Grotius Lecture

8/12/2019 Grotius Lecture

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NINTH ANNUAL GROTIUS LECTURE

The lecture began at 4:15 p.m., Wednesday, March 28,

and was given by !seph "tiglit# !$ %!lumbia &niversity'

the discussant was (achel )yte !$ the *nternati!nal

+inance %!rp!rati!n.

MULTINATIONAL CORPORATIONS: BALANCING

RIGHTS AND RESPONLIBILITIESBy Joseph E. Stiglitz*

THE IMPORTANCE OF CORPORATIONS AND THE

PROBLEMS THEY PRESENT

n increasing $racti!n !$ c!mmerce within each c!untry

is c!nducted by c!rp!rati!ns which are !wned and

c!ntr!lled $r!m !utside its b!rders and which !$ten c!nduct

business in d!#ens !$ c!untry. These c!rp!rati!ns have

br!ught en!rm!us bene$its-indeed, many !$ the bene$its

attributed t! gl!bali#ati!n, such as the cl!sing !$ the

n!wledge gap, the gap between devel!ping c!untries

which is even m!re imp!rtant than the gap in res!urces, isdue in n! small measure t! multinati!nal c!rp!rati!ns.

M!re imp!rtant tan the capital which c!rp!rati!ns bring 1are

the trans$er !$ techn!l!gy, the training !$ human res!urces,

and the access t! internati!nal marets.

*n recent years, especially $!ll!wing the c!llapse !$ the

initiative t! create a Multilateral greements !n *nvestment

/M*0 within the %3,2 there has been a pr!li$erati!n !$

bilateral investment treaties /*Ts0 and investment

pr!visi!ns within bilateral $ree trade agreements.64 /"!me

c!untries /such as *nd!nesia0 have even passed laws

pr!viding similar investment guarantees, !n their !wn.0

These agreements are purp!rtedly t! pr!vide greater

pr!tecti!n $!r invest!rs, thereby enc!uraging cr!ss-b!rder

)"M*7 T9& r!tius %(M9

)uliah dimulai puul 4:15 s!re , (abu, 28 Maret , dan

diberian !leh !seph "tiglit# dari %!lumbia &niversity ,

pembahas adalah (achel )yte dari *nternati!nal +inance

%!rp!rati!n .

;(&"9 M&7T*"*7 : )"*MT( 9) )W*

leh !seph . "tiglit# an>ian perdagangan bebas bilateral. ?/eberapa

negara /seperti *nd!nesia0 bahan mel!l!san undang

undang memberian >aminan investasi yang sama, pada

merea sendiri.0

1< University Professor at Columbia University and chair of its Committee on Global Thought; Chairman of the Brooks World Poverty Institute at ManchesteUniversity; and President of the Initiative for olicy !ialogue" This lecture dra#s heavily from Chater $ of %oseh &" 'tiglit() Making GlobalizationWork) *e# +orkW"W" *orton) -../" The author is indebted to %ose 0lvares) !an Choate) 1uke Peterson) !aniel 'te#art) and Chantal Thomas for helful assistance" 2inancial suorfrom the 2ord) Macarthur) and 3ockefeller Brothers 2oundations is gratefully ackno#ledged" 0fter the first of this lecture #as #ritten) Gus 4an ublished his imortanstudy)Investment Arbitration Treaty and Public Law) 56ford University Press) -..$) #hich aroaches the issues from a legal ersective) but comes to much of thesame critical vie# of these treaties" 7is book rovides a more systematic and comrehensive comilation and interretation of the cases"

*ndeed, in a c!untry lie china, sitting !n 1. trilli!n !$ reserves, there is little value t! the capital itsel$.2The initiative t! create an M* c!llapsed in ct!ber in 1@@8 when the +rench ;rime Minister 7i!nel !spin ann!unced his g!vernment was

withdrawing $r!m the tals. The devel!ping c!untries were w!rried that new !bligati!ns w!uld be imp!sed !n them and that the agreements w!uld themlittle bene$it. +!r additi!nal details, see . de !nAuieres, Retreat OverOECD Pact on Investment, +*. T*M", ct. 21, 1@@8. There is an interestingparallel with the $ailure !$ the multilateral trade tals: each was $!ll!wed by a pr!li$erati!n !$ bilateral agreements that were in general even m!redisadvantage!us t! the devel!ping c!untries.

3 These s!-called $ree trade agreements are n!t really $ree trade agreements but managed trade agreements. $ree trade agreements w!uld

eliminate n!t !nly tari$$s but als! n!n-tari$$ barriers and subsidies. !ne !$ the +Ts /s!-called +ree Trade greements0 d! that. +!r a $urther discussi!nsee, e.g., ";9 . "T*7*TB C . %9(7T, +*(, T(3 +( 77 /2DD50' ";9 . "T*7*TB, M)* 77*BT* W() /2DDE0.

4The number !$ such agreements has been increasing s! rapidly that it is hard t! eep trac. cc!rding t! the & %!n$erence !n Trade and

3evel!pment /&%T30, which tries t! m!nit!r them, the numbers alm!st d!ubled between 1@@5 and 2DD5, g!ing $r!m 1,22 t! 2,4@5. 3uring 2DD5, FD*Ts were c!ncluded. This is the $ewest c!ncluded in any year since 1@@5. These $igures !nly include *Ts, which mae up slightly less than hal$ !$ al*nternati!nal *nvestment greements /**0. &nited ati!ns, Development in International Investment greements in !""#$ ** M*T( . 2 /2DDE0.


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investment. There is t! date, little evidence that have d!ne

s!.5 ;art !$ the reas!ns is that they may in $act curtail

devel!pment strategies, in ways which are adverse t!

gr!wth. s the %7% /the & c!n!mic %!mmissi!n !n

7atin merica and the %aribbean0 c!ncluded, Gc!untries

!$ten $ind that they have assumed !bligati!ns which, $urther

d!wn the r!ad, will place limitati!ns !n their !wn

devel!pment pr!grams. G

E

This paper is c!ncerned with a set !$ m!re $undamental

issues. ven i$ it c!uld be established that *Ts lead t!

increased investment, and even i$ that investment c!uld be

sh!wn t! lead t! higher gr!wth, as measured by increased

3; /gr!ss d!mestic pr!duct0,F it d!es n!t mean that

s!cietal wel$are has been increased, especially !nce

acc!unt is taen !$ res!urce depleti!n and envir!nmental

degradati!n. These agreements are t! imp!se restraints !n

what g!vernment can d!-!r at least t! imp!se a high c!stt! their undertaing certain acti!ns. "!me !$ the activities

which may be c!nstrained may be imp!rtant $!r pr!m!ting

general s!cietal well-being-even i$ pr!$its !$ particular $irms

are a$$ected adversely. *t is this p!ssibility which has made

these agreements a sub>ect !$ such c!ncern and debate.

These agreements are, !$ c!urse, n!t all identical' what

they d! is itsel$ a sub>ect !$ s!me c!ntr!versy. 7ie any

agreements, it depends !n the interpretati!ns !$ particular

w!rds, and the >udicial pr!cesses thr!ugh which these

w!rds are given meaning are !ne !$ the s!urces !$

;er>an>ian ini !n!n untu memberian perlindungan yang

lebih besar bagi invest!r , sehingga mend!r!ng investas

lintas - perbatasan . da sampai saat ini, sediit but

bahwa telah melauannya . agian dari alasan adalah

bahwa merea mungin sebenarnya mengurangi strateg

pembangunan , dengan cara-cara yang merugian

pertumbuhan . "ebagai %7% / )!misi !n!mi ;untu meria 7atin dan )aribia 0 menyimpulan , ? negara-

negara sering menemuan bahwa merea telah

mengasumsian ewa>iban yang , lebih lan>ut di >alan , aan

menempatan pembatasan pada pr!gram pembangunan

merea sendiri . ?

Tulisan ini beraitan dengan serangaian masalah yang

lebih mendasar . ahan >ia itu dapat ditetapan bahwa

*T" menyebaban peningatan investasi , dan bahan >ia

investasi yang bisa terbuti menyebaban pertumbuhan

yang lebih tinggi , yang diuur dengan peningatan ;3

/ pr!du d!mesti brut! 0 , itu tida berarti bahwaese>ahteraan s!sial telah meningat , terutama setelah

aun diambil dari penipisan sumber daya dan degradas

lingungan . ;er>an>ian ini untu memasaan pembatasan

pada apa yang pemerintah bisa lauan - atau setidanya

untu memasaan biaya tinggi untu melauan tindaan

tertentu merea. eberapa egiatan yang dapat dibatas

mungin penting untu mempr!m!sian s!sia

ese>ahteraan umum - bahan >ia euntungan perusahaan

tertentu yang terpengaruh. *ni adalah emunginan ini yang

telah membuat per>an>ian ini men>adi sub>e perhatian dan

perdebatan tersebut .

;er>an>ian ini , tentu sa>a , tida semua identi, apa yang

5 "ee M 9allward-3remerier, 3! ilateral' *nvestment Treaties $$ect +3*H nly a it and They %!uld ite, ;!licy (esearch ;aper !. 121

Washingt!n, 3%: W!rld an, ugust 2DD. &%T3 $!und similar results in Bilateral Investment %reatiesin the &id'())"s/1@@80. While s!me studieshave c!me t! the !pp!site c!nclusi!n. The weight !$ the evidence is !n the side that these agreements have had little i$ any e$$ect. The article by .eumayer and 7. "pess, Do Bilateral Investment %reaties Increase oreign Direct Investment to Developing Co+ntries, / W(73 3I. 15EF-85/2DD500 $!und a p!sitive c!rrelati!n between *Ts and +3*. The article by . "alcuse and . "ullivan, Do BI%s Really -or, n Eval+ation o/ BilateraInvestment%reaties and 0rand Bargain/4E 9(I. *T67 7. . 4E EF-1D /2DD500, als! $!und a p!sitive c!rrelati!n. ut !ther auth!rs have $!und theresults disappear when the sample is altered, andJ!r when *T characteristics are c!ntr!lled $!r. br!ader study by T!bin and (!se-cerman, $!rinstance, $!und n! p!sitive e$$ects. "ee T!bin C ". (!se-erman, +!reign 3irect *nvestment and the usiness nvir!nment in 3evel!ping %!untriesThe *mpact !$ ilateral *nvestment Treaties, =ale %enter $!r law, c!n!mics and ;ublic ;!licy, W!ring ;aper !. 2@, 2DD4, cited in). ;. allagher CM. . 7. irch, Do Investment greements ttract Investment,Evidence /rom 1atin merica, F . W(73 *I. C T(3 @E1-F4 /2DDE0. What is clea$r!m literature is that there is n! c!mpelling evidence that these bilateral investment agreements have an ec!n!mically, !r statistically, signi$icant e$$ec!n gr!wth, let al!ne s!cietal wellbeing. This paper will pr!vide part !$ the eKplanati!n $!r why that may be s!. +!r a current bibli!graphy !n this issue

see . %!sby. G*nternati!nal *nvestment greements and "ustainable 3evel!pment: chieving the Millennium 3evel!pment !als,L *nternati!na*nstitute $!r "ustainable 3evel!pment, Winnipeg, %anada, "eptember 2DD5, availa2le athttpwww.iisd.!rgJpd$J2DD5JinvestmentNiias.pd$O.

6oreign Investment in 1atin merica and the Cari22ean !"""$"antiag!, %hile: &nited ati!ns, une 2DD1, p. 15.

7 n increase in $!reign investment might n!t lead t! higher gr!wth i$, $!r instance, $!reign investment displaced d!mestic investment. *t is

imp!rtant, !$ c!urse, t! measure gr!wth appr!priately, taing int! acc!unt the depleti!n !$ natural res!urces and the degradati!n !$ the envir!nmentM!re!ver, c!untries sh!uld $!cus n!t !n 3; /which m!st !$ the empirical studies d!0, but !n ;/et ati!nal ;r!duct0. The $!rmer l!!s at !utputpr!duced within a c!untry. *$ !utput g!es up, but all !$ the resulting increased inc!me g!es t! $!reigners, it !bvi!usly is !$ little bene$it t! the citi#ens !$the c!untry. &sing these c!ncepts, it is even easier t! see h!w $!reign investment c!uld increase but the well-being !$ the citi#ens decrease. Some othe mines in Pa!a Ne" G!inea# fo$ instan%e# %a!se& si'nifi%ant en(i$onmenta) &e'$a&ation* the )o"# r!yalties the c!untry received may n!have been en!ugh t! c!mpensate $!r this damage.

