1. Introduction
Investment law and adjudication has been said to be ‘one of the fastest growing fields of international economic law’.Footnote 1 Much of our attention has turned to the phenomenon of transnational arbitrations between private economic actors and public law bodies. This has not come without criticism. In recent years, the Transatlantic Trade and Investment Partnership and the EU-Canada Comprehensive Economic and Trade Agreement triggered a publicized and heated debate over investor-state arbitration as a mechanism of global regulatory governance.Footnote 2 Is there a need for such mechanism between economies with well-functioning legal systems? Why privilege a private justice system over courts of sovereign states? One striking aspect of these debates is the absence of historicization. Little exploration has been made of history. The absence of extensive historical work is not wholly accidental. At times, the self-proclaimed lack of history has served to justify the system in place. To say that ‘international investment law is a very young discipline, with the length of its existence appropriately measured in years, rather than decades, let alone centuries’Footnote 3 means that any problem should be excused as a beginner's mistake. Alternatively, the history of international investment law has also been presented in a bold or sweeping linear fashion (‘the uniqueness of the current IIA [international investment agreements] network is a product of an historical evolution going as far back as the Middle Ages’Footnote 4) so as to suggest that what is relevant is really only the ‘era of modern investment treaties [which] began in 1959’.Footnote 5
One notorious exception to this trend is Kate Miles's book, The Origins of International Investment Law, in which she showed that the field did not emerge in 1959 with the advent of bilateral investment treaties.Footnote 6 She traces the origins of international investment law back to the seventeenth century, when Europeans developed legal tools to protect expanded conceptions of property and promote the interests of capitalists investing abroad.Footnote 7 That today's regime protects investment at the expense of other societal and environmental interests, Miles argues, is a direct consequence of its historical roots in colonialism and imperialism. The contribution of this book to the field is undeniable,Footnote 8 and it should be commended for having situated the discussion at the interface of capitalism and imperialism. That said, much remains to be done to uncover the long-standing and complex relationship between the state and the merchants. For Miles's account of the development of an international law on foreign investment rests solely on sovereign power: In her story, merchants are secondary actors whose interests are too often subsumed by or simply aligned with that of their national states. This is a rather poor description of the intricate relationship that public power and private ownership developed in setting up a global regime for the protection of foreign property and investment. If we want to acquire a more thorough and realistic understanding of the ways in which legal instruments and institutions have been developed to organize global commercial activities, we need to look beyond interstates relations; attention should be directed to what Martti Koskenniemi has called ‘the relations of sovereignty and property’.Footnote 9
In this article, I want to add to the ongoing efforts to write the history of international arbitration in commercial and investment matters by including this missing dimension of entanglement (sovereignty/property). I will examine in close details the ways in which the Spanish crown and its concessionaries set up a mechanism to settle legal disputes pertaining to the transatlantic slave trade. It is well-known that the slave trade caused the forced migration of 12 to 15 million African people over five centuries.Footnote 10 This was not carried out outside law and order. From the very beginning, European states and merchants organized it within a (national and international) legal framework. The slave trade's legal basis can be found in the history of asientos de negros, namely, the contracts by which the Spanish crown granted an individual, a company or another state the privilege – and often the monopoly – to supply African slaves to the Spanish colonies in America.Footnote 11 What is much less known is the dispute settlement mechanism that pertained to the slave trade.Footnote 12 I will show that the transformation of asientos de negros from limited royal contracts to large-scale monopolies awarded to foreign chartered companies during the course of the sixteenth, seventeenth and early eighteenth centuries was accompanied by the creation of an international commercial arbitration system.
Such a system did not exist at the turn of the sixteenth century, when the Spanish crown decided to grant individual licences to import black slaves to the Americas. Rapidly, almost all of the licences fell into Portuguese hands, since they monopolized the sources of supply in Africa. This triggered hostility from the Sevillian trading establishment. But having the slave trade run by Portuguese subjects was an unexpected and much welcome source of revenue for the Spanish king, who commissioned specific judges to safeguard his interests (Section 2). With the revolution of Portugal in 1640, the slave trade had to be organized differently. Refusing to deal directly with the Dutch or the English – the largest slave traders by then – the Spanish authorities were drawn by the project of two Genoese bankers. The latter insisted on hiring private judges to guarantee the execution of their contract. From that point on, all slave trade legal issues would be resolved through a separate mechanism available both in the imperial centre and the colonies (Section 3). As foreign chartered companies became more and more involved, the turn to international arbitration intensified. This evolution culminated in 1713, when Spain and England chose arbitration as the dispute settlement system par excellence to resolve commercial problems that might arise in relation to the English South Sea Company's slave trading operations in Spanish America (Section 4).
