The Nafta's Chapter 11 and U.S. Regulatory Takings: Can International Trade Agreements Develop a Consistent and Principled Regulatory Takings Jurisprudence?
posted on 2004-12-15, 00:00authored byDaniel Dominique Leger
This paper begins at the intersection where the NAFTA's Chapter 11 and the Takings Clause of the 5th Amendment of the U.S. Constitution meet. Its purpose is to examine the manner in which Chapter 11 authorized tribunals answer the question of how far is too far when reviewing disputed governmental regulation that may rise to the level of an expropriation and therefore compensable under Chapter 11's investor-protection provisions. This topic invites students of international trade agreements to direct their attention toward U.S. regulatory takings jurisprudence, asking themselves how the U.S. experience may serve as a guide for the challenges that future Chapter 11 tribunals confront as they expound on the meaning of what constitutes an indirect expropriation? The question of how far is too far is, after all, one that still leads to vigorous debate on the bench of the United States Supreme Court nearly 30 years after Penn Central and 80 years since Justice Holmes first framed the debate in Mahon. U.S. Supreme Court precedent shows that sketching clear, distinguishable limits to how far government may go in taking private property through various regulations is not only difficult, but frequently results in a confused and often contradictory body of law.
Supporters and critics of the NAFTA's Chapter 11 investor-protection provisions claim that they are at once a boon to individual property rights or, alternatively, an assault on democracy and the right of a sovereign country to enact regulations through lawful and democratic means. In weighing the merits of their respective arguments, I conclude that the current confused and contradictory state of U.S. regulatory takings jurisprudence is one that is likely to inform future Chapter 11 tribunal decisions. If this is indeed the case - that confused reasoning and contradictory rulings become the norm over time - then the NAFTA's investor protection provisions may well come to frustrate the hopes and fears of supporters and critics alike.