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AB - Abstract This Article explores the legalization characteristics of the investment rules of the Association of South-East Asian Nations (ASEAN). Measured against orthodox and external benchmarks, ASEAN’s investment regime is relatively limited. We make the following two arguments in this Article. First, we argue that while ASEAN members have subscribed to global norms in their own collective investment rules, they have done so in an intentionally selective manner shaped fundamentally by key contextual dynamics. These encompass a complex combination of ASEAN members’ unique deliberation modality (the “ASEAN Way”) informed by their shared historical experience coupled with negative social learning. Using those insights, we suggest that is both possible and desirable to understand the ASEAN approach as an independent and legitimate form of legalization, rather than as a failed or flawed model. Second, and relatedly, we argue that the idiographic nature of legalization in ASEAN compels us to rethink the conventional universal (nomothetic) approach to legalization and embrace a more nuanced conception. Introduction Legalization in domestic governance customarily denotes normalcy. Scholars often attribute economic prosperity in Western countries to a legalized governance system or more generally the existence of the rule of law.1 That same logic is often extended to the international sphere. Most successful international organizations, such as the European Union or the World Trade Organization (WTO), boast of their highly legalized structures and institutions. If this premise holds true, the paucity of legalization in a given international organization is likely to signal a deficiency or failure. This Article challenges such a nomothetic concept of legalization. By exploring the delegalization phenomenon under the internal investment regime of the Association of South-East Asian Nations (ASEAN), the Article embraces an alternative concept of legalization, which is pluralistic, idiographic, and incommensurable, fundamentally shaped by path dependency and sociocultural contexts. The modern orthodoxy of legalization, and the rule of law it represents, has only recently earned the prestigious status of world culture.2 As a form of rationality, legalization exudes a universal appeal paralleling a functionalist thesis. Legalization can facilitate interstate cooperation by reducing uncertainty and transactions costs.3 It is this practical value that has encouraged developing countries, such as most of the ASEAN member states, to embrace “Global Investment Law” (GIL). GIL can be understood as a manifestation of hard legalization in the area of liberalization and protection of foreign investment.4 The ASEAN members have constructed dedicated investment rules among themselves and signed large numbers of bilateral investment treaties (BITs) as well as free trade agreements (FTAs) containing investment chapters with third-party states. Importantly, many of these BITs and FTAs mirror preexisting, strong, and representative norms on investment liberalization and protection reflecting the traditional preferences of developed states, as seen in the United States Model BIT5 and Chapter 11 of the North American Free Trade Agreement (NAFTA),6 which can be collectively labeled as GIL. It would be a mistake to characterize these various treaties entered into by ASEAN members as simple contracts of adhesion. Those members voluntarily accepted GIL as they socialized with “rationalized others,”7 such as developed state counterparts and international organizations. Indeed, the prominence of the Southeast Asian region as a beacon of globalization offers a natural justification for that zealous subscription to the strong precepts of GIL. Foreign trade and investment flows into the region have been nothing short of being spectacular. Between 1990 and 2014, foreign direct investment (FDI) inflow into and outflow from the region have increased approximately ten times and thirty four times, respectively.8 As an institution, ASEAN is at the center of this impressive economic phenomenon in its management of a remarkable stream of international commerce. By 2014, FDI flows to ASEAN members exceeded inflows to China for the first time since 1993, making ASEAN the largest recipient of FDI in the developing world.9 Interestingly, however, we confront at this point a fundamental disjuncture in legal tailoring between intra-ASEAN collective (regional) rules and extra-ASEAN investment treaties (comprising those BITs and FTAs signed between individual ASEAN members and non-ASEAN countries). While the extra-ASEAN treaties reflect a strict adherence to GIL (with strong protections for foreign investments and few reservations/exceptions to host states’ obligations), the collective intra-ASEAN system is orientated differently.10 According to the legalization indicators developed by Kenneth Abbott, Robert Keohane, Andrew Moravcsik, Anne-Marie Slaughter, and Duncan Snidal, those intra-ASEAN investment treaties—which we collectively coin the “ASEAN Investment Regime” (AIR)—exhibit a fairly low degree of legalization.11 From the conventional (functionalist) perspective on legalization, the AIR’s deficiency in legalization should predict low levels of investment activities from and within the ASEAN region. Indeed, there is some evidence for this claim. The puzzling asymmetrical adoption of GIL parallels equally asymmetrical volumes of investment flow between extra- and intra-ASEAN sources.12 Nonetheless, the universalist definition of legalization underpinning GIL betrays the Weberian legal Idealtypus. This Western-born legal rationality was later naturalized and thus functionalized as a legal equivalent of the Mètre des Archives.13 It is this universalism–functionalism embedded in legalization that enables objective measurement (ranking) via certain indicators or indexes. Therefore, “background assumptions” and “conceptual categories” structuring these legalization indicators tend to represent, albeit implicitly, particular (Western) views on law and development.14 Pointedly, Abbott and colleagues admit that “statutes or regulations in highly developed national legal systems are generally taken as prototypical of hard legalization.”15 Against this background, we aim to problematize this hidden nomothetic assumption behind the concept of legalization. Critiquing such assumption, the Article contends, will enable us to better understand the AIR’s characteristically low degree of legalization from a non-functionalist perspective. In our view, it is both possible and desirable to construct the AIR’s distinctively low degree of legalization as a different type of legalization, not necessarily as a failed or flawed model. After all, even Max Weber emphasized that the rational ideal embedded in legalization derives from a historically unique, particularly European, phenomenon. Our approach here departs from mainstream positivist comparisons. Nor do we frame our comparative research as “purely functional” in the manner advanced by Konrad Zweigert and Hein Kötz.16 Our model instead reflects Werner Menski’s critical work on comparative law in a globalizing world drawing on “a methodological approach that integrates the social and ethical elements of law in its various social contexts.”17 Using that methodology, we make the following two arguments in this Article. First, we argue that while ASEAN members subscribe to GIL in their own collective rules, they do so in a selective manner shaped fundamentally by key contextual dynamics. These encompass a complex combination of ASEAN members’ unique decision-making style (the “ASEAN Way”) informed by their shared historical experience and collective memories coupled with negative social learning from the vicarious experience of other nations’ implementation of GIL. Second, we argue that the idiographic nature of legalization under the AIR compels us to rethink the conventional universal (nomothetic) concept of legalization and embrace a more nuanced one. Although the basic function of legalization to each economy should be “neither irrelevant nor unique,”18 law’s deeper, sociocultural dimension must not be hastily universalized. This Article is significant in the following three aspects. First, it offers a more nuanced account of the role of conventional legalization indicators, especially those paradigmatic proxies developed by Abbott and colleagues. Although formulated for descriptive purposes, these indicators nonetheless connote, albeit implicitly, certain normative assumptions in their design. Components of “obligation,” “precision,” and “delegation,” especially when coupled with proffered examples, tend to signify that a higher degree of legalization is necessarily better than a lower degree of legalization. However, by expanding and deepening the notion of legalization, this Article underscores that the AIR’s deliberate departure from GIL, which we define as “delegalization,” is indeed a different, but not necessarily worse, form of legalization. Second, our analysis holds predictive weight in important prospective settings, such as China’s future engagement with the architecture of international economic law. The United States and China are currently negotiating a historic BIT that, when concluded, will certainly generate a number of delicate issues, including the charged rule of law debate.19 Many Western scholars and policy makers still contend that China, and Asian countries in general, might not be fully equipped for a Western model of the rule of law.20 Obviously, their notion of rule of law is a historical product of Western civilization symbolized by both democracy and Weberian legal rationality. While most Asian countries willingly subscribed to the Western style of legalization based on the rule of law ideal, they obviously could not reverse engineer the West’s unique historical development. Asian countries create their own historical pathway and their unique legalization choices must in turn be informed by that path. Finally, this Article delivers a “healthy dose of humility” to universalist metanarratives on global legal culture, such as the world polity theory.21 A legal prototype, such as GIL, is hardly transported intact, especially when a sociocultural ambience of a recipient diverges widely from the origin of that prototype. Importantly, this goes beyond the mere issue of technical adaptation (and capacity constraints) necessary for implementation. Delegalization detected in the AIR is qualitatively different from GIL aptly captured by an Asian analogy. As written in the Huainanzi, an ancient Chinese text, when a tangerine crosses the Huai River, it turns into a hedge thorn.22 This Article unfolds in the following sequence. Part I establishes the conventional orthodoxy of legalization by introducing Abbott and colleagues’ paradigmatic concept of legalization. It also measures legalization in the AIR and finds that the AIR is generally characterized by a low degree of legalization. Part II then critiques nomothetic assumptions behind the conventional concept of legalization and sheds light on the idiographic nature of legalization in AIR from a comparativist standpoint. Based on critical observations made in Part II, Part III identifies two main factors behind such a low degree of legalization under the AIR: the unique historical path of ASEAN members favoring informal structure of decision making as well as effects from negative learning of ASEAN members from foreign investment practices of other countries. Finally, Part IV observes that delegalization may be a different mode of legalization and offers some policy suggestions in that regard. This Article concludes that rethinking legalization should be directed both to outside observers and ASEAN members themselves. I. The Orthodoxy of Legalization as a Benchmark A. Conceptualizing Legalization In a broad sense, legalization is a conscious employment of norms, both soft and hard, in an institutionalized setting. Both international legal scholars and political scientists in the study of international relations widely embrace the thesis of legalization in explaining and understanding various aspects and properties of international law and international politics.23 While this concept remains contested, a paradigmatic working definition can be found in a collaborative work commissioned by a group of pre-eminent international law/international relations scholars, Kenneth Abbott, Robert Keohane, Andrew Moravcsik, Anne-Marie Slaughter, and Duncan Snidal.24 Their definition of legalization focuses on textual and institutional factors in a given international setting. Such definition is a formalistic, ex ante concept, rather than one informed by practical (empirical), ex post characteristics.25 The three main properties that Abbott and colleagues elected in delineating legalization are “obligation,” “precision,” and “delegation.” First, obligation refers to a legal rule’s binding commitment. Indicators of obligation range from unconditional commitments, such as UN General Assembly