Discretionary acts and legitimate expectation: concepts central to a new approach

Two principal concepts have come to dominate the legal approach to the review of administrative acts by the judiciary. A long-standing tradition has established the discretionary nature of acts of the administration, which generally meant that such acts were not subject to judicial review. However, this very concept was qualified in a number of ways, particularly when some form of abuse of power or procedural irregularity tainted the act. The second and more recent concept has been that of legitimate expectation, dealing in part with procedural matters but also with substantive expectations. Both concepts, while originating in domestic decisions, have come to an important degree of global application, mainly by means of the work of international administrative tribunals and in some specialized matters by tribunals established under the ICSID Convention. This contribution will examine the main evolution of these jurisprudential developments and how they offer new perspectives on the approaches taken by domestic and international tribunals in handling the issue of individual rights in the context of the administrative acts of the state.

Regulatory power and its limits

In order to better understand the issues underlying this evolution, it is necessary first to identify which are the main legal interests that need to be taken into account and protected to the extent appropriate by the law.

The first such interest is the right of the state to adopt regulatory measures in implementation of legislation and other expressions of sovereignty.

In the early twentieth century, several remarkable treaties introduced the then novel concept of the direct access of individuals to some international courts and tribunals. This was at the time considered as an exception to the general rule of state exclusivity in international dispute settlement. However, when exception after exception is introduced it is at some point reasonable to ask whether it has not become itself the general rule. Obviously, the answer to this question is not yet positive, but the experience of the twentieth century has clearly established a direction, and it may well be that the evolution will be completed in the present century.

First steps

The first step was to allow an individual to appeal a national decision before an international tribunal. This amounted to a gigantic conceptual innovation in international law, even though restricted to a very specific ambit. This first step was that of the Hague Convention XII of 1907 establishing the International Prize Court, under the terms of which individuals could bring an appeal against the decisions of national prize courts affecting their rights and bring other actions. The effort failed, however, not only because the Convention was never ratified but also for the reason that the state could forbid its nationals from instituting proceedings, or could do so in lieu of the individual, which showed that the state still prevailed in the claim process.

The basic tenet underlying the discussion in the prior chapters is that as international society moves towards centralization, at the same time it includes increasingly decentralized activities and a multiplicity of actors and subjects. Therefore, the dispute resolution system devised by such society must make available both centralized and decentralized mechanisms for attending to the social needs of this evolving structure.

As has been indicated, this dual centralized-decentralized track might appear contradictory but this is only at first sight. All societies, particularly modern ones, have developed both a central function, mostly related to the conduct of governments, and a decentralized structure, where citizens might pursue their activities with as little interference as possible from the government or the state. In fact, the most important aspect of current social evolution is how to overcome the all-encompassing and intruding role of governments that flows from the past traditions of autocratic or authoritarian rule. To the extent that this is achieved a command-free society emerges, allowing for individuals to develop their own interests and initiative, subject only to common rules of social conduct. It is in this framework that democracy has flourished as a paradigm of contemporary social arrangements.

In essence, international society is not different from modern social structures as it ultimately is concerned with providing its subjects with a better and more effective form of government. The subjects, of course, include a more varied spectrum of entities, including states and governments themselves, international organizations, individuals and corporations.

Emerging trends in a global society

It has been pointed out above that the current process of economic globalization is having a potentially decisive impact on the structure of international society and the evolving role of international law. A particular expression of this development is the prominent role assumed by the individual in international dispute settlement related to such globalization. This role has already been well established in the context of investment disputes and is beginning to permeate the arrangements for dispute settlement in international trade, economic integration and other specialized forms of jurisdiction, the most relevant of which will be examined in this chapter.

A highly influential factor in this process is the role of market economies in the context of globalization, which constitutes a common thread underlying most of the new dispute settlement arrangements. As Shihata has explained with regard to national dispute settlement arrangements:

An inherent right to bring claims and seek remedies under international law

Just as the developments in international society relating to decentralization suggest the need for a centralized court to ensure the constitutional unity of such society, so too the process of globalization requires that participants in the system have adequate access to international dispute settlement. The significant participation of individuals and corporations in the global society creates a need for them to have access to dispute settlement, which thus far has been only a limited feature of the inter-state system.

