Conceptualising TCL

Abstract

This chapter first shares additional thoughts on the purpose and legitimacy (Sect. 3.1) of our conceptualisation of TCL before presenting the organisational framework of TCL (Sect. 3.2) as well as the sources, structure, and application of its normative substance (Sect. 3.3).

This chapter first shares additional thoughts on the purpose and legitimacy (Sect. 3.1) of our conceptualisation of TCL before presenting the organisational framework of TCL (Sect. 3.2) as well as the sources, structure, and application of its normative substance (Sect. 3.3).

3.1 The Purpose of TCL

As we have discussed above, we are conceptualising TCL as the field of law governing commodity activities in order to gain a better understanding of the applicable framework and to ultimately assess its effectiveness. This approach may raise questions regarding the legitimacy of our undertaking: Is it necessary to conceptualise a new field of law?

A look in the literature reveals that conceptualising fields of law is a comparatively ‘free’ discipline, meaning that there is little to no dogmatic guidance on why or how it should be performed. In fact, some nineteenth century scholars have argued that the search for the ‘true scientific division of the legal field’ is tantamount to attempting to find the philosopher’s stone because just like this item steeped in legend—it does not exist.¹ Based on this observation, Mariner states that it ‘appears that the division of legal principles into fields of law remains a function of the purpose for which division is useful.’² Thus, within the literature one can discern roughly four different—strongly interlinked—purposes for conceptualisations of new fields of law, namely accessibility, coherence, effectiveness and political cause.

Sherwin sees the purpose of a classification scheme in its function to ‘provide a vocabulary and grammar that can make law more accessible and understandable to those who must use and apply it…’³ Mariner insofar highlights how frequent treatises were in nineteenth century US scholarship that arranged norms according to the subject matter they were applicable to e.g., the law of highways, of railways, and of telegraphs.⁴ The fact that repeatedly in the past scholars have sought to conceptualise fields of law in such manner may well be understood as an indication of the usefulness of even these, conceptually speaking, rather simple approaches. Even in instances where such taxonomy may lack any apparent doctrinal value, it may still render the rules, which apply to the respective subject matter clearer and more comprehensible. One of the aims of conceptualising TCL is to display the current legal framework of GCG, including its deficits and regulatory gaps.⁵ Thus, it aims to render the inter- and transnational norms regulating the commodity sector more accessible for academics, practitioners, government officials, and other stakeholders dealing with the regulation of commodity activities.

As Aagaard puts it, ‘[t]axonomy inevitably and inherently is a quest for coherence’.⁶ In respect to a legal field, he defines ‘coherence as the strength, simplicity, and predominance of the field’s patterns’.⁷ Ruger speaks of the ‘dramatic potential for explanation and illumination’, which coherence entails.⁸ Given the ‘unified, predictable and rational’ account of the law that it promises,⁹ it facilitates the study and application of the respective legal field,¹⁰ thus contributing also to the purpose of accessibility discussed above. Yet, Ruger also questions the ‘orthodox conception’ of coherence, which he defines as consisting of

(1) a reductionist focus on internal logic; (2) a focus on essential legal form; (3) an emphasis on linear historical development; and (4) a high level of institutional specification and centralization.¹¹

He emphasises that the dominant conception of coherence is itself the result of methodological choices that have been made by legal scholars in the past century. Therefore, he advocates for relativising the conventional account of coherence in favour of a more flexible understanding.¹² Moreover, the ‘quest for coherence’ may also cause disadvantages in view of the final taxonomy of the field. It can namely lead to oversimplification i.e., the creation of an ‘appearance of coherence’ where no coherence actually exists.¹³ Furthermore, given that incoherence illustrates a lack of consensus among lawmakers, the attempt to create coherence through ‘internal logic’ may only cause the law-making institutions to push the coherence to other areas of law.¹⁴ Finally, it may also discourage experimentation in law-making.¹⁵

The aim of coherence often corresponds to the purpose of effectiveness. According to Ruhl and Salzmann, the creation of a new field of law can ‘ensure effectiveness by reorienting laws and policies in a more productive structure.’¹⁶ Sherwin states that classifications can ‘make[] it easier for lawyers to argue effectively about the normative aspects of law, for judges to explain their decisions, and for actors to coordinate their activities in response to law.’¹⁷ In the event that specialised technical or deep knowledge arises, creating a new field of law, instead of ‘forc[ing] an existing field to morph itself to absorb the topic whole’, may further contribute to regulatory efficiency—and thus ultimately effectiveness.¹⁸ Our conceptualisation of TCL seeks to inspire subsequent international scholarship as well as regulatory endeavours, which aim to elaborate the existing regulatory framework. It therefore is intended to ultimately foster the effectiveness of the law regulating the commodity sector. This holds true in regard to all transnational, domestic or any other norms, which together form the overall legal framework of particularly transnational commodity activities. In this connection, the standards that TCL comprises could later be integrated in e.g. domestic legal orders. Instead of ‘forcing’ established fields of international law to ‘absorb the topic whole’, TCL adverts to alternative regulatory options. The organisational framework we provide may serve as a guide in logically arranging the norms of TCL, thus fostering its coherence and therefore further contributing to its effectiveness.

