THE INTERT H E I N T E RTHE INTERNATIONN A T I O …

AMERICAN BAR ASSOCIATION321 N. CLARK STREETCHICAGO, ILLINOIS 60610

A TRIANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW

VOLUME 52 • NUMBER 1 • 2019

ARTICLES

Aligning Emerging Global Strategies to Combat Corporate Corruption: From a “Two Thrust Approach” to a “Two Swords One Thrust Strategy” of Compliance, Prosecutorial Discretion, and Sovereign Investor Oversight in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Larry Catá Backer

Investigating Potentially Unlawful Death under International Law: The 2016 Minnesota Protocol . . . . . . . . . . . . Christof Heyns,

Stuart Casey-Maslen, Toby Fisher,

Sarah Knuckey, Thomas Probert,

and Morris Tidball-Binz

Lisbon’s Legacy: Increased Democratic Accountability and Centralized Governance in EU International Investment Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Julia Johnson

Time for the Creation of a Standing U.N. Armed Peace Service and the Potential Employment of Experienced U.S. Veterans as a Significant Component of Such a Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ronald Sievert

Internationalizing the U.S. Law School Classroom: Lessons Learned from Teaching Transnationally. . . . . . . . . Christopher R. Kelley

and Nataliia Borozdina

CASE NOTE

Commission v. Belgium: Belgium’s Tax Law Prevents Free Movement of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . John Gramlich

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SECTION OF INTERNATIONAL LAW2018-2019

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Division Chairs:Americas Division SUSAN BURNS

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Contracts, Transportation, Energy & ALEXANDRA DARRABY

Environment DivisionCorporate & Supply Chain Division STEPHEN GEORGE

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Dispute Resolution Division ED MULLINS

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Human Rights & Corporate Social MICHELLE JACOBSON

Responsibility DivisionLegal Practice, Ethics & Delivery of ALEX JEGLIC

Legal Services DivisionTrade, International Organizations, & NANCY MATOS

Regulatory Practice Division



Members of the Council:Section Delegate GABRIELLE M. BUCKLEY

Section Delegate MICHAEL E. BURKE

Section Delegate STEVEN M. RICHMAN

Alternate Delegate DON S. DE AMICIS

Editor-in-Chief THE INTERNATIONAL LAWYER MARC I. STEINBERG

Editor-in-Chief INTERNATIONAL LAW NEWS RENEE DOPPLICK

Former Section Chair MARCELO E. BOMBAU

Former Section Chair SARA P. SANDFORD

Former Section Chair LISA J. SAVITT

Young Lawyer Division Representative WILLIAM HOWARD NEWMAN

Law Student Division Liaison CHANEN BROWN

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Private International Law Liaison MICHAEL S. COFFEE

International Trade Law Liaison JOHN T. MASTERSON, JR.Non-U.S. Lawyer Representative STEPHEN DENYER

Council Members-At-Large: Term Expires:HANS CORELL 2019

STEVEN HENDRIX 2019SANDRA MCCANDLESS 2019

MARGARET MCKEOWN 2019PATRICIA LEE REFO 2019

DELISSA A. RIDGWAY 2019RUTH WEDGWOOD 2019

MARK AGRAST 2020RONALD J. BETTAUER 2020

CHANTAL-AIMEE DOERRIES 2020ADAM FARLOW 2020BIRGIT KURTZ 2020

HOUSTON PUTNAM LOWRY 2020LINDA MURNANE 2020

VED NANDA 2020RON CASS 2021

DEBORAH ENIX-ROSS 2021CARA LEE NEVILLE 2021

BRUCE RASHKOW 2021LOUISE ELLEN TEITZ 2021



THE INTERNATIONAL LAWYER2019 Volume 52 Number 1

CONTENTS

ARTICLESAligning Emerging Global Strategies to CombatCorporate Corruption: From a “Two ThrustApproach” to a “Two Swords One ThrustStrategy” of Compliance, Prosecutorial Discretion,and Sovereign Investor Oversight in China . . . . . . . . . Larry Cata Backer 1

Investigating Potentially Unlawful Death underInternational Law: The 2016Minnesota Protocol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christof Heyns, 47

Stuart Casey-Maslen,Toby Fisher,

Sarah Knuckey,Thomas Probert,


Lisbon’s Legacy: Increased DemocraticAccountability and CentralizedGovernance in EU InternationalInvestment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Julia Johnson 81

Time for the Creation of a Standing U.N.Armed Peace Service and the PotentialEmployment of Experienced U.S. Veterans asa Significant Component of Such a Force . . . . . . . . . . . . . . Ronald Sievert 111

Internationalizing the U.S. Law SchoolClassroom: Lessons Learnedfrom Teaching Transnationally . . . . . . . . . . . . . . . . . Christopher R. Kelley 131


CASE NOTECommission v. Belgium: Belgium’s Tax LawPrevents Free Movement of Capital . . . . . . . . . . . . . . . . . . . John Gramlich 149



Aligning Emerging Global Strategies to CombatCorporate Corruption: From a “Two ThrustApproach” to a “Two Swords One ThrustStrategy” of Compliance, ProsecutorialDiscretion, and Sovereign Investor Oversightin China

LARRY CATA BACKER*

I. Introduction

Who cares about corruption?1 In September 2017, the media reportedthat parliamentarians at the Council of Europe had been bribed byAzerbaijan to mute criticism of their government within the Council’shuman rights organs.2 Also in September 2017, France’s financialprosecutor announced the commencement of a corruption investigationagainst the son of the former president of the International Association ofAthletics Federations for payments to influence the choice of host cities forthe largest global sporting events.3 At the same time, authorities in Brazillaunched a probe into vote buying for the 2016 Olympics, a criminal

* W. Richard and Mary Eshelman Faculty Scholar Professor of Law and InternationalAffairs, Pennsylvania State University, University Park, Pennsylvania. My great thanks toZhang Lei of Beijing Normal University who has been an inspiration for this article.Great appreciation to my research assistant GAO Shan for his usual excellent work and forthe Chinese translation of the article. This article is an expanded version of an article originallypublished as 58(2), 58(2):17-30

— [Sword One Thrust Strategy” to Combat Criminal Corruption: CorporateCompliance, Prosecutorial Discretion, and Sovereign Investor Oversight, JILIN UNIV. J. UNIVERSITY

JOURNAL OF SOC. SCI.]SOCIAL SCIENCE] 58(2): 17-30 (2018).1. See Alvaro Cuervo-Cazurra, Who Cares about Corruption, 37 J. INT’L BUS. STUD. 807, 807-

822 (2006) (arguing that anti-bribery laws abroad may act as a deterrent against engaging incorruption in foreign countries, but that corruption results in relatively higher FDI fromcountries with high levels of corruption).

2. See Jennifer Rankin, Azerbaijan Revelations Spark ‘Great Concern’ at Council of Europe: Newsof Country’s $2.9bn Lobbying and Money-Laundering Scheme Could Herald Shake-Up at Rights Body,THE GUARDIAN (Sept. 5, 2017), https://www.theguardian.com/world/2017/sep/05/azerbaijan-revelations-could-herald-shake-up-at-council-of-europe?CMP=share_btn_fb (“The details ofthe payments came as an independent panel began confidential hearings into alleged corruptionat [the Parliamentary Assembly of the Council of Europe] Pace in Strasbourg, one of theworld’s oldest human rights bodies.”).

3. See French Prosecutor Pins Corruption in IAAF on Son of Ex-President, FRANCE 24 (Sept. 5,2017), http://www.france24.com/en/20170905-france-french-prosecutor-pins-corruption-iaaf-son-ex-president?ref=fb.



2 THE INTERNATIONAL LAWYER [VOL. 52, NO. 1

offense.4 In January 2016, the Norwegian Pension Fund Global intensifiedits efforts to engage in more aggressive anti-corruption investmentstrategies.5 In December 2013, Vietnam reported that it had sentencedbankers to death in connection with embezzlement from a state ownedbank.6

It’s a message to those in this game to be less greedy and that businessas usual is getting out of hand,” said Adam McCarty, chief economistwith the Hanoi-based consulting firm Mekong Economics. “Themessage to people in the system is this: Your chances of getting caughtare increasing,” McCarty said. “Don’t just rely on big people aboveyou. Because some of these [perpetrators] would’ve had big peopleabove them. And it didn’t help them.7

It is noteworthy that Colombia, shortly after the peace settlement endingfifty years of civil war, turned its attention to the control of criminalcorruption in response to corruption scandals involving transnationalcorporations that reached to the office of the president of the republic.8

“Already seven people have been jailed in the case, including a formersenator and an ex-vice minister of transport. The attorney general alsoasked the Supreme Court of Justice to investigate five other members ofcongress.”9

In China, Ding Ning, the chairman of Yucheng Group, was recentlysentenced to life in prison for his role in an online lending fraud scheme.10

In August 2017, “[t]he Supreme People’s Procuratorate said China would

4. See Brazil Police Launch Raid to Probe Vote-Buying for 2016 Olympics, FRANCE 24 (Sept. 5,2017), http://www.france24.com/en/20170905-brazil-police-launch-raid-probe-vote-buying-2016-olympics?reffb.

5. Norway Fund Blacklists China’s ‘Corrupt’ ZTE, LOC. (Jan. 7, 2016), https://www.thelocal.no/20160107/norway-fund-blacklists-chinas-zte-over-corruption/ (“The world’s biggest sovereignwealth fund, Norway’s public pension fund, has divested from Chinese telecom equipmentmaker ZTE because of corruption fears, the Norwegian central bank which manages the fundsaid on Thursday.”); see also Decision on Exclusion of Company from the Government’s Pension FundGlobal, NORGES BANK (Jan. 7, 2016), https://www.nbim.no/en/transparency/news-list/2016/decision-on-exclusion-of-company-from-the-government-pension-fund-global/.

6. See Patrick Winn, Vietnam Is Sentencing Corrupt Bankers to Death, by Firing Squad, PRI(Apr. 3, 2014), https://www.pri.org/stories/2014-04-03/vietnam-sentencing-corrupt-bankers-death-firing-squad (“In March, a 57-year-old former regional boss from Vietnam DevelopmentBank, another government-run bank, was sentenced to death over a $93-million swindlingjob”).

7. Id.8. Juan Manuel Bedoya-Palacio, Colombia Enters the Age of Enforcement, THE FCPA BLOG

(Aug. 31, 2017), http://www.fcpablog.com/blog/2017/8/31/juan-manuel-bedoya-palacio-colombia-enters-the-era-of-enforc.html.

9. Id.10. See Ding Ning: China’s Biggest Ponzi Scheme Mastermind Sentenced to Life in Prison, THE

INDEPENDENT (Sept. 12, 2017), http://www.independent.co.uk/news/business/news/china-ponzi-scheme-ding-ning-yucheng-group-prison-sentence-ezubo-beijing-a7941811.html.



2019] CHINESE STRATEGIES TO COMBAT CORPORATE CORRUPTION 3

strictly crack down on any crimes that seriously damaged financial securityand that destroyed financial orders.”11

Corruption, especially bribery, has become a matter of internationalconcern. The United Nations (U.N.) Global Compact, a voluntaryinitiative between large enterprises under the leadership of the U.N.committed to implement universal sustainability principles and to take stepsto support U.N. goals, is built around ten principles.12 Its tenth principlestates that “[b]usinesses should work against corruption in all its forms,including extortion and bribery.”13 The U.N. Global Compact hasexpressed the view that “[c]orruption is a considerable obstacle to economicand social development around the world. It has negative impacts onsustainable development and particularly affects poor communities.”14 Inthat respect, the U.N. Global Compact highlights a “two thrust” attack oncorruption. “New and tougher anti-corruption regulations continue toemerge worldwide. All companies need robust anti-corruption measuresand practices to protect their reputations and the interests of theirstakeholders.”15

These “two thrusts”—the first consisting of national legislation (criminaland civil) and the second consisting of corporate self-regulation againstcorruption—have become the foundation of contemporary measures tocombat corruption, especially when committed by individuals within thelargest public or private enterprises.16 The extent of national legislation andinternational efforts to make national legislation coherent is well known.17

National efforts continue to develop. For example, in 2017, the governmentof the United Kingdom adopted the Criminal Finances Act of 2017.18 Inaddition, the range of international agreements respecting corruption

11. Stella Qiu & Vincent Lee, China’s Top Prosecutor to Intensify Crackdown on Financial Crimes,REUTERS (Aug. 22, 2017), https://www.reuters.com/article/china-finance-crime/chinas-top-prosecutor-to-intensify-crackdown-on-financial-crimes-idUSL4N1L841V (“This year, highprofile regulators who have been caught up in President Xi Jinping’s anti-corruption driveinclude the former head of the insurance regulator, former vice chairman of the securitiesregulator and former assistant chairman of banking regulator.”).

12. The Ten Principles of the UN Global Compact, U.N. GLOBAL COMPACT, https://www.unglobalcompact.org/what-is-gc/mission/principles (last visited Oct. 7, 2018) (“The tenprinciples are derived from: the Universal Declaration of Human Rights, the InternationalLabour Organization’s Declaration on Fundamental Principles and Rights at Work, the RioDeclaration on Environment and Development, and the United Nations Convention AgainstCorruption”).

13. Id.14. Anti-Corruption, U.N. GLOBAL COMPACT, https://www.unglobalcompact.org/what-is-gc/

our-work/governance/anti-corruption (last visited Oct. 7, 2018).15. Id.16. See, e.g., DIMITRI VLASSIS, The U.N. Convention Against Corruption Origins And Negotiation

Process in 66 RESOURCE MATERIAL SERIES 126 (2005).17. See, e.g., id.18. Criminal Finances Act 2017, c. 22 (U.K.). The Act made provisions in connection with

terrorist property and created corporate offenses for cases where a person associated with acorporate body or partnership facilitates a tax evasion offense.




touches virtually every country on earth.19 The international community hasalso adopted some soft law instruments with some influence in developingcustomary standards of conduct and expectations in economic relations.20 Inthe United States, the Foreign Corrupt Practices Act (FCPA) has served as amodel, variations of which have been adopted elsewhere.21 The CriminalLaw of the People’s Republic of China prohibits “official bribery,” whichapplies to state officials and state entities, as well as “commercial bribery,”which applies to virtually everyone else.22 A great number of other stateshave enacted anti-bribery and corruption laws as well.23

Recent reports from the global financial sector have highlighted the wayin which this “two thrusts” strategy has also begun to be felt by actors infinancial markets, especially by those firms that are in the business ofinvesting in or lending to operating companies worldwide. In one recentcase,

[a]n American mutual fund manager said in an SEC filing [ ] that it soldall shares it held in Petrofac because of an ongoing corruption

19. See, e.g., United Nations Convention against Corruption, Dec. 9, 2003, 2349 U.N.T.S. 41;United Nations Convention against Transnational Organized Crime and its Protocols, Sept. 29,2003, 2225 U.N.T.S. 209; African Union Convention on Preventing and CombatingCorruption, July 11, 2003, 43 I.L.M. 5; Civil Law Convention on Corruption, Nov. 4, 1999,Eur. T.S. No. 174 (open to non-member states); Criminal Law Convention on Corruption, Jan.27, 1999, Eur. T.S. No. 173 (open to non-member states; Additional Protocol to the CriminalLaw Convention on Corruption, May 15, 2003, Eur. T.S. No. 191 provides that adhering statesembed in their national criminal law the criminalization of active and passive bribery in both thepublic and private sectors, including bribery of members of foreign and domestic parliamentaryassemblies and of officials of international organizations); OECD Convention on CombatingBribery of Foreign Public Officials in International Business Transactions, Dec. 17, 1997, S.Treaty Doc. No. 105-43 (open to all OECD countries and some non-member countries);OECD Convention on Combating Bribery of Foreign Public Officials in International BusinessTransactions, Dec. 17, 1997, S. Treaty Doc. No. 105-43 (open to all OECD countries and somenon-member countries).

20. See, e.g., G.A. Res. 51/191, Declaration Against Corruption and Bribery in InternationalCommercial Transactions, (Dec. 16, 1996). For a review of how this declaration fits into thebroader context of the fight against corruption, see VLASSIS, supra note 16.

21. Foreign Corrupt Practices Act of 1977, 15 U.S.C. § 78dd-1 (2006); see also D. MichaelCrites, The Foreign Corrupt Practices Act at Thirty-Five: A Practitioner’s Guide, 73 OHIO ST. L.J.1049 (2012).

22. See Hui Xu & Sean Wu, Bribery and Corruption: China, GLOBAL LEGAL INSIGHTS (2018),https://www.globallegalinsights.com/practice-areas/bribery-and-corruption/global-legal-insights—-bribery-and-corruption/china; see also Ron Cheng, Why US Companies Should bePaying Attention to China’s New Anti-Corruption Laws, FORBES (July 27, 2016), https://www.forbes.com/sites/roncheng/2016/07/27/why-us-companies-should-be-paying-attention-to-chinas-new-anti-corruption-laws/#6905e4a41db1.

23. The International Bar Association has created a database with the relevant anti-briberylaws from fifty-six states, as well as international conventions. See National Anti-BriberyLegislation, INT’L B. ASSOC. (Dec. 1, 2014), https://www.ibanet.org/LPD/Criminal_Law_Section/AntiCorruption_Committee/Resources.aspx (“texts of international anti-briberyconventions as well as the anti-bribery legislation of a number of countries [are] accurate as of 1December 2014”).




investigation by the UK’s Serious Fraud Office. That SFOinvestigation is focused on Petrofac’s past relationship with Unaoil.Ohio National Fund, Inc. said the “escalating fraud investigation seemsto us a thesis changer.”24

The U.S. Securities and Exchange Commission (SEC) has noted thepriority to which it has given corruption cases under the FCPA; itsenforcement actions suggest the preference for civil penalties as punishmentfor violations of the Act.25 The complex nature of the extraterritorial effectsof anti-corruption measures and the weaknesses of arguments against suchefforts have also been noted.26 Indeed, financial institutions, and mostnotably, sovereign wealth funds, have begun to more vigorously defendagainst corruption by building anti-corruption measures and requirementsinto their investment strategies as well as in their shareholding policies.27

Related to these emerging trends is another—the increasing emphasis onmonitoring and compliance programs imposed formally and informally onand by enterprises.28 Governments incentivize this obligation by theirwillingness to enforce cooperation agreements with enterprises facingcorruption probes in order to avoid criminal sanction.29 These have been

24. Richard L. Cassin, Fund Dumps Petrofac Shares on SFO Probe Concerns, THE FCPA BLOG

(Sept. 8, 2017), http://www.fcpablog.com/blog/2017/9/8/fund-dumps-petrofac-shares-on-sfo-probe-concerns.html. Petrofac designs, builds, operates, and maintains oil and gas facilitiesworldwide. Our Story, PETROFAC.COM, https://www.petrofac.com/en-gb/about-us/our-story/(last visited Oct. 7, 2018). Unaoil provides “industrial solutions to the energy sector in theMiddle East, Central Asia and Africa. These include green and brownfield Engineering andConstruction, Workforce Solutions, Operations and Maintenance, and the provision of nicheequipment and products, such as production chemicals.” Chairman’s Message, UNAOIL.COM,http://www.unaoil.com/about/chairman-s-message/ (last visited Oct. 7, 2018). On July 19,2016, the U.K. Serious Frauds Office (SFO) issued a Press Release in which they announcedthat the SFO is “conducting a criminal investigation into the activities of Unaoil, its officers, itsemployees and its agents in connection with suspected offences of bribery, corruption andmoney laundering.” Unaoil Investigation, SFO.COM (July 19, 2016), https://www.sfo.gov.uk/2016/07/19/unaoil-investigation/. See generally, Unaoil, SFO.COM (July 18, 2018), https://www.sfo.gov.uk/cases/unaoil/.

25. SEC Enforcement Actions: FCPA Cases, SEC.GOV, https://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml (last updated Oct. 2, 2018) (listing companies and amounts of civil penalties from2018 back to 1978). U.S.

26. See Larry Cata Backer, Soft Extra Territorialism and Anti-Corruption Campaigns: On thePerverse Folly of Corrupt States, LAW AT THE END OF THE DAY (Sept. 15, 2006), http://lcbackerblog.blogspot.com/2006/09/soft-extra-territorialism-and-anti.html.

27. See Bestemmelser om forvaltningen av States pensjonsfond, 21. Dec. 2005, nr. 123.28. See Alun Milford, Alun Milford on Deferred Prosecution Agreements, SFO.GOV (Sept. 5,

2017), https://www.sfo.gov.uk/2017/09/05/alun-milford-on-deferred-prosecution-agreements/.29. On U.S., Canadian, and U.K. government’s view of what constitutes an effective

compliance program, see U.S. DEP’T OF JUSTICE, JUSTICE MANUAL, § 9-47.120 (2018)[hereinafter JUSTICE MANUAL]; Corporate Compliance Programs, CANADA.CA, http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03927.html; MINISTRY OF JUSTICE, THE

BRIBERY ACT 2010: GUIDANCE (2010).




advanced in the United States30 and in the United Kingdom.31 What makesthis interesting is the way that governments, having created a strongtradition of respecting the autonomy of corporations even when they aresubsidiaries, now seek to treat production chains as a single enterprise forpurposes of corruption probes. Most interesting among these efforts is theso-called Pilot Program launched by the U.S. Department of Justice in April2016,32 which was designed to encourage company self-reporting andcooperation to avoid exercises of prosecutorial discretion to seek criminalpenalties against companies or their employees.33 Additional due diligenceefforts may be required under provisions of the U.K.’s Criminal FinancesAct of 2017.34 Under this Act, an enterprise may well incur criminal andcivil liability for acts attributable to it occurring within its supply chain ifconnected with torture involving public officials.35 In Brazil, the CleanCompanies Act36 includes a leniency provision permitting state prosecutorsto enter a “deferred prosecution deal for companies willing to plead guiltyand settle corruption charges.”37 The effect is that the legal relationshipsamong corporate enterprises or between corporations and their clients (withwhom there may be no ownership relationship) are now treated as irrelevantfor purposes of criminal investigation.38

These trends tend to challenge the traditional legal and societal principlesfor the organization of business and its responsibilities. They also point to a

30. See U.S. DEP’T OF JUSTICE, EVALUATION OF CORPORATE COMPLIANCE PROGRAMS

(2017), https://www.justice.gov/criminal-fraud/page/file/937501/download. See generally,JUSTICE MANUAL, supra note 29, § 9-28.000.

31. See, e.g., U.K. Bribery Act 2010, c. 23, § 7 (U.K.).32. See U.S. DEP’T OF JUSTICE, THE FRAUD SECTION’S FOREIGN CORRUPT PRACTICES ACT

ENFORCEMENT PLAN AND GUIDANCE (2016), https://www.justice.gov/archives/opa/blog-entry/file/838386/download.

33. See id. The Press Release explained that the Pilot Program was in part “designed tomotivate companies to voluntarily self-disclose FCPA-related misconduct, fully cooperate withthe Fraud Section, and, where appropriate, remediate flaws in their controls and complianceprograms” U.S. DEP’T. OF JUSTICE, Criminal Division Launches New FCPA Pilot Program,JUSTICE.GOV (April 5, 2016), https://www.justice.gov/archives/opa/blog/criminal-division-launches-new-fcpa-pilot-program.

34. See Criminal Finances Act 2017 (U.K.); see also Richard J. Rogers & Sasho Todorov,Compliance Alert: Due Diligence Under the U.K.’s Critical Finances Act of 2017, THE FCPA BLOG

(Sept. 7, 2017), http://www.fcpablog.com/blog/2017/9/7/compliance-alert-due-diligence-under-the-uks-criminal-financ.html.

35. Rogers & Todorov, supra note 34 (“if a company is unfortunate enough to identify a GrossHuman Rights Abuse with which it is connected, it may wish to consider proactivelyinvestigating the allegations. This will help the company beat civil society to the punch, andwill demonstrate a good faith effort to mitigate any potential violations.”).

36. Lei No. 12,846/13, de 13 Agosto 2013, DIARIO OFICIAL DA UNIAO [D.O.U.] de 13.8.2013(Braz.).

37. Felipe Rocha dos Santos, New Guidance for Brazil Anti-Corruption Settlements, THE FCPABLOG (Sept. 7, 2017), http://www.fcpablog.com/blog/2017/9/7/felipe-rocha-dos-santos-new-guidance-for-brazil-anti-corrupt.html. The settlements have proven controversial, and havesometimes been blocked by the Brazilian Federal Prosecutor’s Office for excessive leniency. Id.

38. See Lei No. 12,846/13.




new and heightened importance of corruption for both states and financialinstitutions. The trends suggest some of the ways in which legal systems andthe practices of large institutions in global markets have been contributing tochanges in the frameworks within which corruption is detected, controlled,and punished. This article first examines two less well known elements ofthe “two thrusts” approach to corruption that focus on corporate complianceprograms. The first is the use of sovereign investing as a tool for thecorrection of corruption and the supervision of institutional reform to avoidfuture corruption. The second is the use of prosecutorial discretion to allowlegal regimes to manage corporate compliance programs. In the former case,state officials use private power to aid corporate self-regulation; in the lattercase, state officials use public authority to devolve supervision to corporatesurveillance mechanisms.39

In the next section, the article considers the way in which sovereign wealthfunds are emerging as potentially useful instruments of corruptionmanagement. The section that follows briefly considers the utility ofgovernment policies that favor settlement and cooperation agreements tomanage company efforts at corruption self-regulation in the context ofsovereign lending practices that aid in anti-corruption efforts. The effect,though little publicized, can be quite potent—a “Two Swords One Thrust”can serve as another effective strategy in governmental and private efforts tocombat corruption. The “Two Swords One Thrust” strategy combines thepower of state officials to exercise discretion in managing anti-corruptionlaws and the authority of financial institutions to control the access ofenterprises to their investment universe or to exercise their shareholderauthority to influence corporate behavior. This article suggests briefly theutility of this strategy for Chinese anti-corruption efforts. Within China, itmay be possible to coordinate compliance efforts by the procuratorate withthat of the Chinese sovereign wealth funds through the medium of socialcredit systems currently being developed.

II. One Sword: Prosecutorial Discretion and ComplianceSystems

The majesty of domestic legal orders, and to some extent international lawembedded in such orders, is tempered by the power vested in state officialsto exercise discretion in deciding when and how to apply the law againstthose subject to its strictures. Though the abuse of prosecutorial discretionis a constant problem in many systems40 and can be a mark of systemiccorruption,41 it has never been viewed as corruptive enough to eliminate

39. See JUSTICE MANUAL, supra note 29, § 9-28.000; Bestemmelser om forvaltningen av Statespensjonsfond, nr. 123.

40. See Donald A. Daugherty, The Separation of Powers and Abuses in Prosecutorial Discretion, 79J. CRIM. L. & CRIMINOLOGY 953 (1988-1989).

41. See Elizabeth Price Foley, Allowing Some Illegal Immigrants to Stay Abuses ProsecutorialDiscretion, N.Y. TIMES (Sept. 6, 2016), https://www.nytimes.com/roomfordebate/2014/11/18/




discretionary power in the prosecutor.42 Prosecutorial discretion is usuallyunderstood in terms of individual decisions with respect to a specificindividual or entity subject to investigation. But many states have permittedthe development of rules for the institutionalization of prosecutorialdiscretion.43 The efforts to build a cage of regulation around the decision toenforce the law have some benefits. The regulations provide guidance andreduce the likelihood that personal rather than institutional objectives arethe primary basis for exercises of discretion. They also provide notice topeople and entities subject to the law to permit them to better manage theirbehavior so they may avoid legal entanglements and violation of law. Withrespect to this last point, the institutionalization of discretion effectivelyprovides persons and institutions subject to law a safe harbor againstprosecution if they agree to follow the rules under which prosecutors areinstructed to refrain from bringing legal proceedings.

Some jurisdictions, such as the United States and Brazil, haveinstitutionalized rules for exercising prosecutorial discretion and the safeharbors produced under such rules; they have also developed mechanismsthat empower prosecutors to enter into binding agreements to deferprosecution and to impose conditions for the support of the agreement.44

Prosecutors not only use [deferred and non-prosecution agreements(D/NPAs)] to sanction firms, they also use them to . . . impose mandateson firms that require them to change their internal governance orbusiness practices. These D/NPA mandates thus enable prosecutors tocreate and impose new legal duties whose breach can subject the firm tocriminal sanction.45

The exercise of prosecutorial power in this way has been criticized forexpanding the power to effectively impose conduct norms on corporations inderogation of the traditional powers of legislatures to establish these basicrules for liability.46 Yet it is not necessarily fair to suggest that prosecutors

constitutional-limits-of-presidential-action-on-immigration-12/allowing-some-illegal-immigrants-to-stay-abuses-prosecutorial-discretion?mcubz=0 (“But would it be prosecutorialdiscretion if the president instructed U.S. attorneys to prosecute only heroin cases, and ignoreother drugs prohibited by federal law, such as cocaine, P.C.P. or methamphetamine? . . . Mostpeople would think such acts . . . would . . . constitute a rewriting of the law and violate thepresident’s constitutional duty.”); see generally ANGELA J. DAVIS, ARBITRARY JUSTICE: THE

POWER OF THE AMERICAN PROSECUTOR (2009).42. See, e.g., Bennett L. Gershman, A Moral Standard for the Prosecutor’s Exercise of the Charging

Discretion, 20 FORDHAM URBAN L. J. 513 (1993); CRIMINAL JUSTICE STANDARDS FOR THE

PROSECUTION FUNCTION (AM. BAR ASS’N 2015).43. See JUSTICE MANUAL, supra note 29, § 9-28.000.44. See Jennifer Arlen, Prosecuting Beyond the Rule of Law: Corporate Mandates Imposed Through

Deferred Prosecution Agreements, 8 J. LEGAL ANALYSIS 191 (2016) (criticizing this trend as inviolation of rule of law principles).

45. Id. at 192.46. See, e.g., RICHARD EPSTEIN, Deferred Prosecution Agreements on Trial: Lessons from the Law of

Unconstitutional Conditions in PROSECUTOR IN THE BOARDROOM: USING CRIMINAL LAW TO




use their discretion to create new legal standards without guidance. It mightbe more useful to understand the use of discretionary authority and itsinstitutionalization in policy as a means through which prosecutors caneffectively legalize societal norms and aspirations. In this sense, deferredprosecution agreements (DPAs) and, more generally, policies on chargingfor violations in the face of cooperation and compliance, institutionalizecorporate governance principles that reflect emerging customs and patternsof behavior in corporate behavior. For example,

[the U.K.’s deferred prosecution agreement system] is based on theAmerican model but differs significantly from it in the requirement forjudicial confirmation that the entry into a DPA in the particular case isin the interests of justice and that the proposed agreement’s terms arefair, reasonable and proportionate. The court’s reasons for its decisionmust be published, subject always to a power to delay publication whereit might affect a fair trial of individuals.47

Brazil follows the same model.48 In the United States, whether suchinstitutional rules for constraining prosecutorial discretion or the D/NPSsproduced through them require judicial scrutiny, exceed the administrativeauthority of prosecutors, or otherwise should be a matter of concern for theappropriate U.S. governmental apparatus is an issue left for others.49 Theeffectiveness of using discretionary state power to change enterprisebehaviors as a means of addressing the issue of corruption appears to changethe dynamics of behavior between the state and enterprises. It has movedthe relationship from an adversarial one to one grounded in cooperation. Itis true that this cooperation is coerced and its parameters are entirelycontrolled by the state. But to the extent that cooperation—through thedevelopment of transparent compliance systems—furthers the governmentalpolicies of suppressing bribery and corruption, it reflects an effectiveimplementation of a political choice among core political values.

What is it that these DPAs provide, and how do institutional rules aroundprosecutorial discretion contribute to managing the challenge of corruptionin economic enterprises? A consideration of the parameters of the U.S.approach is instructive. Since 1999, the U.S. Department of Justice hasestablished guidelines for prosecuting corporations and other businessorganizations.50 These guidelines provide parameters for federal prosecutors

REGULATE CORPORATE CONDUCT 38 (Anthony Barkow & Rachel Barkow eds., 2011); JenniferArlen & Reinier Kraakman, Controlling Corporate Misconduct: An Analysis of Corporate LiabilityRegimes, 72 N.Y.U. L. REV. 687 (1997).

47. Milford, supra note 28.48. See Santos, supra note 37.49. See, e.g., Miriam Baer, Governing Corporate Governance, 50 B.C. L. REV. 949 (2009);

Laurence Cunningham, Deferred Prosecutions and Corporate Governance: An Integrated Approach toInvestigation and Reform, 66 FLA. L. REV. 1 (2015); David M. Uhlmann, Deferred Prosecution andNon-Prosecution Agreements and the Erosion of Corporate Criminal Liability, 72 MD. L. REV. 1295(2013).

50. See JUSTICE MANUAL, supra note 29, § 9-28.000 (2018).




and do not create any enforceable rights in parties involved in litigation withthe government.51 The U.S. federal approach is built around the JusticeManual promulgated by the U.S. Department of Justice, specifically thePrinciples of Federal Prosecution of Business Organizations (PBO).52 Itought to be noted that while the PBO is meant to provide instructions forbinding others, it does not itself bind the government.53 The purpose of theManual is to guide the exercise of prosecutorial discretion, but at the sametime to base that on the willingness of individuals and enterprises to changetheir behavior in accordance with the factors used to guide the exercise ofdiscretion.54

The PBO starts with an expression of policy—the fundamental principlethat the prosecution of corporate crime is a high priority.55 The object ofthis policy is the protection of the economic integrity of the U.S. marketsystem “at the expense of the public interest.”56 To that end, the basicapproach is to charge the most serious offense that is consistent with thenature of the wrongdoing.57 The foundation of the policy is to prosecuteindividuals rather than the entity on whose behalf they may be acting.58

The PBO then produces its own aggregated interpretation of the law ofstate corporate fiduciary duty (over which it has no authority to tinker withor change, much less interpret).59 The Department of Justice has chosen tosplit that duty into two parts: first, a duty to shareholders, who are describedas “the corporation’s true owners,”60 and second, a generalized duty ofhonest dealing with outsiders through regulatory filings and publicstatements.61 Regarding this federal initiative to enforce its own reading of

51. See id. § 1-1.200.52. Id. § 9-28.000.53. Id. § 9-28.1500.54. “Since federal prosecutors have great latitude in making crucial decisions concerning

enforcement of a nationwide system of criminal justice, it is desirable, in the interest of the fairand effective administration of justice in the federal system, that all federal prosecutors beguided by a general statement of principles that summarizes appropriate considerations to beweighed, and desirable practices to be followed, in discharging their prosecutorialresponsibilities.” Id. § 9-27.110.

55. Id. § 9-28.010.56. Id.57. See JUSTICE MANUAL, supra note 29, § 9-28.1400.58. Id. § 9-28.010. There are three reasons advanced for this approach. The first is that it is

easier to identify the full extent of enterprise-wrongdoing by following the misbehavior trails ofindividuals. Id. Second, targeting individuals provides an easy way to intelligence that mayproduce evidence of misconduct of more highly placed individuals within the company. Id.Third, “we maximize the likelihood that the final resolution will include charges againstculpable individuals and not just the corporation.” Id. This is emphasized in § 9-28.1300: “Indeciding whether to charge a corporation, prosecutors should consider whether charges againstthe individuals responsible for the corporation’s malfeasance will adequately satisfy the goals offederal prosecution.” Id. § 9-28.1300.

59. Id. § 9-28.100.60. Id.61. Id.




fiduciary duty obligations imposed under state law (along with disclosureobligations and general fraud duties that may be sourced elsewhere),“prosecutors should be mindful of the common cause we share withresponsible corporate leaders who seek to promote trust and confidence.”62

The object of prosecution, then, is at least in part to ensure cooperation andto develop partnerships with corporate leaders to ensure the integrity of theeconomic system within which both operate. This is to be achieved byencouraging not just respect for the law but (in cooperation with prosecutorsat times) vigorous programs of compliance, evidenced by disclosures toprosecutors and other officials as necessary, and self-regulation.63

On this general basis, the PBO builds its core general principle ofprosecution: “[c]orporations should not be treated leniently because of theirartificial nature nor should they be subject to harsher treatment. . . .Indicting corporations for wrongdoing enables the government to be a forcefor positive change of corporate culture, and a force to prevent, discover, andpunish serious crimes.”64 The governance effects of indicting corporationsare emphasized in the commentary to this PBO general principle.65 Anindictment is an efficient form of obtaining broad regulatory compliance andself-regulation without the need for intervention of legislative or otheradministrative bodies.66 In weighing whether civil or regulatory alternativesare better suited to deal with misconduct, prosecutors must consider theadequacy of those methods to “adequately deter, punish and rehabilitate acorporation that has engaged in wrongful conduct.”67 In any case, the goalsof punishment, deterrence, and rehabilitation are at the center ofdiscretionary decision making by the prosecutor.68

Balanced against the quasi-legislative and administrative value ofprosecution is that of D/NPAs. From the core general principle, the PBObuilds a system of principles for exercising discretion in the prosecution ofbusiness entities. The key principle is grounded on the determination, byfederal prosecutors, of the legal effect of corporate personality. Because, thePBO insists, a corporate entity is little more than the sum of the actions of

62. Id.63. Id.64. JUSTICE MANUAL, supra note 29, § 9-28.200.65. Id. § 9.28-200(B).66. Id. (“For instance, corporations are likely to take immediate remedial steps when one is

indicted for criminal misconduct that is pervasive throughout a particular industry. . . . Inaddition, a corporate indictment may result in specific deterrence by changing the culture of theindicted corporation and the behavior of its employees. Finally, . . . there may therefore be asubstantial federal interest in indicting a corporation under such circumstances.” Also, there isan acknowledgment that prosecutors sometimes ought to defer to “civil and regulatoryauthorities.”).

67. Id. § 9-28.1200.68. Id. § 1-12.000 (“Department prosecutors and civil attorneys handling white collar matters

should timely communicate, coordinate, and cooperate with one another and with agencyattorneys to the fullest extent appropriate to the case and permissible by law . . .”). See also id.§ 1-12.100.




individuals, it is the individual rather than the entity to which the prosecutorought to look in the first instance.69

Beyond the key principle of seeking to punish the individual, the PBO alsosets out factors that prosecutors ought to consider in exercising discretion.70

These include the nature and seriousness of the offense, the pervasiveness ofwrongdoing within the enterprise, the corporation’s prior history ofmisconduct, the willingness to cooperate with prosecutors, the value ofcorporate compliance programs, the willingness to timely and voluntarilyconfess to wrongdoing, the extent of corporate remedial action, the extent ofcollateral consequences of wrongdoing, the adequacy of remedies, and theadequacy of prosecutions of individuals.71 The commentary makes clear thatthese factors are illustrative rather than exhaustive, and their use is also amatter of discretion.72

A number of the factors to be considered are the subject of further policy.Special provision is made for activities of a multinational corporation, which“necessarily intersects with federal economic, tax, and criminal lawenforcement policies.”73 The pervasiveness of wrongdoing serves as aprosecutorial trigger in effect to deploy prosecution as a means of re-socializing the corporation to better conduct. Thus, the PBO instructs toprosecute even minor misconduct where it indicates a corporate culture thatprosecutors deem worthy of changing.74 In addition, the PBO adheres to theprinciple that “a corporation, like a natural person, is expected to learn fromits mistakes.”75 Cooperation also has value as a mitigating factor.76 But thenature of cooperation is quite specific—the corporation must identify allindividuals tainted with misconduct and provide all facts “relating to” that

69. Id. § §9-28.210 (“Provable individual culpability should be pursued, particularly if itrelates to high-level corporate officers, even in the face of an offer of a corporate guilty plea orsome other disposition of the charges against the corporation, including a deferred prosecutionor non-prosecution agreement, or a civil resolution.”). Yet the commentary suggests apreference for sweeping individual and entity liability together where possible, providing anexpansive interpretation of legal rules for imputing individual conduct on corporate actors. Id.§ 9-28.210(B).

70. JUSTICE MANUAL, supra note 29, § 9-28.300.71. Id. Note the effect of the factors on building incentive structures to develop and

implement compliance programs satisfactory to the federal prosecution officials and to sacrificelegally protected rights to contest accusation by rewarding confession and disclosure over themore traditional adversarial rights of prosecutorial actions, individual or enterprise. Id. § 9-28.300(B). The result is a weakening of the traditional structures of conventional relationsbetween the state and its subjects, while increasing the efficiency of mechanics of enforcementof behavior norms. See id.

72. Id. § 9-28.300(B).73. Id. § 9-28.400. The comment advises prosecutors to be cognizant of jurisdictional and

prosecution policies of other federal agencies. Id. § 9-28.400(B).74. Id. § 9-28.500.75. JUSTICE MANUAL, supra note 29, § 9-28.600(B).76. Id. § 9-28.700. The PBO notes that the “failure to cooperate, in and of itself, does not

support or require the filing of charges with respect to a corporation any more than with respectto an individual.” Id.




misconduct.77 The PBO is itself bound by higher law to the extent itsprovisions are unavoidable, and they appear to be unavoidable in clashesbetween aggressive efforts to obtain cooperation and the rights of criminaldefendants under the U.S. legal system’s core principles. Provision is thusmade for respect of attorney-client privilege and the attorney work productprotection.78 But the position is defensive and takes some umbrage at theextensive criticism of its aggressive stance, throwing up its assessment of theimportance of its own mandate against the purported efforts of enterprisesand individuals to hide behind the law to avoid punishment for misconduct.79

This is hardly reassuring, but it evidences the extent to which thegovernment apparatus privileges its own interests in the objective of seekingout and punishing wrongdoing—as it sees it.80 This tension is also clear inthe PBO’s consideration of the way in which cooperation is valued inexercising prosecutorial discretion.81 Here, the PBO walks a fine linebetween pushing hard for information and disclosure and recognition of, tothe narrowest extent consistent with law, respect for corporate andindividual rights within an adversarial system. One of the most interestingaspects of this section of the PBO is the way that it highlights the greattension between the mechanics and cultures of the modern administrativestate—grounded in management and compliance—and the old cultures ofcommon-law-based liberal democracy, grounded in the prerogatives ofindividuals and bodies corporate against the sovereign into which theindividual is not entirely subsumed.82

But just as disclosure, compliance, and cooperation can balance in favor ofexercising prosecutorial discretion against litigation and toward D/NPAregimes, obstruction can have the opposite effect.83 “Examples of suchconduct could include: inappropriate directions to employees or theircounsel, such as directions not to be truthful or to conceal relevant facts;making representations or submissions that contain misleading assertions ormaterial omissions; and incomplete or delayed production of records.”84

There is irony here. While the government expects the corporation to fullydisclose all facts related to an investigation, it also expects the corporation’ssilence with respect to its communication with the government, at least to

77. Id. “The extent of the cooperation credit earned will depend on all the various factors thathave traditionally applied in making this assessment (e.g., the timeliness of the cooperation, thediligence, thoroughness and speed of the internal investigation, and the proactive nature of thecooperation).” Id.

78. Id. § 9-28.710.79. Id.80. The tension is especially evident in mediating prosecutorial conduct concerning waivers of

attorney client privilege or work product protections. See id. § 9-28.750.81. JUSTICE MANUAL, supra note 29, § 9-28.720.82. See Larry Cata Backer, Reifying Law - Government, Law and the Rule of Law in Governance

Systems, 26 PENN ST. INT’L L. REV. 521 (2008) (discussing in more theoretical terms).83. JUSTICE MANUAL, supra note 29, § 9-28.730.84. Id.




the extent that such disclosure can be tied to the misconduct of others.85

Moreover, offers of cooperation are not to be confused with immunity.Cooperation is a factor in decisions about the exercise of administrativediscretion; it is not a guarantee of corporate escape from liability.86

The PBO spends some time describing corporate compliance programs.87

Though insufficient in its own right to justify not charging a corporation forcriminal conduct, the “Department encourages such corporate self-policing,including voluntary disclosures to the government of any problems that acorporation discovers on its own.”88 And, citing a number of judicialopinions to this effect, even if a corporate compliance program wasestablished to prevent the criminal conduct in question, the complianceprogram alone is insufficient to avoid prosecution.89 The critical factors ingiving credit for compliance programs—or put another way, the principalcharacter of corporate compliance programs for which PBO provides anincentive—“are whether the program is adequately designed for maximumeffectiveness in preventing and detecting wrongdoing by employees andwhether corporate management is enforcing the program or is tacitlyencouraging or pressuring employees to engage in misconduct to achievebusiness objectives.”90 The ability of the compliance program to ferret outwrongdoing in a timely manner is an important consideration.91 The objectis to distinguish what the PBO characterizes as “paper programs” fromeffective ones, with reference not merely to construction but to staffing andfounding as well.92 Tied to corporate compliance programs is the obligationof voluntary disclosure. Discretion is grounded in effect on corporatecompliance programs, the results of which are routinely transmitted to theappropriate state agencies for review and action.93 This aligns withprograms of other administrative agencies that have already constructedformal programs of “self-reporting coupled with remediation and additionalcriteria.”94 Yet even in the absence of formal, voluntary disclosure programs,ad hoc voluntary disclosure counts for something, as long as it is timely.95 A

85. Id. (“for example, where the disclosure of such information could lead to flight byindividual subjects, destruction of evidence, or dissipation or concealment of assets.”).

86. Id. § 9-28.740.87. Id. § 9-28.800.88. Id.89. Id. § 9-28.800(B).90. JUSTICE MANUAL, supra note 29, § 9-28.800(B).Although there is no formula, the PBO

specifies a number of factors, including “the comprehensiveness of the compliance program; theextent and pervasiveness of the criminal misconduct; the number and level of the corporateemployees involved; the seriousness, duration, and frequency of the misconduct; and anyremedial actions taken by the corporation, including, for example, disciplinary action againstpast violators uncovered by the prior compliance program, and revisions to corporatecompliance programs in light of lessons learned.” Id.

91. Id.92. Id.93. Id. § 9-28.900.94. Id.95. Id.




similar approach applies to weighing the efforts of corporations to providerestitution or otherwise remediate wrongdoing.96 The remediation must bemeaningful and may include disciplining individual wrongdoers, makingrestitution, and reforming compliance mechanisms.97 These efforts touchon the collateral consequences of wrongdoing98—the extent of which aprosecutor may weigh in exercising discretion with respect to charging acrime or resolving a criminal case.99 D/NPAs may be considered in thiscontext “where the collateral consequences of a corporate conviction forinnocent third parties would be significant, . . . with conditions designed,among other things, to promote compliance with applicable law and toprevent recidivism.”100 And that brings the PBO to the heart of itsregulatory sword—the power to enter into plea agreements or D/NPAs.101

The PBO provides a framework for determining the terms of suchagreements or pleas.102 Plea agreements ought to include a consciousadmission of guilt and further the core principles of punishment, deterrence,and rehabilitation.103

The PBO provides the basis for structuring pleas and D/NPAs in thecontext of corruption investigations against enterprises. These guidelinesare set out in an FCPA Enforcement Pilot Project announced as part of theDepartment of Justice’s Fraud Section Foreign Corrupt Practices ActEnforcement Plan and Guidance.104 It starts by declaring bribery to pose “aserious systemic criminal problem across the globe [which] harms those whoplay by the rules, siphons money from communities, and undermines therule of law.”105 To the ends of reducing this threat, the FCPA EnforcementPlan and Guidance specifies a three-step project for advancing its strategy ofcombatting corruption through bribery.106 First, the government committedto intensifying its investigative and prosecutorial efforts against bribery.107

Second, the government committed to engaging in multilateral efforts to

96. JUSTICE MANUAL, supra note 29, § 9-28.1000(A) (“A prosecutor may also consider otherremedial actions, such as improving an existing compliance program or discipliningwrongdoers, in determining whether to charge the corporation and how to resolve corporatecriminal cases.”).

97. Id. § 9-28.1000(B).98. Id. (“Therefore, in evaluating the relevance of collateral consequences, various factors

already discussed, such as the pervasiveness of the criminal conduct and the adequacy of thecorporation’s compliance programs . . . ”).

99. Id. § 9-28.1100(A).100. Id. § 9-28.1100(B).101. Id. § 9-28.1500.102. Id.103. JUSTICE MANUAL, supra note 29, § 9-28.1500.104. U.S. DEP’T OF JUSTICE, THE FRAUD SECTION’S FOREIGN CORRUPT PRACTICES ACT

ENFORCEMENT PLAN AND GUIDANCE (2016) https://www.justice.gov/archives/opa/blog-entry/file/838386/download.105. Id.106. Id.107. Id.




combat bribery.108 The government bragged that “[t]he fruits of thisincreased international cooperation can be seen in the prosecutions of bothindividuals and corporations, in cases involving Archer Daniels Midland,Alcoa, Alstom, Dallas Airmotive, Hewlett-Packard, IAP, Marubeni, VadimMikerin, Parker Drilling, PetroTiger, Total, and VimpelCom, among manyothers.”109

The most important part of the FCPA Enforcement Plan and Guidancewas its third step: the development of a pilot program to “promote greateraccountability for individuals and companies that engage in corporate crimeby motivating companies to voluntarily self-disclose FCPA-relatedmisconduct, fully cooperate with the Fraud Section, . . . and remediate flawsin their controls and compliance programs.”110 The object was to transforma number of key factors for determining the exercise of prosecutorialdiscretion under the Justice Manual PBO111 into a formal program thatproduces “credit” that will “affect the type of disposition, the reduction infine, or the determination of the need for a monitor.”112 The pilot programwas not meant to supplant the PBO and voluntary disclosure.113

This Guidance, by contrast, sets forth the circumstances in which anorganization can receive additional credit in FCPA matters, above andbeyond any fine reduction provided for under the SentencingGuidelines, and the manner in which that additional credit should bedetermined, whether it be in the type of disposition, the extent ofreduction in fine, or the determination of the need for a monitor.114

The three parts of the requirements for compliance with the FCPA pilotprogram are voluntary self-disclosure, full cooperation, and timely andappropriate remediation.115 Voluntary self-disclosure does not includelegally mandated disclosure.116 In order to qualify, the disclosure must occurbefore an imminent threat of disclosure or government investigation; thedisclosure must be made within a reasonably prompt time after becomingaware of the offense (the company is burdened with proof of timeliness); andthe company must disclose all known relevant facts, including all relevantfacts about individuals involved in the wrongdoing.117 To meet thecooperation requirements, in addition to the cooperation standards under

108. Id.109. Id.110. Id.111. JUSTICE MANUAL, supra note 29, § 9-28.300.112. U.S. DEP’T OF JUSTICE, supra note 104 at 25, (referencing the PBO and the United StatesSentencing Guidelines as the basis of the guidance in the Pilot Program).113. Id. (“Nothing in the Guidance is intended to suggest that the government can requirebusiness organizations to voluntarily self-disclose, cooperate, or remediate. Companies remainfree to reject these options and forego the credit available under the pilot program.”).114. Id.115. Id.116. Id.117. Id.




the PBO, the cooperating entity must agree to a fairly comprehensive set ofcooperating obligations.118 These include that the company: (1) make timelyand complete disclosure; (2) cooperate proactively;119 (3) preserve, collect,and disclose all relevant documents; (4) disclose timely updates of internalinvestigations; (5) “[w]here requested, de-confliction of an internalinvestigation with the government investigation”;120 (6) provide all relevantfacts relevant to potential criminal liability by third party companies; (7)make individuals available for interviews by government officials; (8) discloseall relevant facts gathered during independent investigations; (9) discloseoverseas documents and the locations where found and who found them;(10) facilitate the third party production of documents; and (11) whererequested, provide translation of non-English language documents.121

Assessment of the value of cooperation is undertaken on a case by casebasis.122 Lastly, the remediation requirement poses some challenges.123 Toevaluate remediation, it is first necessary to determine whether the companyis eligible for cooperation credit.124 Beyond that, the company will have toevidence a number of requirements. It must evidence an effectivecompliance program.125 The company must also demonstrate appropriatediscipline of employees and any additional steps that “demonstraterecognition of the seriousness of the corporation’s misconduct, acceptanceof responsibility for it, and the implementation of measures to reduce therisk of repetition of such misconduct.”126

The FCPA Enforcement Plan and Guidance provides substantial incentivesfor compliance. Companies receive substantial partial credit for fullcooperation and appropriate remediation without voluntary self-disclosure.127 Much more credit is given for full cooperation, voluntary self-disclosure, and remediation. If a criminal resolution is warranted, then thecompany may receive up to a fifty percent reduction off of the bottom end of

118. Id.119. U.S. DEP’T OF JUSTICE, supra note 104 (“That is, the company must disclose facts that arerelevant to the investigation, even when not specifically asked to do so, and must identifyopportunities for the government to obtain relevant evidence not in the company’s possessionand not otherwise known to the government”).120. Id.121. Id.122. Id. (“Fraud Section should assess the scope, quantity, quality, and timing of cooperationbased on the circumstances of each case when assessing how to evaluate a company’scooperation under this pilot.”).123. Id.124. Id.125. U.S. DEP’T OF JUSTICE, supra note 104. An effective compliance program evidences anestablished “culture of compliance,” the dedication of adequate resources to compliance,adequate personnel, “the independence of the compliance function,” the use of effective riskassessment, adequate promotion and compensation for compliance employees, appropriateauditing of the compliance function, and adequate internal reporting structures. Id.126. Id.127. Id. (“at most a 25% reduction off the bottom of the Sentencing Guidelines fine range”).




the Sentencing Guidelines, and avoid the appointment of a monitor.128 Butthe Fraud Division can also consider a declination of prosecution.129 Thedecision is subject to its own calculus: “this pilot program is intended toencourage companies to disclose FCPA misconduct to permit theprosecution of individuals whose criminal wrongdoing might otherwisenever be uncovered by or disclosed to law enforcement.”130 As of June 29,the Department of Justice had agreed to declinations against sevencompanies under the pilot program.131

In this approach one can discern a new form of national regulatory power.The focus is not on setting standards or on the construction of rules, but onthe control of the exercise of administrative discretion around which theparameters of corporate behavior may be managed. This is a very powerfulsword, indeed. It moves the focus of regulatory control of corruption fromthe construction of legal standards to the mechanics of compliance. And theapproach centers the investigative and charging authority of prosecutors asthe source of governmental power to produce and manage change. It is newin the sense of detaching rule making either from direct action by thelegislature, or from formal rule making by administrative agencies withintheir legislative mandate. It is also new in the sense of the contingency ofthe approach. The approach focuses on the management of executivediscretion, but it is designed as a set of consequences for choices made by the“objects” of regulation.