There is an!ther dimensi!n t! s!cietal well being ab!ut which we will have little t! say: $!reign investment can lead t! an increase in ineAualitystandard measures !$ 3; per capita l!! !nly at averages. Median inc!me c!uld be going down even as average increase, so most citizens on the countrycould be made worse o! "ines which #ollute can decrease incomes o #oor ishermen, even i the mines create a ew high #aying $obs!


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dissatis$acti!n with the agreements. 3i$$erent arbitrati!n

panels have interpreted even the s!me w!rd di$$erently,

creating a high level !$ uncertainty, b!th am!ng

g!vernments and invest!rs, ab!ut eKactly what these

agreements d!.8This article is $!cused n!t !n any speci$ic

agreements, which g!es substantially bey!nd pr!tecti!n

against eKpr!priati!n.

Many !$ the greements-including s!me !$ their m!st

c!ntr!versial aspect-are c!ncerned with the $ar br!ader

issue !$ what happens when changes in regulati!n !r !ther

g!vernment p!licies adversely a$$ect the value !$ a $!reign-

!wned asset.@ The agreements d! n!t, !$ c!urse, st!p

g!vernment $r!m changing regulati!ns, taKes, !r !ther

g!vernment p!lices' but they may reAuire that the

g!vernments c!mpensate th!se that are adversely

a$$ected, and in d!ing s!, they increase the c!sts !$

g!vernments changing regulati!ns and !r !ther

g!vernments p!licies. /*t sh!uld be clear that these

agreements are n!t symmetric: many g!vernments p!liciesand investment lead t! unanticipated increases in the value

!$ assets. ut while c!mpanies demand c!mpensati!n

when there is a change that l!wers asset values, they d!

n!t !$$er t! give the g!vernment bac the increase in value

$r!m these p!sitive changes. *ndeed, attempts by the

g!vernment t! capture the increase in value that result $r!m

g!vernment acti!ns that might p!sitively impact the value !$

the assets might themselves be sub>ect t! invest!r suits,

unless such recapture is guaranteed in the treaty itsel$.1D0

!vernments, !$ c!urse, are c!nstantly changing

regulati!n, and !ther p!licies, and maing investments

which have a variety !$ impacts !n $irms. The general

stance in all s!vereigns, especially in dem!cracies, is that it

sh!uld be the right !$ each g!vernment t! maes these

merea lauan itu sendiri merupaan subye beberapa

!ntr!versi . "eperti per>an>ian apapun, itu tergantung pada

interpretasi dari ata-ata tertentu , dan pr!ses peradilan d

mana ata-ata ini diberi mana adalah salah satu sumbe

etidapuasan dengan per>an>ian . ;anel arbitrase berbeda

telah mena$siran bahan beberapa ata yang berbeda

menciptaan tingat etidapastian yang tinggi , bai d

alangan pemerintah dan invest!r , tentang apa per>an>iantersebut dilauan. rtiel ini tida ber$!us pada per>an>ian

tertentu , yang ber>alan secara substansial di lua

perlindungan terhadap pengambilalihan

anya ;er>an>ian - termasu beberapa dari merea yang

paling !ntr!versial aspe - prihatin dengan masalah yang

>auh lebih luas dari apa yang ter>adi etia perubahan

peraturan atau ebi>aan pemerintah lainnya

mempengaruhi nilai aset mili asing. ;er>an>ian tida , tentu

sa>a , menghentian pemerintah dari perubahan regulasi

pa>a , atau ebi>aan pemerintah lainnya , tetapi merea

mungin meminta pemerintah meng!mpensasi mereayang terena dampa , dan dengan berbuat demiian

merea meningatan biaya pemerintah mengubah

peraturan dan atau ebi>aan pemerintah lain . / 9arus >elas

bahwa per>an>ian ini tida simetris : . )ebi>aan banya

pemerintah dan investasi menyebaban enaian ta

terduga dalam nilai aset Tapi sementara perusahaan

menuntut !mpensasi bila ter>adi perubahan yang

menurunan nilai aset , merea tida menawaran untu

memberian pemerintah embali enaian nilai dar

perubahan-perubahan p!siti$ . Memang , upaya pemerintah

untu menangap enaian nilai yang dihasilan dar

tindaan pemerintah yang mungin berdampa p!siti$ nila

aset mungin sendiri dienaan paaian invest!r , ecual

merebut embali seperti di>amin dalam per>an>ian itu sendir

. 0

;emerintah , tentu sa>a , yang terus berubah regulasi , dan

%The m!st n!t!ri!us eKamples inv!lved arbitrati!n !$ cases in rgentina and %#ech (epublic. "ee $n. @ bel!w. n!ther eKample is pr!vided by

decisi!ns c!ncerns standards !$ c!mpensati!n. While m!st panels have ruled against c!mpensati!n $!r l!st pr!$its, in the $am!us )araha !das case in*nd!nesia, a "wiss ;anel awarded P1@ milli!n t! the private party /including P58 milli!n interest0. while the !riginal investment was !nly P111 milli!n/"ee )urniawan, M!ch. G;ertamina sh!uld pay c!mpensati!n t! )araha: eKperts.L Jaarta Post, March 2D, 2DD2 and 7*=, 9 and T&+9*3=T. G;ertamina settles p!wer dispute.L %he inancial %imes, March 22, 2DDF. %!mpanies6 *nternati!nal p 1E. /The l!st pr!$its may have been

particularly large in this case, because p!ssible c!rrupti!n in the award !$ the c!ntract under "uhart!-!ne !$ several aspects !$ the case that might itparticular galling t! *nd!nesians. "! t!! was the view that they had been enc!uraged by !utside advisers t! cancel the disadvantage!us, and p!ssiblec!rrupt, c!ntract. +!r additi!nal in$!rmati!n, seehttp:JJwww.arahab!-das.c!mJ legalp!int.phpO0.

&There are imp!rtant Auesti!ns even !$ what that means, !n which * shall c!mment brie$ly bel!w, ls!, as * have already c!mmented, and * eKplain

in greater detail bel!w, there is !ng!ing c!ntr!versy ab!ut what these agreements really d! entail. The persistence !$ this ambiguity is itsel$ a $law, inpart related t! de$ects in the dispute res!luti!n mechanism, als! discussed bel!w.

1'+!r imp!rtance, i$ the g!vernment builds a highway near a piece !$ land, the value !$ the land may increase en!rm!usly: a wind$all gain t! the

land!wner. *$ the g!vernment is unable t! appr!priate $!r itsel$ these gains, it my have insu$$icient incentives /!r res!urces0 $!r undertaing these valueenhancing investments. =et while $irms insist !n being c!mpensated when the g!vernment taes acti!ns which decrease the value !$ their pr!perty,they are less enthusiastic ab!ut sharing that arise $r!m g!vernment acti!ns' investment agreements may even preclude such attempts, unless theg!vernment has imp!sed /in a presumably G$air and eAuitableL and Gn!n-discriminat!ryL manner0 a capital gains taK. *mp!sing taKes that w!uld recapturethe gains w!uld have the $urther advantage !$ disc!uraging l!bbying /!r !utright c!rrupti!n0 t! pass legislati!n !r t! mae investments that increaseasset values.
http://www.karahabo-das.com/%20legalpoint.phphttp://www.karahabo-das.com/%20legalpoint.php


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changes, with!ut paying c!mpensati!n $!r any resulting

changes in the value !$ assets. *n the &nited "tates, the

debate has cantered !n regulat!ry taings, with anti-

envir!nmentalists arguing $!r c!mpensati!n. They n!w

that by increasing the c!st !$ envir!nmental regulati!ns,

they will reduce their sc!pe. 11They have argued that the

%!nstituti!n pr!tects against the arbitrary taing !$ pr!perty

with!ut $ull c!mpensati!n, and they have c!ntended thatsuch taings sh!uld even then be highly restricted, e.g. t!

the c!nstructi!n !$ r!ads. 9!wever, c!urts have

c!nsistently re>ected that view.12 *ndeed, in a highly

c!ntr!versial case, the "upreme %!urt sustained the right

!$ eminent d!main t! taings !r land $!r devel!pmental

purp!ses, in which the land taen w!uld subseAuently be

used by private parties. 1 3isapp!inted with these %!urt

rulings, c!nservatives and anti-envir!nmentalists have

turned elsewhere. *n s!me states, they have success$ully

passed initiatives t! pr!vide c!mpensati!n $!r regulat!ry

taings,14 th!ugh such initiatives have n!t yet been $ully

tested in the c!urts. They have intr!duced legislati!n int!%!ngress, but s! $ar, such legislati!n has $ailed t! pass,

th!ugh legislati!n reAuiring the dministrati!n analysis !$

any regulat!ry taing has been appr!ved.15 * was in the

%lint!n dministrati!n /as a member, and later, %hairman ,

ebi>aan lainnya , dan membuat investasi yang memili

berbagai dampa pada perusahaan . "iap umum dalam

semua penguasa , terutama di negara-negara dem!rasi

adalah bahwa hal itu harus men>adi ha masing-masing

pemerintah untu membuat perubahan ini , tanpa

membayar !mpensasi atas perubahan yang ter>adi dalam

nilai aset . 3i meria "eriat , perdebatan telah cantered

pada pengambilalihan peraturan , dengan anti - lingunganhidup berdebat untu !mpensasi . Merea tahu bahwa

dengan meningatan biaya peraturan lingungan , merea

aan mengurangi ruang lingup merea . Merea

berpendapat bahwa )!nstitusi melindungi terhadap

pengambilan sewenang-wenang pr!perti tanpa !mpensas

penuh , dan merea telah berpendapat bahwa

pengambilalihan tersebut harus bahan emudian men>ad

sangat dibatasi , misalnya untu pembangunan >alan

amun, pengadilan telah secara !nsisten men!la

pandangan itu. Memang , dalam asus yang sanga

!ntr!versial , Mahamah gung berelan>utan ha d!main

teremua untu pengambilalihan atau tanah untu tu>uanpembangunan , di mana tanah diambil emudian aan

digunaan !leh piha swasta . )ecewa dengan putusan

Mahamah ini , !nservati$ dan anti - lingungan hidup

telah berubah di tempat lain . 3i beberapa negara , merea

11T! be $air, s!me !$ the adv!cates !$ regulat!ry taings pr!visi!ns see it as n!t >ust instrumental /i.e. reducing the sc!pe $!r regulat!ry taings wil

enhance ec!n!mic e$$iciency0 but believe that such pr!visi!ns are necessary $!r a >ust s!ciety /it is +n/air$in s!me $undamental sense, t! deprive pe!ple!$ their pr!perty' partial deprivati!n thr!ugh regulati!n is als! $undamentally un$air0. We shall discuss these brie$ly bel!w /c$. discussi!n !$ endangeredspecies0.

12The supreme c!urt has utili#ed a three-pr!ng test, devel!pment in ;enn %entral Transp!rtati!n %!. v. %ity !$ ew =!r, 48 &.". 1D4 /1@F80

/which reviewed and upheld a landmar preservati!n law which placed restricti!ns !n the ability !$ !wner !$ landmar buildings appearances in anumber !$ ways0 t! analy#e when regulati!n has g!ne Gt!! $ar,L c!nstituting a taling and there$!re reAuiring c!mpensati!n $r!m the !vernment. These

$act!rs are: the character !$ the g!vernment acti!n, the ec!n!mic impact !$ the regulati!n !n the land!wner, and the distinct investment-bacedeKpectati!ns !$ the land!wner. 7aws and regulati!ns that $!cus !n restricting public nuisance, and pr!tecting the health and sa$ety !$ the c!mmunityhave n!t reAuired c!mpensati!n. "ee, e.g., 9adachec v. "ebastian, 2@ &.". @4, 41D-12 /1@150 /barring bric manu$acturers $r!m residential areas0Iillage !$ uclid v. mbler (ealty %!mpany /1@2E0 was the $irst case t! review and uph!ld municipal #!ning regulati!ns. "ubseAuently, in erman v;arer /1@540, the "upreme %!urt ruler that private pr!perty c!uld be taen $!r public purp!se rather than simply public use. This case led t! !thecases which all!wed cities t! eKercise eminent d!main !ver blighted neighb!rh!!ds.