While the focus of the article is historical, the interest feeding it lies in the present.Footnote 13 The rise of international investment and commercial arbitration has generated a number of concerns. Critics have pointed out that this type of dispute resolution is technically poor, that it strengthens the hands of powerful companies, and that it bypasses national judicial systems in favour of an elite group of arbitrators.Footnote 14 In response to these critics, many actors in the field have put forth small-scale or targeted reforms, often of a procedural nature. One frequently-made suggestion is that we should strengthen arbitrator selection procedures instead of moving away from party-appointed arbitrators. ‘There is no need to gut the arbitration selection system to fix it’.Footnote 15 It is precisely this kind of reforming move that I want to question by looking at the slave trade's dispute settlement system. It appears that many aspects of today's debate are akin to the set of issues that emerged as the slave trade's dispute settlement system was put into place and practiced. In my conclusion, I will address the question: What does it mean that similar legal issues arose already in the sixteenth, seventeenth, and eighteenth centuries, in relation to the commercial enterprise that epitomized the most exploitative form of globalization?
2. Portuguese trading networks and the early licencing system
In 1513, the Spanish crown issued the first individual licences for the importation of ‘a great multitude of blacks to help the Indians in the work of the mines, the tillage of the land . . . and other husbandry’.Footnote 16 The royal licencing system was meant to respond to the growing demands on the labour force in the West Indies and to find an alternative to the system of forced labour of the Indian population that had come under attack in Europe.Footnote 17 Licences were to be valid for a period of time and granted, for a set number of slaves, to Castilian merchants, who would then arrange a slaving voyage.Footnote 18 We know that the start of the operation was rather amateurish: The Spanish king gave most licences to his favourites, who did not care much for the trade.Footnote 19 As they generally did not have any experience with slave trading, they sold their licences to third parties or used them for financial speculation. ‘A roaring trade in licences for the import of fixed numbers of black slaves actually began’, explains Andrea Weindl, ‘without resolving the problem of labour shortages in the New World’.Footnote 20
From 1532 onwards, the Casa de Contratación de Indias (House of Trade) in Seville took charge of managing the slave trade, including the issuance of and control over slave-trading licences. That the Spanish crown decided to regulate the slave trade through the House of Trade, just like any other colonial mercantile activity, meant not only that it sought to subject the importation of black labour to a strict governmental control – against the settlers’ desire – but also that it sought to recover revenues from the slave trade.Footnote 21 Realizing the considerable financial gains that could be made, Spanish authorities increased the price of licences per slave from two ducats in 1513 to 30 ducats and 20 reals customs duty in 1561.Footnote 22 This heavy hands-on involvement of the Spanish state in the operation of the slave trade would last until the last quarter of the eighteenth century.
With the licencing system being set up, more and more legal issues arose. In Spain, the Real y Supremo Consejo de Indias (Council of the Indies) was the highest judicial organ in matters involving the Indies. In the colonies, it was the Royal Audiencias (courts of justice), presided over by the viceroys, that dealt with commercial disputes. Almost every cédula (decree) promulgated by the Crown in relation to the slave trade gave rise to judicial proceedings in the Americas. One example is the royal decree adopted in May 1556 that tried to address settlers’ concerns about high tariffs by fixing a maximum selling price for slaves. As soon as they learned about the decree in July 1557, buyers in Mexico filed complaints against slave traders, asking for the recovery of overpayments or a decrease of obligations. The Audiencia had to decide whether the fixed price applied to slaves who were bought, shipped and/or sold during the ten-month lapse that existed between the passing of the decree in Madrid and its publication in Mexico. As the court did not know which way to go, it sought advice from the Council of the Indies in Seville.Footnote 23 One consequence is that it would take years for such cases to be resolved.
