This pandemic will not reverse globalisation, but it will threaten the transnational rule of law | In Principle

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This pandemic will not reverse globalisation, but it will threaten the transnational rule of law

It is a common concern among commentators on international relations that the COVID-19 pandemic will lead to deglobalisation. Indeed, the havoc wrought by the pandemic in the global economy raises some unsettling questions about the fragility of global supply chains, especially in critical industries, and about the interdependency of national economies. It is nudging sentiment towards reshoring, promoting domestic production and protectionism.

But claims of the pandemic’s deglobalising effects are surely exaggerated. One of the most significant effects of the coronavirus outbreak has been an extraordinary digital leap. Global internet traffic surged in March and April 2020 compared to the same period last year. With the sudden rise of remote work and explosive digitalisation of social interactions during lockdown, data production has also been growing exponentially. Businesses and whole societies are rushing vast areas of their activities online, into the digital world. And this digital world truly knows no borders. It is inherently frictionless and globalised.

National states can still curb cross-border flows of tangible goods and investments in brick-and-mortar businesses, at least in theory. But data, the “oil of the 21st century”, will continue to flow freely across state borders, in abundance. National states cannot stop digital goods, information and news from crossing state lines without resorting to extreme measures. The digital world cannot be deglobalised. And the significance of the digital dimension of today’s economic, social and political life means that the world as such cannot really be deglobalised either. Hence we will continue to live in a globalised world.

What the pandemic threatens to undermine, however, is not globalisation as such, but the emerging system of transnational constitutionalism and transnational rule of law. In other words, the pandemic creates a risk that we will live in a globalised but lawless world.

Inadequacy of state-centred constitutionalism in a globalised digital world

Traditional institutions and mechanisms protecting democracy and the rule of law are based on the Westphalian model of international relations and state sovereignty. Their purpose is to protect democracy and individual liberties by extending systems of checks and balances over the power of the sovereign state to regulate socio-economic relations in its territory. These institutions and mechanisms rest on the assumption that the sovereign, territorial state is the sole keeper of this power, and therefore it is the government of the sovereign state that must be kept in check. However, this assumption has been undermined by globalisation and in particular by the global technological revolution and the emergence of technologies transcending the nation-state.

Such vital social issues as the protection of private life, access to information and free speech, public morals, and the integrity of political discourse and processes, which would traditionally have been addressed internally by states and their constitutions, must now be addressed transnationally. Territorial states and their traditional modes of cooperation have become helpless in the face of problems occurring in these and other areas of globalised societies and economies. The ability to address these problems has shifted to “transnational networks” of a private or intergovernmental nature.

Private transnational networks are the more or less formal creations of transnational industry, such as private international commercial organisations established by multinational enterprises, or are themselves a new kind of MNE, which are not only market actors as such but are becoming transnational economies (marketplaces) in their own right (Google, Facebook, Amazon and the like). By contrast, intergovernmental transnational networks are component institutions of sovereign states, interacting with foreign counterparts in their respective fields. As Andrea Hamann and Hélène Ruiz Fabri put it in “Transnational Networks and Constitutionalism”, states have reacted to the challenges of the global digitalised economy by “disaggregating in order to achieve better cooperation”, or in other words by “splitting up into their component institutions, which are increasingly interacting with their foreign counterparts across borders”.

The problem with both kinds of transnational networks (private and intergovernmental) is that they operate to a great extent beyond the reach of traditional, state-centred constitutional systems. This is why they often suffer from deficits in democratic legitimacy. A constitution is not only a constraint on a traditional government, but also a source of its legitimacy. Traditional, state-centred constitutions are incapable not only of restraining transnational networks but also of providing them with legitimacy. This could already be well seen in the pre-pandemic backlash against intragovernmental, transnational institutions of the European or UN systems of governance, or against such creations of private transnational network governance as international commercial and investment arbitration.

The need for transnational constitutionalism and the EU as its breeding ground

The only solution to this problem is to leap ahead. Returning to the traditional sovereign state and traditional state-centred constitutionalism is no real response. It might have been the right way had deglobalisation been possible and desirable. As already said, however, it is not. We will continue to live in a globalised world. And traditional states will be even less capable of effectively addressing the problems of this globalised world. Transnational network governance will therefore continue to be a necessity. Thus, instead of trying to reverse history, we must think about transnational constitutionalism (constitutionalism beyond the state).