That contingent character of the approach is perhaps its most interestingfeature. The obligations built around these new regulatory approaches arenot mandatory. Corporations have the power to reject the incentives towardleniency written into the guidance. Alternatively, they can choose to changetheir behavior, anticipating that at some point their enterprises will likely bethe target of a complaint and an investigation. Either way, the state uses itspower over the management of criminal behavior to exercise oversight. Andin both cases, it remains the obligation of the state to define the normative

128. Id.129. Id.130. Id.131. See Letter from the Dep’t of Justice to K&L Gates, regarding Nortek, Inc. (June 3, 2016),https://www.justice.gov/criminal-fraud/file/865406/download; Letter from the Dep’t of Justiceto Ropes & Gray LLP, regarding Akamai Technologies, Inc. (June 6, 2016), https://www.justice.gov/criminal-fraud/file/865411/download; Letter from the Dep’t of Justice toWilmerHale, regarding Johnson Controls, Inc. (June 21, 2016), https://www.justice.gov/criminal-fraud/file/874566/download; Letter from the Dep’t of Justice to Weil, Gotchal &Manges LLP, regarding HMT LLC (Sept. 29, 2016), https://www.justice.gov/criminal-fraud/file/899116/download; Letter from the Dep’t of Justice to Locke Lord LLP, regarding NCHCorp. (Sept. 29, 2016), https://www.justice.gov/criminal-fraud/file/899121/download; Letterfrom the Dep’t of Justice to Steptoe & Johnson LLP, regarding Linde North America Inc.,(June 16, 2017), https://www.justice.gov/criminal-fraud/file/974516/download; Letter from theDep’t of Justice to Paul Hastings LLP, regarding CDM Smith Inc. (June 21, 2017), https://www.justice.gov/criminal-fraud/page/file/976976/download. See generally U.S. DEP’T OF

JUSTICE, Declinations, JUSTICE.GOV, https://www.justice.gov/criminal-fraud/pilot-program/declinations (last updated Aug. 23, 2018).




standards around which prosecutorial power is asserted. In the context ofcorruption, those standards tend to be statutory, though they are informedby custom and practice. Yet, it must be emphasized that the decision toinvest more instrumentally in the use of prosecutorial guidance systems—and the institutionalization of discretionary decision making—alsochallenges the legislative authority of state actors in substantial ways. In theUnited States, it presents a challenge to the authority of states, rather than ofthe federal government, to exercise authority over the regulation ofcorporations and corporate governance. It is true enough that federallegislative authority, in the form of the securities laws, has made substantialinroads. But the use of federal prosecutorial authority represents an effortby the executive authority to undermine the coherence of the legislativeauthority of states.

Nevertheless, this approach to behavior management also tends tocomport with emerging sensibilities in regulatory governance.132 From anormative standpoint, the approach of the Department of Justice—and tosome extent that of the Brazilian and U.K. variations—also comports withthe approaches to the organization of governance regimes around issues ofthe corporate social responsibilities, including human rights responsibilities,of business and the role of the state in facilitating the conformity of businesswith those responsibilities.133 For business, there is a focus on cooperation,compliance, disclosure, and remediation in ways that are meant to establishpartnerships between the state and business.

III. The Second Sword: The Role of Sovereign InvestorsThrough the Norwegian Model and its Global Implications

The programs of regulation that flow from the use of institutionalizedrules for the exercise of prosecutorial discretion set up a baseline ofcompliance, reporting, and remediation that serves the core objectives ofpolicing and combatting corruption. But, the efforts of the state through its

132. See generally Larry Cata Backer, Theorizing Regulatory Governance Within Its Ecology: TheStructure of Management in an Age of Globalization, THE SOC. SCI. RES. NETWORK, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2783018 (Last revised Dec. 16, 2016). At its core,it speaks to the management of people and human activity, and the means through which thosecan be implemented for specific purposes grounded in specific ideologies. Regulatorygovernance is also intimately tied to projects of good governance, at least in the sense that bothdiscourses focus on a similar palette of means and ends. Yet, at the same time it is meant toembody a set of premises about the efficiency of managing behaviors and compellingcompliance with authority. It is a form through which public government can be expressed—expanding the administrative possibilities of democratic government, and the essence of privategovernance regimes. Id.133. See Office of High Comm’r of Human Rights, Guiding principles on Business and HumanRights: Implementing the United Nations “Protect, Respect, and Remedy Framework” U.N. Doc. HR/PUB/11/04 (2011). See generally Larry Cata Backer, Moving Forward the UN Guiding Principlesfor Business and Human Rights: Between Enterprise Social Norm, State Domestic Legal Orders, and theTreaty Law That Might Bind Them All, 38 FORDHAM INT’L L.J. 457 (2015).




mechanics of prosecution have been augmented by the role of the state inmarkets. The most effective form of this intervention has been through theactivities of sovereign wealth funds to manage the conduct of operatingenterprises by limiting access to their capital and by exercising shareholderpower in the companies in which they invest. This section considers howthe Norwegian Pension Fund Global (NPFG), Norway’s sovereign wealthfund, has institutionalized a markets-based program that focuses oncorporate anti-corruption efforts.134

The NPFG was created by statute in the Government Pension Fund Actwhich provides that the NPFG is ultimately administered by the Ministry ofFinance.135 The Ministry of Finance has authority to issue guidelines for themanagement of the NPFG.136 Through its guidelines, the Ministry ofFinance has delegated investment authority to the Norges Bank and itsinstrumentalities.137 The Ministry of Finance has also imposed a set ofinvestment objectives to which the Norges Bank must adhere.138 TheNorges Bank is to seek the highest possible returns; it is to avoid investing incompanies excluded from the investment universe, from which the Bank maychoose the enterprise in which to invest; and it is required to exerciseresponsible management.139 Responsible management is specifically definedwith reference to compliance with Norwegian and international standards.140

These include strong principles against corruption in the investment by theNPFG that are built into the substantive principles of the standards to beapplied in making investment decisions.141

The Norges Bank is given authority to make decisions about the exclusionor observation of companies in accordance with the Guidelines for

134. For more detailed discussion of the NPFG and its operation, see Larry Cata Backer,Sovereign Investing and Markets-Based Transnational Rule of Law Building: The NorwegianSovereign Wealth Fund in Global Markets, 29 AM. U. INT’L L. REV. 1 (2013); Larry Cata Backer,Sovereign Wealth Funds as Regulatory Chameleons: The Norwegian Sovereign Wealth Funds andPublic Global Governance Through Private Global Investment 41 GEO. J. INT’L L. 425 (2010).135. Bestemmelser om forvaltningen av States pensjonsfond, nr. 123.136. See Mandat for forvaltningen av Statens pensjonsfond utland, 8. Nov. 2010, nr. 1414.137. Id. at ch. 7 (establishing the relationship between the Norges Bank and the Ministry ofFinance).138. Id. § 1-3.139. Id.140. Id. § 2-2. Responsible management principles include: “(1) The Bank shall establish abroad set of principles for the responsible management of the investment portfolio. (2) Indesigning the principles pursuant to the first paragraph, the Bank shall emphasise the long-termhorizon for the management of the investment portfolio and that the investment portfolio shallbe broadly diversified across the markets included in the investment universe. (3) Theprinciples shall be based on the considerations of good corporate governance andenvironmental and social conditions in the investment management, in accordance withinternationally recognised principles and standards such as the UN Global Compact, theOECD’s Principles of Corporate Governance and the OECD’s Guidelines for MultinationalEnterprises.”141. Id. § 2-2(1).




observation and exclusion from the NPFG.142 The Guidelines forObservation and Exclusion from the Government Pension Fund Global (theGuidelines)143 “apply to the work of the Council on Ethics for theGovernment Pension Fund Global (the Council) and Norges Bank (theBank) on the observation and exclusion of companies from the portfolio ofthe [NPFG].”144 “The [Ethics] Council consists of five members appointedby the Ministry of Finance after receiving a nomination from the [Norges]Bank.”145 The role of the Ethics Council is to evaluate whether specificNPFG investments are consistent with the Ethics Guidelines.146 The EthicsCouncil may, after investigation, recommend to the Norges Bank that acompany be excluded from the NPFG investment universe, that thecompany be placed under observation, or that no action be taken.147 Therecommendation is not mandatory, and the ultimate decision is vested in theNPFG administrator, the Norges Bank.148

There are differences between determinations to exclude a company anddeterminations to put a company under observation.149 An excludedcompany may not be the subject of NPFG investment.150 Once a companyis excluded, the connection between it and the NPFG is severed. TheNPFG will not invest in the excluded company or any of its relatedentities.151 The exclusion decision is publicized,152 and may affect thecompany’s reputation and access to capital. In a sense, exclusion negativelyimpacts the social credit of the excluded company.153 The length of theexclusion will vary.154 An excluded company may seek to have the exclusionlifted.155 To that end, it must seek action from the Ethics Council and the

142. Id. § 2-5.143. See GOV’T ADMIN. SERV. OF NORWAY, GUIDELINES FOR OBSERVATION AND EXCLUSION

FROM THE GOVERNMENT PENSION FUND GLOBAL (2014) https://www.regjeringen.no/contentassets/7c9a364d2d1c474f8220965065695a4a/guidelines_observation_exclusion2016.pdf.[hereinafter GUIDELINES].144. Id. §1(1).145. Id. §4(1).146. Id. §5.147. Id. §5(3).148. Id. §6(1).149. GUIDELINES, supra note 143, §6(3).150. Id. §2(1).151. Id.152. Id. §8(1).153. Social credit is understood here in its more general sense as ranking and reputation. But itcan also be understood in its more formal sense as the ratings, subject to incentive and penaltycurrently being developed in China. See Rogier Creemers, Planning Outline for the Constructionof a Social Credit System (2014-2020), (Last updated on April 25, 2015), https://chinacopyrightandmedia.wordpress.com/2014/06/14/planning-outline-for-the-construction-of-a-social-credit-system-2014-2020/.154. Procedures for the Reinclusion of Companies, THE GOV’T PENSION FUND GLOBAL OF

NORWAY, https://etikkradet.no/procedures-for-the-reinclusion-of-companies/ (last visited Oct.7, 2018).155. Id.




Norges Bank.156 That usually requires a showing that the wrongdoing hasbeen corrected and that systems are in place to better ensure that suchwrongdoing will not be repeated.157

In contrast to exclusion, observation parallels the PBO process in someways. It is grounded on the idea that cooperation, disclosure, remediation,and reform is, in the long run, better for society and the performance of theenterprise.

Being placed under observation by the Council on Ethics signals that acompany has come very close to exclusion from the GPFG. TheCouncil will keep a watchful eye on developments in the company’soperations. Should any new violations of ethical norms be uncovered,or the company fails to implement effective measures to reduce thefuture risk of non-compliance, the condition for recommending itsexclusion from the GPFG may be met.158

The burden remains on the company to substantiate compliance, includingremediation and the implementation of a compliance system that targetswrongdoing.159 Observation permits a measure of supervision by the NPFG.In addition, the NPFG uses its staff to investigate compliance independentlyand receives reports from the company.160 Of course, observation is purelyvoluntary, in the way that compliance with the requirements of the PBO arevoluntary.161 But refusals of cooperation can lead to decisions to divest anddrop a company from the investment universe of the NPFG.162 Thisdivestment is publicized and might have effects on the access of the companyto financial markets.163 It might also open the company, or contribute, toinvestigation by governmental regulators depending on the nature of thewrongdoing.

The substantive principles that guide the decisions of the Ethics Counciland Norges Bank on exclusion and observation are set out in the Guidelines.They are of two distinct kinds. The first consists of product based groundsfor exclusion or observation.164 The other consists of specified conductbased grounds for exclusion or observation.165 Among these, “[c]ompanies

156. Id.157. Id. (“Excluded companies are encouraged to inform the Council of matters that may causetheir exclusion to be revoked”).158. COUNCIL ON ETHICS FOR THE NORWEGIAN GOV’T PENSION FUND – GLOBAL, ANNUAL

REPORT 13 (2016), https://nettsteder.regjeringen.no/etikkradet3/files/2017/03/Etikkraadet_annual_report_2016_web.pdf [hereinafter ANNUAL REPORT 2016].159. Id. (“The Council takes the position that it is up to the company to substantiate that it isworking systematically to prevent violations which may lead to exclusion from the fund.”).160. Id.161. See JUSTICE MANUAL, supra note 29.162. Id.163. Id.164. GUIDELINES, supra note 143, §2 (certain weapons, coal use, and tobacco products, forexample.).165. Id. §3.




may be put under observation or be excluded if there is an unacceptable riskthat the company contributes to or is responsible for . . . grosscorruption.”166 Corruption is understood to include both active and passivecorruption.167 More importantly, the normative standards for corruption aredrawn from both national and international sources, which are made a keyelement of assessment of anti-corruption efforts.168 The NPFG also relieson a number of soft law guidelines to help refine its approach to thestandards it would use to judge anti-corruption efforts in light of corruptionwrongdoing.169

The NPFG has not traditionally focused on corruption, even though itwas one of the categories of misconduct of sufficient severity to support adetermination of divestment and exclusion for the NPFG investmentuniverse. Altogether by 2016, nine cases had been considered, the majorityof them since 2015.170 Indeed, by 2015, the Ethics Council could report that“the criterion we have devoted the most resources to this year is corruption.This is primarily a consequence of the sectoral studies we haveperformed.”171 The Ethics Council noted an increased focus on corruptionas an important element in its monitoring since 2013. “Since 2013, theCouncil on Ethics has not only assessed companies shown by newsmonitoring to have comprehensive corruption accusations levelled at them,but has also specifically reviewed companies in countries and sectors whereinternational rankings show that the risk of corruption is presumed to beparticularly high.”172 Interestingly, there is also reliance on the U.S. Justiceand Securities and Exchange Commission’s Resource Guide to the U.S.

166. Id. §3(e).167. ANNUAL REPORT 2016, supra note 158, at 19.168. Id. at 23 (The Report identifies a number of national and international regulatoryframeworks, including the Foreign Corruption Prevention Act (FCPA) and the UK Bribery Act,as well as The United Nations Global Compact (The Ten Principles), the Asia-PacificEconomic Council (Anti-Corruption Code of Conduct for Business), the InternationalChamber of Commerce (ICC Rules on Combating Corruption), the World Bank (IntegrityCompliance Guidelines), and The World Economic Forum (Partnering Against Corruption-Principles for Countering Bribery).169. Id.; see also, TRACK, http://www.track.unodc.org/Pages/home.aspx (last visited Oct. 3,2018); A Guide for Anti-Corruption Risk Assessment, U.N. GLOBAL COMPACT, https://www.unglobalcompact.org/library/411(last visited Oct. 3, 2018); Good Practice Guidance onInternal Controls, Ethics and Compliance, OECD (2010), available at http://www.oecd.org/investment/anti-bribery/anti-briberyconvention/44884389.pdf.170. See Gross Corruption, THE COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND –GLOBAL, https://etikkradet.no/recommendations/gross-corruption/ (last visited Sept. 23, 2018),for a listing of the cases with links to original sources.171. ANNUAL REPORT 2016, supra note 158, at 5.172. THE COUNCIL ON ETHICS FOR THE NORWEGIAN GOV’T PENSION FUND – GLOBAL,ANNUAL REPORT 2015, at 24, available at https://nettsteder.regjeringen.no/etikkradet3/files/2017/02/Etikkraadet_AR_2015_web-1.pdf; id. at 11 (Companies are “the building andconstruction, defence [sic], and telecommunications industries as well as the oil and gassector.”).




Foreign Corrupt Practices Act,173 and similar guides prepared forcompliance under the criminal provisions of U.K. law.174

In considering corruption as a basis for sanction (observation orexclusion), the NPFG considers both current behavior and future risk ofwrongdoing. Future risk is assessed on the basis of the cooperation of thecompany to the Ethics Council’s investigation, and initial remediationefforts.175 In corruption matters the important signal from the company isthat it acknowledges wrongdoing and its willingness “both internally andexternally . . . to change course.”176 The NPFG also looks to the vitality ofanti-corruption compliance systems and programs.177 To assess the value ofthe company compliance system the NPFG looks to internationalstandards,178 and looks to manifestations of company policies and programsin appropriately drafted and implemented Codes of Conduct, themanifestations of “tones at the top” (expressions from senior managers of theimportance of anti-corruption principles), and proof of the effectiveness ofthe program—manifested by “specific examples of former employees–irrespective of position or role–being sanctioned for non-compliance, asevidence that the same rules apply to everyone.”179 For these to satisfy theCouncil, the company must be willing to engage in dialogue with theCouncil of Ethics and to demonstrate a willingness to modify compliance toassure the NPFG that compliance systems are better able to assure againstfuture risk of corruption wrongdoing.180 The NPFG can develop conditionsand produce conditions to guide the company from observation to fullapproval status.181 NPFG has also suggested programs of integrity due

173. See U.S. DEP’T OF JUST., A RESOURCE GUIDE TO THE U.S. FOREIGN CORRUPT

PRACTICE ACT (2012), available at https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf; see also DEP’T OF COMMERCE, BUSINESS ETHICS: A MANUAL FOR

MANAGING A RESPONSIBLE BUSINESS ENTERPRISE IN EMERGING MARKET ECONOMICS

(2004), available at https://www.trade.gov/goodgovernance/adobe/bem_manual.pdf.174. See U.K. MINISTRY OF JUSTICE, THE BRIBERY ACT (2010), available at http://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf.175. ANNUAL REPORT 2016, supra note 158, at 20 (“First and foremost, the Council attachesimportance to the way in which the company responds to the corruption allegations andwhether individuals who knew or should have known what was going on are removed from theirpositions.”).176. Id.177. Id. (“the Council on Ethics places consider-able emphasis on the anti-corruptionprocedures a company has established and how these are in fact implemented. These measuresare brought together in the company’s anti-corruption programme [sic], which normallyaccounts for an important element of its overall internal control system”).178. Id.179. Id. at 21.180. Id. (“In several companies with which the Council has communicated, face-to-face trainingis also given to agents and important third parties.”).181. ANNUAL REPORT 2016, supra note 158, at 21 (“Based on the dialogue that the Council hashad with certain companies, an absolute precondition for a good educational programme [sic] isthat the company evaluates the extent to which employees feel that the training they have beengiven enables them to handle the situations they may encounter.”).




diligence with company engagement with third parties including crossborder procedures for reporting noncompliance (including anonymousemployee reporting), measures for registering and investigating thesereports, and developing steps for applying discipline.182

The NPFG has also developed principles for the organization of anti-corruption efforts within the institutional structures of companies. In waysthat also echo the PBO and the exercise of prosecutorial discretion, theNPFG explained that

it is considered best practice for multinational companies of a certainsize to have an independent compliance department, which isresponsible for all regions and divisions, and which has sufficientresources and an adequate budget. The head of this department (theChief Compliance Officer or equivalent) reports to group managementand the board. This compliance function is normally responsible forthe overlapping compliance efforts relating to corruption andcompetition law issues, and there is normally a close collaboration andexchange of information between the Compliance Department andthose responsible for other governing bodies. In order for corruptionprevention to be effective, the allocation of roles and responsibilities inthe Compliance Department should be determined by the ChiefCompliance Officer.183

Critical to assessment is voluntary disclosure to supplement the independentassessment of the Ethics Council and its Secretariat. In the absence ofsubstantiation, the NPFG might find it easier to conclude that the risk offuture corruption has not been reduced.184

The assessment and review of the NPFG is usually triggered by ongoingcorruption investigations undertaken by governments.185 In that respect, thereis a de facto connection between the efforts of governments to punishcorruption, and the efforts of sovereign investors, like NPFG, to use theirprivate investor power to drive anti-corruption efforts, includingremediation and reform of compliance systems. But there is no coordination.The two swords exist, but they are wielded by different parties with differentjurisdictions, whose connection is grounded in a convergence of globalnorms around anti-corruption measures and remediation expected tocompanies, and more importantly around compliance efforts as part ofcorporate governance regimes. Indeed, there is little by way of connectionbetween state anti-corruption regimes, even those based on aninstitutionalized prosecutor discretion management system, much lessbetween those and the sovereign investors who have significant influence inglobal markets—especially the NPFG and its Chinese counterparts.

182. Id.183. Id.184. Id. at 22.185. Id. at 7.




The arc of NPFG anti-corruption action is nicely illustrated by an earlyinvestigation against the German multinational corporation Siemens AG.186

In 2007, the Council on Ethics recommended to exclude the Germancompany Siemens AG due to severe and systematic corruption.187 TheCouncil noted that the “Siemens case is very serious with regard to thenumerous and repeated instances of corruption over many years, the largesums involved, and the insecurity associated with the company’scountermeasures.”188 The investigation was triggered well after numerousproceedings had been initiated by governments against Siemens and itsofficials for bribery and other related offences. It was no surprise, then, thatcentral to the Ethics Council’s investigation were court documents,including final and enforceable judgments, along with the products ofadministrative proceedings in a number of jurisdictions.189 These casesinvolved the governments of Germany, Norway, Singapore, and Italy.190

Additional sources of information, and standards against which misconductcould be judged, included some prominent non-governmental organizationsand an investigation commenced by the U.S. Department of Justice.191

Siemens responded to the investigations by initiating projects of cooperationand compliance system building.192

The cooperation was not limited to the states where investigations werelocated but also important international organizations, including theOrganization for Economic Development and Cooperation.193 Thoseefforts served as the foundation of Siemen’s response to NPFG action—effectively that it should receive credit for its cooperation, voluntarydisclosures, and changes in compliance regimes.194 In 2007, that responsewas insufficient for the Ethics Council, which recommended exclusion.195

Rejecting this assessment, the Ministry of Finance decided to place thecompany under observation.196 The Ethics Council persisted by a letter the3rd of September 2008 in which it noted the substantial compliance effortsas well as remediation initiatives undertaken, but still found theminsufficient in response to a request by the Finance Ministry to reconsider its

186. See, e.g., SIEMENS AG, https://www.siemens.com/global/en/home.html (last visited Sept.24, 2018), for more information on the company.187. See COUNCIL ON ETHICS FOR THE NORWEGIAN GOV’T PENSION FUND – GLOBAL,RECOMMENDATION 13 (Nov. 15, 2007), available at http://etikkradet.no/files/2017/05/Recommendation-on-Siemens-2007.pdf [hereinafter RECOMMENDATION].188. Id. at 2.189. Id. at 5.190. Id. at 6–13.191. Id. at 13.192. Id. at 16.193. Id. at 14–16.194. RECOMMENDATION, supra note 187, at 16–17.195. Id. at 20.196. See Siemens AG, COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL (May3, 2017), available at https://etikkradet.no/siemens-ag-english/.




recommendation in light of additional information.197 As part of theobservation regime imposed by the Ministry of Finance, the “Council onEthics and Norges Bank are required to keep Siemens under specialobservation during this period and report annually to the Ministry ofFinance on developments in the company.”198 In June 2012, the Council onEthics recommended to the Ministry of Finance that Siemens be removedfrom the observation list in light of evidence of reform and institutionallyfirmer compliance.199 It reviewed the post-2008 response of Siemens toinstances of corruption (more specifically in the operations in Kuwait andother places), the robustness of the compliance system, and disclosure andresponse.200 The connection between the effects of sovereign investingrelationships on compliance and monitoring and its informal connection tonational corruption efforts is clear.

Two recent cases from the NPFG suggest both the possibilities for goodanti-corruption regimes offered by coordination among government andsovereign investors, and the challenges of the current uncoordinated system.The first involved a Chinese company, ZTE Corporation (ZTE Corp.).201

The second involved a Brazilian state enterprise, Petrobras.202 The sectionends with a suggestion about the direction and importance of institutionaltrends.

A. ZTE CORP.203

On January 7, 2016, the Norges Bank decided to exclude the Chinesecompany, ZTE Corporation, one of the world’s five largest producers oftelecommunications equipment and network solutions, from the investment

197. See COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL, THE COUNCIL ON

ETHICS RECOMMENDATION TO EXCLUDE SIEMENS AG (Sept. 3, 2017), available at http://etikkradet.no/files/2017/05/Svarbrev-til-Finansdepartementet_ENG-2008.pdf.198. COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL, RECOMMENDATION

TO REMOVE SIEMENS AG FROM THE WATCH LIST OF THE NORWEGIAN GOVERNMENT

PENSION FUND GLOBAL 1 (June 15, 2012), available at http://etikkradet.no/files/2017/05/Siemens-2012_eng.pdf.199. Id.200. Id. at 2–6.201. COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL, THE COUNCIL ON

ETHICS RECOMMENDATION TO EXCLUDE ZTE CORP. (June 24, 2015), available at http://etikkradet.no/files/2017/05/ENG-Tilr%C3%A5dning-ZTE-24.-juni-2015-ENGELSK-amended-Nov.-2016.pdf [hereinafter RECOMMENDATION TO EXCLUDE ZTE].202. COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL, RECOMMENDATION

TO PUT A COMPANY IN THE GOV’T PENSION FUND GLOBAL UNDER OBSERVATION:PETROLEO BRASILEIRO SA (Dec. 21, 2015), available at http://etikkradet.no/files/2017/05/Recommendation-Petrobras-21-December-2015.pdf.203. See Larry Cata Backer, Corruption and Investment—Chinese Company ZTE Corp. Excludedfrom Norway Sovereign Wealth Fund Investment Universe, L. AT THE END OF THE DAY (Jan. 7,2016, 12:18 PM), http://lcbackerblog.blogspot.com/2016/01/corruption-and-investment-chinese.html.




universe of the GPFG.204 The company is excluded based on an assessmentof the risk of severe corruption and is grounded in a Council on EthicsRecommendation of June 25, 2015.205 The recommendation reflects thegrowing importance of corruption in investment decisions. But it may alsosuggest a distinction in treatment between European companies which in thepast have been subject to observation, and the use of shareholder power bythe Norwegian soverign wealth fund (SWF) and this company for whichdivestment appeared to be the better option.206

ZTE Corporation is a privately-operated Chinese state-owned enterprisewith substantial private investment in its securities.207 At least as a formalmatter, ZTE is deeply embedded in transnational soft law standards forbusiness conduct. It’s website notes that:

In February, 2009, ZTE Corporation has formally become a member ofthe United Nations Global Compact. ZTE will take this as a newstarting pointing to bring the Global Compact and its Ten Principlesinto its corporate culture and business concept to make great effort topromote the harmonious development among economy, environmentand society, thus committing itself to become the paragon of the GlobalCorporate Citizenship. . . . ZTE’s CSR strategy is to pro-activelydevelop, implement and improve CSR compliance throughout ZTEand its supply chain based on industry best practices, continuouslearning and improvement efforts. Its objective is to develop into aglobal CSR leader long-term.208

As typical for Chinese corporations, corportate social responsibility (CSR)efforts are built around charity and societal programs that work in parallelwith state policy for economic, social, and cultural development.209 “Activein community programs, ZTE participated in relief efforts related to the2004 tsunami in Indonesia, the 2008 earthquake in Sichuan, China, and the

204. RECOMMENDATION TO EXCLUDE ZTE, supra note 201.205. Id.206. See Decision on Exclusion of Company from Government Pension Fund Global, NORGES BANK

INV. MGMT. (Jan. 7, 2016), https://www.nbim.no/en/transparency/news-list/2016/decision-on-exclusion-of-company-from-the-government-pension-fund-global/.207. RECOMMENDATION TO EXCLUDE ZTE, supra note 201.208. See About ZTE: Responsibility, ZTE (2016), http://wwwen.zte.com.cn/en/about/corporate_citizenship/ (last visited Oct. 3, 2018).209. See Larry Cata Backer, China’s Corporate Social Responsibility with National Characteristics:Coherence and Dissonance with the Global Business and Human Rights Project, THE BUSINESS AND

HUMAN RIGHTS LANDSCAPE: MOVING FORWARD, LOOKING BACK 530–58 (Jena Martin &Karen E. Bravo, eds., Cambridge University Press 2016); Larry Cata Backer, Realizing Socio-Economic Rights Under Emerging Global Regulatory Frameworks: The Potential Impact ofPrivatization and the role of Companies in China and India, 45 GEO. WASH. INT’L L. REV. 615(2013).




2010 earthquake in Haiti; ZTE also established the ZTE Special ChildrenCare Fund, the largest charity fund in China.”210

Traditionally, corruption was not necessarily viewed as the center of CSRresponsibilities, touching instead on enterprise obligations to the state andconstrained by the ambiguous line between traditional relationships andillegal practices.211 But recent changes in Chinese policy212 and law213 oughtto have brought anti-corruption efforts to the forefront of ZTE’s operations.Corruption is now understood as a significant breach of the ChineseCommunist Party (CCP) basic line and has become a serious violation of lawand administrative practice. Within China itself, the government has beenmoving swiftly against corporate leaders in large state owned enterprises inthe context of the government’s broadening anti-corruption campaigns.214

Because most heads of Chinese state-owned enterprises (SOEs) are alsomembers of the Communist Party, discipline in anti-corruptioninvestigations usually starts with CCP disciplinary systems.215

But at their core, these investigations and the anti-corruption standardsthat they are based are both domestic and based on internal policy. FuHualing’s recent work is instructive:216

210. About ZTE: Company Overview, ZTE, http://wwwen.zte.com.cn/en/about/corporate_information/ (last visited Oct. 3, 2018).211. Larry Cata Backer, Corporate Social Responsibility with Chinese Characteristics: Part II, L. AT

THE END OF THE DAY (July 9, 2012), http://lcbackerblog.blogspot.com/2012/07/corporate-social-responsibility-with.html; Larry Cata Backer, Corporate Social Responsibility with ChineseCharacteristics, L. AT THE END OF THE DAY (Nov. 9, 2011), http://lcbackerblog.blogspot.com/2011/11/corporate-social-responsibility-with.html; see, e.g., Li-Wen Lin, Corporate SocialResponsibility in China: Window Dressing or Structural Change?, 28 BERKELEY J. INT’L L. 64(2010).212. Larry Cata Backer, Corporate Social Responsibility with Chinese Characteristics Part III: WangMaoling on CSR and the Communist Party Line in China— L.AT THE END OF THE DAY (Mar. 29, 2013), http://lcbackerblog.blogspot.com/2013/03/corporate-social-responsibility-with.html.213. Larry Cata Backer, Zhang Lei on China’s Criminal Law and Anti-Corruption Strategies, L. AT

THE END OF THE DAY (Jan. 1, 2016), http://lcbackerblog.blogspot.com/2016/01/zhang-lei-on-chinas-criminal-law-and.html; Junfeng, et. al., Update on Anti-bribery and Anti-CorruptionRegulations and Enforcement in China, LEXOLOGY (May 21, 2015), https://www.lexology.com/library/detail.aspx?g=ecfa940f-2f7a-4857-944b-3aba6b7e44cb.214. See Jamil Anderlini, China Corruption Purge Snares 115 SOE ‘Tigers’, FIN. TIMES (May 18,2015), https://www.ft.com/content/ad997d5c-fd3c-11e4-9e96-00144feabdc0#axzz3wZZJgce1;Gordon Orr, 5 Ways China’s State-Owned Enterprises Are Adapting to the Downturn, MCKINSEY &CO. (Oct. 13, 2015), http://mckinseychina.com/5-ways-chinas-state-owned-enterprises-are-adapting-to-the-downturn/; Shannon Tiezzi, China’s State-Owned Companies Sweat as ‘Graft-Busters’ Converge, THE DIPLOMAT (Feb. 13, 2015), https://thediplomat.com/2015/02/chinas-state-owned-companies-sweat-as-graft-busters-converge/.215. See, e.g., Anderlini, supra note 214.216. See Hualing Fu, Wielding the Sword: President Xi’s New Anti-Corruption Campaign, THE

SOC. SCI. RES. NETWORK, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2492407 (lastupdated July 8, 2015); id. at 136–155 (“I ask whether China is developing a sui generis model foranti-corruption enforcement that relies on a different control model . . . To quote Wang, the




The Central Commission for Discipline Inspection [(CCDI)] publishedthe criticism in an article on its website yesterday. It is the first of aseries on “pushing SOEs to strictly follow party discipline,” as thewatchdog continues cracking down on corruption. The CCDI hasidentified state-owned enterprises as its focus this year. Twenty-six suchbusinesses were visited in the agency’s first round of inspections thisyear, and another seventeen are currently under inspection.217

Still, it had never been clear that actions outside of China would producelegal effects within China218 even with the enactment of anti-bribery laws.And while as an official matter Chinese authorities had not foreclosed thatpossibility, their actions suggested a focus on internal management, leavingto host states and the international community the obligation to police anddiscipline enterprises operating outside the national territory. The criticalchallenge that approach produces, though, and one finally brought to centerstage with the Norges Bank decision, is the extent to which China willcontinue to defer to such international disciplinary mechanisms when theyare projected to the internal operations of a Chinese SOE (though derivedfrom their external activities). That is, to what extent will China be open tointernationalized disciplinary mechanisms that might affect the scope andframework of CSR related conduct of enterprises with potential effect withinChina? The decision of the Norges Bank brings that question one stepcloser to the necessity of resolution.

But the allegations that brought ZTE to the attention of the NorwaySWF were not corruption within China but corruption allegations in ZTE’soverseas operations. These countries included Algeria, Kenya, Papua NewGuinea, Zambia, and the Philippines.219 Lesser weight was given tocorruption allegations in a number of other states, including Malaysia,Myanmar, Nigeria, and Liberia.220 This was not ZTE’s first conflict withNorwegian business and investment organs. In 2009, “ ‘Norwegiantelecommunications giant Telenor banned for six months Chinese companyZTE Corp. from participating in tenders and new business opportunitiesbecause of an alleged breach of its code of conduct in a procurement

Party is using the anti-corruption campaign to buy the time that the Party needs to developsound anti-corruption institutions and tackle corruption at its root”).217. Nectar Gan & Keira Lu Huang, China’s State-Owned Enterprises Slammed for ‘Entrapping’Officials into Corruption, SOUTH CHINA MORNING POST (July 14, 2015), https://www.scmp.com/news/china/policies-politics/article/1838514/chinas-state-owned-enterprises-slammed-entrapping.218. See, e.g., Larry Cata Backer, Chinese SOEs in Latin America—CSR and Culture, L. AT THE

END OF THE DAY (May 20, 2013), http://lcbackerblog.blogspot.com/2013/05/chinese-soes-in-latin-america-csr-and.html.219. RECOMMENDATION TO EXCLUDE ZTE, supra note 201, at 6–10.220. Id. at 10–12.




proceeding,’ international news agencies reported.”221 It was reported in thefinancial press that the issue leading to the action was tied to corruption:

[A]n industry source has told Light Reading that ZTE representativesattempted to bribe Telenor officials in the course of a recent businesstender. ZTE says the problem was caused by a rogue employee. In astatement emailed to Light Reading and attributed to the vendor’sCEO Yin Yimin, the company noted: “ZTE has a very clear Code ofConduct and, as a listed company, our employees have to adhere to thehighest business standards.”222

As has been its habit from the beginning of its operations, the EthicsCouncil has sought to apply an internationalized standard, interpretedthrough the lens of Norwegian state policy.223 It chose not to apply the lawsof the states in which the corruption allegations were alleged, but rather, ashas become customary in the context of managing conduct withintransnational production chains outside of the home states of enterprisesystems,224 it applied an internationalized governance framework drawn frominternational and transnational sources.

The UN anti-corruption portal TRACK (Tools and Resources for Anti-Corruption Knowledge), Global Compact: A guide for anti-corruptionrisk-assessment (2013), and the OECD’s Good Practice Guidance onInternal Controls, Ethics and Compliance (2010), provide usefulguidance in these matters. In Business Principles for CounteringBribery, Transparency International (TI) has listed a number of generalrecommendations for building robust compliance systems.225

But the Ethics Council also sought to legitimize its approach by a passingreference to Chinese state policy and law.226 The Council did not, however,purport to apply Chinese law to the external operations of ZTE. Thispreference for a single and coherent harmonized international law representsa consistent approach by the Ethics Council and contributes to theconstruction of a transnational governance legality that is intermeshed with,but autonomous of, the national systems within which portions oftransnational actions are taken. It is in this sense that the Ethics Councilcontinues to contribute to the construction of transnational legal orders,

221. Carmela Fonbuena, Norway’s telco giant bans ZTE for 6 months, ABS-CBN NEWS (Oct. 21Oct., 2008), https://news.abs-cbn.com/business/10/21/08/norways-telco-giant-bans-zte-6-months.222. Ray Le Maistre, Telenor Bans ZTE From New Deals, LIGHT READING (Oct. 13, 2008),http://www.lightreading.com/mobile/telenor-bans-zte-from-new-deals/d/d-id/662089#discuss.223. See, Larry Cata Backer, Backer, Larry Cata. Sovereign Investing and Markets-BasedTransnational Rule of Law Building: The Norwegian Sovereign Wealth Fund in Global Markets., 29AM. U. INT’L L. REV. 1 (2013).224. See Larry Cata Backer, Regulating Multinational Corporations—Trends, Challenges, andOpportunities, 22 BROWN J. OF WORLD AFFAIRS 153–173 (2015).225. RECOMMENDATION TO EXCLUDE ZTE, supra note 201, at 12.226. Id. at 12–13.




however characterized.227 ZTE contributed to its own difficulties because,like many other multinational enterprises, and SOEs it underestimates theauthority of actions undertaken by hybrid organs like the Ethics Council.228

It chose not to respond extensively to Ethics Council inquiries.229

The Council on Ethics reported, “In September, the Council had atelephone meeting with an employee from ZTE’s Security & InvestorRelations Department and an employee from the company’s legaldepartment.”230 The company also subsequently replied to an emailcontaining follow-up questions.231 In its replies, the company did notcomment on any of the specific corruption allegations, discussing onlyits internal compliance and anti-corruption systems.232

There might well have been good reason for this evasion.233 ZTEexecutives might well have been considering the risks of giving any evidenceto a foreign organ like the Ethics Council for at least two reasons.234 First, itis not clear that such participation beyond purely judicial organs mighttrigger investigation in China for violation of secrets laws.235 Second, theextent to which ZTE officials provide evidence might be taken into accountby the Chinese Central Commission for Discipline Inspection and itsinvestigations of possible corruption in ZTE within China.236 This later riskwould carry substantial adverse consequences for high ZTE officials, andthey would likely err on the side of caution.237 The difficulty, though, is thatnow that the Norges Bank has acted—and caused embarrassment to aneconomic organ of the Chinese state—it is as likely to trigger a CCDIinvestigation.238 ZTE will suffer double consequences: for failure to comply

227. See Larry Cata Backer, Are Supply Chains Transnational Legal Orders?: What We Can LearnFrom the Rana Plaza Factory Building Collapse, IRVINE J. INT’L TRANSNAT’L & COMPARATIVE L.11 (2016); Larry Cata Backer, The Emerging Normative Structures of Transnational Law: Non-StateEnterprises in Polycentric Asymmetric Global Orders, 31 BYU J. PUB. L. 1 (2016).228. Larry Cata Backer, Corruption and Investment—Chinese Company ZTE Corp. Excluded FromNorway Sovereign Wealth Fund Investment Universe, L. AT THE END OF THE DAY (Jan. 7, 2016),http://lcbackerblog.blogspot.com/2016/01/corruption-and-investment-chinese.html [herinafterCorruption and Investment].229. Id. at 3.230. RECOMMENDATION TO EXCLUDE ZTE, supra note 201, at 14.231. Id.232. Id.233. Larry Cata Backer, From a “Two Thrust Approach” to a “Two Sword One Thrust Strategy” toCombat Criminal Corruption: Corporate Compliance, Prosecutorial Discretion, and Sovereign InvestorOversight 1, 29 (Coalition for Peace & Ethics, Working Paper No. 9/1, 2017) [hereinafter Froma “Two Thrust Approach”].234. Id.235. Id.236. Id.237. Id.238. Id.




with an increasingly coherent internationalized normative order oncorruption and the likely internal investigations that may follow in China.239

The extensiveness of the corruption, the ambiguity of correctivemeasures, and the changes in Chinese policy all contributed to thedetermination of an unacceptable risk supporting exclusion from theinvestment universe.240 But this determination should raise eyebrows aswell.241 And it should raise eyebrows precisely because the determination ispotentially inconsistent with the approach to bribery and corruption—andthe role of the Norwegian Global Pension Fund—in the case of Siemens, acompany whose predilection for bribery as a sound business strategy was alsothe subject of extensive consideration by Norges Bank, the Norway FinanceMinistry, and the Ethics Council.242 On the other hand, it mirrored theaction taken with a Chinese SOE–China Railway Group Ltd.243 In thatcontext, I noted:

The most interesting part of the recommendations was the recognitionby the Ethics Council of the Chinese government’s recent anti-corruption campaigns. Indeed, the corruption allegations arose out ofthe Chinese government’s investigation of a disastrous accident thatoccurred on its high speed rail lines in 2011. The Chinesegovernment’s efforts to deal with the corruption that may havecontributed to the accident were noted with approval, but those effortsdid little to aid CRG in avoiding exclusion. More interesting still wasthat evidence relied on by the Council included “information relating tolegal rulings and internal disciplinary processes in the Communist Partypublished in the Chinese Press.” This might have raised eyebrows inthe West, because the Council specifically referenced the ChineseCommunist Party’s system of shuanggui, a practice that has beencriticized in the West.244

239. Id.240. RECOMMENDATION TO EXCLUDE ZTE, supra note 201, at 15–17.241. From a “Two Thrust Approach”, supra note 233, at 31.242. Id.243. COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL, RECOMMENDATION

TO EXCLUDE CHINA RAILWAY GROUP LTD. FROM THE INVESTMENT UNIVERSE OF THE

GOVERNMENT PENSION FUND GLOBAL (Oct. 10, 2014), http://etikkradet.no/files/2017/02/Recommendation-CRG-10-October-2014.pdf.244. Larry Cata Backer, Change Comes to the Norwegian Sovereign Wealth Fund Global, L. AT THE

END OF THE DAY (Jan. 30, 2015), http://lcbackerblog.blogspot.com/2015/01/change-comes-to-norwegian-sovereign.html; see Larry Cata Backer & Keren Wang, The Emerging Structures ofSocialist Constitutionalism With Chinese Characteristics: Extra Judicial Detention (Laojia andShuanggui) and the Chinese Constitutional Order, 23(2) PAC. RIM L. & POL’Y J. 251 (2014), for adiscussion of the broader constitutional issue; see Larry Cata Backer & Keren Wang,

, , ,CHINA L. R. 207 (2015 ), available at http://www.backerinlaw.com/Site/wp-content/uploads/2015/11/08-08-%E5%A4%96%E8%AF%91.pdf, for the Chineselanguage version.




But, exclusion may reflect a pragmatic determination.245 That pragmatismmight be grounded in an assessment of the willingness of the enterprise torespond favorably to observation status and to the exercise of shareholderrights by an instrumentality of the Norwegian Crown.246 It appears clearthat Siemens was amenable to that exercise of private shareholder activism—but unlikely that a Chinese SOE or a Chinese hybrid entity, like ZTE,would be as compliant.247 That suggests not so much discrimination on thebasis of enterprise origin as a hard headed assessment of corporatewillingness to cooperate.248 But this trend bears watching.249

One wonders, however, why this approach makes any sense in the case ofcorruption. This would have presented an opportunity for Norges Bank torobustly exercise its shareholder power in ways that are directly tied to thelong term maximization of the value of the enterprise in which investment ismade.

In effect, Siemens permitted the Norwegian state to become animportant monitor and standard setter for the scope, content, andoperation of its monitoring and surveillance regimes. This marks asubstantial departure from the traditional arrangement in whichcorporations, subject to the legal constraints of the state ofincorporation—at least with respect to its internal organization,operation, and management—now subjects those core organizationalfeatures to regulation by a foreign state through interventions in privatemarkets. What once was the province of the state through law has nowbecome the province of the state through market interactions producinggovernance principals with the functional effect of law.250

And it might have permitted the Norwegian State, through the Norges Bankto reach deeply into the conduct of production chains in those developingstates where legal and governance internationalization is most clearlytargeted.251 And it might have been used to align Chinese approaches tocorruption to the international standards with which it is, in some respect,quite similar.252 But all of these opportunities were lost by the determinationto take the traditional approach, to retreat from a more positive exercise ofinvestor power and greater fidelity to the project of legal internationalism

245. From a “Two Thrust Approach”, supra note 233, at 31.246. Id.247. Id.248. Id.249. Id.250. See Larry Cata Backer, Governance Without Government: An Overview and Application ofInteractions Between Law-State and Governance-Corporate Systems, in BEYOND TERRITORIALITY:TRANSNATIONAL LEGAL AUTHORITY IN AN AGE OF GLOBALIZATION 87 (Gunther Handl &Zekoll Joachin eds., 2012), for a general discussion.251. From a “Two Thrust Approach”, supra note 233, at 32.252. Id.




within production chains that much of the effort of the Ethics Council isdirected.253

B. PETROBRAS254

Norges Bank has decided to place Petroleo Brasileiro SA (“Petrobras”)255

under observation because of the risk of severe corruption.256 Petrobras isone of the largest state owned petroleum TNCs in Latin America257 and onethat is deeply embedded in corruption investigations258 (including the writeoff of over $2 billion in bribe payments that reached all the way to the officeof the President of the Republic).259 The decision is based on therecommendation submitted by the Council on Ethics for the GovernmentPension Fund Global.260

The decision stands in stark contrast to the January 7, 2016, decision byNorges Bank to exclude the Chinese company ZTE Corporation,261 one ofthe world’s five largest producers of telecommunications equipment andnetwork solutions, based on an assessment of the risk of severe corruption.262

The two decisions together may help begin to make coherent whatever rulesmay be emerging about the obligations of the NPFG in matters ofcorruption under internationalized standards that it invokes. Especiallyimportant may be emerging rules for determining when corruption may

253. Id.254. See Larry Cata Backer, Incoherence or Discretion in Corruption and Investment Approaches?—The Norwegian Pension Fund Global Places Petroleo Brasileiro SA (Petrobras) under observation, L. AT

THE END OF THE DAY (Feb. 2, 2016), http://lcbackerblog.blogspot.com/2016/02/incoherence-in-corruption-and.html [hereinafter Incoherence or Discretion].255. Larry Cata Backer, Should Financial Institutions Have Obligations to Manage the HumanRights Impacts of their Clients?: “Final Statement Friends of the Earth Europe and Friends of the EarthNetherlands/Milieudefensie – Rabobank”, L. AT THE END OF THE DAY (Jan. 21, 2016), http://lcbackerblog.blogspot.com/2016/01/should-financial-institutions-have.html.256. COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND, RECOMMENDATION TO PUT A

COMPANY IN THE GOVERNMENT PENSION FUND GLOBAL UNDER OBSERVATION: PETROLEO

BRASILEIRO SA 1 (Dec. 21, 2015), https://etikkradet.no/files/2017/05/Recommendation-Petrobras-21-December-2015.pdf.257. See Capital Ownership, PETROBRAS (2014), http://www.investidorpetrobras.com.br/en/corporate-governance/capital-ownership.258. Paul Kiernan, Brazil’s Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges:State-run oil company writes off $2.1 billion of alleged bribe payments, WALL ST. J. (Apr. 22, 2015),https://www.wsj.com/articles/brazils-petrobras-reports-nearly-17-billion-impairment-on-assets-corruption-1429744336; see, e.g., Corruption in Brazil: The Big Oily: The Petrobras scandalexplained, ECONOMIST (Dec. 30, 2014), https://www.economist.com/the-americas/2014/12/30/the-big-oily.259. See Michelle Mark, Brazilian President Dilma Rousseff Cleared in Petrobras CorruptionScandal, INT’L BUS. TIMES (Oct. 20, 2015), http://www.ibtimes.com/brazilian-president-dilma-rousseff-cleared-petrobras-corruption-scandal-2146773.260. RECOMMENDATION TO PUT A COMPANY IN THE GOVERNMENT PENSION FUND GLOBAL

UNDER OBSERVATION: PETROLEO BRASILEIRO SA, supra note 256, at 17.261. Corruption and Investment, supra note 228, at 1.262. Id.




trigger greater use of shareholder rights and when it triggers a decision toexclude from investment. To the extent that these decisions do not addclarity, they will serve the developing international consensus on thecorporate responsibility to avoid corruption and the consequentialobligation of investors to police the conduct of the enterprises in which theyinvest.