13"ee )el! v. %ity !$ ew 7!nd!n, %!nn., 545 &.". %!nstituti!n, in the c!nteKt !$ eminent d!main. The %!urt6s decisi!n that taing !$ private

pr!perty t! trans$er c!mpanies /primarily ;$i#er0 in !rder t! b!!st ec!n!mic devel!pment in the %ity was c!ntinues t! generate great !pp!siti!n.

14These regulat!ry taings initiatives have $!und success in reg!n in 2DD4, with the passing !$ Measure F, reAuiring >ust c!mpensati!n $!r any

land use regulati!n passed a$ter the statute was implemented' and als! in ri#!na in 2DDE, when v!ters !verwhelmingly supp!rted ;r!p!siti!n 2DF/cited as the G;rivate ;r!perty (ights ;r!tecti!n rcL0,. 9!wever, initiatives $ailed t! garner su$$icient v!ter in Washingt!n /*nitiative @0, %ali$!rnia/;r!p!siti!n @D0, and *dah! /;r!p!siti!n 20.

The initiative in reg!n has $aced legal challenge in reg!n %!urts. lth!ugh plainti$$s attempting t! !verturn Measure F gained success in the

l!wer c!urts, the reg!n "upreme %!urt $!und measure c!nstituti!nal, and reversed this decisi!n, there$!re clearing the way $!r the initiative t! c!ntinue$uncti!ning. "ee Mac;hers!n v. 3ept. !$ dministrative ;urp!se, 4D r. 11F, 1D ;.d D8 /r. 2DDE0.

"ince the )el! case 2E states have enacted bills restricting the sc!pe !$ )el!. *n states a c!nstituti!nal amendment reducing the sc!pe wasrati$ied, and additi!nal 2 states legislati!n passed bills !nly t! have them vet!ed by the g!vern!r. The ati!nal %!n$erence !$ "tates 7egislaturesmaintains a list !$ passed billsJamendments at: http:JJwww.ncsl.!rgJpr!gramsJnatresJannualmtgupdateDE.htm.s an eKample, the states !$ *llin!is "D8E:L;r!hibits the use !$ eminent d!main t! c!n$er a bene$it !n a particular private entity !r $!r a public use that is merely a preteKt $!r c!n$erring abene$it !n a particular private entity. 7imits the use !$ eminent d!main $!r private devel!pment unless the area is blighted and state !r l!cal g!vernmenhas entered int! a devel!pment agreement with a private entity.L

15%!ngress passed the Treasury, ;!stal "ervices and eneral !vernment ppr!priati!ns ct, 1@@F /;ub. 7. No. 104-208, 645, 110 Stat. 3009

(1997)) in 1997, requiring the office of anage!ent an" #u"gett! prepare a detailed analysis !$ the c!sts and bene$its !$ each regulat!ry acti!n !$the +ederal !vernment. There have been series !$ 9!use bills in the 1D@ th%!ngress attempting t! implement greater limits !n eminent d!main andregulati!n by $ederal g!vernment: h!wever, these pr!p!sals have all died in the "enate. "ee ;rivate ;r!perty (ights ;r!tecti!n ct 2DD5, 9.(. 41281D@th%!ng. /2DD50' Threatened and ndangered "pecies (ec!very ct, 9.(. 824, 1D@ th%!ng. /2DD50' ;rivate ;r!perty (ights *mplementati!n ct9.(. 4FF2, 1D@th%!ng. /2DDE0
http://www.ncsl.org/programs/natres/annualmtgupdate06.htmhttp://www.ncsl.org/programs/natres/annualmtgupdate06.htmhttp://www.ncsl.org/programs/natres/annualmtgupdate06.htm


5/56


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have !btained had there been an !pen and public

discussi!n.18 *$ the &."., in ad!pting such an agreement,

was n!t $ully aware !$ its imp!rt, this is even m!re liely t!

be the case in devel!ping c!untries.1@62D

The c!nseAuences are >ust bec!ming apparent, as the

number !$ suits under these agreements has s!ared. nerecent c!unt has the number !$ cases under arbitrati!n as

eKceeding 2DD since the mid 1@8Ds-entailing claims !$ tens

billi!ns !$ d!llars.21

*n this paper, * want t! $!cus !n s!me $!undati!nal

issue:

a0 *s there a need $!r internati!nal ec!n!mic

agreements c!ncerning the regulati!n !$ multinati!nal

c!rp!rati!nsH

b0 *$ there is, what sh!uld be the sc!pe $!r such

multinati!nal agreements, and what gl!bal instituti!nalarrangements might be m!st e$$ectiveH

c0 *n particular, sh!uld g!vernment have the right t!

restrict entry !$ c!rp!rati!ns /as !pp!sed t! pe!ple !r

capital0 $r!m abr!adH "h!uld they have the right t!

insist !n inc!rp!rati!n inside their !wn c!untryH

d0 Wh! sh!uld be pr!tected by such agreementsH

e0 What sh!uld be the eKtent !$ pr!tecti!n !$ pr!perty

against changes in regulati!n, taKati!n, !r !ther

g!vernment p!liciesH What sh!uld be the standard !$

c!mpensati!nH

$0 "h!uld these agreements be m!re balanced, imp!sing

resp!nsibilities as well as right, and enhancing the

ability !$ h!st c!untries t! imp!se sancti!ns against

th!se that $ail t! live t! their resp!nsibilitiesH

g0 re there legitimate reas!ns that a c!untry might t!

discriminate between $!reign and d!mestic $irmsH

"h!uld investment treaties be limited t! pr!hibiting

such discriminati!nH What are the c!sts and bene$its !$

such a restricti!nH

diberitahu tentang risi! pena$siran semacam itu . 3

bagian >alur cepat beriutnya di )!ngres , masalah >uga

tida mendapatan banya , >ia ada , disusi. *ni meny!r!t

satu di riti utama dari per>an>ian - bahwa merea , di alam

merea , tida dem!ratis' bahwa, memang , bahwa saya

men>adi alasan utama merea : untu menghindari pr!ses

dem!rasi yang n!rmal dan untu mendapatan

perlindungan bagi invest!r bahwa merea tida aanpernah diper!leh telah ada men>adi disusi terbua dan

publi. ia " , dalam mengad!psi esepaatan tersebut

tida sepenuhnya menyadari imp!r , ini bahan lebih

mungin ter>adi di negara-negara berembang .

)!nseuensi hanya men>adi >elas , arena >umlah paaian

di bawah per>an>ian ini telah mel!n>a . "atu c!unt baru-

baru ini memilii >umlah asus di bawah arbitrase sebaga

melebihi 2DD se>a pertengahan 1@8D-an laim - yang

melibatan puluhan miliar d!lar.

3alam tulisan ini , saya ingin $!us pada beberapa isumendasar

a0 paah ada ebutuhan untu per>an>ian e!n!m

internasi!nal tentang regulasi perusahaan multinasi!nal H

b 0 ia ada , apa yang seharusnya men>adi ruang lingup

per>an>ian multinasi!nal seperti itu, dan apa pengaturan

elembagaan gl!bal yang mungin paling e$eti$ H

c 0 "ecara husus , pemerintah harus memilii ha untu

membatasi masunya perusahaan / sebagai lawan dar

!rang atau m!dal 0 dari luar negeri H 9arusah merea

memilii ha untu menuntut penggabungan di dalam

negeri merea sendiri H

d 0 "iapa yang harus dilindungi !leh per>an>ian tersebut H

e 0 pa yang harus men>adi tingat perlindungan ha mili

terhadap perubahan peraturan , perpa>aan , atau

ebi>aan pemerintah lainnya H pa yang harus men>ad

standar !mpensasi H

$ 0 ia per>an>ian ini men>adi lebih seimbang , memasaan

tanggung >awab serta ha , dan meningatan emampuan

1% thers have c!me t! similar c!nclusi!ns. +!r instance, M. 9allward-3riemeier, op cit, $n E: G*n additi!n t! the si#e !$ the awards and the

c!nstraints placed !n p!licymaers, s!me merican critics are c!ncerned that %hapter leven is causing an Gend runL ar!und the c!nstituti!n an aredecidedly antidem!cratic-the terms and c!nseAuences !$ %hapter leven were never publici#ed !r debated pri!r t! signing' that there is n! r!!m $!public c!mment !r even public scrutiny !$ the arbitrati!n pr!cedures' and limited mechanism $!r appeal.L

1&"ee $!r instance the statement !$ ;aistan6s tt!rney eneral at *%"*3 cited in *nvestment Treaty ews, published by the *nternati!nal *nstitute

$!r "ustainable 3evel!pment, 3ecember 1, 2DDE, available athttp:JJwww.iisdJ!rgJpd$J2DDEJitnNdecN2DDE.pd$.

2'*nterestingly, as this article g!es t! press, the investment pr!visi!ns !$ the )!rea-&" bilateral trade agreement have bec!me !ne !$ the ma>!

$!cal p!ints !$ !pp!siti!n. * have had discussi!ns with very seni!r g!vernment !$$icials !$ a small sian c!untry which is under pressure t! sign abilateral investment agreement with the &.". They t!! have gradually bec!me aware !$ the pr!blems !$ these agreements-within the regi!n, theeKperience !$ *nd!nesia, discussed earlier, seems particularly salient. They were, h!wever, n!t c!n$ident that they c!uld resist merican p!liticapressure.

21"ee the &%T3 study at http:JJwww.unctad.!rgJenJd!csJweb s ite it2DD52-en.pd$. lth!ugh investment treaties have been neg!tiated since the

late 11@5Ds, there is n! public evidence !$ their having been used in arbitrati!ns pri!r t! the mid 1@8Ds. Tw! cases al!ne th!se by the ma>!rityshareh!lder !$ =u!s against (ussia and th!se by disgruntled b!ndh!lders against rgentina inv!lve claims !$ m!re than a billi!n d!llars each.+!r a discussi!n !$ the eKp!nentially increasing r!le !$ litigati!n in addressing trade disputes, speci$ically at the WT, see . eattie, +r!m a Tricle t! a+l!!d-9!w 7awsuits are %!ming t! 3ictate the Terms !$ Trade,L inancial %imes, Mar. 2D 2DDF, at 1.
http://www.iisd/org/pdf/2006/itn_dec_2006.pdfhttp://www.iisd/org/pdf/2006/itn_dec_2006.pdfhttp://www.iisd/org/pdf/2006/itn_dec_2006.pdfhttp://www.unctad.org/en/docs/website%20it20052-en.pdfhttp://www.iisd/org/pdf/2006/itn_dec_2006.pdfhttp://www.unctad.org/en/docs/website%20it20052-en.pdf


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h0 *$ the reAuisite gl!bal instituti!nal arrangements can n!t

be created /at least in the sh!rt run0, what can !r

sh!uld individual c!untries d!H

i0 When there are disputes-as there inevitably be-h!w

sh!uld such disputes be res!lvedH

The entire discussi!n is in$!rmed by m!dern ec!n!mic

the!ry, which has helped clari$y the r!le !$ marets and

g!vernment, including the imp!rtance, and limitati!ns, !$

pr!perty right. *n this sense, this paper is a c!ntributi!n t!

the general the!ry !$ law and ec!n!mic, but it lies !n

$!undati!ns that are maredly di$$erent $r!m the

pred!minant %hicag! G7aw and ec!n!micL sch!!l,22which

sees legal instituti!ns as part !$ a system designed t!

ensure e$$iciency, pr!m!ted m!st e$$ectively thr!ugh $ree

maret c!mpetiti!n c!mbined with secure pr!perty right. 2

The last Auarter century has seen a re-eKaminati!n, and are>ecti!n, !$ the ec!n!mic $!undati!ns !n which this the!ry

rests, and the creati!n !$ a new paradigm, based !n

imper$ect in$!rmati!n and inc!mplete marets. *n this new

paradigm,24 marets by themselves are n!t, in general,

e$$icient, and g!vernment interventi!n /s!metimes even

Auite limited interventi!ns, such as circumscribing c!n$licts

!$ interests, as in the case !$ auditing250can lead t! wel$are

impr!vements.2E 7aws and regulati!n are, h!wever, n!t

!nly directed at impr!ving e$$iciency but als! at pr!m!ting

negara-negara tuan rumah untu men>atuhan sans

terhadap merea yang gagal untu hidup dengan tanggung

>awab merea H

g 0 paah ada alasan yang sah bahwa sebuah negara

bisa membedaan antara perusahaan asing dan

d!mesti H 9arusah per>an>ian investasi dibatasi untu

melarang disriminasi tersebut H paah biaya dan

man$aat dari pembatasan seperti ituHh0 ia diperluan pengaturan elembagaan gl!bal yang

tida dapat diciptaan / setidanya dalam >anga pende 0

apa yang dapat atau harus dilauan masing-masing

negara H

i 0 ila ada sengeta - arena ada pasti men>adi -

bagaimana seharusnya perselisihan tersebut diselesaian H

"eluruh disusi diin$!rmasian !leh te!ri e!n!mi m!dern

yang telah membantu memper>elas peran pasar dan

pemerintah , termasu pentingnya , dan eterbatasan , ha

pr!perti . 3alam hal ini , maalah ini merupaan !ntribuste!ri umum huum dan e!n!mi , tetapi terleta pada

$!ndasi yang sangat berbeda dari d!minan %hicag!