The call for redefining the canonically accepted fields of law in the interest of a greater degree of effectiveness, can also be witnessed in Meessen’s work. In his view, instead of maintaining the traditional arrangement of norms according to, first, the level of sources (international, supranational, transnational, domestic law), and second to their legal tradition (e.g. HR or environmental law), we should more strongly emphasise the factual social behaviour that these norms are governing in our classifications of the law.¹⁹ Meessen, referring to economic law, thus advocates for the conceptualisation of fields of law, which correspond to day-to-day issues in human interactions, such as franchise law or the law governing the closing times of businesses.²⁰ On an ‘intermediary level’, he proposes ‘globalized market law’, which ought to comprise trade liberalisation law, transnational capital and labour law, transnational investment and establishment law, as well as domestic competition, privatisation and deregulation laws.²¹ He concludes that for fields of law to be more relevant—and thus effective—they need to be designed with sufficient, for one, reference to the factual problem at hand and,²² for the other, closeness to reality.²³

With Meessen, the taxonomer deems the conceptualisation of this field of law around the specific factual context, policy trade-offs, interests and legal doctrine of commodity activities as a legal taxonomy, which meets these requirements. The factual governance challenges that arise in the commodity sector occur in connection with a distinguishable social behaviour—commodity activity. Whereas these challenges involve various subject matters that are being addressed by separate branches of international law, such as Human Rights, international environmental law, world trade law and international investment law, none of these branches exhibit sufficient closeness to the factual context, interests and policy trade-offs of the commodity sector. Moreover, they are lacking the necessary coherence and consistency to effectively address policy trade-offs. Whereas the established fields of international law may serve to adequately balance some of these trade-offs, they fail to do so with regard to others.²⁴ TCL is intended to fill this gap by emphasising the importance of introducing commodity-directed rules. Insofar, while the conceptualisation of TCL is primarily descriptive in nature in that it portrays direct as well as unintentional TCL,²⁵ the taxonomy presented here naturally also bears a prescriptive element.²⁶ As such, for the purposes of effectiveness, our conceptualisation of TCL will not be limited to a display of the current legal framework, but—again in the tradition of prescriptive legal taxonomies—provide suggestions for creating greater coherence of the law applicable to commodity activities.²⁷

Finally, the conceptualisation of a new field of law can ‘provide a forceful political statement’ regarding the importance of the respective area.²⁸ Ruhl and Salzmann highlight how several social movements were accompanied or eventually resulted in the emergence of new fields of law, such as environmental law or LGBTIQ law, a current example being the one of disaster law.²⁹ Likewise, Tannenbaum emphasises the activist origins of animal law.³⁰ Understood in this way, the creation of a new field of law is meant to pave the way towards greater academic, practical and political attention to the particular topic at hand. In academia, apart from the intensified scholarly analysis of the issue it is supposed to generate, the conceptualisation is particularly also meant to have an educational effect—through the integration of respective courses in law school curricula, future generations of lawyers shall be trained to think of the field as an important, legitimate area of practice.³¹

Again, political reasons for the conceptualisation of a field of law often cross-fertilise other purposes, such as accessibility, effectiveness and coherence. It may be true that to some degree, every definition of a legal field bears political motives. Whereas they may typically be less dominant with regard to fields, which exhibit conventional doctrinal coherence, such as torts or contract law, the emergence of other fields is more clearly lead by political motives.³² Yet, this does not imply that one can infer a lack of methodological legitimacy—or coherence—from a strong political motivation or vice versa. To the contrary, where the political will to regulate is particularly strong, it is more likely that lawmakers are going to establish a comprehensive, coherent legal framework.

Beyond the examples already mentioned above, many other legal fields have been established in the past roughly half century for more or less political reasons.³³ In the 1960s, international investment law was developed out of a set of norms dealing with the so-called ‘diplomatic protection’ of the properties of nationals living and/or exercising business activities abroad.³⁴ Initially due to efforts by mainly Western governments, a net of bilateral investment treaties was created, which in turn emerged to a proper field of international law. Other examples on a rather domestic level, yet with relevance globally, include the law of internet technology or cyberlaw,³⁵ which seeks to increase scholarly, political and overall attention to the effects of IT on the law and vice versa;³⁶ as well as consumer protection law, which, given systemic information and economic asymmetries between consumers and producer companies seeks to implement specific protection mechanisms in favour of the former.³⁷

A further example is the one of International Development Law (IDL).³⁸ The reasons for its creation were expressly ‘politically committed’. IDL is supposed to challenge classical international law in order ‘to work towards the reduction of inequalities and the realization of a new order.’³⁹ This new order would measure all norms and institutions of international law according to their contribution to the alleviation of poverty and underdevelopment.⁴⁰ As such, the ‘particular merit’ of IDL is said to relate to the introduction of ‘the economic factor and level of development into the legal analysis and evaluation of the relations between States.’⁴¹

As a consequence, IDL seeks to shift the focus away from a purely ‘formalistic’ analysis of the norms in place and towards a perception, which appreciates the power imbalances between states with more and those with less influence on the design of international norms:

The question of whether international law succeeds in creating a balance between the formal legal equality of all States and the de facto inequality of their relative power is fully addressed by international development law, which takes the equity factor into account while endeavouring to give content to an overall strategy of development.⁴²

The taxonomer does not seek to obscure that the overall purpose of our updated conceptualisation of TCL is, in the tradition of i.a. IDL, and in view of the pivotal challenge of GCG to establish a functional commodity sector,⁴³ also ‘politically committed’. TCL shall translate the rapidly intensifying efforts in national, supranational, and global governance to subject commodity activities to a more vigorous regulatory framework into concrete implications for international legal doctrine.⁴⁴ Moreover, it intends to inspire academics as well as future generations of lawyers to consider TCL as an important area of research and practice.⁴⁵

3.2 The Organisational Framework of Commodity Law

Now how do we move from identifying the purpose of our conceptualisation to actually organising the field of TCL? This relates to the question how fields of law emerge—and what our role, as taxonomers, is therein.