Petrobras represented the second opportunity for the Ethics Council andNorges Bank to speak to the issue of corruption and to further refine anarticulation of a set of principles under which a financial institution (or evenan institutional investor) might comply with its responsibility to respecthuman rights (Guiding Principles for Business and Human Rights)263 asapplied through its investor code of ethics (the Pension Fund Global’sEthical Guidelines).264 It is emerging that, at least under the Organziationfor Economic Cooperation and Development’s (OECD) frameworkGuidelines for Multinational Enterprises, financial institutions assume atleast some minimal level of responsibility for the human rights detrimentalconduct of clients.265 And corruption has been identified as falling withinthat responsibility both within international soft law and under the PensionFund Global’s Ethical Guidelines.266

But the application of those responsibilities to specific instances has notyet produced a coherent jurisprudence. Much less has it started to develop aset of decisions that might provide guidance to enterprises about thestandards applied by Ethics Council and Bank to issues of corruption thatcould result in no action, in observation status, or in exclusion frominvestment. In the most recent case, on January 7, 2016, Norges Bankdecided to exclude the Chinese company ZTE Corporation, one of theworld’s five largest producers of telecommunications equipment andnetwork solutions, from the investment universe of the GPFG.267 Thecompany is excluded based on an assessment of the risk of severecorruption.268 But, in the Petrobras decision, the Council and the Bankchose observation rather than exclusion.269

One of the more important aspects of the Ethics Council determination isits discussion (and further construction) of the nature of theinternationalized standards of corporate responsibility to eliminate

263. U.N. HUM. RIGHTS OFF. OF THE HIGH COMM’R, GUIDING PRINCIPLES ON BUSINESS

AND HUMAN RIGHTS: IMPLEMENTING THE UNITED NATIONS “PROTECT, RESPECT AND

REMEDY” FRAMEWORK, U.N. Doc. HR/PUB/11/04, U.N. Sales No. 13.XIV.5 (2012).264. GUIDELINES, supra note 143.265. See Larry Cata Backer, Should Financial Institutions Have Obligations to Manage the HumanRights Impacts of their Clients?: “Final Statement Friends of the Earth Europe and Friends of the EarthNetherlands/Milieudefensie – Rabobank”, L. AT THE END OF THE DAY (Jan. 21, 2016, 6:31PM),http://lcbackerblog.blogspot.com/2016/01/should-financial-institutions-have.html.266. GUIDELINES, supra note 143, at 2.267. Corruption and Investment, supra note 228, at 1.268. Id.269. RECOMMENDATION TO PUT A COMPANY IN THE GOVERNMENT PENSION FUND GLOBAL

UNDER OBSERVATION: PETROLEO BRASILEIRO SA, supra note 256, at 17.




corruption.270 The touchstone, again, is not the law of the homejurisdiction—Brazil—but an internationalized normative set of soft law andguidelines that are treated as setting a regulatory baseline against whichcorporate conduct is to be judged. Footnote thirty-three is particularlyimportant as a window on the nature of the regulatory structures withinwhich the jurisprudence of the Ethics Guidelines is developed.271 In a way, itsuggests the way in which transnational institutions have begun to treat asirrelevant the jurisdictional and legalist borders that once were central to theintegrity and application of law systems.272 In its place, one sees theconstruction of a transnational legal order that draws, without muchdistinction, among the laws of states, international conventional law,transnational normative standards and guidelines and quasi regulatory toolkits (the cookbooks of legal, regulatory managerialism) in crafting aninterpretive international law of corruption that it then applies. Thetouchstone here, like that in traditional European Court of Human Rights“margin of appreciation” jurisprudence, is to determine a consensusposition, which is then applied in context.273 Conversely, this approachwould appear to provide a wider margin of discretion in the absence ofconsensus—and that margin might then look more closely either on theinternal governance framework of the enterprise or the law of the domesticlegal order in which this internal corporate governance framework isimplemented.

More important, perhaps, is that the object is not necessarily to eliminatecorruption but to reduce it to what will be deemed to acceptable standards.That produces two quite important approaches to Ethics Counciljudgements. The first is an emphasis on formalism. Like the Delawarecourts development of a monitoring duty of care for corporate boards, theEthics Council places strong emphasis is on the formal construction ofsystems that are deemed minimally robust. That robustness is judged againstthe international standards, not the laws of the home state or the state inwhich corruption is alleged. The second is an emphasis onimplementation.274

The key requirements in international standards for corporatecompliance and anti-corruption systems relevant to this case are thatthe company conducts a comprehensive assessment of corruption risksin its business operations, that the company has zero tolerance forcorruption, that all employees are equipped with tools to avoid

270. Id. at 7–9.271. Id. at 8 n.33.272. Id.273. Larry Cata Backer, Inscribing Judicial Preferences into Our Basic Law: The PoliticalJurisprudence of European Margins of Appreciation As Constitutional Jurisprudence in the U.S., 7TULSA J. COMP. & INT’L L. 327, 338 (2000).274. See Incoherence or Discretion, supra note 254.




becoming involved in corruption, and that relevant processes andprocedures are continuously developed and improved.275

The Ethics Council, then, does not look to actual elimination but rather tothe willingness of the enterprise to devise and apply anti-corruptionsystems.276 The assessment of the willingness of an enterprise to embracethese twin standards, and an assessment of an enterprise’s willingness toapply them, might suggest the difference in treatment between Petrobrasand ZTE Corp.277

But equally important might be the way in which the exercise of discretionplayed a role in the difference in decision between Petrobras and ZTECorp.278 In both cases, the companies operated in places with either weakgovernance or a higher propensity to tolerate corruption.279 Applyinginternational normative standards, that context then places “specialrequirements on the company to have in place robust systems andimplement anti-corruption measures.”280 In Petrobras, the Ethics Councildetermined that its 2013 corruption system overhaul plus internationalpublic and private pressure—states and markets—would have a significanteffect on the company’s willingness to enforce its new system.281 In ZTE,neither a sufficiently robust system nor a perceived internal or externaldisciplinary structure was deemed sufficient.282 Petrobras, then, was judgedmore willing to engage in anti-corruption work sensitive to the internationalstandards the Ethics Council embraced; ZTE Corp. was not. Note that thedifference was not one of compliance—both companies faced a similardegree of temptation, but rather it was based on a sense of likelihood ofmovement in the right direction.

Surprisingly absent from the discussion in either cases was the degree towhich participation in the internal governance of either Petrobras or ZTEby the Pension Fund Global might contribute toward reform, and thus makethe case stronger for observation. The Ethics Council, inexplicably, treatsobservation as a sort of passive act. It is a state of watching—and if thecompany thereafter fails—of action in the form of exclusionrecommendations. Yet that substantially ignores the value of observation, a

275. See RECOMMENDATION TO PUT A COMPANY IN THE GOVERNMENT PENSION FUND

GLOBAL UNDER OBSERVATION: PETROLEO BRASILEIRO SA, supra note 256; see generallyOECD, ANTI-CORRUPTION ETHICS AND COMPLIANCE HANDBOOK FOR BUSINESS 10–14(2013), available at https://www.oecd.org/corruption/Anti-CorruptionEthicsComplianceHandbook.pdf.276. RECOMMENDATION TO PUT A COMPANY IN THE GOVERNMENT PENSION FUND GLOBAL

UNDER OBSERVATION: PETROLEO BRASILEIRO SA, supra note 256, at 9–11.277. RECOMMENDATION TO EXCLUDE ZTE, supra note 201, at 6–10; id. at 13.278. Incoherence or Discretion, supra note 254, at 3.279. Id.280. See Larry Cata Backer, Corporate Social Responsibility in Weak Governance Zones, 14 SANTA

CLARA J. INT’L L. 297 (2016), for a general discussion.281. RECOMMENDATION TO PUT A COMPANY IN THE GOVERNMENT PENSION FUND GLOBAL

UNDER OBSERVATION: PETROLEO BRASILEIRO SA, supra note 256, at 12.282. RECOMMENDATION TO EXCLUDE ZTE, supra note 201, at 15–16.




value that was more clearly specified in Siemens. The object of observationis hardly just to watch. It is meant to provide the Pension Fund Global anopportunity to engage, to participate in the internal governance of theenterprise, and to help it reach decisions in its operations that are compatiblewith the requirements of the Ethics Guidelines, and therefore withinternational consensus standards (or, effectively, law). To fail toacknowledge this represents either an omission, or a retreat from theprinciples of using private shareholder power. And, indeed, as an investor,and as ZTE might make clear—the Pension Fund Global has aresponsibility under the very internationalized standards it applies, tocomply with them itself. In this case, it would require specifying in moredetail the sorts of obligations (responsibilities) the Pension Fund Globalmust undertake under international standards to ensure that its observationof Petrobras is itself compatible with those standards.

What else might account for the difference between Petrobras and ZTEthat induced Council and Bank to exclude the Chinese company and placethe Brazilian company under observation? At one level, one might considerwhether the difference is based on unconscious presumptions about theamenability to corruption and to correction of the states in which thesecompanies are headquartered. One could read the determinations assuggesting a presumption that Chinese companies have little prospect forcorrection and a strong incentive toward corruption, while Braziliancompanies may have similar incentives toward corruption but might be moreamenable to correction. But this would be amount to a jurisprudence ofprejudice rather than of law and hardly to be tolerated by a state institution.On the other hand, it might well indicate a difference in the sort of relationsbetween investors and state-owned enterprises that itself might informdecisions about the utility of exercising shareholder power. Oneunderstands better the value of shareholder power in Petrobras than perhapsin ZTE Corp., and that might have played into the decision. For ChineseSOEs and related entities, that may be an important consideration as theyseek financing from investors even more deeply tied to global standards ofassessment of investment propriety, grounded in consensus norms that thesecompanies might otherwise reject.

Perhaps it was the level of information available to the Ethics Council andthe level of cooperation afforded. Petrobras appeared more willing toengage the Ethics Council, and in any case, more information was availableto the Council and Bank about a very public scandal touching on a crownjewel of Brazilian state enterprises. In contrast, ZTE Corp. did little to helpits own case, and its corruption appeared far more systemic. But that is tosome extent conjecture. Still, an indication of cooperation might provide asufficient basis to choose observation rather than exclusion if only forpractical reasons—the enterprise would be easier to monitor and its progresseasier to assess than with an enterprise that appeared unwilling to cooperateeven against a state sector investor shareholder. Yet Petrobras is notSiemens, and the level of cooperation might be understood as hardly




satisfactory. It would do the Ethics Council well to develop better and moreevenly applied standards for measuring cooperation and the consequencesfor choosing among remedies and approaches when confronted with asignificant breach of its Ethics Guidelines.283

C. SHARPENING THE SWORD: INSTITUTIONAL TRENDS—SOVEREIGN INVESTING AND ITS INSTITUTIONAL

CHARACTER

The NPFG’s latest decisions, ones that seek to broaden its institutionalrole in the development of robust anti-corruption compliance programsamong companies in which it has an ownership interest, are unremarkable inand of themselves. What draws attention is what appears to be a differencein the approach of the Ethics Council, on the one hand, and Norges Bank,on the other, with respect to the use of investment power to institutionalizecorporate governance behaviors. The differences between the EthicsCouncil and Norges Bank now appear with greater clarity as the cultureswithin the Ethics Council—with a focus on the Ethics guidelines andnormative objectives—and the cultures within Norges Bank, with a greateremphasis on more pragmatic approaches to objectives, appear to diverge.284

But, the divergences do not suggest fundamental differences, but ratherdifferences in approaches to the leveraging of Norwegian power throughinvestment within a context in which that political agenda must also generateprofits to the Norwegian Kingdom.285

This is most apparent in the context of corruption—an area of increasingconcern to the Pension Fund Global.286 The Ethics Council went out of itsway to provide a public explanation of its actions—and the institutionalcultures that produced them, in contradistinction to the work of the NorgesBank to which it reports.287 The emphasis was on the constraints imposedby the nature of the Ethics Council’s work.288 These highlighted asubstantial rift in the utility of approaches that might be available tosovereign investors in the anti-corruption area. On the one hand, the EthicsCouncil was constrained by the law that vested it with authority to make oneof three decisions: no action, observation, or exclusion. The Norges Bank,on the other hand, as administrator of the NPFG had a broader discretion—akin to the administrative discretion of prosecutors under PBO—to exercisea broader range of administrative power, including the power to exerciseshareholder rights for public policy ends.

283. See Incoherence or Discretion, supra note 254, at 3.284. Larry Cata Backer, The Battle Between Regulatory and Managerial Approaches Within theNorwegian Sovereign Wealth Fund – The Case of Corruption, L. AT THE END OF THE DAY (May 9,2017), http://lcbackerblog.blogspot.com/2017/05/the-battle-between-regulatory-and.html.285. Id. at 1–2.286. Id.287. Id.288. Id.




This is reflected in the decisions rendered in 2016. In two cases, theEthics Council recommended exclusion from the NPFG investmentuniverse;289 the Norges Bank rejected the recommendation in favor of themore flexible discipline of observation.290 In another two cases, the EthicsCouncil recommended the more formal penalty of observation. In bothcases, the Norges Bank opted for the more discretionary power to exerciseshareholder power and influence over the companies to get them to engagein appropriate reform.291 The Ethics Council noted that although theCouncil perceives the exercise of shareholder rights and observation to beextremely similar measures, it cannot recommend the exercise ofshareholder rights. This is primarily because NBIM is responsible for theexercise of shareholder rights,292 while the Council on Ethics is responsiblefor observation.293

What emerges is a sense that the Ethics Council continues to develop aculture of formalist compliance built around the Ethics Guidelines. Theirapproach is more regulatory and bounded by the techniques of theadministrator and the legislator. There is little flexibility, no sense of thevalue, or utility of discretionary action. These naturally follow from thestructures of their mandate and the character of their activities—quasi-judicial and administrative. The Ethics Council is deeply embedded in thepublic law cultures of the state. The Norges Bank, on the other hand, ismore administrative and functional. It is grounded in contextual flexibilityand in the informal use of power to attain objectives. The Norges Bank ismuch more deeply embedded within the private law cultures of the

289. See Leonardo SpA, COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL (May5, 2017), https://etikkradet.no/leonardo-spa-2/; PetroChina Co Ltd., COUNCIL ON ETHICS FOR

THE GOV’T PENSION FUND – GLOBAL (Aug. 17, 2018), https://etikkradet.no/petrochina-co-ltd-4/.290. See COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL,RECOMMENDATION TO EXCLUDE LEONARDO SPA FROM THE GPFG 21 (2016), https://etikkradet.no/files/2017/05/Leonardo-Tilr%C3%A5dning-ENG-2016.pdf; COUNCIL ON

ETHICS FOR THE GOV’T PENSION FUND – GLOBAL, RECOMMENDATION TO EXCLUDE

PETROCHINA CO. LTD. FROM THE GPFG 11 (2016), https://etikkradet.no/files/2017/05/PetroChina-Tilr%C3%A5dning-ENG-2016.pdf.291. See COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL,RECOMMENDATION TO PLACE ENI SPA ON OBSERVATION 14 (Dec. 20, 2016), https://etikkradet.no/files/2017/05/Eni-Tilr%C3%A5dning-ENG-2016.pdf [hereinafterRECOMMENDATION TO PLACE ENI SPA ON OBSERVATION]; COUNCIL ON ETHICS FOR THE

GOV’T PENSION FUND – GLOBAL, RECOMMENDATION TO PLACE SAIPEM SPA UNDER

OBSERVATION 18 (Dec. 20, 2016), https://etikkradet.no/files/2017/05/Saipem-Tilr%C3%A5dning-ENG-2016-.pdf.292. See Responsibility, NORGES BANK INV. MGMT., https://www.nbim.no/en/responsibility/(last visited Sept. 20, 2018) (“Our tools for active ownership are dialogue with companies,investors, regulators and other standard setters, voting at shareholder meetings and filingshareholder proposals.”); see generally COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND –GLOBAL, RESPONSIBLE INVESTMENT 32–68 (2016), https://www.nbim.no/contentassets/2c3377d07c5a4c4fbd442b345e7cfd67/government-pension-fund-global—-responsible-investment-2016.pdf [hereinafter RESPONSIBLE INVESTMENT].293. See RESPONSIBLE INVESTMENT, supra note 292, at 87.




enterprise. This makes for an interesting contrast between an institutionthat functions within the borders of politics and law, and another thatfunctions within the constraints of economics and markets.294

This is particularly apparent in the quite distinct approaches of the EthicsCouncil and Norges Bank with respect to Eni S.p.A.295 and Saipem S.p.A.,296

both of which the Ethics Council recommended formal observation. Thisrecommendation was essentially institutional and political—it was groundedon the role of the Pension Fund Global as a regulatory actor demandingoversight over conduct. Instead, Norges Bank chose the mechanics ofprivate shareholding to move toward what one can expect to be a similarobjective.297 The Ethics Council put the best face on it that it could—notingthat there was little functional difference between observation and exerciseof shareholder power. And yet that functional similarity does little to hidethe substantial formal difference between a regulatory approach grounded innormative political frameworks, and a managerial approach grounded innormative economic frameworks. From the perspective of the constructionof regulatory frameworks for conduct, the consequences could be quitesubstantial. The former constructs corruption as a political issue with legaleffects disciplined by the institutions of state; the latter constructs corruptionas an economic issue with compliance effects disciplined by the market.298

IV. Conclusion: From “Two Thrusts” to “Two Swords, OneThrust” Approaches and their Value to Chinese Anti-Corruption Efforts

What can China learn from these emerging trends in the area of thecriminalization of corruption and of international efforts to managecorporate compliance programs that enhance a more effective system ofpublic-private cooperation in combatting corruption, especially bribery?Corruption has become an important element of both national andtransnational governance. It is particularly complicated because coherenceamong all of the participants in global production chains are necessary inorder to ensure that the production chain itself remains free of corruption.But that, in turn, requires both coherence in approach to corruption (how itmanifests) and a willingness to privatize corruption enforcement acrossborder. Alternatively, and less efficiently, dominant states might seek toproject their own anti-corruption regimes outward through their control (to

294. See generally Larry Cata Backer, Summary of My Presentation, “The Privatization ofGovernance: Emerging Trends and Actors,” for Conference: New International Trade and RulesBetween Globalization and Anti-Globalization, L. AT THE END OF THE DAY (Apr. 29, 2017, 9:34PM), http://lcbackerblog.blogspot.com/2017/04/summary-of-my-presentation.html.295. See RECOMMENDATION TO PLACE ENI SPA ON OBSERVATION, supra note 291, at 14.296. Id. at 18.297. Sapiem SpA, COUNCIL ON ETHICS FOR THE GOV’T PENSION FUND – GLOBAL (Aug. 17,2018), https://etikkradet.no/saipem-spa-2/; see Eni SpA, COUNCIL ON ETHICS FOR THE GOV’TPENSION FUND – GLOBAL (May 5, 2017), https://etikkradet.no/eni-spa-2/.298. See Incoherence or Discretion, supra note 254, for a general discussion.




the extent of such control in any case) of apex enterprises in productionchains, especially through legal and prosecutorial actions. As an additionaloption, dominant states and their investment instruments (like theNorwegian Pension Fund Global) might seek to project an internationalizedconception of anti-corruption law and standards outward. In either case,projection of anti-corruption standards may be done directly, through law,or indirectly, through the encouragement of societally (privatized)mechanisms for corruption control, through markets critical to thefunctioning of relevant production chains.

The effect, as has become evident in this article, is the development ofwhat can best be understood as another manifestation of a “Two ThrustApproach” in a specific context—the exercise of prosecutorial discretion todevelop robust compliance systems, enhance cooperation, and encourageremediation and the exercise of discretion in the management of sovereigninvestments through SWFs to the same ends. But these two thrusts areuncoordinated, and they do not enhance the productive value of the other.Indeed, their great weakness appears to be that jurisdictions capable ofexercising the sovereign investment thrust are not, at the same time, themost valuable for implementing the governmental criminal prosecutionthrust. At the same time, the natural coordination of both approachessuggests the value of coordination. Both “thrusts” focus on corporatecooperation, voluntary disclosure, remediation, and most importantly,robust compliance programs to ensure the development of anti-corruptioncultures within the enterprise and of vigorous systems for policingcorruption. Together they provide a great incentive—declinations (formalexercise of discretion to close an investigation without charges)299 andexercise of shareholder power by sovereign investors or observation—toavoid criminal investigation and to reform corporate internal governance toreduce the likelihood of criminal activity.300

What that suggests is a natural alignment in states, like China, that havesignificant prosecutorial as well as sovereign investment capacities. Aligningthe basic policy of both the U.S. Justice Department’s pilot program and theNPFG of voluntary disclosure, cooperation, remediation, anddisgorgement,301 it is possible to develop a two-prong and coherent approachto policing corruption. The object would not be to copy and amalgamate,but rather to draw on the regulatory approaches to craft a coordinated dualthrust policy compatible with local law and political principles. That policywould achieve the objectives of the criminal law—to punish wrongdoers and

299. Declinations, U.S. DEPT. OF JUST. (Aug. 23, 2018), https://www.justice.gov/criminal-fraud/pilot-program/declinations. See generally Richard L. Cassin, Hey, Declinations WITHOUTDisgorgement Are Still Popular, too, FCPA BLOG (Sept. 8, 2017, 8:18 AM), http://www.fcpablog.com/blog/2017/9/8/hey-declinations-without-disgorgement-are-still-popular-too.html.300. U.S. DEP’T OF JUST., FCPA CORPORATE ENFORCEMENT POLICY 5 (Nov. 29, 2017),https://www.justice.gov/criminal-fraud/file/838416/download.301. See Cassin, supra note 299.




deter the commission of offenses. But it would also meet the political andsocietal objectives of fostering changes in consensus about the character ofcorporate governance. Those objectives are grounded in robustcompliance302 but also in a cooperative relationship between the state andenterprises.

China might well be able to profit from turning a “Two Thrust Approach”into a “Two Sword One Thrust” strategy. That would require thedevelopment of a capacity to use the Chinese sovereign wealth fundsproactively in a coordinated effort to ensure the development of compliance,disclosure, and cooperation systems that would be policed both from thecriminal side, through the usual state officials, and from the financial side,through the power of sovereign investors to flex their muscles. At the sametime, it would require a distinct approach to the criminal prosecution ofcorruption—one that still focuses on appropriate punishment but also seesthe value in arrangements that advance the important goal of prevention.And, indeed, it would seem that such an effort, the creation of a socialistform of deferred prosecution and cooperation agreement, would be quiteuseful in advancing socialist modernization through law. There are, ofcourse, conceptual and implementation challenges that must be addressed.But the basic concept—the ability to coordinate economic and police powerto effect substantial advances in corporate governance with respect tocorruption and to broaden the base for enforcement of anti-corruptionrules—is an opportunity that would be worth seizing.

Indeed, China is well positioned to seize the opportunity. Within China itmay be possible to coordinate compliance efforts by the procuratorate withthat of the Chinese sovereign wealth funds through the medium of socialcredit systems currently being developed. The parameters for developingrating systems for corporate compliance in the area of corporate socialresponsibility is already well advanced in the West.303 Indeed, “Westernversions of social credit—of providing ratings grounded in targeted dataharvesting, proprietary algorithms, and coordinated incentives and punishments—has become an important regulatory element in the societal field.”304 Itrequires converting the system of exercising discretion, based on the factorsspecified in Section II of this article and the factors for determiningcompliance with sovereign investing compliance requirements discussed in

302. Andrew Brading Spalding, Restoring Pre-Existing Compliance Through the FCPA PilotProgram, 48 U. TOL. L. REV. 519, 523–524 (2017).303. See Larry Cata Backer, Social Credit in the West: Non-State Rating Systems for CSRCompliance, L. AT THE END OF THE DAY (Sept. 16, 2017), http://lcbackerblog.blogspot.com/2017/09/social-credit-in-west-non-state-rating.html (discussing EcoVaid, First Annual CSRPerformance Index (2017)).304. See generally Credit ratings: how Fitch, Moody’s and S&P rate each country, THE GUARDIAN:DATABLOG (Apr. 30, 2010), https://www.theguardian.com/news/datablog/2010/apr/30/credit-ratings-country-fitch-moodys-standard. See Larry Cata Backer, Next Generation Law: DataDriven Governance and Accountability Based Regulatory Systems in the West, and Social CreditRegimes in China 1, 34 (July 7, 2018) (unpublished essay), https://papers.ssrn.com]/sol3/papers.cfm?abstract_id=3209997.




Part III of this article, into the components of a rating system of corporatecompliance. Data can be required from enterprises that can support rating,and the algorithms for transforming data into rating can then follow, basedon the assessment by the relative worth of each factor. The compliancesocial credit rating, then, can be used by both the procuratorate andsovereign investors to make determinations. That can substantially reduceboth the possibility of abuses of discretion in individual cases and canregularize the process of discretionary decision-making. Thus for example,different social credit rating thresholds can lead to different enforcementstrategies within the procuratorate (as well as different sentencingguidelines), and it can also produce incentives that may reduce the cost ofaccessing financial markets.

These are, of course, preliminary observations. Each requires substantialstudy. In the end, some may not prove suitable. Yet what clearly emerges isthat in these cases, especially with respect to policy coordination and themanagement of anti-corruption systems, there may be more efficient waysfor government, in partnership with private actors, to order their regulatoryapproaches. It is also possible that such new approaches can remain faithfulto the rule of law and core principles of political organization withoutlimiting the forms of regulation to ancient forms more suitable for adifferent age. In this new historical stage, it may be necessary to change withthe times and to adjust the forms of law to the contemporary customs andpractices of a society.





Investigating Potentially Unlawful Death underInternational Law: The 2016 MinnesotaProtocol

CHRISTOF HEYNS,* STUART CASEY-MASLEN,** TOBY FISHER,***SARAH KNUCKEY,† THOMAS PROBERT,†† AND

MORRIS TIDBALL-BINZ‡

I. Introduction

Across every region of the world, states are daily alleged to havecommitted or to have failed to prevent unlawful killings. From policeshootings of members of ethnic minorities, to the use of lethal force againstprotestors during peacetime, to indiscriminate air strikes and targetedattacks on civilians during armed conflict, one of the most pressing concernsis ensuring that an effective investigation of the killing is conducted.Without an investigation, accountability is typically impossible, and familiesand communities must endure the pain of loss without knowing the truth,much less seeing justice. Investigations are an essential component of theright to life and are necessary to prevent future violations.

International treaties protect the universally binding right to life andpermit killing only in narrow, strictly defined circumstances. When a lifehas been lost and it is uncertain whether this occurred in accordance withthe law, the death must be investigated. But treaties do not set out thespecific standards or processes for proper investigations of alleged violations.Instead, agreed international legal standards have developed over time.States, international human rights bodies, and practitioners have relied onsupplemental international instruments to set out the agreed substantive andprocedural legal elements of the right to life and to advance the bestinvestigation practice.

* Professor of Human Rights Law and Director of the Institute for International andComparative Law in Africa at the University of Pretoria, and member of the United NationsHuman Rights Committee.

** Honorary Professor, Faculty of Law, University of Pretoria.*** Lieff Cabraser Associate Clinical Professor of Law, Director of the Human Rights Clinic,

and Faculty Co-director of the Human Rights Institute at Columbia Law School, New York.† Head of Research, Freedom from Violence Project, University of Pretoria, and Research

Associate, Centre of Governance and Human Rights, University of Cambridge.†† Barrister, Landmark Chambers, London.

‡ Head of Forensics, Humanitarian Project Plan International, Committee of the Red Cross(ICRC); Visiting Professor, Department of Forensic Medicine, Ethics and Medical Law,Faculty of Medicine, University of Coimbra, Portugal; and Visiting Professor, Department ofBiomedical Health Sciences, University of Milan, Italy.




In May 2017, the Office of the United Nations High Commissioner forHuman Rights (OHCHR) published the Minnesota Protocol on theInvestigation of Potentially Unlawful Death (2016), a restatement of theinternational standards governing the conduct of such investigations.1 The2016 Minnesota Protocol2 is an extensive revision of the original MinnesotaProtocol, officially entitled the United Nations Manual on the EffectivePrevention and Investigation of Extra-legal Arbitrary and SummaryExecutions (the 1991 Minnesota Protocol); the original 1991 MinnesotaProtocol became the point of reference for standards applicable to theinvestigation of potentially unlawful death.3

This article—co-authored by some of those who led the Protocol’srevision—describes the process that led to the original Protocol, exploresthe need for and the method of the Protocol’s revision, and discusses thereasons for decisions taken about the nature or scope of revisions. Also, thisarticle summarizes the relevant international standards by describing how aninvestigation should be conducted in accordance with the new Protocol, andfurther analyzes the Protocol’s status. The article concludes by indicatinghow the Minnesota Protocol can continue to guide implementation of theduty to investigate under international law.

The 2016 Protocol was drafted over the course of two years in a processled by the U.N. Special Rapporteur on extrajudicial, summary or arbitraryexecutions—Christof Heyns—in collaboration with the OHCHR.4 Aninternational team of legal, human rights, investigation, and forensic experts,with support from a high-level advisory panel, reviewed and revised the textof the 1991 Protocol, taking into account legal and technical developmentssince the drafting of the original instrument.5 The revision process aimed toproduce an updated document that would set out international law oninvestigations in a holistic manner and outline good practice in investigationin light of advances in forensic science.6

1. See Off. of the U.N. High Comm’r for Hum. Rts., UN Rights Office Launches GlobalGuidelines for Investigating Unlawful Killings (May 24, 2017), https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=21661&LangID=E.

2. See OFF. OF THE U.N. HIGH COMM’R FOR HUM. RTS., MINNESOTA PROTOCOL ON THE

INVESTIGATION OF POTENTIALLY UNLAWFUL DEATH (2016): THE REVISED UNITED

NATIONS MANUAL ON THE EFFECTIVE PREVENTION AND INVESTIGATION OF EXTRA-LEGAL,ARBITRARY AND SUMMARY EXECUTIONS, U.N. Doc. HR/PUB/17/4, U.N. Sales No.E.17.XIV.3 (2017) [hereinafter Minnesota Protocol II].

3. U.N. OFF. AT VIENNA CTR. FOR SOCIAL DEV. AND HUMANITARIAN AFF., UNITED

NATIONS MANUAL ON THE EFFECTIVE PREVENTION AND INVESTIGATION OF EXTRA-LEGAL,ARBITRARY AND SUMMARY EXECUTIONS, U.N. Doc. ST/CSDHA/12, Sales No. E.91.IV.1(1991), http://hrlibrary.umn.edu/instree/executioninvestigation-91.html [hereinafter MinnesotaProtocol I].

4. Minnesota Protocol II, supra note 2, § VI.5. Off. of the U.N. High Comm’r for Hum. Rts, Revision of the UN Manual on the

Effective Prevention and Investigation of Extra-Legal, Arbitrary and Summary Executions (theMinnesota Protocol), https://www.ohchr.org/en/issues/executions/pages/revisionoftheunmanualpreventionextralegalarbitrary.aspx (last visited Oct. 22, 2018).

6. Id.



2019] THE 2016 MINNESOTA PROTOCOL 49

The right to life has both substantive and procedural legal elements.7 Thesubstantive element pertains to the question of when deprivation of life fallswithin the limitations recognized under international law. For example, inthe circumstances, did a particular use of force in law enforcement or in theconduct of hostilities during armed conflict comply with the applicable legalregimes?8 The procedural element of the right to life concernsaccountability for unlawful death, in particular, when and how investigationsinto deaths that may have been unlawful must be conducted.9 Thus, a failureto conduct a proper investigation of a potentially unlawful death is regarded,in itself, as a violation of the right to life.10 The primary internationalinstruments that set out the procedural aspect of the right to life are theUnited Nations Principles on the Prevention and Investigation of Extra-Legal, Arbitrary and Summary Executions of 1989 (U.N. Principles on theInvestigation of Extrajudicial Executions)11 and the Minnesota Protocol, firstin 1991 and now in its 2016 iteration.12 The 1991 Minnesota Protocol waslargely developed to operationalize and give detailed content to the moregeneral standards set out in the U.N. Principles on the Investigation ofExtrajudicial Executions.13

In focusing on the procedural legal elements of the right to life, the newProtocol provides detail on the legal basis for the duty to investigate, as wellas the triggers for the application of the duty, and its scope. It explains whatinternational law demands of each investigation—that it be “(i) prompt; (ii)effective and thorough; (iii) independent and impartial; and (iv)transparent.”14 Building on the original Protocol, the revision also outlinesthe rights of families during an investigation.15 The revised Protocol, like itspredecessor, is also intended as a practical guide to investigations as well as atraining tool, and the bulk of it sets out the steps required for an effectiveinvestigation.16

The Protocol is a comprehensive restatement of the proceduralcomponent of the right to life.17 It is intended to assist a range of actors,including States, investigators, civil society organizations, and rights-holdersthemselves, to ensure that proper investigations of suspected unlawfulkillings are conducted.18 It is not a step-by-step handbook but a guide togood practice, and the 2016 Protocol reflects scientific developments over

7. See, e.g., McCann v. United Kingdom, 324 Eur. Ct. H.R. (ser. A) 97, 163 (1995).8. See id.9. See id.

10. See id.11. Economic and Social Council Res. 1989/65 (May 24, 1989), https://digitallibrary.un.org/

record/75550?ln=en.12. See Minnesota Protocol II, supra note 2, § VI.13. See id. at § V.14. See id. at 7.15. See id. at 9.16. Compare Minnesota Protocol II, supra note 2, with Minnesota Protocol I, supra note 3.17. See Minnesota Protocol II, supra note 2, § V.18. See id. at 2.




the past twenty-five years and contemporary good investigation practice.19 Itcontains sections on topics such as investigation strategy, crime-scenemanagement, witness interviews, human remains analysis, and professionalethics.20 Prepared by the world’s leading experts across many fields, theProtocol provides the leading international standard for deathinvestigations.21

II. Elaboration of the U.N. Principles on the Investigation ofExtrajudicial Executions and the 1991 Minnesota Protocol

The original 1991 Protocol and the U.N. Principles on the Investigationof Extrajudicial Executions developed out of the efforts of coalitions ofadvocates from around the world and from both law and the sciences, andfrom civil society and intergovernmental organizations.22 They developed incontexts of significant international concern for politically motivated Stateviolence, the increasing use by international civil society of strategies focusedon human rights norm development, the establishment of U.N. SpecialProcedures, and the increasing use of forensics in human rightsinvestigations.23

The issue of State torture and killings was one of the touchstone humanrights issues of the late 1970s and early 1980s, particularly for civil society inLatin America, and seeking accountability for State perpetrators was one ofthe main areas of emphasis.24 A global campaign against torture during themid-1970s led by human rights Non-Governmental Organizations (NGOs),such as Amnesty International, brought the role that civil society could playin addressing serious violations of bodily integrity into global focus, andhelped set the stage for international efforts to develop norms related toextrajudicial killings.25 Official organs of the United Nations were alsoseized by the challenge of how to address political killings and the challengeof impunity for unlawful killings.26 In 1982, the United NationsCommission on Human Rights appointed prominent Kenyan lawyer AmosWako as Special Rapporteur to study the problem of extrajudicial, summary,

19. See id. § V.2.20. See id. §§ X-XI.21. See id. § VI.22. See id.23. See Minnesota Protocol I, supra note 3, at 4; Minnesota Protocol II, supra note 2, § V.24. Naomi Roht-Arriaza, State Responsibility to Investigate and Prosecute Grave Human Rights

Violations in International Law, 78 CAL. L. REV. 449, 454 (1990).25. See Amnesty Int’l, Conference for the Abolition of Torture, Final Report, at 7, AI Index ACT

40/002/1973 (Dec. 11, 1973), https://www.amnesty.org/download/Documents/204000/act400021973en.pdf.

26. ROXANA FERLLINI, FORENSIC ARCHAEOLOGY AND HUMAN RIGHTS VIOLATIONS 57(Roxana Ferllini et al., eds., 2007).




or arbitrary executions, specifically in response to political killings in LatinAmerican and Africa.27

During the 1980s, forensic science techniques took on an increasinglycritical function in investigations of human rights violations—particularly inArgentina with the work of the Equipo Argentino de Antropologia Forense(Argentine Forensic Anthropology Team) (EAAF)—and then spread acrossthe region and the world.28 As the use of forensics increased globally andincreased the possibilities for truth and accountability by expanding andstrengthening available scientific evidence—even long after death—it alsoraised questions about proper procedures and agreed best scientific practice.

The growing importance of forensic investigations for the protection ofthe right to life began to be clearly articulated by civil society and U.N.-appointed experts during the 1980s.29 Human rights NGOs, such as theEAAF, used forensic techniques as their primary method to advanceaccountability and the rights of families of the murdered and thedisappeared.30 Groups like Amnesty International underlined theimportance of governments establishing proper investigation procedures sothat families could learn the cause of death and identify those responsible.31

One of the driving forces behind bringing a forensic component into legalstandards on the investigation of suspicious deaths was David Weissbrodt, ahuman rights scholar based at the University of Minnesota.32 In 1983, as

27. See Economic and Social Council Res. 1982/35, ¶¶ 3–5 (May 7, 1982); S. Amos Wako(Special Rapporteur on Summary or Arbitrary Executions), Summary or Arbitrary Executions, ati, U.N. Doc. E/CN.4/1983/16/Add.1 (Jan. 31, 1983), https://documents-dds-ny.un.org/doc/UNDOC/GEN/G83/113/62/PDF/G8311362.pdf?OpenElement. In the keynote address tothe Commission on Human Rights in 1982, to which the creation of the mandate is oftenattached, by the Director of the Division of Human Rights, Theo van Boven took the thenunusual step of directly naming States, and citing numbers. He mentioned in particular Chile,El Salvador, Equatorial Guinea, Guatemala, and Uganda. He also cited the annual report of theInter-American Commission on Human Rights. See U.N. ESCOR, 38th Session, 1st mtg. at 3,U.N. Doc. E/CN.4/1982/SR.1 (Feb. 2, 1982); see also ANN MARIE CLARK, DIPLOMACY OF

CONSCIENCE: AMNESTY INTERNATIONAL AND CHANGING HUMAN RIGHTS NORMS 109(Princeton Univ. Press ed., 2001).

28. See Luis Fondebrider, Reflections on the Scientific Documentation of Human Rights Violations,84 INT’L REV. RED CROSS 885, 887 (2002); Robert H. Kirschner & Karl E. Hannibal, TheApplication of the Forensic Sciences to Human Rights Investigations, 13 MED. & L. 451, 455 (1994).

29. FERLLINI, supra note 26, at 12.30. See Mercedes Doretti & Luis Fondebrider, Truth, Justice, Reparation, and Reconciliation, a

Long Way in Third World Countries, in ARCHEOLOGIES OF THE CONTEMPORARY PAST 138, 144(Victor Buchli & Gavin Lucas eds., 2001).

31. See Amnesty Int’l, Extrajudicial Executions in El Salvador, Report of an Amnesty InternationalMission to Examine Post-Mortem and Investigative Procedures in Political Killings, 1–6 July 1983, at11, 45, AI Index AMR 29/14/84 (May 1984) (the report further noted that: “[c]ertification ofdeath, like registration of births, is generally considered a fundamental responsibility of thegovernment, through which demographic data is maintained, public health monitored and rightto life protected”).

32. Cynthia Scott, The “Minnesota Protocol” - created by faculty and alumni of the University ofMinnesota Law School - holds governments accountable for their crimes against humanity, https://umnalumni.org/UMAA-stories/In-the-Bones (last visited Oct. 22, 2018).




Amnesty International was preparing a report on El Salvador and finalizingits influential Political Killings by Governments report, Weissbrodt was onsabbatical leave working at Amnesty’s legal office in London.33 The latterreport built upon an international meeting organized by the Dutch sectionof Amnesty in May 1982, which played a central role in emerginginternational interest in the subject.34

Central to the conclusions and recommendations of that meeting hadbeen that “[m]inimum standards should be developed for investigation andthe assessment of information by non-governmental organizations in casesof extrajudicial executions” and that “[m]inimum standards should bedeveloped to establish that a government has investigated reports ofextrajudicial executions in good faith.”35 At a practical level, the utility ofsuch agreed standards was made evident in the aftermath of the assassinationof Senator Benigno Aquino in 1983, when advocacy organizations criticizedthe failure of the Marcos regime to conduct a meaningful investigation.36

They could not point to an explicit international standard according towhich the regime could be found wanting.37

That year, at Weissbrodt’s suggestion, the newly founded MinnesotaLawyers International Human Rights Committee (the Minnesota Lawyers)engaged an international group of experts in law and forensic science todevelop practical guidance on the conduct of forensic investigations intosuspicious deaths.38 That project was divided into two parts: one medicaland the other legal.39 At the same time, the newly appointed U.N. SpecialRapporteur, Amos Wako, highlighted the issue of investigations as central tothe work of the mandate.40 Indeed, in Wako’s very first report, published in1983, he listed among his recommendations that “[m]inimum standards ofinvestigation need to be laid down to show whether a Government hasgenuinely investigated a case reported to it and that those responsible arefully accountable.”41

33. See KATHRYN SIKKINK, THE JUSTICE CASCADE, HOW HUMAN RIGHTS PROSECUTIONS

ARE CHANGING WORLD POLITICS 108 (2011).34. See Amnesty Int’l, Political Killings by Governments, at 100–17, 120–27, AI Index ACT 03/

26/82 (Dec. 15, 1983) (Expanding on the Final Statement of the International Conference onExtrajudicial Executions, attached in Appendix II).

35. See id. at 111.36. Kaoru Umino, Note, Investigating the Assassination of Benigno S. Aquino: Lessons from the

Agrava Commission, 18 COLUM. HUM. RTS. L. REV. 169, 187 (1986).37. See Clark, supra note 27, at 114.38. See Jennifer Prestholdt, The Minnesota Protocol: Creating Guidelines for Effective

Investigations, ADVOCATES POST (Feb. 26, 2016), https://theadvocatespost.org/2016/02/26/minnestota_protocol.

39. See id.40. S. Amos Wako (Special Rapporteur on Summary or Arbitrary Executions), Summary or

Arbitrary Executions, at 43, U.N. Doc. E/CN.4/1983/16/Add.1 (Jan. 31, 1983), https://documents-dds-ny.un.org/doc/UNDOC/GEN/G83/113/62/PDF/G8311362.pdf.

41. Id.




In September 1984, an interregional preparatory meeting convened inVarenna, Italy, ahead of the Seventh United Nations Congress on thePrevention of Crime and the Treatment of Offenders (now known as theU.N. Congress on Crime Prevention and Criminal Justice).42 Thepreparatory meeting was dedicated to the “formulation and application ofUnited Nations standards and norms in criminal justice,” with an agendaitem addressing extra-legal, arbitrary, and summary executions, building onthe Special Rapporteur’s 1983 report.43

The meeting made a set of “recommendations for consideration andfurther action by the . . . Congress, [including,] in the national context:[s]tandards for the genuine investigation of all violent deaths and all deathsin custody should be established;” that independent monitoring should beprotected; that those entrusted with inquiries should possess acknowledged“impartiality and competence” and be empowered with necessaryinvestigatory powers; and that “[t]here should be procedures to guaranteethat deaths in any official kind of custody or custody known to, or permittedby, the authorities were reported to appropriate independent authorities,whose task should be to conduct a genuine and reliable investigation of suchdeaths.”44 The following year, drawing particular attention to these detailedrecommendations from the preparatory meeting, the Congress requested areport from the U.N. Secretary-General that would review all documents onthe effective prevention, investigation, and elimination of extra-legal,arbitrary, and summary executions for review by the Committee on CrimePrevention and Control.45

In his 1986 report, Special Rapporteur Wako highlighted “a need todevelop international standards designed to ensure that investigations areconducted into all cases of suspicious death and in particular those at thehands of the law enforcement agencies in all situations.”46 Such standards,he noted, should include adequate autopsies, and the results should be madepublic.47 Although this was far from generally accepted at the time, he alsohighlighted that “[a] death in any type of custody should be regarded as

42. See Seventh U.N. Cong. on the Prevention of Crime and the Treatment of Offenders,Report of the Interregional Preparatory Meeting for the Seventh United Nations Congress on thePrevention of Crime and the Treatment of Offenders on Topic V: “Formulation and Application of theUnited Nations Standards and Norms in Criminal Justice”, at i, UN Doc. A/CONF.121/IPM/3(Oct. 10, 1984), https://www.unodc.org/documents/congress//Previous_Congresses/7th_Congress_1985/042_ACONF.121.IPM.3_Topic_V_-_Formulation_and_Application_of_UN_Standards_and_Norms_in_Criminal_Justice.pdf.

43. See id. §§ i–ii (internal quotations omitted).44. See id. at 16–17.45. See UN DEP’T OF INT’L ECON. AND SOC. AFFAIRS, SEVENTH UNITED NATIONS

CONGRESS ON THE PREVENTION OF CRIME AND THE TREATMENT OF OFFENDERS, at 78,U.N. Doc. A/CONF.121/22/Rev.1, U.N. Sales No. E.86.IV.1 (1985), https://digitallibrary.un.org/record/114498/files/a-conf-121-22-rev-1-e.pdf.

46. S. Amos Wako (Special Rapporteur on Summary or Arbitrary Executions), Summary orArbitrary Executions, § 209, U.N. Doc. E/CN.4/1986/21 (Feb. 7, 1986).

47. Id.




prima facie a summary or arbitrary execution and appropriate investigationsshould immediately be made to confirm or rebut the presumption.”48 In thesame year, the Economic and Social Council (ECOSOC) passed a resolutionrequesting that the U.N. Committee on Crime Prevention and Controlconsider arbitrary executions during its 1988 session “with a view toelaborating principles on the effective prevention and investigation of suchpractices.”49

The following year, in the resolution concerning the Special Rapporteur’smandate, the Commission on Human Rights and ECOSOC underlined hisrecommendation that States should “[r]eview the machinery forinvestigation of deaths under suspicious circumstances in order to secure animpartial, independent investigation on such deaths, including an adequateautopsy.”50 They specifically recommended that international organizations“[m]ake a concerted effort to draft international standards designed toensure proper investigation by appropriate authorities into all cases ofsuspicious death, including provisions for adequate autopsy.”51

In explaining the significance of such standards, David Weissbrodt notedthat, in addition to the practical benefits of knowledge sharing in improvingthe quality of investigations:

the existence of internationally accepted standards [would] enable theinternational community of forensic scientists, police officers,prosecuting lawyers and judges to provide support, some protection andautonomy for physicians and investigators who might otherwise beintimidated by their governments or other groups into performinginadequate investigations or reaching unjustified conclusions.52

At this point, the civil society processes and the official U.N. processesbegan to overlap. At their own initiative, and building upon their earlierresearch, the Minnesota Lawyers drafted a document that also partly spoketo the ECOSOC and Commission recommendation, entitled “Standards forthe Investigation of Arbitrary Killings.”53 Meanwhile, the U.N. Secretariatin Vienna prepared a set of draft principles on the effective prevention andinvestigation of extra-legal, arbitrary, and summary executions.54 Both draftdocuments were presented at an October 1987 conference, hosted by theMinnesota Lawyers, on the subject of “Promoting Human Rights Through

48. Id.49. Economic and Social Council Res. 1986/10, § VI(2) (May 21, 1986).50. See Comm. on Hum. Rts., Rep. on Its Forty-Third Session, at 3, U.N. Doc. E/CN.4/

1987/60 (Feb. 2–Mar. 13, 1987) (commission on Human Rights Resolution 1987/57 wasadopted without a vote on March 11, 1987).

51. Id. at 3–4.52. David Weissbrodt, The Three “Theme” Special Rapporteurs of the UN Commission on Human

Rights, 80 A.J.I.L. 685, 692 (1986).53. See, e.g., David Weissbrodt and Terri Rosen, Principles against Executions, 13 HAMLINE L.

REV. 579, 584 (1990) (internal quotations omitted).54. See Minnesota Protocol I, supra note 3, at 10.




Adequate Inquiry Procedures,” which was attended by all the relevant U.N.agencies and a range of human rights NGOs.55

In June 1988, another preparatory meeting was held in Vienna to developthe documents emanating from Minnesota into a set of principles that waspresented to and adopted by the Committee on Crime Prevention andControl in August 1988.56 In May 1989, ECOSOC adopted the U.N.Principles on the Investigation of Executions, under the title United NationsPrinciples on the Prevention and Investigation of Extra-Legal, Arbitrary andSummary Executions.57 The Principles were endorsed by the GeneralAssembly later that year.58

In his 1990 report, the Special Rapporteur commended the collaborationthat had led to the adoption of the U.N. Principles on the Investigation ofExtrajudicial Executions, including the role played by the MinnesotaLawyers, describing the Principles as “a milestone for his mandate” thatwould strongly support its implementation.59 He emphasized that:

[Because] the principles adopted by the Economic and Social Councilreflect the Special Rapporteur’s ideas and views in sufficient detail, he[would] be able to refer, without any reservation, to these principles inhis examination of alleged incidents of summary or arbitrary executions.Any Government’s practice that fails to reach the standards set out inthe principles may be regarded as an indication of the Government’sresponsibility, even if no Government officials are found to be directlyinvolved in the acts of summary or arbitrary execution.60

He also drew the Commission’s attention to the fact that work wascontinuing on a manual to supplement these principles and stated that helooked forward to it becoming widely available.61

The process of elaborating the more practice-oriented Manual had beencontinuing alongside the development of the U.N. Principles on theInvestigation of Extrajudicial Executions. Weissbrodt, on behalf of theMinnesota Lawyers, had been liaising with the Danish Permanent Missionto the United Nations, which, at the Commission for Human Rights andthen the General Assembly, presented language for resolutions thatreferenced the draft manual.62 One such resolution was the GeneralAssembly’s resolution on the Special Rapporteur’s mandate in 1988, which

55. David Weissbrodt, supra note 53.56. Id. at 585.57. Economic and Social Council Res. 1989/65, ¶ 12 (May 24, 1989).58. G.A. Res. 44/162, ¶¶ 11–12 (Dec. 15, 1989) (adopted without a vote).59. S. Amos Wako (Special Rapporteur on Summary or Arbitrary Executions), Summary or

Arbitrary Executions, § 461, U.N. Doc. E/CN.4/1990/22 (Jan. 23, 1990).60. Id. § 463.61. See id. § 464.62. See Comm’n on Human Rights Res. 1998/36, U.N. Doc. E/CN.4/RES/1998/36 (Apr. 17,

1998); Comm’n on Human Rights Res. 2005/26, U.N. Doc. E/CN.4/2005/26, § 3 (Apr. 19,2005).




had called on Member States, international organizations, and NGOs “tosupport the efforts made in the United Nations forums towards the adoptionof an international instrument that would incorporate internationalstandards for proper investigation of all cases of death in suspiciouscircumstances, including provision for adequate autopsy” and had endorsedthe Special Rapporteur’s proposals concerning the elements to be included.63

A 1990 meeting of the Committee on Crime Prevention and Control,held in Vienna, adopted a draft resolution, “Implementation of UnitedNations Standards and Norms in Crime Prevention and Criminal Justice,”that highlighted, among other documents, the adoption of the Principles byECOSOC and called on Member States to implement such standards at thenational level and to devise means of enhancing their observance (includingthrough channels such as university curricula, training seminars, professionalgroups and the mass media).64

Many drafts of the Manual were exchanged between U.N. officials andstaff working with the Minnesota Lawyers, Amnesty International, andothers. Eventually, in May 1991, the then Crime Prevention and CriminalJustice Branch of the Centre for Social Development and HumanitarianAffairs (the forerunner of the U.N. Office on Drugs and Crime, UNODC)concluded and published the document, now titled the United NationsManual on the Effective Prevention and Investigation of Extra-legal,Arbitrary and Summary Executions.65 Unlike the U.N. Principles on theInvestigation of Extrajudicial Executions, which were “endorsed” by theGeneral Assembly, the Manual did not receive official, high-level approvalwithin the United Nations.66 It was thus an expert document, with itsimportance deriving from the expertise of the multidisciplinary group thatdrafted it.67

While the new document was officially called the “United NationsManual,” it soon became known as the Minnesota Protocol, which was thesubtitle of the Model Protocol for a Legal Investigation of Extralegal,Arbitrary and Summary Executions.68 The text of the new document affirmsthat the adoption of standards on investigations:

[The 2016 Minnesota Protocol] will also provide internationalobservers with guidelines to evaluate investigations of suspicious deaths.Non-compliance with the standards can be publicized and pressurebrought against non-complying Governments, especially where extra-legal, arbitrary and summary executions are believed to have occurred.If a Government refuses to establish impartial inquest procedures in

63. G.A. Res. 43/151, ¶¶ 10–11 (Dec. 8, 1988).64. Comm. on Crime Prevention and Control Rep. on Its Eleventh Session U.N. Doc. E/

AC.57/1990/80, at 8, 10 (Feb. 5, 1990).65. See Minnesota Protocol I, supra note 3, at 10.66. See Minnesota Protocol II, supra note 2, § V.67. See id.68. Id.




such cases, it might be inferred that the Government is hiding suchexecutions. The fear of condemnation by the international communitymay encourage government compliance with the inquest standards,which, in turn, should reduce extra-legal, arbitrary and summaryexecutions.69

In his report the following year, Special Rapporteur Wako noted that it was“a document of major importance for guaranteeing the right to life” andurged all governments to incorporate these procedures into nationallegislation and practice, as well as in training programs for law enforcementofficials.70

III. The Revision of the Minnesota Protocol

A. MOTIVATION FOR REVISION

“A number of considerations prompted [the Special Rapporteur onextrajudicial, summary or arbitrary executions, Christof] Heyns, to consider”revising the 1991 Minnesota Protocol during his term as mandate holder(2010–2016).71

He encountered the application of the Minnesota Protocol in the fieldduring country visits, the first of which took place during his mission toIndia in 2012. In mortuaries, medical personnel involved in autopsiesemphasized to the Special Rapporteur the importance of the Protocol,but at the same time pointed out that it had become outdated. TheSpecial Rapporteur consulted forensic experts working for U.N. bodies,the International Committee of the Red Cross (ICRC), and NGOs,who expressed the same concerns while adding that the Protocol lackeda section on the identification of the dead in cases of suspicious death,an aspect of an investigation that had evolved since the Protocol’soriginal elaboration to become a critical issue.72

While the revision was prompted by concerns expressed by medical andforensic experts, an examination of the Protocol also revealed that thesection on “legal standards” (Section I)—setting out the main instrumentsand mechanisms for the protection of human rights of relevance to arbitraryexecutions—had become wholly outdated.73 At the same time, the Protocolsaid little about the right to life itself or the role of investigations in the

69. Id. at 14.70. S. Amos Wako (Special Rapporteur on Summary or Arbitrary Executions), Summary or

Arbitrary Executions, § 22, U.N. Doc. E/CN.4/1992/30 (Jan. 31, 1992).71. The Minnesota Protocol on the Investigation of Potentially Unlawful Death (2016), INST. FOR

INT’L AND COMP. L. IN AFR., http://www.icla.up.ac.za/engagement-with-international-organisations/un/special-projects/revision-of-the-un-manual (last visited Oct. 11, 2018)[hereinafter Minnesota Protocol Comp. Law].