9uum dan e!n!mi ? se!lah , yang menempatan

institusi huum sebagai bagian dari sebuah sistem yang

dirancang untu memastian e$isiensi , dipr!m!sian paling

e$eti$ melalui !mpetisi pasar bebas di!mbinasian

dengan ha eayaan aman . "eperempat abad terahir

telah melihat pemerisaan ulang , dan pen!laan , $!ndas

e!n!mi yang te!ri ini bersandar , dan penciptaan sebuah

22This set !$ the!ries has been m!st $!rce$ully articulated in the w!rs !$ (ichard ;!sner. "ee (. ;!sner, Economic nalysis o/1a3, Fth ed.

W!lters )luwer 7aw and usiness, 2DDF, and (. ;!sner and c!n!mics, I!ls *-***., c!-edited with +. ;arisi, sward lgar ;ublishing, 1@@F.

23This sch!!l typically als! sees there being str!ng ec!n!mic $!rces t! maintain c!mpetiti!n /s!, $!r instance, there is little need $!r anti-trust

acti!n0. +!r eKample, even when there is a natural m!n!p!ly /a single $irm d!minates the maret, because !$ increasing returns t! scale0, c!mpetiti!n/orthe maret-t! be that single $irm-is s! str!ng that e$$iciency is ensured. "ee W. aum!l, ;an#ar, and (. Willig, Contesta2le &aret 4 the %heory oInd+stry Str+ct+re, cademic ;ress, 1@@8. 7ie much !$ the rest !$ this the!ry, it rests !n wea $!undati!n: i$ there are even arbitrarily small sun c!ststhen marets are n!t c!ntestable' p!tential c!mpetiti!n d!es n!t su$$ice t! ensure ec!n!mic e$$iciency. "ee, e.g. . +arell, G%heap Tal, %!!rdinati!nand ntry$5 Rand Jo+rnal o/ Economics, 18/10, "pring 1@8F,, 4-@, . . "tigli#t, GTechn!l!gical %hange, "un %!sts, and %!mpetiti!n,L BrooingsPapers on Economic ctivity, , 1@8F, /als! in special issue !$ &icroeconomics, M. . aily and %. Winst!n /eds.0, 1@88, pp. 88-@4F0' and ;. 3asguptaand . . "tiglit#, G;!tential %!mpetiti!n, ctual %!mpetiti!n and c!n!mic Wel$are,L E+ropean Economic Revie3, 2, may 1@88, pp. 5E@-FF.

24+!r an eKp!siti!n, see . . "tilit# G*n$!rmati!n and the %hange in the ;aradigm in c!n!mic,G in 1es Pri6 7o2el Prizes !""(, T!re +rangsmy

/ed.0, The !bel +!undati!n, pp. 4F2-54D abbreviated versi!n in, merican Economic Revie3, @2/0, une 2DD2, pp. 4ED-5D1. "ee bel!w $!r aeKtensive discussi!n !$ the limitati!ns !$ the G!ldL paradigm.

25"ee "arbanes-!Kley ct !$ 2DD2, ;ub. 7. !. 1DF-2D4, 11E "tat. F45 /c!di$ied as amended in scattered secti!ns !$ 11, 15, 18, and 2@ &.".%.0

"ecti!n 2D1 c!ncern what !ther business the audit!r can per$!rm with an audited c!mpany. They are prevented $r!m pr!viding the Gissuerc!ntemp!rane!usly with the audit, any n!n-audit service.L

26

This revisi!nist view has als! changed perspective !n !ther n!n-maret instituti!ns. ;revi!usly, s!me had argued that n!n-maret instituti!ns

ar!se t! address maret $ailures /see, e.g. 3. !rt, Str+ct+re and Change in Economic 8istory, ew =!r: WW !rt!n, [email protected] +!r instance, because !m!ral ha#ard, marets pr!vide !nly limited insurance, and gaps in maret insurance are $illed in, in part, by n!n-maret instituti!ns, lie $amilies. ;uttingaside the $uncti!nalist $allacy, a cl!ser analysis !$ the interacti!ns between these n!n-maret instituti!ns and marets sh!ws that they may, in $act, bedys$uncti!nal' that is, while they may arise t! $ill in h!les le$t by the maret, marets resp!nd t! these n!n-maret instituti!ns, with the net result that the!verall level !$ insurance, and ec!n!mic wel$are, may be decreased: the n!n-maret instituti!ns, which are less e$$icient in ris sharing than the maretinstituti!ns, cr!wd !ut the maret instituti!ns. "ee (. rn!tt and . . "tiglit#, GM!ral 9a#ard and !n-Maret *nstituti!ns: 3ys$uncti!nal %r!wding ut !r;eer M!nit!ring,L merican Economic Revie3, 81/10, March 1@@1, pp. 1F@-@D. !rth6s m!re recent w!rs, Instit+tions$ instit+tional Change andEconomic Per/ormance, %ambridge &niversity ;ress, 1@@D and 9nderstanding the Process o/ Economic Change , ;rincet!n &niversity ;ress, 2DD5seem t! re$lect a rec!gniti!ns !$ the limitati!ns in the earlier view. +!r a br!ader discussi!n !$ these issue, see . . "tiglit#, G%hallenges in the nalysis!$ the (!le !$ *nstituti!ns in c!n!mic 3evel!pment,L in :illaBorsig -orshop Series !"""; %he Instit+tional o+ndations o/ a &aret Economy, udrun)!chend!r$er-7ucius and !ris ;les!vic /eds.0. erman +!undati!n $!r /3"0, 2DD1, pp. 15-28


8/56

s!cial >ustice m!re br!adly de$ined, including pr!tecting

th!se wh! might !therwise n!t $are s! well in the maret

ec!n!my i$ le$t t! themselves. This helps eKplain legislati!n

and regulati!n designed t! pr!tect c!nsumers, w!rers,

and invest!rs. *n additi!n, there are s!me areas in which

rules are essential: every game, including the maret game,

reAuires rules and re$erees. There may be m!re than !ne

set !$ Ge$$icientL rules, but di$$erent rules have di$$erentdistributi!nal c!nseAuences. "!ciety, in selecting a set !$

rules t! regulate ec!n!mic behavi!r, has t! be mind$ul !$

these distributi!nal c!nseAuences.

*n the internati!nal setting, seeming symmetric /!r G$airL0

rules !r agreements may have asymmetric /!r Gun$airL0

e$$ects, because !$ the di$$erences in circumstances !$ the

c!untries t! which they apply, including di$$erences in their

p!litical !r ec!n!mic p!wer in en$!rcement, !r their abilityt! use p!litical p!wers t! eKtract $urther terms in an!ther

c!nteKt. When ntigua w!n ma>!r batter against &.".

restricti!ns !n !n-line gambling in the WT, there was n!

way it c!uld e$$ectively en$!rce it: imp!sing trade sancti!ns

w!uld have hurt ntigua $ar m!re than it w!uld have hurt

the &.". y c!ntrast, hat ntigua engaged in an un$air trade

acti!n against the &."., any sancti!ns t! the &.". against

ntigua w!uld have been p!wer$ul.2F$ter devel!ped and

less devel!ped c!untries have agreed t! a trade

liberali#ati!n agreement, $!r instance, the *M+ and the

W!rd an may insist that the devel!ping c!untry engage

in $urther liberali#ati!n, i$ it is t! receive a reAuested grant

!r l!an. drug c!mpany in the &.". will success$ully

pressure the &.". g!vernment t! put pressure !n a $!reign

c!untry that c!nsiders issuing a c!mpuls!ry license n!t t!

d! s!, even when the issuance !$ that license is t!tally

within the $ramew!r !$ the WT. This implies that !ne

cann!t l!! at the reas!nableness !$ any particular

agreement in is!lati!n $r!m a br!ader c!nteKt-!r even

assess its true impact.

We l!! at the laws relating t! c!rp!rate g!vernance

and banruptcy thr!ugh this perspective. We argue that

even a narr!w $!cus !n e$$iciency reAuires g!ing bey!nd

$ramew!rs that ensure shareh!lder value maKimi#ati!n,

but that when a br!ader perspective inc!rp!rating eAuity as

well as e$$iciency is taen, the case $!r alternative

$ramew!rs bec!mes even m!re c!mpelling. We argue that

*Ts may inter$ere with a c!untry6s ability t! devel!p a legal

paradigma baru , berdasaran in$!rmasi yang tida

sempurna dan pasar tida lengap . 3alam paradigma baru

ini , pasar sendiri tida , secara umum , e$isien , dan

intervensi pemerintah / adang-adang bahan intervens

sangat terbatas , seperti circumscribing !n$li

epentingan , seperti dalam asus auditing 0 dapa

mengarah pada peningatan ese>ahteraan . 9uum dan

regulasi , bagaimanapun , tida hanya diarahan untumeningatan e$isiensi tetapi >uga untu mempr!m!sian

eadilan s!sial yang lebih luas dide$inisian , termasu

melindungi !rang-!rang yang mungin tida tari$ sanga

bai dalam e!n!mi pasar >ia dibiaran sendiri . 9al in

membantu men>elasan undang-undang dan peraturan

yang dirancang untu melindungi !nsumen , peer>a , dan

invest!r . "elain itu, ada beberapa daerah di mana aturan

penting : setiap pertandingan , termasu pertandingan

pasar , membutuhan peraturan dan wasit . Mungin ada

lebih dari satu set ? e$isien ? aturan , tapi aturan yang

berbeda memilii !nseuensi distribusi yang berbeda

Masyaraat , dalam memilih seperangat aturan untumengatur perilau e!n!mi , harus sadar ini !nseuens

distribusi .

