Supreme Court Has an Eminem Moment
Will the real Slim Shady please stand up? The justices of the Supreme Court might not care much for Marshall Mathers -- assuming they know who he is -- but they share his penchant for studied self-contradiction. Today they decided two cases on the interpretation of treaties based on almost perfectly opposed principles. In one case, involving child kidnapping, the court said the global treaty should not be interpreted as though it were a U.S. law. In the other, which concerned arbitration, the court said that the treaty should be read just as though it were a domestic contract. Huh?
The child abduction case is the more sensational of the two. The Hague Convention on Civil Aspects of Child Abduction (one wonders how many bureaucrats it took to come up with that name) says that if one parent without the consent of the other takes their child to another country, and the child is found within a year, the child must be immediately and automatically returned home. Otherwise, a court must consider the best interests of the child, who may have developed ties in the new country.
In Lozano v. Montoya Alvarez, the court had to consider the situation of a mother who left the U.K. for New York with her daughter in tow, and was not discovered by the father for 16 months. (The mother alleges abuse, which the father denies, and the court didn't address the issue.) Under the language of the statute, a year had passed, so no automatic return would be ordered. But the father argued for a principle called "equitable tolling," according to which the one-year period should not be counted from when the mother fled the U.K., but from when the father was able to find the child.
Equitable tolling is a familiar enough doctrine under U.S. law: Judges stop the running of some statute of limitations in accordance with some combination of justice and common sense, even if the law doesn't mention the circumstance. Victims of child abuse, for example, have sometimes won equitable tolling when their suits would otherwise be time-barred, on the theory that the time limit should run from when the abuse was discovered, not when it actually occurred. The father in the Lozano case wanted the same principle applied to his search.
The Supreme Court refused, and for the very specific reason that the treaty was not a federal statute. The court said it would be "particularly inappropriate to deploy this back­ground principle of American law automatically when interpreting a treaty." It concluded that the signatories to the treaty had not expected the possibility of equitable tolling, and the father lost his suit.
But before you think logic won the day, turn the less emotionally compelling but very economically important question of bilateral investment treaties, raised in BG Group v. Republic of Argentina. The treaty in question, between the U.K. and Argentina, provided that in case of a dispute, the parties could go to binding arbitration in a place of their choosing -- provided they first submitted their dispute to a court in the country where the investment was made.
BG Group, a British oil and gas company, bought a majority stake in an Argentinian energy firm that held an exclusive 35-year license to distribute gas in Buenos Aires, subject to a reasonable dollar-denominated return. After the 2001-02 economic crisis, the Argentine government re-denominated the return in pesos at an artificially low exchange rate. BG went to arbitration in the U.S. -- without first filing suit in Argentina as the treaty on its face required. The American arbitrator decided for BG, reasoning that Argentina's behavior justified BG in skipping the step of going to court in Argentina, where it was sure to lose.
The U.S. Court of Appeals for the D.C. Circuit reversed the arbitrator's award, considering the issue afresh and deciding the treaty required going to court before arbitrating. Yesterday the Supreme Court reversed the circuit judges, and for a very specific reason: it interpreted the treaty as if it were "an ordinary contract between private parties." When an arbitrator interprets a contract, a courts ordinarily defers to the arbitrator's judgment instead of making its own decision from scratch. Deferring to the arbitrator's judgment that litigation was unnecessary meant that BG's victory was reinstated.
This despite the fact that the solicitor general filed a friend of the court brief in the case expressly urging that a treaty should not be interpreted like a domestic legal agreement. Countries have special interests, the government maintained, and litigation in its own courts might be a condition for consenting to the treaty in the first place. The court said it did not "accept the Solicitor General's view as applied to the treaty." Rather, it held, "[a]s a general matter, a treaty is a contract, though between nations." It concluded that when an arbitration award was made in United States, a court should "normally apply the presumptions supplied by American law."
What, if anything, explains the contradiction between the two decisions issued the same day, one insisting that treaties are special and the other insisting they are perfectly ordinary legal agreements? It's possible, of course, that the justices were sympathetic to the fleeing mother in the Lozano case and to the foreign investor in the BG case; but that would be pretty crude favoritism, and wouldn't explain the court's reasoning. It's also true that a creative lawyer could "resolve" the contradiction by claiming that in both cases, the court was just trying to figure out what the parties to the treaty wanted. But this would be dubious, since in the BG case the court relied on a domestic U.S. legal principle (deference to the arbitrator) that was completely irrelevant to a bilateral treaty between the U.K. and Argentina.
The best I can do is to tell you that, when it comes to interpreting treaties, the court really has almost no idea what it's doing. The judges are trained in U.S. law, not international law, so they tend to rely on the domestic principles they know best. When some principle seems especially distinctive to the Anglo-American tradition -- such as equitable tolling -- they realize they probably shouldn't apply it. The result is embarrassing contradiction. When it comes to international affairs, America can be like that.
(Noah Feldman, a law professor at Harvard University and the author of "Cool War: The Future of Global Competition," is a Bloomberg View columnist. Follow him on Twitter at @NoahRFeldman.)
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