matters
(procedures were introduced in the 2007 amendments to the Canada-U.S.
tax treaty), and reduced withholding taxes.
European-style customs union, NAFTA also does not strive to create a truly
free flow of goods across borders. Under NAFTA rules, custom officials often
stop goods at the border to ensure that the goods are properly marked as orig-
inating from a NAFTA country. Accordingly, there is not yet an impetus to
remove border tax adjustments in North America because goods already have
to stop at the border. In any event, the cross-border tax treatment of goods
and services is currently not a major area of concern. Economists generally
assert that, at least in the long run, exchange rates offset the impact of taxes
on goods and services, such as Mexico’s Value-Added Tax or Canada’s Goods
and Services Tax, which are imposed on a destination basis (that is, taxes are
placed on imported goods while exports leave the country tax free).34
There have been two NAFTA arbitration tribunal findings surrounding
taxation measures in the context of the provisions that protect cross-border
investments. In NAFTA Chapter 11 Arbitration between Pope & Talbot, Inc.
and Canada, a NAFTA Tribunal found that an agreement between Canada
and the United States concerning the imposition by Canada of an export tax
on softwood lumber did not violate performance requirements or expropria-
tion and compensation provisions of NAFTA.35 The Tribunal noted, among
other things, that while Canada’s regime, including the export tax, deterred
increased exports to the United States, this deterrence did not constitute a
prohibited “requirement” because the regime permitted unlimited exports at
a higher fee rate.36 The Tribunal also concluded that the regime did not qual-
ify as an expropriation for failure to meet the test of being an interference
“sufficiently restrictive” to support a conclusion that the property had been
“taken” from its owner.37 The Tribunal’s decision can be portrayed as tolerat-
ing limited government interference with markets as long as this interference
does not subvert the core objectives of NAFTA.
In Feldman v. Mexico, a NAFTA Tribunal found that the denial of
VAT refunds to a U.S. citizen for exports of cigarettes from Mexico did
not constitute, among other things, a violation of the expropriation and
compensation requirements. A majority of the Tribunal did, however, find
that Mexico’s tax policy discriminated against the U.S. citizen’s company
vis-à-vis its domestic competitors in contravention with national treatment
obligations in Article 1102. As a remedy for the discrimination, the tribunal
awarded the taxpayer approximately U.S.$ 1.6 million in damages for the lost
tax rebates.38 Consistent with the other decision, the Tribunal agreed that a
remedy was appropriate due to the clear violation of a principle—national
treatment—that promotes the core objectives of NAFTA.39
In addition to the cross-border treatment of goods, NAFTA also has
certain national treatment and Most Favored Nation (MFN) obligations
with respect to specified services. These obligations ensure that, in many
The Strict Subsidiarity Principle under NAFTA Law and Policy ● 139
The three tax treaties indicate that national treatment applies to different
taxes. The U.S.-Mexico tax treaty indicates that all taxes by all levels of gov-
ernment are covered.45 The Canada-U.S. tax treaty covers only national-level
taxes (thus, the Goods and Services Tax is covered).46 Finally, only taxes sub-
ject to the tax treaty (that is, federal income taxes and the Mexican asset tax)
are covered by the Canada-Mexico tax treaty.47
Conclusion
NAFTA represents the aspiration of the North American governments to
improve the welfare and standards of living of their citizens and residents
through enhanced regional economic integration. The deal also reflects the
very real concerns that these governments have surrounding unwarranted
intrusions into their political sovereignty that could erode national cultural
distinctiveness or harm their ability to pursue diverse policies to improve the
economic or social welfare of their citizens. Moreover, as a free trade area
rather than an EU-style customs union, NAFTA’s main goals to reduce cross-
border barriers to trade and investment do not generally require major forms
of institutional support. For this reason, NAFTA did not involve the creation
of any significant centralized political linkages among the North American
governments.
Nevertheless, with over 15 years of experience with NAFTA, a concern
has arisen that the deal is not promoting its core objectives to the extent
first thought possible. In particular, NAFTA may not be promoting sufficient
efficiencies that would enable multinational firms based within the North
American bloc to compete as effectively as possible with other multinational
firms located in regionally integrated areas such as the EU or with emerg-
ing economic giants such as China. To move the deal forward, it has been
suggested that the history and current political reality of North America,
144 ● Arthur J. Cockfield
the mandate of the NAFTA deal itself, along with theoretical perspectives
within economics and international relations works, all support the use of
a strict subsidiarity principle to guide the development of NAFTA reform
efforts.
Under a strict subsidiarity principle, the NAFTA governments should take
only centralized action when they agree on the following: (a) it is necessary
to achieve the core objectives of NAFTA, (b) it will not result in undue
intrusions into the political sovereignty of each partner such as through
the development of supranational institutions that could harmonize laws,
and (c) market forces or the unilateral actions of a NAFTA country can-
not achieve the core objectives. Coordination via central institutions, rather
than the harmonization of laws, is the preferred route. With respect to North
American tax policy, this principle calls for a strategy of heightened multi-
lateral coordination, including the development of a NAFTA Tax Working
Group.
Notes
1. See Treaty of Lisbon amending the Treaty on European Union and the Treaty
establishing the European Community, signed at Lisbon, 13 December 2007,
Official Journal of the European Union, C 306/12 (Dec. 12, 2007). The Treaty
was ratified by all European Union governments and entered into force on
December 1, 2009.
2. Case 294/83, Parti ecologiste ‘Les Verts’ v. European Parliament, 1986 E.C.R. 1339,
1365.
3. Single European Act, February 28, 1986, OJ 1987 L 169, June 29, 1987.
4. See, for example, J. H. H. Weiler, The Transformation of Europe, 100 Yale
L. J. 2403 (1991). This section draws from an earlier work comparing EU
and NAFTA developments. See Arthur J. Cockfield, NAFTA Tax Law and Pol-
icy: Resolving the Clash between Economic and Sovereignty Interests 105–127
(Toronto: University of Toronto Press, 2005) (hereinafter “NAFTA Tax Law and
Policy”).
5. The subsidiarity principle has different meanings depending on the political
context (e.g., the principle is used in U.S. discussions concerning federalism),
and the analysis herein will focus only on the meaning with respect to EU
developments. In addition, the proper interpretation of the EU’s version of the
subsidiarity principle remains contentious with different observers emphasizing
the legal and/or political aspects of this principle. This chapter does not attempt
to address these complexities.