3alam pengaturan internasi!nal , simetris tampa / atau

$air ? 0 aturan atau per>an>ian mungin memilii asimetris

/ atau ? tida adil ? 0 e$e , arena perbedaan dalam

eadaan negara yang merea terapan , termasu

perbedaan dalam euasaan p!liti atau e!n!mi merea

di penegaan huum, atau emampuan merea untu

menggunaan euatan p!liti untu mengambil istilah

lebih lan>ut dalam !ntes lain . )etia ntigua

memenangan ad!nan besar terhadap pembatasan "

pada !n-line per>udian di WT , tida ada cara yang e$eti

bisa menegaannya : pemberian sansi perdagangan

aan menyaiti ntigua >auh lebih dari itu aan meluai y

!ntras " , t!pi ntigua terlibat dalam tindaan

perdagangan yang tida adil terhadap " , sansi apapun

terhadap " terhadap ntigua aan men>adi uat . "etelah

diembangan dan negara-negara urang berembang

telah sepaat untu per>an>ian liberalisasi perdagangan

misalnya , *M+ dan W!rd an mungin bersieras bahwa

negara berembang terlibat dalam liberalisasi lebih lan>ut

>ia ingin menerima hibah diminta atau pin>aman . "ebuahperusahaan !bat di meria "eriat aan berhasil menean

pemerintah " untu menean negara asing yang

mempertimbangan mengeluaran lisensi wa>ib untu tida

melauannya , bahan etia penerbitan lisensi yang

benar-benar dalam eranga WT . *ni berarti bahwa

sese!rang tida dapat melihat ewa>aran per>an>ian tertentu

dalam is!lasi dari !ntes yang lebih luas - atau bahan

menilai dampanya sebenarnya

27This ;articular pr!blem c!uld be remedied by all!wing trade sancti!ns t! be maretable. "ee, e.g. %harlt!n and "tiglit#, op. cit.


9/56

$ramew!r maKimi#ing s!ciety6s s!cial wel$are.

We view *Ts thr!ugh tw! di$$erent lenses-as imp!sing

restrictions !n the ability !$ g!vernments t! imp!se certain

regulati!ns /!r t! change certain p!lices0, and as pr!viding

ins+rance t! th!se establishing businesses within a

>urisdicti!n against l!sses that might !ccur in the event !$such changes. *mp!sing restricti!ns !n their behavi!r may

reduce regulat!ry uncertainty /alth!ugh at a high c!st0, but

it may n!t be the best way t! reduce ris. s an alternative,

sh!uld the maret pr!vide insuranceH !rmally, $ree

maret adv!cates thin !$ marets as m!re e$$icient than

g!vernment in pr!viding insurance. *s there a rati!nale, in

this case, t! rely !n publicly pr!vided insuranceH We will

argue, h!wever, that the way that m!st *Ts have been

designed may actually be increasing at least s!me aspects

!$ ris: i$ ris mitigati!n were their primary !b>ective, they

have $ailed t! d! s! in either an e$$icient !r $air way.

#a$ic %er$&ecti'e$

The basic perspective * tae in this paper is the

$!ll!wing: it is hard t! thin !$ a success$ul merican

c!n!mic with !nly state laws and n! way !$ dealing with

cr!ss-b!rder disputes. We have devel!ped a $inely h!ned

system /alth!ugh n!t with!ut its $laws0 de$ining what states

may d!. The system is designed t! ensure that states d!

n!t inter$ere with interstate c!mmerce and that they d! n!t

give business privileges t! their residents at the eKpense !$

!utsiders, but, at the s!me time, t! pr!vide them latitude t!

pass regulati!ns and laws t! pr!tect their citi#en. h!st !$

c!mplicated issues are raised: d! minimum wage laws

inter$ere with interstate c!mmerce !r !therwise restrict

basic rightsH283! state envir!nmental laws s! d!H There

is, implicitly, a care$ul balancing. bvi!usly, any law can

a$$ect c!mmerce, and any law acti!ns which individuals

might !therwise undertae,. %learly, laws designed t!

inter$ere with interstate c!mmerce are n!t all!wed, but h!w$ar can !r sh!uld !ne g! in striing d!wn laws $!r which this

is s!me incidental e$$ectH "h!uld it be a matter !r principle,

which might, $!r instance, restrict any minimum wage

legislati!n !r any lab!r legislati!nH r a matter !$ >udging

the magnitude !$ the e$$ectH "imilar Auesti!n arise in

assessing whether such laws vi!late basic right t! c!ntract.

)ami melihat undang-undang yang beraitan dengan tata

el!la perusahaan dan ebangrutan melalui perspeti$ ini

)ami berpendapat bahwa bahan $!us sempit pada

e$isiensi memerluan melampaui eranga er>a yang

memastian masimalisasi nilai pemegang saham , tetap

etia sebuah perspeti$ yang lebih luas menggabungan

euitas serta e$isiensi diambil , asus untu eranga er>a

alternati$ men>adi lebih menari . )ami berpendapat bahwa*T" dapat mengganggu emampuan suatu negara untu

mengembangan ese>ahteraan s!sial eranga huum

memasimalan masyaraat

)ami melihat *T" melalui dua lensa yang berbeda -as

memberlauan pembatasan terhadap emampuan

pemerintah untu memberlauan peraturan tertentu / atau

untu mengubah ebi>aan tertentu 0 , dan menyediaan

asuransi untu !rang-!rang mendirian bisnis dalam

yurisdisi terhadap erugian yang mungin ter>adi dalam

hal perubahan tersebut . Menerapan pembatasan pada

perilau merea dapat mengurangi etidapastian regulas/mesipun dengan biaya tinggi 0 , tetapi mungin buan

cara terbai untu mengurangi risi! . "ebagai alternati$

sebainya pasar menyediaan asuransi H iasanya , para

penduung pasar bebas menganggap pasar sebagai lebih

e$isien daripada pemerintah dalam memberian asuransi

paah ada alasan , dalam hal ini , bergantung pada

asuransi yang diberian publi H )ami aan berpendapat

bagaimanapun , bahwa cara yang paling *T" telah

dirancang sebenarnya bisa meningat setidanya beberapa

aspe risi! : >ia mitigasi risi! adalah tu>uan utama

merea , merea telah gagal untu melauannya dalam

cara yang e$isien bai atau adil .

3asar ;erspeti$

;erspeti$ dasar saya ambil dalam maalah ini adalah

sebagai beriut : sulit untu memiiran suses meria

!n!mi dengan hanya huum negara dan tida ada cara

untu menangani perselisihan lintas batas . )ami telah

mengembangan sistem halus terasah / mesipun tida

tanpa $laws 0 mende$inisian apa yang menyataan dapa

dilauan. "istem ini dirancang untu memastian bahwa

negara tida mengganggu perdagangan antarnegara danbahwa merea tida memberian ha bisnis untu warga

merea dengan meng!rbanan !rang luar , tetapi , pada

beberapa watu , untu menyediaan merea lintang

melewati peraturan dan undang-undang untu melindung

merea warga negara . "e>umlah isu yang rumi

dibangitan : >angan undang-undang upah minimum

2%See, for instance, Lochner v New York, 198 U.S. 45 (1905) which struck own a New York state !aw !i"itin# the number !$ h!urs a bae

c!uld w!r each wee, !n the basic that the law was an Gunreasonable) unnecessary and arbitrary interference #ith the right and liberty of the individual tocontract8" Muller v 5regon) -.9 U"'" :- ; allo#ed restrictions on #omen #orking) because it #as vie#ed to a reasonable restriction" 2inally) West Coast 7oteCo" v Parrish) ?.. U"'" ?$= " allo#ed states to ass minimum #age la#s, in the end) both states and the federal government #ere allo#ed to ass such la#s"


10/56

s we debate the Auesti!n inside the &nited "tates, there

are dem!cratic pr!cesses at play at all levels. *n principle, i$

states are en>!ined $r!m passing minimum wage laws, then

the +ederal g!vernment might be able t! d! s!. "! t!! $!r

!ther pieces !$ regulati!n. ut seri!us pr!blems may arise

when higher level b!dies imp!se restricti!n !n level

auth!rities, but th!se higher level auth!rities d! n!t

themselves have the right t! tae acti!n. regulat!ry gapmay arise.2@

"imilarly, as we m!ve t! a gl!bal ec!n!my, we will

need t! have legal $ramew!rs g!verning cr!ss b!rder

disputes,. There will be a need t! assess what regulati!nsc!nstitute an un$air restricti!n !n trade. ut un$!rtunately,

ec!n!mic gl!bali#ati!n has !utpaced p!litical gl!bali#ati!n:

we have n!t devel!ped the reAuisite dem!cratic

internati!nal instituti!ns, either $!r drawing up agreements

!r ad>udicating disputes. The internati!nal agreements we

have, $!r instance, in trade are the result !$ hard bargaining

behind cl!sed d!!r, with the interests !$ special interests in

the large and ec!n!mically d!minant c!untries /ur!pe and

the &.".0 prevailing.D

*Ts and the investment pr!visi!ns !$ +Ts have

attempted t! $ill in the gap, but they have d!ne s! in a way

which is $ar $r!m satis$act!ry. They are based !n an

inc!herent set !$ ec!n!mic principles, which leads t! a

$ailed understanding !$ the appr!priate r!le !$ nati!nal

regulati!n. We argue $urther that there is a $undamental

di$$erence between the rights !$ lab!r and capital t! m!ve

acr!ss b!rders and the rights !$ a c!rp!rati!n inc!rp!rated

in !ne >urisdicti!n t! !perate in an!ther, and that it is a

legitimate prer!gative !$ g!vernments t! reAuire that th!se

wishing t! engage in material business within their b!rders

t! be inc!rp!rated /e.g. thr!ugh the establishment !$ asubsidiary0 within the c!untry. s the discussi!n bel!w will

mae clear, h!wever, these reAuirements are necessary,

but n!t su$$icient: there are $ar deeper pr!blems with the

investment agreements.

mengganggu perdagangan antarnegara atau membatas

ha-ha dasar H paah huum lingungan negara begitu H

da , secara implisit , menyeimbangan hati-hati . elas

huum apapun dapat mempengaruhi perdagangan, dan

tindaan huum yang individu mungin sebalinya

melauan , . elas , undang-undang yang dirancang untu

mengganggu perdagangan antarnegara tida

diperb!lehan , tetapi seberapa >auh bisa atau harus satumasu menc!l! turun huum yang ini adalah beberapa

e$e insidental H 9arusah itu men>adi masalah atau prinsip

, yang mungin , misalnya , membatasi setiap undang

undang upah minimum atau huum perburuhan apapunH

tau s!al menilai besarnya e$eH ;ertanyaan serupa

muncul dalam menilai apaah undang-undang tersebu

melanggar ha dasar untu !ntra . "eperti ita

memperdebatan pertanyaan di dalam meria "eriat

ada pr!ses dem!rasi yang bermain di semua tingatan

;ada prinsipnya , >ia negara-negara yang diperintahan

dari mengesahan undang-undang upah minimum , maa

pemerintah +ederal mungin bisa melauannya 3emiian >uga untu bagian lain dari peraturan . Tap

masalah serius mungin muncul etia tubuh tingat yang

lebih tinggi memberlauan pembatasan !t!ritas tingat

tetapi merea !t!ritas tingat yang lebih tinggi itu sendir

tida memilii ha untu mengambil tindaan . "ebuah

esen>angan peraturan mungin timbul

3emiian seperti yang ita pindah e e!n!mi gl!bal , ita

perlu memilii eranga huum yang mengatur sengeta

lintas batas , . an ada ebutuhan untu menilai apa

peraturan merupaan suatu pembatasan yang tida adi

pada perdagangan . amun sayangnya , gl!balisas

e!n!mi telah melebihi gl!balisasi p!liti : ita tida

mengembangan lembaga-lembaga internasi!nal yang

dem!ratis yang diperluan , bai untu menyusun

per>an>ian atau mengadili sengeta . ;er>an>ian

internasi!nal yang ita milii , misalnya , dalam

perdagangan adalah hasil dari tawar-menawar eras d

bali pintu tertutup , dengan epentingan epentingan

husus di negara-negara besar dan d!minan e!n!m

/ r!pa dan " 0 yang berlau

*T" dan etentuan investasi +T telah berusaha untumengisi esen>angan , tetapi merea melauannya

dengan cara yang >auh dari memuasan . Merea

didasaran pada seperangat !heren prinsip-prinsip

e!n!mi , yang mengarah e pemahaman yang gaga

2&'ome argued that the Constitution rohibited state minimum #age la#s but did not give the 2ederal Government the o#er to ass such la#s" 'ee the cases mentioned in fn" -= restricting state@s rights to ass minimum rights la#s+et in 0dkin@s v Children@s 7osital in =-? the 'ureme Court found that federal minimum #age legislation for #omen #as unconstitutional" The ossibility of thecreation of Ano man@s8 lands is of articular concern; in globali(ation; at least #ithin the United 'tates) there are relatively easy #ays of Afi6ing8 the roblem osed bysuch gas" 0nd the government has at least fiscal resources to address some of the adverse conseuences"

3'In Making Globalization Work, op cit" I cite many e6amles the U"'" Trade 3eresentative has ushed for olicies ) #hich

#hile they may increase rofits of certain cororate interest) may be against the broader interests of the United 'tates"


11/56

ne !$ the pr!blems !$ the *Ts is that they are !ne -

sided and unbalanced: they give c!rp!rati!ns rights with!ut

resp!nsibilities, c!mpensati!n $!r adverse treatment, but

n!t rec!very !$ capital gains $r!m p!sitive treatment' they

have given $!reign $irms pr!tecti!ns n!t a$$!rded t!

d!mestic $irms, thereby creating an un level playing $ield,with perverse incentives.1 There are g!!d reas!ns that

g!vernments have n!t pr!vided these guarantees t!

d!mestic $irms-and there are g!!d reas!ns that they sh!uld

n!t be pr!vided t! internati!nal $irms.

