Forum Shopping Before International Tribunals: (Real) Concerns, (Im)Possible Solutions

42 Pages Posted: 28 Feb 2011

See all articles by Joost Pauwelyn

Joost Pauwelyn

Graduate Institute of International and Development Studies (IHEID); Georgetown University Law Centre

Luiz Eduardo Salles

affiliation not provided to SSRN

Date Written: 2009

Abstract

This article pursues Professor Yasuhei Taniguchi’s inclination for procedural questions and applies it to the central problem in one of Taniguchi’s most celebrated rulings, Mexico — Soft Drinks1 (a case he chaired on appeal), namely, forum shopping before international tribunals. The Soft Drinks dispute between Mexico and the United States originated because of contested sugar quotas allocated to Mexico under the North American Free Trade Agreement2 (NAFTA).3 When Mexico attempted to enforce those alleged quota rights under NAFTA, the procedure was stranded in the panel selection stage where, according to Mexico, the United States simply refused to appoint panelists in violation of NAFTA. To retaliate against this state of affairs, and instead of gaining larger quota shares on the U.S. sugar market, Mexico imposed a discriminatory tax on imports of U.S. soft drinks.5 The United States then decided to challenge the Mexican tax, not under NAFTA, but at the World Trade Organization (WTO).

In the WTO proceedings, Mexico insisted that the larger U.S.- Mexico “sugar war” be decided under NAFTA, where Mexico had already requested a panel.7 The United States, in contrast, insisted that it had the right to a WTO ruling on the consistency of the Mexican tax.8 Both the panel and the Appellate Body sided with the United States and found that the tax violated the General Agreement on Tariffs and Trade9 (GATT). Mexico’s claim before NAFTA remains undecided.

The goal of this article is not to critically examine the Soft Drinks ruling. Rather, the article examines the nature and potential concerns of the relatively new phenomenon of forum shopping among international tribunals. Further, it asks the question whether domestic law principles such as res judicata, lis pendens, and forum non conveniens could be used to alleviate such concerns. The article finds that, to the extent these principles apply before international tribunals, they fail to address the problem. Instead, states should regulate forum shopping explicitly in their treaty regimes, and international tribunals should defer to such explicit treaty clauses. The article identifies the distinction between questions of a tribunal’s jurisdiction and questions of admissibility of claims as key to the implementation of jurisdictional coordination — be it through general principles of law or treaty rules on forum selection. This distinction is generally applicable before international tribunals but has been overlooked in the WTO context. The article also argues that to deal with the rise of forum shopping in international adjudication, more thought should be given to the question of whether tribunals have or should have some margin of judicial discretion not to exercise jurisdiction in cases in which forum shopping is at stake. To put these proposals in dynamic context, the article uses four variables, or scales, that will impact the assessment of both concerns and solutions for forum shopping among international tribunals, namely (1) a regime vs. system approach to international tribunals, (2) a partyfocus vs. legality-focus, (3) consensual vs. compulsory jurisdiction, and (4) specific vs. general jurisdiction.

The article proceeds in the following manner. Part I assesses the main concerns with forum shopping in domestic law, compares these concerns to international law, and identifies a number of variables that condition the emergence of this phenomenon internationally. Part II discusses where one could look for solutions to these concerns, briefly surveys domestic law solutions, and suggests that to avoid the risk of inconsistent rulings states should explicitly regulate forum selection when creating new tribunals or new treaties. In Part III, we explain the procedural technique through which general principles of law and treaty clauses on forum choice can play a role in jurisdictional coordination between WTO adjudicative bodies and other international tribunals by introducing the distinction between jurisdiction and admissibility. Part IV discusses why “general principles” such as res judicata, lis pendens, and forum non conveniens do not appropriately address the problem of forum shopping at the international level. This finding reinforces the argument that states should address the problem explicitly when negotiating their dispute settlement obligations. Part V argues that, given the move along the four scales identified earlier, some room for judicial discretion is needed to provide the necessary flexibility for jurisdictional coordination and advocates the emergence of the notion of le juge naturel or the “natural forum” as a possible solution.

Keywords: International Law, International Trade Law, International Tribunals

Suggested Citation

Pauwelyn, Joost and Salles, Luiz Eduardo, Forum Shopping Before International Tribunals: (Real) Concerns, (Im)Possible Solutions (2009). Cornell International Law Journal, Vol. 42, 2009, Available at SSRN: https://ssrn.com/abstract=1768742

Joost Pauwelyn (Contact Author)

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, Geneva CH-1211
Switzerland

HOME PAGE: http://graduateinstitute.ch

Georgetown University Law Centre ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Luiz Eduardo Salles

affiliation not provided to SSRN ( email )

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