Authority, Legitimacy, and Fragmentation in the (Envisaged) Dispute Settlement Disciplines in Mega-Regionals

This chapter analyzes the inter-state and investor-state dispute settlement disciplines included in mega-regionals, with a specific focus on the already finalized Comprehensive Economic and Trade Agreement and the Trans-Pacific Partnership. It argues that dispute settlement disciplines increasingly assume a pivotal role in trade and investment negotiations and raise fundamental questions about the authority and legitimacy of international dispute resolution and concerns of fragmentation. While preferences of states participating in mega-regionals coincide in agreeing on inter-state arbitration as a compliance mechanism that minimizes both the authority of dispute resolvers and negative effects of fragmentation in respect of the World Trade Organization, starker differences arise on investor-state dispute settlement. Whereas the European Union (EU) pushes for the creation of permanent judicial bodies, the United States seemingly prefer a reformed version of investor-state arbitration. The underlying clash of ideologies shapes what may turn into a constitutional moment for international economic law more generally, as the EU and US positions directly clash in the negotiations of the Transatlantic Trade and Investment Partnership