作者/科法所 2014級 碩班 羅致遠
Introduction
On December 8th, 2014, the Institute of Technology Law of National Chiao Tung University (ITL) welcomed Dean Austen Parrish and Professor Hannah Buxbaum of Indiana University Maurer School of Law to give a much-anticipated joint speech on transnational dispute resolution. In their presentation, Dean Parrish and Professor Buxbaum used two well-known cases of cross-border disputes to demonstrate the interplay between domestic and international law. The speech served as a symbol of the newly formed partnership between ITL and Maurer School of Law and was a success.
Both guest speakers are experts in the field of trans-boundary disputes. Dean Parrish is an esteemed and widely published scholar in transnational law, and his research is focused on critiquing the role of domestic law institutions in addressing global challenges. Professor Buxbaum has won various teaching awards and her areas of expertise are in private international law and international jurisdiction and litigation. Her researches are published in leading journals and she has also co-authored a casebook on transnational business problems.
The topic that was covered is an important one. Echoing what Dean Parrish said in his opening statement, the number of transnational disputes has increased over the years due to the trend of globalization, and from the strategic standpoint of litigants, choosing whether to file suit under domestic or international institutions or mechanisms has become more important than ever. Furthermore, in light of current investment treaty negotiations, including those in the Trans-Pacific Partnership and in the Transatlantic Trade and Investment Partnership, questions regarding the overlapping of domestic law and international treaties need to be answered. This note will provide a brief summary on each of the cases presented, the implications of the cases, and the author’s reflection.
Case 1: Trail Smelter and Pakootas
The Trail Smelter and Pakootas case consists of two trans-boundary environmental disputes involving the U.S. and Canada. The first dispute (1929), referred to as the Trail Smelter Arbitration, was resolved through ratifying a Convention, which allowed for an international arbitral tribunal to be constituted. The dispute concerned air pollution generated by the smelter in Trail, British Columbia that was causing harm to the environment in Washington State. In this case, the Tribunal propounded what is now known as the “no harm principle,” which is the idea that although each nation may use its own resources as it saw fit, it must use the resources in such a manner that does not cause significant harm to a neighboring nation. The Tribunal decided that since the Trail Smelter indeed caused damage to the environment in Washington State, Canada is required to compensate the U.S.
The second dispute (1999) was the Pakootas v. Teck Cominco case. From around 1906 to 1995, the Trail Smelter had dumped a total of approximately 100 thousand metric tons of slag into the Columbia River, where it was carried downstream into an area in Washington State that was owned by an indigenous group called the Colville Tribe. The slag affected the local environment as well as the health of the indigenous people. In 1999, instead of bringing the issue to an arbitral tribunal like in the Trail Smelter Arbitration, the Colville Tribe petitioned the United States’ Environmental Protection Agency (EPA) to assess the contamination. After determining that the Trail Smelter was the predominant source of the contamination, the EPA issued a Unilateral Administrative Order (UAO) directing Teck Cominco to clean up the slag. When Teck Cominco failed to comply with the order, Joseph Pakootas of the Colville Tribe filed an action to enforce the UAO under the provision of Superfund (a statute requiring the cleanup of polluted land) in the District Court of the Eastern District of Washington. Contrary to Teck’s claim that Superfund cannot be applied to a Canadian company operating outside of the U.S., the court considered the pollution a wholly domestic issue. The case was appealed to the U.S. Supreme Court and is still ongoing.
Case 2: Eli Lilly
The Eli Lilly case also includes two separate disputes. The first dispute was an ordinary intellectual property lawsuit between Eli Lilly and a drug manufacturer in Canada called Novopharm. In 2007, Novopharm started marketing the generic version of Zyprexa, which Eli Lilly had patented. In response, Eli Lilly sued Novopharm for patent infringement in the Canadian Court. In its judgment, the Court held that Lilly’s patent was invalid, since “promised utility” was not demonstrated. Eli Lilly appealed the case to Canada’s Supreme Court, which also reached the same conclusion.
The second dispute occurred as a result of the court judgment in the first dispute. In 2013, an arbitration was commenced and the tribunal was constituted pursuant to Article 1123 of NAFTA, with Eli Lilly claiming that in applying the promised utility doctrine in a way that diminished the value of Eli Lilly’s patents, the Canadian courts have violated Canada’s intellectual property obligations under NAFTA. The case is ongoing.
Implications and Personal Reflection
The two cases exposed certain issues regarding transnational norms and dispute settlement mechanisms. In particular, they raised important questions such as whether a trans-boundary dispute should be subject to domestic dispute resolution systems or international mechanisms, and whether it should be governed by national or international norms. Moreover, the question of how to deal with conflicting results under domestic and transnational dispute settlement mechanisms when they arise also needs to be properly addressed.
Dean Parrish maintains the view that the better approach in dealing with trans-boundary issues is not to rely solely on international customary law, but rather, to also spur bilateral negotiations and avoid applying domestic law extraterritorially. He argues that the extra-territorialism of domestic law could give rise to a pluralistic system, which would pose significant concerns. For example, since countries differ in their opinions on certain subjects, something that is illegal in one country may be legal in another. Thus, if countries were to apply their domestic law on the actions of companies operating solely in another country (as was the case in the Pakootas v. Teck Cominco), it would create tremendous uncertainty for investors and companies of that country, as they would have to comply with multiple legal systems even when they are only investing or operating in one country.
Professor Buxbaum disagrees with Dean Parrish in this respect. She contends that extra-territorialism of domestic law could be favorable in instances where countries share the same view. For example, the prohibition of cartels is a substantive norm among countries in the international community, and although details in procedural law and punishment fluctuate, the general principle is the same. Therefore, applying American antitrust law extraterritorially can be justified; especially in cases where developing countries lack the legal infrastructure or economic capacity to prosecute cartels. Professor Buxbaum further argues that in these cases, the benefit of preventing enormous economic ramifications of cartels outweighs the harm of the impingement of a country’s sovereignty right.
Both professors have made some really compelling arguments. However, Dean Parrish’s approach seems to be more convincing. The invasion of sovereignty, regardless of whether the cause is just or not, is an extremely sensitive issue. The extra-territorialism of domestic law may work well in some cases, but it would also create uncertainty for investors and corporations, as mentioned by Dean Parrish. Additionally, it would be difficult to draw the line with regard to which types of issues have a substantive norm that is recognized widely enough for extra-territorialism of domestic law to be allowed. It might also impede the development of the legal systems in developing countries if they have fewer chances to apply their own laws in issues such as antitrust.
As suggested by Dean Parrish, bilateral agreements would be a better route to solving trans-boundary disputes. If substantive norms exist for a particular issue, it shouldn’t be difficult for countries to reach a common ground on how said issue should be treated legally. That being said, there could be scenarios where bilateral agreements may not be specific enough to be helpful and that customary international law may have to be relied on in the end where they fall short. Professor Buxbaum made good points in the respect that we need to rely on multiple mechanisms to regulate the economy effectively, as transnational corporations are extremely skilled at operating in the spaces between national governments.
The following are three preliminary points that can be gathered from the joint speech: First, bilateral negotiations could be a useful way to resolve transnational disputes and should be faithfully considered by the disputing States. Second, such approach could avoid conflict between domestic and transnational norms and could partially harmonize them. Third, when bilateral agreements cannot be reached, more comprehensive rules to resolve conflicting results under domestic and transnational dispute settlement mechanisms might still be needed.
The speech was genuinely enjoyable as it was informative and well presented.