declarations that invoke jus cogens, to overt negation of binding effect, such as treaty reservations.26 Importantly, the concept of obligation not only exhibits substantive norms but also implicates derivative procedures and particular forms of discourse.27 For example, failing to comply with a binding obligation entails certain legal consequences, such as “state responsibility” under public international law. Granted, determining eventual violations is a complicated issue, subject to a plethora of precluding circumstances (or exceptions) ranging from a doctrine of rebus sic standibus to self-defense.28 Also, remedial issues, such as cessation, restitution, compensation, and satisfaction (apology), derive from binding obligation. Second, precision engages the level of textual ambiguity (or determinacy) that shapes subsequent interpretation in practice.29 Indicators of precision spread from determinate rules that are self-evident and therefore leave little room for interpretation to self-judging provisions subject to autonomous (sovereign) interpretation.30 Legal scholars from various theoretical positions impute to precision certain properties or virtues of law, such as rationality (James Morrow), compliance pull (Thomas Frank), and predictability (Lon Fuller).31 As to the degree of precision (or imprecision) of legal provisions, an oft-invoked dichotomy of “rules” and “standards” may be relevant to international law, despite its domestic law origin.32 Under the thick institutional context that features a rich set of both administrative (secretarial) and judicial apparatus, as seen in the European Union, there is a textual division of labor between rules and standards (such as EU Regulations and Directives, respectively). Nonetheless, most international organizations display thin institutional contexts that lack equivalence to this apparatus and leave issues of implementation and interpretation in the hands of contracting parties themselves. Third, delegation denotes the extent to which states authorize third-party institutions, such as courts, arbitration panels, and administrative organs, to interpret legal rules, resolve disputes, and oversee treaty implementation.33 Indicators of delegation vary from non-delegation (pure diplomacy) to binding arbitration (arbitral panel) to full adjudication (international court).34 The most representative form of delegation in most international organizations is through third-party dispute settlement. For example, the EU has highly advanced international courts, such as the Court of Justice of the European Union and the European Court of Human Rights. The WTO also has a sophisticated adjudicatory system comprised of first-order panels and the Appellate Body. Besides dispute resolution, international bureaucracies (such as the WTO Secretariat) help implement treaties by clarifying agreed rules, coordinating policy discourse, and administering enforcement.35 Some international bureaucracies, such as the Codex Alimentarius Commission, established jointly by the World Health Organization (WHO) and the Food and Agricultural Organization (FAO), create a variety of soft norms in the form of recommendations and guidelines.36 While delegation in general tends to elicit tensions with sovereign states, we still find collective commitment to highly centralized enforcement mechanisms in particular settings, as seen in the UN Security Council and the WTO Dispute Settlement Body (DSB).37 Based on these three dimensions of legalization, Abbott and colleagues classify existing international organizations and other less institutionalized forms of international arrangements in accordance with eight ideal types: Type I (high degree of obligation, high degree of precision, and high degree of delegation), Type II (high degree of obligation, low degree of precision, and high degree of delegation), Type III (high degree of obligation, high degree of precision, and low degree of delegation), Type IV (low degree of obligation, high degree of precision, and high or moderate degree of delegation), Type V (high degree of obligation, low degree of precision, and low degree of delegation), Type VI (low degree of obligation, low degree of precision, and high or moderate degree of delegation), Type VII (low degree of obligation, high degree of precision, and low degree of delegation), and Type VIII (low degree of obligation, low degree of precision, and low degree of delegation).38 Using this model, the European Union treaties naturally fall under Type I due to their sophisticated legal regimes that are close approximates to those of domestic governments. In the middle of that continuum, the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer39 belongs to Type III in that, despite clear binding obligations, it does not feature any delegation for implementation and adjudication. Further along the spectrum, the International Monetary Fund (IMF) falls under Type VI in that while delegation for policy coordination is conspicuous, legally binding obligation may be politically inconceivable in this issue area. Finally, the G7 is categorized under Type VIII on account of its highly diplomatic nature, which is antithetical to legally binding obligation. B. Measuring Legalization of the ASEAN Investment Regime The AIR is constituted by a collection of treaties signed over the past three decades among ASEAN members to promote intra-ASEAN investment. Since the onset of decolonialization at the end of the Second World War, ASEAN members had long maintained inward-looking economic strategies, such as import substitution, until collectively embracing the neoliberal open market paradigm in the 1980s. The first regional investment agreement, the “ASEAN Agreement for Promotion and Protection of Investments,” was signed in 1987.40 The 1987 ASEAN Agreement later evolved into the Framework Agreement (ASEAN Investment Area) in 199841 and the ASEAN Comprehensive Investment Agreement (ACIA) in 2009.42 In general, the depth and width of investment liberalization and market integration was heightened with each iteration. While the first initiative (the 1987 ASEAN Agreement) was a conscious effort to signal a break from previous state-driven economic strategies toward a freer “flow of private investments,”43 the scope of treaty obligations—as a first indicator of legalization—remained profoundly limited. For example, investor protections from the treaty would only apply if an ASEAN member had “specifically approved in writing” and “registered” an investment, upon which it could impose “such conditions as it deems fit for the purposes of this Agreement.”44 More surprisingly, ASEAN members failed to stipulate national treatment—a critical obligation of equality in treatment—to foreign investors and investments from another ASEAN state. Instead, they simply reserved that possibility for future negotiations.45 The Asian financial crisis in 1997–1998 as well as the surge of China as a global factory prompted ASEAN members to reinforce their collective efforts toward market integration in the region.46 The 1998 Framework Agreement was designed to establish “a competitive ASEAN Investment Area” (AIA),47 which appears to be cognizant of China as a potential rival host of foreign investment. Under the 1998 Framework Agreement, member states were ambitious enough to commit themselves to a “more liberal and transparent investment environment” that would “substantially increase the flow of investments from both ASEAN and non-ASEAN sources.”48 This strong liberalization mandate was matched by an exceedingly ambitious timeframe.49 Nonetheless, strict threshold requirements could still neutralize these ambitious investment liberalization commitments. For example, only an “ASEAN investor” may benefit from the newly liberalized ASEAN Investment Area. Yet, to be eligible as an ASEAN investor, a national or juridical person of any ASEAN member state must make an investment in another member state, the effective ASEAN equity of which taken cumulatively with all other ASEAN equities fulfills at least the minimum percentage required to meet the national equity requirement and other equity requirements of domestic laws and published national policies, if any, of the host country in respect of that investment.50 Note that there is no clear definition of “effective ASEAN equity” under the 1998 Framework Agreement leaving this to the sovereign discretion of each ASEAN member to establish its own conditions and levels. At point of operation also, member states retained significant discretion to exclude their domestic economies from liberalization obligations. The 1998 Framework Agreement allows for industries and measures affecting investments to be exempted via preparation of a “Temporary Exclusion List” and “Sensitive List.”51 The uneven pattern of legalization is further evident in the choices made on dispute settlement in the 1998 Framework Agreement. Here we have a striking regression from both the 1987 ASEAN Agreement as well as the typical extra-ASEAN BIT entered into by individual ASEAN member states. Now as a collectivity, the ASEAN members have limited the use of dispute resolution to “state-to-state” procedures and therefore denied any private standing of foreign investors to challenge a host country’s measures that violated material obligations, such as national treatment and fair and equitable treatment. Therefore, the only possibility open to a foreign claimant in 1998 would be to repackage any dispute to fall within the old treaty (the 1987 ASEAN Agreement) so as to initiate those rights to investor–state arbitration. The current agreement, ACIA, is the most advanced model characterized by thicker levels of legalization. While the 1987 and 1998 agreements focus on typical goals of most investment regimes, such as qualified investment liberalization and investor protection, the ACIA embraces a deeper, integrationist telos. Under ACIA, ASEAN members have decided to achieve economic integration through “joint promotion of the region as an integrated investment area.”52 In the ASEAN Economic Community Blueprint 2025, the ASEAN members strategically position that integrationist commitment as a means to “enhance the region’s participation in global value chains.”53 To that end, the ACIA’s integrationist telos is accompanied by a considerable degree of both certainty and sophistication in the legal language. The old instruments from 1987 and 1998 are terminated on entry into force of the ACIA,54 clearing any legal uncertainties that might have occurred due to the existence of multiple treaties on the same subject. Moreover, ACIA actively seeks to emulate global investment law (“comparable to international best practices”) in the development of a “comprehensive investment agreement.”55 Global investment law naturally connotes representative legal practices on international investment regulation demonstrated by NAFTA Chapter 11 and other model BITs created by the United States and other developed states. In the same line, ACIA now clarifies the previously undefined approval precondition to coverage (“covered investment”) as investment in an ASEAN member “admitted according to its laws, regulations and national policies, and where applicable, specifically approved in writing by the competent authority of a Member State.”56 Now ASEAN members may no longer defer to domestic law conditions but are subject to an “approval in writing” requirement under ACIA, which provides “[f]or the purpose of protection, the procedures relating to specific approval in writing shall be specified in Annex 1 (Approval in Writing).”57 This mandated approval in writing requirement is explicitly designed to secure “improvement of transparency and predictability of investment rules, regulations and procedures conducive to increased investment among Member States.”58 Nonetheless, other aspects of the ACIA eclipse these enhanced levels of legalization. First, in terms of “obligation,” the ACIA is littered with loopholes. The ACIA excludes extra-ASEAN investments, leaving them subject to BITs and investment chapters in FTAs. On the other hand, when it comes to facilitating intra-ASEAN capital flows, the ACIA seemingly breaks new ground in fostering liberalization. The twin-track system of temporary and sensitive reservations in the 1998 Framework Agreement is now replaced with a single reservation list.59 Yet even here, there are pointed indications of resistance to constraints on sovereignty. The market-access obligations in the ACIA are limited to a defined set of economic sectors.60 Moving from the nature of “obligations” to levels of “precision” as a second indicator of legalization, despite some efforts to enhance due process and transparency, the ACIA is still characterized by reservations of authority by state parties. In many other investment treaties, foreign investment may be permitted and thus protected if it satisfies the requirement that it contributes to economic development of a host country. Yet, the ACIA does not grant arbitrators the discretion to make this critical judgment as to contribution towards economic