In the literature on the emergence of new fields of law, which notably largely stems from scholarship focusing on US and European domestic law, this process has been described as a ‘narration’. Accordingly, three actors—legislators, courts and academia—are predominantly shaping the narrative on whether or not an area of legal inquiry is to be qualified as a proper field of law. This ‘process of narration’ is said to consist of three elements:

• (a) The ‘articulation of distinctive principles and themes’,

• (b) The expression of the emerging field of law as ‘structurally coherent’, and

• (c) The understanding of the respective body of law as ‘special and distinctive’.⁴⁶

Mariner ascertains that ‘[l]egal fields arise and fade away, expand and contract according to the problems and possibilities of contemporary society and commerce.’⁴⁷ She observes that fields of law typically grow up ‘according to quite different principles of organization, principles that are neither mutually exclusive nor internally consistent.’⁴⁸ In the end, she contends that there is ‘no ultimate authority’ competent to define what constitutes a field of law and what does not. Consequently, she argues, ‘a field may be defined by its own practitioners for their purposes or tastes. The test of its validity lies in whether others accept it.’⁴⁹

One remark shall be added to these observations. The emergence of fields of law differs in its degree of coordination. At times a new field of law is deliberately being created through an act or a series of acts of law. This scenario describes the coordinated, planned approach of conscious lawmakers that have identified the particular need to regulate specific behaviour not merely through a (few) norm(s), but through an entire rule system consisting of a series of interconnected norms. In the international law context, such is typically the case when the international community is adopting a novel international agreement, or series of agreements. One example for such a rather deliberate, coordinated creation of a field of law is WTO law.⁵⁰

Another pathway for a field of law to emerge is a more gradual one. Under such a scenario, the three actors shaping the ‘narrative’ identified by Hervey interact in a disorganised, somewhat incidental manner. A court ruling may touch upon a not yet established ‘field x’, which in turn is being discussed in academic literature. Gradually, this trend may accrete and, in the end, elicit actions by national or supranational lawmakers. Despite still not fully conceptualised as such, more and more scholars and practitioners will reference the ‘field x’, eventually giving rise to the question, what exactly constitutes this legal field. What frequently follows are scholarly attempts to conceptualise the organisational framework of the respective field of law. It is this latter pathway, which can be observed (supra)nationally in the cases of e.g., environmental and (EU) health law. On the international level, one field, which emerged rather gradually is international investment law.⁵¹

Whenever we, as taxonomers, decide to create organisational frameworks of fields of law, we can choose between descriptive/observational approaches on the one hand and more normative approaches on the other.⁵² Descriptive approaches typically lead to conceptualisations of fields of law according to a specific subject matter they are addressing, such as the ‘law of highways, the law of railways, the law of telegraphs, and the law of building associations …’⁵³ or the famous ‘law of the horse’.⁵⁴ Many of those fields of law have evolved ‘as a matter of historical accident or practical need’.⁵⁵ They stand for a taxonomy that ‘does not attribute meaning to legal categories’.⁵⁶ Such classifications generally pursue the mere purpose of presenting the law in an orderly way, thus making it more comprehensible and as a consequence more accessible for legal practitioners and scholars alike.⁵⁷

While some of these classifications depict fields of law that have long been established in legal doctrine and education, such as tort law,⁵⁸ merely descriptive conceptualisations of legal areas have been repeatedly ridiculed for their lack of coherence and normative value. Easterbrook established the term of the ‘law of the horse’ problem, which stands paradigmatically for a conceptualisation of the law, which appears to be devoid of any usefulness.⁵⁹ In his opinion, ‘“Law and …” courses should be limited to subjects that could illuminate the entire law’, all other combinations are said to run the risk of ‘multidisciplinary dilettantism’ or the ‘cross-sterilization of ideas’.⁶⁰

More normative approaches to legal taxonomy pay greater attention to developing a proper methodology for the definition of a field of law ‘beyond historical accident or subject matter’.⁶¹ Under the functional approach, ‘legal rules are classified according to the roles they perform within the legal system or society at large’⁶² e.g., according to their functions as ‘responses to wrongs’ or as interpretation rules regarding private contracts.⁶³ The formalist approach emphasises the ‘logical relations among categories of law’ and is concerned rather with internal logic than social functions as a classification criterion.⁶⁴ However, as Sherwin highlights, no taxonomy can be purely formal in that it needs to rely on previously established categories of the law, which typically have evolved based on doctrinal traditions. Based on these categories the formal taxonomer aims to elaborate the most ‘logically coherent classificatory scheme’.⁶⁵

Despite these rough categorisations of the approaches to legal taxonomy, the literature on corresponding methodology until not long ago has been said to be ‘notable for the absence of an epistemology or meta theory for positively defining the essential characteristics of a “field of law”.’⁶⁶ As a consequence, nearly every somewhat logical arrangement of norms could potentially claim to depict a conceptualisation of a field of law. However, in the past decade, some scholars have attempted to fill this methodological gap by providing abstract reflections on the key elements of organisational frameworks of fields of law, particularly Aagaard.⁶⁷ In his 2010 article, he elaborates a comprehensive theoretical framework for the conceptualisation of fields of law.⁶⁸ Subsequently, the central elements of his approach will be outlined in brief. They have substantially guided the conceptualisation of TCL in this book.⁶⁹

3.2.1 Definition of Commodity Law

As a first step in creating the organisational framework of a field of law, one needs to ‘start with some understanding of what [one thinks] falls within the category of situations that comprise that field.’⁷⁰ Sherwin expounds that the first task of the taxonomer is to find a definition, which is ‘sufficiently tailored and determinate to provide a comprehensible description of the instances that fall within [the organisational framework].’⁷¹ Aagaard points out that the challenge is to define the field in a way that, for one, yields a coherent concept and, for the other, employs concepts, which assist us in analysing and understanding the field. As a consequence, the taxonomer may have to revisit her initial definition once she has gained a more thorough understanding of the organisational framework of the field.⁷²