The view that only states are subjects of international law is no longer sustainable either in theory or practice. The opposite view, that individuals are the sole subjects of international law, while perhaps more attractive as a matter of legal theory, has not found support in an international society where states and international organizations participate as entities endowed with international personality. It is no longer disputed that individuals have international personality and may be direct beneficiaries of rights, as well as have duties, under international law. But there is still a major unsettled question in respect of their capacity to exercise these rights and to be held responsible for their duties in the international legal system.

As has been pointed out, “[l]egal personality is an acknowledgement that an entity is capable of exercising certain rights and being subject to certain duties on its own account under a particular system of law.”

I have been greatly honored by the invitation of Sir Elihu Lauterpacht and the Lauterpacht Research Centre for International Law at the University of Cambridge to deliver the Sir Hersch Lauterpacht Memorial Lectures for 2001. Because these are the first Lauterpacht Memorial Lectures at the beginning of a new century, it is appropriate to focus on a subject that is likely to endure for many years and to which Sir Hersch Lauterpacht greatly contributed in his own time.

The new arrangements for dispute settlement under international law in an evolving international society pose a number of key questions. First, it must be asked what are the likely characteristics of international society in the foreseeable future and what will be their impact upon the international legal order. The evolution that took place in this respect during the twentieth century offers a number of discernible trends that might serve to identify the basic features of the international society and of international law.

The second major question arises from the fact that international relations in an evolving society, one that is still developing its governing structure and rules, necessarily result in a whole set of new issues associated with the different types of disputes that need to be attended to in the changing legal environment. This in turn raises the question of the most adequate dispute settlement arrangements for handling the new legal, moral and political concerns of the international community.

The previous chapters have shown that international society is moving towards a more centralized system of public justice, with more emphasis on what can properly be described as “constitutional” issues. At the same time, a degree of decentralization may be noted: this takes the form of direct access of individuals to international courts and tribunals, and their participation in other procedures, most notably in specialized jurisdictions. At first sight, this coexsitence of centralization and decentralization may appear as a fundamental contradiction that could result in adverse prospects for dispute settlement. It is suggested that this is not the case.

Indeed, both trends are gradually developing or are likely to develop links and interrelations that could result in a more structured and integrated system of international dispute settlement. Such a development would be an important step forward: both public and private mechanisms could be combined, taking into account both states and individuals. An example is the World Trade Organization, where an integrated dispute settlement system has been put in place and where gradually the role of the individual is being recognized.

Combining dispute settlement methods in an integrated system

A salient feature of the WTO Dispute Settlement Understanding (DSU) is that it has been structured as an integrated system. Not only is this so because it covers disputes under the many instruments that compose the legal framework of the World Trade Organization but also because it provides for various methods of dispute settlement, all of the above under the central administration of the Dispute Settlement Body.

The public system of international adjudication performs an essential function in the settlement of disputes, both in inter-state relations and in a number of situations that involve individuals and other private parties. However, as has been shown in the preceding chapters, there is a constant need to facilitate dispute settlement in a broader context, particularly in so far as disputes increasingly involve private interests in a global market, regardless of whether states or other private parties are involved. This has led to the development of an alternative dispute resolution system for intermational disputes. This system is already one of the central features of international society and will no doubt be further developed in the years ahead. This chapter will examine some of the recent improvements in this field, explore some relevant domestic experiences and their possible influence on international developments, and present some proposals on how these developments might evolve into a structured system interconnected with public courts and tribunals.

Enhancement of an international alternative dispute resolution system

Alternative dispute resolution has been described in a domestic context as a halfway house between the certainty of the adversarial system and the flexibility of private negotiation. But it does not exclude adjudication in its entirety. In fact, adjudication as a result of arbitration is very much a part of the developing alternative dispute resolution system, as are decisions of a number of tribunals established for different specialized purposes. Only exceptionally has arbitration been excluded from alternative dispute settlement arrangements.