Collective Conduct in the Brexit Era
Whilst the year 1963 in the United States conjures up images of beatniks, civil rights protests and JFK’s convoy, for Europe the year was noticeably more modest. This side of the pond saw the formation of the European Committee on Legal Cooperation, the intergovernmental body responsible for the standard-setting activities of the Council of Europe in the field of public and private law. It is this same function that will see a renewed focus in 2018, as legal maladies aren’t addressed by other institutions.
Perhaps unlike the Council of Europe, the CDCJ is still functioning and has not yet fallen under the predatory gaze of the Eurosceptics; with a current emphasis on judicial independence and lobbying constraints.
What will increasingly become apparent though, is its role in collective responsibility. The common elements of foreign policy amongst European states have been largely commendable for decades, but are sadly falling short of the mark as of late. This is attributable to attempts to copy UN actions, but mainly due to a finance-centric legislative agenda.
There are three major elements to consider: that a breach of an international obligation is attributable to a state, that it can be attributed to state direction by non-state actors, and if another party is liable by means of ancillary responsibility. The last time this approach to executive action was dominant over the demands of the financiers, who were not held at bay at all by lobbying laws during the 2009 financial crisis, was in the late 1990’s.
Rather than a reactionary doddery response to crises as they emerge, this would entail preemptive parameters and established normalcies. ‘Too big to fail’ is the acceptance that systemic importance status can be granted without a set of well defined processes, by which limited liability should operate concurrently. A return in principle to the substantive treaty underpinning of international actions does not negate their evolution by incremental minimum standards legislation and acts of judicial activism, but would significantly alter the string of diktats reaching around the continent, to a greater or lesser extent, than in the current system.
At no point in recent history has the exercise of power by private entities posing as state organs been as evident as it is today. The US Treasury is run by a former Goldman Sachs executive. Its currency comptroller’s former bank was purchased from the Federal Deposit Insurance Corporation, and its Secretary of State is an oil magnate. By rejecting the trade agreements of the Obama administration and rejecting EITI, for example, the inability to change this perception or to act retrospectively is cemented for the entirety of the current administration’s tenure. Whilst many will dismiss this as treaty shopping at worst and an expedited free market at best; the sheer incidences of attempted amendments to great depression era legislation ought to be indicative enough of the gravitas of the current climate.
This is not the blind leading the blind. This is the blind, deaf and dumb leading the blind, deaf, dumb and disabled up a steep hill at night in the winter.
That these auxiliaries might be acting in energy and finance is one travesty, but the inability to prevent the contagion of other industries could prove highly dangerous. As belligerent status is invoked by foreign governments against quasi-state employees, referral to the International Law Commission may be warranted.
This disregard for transparency may lead to the debasement of diplomatic and investment protection. Eventually it may become so dog eat dog the only thing left for the dogs to eat will be the people stranded up the hill.
The crux of investment treaties is that an investor can make a claim against a state in the event of injury, but this does not amount to an insurance policy, especially when the state itself is so heavily involved as is the case at present. Instead, sanctions, foreign currency reserves and special drawing rights are on the table; none of which are accessible to private institutions.
With such heavy state direction, the claim will no longer be valid against host states, but against hegemonic power projecting states on the basis of ancillary responsibility for their direction of their own private institutions.
There may be some who believe they are beating the system by diminishing minimum standards; instead they are competing in a race to the bottom which will lead only to extremes of unacceptable actions until no one is left with moral authority.
As the United States diminishes its respectability to the point of becoming a laughing stock, the European Union will make one of two choices. Either it will close ranks and focus on to the letter implementation of Union Law; or it will embrace a set of measures that enable a legislative ecosystem of sorts.
At the centre of such a system must be the balanced reproach of states acting extrajudicially. The Americans may seek punitive damages or remedy for loss of profits. As discussed, this piecemeal approach cannot last very long, especially with such loose capital reserve standings as is currently evident.
Instead we will see free-market retorsion measures, in which states’ competing interests are naturally kept at bay by wronged host states. These will be balanced by advantages for states who pick up on non-performance by another. This is not by any stretch of the imagination an abandonment of common foreign policy that has stood the test of time, instead it is an enforcement mechanism that ought to be embraced and encouraged to accelerate change and ensure tangible growth.
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