Global Adversarial Legalism: The Private Regulation of FDI as a Species of Global Administrative Law

Ariel Meyerstein, University of California, Berkeley

Abstract

This article explores the theoretical paradigm I refer to as “global adversarial legalism,” building on Robert Kagan’s description of the American legal system. Adversarial legalism has also been explained as a governance strategy deployed by the relatively weak central governance institutions of the European Union as a means of spreading EU law. It usefully captures the fragmented political authority and relatively weak hierarchical control of the global governance, or lack thereof, of foreign direct investment.

One facet of this global adversarial legalism, already much debated, is the concern that investment arbitration tribunals exercise an overly broad and perhaps illegitimate form of “global administrative review” of State measures. This chapter focuses instead on the other side of this global adversarial legalism that has not received any scholarly attention: the advent of FDI-impacted individuals and communities alleging violations of voluntary transnational norms espoused by corporate actors involved in regimes of global private regulation, such as the Equator Principles described above. The article argues that the EPs’ application to a project loan expands the substantive criteria applicable to project review and creates additional layers of review of corporate compliance with national and international norms. Because of the role of information and the power of reputation in setting behavior, these quasi-legal norms and modes of adjudication may serve as functional equivalents to supranational administrative review. This globalized process of rights ‘adjudication’, however, is inherently messy, and unlike national judicial authority, is not governed by any real standards or procedures of administrative review. Thus, a more complicated dynamic emerges, raising interesting questions about State sovereignty and decision making related to national development agendas, and what might be rather paradoxical outcomes from a development perspective: interventions on behalf of project-affected populations can interfere with national planning and overall development levels of host countries by adding transaction costs and delaying important infrastructure investment that, depending on the type of project, is said to be crucial to economic development.