72. Id.73. See Minnesota Protocol I, supra note 3, at 4–12.




realization of this right.74 The section justifying the elaboration ofinternational standards on the investigation of arbitrary killings (Section II)made sense when the enterprise was first embarked upon, but no longerseemed necessary.75 The section on Commissions of Inquiry (SectionIII(D)) was also outdated and had been little used in practice.76

It was clear that the Minnesota Protocol was largely used by medicaland forensic practitioners, but the fact that it contained some legalprovisions, however fragmented and outdated, provided an opportunityto develop the legal part of the Protocol further and to ensure thecoherence between the medical and legal components.77

It had also become clear that the process of ensuring accountability had to beconceptualized as a chain, which was only as strong as its weakest link. Ifanyone involved in that process—the police, other investigators, forensicspecialists, prosecutors, or judges—did not do a proper job, the efforts of theothers would come to naught, thereby reducing accountability.

“In a number of reports, the Special Rapporteur emphasized that properinvestigations were part and parcel of respecting, protecting, and ensuringthe right to life and a lack of accountability constituted a violation of theright to life in itself.”78 Research for a report by the Rapporteur on thesafety of journalists revealed the direct correlation between the vulnerabilityof such groups and the lack of proper accountability mechanisms.79 Theincreased focus of the mandate on the right to life in the context of armedconflict and counterterrorism measures, including through the use of armeddrones, also brought to the fore the question of the triggers and standardsfor investigations in such situations.80

Overall, and building upon the work of his predecessors, it became acentral contention of Heyns’ work in the mandate that a focus on thesubstantive aspects of the right to life was incomplete, and had to besupplemented with an emphasis on the procedural aspects. In many casesexamined by the Rapporteur, Member States would not dispute the

74. See generally id.75. See id. at 13–14.76. See id. at 18–23.77. Id.78. Id.; see Christof Heyns (Special Rapporteur on Extrajudicial, Summary or Arbitrary

Executions), Report of the Special Rapporteur on Extrajudicial, Summary or Arbitrary Executions, ¶44, U.N. Doc. A/66/330 (Aug. 30, 2011) (this point was first explicitly made by the Rapporteurin his report on use of force by law enforcement).

79. Christof Heyns (Special Rapporteur on Extrajudicial, Summary or Arbitrary Executions),Report of the UN Special Rapporteur on extrajudicial, summary or arbitrary executions, ¶ 43, U.N.Doc. A/HRC/20/22 (Apr. 10, 2012).

80. Christof Heyns (Special Rapporteur on Extrajudicial, Summary or Arbitrary Executions),Report of the UN Special Rapporteur on extrajudicial, summary or arbitrary executions, ¶¶ 1, 108,U.N. Doc. A/68/382 (Sept. 13, 2013) (discussing armed drones).




applicable substantive legal standards, but instead would deny the facts.81 Inother words, the full realization of the right to life would often depend onproper investigations.82 The revision of the Protocol can thus be seen as aneffort to guide the work of the mandate, as well as an effort to assist otherswho play a role in the accountability chain.

With this in mind, the Special Rapporteur commissioned Toby Fisher, abarrister specializing in human rights law, to conduct

[a] scoping exercise to determine the extent to which stakeholdersaround the globe supported a proposal to revise and update theProtocol. The responses were consistent: the Protocol was useful andimportant, but in need of thorough revision: from both the forensicscience advances and with regard to the international legaldevelopments.83

DNA testing and digital photography, among other technologies, haverevolutionized forensic science and needed to be appropriately reflected inany revised Protocol.

Moreover, as part of the scoping exercise, the Rapporteur “identified aseries of resolutions from 1998 to 2005 from the then U.N. Commission onHuman Rights that called on the OHCHR and UNODC’s CrimePrevention and Criminal Justice Division to consider revising the Manual”and requested the U.N. Secretary-General to provide the necessaryfunding.84

Notwithstanding those resolutions, no work had been done to revise thedocument by 2013, though they provided further support to the

81. Christof Heyns (Special Rapporteur on Extrajudicial, Summary or Arbitrary Executions)& Maina Kiai (Special Rapporteur on the Rights to Freedom of Peaceful Assembly and ofAssociation), Joint Report of the Special Rapporteur on the Rights to Freedom of Peaceful Assembly andof Association and the Special Rapporteur on Extrajudicial, Summary, or Arbitrary Executions on theProper Management of Assemblies, U.N. Doc. A/HRC/31/66 (Feb. 4, 2016).

82. See id.83. Minnesota Protocol Comp. Law, supra note 71. The members of the Legal and Forensics

Working Groups are listed on page vii of the 2016 Minnesota Protocol. They included expertsfrom organizations and institutions such as the International Criminal Court, the SpecialTribunal for Lebanon, the ICRC, Human Rights Watch, the International Commission ofJurists, and Physicians for Human Rights. Several experts had served as co-authors of the 1991Minnesota Protocol. Id.

84. Id.; see also Comm’n on Human Rights Res. 2005/26, U.N. Doc. E/CN.4/RES/2005/26,§ 9 (Apr. 20, 2005); Comm’n on Human Rights Res. 2003/33, U.N. Doc. E/CN.4/RES/2003/33, § 9 (Apr. 23, 2003); Comm’n on Human Rights Res. 2000/32, U.N. Doc. E/CN.4/RES/2000/32, § 4 (Apr. 20, 2000); Comm’n on Human Rights Res. 1998/36, U.N. Doc. E/CN.4/1998/36, § 3 (Apr. 17, 1998). Two Human Rights Council Resolutions refer to the Commissionon Human Rights resolutions cited above and call on the High Commissioner to submit areport on the possibility of drafting a manual that may serve a guide for the most effectiveapplication of forensic genetics. See Human Rights Council Res. 15/5, U.N. Doc. A/HRC/RES/15/5, § 7 (Oct. 6, 2010); Human Rights Council Res. 10/26, U.N. Doc. A/HRC/RES/10/26, § 6 (Mar. 27, 2009).




mandate initiating the process and for close collaboration with theOHCHR. Such a formal collaboration between the mandate and theOHCHR was established, with the Office’s expertise proving invaluablethroughout the revision process.85

The scoping exercise also sought to elicit views as to whether the SpecialRapporteur should initiate a wider process to update the U.N. Principles onthe Investigation of Extrajudicial Executions at the same time. The generalassessment was that the U.N. Principles continued broadly to reflect theinternational law standards required for an effective investigation andprovided a framework—endorsed by the U.N. General Assembly—uponwhich a revised Minnesota Protocol could be based.

B. THE PROCESS OF REVISION

Having examined the status and content of the original document todetermine that a revision would be beneficial, the next step was to determinethe process through which such a revision should take place.

Recognizing the diverse expertise involved in conducting investigationsand in drafting and using the 1991 Protocol, it was decided to createdrafting teams of world-renowned scholars and practitioners, withOHCHR and UNODC both contributing their own expertise andproviding an anchor for the process. A high-level advisory panel was setup to offer broader guidance. A procedure was fashioned forgovernment and public consultation and input at multiple phases of therevision process. Just as with the original version, the mandate of theU.N. Special Rapporteur was to play a critical role in orienting theeffort.86

There was general agreement about the need to retain within the Protocolthe voice of experts—those charged on a daily basis with forensic or otherinvestigative practice. In light of political realities and the technicalcomplexity of the subject matter, this would make formal adoption by aUnited Nations body, such as the Human Rights Council, challenging. Thedecision was made to repeat the approach of the original Protocol, whichwas to present it essentially as an expert document, developed incollaboration with and published by a U.N. body, in this case the OHCHR.

Between January and May 2015, invitations were sent to a diverse rangeof experts to become part of two working groups to draft the reviseddocument, as well as to join the advisory panel. Working group andadvisory panel members were selected based on their internationallyrecognized expertise as well as to ensure a broad range of types ofdisciplinary knowledge and global representation.87

85. Minnesota Protocol Comp. Law, supra note 71.86. Id.87. Id.




A legal working group was appointed to draft the international legalaspects of the Protocol.88 Chaired by Professor Sarah Knuckey of ColumbiaLaw School, it included experts in international human rights law,international criminal law, and international humanitarian law.89 A forensicsand investigations working group was also appointed to draft theinvestigation process aspects of the Protocol.90 It was chaired by Dr MorrisTidball-Binz, then the Head of Forensic Services at the ICRC, and includedexperts in criminal investigation, fact-finding missions, and forensicmedicine and anthropology.91

Research was coordinated by Stuart Casey-Maslen with ThomasProbert and Toby Fisher. The advisory panel of legal, forensics, andinvestigative experts, which included members drawn from Africa, theAmericas, Asia, the Middle East, Western and Central Europe, andOceania, were asked to review the text at critical junctures and providesuggestions.92

“In May 2015, an initial government and public consultation was opened”via a note verbale to diplomatic missions in Geneva and via the OHCHRwebsite.93 This consultation introduced the initial results of the scopingexercise and a preliminary draft table of contents and presented various keyquestions and consultation points.94 These issues ranged from establishingthe scope of the revised Protocol to the choice between providing minimum

88. Id.89. Id.90. Id.91. Minnesota Protocol Comp. Law, supra note 71. The members of the Legal and Forensics

Working Groups are listed on page vii of the 2016 Minnesota Protocol. They included expertsfrom organizations and institutions such as the International Criminal Court, the SpecialTribunal for Lebanon, the ICRC, Human Rights Watch, the International Commission ofJurists, and Physicians for Human Rights. Several experts had served as co-authors of the 1991Minnesota Protocol.

92. Id. Among many others, the Panel included former and current UN Special Rapporteurs;the Chairs of the UN Human Rights Committee and the UN Working Group on Enforced orInvoluntary Disappearances; a former UN High Commissioner for Human Rights; expertsfrom the African Commission on Human and Peoples’ Rights (ACHPR), the Association ofSoutheast Asian Nations (ASEAN) Intergovernmental Commission on Human Rights, and theInter-American Commission on Human Rights; the Head of Investigations from theInternational Criminal Court; the President of the International Association of ForensicScientists; and the Director of Forensic Sciences at the International Commission for MissingPersons. Importantly, a senior official from UNODC, under whose auspices the originalMinnesota Protocol was adopted, also agreed to serve on the Advisory Panel.

93. Id.; see also Off. of the U.N. High Comm’r for Hum. Rts., Revision of the UN Manual onthe Effective Prevention and Investigation of Extra-Legal, Arbitrary and Summary Executions(the Minnesota Protocol), https://www.ohchr.org/en/issues/executions/pages/revisionoftheunmanualpreventionextralegalarbitrary.aspx (last visited Oct. 8, 2018).

94. See Christof Heyns (Special Rapporteur on Extrajudicial, Summary or ArbitraryExecutions), The UN Manual on the Effective Prevention and Investigation of Extra-legal, Arbitraryand Summary Executions: Consultation Document, (May 11, 2015), https://www.ohchr.org/Documents/Issues/Executions/UNManual2015/Annex2_Consultation_document.pdf.




standards or good practice. Advisory Panel members were also asked toprovide advice on these issues.95

At the end of July 2015, the two working groups convened in Geneva toconsider the results of the initial consultation and to break down theinitial work of revision. Drafts were prepared, internally reviewed, andcollated during the second half of 2015, ready for consideration of theworking groups, who would meet together again in Geneva thefollowing year. Meanwhile, [to make sure the process was astransparent as possible,] the Special Rapporteur dedicated half of histhematic report to the General Assembly to the question of the use offorensics in investigations.96

He again underlined the importance of investigations and agreedstandards for their conduct to the universal protection of the right to life,and he stated that he had initiated the process to revise the Protocol.97

When presenting that report in New York, he and the chairs of the twoworking groups presented on the revision process to a side-eventorganized for [Member] States and other stakeholders.

The working groups met again in February 2016 in Geneva to reviewthe initial drafts of many of the different components of the revised text.During the course of these meetings, the OHCHR convened an openbriefing for all [Member] States and other interested stakeholders; theseenabled the Rapporteur and the chairs of the two working groups torespond to questions about both the process and the substance of therevision. Several State delegations raised pertinent questions, makingclear their intention to engage fully with the upcoming second writtenconsultation.

By April 2016, a full draft text was distributed to the Advisory Panelfor comment and, upon further revision, published for a secondstakeholder consultation which ran until early June. Again, responsesfrom a range of different stakeholders, including [Member] States, civilsociety organizations, and practitioners, were considered in detail by theworking groups and amendments made to the draft text followingextensive working group discussion and Advisory Panel input.The Special Rapporteur informed the Human Rights Council of thecompletion of the revision in June 2016. The text of the revisedProtocol was presented to the U.N. High Commissioner on the last dayof the Special Rapporteur’s mandate: 31 July 2016.98

“After going through internal review and approval processes, OHCHRpublished the Minnesota Protocol” (in advance e-version) in May 2017, and

95. See id. ¶¶ 4–5.96. Minnesota Protocol Comp. Law, supra note 71.97. See Christof Heyns, Report of the UN Special Rapporteur on extrajudicial, summary or arbitrary

executions, § 65, U.N. Doc. A/70/304, (Aug. 7, 2015).98. Minnesota Protocol Comp. Law, supra note 71.




published the final electronic and hard-copy English versions in October2017.99 As of writing, translations were underway into the other five officialU.N. languages: Arabic, Chinese, French, Russian, and Spanish.100

C. ISSUES DURING THE REVISION

The revision process required the Special Rapporteur and the expertdrafting teams to resolve numerous issues about the content, scope, andpurposes of the Protocol. Among the cross-cutting issues requiringdeliberation were: the naming of the document (and its implications);whether the practical guidance in the document should be at the level of bestpractice, good practice, or minimum standards (or something else); whetherand how the document should cover deaths during armed conflict; and howthe original Protocol’s sections on commissions of inquiry should be treated.

1. The Name of the Protocol

A preliminary issue that arose during drafting was what to call thedocument. The original title had formally been the United Nations Manualon the Effective Prevention and Investigation of Extra-legal, Arbitrary andSummary Executions, but it was most often referred to and known by theinformal title: the Minnesota Protocol. The drafters decided to make thepopular name “Minnesota Protocol” official, both because of the value ofretaining and elevating the internationally recognized name and to recognizethe ground-breaking work of the original drafters and their base inMinnesota.

There was some discussion about whether the term “protocol” should beused. Under international law, this term normally refers to a treaty, which isbinding international law.101 This raised the question as to whether the useof the term in the context of the Minnesota Protocol could be misleading.But the history of the document and its dominant original use in forensiccircles indicates that the use of the term may primarily be traced to its sensein medicine and other sciences, where “protocol” refers to an explicit,“detailed plan of a scientific or medical experiment, treatment, orprocedure.”102 The Istanbul Protocol, which addresses the investigation ofalleged torture, has used the word “protocol” in the same sense as theMinnesota Protocol, and was similarly used by lawyers and those in otherdisciplines.103 By the time of the Minnesota Protocol’s revision, thecombination of “Minnesota” and “protocol” had been long established.

99. See id.100. See id.101. PARRY AND GRANT ENCYCLOPAEDIC DICTIONARY OF INTERNATIONAL LAW 404–05(John P. Grant & J. Craig Barker eds., 2004).102. Medical Definition of Protocol, MERIAM-WEBSTER, https://www.merriam-webster.com/dictionary/protocol#medicalDictionary (last visited Oct. 8, 2018).103. The formal title is the UN Manual on the Effective Investigation and Documentation ofTorture and Other Cruel, Inhuman or Degrading Treatment or Punishment. See generally OFF.




Finally, the name of the original Minnesota Protocol referred to theinvestigation of “Extra-legal, Arbitrary, and Summary Executions.”104 Therevision working groups assessed that such language could be seen asprejudging the issue of whether the deaths being investigated were indeedunlawful, hence the preference for using the term “potentially unlawfuldeath” in the new document. The wording of “unlawful death” was alsochosen because of its simplicity, its ability to be readily understood withouttechnical knowledge, and the understanding that any type of unlawful deathwas covered whether it resulted from an act or from an omission.

2. Best Practice, Good Practice, or Minimum Standards?

A second preliminary issue was to decide the level at which the guidancein the revised Protocol should be set. Should it aim for minimum standards,good practice, best practice, or something else? After extensive discussionamong the contributing experts, it was decided that the Protocol should beframed as setting out good practice, setting a high standard of achievementfor effective investigations. Nonetheless, the new Protocol (in paragraphsix) notes that, “[a]lthough some [Member] States may not yet be in aposition to follow all of the guidance set out within it, nothing in theProtocol should be interpreted . . . as reliev[ing] or excus[ing] any State fromfull compliance with its obligations under international human rights law.”105

At the same time, in a number of cases, the Protocol offers guidance onminimum measures if the recommended practice is not feasible in thecircumstances.106 Paragraph sixty, for example, stipulates that when enteringa possible crime scene “suitable protective clothing should be worn whereverit is available” and notes that this should “includ[e], at a minimum, glovesand masks.”107 Consonant with practice in the International Organizationfor Standardization (ISO) standard-setting, the word shall is used to denote arequirement from which no deviation is acceptable whereas should identifiesrecommended action.108

The good practice set out in the Protocol can also be relevant to theinvestigation work of civil society. “[W]here the rule of law has brokendown, such as during armed conflict” or repressive rule, state actors may failto conduct the required investigations, and international legal bodies maynot be able to exercise jurisdiction until long after any crimes have occurred,if ever.109 Under such circumstances, civil society actors without forensicexpertise, “such as medical workers, journalists, or human rights activists,

OF THE U.N. HIGH COMM’R FOR HUM. RTS., ISTABUL PROTOCOL, U.N. Doc. HR/P/PT/8/Rev.1, U.N. Sales No. E.04.XIV.3 (2004).104. Minnesota Protocol I, supra note 3.105. See Minnesota Protocol II, supra note 2, ¶ 6.106. Id. ¶¶ 25, 32, 60, 155.107. Id. ¶ 60.108. INT’L ORG. FOR STANDARDIZATION, HOW TO WRITE STANDARDS 4 (2016), https://www.iso.org/files/live/sites/isoorg/files/archive/pdf/en/how-to-write-standards.pdf.109. See Minnesota Protocol II, supra note 2, ¶ 169.




may be the first to come upon the scene.”110 What they document will often“be important to future investigations as well as to the proper managementof the dead and the identification of victims, even though they have no [Statecriminal investigation and prosecution] mandate to identify, document, orcollect evidence.”111

Nonetheless, documentation through methodical photographing and/orvideo recording, interviewing, accurate measuring, and thorough note-taking is a means for civil society members to contribute to truth-seekingand/or future judicial inquiries. The Protocol observes that “[t]he credibilityof such documentation is increased when [any evidence obtained respects]chain-of-custody standards, allowing for independent verification of theidentity of the author, the origin of the information and how [any evidencewas] subsequently stored or managed.”112

3. Applicability in Armed Conflict

Another issue was whether to explicitly include within the scope of theProtocol those deaths occurring during armed conflict and particularlyduring the conduct of hostilities (i.e. combat). The original Protocol wasnot clear on this point. The dilemma surrounds the differing legal standardsfor what amounts to arbitrary deprivation of life during the conduct ofhostilities. In general, the rules of international humanitarian law are lessrestrictive than those applicable to law enforcement.113 The decision wastaken that the new Protocol should clearly cover all situations of arbitrarydeprivation of life for reasons of law, principle, and pragmatism. The rightto life clearly continues to apply during armed conflict, as does the legal dutyto investigate.114 Given the large number of alleged unlawful killings duringarmed conflicts, the Protocol’s inapplicability to such cases would create asignificant protection gap and reduce its utility in some of the mostsignificant contemporary crises.115

The 2016 Protocol is thus explicit about its applicability at all times—whether peacetime, internal disturbance, or armed conflict.116 But therevision notes that the duty to investigate principles “must . . . be consideredin light of both the circumstances and the underlying principles governinginternational humanitarian law,” and that an armed conflict “may pose

110. See id.111. Id.112. Id. ¶ 170.113. Louise Doswald-Beck, The Right to Life in Armed Conflict: Does International HumanitarianLaw Provide All the Answers?, 88 INT. REV. OF THE RED CROSS 881, 891 (2006).114. See Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, 1996 I.C.J.Rep. 95, § 25 (July 8).115. Agnes Callamard (Special Rapporteur on Extrajudicial, Summary or Arbitrary Executionson Armed Non-State Actors), Report of the Special Rapporteur on Extrajudicial, Summary orArbitrary Executions on Armed Non-State Actors: The Protection of the Right to Life, U.N. Doc. A/HRC/RES 38/44 (Jun. 5, 2018).116. See Minnesota Protocol II, supra note 2, ¶¶ 16, 20.




practical challenges” for an investigation.117 The Protocol describes thespecific investigation obligations during the conduct of hostilities in anarmed conflict, providing for post-operation assessment, an inquiry, or a fullinvestigation, depending on whether a violation of internationalhumanitarian law or a war crime (i.e. a serious violation of internationalhumanitarian law for which individual criminal responsibility is envisaged) issuspected to have occurred.118

4. Commissions of Inquiry

The fourth decision made was to reframe the treatment of commissions ofinquiry during the revised Protocol. These were treated in a dedicatedsection of the original Minnesota Protocol, which is not the case in the 2016version.119 Commissions of inquiry may be a mechanism to implement theduty to investigate, but they are not the only (or even the primary) means bywhich this can occur.120 The 2016 Protocol focuses on setting the standardsfor investigations rather than prescribing the particular form that theyshould take—whether it is courts, commissions of inquiry, or another bodyor mechanism.121

5. Structural Changes in the Protocol

The original Protocol had five sections and three annexes.122 The firstsection addressed international human rights standards while the seconddescribed the elaboration of the 1989 U.N. Principles and the 1991 Protocolitself.123 Three model protocols addressed, respectively, the legalinvestigation of extra-legal, arbitrary, and summary executions (focusing oncommissions of inquiry); autopsy; and the disinterment and analysis ofskeletal remains.124 Annexes included a copy of the U.N. Principles on theInvestigation of Extrajudicial Executions, offered guidance on the post-mortem detection of torture, and attached drawings of parts of the humanbody for use in autopsies to identify torture.125

117. See id. ¶ 20.118. See id.119. Minnesota Protocol I, supra note 3, § III(D)(13).120. Minnesota Protocol II, supra note 2, ¶ 39.121. Minnesota Protocol II, supra note 2, ¶ 38 (“The duty to investigate does not necessarilycall for one particular investigative mechanism in preference to another. States may use a widerange of mechanisms consistent with domestic law and practice, provided those mechanismsmeet the international law requirements of the duty to investigate. . . . Whichever mechanismsare used, however, they must, as a whole, meet the minimum requirements set out in theseGuidelines.”).122. See Minnesota Protocol I, supra note 3.123. Id. art. I.124. Id. §§ III-V.125. Id. at Annex §§ I-III.




The 2016 Minnesota Protocol has seven sections.126 Section I sets out itsaim and scope.127 Section II outlines the relevant international legalframework, describing the right to life under international law, the duties ofaccountability and remedy, and the triggering and scope of the duty toinvestigate.128 This section also describes the requisite character of anyinvestigation: that it be prompt, effective, independent, impartial, andtransparent.129 It also emphasizes the importance of the participation andprotection of family members during an investigation. Section III definesprofessional ethics that govern the conduct of all those involved in anyinvestigation of potentially unlawful death.130

Section IV describes how an investigation of potentially unlawful deathshould be conducted.131 It summarizes the general principles that apply toinvestigations and then details the investigation process, including how tocollect and manage data, materials, and important physical locations,including the death/crime scene; family liaison; understanding the victim;finding, interviewing, and protecting witnesses; international technicalassistance; telecommunications and other digital evidence; and financialissues.132 Also addressed in Section IV are the recovery of human remains,the analysis of skeletal remains, the identification of dead bodies, types ofevidence and sampling, and autopsy.133

Section V sets out detailed guidelines on crime-scene investigation, theconduct of interviews, the excavation of graves, autopsy, and the analysis ofskeletal remains.134 Section VI is a glossary of key forensic and medicalterms.135 Finally, the five annexes in Section VII contain, respectively,anatomical sketches, a case details form, a firearm wound chart, a stab woundchart, and an adult dental chart.136

IV. The Duty to Investigate under International Law

The 2016 Minnesota Protocol clarifies the international legal obligationof Member States to investigate potentially unlawful deaths and the legallyrequired elements of such investigations.137 The 1991 Protocol containedonly minimal articulation of Member States’ legal duties.138 The drafters ofthe 2016 text incorporated the significant international legal developments

126. See Minnesota Protocol II, supra note 2.127. Id. ¶¶ 1-6.128. Id. ¶¶ 7-40.129. See id. ¶ 20.130. Id. ¶¶ 41-45.131. Id. ¶¶ 46-166.132. Id.133. See Minnesota Protocol II, supra note 2, ¶¶ 46-166.134. Id. ¶¶ 167-292.135. Id.136. Id. ¶¶ 52-55.137. Id. ¶¶ 57-87.138. Id. ¶¶ 7-40.




in the intervening decades, and the updated Protocol includes detailedexpression of the source of the duty to investigate, the triggers for and scopeof the duty, its key elements, and an explanation of the legal rules related tothe participation and protection of family members during investigationsinto potentially unlawful death.139

The 1991 Protocol did not provide detailed guidance on relevantinternational law. It restated the right to life and its expression in treatiesand other international documents, and, importantly, it described actionstaken by international and regional human rights mechanisms to protect theright, including the history of calls for elaboration of international standardsfor investigations.140 The 1991 Protocol included detail on reporting by theU.N. Special Rapporteur and a key 1988 report laying out elements thatshould form part of such standards.141 It also included a short paragraphsummarizing the “fundamental principles of any viable investigation into thecauses of death,” drawing on the U.N. Principles on the Investigation ofExtrajudicial Executions, as discussed above.142 The 1991 Protocol alsobriefly outlined landmark Inter-American human rights decisions setting outthe duty to investigate and described the extent of relevant African andEuropean regional jurisprudence, which was then minimal.143

In contrast, the 2016 Protocol provides detailed legal guidance both onthe triggers for and scope of an investigation into a potentially unlawfuldeath and on the duty’s key elements.144 Since the drafting of the originalProtocol, there have been significant international legal developments,including numerous cases in the Inter-American, African, and Europeanregional human rights systems; decisions by the U.N. Human RightsCommittee; international and regional resolutions; General Commentsinterpreting the right to life and related issues; national judicial decisions;and new international principles and guidelines.145 As scientific andinvestigation developments enabled the forensic experts involved in revisingthe Protocol to update those aspects of the document, legal developmentsover the preceding two decades enabled the legal team involved in therevision to substantially expand and deepen the legal sections of theProtocol. In clarifying the nature of the Member State’s duty to investigateand setting out accepted international law, the new Protocol builds upon the1991 original, provides a reference point that can assist Member States infulfilling their obligations, and supports the efforts of civil society inassessing the adequacy of government investigations.

139. Minnesota Protocol I, supra note 3, § I.140. Minnesota Protocol II, supra note 2, ¶¶ 7–40.141. See Minnesota Protocol I, supra note 3, § I(A)(3).142. See id. § III.143. See id. § I(C).144. See Minnesota Protocol II, supra note 2, ¶¶ 7-40.145. Selected Uses of the Minnesota Protocol Since its Revision in 2016, INST. FOR INT’L AND COMP.L. IN AFR., http://www.icla.up.ac.za/special-projects/revision-of-the-un-manual/uses-of-the-minnesota-protocol (last visited Oct. 10, 2018).




A. THE RIGHT TO LIFE UNDER INTERNATIONAL LAW AND THE

SOURCE OF THE DUTY TO INVESTIGATE

The duty to investigate potentially unlawful death is an integral part of theMember State’s obligation to respect, protect, and fulfill the right to life, andis also grounded in the Member State’s obligation to provide remedy in theevent of a breach.146 As the 2016 Protocol explains:

The right not to be arbitrarily deprived of life is a foundational anduniversally recognized right, applicable at all times and in allcircumstances. . . . The right to life is a norm of jus cogens and isprotected by international and regional treaties, customary internationallaw and domestic legal systems.147

To fulfill their international legal obligations, Member States must respectthe right to life, meaning they must “not deprive any person of their lifearbitrarily.”148 They must protect and fulfill the right, “including byexercising due diligence to prevent the arbitrary deprivation of life by privateactors.”149 This was described earlier as the substantive part of the right.Further, Member States must investigate suspected cases of unlawful deaths,ensure accountability for wrongdoing, and provide remedies to victims.“The duty to investigate,” the procedural component of the right, “is anessential part of . . . the right to life,” and a failure to investigate is itself alegal violation.150

Families have the right to a remedy in the event of a disappearance orunlawful killing. This right includes the rights to disclosure of the truth ofwhat happened, to seek and obtain information on the cause and manner ofdeath, and to accountability for perpetrators.151 The Protocol also notes that“[t]he right to know the truth [of what happened] extends to society as awhole.”152 Additionally, the revised Protocol sets out Member States’obligations under international humanitarian law, including obligations toprovide families with any information on relatives reported missing and toidentify the dead.153

B. TRIGGERS FOR AN INVESTIGATION

The 2016 Protocol clarifies that “[a Member] State’s duty to investigate istriggered where it knows or should have known of any potentially unlawfuldeath.”154 Where the Member State or its agents have caused the death, it

146. Minnesota Protocol II, supra note 2, ¶ 8.147. Id. ¶ 7.148. Id. ¶ 8(a).149. Id. ¶ 8(b).150. Id. ¶ 8(c).151. Id. ¶¶ 10–11.152. Id. ¶ 13.153. Minnesota Protocol II, supra note 2, ¶ 14.154. Id. ¶ 15.




will be deemed to have known that the death was potentially unlawful.155 Inany event, a formal complaint is not necessary to trigger the duty—animportant rule that ensures that Member States cannot seek to evade theirinvestigation responsibilities by pointing to the non-fulfillment ofprocedural formalities.156 The Protocol also addresses cases where a victim’sfamily does not make a complaint because of fear of retaliation; rather, theMember State should know of the potentially unlawful death because of, forexample, credible media reports.157 Where they do make a complaint, theobligation is not on families and NGOs to show or prove an unlawful death:where “reasonable allegations” are made, the Member State mustinvestigate.158

C. SCOPE OF THE DUTY TO INVESTIGATE

The 1991 Protocol, drafted in the context of concerns about politicalassassinations and State-sanctioned extrajudicial killings, was primarilyconcerned with investigations of such cases.159 The 2016 Protocol,responding to both legal developments as well as increasing internationalattention to other forms of killings—including those by non-State actors—describes four kinds of contexts in which the Protocol will be mostrelevant.160 First, the State has a duty to investigate all those cases where theState or its agents caused the death, regardless of whether there is reason tosuspect it amounted to arbitrary deprivation of life.161 Thus, all cases ofkillings by police, or those committed by military forces outside the conductof hostilities, must automatically be investigated.162 Relatedly, the dutyapplies where a death is attributable to the State, such as killings by deathsquads committed with the Member State’s acquiescence.163

Second, the Member State must investigate all deaths in custody, and,given the Member State’s control over detainees, it is widely agreed thatthere is a “general presumption of [Member] State responsibility in suchcases.”164 Third, the duty to investigate applies “where the [Member] Statemay have breached its obligations to protect life. This includes, for example,any situation where a [Member] State fails to exercise due diligence toprotect an individual” from violence by non-State actors that wasforeseeable.165 Finally, even where there is no reason to suspect that the

155. Id. ¶ 16.156. Id. ¶ 15.157. See id. ¶¶ 50-83.158. See id. ¶ 15.159. Jennifer Prestholdt, The Minnesota Protocol: Creating Guidelines for Effective Inevstigations,XXVII(1) HUM. RTS. OBSERVER 4, 4 (2016).160. Minnesota Protocol II, supra note 2, ¶¶ 2, 16–19.161. Id.162. Id.163. Id. ¶ 2(a).164. Id. ¶ 17.165. Id. ¶ 2(c).




Member State bears international legal responsibility, it has a duty toinvestigate all deaths that are potentially unlawful under domestic law.166

D. ELEMENTS OF THE DUTY TO INVESTIGATE

One of the most important contributions of the 2016 Protocol is its detailedstatement on the legally required elements of the duty to investigate. Thecore elements—that an investigation be prompt, effective, independent,impartial, and transparent—have long been acknowledged as essential.167

The revised Protocol, relying on human rights law developments since thefirst Protocol was drafted, provides detail about what each element demandsin practice.168

A prompt investigation is carried out “as soon as possible,” and anygovernment “[o]fficials with knowledge of a potentially unlawful death mustreport it . . . without delay.”169 The duty to investigate continues until it issatisfied: “the duty does not cease even with the passing of significanttime.”170 An effective and thorough investigation requires the Member State tocollect “all testimonial, documentary and physical evidence” so that theinvestigation is capable of ensuring accountability.171 The Protocol outlinesthe essential goals of an effective human rights investigation, includingidentification of the victim, determination of the manner and cause of death,determination of responsibility for the death, and an assessment as towhether the right to life was violated.172 It also sets out the minimumresources and powers that the investigatory authority must have, such as thepower to compel witnesses.173

An investigation “must be, and must be seen to be” both independent andimpartial.174 This requirement is of critical importance when the MemberState is suspected of involvement in a killing: impunity often results frombiased or influenced investigations. Transparency of investigation processesand outcomes is essential to promoting effectiveness and accountability.175

The Protocol outlines the minimum transparency requirements, includingthe investigation procedures and findings.176 Limitations on transparencyare permissible only when “strictly necessary for a legitimate purpose,” andsecrecy is not permitted when it would result in concealment of informationabout the fate of a victim or in impunity.177

166. Id.167. See, e.g., Economic and Social Council Res. 1989/65, at ¶¶ 9, 14, 16–17 (May 24, 1989).168. See Minnesota Protocol II, supra note 2, ¶¶ 22-33.169. Id.170. Id.171. Id. ¶ 24.172. Id. ¶¶ 25–26.173. Id. ¶ 27.174. Id. ¶ 28.175. Minnesota Protocol II, supra note 2, ¶ 32.176. Id.177. Id. ¶ 33.




V. The Conduct of an Investigation into Potentially UnlawfulDeath

The 2016 Protocol outlines in detail the steps that an investigation into apotentially unlawful death should take.178 Very little was included in theoriginal Protocol on key issues such as investigation strategy, witnessinterviews, chain of custody of evidence, and professional ethics.179 Theselacunae are all addressed along with updated guidance reflectingtechnological and technical developments in forensic investigations, whetherthe investigation is for the purpose of criminal law or for other means ofaccountability.

A. INVESTIGATION STRATEGY

As the Protocol explains, “the overarching strategy of any investigation [intoa potentially unlawful death] should be methodical and transparent, and alllegitimate lines of inquiry should be pursued. Depending on thecircumstances, both routine investigative steps and highly specializedtechniques may be required.”180

An investigation may gather many different types of material, not all ofwhich will be used as evidence in a judicial proceeding. Nevertheless,all materials and observations relevant to the investigation should besecured, recorded and logged. This includes all decisions taken,information gathered, and witness statements. The source, date andtime of collection of all material must also be logged.181

As part of the strategy,

activities should be planned and . . . resources allocated in order tomanage . . . the collection, analysis and management of evidence, dataand materials; [t]he forensic examination of important physicallocations, including the death/crime scene; [f]amily liaison; [t]hedevelopment of a victim profile; [f]inding, interviewing and protectingwitnesses; [i]nternational technical assistance; [t]elecommunications andother digital evidence; [f]inancial issues; [and the establishment of a]chronology of events.182

B. CRIME-SCENE MANAGEMENT

In the investigation of a potentially unlawful death there may or maynot be a body in a known location, which in turn may or may not be theplace where the death occurred. Every important physical location in

178. Id. ¶¶ 46-83.179. See Minnesota Protocol I, supra note 3, § 3.180. Minnesota Protocol II, supra note 2, ¶ 48.181. Id. ¶ 49.182. Id. ¶ 52.




the investigation should be located and identified, including the site ofencounters between the victim(s) and any identified suspects, thelocation of any crimes, and possible burial sites.183

“The term ‘crime scene’ is used without prejudice to the determination ofwhether a crime has actually occurred.”184

Any forensic analysis, including but not limited to the crime scene,requires . . . documentation . . . [by] photography, measurement, note-taking, and inventory. These should all be cross-referenced againsteach other to improve the independent understanding of a death sceneand increase the credibility of the collected evidence.185

Every stage of evidence recovery, storage, transportation and forensicanalysis, from crime scene to court and through to the end of the judicialprocesses, should be effectively recorded to ensure the integrity of theevidence. Chain of custody includes the identity and sequence of all personswho possessed [an] item [of evidence] from the time of its acquisition byofficials to its presentation in court. Any gaps in that chain can prevent theintroduction of the item as evidence against a criminal defendant. Evidentialmaterial should be transported in a manner that protects it frommanipulation, degradation and cross-contamination with other evidence.Each piece of evidence recovered, including human remains, should beuniquely referenced and marked to ensure its identification from point ofseizure to analysis and storage. To meet chain of evidence and integrityrequirements, the transportation, tracking and storage of this evidenceshould include the investigator’s details.186

C. INTERVIEWING WITNESSES AND SUSPECTS AND WITNESS

PROTECTION

A new section in the Minnesota Protocol describes good practice forinterviewing witnesses and suspects and for ensuring witness protection. Itnotes that “[i]nterviews form an integral part of almost any investigation. Ifconducted well, they can obtain accurate, reliable and complete informationfrom victims, witnesses, suspects and others.”187 By contrast, “[p]oorlyconducted interviews can undermine an investigation and place people atrisk.”188

Alongside detailed guidance on conducting interviews with people whomight have information about a potentially unlawful death, the Protocolnotes that “[i]nvestigators conducting interviews should approach allwitnesses with an open mind and observe the highest ethical standards. A

183. Id. ¶¶ 56, 58.184. Id.185. Id. ¶ 175.186. Id. ¶ 65.187. Minnesota Protocol II, supra note 2, ¶ 84.188. Id.




careful assessment of risk, strategies and adequate human and financialresources must be in place to ensure the safety and security of all witnesses inthe case,” including by establishing an effective witness protectionProgramme where appropriate.189

“All formal and informal interviews should be recorded, regardless ofwhere they take place, right from the commencement of an investigator’scontact with a prospective witness or suspect. In certain circumstances thismay be subject to the consent of the prospective witness or suspect.”190

D. RECOVERY AND IDENTIFICATION OF DEAD BODIES AND

EVIDENCE MANAGEMENT

This new section in the 2016 Protocol captures the remarkable evolutionof forensic science since the publication of the first Protocol, particularly asit applies to the collection and analysis of evidence and to humanidentification.191

Developments in the field of forensic genetics and DNA analysis havemade it possible today to reliably identify minuscule and very old samples ofhuman tissue.192 Forensic archaeology, anthropology, and pathology have,over the past thirty years, significantly expanded the forensic scientists’toolbox for the recovery, analysis, documentation, and identification ofhuman skeletal remains, as well as the scientific assessment of the mannerand cause of death.193 The standards for admissibility of forensic evidencehave also evolved, with more exacting requirements for the scientific basis ofexpert conclusions.194

Since the original Protocol, practice related to identification of the deadhas also evolved. While, controversially, some early investigations carriedout by the international criminal tribunals for the former Yugoslavia andRwanda focused on gathering evidence for prosecution over the needs offamilies to have their loved ones identified,195 forensic scientists examiningthe dead are now expected to seek to identify remains as a matter of principle

189. Id.190. Id. ¶ 88.191. Id. ¶¶ 115-147.192. Veronique Greenwood, How Science Is Putting a New Face on Crime Solving, NAT’LGEOGRAPHIC (July 2016), https://www.nationalgeographic.com/magazine/2016/07/forensic-science-justice-crime-evidence/.193. Vernon J. Geberth, M.S., M.P.S., 30 Years of DNA Technology, FORENSIC MAG. (Mar. 3,2017, 3:18PM), https://www.forensicmag.com/article/2017/03/30-years-dna-technology.194. See, e.g., Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592–93 (1993) (discussing“junk science”).195. See, e.g., Adam Rosenblatt, International Forensic Investigations and the Human Rights of theDead, 32 HUM. RTS. Q. 921, 923 (2010); Eric Stover & Rachel Shigekane, The Missing in theAftermath of War: When Do the Needs of Victims’ Families and International War Crimes Clash?, 84INT’L REV. RED CROSS 845, 853 (2002).




and to advance the rights of families.196 The 2003 Conference on TheMissing and Their Families, organized by the ICRC, concluded that it iswrong to investigate the dead from armed conflicts or disasters if thisinvestigation is focused exclusively on documenting the cause and manner ofdeath and does not include efforts to identify the victims.197 In addition, theduty of medico-legal experts to protect the dignity of the dead has evolvedsince the publication of the first edition of the Protocol to become auniversal requirement.198

In consideration of these developments, the new Protocol advocates for anintegrated and scientifically sound approach to using forensic evidence.199 Itcalls for forensic human identification in every case of potentially unlawfuldeath, outlining the general principles and the scientific approach requiredto reliably identify single or multiple bodies.200 Notably, DNA testing hasrevolutionized victim and suspect identification, while the risks of mistakenvisual identification have been widely recognized. Additional detailedguidance is provided in Section V of the Protocol for practitioners on crime-scene investigation, excavation of graves, autopsy, and the analysis of skeletalremains.201

E. AUTOPSY

The section on autopsy outlines the general principles guiding thepractice of an autopsy in cases of potentially unlawful death and the duties offorensic doctors in relation to death investigations and reporting.202

Additional guidance for practitioners is provided under the DetailedGuidelines on Autopsy in Section V(D).203

In cases of potentially unlawful death, an autopsy is often the single mostimportant and determining investigation for establishing the deceasedperson’s identity and the cause, manner, and circumstances of death. It mayalso provide evidence of torture.204

Autopsy techniques and methods have remained consistent in manyimportant respects since the first edition of the Protocol, which is regarded

196. See, e.g., International Criminal Police Organization [INTERPOL] Res. AGN/65/RES/13/1996, at 1 (1996) (“RECOGNIZING that for legal, religious, cultural and other reasons,human beings have the right not to lose their identities after death, and that the identification ofdisaster victims is often of vital importance for police investigations.”).197. Int’l Comm. of the Red Cross [ICRC], The Missing and Their Families, ICRC/TheMissing/01.2003/EN/10, at 11 (Feb. 19–21, 2003), https://www.icrc.org/eng/resources/documents/report/5jahr8.htm.198. World Med. Assoc., WMA Statement on Forensic Investigations of the Missing (Mar. 23,2017), https://www.wma.net/policies-post/wma-statement-on-forensic-investigations-of-the-missing-2/.199. Minnesota Protocol II, supra note 2, ¶ 120.200. Id.201. Id. § V.202. See, e.g., id. § IV(G).203. Id. ¶¶ 250-273.204. Id. ¶ 151.




as standard practice by practitioners worldwide and has since also served asmodel for other standards of autopsy practice.205 Changes to this sectionwere therefore kept to a minimum, incorporating critical developments suchas new forms of radiological imaging, including computerized tomography(CT scanning) and magnetic resonance imaging (MRI).206 These techniquestoday offer a valuable complement to standard autopsies, including in casesof mass fatalities.207 In addition, the new Protocol includes updated andexpanded guidance for the documentation of torture, including lessonslearned from the use and implementation worldwide of the IstanbulProtocol.208

F. PROFESSIONAL ETHICS

Another new section in the 2016 Protocol addresses the professionalethics of investigators.209 It was added to highlight the important role ofprofessional norms and duties in governing the conduct of deathinvestigations, separate from the legal standards for investigations thatMember States are required to uphold. “All those involved ininvestigations” bear ethical responsibilities toward victims, their familymembers, and others affected by an investigation.210 “They must work tosecure the integrity and effectiveness of the investigation process and toadvance the goals of justice and human rights.”211

Forensic doctors, for example, may be contracted to work for the police,but they need to maintain their independence, especially when the police’sdirect or indirect involvement in a death is suspected or alleged.212

Investigators must respect the safety, privacy, well-being, dignity, andhuman rights of anyone affected.213 “They should [also] endeavor to respectthe culture and customs of all persons affected by the investigation, as well asthe wishes of family members, while still fulfilling their duty to conduct aneffective investigation.”214 The dignity of the dead must be respectedthroughout.

205. See, e.g., Council of Europe Comm. of Ministers, Recommendation no. R (99)3 of the Comm.of Ministers to Member States on the Harmonisation of Medico-Legal Autopsy Rules (adopted Feb. 2,1999), https://www.coe.int/t/dg3/healthbioethic/texts_and_documents/RecR(99)3.pdf; see also,U.N. OFFICE ON DRUGS AND CRIME, FORENSIC AUTOPSY: MANUAL FOR FORENSIC

PATHOLOGISTS (Oct. 2015), https://staff.najah.edu/media/scientific-research/books/2017/05/29/PSEX02_Autopsy-compressed_1.pdf.206. See Minnesota Protocol II, supra note 2, ¶ 158.207. See generally Stephen M. Cordner et al., Forensic Medical Response to the 2009 VictorianBushfires Disaster, 205 FORENSIC SCI. INT’L 2–7 (2011).208. See Minnesota Protocol II, supra note 2, ¶ 271.209. Id. ¶¶ 41–45.210. Id. ¶ 41.211. Id.212. Id. ¶ 44.213. Id. ¶ 41.214. Id. ¶ 43.




G. THE PARTICIPATION AND PROTECTION OF FAMILY MEMBERS

The 2016 Protocol devotes attention to the rights of the families of aperson suspected of having been killed or disappeared, including setting outtheir right to participate in investigations.215 The rights-based approach ofthe 2016 Protocol ensures that the interests and rights of those most affectedby the alleged rights violation are upheld throughout the investigation.Recognizing the special interest of families in investigations and the right offamilies to be informed as set out in the 1991 Protocol, the 2016 revisionprovides additional detail on Member States’ duties to families.216 MemberStates “must enable all close relatives to participate effectively in theinvestigation” and ensure that families are kept informed of the investigationprogress, with funding provided for a lawyer where necessary.217 In addition,Member States must protect family members from any retaliation resultingfor their involvement in investigations.218

The revised Protocol also explains families’ rights in relation to theremains of their deceased relatives, including the right to be informedfollowing any identification, and to have remains returned to them to enabledignified and culturally appropriate burial.219

VI. Soft Law and Other Standards on the Right to Life

What is the legal status of the Minnesota Protocol? It is not a legallybinding treaty or a resolution voted for by Member States.220 Nor did itfollow the route of the U.N. Principles on the Investigation of ExtrajudicialExecutions, which was adopted by ECOSOC and endorsed by the GeneralAssembly.221 But as the Statute of the International Court of Justicerecognizes, “judicial decisions and the teachings of the most highly qualifiedpublicists” are “subsidiary means for the determination of rules of law.”222

The Protocol thus derives its influence from the expertise of its authors,the mandate given them by the U.N. Special Rapporteur, the fact that it wasdeveloped in collaboration with the OHCHR at the request of the HumanRights Council, its careful consultation process, and the significant prior useof the earlier Protocol by international human rights bodies andpractitioners. The intent of the drafters was to summarize accurately and

215. Minnesota Protocol II, supra note 2, ¶¶ 35–37.216. See Minnesota Protocol I, supra note 3, § III(D)(13).217. Minnesota Protocol II, supra note 2, ¶ 35.218. Id. ¶ 36.219. Id. ¶ 37.220. Office of High Commissioner Launches Revised Guidelines for Investigating Unlawful Killings,INT’L JUSTICE RES. CTR. (June 5, 2017), https://ijrcenter.org/2017/06/05/office-of-high-commissioner-launches-revised-guidelines-for-investigating-unlawful-killings/.221. See Economic and Social Council Res. 1989/65 (May 1, 1989), http://www.un-documents.net/1989-65.htm.222. Statute of the International Court of Justice, art. 38(1)(d), June 26, 1945.




concisely existing international law on the right to life and investigationobligations.