development. Arbitrators can only determine whether a given asset constitutes investment understood as, inter alia, “commitment of capital, the expectation of gain or profit, or the assumption of risk.”61 This aversion toward conferral of wide discretion on arbitrators originates from past experience by some ASEAN members in adjudication of the definition of “foreign investment” to be covered and thus protected by BITs. In particular, a lone arbitrator in Malaysian Salvors v. Malaysia concocted various criteria necessary for a given investment (asset) to be covered by the ICSID Convention.62 Obviously, most ASEAN members remain extremely reluctant to allow arbitrators to detail these conditions when it comes to this critical threshold question. On “delegation,” the ACIA surprisingly lacks one of the typical protections in modern investment treaties—an “umbrella clause”—which converts a breach of contract between a host country and a foreign investor into a treaty violation.63 Here too one can discern a fear of the potential for broad interpretations of that clause, in a way that might unduly prevent host countries from exercising their regulatory policies. The Philippines’ specific experience in SGS v. Philippines seems to have influenced this conspicuous omission. In this case, a foreign investor sued the Philippines for a breach of contract turned treaty violation under an umbrella clause in the Switzerland–Philippines BIT.64 However, the contract in question explicitly required that any dispute arising under the contract should be adjudicated in the courts of the Philippines, raising the charged question of why the tribunal would disrupt this specifically negotiated choice. Although Philippines eventually prevailed in the case, the tribunal’s broad interpretation of the umbrella clause seemed to prompt the ACIA negotiators to eliminate the controversial clause. There is further evidence of a tight feedback loop between key investor–state arbitral cases and particular negotiation choices that push toward less delegation of authority to third-party adjudicators in the ACIA.65 When it comes to the obligation to accord most-favoured-nation (MFN) treatment, some arbitral tribunals have ruled that this obligation can be used by a foreign claimant to import dispute settlement mechanisms from another treaty entered into by the respondent host state. In that way, claimants have been able to avoid preconditions to the commencement of investor–state arbitration in the primary treaty such as a mandatory period of litigation in the domestic courts of the host state. In the first ruling of this jurisprudential line, the Maffezini v. Spain tribunal relied on a comparative methodology (drawing on different formulations within the universe of BITs) to justify its broad interpretation of the MFN obligation, pointing out that where states parties have decided to confine the obligation to substantive rather than procedural differences they have done so explicitly in a given clause.66 The ACIA negotiators in turn have provided future tribunals with precisely that sort of explicit direction in footnote 4, which provides that “[f]or greater certainty . . . this Article shall not apply to investor–State dispute settlement procedures that are available in other agreements to which Member States are party.”67 In sum, according to the legalization indicators developed by Abbott and colleagues, the AIR’s level of obligation may be considered “moderate” or “low” in the presence of a number of contingent obligations subject to various national reservations. Its level of precision may be deemed “low” due to the broad reservation of discretion left to member states. Its level of delegation may also be regarded as “low” on account of characteristically high jurisdictional thresholds that seriously impede the initiation of arbitration. Overall, the AIR appears to fall between Type V and VII in the Abbott and colleagues’ scale of legalization and thus offers a far lower level of institutionalized protection for foreign investors than that extended by GIL.68 II. Critiquing the Nomothetic Assumptions Underlying Legalization A. Revisiting Legalization in the ASEAN Investment Regime The aforementioned glaring gap between GIL and AIR appears perplexing. On the one hand, a legalization drive in the AIR originated from within for a functional purpose, driven by an urgent need for deeper integration and interstate cooperation to reduce uncertainty and transactions costs in administering complex international relations in the investment area.69 From this perspective, the AIR’s characteristic low degree of legalization may demonstrate a deep-seated failure of cooperation in the area of intra-ASEAN investment.70 On the other hand, however, legalization does not seem to be fully internalized among ASEAN members. It has not become their true internal operational language in public decision making, while they may still use legalization as an instrument for facilitating interstate cooperation with non-ASEAN members. ASEAN members may still fear that legalization in the AIR would somehow destroy or transmogrify (“decenter”) their “imagined national essence[s].”71 Indeed, a number of scholars have vindicated these apprehensions against global law in general, particularly its Western version. Commentators have often put forward the proposition that law should be characterized beyond its mere manifestation as lex scripta, and appropriately represent dynamic, ever-changing reflections of distinct sociocultural lives.72 At first glance, Abbott and colleagues seem to be cognizant of this concern. For example, they claim that they deliberately distance themselves from any evaluative use of the concept of legalization.73 According to their claim, they simply employ this term purely for analytical and descriptive purposes, instead of advancing any explicit normative positions. Nonetheless, despite the authors’ disclaimer, the very gauging of the degree of legalization of representative international organizations in three main attributes (obligation, precision, and delegation) and ranking them (from I to VIII) cannot avoid being evaluative and therefore potentially normative. For example, the very fact that some of most advanced and sophisticated international entities, such as the European Union, are indeed ranked at the top of the list reveals certain normative traits underlying their legalization index. Or, a more accurate observation may be that it is the very experience and existence of those highly legalized (Western) organizations that tend to provide ideal types for legalization. This proposition appears to signify a certain causal relationship between legalization and socioeconomic development.74 By the same token, it also seems to connote the normative superiority of higher degrees of legalization, despite thoughtful disclaimers against any normative implications by the authors. Their legalization ranking system (from I to VIII) not only surveys legal reality but also highlight the “gap between reality and the ideal, between performance and the standard.”75 Importantly, those numerical indicators may privilege the traditional Western type of legal function, which emphasizes an economic role of legalization such as a deregulatory (laissez-faire) function, and eventually reproduce such type in other regions in the name of governance.76 The Western tradition of idealizing legalization dates back to Max Weber. The critical place of law and legalization in Max Weber’s celebrated categorization of rationality lends credence to such observation. The capitalist obsession to “master all things by calculation”77 coupled with the market’s inherent zeal toward predictability naturally constructed an ideal of legalization as a symbol of formal rationality.78 David Schneiderman observes that international investment law tends to demonstrate the Weberian legalization in that it is “an ensemble of impersonal rules that must be administered impartially by a cadre of professional experts.”79 On this account, the legal protection provided by international investment law is said to simply allow investors to rationally calculate their risks when operating abroad.80 The Weberian legalization is oft accompanied by the “inevitability” thesis, suggesting that it is “a natural, normal, and even inevitable process that all states everywhere would undergo if only certain pesky barriers were removed.”81 Legalization as the Weberian ideal type has recently been reincarnated as a “global culture” of legalization82 or “neoliberal legal globalization.”83 “World polity theory” aptly captures such trends, in particular the rise of GIL. Based on the thesis of global convergence of law,84 world polity theorists would highlight the fact that ASEAN members voluntarily accepted GIL as they interacted with “rationalized others,”85 including developed countries and international organizations. While ASEAN members may have seen somehow socialized to “want” GIL,86 world polity theorists would not treat this socialization process as a forced one.87 World polity theorists may instead represent GIL as an ideal (rationalized) form of economic governance and therefore that adopting GIL actually legitimizes the AIR.88 It is in this sense that legalization indicators adopted by Abbott and colleagues may translate into a tool for “global governance.”89 For Davis and colleagues, it is those social indicators that can shape the governance topology (“where, by whom, and in relation to whom governance takes place”), standard-setting processes, regulatory decision-making processes, and how the exercise of power is regulated and contested.90 B. Perils of Blinded Legalization Notably, Max Weber himself observed that the rise of legalism in the Western society resulted from the unique history of the West: the separation of religious and secular law allowing a “divorce” of legal and moral norms, “bureaucratization of the Catholic Church,” “Roman law heritage,” “European kings’ alliance with rising bourgeois interests,” and the existence of “highly specialized profession” handling law.91 David Trubek insightfully observed that modern Western law thinkers, driven by their “core conception,” which he referred to as a concept from their own society on the nature and function of law, might be led to believe that “measures to increase legal purposeness will both foster legal autonomy and strengthen liberal and democratic tendencies.”92 According to Trubek, this “ethnocentric” nature of the core conception derived from the Western culture and history is implicitly based on a “pluralist” political system under which law is a form of settlement out of competitive political struggle in a society.93 For this reason, Trubek viewed that the Western legal Idealtypus highlighting an economic role of law should not be mechanically universalized.94 In sum, tensions may rise when a nomothetic metric of legalization is applied through transplant to non-Western organizations that do not necessarily share the same genealogy, or its sociocultural and historical context.95 Admittedly, it might be unavoidable for Western observers to retain their own “rules of logic”96 when investigating non-Western norms and institutions and thereby to lose sight of non-Western societies’ own “accumulated body of interpretive constructs . . . that may appear in the form of proverbs, precepts, moral tales or myths.”97 However, if Western observers “impose,” explicitly or implicitly, their own categories of legalization to judge non-Western legal systems, they might “blind” themselves to the potency of non-Western versions of legalization.98 In other words, a universal and deracinated invocation of legalization tends to generate a static and commodified notion of law that can be transported across different social contexts.99 According to John Ohnesorge, such prescriptive rhetoric of legalization is driven too often by international business lobbies which vehemently pursue a deregulatory agenda which limits the discretion of government officials.100 In an emphatic objection to such a functional agenda of legalization, Ohnesorge disproves the relationship between law and development by highlighting economic development in the Northeast Asian countries, such as South Korea, Taiwan, and Japan. Economic successes of these countries, which share strong Confucian values, are not attributable to any salient role of law or rule of law.101 Concomitantly, this universalistic invocation of legalization is vulnerable to “attribution errors” in social psychology: Western observers might too easily attribute failures or suboptimal outcomes in foreign countries simply to lack of legalization. They tend to underestimate the contributions from non-legal factors, such as the limited capacity and resources.102 As a charged example, those observers often ascribe African countries’ underdevelopment to their alleged lack of legalization. However, their poverty and government failures may be more reflective of extralegal factors, such as colonialist legacies and other complex geopolitical settings. These attribution errors tend to dismiss the status quo too