The Private Law Dimension of the International Economic Governance of Networks: From Treaties to Codes
In Handbook on International Economic Governance and Market Regulation edited by Jean-Michel Glachant, Eric Brousseau, Jérôme Sgard, Oxford University Press (2018 Forthcoming)
Posted: 11 Oct 2017
Date Written: October 1, 2017
The intertwined relationship between law and the dynamic transformation of network industries in the fields of energy (electricity, gas, oil), communication (telephone, internet) and transportation (railway, aviation) is commonly observed from two different perspectives and modulations. One is horizontal and does not allow for pluralism in law; the other is vertical and pluralism is at its core. Horizontal modulations describe how liberalization and privatization of previously state-owned firms and regulated monopolies come with the process of re-regulation rather than deregulation. The shift from state-controlled coordination to commercial economic sectors runs in parallel with re-regulation to assure open or non-discriminatory access to natural monopolies, thereon networks. Meanwhile, vertical modulations show that economic governance of network industries is no longer restricted to the application of national laws within territorially-based jurisdictions. If non-discriminatory access to networks is essential to access markets, the cross-border trade of utilities invokes rules of transnational and international law to assure the free movement of essential goods and services. The impact of supranational legal systems into network industries is notorious in the field of EU law and ever more so in the rules of WTO and other trade agreements. Legal pluralism is at the heart of international economic governance, encompassing even these traditionally state-operated and state-regulated industries.
Yet, normative and descriptive propositions about the economic governance of network industries tend to neglect the impact of supranational legal systems into matters of private law. This chapter is meant to remedy the private law deficit in vertical modulations. Liberalization, privatization and re-regulation of network industries bring private law back to the economic governance of network industries. There are two primary reasons why the private law dimension of the economic governance of networks tends to be neglected in vertical modulations. First, theories of regulation do not perceive rules through categories of public and private law. When they do through law and economics, economic efficiency serves as justification, which is highly controversial in legal scholarship. Second, studies on transnational and international law dealing with barriers to trade are caught in debates over tensions between market freedom and the legitimacy of state regulation that narrows or limits trade. Neither horizontal nor vertical modulations pay much attention to the importance of private law in the creation of transnational markets for network utilities.
To remedy the private law deficit, the chapter is broken down into three steps. The first step reassesses theories of regulation through the concepts of public and private law. It enlightens the private law deficit in theories of regulation so as to advance the discussion towards vertical modulations. The second step enters the realm of international economic governance by investigating how conflicts between supranational rules on market freedom and national private law lead to the rise of supranational private law. EU law is the most advanced epitome of transnational law, while EU energy law is remarkable for enacting a robust code of sector-related private law. The third step shifts the focus to trade law and how free trade agreements (GATT/GATS) confront rules of private law.
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