Reviving the Treaty of Friendship: Enforcing International Investment Law in U.S. Courts
John F. Coyle
University of North Carolina School of Law
Jason W. Yackee
University of Wisconsin Law School
May 5, 2016
Arizona State Law Journal, Forthcoming
UNC Legal Studies Research Paper No. 2776279
Univ. of Wisconsin Legal Studies Research Paper No. 1382
In an earlier era, treaties of Friendship, Commerce, and Navigation (FCNs) were the primary international law mechanism through which the U.S. government sought to promote and protect foreign investment. Conventional wisdom holds that FCNs are of only limited historical interest, having been replaced by more ambitious bilateral investment treaties (BITs).
In this Article we provide a partial challenge to the conventional wisdom. Our aim is to revive interest in the FCNs by arguing that these treaties, most of which remain in force, provide foreign investors with domestically enforceable rights in the courts of the United States. Many FCNs contain promises of favorable substantive treatment that are quite similar, if not identical, to the rights commonly extended to investors through BITs and investment chapters in free trade agreements such as NAFTA. We argue that because FCNs are self-executing and give rise to a private right of action, foreign nationals and companies can invoke these treaties against U.S. governmental entities in domestic litigation. The treaties thus provide investors with the ability to access substantive international investment law through domestic litigation rather than international arbitration.
This ability is of significant practical and theoretical importance. First, it could lead foreign companies to radically rethink their approach to asserting indirect or regulatory takings claims against governmental entities in the United States. Second, it suggests that these entities’ risk exposure to international investment law is greater than commonly recognized. Third, it suggests a mechanism through which U.S. courts may play a meaningful role in interpreting, articulating and developing international investment law. Fourth, and finally, it suggests that foreign investors may in some cases enjoy domestically enforceable rights that are superior to those accorded to citizens under the U.S. Constitution.
Number of Pages in PDF File: 54
Keywords: bilateral investment treaty; treaty of friendship, commerce, and navigation; expropriation; full protection and security; fair and equitable treatment; international law in domestic courts; self-execution; private right of action
Date posted: May 6, 2016 ; Last revised: February 18, 2017