The beginnings of such transnational constitutionalism were observable in the EU before the pandemic. The EU has struggled from the outset with issues of democratic legitimacy characteristic for all transnational systems transcending national political institutions. However, also from the outset, it has been rooted in a political morality which could serve as a cornerstone for a transnational constitution.

EU member states form a community centred around common values, dedicated to the pursuit of common welfare. A community of this sort is built on a form of mutual trust which Daniel Halberstam identifies as “fidelity” in his article “Of Power and Responsibility: The Political Morality of Federal Systems”. States forming such a community must not treat one another as rivals who have achieved a compromise in a power struggle, but as loyal partners carrying out a joint venture, never losing sight of its transcendent purpose and always caring for the proper functioning of the system as a whole, rather than for their mere self-interest. Only systems based on such political morality are able to achieve the convergence of their institutions and laws needed to tackle the challenges of the global, digitalised world. It is also only such systems that can provide oversight and accountability for their private and intergovernmental transnational network components, as well as fuelling them with the necessary legitimacy. The EU system and its underlying philosophy is therefore a prototype for global constitutionalism.

Anti-fidelity sentiments inspired by the pandemic

Unfortunately, the pandemic is inspiring sentiments undermining the appeal of such political morality as that on which the EU is based and which could be built by modern global governance. Even before the pandemic, the EU’s consistent, fidelity-based approach to transnational relations was often considered “naïve” or “utopian”. The best example was the very recent criticism of the EU’s investment protection and antitrust policies. The European Commission’s decision to challenge intra-EU bilateral investment treaties in the name of the fundamental principle of loyalty and mutual trust in national judiciaries of the member states, as supported by the Court of Justice in the infamous Achmea judgment, attracted fierce and cynical criticism. So did the Commission’s embrace of the elements of “antitrust hipsterism” in competition policy and its refusal to yield to demands by some member states for more “European economic patriotism” in the form of exceptional treatment of European champions.

These trends are only being exacerbated by the pandemic. The deadly virus stirs fear and hostility. This is being skilfully exploited by populist politicians to excite distrust in all institutions transcending the national state and to sow chauvinism and attachment to national states, with “my-country-first” policies then following, for short-sighted political gain. Legitimate questions about the shape and direction of European transnational constitutionalism are being twisted and cynically abused by those who speak of the need to return to the safe legitimacy of the national state and its constitution, but are in fact interested in undermining all constitutionalism, be it national or transnational.

Contrary to the nationalist rhetoric employed by populist politicians, their “take-back-control” approach will not lead to the comeback of sovereign states which would cater to the needs and interests of national communities. All this counter-revolution can do is deprive the irretrievably globalised world of the opportunity to develop institutions that could ensure it is governed in a civic and civil way, instead of becoming a Darwinian battleground for the ruthless pursuit of self-interest by obscure cliques controlling ever more obsolete and powerless institutions of nation-states.

The European model of transnational constitutionalism is far from complete. This is perfectly demonstrated by a recent judgment by the German Federal Constitutional Court (Bundesverfassungsgericht). The BVerfG has shaken the foundations of European law by refusing to follow a preliminary ruling from the Court of Justice of the European Union. Contrary to what many populists would say, this was not a triumphant restatement of state-centred constitutionalism, but rather the BVerfG asserting its perfectly due role in the EU’s transnational constitutional system. This is a role neither superior nor subordinate to the CJEU. It is the role of a loyal partner to the CJEU as well as other national courts and of a member in good standing of the EU’s judicial community.

The BVerfG essentially restated its appreciation for and deference to the system of EU law based on binding and overriding CJEU precedent. But it also asserted its ability to responsibly assess whether a CJEU judgment was rendered “per incuriam” and should be refused the status of a binding precedent, for the sake of the wellbeing of the EU’s system of law as a whole. The ability of European national courts to fulfil this delicate role loyally, independently and in good faith is as necessary for the proper functioning of the transnational system of European law as the per incuriam rule is for the proper functioning of national common-law systems based on the doctrine of precedent. The BVerfG judgment is a milestone in the process of forging the EU’s transnational unwritten constitution. It comes at a time when socio-political sentiments caused by the progressing crisis threaten to undermine this process altogether. This process will only be successful if its actors conduct themselves in good faith and with due regard for what is at stake.

Tomasz Wardyński, adwokat, Stanisław Drozd, adwokat, Dispute Resolution & Arbitration practice, Wardyński & Partners