unreservedly and jump to “reflexive” prescriptions.103 Many (Western) policy makers and international organizations still believe that legalization, as both a beacon and a metric, is a sine qua non for development.104 Legalization or its alter ego of “good governance” is an important condition on the basis of which international organizations, such as the International Monetary Fund and the World Bank, determine the eligibility of funding to needy countries.105 Recently, the “law optimists” have claimed a “methodological superiority” over those who are skeptical of the role of law in development by providing empirical studies to support their position.106 For example, in the 1990s, economists such as Robert Barro and Daniel Kaufmann began to analyze cross-country data to identify any causal relations between the existence of legal institutions and socioeconomic development.107 In a similar vein, the so-called “measurement movement” has flourished, as is seen in various projects, such as the “Contract Intensive Money” (CIM) measuring the degree of contract enforcement in a country,108 the World Bank’s “Worldwide Governance Indicators,”109 and the “Lex Mundi” project surveying lawyers on certain questions allegedly related to law and legalization.110 However, these quantitative studies involving indicators tend to amalgamate variables measuring legal and non-legal factors, such as the wealth of societies,111 thereby exaggerating the attributive force of legalization to economic development. For example, some rule of law indices include such parameters as crime rate, number of judicial review cases, and number of lawyers per 100,000 persons, which may be related more to resources than purely legal factors.112 Similarly, the World Bank has measured the level of good governance based on the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence. According to that measure, the United States is at the ninetieth percentile while China at less than the fiftieth percentile. Yet, as discussed above, all these (functional) criteria have originated from the Western experiences and failed to consider the unique context which might produce incommensurable consequences as to these functions. Those reformers and donors, albeit well intended, are so often oblivious to the fact that “law is rooted in a social context that may well vary among nations.”113 In sum, the concept of legalization, as far as ASEAN is concerned, should not be defined as detached from the Southeast Asian sociocultural context. It must be “contextualized” by taking into due consideration ASEAN’s unique culture, history, and tradition, such as the ASEAN Way,114 which we now turn to. III. Contextualizing Legalization in the ASEAN Investment Regime A. Path Dependency (“ASEAN Way”) As discussed above, given the ASEAN members’ explicit neoliberal commitments to intra-ASEAN investment liberalization, the characteristically low degree of legalization in the AIR may seem puzzling. Moreover, one might reasonably suspect that even this limited ex ante legal design (law on the books) would never be implemented ex post as it was originally anticipated (law in action).115 Here, unique sociocultural attributes shared by ASEAN members tend to offer a key to solving the puzzle. In particular, one trait stands out that emphasizes informality, consultation, and consensus in collective decision making, often coined as the “ASEAN Way.”116 Once entrenched in the ASEAN structure at an earlier point in time, the ASEAN Way has since left an irreversible and indelible impact on subsequent institutional developments under the auspices of ASEAN, including the AIR.117 Peter Boyce aptly describes key operational terms of the ASEAN Way as follows: (1) A disposition to favour summit meetings . . . , (2) a recourse to musyawarah principles and concepts in the conduct of high level conferences, (3) a preference for concealed and often ‘unofficial’ preliminary transactions by special agents prior to formal ministerial conferences, (4) a preference for ad hoc rather than institutionalized practices, (5) an avoidance of judicial or arbitration machinery for the settlement of disputes, (6) readiness to accept mediation or good offices from friendly third parties in the region . . . .118 From this unique ASEAN perspective, legalization may be neither inevitable nor desirable.119 Delegalized strategies, such as informal diplomacy or trans-governmental networks, may coexist with legalization. Indeed, the ASEAN’s core ideology is comprised of two principles—musyawarah (consultation) and mufakat (consensus)—that originate from an anti-legal domestic decision making culture of many ASEAN members.120 Moreover, the creation of “Senior Officials Meeting” (SOM) in various sectors, such as economics, the environment, and science, as well as national secretariats in the foreign ministry of each member has prioritized trans-governmental cooperation in the ASEAN over more legalistic/judicial strategies.121 The informality of ASEAN is geared toward facilitating dialogue and cooperation among members even on the most sensitive issues or under politically charged circumstances.122 Miles Kahler aptly submits that: [T]hose regional institutions constructed with significant Asian participation remained highly informal and explicitly rejected legalization in their design. Formal rules and obligations were limited in number; codes of conduct or principles have been favored over precisely defined agreements; and disputes have been managed, if not resolved, without delegation to their-party adjudication.123 The ASEAN Way provides an “institutional point of reference” against which the opportunity costs of undermining sovereignty can be measured.124 Viewed from the perspective of the ASEAN Way, legalization incurs “sovereignty costs,”125 which connotes the fear of “uncontrollability”126 regarding “the potential for inferior outcomes, loss of authority, and diminution of sovereignty.”127 While sovereignty costs seem to be an inevitable and universal consequence from legalization,128 their actual calculation tends to vary depending on the context in which such calculation is situated.129 For example, ASEAN countries seem largely unconcerned with the sovereignty costs incurred by being members of the WTO, which is a fairly legalized organization. Indeed, it is telling that individual ASEAN members have a track record of challenging each other more via dispute settlement in the WTO than through processes in ASEAN.130 Yet the AIR with its low degree of legalization among ASEAN members—across all three dimensions of obligation, precision, and delegation—clearly evidences the piercing priority and recognition given by those same states of sovereignty costs in that specific institutional context. This peculiar asymmetry in embracing legalization between an extra-ASEAN matter and an intra-ASEAN economic matter characterizes the ASEAN Way. The ASEAN Way can be traced to the unique postwar history of this region.131 All of the ASEAN states (except for Thailand) had been colonized (whether de jure or de facto) and thus held an existential angst on their sovereignty even after the political struggle to achieve independence. The desire for respect and recognition in the post-colonial era turned state sovereignty and nationalism into something of a moral agenda.132 It is not surprising in this respect that the doctrine of noninterference, which is an essential element of the ASEAN Way, preceded the creation of the ASEAN and dates back to the famous 1955 Bandung Asian-African Conference.133 In that same time period, exogenous anxiety was intertwined with their endogenous security concerns over insurgency brewed by economic deprivation prevalent across the region in the 1960s.134 In sum, this prominent path dependency as to a passionate defense of sovereignty, which Tom Ginsberg dubs “Eastphalia,”135 tends to deter law, at least as it is understood in Western society, from playing a major role in the ASEAN integration process in general. The ideological tensions of the Cold War further complicated this external–internal security dilemma as some governments, such as Indonesia, were directly challenged by communist-led revolutionary movements. After initial reconciliatory mechanisms, such as the “Association of Southeast Asia” (ASA) and “Maphilindo,” bore no fruit, a critical incidence broke out. During the period from 1963 to 1966, Indonesia aggressively challenged—via both diplomatic and military interventions—Malaysia’s new government (the Malaysian Federation). This destructive campaign, coined Konfrontasi (“Confrontation”),136 has imprinted an indelible collective memory across the region characterized by strong appeal to the principles of sovereignty and noninterference. Shortly after the Konfrontasi ended, the Bangkok Declaration137 established ASEAN in 1967 to forestall this type of destructive behavior by embedding security cooperation in the region among the five founding members (Indonesia, Malaysia, Philippines, Thailand, and Singapore). This distinct ASEAN history illustrates a reverse sequence in interstate cooperation from a traditional neo-functionalist perspective. Note that the origin of interstate cooperation in the South-East Asian region can be located not in the economic area but in the security area. Compare this ASEAN experience with the original architecture of European integration under which economic cooperation preceded political or security cooperation.138 Given that the initial success of ASEAN security cooperation is attributable mainly to its informal structure centering on sovereignty and consensus, it would seem natural that the ASEAN Way would also set an enduring legacy in subsequent attempts to build economic cooperation in areas of trade and investment.139 Furthermore, these attributes of the ASEAN Way in shaping the strategic direction and level of economic cooperation among members is put into sharp perspective when ASEAN is compared with other international economic regimes. For example, in the case of the WTO, legalization has been a strong engine by which to accomplish a “meta-regime” of trade liberalization,140 both functionally (such as reduction of uncertainty) and constitutionally (through allocation of power between the WTO and its members). While ASEAN countries share, to some extent, this meta-regime of economic liberalization with the rest of WTO members, those ASEAN states, among themselves, are subject to another, perhaps more strongly entrenched, meta-regime of “a preference for informal elite-based diplomacy, decision-making by mutual consultation and consensus, and a preference for incrementalism.”141 As a pointed example of the latter, ASEAN has developed unique legal tools that allow for variegation in the implementation of hard commitments. The “ASEAN-X” formula enables flexible participation in cases where member states are not able to commit to a specific initiative. For example, under the 2003 Protocol to Amend the ASEAN Framework Agreement on Services, two or more member states may proceed to liberalize a particular services sector (or subsector) without extending that promise to a member state that is not yet ready to do the same.142 Variable geometry of this sort within ASEAN would be later enshrined in the 2007 ASEAN Charter.143 One might be tempted to simply equate the ASEAN Way with a visible anti-legal culture in the region, often attributed to so-called “Asian values” summarized as “less adversarial and litigious, less intent on demonstrating right and wrong, more concerned with avoiding conflict.”144 Critically, however, ASEAN countries are so culturally, ethnically, and religiously diverse that identifying common (lowest) denominators necessary to form a formal organization with binding legal force has been daunting.145 Their different languages, customs, moral systems, and stages in economic development146 have been an impediment toward a strong degree of legalization that would in turn potentially limit each nation’s exercise of its hard-won sovereignty. In this regard, Robert Scalapino observes that the “Asianization” which he defines as a “widening and deepening network of ties between and among Asian states of diverse political and cultural nature,” remains unfinished.147 Indeed, this unfinished Asianization also attests to the voluntary nature of another institution in the region made up of a majority of Asian states, the Asia-Pacific Economic Cooperation (APEC). Member commitments under APEC also lack hard levels of legal binding.148 Granted, the enduring legacy of the ASEAN Way has not been without periodic challenge, such as with the launch of the “ASEAN Charter” in 2007. The Charter confers international legal personality on ASEAN149 and implements a more legalized system especially through the creation of formalized institutions.150 Despite these challenges, the principles of noninterference, consultation, and consensus remain largely unscathed.151 As a pointed example, consider the proposal for “flexible engagement” that emerged after the damaging 1997 Asian financial crisis. This would have modified the principle of