6. See Treaty of Lisbon amending the Treaty on European Union and the Treaty
establishing the European Community, signed at Lisbon, December 13, 2007,
Official Journal of the European Union, C 306/12 (December 12, 2007). Impor-
tantly, as of February 2009, only 23 of the 27 EU member states had ratified the
The Strict Subsidiarity Principle under NAFTA Law and Policy ● 145
Treaty of Lisbon, and it will not take effect until all of the member states ratify
this treaty.
7. Id. at 150–152.
8. Single European Act, Article 8(a), supra note 2.
9. The effect of the subsidiarity principle on areas such as taxation continues to be
debated. See, for example, Sijbren Cnossen, Reform and Harmonization of the
Company Tax Systems in the European Union 24 (Research Centre for Eco-
nomic Policy Research Memorandum 9606, 1996) (arguing that subsidiarity
suggests “that tax sovereignty has to be ceded in establishing the tax entitlement
rules so that tax independency can be exercised more fully in administering these
rules”). But see Moris Lehner, EC Law and the Competence to Abolish Double
Taxation, in Tax Treaties and EC Law 1, 13, (Series on International Taxation,
vol.16, 1997) (concluding that subsidiarity and its impact on Article 220 of the
Treaty of Rome requires the EU countries themselves to take action to abolish
double taxation via their tax treaties).
10. See Arthur J. Cockfield, Tax Integration under NAFTA: Resolving the Con-
flict between Economic and Sovereignty Interests, 34 Stanford J. Int’l L. 39
(1998).
11. See Frederick M. Abbott, Law and Policy of Regional Integration: The
NAFTA and Western Hemispheric Integration in the World Trade Organization
28 (1995).
12. See, for example, Maryse Robert, Negotiating NAFTA: Explaining the Outcome
in Culture, Textiles, Autos and Pharmaceuticals 24–42(2000).
13. See Arthur J. Cockfield, Legal Constraints on Transferring Personal Information
across Borders: A Comparative Analysis of Canadian and Foreign Private Sector
Privacy Laws, in Elia Zureik et al., eds., Surveillance, Privacy, and the Glob-
alization of Personal Information: International Comparisons (Montreal and
Kingston: McGill-Queen’s University Press, 2010), at p. 50 (discussing relevant
privacy laws from Canada, the United States and Mexico).
14. See David Loukedelis, Privacy and the USA Patriot Act: Implications for British
Columbia Public Sector Outsourcing (Office of the Information and Privacy
Commissioner, October 2004).
15. See Robert A. Pastor, NAFTA Is Not Enough: Steps toward a North American
Community, in Peter Haskin and Robert E. Litan, eds., The Future of North
American Integration 87, 100 (2002).
16. Ibid. at 102–103.
17. But see Leo Panitch, Rethinking the Role of the State, in James H. Mittelman,
ed., Globalization: Critical Reflections 96 (1996) (arguing NAFTA will function
as an economic constitution, setting the types of economic policies that all
governments must follow).
18. See Gary Clyde Hubauer and Jeffrey J. Schott, NAFTA Revisited: Achievements
and Challenges 61 (2005).
19. See, for example, O.E. Williamson, Public and Private Bureaucracies: A Trans-
action Cost Economics Perspective, 15 J. Law, Economics, and Organization
146 ● Arthur J. Cockfield
33. For a discussion on this point, see Paul R. McDaniel, Formulary Taxation in the
North American Free Trade Zone, 49 Tax Law Review 691, 715 (1994) (dis-
cussing the use of tax expenditures in Canada and the United States). Certain
tax provisions of the NAFTA countries have been challenged under GATT from
time to time; see Asif H. Qureshi, “Trade Related Aspects of International Tax-
ation: A New WTO Code of Conduct?” (1996) 161 Journal of World Trade 30
(describing GATT panel decisions concerning trade promoting both Canadian
and American tax provisions). There is an additional provision that prohibits
the NAFTA countries from imposing export taxes on the export of goods to
another NAFTA country in many circumstances. NAFTA Article 2103(3)(b).
NAFTA national treatment requirements do not extend to any nonconforming
tax measures that are currently in force or to measures that continue or amend the
initial measure in such a way as not to decrease the conformity. NAFTA Article
2103(4)(d).
34. See Jane G. Gravelle, “International Tax Competition: Does It Make a Dif-
ference for Tax Policy?” (1986) 39 National Tax Journal 375 (explaining how
exchange rates adjust to offset price effects of rebated indirect taxes and corporate
income taxes); Slemrod, supra note 31, at 283 (noting that indirect taxes with
nonuniform rates can distort the pattern of production and trade).
35. See International Trade Canada, Dispute Settlement NAFTA—Chapter 11—
Investment, “NAFTA Chapter 11 Arbitration between Pope & Talbot, Inc. and
Canada” (26 June 2000). In a second decision involving this case that was ren-
dered on May 31, 2002, the Tribunal awarded damages for expenses incurred as
a result of a verification audit.
36. Id. at par. 75.
37. Id. at par. 102.
38. See Feldman v. Mexico (2002), ARB(AF)/99/1. Because Ottawa was the seat
of arbitration, Mexico brought an application to set aside the NAFTA award
before the Ontario Superior Court of Justice. In upholding the award, the court
expressed to the need for a high level of deference to the expert Tribunal’s find-
ings. See Mexico v. Karpa (2003) O.J. No. 5070 (S.C.J.). The decision was
subsequently upheld by the Ontario Court of Appeal (see Mexico v. Karpa [2005]
O.J. No. 16 (C.A.).
39. Id. at par. 184 and 187.
40. NAFTA Article 1201.
41. NAFTA Article 2103(4)(a).
42. NAFTA Article 2103(4)(b).
43. NAFTA annex 2103.4 describes the application of the Mexican asset tax.
44. NAFTA articles 1102 to 1104.
45. Article XXV.6 of the U.S.-Mexico tax treaty.
46. Article XIII of the third protocol.
47. Article XXIII.5 of the Canada-Mexico tax treaty.
48. This section draws from NAFTA Tax Law and Policy, supra note 3, at
175–183.
148 ● Arthur J. Cockfield
49. See Victor Thuronyi, International Tax Cooperation and a Multilateral Treaty,
Brooklyn J. Int’l L. 1641 (2001) (discussing how a gradual movement toward
multilateral tax treaties could be accomplished, including through the devel-
opment of multilateral regional tax treaties); Diane M. Ring, Commentary:
Prospects for a Multilateral Tax Treaty, 26 Brookly J. Int’l L. 1699 (2001)
(discussing different processes to promote multilateral treaty negotiations).
