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Judging Judges: From 'Principal-Agent Theory' to 'Constitutional Justice' in Multilevel 'Judicial Governance' of Economic Cooperation Among Citizens


  • Ernst-Ulrich Petersmann


How should citizens evaluate the ever more important case law of international economic courts and their sometimes inadequate responses (e.g. by investor-state arbitration) to 'the governance gaps created by globalization (which) provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation'? Section I recalls that the customary law requirement (as codified in the Vienna Convention on the Law of Treaties) of settling 'disputes concerning treaties, like other international disputes, … in conformity with the principles of justice and international law', including 'universal respect for, and observance of, human rights and fundamental freedoms for all' (Preamble VCLT), reflects the constitutional functions of courts to interpret and apply law in conformity with 'rule of law', justice and human rights as constitutional restraints on the 'rule of men' and their 'rule by law'. Section II explains why some of the governance problems of the World Trade Organization (WTO) are due to power-oriented conceptions of 'principal-agent' relationships as 'member-driven governance' without regard to the constitutional functions of WTO bodies to provide collective public goods with due respect for citizens as 'democratic principals'. Sections III and IV recall how the European Court of Justice (ECJ), the European Court of Human Rights (ECtHR) and the European Free Trade Area (EFTA) Court developed diverse 'constitutional methods' of interpreting treaties among European states as 'constitutional instruments' protecting fundamental freedoms and social rights of European producers, investors, traders and consumers. Sections V and VI argue that the worldwide context of international economic law (IEL) differs from multilevel European constitutionalism and requires WTO and North American Free Trade Agreement (NAFTA) dispute settlement bodies and investor-state arbitral tribunals to exercise more judicial deference and respect for the diversity of constitutional principles in WTO Members and their regulatory discretion. Section VII concludes that national, regional and worldwide economic courts should promote common conceptions of rule of law and 'constitutional justice', following the 'solange method' of multilevel cooperation among national and international courts in Europe, in order to protect transnational 'rule of law communities' for mutually beneficial economic cooperation among citizens across frontiers. , Oxford University Press.

Suggested Citation

  • Ernst-Ulrich Petersmann, 2008. "Judging Judges: From 'Principal-Agent Theory' to 'Constitutional Justice' in Multilevel 'Judicial Governance' of Economic Cooperation Among Citizens," Journal of International Economic Law, Oxford University Press, vol. 11(4), pages 827-884, December.
  • Handle: RePEc:oup:jieclw:v:11:y:2008:i:4:p:827-884

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