Legal fields are frequently being defined around a substantive topic or specific subject matter.⁷³ As stated above, also a taxonomy, which merely distinguishes itself from other arrangements of the law through the factual context to which it applies may serve material purposes, such as rendering the law more accessible or increasing the scholarly and political attention to an important issue.⁷⁴ In order to conceptualise a field of law, which, in addition, displays coherence, one needs to identify features that are legally relevant and at the same time exhibit sufficient commonality as well as distinctiveness in comparison to other fields of law.⁷⁵

Our conceptualisation of TCL will naturally first require a definition of the term commodity. Whereas there may typically be many ways to define such notion, our taxonomy insofar disposes of somewhat favourable starting conditions in that there already exists a definition of the term in the context of international law.⁷⁶ The decision to employ this historical notion of ‘commodity’, in essence contained in Article 56(1) HC, ensures doctrinal consistency with already existing norms and treatises addressing transnational commodity activities. Insofar, our conceptualisation of TCL is rather an updated outline of the transnational legal framework addressing GCG than the creation of an entirely novel field of law. It draws on the earlier undertakings aimed at an international regulation of commodity activities and seeks to carve out in more detail the specific requirements and circumstances of such an endeavour.⁷⁷ Put differently, and borrowing Aagaard’s expression, we are ‘interested in how the legal classification of [commodity] law illuminates the functioning of the’ remainder of inter- and transnational law that commodity activities are already subjected to.⁷⁸

This leads us to the task of defining commodity law. A useful definition needs to master the challenge of balancing over-inclusiveness and under-inclusiveness.⁷⁹ As the definition of the term commodity indicates, commodity law is supposed to cover a distinct, primarily economic activity, which relates to the depletion of natural resources for secondary purposes. Thus, it does not mean to comprise all laws, which are relevant with regard to commodities in any way. Rather, it purports to focus on this precise human activity, which will be spelled out in greater detail in the subsequent sections. For now, and for the purpose of the elaboration of its organisational framework, commodity law shall be defined as

all law that regulates commodity-related human activity and its impacts.

This definition is evidently still quite broad. It will be narrowed down further in the following section, which introduces the core conceptual characteristics of commodity law.

3.2.2 Core Conceptual Characteristics of Commodity Law

Aagaard conceptualises ‘a legal field as the interaction among four underlying constitutive dimensions of the field: factual context, policy trade-offs, values and interests, and legal doctrine’:⁸⁰

Every area of the law operates within a factual context, a set of factual characteristics shared in common by situations that arise within the field. These factual characteristics create certain policy trade-offs, which dictate the range of options available to lawmaking institutions such as courts, legislatures, executive branch agencies, and the public. The lawmaking institutions apply values and interests to choose among the available options dictated by the trade-offs. Legal doctrine – the law of the field – arises as the product of the lawmaking institutions’ choices among available options – that is, the application of values and interests to policy trade-offs.⁸¹

Therefore, he claims that factual context should only be relevant for taxonomy where it either creates policy trade-offs that matter to decision-making institutions or influences the values and interests these institutions are basing their decisions on. Hence, when the taxonomer conceptualizes a field of law, she should draw on factual characteristics only where they give rise to policy trade-offs that, by restricting the available legal options, have an effect on legal doctrine.⁸²

Legal scholarship exhibits examples for conceptualisations of fields of law based on each of the four dimensions.⁸³ However, only an imaginary ‘perfect’ model of a field of law would display cohesive patterns throughout all dimensions—thus, conceptualisations of fields of law can be based on only one or the combination of two or more dimensions.⁸⁴

Moreover, Aagaard defines two minimum requirements for conceptualisations of a field of law to depict a useful taxonomy. The first element is commonality, which refers to certain individual or aggregated features being common to the scenarios arising in the legal area. These commonalities can arise in any of the four constitutive dimensions of the field of law. One important requirement consists of the commonalities being legally relevant i.e., ‘they must make a difference in how the law applies. […] Otherwise, an area of law appears to be merely an amorphous amalgamation of portions of other, existing fields.’⁸⁵ Some proponents in the literature have questioned, whether a legal field must necessarily exhibit ‘strict commonality’.⁸⁶ Instead, they deem it sufficient for a field of law to be cohered by ‘a common pool of characteristics’, which forms ‘“a complicated network of similarities overlapping and crisscrossing” that defines the concept.’⁸⁷

The second minimum requirement for a field of law according to Aagaard is its distinctiveness—the ‘idea that some features of a field are distinct to that field and not present in other fields.’⁸⁸ A distinct identity of the field legitimises its conceptualisation and isolated study. Consequently, the ‘organizing feature’ needs to be ‘distinctive to the area’, which can be due either to ‘unique features of the field’ or because of a ‘unique interplay of otherwise nonunique features’.⁸⁹

Ibrahim and Smith specify that

distinctiveness may manifest itself in the creation of a unique set of legal rules or legal practices, in the unique expression or interaction of more generally applicable legal rules, or in unique insights about law.⁹⁰

While this statement suggests that distinctiveness needs to relate to legal doctrine, Aagaard claims that sufficient distinctiveness of fields of law can arise also from other characteristics, such as factual context.⁹¹ Epstein contends that instead of looking at doctrinal content, it is more reasonable to look at how lawyers apply doctrinal principles given that these principles frequently operate in more than one traditional field of law.⁹² Therefore, doctrine itself cannot constitute the only determinant of the distinctiveness of a legal field.⁹³ In fact, the distinctive identity of various other legal fields has been confirmed due to characteristic features beyond doctrinal content.⁹⁴ Distinctiveness thus can arise from any constitutive dimension of a field of law. Besides, Aagaard highlights that distinctiveness shall not be confused with uniqueness. In his view, it is sufficient for a field of law, which merits unified consideration to be ‘unified by sufficient similarity and distinctiveness—even if not perfect uniqueness…’⁹⁵

Subsequently, two different constitutive dimensions of the organisational framework of commodity law will be analysed. For one, its core conceptual characteristics arise from the factual context in which commodity-related human activity occurs (Sect. 3.2.2.1). For the other, as we have seen commodity law exhibits policy trade-offs, which are distinct to its field (Sect. 3.2.2.2).