noninterference and allowed ASEAN members to freely criticize each other’s domestic policies under certain conditions. While Thailand and the Philippines supported this change,152 most ASEAN members fiercely rejected it.153 B. Negative Social Learning A social actor, whether human or state via anthropomorphic analogy,154 learns through their social interactions. While they may learn through direct experience (such as learning by doing), they may also learn through indirect experience (learning by observation). Learning by observation takes place on a “vicarious” basis by witnessing others’ behavior and its outcome.155 This competence of learning by observation protects social actors from numerous trials and errors that they would have experienced themselves.156 As Albert Bandura contends, “from observing others one forms an idea of how new behaviors are performed, and on later occasions this coded information serves as a guide for action.”157 Importantly, when a social actor builds its own behavioral model through observation, such modeling does not necessarily translate into mere mimicking or emulation of observed behaviors by others. Often, a social actor’s modeling involves a creative path by departing, partially or entirely, from the conventional behavioral patterns of others.158 Such negative social learning occurs when a social actor observes undesirable consequences that others may suffer due to the latter’s adoption of particular strategies or policies. This “vicarious punishment” leads an observing actor to avoid the same path that others have trodden.159 This social learning theory offers a powerful analytical tool that can explain the AIR’s selective adoption of GIL. Both emulation of and resistance to GIL demonstrate a complex manifestation of social learning by the AIR. ASEAN members did not merely imitate GIL mutatis mutandis; they made deliberate efforts to create a certain normative distance from the global legal culture, driven mainly from serious considerations of local conditions and capacities. By this concept of (negative) social learning, we intend to capture the AIR’s conscious efforts to selectively limit model standards of legalization found in GIL comprised of NAFTA Chapter 11 and a dense web of bilateral BITs. Here, protections against “expropriation” and provision of rights to “dispute settlement” under the ACIA render excellent cases in point. Certain ACIA provisions on expropriation exhibit a decreased level of legalization in terms of “obligation” while other ACIA provisions on dispute settlement manifest the same trend in light of “delegation.” 1. Indirect Expropriation Like most investment treaties, the ACIA guarantees compensation for both direct and indirect expropriation of foreign investment. While the concept and identification of direct expropriation is clear, the real difficulty lies in understanding what comprises indirect expropriation. In older BITs—as well as NAFTA Chapter 11—there is no real treaty guidance as to what criteria should be taken into account in assessing whether general regulation or taxation that causes economic harm to the foreign investor should be sanctioned as indirect expropriation thereby triggering an obligation on the host state to compensate the foreign investor. In 2004, however, the United States in a post-NAFTA amendment elected to reorient its protections against indirect expropriation by reference to U.S. constitutional law,160 specifically the U.S. Supreme Court’s decision in Penn Central Transportation, Co. v. New York City.161 This strategy reflects the United States’ likely risk tolerance on the meta-question of compensation for general regulation that interferes with the profitability of foreign investment. Yet strangely, other states often simply replicate this American treaty innovation without any amendment or tailoring. This duplication is particularly puzzling from a country like Australia whose constitutional position on compensation for government takings is much more conservative than that of the United States.162 Yet when it comes to the ACIA, the ASEAN states have avoided some of this problematic pathology. They have certainly drawn from the U.S. list of criteria that must be considered by an adjudicator in testing for indirect expropriation but they have also modified it in one important respect. In particular, For example, Annex 2(3) of the ACIA provides that determining the existence of indirect expropriation requires “a case-by-case, fact-based inquiry” considering such factors as “whether the government action breaches the government’s prior binding written commitment to the investor.”163 Note that in the U.S. version, it is enough that regulatory actions simply “interfere with distinct, reasonable, investment-backed expectations.”164 Compare this low threshold with the standard now set in the ACIA. Under the latter, it is the existence of a prior binding commitment that the state had specifically undertaken in writing which will be probative. The threshold is set significantly higher which, in turn, may better accommodate those ASEAN members with limited administrative capacity and internal clearing processes for dealing with prospective foreign investors. 2. Dispute Settlement Claimants (foreign investors) have tended to appoint those who have extensive expertise in commercial arbitration to investor–state arbitral panels. Those legal professionals then come to the new construct with an existing set of habits and practices without always considering whether those methods are appropriate when resolving a dispute under a broadly worded treaty compared to an individually negotiated contract. There is, in short, a fundamental conceptual difference between commercial arbitration (based on a specifically negotiated contract between key parties) and investment arbitration (where the subject matter of the dispute will normally engage general legal regulation that is passed at some later stage after entry into the BIT). However, a certain set of arbitral awards have simply ignored the parameters of the treaty bargain and instead created strained and largely implausible legal constructions.165 Under the ACIA, this concern about the contours of investor–state arbitration manifests itself in a range of provisions with various implications. In particular, the dispute settlement provisions of the ACIA confer significant authority on the ASEAN member states to impose their views on dispute settlement. For example, Article 40(3) of the ACIA confirms that any joint decision of the ASEAN member states shall not only be binding on a tribunal (using the language of NAFTA Article 1131(2)) but also that “any decision or award issued by a tribunal must be consistent with that decision.”166 There is then clear potential for the intervention of the “executive” into the activities of the “judiciary,” both broadly described. The cause of this ex ante reservation of authority—which, by definition, constrains the zone of discretion afforded to adjudicators—is once again the growing state concern over the quality of reasoning and outcome in investor–state arbitration. The ACIA’s negotiators have also been prudently mindful of the inevitable difficulties of reaching inter-governmental consensus in achieving a “joint interpretation,” which are significantly higher in the ASEAN (with ten members) than in the NAFTA (among three members). Even if the ASEAN members fail to reach consensus, the individual interpretations submitted by any ASEAN member are to be forwarded to the tribunal, giving it valuable (albeit partial) understanding of member state expectations of the legal orientation of the regime.167 IV. Delegalization: Reimagining Legalization in the ASEAN Investment Regime A. Legalization Through a Comparativist Lens The nomothetic assumptions concealed yet deeply rooted in the very notion of legalization are of Western genealogy, as critiqued in Part II. Therefore, uncritical transplantation of the conventional orthodoxy of legalization into the AIR is questionable, in particular considering the ASEAN’s unique sociocultural contexts, as discussed in Part III. Indeed, one should not hastily conclude that ASEAN members demonstrate full adherence to a particular (Western) version of legalization. Such a premature conclusion seriously hampers our intellectual due diligence in exploring the authentic status of legalization under the AIR.168 It is conceivable that different forms of legal rationality other than the Western version may exist.169 Here, we define “delegalization” as a deliberate departure from a preestablished normative pattern in a given issue area, such as GIL. Importantly, the AIR’s delegalization manifests itself as a legalized form. As a measured diversion from preexisting normative models, such as those embodied in NAFTA Chapter 11 or BITs, delegalization must be distinguishable from a failed legalization. Note that the AIR could have elected not to legalize such delegalization, and would not have adopted any investment treaties, such as the ACIA, in the first place. Ironically, however, the AIR does legalize this delegalization in terms of explicit treaty languages with a view to rendering a binding force. In other words, what ASEAN members appear to have intended through delegalization is twofold. On the one hand, prompted by path dependency and negative social learning discussed above, they desired to undo (“delegalize”) the standard level of obligation, precision, and delegation that has been deemed a gold standard in GIL. On the other hand, they also wanted to bind (“legalize”) such delegalization outcomes in a treaty form to accord them a formal and enduring status. Delegalization as an alternative form of legalization may be best understood from the standpoint of comparative law. More often than not, nomothetic assumptions behind legalization lead norm exporters to attempt, often futilely, to apply their own legal heuristic structured under their own legal system to a foreign context. Here, Ernst Rabel’s conceptual dyad of function and context may help lay bare those nomothetic assumptions.170 According to Rabel, function is an evaluative criterion as well as a referential point in comparative law. Any comparison between two different legal institutions or systems inherently connotes a certain purposeful enterprise of juxtaposing, investigating, and evaluating a common role or value of those different legal institutions or systems. In case of international investment law, legalization is regarded as an essential instrument with which to promote foreign investment. On the other hand, context provides a unique milieu against which the foregoing function plays out. Context is defined mostly by different sociocultural configurations. In this sense, NAFTA Chapter 11, which applies only to Mexico, Canada, and the United States, is situated very differently from the ACIA, which applies only to ASEAN countries, such as Indonesia, Malaysia, Thailand, Singapore, and the Philippines. When an outside observer applies this alleged common referential frame to the AIR, he or she tends to project his or her own assumptions on such a function, such as (law-driven) investment promotion, derived from a society and culture to which he or she has been exposed. The outside observer might lose sight of critical foreign details (contexts) and thus suffer intellectual astigmatism under which his or her vision of an observed object becomes obscure. As David Gerber warns, the outside observer may misread a foreign legal document, such as the ACIA, since he or she unconsciously employs his or her own contextualized cognitive device (“authority heuristic”) that concerns the authoritative influence of legal texts on decision makers.171 This biased cognitive device risks generating distorted knowledge and illusionary statements on foreign laws.172 Gerber also defines the extent of such cognitive distortion as “heuristic distance” which is measured by differences between the two sets of authority heuristics, i.e., one on the basis of which is compared and the other with which is compared.173 This heuristic distance may bankrupt any attempt to genuinely understand a foreign law and its legal system. Consider this telling example: The outside observer may disregard a sociocultural gap extant between his or her own context and the ASEAN context, regarding litigiousness or law’s general status as modus operandi of social affairs.174 Thus some of the truncated legalization of the AIR, even in its most evolved form (ACIA), may remain mysterious to him or her, given the ACIA’s firm resolution toward the intensification of intra-ASEAN investment flows. Under these circumstances, the outside observer may underappreciate the status quo of the ASEAN context, cultivate over-expectation toward the official goal, and even encourage ASEAN countries to step up legalization in the future. In sum, the outside observer may neglect a holistic picture on the AIR itself, i.e., its “functioning wholes,”175 which is a product of complicated negotiation between domestic politics and regional economics. In order to avoid such confusion and its grave