Global Adversarial Legalism: Global Private Governance of FDI as a Species of Global Administrative Law

This paper argues that the fractured nature of the governance of foreign direct investment ('FDI') has given rise to a two-faceted 'global adversarial legalism.' One facet of this global adversarial legalism, already much debated, is the concern that investment arbitration tribunals exercise an overly broad and perhaps illegitimate form of 'global administrative review' of State measures. This paper focuses on the other side of this global adversarial legalism that has not received sufficient scholarly attention: the advent of FDI-impacted individuals and communities alleging violations of voluntary transnational norms espoused by corporate actors involved in regimes of global private regulation. The primary example of this more recent phenomenon is the emergence of the Equator Principles, a regime of private global governance created by investment banks. The EPs standardize the banks’ environmental and social risk management of their investments in large infrastructure projects developed in host states whose weak regulatory capacities fail to prevent or mitigate project impacts. Just as arbitral clauses in public contracts can internationalize a dispute for resolution by a transnational arbitral tribunal, the EPs’ application to a project loan expands the substantive criteria applicable to project review and creates additional layers of review of corporate compliance with national and international norms. This interaction also creates a complicated dynamic with regard to State sovereignty and decision making related to national development agendas. By creating a global standard, the private regime empowers civil society actors and others not party to the underlying contracts to intervene in national debates and inter-governmental branch dialogue concerning project review and approval, thereby instantiating a quasi-administrative review that has powerful effects in the court of public opinion, even though - unlike traditional treaty-based transnational legal processes - the States have not themselves consented either to the substantive norms nor to the ‘jurisdiction’ of these processes. The paper also addresses the challenging normative implications of such adversarial legalism: how the protection of marginalized communities and ecosystems can impose broader societal transaction costs on national economic development.