The Protocol falls into the category of supplementary standards found inmany fields of international law which, while not qualifying as directlybinding law, are highly influential in terms of shaping decision-making.Such instruments dealing with the right to life have often been relied uponby international courts and treaty bodies, to give content to the legalobligations of Member States. This has been the case, for example, with theCode of Conduct for Law Enforcement Officials of 1979223 and the BasicPrinciples on the Use of Force and Firearms by Law Enforcement Officialsof 1990.224 The U.N. Principles on the Investigation of ExtrajudicialExecutions have been cited widely.225

The Minnesota Protocol has also been cited regularly by U.N. bodies,226

regional courts,227 and national courts228 as encapsulating internationalstandards on the investigation of suspicious deaths, and it has been reliedupon by international organizations and NGOs as setting good practice forsuch investigations.229 Its most frequent use thus far has been in the medical

223. See, e.g., Dorzema v. Domincan Republic, Judgement, Inter-Am. Ct. H.R. (ser. C) No.251, ¶ 78 (Oct. 24, 2012); Zambrano Velez v. Ecuador, Merits, Reparations, and Costs,Judgement, Inter-Am. Ct. H.R. (Ser. C) No. 166, ¶¶ 99, 101 (July 4, 2007).224. See, e.g., Giuliani v. Italy, App. No. 23458/02, Eur. Ct. H.R., ¶ 154 (2011); Finognenov v.Russia, App. Nos. 18299/03 and 27311/03, Eur. Ct. H.R., ¶ 162 (2011); Zambrano Velez v.Ecuador, Merits, Reparations, and Costs, Judgement, Inter-Am. Ct. H.R. (Ser. C) No. 166,¶¶ 99, 101 (July 4, 2007).225. Vargas-Areco v. Paraguay, Merits, Reparations, and Costs, Judgement, Inter-Am. Ct. H.R.(Ser. C) No. 155, ¶ 91 (Sept 26, 2006); McCann v. United Kingdom, App. No. 18984/91, Eur.Ct. H.R., ¶ 140 (1995); Kelly v. United Kingdom, App. No. 30054/96, Eur. Ct. H.R., ¶ 78(2001); U.N. Hun. Rts. Comm., Olmedo v. Paraguay, at ¶ 3.6, U.N. Doc. CCPR/C/104/D/1828/2008 (2008).226. U.N. Hum. Rts. Comm., Olmedo v. Paraguay, at ¶ 3.6, U.N. Doc. CCPR/C/104/D/1828/2008 (2008).227. Gonzalez v. Venezuela, Merits, Judgement, Inter-Am. Ct. H.R. (Ser. C) No. 256, ¶¶ 133,136, 141 (2012); Sanchez v. Honduras, Preliminary Objections, Merits, Reparations and Costs,Judgement, Inter-Am. Ct. H.R. (Ser. C) No. 99, ¶ 127 (2003); McKerr v. United Kingdom,App. No. 28883/95, Eur. Ct. H.R., ¶¶ 97, 103, 136 (2001); Shanaghan v. United Kingdom,App. No. 37715/97, Eur. Ct. H.R., ¶¶ 74, 80 (2001).228. In Re McKerr, [2004] UKHL 12, ¶ 39.229. Amnesty Int’l, If You Are Poor You Are Killed: Extrajudicial Executions in the Philippines’ “Waron Drugs”, at 65, AI Index ASA 35/5517/2017 (2017), https://www.amnestyusa.org/wp-content/uploads/2017/04/philippines_ejk_report_v19_final_0.pdf; Amnesty Int’l, Waiting in Vain,Jamaica: Unlawful Police Killings and Relatives Long Struggle for Justice, at 22, 27, 32, 38, 40, 50, AIIndex AMR 38/5092/2016 (2016), https://www.amnestyusa.org/wp-content/uploads/2017/04/jamaica_waiting_in_vain_-_report_eng.pdf; Hum. Rts. Watch, All Thieves Must Be Killed:Extrajudicial Executions in Western Rwanda, at 5–6 (2017), https://www.hrw.org/sites/default/files/report_pdf/rwanda0717_web_1.pdf; Hum. Rts. Watch, No Justice Just Adds to the Pain:Killings, Disappearances, and Impunity in the Philippines, at 71–72 (2011), https://www.hrw.org/sites/default/files/reports/philippines0711WebRevised.pdf; Hum. Rts. Watch, Work on HimUntil He Confesses: Impunity for Torture in Egypt, at 61 (2011), https://www.hrw.org/sites/default/files/reports/egypt0111webwcover_0.pdf.




sphere, where it has become the standard for assessing the compliance of anautopsy with international law.230

The experts who engaged in updating the Protocol did so at the behest ofthe Special Rapporteur in collaboration with the OHCHR and after theOHCHR was requested to do so by the predecessor of the Human RightsCouncil. Extensive consultation with Member States and other stakeholderstook place under the auspices of the Special Rapporteur and the OHCHR indeveloping the document. The Minnesota Protocol also serves to givecontent to the U.N. Principles on the Investigation of ExtrajudicialExecutions, which were endorsed by the General Assembly. Because theOHCHR published the Protocol, it has a more formal nature than manyother expert documents.

In this context, it is instructive to look at the status of the “sister”instrument to the Minnesota Protocol, namely the “Istanbul Protocol,”231

which is to the investigation of torture what the Minnesota Protocol is toinvestigation of unlawful death. Officially known as the U.N. Manual on theEffective Investigation and Documentation of Torture and Other Cruel,Inhuman or Degrading Treatment or Punishment, it was the use of theMinnesota Protocol as a reference point by the Turkish Medical Associationthat led to the collaboration that resulted in the adoption of the IstanbulProtocol.232 The Istanbul Protocol is also essentially an expert documentand has likewise been widely used in the field by lawyers, courts, medical andother professionals.233 Both documents stand uncontested as the leadingstandards in their respective fields.

VII. Looking Forward

As the U.N. High Commissioner for Human Rights writes in hisForeword to the 2016 Minnesota Protocol, “[a] suspicious death occurringanywhere in the world is potentially a violation of the right to life, oftendescribed as the supreme human right, and therefore a prompt, impartialand effective investigation is key to ensuring that a culture ofaccountability—rather than impunity—prevails.”234

The main issue for the vast majority of unlawful killings is not acceptanceof the substantive standards: Member States and others who may beimplicated typically do not deny that it is wrong to kill someone who does

230. J. PAYNE-JAMES ET AL., SIMPSON’S FORENSIC MEDICINE, 33 (13th ed. 2014); StephenCordner & Helen McKelvie, Developing Standards in International Forensic Work to IdentifyMissing Persons, 84 INT’L REV. RED CROSS 848, 871–81 (2002).231. See, e.g., OFF. OF THE U.N. HIGH COMM’R FOR HUM. RTS., ISTANBUL PROTOCOL:MANUAL ON THE EFFECTIVE INVESTIGATION AND DOCUMENTATION OF TORTURE AND

OTHER CRUEL, INHUMAN, OR DEGRADING TREATMENT OR PUNISHMENT, U.N. Doc., HR/P/PT/8/Rev. 1, U.N. Sales No. E.04.XIV.3 (1999) [hereinafter Istanbul Protocol].232. See Holger Furtmayr & Andreas Frewer, Documentation of Torture and the Istanbul Protocol:Applied Medical Ethics, 13 MED. HEALTH CARE AND PHIL. 279, 281 (2010).233. Istanbul Protocol, supra note 231.234. Minnesota Protocol II, supra note 2, § V.




not pose a threat. Instead, they deny that this is what happened in aparticular case when a body is found. Member States may, for example,claim that the perpetrators were not their agents or people for whose actionsthey are responsible, or they may claim that the person in fact posed a threat.Instead, most often contested are the facts and the evidence. To securebetter protection of the right to life, the capacity and willingness of MemberStates to undertake effective investigations to answer the questions aboutperpetrators and surrounding circumstances must be strengthened. TheMinnesota Protocol is aimed at furthering an evidence- and rights-basedapproach to accountability. Investigations are but one initial step in thebroader process of accountability, which entails assigning responsibility andalso reparations and reform.

The new Minnesota Protocol is premised on the idea of investigations aspart of a holistic process, and as a chain involving a whole range of playerswho all need to fulfill their roles in order to ensure that the work of otherparticipants in the process comes to fruition and that accountability isachieved. Its added value is that it restates the international standardsapplicable to the process as a whole, enabling everyone involved to workfrom the same shared understanding.

For twenty-five years, the 1991 Minnesota Protocol has served to establishsome of the core components of a global understanding of what a properinvestigation entails, especially from a medical perspective. The newProtocol seeks to strengthen both the normative value and the practicalcontent of accountability, providing a global reference point on internationallaw standards and how to achieve effective and reliable investigations intopotential violations of the right to life, while involving all the relevantscientific disciplines and experts. By ensuring that each of the links of theinvestigation chain reflects the latest developments, the 2016 Protocolprovides a basis from which professionals in all parts of the world canreinforce and promote a fundamental aspect of the protection of the right tolife–ensuring accountability for unlawful killing.



Lisbon’s Legacy: Increased DemocraticAccountability and Centralized Governance inEU International Investment Policy

JULIA JOHNSON*

“We need a structure that can accommodate the diversity of its members – North,South, East, West, large, small, old and new. Some of whom are contemplatingmuch closer economic and political integration . . . . [But] with courage andconviction I believe we can deliver a more flexible, adaptable and open EuropeanUnion in which the interests and ambitions of all its members can be met.”

-David Cameron1

I. Introduction

The Lisbon Treaty (Lisbon),2 which entered into force on December 1,2009,3 has already changed international investment law and policy in theEuropean Union (EU). Tellingly, EU and non-EU nations are beginning toenter into different forms of investment relationships. Such alterations ininvestment relationships will extend to bilateral investment treaties (BITs).4

Albeit slowly and inconsistently, Lisbon has begun to alter global investmentpatterns both inside and outside the EU by consolidating the EU’sgovernance structure and leading to the implementation of shared policygoals.5

Lisbon has bolstered the governance structure of the EU—overseen andoperated by the European Council (EC) and European Parliament (EP)—and has begun paving the way for a common European investment policy. A

* J.D., Duke University School of Law.1. David Cameron’s EU speech - full text, THE GUARDIAN (Jan. 23, 2013), https://

www.theguardian.com/politics/2013/jan/23/david-cameron-eu-speech-referendum.2. Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing

the European Community, Dec. 13, 2007, 2007 O.J. (C 306) 1 [hereinafter Treaty of Lisbon].3. European Commission Press Release IP/09/1855, European Commission Welcomes the

Entry Into Force of the Treaty of Lisbon (Dec. 1, 2009) (“The Treaty of Lisbon amends thecurrent EU and EC treaties, without replacing them. It will provide the Union with the legalframework and tools necessary to meet future challenges and to respond to citizens’ demands.”).

4. Sean Cumberlege & Bryan Neihart, Section 23:28 Bilateral Investment Treaty—DefiningInvestment and Investor, 3 TRANSNAT’L BUS. TRANSACTIONS § 23:28 (last updated Aug. 2018)[hereinafter Defining Investment and Investor] (explaining that a BIT “protect[s] the investmentof an investor in the territory of a host country”).

5. Carrie E. Anderer, Bilateral Investment Treaties and the EU Legal Order: Implications of theLisbon Treaty, 35 BROOK. J. INT’L L. 851, 876 (2010).




common European investment policy, however, threatens BITs entered intoby individual EU Member States with third nations.6

Some non-EU nations may not perceive the consolidation of EUinvestment policy favorably, believing that their investors run a greater riskof expropriation or otherwise limited returns.7 These nations fear theirinvestors may not reap the intended benefits of their investments, leavingthem less likely to invest in the future.8 Time will tell whether a unifiedEuropean investment policy under Lisbon will increase investment flowsthrough Europe and will improve the EU foreign direct investment (FDI).But perhaps Lisbon’s most important function will be to enable Europeannations to come together to reach common economic and social goals.9

It is not yet clear how the EC and the EP will delegate the exclusivecompetence granted by Lisbon.10 Post-Lisbon, the EU must sharecompetence with Member States: i.e., Member States may pursue bindingacts only when the EU does not act on a particular issue.11 Sharedcompetence restricts the capacities of Member States,12 altering the balanceof power from a fragmented national system to a centralized continentalframework.13

This shift to a centralized framework is likely to shape Europe’sinternational investment policies. For example, the EP must consider a hostof factors, including a bevy of non-economic factors, in its policy decisions.Such non-economic considerations are already beginning to materialize ininternational investment policies.14 Political, moral, and social issues—suchas human rights and environmental concerns, including climate change andsustainable development—are likely to be featured more prominently infuture extra-EU BITs and in other more generalized investment policies.15

Given the heightened stature of the EC and the EP, Member States aremore likely to accept and implement these non-economic policies, whichwill in turn positively reform extra-EU BITs and develop a more

6. Id. at 875; Thomas Daemen, Why the European Union’s Lisbon Treaty Matters to In-HouseCounsel, 28 No. 5 ACC Docket 88, 90 (2010).

7. Anderer, supra note 5, at 875.8. Id.9. Id. at 873.

10. See e.g., John R. Schmertz & Mike Meier, EU Publishes the Text of the Treaty of Lisbon andCharter of Fundamental Rights on the European Union, 13 INT’L L. UPDATE 220 (2007).

11. FAQ on the EU competences and the European Commission powers, THE EUR. CITIZENS’INITIATIVE, http://ec.europa.eu/citizens-initiative/public/competences/faq#q1(last updatedOct. 16, 2018) [hereinafter FAQ on the EU].

12. Id.13. Id.14. Erika Szyszczak, Building a Socioeconomic Constitution: A Fantastic Object?, 35 FORDHAM

INT’L L.J. 1364, 1366, 1369 (2012) (“The new emphasis upon social values and the role ofsolidarity is significant in a global economy increasingly leaning towards neoliberal values andin a European economy heavily shaken by economic recession.”).

15. Id. at 1367, 1388.



2019] LISBON’S LEGACY 83

transparent, efficient, and sustainable EU investment policy.16 Thereformed investment structure is also likely to improve relationshipsbetween EU and non-EU nations.17 These improved relationships mayincrease investment flows in some ways.18 Finally, due to the rise of non-economic and other exogenous concerns in investment policy, tensionsinherent in extra-EU BITs that are often biased in favor of host stateinvestors are likely to be relaxed. If implemented correctly, policy can beintertwined with investor protection. But the positive effects of a commonEU investment regime will not be realized unless certain steps are taken tobreak potential deadlocks and reduce internal policy disputes—politicaldifferences between the EC and the EP may lead to internal squabbles thatreduce the effectiveness of standardized policies. To mitigate this risk,mechanisms to break potential deadlocks and to ensure consistency inmultinational trade policy decisions are needed.

This article reviews the current state of Europe’s international investmentpolicy. First, this article will analyze the tensions that may arise after theexclusive competence to regulate investment is conferred upon the EC andthe EP and ceded from Member States. Second, this article will discuss therelationship between the EC and the EP after Lisbon, reviewing overlapsand inconsistencies in power, and how the two bodies may jointly alter theEuropean investment regime. Third, this article will consider the future ofFDI in a central investment policy. Theoretically, enabling EU exclusivecompetence is likely to improve investment policy overall, although theincreased prominence of non-economic considerations may increase tradetransactions costs and other negative indicators that might simultaneouslyreduce investment flows. Finally, this article will consider public policyconsiderations, including how the EU’s international investment policy willaffect its relationship with the United States (US) and other nations.

II. Background

A. INTERNATIONAL INVESTMENT POLICY BEFORE LISBON’SENACTMENT

A general understanding of the Lisbon Treaty and internationalinvestment vehicles is necessary to know how recent changes affectEuropean investment policy. Signed on December 13, 2007, the LisbonTreaty supersedes the Treaty on the European Union and the TreatyEstablishing the European Community.19 Broadly, the Lisbon Treatyexpands the EP, makes the Fundamental Rights Charter legally binding, andrecognizes the EU as a single legal personality.20 Prior to Lisbon, it was

16. Id. at 1369.17. Id.18. Id.19. Treaty of Lisbon, supra note 2, at 10, 43; Schmertz & Meier, supra note 10.20. Treaty of Lisbon, supra note 2, at 10, 43; Schmertz & Meier, supra note 10, at 220.




unclear whether the EU had legal personality, and thus could enter intointernational agreements.21 Article 47 rectifies this ambiguity and makesclear that the EU acts as a single “legal personality.”22 Lisbon encompassesother broad topics affecting the EU, such as structural cooperation, that willlargely not be discussed here.23

1. BITs

BITs are often the favored method to govern the relationship betweengovernments and foreign investors, especially in developing countries whereinvestor protections are unclear.24 A BIT requires an investment andinvestor.25 An investor may be a private person or company who is a“national” of the country under the BIT.26 Usually, citizenship laws of thecontracting party dictate whether a party is a national.27 If the investor is acorporate entity, citizenship will usually depend on the place ofincorporation, the principal place of business, or the place of ownership andcontrol.28 An investment may include every type of asset invested by theinvestor in the host nation.29 These assets may include (1) property, (2)company shares and stocks, (3) contract claims, (4) intellectual propertyrights, and (5) “rights to manufacture, use and sell products.”30 Investmentsmust comply with the host state’s laws and regulations.31 Disputes arising inthe context of a BIT are typically resolved by an arbitral tribunal such as the

21. Daniele Gallo & Fernanda G. Nicola, The External Dimension of Eu Investment Law:Jurisdictional Clashes and Transformative Adjudication, 39 FORDHAM INT’L L.J. 1081, 1105 (2016).

22. Consolidated version of the Treaty on European Union art. 47, June 7, 2016, 2016 OJ (C202) 1 [hereinafter TEU].

23. Treaty of Lisbon, supra note 2, at 153; Schmertz & Meier, supra note 10, at 220.24. Andrew Y. Guzman, Why LDCS Sign Treaties that Hurt Them: Explaining the Popularity of

Bilateral Investment Treaties, 38 VA. J. INT’L L. 639, 641–42 (1998).25. Sean Cumberlege & Bryan Neihart, Section 23:27 Bilateral Investment Treaty—Typical

Structure of a BIT, 3 TRANSNAT’L BUS. TRANSACTIONS § 23:27 (LAST UPDATED AUG. 2018).26. Cumberlege & Neihart, supra note 4.27. Id.28. Id. See, e.g., Agreement between Australia and the Republic of Poland on the Reciprocal Promotion

and Protection of Investments, signed 7 May 1991, [1992] ATS 10 (entered into force 27 March1992) art. I, ¶ 1(d) http://investmentpolicyhub.unctad.org/Download/TreatyFile/163 (defining“‘national’ of a Contracting Party” as a “company or a natural person who is a citizen or apermanent resident of a Contracting Party under its law”); Treaty Between the Government ofthe United States of America and the Government of the Republic of Lithuania for theEncouragement and Reciprocal Protection of Investment, Lith.-U.S., art. I, ¶ 1(c), Jan. 14,1998, S. TREATY DOC. NO. 106-42 (defining “national” of a party as a “natural person who, forthe [U.S.], is a national of the [U.S.] under its applicable laws, and for Lithuania, is a citizen ofthe Republic of Lithuania under its applicable laws”).

29. Cumberlege & Neihart, supra note 4.30. Id.31. Id.; see also M. SORNARAJAH, THE INTERNATIONAL LAW ON FOREIGN INVESTMENT 373

(4th ed. 2017).




International Centre for the Settlement of Investment Disputes (ICSID),32

or with the assistance of the United Nations Conference on Trade andDevelopment (UNCTAD).33 Portfolio investments are typically short-terminvestments with earnings derived from the acquisition itself.34 In contrast,foreign direct investment (FDI) focuses on developing long-term economicrelationships between the parties.35

2. Lack of Explicit Competence Prior to Lisbon

Before the Lisbon Treaty was enacted, the EU lacked the explicitcompetence in all of the areas that are incorporated in what is now theCommon Commercial Policy (CCP).36 For example, pre-Lisbon, the EUlacked explicit competence to oversee “commercial aspects of internationalproperty rights,” trade in services, and FDI.37 The EC shared itsinternational investment competence with Member States.38 Agreementsthat were not solely limited to the trade of goods would be negotiatedthrough mixed agreements of Member States and the EU.39 Prior toLisbon, the EC negotiated investment agreements for services, while theMember States negotiated investment agreements containing provisions for“investment protection and protection against unfair or uncompensatedexpropriation.”40

Creating a CCP, with hopes of devising a “common external economicpolicy,” had been a goal of the Commission beginning with the negotiations

32. Adolfo Duranona, Bilateral Investment Treaties, 2005 No. 2 Rocky Mtn. Min. L. Inst.Paper No. 4 §§ 1, 4 (2005) (stating that the ICSID was created in 1965 under pressure of theWorld Bank).

33. U.N. Conf. on Trade and Dev., UNCTAD at a Glance 2, UNCTAD/OSG/CIO/MISC/2017 (Sept. 2017), https://unctad.org/en/PublicationsLibrary/osgciomisc2017_en.pdf?user=17(explaining that UNCTAD is the U.N. entity entrusted with “economic and sustainabledevelopment issues with a focus on trade, finance, investment and technology”); see also U.N.Conf. on Trade and Dev., Dispute Settlement: International Commercial Arbitration, 5.3Arbitral Tribunal, at ii, 1, UNCTAD/EDM/Misc.232/Add.34 (2003), https://unctad.org/en/Docs/edmmisc232add34_en.pdf.

34. Siegfried Fina & Gabriel M. Lentner, The Scope of the EU’s Investment Competence AfterLisbon, 14 SANTA CLARA J. INT’L L. 419, 428 (2016); see also Org. for Econ. Co-Operation andDev. [OECD], OECD Benchmark Definition of Foreign Direct Investment 22–23 (4th ed. 2008),http://www.oecd.org/daf/inv/investmentstatisticsandanalysis/40193734.pdf.

35. Fina & Lentner, supra note 34, at 428-29, n.76; see also Int’l Monetary Fund [IMF],Balance of Payments and International Investment Position Manual (6th ed. 2009).

36. Sean McClay, Note, Can It Lead from Behind? The European Union’s Struggle to Catch Up inInternational Investment Policy Making in the Wake of the Lisbon Treaty, 51 TEX. INT’L L.J. 259,260 (2016); see also Freya Baetens et al., Determining International Responsibility Under the NewExtra-EU Investment Agreements: What Foreign Investors in the EU Should Know, 47 VAND. J.TRANSNAT’L L. 1203, 1215 (2014).

37. McClay, supra note 36, at 260.; see also Baetens, supra note 36, at 1215.38. Fina & Lentner, supra note 34, at 428.39. McClay, supra note 36, at 260–61; Gabriele Mazzini, The European Union and Investor-State

Arbitration: A Work in Progress, 24 AM. REV. INT’L ARB. 611, 613 (2013).40. Fina & Lentner, supra note 34, at 425–26.




of the Maastricht Treaty in the early 1990s.41 In 1997, the Treaty ofAmsterdam increased competences entrusted to the EU, but it failed toachieve “full external competence.”42

Full external competence for all aspects of international trade fell shortpartly because the 1957 Treaty of Rome was “signed with only six relativelysimilar countries in mind,”43 and because it failed to account for the possibleexpansion of the EU to include new (and often, formerly-Communist)Member States.44 Scholars have suggested that early treaty draftersintentionally developed an international trade framework of mixedcompetence, instead of exclusive competence, because they believedEuropean nations would likely splinter and fail to reach an accord duringinternational negotiations.45

Competence is the right to engage in certain powers and authorities.46

EU bodies are limited to acting in accordance with the competences grantedto them by Member States.47 In the international investment realm, itremains unclear whether the Member States retain certain, or any,competence for BITs; many Member States believe they may still enter intoBITs.48 In contrast, the EC has maintained that its investment competence isabsolute and exclusive.49 Nevertheless, under the doctrine of impliedpowers, certain competences given to the EU are implied because theyfurther the intent of EU treaties.50

B. LISBON’S CHANGES TO TRADE

Lisbon changed Europe’s trade structure significantly. Perhaps the mostimportant part of the Lisbon Treaty lies in Article 207, which “transferredtrade in services, certain intellectual property issues, and FDI into the

41. McClay, supra note 36, at 261; Rafael Leal-Arcas, Is EC Trade Policy up to Par?: A LegalAnalysis Over Time—Rome, Marrakesh, Amsterdam, Nice, and the Constitutional Treaty, 13 COLUM.J. EUR. L. 305, 347 (2007).

42. McClay, supra note 36, at 261; Leal-Arcas, supra note 41, at 359–60.43. McClay, supra note 36, at 261; Leal-Arcas, supra note 41, at 349.44. Leal-Arcas, supra note 41, at 323.45. McClay, supra note 36, at 261 (“Additionally, a lack of any meaningful role for the

European Parliament in external trade matters pre-Lisbon created glaring ‘democratic deficit’issues, which would have only been exacerbated if the EU had even more power to concludetrade and investment agreements.”); see also Leal-Arcas, supra note 41, at 349.

46. Consolidated Version of the Treaty on European Union, art. 5(1)–(2), Oct. 26, 2012, 2012O.J. (C 326) 1, 18.

47. Id. at 5(2).48. Fina & Lentner, supra note 34, at 429; see also Council of the European Union Press

Release, Conclusions on a Comprehensive European International Investment Policy § 2, 9(Oct. 25, 2010).

49. Fina & Lentner, supra note 34, at 430–31.50. Id. at 431.




CCP.”51 For the first time, “the CCP [has been] explicitly embedded into abroader framework of EU external relations law” under Lisbon.52

Accordingly, Lisbon entrusted the EU with negotiating treaties pertainingto FDI.53

The Lisbon Treaty explicitly expands upon existing policy objectives inareas of climate change and the environment, energy and sustainabledevelopment, health care, labor laws, and privacy.54 Although previousEuropean treaties attempted similar policy objectives, Lisbon has grantedthe EU more concrete and specific mechanisms to achieve diverse policygoals.55 Nevertheless, Member States did not relinquish all governanceauthority under Lisbon. Indeed, many prominent aspects of governance,such as taxation, remain exclusively under the control of Member States.56

This shift in competence for foreign investment to the EU gives proof of agrowing trend to increase investment protections with the hope that theseefforts will increase cross-border investments.57

C. THE TRANSFER OF EXCLUSIVE COMPETENCE TO THE EC AND

THE EP

By transferring competence to the EC and the EP, the drafters of theLisbon Treaty intended for the EU investment policy to operate as aregional unit, thereby diminishing fragmentation between investmentpolicies between individual Member States.58 Such intent is expressed in theEU’s governance structure.59

Many of the Lisbon Treaty’s policies pertaining to investment and tradepolicy are found in the amended Treaty on the Functioning of the EuropeanUnion (TFEU). Articles 3 and 207(1) of the TFEU give the EC and the EPthe exclusive competence to oversee the CCP,60 allows the EC to control themonetary policy of those Member States using the euro, and grants the ECthe power to develop competition rules required for the internal market tofunction effectively.61 Moreover, Article 207 of the TFEU incorporates FDI

51. Id. at 216; McClay, supra note 36, at 261; see also Treaty of Lisbon, supra note 2, at 92.(This provision has been incorporated into the Treaty on the Functioning of the EuropeanUnion.).

52. McClay, supra note 36, at 261; Boris Rigod, “Global Europe”: The EU’s New Trade Policy inits Legal Context, 18 COLUM. J. EUR. L. 277, 297 (2012).

53. Fina & Lentner, supra note 34, at 421.54. Daemen, supra note 6, at 93.55. Id.56. Id.57. Fina & Lentner, supra note 34, at 421.58. Treaty of Lisbon, supra note 2, at 18.59. See id.60. Youri Devuyst, The European Union’s Competence in International Trade After the Treaty of

Lisbon, 39 GA. J. INT’L & COMP. L. 639, 645 (2011).61. Consolidated Version of the Treaty on the Functioning of the European Union, art. 3,

119, Oct. 26, 2012, 2012 O.J. (C 326) 47, 51 [hereinafter TFEU] (Additionally, TFEU’s Article63 bars restrictions of all types placed on movement of capital between EU nations as between




into the CCP overseen by the EU.62 The CCP establishes uniformprinciples for changes in tariff rates, the conclusion of tariff and tradeagreements relating to trade in goods and services, and the commercialaspects of intellectual property, foreign direct investment, the achievementof uniformity in measures of liberalization, export policy, and measures toprotect trade such as those taken in the event of dumping or subsidies.63

TFEU’s reference to the CCP encompasses the EU’s jurisdiction overFDI, which includes extra-EU BITs.64 Furthermore, Article 294 of theTFEU increases the EP’s power, which allows for a shared decision featurewith the EC—or “ordinary legislative procedure”—over the CCP.65

Therefore, this provision effectively shifts the control center for investmentregulations out of the dominion of the Member States and grants this rightto the EC and the EP.66 This renders the “shared competence” modelobsolete, which had previously allowed the Member States and the EU toshare control over international investment.67

Other provisions of the TFEU also demonstrate the shift to a centralizedsystem of shared powers for the EU. For example, Article 308 calls for thecreation of a European Investment Bank—of which the Member States areparticipants—that finances projects for areas lacking such resources, in turn,modernizing the domestic market and funding common interest projects.68

Furthermore, Article 28 provides for “the adoption of a common customstariff in . . . relations with third countries,” so as to promote the free andopen transfer of goods.69 In addition, Article 127 of the TFEU provides forthe European System of Central Banks (ESCB) to be given responsibility to“define and implement the monetary policy of the Union.”70 Consequently,the groundwork for an EU-wide investment policy is effectively laid through

both EU and non-EU nations.: BITs often exist to guarantee the enforcement of thisprovision.).

62. Id. art. 207.63. Id.; see also Treaty Establishing a Constitution for Europe, art. III-315, Dec. 16, 2004, 2004

O.J. (C 310) 1, 142 (matching the exact wording of the Constitutional Treaty’s Article III-315provision); see also Devuyst, supra note 60, at 653.

64. TFEU, supra note 61, art. 207.65. Id. art. 289, 294; see also Stephanie Schacherer, Can EU Member States Still Negotiate BITS

With Third Countries?, INV. TREATY NEWS (Aug. 10, 2016), www.iisd.org/itn/2016/08/10/can-eu-member-states-still-negotiate-bits-with-third-countries-stefanie-schacherer. Fortunatelyfor investors, BITs entered into prior to Lisbon’s ratification are likely to remain valid after theMember States reconcile any legal incompatibilities, even if some reconciliation may need to beundertaken between intra-EU BITs and extra-EU BITs, and transitional steps may need to beimplicated in order to bridge any dissonance between extra-EU BITs prior to Lisbon’sratification.

66. Fina & Lentner, supra note 34, at 421.67. Id.68. TFEU, supra note 61, art. 308.69. Id. art. 28.70. Id. art. 28(2); see also Ralph H. Folsom, International Business Transactions § 28.14 (ed.

2017) (“[U]nder Lisbon, the European Central Bank was officially designated an EUinstitution.”).




multiple mechanisms designed to redirect the focus of EU investmentcontrol, while also providing for the creation of supplementary institutionssuch as the Bank to legitimize this control.71

Article 206 also fosters a liberal, open trade policy by removing“restrictions on international trade and on foreign direct investment [and]lowering customs, and limiting other investment barriers.”72 In theaggregate, the Lisbon Treaty liberalizes trade policies and promotes theopenness of trade flows between EU and non-EU nations.73 As discussedbelow, these factors can positively affect FDI and extra-EU BITs unless theyare thwarted by internal tension between Member States and the governingbodies.

III. Analysis

A. TENSIONS BETWEEN EU MEMBER STATES MAY ARISE BASED ON

DIFFERING NEEDS

Changes to European investment policy may increase tensions betweenEU Member States where issues affecting their populations, environments,and economies differ. Member States often disagree on a variety ofprovisions regarding dispute settlement, redefining the parties who mayenter into an investment; what an investment encompasses; the parametersof sustainable business practices; and social and moral implications.74 A shiftto an EU-centric competence does not eradicate these issues. Moreover,drafting regional BITs means that individual nations will lose the ability tocraft BITs tailored to the unique concerns affecting that nation.75 But thecore changes made to future extra-EU BITs will recognize essential humanrights standards, the rights of laborers, environmental protections (fromindustrial waste, for example), and a political policy dimension.76 AfterLisbon, general essential rights take precedence over the idiosyncratic needsof individual nations.77

71. Anderer, supra note 5, at 880.72. TFEU, supra note 61, art. 206.73. Id. art. 351 (explaining that extra-EU BITs concluded before January 1, 1958, are not

affected by the TFEU).74. Nikos Lavranos, Bilateral Investment Treaties (BITs) and EU Law, ESIL Conference 5

(Sep. 28, 2010).75. Id.76. Anne Pollet-Fort, EU Ctr. in Singapore, Implications of the Lisbon Treaty on EU External

Trade Policy, at 2–3, 2 Background Brief (Mar. 2010), http://aei.pitt.edu/33652/1/LisbonImpactonTrade-rev6Mar.pdf. (“The enhanced role of the [European Parliament] willalso increase the possibility of having non-economic objectives such as human rights and socialstandards issues being included in future trade agreements.”).

77. Id. at 13.




1. Lisbon May Reduce the Ability of Weaker EU Nations to Shape TheirIndividual Investment Policy

Post-Lisbon, Member States are limited in their ability to draft individualinvestment policies.78 The shared competence model previously allowed forsubstantially more policy power and a more active role by the individualnations in developing an investment policy consistent with the unique needsof the state, including human rights, workforce, and other non-economicconsiderations.79 While the intended effect of Lisbon is to provide for asynthesized Europe acting as a single body, a corresponding consequence isthat Member States no longer have the capacity to shape investment policiesin light of their special circumstances.80 But the interests of the EUgenerally and the interests of Member States specifically may be mutuallyexclusive in certain circumstances.81 For instance, while smaller or weakerEU states may struggle to attract FDI into their borders, larger EU nationsmay not encounter such difficulties.82 Without a compensatory mechanism,weaker EU states may not receive equal investment protections andincentives compared to a European heavyweight, thereby furtheringeconomic equalities in Europe.83

Monetary crises illustrates one harm that can befall a nation that cannotcontrol its own policy.84 For example, if a nation is encountering aneconomic slowdown, it often utilizes monetary policy to help prevent the

78. Frank Schorkopf, Case Nos. 2 BE 2/08, 2 BVE 5/08, 2 BVR 1010/08, 2 BVR 1022/08, 2 BVR1259/08, and 2 BVR 182/09. 123 BVERFGE 267 (2009), http://www.bundesverfassungsgericht.de.bundesverfassungsgericht (Federal Constitutional Court ofGermany), June 30, 2009, 104 AM. J. INT’L L. 259, 262 (2010) (The German Court specifiedthat certain rights are reserved to the individual state, and it held that “[b]eyond this specificauthority already transferred to the EU, the Court defined certain domestic rights concerning‘the political formation of economic, cultural and social circumstances’ with which Europeanunification shall not substantially interfere . . . .”).

79. See id.80. See id.81. Matthias Niedobitek, The Lisbon Case of 30 June 2009—A Comment from the European Law

Perspective, 10 GERMAN L. J. 1267, 1268 (2009) (“[T]he required involvement of the Germanparliament in the adoption of Union acts can conflict with the necessary ‘responsiveness to theneeds of European integration’ . . . of the German federal state.”); see generally MATTHIAS

NIEDOBITEK, ZUR “EUROPATAUGLICHKEIT” DES DEUTSCHEN BUNDESSTAATES NACH DER

FODERALISMUSREFORM, EUROPAISCHE FORSCHUNGSPERSPEKTIVEN: ELEMENTE EINER

EUROPAWISSENSCHAFT [On the “European Opportunity” of the German Federal State afterthe Federalism Reform, in European Research Perspective Elements of a European Science]201 (Peter Jurczek & Matthias Niedobitek eds., 2008).

82. Communication from the Commission: Annual Growth Survey 2012, at 8–9, COM/2011/0815 final.

83. See, e.g., Foreign Direct Investment—Flows: Statistics Explained, EUROSTAT (July 9, 2018),https://ec.europa.eu/eurostat/statistics-explained/index.php/Foreign_direct_investment_-_flows.

84. Id.




economy from contracting excessively or to buffer a recession.85 But if aweaker EU nation is experiencing an economic slowdown, while the rest ofthe EU is not in a comparable situation, the EU monetary policy may notmitigate its effects upon a single smaller Member.86 Instead, the weakernation has fewer remedies to mitigate the effects of an economic downturnand may need outside assistance.87 Such a scenario could occur in aninternational investment framework, where a smaller nation struggling toattract inward investment from foreigners will continue to lag farther behindother EU Member States.88 Weaker nations would have fewer policy toolsto attract investment more cheaply and efficiently than their competitorstronger nations.89 Consequently, balancing the rights of the Member Statesand the interests of the community as a whole will require delicate balancingso as not to bypass the needs of weaker nations in favor of stronger nations.90

Furthermore, scenarios may arise in which a Member State and the EUdisagree on a particular policy matter, such as when a Member State desiresinvestment in a non-EU nation, but the EU does not acquiesce. Forexample, conflict may arise when the EU does not approve an investmentwith a nation on an issue relating to non-economic grounds (such asgenocide or violations of a disarmament pact). Though liberalization oftrade and investment is a component of international law under the GeneralAgreement on Tariffs and Trade (GATT),91 the EU may choose to curtail aBIT between a nation whose actions it does not approve out of moral orsocial concerns, thus escalating tensions between the EU Member States andthe EU.92 Thus, a Member State seeking to foster relations with a non-EUstate may be restrained in its capacity to act separately from the EU, and thismay prevent the autonomy of Member States to secure national interests.93

Conversely, as noted above, any Member State’s diminished autonomy willbe counter-balanced by increased transparency and efficiency. Member

85. John C. Williams, President and CEO, Fed. Reserve Bank of S.F., Speech at the WorldAffairs Council: Supporting Strong, Steady, and Sustainable Growth (April 6, 2018).

86. Foreign Direct Investment—Flows: Statistics Explained, supra note 83.87. Id. (Greece has experienced instability due to an unsustainable monetary policy instigated

in order to join the European currency.); see generally Recommendation for a CouncilRecommendation on Greece’s 2012 National Reform Programme, COM/2012/307 final.

88. Catching Up Regions, EUR. COMM., http://ec.europa.eu/ regional_policy/en/policy/how/improving-investment/lagging_regions/ (last visited Oct. 9, 2018); see also Thomas Farole &Soraya Goga, 5 Things You (Probably) Didn’t Know About the EU’s “Lagging Regions”, WORLD

BANK: EURASIAN PERSPECTIVES (Dec. 12, 2017), http://blogs.worldbank.org/europeandcentralasia/print/5-things-you-probably-didn-t-know-about-eu-s-lagging-regions.

89. See Caroline Galvan, The Top 10 Most Competitive Economies in Europe, WORLD ECON. F.(Sept. 30, 2015), www.weforum.org/agenda/2015/09/the-top-10-most-competitive-economies-in-europe.

90. Foreign Direct Investment—Flows: Statistics Explained, supra note 83.91. Id.92. Vincent Depaigne, Protecting fundamental rights in trade agreements between the EU and third

countries, 42 E.L. REV. 562, 575 (2017).93. Id.




States will have additional diplomatic channels through which to fosterrelations with non-EU nations.94

In addition, investment policies that are most effective for one nation’senterprises may not correspondingly be best for another nation, making itdifficult for the EC and the EP to balance the demands of all Member Stateswhen making investment policy decisions.95 Instead, the overall EUinvestment policies may be skewed in favor of the stronger EU nations,which often dominate the political agenda.96 Because stronger EU nationsalso often possess the greater FDI flows, it makes economic sense for the EUto develop its policies addressing the concerns of its stronger nations.97

Unfortunately, in diminishing the needs of its smaller or weaker states, theEU may hinder the economic development of these nations.98 This becomesespecially relevant as Eastern European nations increasingly seek to enterthe EU.99 These nations, many of them former members of the SovietUnion, may need special provisions or policies to spur re-development.100

On the other hand, though weaker Member States may be restricted fromconducting BITs on their own, it is possible that any detriment is offset bythe EC’s ability to provide a stable investment platform, increasing overallinvestment opportunities for these nations, which independently may havefostered an unattractive investment climate.101 Thus, efforts to promotecooperation between the EU and its Member States should be made soconsiderations peculiar to weaker nations may be acknowledged andimplemented.102

Developing accommodations for weaker nations is also in line with theGeneral Agreement on Trade in Services (GATS).103 For example, ArticleIV(3) provides that “[p]articular account shall be taken of the serious

94. Id.95. See generally Wenhua Shan & Sheng Zhang, The Treaty of Lisbon: Half Way toward a

Common Investment Policy, 21 E.J. OF INT’L L. 1049 (2010), https://doi.org/10.1093/ejil/chq071.96. See generally Sophie Meunier, Integration by Stealth: How the European Union Gained

Competence over Foreign Direct Investment, 55 J. OF COMMON MKT. STUD. 593 (2017), https://doi.org/10.1111/jcms.12528.

97. Id.98. See Single Market Integration and Competitiveness in the EU and its Member States

2016, EUR. COMM’N (Nov. 21, 2016), http://ec.europa.eu/growth/content/single-market-integration-and-competitiveness-eu-and-its-member-states-2016_en [hereinafter Competitivenessin the EU and its Member States]; Foreign Direct Investment—Flows: Statistics Explained, supranote 83.

99. See generally Countries, EUR. UNION, https://europa.eu/european-union/about-eu/countries_en) (last visited Oct. 10, 2018).100. See Mark Rice-Oxley et al., End of the USSR: Visualizing How the Former Soviet CountriesAre Doing, 20 Years On, THE GUARDIAN, Aug. 17, 2011, www.theguardian.com/news/datablog/2011/aug/17/ussr-soviet-countries-data.101. See Competitiveness in the EU and its Member States, supra note 98.102. See id.103. General Agreement on Trade in Services, art. 4–5, Apr. 15, 1994, Marrakesh AgreementEstablishing the World Trade Organization, Annex 1B, 1869 U.N.T.S. 183, 33 I.L.M. 1167(1994) [hereinafter GATS].




difficulty of the least-developed countries in accepting negotiated specificcommitments in view of their special economic situation and theirdevelopment, trade and financial needs.”104 Such a provision suggests thatconcerted action to consider the needs of under-developed nations is vital toincrease the EU’s economic prosperity and to prevent stronger EU nationsfrom dominating international investment.105

Though the loss of powers by the Member States necessarily leads to therelinquishment of certain rights, Lisbon also enables the EU, albeitexclusively, to develop an international investment policy in, a consistent andcohesive manner.106 Such a cohesive investment platform benefits not onlyEU investors, but also non-EU investors. Instead of dealing with haphazardand confusing obligations to invest in neighboring nations,107 now, the non-investors can count on “legal certainty . . . [for] investors operating underthe terms of these agreements.”108 This shift in power to the EU’s “controlnucleus” is likely to promote a stable and fair trading network, even if theEU must still ensure that its international investment policy represents theneeds of individual Member States and the region as a whole.109

2. Will Tensions Between the EC and the EP after Lisbon Lead toIncreased Democratic Accountability?

Secondly, while Lisbon shifts the investment regime from a system ofshared competence between the individual Member States to the co-decisionpowers of the EC and the EP,110 the scope of these rights is ambiguous andcould lead to confusion or divergence from core EU interests.111

Conversely, allowing the EP a role in investment negotiations, by effectivelyinstilling the EP with a veto capacity, is likely to result, in the aggregate, inthe EU investment regime becoming more democratic and moreaccountable to the EU people.112 Nonetheless, the environment is ripe fortensions to develop between the EC and the EP as they attempt to define thescope of the rights and responsibilities conferred upon them underLisbon.113 The next section will discuss the potential tensions that may arise.

104. Id. art. IV(3).105. See id.106. Communication from the Commission to the Council, the European Parliament, theEuropean Economic and Social Committee and the Committee of the Regions Towards aComprehensive European International Investment Policy, at 2, 4 COM/2010/343 final[hereinafter Towards a Comprehensive European International Investment Policy].107. Id.108. Id.109. Id. at 4, 11.110. Id. at 9.111. Anderer, supra note 5, at 864.112. Id. at 854.113. Id.




3. A Dispute Settlement Mechanism is Necessary to Break Conflicts

In addition to conflicts between the Member States, conflicts may alsoarise between the EC and the EP. An effective dispute settlementmechanism is lacking.114 Moreover, the EP, imbued with new authoritiesunder Lisbon, may be influenced by the Member States to a greater extentthan previously; for example, by soliciting recommendations or other inputsfrom the Member States.115 By giving Member States a greater role in theEP, key decisions could better reflect the needs of the Member States.116

As described previously, prior to Lisbon, the EP possessed only a verylimited role in EU investment policy and was effectively excluded fromnegotiations regarding BITs and other trade negotiations with non-EUnations.117 Instead, the Member States, along with the EC, possessed thisrole and the EC was formally in charge of instigating trade negotiations andproposing such endeavors to the Council of Ministers.118 The EC wouldthen enter into negotiations with third nations and the Member States.119

Upon agreement and formal signature, the EC would then authorize thedocument.120 The EP’s opinion was rarely sought or considered.121

At times, the EP played a vital role in deciding key issues, such as in theevent of a substantial budget consideration and the creation of newinstitutional arrangements affecting the EP.122 But for the most part, priorto Lisbon, the EP retained little voice on trade and investment matters, evenif it was not completely barred from influencing trade decisions.123 But evenwhen the EP had input, the EP’s approval was rarely compulsory, leavingthe EP with little power to shape the EU investment policy with non-EUnations.124 Thus, the EC and the Member States maintained responsibilityfor creating BITs and otherwise forging the future of EU internationalinvestment.125

The Lisbon Treaty shifted this balance of power. Post-Lisbon, the ECand the EP have become co-decision-makers on issues pertaining to CCP.126

Article 207 of the TFEU provides that “the European Parliament and theCouncil . . . in accordance with the ordinary legislative procedure . . . shalladopt the measures . . . for implementing the common commercial

114. Id. at 855.115. Id. at 881.116. See id.117. Id. at 854.118. Id. at 855.119. Id.120. Id. at 863.121. Id.122. See Ronnie Downes et al., Budgeting and Performance in the European Union: A review in thecontext of EU Budget Focused on Results, 2017 OECD J. ON BUDGETING 1, 33 (2017).123. Eur. Comm’n Press Release, Explaining the Treaty of Lisbon, Brussels (Dec. 1, 2009).124. See id.125. Anderer, supra note 5, at 857.126. Id. at 873.




policy.”127 The EC and the EP must also keep each other regularlyinformed. In addition to instilling effective legislative and veto power, theEC President must “present a report to the [EP] after the meetings of the[EC].”128 Moreover, the EC High Representative must “regularly consult”with the EP regarding its “basic choices” in order to “ensure that the viewsof the European Parliament are duly taken into consideration.”129 Finally,the EP has been granted the right to supervise the implementation of trademeasures, thus ensuring that the EP’s opinions are actually heeded.130

Although the TFEU broadly shifts the control nucleus away fromMember States,131 that is unlikely to be the most controversial and turmoil-ridden provision. It may instead take a backseat to the effects of a potentialconflict between the EC and the EP.132 Post-Lisbon, before any extra-EUinvestment agreement may come into existence, it must first be approved bythe EP.133 Consequently, the EP’s approval now becomes mandatory for aninvestment agreement to become effective.134 On the other hand, the ECretains the power to enter into trade negotiations because, while the EPmust approve investment agreements, it defers to the EC to enter intonegotiations.135 As a result, the EP must agree with the terms of theagreement early in the process to avoid a delay.136 In regards to how thechange to qualified majority voting will shift decisions, the individualpersonalities of the EC and the EP may come to take a larger role in thedecision-making process, thus politicizing the process in a way that Lisbon’sdrafters never intended.137

127. TFEU, supra note 61, art. 207.128. 2012 TEU supra note 46, art. 15(6)(d).129. Id. art. 36.130. Id. at 860-61, 868-69 (there is often little to no relationship between a nation’s investmentpolicies and its national policies as a whole—this “interconnect” is missing); Pollet-Fort, supranote 76, at 11, 15 (the current international investment regime is comprised of thousands ofindividual treaties; a central aim as government policies merge with investment should be torestore this connection); Anderer, supra note 5, at 856 (leading to complexity, gaps, andambiguity in coverage); see generally Schacherer, supra note 65 (arbitration awards are oftenfound to be unpredictable).131. Schorkopf, supra note 78, at 262 (“The Court held that to avoid imminentunconstitutionality the EU must cautiously exercise any new or expanded power brought by theLisbon Treaty ratification. The Court asserted that [M]ember [S]tates must maintain theirright to control the legal and practical ‘precondition of a living democracy.’”).132. See TFEU, supra note 61, art. 294. A wrestling for power may result from the co-decisionmaking between the EC and the EP (art. 294(2)) and from the qualified voting mechanism ofthe “ordinary legislative procedure” (art. 294(8)). It is unclear how these two provisions willshift the outcome of key investment decisions and, thus, pave the way for a potential conflictbetween these entities; see also Anderer, supra note 5, at 875.133. Anderer, supra note 5, at 879.134. Id.135. Pollet-Fort, supra note 76, at 5 (“This means that the opinion of the EP becomes essentialand this even before the initiation of any future trade negotiations if one wants to avoid the riskof having the entirety of the agreement blocked by the EP.”).136. Id. at 3.137. Id. at 2.




Under Article 207 of the TFEU, the EP has been imbued with a steadfastveto power. If the EP does not agree with an investment agreement, it mayeffectively block its passage.138 But the EP may only make the decision as towhether to approve or deny an investment agreement wholesale, andtherefore the EP still cannot mandate changes to the agreement unless itprovides its recommendations. Practically, this means the EC continues tohold greater power than the EP. Further, it is conceivable that EP willpresuppose that the investment is generally a beneficial endeavor, andtherefore the EP may be inclined to accept the provision on balance, eventhough the EP does not agree with all facets of the proposal.139 The EP maybe especially likely to wield its veto power when certain key non-economicprovisions of an investment agreement are at issue.140 Consequently, it maybe difficult to predict in advance when the EP may block an agreement,thereby increasing investor uncertainty.141

4. Enactment of a Line-by-Line Veto EP Power Would Reduce Delays

Due to the conflicts described above, the rights conferred to the EP byArticle 207 would have been more effective if the EP had been granted aline-by-line or otherwise nuanced veto power, thus equalizing the EP’s rolewith the EC. Unnecessary delays in the execution of trade and investmentagreements may harm relationships with third nations and diminish extra-EU trade.142 Without changes to this structure, all investment negotiationsmay come to a halt due to a deadlock based on a particular political oreconomic issue.143 In turn, investment flows would be reduced. If the ECand the EP are unable to reach an agreement, then progress toward aninvestment agreement may be stalled or halted altogether.

Even so, potential disputes between the EC and the EP are not entirelynegative. Because the EP is elected directly by the EU people throughuniversal suffrage, key decisions may be more equitable and democraticallyaccountable.144 Thus, affording the EP a co-decision-making authority mayresult in decisions that better reflect the interests of the EU people and notjust heads-of-state.145

138. Id. at 11.139. See Anderer, supra note 5.140. See id.141. See id.142. See id.143. TFEU, supra note 61, at arts. 44, 50, 64. Article 64 of the TFEU effectively providespower for a qualified majority to govern measures pertaining to capital investments, althoughArticle 44 states that any such restrictions may not discriminate based on nationality.Moreover, Article 50 imbues the EC and the EP with substantial authority to carry out suchduties, including competence over investment policy.144. See Anderer, supra note 5.145. See Sebastian Kurpas, The Treaty of Lisbon—How Much “Constitution” is Left?, Ctr. forEuropean Pol’y Stud., 147 CEPS POLICY BRIEF, at 9 (Dec. 2007), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1334072.