50. See, for example, Arthur J. Cockfield, Transforming the Internet into a Taxable
Forum: A Case Study in E-commerce Taxation, 85 Min. L. Rev. 1171, 1263–
1265 (2001) (discussing how cooperation surrounding technological measures
to enforce tax laws would help to preserve sovereignty).
51. See NAFTA Tax Law and Policy, supra note 3, 166–174.
CHAPTER 7
Introduction
Much has been accomplished 20 years after the Single European Act, which
led to the widening scope and deepening of the internal market in Europe.
The internal market has extended to cover most of the goods sector, select
service sectors, and made significant progress in capital market liberalization
and intellectual property rights. For labor, progress has been more limited
with continued restrictions in place that limit mobility. Assessment should
also take account of cross-cutting issues such as public procurement, research,
and innovation policies, which influence the market dynamics and strategies
of firms in Europe.1
Yet in taking stock, the accomplishments are considerable as the formal
legal framework and institutional setting have extended European economic
governance beyond its territorial borders as the EU has advanced its regu-
latory rules at the international level. Such rule promotion has allowed for
economic policy coordination that reflects efforts to manage and shape glob-
alization processes in Europe. However, there are concerns about the potential
risks to the single market in the current economic climate as protectionist
pressures will require robust responses to ensure that competition is not dis-
torted. While the legal underpinning of the single market continues to be
robust, the political pressures will determine the strength of commitment to
further market liberalization and integration—and the vitality of the single
market—as the engine for economic growth in Europe in coming years.
The principal aim of this chapter is to critically address the function-
ing of the single market, given the vast range of tools and instruments in
Goods – does not fully exist in – safety, health, environment – safety, health, environment and – competition policy is – uniformity EC law in
law or practice and consumer protection risk consumer protection risk regulated by both EU this area, regulation of
– mutual recognition regulations are flawed regulations are flawed and member-sates damages
of MS standards is – regulation of product liability – regulation of product liability – regulation of taxation – trans-European
problematic – national regulations are few – regulation of public network is weak
– movement of foreign procurement – it is unclear if national
direct investment – national regulations are regulations hinder
(FDI) is free few integration
Services – does not fully exist in – some safety, health, – regulation of minimum standards – competition policy – uniformity EC law in
law, in practice is environment and consumer for professional services regulated by EU and this area, regulation of
limited and not protection risk regulations are – some regulation of safety, health, MS is often soft damages
uniformly enforced flawed environment and consumer – regulation of taxation – trans-European
– many derogations by – regulation of systemic risks protection risk – regulation of public network is weak
MS across various (linked failures in banking – all network industries (transport, procurement – it is unclear if national
types of services, i.e., system that can lead to crisis) energy, telecommunications) are – existence of labor regulations hinder
derogations are – regulation of minimal regulated, but free movement is restrictions integration
undisciplined standards for professional still remote – national regulations are
– mutual recognition of services – regulation of “general good” is abundant, which is an
standards is rare – regulation of internet network lacking obstacle to integration
– movement of foreign security – enforcement is flawed – national regulation of
direct investment – national regulations especially – national regulations are abundant EU patents is an
(FDI) is free in professional services hinder and are an obstacle to integration obstacle
mobility and rights of
establishment
Capital – does not fully exist in – regulation of systemic risks – disclosure rules – little regulation of – creation of Euro
law or practice – regulation of taxation is an – some corporate governance taxation
(at times, costly) obstacle regulation – regulation of clearing &
– mutual recognition of – regulation of accounting settlement is under
MS standards in standards review
company law is rare – national regulations exist in – national regulations
company law, which is an exist in both taxation
obstacle for integration and clearing &
settlement, which is an
obstacle to integration
Labor – has legal limitations – regulation of workplace risk – mutual recognition of diplomas is – regulation of portability
– does not fully exist in – establishment of selected min. based on minimum training pensions
practice, restrictions standards (e.g.training) standards regulation – regulation of portability
apply to some social security claims
countries) – establishment of posted
– mutual recognition is workers rules
not applicable – national regulations are
substantial in
employment protection
law, equity links, etc,
which is an obstacle to
integration
153
154 ● Michelle Egan
Harmonization
Traditional regulatory instruments such as harmonization have been widely
used in relation to the single market. Harmonization is justified as a
Harmonization
Regulatory competition and mutual recognition
Third party regulation (mandatory inspections/audits by non-government parties)
Performance-based rules (open method of coordination)
Self-regulation and co-regulation (codes of conduct, voluntary agreements)
Market-based instruments (taxes, tradable permits)
156 ● Michelle Egan
Mutual Recognition
Mutual recognition is a central trade principle in the single market as
it addresses the problems created by regulatory barriers between member
states.22 Mutual recognition starts from the idea that member states empha-
size equivalent regulatory objectives in safety, health, environment, and
consumer protection. The assumption is that such goods and services should
be allowed unhindered access to circulate freely without additional licens-
ing, certification, or inspection as the regulatory objectives are equivalent.23
To bolster this effort, case law has required member states to include reference
to mutual recognition in their national legislation so accepting the princi-
ple that the free trade principle will prevail where regulatory objectives are
equivalent.24 This had the great advantage that agreement on the remaining
regulatory objectives would be restricted to issues where regulatory practices
differed substantially. Mutual recognition is facilitated by treaty obligations
and ensures that free movement of goods and services do not require harmo-
nization. The burden of proof of non-equivalence of regulations rests with
member states, and where this is upheld, the treaty allows for free movement
through harmonization under qualified majority voting. All derogations are
Single Market Governance ● 157
Market-Based Incentives
There is also a widespread desire based on subsidiarity and competitiveness
concerns to use more market-based policy instruments such as charges, taxes,
and permits. These market-based instruments vary in terms of the coercive-
ness imposed upon target actors, and are often assimilated elements from
national initiatives.38 Along with stricter liability laws, these instruments that
correspond to the polluter pays principle are much broader than intervention-
ist measures. The emphasis on market-based, cost-effective instruments fit the
broader neoliberal shift in Europe, but the subsequent regulatory changes in
such instruments has been to shift from detailed specifications to broad objec-
tives, leaving member states to adapt to specific conditions. However, the
growth of environmental taxes and charges at the national level has not been
matched at the EU level, as tax issues unlike environmental policy require
unanimous approval among member states. While economic instruments
Single Market Governance ● 159
may spill over from the national level, there is often pressure for uniform
standards to avoid trade barriers and distortions of competition.