consequences, outside observers should redefine legalization not from an unexamined assumption but from a careful construction. If we focus on the AIR’s unique historical and policy contexts, symbolized by the ASEAN Way and negative social learning, respectively, we can understand its delegalization strategy as the ASEAN’s own invocation of legalization. To ASEAN elites, treaties such as the ACIA, are an expressive avenue that confirms and declares the establishment of ASEAN’s investment community after a number of consultations and meetings. What the ACIA stipulates can be said to reflect what ASEAN members deem most appropriate, given their history, culture, and the current status of economic development and cooperation among them. Note that delegalization concerns “deliberately” mitigated levels of obligation, precision, and delegation. ASEAN members desired to document and officialize the sedimentations of their collective endeavors whose evolution started from the 1987 Agreement, went through the 1998 Framework Agreement, and finally led to the ACIA in 2009. From this social perspective, we can conceive delegalization as an alternative form of legalization. B. Enter Human Agency The new optic of delegalization heralds many different ways in which law and societal values interplay.176 Official texts may not be an exclusive source for normativity.177 As William Alford aptly observes, we must embrace law’s “complexity, malleability, and subtlety as both an expression and a molder of a society’s values and institution.”178 In this regard, Alford underscores a comparativist “due diligence” of “consider[ing] basic issues of historical experiences, institutional structure, political power and the like.”179 This critical nexus between law and society in turn reminds us of the imports of “human agency”180 in relation to legalization and legal institutions. After all, it is human agency (“personal element”)181 that operates, coordinates, and implements whatever norms and institutions. For example, Asian businesses often address particular trade barriers they face by resorting not necessarily to formal rules but to various layers of discretion held by Asian policy makers of all levels.182 Yet, such personal element, which connotes discretion or judgment, appears to run against the classical Weberian notion of law that emphasizes a mechanical operation system made up of preprogrammed rules and procedures. Under the Weberian ideal types, human agency may fall within the disapproving category of “substantive rationality.” Human agency plays a critical role in a delegalized environment by facilitating socialization and trust building among key players, such as government officials. Here, government networks, as witnessed in the APEC183 and the G20,184 can be harnessed for this purpose. Working-level officials, not necessarily high-ranking officials such as ministers, establish and maintain informal yet effective communicative fora in which they can discuss and review each other’s foreign investment policies in a candid and constructive manner. Such networks may produce some soft law, such as guidelines and recommendation, which are not legally binding yet nonetheless may induce the AIR members to voluntarily liberalize intra-ASEAN investment and integrate internal FDI flows.185 Admittedly, one may point to a limited, or even disappointing, trade and investment liberalization record under the APEC.186 Nonetheless, it must be noted that trade liberalization driven by ASEAN members in the 1980s and the 1990s was mostly conducted on a voluntary basis.187 This past liberalization pattern speaks in favor of soft legalization, which is also amenable to ASEAN’s time-honored tradition of the ASEAN Way. Two interrelated policy suggestions are in order. First, based on a collective vision of the ASEAN Economic Community (AEC), ASEAN leaders must provide working-level officials more political weight and encourage them to present feasible, not merely aspirational, steps toward further liberalization of intra-ASEAN investment. The best avenue for a government network for this purpose is the “Coordinating Committee on Investment” (CCI) under the ASEAN Investment Area (AIA) Council.188 The CCI, comprised of senior government officials responsible for investment policies, is an executive organ of the AIA Council. ASEAN leaders can collectively boost the CCI’s role and status by equipping their professional decision-making with political capital necessary to implement their policy recommendations. Second, the CCI should work with private businesses in identifying priority liberalization areas and formulating workable plans. As seen in the “ASEAN Business & Investment Summit” under the auspices of the “ASEAN Business Advisory Council,”189 the private business sector may help the CCI in implementing its investment-related guidelines by demanding transparency and peer review over domestic investment policies.190 In particular, given the ever-increasing importance of investment in regional (intra-ASEAN) supply chains, supply-chain connectivity191 must be part of discussions and deliberations with private businesses. From the supply-chain perspective, the conventional configuration of political economy in ASEAN countries must change. Conclusion This Article began by exploring the AIR’s distinct characteristics based on Abbott and colleagues’ concept of legalization. Clearly, the AIR exhibits a low degree of legalization measured against these benchmark indicators. We have sought to contextualize and explain this low degree of legalization through both the ASEAN Way and negative social learning. The adaptation and reimagination embedded into the AIR calls into question universalist assumptions underpinning the concept of legalization and highlights the idiographic nature of legalization from a comparative law perspective. Instead, delegalization can be an independent and entirely legitimate mode of legalization. Rethinking legalization should be directed both to outside observers and ASEAN members themselves. Outside observers should create within them a “critical space” in which they can acknowledge the provisional, not absolute, nature of assumptions underlying their contemporary beliefs that are susceptible to future changes.192 ASEAN members should also realize that their strategic adoption of legalization might not bear the fruit expected, as they cannot reverse engineer the historical causal relationship between legalization and economic development that had originated from Europe. Looking to the future, it may well be that some combination of collective political leadership,193 alacritous bureaucracy, and enthusiastic private sector input can translate into greater intra-ASEAN investment flows, with or without relevant treaty texts. We thank David Gerber for his excellent feedback on an earlier draft. Footnotes 1. See, e.g., Douglas North, Institutions, Institutional Change, and Economic Performance (1990) (viewing legalization as a form of institution and emphasizing its critical contribution to economic development); Stephen Knack & Philip Keefer, Institutions and Economic Performance: Cross Country Tests Using Alternative Institutional Measures, 7 Econ. & Pol. 207 (1995) (establishing the relationship between the existence of law and order and economic prosperity using a quantitative methodology); Tom Ginsburg, Does Law Matter for Economic Development? Evidence From East Asia, 34 Law & Soc’y Rev. 829 (2000) (highlighting a positive nexus between legalization and economic development). Regarding a critical analysis on this premise, see notably The New Law and Economic Development: A Critical Appraisal (David M. Trubek & Alvaro Santos eds., 2006). 2. Boaventura de Sousa Santos, Toward a New Legal Common Sense: Law, Globalization and Emancipation 314 (2002). 3. Frederick M. Abbott, NAFTA and the Legalization of World Politics: A Case Study, inLegalization and World Politics 136 (Judith L. Goldstein et al. eds., 2001) (observing that legalization (using hard law) under NAFTA contributes to the reduction of interstate transaction cost and risk premiums borne by private businesses). 4. Terence C. Halliday & Pavel Osinsky, Globalization of Law, 32 Ann. Rev. Soc. 447, 452 (2006). 5. U.S. Dep’t of State, Model Bilateral Investment Treaty (2004), www.state.gov/documents/organization/117601.pdf [hereinafter 2004 U.S. Model BIT]. 6. North American Free Trade Agreement, Can.-Mex.-U.S., ch. 11, Dec. 17, 1992, 32 I.L.M. 289 (1993). 7. John Boli & George M. Thomas, World Polity Formation Since 1875: World Culture and International Non-governmental Organizations (1997). 8. FDI Statistics, United Nations Conference on Trade & Dev. (UNCTAD), www.unctad.org/fdistatistics. 9. ASEAN Secretariat & UNCTAD, ASEAN Investment Report, at xv (2015). 10. See, e.g., Diane Desierto, Regulatory Freedom and Control in the New ASEAN Regional Investment Treaties, 16 J. World Inv. & Trade 1018, 1023 (2015) (identifying “how the ASEAN Member States have reserved uniquely expansive spaces of regulatory freedom and sovereign control in relation to obligations and protections built into the new ASEAN investment treaties”). 11. Kenneth W. Abbott et al., The Concept of Legalization, inLegalization and World Politics,supra note 3, at 17. 12. ASEAN Secretariat & UNCTAD,supra note 9, at v (finding that intra-ASEAN investment accounted for 18% of total FDI into the region in 2014). 13. See Miles Kahler, Legalization as Strategy: The Asia-Pacific Case, inLegalization and World Politics,supra note 3, at 165. 14. Tor Krever, Quantifying Law: Legal Indicator Projects and the Reproduction of Neoliberal Common Sense, 34 Third World Q. 131, 132 (2013). 15. Abbott et al., supra note 11, at 18 (emphasis added). 16. Konrad Zweigert & Hein Kötz, An Introduction to Comparative Law 40 (Tony Weir trans., 3d ed. 1998). On the role of functionalism in comparative law, see also Ralf Michaels, The Functional Method of Comparative Law, inThe Oxford Handbook of Comparative Law 339 (M. Reimann & R. Zimmermann eds., 2008). 17. Werner Menski, Comparative Law in a Global Context: The Legal Systems of Asia and Africa 7 (2d ed. 2006). 18. Asian Development Bank (ADB), The Role of Law and Legal Institutions in Asian Economic Development 1960–1995 (Executive Summary) 6 (1998). 19. See, e.g., Cai Congyan, China–US BIT Negotiations and the Future of the Investment Treaty Regime: A Grand Bilateral Bargain with Multilateral Implications, 12 J. Int’l Econ. L. 457, 499–502 (2009). 20. “American workers and companies have already paid a heavy price for China’s consistent disregard of its international. We have little confidence that an investment treaty will lead China to a newfound sense of obligation to fulfill its promises.” See Two Senators Concerned About Talks with China, Int’l Trade Daily Bloomberg, Sept. 24, 2015. 21. Cf. Paul Pierson, Increasing Returns, Path Dependence, and the Study of Politics, 94 Am. Pol. Sci. Rev. 251, 266 (2000). 22. The Huainanzi: A Guide to the Theory and Practice of Government in Early Han China (John S. Major et al. eds. & trans., 2013). The original text in the Huainanzi (淮南子) is as follows: “橘渡淮而爲枳.” 23. See, e.g., Beth A. Simmons & Richard H. Steinberg, International Law and International Relations (2007); Christian Brütsch & Dirk Lehmkuhl, Law and Legalization in Transnational Relations (2007); Am. Soc’y of Comparative Law (ASIL), Legalization of International Relations/Internationalization of International Law, Proceedings of the 96th Annual Meeting (2002). 24. Abbott et al., supra note 11. 25. Id. at 18 (“Note that we have defined legalization in terms of key characteristics of rules and procedures, not in terms of effects.”). 26. Id. at 26. 27. Id. at 24–28. 28. Id. at 25. 29. Id. at 28–31. 30. Id. at 30–31. 31. Id. at 29. 32. Id. at 29–30. 33. Id. at 31–34. 34. Id. at 32. 35. Id. at 33. 36. Id. 37. Id. at 34. 38. Id. at 22. 39. Sept. 16, 1987, 1522 U.N.T.S. 3. 40. Agreement Among the Government of Brunei Darussalam, the Republic of Indonesia, Malaysia, the Republic of the Philippines, the Republic of Singapore, and the Kingdom of Thailand for the Promotion and Protection of Investments, Dec. 15, 1987, 27 I.L.M. 612 (1988) [hereinafter 1987 ASEAN Agreement]. 41. Framework Agreement on the ASEAN Investment Area (Oct. 7, 1998), http://agreement.asean.org/media/download/20140119040024.pdf [hereinafter 1998 Framework Agreement]. 42.. ASEAN Comprehensive Investment Agreement (Feb. 26, 2009), http://www.asean.org/storage/images/2013/economic/aia/ACIA_Final_Text_26%20Feb%202009.pdf [hereinafter ACIA]. 43. 1987 ASEAN Agreement, supra note 40, pmbl. recitals 2, 3. 44. Id. art. II(1). 45. Id. art. IV(4). 46. See George O. White III, From Snowplows to Siopao—Trying to Compete in a Global Marketplace: The ASEAN Free Trade Area, 8 Tulsa J. Comp. & Int’l L. 177, 195 (2000) (viewing that the ASEAN market integration is an inevitable reaction to increasing competitive pressures from China); Richard Stubbs, ASEAN Plus Three: Emerging East Asian Regionalism?, 42 Asian Surv. 440, 454 (2002) (observing that the Asian financial crisis prompted East-Asian economies to find ways of protecting themselves from negative effects of globalization). 