Conversely, the EC may be in a better position to make such decisionsdue to better institutional and governance capacity, whereas members of theEP may not have such knowledge.146 Because Article 207 effectively barredMember States from possessing a veto power in EU investment decisions,147

it is unclear whether the EP’s decisions will adequately reflect MemberStates’ needs or meet Member States’ best interests. As a result, MemberStates may act outside the centralized EU framework when their interestsare not represented. If Member States choose to take individual actionsinstead of relying on a central EU authority, the EC and the EP would loselegitimacy, and Lisbon’s efficacy in standardizing EU investment would bereduced.148

Adding to this complexity, EU international treaty-making, in practice, isoften very disparate and covers a wide variety of issues spanning the EU.149

Prior to Lisbon, international investment was generally considered on anational—and therefore smaller—scale.150 In taking competence away fromthe Member States, the EC and the EP have been given a largeresponsibility to standardize a series of non-standard investmentagreements.151 Yet, the EP’s decisions may be politicized,152 and non-economic considerations may be emphasized during the investment process,even where it does not make sense to do so.153 This increasing politicization

146. See id. at 11.147. Treaty of Lisbon, supra note 2, art. 9(D)(5), 20. This provision does not automatically gointo effect; rather, it requires a unanimous vote by the Council; Pollet-Fort, supra note 76, at 12(“This meant that any national parliament of a Member State discontent with the provisions ofa chapter could veto the agreement in its entirety.”).148. Pollet-Fort, supra note 76, at 3. (“The increased role given to the EP in the EU tradepolicy may therefore contribute to increased politicization of future trade negotiations leadingto uncertainties and possible delays in getting a trade agreement through.”).149. Lorenza Mola, Which Role for the EU in the Development of International Investment Law?(Society of International Economic Law, Working Paper No. 26/08, 2008), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=115458.150. Towards a Comprehensive European International Investment Policy, supra note 106, at 8.151. Id. at 7–8 (There is evidence that the EU is moving towards operating as a regional unit.For instance, on September 12, 2011, an EU-wide investment doctrine was entered into withSingapore, India, and Canada. Though these collective EU BITs generally resembled BITsentered into by individual nations, many scholars have suggested that the EU-wide BITs willinclude “preambular references to corporate social responsibility (CSR), environmental andsocial issues.”); U.N. Conf. on Trade and Dev., Investment Policy Monitor No.6, A PeriodicReport by the UNCTAD Secretariat, 8 (Oct. 11, 2011), https://unctad.org/en/Docs/webdiaeia2011d12_en.pdf.152. Pollet-Fort, supra note 76, at 15 (“The increased role of the European Parliament maylead to a ‘politicization’ of the Common Commercial Policy and the use of conditionality intrade policy made be reinforced.”).153. U.N. CONF. ON TRADE AND DEV., WORLD INVESTMENT REPORT 2012: TOWARDS A

NEW GENERATION OF INVESTMENT POLICIES, U.N. Sales No. E.12.II.D.3 (2012) [hereinafterREPORT 2012]. Moreover, increased transparency and absolute standards should be applied toinvestor-state dispute settlement mechanisms and unifying the EU investment regime makesthis increasingly possible.




may detract from the future progression of the EU investment regime,especially the aim of “liberalization” of trade flows.154

A key consideration for the future will be to develop a mechanism inwhich to break deadlocks, or at the very least, increase harmonizationbetween the EC and the EP so they are able to adequately represent theneeds of the Member States and EU as a whole.155 Additionally, allowing forEP input may lead to significant delays in coming to a decision, and thusimpose a temporal deadline in which a decision must be made may likewisebe beneficial.156 Though not a panacea, such implementations will helpbuffer the transition to an exclusive competence framework.157

In sum, shifting from a shared competence model to an exclusivecompetence regime will likely increase uncertainties and result in a strugglefor control between the EC and the EP, especially if the two entities aredissimilar in thought.158 On the one hand, this shift may lead to an increasedchance for deadlock, as the EP may continually block an investmentnegotiation it does not agree with wholesale; on the other hand, thetransition to a co-decision-making function may result in the EU investmentregime becoming more democratic and representative of EU investors.159

While only time will bring forth the practical effects of this change, muchwill rest upon the personalities and egos in the EP, as well as its similaritiesin thought and policy aims with the EC.160

Although the CCP should be “guided by the principles and objectives ofthe Union’s external action more generally, including the promotion of therule of law, human rights and sustainable development” as delineated underArticle 205 of the TFEU, the EC and the EP must ensure that acting toachieve these objectives does not lead to political deadlock.161 Despiteattempts to reach a common goal, the EC and the EP may fail to reach an

154. See, e.g., Roger Goebel, Supranational? Federal? Intergovernmental? The GovernmentalStructure of the European Union After the Treaty of Lisbon, 20 COLUM. J. EUR. L. 77, 138 (2013)(discussing opposition by smaller nations to the creation of an EU President, the author notes)(“Presumably the smaller State political leaders were concerned that a longer Presidential term[influence by the President] would give greater weight to the views of the larger States.”).155. Towards a Comprehensive European International Investment Policy, supra note 106, at10. This is consistent with the EU’s policies in following the provisions set forth by the WTO,which is looking to promote a policy of openness and transparency.156. Id. (The EU Energy Charter is a good example of present negotiations.); Jean-FrancoisBrakeland & Colin Brown, Presentation at the European Comm’n Civ. Soc’y DialogueMeeting, The impact of the Lisbon Treaty on trade policy, 2-7 (Jan. 27, 2010), http://trade.ec.europa.eu/doclib/docs/2010/february/tradoc_145757.pdf.157. Anderer, supra note 5, at 875.158. See id.159. See id.160. See id.161. Towards a Comprehensive European International Investment Policy, supra note 106, at 9.Because the Lisbon Treaty aims to create an overarching treaty that governs numerous facets ofEuropean legalities, the invocation of these issues also suggests that its drafters sought toincrease the consideration given to these issues in its BITs. Thus, this suggests that extra-EUBITs will be more likely to contain provisions expressly forbidding, for example, pressing




agreement based solely upon the technicalities of achieving this aim, to thedetriment of the EU investment regime, and consequently, a disputeresolution mechanism should be created to resolve impasses and preventpolitical agendas from dominating the EU investment regime.162

5. Lisbon Will Likely Increase FDI Flows and Promote Efficiency, but MayLead to Negative Externalities

Centralization of EU investment policies is likely to cause aregionalization of FDI flows both in the EU and globally. These regionalinvestment blocks are likely to further foster cross-border investments.163

Despite the conflicts that may arise due to the shift in power among theEC and the EP, as well as loss of authority of the Member States, Lisbon’sstandardization of EU investment policy may increase FDI.164 Given thatthe EP may also be actively considering numerous other political, moral, andsocial objectives, infusing investment policy with the EP’s overarchingagenda could decrease efficiency, transparency, and predictability becausenew concerns the EP must grapple with arise without predictability andwithout knowing their effects upon investment.165 Accordingly, the shift toexclusive competence may simultaneously increase negative externalities asthe EU CCP aims to synthesize EU investment policy with overarchingissues pertinent to the European community as a whole.166

Because FDI constitutes a major component of European GDP, bringingFDI into the domain of the exclusive EU competence, through Article 207of the TFEU,167 may increase ease of market access.168 Given its sheermagnitude and the financial implications, FDI is most effectively regulatedat the EU level, especially given that the EU may pool resources from the

environmental concerns, such as dumping in certain areas or to prevent investment in an areaout of political aims.162. THE TREATY OF LISBON AND THE FUTURE OF EUROPEAN LAW AND POLICY, 277–78(eds. Martin Trybus & Luca Rubini, 2012). By allowing the consideration of non-economicfactors, the EU will bring in its investment policy to align with its overarching goals.Additionally, by allowing for greater access of dispute settlement proceedings, the EU willpromote transparency and improve perceptions of legitimacy of the dispute resolution system.163. Anderer, supra note 5, at 875 (“While the transfer of competence over FDI from theindividual EU Member States to the EU creates a number of problems, if these problems areadequately dealt with, then the changes to FDI embodied in the Lisbon Treaty will represent animprovement over the EU’s prior international investment regime.”).164. See id. at 875 (“All these changes to bring trade in goods and services and FDI under theexclusive competence of the EU are expected to contribute to a streamlining of the tradepolicy.”); see also Pollet-Fort, supra note 76, at 3.165. See id. at 854.166. See Anderer, supra note 5, at 874.167. Treaty of Lisbon, supra note 2, art. 207.168. Impacts of EU Outward FDI on EU Economy, EUROPEAN COMM’N. (last visited Aug. 10,2017). http://trade.ec.europa.eu/doclib/docs/2010/june/tradoc_146273.pdf. From 2001 to2006, outward FDI alone has increased the GDP of the EU by over _20 billion.




Member States.169 Moreover, though the development of a centralized,stable investment policy is not the exclusive determinant of FDI flows bothinto and out of the EU, it does serve to increase transparency, efficiency, andmitigate instability.170 But while FDI flows will most likely increase as aresult of the foregoing, FDI flows may also face downward pressures due tothe rise of a host of exogenous and non-economic considerations.171 Thus,these increased regulations will likely increase the costs of investinginternationally.172

While the EU is currently a strong force in global FDI flows, comprisingnearly half of all FDI worldwide, European FDI flows has recently beensteadily losing ground per relative standing in the world market.173 It isunclear whether the changes brought by Lisbon will halt the backward slideof the European market.174 During Europe’s retreat, third-world nations,such as China, India, and Brazil, have been profoundly altering the globalinvestment commonplace, demanding renewed consideration of both theinvestment opportunities within their borders, as well as these nations’strengthened capacities to invest in Europe.175 Such third-world nations,often referred to as “emerging market” economies, have been steadily

169. See id.170. Towards a Comprehensive European International Investment Policy, supra note 106, at6–7 (The value and role of outward FDI has been hotly debated by EU and non-EU nationsalike, though most nations generally cede that inward FDI is worth attracting. But outwardFDI will likely provide value to the EU as well. For instance, Copenhagen Economics statesthat the number of jobs going abroad generally represents only between zero point five percentand two percent of the total number of jobs leaving the nation. Moreover, for every one-hundred jobs that move overseas, about fifty of the jobs were newly created altogether. Paneleconomists undertook a study in which they analyzed the effects of outward FDI on the EUeconomy, and determined that outward FDI leads to increases in productivity and efficiency ofEU companies—thus increasing their competitiveness on the global marketplace. While theUS and EU continue to promote outward FDI, many other nations have undertaken measuresto curtail such investment in the belief that these resources should instead be developeddomestically.); see also Eva R. Sunesen, Svend T. Jesperson & Martin H. Thelle Impacts of EUOutward FDI, COPENHAGEN ECON., at 5 (May 20, 2010) http://trade.ec.europa.eu/doclib/docs/2010/june/tradoc_146270.pdf.171. Id.172. REPORT 2012, supra note 153, at 81.173. Id. at 169.174. See id.175. Victor Mosoti, Bilateral Investment Treaties and the Possibility of a Multilateral Framework onInvestment at the World Trade Organization: Are Poor Economies Caught in Between?, 26 NW. J.INT’L & BUS., 95, 113–15 (2005) (“Most African countries now do everything in their power tocreate an environment that is conducive to FDI, which represents a tectonic shift fromprevailing autarchic thinking of the 1970s. The vast majority of these countries now universallywelcome foreign investment almost unreservedly, have signed many BITs and have heavilyengaged in negotiations, especially those sponsored by UNCTAD.”).




increasing in global FDI.176 Foreign investors may be reticent to investwhen they view EU’s investment regime to be unstable.177

Regarding EU outward FDI flows, EU investors may be wary of investingin developing nations that may not have the capacities or infrastructure todeal with the externalities associated with development, such asenvironmental waste or human displacement.178 Accordingly, investmentagreements should incorporate mechanisms to help these nations addressindustrial externalities by including, for example, provisions where theinvestor will assist with environmental mitigation.179 By incorporatingenvironmental and other “soft” considerations in investment agreements,weaker nations may enjoy increased investments while reducing exposure toharmful externalities.180 Of course, the EU may likewise want to includeenvironmental and human rights provisions for outside investors investingwithin its borders.181

Moreover, the centralized EU investment control may also change theway investment agreements are drafted. Most-favoured nation (MFN)clauses are frequently featured in investment agreements such as BITs.182 Ina BIT, a MFN clause “means that investments or investors of onecontracting party are entitled to treatment by the other contracting partythat is no less favourable than the treatment the latter grants to investmentsor investors of any other third party.”183 In particular, the MFN and

176. See id.; Towards a Comprehensive European International Investment Policy, supra note106, at 3.177. Anderer, supra note 5, at 875 (“If foreign investors believe that the EU’s system does notprovide adequate protection, they may choose to retract their investments. This will make itdifficult for the EU to attract new foreign investors who will likely forego opportunities in theEU to avoid the problems associated with an unstable investment regime.”).178. REPORT 2012, supra note 153, at 82.179. See U.N. Env’t. Programme, The Montreal Protocol on Substances that Deplete theOzone Layer, art. 5, 25 (2000) https://unep.ch/ozone/pdf/Montreal-Protocol2000.pdf(Montreal Protocol instilled time-adjusted regulations for meeting Protocol provisions basedupon the unique needs of developing nations.).180. Goebel, supra note 154, at 86 (“As successive Treaty amendments have authorized socialand employment policy, environmental protection, consumer rights and other fields of action,the [EC] has promoted each with equal vigor on a Community[-]wide basis through actionprograms and initiatives for legislation.”); see also Philippa Watson, EU SOCIAL AND

EMPLOYMENT LAW: POLICY AND PRACTICE IN AN ENLARGED EUROPE, 66–68 (OxfordUniversity Press, 2009).181. Goebel, supra note 154, at 86.182. See UNCTAD, BILATERAL INVESTMENT TREATIES 1995-2006: TRENDS IN INVESTMENT

RULEMAKING, at 93, U.N. Doc. UNCTAD/ITE/IIA/2006/5, U.N. Sales No. E.06.II.D.16(2007). Consequently, the MFN clauses for each individual BIT should be drafted withparticularity, while the EC should perhaps formulate a ‘model’ MFN clause as a defaultprovision. Moreover, the ‘model’ MFN clause should be drafted with the weaker nations’specific needs in mind. For example, an MFN clause may propose that standards of treatmentare to be considered from the view of the weaker nation, or that a particular dispute (in someinstances, and admittedly not all) be resolved as against the nation most capable of dealing withthe consequences.183. Anderer, supra note 5, at 859.




national treatment provisions continue to carry crucial importance ininvestment agreements in order to ensure that weaker nations—both EUand non-EU—receive the same protection as the stronger nations.184 Nolonger should MFN provisions be based upon a relative standard of anindividual nation. Instead, new clauses such as post-admission “fair andequitable treatment” and “full security and protection” may come to possessnew significance as they become increasingly utilized to develop a thresholdstandard for investor protection that carries across nations.185 Previousnational BITs are unlikely to serve as a model for incorporating suchprotections. For example, the German Model Treaty, in Article 3(1) and3(2),186 does not provide for exceptions in areas where a local industry orgroup may need special preference in order to develop or sustain itself.187

Such a need, as described above, is necessary due to the endemic inequalitiesbetween the Member States in their industrial capacities.188

Despite the move toward unified investment agreements, theseagreements may need to be drafted in a more flexible manner to allows itsprovisions to be interpreted in the interest of fairness, especially as itpertains to weaker nations.189 Increased flexibility accords with GATS, PartIV, Article XIX, which provides that “[t]here shall be appropriate flexibilityfor individual developing country Members for opening fewer sectors,

184. Ross Eventon, Future Forms of EU Investment Competence: The German Model BIT as aMinimum Level of Protection, in RECLAIMING PUBLIC INTEREST IN EUROPE’S INTERNATIONAL

INVESTMENT POLICY, EU INVESTMENT AGREEMENTS IN LISBON TREATY ERA: A READER, 22(Ross Eventon ed., Kate Wilson trans., 2011), http://corporateeurope.org/sites/default/files/S2b%20investment%20reader%20-%2050%20pages!.pdf.185. Towards a Comprehensive European International Investment Policy, supra note 106 at 8,11. But in achieving these aims, the EU should work to ensure that investors receive, at thevery least, equal treatment as to that which they received under the BITs by individual Memberstates. This is a tall aim—though vital to ensuring a strong reception to increased ECcompetence—and will require collaboration between the EC and the Member states. In orderto secure increased cooperation between the EC and the Member states, binding statementsshould be secured to ensure the open flow of investment and the maintenance of standards ofcare. Such standards should be developed in accordance with the ‘best practices’ by theMember states. Moreover, in the interim, stand-alone investment negotiations should continueto be available as a transitional mechanism.186. German Model Treaty 2008, art. 3, Federal Ministry for Economics and Technology(2008), italaw.com/documents/2008-GermanModelBIT.doc; Eventon, supra note 184, at 22.(“The National Treatment and Most Favoured Nation provisions restrict states from takingmeasures to enhance local production or enterprise for fear of breaking this provision.”).187. Eventon, supra note 184, at 22. An example of an industry which may need specialtreatment in order to survive would be the US automobile industry, which would likely havecollapsed after being unable to compete with foreign manufacturers.188. Armand De Mestral, “Is A Model EU BIT Possible—Or Even Desirable?” COLUM. FDIPERSP. NO. 21 (Value Columbia Center on Sustainable Development, Mar. 24, 2010), http://academiccommons.columbia.edu/catalog/ac%3A125914.189. “Investment,” Trade Topics, EUR. COMM’N, Armand De Mestral, “Is A Model EU BITPossible—Or Even Desirable?” COLUM. FDI PERSP. NO. 21 (Value Columbia Center onSustainable Development, Mar. 24, 2010), http://academiccommons.columbia.edu/catalog/ac%3A125914 (last visited Aug. 10, 2017).




liberalizing fewer types of transactions, [and] progressively extending marketaccess in line with their development situation . . . .”190

Even more, an argument may be made that the EU is not yet sufficientlyunified to create a single investment agreement for all of its Member States.Some nations, fearing loss of their autonomy over international investmentpolicy, have begun taking measures to restore their former control. TheUnited Kingdom’s (UK) recent referendum vote to leave the EU is a recentexample of backlash against further EU integration efforts by the MemberStates.191 After leaving the EU, the UK will once again assert completecontrol over its investment policy.192 In doing so, the UK will need tonegotiate new trade agreements, including free trade agreements andbilateral trade pacts with developing nations.193 The UK will also lose accessto the single European market and will consequently seek to redraw its tradepolicy with the EU.194

This recent backlash is but one indication that the EU is not sufficientlyunified at this point in time to draft, oversee, and implement a singleuniform investment policy. Tellingly, many individual Member Statescontinue to enter into investment treaties separately, suggesting that thepace of EU investment unification has slowed or stalled.195 Theinconsistencies between EU individual national investment policies and EUinvestment policies may present to the world a confused image, as thesepolicies may overlap or contradict others.196 Increased instability in EUinvestment policies may reduce FDI flows if such inconsistencies are notrectified.197 Moreover, the authority of the individual Member States to acton international investment issues—or even to what extent the MemberStates retain control over their own domestic markets—remains ambiguousafter Lisbon.198 This area will continue to present a tricky dichotomy as theEU considers the rights of the Member States and the Union, withoutdepriving either of opportunities for growth.199 Finally, replacing the overone-thousand individually created BITs and transforming them into acommon body of European investment law is an extensive undertaking thatwill likely take decades to complete.200

It remains unclear whether Europe will be able to consolidate itsinvestment policies into a single series of investment agreements.201 Recent

190. GATS, supra note 103, Part IV art. XIX.191. See Jean Heilman Grier, Brexit: Trade Implications, 16–11 BRIEFING PAPERS 1 (Oct. 2016)(discussing Brexit and future trade policy options for the UK).192. Id.193. See id. at 1.194. See id. at 2.195. See id. at 1.196. See id.197. See id.198. See id.199. See id.200. De Mestrel, supra note 188, at 1-2.201. Id. at 1.




backlash by EU Member States suggests that such consolidation may be anelusive task.

6. Consolidation of EU International Investment Will Promote PublicPolicy Goals

Public policy initiatives in Europe strongly favor consolidation of itsinternational investment framework. Trade and investment consolidation islikely to improve business relations with non-EU nations and promoteregional unification and economic modernization within Europe.202

Moreover, Lisbon’s effects on the EU’s investment policy will likely benefitits relationship with key partners, including the US, with which itsinvestment flows are most substantial.203

European policymakers have stated the EU seeks to transition into a“smart, sustainable, and inclusive economy.”204 Though at the outset itappears the shift toward an EU-centric model will unjustifiably promote EUinvestment interests, this shift in power is unlikely to be Lisbon’s legacy.205

Instead, the implementation of exogenous and non-economic considerationsin international investment law may ease tensions between the EU andforeign investors, and place increasing importance on social issues thatpreviously did not take precedence in investment agreements.206 While thetransaction costs associated with investments may increase in the near term,over time, the move to a common investment framework andstandardization of key human rights, social, and environmental issues willlikely promote investment stability.207

Moreover, an EU central investment framework is likely to solidify theEU’s relationships with key nations, including the US, its largest investmentpartner.208 To date, the EU and US have repeatedly affirmed theircommitment to an open investment policy between each other, and themove toward a centralized EU investment policy will facilitate increasedtrade between the two regions, especially as non-discriminatory policies that

202. Towards a Comprehensive European International Investment Policy, supra note 106, at 3.203. Id. at 9.204. Communication from the Commission, Europe 2020 A Strategy for Smart, Sustainableand Inclusive Growth, COM/2010/2020 final. (In so doing, the EU is looking to modernize itslabor force, technologies, and infrastructure. The EU seeks to lower its unemployment rate,particularly among older workers. Increasing FDI flows will have the ramifications ofincreasing employment rates, at least, this is the hope of the EU. Additionally, increasedinvestment will force the EU to modernize its economic and physical infrastructure – asincreasing investment, both inward and outward, will hopefully cause EU companies to becomeboth more competitive and more efficient.).205. Towards a Comprehensive European International Investment Policy, supra note 106, at 9.206. Id. at 11.207. Id. at 9.208. USA-EU – International Trade in Goods Statistics, EUROSTAT, http://ec.europa.eu/eurostat/statistics-explained/index.php/USA-EU_-_international_trade_in_goods_statistics (last visitedMay 4, 2017).




“provide investors clear guidance” on investment restrictions areincreasingly employed.209

Cultivating stronger investment relationships with longstandinginvestment partners provides a straightforward avenue for bolstering existinginvestment.210 In particular, the EU and US are each other’s biggestinvestor.211 Specifically, in 2007, the EU stock of FDI in the US totaledC= 1043 billion, while the US FDI stock in the EU was C= 1030 billion,representing roughly one-half of each other’s total FDI.212 EU investmentpolicies generally align with those of the US, perhaps more so than nearly allnations. The EU and US’s shared investment goals were demonstrated inApril 2012, when the EU and US jointly issued their “Shared Principles forInternational Investment,” describing their goal of providing a “level playingfield” and creating “open and non-discriminatory investment climates” forinvestors between the two nations.213 Buoyed by support from EU and USinternational investment policies, the rise of interjecting non-economicfactors, such as human and laborer rights, climate change, and workforceissues, are likely to play a greater role than ever before in internationalagreements.214 Demonstrating the rise of “soft” factors, there are alreadynumerous current non-binding guidelines on point suggesting non-economic considerations will be increasingly taken into account.215

Interjecting “soft” factors into investment agreements also fits generally intothe aims under Article 205 of the TFEU, which provides for the creation ofgeneral policies for “human rights and sustainable development.”216

It is unclear whether a consolidated EU investment policy will promoteinvestment flows to and from the EU and third-world nations, especiallyemerging countries that lack a longstanding relationship with the EU.217

209. EU-US Open Investment Statement, Trade, EUROPEAN COMM’N (May 13, 2008), http://trade.ec.europa.eu/doclib/docs/2008/may/tradoc_138821.pdf. Both the EU and US openlyseek to avoid protectionist mechanisms, and consequently allow for the free flow of trade, withthe exception of national security issues.210. Id.211. European Commission Press Release MEMO/09/118, Global Partners: EU-US Trade andInvestment (Mar. 18, 2009), http://europa.eu/rapid/press-release_MEMO-09-118_en.htm?locale=en.212. Id.213. Statement of the European Union and the United States on Shared Principles for InternationalInvestment, Trade, EUROPEAN COMM’N, http://trade.ec.europa.eu/doclib/docs/2012/april/tradoc_149331.pdf. Notably, some of these exogenous considerations are invoked in thestatement, including the promotion of ethically responsible behavior by businesses.214. See id.215. REPORT 2012, supra note 153, at 91.216. Towards a Comprehensive European International Investment Policy, supra note 106, at 9.217. Consultation on the Future Investment Relationship Between the EU and China, Trade,EUROPEAN COMM’N (May 2, 2001), http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147866.pdf. In fact, it is quite difficult to see how the EU’s relationship with China will developin the future, given that China does not share the same penchant for exceedingly liberal tradeflows, nor is it a democratic society. Other nations, in crafting their future relations with theEU will likely fall somewhere on this continuum, with those nations sharing the most political,




Perhaps the best strategy for the EU is to keep investment flows between theEU and third-world nations as open and transparent as possible.218

Nonetheless, once the EU exits the field of common-market adherents,whose ideological and political views may differ from those of the EU,providing for a more effective and efficient dispute settlement mechanism inthe event of investor disputes will most likely be the best method to maintainrelations and continue investment.219

Consequently, after the Lisbon Treaty, the European investmentlandscape has fundamentally changed. Instead of the over one-thousandindividual BITs entered into by the EU Member States,220 non-EU investorsmay perhaps look to a single, overarching EU Model BIT and EU-wideinternational investment policy decisions. Investment agreements will bemore transparent and efficient.221 After consolidating its investmentframework, if the EU can afford protection for the autonomy andparticularized needs of its Member States, investment to and from Europecould be facilitated to a greater extent than ever before.222 If implementedcorrectly, economic and trade relations with third world nations will only beimproved.223 Shifting the control center of the European investment regimeto the EC and the EP aligns with the EU’s political goals and aptlydemonstrates the continent’s capacity to unify to promote welfare for allEuropeans, regardless of the Member State to which they owe allegiance.

IV. Conclusion

In conclusion, Lisbon is likely to change EU international investmentpolicy significantly. Non-economic considerations, including human rights,climate change, and sustainable development are likely to be featured moreprominently in investment policy decisions. The shift to a centralizedframework will likely affect EU international trade flows positively and mayincrease FDI. Moreover, public policy factors suggest that changes broughtabout by Lisbon are likely to improve investment relations with the US andother third nations, while simultaneously promoting market access andinvestment stability in cross-border transactions. The Lisbon Treaty aims toincrease the transparency, efficiency, and unity of the EU political andeconomic system. By initiating the steady decline of BITs conducted by theMember States in favor of a common investment regime, Lisbon is slowlyfulfilling its goals.

economic, and social commonalities with the EU most likely to benefit from Lisbon’s changesto the EU’s investment regime.218. “Investment,” Trade Topics, supra note 189.219. REPORT 2012, supra note 153, at 97.220. “Investment,” Trade Topics, supra note 189.221. Id.222. See id.223. See id.




Appendix APROPOSED CHANGES TO THE LISBON FRAMEWORK

1. CREATE A DEADLOCK MECHANISM IN ORDER TO RESOLVE DISPUTES

BETWEEN THE EC AND THE EP2. DEVELOP FAIRNESS CONSIDERATIONS FOR WEAKER NATIONS

WHICH MAY BE PASSED OVER DURING KEY INTERNATIONAL

INVESTMENT DECISIONS

3. STANDARDIZE REQUIREMENTS FOR HUMAN RIGHTS, ENVIRONMEN-TAL, AND SOCIAL GOALS IN INVESTMENT AGREEMENTS

4. CLARIFY INVESTOR PROTECTIONS AND DISPUTE RESOLUTION

MECHANISMS

5. LIMIT THE SCOPE OF LISBON’S AUTHORITY OVER OTHER AREAS OF

GOVERNANCE, AND CLARIFY THE RIGHTS AFFORDED TO THE

MEMBER STATES TO GOVERN THEIR ECONOMIC, INVESTMENT,AND TRADE POLICIES




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Armand De Mestral, “Is a Model EU BIT Possible—or Even Desirable?”,COLUMBIA FDI PERSPECTIVES NO. 21 (Vale Columbia Center onSustainable Development, Mar. 24, 2010), http://academiccommons.columbia.edu/catalog/ac%3A125914.

THE TREATY OF LISBON AND THE FUTURE OF EUROPEAN LAW AND

POLICY, 278 (eds. Martin Trybus & Luca Rubini, 2012).

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Freya Baetens et al., Determining International Responsibility Under the NewExtra-EU Investment Agreements: What Foreign Investors in the EU ShouldKnow, 47 VAND. J. TRANSNAT’L L. 1203, 1215 (2014).

Gabriele Mazzini, The European Union and Investor-State Arbitration: A Workin Progress, 24 AM. REV. INT’L ARB. 611, 613 (2013).

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DG Trade G.I, Establishment, Trade in Services and E-Commerce, Council Ofthe EU General Secretariat 133 Committee, 1, 3 (July 28, 2006), http://www.iisd.org/pdf/2006/itn_ecom.pdf.

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Rafael Leal-Arcas, Is EC Trade Policy up to Par?: A Legal Analysis Over Time—Rome, Marrakesh, Amsterdam, Nice, and the Constitutional Treaty, 13 COLUM.J. EUR. L. 305, 347 (2007).

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The Montreal Protocol on Substances that Deplete the Ozone Layer, Art. 5.,OZONE SECRETARIAT UNITED NATIONS ENVIRONMENT PROGRAMME

(2000), https://unep.ch/ozone/pdf/Montreal-Protocol2000.pdf.

Towards a Comprehensive European International Investment Policy, EUROPEAN

COMM’N, 7 (July 7, 2010) http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147884.pdf.

Consolidated Version of the Treaty on the Functioning of the EuropeanUnion art. 3, 207, June 7, 2016, 2016 O.J. (C 202) 59, https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=uriserv:OJ.C_.2016.202.01.0001.01.ENG&toc=OJ:C:2016:202:TOC#C_2016202EN.01001301.

Ross Eventon, Future Forms of EU Investment Competence: The German ModelBIT as a Minimum Level of Protection, RECLAIMING PUBLIC INTEREST IN

EUROPE’S INTERNATIONAL INVESTMENT POLICY. EU INVESTMENT

AGREEMENTS IN THE LISBON TREATY ERA: A READER, 22 (2001) http://corporateeurope.org/sites/default/files/S2b%20investment%20reader%20-%2050%20pages!.pdf.





Time for the Creation of a Standing U.N. ArmedPeace Service and the Potential Employment ofExperienced U.S. Veterans as a SignificantComponent of Such a Force

RONALD SIEVERT*

“We must make sure that its work is fruitful, that it is a reality and not a sham,that it is a force for action, and not merely a frothing of words . . . .”1

Winston Churchill, speaking of the U.N. Fulton, Missouri 1946

I. History

Since its inception, the founders of the United Nations (U.N.) envisionedagreements among nations that would establish a responsive, proactivemilitary force that could take action under Chapter VII of the U.N. Charter“as may be necessary to maintain or restore international peace andsecurity.”2 But the Cold War immediately intervened, and when theMilitary Staff Committee established by the Charter3 first met in 1946, itfound significant disagreements among the permanent five members of theSecurity Council as to the size, composition, and basing of such a force.4

Then U.N. Secretary-General Trygve Lie proposed, in succession, a U.N.Guard Force, a U.N. Legion, and a U.N. Volunteer Reserve to at leastmaintain peace and perform constabulary functions pursuant to Chapter VI.5

The U.N. abandoned even these less ambitious plans, however, because theplans received no support.6 The United States and USSR were concernedthat a permanent force might act against their interests, especially in the

* Professor of National Security and International Law, George H.W. Bush School ofGovernment and University of Texas School of Law, J.D. University of Texas 1977. The authorwould like to thank graduate assistant Emiley Pagrabs, Master’s in International Affairs BushSchool 2018, for her research and editorial assistance in support of this article.

1. Winston Churchill, Speech in Fulton, Missouri on the UN (Mar. 5, 1946), in MARTIN

GILBERT, NEVER DESPAIR: WINSTON CHURCHILL 1945-1965, 199 (Heinemann 1988).2. U.N. Charter art. 42. See Adam Roberts, Proposals for UN Standing Forces: A Critical

History, in THE UNITED NATIONS SECURITY COUNCIL AND WAR: EVOLUTION OF THOUGHT

AND PRACTICE SINCE 1945, 101–102 (Vaughn Lowe et al. eds., 2008).3. U.N. Charter art. 47.4. Roberts, supra note 2, at 100.5. Dan Hayes Griffith, Improving United Nations Rapid Reaction Capability: is a volunteer

rapid reaction force the answer? 7-8 (2008) (unpublished Honors Thesis, University of Oregon)(on file with Department of Political Science, University of Oregon).

6. Id. at 8-9.




developing Cold War proxy wars between the two superpowers.7 The U.N.eventually obtained Security Council authorization to dispatch troops from afew contributing member states to act as lightly armed truce observers whowould monitor compliance with peace treaties in Palestine, the Sinai,Kashmir, and Lebanon with the consent of the parties.8 These troops weregenerally under orders never to take the initiative in the use of armed forceand to only act in self-defense.9 At one point, however, they acted to removeforeign troops and mercenaries from the Congo.10

The end of the Cold War reinvigorated the original expectation that theU.N. should have the ability to quickly field a strong force to maintain peaceand prevent aggression.11 Between 1988 and 1993, the Security Councilactually sanctioned twelve limited operations in “conflicts that had[previously] been fueled by Cold War intrigue.”12 But these operations werelimited in scope, and the U.N. troops were “weak[ ] in the face of violentharassment . . . [and stymied by] delays in getting states to contribute forcesto . . . urgent [U.N.] mission[s] . . . .”13 This was painfully obvious inCambodia, Angola, Somalia, and, perhaps above all, in the failure toimmediately act during the horribly tragic genocides in Bosnia andRwanda.14 Something had to be done. Sir Brian Urquhart, echoed by theNetherlands Foreign Minister Hans Van Mierlo, put forth the strongestproposals for a standing U.N. Volunteer Military Force.15 As Urquhartwrote:

Recent [U.N.] experiences provide a good argument for at leastconsidering the establishment of an immediately available elite [U.N.]force directly recruited from volunteers worldwide. Hitherto theSecurity Council has lacked the capacity to deploy a convincing militarypresence at the outset of a crisis before the situation has disintegratedand become uncontrollable . . . . [This] might give the Security Council(and the Secretary-General) the capacity to display strength anddetermination at a point where larger disasters could be avoided.16

7. Id. at 7-8.8. Id. at 6; Finn Seyersted, United Nations Forces Some Legal Problems, 37 BRIT. Y. B. INT’L

351, 354 (1962).9. Seyersted, supra note 8, at 399.

10. Id. at 397.11. Griffith, supra note 5, at 9.12. Id. at 9.13. Roberts, supra note 2, at 107.14. Id. at 107; see also IN SEARCH OF INTERNATIONAL JUSTICE (Bullfrog Films 2005); GHOSTS

OF RWANDA (Frontline 2004).15. Gordon Wilson, Arm in Arm After the Cold War? The Uneasy NATO-UN Relationship, 2

INT’L PEACEKEEPING 1, 91-92 (Spring 1995); see also H. PETER LANGILLE, DEVELOPING A

UNITED NATIONS EMERGENCY PEACE SERVICE 55 (Palgrave Macmillan 2016); Roberts, supranote 2, at 117.

16. Roberts, supra note 2, at 107.



2019] U.N. ARMED PEACE SERVICE 113

This suggestion was not limited to peacekeeping only but also envisioned afast military response to external threats as well as enforcing a ceasefire in anincipient civil war.17

The idea of a standing U.N. volunteer force, instead of calling on membernations on an ad hoc basis, seemed to make sense on its face. As Carl Kaysenand George Rathjens observed, nation states are naturally reluctant to supplycontingents to any mission where they perceive there is a good possibilitythat their units will incur significant casualties.18 In democratic societies,politicians are very sensitive to the fact that this could cause a major backlashagainst them.19 As a result, many nations spent months debating whetherthey should assist, thus slowing overall deployment time.20 The mostcommon contributing states to date had been developing countries (in partmotivated by U.N. funding) that lacked the well-equipped and trainedarmed forces that a permanent volunteer armed force would have.21

But some experts responded that such a U.N. force would theoreticallycreate a disconnect between power and responsibility.22 The SecurityCouncil would have the ability to authorize operations, but permanentmembers would not have the responsibility to take any real actionthemselves.23 In addition, there was overt fear of the U.N. assuming anaggressive independent military role in world affairs as opposed tofunctioning primarily as an organization who maintains peace.24 Otherswere concerned about the cost and believed an active military organization“risk[ed] the [U.N.]’s reputation for impartiality . . . [and] could seriouslyundermine the [U.N.]’s, and more especially the Secretary-General’s,reputation and capabilities.”25 Some claimed that such a force could lead toworld government and an abuse of authority that would threaten theindependence of smaller nations as well as the prerogatives of majorpowers.26

17. Id. at 108.18. Carl Kaysen & George Rathjens, The Case for a Volunteer U.N. Military Force, 132

DAEDALUS 91, 92 (2003).19. Id. at 93.20. Id.21. Griffith, supra note 5, at 28.22. See Wilson, supra note 15, at 92.23. Id.24. STAFF OF THE AUSTL. HOUSE OF REPRESENTATIVES JOINT STANDING COMM. ON

FOREIGN AFFAIRS, DEF., AND TRADE, REP. ON AUSTRALIA’S ROLE IN UNITED NATIONS

REFORM, 75 (Comm. Print 2001), http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=JFadt/u_nations/unchap4.pdf.

25. Roberts, supra note 2, at 126–28.26. STAFF OF THE AUSTL. HOUSE OF REPRESENTATIVES JOINT STANDING COMM. ON


REFORM, 75, (Comm. Print 2001), http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=JFadt/u_nations/unchap4.pdf;;Georgia Covill, Creating a UN Standing Army, 2015 COSTEAS-GEITONAS SCHOOL MODEL

UNITED NATIONS, at 1, http://cgsmun.gr/wp-content/uploads/2015/10th/Study_Guides/SC_2_GC.pdf; see also Gideon Rachman, Opinion, Why the world needs a United Nations army,




Accordingly, the U.N. even gave some thought to hiring private militarycontractors (PMCs) when needed instead of establishing a U.N. force.27

Throughout the 1980s and 1990s, PMCs provided security services on aglobal scale.28 They were deployed to Mozambique, Saudi Arabia, Hungary,Croatia, and Bosnia; the United States used them to outsource some aspectsof military training.29 But “evidence [had] show[n] [that] PMCs [were]capable of human rights abuses and severe criminal acts with little or norecourse . . . to address those violations.”30 After considering PMCs as aquick reaction force in Rwanda, Kofi Annan, then U.N. UndersecretaryGeneral for Peacekeeping, rejected the idea, concluding that “the world maynot be ready to privatize peace.”31

Recognizing member states’ resistance to the idea of a permanent force,the potential issues with private corporations, and the fact that the ad hocsystem of soliciting troops at a moment of crisis was not working, SecretaryGeneral Boutros Ghali established a U.N. Standby Arrangements System(SAS) in the early 1990s.32 The SAS, still in place today, is “based uponcommitments by Member States to contribute specified resources withinagreed response time for [U.N.] peacekeeping operations.”33 Resourcesremain on standby in their home country until the Secretary-Generalrequests their use.34 States still have discretion as to whether the SAS canuse their troops or resources in individual operations.35

SAS appeared to have a lot of promise at its inception; within ten years,eighty-eight nations expressed their willingness to participate.36 But,although there were some successes, it was increasingly obvious over time

FIN. TIMES, July 20, 2009, https://www.ft.com/content/325b3c42-7558-11de-9ed5-00144feabdc0.

27. Deven R. Desai, Have Your Cake and Eat It Too: A Proposal For a Layered Approach toRegulating Private Military Companies, 39 U. S. F. L. REV. 825, 847–49 (2005), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=893857.

28. Id. at 831.29. Id. at 831-32.30. Id. at 849.31. Press Release, Secretary-General, Secretary-General Reflects on ‘Intervention’ in Thirty-

Fifth Annual Ditchley Foundation Lecture, U.N. Press Release SG/SM/6613 (June 26, 1998).32. STAFF OF THE AUSTL. HOUSE OF REPRESENTATIVES JOINT STANDING COMM. ON


REFORM, 75 (Comm. Print 2001), http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=JFadt/u_nations/unchap4.pdf.

33. Id. (citation omitted).34. Id.35. Id. at 68; Griffith, supra note 5, at 9–11.36. STAFF OF THE AUSTL. HOUSE OF REPRESENTATIVES JOINT STANDING COMM. ON


REFORM, 75 (Comm. Print 2001), http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=JFadt/u_nations/unchap4.pdf;Amanda Lieverse, A Rapid Reaction Capability for the United Nations: Past Failures andFuture Possibilities, 45–53 (2006) (unpublished Honors Thesis, University of Manitoba) (on filewith Department of Political Studies, University of Manitoba).




that states have chronically failed to deploy forces in a timely manner.37 In2000, the U.N. Panel on Peace Operations issued the Brahimi report(named after panel chairman Lakhdar Brahimi) concluding that the failure ofstates to meet their commitments, shortages of well-trained troops, and pooraccess to necessary material and resources prevented rapid and effectivepeacekeeper deployment.38

A stop-gap emerged in 2000 with the implementation of a Danishproposal to create a U.N. Standby Forces Brigade at High Readiness(SHIRBRIG) composed of 5,000 troops from sixteen states.39 This forcewas for U.N. peacekeeping operations under Chapter VI only and still reliedon the consent of the parties as well as a nation-state’s willingness toparticipate on a case by case basis.40 The U.N. deployed 1,200–1,500SHIRBRIG troops to Eritrea and Ethiopia with some success, but the U.N.abandoned the Brigade in 2009 due to the failure of members to meetpledges of actual military support.41 As noted by Denmark’s DefenseMinister, “in the case of SHIRBRIG, either member countries were unableto relinquish the troops needed[,] or if soldiers finally were provided,countries wanted specific influence over [exactly] how they were put touse.”42

With the continuing sting and embarrassment of the U.N.’s failure tointervene in the Balkans and Rwanda, the General Assembly in 2005endorsed the concept of Responsibility to Protect (R2P).43 Pillar One ofR2P notes that every nation has the responsibility to protect its populationsfrom genocide, war crimes, crimes against humanity, and ethnic cleansing.44

Pillar Three, however, states that if a country “is manifestly failing to protectits populations, the international community must be prepared to takeappropriate collective action, in a timely and decisive manner and inaccordance with the [U.N.] Charter.”45

R2P clearly provided greater incentive for the U.N. to, at the very least,make the Standby Arrangements System work. Nevertheless, as recently as2015, the U.N.’s High-Level Panel on Peace Operations concluded that:

37. Griffith, supra note 5, at 10.38. Id. at 12.39. Lieverse, supra note 36, at 43.40. Roberts, supra note 2, at 119–20.41. Walter C. Soderlund, Professor Emeritus, Dep’t of Political Sci. Univ. of Windsor, The

Responsibility to Prevent: From Identification to Implementation, Presentation at The AnnualConference of the Canadian Political Science Association (June 4–6, 2013), https://www.cpsa-acsp.ca/papers-2013/Soderlund.pdf.

42. Jonas von Freiesleben, Denmark Remains Committed to UN Peacekeeping – but isContemplating SHIRBRIG Pull-Out, CTR. FOR UN REFORM EDUC. (Aug. 6, 2008), http://www.centerforunreform.org/?q=node/359.

43. See About R2P, GLOB. CTR. ON THE RESPONSIBILITY TO PROTECT, http://www.globalr2p.org/about_r2p (last visited Oct. 1, 2018).

44. Id.45. Id.




Slow deployment is one of the greatest impediments to more effectivepeace operations . . . . The [U.N.] Security Council has no standingarmy to call upon. Reliance on ad hoc solutions for rapidly deployingnew missions and for crisis response has limited the timeliness andeffectiveness of international response . . . . [R]epeated calls for a globalon-call standby capacity have foundered time and again on concernsabout predictability, availability and cost.46

Rather than recommending a permanent standing U.N. force, aspreviously suggested by Urquart, the Panel instead recommended thatregional forces, such as the European and African Union, step up.47

Regional forces eventually intervened in the Balkans with the insertion ofNATO forces48 and in the Congo with active operations of the U.N.Intervention Brigade.49 But the world watched for many years as Serbiaundertook ethnic cleansing in Bosnia and Kosovo,50 and rebel groupscommitted atrocities in the Congo51 before these regional organizationsfinally took action. African Union troops deployed to Somalia were “simplyinadequate,”52 while in Mali, deployment was slow and the force small anduntrained.53 As Secretary-General Ban Ki-Moon stated:

We have been talking for some time about the need for the [U.N.] andkey regional actors to be able to deploy more rapidly, especially in acuteemergencies. The EU Battlegroup was created for this purpose, as wasthe African Standby force. But despite years of investment, we are stillfar from having predictable and effective mechanisms for rapiddeployment.54

46. Rep. of the High-level Indep. Panel on Peace Operations on uniting our strengths forpeace: politics, partnership and people, ¶¶ 195–196, U.N. Doc. A/70/95 (June 17, 2015).

47. See LANGILLE, supra note 15, at 14; see also Shibley Telhami, Is a Standing United NationsArmy Possible – Or Desirable, 28 CORNELL INT’L L. J. 673, 680–81 (1995).

48. See MARK JANIS & JOHN NOYES, INTERNATIONAL LAW, CASES AND COMMENTARY,657–63, 657 (4th ed. 2011) (contains an excellent history of NATOs indecisiveness and footdragging in the Balkans).

49. Nicholas Kulish & Somini Sengupta, New UN Brigades Aggressive Stance in Africa BringsSuccess and Risks, N.Y. TIMES, Nov. 12, 2013, http://www.nytimes.com/2013/11/13/world/africa/new-un-brigades-aggressive-stance-in-africa-brings-success-and-risks.html.

50. JANIS & NOYES, supra note 48, at 659.51. See Congo: War Crimes in Kisangani, Implicated Commanders Named, HUMAN RIGHTS

WATCH, (Aug. 20, 2002), https://www.hrw.org/news/2002/08/20/congo-war-crimes-kisangani(last visited Oct. 1, 2018); see also Julie Reynaert, Editorial, MONUS/MONUSCO and CivilianProtection in the Kivus, INT’L PEACE INFO. SERV., (Mar. 2, 2011), http://reliefweb.int/sites/reliefweb.int/files/resources/D11C9B161C343539C1257847004BF8BF-Full_Report.pdf (Ittook ten years before the Intervention Brigade was dispatched).

52. Rachman, supra note 26.53. Matthew Willis, Occasional Paper, Mali: The Case for A Permanent UN Intervention Force?,

RUSI, 2–5 (July 2013), https://rusi.org/sites/default/files/201307_op_un_shield.pdf.54. U.N. Secretary-General, Remarks at the Security Council’s open debate on “United

Nations Peacekeeping; Regional Partnerships and Its Evolution” (July 28, 2014U.N.), https://




In light of this history, including the recent failures of SAS and regionalforces, conflict resolution scholar Peter Langille proposed a United NationsEmergency Peace Service (UNEPS).55 As explained at length in his 2016book, Developing a United Nations Emergency Peace Service, UNEPS would bea well-qualified and dedicated U.N. force composed of approximately 14,000or greater if needed, volunteer civilian, police, and military professionalswho are selected, trained, and employed by the U.N.56 It would bemultidimensional and multifunctional, capable of aggressive militaryoperations as well as humanitarian, health, and environmental missions.57

UNEPS would prepare deployable personnel, equipment, and supplies forprompt staging on short notice from designated U.N. operational bases.58

Reviewing prior opposition to such a force, Langille notes that UNEPSmembers would be highly trained and could rely on the lessons learned fromthe considerable, difficult experience the U.N. has had in previouspeacekeeping deployments.59 As for undermining the U.N.’s reputation andimpartiality, he argues that the use of force, when needed, would be to“support peace processes, protect civilians, and fulfill legitimateinternational mandates.”60 “Overall, the [U.N.]’s reputation has notdiminished from the [U.N.]’s use of force, but it has suffered from thereluctance and failure to use force when it could have saved thousands oflives, even hundreds of thousands.”61

Langille acknowledges that one of the key objections to such a force iscost as “[a]usterity is a [U.N.] priority and departments are [constantly]ordered to ‘do more with less.’”62 But he convincingly argues that “whendelays on securing approval and deployment fail to stem violence, there tendto be far higher [financial and humanitarian] costs and lower prospects ofsuccess.”63 To cite one example, General Dallaire, who commanded thesmall U.N. peacekeeping force in Rwanda, claimed that:

[P]rompt access to a force of 5,000 well-trained soldiers could haveprevented much of the genocide. In response to pleas for furthertroops, which might have cost US $200–300 million, the internationalcommunity simply delayed for three months. After initially refusing tohelp, while 800,000 people were slaughtered, it then poured severalbillion dollars into relief for refugees and reconstruction aid. Yet, the

www.un.org/sg/en/content/sg/speeches/2014-07-28/remarks-security-council-open-debate-united-nations-peacekeeping.

55. LANGILLE, supra note 15, at vii.56. Id. at 2–3.57. Id. at 2.58. Id. at 2, 4.59. Id. at 60–80 (Langille reviews opposition and provides response; capabilities are reviewed

at 61–67).60. Id. at 66.61. LANGUILLE, supra note 15, at 65.62. Id. at 74.63. Id. at 76. See also costs addressed at 73–80.




violence triggered in Rwanda did not stop there as the armed conflictgradually spilled over into neighboring states . . . .64

Langille notes that the same “familiar pattern” followed in the Congo,Darfur, and Central African Republic.65 “It is reasonable to assume thatthose responsible for planning [such] violent actions might be deterred fromsuch behavior if the [U.N.] had ready access to a mechanism that could notonly thwart their plans, but hold them accountable for their actions.”66 Inthis latter respect, the international criminal tribunals and InternationalCriminal Court (ICC) can be an important deterrent, but the ICC itselflacks a police force of its own.67 “UNEPS could serve in this capacity,representing both the psychological and physical presence required touphold international law.”68

Of course, if UNEPS is deployed by the Security Council under Langille’splan, one is always concerned about historical instances of the vetopreventing the Security Council from acting. The Council’s “members havedifferent interests and views, making rapid agreement on action hard tosecure.”69 But the Security Council’s unanimous votes since the end of theCold War concerning the invasion of Kuwait,70 terrorism,71 and especiallythe concepts promulgated by the Responsibility to Protect72 and the 2004U.N. Panel on Threats and Challenges,73 offer hope that the SecurityCouncil may not be an obstacle in every case. Recognizing that thepermanent members’ veto power was necessary to establish the U.N., thePanel on Threats and Challenges nevertheless concluded:

[A]s a whole the institution of the veto has an anachronistic characterthat is unsuitable for the institution in an increasingly democratic ageand we would urge that its use be limited to matters where vitalinterests are genuinely at stake. We also ask the permanent members,in their individual capacities, to pledge themselves to refrain from theuse of the veto in cases of genocide and large-scale human rightsabuses.74

64. Id. at 74–75.65. Id.66. Id. at 77.67. LANGILLE, supra note 15, at 77.68. Id.; see also Ron Sievert, A New Perspective on the ICC: Why the Right Should Embrace the ICC

and How America Can Use It, 68 U. PITT. L. REV. 79 (2006).69. Roberts, supra note 2, at 127.70. S.C. Res. 678 (Nov. 29, 1990).71. S.C. Res. 1373 (Sept. 28, 2001).72. Responsibility to Protect, U.N. OFF. ON GENOCIDE PREVENTION AND RESP. TO PROTECT,

http://www.un.org/en/genocideprevention/about-responsibility-to-protect.html (last visitedOct. 15, 2018).