The involvement of foreigners was a complicating factor in the royal licencing system. Under the monopolistic system, participation of non-nationals in any kind of trade with the Indies was legally forbidden. However, the Portuguese were involved from very early on: Since Spain had no trading posts in Africa, Spaniards necessarily had to liaise with their neighbours who had privileged access to Africa.Footnote 24 The steady rise in the price of slave licences in the mid-sixteenth century made Portuguese professional traders even more prominent in the operations. Their participation peaked with the occupation of Portugal by Spain between 1580 and 1640. Indeed, as soon as Philip II secured the throne of Portugal for himself, he began to conclude licencing agreements with his new subjects, and especially with Portuguese rendeiros (holders of the royal tax-farming contract on slave export duties in Africa).Footnote 25 At that point, there were three major areas of slaving – the Cape Verde Islands, São Tomé, and Angola. Philip II signed contracts for the supply of slaves to the Spanish Indies from these three regions. In return for their licences, Portuguese rendeiros would pay the crown a percentage of their profits.
These contracts were met with growing hostility on the part of Sevillian merchants. In fact, the ever-expanding participation of the Portuguese in the slave trade triggered a heated debate in the 1580s that opposed the Council of the Indies, on the one hand, to the Consulado de Sevilla, a powerful guild or consortium of Sevillian merchants, together with the House of Trade, on the other hand. The debate was not about the legitimacy of the slave trade; it was about who should benefit from it. Enriqueta Vila Vilar has shown that, by then, everyone had come to the idea that the slave trade would best be carried out by means of a monopoly contract.Footnote 26 But who was to obtain the lion's share? The Council of the Indies was in favour of the Portuguese, because of their substantial capital available, direct access to the factories of Cacheu and Luanda, and the benefit of long experience. But the Consulado de Sevilla wrote to the king to warn against the infiltration of converso merchants or ‘New Christians’Footnote 27 in the Indies and denounce the draining away of Spanish silver. In an attempt to hold onto its declining share, the Consulado de Sevilla tried to obtain the monopoly over the administration of slave-trading licences for a period of nine years. The deal was never concluded. In 1595, the Spanish authorities signed what is now called ‘the first important asiento de negros’Footnote 28 with Pedro Gomez Reynel, a wealthy courtier from Lisbon, whose financial offer was deemed more advantageous. Reynel undertook the obligation to deliver 4,250 slaves to America per year, for a duration of nine years. In return, he agreed to finance an amount of 100,000 ducats – a huge amount at the time – to be paid annually to the crown.Footnote 29
This contract is usually viewed as a stepping stone because it embodied all the characteristics of subsequent contracts.Footnote 30 But this asiento is also important because it introduced jueces de comisión in the slave trade legal framework. Specific judges were commissioned either by the king (in Spain) or the viceroy (in the Indies) to hear all asiento-related cases, and thus ‘to avoid the drawbacks of judicial delays’.Footnote 31 These were not private judges insofar as they were selected from ordinary judges and worked together with a warrant officer and a clerk who were also specially appointed. Neither was it a strictly separate or exclusive judicial procedure, given that Reynel and all licences holders kept the right to address themselves to ordinary courts. Let us recall that the institution of juez de comisión was well established in Spain: The infant state administration was in the hands of officers and commissioners who were, respectively, the ordinary and extraordinary agents of the monarch.Footnote 32 Officers tended to be proprietors of their posts and thus fairly independent; besides, the honour associated to their posts meant that officers were able to grow rich and could be ennobled; ‘often they were not very diligent in performing their tasks’.Footnote 33 In comparison, commissioners had duties limited by their letters of commission, which could be revoked at any moment. Their more vulnerable status and the greater docility that resulted from it made them the administration's main instruments. This is why the introduction of jueces de comisión in the slave trade operation should be seen, first and foremost, as a measure meant to ensure the respect of the monarch's will.Footnote 34
Busto de Bustamante, the king's counsel at the House of Trade, was commissioned to supervise the implementation of Reynel's asiento.Footnote 35 As the main juez de comisión, he was entitled to visit ships prior to their departure to America and upon their return to the Iberian Peninsula, and report any case of fraud and corruption. His jurisdiction extended beyond the termination of the contract, so as to be able to recover any remaining debt and prosecute those responsible of fraudulent activities. Unfortunately, little is known about the decisions Bustamante took in relation to the asiento. More has been written on the uneasy relationship Reynel maintained with his creditors – a handful of wealthy bankersFootnote 36 – and on the men he put in place to run operations. In addition to employing his two brothers as general managers in Seville, he had agents working for him in Cartagena, Vera Cruz, Puerto Rico, Bahia, and Rio de Janeiro. This indicates that from (at least) 1595 onwards, Portuguese asentistas built an administrative and financial infrastructure across the Hispanic Empire.Footnote 37 Their agents came to play a central role in the system, managing both the legal and illegal slave trade. Although their obligations and duties were duly set out in the asiento, these middlemen were very powerful, ‘vested with full powers of the asentistas, they were actually the ones doing the business’.Footnote 38