47. 1987 ASEAN Agreement, supra note 40, art. 3(a). See Suthad Setboonsarng, ASEAN Economic Cooperation: Adjusting to the Crisis, inSoutheast Asian Affairs 1998, at 18 (Derek Da Cunha & John Funston eds., 1998). 48. 1987 ASEAN Agreement, supra note 40, art. 3(a)(i) (emphasis added). 49. Id. art. 4. 50. 1998 Framework Agreement, supra note 41, art. 1 (emphasis added). 51. Id. art. 7(2). 52. Id. art. 1(d). 53. ASEAN Secretariat, ASEAN Economic Community Blueprint 2025, at 11 (2015). 54. ACIA, supra note 42, art. 47(1). 55. Id. recital 1. 56. Id. art. 4(a). 57. Id. art. 4(1) n.1. 58. Id. art. 1(c) (emphasis added). 59. Id. art. 9. For details on the reservation lists submitted by each member state, see ASEAN Comprehensive Investment Agreement, Invest in ASEAN,http://investasean.asean.org/index.php/page/view/asean-free-trade-area-agreements/view/757/newsid/871/the-asean-comprehensive-investment-agreement.html (last visited Oct. 7, 2016). 60. ACIA, supra note 42, art. 3(3). For overview of the liberalization sectors in ACIA, see Julien Chaisse & Sufian Jusoh, The ASEAN Comprehensive Investment Agreement 69 (2016). 61. ACIA, supra note 42, art. 4(c) n.2. 62. Malaysian Historical Salvors, SDN, BHD v. Malaysia, ICSID Case No. ARB/05/10, Award on Jurisdiction, ¶¶ 109–30 (May 17, 2007) (citing Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Mar. 18, 1965, 575 U.N.T.S. 159). 63. Cf. 1987 ASEAN Agreement, supra note 40, art. III(3) (including an umbrella clause). 64. SGS Société Générale de Surveillance S.A. v. Republic of the Phil., ICSID Case No. ARB/02/6, Decision of the Tribunal on Objections to Jurisdiction (Jan. 29, 2004), 8 ICSID Rep. 518 (2005). 65. Cf. Joel Vander Kooi, The ASEAN Enhanced Dispute Settlement Mechanism: Doing It the “ASEAN Way,” 20 N.Y. Int’l L. Rev. 1, 23 (2007) (observing that ASEAN states have traditionally avoided bestowing great power on the dispute resolution bodies). 66. Emilio Agustín v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Decision of the Tribunal on Objections to Jurisdiction, ¶ 51-4 (Jan. 25, 2000). 67. ACIA, supra note 42, art. 6 n.4(a). 68. Abbott et al., supra note 11, at 22. 69. Cf. Abbott, supra note 3, at 135, 136 (observing that legalization (using hard law) under NAFTA contributes to the reduction of interstate transaction cost and risk premiums borne by private businesses); Halliday & Osinsky, supra note 4, at 453. 70. Cf. Abbott, supra note 3, at 137 (viewing APEC as “a failed experiment in alternative legalization”). 71. Daniel C. Lynch, International “Decentering” and Democratization: The Case of Thailand, 48 Int’l Stud. Q. 339, 340 (2004). 72. Cf. Robert M. Cover, Nomos and Narrative, 97 Harv. L. Rev. 4, 9 (1982) (“A legal tradition is hence part and parcel of a complex normative world. The tradition includes not only a corpus juris, but also a language and a mythos—narratives in which the corpus juris is located by those whose wills act upon it. . . . These myths establish a repertoire of moves—a lexicon of normative action—that may be combined into meaningful patterns culled from the meaningful patterns of the past.” (emphasis added)). By contrasting the traditional, formalist conception of rules with the Wittgensteinian social conception, Margaret Radin also elucidated the same proposition. According to Radin, rules are a social conception determined essentially by social context, and therefore changeable and inseparable from mores and practices. See Margaret Jane Radin, Reconsidering the Rule of Law, 69 B.U. L. Rev. 781, 797–10 (1989). See also Paul W. Kahn, Freedom, Autonomy, and the Cultural Study of Law, 13 Yale J.L. & Human. 141, 141 (2001) (observing that “law is . . . constitutive of the self-understanding of individuals and communities”). 73. Abbott et al., supra note 11, at 19 (emphasizing that their concept of legalization is a “working definition, intended to frame the analytical and empirical” approaches). 74. Krever, supra note 14, at 132. 75. Id. at 144 (emphasis added). 76. Id. at 142. 77. Max Weber, Science as a Vocation, inFrom Max Weber: Essays in Sociology 139 (H.H. Gerth & C. Wright Mills eds., 1946). 78. David Schneiderman, International Investment Law as Formally Rational Law: A Weberian Analysis, inResearch Handbook on the Sociology of International Law (Moshe Hirsch & Andrew Lang eds., forthcoming 2018) (manuscript at 2), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2931770. 79. Id. at 3. 80. Zachary Douglas, The International Law of Investment Claims 1–2 (2009). 81. Cf. Lynch, supra note 71, at 341 (discussing the inevitability thesis behind “democratization”). 82. Id. at 344. 83. De Sousa Santos,supra note 2, at 314. 84. John W. Meyer et al., World Society and the Nation-State, 103 Am. J. Soc. 144, 146 (1997) (“Our forecast would be imprecise because of the complexity of the interplay among various world models and local traditions, but the likely range of outcomes would be quite limited.”). 85. John Boli & George M. Thomas, World Polity Formation Since 1875: World Culture and International Non-governmental Organizations (1997). 86. Martha Finnemore, National Interests in International Society 2 (1996). 87. “World system theory” views that a world system is made up of core and periphery states in accordance with global division of labor based on their political-economic power. See generallyImmanuel Wallerstein, The Modern World System (1974); Christopher Chase-Dunn, Global Formation: Structures of the World Economy (1989). 88. Meyer et al., supra note 84, at 148. 89. Kevin E. Davis et al., Indicators as a Technology of Global Governance, 46 Law & Soc’y Rev. 71 (2012). 90. Id. at 80. See also Sally Engel Merry, Measuring the World: Indicators, Human Rights, and Global Governance, 52 Current Anthropology S83, S92 (2011) (observing that indicators may be a “form of knowledge production and governance”). 91. David M. Trubek, Max Weber on Law and the Rise of Capitalism, 1972 Wis. L. Rev. 720, 736–39. 92. David M. Trubek, Toward a Social Theory of Law: An Essay on the Study of Law and Development, 82 Yale L.J. 1, 18–19 (1972). 93. SeeLawrence M. Friedman, The Republic of Choice: Law, Authority and Culture 201 (1990). 94. Trubek, supra note 91, at 751–52. 95. Cf. William P. Alford, Tasselled Loafers for Barefoot Lawyers: Transformation and Tension in the World of Chinese Legal Workers, 144 China Q. 22 (1995) (criticizing the tendency of some foreign observers of China to “mistake appearances for substance” under the rhetoric of the “tasseled loafers” phenomenon). 96. Bryan R. Wilson, A Sociologist’s Introduction, inRationality, at x (Bryan R. Wilson ed., 1970). 97. Id. at xi. 98. Id. at xvi. 99. See Trubek, supra note 91, at 751–52. 100. John K.M. Ohnesorge, The Rule of Law, Economic Development, and Developmental States of Northeast Asia, inLaw and Development in East and Southeast Asia 70, 97 (Christoph Antons ed., 2003). 101. Id. See also Robert Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (1990) (emphasizing the role of government in East Asian economic development). 102. See generallyRonald Inglehart, Modernization and Postmodernization: Cultural, Economic, and Political Change in 43 Societies (1997). See also Michael W. Dowdle, Heretical Laments: China and the Fallacies of “Rule of Law,” 11 Cultural Dynamics 287, 300–01 (1999). 103. Dowdle, supra note 102, at 308. Regarding this type of prescriptions, see, e.g., Paul Gewirtz, The U.S.–China Rule of Law Initiative, 11 Wm. & Mary Bill Rts. J. 603 (2003). 104. Kenneth W. Dam, The Law–Growth Nexus: The Rule of Law and Economic Development 2 (2006). 105. Ohnesorge, supra note 100, at 97. 106. Kevin E. Davis, What Can the Rule of Law Variables Tell Us About Rule of Law Reforms, 26 Mich. J. Int’l L. 141, 143 (2004) (emphasis added). 107. Id. at 144 (citing Robert J. Barro, Determinants of Economic Growth: A Cross-Country Empirical Study (1997)); Daniel Kaufmann et al., Governance Matters (World Bank Policy Research, Working Paper No. 2196, 1999), http://documents.worldbank.org/curated/en/665731468739470954/pdf/multi-page.pdf; Christopher Clague et al., Institutions and Economic Performance: Property Rights and Contract Enforcement, inInstitutions and Economic Development: Growth and Governance in Less-Developed and Post-Socialist Countries 67 (Christopher Clague ed., 1997). 108. Christopher Clague et al., Contract-Intensive Money, 4 J. Econ. Growth 185, 205 (1999). 109. Worldwide Governance Indicators, World Bank, http://info.worldbank.org/governance/wgi/index.aspx. 110. Simeon Djankov et al., Courts: The Lex Mundi Project (Nat’l Bureau of Econ. Research, Working Paper No. 8890, 2002), http://www.nber.org/papers/w8890. 111. Davis, supra note 106, at 146. 112. Benny Y.T. Tai, Developing an Index of the Rule of Law: Sharing the Experience of Hong Kong, 2 Asian J. Comp. L. 1, 7 (2007). 113. William P. Alford, Exporting the “Pursuit of Happiness,” 113 Harv. L. Rev. 1677, 1690 (2000) (reviewing Thomas Carothers, Aiding Democracy Abroad: The Learning Curve (1999)). 114. Xin Ren, Tradition of the Law and Law of the Tradition: Law, State, and Social Control in China 4 (1997). 115. See, e.g., Alan Watson, Law in Books, Law in Action and Society (Faculty Colloquium Series, Univ. of Georgia School of Law, Paper No. 1, 2006), http://digitalcommons.law.uga.edu/conf_coll_symp_colloquia/1. 116. The most conspicuous legal ground for the ASEAN Way may be found in the Treaty of Amity and Cooperation in Southeast Asia, art. 2, Feb. 24, 1976, 1025 U.N.T.S. 15,063, which spells out six fundamental principles (respect for sovereignty, freedom from external interference, noninterference in internal affairs, peaceful resolution of disputes, prohibition of the use of force, and cooperation) that guide ASEAN members’ foreign policies. See alsoAmitav Acharya, Constructing a Security Community in Southeast Asia 62 (3d ed. 2014) (quoting the former Singaporean Foreign Minister S. Jayakumar, who observed that “the ASEAN Way stresses informality, organization minimalism, inclusiveness, intensive consultations leading to consensus and peaceful resolution of disputes”). See also Lee Kim Chew, ASEAN Unity Showing Signs of Fraying, Strait Times, July 23, 1998, at 23. 117. Cf. William H. Sewell Jr., Three Temporalities: Toward an Eventful Sociology, inThe Historic Turn in the Human Sciences 245, 262–63 (Terrance J. McDonald ed., 1996); Margaret Levi, A Model, a Method, and a Map: Rational Choice in Comparative and Historical Analysis, inComparative Politics: Rationality, Culture, and Structure 19, 28–29 (Mark I. Lichbach & Alan S. Zuckerman eds. 1997). 118. Peter Boyce, The Machinery of Southeast Asian Regional Diplomacy, inNew Directions in the International Relations of Southeast Asia: Global Powers and Southeast Asia 175 (1973), quoted inAcharya, supra note 116, at 63. See also Geoffrey B. Cockerham, Regional Integration in ASEAN: Institutional Design and the ASEAN Way, 27 E. Asia 165 (2010). Admittedly, the intensity of the ASEAN Way has not always been consistent, depending on various factors, such as expanded membership, formalistic needs due to ever-increasing intra-ASEAN interactions, and changes in the regional security situation (such as Vietnam’s invasion to Cambodia in 1978). SeeAcharya, supra note 116, at 64, 69. 119. Miles Kahler, Conclusion: The Causes and Consequences of Legalization, inLegalization and World Politics,supra note 3, at 299. 120. Acharya, supra note 116, at 44. 121. Kahler, supra note 13, at 169–70. 122. Vinod K. Aggarwal & Jonathan T. Chow, The Perils of Consensus: How ASEAN’s Meta-Regime Undermines Economic and Environmental Cooperation, 17 Rev. Int’l Pol. Econ. 262, 269 (2010); Michael Leifer, ASEAN and the Security of South-East Asia 50 (1989); Tom Ginsberg, The State of Sovereignty in Southeast Asia, 99 Am. Soc’y Int’l L. Proc. 419, 421 (2005). 123. Kahler, supra note 13, at 165. 124. Leifer, supra note 122, at 151. 125. Kahler, supra note 13, at 177: Carl J. Green, APEC and Trans-Pacific Dispute Management, 26 Law & Pol’y Int’l Bus. 719, 730–31 (1995). 126. SeeCharles E. Lindblom, Politics and Markets: The World’s Political–Economic Systems 24 (1977). 127. Kenneth W. Abbott & Duncan Snidal, Hard and Soft Law in International Governance, inLegalization and World Politics,supra note 3, at 37, 53. 128. The familiar criticism of “democratic deficiency” as well as the related appeal to the principle of “subsidiarity” has always accompanied the evolution of the European Union. In the United States, domestic politicians often express their umbrage toward unfavorable decisions of the WTO tribunal, describing it as a “kangaroo court.” See Gary G. Yerkey, Sen. Baucus Calls WTO “Kangaroo Court” with Strong “Bias” Against the United States, 19 Int’l Trade Rep. (BNA) 1679 (2002). 129. Abbott & Snidal, supra note 127, at 57 (observing that sovereign costs may vary across states and temporal dimensions even on the same issue). 