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

41 Pages Posted: 19 Jun 2008 Last revised: 23 Dec 2013

See all articles by Ernst-Ulrich Petersmann

Ernst-Ulrich Petersmann

European University Institute - Department of Law (LAW)

Date Written: June 17, 2008


Under GATT 1947, intergovernmental dispute settlement panels perceived themselves as political agents of governments whose discretionary powers required judicial deference. WTO dispute settlement panels and the Appellate Body interpret their judicial mandates rather in constitutional terms limiting the trade policy discretion of governments. This paper argues that the progressive "constitutionalization" of international economic law for the benefit of citizen rights requires international courts and investor-state arbitral tribunals to review whether their task of settling international disputes "in conformity with principles of justice and international law", as explicitly mandated by the customary methods of international treaty interpretation, calls for "constitutional methods" of treaty interpretation. 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 European treaties as "constitutional instruments" protecting fundamental freedoms and social rights of European producers, investors, traders and consumers. This "judicial constitutionalization" of European economic law by European courts was democratically accepted by citizens, national courts, parliaments and governments because the judicial "European public reason" protected individual rights and European "public goods" more effectively than the "Westphalian reasoning" of self-interested governments. The "Solange method" of multilevel cooperation among European courts "as long as" constitutional rights are adequately protected reflects an "overlapping constitutional consensus" on the need for "constitutional justice" in European law protecting cooperation among free citizens. The power-oriented rationality of governments interested in limiting their judicial accountability is increasingly challenged also in other, citizen-oriented areas of international law, such as international economic and environmental law, human rights law, international criminal law and sanctions against alleged terrorists. The "judicialization" and "constitutionalization" of international law resulting from judicial protection and "balancing" of constitutional rights confirms J.Rawls insight that, "in a constitutional regime with judicial review, public reason is the reason of its supreme court" and is of constitutional importance for maintaining an "overlapping, constitutional consensus" among free citizens with conflicting moral, religious and philosophical doctrines.

Keywords: Intergovernmental Dispute, WTO, Dispute Settlement Panel, Constitutional Instrument, Constitutional, Solange Method, GATT, Multilevel Cooperation, Westphalian Reasoning, Judicial Accountability, Judicialization

JEL Classification: F02, F10, F13, F14, F15

Suggested Citation

Petersmann, Ernst-Ulrich, Judging Judges: From 'Principal-Agent Theory' to 'Constitutional Justice' in Multilevel 'Judicial Governance' of Economic Cooperation Among Citizens (June 17, 2008). Society of International Economic Law (SIEL) Inaugural Conference 2008 Paper, Available at SSRN: https://ssrn.com/abstract=1147060 or http://dx.doi.org/10.2139/ssrn.1147060

Ernst-Ulrich Petersmann (Contact Author)

European University Institute - Department of Law (LAW) ( email )

Via Bolognese 156 (Villa Salviati)
50-139 Firenze

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