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Glinavos on Constitutionalization of Pro-Market Policies

By Lawrence Solum

Ioannis Glinavos (Kingston University) has posted Pro-Market Reform Sustainability and the Tool of 'Constitutionalization': Economic Rights as Fundamental Rights? on SSRN. Here is the abstract:

This paper explores the potential of the concept of 'constitutionalisation' of pro market policies to explain the contemporary nature of the state market relationship. The analysis in this paper shows that the contemporary legal framework offers opportunities to investors to challenge and control state action on the 'micro level' via what has been described as a 'regulatory freeze'. This means that it is not so much that courts and tribunals have adopted significantly expanded definitions of expropriation in order to fundamentally restrict state regulatory discretion. On the contrary, a regulatory freeze is the consequence of states' own reluctance to legislate/regulate in areas where challenges might be brought. The paper goes on to argue that the legal position is supplemented by an enforcement arm distinct from legal mechanisms. The market exercises 'macro level' control over state discretion through its ability to penalise states that challenge or seek to challenge the current, predominately pro market incarnation of the state market relationship. The paper begins by an evaluation of the role of private property rights in modern capitalism which shows the extent to which modern interpretations of market expectations are anchored on the protection of private property. The paper then proceeds with a comparative study examining definitions of expropriation internationally, aiming to define the outer limits of curbs on state discretion. This discussion inevitably addresses the work of private dispute resolution mechanisms (ICSID, Iran-US Claims Tribunal) and institutional mechanisms for dispute resolution contained in NAFTA, the EU and the ECHR. Finally, the paper reflects on the Greek sovereign debt crisis of 2010, showing the potential of international markets to influence policy directions consistent with global capital market expectations, creating an almost constitutional global system of restrictions on government discretion consistent with a liberal version of the state-market relationship. The paper concludes by suggesting that efforts to cement a liberal version of the state-market relationship, using national and supranational legal curbs on government discretion are politically dangerous and developmentally short sighted, especially when the enforcement mechanisms take extra legal paths.

Full post as published by Legal Theory Blog on June 12, 2010 (boomark / email).