73. U.N. High Level Panel on Threats, Challenges and Change, A More Secure World; OurShared Responsibility, U.N. Doc A/59/565 (Dec. 2, 2004).

74. Id. ¶ 256.




The existence of UNEPS or a similar permanent force would likely makethe exercise of the veto even less likely, as “for the Security Council, the‘will’ to do a job often depends on having an appropriate tool for the job,preferably one that is readily available and reliable.”75 In the words ofProfessor Juan Mendez:

If the [U.N.] had at its disposal a deployment-ready force with bothmilitary and civilian capabilities, trained on the basis of the accumulatedexperience of previous peace-keeping operations, it would be lesspossible to allege that the international community’s hands are tied, andless likely that the lack of political will to act, will again condemn us tofrustration.76

II. The United States As a Primary Source of Recruits for aPermanent Force

A review of previous history, as well as the arguments in support of apermanent U.N. peace force, leads to the inescapable conclusion that weshould witness the creation of such an organization at some point in the nearfuture. One cannot predict the time, but it would appear to be part of thenecessary and inevitable flow of events. In contemplating the formation ofthis force, it is hard to imagine a better recruiting source to help fill theranks than U.S. military veterans. The U.S. armed forces are well regardedas probably the best trained troops in the world.77 More veterans areavailable as the military has decreased in size from 2.1 million to 1.3 millionin the last twenty-five years,78 with a 100,000 reduction since just 2004.79 Itis estimated that there will be approximately 2.1 million retirees by 2020.80

A very significant number were previously deployed to the Middle East,

75. LANGILLE, supra note 15, at 69–70.76. Juan Mendez, Prevention of Genocide and Its Challenges, in STANDING FOR CHANGE IN

PEACEKEEPING OPERATIONS 44, 45 (Global Action to Prevent War 2009).77. Jeremy Bender, Ranked: The World’s Strongest Militaries, BUS. INSIDER, (Oct. 3, 2015),

http://www.businessinsider.com/these-are-the-worlds-20-strongest-militaries-ranked-2015-9/#20-canada-1; Logan Nye, Top Ten Militaries in the World 2017, MILITARY.COM (Aug. 4, 2017),https://www.military.com/undertheradar/2017/08/top-10-militaries-world-2017.

78. Kim Parker, Anthony Cilluffo, & Renee Stepler, 6 Facts about the US Military and itsChanging Demographics, PEW RES. CTR (Apr. 13, 2017), http://www.pewresearch.org/fact-tank/2017/04/13/6-facts-about-the-u-s-military-and-its-changing-demographics/ (changehighlighted in graph).

79. Id.; The World Bank, DataBank: World Development Indicators, Armed ForcesPersonnel, total, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators (last visited Dec. 19, 2017) (the World Bank reports 1,473,000 in 2004, and the PEWgraph shows 1,340,533 in 2015).

80. Forecast number of military retirees in the US from 2017 to 2027 (in 1,000), STATISTA, https://www.statista.com/statistics/217354/forecast-number-of-military-retirees-in-the-us/ (last visitedOct. 1, 2018).




Africa, and other hot spots around the world.81 The United States is alreadythe largest contributor of personnel to the U.N. Secretariat, with many ofthese employees working in the Diplomatic Security Section.82 While theU.S. unemployment rate may fluctuate, a number of veterans consider theirservice as their job especially in comparison to their current employment.83

Specifically, a 2010 survey found that the four services ranked in the top tenplaces to work, beating out Microsoft, Johnson and Johnson, and Disney.84

Professor Bradley Brummel noted that “the military provides many of theessential elements to finding happiness at work, including having ameaningful impact on the world, having true camaraderie with your co-workers and having the opportunities to develop skills.”85 It would seem thatsuch highly trained and motivated individuals could easily supply up to aquarter or more of a contemplated 20,000- member U.N. force.

But little known constitutional and statutory provisions present potentialobstacles that must be addressed before U.S. citizens could make such acontribution. The first is the Emoluments Clause of the Constitution,which states that “no Person holding any Office of Profit or Trust under [theUnited States], shall, without the consent of Congress accept of any present,Emolument, Office, or Title, of any kind whatever, from any King, Prince,or foreign State.”86 Emolument has been defined as “profit arising fromoffice or employment; that which is received as a compensation for services. . . [such as salary].”87 Additionally, the nineteenth century Neutrality Actsmake it illegal for a U.S. citizen to “enlist[ ] . . . or to go beyond thejurisdiction of the United States . . . to be enlisted . . . in the service of anyforeign prince, [or] state . . . as a soldier or as a marine or seaman . . . .”88

81. Operation Enduring Freedom and Operation Iraqi Freedom: Demographics and Impact, inRETURNING HOME FROM IRAQ AND AFGHANISTAN: PRELIMINARY ASSESSMENT OF

READJUSTMENT NEEDS OF VETERANS, SERVICE MEMBERS, AND THEIR FAMILIES 17, 17–38(Inst. of Med. Comm. on the Initial Assessment of Readjustment Needs of Military Pers.,Veterans, and Their Families, 2010).

82. The Secretary-General, Composition of the Secretariat: staff demographics, U.N. Doc A/72/123 (July 11, 2017); Denis Fitzgerald, Where Do the 41,000 People Working for the U.N.Secretariat Come From, U.N. TRIBUNE (Mar. 3, 2016), http://untribune.com/where-do-the-41000-people-working-for-the-un-secretariat-come-from/; see generally William J. Durch &Michelle Ker, Police in U.N. Peacekeeping: Improving Selection, Recruitment, and Deployment, INT’LPEACE INST., (Nov. 2013), https://www.ipinst.org/wp-content/uploads/publications/ipi_e_pub_police_in_un_peacekeeping.pdf (Most U.N. Police come from Jordan, Bangladesh and India,but of course the function of the contemplated armed forces would be far beyond routine policeduties.).

83. See Brian Anthony Hernandez, US military beats out Disney as happy place to work, THE

CHRISTIAN SCIENCE MONITOR (Oct. 25, 2010), https://www.csmonitor.com/Business/Latest-News-Wires/2010/1025/US-military-beats-out-Disney-as-happy-place-to-work.

84. Id.85. Id.86. U.S. CONST. art. I, § 9, cl. 8.87. Apple v. County of Crawford, 105 Pa. 300, 303 (1884) (quoting definition of emolument

from Webster’s Unabridged Dictionary (n.d.)).88. 18 U.S.C. § 958–960 (1994).




Finally, the Immigration Acts provide for loss of U.S. nationality if a U.S.citizen “enter[s] or serv[ed] in the armed forces of a foreign state . . . as acommissioned or non-commissioned officer . . . .”89

At first glance, the archaic wording of the Emoluments Clause mightappear to have little practical importance in the twenty first century. But inlight of judicial and administrative opinions, as well as the new militaryretirement system, it could potentially apply to a sizable portion of all U.S.military veterans. In 1883, the Supreme Court held that “officers of thearmy on the retired list are [still] a part of the army of the United States. . . .”90 Relying on this and subsequent case law, the Attorney General in1909 extended this finding to enlisted men, concluding the following: “Themilitary status, whether that of an officer or enlisted man, is an office orfundamentally like one. The quoted language is therefore directly applicableto the case of a military officer and is applicable either directly or by analogyto the case of an enlisted man.”91

In 1922, the Comptroller General of the United States, referring to theDual Office Act of 1894, found that:

Enlisted men on the retired list are now as much a part of the Army orNavy, respectively, as . . . commissioned or warrant officers are . . . . Isee no grounds for distinction . . . . The term office as used in the act of1894 is a broad [sic] general term which has been construed to includeany person holding a place or position under the government and paidfrom government funds.92

According to Major Joseph P. Creekmore in his extensive article onmilitary status, by the end of World War II, the concept of “office of anenlisted man on the retired list” had solidified and become firmlyentrenched as a rule in administrative opinions considering theapplicability of Article 1, Section 9, Clause 8 (the Emoluments Clause),to retired enlisted persons, as being an “office under the UnitedStates.”93

Jeffery Green in his 2013 article, Application of the Emolument Clauseto DOD Civilian Employees and Military Personnel, appears to concur,noting that: “This prohibition [now] applies even after retirement . . . .[R]eservists are also subject to the Emoluments Clause, even after

89. 8 U.S.C. § 1481, 3a (1988).90. Wood v. United States, 107 U.S. 414, 417 (1883).91. Army Officers-Retirement-Contract Surgeons Employed During the Civil War, 27 Op.

Att’y Gen. 468, 472 (1909) (relying on United States v. Grimly, 137 U.S. 147 (1890); Wood v.United States, 107 U.S. 414 (1883); Hartwell v. United States, 6 U.S. (1 Wall.) 385 (1868)).

92. Director United States Veterans Bureau, 1 Comp. Gen. 700, 702 (1922).93. Major Joseph P. Creekmore, Acceptance of Foreign Employment by Retired Military Personnel,

43 MIL. L. REV. 111, 128–29 (1969).




completing the requisite number of years to be eligible for retired payand having been transferred to inactive status.”94

An analysis of the recently enacted military retirement system wouldbolster these conclusions as officers and enlisted members both may havelengthy military obligations after active duty and all are now eligible toreceive government funds for life.95 Members of the armed forces today arecommitted for a minimum of eight years.96 This means that if they serve onactive duty for three years, then they may still be recalled to duty as amember of the Individual Ready Reserve for five years.97 Further, if theyserve at least twenty years and receive retirement pay, then they may becalled to active duty for life.98 Under the new U.S. Uniformed ServicesBlended Retirement System, however, anyone who has served, no matterhow short their term on active duty, “can [now] get automatic and matchingThrift Savings Plan contributions . . . in addition to monthly annuities forlife.”99 This, in combination with the previous administrative opinions citedabove, suggests that virtually all veterans can receive continuous paymentfrom the U.S. Government and are potentially almost always holding an“office of profit” in the United States.

But is an international organization like the U.N. a “foreign state” underthe constitution’s Emoluments Clause? Surprisingly, the answer is not clear.In 1957 the Judge Advocate General (JAG) of the Army advised a retiredofficer who was considering accepting a position with the United NationsTechnical Assistance Administration that the Emoluments Clause couldpreclude such employment because “the character of the United Nationsmight justify the conclusion that it is a ‘foreign state’ within the meaning ofthe constitutional provision.”100 This position was confirmed by JAG a yearlater with respect to the United Nations Educational, Scientific and CulturalOrganization, although it was noted the Department of Justice wouldeventually have to make a final determination.101 In 1977, the Foreign Gifts

94. Jeffrey Green, Application of the Emoluments Clause to Department of Defense CivilianEmployees and Military Personnel, U.N. ARMY LAW., June 2013, at 16–17.

95. Ann Carns, Military Is Overhauling Its Retirement Systems, N.Y. TIMES (Nov. 3, 2017),https://www.nytimes.com/2017/11/03/your-money/military-pensions-thrift-savings-plan.html.

96. Rod Powers, US Military Enlistment Contracts and Enlistment Incentives, BALANCE CAREERS,https://www.thebalancecareers.com/what-the-recruiter-never-told-you-3332715 (last updatedAug. 22, 2018).

97. Id.98. Powers, supra note 96.99. The U.S. Uniformed Services Blended Retirement System, DEP’T DEF. (Dec. 2015), https://

dod.defense.gov/Portals/1/Documents/pubs/Tab%20B%20Blended%20Retirement%20System%20Infographic_12.9.15_FINAL3_508%20(1).pdf?ver=2016-04-21-073227-327.100. Creekmore, supra note 93, at 147.101. Id.




Act102 was amended to include international organizations under thedefinition of “foreign government.”103

In 1953, the Office of Legal Counsel (OLC) at the Department of Justicehad indicated there would be no problem with a federal judge serving on aU.N. International Law Commission because such organizations wereunknown when the framers had drafted the Emoluments Clause.104 Later,the OLC expressed doubt about this conclusion with regards to the U.N.,noting that “employment by the United Nations Secretariat containselements comparable to accepting an office from a foreign government.”105

In the opinion of the Assistant Attorney General, there was “some basis forregarding United Nations employment as coming within the spirit if not theletter of the prohibition of Article I, Section 9, Clause 8 of theConstitution.”106

The Office of Legal Counsel appeared to reverse its position again with a2001 opinion on the World Bank. The OLC stated that “[i]n recent years,this Office in oral advice has consistently construed the terms ‘King, Princeor foreign State’ to exclude international and multinational organizations”although our “few formal written opinions, going back to the 1950s, havenot shown the same consistency.”107 With regards to the World Bank, theOLC stated that this U.N.-sponsored international financial organization“has neither a defined territory nor a permanent population under itscontrol.”108 The United States appoints a governor for the bank as well as anexecutive director, and “by tradition[,] the World Bank’s President is anational of the United States, which is the World Bank’s largestshareholder.”109 Based on these facts, the Bank’s “important role in carryingout our foreign policy,” and the United States’ “leadership role in itsdecisionmaking[,] . . . employment . . . would not directly raise the concernsabout divided loyalty that the Emoluments Clause was designed toaddress.”110

There are obvious contradictions implicit in these OLC opinions withrespect to servicepersons serving in a U.N. Peace Force. On the one hand,the OLC has provided consistent oral advice that the Emoluments Clausedoes not apply to international organizations, which have neither a definedterritory nor a population, and acknowledges the restriction cannot applybecause such organizations did not even exist in 1789. Furthermore, at leastin the case of the World Bank, there is likely to be little conflict between this

102. Foreign Gifts and Decorations Act, 5 U.S.C. § 7342 (2011).103. Foreign Relations Authorization Act, Fiscal Year 1978, PL 95-105, 91 Stat 844, 863(1977).104. Emoluments Clause and the World Bank, 25 Op. O.L.C. 113, 115 (2001).105. Id. at 115.106. Id.107. Id. at 114–115 (emphasis added).108. Id. at 116.109. Id. at 113.110. Emoluments Clause and the World Bank, supra note 104, at 116. (emphasis added).




international organization and U.S. policy because the United States hassuch control over decision-making. On the other hand, the United Statesdoes not control the leadership of the entire U.N. as a reliable instrument ofU.S. foreign policy as it does the World Bank, a fact aptly demonstrated bynumerous U.N. decisions, from the second Gulf War111 to the official andwidespread condemnation of the U.S. announcement that it would move itsembassy in Israel to Jerusalem.112 The OLC could thus in the future treatthe U.N. as a foreign state and find that employment with various U.N.organizations other than the World Bank actually comes within “the spirit ifnot the letter” of the Emolument clause.113

The Emolument Clause does, however, state that such employment isprohibited “without the consent of Congress,” so any ambiguity reflected inthese opinions could be resolved with congressional legislation.114 In 1982,Congress passed a law specifically referencing the Emolument Clause andconsenting to the civil employment of retired servicepersons with a foreigngovernment only “if the Secretary concerned and the Secretary of Stateapprove.115 This was followed by legislation applicable to “retiredmember[s] of the uniformed services” accepting employment or holdingoffice in the “military forces of a newly democratic nation” if the Secretaryof the service-member’s former branch and the Secretary of State “jointlydetermine whether a nation is a newly democratic nation” and “approve theemployment or holding of such office or position.”116 If the Department ofJustice were to reverse its most recent oral and written opinions suggestingthat international organizations are not a “foreign state,” Congress wouldhave precedent for passing legislation that would open the door andeliminate the problem.

As for the Neutrality Acts pertaining to accepting a commission orenlisting in the service of a foreign state,117 completely aside from theprevious discussion on the meaning of “foreign state,” a close reading of thestatutes reveals that they refer to recruitment “within the jurisdiction” of theUnited States,118 or “within the United States.”119 The Supreme Court inWiborg v. United States held that these statutes did not apply to someone whowent abroad to enlist as long as they were not hired in the United States.120

Signing up at U.N. Headquarters would not be a problem, as the U.N. is

111. MARK WESTON JANIS & JOHN E. NOYES, INTERNATIONAL LAW, CASES AND

COMMENTARY 777 (5th ed. 2014).112. Rick Gladstone & Mark Landler, U.N. General Assembly Condemns U.S. Decree onJerusalem, N.Y. TIMES (Dec. 21, 2017), https://www.nytimes.com/2017/12/21/world/middleeast/trump-jerusalem-united-nations.html.113. Emoluments Clause and the World Bank, supra note 104, at 115.114. U.S. CONST. art. I, § 9, cl. 8.115. 37 U.S.C. § 908(a)–(b) (2012).116. 10 U.S.C. § 1060 (a)–(c) (2003).117. 18 U.S.C. §§ 958–60 (1994).118. 18 U.S.C. § 958 (2011).119. 18 U.S.C. § 959 (1994); 18 USC § 960 (1994).120. Wiborg v. United States, 16 S.Ct. 1127, 1130 (1896).




“International Territory.”121 The Neutrality Acts have not been an obstacleto many American citizens who have recently joined the Israeli andAustralian armed forces.122 It would be treason, however, if the soldierfound themselves in a position where they would “lev[y] war” against theUnited States “or adhere to [our] enemies, giving them aid and comfort.”123

Finally, it is fairly clear today, that despite some of the original languageof the Immigration Code pertaining to loss of nationality when entering thearmed forces of a foreign state,124 a U.S. national will not automatically losetheir citizenship when entering another nation’s army. This was not alwaysthe case as the U.S. statutes and the Supreme Court were at one time fairlystrict in enforcing the loss of citizenship on those who engaged in a list ofprohibited acts including foreign service.125 In 1958, the Supreme Courtheld that it was proper for Congress to require that anyone who voted in aforeign election should immediately lose their U.S. citizenship.126 This waspart of Congress’ ability to regulate foreign affairs and avoid potentialdiplomatic embarrassment.127 Just nine years later, however, in Afroyim v.Rusk,128 the Court held that citizenship was not fleeting and could not be lostwithout voluntary and intentional renunciation.129 Title 8 U.S.C. 1481 (a)(3)thus now:

provides for [the] loss of nationality if a U.S. national voluntarily andwith the intention of relinquishing U.S. nationality enters or serves inthe armed forces of a foreign state engaged in hostilities against theUnited States or serves in the armed forces of any foreign country as acommissioned or non-commissioned officer.130

121. Lynn Freehill-Maye, The International Territory in the Middle of New York, MENTAL FLOSS

(Dec. 2, 2016), http://mentalfloss.com/article/89319/international-territory-middle-new-york-city.122. Dan Lamothe, How Can Americans be Fighting for Israel in Gaza? Some Background, WASH.POST (July 21, 2014), https://www.washingtonpost.com/news/checkpoint/wp/2014/07/21/how-can-americans-be-fighting-for-israel-in-gaza-some-background/?utm_term=.ad396aee69c5;Lauren Raab, Why Would an American Join Israel’s Military?, L. A. TIMES (July 21, 2014), http://www.latimes.com/nation/nationnow/la-fg-americans-israel-gaza-military-20140721-story.html;Seth Robson, Serving Down Under: Australia Offers Military Jobs to US Troops Facing Separation,STARS & STRIPES (May 8, 2012), https://www.stripes.com/news/serving-down-under-australia-offers-military-jobs-to-us-troops-facing-separation-1.176622.123. 18 U.S.C. § 2381 (1994).124. 8 U.S.C. § 1481 (2012).125. See 8 U.S.C. § 801(a)–(d) (repealed 1952).126. Perez v. Brownell, 78 S. Ct. 568, 568–69 (1958).127. Id. at 576.128. Afoyim v. Rusk, 87 S.Ct. 1160 (1967).129. Id. at 1665.130. Bureau of Consular Affairs, Advice About Possible Loss of U.S. Nationality and DualNationality, TRAVEL.STATE.GOV, https://travel.state.gov/content/travel_old/en/legal-considerations/us-citizenship-laws-policies/citizenship-and-dual-nationality/citizenship-and-foreign-military-service.html (last visited Oct. 1, 2018).




In adjudicating loss of nationality cases, the State Department has“established an administrative presumption that a person serving in thearmed forces of a foreign state not engaged in hostilities against the U.S.does not have the intention to relinquish nationality.”131 Theaforementioned soldiers who are citizens of the United States serving in thearmed forces of Israel, Australia, and other nations thus do not generally loseU.S. citizenship.132 This should not be a problem for veterans serving with aU.N. Peace Force except in the very rare, and hopefully unimaginable, casethat the U.N. was somehow engaged in hostilities against the United States.

III. Would Deployment of Such a Force Need CongressionalAuthorization?

If U.S. military veterans are still technically U.S. troops because they“hold an office of profit” in the United States pursuant to the cited AttorneyGeneral’s and Comptroller’s opinions and the new retirement systemproviding for retirement for life, can they be deployed in a U.N. peace forcewithout congressional approval? This gets into a war powers issue that hasbedeviled scholars and politicians for decades.133 Plenty has already beenwritten on the subject and it is beyond the scope of this paper to embark on acomplete recitation of the numerous lengthy arguments. But, it is importantto review the essence of the matter.

A bare reading of the U.N. Charter would support the position that oncethe Security Council decides to use force, the United States and othernations are then obligated to supply troops. Article 42 of the Charter statesthat if other measures prove inadequate, the Security Council may decide to“take such action by air, sea, or land forces as may be necessary to maintainor restore international peace and security.”134 Article 25 of the Charterstates that “[t]he Members of the United Nations agree to accept and carryout the decisions of the Security Council in accordance with the presentCharter.”135 This could be the end of the discussion. But Article 43 statesthat members “undertake to make available to the Security Council . . . inaccordance with . . . agreements, armed forces . . . necessary for the purposeof maintaining international peace and security.” These agreements “shallbe subject to ratification by the signatory states in accordance with their

131. Id.132. Lamothe, supra note 122.133. Louis Fisher, The Korean War: On What Legal Basis Did Truman Act?, 89 AM. J. INT’L L. 21(1995); Fred L. Morrison, Characteristics of International Administration in Crisis Areas: A Viewfrom the United States of America, 54 AM. J. COMP. L. 443 (2006); James A.R. Nafzinger &Edward M. Wise, The Status in United States Law of Security Council Resolutions Under Chapter VIIof The United Nations Charter, 46 AM. J. COMP. L. 421 (1998); Jane E. Stromseth, RethinkingWar Powers: Congress, The President, and the United Nations, 81 GEO. L.J. 597 (1993); TimothyD.A. O’Hara, Without Justification: Misplaced Reliance on United Nations Security CouncilResolutions for Presidential War Making, 31 J. MARSHALL L. REV. 583 (1998).134. U.N. Charter art. 42.135. U.N. Charter art. 25.




respective constitutional processes.”136 Depending on interpretation, Article43 is either an anachronistic red herring completely irrelevant to the legaldeployment of troops mandated by Article 42 and Article 25,137 or the sinequa non establishing the absolute necessity of “agreements” sanctioned byCongress before U.S. forces may be utilized.138

When the U.N. Charter was submitted to the Senate for ratification as atreaty, many Senators appeared to believe in the necessity that Article 43agreements must be sanctioned by the legislature before U.S. troops couldbe dispatched.139 John Foster Dulles, the State Department advisor to theU.S. delegation in San Francisco, testified that such agreements would needthe approval of the Senate and could not be done unilaterally by thePresident.140 Congress subsequently passed the U.N. Participation Act(UNPA) stating that:

The President shall not be deemed to require the authorization of theCongress to make available to the Security Council on its call in orderto take action under article 42 of said Charter and pursuant to suchspecial agreement or agreements the armed forces . . . provided [for]therein: Provided, That nothing herein contained shall be construed asauthorization to the President by the Congress to make available to theSecurity Council for such purpose armed forces . . . in addition to theforces . . . provided for in such special agreement or agreements.141

Thus, in the opinion of Louis Fisher and others, it is only after “thePresident receives the approval of Congress for a special agreement [that] hedoes not need its subsequent approval to provide military assistance underArticle 42 . . . [N]othing in the [UNPA] is to be construed as congressionalapproval of [any] other agreements entered into by the President.”142 JamesA.R. Nafziger & Edward M. Wise point out that “no such specialagreements have ever been concluded . . . under Article 43 of the [U.N.]Charter.”143

Proponents of Security Council and presidential power could argue,however, that the UNPA only related to the process of negotiating Article43 “agreements,” and that this is a matter separate and apart from theobligations created by Article 42 and Article 25. Indeed, this appeared to bethe position of President Truman when he ordered U.S. forces to Korea in

136. U.N. Charter art. 43, ¶¶ 1, 3.137. Thomas M. Franck & Faiza Patel, UN Police Action in Lieu of War: “The Old OrderChangeth”, 85 AM. J. OF INT’L L. 63 (1991).138. Nafzinger & Wise, supra note 133, at 430.139. The Charter of the U.N.: Hearings before the Senate Comm. on Foreign Relations, 79th Cong.645–646 (1945).140. Id. (statement of John Foster Dulles, Advisor to U.S. Delegation in San Francisco, StateDepartment).141. United Nations Participation Act of 1945, Pub. L. No. 79-264, ch.583, § 6, 59 Stat. 619,621 (1945) (first emphasis added).142. Fisher, supra note 133, at 29; see also O’Hara, supra note 133.143. Nafziger & Wise, supra note 133, at 429.




1950 without Congressional authorization.144 The President stated: “TheSecurity Council called upon all members . . . to render every assistance tothe United Nations in the execution of this resolution [to defend SouthKorea]. In these circumstances I have ordered United States air and seaforces to give the [South] Korean Government troops cover and support.”145

Secretary of State Acheson claimed the deployment was “under the aegis ofthe United Nations”146 and “in conformity with the resolutions of theSecurity Council.”147

President George H.W. Bush and President Clinton appeared to be of thesame belief as President Truman. President Bush initially made the decisionto deploy troops to the Gulf to defend Kuwait without seekingCongressional authorization.148 He eventually sought a congressionalauthorization of force for political reasons, but at the same time stated thathe had the constitutional right to unilaterally implement the U.N.resolutions.149 President Clinton prepared for a large scale invasion of Haitiin 1994 without congressional permission in order “to carry out the will ofthe United Nations.”150 When the unanimous Senate claimed that the U.N.Haiti resolution was not constitutional authorization,151 Clinton respondedthat he believed “[l]ike [his] predecessors of both parties,” that theConstitution did not require him to receive congressional approval to fulfilla U.N. resolution.152

This approach is arguably directly in conflict with the UNPA as well asthe War Powers Act (WPA) requiring the President to receive congressionalpermission within sixty days of sending our forces into hostilities.153 Thefact that the U.N. Charter is a Treaty would not necessarily avail thePresident, as the WPA states that authority to introduce forces intohostilities “shall not be inferred . . . from any Treaty . . . unless such treaty isimplemented by legislation specifically authorizing the introduction ofUnited States Armed Forces.”154 The UNPA certainly does not specificallyauthorize a significant use of such forces. A major deployment, therefore,could easily provoke a constitutional crisis in which the Supreme Court’slandmark decision in Youngstown Sheet and Tube v. Sawyer would be a crucialpart of the analysis.155 Youngstown famously held that when the Presidentacts inconsistent with Congress’ express will, “his power is at its lowest ebb,”

144. Fisher, supra note 133.145. Id. at 32.146. 23 State Dept. Bull. 43, 43 (1950).147. Id. at 46.148. O’Hara, supra note 133, at 590.149. Id,150. Address to the Nation on Haiti, 30 WEEKLY COMP. PRES. DOC. 1779, 1780 (Sept. 15, 1994).151. 103 Cong. Rec. S10540 (daily ed. Aug. 3, 1994).152. The President’s News Conference, 30 Weekly Comp. Press Doc. 1614, 1616 (Aug. 3,1994).153. War Powers Resolution, 50 U.S.C. §1544(b) et seq.154. 50 U.S.C. § 1547(a)(2).155. Youngstown Sheet and Tube Co. v. Sawyer, 72 S.Ct. 863 (1952).




and “he can only rely upon his constitutional powers minus anyconstitutional powers of Congress over the matter.”156

But aside from the fact that most Presidents have maintained that theWPA is unconstitutional,157 we are not dealing here with the deployment ofa major part of the standing U.S. Army, but rather with U.S. veterans as partof a U.N. peacekeeping force. President Truman appeared to be thinking ofhis constitutional ability to use U.S. troops in a limited role when he initiallycalled the assignment of forces to Korea a “police action.”158 After the WPAwas passed, President Clinton deployed a brigade sized unit to Kosovodespite Congress’ refusal to authorize action,159 and President Obamaconducted an air war in Libya without seeking legislative permission on thegrounds that there was a limited mission, danger, or risk of escalation.160

Indeed, Presidents have ordered some type of military deployment in U.S.history over 200 times with only five congressional declarations of war.161 Atleast in this type of restricted action, the President appears to be backed upby both history, which is a factor in Youngstown analysis,162 as well as suchSupreme Court cases as Cunningham v. Neagle, referring to the President’sunilateral “rights, duties, and obligations growing out of the constitutionitself, our international relations, and all the protection implied,”163 andUnited States v. Curtis Wright Exporting Co., highlighting the President’s“delicate, plenary and exclusive power . . . as the sole organ of the federalgovernment in the field of international relations.”164

IV. Conclusion

As noted in the first section of this paper, it was the intent of the foundersof the U.N. that some force would always be ready to maintain and restoreinternational peace and security. It was originally envisioned that theseforces would be supplied by nation states. The Cold War and the inabilityof nations to agree to always provide well trained national troopsimmediately upon U.N. request has extinguished this vision. The result hasbeen the horrors of Rwanda and the Balkans, which are now being followedby despotic actions and ISIS inspired atrocities on the African continent. Itis understandable that democracies do not want to send active duty armies tosome of these dangerous hot spots, but, where there is a good chance ofsuccess, a permanent U.N. force could be deployed without the samepolitical repercussions. The time has truly come for such a force. Statesmen

156. Id. at 871.157. Morrison, supra note 133, at 452.158. Presidential News Conference, 179 PUB. PAPERS 502, 504 (June 29, 1950).159. See Campbell v. Clinton, 203 F.3d 19 (D.C. Cir. 2000).160. See Libya and War Powers: Hearing Before the Comm. on Foreign Relations, 112th Cong.(2011).161. O’Hara, supra note 133, at 601.162. Youngstown, 72 S.Ct. at 872.163. Cunningham v. Neagle, 10 S.Ct. 658, 668 (1890).164. United States v. Curtis Wright Exp. Co., 57 S.Ct. 216, 221 (1936).




such as Sir Brian Urquhart and Hans Van Mierlo and scholars like PeterLangille have now led the way. It is only necessary to act.

Troops for a permanent force could come from all over the world. Since9/11, the United States has done an outstanding job training thousands ofyoung soldiers, who have also gained invaluable experience in Iraq andAfghanistan. Many are now “retired” veterans. The author has often notedin his conversations with these young veterans that they are proud of servingin the military, partly because of the discipline, but also because, in ProfessorBrumley’s words, as soldiers, they were “having a meaningful impact on theworld.”165 Any potential issues posed by their retirement pay and theEmoluments Clause because they may still hold an “office of profit” in theUnited States could be easily met with legislation in the same manner thatCongress acted to permit service with foreign and newly emergingdemocracies in 1982 and 2003.166 Furthermore, if the retirement system stilltechnically makes them US troops, there exists plenty of precedent for theveterans’ deployment in narrow and limited peace-focused missions withoutCongressional authorization, which is consistent with the President’sconstitutional foreign affairs powers.

The creation of a U.N. Peace Force and the utilization of U.S. veterans tocontinue their service in support of world peace and stability are two ideaswhich simply make sense. We do not want to simply stand by and repeatedlyobserve genocide as we did in Rwanda and the Balkans because nation statesand the U.N. were powerless to act.

165. Hernandez, supra note 83.166. 37 U.S.C. § 908(a)–(b) (2012); 10 U.S.C. § 1060 (a)–(c) (2003).



Internationalizing the U.S. Law SchoolClassroom: Lessons Learned from TeachingTransnationally

CHRISTOPHER R. KELLEY* AND NATALIIA BOROZDINA**

The classroom continues to be the dominant teaching environmentdespite the growth of “classroomless” distance education.1 A classroom letsthose in it interact in real time, thus allowing all to gain the benefits of face-to-face interactions.2 The classroom, however, is a problematic place to“internationalize,” particularly when the students and the professor in it aremostly or all domestic.3 When lacking international students and professors,an alternative is to bring either or both into the classroom virtually usingdigital audiovisual technology.4 This technology lets teachers teachtransnationally; that is, to teach students in different countriessimultaneously or to teach students in one country from another country.5

This article focuses on two University of Arkansas School of Lawtransnational courses. In the first, a Rule of Law Colloquium course, thestudents are in Arkansas and Ukraine. In the second, an InternationalCommercial Arbitration course, the students and one professor are in

* Christopher R. Kelley is an Associate Professor of Law at the University of Arkansas. Hewas a U.S. Fulbright Scholar in Ukraine in 2005 and in the Republic of Moldova in 2011.

** Nataliia Borozdina is a graduate student in the University of Arkansas’s College ofEducation and Health Professionals funded through the Fulbright Graduate Student Programfor Russians. She co-authored this article as a 2018 summer intern at the University ofArkansas School of Law with support from the United States Department of State’s Edmund S.Muskie Internship Program.

1. See Martin Pritikin, ABA Online Credit Increase a Step in the Right Direction, LAW 360 (Sept.4, 2018, 3:12 PM), https://www.law360.com/articles/1076685/aba-online-credit-increase-a-step-in-the-right-direction.

2. See Gerald F. Hess, Blended Courses in Law School: The Best of Online and Face-to-FaceLearning?, 45 MCGEORGE L. REV. 51, 59 (2013).

3. See Carole Silver, Internationalizing U.S. Legal Education: A Report on the Education ofTransnational Lawyers, 14 CARDOZO J. INT’L & COMP. L. 143, 154 (2006) (noting the presenceof foreign law students internationalizes a law school’s student body); Carole Silver, Getting RealAbout Globalization and Legal Education: Potential and Perspectives for the U.S., 24 STAN. L. &POL’Y REV. 457, 469 (2013).

4. Andrew Moore et al., The Globalization of Legal Education, 92 MICH. B.J. 40, 42 (2013).5. Digital technology has these and many other uses in legal education. For two annotated

bibliographies of publications about legal education and technology, see Pearl Goldman, LegalEducation and Technology: An Annotated Bibliography, 93 L. LIBR. J. 423 (2001), and PearlGoldman, Legal Education and Technology II: An Annotated Bibliography, 100 L. LIBR. J. 415(2008).




Arkansas; two other professors are in Germany and Switzerland,respectively, and occasionally elsewhere, usually Russia.6

Both courses have been taught as transnational courses for at least fourconsecutive years.7 Though transnational courses are an uncommon way tointernationalize the classroom, they can be effective international learningexperiences. Therefore, the first of this article’s two purposes is to encourageothers, lawyers and law professors, to try transnational teaching.

Teaching transnationally well, however, is challenging.8 And how-tomanuals are scant. Nevertheless, lessons learned from others’ experiencescan help. This article’s second purpose, therefore, is to offer lessons learnedabout how to create and manage a transnational course. These lessons weremostly learned from four years of transnationally teaching the two types oftransnational courses on which this article focuses.9

This article’s Part I briefly discusses reasons for internationalizing theclassroom. There and elsewhere, this article focuses on two gains: enrichingclassroom discussions and enhancing the students’ overall learningexperience. It then turns, in Part II, to the history and attributes of the twocourses from which this article mostly draws its lessons learned. Thecourses’ history and attributes thus provide an essential context for thisarticle’s core—these lessons. In its Part III, this article discusses theselessons, most of which are practical. They are practical because teachingtransitionally is different from teaching domestically, and these differencesare potential tripping hazards that are better avoided than not. The articleconcludes with thoughts about the overall potential for and experience ofteaching transnationally.

6. As discussed in this article’s Part II.C, these international professors are experiencedpractitioners. For a discussion of the advantages of teaching courses by teams of professors andpractitioners, see R. Michael Cassidy, Reforming the Law School Curriculum from the Top Down, 64J. LEGAL EDUC. 428, 432-39 (2015).

7. See Christopher R. Kelley, LAWW 5252, International Commercial Arbitration (coursesyllabus) (on file with author) [hereinafter International Commercial Arbitration]; ChristopherR. Kelley, LAWW 5692, Rule of Law Colloquium (2018) (course syllabus) (on file with author)[hereinafter Rule of Law Colloquium].

8. In addition to the challenges associated with creating and maintaining the transnationalrelationships needed for a transnational course, adapting to digital technology also can bechallenging. For a discussion of these challenges and the potential gains from overcomingthem, see W. Warren Binford, Envisioning a Twenty-First Century Legal Education, 43 WASH. U.J.L. & POL’Y 157 (2013).

9. Professor Kelley has taught a Legal Writing in English course almost every semester forsix years to law students at the Kyiv Taras Shevchenko National University Law Faculty in Kyiv,Ukraine, using Skype. Some of the lessons learned doing this were learned again teaching theRule of Law Colloquium and International Commercial Arbitration courses transnationally.



2019] INTERNATIONALIZING U.S. LAW CLASSROOM 133

I. Reasons to Teach Transnationally

Much has been written about internationalizing the law schoolclassroom.10 Nearly all this literature raises and answers the question of whyinternationalizing the law school classroom a worthy goal. Relative to U.S.law students, perhaps the most fundamental of these answers is “thatAmericans lack basic knowledge, awareness, or interest concerning the worldbeyond their borders, whether in terms of history, public affairs, culture,language, or even basic geography.”11 And these gaps mean that Americanlawyers, like other Americans living in an increasingly interdependent world,“cannot meaningfully function as responsible democratic citizens withoutboth greater global knowledge and the capacities and sensibilities necessaryto engage that knowledge critically and with sophistication.”12

Other answers are offered in writings that explore different ways tointernationalize the classroom. For example, the benefits of “learning bydoing cross-culturally” have been touted for an international tradesimulation course involving U.S. and Chinese students.13 Likewise, “video-real-time negotiations involving students and/or professors and practitionersaround the world [can] expose[ ] students to other legal cultures.”14 Andarguments offered for globalizing the classroom by introducinginternational, transnational, and comparative law into core courses like CivilProcedure, Constitutional Law, Contracts, Property, and Torts includeimproving students’ understanding and application of domestic law,

10. This literature can be traced to the globalization of law, the recognition of which seepedmore than burst into U.S. law schools’ consciousness. In 1993, for example, the Indiana Journalof Global Legal Studies launched with an article on the globalization of law. See MartinShapiro, The Globalization of Law, 1 IND. J. GLOBAL LEGAL STUD. 37, 37 (1993). Only later,however, did articles announcing the internationalization of legal education and proposing waysto do it become more numerous. See, e.g., Farida Ali, Globalizing the U.S. Law SchoolCurriculum: How Should Legal Educators Respond?, 41 INT’L J. LEGAL INFO. 249, 265–70, 275–81(2013); Simon Chesterman, The Evolution of Legal Education: Internationalization,Transnationalization, Globalization, 10 GERMAN L.J. 877, 884–885 (2009); Louis F. Del Duca,Symposium on Emerging Worldwide Strategies in Internationalizing Legal Education, 18 DICK. J.INT’L L. 411, 413–16 (2000); Elizabeth Rindskopf Parker, Globalizing the Law SchoolCurriculum: Affirming the Ends and Recognizing the Need for Divergent Means, 23 PENN. ST. INT’LL. REV. 753, 756 (2005); Carole Silver, Getting Real About Globalization and Legal Education:Potential and Perspectives for the U.S., 24 STAN. L. & POL’Y REV. 457, 469 (2013); DavidTobenkin, Legal Minds: Internationalization Is Expanding Rapidly at Law School, INT’L EDUCATOR,Jan.–Feb. 2009, at 28, https://www.nafsa.org/_/File/_/janfeb09_feature_legalminds.pdf.

11. Anil Kalhan, Thinking Critically about International and Transnational Legal Education, 5DREXEL L. REV. 285, 285 (2013).

12. Id. at 286.13. Tahirih Lee, Technology-Based Experiential Learning: A Transnational Experiment, 64 J.

LEGAL EDUC. 455, 471-78 (2015).14. Robert E. Lutz, Reforming Approaches to Educating Transnational Lawyers: Observations from

America, 61 J. LEGAL EDUC. 449, 454 (2012). For an extended discussion of developingintercultural competency in U.S. law school classrooms, see Rachel Moran, When InterculturalCompetency Comes to Class: Navigating Difference in the Modern American Law School, 26 PAC

MCGEORGE GLOBAL BUS. & DEV. L.J. 109 (2013).




preparing students for an increasingly global legal market, and developingstudents’ capacities to offer “leadership in the global community” after theygraduate from law school.15

This article does not attempt to catalog all the benefits of transnationalteaching. Instead, it focuses primarily on the potential for student gains intwo ways. The first gain comes from introducing transnational perspectivesinto a course, particularly one that has transnational dimensions and its classsessions are centered on professor-guided student discussions. Teaching acourse like this transnationally can enrich its U.S. and international studentsby giving them the opportunity to compare their perspectives and the basesfor them cross-culturally and otherwise. For example, the Rule of LawColloquium, which is built around the almost universal claim that the rule oflaw is good, introduced different perspectives that took into account howmany parts of the world largely disregard the rule of law.16 Many U.S. lawstudents poorly understand what the rule of law means, much less thepatchwork of its global reach.17 A transnational perspective, particularly oneoffered by Ukraine where the rule of law has been and is lacking,18 has thepotential to deepen both U.S. and Ukrainian law students’ understanding ofwhat the rule of law means in theory, and as practiced in different parts ofthe world.19

Second, buttressing the teaching of international law courses through thecontributions of an attorney or a professor from another countryunderscores the course’s international dimension.20 An internationalattorney’s virtual classroom presence also models the relationships amongattorneys in international law firms and in alliances between and amongdomestic and foreign law firms.21 And, for some students, it introduces them

15. Franklin A. Gevurtz, et al., Report Regarding the Pacific McGeorge Workshop on Globalizingthe Law School Curriculum, 19 PAC. MC GEORGE GLOBAL BUS. & DEV. L.J. 267, 273-77 (2006).

16. Lord Tom Bingham characterizes the rule of law as “the nearest we are likely to approachto a universal secular religion.” TOM BINGHAM, THE RULE OF LAW 174 (2010).

17. See, e.g., Shunmugam Jayakumar, Applying the Rule of Law, 43 INT’L LAW. 83, 84 (2009)(discussing the global reach of the rule of law).

18. Ander Aslund in 2009, for example, observed that “[c]orruption in Ukrainian courts ispervasive. . . . Bribes are paid at every step from entry into law school to the appointment ofjudges.” ANDER ASLUND, HOW UKRAINE BECAME A MARKET ECONOMY AND DEMOCRACY

245 (2009).19. In discussing the Northwestern University School of Law’s strategic planning report, Plan

2008: Preparing Great Leaders for the Changing World, it’s now former dean, David E. VanZandt, observed that “the key competency that enables a lawyer to be successful in theemerging global environment is neither the substantive knowledge of specific legal systems notthe ability to speak a non-English language, although these can certainly help. . . . Rather, thekey is having experience working with people from other nations and with other legal systems.”David E. Van Zandt, Foundational Competencies: Innovation in Legal Education, 61 RUTGERS L.REV. 1127, 1140-41 (2009).

20. See Robert E. Lutz, Reforming Approaches to Educating Transnational Lawyers: Observationsfrom America, 61 J. LEGAL EDUC. 449, 454 (2012).

21. For a discussion of the globalization of law firms, including through alliances, see D.Daniel Sokol, Globalization of Law Firms: A Survey of the Literature and a Research Agenda for




for the first time to an attorney or a professor practicing or teaching abroad.Moreover, from each class session’s start to its end, the students have aninternational experience virtually.22 This, in turn, contributes to theiroverall appreciation for the course’s subject by aligning their learningenvironment with the course’s international law content.

II. Two Examples of Transnational Courses: A Rule of LawColloquium and an International Commercial ArbitrationCourse

This article uses two courses as examples and reference points: a Rule ofLaw Colloquium course and an International Commercial Arbitrationcourse. They represent two types of transnational courses. In the former,students in another country—Ukraine, in this instance—are brought intothe classroom virtually; that is, through digital audiovisual technology.23 Inthe latter, two adjunct professors, both experienced international arbitrationattorneys, are brought into the classroom virtually.24

These courses and their respective histories and attributes illustrate howtransnational courses might be created and their potential strengths andweaknesses. As to the former, both courses have a common history: theyemerged from one of this article’s author’s teaching and related activities inEastern Europe, Russia, and Kazakhstan.25 This professor’s teaching andrelated activities abroad, coupled with his thinking that both courses wouldbe better if they consistently had either international students in them orinternational professors teaching them, led him to convert both coursesfrom traditional courses to transnational courses. This, in turn, taughtlessons about transnational courses’ strengths and weaknesses.

A. THE COURSES’ COMMON HISTORY

The courses’ common history has three foundations: the FulbrightProgram,26 the American Bar Association’s Section of International Law,and multiple law schools’ openness to different ways of teaching. Without

Further Study, 14 IND. J. GLOBAL LEGAL STUD. 5, 15–16 (2007). For a discussion of how theglobalization of law has affected lawyers practicing outside of international law firms andalliances, see Laurel S. Terry, The Legal World Is Flat: Globalization and Its Effect on LawyersPracticing in Non-Global Law Firms, 28 NW. J. INT’L L. & BUS. 527 (2008).

22. International Commercial Arbitration, supra note 7.23. See id.24. See id.25. See generally Christopher R. Kelley, Teaching Abroad: A Freelancer’s Perspective Written on

Returning from the Belarusian State University Law Faculty, Minsk, Belarus, INT’L LEGAL EDUC. &SPECIALIST CERTIFICATION COMMITTEE NEWSL. (ABA Sec. of Int’l Law, D.C.), Jan. 2017 at3–11, http://apps.americanbar.org/webupload/commupload/IC962500/relatedresources/ILESC_Newsletter_Jan_2017_Final.pdf.

26. See generally Dena S. Davis, How to Use the Fulbright Program to Internationalize Your LawSchool, 61 J. LEGAL EDUC. 104 (2011) (providing an overview of the Fulbright Program).




any one of these and the relationships they engendered, neither coursewould have been a transnational course.

Though both courses were not transnational courses until 2014, theirgenesis can be traced to 2005. In 2005, their professor was a U.S. FulbrightScholar in Kharkiv, Ukraine, where he taught abroad for the first time.27

The following year, he began teaching in Ukraine as a freelancer and laterbegan teaching as a freelancer in Moldova,28 Lithuania, Belarus, Kazakhstan,and Russia. Here, “freelancer” means he taught independently of any third-party sponsor. He continues to teach this way, except he receives anhonorarium as a nonresident professor at the Kyiv Taras ShevchenkoNational University Law Faculty in Kyiv, Ukraine (Shevchenko).29

In 2006, moved by his Fulbright experiences in Kharkiv, he became activein the American Bar Association’s Section of International Law and assumedleadership positions at the committee and division levels.30 As relevant here,these positions led him to participate in planning for several annual Sectionconferences in Moscow. At the first of these conferences, he met Dr. AnnaKozmenko, a Russian attorney educated in Russia and Switzerland.31 Dr.Kozmenko is one of the adjunct professors who teaches the transnationalInternational Commercial Arbitration course.32

Though the professor first met Dr. Kozmenko in Moscow, he wasintroduced to her by a Ukrainian student he had recruited to his law school’sLL.M. program. In turn, through email exchanges, he introduced Dr.Kozmenko to the Section of International Law and its Moscow conferencewhere they met.

Summarized and described generically, the course’s common historyillustrates three ways to form the ties necessary to create a transnationalcourse. The first is to teach or lecture abroad. The second is to participatein conferences abroad. The third is to develop relationships abroad throughinternational students and visiting scholars on campus or otherwise nearby.Of course, some U.S. law schools can combine their internationalconnections, wealth, and prestige to create transnational courses moreexpeditiously than this.

27. See Kelley, supra note 25, at 2.28. In 2011, Professor Kelley was a U.S. Fulbright Scholar in Chisinau, Republic of Moldova,

after having taught in Chisinau as a freelancer.29. See Kelley, supra note 25, at 2.30. See Faculty Directory for Christopher R. Kelley, UNIV. OF ARK. SCHL. OF LAW, https://

law.uark.edu/directory/directory-faculty/uid/ckelley/name/Christopher-Kelley/ (last visitedOct. 22, 2018).

31. Curriculum Vitae of Dr. Anna Kozmenko, SCHELLENBERG WITTMER, https://www.swlegal.ch/en/lawyers/lawyer-detail/anna-kozmenko/ (last visited Oct. 22, 2018).

32. See id.




B. THE RULE OF LAW COLLOQUIUM

Created in 2009, the two-credit Rule of Law Colloquium course wasinspired by the World Justice Project33 (WJP) and William H. Neukom,34

the WJP’s founder. The WJP strives to broaden understanding of andappreciation for the rule of law worldwide.35 Its focus is on contemporaryrule of law issues and the effects of the rule of law’s presence or absence ondaily life throughout the world.36

With the WJP as its inspiration, the Rule of Law Colloquium historicallyhas covered what the rule of law is and why it matters; the rule of law’s rolein economic development and post-conflict and other transitional societies;and corruption: its causes, consequences, and cures.37 These broad themesinvite a contemporary and international perspective, which the course hashad since its inception.38 The inaugural course offering, for instance, wassubstantially devoted to presentations from attorneys and others who joinedthe class by Skype from Dushanbe, Tajikistan; Kyiv, Ukraine; Moscow,Russia; Lagos, Nigeria; Beijing, China; and Washington, D.C.39

The course’s content has changed each year, partially in response tostudent interest and partially to remain contemporary. Yet, it has had twoconstants across all its offerings. The first has been introductory readingsand discussions about the rule of law’s contested meanings, which havefamously branched into “thin” and “thick” definitions.40 The secondconstant has been that the course does not teach any doctrine. Instead, thecourse’s theme and ultimate inquiry has been a question posed to itsstudents: “What does the rule of law mean to you?” This also always hasbeen the course’s single exam question, though the students have the optionto write about anything else related to the rule of law. Even with thisoption, the course’s content has always been designed to stimulate eachstudent’s answer to the question of what the rule of law means to him orher.41

33. WORLD JUSTICE PROJECT, https://worldjusticeproject.org/ (last visited Oct. 22, 2018).34. William (Bill) Neukom’s illustrious career is summarized on the World Justice Program’s

website. William H. Neukom, WORLD JUSTICE PROJECT, https://worldjusticeproject.org/about-us/who-we-are/officers/william-h_neukom (last visited Oct. 22, 2018).

35. About Us, THE WORLD JUSTICE PROJECT, https://worldjusticeproject.org/about-us (lastvisited Oct. 22, 2018).

36. As the World Justice Project notes, “Traditionally, the rule of law has been viewed as thedomain of lawyers and judges. But everyday issues of safety, rights, justice, and governanceaffect us all; everyone is a stakeholder in the rule of law.” Id.

