The in dubio pro development principle: a right to development in trade and investment regimes.

• Author: Alvarez Zarate, Jose Manuel

1. INTRODUCTION

   It is important to recall that the current International Economic Law ("IEL") regime has been construed considering the ideas and promises of growth and economic development for all, including developing countries, as states are bound by such promises allegedly made in good faith. (1) The liberal interpretation that progressive liberalization of access to goods, services and capital, on one hand, whilst denying access to knowledge and technology, on the other (2)--absorbed into the interpretation of IEL rules by investment arbitrators and trade panels--may no longer deny the IEL foundational Right to Develop ("RTD") and its corollary principle in dubio pro development. The former interpretation may reduce the policy space (3) for developing countries to adopt developmental policies though their local regulation. (4)

   There are at least three scenarios in which the adoption of developmental policies may have interpretative problems: (i) in the political discussion, when countries negotiate and discuss the construction of or changes to the economic system and the models of investment and trade regimes; (ii) in the process of applying the rules by interpreting them when countries need to pursue their economic interests, by enacting policies for their own economic development; and (iii) before dispute settlement mechanisms, such as trade panels or investment tribunals. (5)

   The above merits an economic-political debate and a legal discussion; this paper will focus on the latter. There is a huge amount of academic literature in the field of law and development (6) that supports the economic-political discussion and helps us understand the strategic importance of development for emerging nations and its relationship to trade and investment rules. However, this paper will mainly focus on the legal aspects in the adoption of developmental policies by emerging nations, as the arguments pleaded above and made by an IEL dispute settlement body must be free from political considerations. (7) The IEL rules on investment and trade, currently in force in many states, are part of the mandatory international rule of law for states. Therefore, these rules and their interpretation are shaping states' development ideals and have important consequences when international economic obligations are assessed, both in trade and investment disciplines, at the point in which they collide with the RTD. (8) As Markus Wagner points out, "international trade and investment law can offer valuable insights for one another;" both systems are apparently "twins separated at birth" and are thus sufficiently similar enough to warrant a meaningful comparison, (9) which justifies the inclusion of both regimes in this paper, and suggests that the RTD and the in dubio pro development follow the same conditions in both regimes.

   The question of the existence of a right for nations to develop in trade and investment agreements is crucial and controversial, particularly when assessing some of the economic consequences of those agreements for developing nations, (10) and when developing countries must regulate for economic developmental purposes. The RTD, as revealed in this paper, would grant broader policy space in limited cases to developing countries. (11) It is not intended, however, that developing countries would have unlimited policy space, as that would undermine the trade and investment systems. (12)

   Liberal theories, which do not recognize the RTD, apply to when developing countries rely on their own efforts to mobilize productive resources and to raise their levels of domestic investment, human capital, and know-how. (13) However, for this, they must have the widest possible room available to maneuver and determine which policies work in their particular conditions, and not be subjected to a constant shrinking of their policy space by IEL institutions originally established to support more balanced and inclusive outcomes, (14) where indeed the RTD was recognized.

   The RTD looks as if it is circumscribed to political discourse. It is not, as shown by its recognition in soft-law instruments such as declarations (15) and U.N. General Assembly resolutions, (16) or as hard-law in human rights treaties, which recognize development as inextricably linked to economic, social and political rights. (17) Nevertheless, in treaty practice, development seems to have been neglected to the point where it has become a non-enforceable right. While it is customarily established in treaty preambles, the right to development has received little practical application by states and dispute settlement bodies when such entities are enforcing international economic obligations. (18) Academics have also neglected the RTD discussion, with some ignoring the legal perspective of developing countries, whittling it down to an ideological position (19) or deeming it an unenforceable right before dispute settlement bodies. (20) However, a few well- founded exceptions, where development concerns are seen as a right, have reluctantly arisen. (21) The disdain for the RTD has driven some investment arbitrators to interpret the opposite of the in dubio pro development, i.e. when in doubt, treaty obligations are meant to protect the rights of the investor and not the state's rights. (22)

2. IS DEVELOPMENT AN ECONOMIC ISSUE, AN ISSUE OF LAW, OR BOTH?

   1. Development as a Right of the State

      This paper does not seek to address an issue that is common in academic research on this topic, which is whether the RTD is a human right and as such, how difficult it may be to enforce this right before an international tribunal. (23) Hence, for the purposes of this work, the RTD is not understood exclusively as a human right but as a state's economic right that is embedded in trade and investment treaties. Scholars have recognized the significant problems presented by analyzing the RTD from a human rights perspective for its recognition in trade and investment treaties. (24) It may be problematic to use a human rights perspective in an IEL case, as, due to the fragmentation of international law, a dilemma of systemic application and interpretation of law will ultimately be faced. (25) However, applying the RTD directly to an IEL case, as an obligation embedded in the system, eliminates the need for that discussion.

      In human rights discourse, it has been argued that even if the RTD exists, governments of developing states owe it to their own populations, and thus is not owed by foreign developed countries. This situation is not within the scope of this paper. Nevertheless, assuming that such a claim is correct, it would not serve as an argument against the use proposed for the RTD--in fact, it is an argument that would strengthen its use in trade and investment cases. If developing states have the international duty to grant and guarantee the RTD as a human right of their inhabitants, they must not be placed in a position in which they must decide whether to fulfill such developmental expectations or to be subject to claims because a trade partner or an investor may challenge the country's measures implemented for development purposes.

      Thus, as will later be discussed, the RTD can be understood and identified from within IEL's system, without direct recourse to human rights treaties. If the rules and principles that grant the RTD can be found within the IEL system, and thus can be applied directly in a trade or investment case, one does not need to search for such a right in another international treaty. Therefore, this paper calls for states and adjudicators to reinterpret trade and investment treaties (26) as developmental language can already be found there.

      Another recurrent objection to the enforceability of the RTD is the non- justiciability of the issues to which it may give rise. (27) Some scholars have concluded that the RTD is non-justiciable under international law. (28) This paper proposes a different approach. If IEL adjudicators were given broad discretion in deciding commonly understood trade and investment disputes as well as the power to determine their jurisdiction and merits, adjudicators would then have also the ability to decide on matters applying the in dubio pro development principle.

      For these reasons, this paper proposes to overcome such a dilemma by acknowledging that a claim against a developed country before an international dispute resolution mechanism is not a prerequisite for recognition of the RTD. Rather, just as defendants may plead certain affirmative defenses in municipal law when sued in local courts, a developing country may employ the RTD and in dubio pro development principle as a defense in an IEL case. By recognizing that states enjoy a right not to be declared responsible for breaching IEL obligations when pursuing development-related goals, a state's RTD can be given normative value within the IEL system.

   2. What Kind of Economic Development Must International Economic Law Confront?

      Before tackling issues of development, one must first be able to define the concept. Scholars and international institutions have attempted to define development in a variety of ways. (29) Questions arise about whether it should only encompass economic growth as seen in some trade and investment treaties, (30) or whether other factors must be analyzed when determining what contributes to a country's development. Moreover, it is vital to determine which developmental policies are in conformity with international obligations. Although its meaning is deeply influenced by economic and political theories, this issue has legal consequences, as it is important to clarify what amount of policy space is needed to pursue development goals, taking into account the RTD and the in dubio pro development principle.

      A more comprehensive understanding of development, one that recognizes economic growth as intrinsically tied to areas of environmental sustainability...