* appr!ach these issues $r!m the perspective !$ an

ec!n!mist, an ec!n!mist that sees instituti!ns lie

Gc!rp!rati!nsL and Gpr!perty rightsL as s!cial c!nstructi!ns,

t! be evaluated !n h!w well they serve br!ader public

interest. *ndividuals have rights-the inds !$ rights inscribedin the ill !$ (ights. *ndividuals may have certain rights t!

act t!gether c!llectively, but there is n! inherent right, $!r

instance, t! limited liability, which de$ines c!rp!rati!ns.

7imited liability is a s!cial c!nstructi!n which has a pr!ven

very use$ul' indeed, with!ut it, it w!uld be hart t! imagine

m!dern capitalism.2ut the circumstances in which the

c!rp!rate veil can be pierced, the GrightsL which !ught t! be

granted t! these limited liability instituti!ns /including the

right t! enter a c!untry0, !r the eKtent t! which the !$$icers

!$ these instituti!ns sh!uld be held liable $!r the acti!ns

which these instituti!ns tae, is a matter !$ ec!n!mic and

s!cial p!licy. T! repeat, they have n! inherent rights.

Thus, an analysis !$ the desirability !$ eKtending t!

c!rp!rati!ns certain rights is Auintessentially a matter !$

ec!n!mic and s!cial analysis-t! ascertain what are the

c!nseAuences !$ !ne set !$ pr!visi!ns !r an!ther. The

intent !$ this paper is t! pr!vide this analysis.

(eaders will sea a cl!se parallel between the appr!ach

taen here and that taen by d!l$ . erle and ardiner %.Means in their classic w!r$ %he &odern Corporation and

Private Property.4They called attenti!n t! the separati!n !$

!wnership and c!ntr!l and eKpl!red the implicati!ns $!r

peran sesuai regulasi nasi!nal . )ami berpendapat lebih

lan>ut bahwa ada perbedaan mendasar antara ha-ha

tenaga er>a dan m!dal untu bergera lintas batas dan

ha-ha perusahaan yang tergabung dalam satu yurisdis

untu ber!perasi di negara lain , dan bahwa hal itu adalah

ha prer!gati$ yang sah dari pemerintah untu

mengharusan merea yang ingin terlibat dalam bisnis

bahan dalam perbatasan merea untu dimasuan/ misalnya melalui pembentuan ana perusahaan 0 d

dalam negeri . "eperti pembahasan di bawah ini aan

membuat >elas , bagaimanapun , persyaratan in

diperluan , tetapi tida cuup : ada masalah yang >auh

lebih dalam dengan per>an>ian investasi .

"alah satu masalah dari *T" adalah bahwa merea

adalah satu - sisi dan seimbang : merea memberian

perusahaan ha tanpa tanggung >awab , !mpensasi untu

peng!batan yang merugian , tetapi tida pemulihan capita

gain dari peng!batan p!siti$ , merea telah memberian

perusahaan asing perlindungan tida diberian epadaperusahaan-perusahaan d!mesti , sehingga menciptaan

tingat lapangan bermain un , dengan insenti$ . da alasan

yang bai bahwa pemerintah belum memberian >aminan

ini untu d!mesti perusahaan - dan ada alasan yang bai

bahwa merea tida b!leh diberian epada perusahaan-

perusahaan internasi!nal

u mendeati masalah ini dari perspeti$ se!rang

e!n!m , se!rang e!n!m yang melihat lembaga-lembaga

seperti ? perusahaan ? dan ? ha mili ? sebagai !nstrus

s!sial , yang aan dievaluasi pada seberapa bai merea

melayani epentingan publi yang lebih luas . *ndividu

memilii ha - >enis ha tertulis dalam ill !$ (ights

*ndividu mungin memilii ha-ha tertentu untu bertinda

bersama-sama secara !leti$ , tetapi tida ada yang

meleat tepat , misalnya, untu perser!an terbatas , yang

mende$inisian perusahaan . ;erser!an terbatas

merupaan !nstrusi s!sial yang memilii terbuti sanga

berguna , memang, tanpa itu , aan hart membayangan

apitalisme m!dern . Tapi eadaan dimana tabi

perusahaan dapat menembus , yang ? ha ? yang

seharusnya diberian epada lembaga-lembaga perser!an

terbatas / termasu ha untu masu e suatu negara 0 atau se>auh mana petugas dari lembaga-lembaga ini harus

bertanggung >awab atas tindaan yang lembaga-lembaga

ini mengambil , adalah masalah ebi>aan e!n!mi dan

31Concern about this has led the U"'") in the recent oreaDU' 2ree Trade 0greement to include rovisions #hich ensure that orean investors in the U"'" do not

have more rights and rotections than U"'" investors"32

'ee B" Green#ald and %" &" 'tilit() AInformation) 2inance and Markets, The 0rchitecture of 0llocative Mechanisms)8 Industrial and orporate !ange)

==-)" ?$D/?"33

I take this vie#) recogni(ing that some argued that cororations do enEoy some rotection under the U"'" Constitution" 'ee "anta lara ounty v# "out!ern

Paci$ic %ailroad o")99- U"'" ?=: #hich many interret as granting : th0mendment due rocess rotection to cororations"34

The 1@@2 editi!n was published by Macmillan' the revised editi!n /1@FE0 was published by 9arc!urt race.


12/56

pr!perty rights. My 1@855 paper helped put erle and

Means !n s!lid $!!tings' it pr!vided in$!rmati!n the!retic

$!undati!ns $!r the separati!n !$ !wnership and c!ntr!l and

helped eKplain why e$$ective c!ntr!l is n!t eKercised by

shareh!lders.E*t als! helped begin the m!dern discussi!n

!$ c!rp!rate g!vernance.F

ne m!re preliminary caveat: !ne !$ the pr!blems with

the bilateral investment agreements is that they inv!e

inherently ambigu!us terms /G$air and eAuitable treatmentL0'

the ad>udicati!n pr!cess !$ten inv!es standards !$

c!mmercial secrecy, even th!ugh !ne !$ the parties t! the

suit a public entity in which there sh!uld be high standards

!$ transparence' di$$erent arbitrati!n panels can c!me t!

!pp!site c!nclusi!ns in alm!st identical cases'8and there

is typically n! way in which such di$$erences get res!lved.

"ince a large $racti!n !$ the agreements are !$ recent

vintage, there is c!nsiderable uncertainty ab!ut what they

may imply. *n the l!ng run, greater balance may beachieved than has s!metimes been the case in the

past'@and the $ears eKpressed here may pr!ve

unwarranted. ;art !$ the intent !$ this paper is t! in$luence

the ev!luti!n !$ this critical area !$ law.

The sec!nd secti!n, G;r!blems ;!sed $!r

Multinati!nals,L pr!vides a brie$ reprise !$ the imp!rtant

c!ntributi!ns !$ multinati!nals-and !$ special pr!blems that

they p!se, pr!blems that may be s!mewhat di$$erent $r!m

th!se p!sed by d!mestic $irms' it describes the bene$its

s!sial . &ntu mengulang , merea tida memilii ha yang

meleat .

3engan demiian , analisis einginan memperluas

perusahaan ha tertentu dasarnya masalah e!n!mi dan

s!sial - analisis untu memastian apa !nseuensi dar

satu set etentuan atau yang lain . Masud d!umen in

adalah untu memberian analisis ini .

;embaca aan laut paralel yang erat antara pendeatan

yang dilauan di sini dan yang diambil !leh d!l$ . erle

dan ardiner %. Means dalam arya lasi merea , The

M!dern %!rp!rati!n dan Mili ;ribadi . Merea meminta

perhatian pada pemisahan epemilian dan !ntr!l dan

men>ela>ahi impliasi untu ha mili . My paper 1@85

membantu menempatan erle dan Means pada p!ndas

yang s!lid , melainan memberian in$!rmasi dasar te!r

untu pemisahan epemilian dan !ntr!l dan membantu

men>elasan mengapa !ntr!l yang e$eti$ tida dilauan

!leh pemegang saham . 9al ini >uga membantu memuladisusi m!dern tata el!la perusahaan .

"atu peringatan lebih awal : salah satu masalah dengan

per>an>ian investasi bilateral adalah bahwa merea

memanggil istilah inheren ambigu / ? perlauan yang adi

dan merata ? 0 ' pr!ses a>udiasi sering memanggil standa

erahasiaan !mersial , mesipun salah satu piha dalam

gugatan entitas publi di mana harus ada standar tingg

transparansi , panel arbitrase yang berbeda bisa datang e

esimpulan yang berlawanan dalam asus-asus yang

hampir sama , dan ada biasanya tida ada cara di mana

perbedaan tersebut bisa diselesaian . )arena sebagian

35G%redit Marets and the %!ntr!l !$ %apita,L Jo+rnal o/ money$ Baning$ and Credit, 1F/20, May 1@85, pp.1-152

.36

The pr!blems are related n!t !nly t! imper$ect, asymmetric, and c!stly in$!rmati!n, but t! $act that g!!d management !$ a $irm is a public g!!d

/in the technical, "amuels!nian sense0: all shareh!lders bene$it i$ $irm pr!$its increase as a result !$ better management. s a public g!!d, there will bean undersupply !$ !versight !$ c!rp!rate management. "ee the discussi!n bel!w, ec!n!mic The!ry and the (egulati!n !$ *nvestment.

37arlier, * had eKpl!red limitati!ns !n alternative mechanism $!r c!rp!rate c!ntr!l, such as tae!vers. "ee, e.g. G"!me aspects !$ the ;ure The!ry

!$ %!rp!rate +inance: anruptcies, and Tae-vers,L Bell Jo+rnal o/ Economist, /20, utumn 1@F2, pp. 458-482' Gwnership, %!ntr!l and $$icienMarets: "!me ;arad!Kes in the The!ry !$ %apital Marets,L in EconomicReg+lation; Essays in honor o/ JamesR. 7elson, )enneth 3. !yer andWilliam . "hepherd /eds.0, Michigan "tate &niversity ;ress, 1@82, pp. 11-41. +!r a m!re recent c!ntributi!n sh!wing h!w managers can ensc!ncethemselves and act in ways that are n!t in the interest !$ their shareh!lders, see . dlin and . . "tigli#t G3isc!uraging (ivals: Managerial (ent-"eeing and c!n!mic *ne$$iciencies,L merican Economic Revie3, 85/50, 3ecember 1@@5, pp. 1D1-112. "ee als!, liver 9art and "an$!rd

r!ssman. GTae!ver ids, the +ree-rider ;r!blem and the The!ry !$ the %!rp!rati!n, Bell Jo+rnal o/ Economics, 11/10, 1@8D, pp. 42-E41.