130. Panel Report, Vietnam v. Indonesia (Indonesia—Safeguard on Certain Iron or Steel Products), WTO Doc. WT/DS496/R (adopted Aug. 18, 2007); Request for Consultations Under Article XXIII.1 of the GATT 1994, Singapore v. Malaysia (Malaysia—Prohibition of Imports of Polyethylene and Polypropylene), WTO Doc. WT/DS1/R (adopted Jan. 13, 1995); Panel Report, Philippines v. Thailand (Thailand—Customs and Fiscal Measures on Cigarettes from the Philippines), WTO Doc. WT/DS371/R (adopted Nov. 15, 2010). 131. For this part of discussion, we draw mainly on Aggarwal & Chow, supra note 122, and Leifer, supra note 122. 132. See alsoJürgen Haacke, ASEAN’s Diplomatic and Security Culture: Origins, Development and Prospects 18–20, 31 (2003). 133. Id. at 16; Acharya, supra note 116, at 56. 134. Acharya, supra note 116, at 57. 135. Tom Ginsberg, Eastphalia and Asian Regionalism, 44 U.C. Davis L. Rev. 859 (2011). 136. See generally J.A.C. Mackie, Konfrontasi: The Indonesia–Malaysia Dispute 1963–1966 (1974). 137. Association of Southeast Asian Nations Declaration, Aug. 8, 1967, 6 I.L.M. 1233 (1967) [hereinafter Bangkok Declaration]. 138. Aggarwal & Chow, supra note 122, at 276. 139. Of course, this is not an evaluative statement. In fact, some observers believe that the ASEAN Way has hindered economic cooperation in intra-ASEAN trade and investment. Vinod Aggarwal and Jonathan Chow argue that the principle of “non-interference,” which constitutes the ASEAN Way, has severely hampered collective efforts in advancing regional interests, such as trade and investment. Aggarwal & Chow, supra note 122, at 276. 140. See generallyVinod K. Aggarwal, Liberal Protectionism (1985). 141. Aggarwal & Chow, supra note 122, at 267. 142. Protocol to Amend the ASEAN Framework Agreement on Services art. 1 (Sept. 2, 2002), http://investasean.asean.org/files/upload/Doc%2009%20-%20AFAS_Amendment_Protocol.pdf. 143. Charter of the Association of Southeast Asian Nations art. 21(2), Nov. 20, 2007, 2624 U.N.T.S.223 [hereinafter ASEAN Charter]. 144. Kahler, supra note 13, at 176. 145. Id. Paul M. Evans, Regional Institutions, Regional Identities, inEastern Asia: An Introductory History 451, 451–58 (Colin Mackerras ed., 3d ed. 2000); Harry Harding, International Order and Organization in the Asia-Pacific Region, inEast Asia in Transition: Toward a New Regional Order 325, 327 (Robert S. Ross ed., 1995). The dearth of sociocultural commonalities among ASEAN members appears to be one of contributing factors to the ASEAN’s characteristic “lowest common denominators” phenomenon, which tends to illuminate the yearning gap in the scope of investment liberalization between extra-ASEAN and intra-ASEAN FTAs. We owe this insight to an anonymous reviewer. 146. See David Pilling, The Fiction of a Unified, Harmonized ASEAN, Fin. Times, Dec. 10, 2015, at 9. See also Mari Pangestu et al., A New Look at Intra-ASEAN Economic Cooperation, 8 ASEAN Econ. Bull. (1992). 147. Robert A. Scalapino, Regionalism in the Pacific: Prospects and Problems for the Pacific Basin, 26 Atl. Cmty. Q. 174, 178 (1988). 148. See generally Sungjoon Cho, Rethinking APEC: A New Experiment for a Post-Modern Institutional Arrangement, inWTO and East Asia 381 (Mitsuo Matushita & Dukgeun Ahn eds., 2004). 149. ASEAN Charter, supra note 143, art. 3. 150. Id. ch. IV (Organs). 151. Id. art. 2(1)(2)(a) (affirming the principle of “respect for the independence, sovereignty, equality, territorial integrity of all ASEAN Member States”); id. art. 2(1)(2)(e) (affirming the principle of “non-interference in the internal affairs of ASEAN Member States”); id. art. 2(1)(2)(g) (affirming the principle of “enhanced consultations on matters seriously affecting the common interest of ASEAN”). See also Aggarwal & Chow, supra note 122, at 274. 152. Hiro Katsumata, Why Is ASEAN Diplomacy Changing? From “Noninterference” to “Open and Frank Discussions,” 44 Asian Surv. 237, 239 (2004). 153. Jürgen Haacke, “Enhanced Interaction” with Myanmar and the Project of a Security Community: Is ASEAN Refining or Breaking with Its Diplomatic and Security Culture?, 27 Contemp. Se. Asia 188, 189 (2005); Robin Ramcharan, ASEAN and Non-interference: A Principle Maintained, 22 Contemp. Se. Asia 60 (2000). Cf. Diane A. Desierto, Investment Treaties: ASEAN, inAsia Rising: Growth and Resilience in an Uncertain Global Economy 184, 197–99 (Hall Hill & Maria Socorro Gochoco-Bautista eds., 2013) (documenting a broad zone of discretion in some policy areas related to investment under the ACIA). 154. Regarding anthropomorphism, see generally Sungjoon Cho, An International Organization’s Identity Crisis, 34 Nw. J. Int’l L. & Bus. 359 (2014). 155. Albert Bandura, Social Learning Theory 12 (1977). While social scientists define and utilize social learning theory in various manners that may suit their particular research projects, one might still locate some coherent themes. For example, a specific process may translate into social learning only when it goes beyond an individual behavioral dimension and enters into a social unit or community of practice. Mark S. Reed et al., What Is Social Learning?, 15 Ecology & Soc’y (2010), https://www.ecologyandsociety.org/vol15/iss4/resp1/. Social learning theory has also been adopted to explain crimes and other socially deviant behaviors. See, e.g., Travis C. Pratt et al., The Empirical Status of Social Learning Theory: A Meta-Analysis, 27 Justice Q. 765 (2010); Wesley Jennings & Brandy B. Henderson, Social Learning Theory, inThe Encyclopedia of Theoretical Criminology 1 (J. Mitchell Miller ed., 2014). For the purpose of this Article, we draw mainly on the classical work by Albert Bandura. 156. Bandura,supra note 155, at 12. 157. Id. at 22. 158. Id. at 48. 159. Id. at 119. 160. 2004 U.S. Model BIT, supra note 5, annex B(4) (requiring an adjudicator to consider the “character of the government action” along with its “economic impact” and interference with “reasonable investment-backed expectations” in determining whether a regulatory measure could constitute indirect expropriation). 161. 438 U.S. 104 (1978). In engaging in these essentially ad hoc, factual inquiries, the Court’s decisions have identified several factors that have particular significance. The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct reasonable investment-backed expectations are, of course, relevant considerations. So, too, is the character of the governmental action. Id. at 124 (citation omitted). 162. Under Australian constitutional doctrine, more is required than simple deprival of economic value in grounding a claim for breach of section 51(xxxi) of the Commonwealth Constitution. Recently, the High Court of Australia ruled that an identifiable and clear “acquisition” of property (normally by the state) is a necessary condition of violation. See ICM Agric. Pty, Ltd. v. Commonwealth [2009] HCA 51, 81–86 (French, C.J., Gummow, & Crennan, JJ.); id. at 142–54 (Hayne, Kiefel, & Bell, JJ.). 163. ACIA, supra note 42, annex 2(3). 164. 2004 US Model BIT, supra note 5, annex B(4)(a)(ii). 165. Compare Pope & Talbot v. Government of Canada, Award on the Merits of Phase 2, ¶¶ 110–11 (UNCITRAL Apr. 10, 2001), https://www.italaw.com/sites/default/files/case-documents/ita0678.pdf, and SD Myers v. Government of Canada, Partial Award, ¶¶ 259–69 (UNCITRAL Nov. 13, 2000), https://www.italaw.com/sites/default/files/case-documents/ita0747.pdf (both ruling that NAFTA Article 1105 adopts an additive component that extends beyond the scope of protection at customary international law), with The United Mexican States v. Metalclad Corp. 2001 BCSC 664, ¶¶ 64–66 (Can.) (criticizing the Pope & Talbot and Myers awards on the interpretation of NAFTA Article 1105 as ignoring the plain text of that treaty provision). 166. ACIA, supra note 42, art. 40(3). 167. Id. art. 40(2). 168. Cf. Randall Peerenboom, Let One Hundred Flowers Bloom, One Hundred Schools Contend: Debating Rule of Law in China, 23 Mich. J. Int’l L. 471, 526–27 (2002) (introducing Donald Clarke’s criticism of the “imperfect realization of an ideal” approach that tends to “dictate” the questions to ask as to what would be relevant data and how one should interpret the phenomenon). 169. Teemu Ruskola, Legal Orientalism, 101 Mich. L. Rev. 179, 228 n.207 (2002). 170. See generallyErnst Rabel, Das Recht des Warenkaufs (1936). 171. David J. Gerber, Authority Heuristics, 79 Chi.-Kent L. Rev. 959, 959–60 (2004). 172. Id. at 969–72. 173. Id. at 972. 174. SeeDam, supra note 104. 175. Mary Ann Glendon et al., Comparative Legal Traditions 11 (3d ed. 2008). 176. Dowdle, supra note 102, at 308; Teemu Ruskola, Law Without Law, or Is “Chinese Law” an Oxymoron?, 11 Wm. & Mary Bill Rts. J. 655, 668 (2003) (“A moralistic black-and-white division of states into those having and those lacking the ‘rule of law’ runs the risk of being—and certainly being perceived as—an act of self-congratulation by those who deem themselves ruled by law.”). 177. See Jutta Brunnée & Stephen J. Toope, International Law and Constructivism: Elements of an Interactional Theory of International Law, 39 Col. J. Transnat’l L. 19, 48 n.117 (2000). See also Roderick A. Macdonald, Legislation and Governance, inRediscovering Fuller: Essays on Implicit Law and Institutional Design 305, 309 (Willem J. Witteveen & Wibren van der Burg eds., 1999). 178. William P. Alford, Law, Law, What Law: Why Western Scholars of Chinese History and Society Have Not Had More to Say About Its Law, 23 Mod. China 398, 412 (1997). Cf. Peerenboom, supra note 168, at 512 (observing that “implementation of the rule of law ideal is always a matter of degree”). 179. William P. Alford, Of Lawyers Lost and Found: Searching for Legal Professionalism in the People’s Republic of China, inRaising the Bar: The Emerging Legal Profession in East Asia 287, 297 (William P. Alford ed., 2004). 180. According to John Ohnesorge, human agency may be defined as the “capacity with which we are endowed to make choices, for good or ill, and the responsibility attendant upon choices we make.” See Ohnesorge, supra note 100, at 109. 181. Karen G. Turner, Introduction: The Problem of Paradigms, inThe Limits of the Rule of Law in China 3, 7 (Karen G. Turner et al. eds., 2000). See also Lee Leviter, The ASEAN Charter: ASEAN Failure or Member Failure?, 43 N.Y.U. J. Int’l L. & Pol. 159, 168 (2010) (viewing that the ASEAN Way connotes “relations-based governance”); Paul J. Davidson, The ASEAN Way and the Role of Law in ASEAN Economic Cooperation, 8 Sing. Y.B. Int’l L. 165, 167 (2004) (observing that the ASEAN Way emphasizes the “personal approach” in contrast to the Western Way that focuses on structural functions). 182. Michael Ewing-Chow, ASEAN Integration, the Rule of Law, and Investment Agreements, 107 Am. Soc’y Int’l L. Proc. 284, 284–85 (2013). 183. Cho, supra note 148, at 405–07, 410–12. See also Pasha Hsieh, Reassessing APEC’s Role as Trans-Regional Economic Architecture: Legal and Policy Dimensions, 16 J. Int’l Econ. L. 119 (2013) (discussing APEC’s “soft institutionalism”). 184. See generally Sungjoon Cho & Claire R. Kelly, Promises and Perils of New Global Governance: A Case of the G20, 12 Chi. J. Int’l L. 491 (2012). 185. Cf. Luu Huong Ly, Regional Harmonization of Competition Law and Policy: An ASEAN Approach, 2 Asian J. Int’l L. 291 (2012) (discussing the soft law approach to the harmonization of competition law in the ASEAN region). 186. See John Ravenhill, APEC Adrift: Implications for Economic Regionalism in Asia and the Pacific, 13 Pac. Rev. 319 (2000). 187. Cf. John Ravenhill, Fighting Irrelevance: An Economic Community with ASEAN Characteristics, 21 Pac. Rev. 469, 472 (2008); Deborah A. Hass, Out of Others’ Shadows: ASEAN Moves Toward Greater Regional Cooperation in the Face of the EC and NAFTA, 9 Am. U. J. Int’l L. & Pol’y 809, 829–32 (1994). 188. ASEAN Investment Area (AIA) Council, ASEAN (May 16, 2012), http://asean.org/asean-economic-community/asean-investment-area-aia-council/. 189. See, e.g., Press Release, ASEAN Business Advisory Council, Malaysia Hosts World Leaders at ASEAN Business and Investment Summit 2015 (Nov. 21, 2010), http://www.aseanbac.com.my/_content/news/Press_Release/PostABIS2015PressRelease-MalaysiaHostsWorldLeadersatASEANBusinessandInvestmentSummit2015.pdf. 190. We owe an anonymous review this insight. 191. Cf. Asia-Pacific Econ. Cooperation (APEC), Committee on Trade and Investment,http://www.apec.org/Groups/Committee-on-Trade-and-Investment.aspx. 192. Paul W. Kahn, Speaking Law to Power: Popular Sovereignty, Human Rights, and the New International Order, 1 Chi. J. Int’l L. 1, 8 (2000). 193. James V. Feinerman, The Rule of Law Imposed from Outside: China’s Foreign-Oriented Legal Regime Since 1978, inThe Limits of the Rule of Law in China,supra note 181, at 305, 317–18. © The Author(s) [2018]. Published by Oxford University Press on behalf of the American Society of Comparative Law. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)
TI - Legalizing the ASEAN Way: Adapting and Reimagining the ASEAN Investment Regime
JF - American Journal of Comparative Law
DO - 10.1093/ajcl/avy026
DA - 2018-06-01
UR - https://www.deepdyve.com/lp/oxford-university-press/legalizing-the-asean-way-adapting-and-reimagining-the-asean-investment-LXTQGpgm2d
SP - 233
EP - 266
VL - 66
IS - 2
DP - DeepDyve
ER -