The premise of this book is that international investment treaties which are ostensibly aimed at fostering beneficial capital transfer through the provision of a secure legal framework should instead be viewed with circumspection because these agreements undermine the “constitutional” entitlement of sovereign states to regulate themselves, which is often against the interest of their citizens. This argument is presented in several forms throughout and is at its best a novel take on international investment law from the perspective of political philosophy, and at its worst is another tired rant against American and European capitalism. Author David Schneiderman depicts constitutionalism and its rules as a “normative guide” (p. 5) which is offered, along with democracy and citizenship, as the preferred institutional alternative to the dual religions of globalization and the free market. The heavy, often clouded emphasis on constitutional theory, notably that of the United States and its devotion to private property, while instructive for its contextualization of the roots of expropriation in international law (ch. 2), detracts from the much more focused material on the international investment disputes brought under the North American Free Trade Agreement (“NAFTA”) and the fair and equitable treatment standard which Schneiderman analyses with considerable vigour (ch. 3). His comments on the environmental purpose behind investment-hostile regulations in these disputes are particularly thought-provoking (pp. 85–87, 93–95). Legal scholars may be distracted by the author's style of citation drawn from the social sciences, and more problematically, his occasional superficial approach to the core legal issues, such as his outline of World Trade Organization (“WTO”) case law (pp. 65–67) both of which suggest that his primary audience is those with a background in political science and not law.
Schneiderman's recurrent criticism of the neoliberal regime and the corresponding need for governmental intervention in markets is undeniably prescient, as the recent bailouts of major financial institutions in Europe and US have dismally revealed, but his persistent condemnation of laissez faire capitalism as the dominant objective of governance is ultimately incomplete. He fails to offer a substantive remonstration against the advantages of investment-conducive legislation to stakeholders such as shareholders, consumers and foreign labour and he cites the incapacity of international investment to stimulate the economies of host states as if it were an established fact (pp. 224–225) – where others have observed the exact opposite, as evinced by the growing popularity of Bilateral Investment Treaties (“BITs”) ratified by developing countries.
The central premise that international investment treaties are hostile to the signatory state's regulatory autonomy is vitiated by the inescapable reality that BITs are voluntary exchanges between states each of which seeks to gain advantage economically for the benefit of its citizens (except of course in instances of corruption, which the book does not address directly). The mere fact that failure to ratify a BIT would be economically hazardous is not indicative of undue influence as argued (p. 62). The conclusion that states should be free to breach their international commitments for the sake of amorphous concepts of “public interest”, such as South Africa's disastrous Black Economic Empowerment (“BEE”) policy (ch. 5), is offensive to the sanctity of contract upon which future exchanges, not to mention a significant aspect of statehood itself, depends. NAFTA based interference with New Brunswick car insurance legislation (pp. 71–72) is an inappropriately benign example of undue restriction on regulatory autonomy when one considers such crises as the full scale collapse of the Argentine economy precipitated in large part due to governmental incompetence – which is a risk that a foreign investor should not be compelled to share, contrary to Schneiderman's view (p. 102 and 212). Foreign investors should suffer the consequences of local economic downturns provided that these are not the result of the host state's greed or mismanagement – the determination of which is an issue deserving of case-by-case analysis, not sweeping exceptions in the name of constitutionalism. Furthermore, Schneiderman's theory that investment treaties have undermined states' prerogative of self-government is largely ignorant of the reality that sacrificing regulatory autonomy is a necessary compromise in order to gain membership in a global community and thereby benefit from wealth transfers that often (admittedly not always) result from foreign direct investment under the stable guarantee of the rule of law. Schneiderman appears to be aware of this dual feature of globalization (as evinced in the introduction to Chapter Four) however he neglects to account for it sufficiently.
It is only near the book's end that the author offers a constructive alternative to the constitutionally-inhibiting international investment regime: anti-discrimination laws which will protect foreign investors who may be unfairly targeted by host states because of their foreign character (p. 232) and the enlargement of foreign investment insurance programs, such as that offered by the Multilateral Investment Guarantee Agency (“MIGA”) (p. 233). While both are compelling and deserving of further attention by scholars, only the former is plausible, as surely the cost of funding insurance against damaging host state intervention in large scale investment projects will be passed on to vulnerable consumers or else it will render such projects prohibitively expensive. Insurance against the risk of regulatory expropriation will be priced according to the ability of host states to intervene lawfully, and without a comprehensive commitment to protect investment as enshrined for example in a BIT, this risk will be simply too costly to bear. Anti-discrimination as a means of regulating international investment will depend further, as Schneiderman rightly notes earlier, on the comparator group chosen for discrimination analysis (p. 154, 172).
Constitutionalizing Economic Globalization offers insightful commentary on some of the ongoing problems with international investment law, for example the regime's often opaque and unpredictable rules as well as its difficulty in accommodating genuine economic crises and environmental issues. As an author Schneiderman is an assiduous researcher (the case studies on Latin America and South Africa are particularly impressive) and for these reasons alone the book should be read by anyone with an interest in international investment law, especially those familiar with political philosophy. Generally, the application of domestic constitutional principles to the field of international investment law is a unique approach done skilfully. Unfortunately, however, the book hints (strongly) of a bias against wealth generation and associated consumerism per se rather than at the possibly misconceived ways in which it is achieved through the interaction of sovereign legal systems. Such ideology may have now become so universally accepted, particularly within academia, that it has become an unquestionable “normative guide” against which investment laws can be meaningfully scrutinized, and this may be cause for concern.