Consultation
Promoting notions of partnership is one means to encourage better coordina-
tion. While the European Union utilizes joint consultation and coordinates
industry-wide groups to provide guidance on issues such as collaborative
research and innovation, this process tends to be ad hoc. It does not resem-
ble old interventionist practices of industrial policy either at the national or
at the European level, but rather reflects efforts at providing mutual infor-
mation to improve European competitiveness. In the area of social policy,
160 ● Michelle Egan
where member states are reluctant to involve the European Union, there has
been efforts to engage civil society in which there has been creative use of
its limited competences to promote action plans and non-binding guidelines.
In many instances the EU has promoted and fostered collective action in
social policy, supporting civil society networks and using this consultation to
identify salient issues and push for expanded competence.44 Such consulta-
tion is reflective of what has been described as “integration by stealth” rather
than more formal advocacy or rule-making that characterizes other policy
areas.45
While this represents a stylized typology of different regulatory strategies
in relation to the European Union, there is considerable interaction between
“soft” and “hard” law mechanisms, as soft law exists in relation to hard law.46
More importantly in considering the role of legal harmonization, we need
to acknowledge the combined effects between various types of governance
mechanisms in shaping overall policy coherence and effectiveness.
Traditionally, lawyers seem to prefer traditional mechanisms such as har-
monization that provide uniform rules with flexible amendment procedures
or mutual recognition principles as the most effective way to foster the
internal market.47 In fact, addressing the costs of regulatory differences is
supported by the original legal structure of the treaty (the term used is
“approximation” as well as harmonization). Yet there are also concerns about
the shift away from the traditional “community method” toward treaty provi-
sions that promote differentiated regimes (Article 15 EC 95), new approach
(83/89), or open method of coordination approaches.48 As Armstrong notes,
these new instruments pose challenges to a structural doctrine based on bind-
ing legal rights.49 While there has been increasing acceptance of these carefully
crafted political solutions especially among the academic community, and
considerable promotion of such reflexive, deliberative, or participatory strate-
gies, we need to engage in a substantive analysis of costs and benefits of such
governance structures. It would be a mistake to assume that harmonization is
the better remedy without considering different social norms when pushing
conformity (e.g., cross-border recognition of same sex marriages, or access to
abortions services across member states under freedom of service provisions).
Normative considerations about the impact of community constraints on
member states tend to be downplayed by economists and lawyers interested
in the economic freedoms.
The legal perspective on the internal market tends to focus on the broad
constitutional rules—to determine the extent of prohibitions on economic
freedoms, the legal bases for conferring harmonization, and the use of these
competences. An interesting issue in relation to the single market is the
impact of the uneven development of case law concerning the four freedoms
Single Market Governance ● 161
in the internal market, since coherence and predictability for both market
operators and national regulators is considered a crucial corollary to the effec-
tive functioning of the internal market.50 While historically European case
law was shaped by the free movement of goods, followed by free movement of
workers, the case law in services and rights of establishment owes much to the
expansion of the concept of services that has changed the prevailing economic
reality of services since its original conception in the Treaty of Rome.51
Despite the limits of market integration through case law, national prohi-
bitions have been struck down in fields like company law,52 health care, media
law, and environmental policy. Yet despite the wealth of case law concern-
ing market integration, legislative measures—even modest harmonization
ones—are likely to have more impact on market operators than does case
law in Europe. This consideration brings us to the issue of compliance and
effectiveness in post-legislative politics, where the EU has developed both
management and enforcement mechanisms to promote capacity-building
and dispute-settlement.
policies, and institutions of countries with vastly different political, legal, and
administrative traditions. These difficulties have forced a reassessment of var-
ious harmonization strategies and stimulated the search for alternatives to
harmonization. As such, the effectiveness of European law has risen on the
agenda as attention has shifted from the establishment of the single market
toward ensuring that the single market is functioning properly. The “bet-
ter regulation” effort to simplify the legal environment,67 reduce regulatory
burdens, and use impact assessment has been touted as a way of enhancing
European competitiveness in the global economy.68
Yet the effectiveness of the European legal system is based on the compli-
ance and implementation of the legal rules. The situation in Europe reveals
a gap between administrative and legal reality, between formal implemen-
tation and actual operation in practice, as different strategies that are often
widely touted as central to market integration have encountered problems.69
The inherent complexity of such a system of multilevel governance means
that compliance and implementation involve multiple actors, institutions,
and agencies. What has emerged in Europe is a range of “hard” and “soft”
legislative means to influence, structure, and sanction states to implement
law and policy in relation to the single market as well as other related policy
areas.
If the goal is to think about different legislative techniques used by the
EU to integrate markets, in order to remove trade barriers, promote com-
mon policies, and enhance regulatory competition, we need also to ask about
the sort of mechanisms in place to enhance compliance with European law.
While the “establishment” of the internal market is the treaty objective, it can
be accomplished only if common rules and standards or mutual recognition
practices can be agreed upon, and then successfully implemented. Such con-
siderations are also applicable to NAFTA where fostering closer economic and
legal coordination offers an opportunity to experiment with new methods for
securing market access that complement the emphasis on legal harmonization
with additional mechanisms that enhance patterns of compliance.70 Ques-
tions about the effectiveness of different regulatory strategies in achieving the
single market, and what lessons can be drawn from the ability of the EU to
develop functional and effective governance structures, have inspired a rich
scholarly and policy literature over the past decade.71
Deep integration cannot be understood independently of the legal, institu-
tional, and political realities that both create and constrain it. While European
legal systems are making a transition from state-based common and civil
law system to a common European legal system, the institutional and polit-
ical constraints stemming from the form of free trade agreement chosen
by NAFTA continue.72 Despite its many limitations and dim prospects for
Single Market Governance ● 167
most significant is the role of mutual recognition that allows for the accep-
tance of mutual equivalence and reciprocity. However, there are significant
problems at the implementation stage in terms of administrative practices
and recognition of regulatory equivalence. This requires mutual trust and
a support structure to ensure compliance. Thus, it would be beneficial to
look at the range of governance mechanisms within the European Union
to understand the suitability of using mutual recognition, open method of
coordination, and other instruments rather than legal harmonization.
This then leads us to consider the second issue, which is one of imple-
mentation and compliance. In the European case, we need to look at efforts
at regulatory notification (mutual information) to prevent the emergence of
potential non-tariff barriers to trade. We also need to look at how effective are
infringement proceedings and whether they are a viable option for address-
ing problems of compliance. This requires a significant horizontal transfer of
sovereignty to allow such dispute settlement mechanisms to work, and it may
be that other informal modes of governance may be more fruitful. Part of the
implementation problem may be the result of different national institutional
capacities, or legal or regulatory cultures. It may be that the style of decision
rules affects policy outcomes as European law includes directives, regulations,
and recommendations.