37. See Rule of Law Colloquium, supra note 7.38. See id.39. See id.40. See Brian Tamanaha, The History and Elements of the Rule of Law, 2012 SING. J. LEGAL

STUD. 232, 233 (2012); Brian Tamanaha, A Concise Guide to the Rule of Law 3 (St. John’s Univ.School of Law, Legal Studies Research Paper Series, Paper #07-0082, 2007), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1012051.

41. See Rule of Law Colloquium, supra note 7.




Over time, the course increasingly has focused on one of the rule of law’sopposites: corruption.42 This part of the course is directed at exploring whyindividuals and societies become corrupted, the effects of corruption, andways to ameliorate corruption, including through laws like the U.S. ForeignCorrupt Practices Act43 and the U.K. Bribery Act.44

Yet even here—in a study of corruption—the focus is on the students.The course’s underlying premise has always been that every student in thecourse will encounter corrupt behavior and might even be tempted to actcorruptly themselves, even if only by overbilling clients just a little. And thequestion posed to them, to be answered only by them and not theirprofessor, is what they will do when they encounter corrupt behavior or aretempted to act corruptly.45

As the course’s coverage of corruption expanded, its professor realizedthat he had access to a previously untapped resource—Ukrainian lawstudents. Ukraine has had a long history of corruption.46 Some of thishistory predated Ukraine’s independence in 1991 after the Soviet Uniondisbanded.47 But much of it, and certainly the history current Ukrainian lawstudents have lived through, is contemporary.48 From the OrangeRevolution in 200449 to the Revolution of Dignity in 2013 and 2014,50

corruption has loomed large as the scourge it is in today’s Ukraine. Andevery Ukrainian law student knows what it is like to live in a societypermeated by corruption, including the corruption in Ukraine’s judicialsystem.51

Mindful of this, the professor approached the Shevchenko faculty in 2014and asked if it would help him recruit students to participate in his Rule ofLaw Colloquium course by distance beginning in the 2015 Spring semester.The Shevchenko’s faculty agreed, and students at Shevchenko and other

42. See, e.g., A.B.A., ABA Programs Have Global Impact, 41 ARK. LAW. 14, 14 (2006)(“Corruption undermines the rule of law . . . .”).

43. See generally Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd–1, et seq.44. See generally Bribery Act, 2010, c. 23 (U.K.), http://www.legislation.gov.uk/ukpga/2010/

23/pdfs/ukpga_20100023_en.pdf; see Rule of Law Colloquium, supra note 7.45. See Rule of Law Colloquium, supra note 7.46. See Louise I. Shelley, Organized Crime and Corruption in Ukraine: Impediments to the

Development of a Free Market Economy, 6 DEMOKRATIZATSIYA: J. POST-SOVIET

DEMOCRATIZATION 648, 648 (1998).47. See id. at 651–52.48. See generally Serhii Plokhy, THE GATES OF EUROPE: A HISTORY OF UKRAINE 330-36

(2015) (describing Ukraine’s contemporary experiences with corruption).49. See generally ANDREW WILSON, UKRAINE’S ORANGE REVOLUTION (2005) (describing and

analyzing Ukraine’s Orange Revolution).50. See generally ANDREW WILSON, UKRAINE CRISIS: WHAT IT MEANS FOR THE WEST

(2014) (describing and analyzing Ukraine’s Revolution of Dignity, also known by the locationwhere much of it took place, Kyiv’s Maidan).

51. For a discussion of corruption in Ukraine’s judicial system, see Alexei Trochev, Meddlingwith Justice: Competitive Politics, Impunity, and Distrusted Courts in Post-Orange Ukraine, 18DEMOKRATIZATSIYA: J. POST-SOVIET DEMOCRATIZATION 122 (2010).




Kyiv law schools volunteered. Shevchenko was the course’s Ukrainian homefor two years.

After two years, the Shevchenko professor most instrumental in recruitingstudents for the course retired, leaving Shevchenko’s hosting the course indoubt. Accordingly, the course’s Ukrainian home moved to the Ivan FrankoNational University Law Faculty in Lviv, Ukraine. There, students in theLviv branch of the School of American Law, a cooperative endeavor with theITT Chicago-Kent College of Law,52 began participating in the course inthe Spring 2017 semester. In the Spring 2018 semester, a Belarusian studentand two Russian students also participated in the course.

The international students brought new perspectives and dynamics toclassroom discussions. Most of the course’s U.S. students were from oneU.S. state and its neighboring states. Few had traveled internationally.Fewer still had traveled to a former Soviet republic, particularly one that hasbeen featured in the news as often as Ukraine has been since its Revolutionof Dignity, Russia’s annexation of Crimea, and the deadly, ongoing armedconflict in eastern Ukraine’s Donbas region.53 In short, not only had theinternational students grown up half a world apart from the U.S. students,their immediate experiences were unlike those of the U.S. students.

The two groups of students’ perspectives differed, too, though their lawstudies provided common cultural perspective. Yet even the two groups’respective law studies differed. Ukraine, for instance, follows the civil lawtradition54 and the U.S. (apart from Louisiana) follows the common lawtradition.

The classroom dynamics varied across the four years. Sometimes the U.S.students dominated the class discussions; other times the Ukrainian studentsdid. As often occurs in traditional classrooms, one or two students usuallyaccounted for this dominance. In the 2017 Spring semester course, forinstance, three Ukrainian students outshined all the others by reading extramaterials and reporting on them.

In sum, a transnational course has a greater potential for moreperspectives than a traditional course has, absent a traditional classroom inwhich domestic and international students are equal or almost equal innumber. This and the experiences both the domestic and internationalstudents share by being in the same course in real time are reasons enoughto favor a transnational course.

And there is another reason—the possibility for serendipitousopportunities. For example, in the 2016 Spring semester, the second year inwhich the course was hosted at Shevchenko, an Australian law professor,acting on behalf of the International Bar Association’s Section of Criminal

52. About School of American Law (SAL), IIT CHICAGO-KENT COLL. OF LAW, https://www.salchicagokent.com/index.php/about-sil (last visited Oct. 22, 2018).

53. Andrey Kurkov, Ukraine’s Revolution: Making Sense of a Year of Chaos, BBC NEWS: WORLD

(Nov. 21, 2014), https://www.bbc.com/news/world-europe-30131108.54. Alexander Biryukov & Myroslava Kryvonos, A Research Guide to Ukraine Law, HAUSER

GLOB. LAW SCH. PROGRAM (Mar. 2006), http://www.nyulawglobal.org/globalex/Ukraine.html.




Law Anti-Corruption Subcommittee, asked the course’s professor toparticipate in a project designed to explore various drivers of corruption andways to counteract them. He, in turn, presented this project to the Rule ofLaw Colloquium students.

Three U.S. students, a Russian LL.M. student, and four Shevchenkostudents volunteered to undertake the project.55 Before the semester ended,they had sent a thirty-nine-page report on the influence of corporate codesof conduct in preventing corruption to a group of law students in Australiawho were working on the same project.56 This multinational project neverwould have happened had the Rule of Law Colloquium not been atransnational course.

C. INTERNATIONAL COMMERCIAL ARBITRATION

The two-credit International Commercial Arbitration course began as atraditionally taught course.57 It became a transnational course when Dr.Anna Kozmenko started co-teaching it from Zurich, Switzerland, where shepractices international arbitration.58 A year later, James Menz joined her inco-teaching the course, initially from Zurich and later from Cologne,Germany.59 Since then, this course has had three instructors, only one ofwhom is physically in the classroom. Dr. Kozmenko and Mr. Menzparticipated through the same digital audiovisual technology used by theRule of Law Colloquium course since the Spring 2017 semester.

Dr. Kozmenko is Russian; Mr. Menz is German-American.60 In additionto bringing an international perspective to the course, they also bringcombined experience and expertise unmatched on the U.S. law school’sresident faculty.61 Dr. Kozmenko, a senior associate with the Schellenberg

55. University of Arkansas School of Law & Taras Shevchenko National University of Kyiv,Collective Research Report: Corporate Codes of Conduct (2016) (unpublished research report)(on file with author).

56. Id.57. See International Commercial Arbitration, supra note 7.58. Curriculum Vitae of Dr. Anna Kozmenko, SCHELLENBERG WITTMER, https://www.swlegal.

ch/en/lawyers/lawyer-detail/anna-kozmenko/ (last visited Oct. 22, 2018). See id.59. Curriculum Vitae of James Menz, ASA, https://profiles.arbitration-ch.org/profile/573-

James-Menz-Counsel-civil_law-common_law-european_law (last visited Oct. 22, 2018). SeeInternational Commercial Arbitration, supra note 7.

60. See Curriculum Vitae of Dr. Anna Kozmenko, supra note 58; Curriculum Vitae of James Menz,supra note 59.

61. Largely because of their expertise and experience, the course text is the student version ofa leading international arbitration treatise, NIGEL BLACKABY & CONSTANTINE PARTASIDES

WITH ALAN REDFERN & MARTIN HUNTER, REDFERN AND HUNTER ON INTERNATIONAL

ARBITRATION (6th ed. 2015). The classroom experience is devoted to amplifying the treatise’stext with more in-depth, current information; examples of the application of various rules,practices, and procedures outside of the treatise; and discussions between the students and thecourse’s three professors. For example, though the course does not cover international sportsarbitration, at least two Arkansas students have had a keen interest in sports arbitration, as doesProfessor Kozmenko because she is experienced in representing athletes in sports arbitration.




Wittmer law firm in Zurich, is internationally recognized for her knowledgeand skills as an arbitration attorney, an arbitrator, and a legal secretary toarbitral tribunals.62 Mr. Menz also has stellar credentials. In addition to hisextensive experience as an arbitration attorney, an arbitrator, and a legalsecretary to arbitral tribunals, Mr. Menz is the Deputy Secretary Generaland Head of Case Management at the German Institution of Arbitration.63

Professors Kozmenko and Menz covered how international commercialarbitrations work beyond what any casebook, treatise, of other readingscould tell the students as effectively and efficiently. As important, thestudents experienced the professionalism and personal enjoyment inpracticing international commercial arbitration that Professors Kozmenkoand Menz brought to the classroom.

III. Lessons Learned

Traditionally teaching the Rule of Law Colloquium and InternationalCommercial Arbitration courses transnationally taught lessons, most ofwhich were learned through trial and error. Some of these trials and errorswere unique or are unlikely to be commonly encountered. For example,most U.S. law school classrooms now have better digital audiovisualequipment than a webcam connected to a laptop computer.64 But when theRule of Law Colloquium course was first offered, years before it became atransnational course, international guest lecturers joined the class by Skype.The classroom’s only technology was a laptop connected to a webcam withan integrated microphone that was not sensitive enough to capture the voiceof anyone not sitting close to it. Therefore, the students who wanted to askthe guest lecturer a question had to come to the front of the classroom andask the question almost directly into the webcam’s microphone. This wasnot an ideal solution, yet it worked until better technology was available.

Some of the lessons discussed here apply equally to a course with domesticand international students in different places, like the Rule of LawColloquium course, and to a course in which domestic students are taughtby one or more professors abroad, like the International CommercialArbitration course. Most of these lessons, however, concern transnationalcourses in which the domestic students and the international students are indifferent places. These courses are inherently more difficult to create andteach than courses in which a professor teaches students in a domesticclassroom from abroad.

See Curriculum Vitae of Dr. Anna Kozmenko, supra note 68. The classroom sessions are informaland time-affluent enough to allow for responding to individual student’s interests outside ofinternational commercial arbitration. Moreover, both Professors Kozmenko and Menzwelcomed individual inquiries from students by email.

62. See Curriculum Vitae of Dr. Anna Kozmenko, supra note 58.63. See Curriculum Vitae of James Menz, supra note 59.64. See Michele Pistone, Law Schools and Technology: Where We Are and Where We Are Heading,

64 J. LEGAL EDUC. 586, 592–98 (2015).




The lessons are discussed in the order of their importance. Because nolesson is more important than the collaborators’ relationship, it leads.Whether international collaborators are found by teaching abroad, attendinginternational conferences, teaching or meeting international studentsdomestically, or otherwise, a good relationship between or among thecollaborators is critical to a transnational course’s success.

Technology is discussed second. Technology will matter because atransnational course uses at least two sets of it—one set in the domesticclassroom and the other set or sets in one or more places abroad.65

Technology is only as good as its weakest link. And every pairing oftechnology will have a weak link. When that weak link is discovered, fixingor working around it will significantly depend on the collaborators’ workingrelationship. Thus, that relationship and the technology are inextricablylinked.

Scheduling the course comes next. Scheduling must account for theworld’s time zones.66 The greater the time difference between two locations,the greater the difficulty of finding a mutually convenient time for atransnational course. Even when the time difference is insignificant,institutional and individual schedules can differ. Therefore, scheduling thecourse appropriately is an essential first step.

The remaining lessons learned assume the course is scheduled, thetechnology works, and the course’s organizers are collaborating well. Statedbroadly, these lessons relate to engaging the students, managing the course,and having fun with all the moving pieces that form the whole of atransnational course.

A. PREPARING THE COURSE: GOOD RELATIONSHIPS

Creating a transnational course requires good working relationshipsbetween or among its domestic and international collaborators. The partiesmust have compatible interests and a willingness to assume theresponsibilities necessary to advance these interests. A transnational coursecannot exist unless someone recruits the international students or, if theclassroom is internationalized by one or more professors, the domesticprofessor works well with the international professor or professors.

Creating a good relationship with the requisite trust and good willrequires patience, mutual gain, and transparency. Patience is importantbecause most transnational courses are not “plug and play” endeavors.Instead, transnational courses are usually experimental because they areeither uncommon or untried at most U.S. law schools.

Mutual gain is important because a transnational course will neither workwell in its first offering nor endure unless the students or professors on eachend gain something in return for their time, and perhaps their financial

65. See id. at 593–94.66. Currently, the world has over twenty-seven time zones. See TIMEANDDATE.COM, https://

www.timeanddate.com/time/current-number-time-zones.html (last visited Oct. 22, 2018).




investment, such as the acquisition of the appropriate equipment if it is notalready in place. Ordinarily mutual gain is presumed. Nevertheless, theneeds and interests of all the participants must be served because thispresumption is rebuttable.

Finally, transparency is important because all the participants, studentsand professors alike, need to know the course’s goals and the limits ofteaching transnationally, including the technology’s limits. A goal of atransnational course is to connect. Yet, as anyone who has used the Internetknows, poor and interrupted connections happen. Everyone shouldunderstand and accept these and other technology-related risks. Beingrealistic, open, and prepared for this is important.

B. PREPARING THE COURSE: TECHNOLOGY

The technology will matter. Having the best available helps. Yet evenwith the best available technology, a good relationship between or amongthe collaborators will help them effectively use it and deal with itsshortcomings. As to the latter, one way to prepare for the occasional yetinevitable technology problems that require immediate attention is for eachcollaborator to have the mobile telephone numbers of her cohorts.

The best available technology, however, is not always at hand. WhileShevchenko was the Rule of Law Colloquium course’s Ukrainian home, forexample, the available audiovisual technology was basic. The software wasSkype. Shevchenko used an older model MacBook wirelessly connected tothe Internet and wired to a basic webcam mounted high on the wall at thefront of the classroom. A hand-held microphone was passed from student tostudent. If a student forgot to turn off the microphone after speaking,feedback blasted through the speakers in the U.S. classroom. The internalmicrophone in the MacBook did the same until that feedback source wasdiscovered and the internal microphone was disabled.

Using Skype prevented showing videos available only in DVD format.Two videos available only in DVD format were important components ofthe course—The Response, a reenactment of a Combatant Status ReviewTribunal proceeding at Guantanamo Bay produced with the cooperation theUniversity of Maryland School of Law and the Venable L.L.P. law firm,67

and Living with Corruption, featuring award winning African journalistSorious Samura.68 To solve this problem, the course’s professor took bothDVDs and others used in the course to Kyiv so they could be shownsimultaneously with their showing in the U.S. For videos available online,the Skype connection was disconnected while the video was shown in bothclassrooms.

67. See generally THE RESPONSE, https://www.theresponsemovie.com/ (last visited Oct. 22,2018).

68. See generally LIVING WITH CORRUPTION, https://insighttwi.com/films/living-with/corruption (last visited Oct. 22, 2018).




Unlike when Shevchenko hosted the Rule of Law Colloquium course andall the students were in a Shevchenko classroom, a minority of the School ofAmerican Law students were in an Ivan Franko National University LawFaculty classroom when they participated in the course. Indeed, many werenot even in Lviv. Instead they were scattered across Ukraine from Kyiv inthe east, to Odesa in the south, to Lviv in the west.69 In the 2018 Springsemester, one student participated from Minsk, Belarus.

Even with students this widely disbursed, each could participate. Theaudiovisual technology the course began using in 2017, Lifesize Cloud,allowed individual students to participate from anywhere they had Internetaccess.70 The six large monitors in the U.S. classroom displayed a videoimage of each student on a portion of each screen, or, if the students were ina classroom, a video image of those students as a group. The Ukrainianstudents and, in the 2018 Spring semester, the Belarusian student, usedeither their computer’s or their webcam’s microphone, while the U.S.students used an array of microphones suspended from their classroom’sceiling. Lifesize Cloud permitted everyone to see DVD and online videossimultaneously.71 In other words, whatever was shown on the screens in theU.S. classroom could be seen by anyone participating in the course bydistance.

Through Lifesize Cloud and its associated hardware in the U.S.classroom, each class session was recorded.72 This gave all the students theopportunity to watch the class sessions they missed and mitigated thescheduling conflicts for some of the Ukrainian students discussedimmediately below.

C. PREPARING THE COURSE: SCHEDULING

Scheduling a transnational course requires accommodating anydifferences in the beginning and ending of semesters and in the time at eachlocation. How much these differences will matter will vary.

For example, the differences in the start and ending of the Springsemester between the U.S. law school and the Ivan Franko NationalUniversity Law Faculty mattered little because the Ukrainian studentsparticipated independently of the start and end of the semester there. Most

69. In the 2017 and 2018 Spring semesters, some students were away from their homesbecause they had been displaced from Ukraine’s far-eastern Donbass region by the violentconflict there. For a discussion of this conflict’s origins, see RAJAN MENON & EUGENE

RUMER, CONFLICT IN UKRAINE: THE UNWINDING OF THE POST-COLD WAR ORDER 53–86(2015).

70. See generally Video Conferencing in the Classroom, LIFESIZE CLOUD, https://www.lifesize.com/~/media/Documents/Related%20Resources/Guides/6%20Reasons%20Why%20Video%20Conferencing%20is%20Essential%20For%20Education%20Guide.ashx (lastvisited Oct. 12, 2018).

71. See id.72. See id.




were not even in Lviv when the course started and ended, which wasaccording to the U.S. law school’s schedule.

The Rule of Law Colloquium course’s class session times, however, werenot particularly convenient for the Ukrainian students. The course began at8:00 a.m. and ended at 9:40 a.m., U.S. Central Time.73 The correspondingschedule in Ukraine was from 4:00 to 5:40 p.m. except when Ukraine wenton daylight savings time a week later than the U.S.74

Because many of the Ukrainian students had jobs or other schedulingconflicts, not all who signed up for the course participated regularly.Typically, about twenty to twenty-five Ukrainian students signed up for thecourse in the 2017 and 2018 Spring semesters, and about half or fewer ofthem regularly participated. Beginning in 2018 Spring semester, the coursewas recorded and posted on a site hosted by the U.S. law school, thus givingthe Ukrainian and U.S. students who missed a class the opportunity to viewit online.

As for the International Commercial Arbitration course, adding twoprofessors to the classroom virtually was easier than adding internationalstudents to the Rule of Law Colloquium course for obvious reasons. TheInternational Commercial Arbitration course was scheduled to correspondwith the end of the normal workday for Professors Kozmenko and Menz. Ifone of them could not participate in a class session, the other usually could.If neither could participate, the course’s U.S. professor taught that day’sclass session.

D. MANAGING THE COURSE: GETTING STARTED

Traditional, single-classroom courses work best when their students feelconnected. This is true for distance courses, too.75 Yet even when they arephysically present in the classroom and on campus, international studentsare often ignored or poorly integrated into the classroom and beyond.76

International students sometimes lack confidence in their English languageskills, which discourages them from participating as much as they would liketo participate.77 The same can happen in a transnational course.Nevertheless, these barriers to interaction can be reduced and even avoidedif the students on each side of the audiovisual connection get to know eachother outside the class sessions.78

Getting the students to know each other outside the class sessions can befostered by asking or requiring them to exchange emails about themselves or

73. See Rule of Law Colloquium, supra note 7.74. See id.75. See MICHELLE D. MILLER, MINDS ONLINE: TEACHING EFFECTIVELY WITH

TECHNOLOGY 21 (2016).76. Carole Silver, Internationalizing U.S. Legal Education: A Report on the Education of

Transnational Lawyers, 14 CARDOZO J. INT’L & COMP. L. 143, 168 (2006).77. See id.78. See id. at 168–70.




by creating a social media presence for the course. The students also can beasked or required to submit their respective CV with an embedded photo; inturn, each student’s CV would be distributed to all the students. To thesame end, the students also can be required or encouraged to workcollaboratively on case studies or other exercises outside of class sessions andto jointly present their work in class.

Of course, the U.S. students should be introduced to the country wherethe international students are. For example, Ukraine’s location is a mysteryto most Americans. A 2014 survey found that only one in six Americans(sixteen percent) could locate Ukraine on a high-resolution map. Somerespondents even placed Ukraine in the U.S.

E. MANAGING THE COURSE: THE TWO-CLASSROOM CHALLENGE

A transnational course happens in at least two places. The professor,however, is in only one of them; the other place and those there are seenonly as images on a screen or monitor and are heard only throughmicrophones.79

This presents the professor with the challenge of resisting the naturaltendency to favor the students physically in front of him or her. At times,this is warranted, particularly when the students in the professor’s classroomare paying tuition for the course and earning the academic credit assigned toit, and the international students are not. But good classroom discussionsdepend on interaction. The more robust the interaction, the better thediscussion.

Therefore, the professor should discipline himself or herself to favor equalattention to both or all the classrooms, the latter being the locations wheredispersed students are. This usually takes conscious effort and practice.

Managing the classroom appropriately also requires being mindful of thedifferences in educational background, experience, and knowledge amongthe students. Some of these differences will remain in the backgroundduring most discussions. However, when discussions turn to domestic orforeign current events, the professor should not assume all the students areequally familiar with these events. Instead, she should preface the discussionor interject into it enough information to let all the students participate inthe discussion or should ask a student to do so. The same applies touncommonly used idioms, colloquialisms, and words or phrases drawn froma sport if the sport is unfamiliar to the international students.

Relying on assigned readings as the regular foundation for each classsession’s discussion will not always work, particularly if the readings arelengthy. Not enough students will have read them to sustain a discussion. Away to overcome this problem is to begin the class with a video related to thereadings. This can create a foundation for a discussion that can be amplifiedby the students who have read the readings. Moreover, videos are often

79. See Pistone, supra note 64, at 593–94.




more powerful, including emotionally, than readings. A TEDx talk, forexample, can be both intellectually and emotionally stimulating, thusenhancing the students’ discussions and learning.80

Irrespective of how a professor intends to structure class sessions, hertelling the international students about her teaching style, teaching methods,and expectations before the course begins will help them adjust to the courseand its classrooms’ physical and virtual environments. For example, if theinternational students are accustomed through their home law school’spractices to starting class sessions by responding to their professor’squestions about the day’s readings and this is not what the professor will bedoing, she should tell them this.81

The professor should be mindful, however, that she might not be able torequire the international students to do things she requires of her domesticstudents. If, for instance, the international students are volunteers and arenot taking the course for academic credit at the professor’s law school ortheirs, the professor’s influence might be tempered accordingly. The bestshe might be able to do is to tell the students why she wants them toparticipate as she is asking of them. If she is awarding the internationalstudents a certificate attesting to their successful completion of the course,setting clear, measurable standards as perquisites for their receipt of theircertificates also might help.

This said, the professor should consider not letting the perfect be theenemy of the good. Teaching a transnational course, particularly for the firsttime, is a learning experience for everyone. And an early learning experiencewill be meshing the cultural and experiential differences among the studentsin addition to their individual personalities. But courses are taughttransnationally because of these differences. Letting them unfold duringclass sessions and addressing them as they unfold can promote the learningthe professor is seeking. They are a reason why transnational teaching isfun.

F. MANAGING THE COURSE: THE FUN PART

Teaching transnationally is fun. At least it is for those willing to assumethe risks that come from stepping off the most well-traveled paths on to lessfrequently traveled ones. The risks are not great, however, because atransnationally taught course can be converted to a traditionally taught oneif the transnational element goes badly.

The fun part is stretching the boundaries that constrain traditionalteaching to its two-dimensional structure—a professor and his or herstudents in one classroom. A transnational course will always have at least

80. Connecting students’ intellects with their emotions is likely to improve their learning.MINDS ONLINE: TEACHING EFFECTIVELY WITH TECHNOLOGY, supra note 75, at 110–11.

81. For insights into how Russian law students are taught, for example, see Dmitry Maleshin,The Crisis of Russian Legal Education in Comparative Perspective, 66 J. LEGAL EDUC. 289, 306–07(2017).




three dimensions. This creates more moving parts compared to atraditionally taught course. Coordinating those parts is where much of thefun resides.

Indeed, to the extent that teaching is about people interacting for theirmutual benefit, then transnational teaching offers more cross-culturalopportunities for this interaction than teaching all or mostly domesticstudents does. And for professors who are seeking to expand theiropportunities to make a difference in their lives and in the lives of theirstudents, then transnational teaching offers one of these opportunities.Because transnational teaching transcends national boundaries, it not onlyunderscores the mutual benefits of interacting, it also underscores themutual interdependence of peoples globally. This is more than fun; it can beprofoundly rewarding.

IV. Conclusion

This article seeks to encourage others, lawyers and law professors, to tryteaching transnationally. And it offers lessons learned from teaching andparticipating in two transitional courses, the Rule of Law Colloquium andInternational Commercial Arbitration, each of which represents one of twodifferent ways to teach transnationally. Both ways of teachingtransnationally hold considerable promise.

This promise, at its core, lies in transnational teaching’s opportunities toconnect people from all parts of the globe. Connecting people from acrossthe globe is what the Fulbright Program, the ABA Section of InternationalLaw, and most law schools strive to do. Three law schools, the FulbrightProgram, and the ABA Section of International Law created theopportunities to teach the two courses described in this article. As we see it,teaching transnationally carries these goals and opportunities forward.

We, an American and a Russian, wrote this article as interconnected andinterdependent academics in an increasingly globalized academiccommunity. We had fun writing it. We hope it inspires and helps yourteaching transnationally.



Commission v. Belgium: Belgium’s Tax LawPrevents Free Movement of Capital

JOHN GRAMLICH*

I. Introduction

In Commission v. Belgium, the Court of Justice of the European Union(CJEU) held that Article 7 of Wetboek van de inkomstenbelastingen 1992[Income Tax Code] (ITC ’92) of Belgium is in violation of both theEuropean Union law under Article 63 Treaty on the Functioning of theEuropean Union (TFEU) and Article 40 of the Agreement on the EuropeanEconomic Area of 2 May 1992 (the EEA Agreement).1 Income Tax underArticle 7 varies depending on whether property is held within Belgium oroutside of Belgium, which contradicts the requirements of both the TFEUand the EEA Agreement.2 The Court found that Belgium is restricting the“free movement of capital” in direct conflict with Article 63 TFEU andArticle 40 of the EEA.3 This restriction on the free movement of capital isdiscouraging Belgium residents from investing in property residing in otherMember States within the European Union because there can be higher taxconsequences for investing money in property abroad rather than inBelgium.4 The Court further found that Belgium must pay the court coststo the Commission in accordance with Article 138(1) of the Rules ofProcedure of the Court of Justice.5

In this case, on “7 November 2007, the Commission pointed out thatBelgian tax provisions on income from immovable property located abroadmight be incompatible with the obligations arising from Article 63 TFEUand Article 40 of the EEA Agreement.”6 That incompatibility was foundwhen the Commission observed different procedures for calculating taxableincome on “property located in Belgium versus property located [outside ofBelgium.]”7 The ITC ’92 requires that a Belgian resident’s tax base forproperty located in Belgium is calculated on the basis of the cadastral value,while the tax base from property located outside of Belgium is calculated on

* John Gramlich is a candidate for Juris Doctor, class of 2020, at SMU Dedman School ofLaw. John played basketball at St. Edward’s University, in Austin, Texas.

1. See Case C-110/17, Belgium v. Comm’n, 2018 E.C.R. 250.2. See id. ¶ 65.3. See id. ¶¶ 55, 63.4. See id. ¶¶ 23, 53.5. See id. ¶ 66.6. See id. ¶ 12.7. Linda Thompson, “Belgian Residents With Rental Property in Tax Limbo,” BLOOMBERG

L. DAILY TAX REP.: INT’L (Aug. 28, 2018).




the revenue generated from renting that property, or “rental value.”8 Thecadastral value was established in 1975 from an “estimate of the net normalrental value” and has been increased each year since 1991 ”according to theconsumer price index.”9 The Commission concluded that Belgian residentswith income from property arising outside of the state were “treateddisadvantageously in comparison with income relating to immovableproperty located in Belgium.”10 Belgium responded to the Commission byrejecting the claims that persons with income from property located abroadwere treated disadvantageously.11 In March of 2012, the Commission issueda “reasoned opinion” that stated its prior findings.12 In response, “Belgiumindicated that it accepted the Commission’s position and [began] to preparedraft legislation . . . to rectify the infringement.”13 But the Commissionsuspended the infringement proceedings because, on September 11, 2013,the lower court ruled that:

Article 63 TFEU [must] be interpreted as precluding legislation of aMember State on the taxation of income of residents of that State[, suchas that at issue in the main proceedings,] in so far as it is liable to lead,when a progressivity clause contained in a convention for theprevention of double taxation is applied, to a higher rate of tax onincome merely because the method for determining income fromimmovable property results in income deriving from immovableproperty that is not rented out situated in another Member State beingassessed at a higher amount than income from such property situated inthe first Member State.14

It is for the referring court to ascertain whether that is in fact theeffect of the legislation at issue in the dispute in the main proceedings.15

In response, Belgium argues that the two methods of determiningincome complies with Article 63 TFEU and Article 40 of the EEAagreement because freedom of capital movement is still guaranteed.16

Therefore, the question of whether the two different methods ofdetermining tax rates actually results in higher tax consequences forincome derived from property located abroad is for the CJEU todetermine.17

8. Case C-110/17, Comm’n v. Belgium, ¶ 3.9. Belgian Tax Treatment of Foreign Real Estate Incompatible with EU Law, TAXPATRIA (2018),

https://www.taxpatria.be/belgian-tax-treatment-of-foreign-real-estate-incompatible-with-eu-law/.

10. Case C-110/17, Comm’n v. Belgium, ¶ 12.11. Id.12. Id. ¶14.13. Id.14. Id. ¶ 16.15. Id. ¶ 30.16. Id. ¶¶ 26-30.17. Id.



2019] COMMISSION V. BELGIUM 151

II. Legal Background: Free Movement of Capital

The European Union was initially established “to stabilize political andeconomical issues and to unify the law of diversed states and established fourfreedoms: free movement of capital, free movement of services, freemovement of people and free movement of goods.”18 As the EuropeanUnion has grown and expanded, freedom of capital has become an “essentialelement for the proper functioning of the large European internal market.”19

The 1988 Directive 88/361 and EEA Agreement were established to ensure“the full liberalization of capital movements.”20 Today, the European Unionhas gone even further than the power under the directive by expresslyestablishing the free movement of capital in Article 63 TFEU, whichprohibits “all restrictions on the movement of capital between MemberStates and between Member States and third countries.”21 This was a largestep in ensuring the free movement of capital because articles within Treatiesare directly effective throughout the Member States.22 If a piece oflegislation is directly effective, that means “it does not need anyimplementing legislation at member states’ level and it directly confersrights on individuals which they can rely on before national courts.”23 Butthe European Union does establish “temporary safeguard measures to betaken” in Articles 65 and 66 TFEU if a country can show “serious difficultiesfor the operation of economic and monetary union,” or to prevent violationof national law particularly regarding taxation.24 Article 65(1) allows fordifferent tax treatment of Member State residents and foreign investment,but it cannot be a means of arbitrary discrimination.25 Article 65(1)(a) “mustbe interpreted strictly” and cannot “be interpreted as meaning that all taxlegislation which draws a distinction between taxpayers based on . . . theState in which they invest their capital is automatically compatible with theTreaty.”26 Recently, the CJEU narrowed Article 63 slightly by stating thereare special capital movement provisions when free capital movement relates

18. Cansu Korkmaz, Free Movement of Good in European Union Member States, (Jan. 14,2009) (unpublished manuscript, Kadir Has University) (on file with author), http://www.academia.edu/2583771/Free_Movement_of_Goods_in_European_Union.

19. NICHOLAS MOUSSIS, 6.7 Free Movement of Capital in the EU, in ACCESS TO EUROPEAN

UNION: LAW, ECONOMICS, POLICIES. (19th ed. 2011), http://europedia.moussis.eu/books/Book_2/.

20. Id.21. Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing

the European Community, art. 63, Dec. 13, 2007, 2007 O.J. (C 306) [hereinafter Treaty ofLisbon]; see also Case C-197/11 and Case C-203/11, Libert and Others, 2013 E.C.R. 288, ¶ 93.

22. Case C-101/05, Skatteverket v. A, 2007 E.C.R. I-11531, ¶¶ 21-22.23. Legal Basis for the free movement of capital, EUR. COMM’N (2016), https://ec.europa.eu/info/

system/files/legal-basis-free-movement-capital-20122016_en.pdf.24. MOUSSIS, supra note 19.25. The Treaty of Lisbon, supra note 21, art. 65(1).26. Case C-489/13, Verest and Gerards, 2014 E.C.R. 2210, ¶ 55.




to “British, Danish, Dutch and French Overseas Countries andTerritories.”27

In Verest and Gerards, two Belgium residents appealed the dismissal oftheir prior action against the Court of First Instance, Antwerp, aboutadjustments that Belgian tax authorities made to their tax declaration in 2005regarding tax consequences to their property located in France.28 As notedby the court, “Member States retain competence for determining the criteriafor taxation on income and capital with a view to eliminating doubletaxation.”29 That competence retained by the Member States is known asfiscal jurisdiction.30 However, “fiscal jurisdiction does not allow MemberStates to apply measures contrary to the freedoms of movement guaranteedby the FEU Treaty.”31 Therefore, Member States have the freedom to laydown their taxation methods against their residents so long as the taxationmethod does not infringe on the binding laws of the Treaty.32

The CJEU further established in Commission v. Greece “the existence of arestriction on the free movement of capital within the meaning of Article 63TFEU . . . [to] be transposed mutatis mutandis to Article 40 of the EEAAgreement.”33 In other words, when the CJEU is confronted with a caseinvolving the question of free movement of capital, the court recognizesArticle 63 TFEU and Article 40 of the EEA Agreement to act as bindinglaw.34 Therefore, in cases where the court decides a country did not fulfill itsobligations under Article 63 TFEU, the court will also decide that thecountry did not fulfill its obligations under Article 40 of the EEAAgreement.

There are situations where the European Union will allow a MemberState to infringe on the free movement of capital protections provided byArticle 63 TFEU and Article 40 of the EEA Agreement, but it is uncommonfor an exception to be granted.35 The Court of Justice considers “[t]he freemovement of capital [to be] a fundamental principle of the Treaty [ofLisbon]” that can only can be overridden by national legislation which (1)justifies “public-interest grounds,” and (2) does “not go beyond what isnecessary in order to attain it, so as to accord with the principle of

27. Wessel Geursen, Overseas Tax Holiday to Dutch Caribbean Under the Free Movement ofCapital Spoiled by CJEU in TBG Limited-Case, EUR. L. BLOG (Jul. 17, 2014), http://europeanlawblog.eu/tag/free-movement-of-capital-2/.

28. Case C-489/13, Verest and Gerards, ¶¶ 8-10.29. Id. ¶ 18 (citing Case C-303/12, Imfeld and Garcet, 2013 E.C.R. 822, ¶ 41).30. Case C-489/13, Verest and Gerards, ¶ 18.31. Id.32. Id. ¶ 20.33. Case C-98/16, Comm’n v. Greece, 2017 E.C.R. 346, ¶ 63.34. Case C-589/14, Comm’n v. Belgium, 2015 E.C.R. 736, ¶ 49.35. Jarrod Tudor, The Free Movement of Capital in Europe: Is the European Court of Justice

Living up to its Framers’ Intent and Setting an Example for the World? 25 (Apr. 4, 2015)(unpublished manuscript, Kent State University) (on file with author), https://works.bepress.com/jarrod_tudor/3/University.




proportionality.”36 Under Article 63 TFEU, case law has established that acountry may prove that legislation is in the country’s best public interestregardless of conflicts with European Union law by putting forth sufficientevidence.37 But in Commission v. Belgium, Belgium did not provide enoughevidence to prove such interest.38 Therefore, the court correctly held there isno overriding public-interest justification to treat income derived fromproperty abroad differently than income derived from property at home.39

Case law establishes that Member States rarely are awarded the ability toinfringe on European Union law by restricting free movement of capital forpublic-interest reasons.40 Belgium must present sufficient evidence of an“overriding reason . . . [to] justify the restriction on the free movement ofcapital within the meaning of Article 63 TFEU” to prove a public-interestexception applies.41 The fact that Belgium did not purport any argumentabout lower tax consequences on owners of property located in Belgiumversus property located abroad establishes that there was not any overridingpublic-interest reason to conflict with Article 63 TFEU.42 Providing lowertax rates for some Belgium residents is not an overriding public-interestjustification to restrict the free movement of capital, so the country was notpermitted to discourage Belgium residents from investing in propertyoutside of the country.43

III. Application by the Court: The Two Different Methods

In order to understand the reasoning and holding from the CJEU inCommission v. Belgium, it is imperative to understand the two differentmethods Belgium uses for assessing income from property abroad andincome from property at home. For the former, the ITC ’92 indicates thevalue is determined by the actual rental value from revenue.44 Conversely,for income from property in Belgium, the ITC ’92 determines the taxconsequences on the basis of cadastral value.45 Therefore, under the ITC’92, Belgium assesses tax consequences from property located abroad andproperty located at home by two different methods.46 But, the real questionis: do the two different methods result in a restriction or discouragement ofcapital movement?

Comparable properties can be assessed different tax consequences by thetwo methods because each method determines potential rental value

36. Case C-174/04, Comm’n v. Italy, 2005 E.C.R. I-04933, ¶ 32.37. Case C-190/12, Emerging Mkts.’ Series of DFA Inv. Trust Co., 2014 E.C.R. 249, ¶ 45.38. Case C-110/17, Comm’n v. Belgium, 2018 E.C.R. 250, ¶ 62.39. Id.40. Tudor, supra note 35, at 53.41. Id.42. Id.43. Case C-244/15, Comm’n v. Hellenic, 2016 E.C.R. 359, ¶ 43.44. Wetboek van de inkomstenbelastingen [Income Tax Code], § 7(a) (1992).45. Id.46. Id.




differently.47 For property located in Belgium, a flat rate is applied based onthat property’s cadastral value, which in 1975 was determined by “anestimate of the net normal rental value.”48 That estimate, since 1991, hasbeen adjusted each year to account for increases in consumer price index.49

Differently, the actual rental value, used to determine tax consequences forincome derived from property abroad, is represented by “the annual averagegross rent which, should that property be rented, could have beencollected.”50 Comparing the two methods, “Belgium does not dispute thatthe cadastral value of immovable property situated in Belgium is lower thanthe actual rent of that property or its actual rental value.”51 In other words,property abroad is being assessed at a fair market value, while property inBelgium is not. This method of assessment may discourage investments inother Member States, which is one of the main activities the EU aimed toprevent when Article 63 TFEU was enacted.52 Therefore, there is nodenying that the two methods of assessing property can determine differentvalues of comparable properties.

But, this does not fully show the two different methods restrict the freemovement of capital; even though there is a gap between cadastral value andactual rental value in the Commission v. Belgium case, that “does notnecessarily mean that the income from immovable property situated in astate other than the Kingdom of Belgium is higher than the cadastral valueof comparable immovable property on Belgian territory” in the majority ofcircumstances.53 In other words, the court goes through an extra step ofanalysis because it must be shown on a consistent basis that the cadastralvalue method is lower than the actual rental value method, and not just inthis one case.54 This broader view of the two different methods restrictingthe free movement of capital ensures the holding in Commission v. Belgium ismuch more effective. Because the court considers the case on restricting thefree movement of capital to any Member States, and not just the MemberState relevant in the case, the court ensures a broader, stronger precedent.Belgium cannot successfully argue in a future case where the value ofproperty located in Belgium based on the cadastral value is higher thanproperty located outside of Belgium based on actual rental value, because thecourt has already shown that cadastral value overall undervalues property,and thus is restricting the free movement of capital if Belgium uses actualrental value to assess property located outside of Belgium under thisprecedent.55 The court verifies that the two different methods conflict with

47. Case C-110/17, Comm’n v. Belgium, 2018 E.C.R. 250, ¶ 45.48. Id. ¶ 42.49. Belgian Tax Treatment of Foreign Real Estate Incompatible with EU Law, supra note 9.50. Case C-110/17, Commission v. Belgium, ¶ 44.51. Id. ¶ 45.52. Korkmaz, supra note 18.53. Case C-110/17, Commission v. Belgium, ¶ 46.54. Id.55. Id. ¶ 49.




European Union treaty law and thus must be amended to accord withexisting law.56

In order to confirm Belgium did not fulfill its obligations under Article 63TFEU and Article 40 of the EEA Agreement, the European Commissionmust prove there was some restriction on the movement of capital orproperty located outside of Belgium, including discouragement of capitalinvestments outside of the country.57 But it should be noted that if the courtis considering “situations which are not objectively comparable” the courtcannot show any restrictions.58 Properties and their values are objectivelycomparable even if the properties are located in different countries. Becauseof this objective comparability of property values regardless of location, theEuropean Commission was able to show that the value of a property locatedoutside of Belgium was valued at a price that made tax consequences highercompared to a similar property located in Belgium, resulting in taxconsequences that act as restrictions from purchasing property abroadcompared to purchasing property at home in Belgium.59 Even Belgiumadmits that the cadastral value is historically lower than the fair marketvalue, which results in cadastral value of property in Belgium to be valuedlower than the rent that could be obtained from the rental market.60

Therefore, though in some small circumstances the actual rental valuedetermined from property abroad could be less than the cadastral value,most often the property abroad is going to be valued higher.61 The courtsimply stated property outside of Belgium “is overvalued in relation toincome from immovable property situated in Belgium.”62

The court properly held Belgium tax code, specifically Article 7 of theITC ’92, was incompatible with binding European Union treaty law underArticle 63 TFEU and Article 40 of the EEA Agreement, because the taxcode discourages Belgian residents from purchasing property located outsideof the country. Also, it is important to note that Belgium concedes manyimportant points; one being that cadastral value—the method of valuingproperty inside the borders of Belgium—is historically low.63 There aremany political reasons the elected officials in Belgium want to keep value ofproperty inside their country low and thereby allowing Belgium residentspay lower taxes; but if the country is going to do so, they must not restrictcapital movement by valuing property located outside of Belgium higher.64

To be clear, what violates European Union law is the disadvantageous taxtreatment that property outside of Belgium incurs compared to property

56. Id.57. Id. ¶ 40.58. Case C-190/12, Emerging Mkts.’ Series of DFA Inv. Trust Co., 2014 E.C.R. 249, ¶ 31.59. Case C-110/17, Commission v. Belgium, ¶ 49.60. Id. ¶ 45.61. Id. ¶ 49.62. Id.63. Id. ¶ 45.64. Belgian Tax Treatment of Foreign Real Estate Incompatible with EU Law, supra note 9.




located in Belgium, not the manner in which Belgium values the property inBelgium.65 Therefore, it would be compatible with European Union law ifBelgium valued both property in Belgium and property outside of thecountry by its cadastral value. So long as Belgium is consistent with the taxconsequences on property within and outside of the country, the code willnot conflict with free movement of capital because there will be norestriction or discouragement to Belgium residents to invest in propertylocated outside of the country.66

Although implications of Commission v. Belgium may be limited towealthier individuals who have the means of investing in property outside ofBelgium, depending on how Belgian elected officials correct the tax code,the results could affect many Belgium residents. Jan Lambrechts, anEuropean Union Specialist on Capital, fears that Belgium will continue to“trend for radical tax increases” in the near future because of theincompatibility of Belgium’s tax code with European Union treaty law.67

Belgium, like so many countries, taxes individuals on a progressive taxscale.68 Because the country already believes individuals with greater meansof paying taxes should pay higher taxes, property outside of Belgium in“secondary homes,” or investment properties, will most likely be “deemed tobe excessive signs of welfare” and could thus be at risk of a tax increase in thefuture.69 Further, some believe that “a sudden tax increase on real estatecould result [in] public unrest.”70 It will be interesting to see how theBelgian government corrects the tax code and how Belgium residentsrespond to the change.

This holding is important because it sets further precedent that theEuropean Union will ensure countries are not restricting the free movementof capital even if the monetary effect is minimal. Remembering why theEuropean Union was formed in the first place emphasizes why this rulingagainst even a small restriction on the free movement of capital is important.As referenced earlier, one of the major reasons the European Union wasformed was to ensure that there were no restrictions on the free movementof capital between European Union Member States.71 The free movement

65. Case C-489/13, Verest and Gerards, 2014 E.C.R. 2210, ¶¶ 18-19.66. Id. ¶ 18.67. Jan Lambrechts, Owning Properties Abroad – New Tax Changes Upcoming, ICHIBAN

CONSULT BLOG (Dec. 4, 2013), http://ichibanconsult.be/blog/owning-properties-abroad-new-tax-changes-upcoming/.

68. Belgium – Income Tax, Taxation of International Executives, KPMG (Dec. 31, 2017), https://home.kpmg.com/xx/en/home/insights/2011/12/belgium-income-tax.html (“Income tax iscalculated by applying a progressive tax rate schedule to taxable income.”); see generallyProgressive Tax, INVESTOPEDIA, https://www.investopedia.com/terms/p/progressivetax.asp (lastvisited Nov. 12, 2018) (“A progressive tax is a tax that imposes a lower tax rate on low-incomeearners compared to those with a higher income, making it based on the taxpayer’s ability topay.”).

69. Lambrechts, supra note 67.70. Belgian Tax Treatment of Foreign Real Estate Incompatible with EU Law, supra note 9.71. Korkmaz, supra note 18.




of capital “enables, integrated, open, competitive and efficient Europeanfinancial markets and services.”72 But, before the 1988 Directive 88/36173

and EEA Agreement, and later the Article 63 TFEU, there was no freemovement of capital. Since the legally binding assertion of free movement ofcapital, there has been a transition period for many Member States.74

Transition periods can be significant, as demonstrated by the holding inCommission v. Belgium. Article 7 of the ITC ’92 was formed over twenty-sixyears ago. That is a long transition period for Belgium to adopt tax laws thatfollow binding European Union law.

IV. Conclusion: The Future of Belgium Property Tax Law

Now that Article 7 of the ITC ’92 has been proven to conflict withEuropean Union law under Article 63 TFEU and Article 40 of the EEAAgreement, the question for taxpayers in Belgium is: how do I file a correcttax return if I own property outside of the country? According to Jan Torsin,senior manager of tax at the Van Havermaet advisory firm in Belgium,‘“things are very unclear at the moment; you have no legal certainty.’”75 Inthe meantime, practitioners are advising Belgium residents with propertylocated abroad to be aware of the method by which the property is valued.76

Some individuals will use the holding in European Commission v. Belgium tolower the value of their property located abroad, but according to taxadvisors in Belgium that may be risky.77 Kizzy Wandelaer, tax director atKPMG Tax Advisers stated that if residents lower their abroad propertyassessment they “will be looking at a court battle because . . . the taxadministration will contest this.”78

In response to the holding in Commission v. Belgium, the Finance Ministryhas publicly stated that they would change the tax law to address the conflictwith Article 63 TFEU and Article 40 of the EEA Agreement.79 If Belgiumcontinues to delay changing the “unequal treatment” of tax consequences onproperty located in Belgium versus property located outside of Belgium, thecountry could face penalties from the European Union.80 Interestingly,Belgian Finance Minister, Johan Van Overtveldt, suggested Belgium wouldchange the way property abroad is valued, “rather than amending thecadastral value method, which would increase tax bills.”81 Belgium is alreadya very highly taxed country with a total tax rate in 2016 of 53.7%, “the

72. Free Movement of Capital in the EU, EUBUSINESS (Aug. 1, 2009), https://www.eubusiness.com/topics/single-market/capital.

73. See generally Council Directive 88/361, 1988 O.J. (L 178) 1 (EU).74. Free Movement of Capital in the EU, supra note 73.75. Thompson, supra note 7 (internal citations omitted).76. Id.77. Id.78. Id.79. Id.80. Belgian Tax Treatment of Foreign Real Estate Incompatible with EU Law, supra note 9.81. Thompson, supra note 7.




highest tax rate in Western Europe.”82 With an already high tax rate on itscitizens, the Finance Ministry’s objective to avoid raising taxes seems logical.But, it is unlikely that there will be an update to the tax code before generalelections are held in May 2019.83 Therefore, the impact of Commission v.Belgium will put taxpayers in limbo because individuals will not know how toaccess the value or rental value of their property located outside ofBelgium.84

It is important to limit Commission v. Belgium to its facts: here the court isspecifically discussing the tax consequences associated with the value of theproperty. The valuation is the problem and what conflicts with EuropeanUnion Treaty law, whether the property is rented out for income or not.85

The differing valuation between property located in Belgium and propertylocated outside of Belgium by the two different methods used is the focus ofthe court’s ruling. While the court makes clear in Commission v. Belgium thatArticle 7 of the ITC ’92 conflicts with European Union Treaty law and mustbe addressed, this case does not directly resolve the problem of tax valuationof property outside of Belgium.

82. Andrew Henderson, 15 Countries with the Highest Tax Rates in the World, NOMAD

CAPITALIST, http://nomadcapitalist.com/2017/08/07/countries-with-the-highest-tax/ (lastvisited Nov. 12, 2018).

83. Thompson, supra note 7.84. Id.85. Case C-110/17, Commission v. Belgium, 2018 E.C.R. 250, ¶¶ 18-19.



AMERICAN BAR ASSOCIATION321 N. CLARK STREETCHICAGO, ILLINOIS 60610

A TRIANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW

VOLUME 52 • NUMBER 1 • 2019

ARTICLES

Aligning Emerging Global Strategies to Combat Corporate Corruption: From a “Two Thrust Approach” to a “Two Swords One Thrust Strategy” of Compliance, Prosecutorial Discretion, and Sovereign Investor Oversight in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Larry Catá Backer

Investigating Potentially Unlawful Death under International Law: The 2016 Minnesota Protocol . . . . . . . . . . . . Christof Heyns,

Stuart Casey-Maslen, Toby Fisher,

Sarah Knuckey, Thomas Probert,


Lisbon’s Legacy: Increased Democratic Accountability and Centralized Governance in EU International Investment Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Julia Johnson

Time for the Creation of a Standing U.N. Armed Peace Service and the Potential Employment of Experienced U.S. Veterans as a Significant Component of Such a Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ronald Sievert

Internationalizing the U.S. Law School Classroom: Lessons Learned from Teaching Transnationally. . . . . . . . . Christopher R. Kelley


CASE NOTE

Commission v. Belgium: Belgium’s Tax Law Prevents Free Movement of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . John Gramlich

PUBLISHED IN COOPERATION WITH

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