Dealing with trans-territorial executive rule-making.

• Author: Hofmann, Herwig C.H.

ABSTRACT

This Article discusses the reality of executive rule-making procedures with trans-territorial effect, with other words, the creation of non-legislative rules which have an effect outside the territorial limits of the jurisdiction of origin. It maps the phenomenon, discusses some of its central challenges for the realization of general principles of law and considers possible legal approaches addressing these. One of the most important issues thereby is to find workable solutions in the context of the pluralism of sources of law--national, supranational and international.

1. INTRODUCTION

   Executive rule-making is characterized by the creation of acts which, albeit often legislative in character, do not follow a formal parliamentary legislative process. Executive rule-making powers are generally powers delegated to administrative bodies and institutions or, for example in the area of standard setting, hybrid public-private actors. In many instances, rule-making powers are also delegated to supranational or international bodies. This is a phenomenon not only in the quasi-federal system of the European Union but, as further discussed in this article, a reality in many areas such as international environmental law setting rules on fisheries, forestry and air pollution as well as in mattes such as food safety with the codex alimentarius or banking regulation with standards being set by the Basel committee. Such delegation, in turn, often in practice leads to an almost mandatory application of the content of foreign rules in the domestic legal system--both in the form of rules established on the international or supranational level, as well as in the form of mutual recognition and enforcement of rules established in foreign jurisdictions. Examples for such obligations arise from the WTO's TBT and SPS agreements. An important phenomenon of modern public law is thereby the permeation of the link between rule-making and the territorial reach of the law of a jurisdiction. (1) This Article therefore discusses various aspects and consequences of the phenomenon of de-territorialization of executive rulemaking.

   At issue is whether there are any standards for trans-territorial rulemaking which could ensure compliance with key values of public law such as the rule of law, respect for fundamental rights, participatory forms of governing, and accountability of actors. In recent years, much thoughtful scholarship has been developed on "global administrative law". This scholarship seeks to understand the regulatory framework of international administrative cooperation as well as international organizations active in matters traditionally regarded as matters belonging to administrative law. (2) But these discussions also pre-date the coining of the phrase "global administrative law" in the academic literature. Many of the more traditional concepts addressing aspects of public law that transcend the territorial reach of public law have already been questioned in the context of the discussion of transnational law. (3) "Transnational law" is a term which is slightly misleading when it comes to public law, (4) because the link between the law and its applicability is not the "nation" given that many states are composed by multiple nations but the territorial reach of a jurisdiction. For this reason, focusing on executive rulemaking outside of states, this Article uses the more precise but less common term "trans-territorial." In any case, "transnational" and "trans-territorial" both look specifically at those matters which "trans"-cend the traditional dichotomy of distinguishing between national versus international law and a clear delimitation of these spheres. The reality what one might describe as post-Westphalian trans-territorial public law is that it transcends territorial limits of jurisdictions. The jurisdictional reach appears increasingly more akin to a continuum in which the purely national and the purely international--i.e., inter-state--are the two extremes of a range instead of a strict dichotomy. (6) Many options of the exercise of public powers lie in-between, and this Article focuses on these areas.

   The concepts and consequences of this phenomenon discussed in this Article are mainly illustrated with the help of examples from the law of the World Trade Organization (WTO). Not only is the WTO probably the best known international structure to many readers, but it also offers a rich pallet of examples due to the complexity of topics addressed within the WTO and the relative maturity of its legal order. WTO law promotes the two phenomena of trans-territorialized rule-making: First, WTO law not only itself sets rules complied with by the WTO member states, but it also, second, requires that its members, under certain circumstances, mutually recognize each other's regulatory standards (7) and comply with other members' private rulemaking and commonly accepted technical standards. (8) The approach of this Article is thus both descriptive, in that it seeks to map the phenomenon, as well as normative, in that it asks what could be done in view of the so perceived reality. Conversely, this Article does not focus on what should be dealt with in the national or the international sphere.

2. MAPPING TRANS-TERRITORIAL RULE-MAKING

   1. Background

      Executive rule-making takes place on multiple levels by international and supranational organizations, national government bodies, or by reference to standards set by private actors. It can be created outside of a state, but it can also be the result of extra-territorial application of domestic law to situations located beyond the territory of the regulating state.

      Today's de-territorialization of executive rule-making appears to have begun with increased regulation of conditions for cross-border trade and commerce. This regulation was initially accomplished through international treaties such as the 1883 Paris Union Convention for the Protection of Industrial Property (9) or the 1886 Berne Convention for the Protection of Literary and Artistic Work. (10) Later, more encompassing treaty regimes such as the 1948 General Agreement on Tariffs and Trade (GATT) emerged. (11) In the 1990s, a period of rapid growth and development of international structures brought GATT into the fold of the WTO. (12)

      In many respects the regulation of trade led to a spill-over of regulatory action into areas such as health and safety regulation, banking and insurance regulation, working conditions and labour regulation, taxation and distribution of tax powers, and protection of investments. Another source of transterritorialization arose from the need to regulate consequences of activities which are not limited to territorially-defined political borders such as environmental regulation and, to a certain degree, regulation of the Internet. (13) Despite the many differences amongst the "trans-territorialized" regulatory regimes, they both generally have the capacity to exercise considerable influence in domestic administrative practice and decision-making.

      For reasons of clarity, the following mapping exercise of trans-territorial rule-making will first look at unilateral rule-making which transcends the territorial limitations of a jurisdiction with de jure or de facto trans-territorial effect. It will then address trans-territorial rule-making by international organizations, standard setting, and rule-making by conditionality of financial aid by international banks.

   2. Unilateral Rule-making with Trans-territorial Effect

      The applicability of the public law of one jurisdiction in another jurisdiction is set nationally in the context of what is known as "international administrative law." (14) Despite the fact that such law is essentially national, it does have to comply with principles of public international law, especially the "links doctrine" as was developed in the wake of the International Court of Justice's (ICJ) less than universally endorsed Nottebohm decision. (15) This doctrine recognizes as connecting factors, the right to regulate situations having a genuine or effective link to state powers, (16) such as those relating to territoriality, citizenship, and the right of self-organization. (17)

      Of those three factors, the most commonly applied factor in administrative rule-making is the territoriality principle. Under a strict reading of that principle, states--and supranational organizations such as the EU--cannot enact measures on the territory of another state without the latter's consent. Positively formulated, the territoriality principle allows a state to exercise regulatory powers unilaterally with respect to all matters related to the territory, either (1) in the context of "subjective territoriality"--which provides a basis of jurisdiction over acts which originated within a foreign territory but were implemented or completed within the relevant state's own territory--or (2) in the context of "objective territoriality"--a connecting factor in cases in which the affected activity originates within a state's territory but is implemented or carried to its conclusion abroad. Thereby states have been applying their rules in an extra-territorial fashion. Classic examples have been extra-territorial application of antitrust rules. (18) Newer forms of extraterritorial jurisdiction affect activities which by nature have no, or only little, physical contact with the territory of a jurisdiction such as telecommunications, and Internet law. (19)

      But there is another dimension to trans-territorialism of executive rulemaking. Treaties under public international law may require "mutual recognition" of rules set by other states. Executive rule-making of one state can thereby become applicable by transfer from the law of one jurisdiction into that of another. Voluntary mutual recognition schemes, which are not based on explicit obligations in international or supranational legal systems, include...