And yet, Reynel's enterprise did not go as planned. His agents faced strong resistance in the Americas, and Reynel saw his asiento revoked in 1601 after he was found guilty of ‘colluding with smugglers’.Footnote 39 For a decade, the Spanish administration struggled to find a reliable (and lasting) asentista.Footnote 40 These repeated setbacks led the Consulado de Sevilla to regain leverage with the king. Complaints against the involvement of Portuguese merchants in the Indies had continued, uninterrupted, to emanate from the ranks of Castilian officialdom.Footnote 41 This time, their criticism focused on the navigation system.Footnote 42 A special Junta was set up to review the navigation laws. How should transportation be done? The Consulado de Sevilla made the following proposal: In addition to prohibiting navíos sueltos, the authorities should require all slave ships to transit through Seville on their way from Africa to America. The reaction from Lisbon was quick – not only merchants but also state officials opposed such a ‘preposterous project’.Footnote 43 After some hesitation, the Junta endorsed the solution put forth by the Consulado de Sevilla, so that between 1611 and 1615, all slave ships could go to the Indies only via Seville. This heavy-handed attempt to re-boost Seville's commercial activities, however, merely suppressed the legal trade and aided a flourishing contraband trade. The income shortfall for the Spanish treasury was so tremendous that another Junta was established to discuss the future organization of the slave trade. In March 1614, high officials from both the Spanish and the Portuguese governments met at the house of the President of the Council of Castile to discuss the matter.Footnote 44 The conditions under which the following asiento was concluded a year later with Antonio Fernández Delvás show that a compromise had been reached.Footnote 45
As this incident makes clear, the slave trade had become a matter of utmost importance to both governments. By allowing Delvás – a Portuguese slave trade magnate – to be in charge of the operations, Madrid hoped to increase its benefits while responding to the labour shortage in the colonies. For a while, its wishes seemed to come true: Within three years ‘more slaves arrived in the Indies than in any previous period’.Footnote 46 So why did Delvás have to declare bankruptcy in 1621? Not everyone was happy with the benefits he made.Footnote 47 The traffic had become almost impossible to control, and the Royal Treasury complained repeatedly to the Council of the Indies about massive losses incurred due to fraud. But if the state could not count on its officers to supervise the implementation of the asiento, neither could Delvás. Even though the latter made use of all legal means available to him, including the use of jueces de comisión, he could not prevent royal officials from throwing a spanner in the works:
In Seville there were constant disagreements about the issuance of registers and the boarding of crews, provisions or goods . . . In the Indies, things were even worse. In the ports of permission, [officers] were as unfaithful to the interests of the King as to those of Delvas. Because officials were working hands and hands with interlopers, they either had to be bought or one would have them as enemies . . . In the ports that were not permitted, fraud was almost ubiquitous. Pretexting bad weather or damages, owners of slave ships with no license could come and disembark with the connivance of royal officers.Footnote 48
The point that I want to make is that it was not clear how one could ensure a rightful course of actions in such circumstances. The next asentista, Manuel Rodríguez Lamégo, hired his own coast guards and police force in the Indies to oversee the actions of royal officials. This may partly explain why his asiento was the first slave-trading contract to run until its expiration (1623–1631). More decisive, however, is the tacit agreement that was reached between the state and the merchant: The Spanish authorities, in desperate need of money, showed their good will towards the slave trader, who in turn did not shy from resorting to fraudulent activities to cover his expenses.Footnote 49 That this equilibrium was fragile can be seen in the running of the next asiento (1631–1638). Although the contract had been meticulously drafted, the contractors saw their business hampered by the continuing malevolence of royal officials, and also by the monarch's whims,Footnote 50 the war with Holland,Footnote 51 and Portugal's loss of African possessions.Footnote 52 Another concern was the increasing power of the Inquisition throughout the Hispanic Empire against ‘New Christians’. As a consequence, no Portuguese slave trader submitted a bid for the next contract. Former asentistas eventually offered to renew their contract, but on the condition that sanctions be made more effective against corrupt royal officials.