3.2.2.1 Factual

Two factual elements can in the simplest terms specify what constitutes ‘commodity-related human activity’, or in short ‘commodity activity’. Such activity typically occurs in connection with, for one,

the removal of an item from earth and, for the other,

a specific purpose that relates to the removed item.

This evidently requires a few explanations. We shall begin with the first element of commodity activity, the removal of an item from earth. Human beings are using natural resources in various ways. Watercourses may be used for navigation purposes or in order to generate electricity, forests can serve as recreational areas; the sunlight and wind can likewise serve as sources of renewable energies. All these uses of natural resources are, however, distinct from commodity activity. None of them necessitates the removal of anything from the natural environment or, simply speaking, earth.⁹⁶ Consequently, commodity law can be classified as a distinct sub-branch of natural resources law (NRL).⁹⁷

Both terms removal and item have deliberately been chosen for their broadness. While significant portions of these removal activities may aptly be characterised as ‘extraction’—in particular in mining—the usage of this latter notion would generally exclude especially food commodities that are rather being ‘harvested’, ‘farmed’ or ‘fished’ as well as forestry products, which are usually being ‘logged’.⁹⁸ The respective item becomes a ‘commodity’ at the latest once it has been removed from the natural environment, depending on the kind of item. The seeds of a cocoa plant, for instance, according to our definition of ‘commodity’ may already be considered as such, when the plant is still rooted in the ground on a plantation. Except for the harvesting process, the seeds have already acquired their natural or raw form, which suffices for them to constitute a commodity. A precious metal, to the contrary, will typically still be contained in an ore, which in turn is still incident to gangue material and waste rock. It becomes a commodity once it has been separated (extracted) from the natural environment in a way, which allows for its differentiated identification as a raw and/or tradable item. However, since commodity law, as will become clear subsequently, covers a broad range of activities also before and after the ‘removal’ has taken place, this distinction is rather less relevant.

Everything that is being removed from earth can potentially be considered a commodity—provided, it meets the second factual element of a specific purpose that relates to the removed item.⁹⁹ The specific purpose, which relates to the removed item, distinguishes commodity activity from other human activity, which involves the removal of natural resources, such as construction projects, particularly large infrastructure projects. When it comes to such projects, the removed matter, however, is typically not of (primary) interest for the actors concerned. It rather constitutes an impediment to the operations, which focus on the implementation of an aim that is unrelated to the removed item.

The specific purpose of commodity activity related to the removed item will naturally lie in using it for economic gain, i.e. selling or trading it, including various intermediary steps, such as processing and shipment. Therefore, one could also define an economic purpose related to the removed item as a core conceptual characteristic of commodity law. However, the kind of purpose that one pursues in relation to an item removed from earth does not at all alter the activity itself—which would remain the same also in the unlikely event that one should extract or harvest commodities with the end goal in mind to later donate them. In order to keep the organisational framework of commodity law as simple and abstract as possible, it shall therefore be defined regardless of an economic purpose that the ‘remover’ may be pursuing with regard to the removed item.¹⁰⁰

These remarks already shed more light as to what can be understood as ‘commodity activity’. Nevertheless, some further clarifications are necessary regarding the scope of activities, which occur in connection with the removal and still qualify as commodity activity. Naturally, the removal process itself, whether it involves harvesting, logging, fishing, or extraction constitutes a commodity activity. However, the commodity sector exhibits a whole range of different activities, which all relate to this removal process. These activities have most vividly been portrayed along the so-called Commodity Value Chain.¹⁰¹ For our purposes, we shall use the commodity value chain to elucidate the range of activities, which occur in connection with the removal of an item from earth for a specific purpose that relates to this item. For instance, with regard to extractive industries, one can distinguish between the exploration, extraction, processing, storage and shipping, sale and trading as well as the post-extraction phases.¹⁰² For other industries, the commodity value chain will be designed differently, notably using different terminology for the terms ‘exploration’, ‘extraction’ and potentially ‘processing’, and usually extending from producer to end-consumer.¹⁰³

On a more abstract level, commodity activities can be said to range from pre-removal activities, which include exploration, but also cultivation, plantation and related undertakings, such as the clearance of a specific area in preparation of a ‘removal’ activity, to the ultimate post-removal activity of selling and/or trading the respective commodity. The intermediary steps are, of course speaking on a very abstract level, similar regardless of the type of commodity and involve processing, storage and shipping, sale and trading. Once a removal activity has been abandoned permanently, additional post-removal activities are required, such as a proper closing of the removal site (e.g. mine closure) including a restoration of the natural environment that may have been affected by the removal activities.

The manufacture of secondary or end products from commodities does not constitute commodity activity. While of course the removal activity is a necessary precondition for such manufacture to be possible, it does not shape these processes to the same extent as those activities, which occur in closer connection to it. Commodity activity constitutes a preliminary stage within the global value chain, which is followed by the ensuing, yet separate stage of manufacture.¹⁰⁴ Also, typically the governance challenges and policy trade-offs, which occur in connection with removal-related activities, are distinct from the ones to ensure a well-governed manufacture process.¹⁰⁵

3.2.2.2 Policy Trade-Offs

The specific commodity policy trade-offs, which have been already elaborated above, constitute further commonalities of commodity law, which at the same time illustrate its distinctiveness from other fields. The existence of one or several of the policy trade-offs described above can thus be characterised as an additional common feature of commodity law. These policy trade-offs ‘limit legal choice’ in that the elaboration of the law regulating commodity activities should be guided by an awareness of their existence.¹⁰⁶ They thus ‘reflect the analytical and instrumental aims’ of the conceptualisation of TCL;¹⁰⁷ they ‘make a difference in how the law applies’—or rather, in the many incidents where they are covered by indirect TCL,¹⁰⁸ should apply.¹⁰⁹