How much discretion should be given to states in deciding how to imple-
ment common laws is critical as directives allow for more variation than
regulations in the European context. In addition, the European Union adopts
significant secondary rule-making with varying administrative procedures
that allow member states to exercise regulatory oversight and control. Very
little is known about the impact of secondary rule-making even though it is
part of the legal harmonization process. Not much analysis has been done on
the impact of secondary rule-making on the overall effort to deliver common
policies despite the significance of administrative law in shaping regulatory
practices.
The third issue is the extent to which the allocation of regulatory powers
occurs. The expansion of policy fields affected by case law, the reduction of
national provisions in many areas affecting market access, and the application
of the subsidiarity principle all affect European governance. The question is
whether subsidiarity makes sense in a shallow free trade agreement. Deeper
market integration in Europe in goods, capital, labor and technology has
focused attention on what public functions the EU should or should not
consider at the central level, wholly or partially, to deal with macroeconomic
stabilization, cross-border externalities or redistribution. While subsidiarity
requires the EU to demonstrate a need to act in common, what matters
in the market is whether cooperation is credible, and if not, may require
Single Market Governance ● 169
Notes
1. Jacques Pelkmans, “European Industrial Policy,” in International Handbook on
Industrial Policy, eds. Sandrine Labory and Patrizo Bianchi (Northampton:
Edward Elgar Publishing, 2006), 45–79.
2. Fritz Scharpf, “The European Social Model: Coping with the Challenges of
Diversity,” Journal of Common Market Studies 40, no. 4 (2002): 645–670 at 647.
3. See Laval case C-34105 and Viking Line Case C438/05.
4. Supra note 2.
5. However, there have been some important recent developments in case law in
field of services. The traditional analysis, instituted when services were a residual
category, has shifted bringing it into line with GATS and WTO, as the Court
has abandoned the artificial distinction between services and establishment. See
C-55/94, Gebhard, [1995] ECR I-4165 and subsequent case law.
6. Henk Kox and Arjan Lejour, “Prospects of Integrating Service Markets” (in EU
presentation/paper at the CTR Conference Towards a Transatlantic Service Mar-
ket February 2007 (based on analysis for the Dutch Bureau of Economic Policy
Analysis)) and European Commission Communication “A framework for target-
based tripartite contracts and agreements between the Community, the States
and regional and local authorities” COM (2002) 709 final.
7. Issues of labor restrictions in CEE are dealt with in Heather Grabbe, The
EU’s Transformative Power. Europeanization through Conditionality in Central and
Eastern Europe (Basingstoke: Palgrave Macmillan, 2006).
8. European Commission Mutual Recognition in the Context of the Follow-up to
the Action Plan for the Single Market. Communication from the Commission
to the Council and the European Parliament. COM (99) 299 final, 16.06.1999.
For example, accession treaties provide the Czech Republic, Hungary and Poland
and Bulgaria and Romania certain transitional agreements with regard to land
markets during which time they can restrict ownership of EU nationals who are
non resident. This is not new—in the opt-out provisions of Maastricht Treaty,
Denmark has the right to maintain its controls over the acquisition of second
homes.
170 ● Michelle Egan
9. There are different estimates of the effects of services liberalization. Kox et al.,
(2004) suggest that intra-European trade in services could increase by 30–60
percent and direct investment by 20–35 percent of the service directive is
implemented.
10. Supra note 2, Copenhagen Economics. Denmark Final Report, 2005. Economic
Impact of the Proposal for a Directive on Service in the International mar-
ket, http://ec.europa.eu/internal_market/services/docs/services-dir/studies/2005-
01-cph-study_en.pdf (accessed September 2, 2005).
11. Fritz Scharpf, Governing Europe (Oxford: Oxford University Press, 1999).
12. Joshua Cohen and Charles Sabel, “Directly-Deliberative Polyarchy,” European
Law Journal 3, no. 4 (1997) and Ann Marie Slaughter, “Disaggregated
Sovereignty: Toward the Public Accountability of Global Government Net-
works,” Government and Opposition 39, no. 2 (Spring 2004):159–190.
13. Giandomenico Majone, “From Positive to the Regulatory State: Causes and Con-
sequences of Changes in the Mode of Governance,” Journal of Public Policy 17,
no. 2 (1997):139–167.
14. David Levi-Faur, “The Global Diffusion of Regulatory Capitalism,” The
ANNALS of the American Academy of Political and Social Sciences 598,
no. 1(2005):12–32.
15. B. Guy Peters, “Forms of informality: Identifying informal governance in
the European Union,” Perspectives on European Politics and Society 7, no.1
(2006):25–40
16. Peter Hall, “Policy paradigms, social learning and the state: the case of economic
policy-making in Britain,” Comparative Politics25, no. 3 (2003): 275–296.
17. Adrienne Heritier, “The Accommodation of Diversity in European Policymaking
and its outcomes,” Journal of European Public Policy 3, (1996):149–67.
18. Gráinne de Búrca and Joanne Scott eds., Law and New Governance in the EU and
US (Oxford: Hart, 2006).
19. Jacques Pelkmans, “Mutual Recognition in Goods and Services: An Economic
Perspective College of Europe,” BEPP series briefing no. 2 (December 2002)
at 3.
20. Supra note 18.
21. Michelle Egan, Constructing a European Market: Standards, Regulation and Gov-
ernance (Oxford: Oxford University Press, 2001) and Harm Scheppel, The
Constitution of Private Governance (Oxford: Hart Publishing 2005).
22. Susanne K. Schmidt, “Mutual Recognition as a New Mode of Governance,”
Journal of European Public Policy 14, no. 5 (2007): 667–681.
23. See Dassonville for measures having equivalent effect to quantitative restriction;
see Cassis for principles of equivalence and see more restrictive interpretation in
Keck. For an overview see Egan 2001.
24. Case 184/96 Commission vs France (1988) ECR I-6197.
25. Member States may invoke reasons of public interest to justify a national measure
where that measure complies with fundamental rights guarantees. For example,
Omega, 2004 ECR I-9069 Non-economic policy reasons recognized by the treaty
Single Market Governance ● 171
42. Claudio Radaelli, “The code of conduct against harmful tax competition: Open
method of coordination in disguise?,” Public Administration 81, no. 3 (2003):
513–531. I have drawn extensively from Radaelli in this paragraph.
43. Id.
44. Laura Cram, “From ‘integration by Stealth’ to ‘good governance’ in EU social
policy,” in Innovative governance in the European Union: The Politics of Multi-
level Policymaking, eds. Ingeborg Tömmel and Amy Verdun (Colorado: Lynne
Reinner, 2009).