This proposal did not go through. The revolt of Portugal in December 1640 and the recovery of its political independence prompted the Spanish king to break off all commercial relations with his neighbour: ‘An angry and vindictive Philip IV, egged on by Casa de Contratación elements, took the only revenge immediately available to him; he cancelled the asiento and prohibited his American subjects from buying slaves from Portuguese sources.’Footnote 53 For a decade, the Council of the Indies refused to sign large contracts for the slave trade, even though merchants from Portugal, Holland, and England offered their services. A flow of desperate memoranda about labour shortages came from virtually all American colonies.Footnote 54
3. Foreign involvement and the introduction of ‘judges-conservators’
One such memorandum was presented to Philip IV during the negotiations that led to the next slave-trading arrangement. It sought to reinforce the claim that the limbo in which the legal slave trade had found itself had to stop: The Hispanic Empire's viability depended on the uninterrupted flow of an enslaved labour force. Allusion was also made to the soaring number of foreign (mostly Dutch) interlopers taking over the trading networks in the Indies, and hence to the colossal financial losses incurred by the Spanish Royal Treasury. The Dominican priest who was negotiating on behalf of two interested contractors managed to convince the king of the viability of their project. In July 1662, the Spanish administration signed an asiento with Domingo Grillo and Ambrosio Lomelín, two wealthy Genoese merchants living in Seville. Their 19-point contract is a turning point in the evolution of the slave trade's legal framework, not least because it introduced a new judicial office, that of the juez conservador.Footnote 55
The Grillos – as they would be known in the ‘New World’ – were not just any other foreign merchants; they were bankers to the Spanish king and ‘knew how to manipulate the strings of power at the Spanish court’.Footnote 56 Their religion and nationality were also seen as an advantage.Footnote 57 By then, most Western monarchical powers had acquired lands in the Americas as well as trading posts along the African coast; they had become slave traders and had learned from the Portuguese that the slave trade was the best way to access the American market. Indeed, the asiento trade was not only a business venture in its own right but also the only way by which foreigners could legally infringe on the Spanish colonial monopoly on trade. Smuggling goods or interloping, which had flourished on all sides, had proven to be a risky activity. With the asiento in hand, one could bring in manufactured commodities from Europe to sell to the settlers and purchase (slave-produced) cash crops in American fairs directly, instead of in Seville. Obtaining the asiento de negros thus became the subject of fierce competition among foreign contractors. Merchants from all over Europe ‘longed for the Assiento itself, since by its possession the risks of clandestine trade might be avoided and the profits of middleman and principal united in their hands’.Footnote 58 The crown had to decide to whom it would yield the lucrative trade. Given that Philip IV refused to do any more business with the Portuguese, those left were merchants from three competing – and problematic – colonial powers: Holland, England, and France.Footnote 59 What Philip IV chose to do in 1662 is to turn to intermediaries.
He granted the Grillos the exclusive right to procure and sell slaves in the Spanish colonies in America (1662–1674). In comparison to what had been done previously, the two Genoese merchants were not to resell licences but to organize the slave trade by themselves.Footnote 60 The terms of the contract obliged them to ship a total of 24,500 piezas de Indias to the Indies in the space of seven years. One pieza de Indias referred, generally speaking, to a young adult male meeting certain specifications as to size, physical condition, and health. The very young, the old, and females were commodified as fractional parts of a pieza de Indias. As Philip Curtin noted, this measure was convenient for Spanish imperial economic planning ‘where the need was a given amount of labour power, not a given number of individuals’.Footnote 61 It is also worth noting that the Grillos were not slave traders but investors; they needed to obtain their slaves from somewhere and were allowed to purchase them from ‘any nation at peace with Spain’ (article 8). In practice, they relied almost entirely on the supply of slaves provided by companies from northern Europe: The English Royal African Company (in Barbados and Jamaica) and the Dutch West Indian Company (in Curaçao) became their main subcontractors.Footnote 62
To supervise the operations, Grillo and Lomelín could appoint up to three agents ‘in any port or city where they might be needed’ (article 11). These agents would be conceded all sorts of immunities and considerations by the Spanish administration. Most importantly, the contract specified that their agents could not be prosecuted by ordinary justice in the Indies. Instead, their agents’ actions were to be overseen by ‘un juez privativo, conservador de este asiento’ – that is to say, a private judge, whose role was to defend or protect (‘conservar’) the interest of the asiento and to make sure that no slaves other than those of the Grillos would be introduced into the Indies during the contract's lifetime (article 12). These judges had to be Spanish nationals and chosen from the ‘most disinterested servers of the Crown’ (article 12). They were to be nominated by the Council of the Indies from a list of candidates submitted by the asentistas, who would also pay their salaries. These judges would have exclusive jurisdiction over all (civil and criminal) disputes arising out of the asiento, and their decisions could be appealed only to the Council of the Indies. In short, from 1662 onwards, a specific dispute settlement mechanism was established to adjudicate all slave-trade matters.