This is furthermore underlined by the fact that many states have adopted specific regulatory and fiscal frameworks for the commodity sector, which are ‘distinctly different’ from the ones that apply to other industries.¹¹⁰ States as the legislators of international law have thus repeatedly expressed their perception of commodity law as a distinct subject matter, which is i.a. reflected in chapter VI of the Havana Charter, several GATT provisions,¹¹¹ the various ICAs, which have been introduced and/or are still in existence today, as well as the Integrated Programme for Commodities (IPC), the Common Fund for Commodities (CFC), International Commodity Organisations (ICOs) and other commodity-directed governance programs of UNCTAD.¹¹² All of these examples thus support the contention that commodity activity as well as its associated policy trade-offs from the perspective of legal taxonomy constitute legally relevant commonalities, which should be governed by what one conceptualises as a distinct field of law.

Regarding its distinctiveness from other fields, the set of trade-offs discussed above may generally also be relevant in relation to other economic activities, such as large-scale infrastructure projects. However, the respective interests would be relevant to a different degree, i.e. their ratio to one another would differ. For instance, commodities are typically being considered as a form of ‘national wealth’. Consequently, the demand for participation and adequate development effects of commodity activity will often be comparatively greater than in the case of infrastructure construction. Likewise, the great significance that commodity exports can have for the national economy of an individual state is typically not mirrored in a comparable significance of an infrastructure project.¹¹³ There is thus a commodity-specific layout of these policy trade-offs. Since the threshold here is distinctiveness and not uniqueness,¹¹⁴ the fact that other layouts, such as the construction-specific layout, of these trade-offs may be somewhat similar does not rebut the claim regarding the distinctiveness of commodity law also in this respect.

3.3 The Norms of TCL

After having delineated the organisational framework of commodity law, this section briefly outlines how the normative substance of TCL operates within the organisational framework we have presented above. The purpose of this exercise is to expound the transnational rules that are governing commodity activities. This approach corresponds with the overall aim of this book to first provide a conceptualised account of the transnational law regulating commodity activities and to then, as a second step, suggest specific instruments for reinforcing this existing regulatory framework. Rather than delivering a comprehensive account of all the norms governing commodity activities, the overview provided below therefore seeks to display the central types of norms as well as corresponding factual scenarios they apply to.¹¹⁵

As mentioned repeatedly, TCL is a transnational legal framework. This property relates to the concept of GCG.¹¹⁶ First and foremost, its transnational nature constitutes an analytical category from which the normative framework applicable to commodity activity is being assessed.¹¹⁷ Instead of exclusively focusing on rules of inter-national law—an approach that would relate to the classical concept of government¹¹⁸—our conceptualisation will be based on international rules, and additionally comprise private standards and select domestic norms that exhibit a transnational scope.¹¹⁹ This approach appears particularly natural in light of the transnational nature of commodity activity, especially whenever extracted materials are being traded, as well as given the pivotal role of TNCs and multi-stakeholder standard-setting institutions therein.¹²⁰

3.3.1 Sources of TCL

The diverse legal sources that this conceptualisation is based on can be categorised as follows:

The first category, the classical inter-national framework can roughly be divided into international agreements, principles of international law, UN soft law, and standards issued or adopted by other international organisations, such as OECD or International Finance Corporation (IFC).

The second category consists of either industry, corporate, or civil society standards, which typically are elaborated through multi-stakeholder or broad industry or civil society processes. Frequently, these processes are either initiated or facilitated by international organisations.

A third category of sources used in the conceptualisation of TCL is the domestic legal framework. It includes the constitutional framework as well as domestic legislation and regulation, particularly in the fields of labour, environment, public accountability, taxation, fiscal terms, customs, non-discrimination, transparency, privacy, anti-corruption and licensing. This book, however, makes reference exclusively to those sources of domestic law, which exhibit transnational effects, and are of particular importance in the commodity sector.¹²¹

A fourth category is composed of transnational contract law insofar as it provides for rules, which proliferate beyond the application of contractual terms inter partes. This category plays a comparatively smaller role in our conceptualisation of TCL. Given that most rules, which can be abstracted as common, potentially customary elements from transnational contract law will typically already feature in at least the domestic legal order as a general principle of law, their analysis would presumably bring about only few new insights. This observation, however, does not in any way diminish the potentially great normative force that transnational contracts may exhibit, particularly in the commodity sector.¹²²

All four types of sources are naturally subject to judicial application and interpretation, as well as to scholarly analysis—as a consequence, relevant inter-, transnational and domestic case law as well as international legal scholarship constitute additional sources, which informed our conceptualisation of TCL.

This categorisation of the sources of TCL, of course, can only be ideal-typical. For instance, the lines between soft law and civil society standards may often be blurred given the diverging roles that international organisations tend to play in multi-stakeholder processes as either mere facilitators or owners. In the latter case, the process of elaborating a new standard is typically followed by its formal adoption through the respective governing bodies of the international organisation in question. In the former case, the outcome may be a civil society or industry standard. While the differentiation between UN soft law as well as international organisation (IO) standards on the one hand and corporate as well as civil society standards on the other based on whether or not they have been formally adopted according to the internal procedures of the respective IO is of course logical from a formalist point of view, it makes a compelling case for perceiving the legal framework as a ‘transnational whole’, and thus abandoning the classical boxes of international law as spelled out in Article 38 ICJ statute.¹²³

3.3.2 Structure of TCL

It would go beyond the realms of this treatise to portray the entire substance of TCL including its normative content. However, our subsequent analysis of normative patterns of TCL draws on a comprehensive study of the applicable instruments and standards. Consequently, Chap. 4 will discuss a variety of concrete normative content of the substance of TCL; a brief overview of its structure shall be provided here. In addition, an overview of the relevant instruments and provisions, which form the substance of TCL, can be found in the annex below.