45. Giandomenico Majone, Dilemmas of European Integration: The Ambiguities and
Pitfalls of Integration by Stealth, (Oxford: Oxford University Press, 2005).
46. Harm Scheppel, The Constitution of Private Governance (Oxford: Hart Publish-
ing, 2005).
47. Dominik Hanf, “Legal Concept and Meaning in the Internal Market” in The EU
Internal Market in Comparative Perspective, eds. Jacques Pelkmans et al. (Brussels:
Peter Lang, 2008) at 13.
48. Cf. supra note 30.
49. Kenneth Armstrong, “Legal Integration: Theorising the Legal Dimension of
European Integration,” Journal of Common Market Studies 36, no. 2 (1998) at
163.
50. Supra note 48; J. Snell, Goods and Services in EC Law: A Study of the Relationship
Between the Freedoms (Oxford: Oxford University Press, 2002).
51. V. Hatzopoulos, “Legal Aspects of the Internal Market in Services,” in The
EU Internal Market in Perspective, eds. Jacques Pelkmans et al. (College of
Europe/Peter Lang Series: Brussels, 2008).
52. For example, challenging special rights of member states to retain golden shares
over formally publicly owned companies.
53. Abram Chayes and Antonia Handler Chayes, The New Sovereignty: Compliance
with International Regulatory Agreements (Harvard: Harvard University Press,
1996); Cliff Carruba, “Courts and Compliance in International Regulatory
Regimes,” Journal of Politics 67, no. 3 (August 2005): 669–689; Jonas Tallberg,
“Paths to Compliance: Enforcement, Management, and the European Union,”
International Organization 56, no. 3, (Summer 2002): 609–643; Gerda Falkner
et al., Complying With Europe: EU Harmonization and Soft Law in the Member
States (Cambridge: Cambridge University Press, 2005).
54. Tallberg, Id. at 616.
55. Falkner, Id.
56. Oliver Treib, “Implementing and complying with EU governance outputs,” in
Living Reviews of European Governance, http://europeangovernance.livingreviews.
org/Articles/lreg-2008-5/Accessed July 4, 2012. Quantitative analysis of pre-
liminary rulings and direct actions have found that courts are strategic actors
seeking to maintain their legitimacy by avoiding rulings that will be rejected
(Daniel Kelemen, “The Limits of Judicial Power: Trade-Environment Dis-
putes in the GATT/WTO and the EU,” Comparative Political Studies 34,
no.6 (2001): 622–650). When a simple majority of member states articulates
Single Market Governance ● 173
support for a national rule the court is unlikely to rule against majority pref-
erences (Geoffrey Garrett, Daniel Kelemen, and Heiner Schulz, “Legal Politics
in the European Union,” International Organization 52, no. 1 (Winter 1998):
149–176).
57. George Bremann and Kattharina Pistor, “Introduction,” in Law and Governance
in an Enlarged European Union, eds. George Bermann and Katherine Pistor
(Oxford: Oxford hart Publishing, 2004) at xvi; Francovich v. Italy, Cases C-6,
9/90, [1991] ECR 5357; Brasserie du Pecheur SA v. Germany, and The Queen
v. Secretary of State for Transport ex parte Factortame Ltd., Joined Cases C-46,
48, [1996] ECR I-1029.
58. Karen Alter, Establishing the Supremacy of European Law (Oxford: Oxford
University Press, 2001).
59. See Communication “A framework for target based tripartite contracts and agree-
ments between the Community, the States and regional and local authorities”
COM (2002) 709 final.
60. Supra note 22.
61. Jeffery Pressman and Aaron Wildavsky, Implementation: How Great Expectations
in Washington are Dashed in Oakland; or, Why it’s Amazing that Federal Pro-
grams Work at all. (Berkeley: University of California Press, 1984). A directive
“shall be binding, as to the result to be achieved upon each Member State to
which it is addressed, but shall leave to the national authorities the choice of
form and methods.” EC Treaty, art. 189.
62. Fritz W. Scharpf, “The Joint-Decision Trap. Lessons from German Federalism
and European Integration,” Public Administration 66 (1988): 239–287.
63. UNICE, 1995; Molitor Report, “Report of the Group of Independent Experts
on Legislative and Administrative Simplification” COM 5, 288 final, Brussels
June 21, 1995.
64. Claudio Radaelli and Fabrizio De Francesco, Regulatory Quality in Europe
Concepts, Measures and Policy Processes (Manchester: University Press,
2006).
65. Claudio M. Radaelli, “Governing European Regulation the challenges ahead,”
RSC Policy Paper no. 98/3 (Florence: European University Institute, 1998).
66. Jacques Pelkmans, “Economic Concept and Meaning of the International Mar-
ket,” in The EU Internal Market in Comparative Perspective, eds. J Pelkmans et al.
(Brussels: Peter Lang Publishers, 2008).
67. As outlined in the renewed “Lisbon Strategy” (2005).
68. Andrea Renda, “Impact Assessment in the EU: The State of the Art and the Art of
the State,” http://aei.pitt.edu/32591/1/30._Impact_Assessment_in_the_EU.pdf
Accessed July 4, 2012 C.M. Radaelli, “Getting to grips with quality in the diffu-
sion of regulatory impact assessment in Europe,” Public Money and Management
24, no. 5 (October 2004): 271–276.
69. Egan, supra note 22; Pelkmans, supra note 2, Falkner et al., supra note 56.
70. Roland Bieber and Micaela Vaerini, “Implementation and Compliance: Stim-
ulus for New Governance Structures in the Accession Countries,” in Law and
174 ● Michelle Egan
I
n late 2003, Vicente Fox, president of Mexico (2000–2006), sent to
Congress a bill to reform the Federal Criminal Code and the National
Health Statute. The objective was to generate the proper incentives for
state and municipal authorities to get involved in addressing the problems
that drug trafficking and drug consumption generate. Some of the bill’s pro-
visions established that the consumption of certain illegal substances would
not be punished so long as the arrested persons were able to prove that they
were consumers as opposed to dealers. Two years later, Congress passed the
bill.1 The media began covering this issue under the assumption that this
reform implied some sort of “soft legalization” of drugs.2 However, in a quite
surprising move, once the bill was ready to be enacted, President Fox decided
to veto it.3 Many sources attributed this change of course to the pressure that
the U.S. government exercised over President Fox’s administration.4
This example shows that even the decision-making process in a field as
sensitive as criminal law is a matter of debate inside the NAFTA region. This
observation also is confirmed by several other examples provided within this
book. Perhaps, in a predominantly silent way, legal construction happens to
be a very relevant issue for the North American agenda. The case of regional
security is quite compelling when viewed in light of the difficulties that arise
when the transportation of goods faces strict border regulations.5 There are
clear examples on the role of harmonization; however, the close relationship
among the three countries and their shared market also produces interaction
such jurisdiction. Because the case involved a forced disappearance that hap-
pened in 1974 (and over which Mexico accepted jurisdiction in 1999), the
Supreme Court had to decide whether the Inter-American Court’s decision
overextended its mandate.