The initial project that the Dominican priest had submitted to the king on behalf of the Grillos already envisaged the enrolment of private judges to guarantee the proper execution of the contract. Where had he got that idea from? At the time, many foreign merchants lived in Seville or Cadiz, the hub for the Indies trade. Although not directly involved (as it was prohibited) they participated indirectly in the trade and were familiar with the institution of the juez conservador. Businessmen doing colonial re-export were, indeed, members of corporative mercantile organizations (‘nations’) that had, since the early sixteenth century, striven to receive special privileges for their members.Footnote 63 Each nation had a consul that was responsible for ensuring that treaties were complied with, for solving internal problems within the community, and for acting as their representative. By the mid-seventeenth century, however, consuls were gradually set aside; most nations came to benefit from a judge-conservator to settle lawsuits between their members and Spaniards or other foreigners.Footnote 64 This private mechanism not only accelerated lawsuits and made them less expensive, but also made sure that the merchants’ interests were duly taken into account. The nations’ judges-conservators facilitated trade, notably by putting a stop to any excess on the part of the contraband inspectors.Footnote 65
Even though the idea to transpose the juez conservador institution to the slave trade legal framework came from the merchants, it would be overly simplistic to see the introduction of private judges as a sign of the weakening of public power before the demands of private or corporate power. It is more appropriate to see it as an arrangement, as a compromise, or perhaps even as a ‘convergence between the private interests of businessmen and the needs of the Crown's political economy’.Footnote 66 Undoubtedly, the Grillos were eager to employ private judges to watch over the asiento. The new adjudicative system promised to be quicker and more efficient – it is always easier to persuade someone to do something if you are paying that person.Footnote 67 They also knew from previous asentistas that settlers and retailers in the Indies would not welcome their agents, and that royal officials would not be keen to assist them. That said, Madrid also supported the creation of a separate transnational judicial procedure. The authorities wanted – as much as the Grillos – the asiento to be successful, not least because the contractors had agreed to build ten shipyards for them on the Biscayan coast and to supply the shipyards in Havana, Campeche, and Santo Domingo with slaves and materials. That the asiento was connected to a shipbuilding program is precisely what had convinced the Spanish crown, in desperate need to refurbish its fleet but lacking the money to do so, to sign the agreement in the first place. To say it differently, the asiento inscribed the slave trade in a wider political economy that, from the state's perspective, commanded the setting up of a separate jurisdiction.Footnote 68 Besides, Madrid was very much aware of the indiscipline and venality of its colonial administration.Footnote 69 The new system promised not to solve, but to circumvent the corruption and negligence that were endemic among royal officials in the Indies. Jueces conservadores would not be tributary to the colonial administration (as had been the case of jueces de comisión), but rather to the Council of the Indies. In short, by taking power over both the legal and contraband trade off the hands of the viceroys and Audiencias, the state hoped to reinforce its authority.Footnote 70
The appointment of judges-conservators became an issue of primary importance. Soon after the contract was concluded, the Grillos put forth nomination proposals to the Council of the Indies to fulfil the new positions in key locations, both in Spain and in the Americas.Footnote 71 These positions came with prestige and power: Not only would the responsibilities of judges-conservators be comparable to those of the viceroys and Audiencias, but the issues they would address would affect a crucial sector of the economies of American ports and cities. For the asentistas, the best candidates were those who, in addition to having expertise and technical knowledge, would have the power to implement their decisions. They submitted the names of judges and public prosecutors of Audiencias, governors of islands or large cities, members of the Casa de Contratación, important clergymen and lawyers, etc. Some of the proposals were intensely debated.Footnote 72 Within the Council of the Indies, the strongest opposition came from the fiscal (king's counsel or prosecutor), who contested the nomination of several governors or royal officers in the Indies on the ground that it was incompatible with their duty ‘to defend the interests of ordinary justice and to combat fraud that could be done by the Grillos’ factors’.Footnote 73 In the end, though, the vast majority of the 41 appointed jueces conservadores were also members of the administration, which meant that the individuals charged with ensuring law and order in the colonies were also charged with protecting the asiento.Footnote 74
