A Tailor-Made (Legal) Suit? The Actual Scope, Power, and Functioning of nafta Chapter 11’s Rules and Institutions for the Settlement of Cross-Border Disputes

Abstract

Numerous scholars argue that the rules, mechanisms, and bodies established under nafta’s Chapter 11 for the settlement of foreign direct investment disputes have undermined the policy-making capabilities of governments in the U.S., Mexico, and Canada for promoting public welfare in their countries. This article argues that Chapter 11 has instead contributed to reaffirming governments’ power to enact and uphold social-oriented domestic laws. It demonstrates that Chapter 11’s dispute settlement mechanisms were created and operate according to the interests of the national governments in facilitating and increasing the flows of trade and capital investment between countries without compromising their sovereignty and policy-making powers.