This post is part of our symposium on The Neoliberal Republic by Antoine Vauchez and Pierre France. Read all posts here.
The Neoliberal Republic offers an insightful portrayal of how neoliberalism has permeated France in the past decades. The book helps us to grasp how the legal universe has been deeply implicated in the power grab by the private sphere. The protagonists of the story are the pantouflers, the top public civil servants who migrate to the private sector, possibly allured by salaries that are manifestly superior to what can be earned even in the most prestigious public institutions. With grace, the authors show how this steady elitist exodus from the public to the private has led to the emergence of an interstitial public-private space, which hollows out the public sphere. Even more: in an Orwellian move, the private comes to occupy the realm of the public, making it impossible to detect conflicts of interest, as the private is public.
Eroding the Public Interest, from France to the World
The French state’s neoliberal turn is no exception in the global legal landscape. In the notes that follow, I want to draw a parallel with the international level, where a similar—and possibly more brutal—process of hollowing out the public interest is unfolding. Investor-state arbitration (ISA) or investor-state dispute settlement (ISDS), both of which are at the heart of contemporary international investment law (IIL), can be seen as profoundly blurring the lines between the public and the private.
This legal system is primarily oriented toward establishing and protecting the rights of foreign investors. The system has grown enormously in the last fifty years: today it comprises more than 3000 investment treaties that have given rise to more than 900 ISDS disputes. Bestowing exceptionally strong substantive and procedural rights on foreign investors through such a capillary network of treaties puts “capital on legal steroids.” This makes a striking contrast with the much weaker international rules protecting the public interest. Human rights treaties, for example, entrust human beings with comparatively much feebler enforcement mechanisms.
If public-private crossovers became widespread in the neoliberal transformation of France, they are a defining feature of the IIL system. It is by design that international lawyers can act interchangeably as party-appointed arbitrators, legal counsels, or expert witness. The system has also functioned as a magnet for some of the most illustrious public international lawyers. As in Vauchez and France’s story, these public lawyers are not simply migrating toward a realm that is defending private rights (and not just any private rights, but the property rights of some of the richest corporations in the world). They are straddling the two worlds. Most strikingly, authoritative public international lawyers acted as arbitrators and consultants in ISDS cases, while simultaneously serving as judges at the ICJ. This coexistence was accepted and normalized—until 2018, when it was announced that members of the ICJ would not serve as ISDS arbitrators during their tenure on the Court.
It is hard to tell why a judge of the ICJ—unquestionably the most prestigious international court—would accept work aimed chiefly at protecting private interests, but money may have something to do with it. As in the French context, it is embarrassing to observe the stark difference in salary between public and private international lawyers. While ICJ Judges are generously remunerated, with a base annual salary of $176,437 as of 2018, arbitrators can earn an average of more than $400,000 per case. Yet it may be reductionist to ascribe the public-private crossovers to greed only. Vauchez and France have shown how in France, epistemic brokerage lent legitimacy and dignity to the newly constructed public-private sphere. At the juncture of influential networks, lawyers (and economists) have leveraged their position of epistemic authority to theorize and normalize the public-private merger. Arguably, epistemic brokerage may have also operated at the international level to legitimize ISDS.
Public-Washing the Private Interest
Through sophisticated academic constructions, ISDS has slowly gained the status of public international law, or at least that of a system capable of protecting and promoting the global public interest. This way of lending legitimacy to legal regimes aimed at promoting private interests could be labelled public-washing. If the normalization of a free-market discourse within public law circles has played a role in turning France into a Neoliberal Republic, public-washing has also featured prominently in IIL. The field, which has been widely criticized for its direct lineage with colonialism and for its profound asymmetry (empowering foreign investors while weakening the rights of states and civil society actors), has been skillfully re-packaged as a tool for advancing the public interest. Three mainstream narratives have been mobilized for this purpose. The first two narratives frame the IIL system as capable of promoting development and the rule of law. However, when examined closely, such narratives turn out to be specious. For example, there is hardly any empirical data to demonstrate that investment treaties lead to development. Even when investment treaties do attract FDI (for which the evidence is at best mixed), FDI by itself does not bring about development. In fact, research on “immiserizing growth” has shown how FDI can further contribute to environmental degradation and the impoverishment of the most vulnerable local people. If the development rhetoric mainly fails on empirical grounds, the rule-of-law narrative fails even on its own terms. By granting rights and privileges only to investors and leaving the rest of society right-less and voice-less, ISDS represents a break from the ideal of universality and equality before law. The narrative is credible only if we subscribe to a neoliberal vision of the rule of law or, to borrow the words of Ugo Mattei and Laura Nader, if the rule of law ideal is transformed “into an imperial ideology.”