3%(he two most notable e)am#les were the 3 *ctober 2''6 ruling o the +-+. tribunal in the /0 v! rgentina ase +-+. ase no! arb'21, .ecision on

/iability, available at htt#ita!law!uvic!cadoc$ustments/0rgentina/iabiliity!#d8, on the issue o the 9state o necessity,: and the result in "- v! rgentina+-+. ase ;o! rb'1% ward 12 "ay 2''5, 44 +!/!"! 12'5 2''5e#ublic ?!@! v! zech

>e#ublic A;+(>/ (he ;etherlandszech >e#ublic ?+(e#ublic, A;+(>/! Anited -tateszech >e#ublic ?+(

the ormer set o cases, see !>einisch, 9;ecessity in +nternational investment rbitrationCn Annecessary -#lit o >ecent +-+. casesD omments on "- v

rgentina and /0 v! rgentina,:Journal of WorldInvestment and Trade, %2


13/56

they have br!ught but als! eKplains why they have been

sub>ect t! such criticism. The third secti!n pr!vides the c!re

!$ the ec!n!mic analysis. *t articulates the maret

$undamentalism p!siti!n underlying many !$ the arguments

!$ $ree maret adv!cates, including th!se stressing the

imp!rtance !$ pr!tecti!n /s!metimes re$erred t! as the

%hicag! sch!!l0. *t eKplains /a0 why under th!se

perspectives there w!uld be n! need $!r bilateral tradeagreements' but /b0 why these ideas have been re>ected by

m!dern ec!n!mic analysis. n the basis !$ this, it eKplains

why g!vernment regulati!n is reAuired and applies that

analysis t! eKplain the need $!r g!vernment rules g!verning

c!rp!rate g!vernance and banruptcy.

ey Auesti!n is whether there is a single GbestL set !$

legal instituti!ns-$!r instance, a single ;aret! ptimal4Dset

!$ c!rp!rate g!vernance and banruptcy laws. *$ there is,

then it w!uld mae sense t! standardi#e legal $ramew!rs'but i$ there is n!t, it d!es n!t. *n the $!urth secti!n, we

eKplain why there is n!t a single ;aret! d!minant legal

$ramew!r, and acc!rdingly why standardi#ati!n may be

undesirable.41

The $!ll!wing secti!ns then apply this analysis t!

several !$ the central issues under dispute in the

c!ntr!versy !ver investment treaties:

a0 What rights sh!uld $!reign $irms have t!

establish themselvesH We argue in G*mplicati!ns $!r

ilateral Trade greements: (ights !$

stablishmentL against even the limited rights t!

establishment emb!died in many !$ the recent

investment treaties.

ut the vari!us pr!blems with *Ts will n!t be

s!lved merely by reAuiring $!reigners t! inc!rp!rate

l!cal subsidiaries in the h!st state. (ather, the

treaties themselves need t! be restructured.42

b0 Wh! sh!uld be pr!tected and against what

GmeasuresL /acti!ns0H with what GstandardsLH +!r

instance, sh!uld there be pr!tecti!n simply against

discriminati!n, !r against acti!ns which areinc!nsistent with principles !$ G$air and eAuitableLH

besar dari per>an>ian adalah vintage baru-baru ini , ada

etidapastian tentang apa yang merea menyiratan

3alam >anga pan>ang , eseimbangan yang lebih besar

dapat dicapai daripada yang adang-adang telah ter>adi d

masa lalu, dan ehawatiran yang diungapan di sin

mungin terbuti tida beralasan . agian dari masud dar

tulisan ini adalah untu mempengaruhi ev!lusi daerah in

ritis huum .

agian edua , ? Masalah erp!se untu perusahaan

multinasi!nal , ? menyediaan reprise singat !ntribus

penting dari perusahaan multinasi!nal dan masalah husus

yang merea a>uan , masalah yang mungin aga berbeda

dari yang dia>uan !leh perusahaan-perusahaan d!mesti

melainan menggambaran man$aat yang merea telah

membawa tetapi >uga men>elasan mengapa merea telah

dienaan riti tersebut . agian etiga memberian int

dari analisis e!n!mi . *ni mengartiulasian p!sis

$undamentalisme pasar yang mendasari banya argumen

penduung pasar bebas , termasu yang meneananpentingnya perlindungan / adang-adang disebut sebaga

se!lah %hicag! 0 . *ni men>elasan / a0 mengapa dalam

perspeti$-perspeti$ tida aan ada ebutuhan untu

per>an>ian perdagangan bilateral , tetapi / b 0 mengapa ide-

ide ini telah dit!la !leh analisis e!n!mi m!dern. tas

dasar ini, men>elasan mengapa peraturan pemerintah

yang diperluan dan menerapan analisis yang

men>elasan perlunya peraturan pemerintah yang mengatu

tata el!la perusahaan dan ebangrutan .

"ebuah pertanyaan unci adalah apaah ada satu ? terbai

? set lembaga - bagi huum misalnya , satu ;aret! ptima

set tata el!la perusahaan dan ebangrutan huum . ia

ada , maa aan masu aal untu membauan eranga

huum , tetapi >ia tida ada , tida. ;ada bagian eempat

ita men>elasan mengapa tida ada eranga huum

;aret! d!minan , dan arenanya mengapa standarisas

mungin tida diinginan .

agian beriut emudian menerapan analisis ini untu

beberapa isu sentral dalam sengeta dalam !ntr!vers

atas per>an>ian investasi :

a0 9a-ha apa yang harus perusahaan asing harusmembangun diri H )ami berdebat di ? *mpliasi ;er>an>ian

4' law /!r res!urce all!cati!n0 is said t! be ;aret! ptima i$ there is n! !ther law /!r res!urce all!cati!n0 such that every!ne is better !$$. *$ there

is a single ;aret! ptimal legal structure, then presumably there will be unanimity in supp!rt' but i$ there are multiple ;aret! ptimal legal structuresthere will be trade-!$$s, with s!me individuals better !$$ under !ne, !ther under an!ther.

41There may, !$ c!urse, be e$$iciency gains $r!m standardi#ati!n' but these e$$iciency gains need t! be c!mpared with the e$$iciency l!sses-the

standardi#ati!n rules may be less suited t! the ec!n!mic situati!n !$ s!me, !r all, !$ the c!untries than a m!re tail!red set !$ rules' and there may belarge distributive c!nseAuences which m!re than !$$set the e$$iciency gains-the standard may be tail!red t! the rich and p!wer$ul, t! the disadvantage !!thers.

42*ndeed, many !$ the $!reign investment disputes inv!lve a l!cal subsidiary inc!rp!rated in the h!st state, where the $!reign parent inv!es the

internati!nal treaty right, in an e$$!rt t! get better treatment $!r its investments in the h!st state.


14/56

*$ the latter, what is t! be meant by such w!rldH

What sh!uld be the standard !$ c!mpensati!nH

There is little dispute ab!ut the issue !$ pr!tecti!n $r!m

eKplicit eKpr!priati!n.4 GWhat ets ;r!tectedH (egulat!ry

TaingsL 7!! at !ne !$ the critical ways that the *Ts g!

well bey!nd pr!tecting against eKpr!priati!n, t! pr!tecting

against in regulati!ns-!r even the e$$ect !$ eKistingregulati!ns. We argue that such pr!tecti!ns can undermine

ec!n!mic e$$iciency and can be c!ntrary t! basic principles

!$ s!cial >ustice, particularly given the standards that have

s!metimes been inv!ed.

$ c!urse, the bilateral agreements d! n!t pr!hibit

g!vernments $r!m undertaing vari!us acti!ns' they simply

reAuire the g!vernment t! pr!vide c!mpensati!n. ut $!r

cash strapped g!vernments, the e$$ect may be much the

same. The seventh secti!n, G"tandards !$ %!mpensati!nL,

addresses the issue !$ c!mpensati!n, arguing str!nglyagainst the br!ader c!mpensati!n s!metimes reAuired

/which includes l!st pr!$its440 but als! suggesting that even

c!mpensati!n $!r reduced value !$ investments may be

pr!blematic.

G(ights and (esp!nsibilitiesL argues that the

investment agreements have been !ne-sided, that they

have given $!reign c!mpanies rights with!ut imp!sing

resp!nsibilities, !r with!ut even $acilitating the ability !$

devel!ping c!untries t! ensure that the multinati!nal

c!rp!rati!ns live up t! their !bligati!ns.

ne !$ the m!st critici#ed aspects !$ these agreements

is the dispute res!luti!n mechanisms: the use !$ arbitrati!n

c!urts, designed t! settle c!mmercial dispute, t! en$!rce an

agreement !n a g!vernment. The pr!cesses !$ten lac the

!penness and transparency that we have c!me t! eKpect

$r!m >udicial pr!ceedings in a dem!cratic s!ciety and have

!$ten sh!wn little regard t! br!ader s!cietal c!ncerns, as

they $!cus eKclusively !n the rights !$ invest!rs. The

secti!n titled G3ispute (es!luti!nL argues that there is much

merit in these criticisms and pr!p!ses re$!rms in thead>udicati!n pr!cess, including the creati!n !$ an

internati!nal c!mmercial c!urt.

;erdagangan ilateral : 9a ;endirian ? melawan bahan

ha terbatas pada pembentuan diwu>udan dalam banya

per>an>ian investasi baru-baru ini .

amun berbagai masalah dengan *T" tida aan

diselesaian hanya dengan mengharusan !rang asing

untu memasuan ana perusahaan l!al di negara tuan

rumah . "ebalinya, per>an>ian itu sendiri perlu

direstruturisasi .

b 0 "iapa yang harus dilindungi dan terhadap apa ?

tindaan ? / tindaan 0 H dengan apa yang ? standar ? H

Misalnya , harus ada perlindungan hanya terhadap

disriminasi , atau terhadap tindaan yang tida !nsisten

dengan prinsip-prinsip ? adil dan merata ? H ia yang

terahir, apa yang harus dimasud dengan dunia sepert

ituH pa yang harus men>adi standar !mpensasi H

da sediit perselisihan tentang masalah perlindungan dar

pengambilalihan esplisit . ? pa Mendapat ;r!tected H;engambilalihan peraturan ? 7ihatlah salah satu cara

penting bahwa *T" melampaui melindungi terhadap

pengambilalihan , untu melindungi terhadap peraturan

atau bahan e$e dari peraturan yang ada . )am

berpendapat bahwa perlindungan tersebut dapat merusa

e$isiensi e!n!mi dan dapat bertentangan dengan prinsip

prinsip dasar eadilan s!sial , terutama mengingat standa

yang teradang telah dipanggil

Tentu sa>a, per>an>ian bilateral tida melarang pemerintah

dari melauan berbagai tindaan , merea hanya

mengharusan pemerintah untu memberian

!mpensasi . Tapi untu eurangan uang tuna

pemerintah , e$enya mungin sama . agian etu>uh ,

"tandar )!mpensasi ? , membahas masalah !mpensasi

berdebat eras terhadap !mpensasi yang lebih luas

adang-adang diperluan / termasu ehilangan

euntungan 0, tetapi >uga menun>uan bahwa bahan

!mpensasi untu nilai diurangi investasi mungin

bermasalah

? 9a dan )ewa>iban ? berpendapat bahwa per>an>ian

investasi telah satu sisi , bahwa merea telah memberianha perusahaan asing tanpa memasaan tanggung

>awab , atau bahan tanpa mem$asilitasi emampuan

negara-negara berembang untu memastian bahwa

perusahaan-perusahaan multinasi!nal hidup sampa

43 3evel!ping c!untries $!r a l!ng time resisted any $!rmal c!mmitment n!t t! eKpr!priate, !pp!sing, $!r instance, the 9ull (ule, named a$te

"ecretary !$ "tate %!rdell 9ull, articulated in 1@2, which called $!r Gpr!mpt, adeAuate and e$$ectiveL c!mpensati!n. /"ee 9.. "teiner, 3.+. Iagts, and9.9. )!h, %ransnational 1egal Pro2lems, 45E-5F, 1@@4, and .T. u#man, GKplaining the ;!pularity !$ ilateral *nvestment Treaties: Why 73%6s "ignTreaties that 9urt Them,L :irginia Jo+rnal o/International la3, 8/E@0, 1@@8, pp. E@-8@. *nvestment treaties typically d! n!t pr!hibit eKpr!priati!n bu!nly c!mmit eKpr!priating g!vernments t! pr!viding c!mpensati!n. This $!cuses attenti!n !n the bases !$ c!mpensati!n. "ee the secti!n G"tandards !$%!mpensati!n.L

44s in the *nd!nesian case cited earlier.