What is striking about the wording of the 1662 contract is the way it portrays the merchants and the state as working hand in hand. Were they not equally interested in combating smuggling?Footnote 75 It is almost as if the asiento was meant less to allow the Grillos to do their business than to enhance the power of the state. In addition to regaining its maritime power, the state would finally respond to the colonies’ need for a labour force and benefit financially from the trade. Not everyone was convinced of this, though. The fiscal of the Council of the Indies proved to be a particularly fierce opponent of the Grillos, whom he believed had been conceded ‘outrageous trading benefits that were detrimental to the crown’.Footnote 76 He contested the contracts the Grillos concluded with Dutch and English chartered companies, considering the transactions to be endangering the security of the Empire and self-defeating for colonial commerce overall.Footnote 77 He persuaded the Council of the Indies to annul these contracts in 1663, which resulted in major disruptions to the trade and delays in the shipbuilding program. This was followed by endless administrative hurdles and lawsuits, most of which ended only as a result of an agreement the Grillos signed with the crown several years after the end of the asiento.Footnote 78
4. The jealousy of trade
Throughout the seventeenth century, Portugal, France, England, and Holland developed their overseas empires largely by means of commercial companies. It was only a matter of time before they would seek to exploit commercial opportunities in the Americas.Footnote 79 Yet, Spain tried to avoid contracting directly with foreign chartered companies for as long as possible, given that their ‘quasi-national character . . . would result in political complications that endangered not only European politics but also the integrity of overseas colonies’.Footnote 80 Hence Spanish authorities persisted, in 1692, in granting the slave trade monopoly to a national, a private entrepreneur from Caracas named Bernardo Marín de Guzmán, while knowing that his main sponsor was the Portuguese Cacheu Company. Problems arose upon Guzmán's unexpected death in 1695. Representatives of the Cacheu Company petitioned Madrid, arguing that the operation should revert to them. The Council of the Indies rejected their demand, insisting that arrangements made between Guzmán and them were in no way binding upon the Spanish government.Footnote 81 But to whom should the asiento be otherwise granted? As Leslie Rout summed up well, Spain ‘no longer tolerate[d] the Dutch, was frightened of the English, and was at war with the French – the only potential supplier left was Portugal’.Footnote 82 Once the Cacheu Company proposed to advance a desperately needed 200,000 pesos loan, Charles II overruled the Council of the Indies and agreed to sign a contract with Manuel Ferreira de Carvallo in the name of the Portuguese company. The latter, benefitting from generous contractual terms, launched a brief but apparently profitable trade with the Spanish Indies (1696–1701).Footnote 83
What I want to highlight with this episode is that Spain came to use the asiento as an indirect method of applying political pressure and also, eventually, as a bargaining chip in diplomatic settings.Footnote 84 The slave trade had become part of a global market competition, whereby states sought to establish trading monopolies for their merchants.Footnote 85 For Spain, this meant opening the door to more and more diplomatic interventions in the operation of the slave trade. Conversely, foreign commercial companies gradually secured terms that were more and more favourable to them. They also worked to strengthen the position of the juez conservador, even though this did not automatically play in their favour. They had to deal with another key actor – the Council of the Indies – who had gained additional leverage by becoming the appellate body.