There also were questions regarding Mexico’s reservations to the Inter-
American Court’s jurisdiction.21 In July 2011, the Supreme Court heard the
case and provided a much contested resolution. A majority of justices agreed
that reservations and interpretative clauses may not be analyzed once there is
a resolution by the Inter-American Court. The justices also agreed that the
federal judiciary was bound by resolutions of the Inter-American Court.22
The Radilla case represents an important step in the recognition by
Mexican Courts of resolutions made by international courts. However, the
justices continue to argue about the way in which treaties should be incor-
porated into Mexican law. In this case, the problem is Article 1 of the
Mexican Constitution and the status that it provides to human rights guar-
antees contained in treaties that subsequently have been incorporated into
the Constitution. In a way, this phrasing may create two standards. The
first one is that any rule contained in a treaty that protects a human right
will be considered part of the rights recognized by the Mexican Constitu-
tion. The second standard is that any other rule contained in a treaty will be
incorporated into the Mexican legal system in accordance with the existing
rules. The resolution to this problem is, still, pending.23 The justices con-
tinue to debate the strength of human right clauses in treaties vis-à-vis the
Constitution.
The previous two cases provide us with a few insights into the Mexican
interpretation of treaties and judgments. First, Mexican Courts will follow
judgments by international tribunals with deference. A very similar sta-
tus is recognized to arbitration awards.24 Second, arguments based on the
possible infringement of human rights will be taken into consideration in
deciding questions that have to do with the enforcement of statutes or any
administrative decision-making process.25
Constitutional amendments, as well as their judicial interpretations, also
have had an impact over the federal framework. The case of gas stations in
Ciudad Juárez can be useful to illustrate this point.26 In this case, the federal
government challenged municipal regulations of Ciudad Juárez that deter-
mined that the minimum distance between gas stations in the city was to be
restricted to 1,500 meters. According to the federal government, the city did
not have the authority to regulate within that subject area. The city argued
that the regulation was based on its general authority to regulate public safety.
Eventually the city prevailed on the constitutional merits of its arguments.27
This controversy represents a clear example of the way in which federalism
Conclusion ● 179
Conclusions
After almost 20 years of the NAFTA experience, things have changed.28 The
Mexican legal system has transformed itself in several respects.29 But how does
that change look for the future of the NAFTA region?
In Chapter 1, Mathew T. Simpson mentions two challenges for harmo-
nization: the differences between the civil and the common law systems, and
federalism. That second challenge, federalism, is changing in Mexico. It is
hard to say how much further it will change. Several constitutional amend-
ments have been passed in this area, and there is no reason to believe that they
will stop, soon.30 At this point, the characterization of Mexico as a centralized
federalist country needs to be reviewed. In some areas, the federal government
remains strong. Still, in many other areas, state and municipal governments
are becoming relevant players.
The impact of the new human rights regime in Mexico is also worth con-
sidering.31 New procedural alternatives, as well as the expansion of human
rights within the Constitution, most likely will result in a wide variety of
cases in this area being brought before the courts.32 As James T. McHugh
notes in Chapter 4, this subject has been important to Mexico’s revolutionary
heritage. He also has noted, elsewhere, the significance of the country’s civil
law system in this respect.33
On the other hand, the differences between the civil and the common
law systems have not proven to be such an important obstacle, thus far.
Many chapters in this book document the way that not only Mexican insti-
tutions but also similar institutions in Quebec or in Louisiana have been able
to sustain active exchanges without significant problems. Nevertheless, the
legal practices that have resulted from NAFTA remain far from most of the
mainstream legal problems in Mexico.
As Peter Glenn suggests in Chapter 2, the informal process of harmoniza-
tion will keep producing solutions to the day-to-day issues that arise within
the NAFTA region. A rising number of Mexican lawyers are specializing
in business transactions relevant to NAFTA and its legal practices and reg-
ulations.34 Their activities seem to be paving that informal path to future
harmonization within North America. At this point, it is hard to assess how
deep these changes have been or will be. For example, the drafting of con-
tracts may be an area where the influence of NAFTA may be observed in this
respect.35 Still there is no hard evidence of these changes in other legal areas.
180 ● José Antonio Caballero Juárez
A more pressing issue for collaboration and cooperation has to do with the
agendas of the three countries of the NAFTA region. It seems that a trilateral
policy for the region is far from being reached. Most of the actions take
place from the bilateral perspective. The Mexican agenda is, currently, quite
clear, and it is focused upon the United States. Immigration issues remain
a priority of this agenda. However, security and criminal justice also remain
pressing issues. This development is the point at which there seems to be
an opportunity for the development of more stable institutions inside the
NAFTA framework, as some of the chapters in this book suggest.
Notes
1. Bill presented to Congress, January 7, 2004. The bill was passed by the House
and the Senate in April, 2006, Dictamen de las Comisiones unidas de Justicia,
Salud y Seguridad Social y Estudios Legislativos Segunda, de Senado de la
República, Gaceta del Senado, April 27, 2006. http://www.senado.gob.mx/index.
php?ver= sp&mn= 4&sm= 2&f= 2006/4/27 (last accessed June 2012).
2. “Aprueba Senado ley que permite portación mínima de drogas,” El Univer-
sal, April 28, 2006. http://www.eluniversal.com.mx/notas/345730.html (last
accessed March, 2012).
3. La Presidencia de la República reconoce el trabajo que el Congreso de la Unión
realize en torno a las reformas a la Ley General de Salud y a los Códigos
Penal Federal y Federal de Procedimientos Penales. http://fox.presidencia.gob.
mx/actividades/comunicados/?contenido= 24768 (last accessed March, 2012).
4. See, for example, “Under U.S. Pressure, Mexico President Seeks Review of Drug
Law,” New York Times, May 4, 2006. http://www.nytimes.com/2006/05/04/
world/americas/ 04mexico.html (last accessed March 2012).