While there are numerous possibilities to logically arrange the diverse sources outlined above and therefore expound the architecture of TCL they are revealing, Dederer in my opinion has provided the most clear, convincing structure.¹²⁴ The subsequent portrayal of TCL follows a version of his ‘limited sovereignty’ structure, which has been significantly modified and extended. However, as notably Schrijver has emphasised, instead of limiting it, norms of international law often rather tend to qualify the principle of PSNR in the sense of detailing how the sovereignty of states needs to be exercised.¹²⁵ Thus we shall employ the perspective of ‘qualified sovereignty’ for the remainder of our investigation.

According to this outline, first of all, international law declares the nation state—or more precisely its respective population—as being principally competent to regulate the use of natural resources. This holds generally true with regard to those resources that are located on its territory or under its sovereign command. However, one can discern a certain tension with more recent concepts of international law, which emphasise the fact that commodities may be a ‘common concern’ of all of humankind. The corresponding principles of permanent sovereignty over natural resources and common concern will be subject to our analysis in Sect. 4.1 below.

Secondly, even where the nation state or its population respectively disposes of sovereignty over its commodity reserves, several fields of transnational, especially inter-national law qualify this sovereignty.¹²⁶ According to their subject matter, one can distinguish eight categories of these, largely self-imposed, qualifications: Human Rights; environmental protection; liberalised trade; shared resources; good governance; fiscal framework; financial regulation; and armed conflict. Several of these qualifications of a state’s sovereignty over commodity resources will feature in our analysis in Chap. 4 below. For an overview see also the TCL outline contained in the annex.

Thirdly, sovereignty over resources typically comprises the competence to transfer commodity-related rights onto third parties, particularly from the private sector. The transfer of these rights is usually being performed through specific agreements between the state party and the transferee. The transfer process, as well as the arising obligations for transferees, is governed by various inter- and transnational standards, most of which qualify as either soft law or private industry standards. Once a state has transferred rights onto a third party, its sovereignty is further qualified by various obligations to protect these rights under international investment law.¹²⁷ The norms and standards regulating the transfer of commodity rights are illustrated in the TCL outline in the annex and will also inform our subsequent analysis in Chap. 4.

Besides, all qualifications of a state’s sovereignty are typically being accompanied by ‘secondary qualifications’, which provide for procedures to regulate externalities or dispute settlement respectively. Corresponding mechanisms can also arise from private industry standards or investor-state agreements.

3.3.3 TCL in the Commodity Governance Matrix

While we have just learned about the abstract structure of TCL, we shall now examine how its norm subsets apply within the commodity governance matrix. As we have seen, commodity activities occur in a matrix of largely five interests and corresponding trade-offs, which arise between the different stakeholders: economic gain, development, preservation, control, and participation.¹²⁸ In this section we will give a brief account of which one of these five interests a selection of the various norm subsets of TCL are seeking to foster primarily.¹²⁹

Naturally, all norms are serving multiple purposes. For instance, every norm will ultimately serve the purpose of controlling a commodity activity, i.e. upholding the rule of law. Moreover, as I have argued elsewhere, one can maintain that every legal norm ultimately is intended to foster the development of society.¹³⁰ Here, however, we shall roughly categorise the norm subsets of TCL according to their primary regulatory objective. The goal here is thus less to paint a dogmatic picture, which is entirely consistent, but rather to sketch an overview that exposes normative conflict lines between various norm subsets of TCL. For that purpose, we shall employ those understandings of the terms, which we have already developed in Chap. 2 above.

When it comes to reaping the economic benefits of commodity activities, the rules that come to mind first and foremost are the ones featuring in the applicable fiscal regime. Through these rules, the respective host government ensures that it receives financial benefits from the respective commodity business, i.a. through taxes and royalties. Not least in order to attract foreign investment in the commodity sector, the investment protection rules in place guarantee foreign investors certain safeguards against regulatory or other activities by the host state. Once the host government has decided to transfer—e.g. exploration or exploitation—rights onto private third parties, their right to property as well as potentially their ‘legitimate expectations’ are being protected under these rules.¹³¹ Particularly so-called stabilisation clauses that are seeking to prevent unexpected changes in the regulatory environment, especially with regard to the fiscal regime, can serve to safeguard the economic expectations of the investor.¹³² As a result, what may conflict here are the economic interests of investors on the one hand and host states on the other. Such conflicts arise for instance, when host states are of the view that they do not sufficiently benefit from commodity activities e.g., through so-called resource rents. Consequently, the host state may introduce changes in the fiscal regime for instance regarding the taxation of commodity corporations. This, in turn, may cause investors to seek compensation due to a frustration of their economic expectations.

Further provisions that primarily seek to promote the economic benefits from commodity activities are the ones liberalising international trade, particularly Articles I, II, III and XI:1 GATT.¹³³ By removing obstacles, such as duties and quantitative restrictions, in cross-border trade these rules are intended to facilitate trade and thus promote economic growth. Yet again, issues may arise with regard to the policy space that is left to states, which are for instance aiming to promote infant industries or price stability in their commodity markets. Such measures may be interpreted by the WTO DSB as trade distortions, and therefore held to be unlawful under WTO discipline. In essence, this conflict demonstrates diverging perceptions of what economic policies bring about the most beneficial results. While consumer states typically favour liberalising commodity trade, as well as trade in manufactures, to the greatest extent possible, producer states, especially Commodity Dependent Developing Countries (CDDCs), may seek to pursue import substitution industrialisation measures and therefore put in place safeguards for emerging domestic industries.¹³⁴ Furthermore, also the norms covering the use of shared resources are seeking to foster the economic benefits of both—or all—parties concerned through cooperation and equitable utilisation. Joint development agreements are likewise serving this purpose.

