Investor-State Tribunals and Constitutional Courts: The Mexican Sweeteners Saga

Abstract

This article tackles the provocative question of the relationship between international and domestic adjudicatory bodies. The article does so by analyzing the debate between liberals and developmentalists over the effects of investor-state arbitration tribunals on domestic courts. For liberals, investor-state tribunals are a positive complement to domestic judicial institutions for their ability to ‘de-politicize’ investment disputes, leading to economic policy stability that encourages foreign investment. For developmentalists, the same international alternatives reduce institutional quality because they allow powerful actors to avoid local judicial institutions by relying on supranational adjudication. Through a comprehensive analysis of the negotiations of Chapter Eleven of NAFTA and the recent cases in the sweeteners conflict between Mexico and the United States, this article attempts to address how investor-state arbitration tribunals and constitutional courts interact and affect each other.

The case study reveals two important lessons to this debate: i) scholars arguing against investor-state arbitration on the grounds of ‘circumvention’ of domestic courts may do well to calibrate the debate of the use of remedies as one of added remedial possibilities in complex strategic litigation; ii) scholars defending investor-state arbitration on the grounds of ‘de-politicization’ of investment disputes may do well by understanding international adjudicatory bodies as players with veto power effecting in domestic judicial politics.

Keywords: NAFTA, Mexico, Investor-State arbitration, ICSID, Dispute Settlement, International Legal Studies