5. Greg Anderson, “The Fragmentation and Integration of North American Gover-
nance: Border Security and Economic Policy for the Obama Administration,” 2
SPP Briefing Papers, Focus on the United States, School of Public Policy, University
of Calgary, no. 4 (October 2009), p. 15.
6. See Glenn, Chapter 2, on foreign governments or enterprises interacting with
regional or local actors to argue in favor of certain policies.
7. The amendments include reforms to the criminal justice system, the writ of
amparo, and human rights—see the decrees published in Diario Oficial de la
Federación June 18, 2008; June 6, 2011; and June 10, 2011.
8. Angeles M. Villarreal and Jennifer E. Lake, “Security and Prosperity Partnership
of North America: An Overview and Selected Issues,” CRS Report for Congress,
Congressional Research Service, January 22, 2010.
9. Anderson, p. 3, n. 5.
10. Eric L. Olson and Christopher E. Wilson, “Beyond Merida: The Evolv-
ing Approach to U.S.-Mexico Security Cooperation,” Working Paper Series on
U.S.-Mexico Security Cooperation, Woodrow Wilson International Center for
Conclusion ● 181
25. The extent to which this consideration will occur remains under review by the
Mexican Supreme Court, Sessions of March 12 and 13, 2012. http://www.scjn.
gob.mx/ pleno/paginas/ver_taquigraficas.aspx.
26. Controversia Constitucional 21/2006 (Pleno, S.C.J.N, March 24, 2008). Also
relevant for federalism: Controversia Constitucional 54/2009 (Pleno, S.C.J.N,
May 27, 2010) and Controversia Constitucional 72/2008 (Pleno, S.C.J.N.
May 12, 2011).
27. Controversia Constitucional 21/2006 (Pleno, S.C.J.N, March 24, 2008). Also
relevant for federalism: Controversia Constitucional 54/2009 (Pleno, S.C.J.N,
May 27, 2010) and Controversia Constitucional 72/2008 (Pleno, S.C.J.N.
May 12, 2011).
28. Still, as McHugh shows, there are very many diverse institutional settings in the
región—see Chapter 4.
29. A recent account on the changes of the legal system in Mexico is Sergio López
Ayllón and Héctor Fix Fierro, “La modernización del sistema jurídico (1970–
2000)” in Elisa Servín, Del nacionalismo al neoliberalismo, 1940–1994, Historia
crítica de las modernizaciones en México (México: Fondo de Cultura Económica,
2010).
30. For example, Article 73 of the Mexican Constitution regulates Congress’ attribu-
tions. This article has been amended more than 30 times since 1994.
31. In this case, there may be an impact on Chapter 11 litigation—see, for example,
Susan Karmanian’s remarks on Glamis Gold, Ltd. v. United States in Chapter 6.
32. There are two relevant amendments from a procedural perspective. The first one
is class actions. The second one is a reconfiguration of the writ of amparo. Both
amendments were invoked in 2011.
33. James T. McHugh, Comparative Constitutional Traditions (New York: Peter Lang,
2003), pp. 188–189.
34. Héctor Fix Fierro y Sergio López Ayllón. “¿Muchos abogados, pero poca pro-
fesión? Derecho y profesión jurídica en el México contemporáneo,” Fix Fierro,
Héctor (editor). Del gobierno de los abogados al imperio de las leyes. Estudios socio-
jurídicos sobre educación y profesión jurídicas en el México contemporáneo (México:
UNAM, 2006).
35. There are no empirical assessments available on this subject matter. Neverthe-
less, a review of two websites that register contracts provides some insights
into the way in which contract drafting may be changing, Comisión Nacional
para la Protección y Defensa de los Usuarios de Servicios Financieros, http://
e-portalif.condusef.gob.mx/reca/_index.php (last accessed March 2012), and
Procuraduría Federal del Consumidor, http://burocomercial.profeco.gob.mx/
BC/faces/inicio.jsp (last accessed March 2012).
Contributors
Arthur Cockfield is Associate Dean and Associate Professor of the Queen’s University
Faculty of Law. He is an expert on NAFTA tax law and policy and his book on this
subject was short-listed for the prestigious Doug C. Purvis Memorial Award for a work
of excellence in Canadian economic policy. Dean Cockfield is a recipient of a Charles
D. Gonthier Research Fellowship from the Canadian Institute for the Administration
of Justice, an American Tax Policy Institute research grant, a Canadian Federation for
the Humanities and Social Sciences publication grant, and multiple Social Science
and Humanities Research Council research grants, including in connection with the
Globalization of Personal Data project. He also has published widely on technology,
privacy, and taxation law.
Michelle Egan is Associate Professor and Coordinator for the European and Russian
Studies program in the Comparative and Regional Studies Division of the School of
International Service of American University. She also was awarded a Jean Monnet
Chair in European Integration. Dr. Egan has been awarded a German Marshall Fund
Fellowship, Robert Bosch Fellowship, a German-American Academic Council Fel-
lowship, a Jean Monnet Fellowship, and a Howard Foundation Fellowship. She is
currently European Council Co-Chair and a member of the American Consortium
for European Union Studies. Dr. Egan has published a variety of books and arti-
cles focusing on comparative politics and international relations of Europe and is the
recipient of a number of fellowships and awards for her teaching and curriculum
development work.
Idea, Toward a North American Community: Lessons from the Old World for the New
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Matthew T. Simpson is an Attorney with Weil Gotshal and Manges LLP, and a
Peace Fellow with the Public International Law & Policy Group (PILPG). Currently,
Mr. Simpson advises key stakeholders in the ongoing Sudan (Darfur and Southern
Sudan) and Cyprus peace processes. Previously Mr. Simpson assisted the Iraqi Consti-
tutional Review Commission in the 2007 round of Iraqi constitutional amendments
and advised the Republic of Montenegro on issues relating to genocide claims at the
International Court of Justice. In 2007, Mr. Simpson traveled to Northern Cyprus
and assisted a group of Turkish Cypriots with the drafting of an electoral disenfran-
chisement claim at the European Court of Human Rights and the strategic and tactical
decisions associated with bringing such a claim. In early 2008 Mr. Simpson advised
central figures in the Darfuri Diaspora around the world on their involvement in the
Darfur Peace process and the appropriate methods for establishing the rule of law and
achieving sustainable peace. He also has served as a Project Director at the Center for
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California, 105–6, 107 European Court of Human Rights, 45
Calvo Doctrine, 95 European Court of Justice, 19–20,
Canada, ix, x–ix, 1, 2, 7, 11, 16, 29, 45, 80, 82, 127, 128–9, 162–3
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208 ● Index
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210 ● Index