In order to promote the development benefits of commodity activities, again particularly the fiscal rules that are applicable in the respective host state ensure the capture of an adequate share of resource rents. In an ideal state, these financial resources are being used in the most effective way for the society’s development.¹³⁵ Further development benefits can be sought i.a. through local content provisions or other rules seeking to promote economic linkages between commodity activity and the host state’s economy. Such clauses are often included in or annexed to investment contracts, concession or production-sharing agreements. However, applicable Bilateral Investment Treaties (BITs) as well as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Trade-Related Investment Measures (TRIMS) agreements may significantly limit states’ policy space when it comes to introducing such measures.

At the same time, WTO disciplines also contain a few provisions allowing for development policies, such as infant-industry promotion according to Article XVIII GATT or the special provisions for Commodity Dependent Developing Countries e.g. contained in Article XXXVI:4 GATT. However, these provisions are of limited effectiveness.¹³⁶ Moreover, while Part IV of the GATT—the chapter on trade and development—seeks to foster economic and social advancement, it does not refer to environmental protection in that connection, therefore leaving out the third pillar of SD.¹³⁷ The Enabling Clause and the Generalised System of Preferences (GSP) open further possibilities to promote special treatment for developing countries. However, trade and development provisions—as opposed to the liberalisation provisions of the GATT—are said to be ‘declaratory rather than obligatory’, and therefore appear to be of little ‘bite’ when it comes to creating a trade environment that is cognisant of the imperatives of the developing world.¹³⁸ One major obstacle in that connection consists of ever rising SPS standards in the developed world, which effectively bar many products from developing countries from entering their markets.¹³⁹

A state’s competence to decide in what way and to what extent it develops its commodity deposits is further qualified by the internal dimension of the right to freely dispose over natural resources. Particularly where commodity activities have effects on the right to subsistence of local populations or indigenous peoples, such exploitation may be unlawful. Moreover, the right to development calls for the ‘fair distribution of [the] benefits of development.’¹⁴⁰ Also standards addressing corporate behaviour, such as the OECD Guidelines for Multinational Enterprises (OECDG), are seeking to increase the SD benefits of business operations.

The objective of preservation is particularly being pursued by the various norms aimed at environmental protection, such as the precautionary principle as well as the principle of preventive action. Furthermore, the natural environment may also be protected under indigenous peoples’ rights, especially where their cultural identities are deeply influenced by or comprise lands, territories, waters, or the like. Again, the right to freely dispose over natural resources (RFD) may require states to refrain from conducting or authorising commodity activities where those threaten the means of subsistence of local populations—and therefore effectively operate as a safeguard for the territories or waters concerned. With regard to shared resources, particularly the principle of equitable utilisation requires states to control, prevent, reduce, or eliminate any adverse environmental effects that may originate from shared resource use.¹⁴¹ The more sophisticated joint development agreements are, the more likely they may be to also foster environmental protection.¹⁴² In scenarios of armed conflict, several rules of international humanitarian law (IHL) are protecting commodity deposits from being harmed or unlawfully exploited.

The objective of controlling commodity activities is a subsidiary category to the objectives of economic gain, development and preservation described above. It relates to the general interest especially of host governments to maintain administrative power and the rule of law respectively over what commodity operations are being carried out where, when, by whom, and how. Governments in this respect particularly make use of licenses, concessions, and other public-private contracts that detail the obligations which private actors need to observe when conducting commodity activity. Ideally, and as is frequently the case, these contracts intertwine with a broader legal framework that comprises international labour rights, provides for land tenure rights, and other pertinent HR. For the objective of upholding the rule of law, especially with regard to compensation for wrongs suffered, the right to remedy, according to Articles 8 UDHR, 2(3) ICCPR, 6 CERD, and 2(c) CEDAW bears particular significance.

Moreover, the objective of control is being fostered by the various good governance standards, such as the anti-corruption provisions as e.g. set forth in the UN Convention Against Corruption (CAC), the Berlin II Guidelines for Mining and Sustainable Development or the AMV. Transparency initiatives like the Extractive Industries Transparency Initiative (EITI) often constitute the first step towards regulating various aspects of commodity activity in a targeted manner. Under the UN Guiding Principles for Business and Human Rights (UN GP) framework, states are obliged to protect against HR violations by third parties, including corporations—and thus to especially regulate or legislate accordingly.¹⁴³

Fifth and last, several norms of TCL are seeking to ensure the participation of various stakeholders in decision-making processes related to commodity activity. The right of the freedom of expression, the right to access to information and particularly the right to free, prior and informed consent (FPIC) are serving this purpose. Article 1(2) ICESCR obliges states to administer public resources in a transparent manner. Through the freedom of assembly as well as association, particularly private citizens, workers and civil society organisations have the right to actively voice their opinion regarding commodity policy. Again, also the internal dimension of the RFD may be relevant in this respect.

FPIC particularly requires states to obtain consent from indigenous and local populations prior to authorising or conducting a commodity operation. This duty evidently may conflict with the economic interests of host governments and investors. Where it has been violated, again the right to remedy plays a key role in addressing matters of compensation and reparation. In this respect, UN GP #22 sets forth that corporations should provide legitimate remediation processes for HR violations they have caused or contributed to. Similarly, the OECD Guidelines for Multinational Enterprises require states to maintain National Contact Points, which i.a. serve to address enquiries resulting from conflicts over the implementation of the guidelines, e.g. between Multinational Enterprises and civil society. The latter’s ability to publicly advocate their interests has not least been fostered significantly by the resource transparency movement leading to the publication of commodity activity documentation.