Judicial integration in the Americas? A comparison of dispute settlement in NAFTA and MERCOSUR

Abstract

"The influence of the European Court of Justice (ECJ) on regional integration in Europe is a widely discussed topic in the academic literature. However, outside of Europe, the influence of court-like bodies on integration processes in other regions is much less analysed. Dispute settlement bodies in regional integration schemes outside Europe are not as strong as the ECJ, but they may nevertheless influence regional integration. When judging disputes, court-like bodies have to establish case law in order to be legally consistent with their decision-making – even if precedence effects are formally ruled out by the respective treaties. This case law may lead to increasing integration if the treaties are interpreted respectively. In order to explore the influence of court-like bodies on regional integration outside of Europe, this article compares NAFTA's dispute settlement mechanisms on competition and investment with the dispute settlement mechanism of MERCOSUR. The somewhat surprising result is that although MERCOSUR’s dispute settlement mechanism is formally stronger than its counterpart in North America, the latter exercises more influence on the dynamic of regional integration. The reason for this is that due to larger economic interdependence in North America, NAFTA’s dispute settlement mechanism is confronted with far more disputes than its counterpart in the South. This leads to many more possibilities for developing case law and for interpreting the respective treaties. The theoretically important conclusion is that not only the formal rules are important for judicial integration in regional integration schemes, but that only the interaction of legal rules and economic demands leads to dynamic regional integration projects." (author's abstract)