The third narrative concedes that IIL can give rise to clashes between private and public interest, but it posits that the application of public law doctrines such as proportionality analysis can resolve the tensions. It is assumed that, by applying proportionality, three arbitrators can balance the private with the public interest (as represented by foreign investors and the state, respectively). Such an assumption, however, misses out an important dimension of the formation of the public interest: struggle.
Public Interest and Struggle
The people struggling on a daily basis for a better environment or for the respect of their basic human rights—often putting their lives at risk—are made invisible by IIL. For example, several ISDS cases have arisen where a concession to operate an environmentally harmful activity was initially granted without sufficient consideration of its impact on the environment and without the involvement of local people. Often the impacted people were those who unearthed key knowledge on environmental pollution and health hazards that was initially neglected by public authorities. But it has happened that in cases where a struggle for environmental and human rights protection has been won, and the government or a domestic court withdraws a questionable concession, an arbitration tribunal intervenes to restore the private power. This was the case in Tecmed v. Mexico, where the Mexican state refused to renew a Spanish corporation’s license to operate a toxic waste facility in Hermosillo because of violations of domestic environmental and public health laws. Interestingly, this case was praised for marking the first use of proportionality analysis by an ISDS arbitration panel. And yet, the case is representative of how, in practice, the public interest can be countermanded through the very application of public law doctrines. The Tribunal found in favour of the Spanish company, Tecmed, because, in its opinion, the state’s decision was motivated by “socio-political” reasons. Not impressed by the public’s protests, the tribunal implicitly treated the socio-political as an undignified irrational space.
But it is exactly in this socio-political realm, anathema to neoliberalism, that public knowledge is produced. It is through situated knowledge that the public interest can be defended. In this specific case, it was local communities that first discovered that the Spanish company was violating the conditions of the permit by, for example, treating liquid and biological-infectious waste that it was not authorized to handle. That the Mexican public authorities later ascertained the company’s multiple violations was arguably due to the courageous protests of local communities. In “weighing” the public and the private interest, the tribunal hardly engaged in a serious evaluation environmental and health risks to the local communities. The people were not heard (let alone listened to). How could they be? People have neither rights nor voice before such tribunals.
Tecmed v. Mexico is paradigmatic of another way in which the neoliberal project shrinks the public sphere: by numbing the agency of real people, taking away their voice and rights. Let us now come back to Vauchez and France’s book, which they conclude by reflecting on how, through the blurring of the public and private spheres, “the presumed correspondence between the public interest and the interest of the state, long the essential reference point of our democracies, had broken down.” Against this background, they do not suggest giving up on the public-private distinction. Instead, they advocate a new political vision in which the elite are no longer “ethical prophets of public interests.” A new, more encompassing democratic stewardship is called for. To once again link the domestic to the international, it appears that an important move in rescuing the global public interest would be to expand peoples’ rights and voices, starting with those of the most oppressed. A countermove to the neoliberal assault on the public would thus be to reinforce its very core: the people.
The good news is that the public resists, reclaiming its space. Just think of recent climate change litigation, where through bottom-up legal mobilization, people spurred much needed climate action, including a recent victory of a multitude of publics against Shell before a Dutch domestic court. As academic lawyers, we can also contribute (albeit marginally) to rescue the public interest from a private power grab. By painstakingly documenting the systemic ways in which pantouflage unfolds, Vauchez and France have laid bare the conflict of public and private interests as idiosyncratic expression of the neoliberal project. Documenting and denouncing the multifarious ways through which the public interest is being battered is a necessary step towards defending it. This is, in my view, the power of Vauchez and France’s book.