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The pr!blems in regulati!n unc!vered in previ!us

secti!ns highlight the need $!r a better internati!nal

$ramew!r $!r g!verning cr!ss-b!rder ec!n!mic activities, a

sub>ect taen up in GT!ward (egulating Multinati!nal

%!rp!rati!ns l!bally.L We emphasi#e tw! c!re principles:

/a0 minimi#ing the sc!pe !$ such agreements t! standards

that are viewed as abs!lutely essential $!r the c!nduct !$cr!ss b!rder business' and /b0 n!n-discriminati!n /G!n-

3iscriminati!nL0.

The neKt secti!ns tae up tw! !$ the ey criticisms !$

the bilateral agreements: they are n!t designed in ways that

mae the appr!priate legal ev!luti!n p!ssible. *t is di$$icult

t! c!rrect GmistaesL either in the design !$ the treaties !r

the interpretati!n !$ the pr!visi!ns /$urther rein$!rcing the

argument $!r a limited sc!pe $!r such agreements0.

+urtherm!re, the p!litical pr!cesses underlying these

investments are $undamentally undem!cratic.

The $inal secti!n pr!vides c!ncluding remar: balance

need t! the g!vernance !$ cr!ss b!rder ec!n!mic relati!ns.

%!untries sh!uld be eKtremely cauti!us in signing bilateral

investment treaties /especially the m!re eKpansive

agreements that g! bey!nd n!n discriminati!n0. nd it

pr!vides supp!rt $!r the initiatives !$ several c!untries

/cuad!r, !livia, %#ech (epublic0 and !ther $!r revising

eKisting agreements. There needs t! be a seri!us r!llbac

in the agreements already signed.

PROBLEMS POSED BY MULTINATIONALS

+!r all the reas!ns given earlier, multinati!nals have

br!ught en!rm!us bene$its. T!day c!untries ar!und the

w!rld c!mpete t! attract multinati!nals' they b!ast !$

having a business-$riendly envir!nment. nd $!reign capital

has p!ured in t! devel!ping c!untries, increasing siK $!ld

between 1@@D and 1@@F, be$!re it sl!wed /and reversed0 as

a result !$ the ast sian and gl!bal $inancial crisis.45

ut $!r all the bene$its they bring, multinati!nals have

been vili$ied-and !$ten $!r g!!d reas!n.

*n s!me cases they tae a c!untry6s natural res!urces,

paying but a while leaving behind an envir!nmental

disaster.4EWhen called up!n by the g!vernment t! clean up

ewa>iban merea

"alah satu aspe yang paling diriti dari per>an>ian in

adalah meanisme penyelesaian sengeta : penggunaan

pengadilan arbitrase , yang dirancang untu menyelesaian

sengeta !mersial , untu menegaan esepaatan

mengenai pemerintah . ;r!ses sering eurangan

eterbuaan dan transparansi yang ita telah datang eharapan dari pr!ses peradilan dalam masyaraa

dem!ratis dan sering menun>uan sediit beraitan

dengan masalah s!sial yang lebih luas , arena merea

$!us secara eslusi$ pada ha-ha invest!r . agian

ber>udul ? ;enyelesaian "engeta ? berpendapat bahwa

ada banya man$aat dalam riti-riti ini dan mengusulan

re$!rmasi dalam pr!ses a>udiasi , termasu pembentuan

pengadilan !mersial internasi!nal

Masalah dalam peraturan ditemuan di bagian sebelumnya

meny!r!ti ebutuhan untu eranga er>a internasi!na

yang lebih bai untu mengatur egiatan e!n!mi lintasbatas , sub>e diambil dalam )ami meneanan dua prinsip

inti ? Menu>u ;engaturan ;erusahaan Multinasi!nal gl!bal

? : / 0 meminimalan ruang lingup per>an>ian tersebu

dengan standar yang dipandang sebagai sangat penting

untu men>alanan bisnis lintas batas , dan / b 0 n!n

disriminasi / ? n!n - disriminasi ? 0

agian beriutnya mengambil dua riti utama dar

per>an>ian bilateral : merea tida dirancang dengan cara

yang membuat ev!lusi huum yang tepat mungin. "uli

untu memperbaii ? esalahan ? bai dalam desain

per>an>ian atau pena$siran etentuan / lebih lan>u

memperuat argumen untu lingup terbatas untu

per>an>ian tersebut 0 . "elain itu , pr!ses-pr!ses p!liti yang

mendasari investasi ini pada dasarnya tida dem!ratis

agian terahir memberian menyimpulan !mentar

eseimbangan perlu tata hubungan e!n!mi lintas batas

egara harus sangat berhati-hati dalam menandatangan

per>an>ian investasi bilateral / terutama per>an>ian yang

lebih luas yang melampaui n!n disriminasi 0 . 3an

menyediaan duungan untu inisiati$ dari beberapa negara

/ uad!r , !livia , (epubli %e! 0 dan lainnya untumerevisi per>an>ian yang ada . ;erlu ada r!llbac serius

dalam per>an>ian yang sudah ditandatangani

Masalah yang ditimbulan !leh M&7T*"*7

&ntu semua alasan yang diberian sebelumnya

45&%T3 pr!vides data !n +3* $l!w t! devel!ping c!untries. *n c!nstant value term /2DDD &"P0, net +3* $l!w t! devel!ping c!untries /in$l!ws

!ut$l!ws0 in 1@@D were [email protected] billi!n. This r!se t! P1E. billi!n in 1@@@, an increase !$ 5.E times. et $l!ws remained bel!w this level until 2DD5. "incethen they have increased t! P1FE.@ billi!n, an increase !$ 8U $r!m 1@@@ levels.

46"ee, $!r instance, the discussi!ns in ared 3iam!nd, Collapse, ;enguin, 2DD5, and in %hapter 5 !$ . . "tiglit#, &aing 0lo2alization -or$ op

cit.


16/56

the mess, they ann!unce that there are banrupt: all the

revenues have already been paid !ut t! shareh!lders. They

tae advantage !$ limited liability.4F

*n s!me cases, when the adverse c!nseAuences !$

their acti!ns are critici#ed, the M%s plead that they are

simply $!ll!wing the law' but such de$enses aredisingenu!us, $!r they !$ten w!r hard t! mae sure that

the law is the law that suits them well and maKimi#es their

pr!$its.

%!nsider $!r instance, the regulati!n !$ cigarettes. We-

and * include in the GweL the cigarette c!mpanies48-have

n!wn $!r decades that cigarettes are bad $!r !ne6s health,

but the cigarette c!mpanies have deliberately tried t!

create c!n$usi!n ab!ut the scienti$ic evidence. While they

have w!red hard t! st!p regulati!n, they have als! w!red

hard t! mae sure that they d! n!t bear any liability $!r theen!rm!us c!sts that result $r!m their danger!us pr!ducts.

/M!re recently, KK!n has engaged in a similar attempt t!

discredit the science !$ gl!bal warming,4@When ; !wned

up t! the riss !$ gl!bal warming, it was castigated by the

!ther members !$ the !il club, $!r a while alm!st treated as

a pariah.0

*n devel!ping c!untries, there are widespread

allegati!ns !$ c!rrupti!n-and many c!ntracts that !nly mae

sense when see in that c!nteKt. +!r years, many c!untries

pr!vided taK deducti!ns $!r bribes' in e$$ect, Western

g!vernments were subsidi#ing them, even th!ugh they

undermined dem!cratic g!vernance abr!ad /and even as

they lectured them ab!ut the imp!rtance !$ g!vernance0. *

was the &.". representative t! the %3 ministerial

meeting in the mid-1@@Ds, when the &.". was pushing $!r

the anti-bribery %!nventi!n. * was sh!ced by the

resistance.

The pr!blem is m!re pervasive. %!mpanies, lie ;

perusahaan multinasi!nal telah membawa man$aat besar

9ari ini negara di seluruh dunia bersaing untu menari

perusahaan multinasi!nal , merea membanggaan

memilii lingungan yang ramah bisnis . 3an m!dal asing

telah dituangan e negara-negara berembang

meningat enam ali lipat antara tahun 1@@D dan 1@@F

sebelum melambat / dan terbali 0 sebagai aibat dari sia

Timur dan risis euangan gl!bal

Tetapi untu semua man$aat yang merea bawa

perusahaan multinasi!nal telah di$itnah dan sering untu

alasan yang bai

3alam beberapa asus merea mengambil sumber daya

alam suatu negara , membayar tapi sementara

meninggalan bencana lingungan . )etia dipanggil !leh

pemerintah untu membersihan eacauan , merea

mengumuman bahwa ada bangrut : semua pendapatan

telah dibayaran epada para pemegang saham . Merea

mengambil euntungan dari perser!an terbatas .

3alam beberapa asus , etia !nseuensi yang

merugian dari tindaan merea diriti , perusahaan

multinasi!nal mengau bahwa merea hanya mengiut

huum , tetapi pertahanan seperti >u>ur , arena merea

sering beer>a eras untu memastian bahwa huum

adalah huum yang sesuai dengan merea dengan bai

dan memasimalan euntungan merea

;ertimbangan misalnya, regulasi r!! . )ami - dan saya

termasu dalam ? ita ? perusahaan - r!! telah diena

selama puluhan tahun bahwa r!! tida bai untu

esehatan sese!rang , tetapi perusahaan r!! telah

senga>a menc!ba untu menciptaan ebingungan atas

buti ilmiah . "ementara merea telah beer>a eras untu

menghentian regulasi , merea >uga beer>a eras untu

memastian bahwa merea tida menanggung ewa>iban

untu biaya yang sangat besar yang dihasilan dari pr!du

pr!du berbahaya merea. / aru-baru ini , KK!n telah

terlibat dalam upaya serupa untu mendisreditan ilmu

pemanasan gl!bal , )etia ; dimilii hingga risi!

pemanasan gl!bal , itu diecam !leh angg!ta lain dari lub

minya , untu sementara hampir diperlauan sebaga

47This is true b!th devel!ped and devel!ping c!untries. "ee ared 3iam!nd, Collapse, ;enguin: 2DD5.

4%"ee, $!r instance, the $indings in &nited "tates !$ merica v ;hillip M!rris &" *nc, %ivil cti!n !. @@-24@E /)0 and the evidence submitted in

"chwab v. ;hillip M!rris &", DE-4EEE, &.". %!urt !$ ppeals $!r the 2d %ircuit /ew =!r0 ;age 25@ details the $!rmer c!urt6s $inding that: G*n the1@5Ds, 3e$endants egan Their !int %ampaign t! +alsely 3eny and 3ist!rt the Kistence !$ a 7in etween %igarette "m!ing and 3isease, venTh!ught Their *nternal 3!cuments (ec!gni#ed *ts KistenceL The $ull $indings are available at: www.usd!>.g!vJcivilJcasesJt!bacc!2Jamended!pini!n.pd$O /accessed !n !v 25, 2DDF0.

4&"ee . all, GKK!n "!$tens %limate %hange "tance,L %he 3all Street Jo+rnal, anuary 11, 2DDF, 2: G*ts t!p eKecutives have !penly Auesti!ned

the scienti$ic validity !$ claims that $!ssil-$uel emissi!ns are warming the planet, and it has $unded !utside gr!ups that have challenged such claims inlanguage s!metimes str!nger than the c!mpany itsel$ has used.L +!r instance, it $unded the %!mpetitive nterprise *nstitute, a Washingt!n-based thinthan that ran televisi!n ads saying that carb!n di!Kide /the main greenh!use gas0 is help$ul.
http://www.usdoj.gov/civil/cases/tobacco2/amended%20opinion.pdfhttp://www.usdoj.gov/civil/cases/tobacco2/amended%20opinion.pdfhttp://www.usdoj.gov/civil/cases/tobacco2/amended%20opinion.pdfhttp://www.usdoj.gov/civil/cases/tobacco2/amended%20opinion.pdf


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and 9ydr!, that have made an e$$!rt t! mae their

transacti!ns m!re transparent, have n!t with supp!rt $r!m

their c!lleagues.5D This puts the Gg

Grotius Lecture

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