Take for instance the 1696 asiento. It broadened the jurisdiction of judges-conservators, especially with regard to the seizure of foreign vessels, and reaffirmed their independence (article 9). It also stated that the asiento holder had the power to appoint, remove, and displace judges-conservators at pleasure (article 8).Footnote 86 These provisions enabled the company to take disciplinary action against judges who tended to privilege the crown's interests,Footnote 87 and to complain against the wrongful behaviour of Spanish royal officials.Footnote 88 Most of the tensions, however, crystallized around the relations between the Cacheu Company and the Council of the Indies. The former had a number of complaints and appeal procedures pending in perpetuum in front of the latter, including an important reclamation complaint following the sack of Cartagena. Upon hearing that the Council allowed other merchants to bring slaves to Santo Domingo – a clear violation of the monopoly – the Portuguese ambassador in Madrid got involved, and asked for the setting up of a special Junta composed of three ‘dispassionate men’Footnote 89 to replace the Council of the Indies. His proposition was rejected. Shortly after, the president of the Council, who was also the asiento’s chief judge, died. Unhappy with the next-of-kin, the company tried to appoint another member of the Council, who seemed more sympathetic to its concerns, as chief judge. The Council opposed this nomination, stating (against a strict wording of article 8) that control over the appointment and removal of judges remained ultimately in its hands. In its decision, the Council stressed that the company had failed to fulfil its obligations while profiting from unprecedented contraband trade.Footnote 90
Needless to say, the relations between Portugal and Spain had grown extremely tense when Charles II died in 1700. In his last testament, Charles II left his kingdom to Philip of Anjou, grandson of Louis XIV. As soon as Philip V was enthroned, his grandfather took a firm hand in Spanish foreign affairs. The Portuguese asiento was dissolved and negotiations took place between France and Portugal to settle disputes related to its liquidation. In 1701, a new asiento was concluded with Jean-Baptiste Ducasse in favour of the French Royal Company of Guinea. These contractual terms constituted ‘the most favourable proffered to any supplier yet’.Footnote 91 The company was to bring 48,000 piezas de Indias over a ten-year period and it could disembark them at any American port not specifically prohibited, including Buenos Aires. Nonetheless, the company's activities did not run smoothly, in part because of the hostility shown by the Council of the Indies. While the new king believed that both he and Spain would profit from the change in asentistas, the Council of the Indies vigorously opposed what it perceived to be French interference in Spanish internal affairs. Its members were outraged by a provision of the asiento that took their jurisdiction away in case of wrongdoings by royal officials and assigned it to the king.Footnote 92 Unsurprisingly, as the activities started, the Council did nothing to stop colonial officials from harassing the Guinea Company at every turn. It also took measures that went actively against the asiento.Footnote 93 Outraged by such obstructionism, French diplomats intervened with Philip V. In 1703, they managed to sideline the Council of the Indies by establishing what the Portuguese had wanted, a special Junta, composed of three members whose supplementary salary the company would pay.Footnote 94 But the Junta did not play much of a role. It was dissolved by decree in 1708 when the Spanish king, gaining some autonomy, reassigned all asiento affairs to the Council of the Indies.Footnote 95
The award of the asiento to the French in 1701 is said to have been an important motive for the outbreak of the War of the Spanish Succession (1702–1713). The British felt deprived of their participation in the lucrative slave-trade. When the peace negotiations started, the British made it clear that they wanted the asiento.Footnote 96 On 26 March 1713, representatives of Spain and Britain signed the Asiento Treaty by which the British were to provide 144,000 piezas de Indias over a 30-year period under the same conditions that the Portuguese and French had enjoyed, and more.Footnote 97 In return for handing the slave trade monopoly over to the British, Philip V kept himself on the throne of Spain; he also obtained a quarter of the company's business and received a 200,000 pesos loan, which he only had to refund after 20 years. For the South Sea Company, which had just been created, the contract offered very generous conditions; it could send a 500-ton ship with consumer goods from London to Portobello once a year – the so-called ‘annual ship’. Among the company's other privileges was the strengthening of the dispute settlement mechanism. The company had the power to name as many jueces conservadores as they saw fit (article 13). More importantly, the treaty provided for the establishment of a reduced advisory or appellate body to supervise the asiento (article 38). The Junta del asiento, as it was called, was an executive committee composed of three jointly appointed ministers; it would advise the Spanish king on all petitions or legal disputes concerning the slave trade and annual ships. Lord Lexington, British ambassador to Madrid and a key negotiator of the treaty, reported that it was ‘the best Asiento that was ever made and a more advantageous treaty of commerce [than] any nation yet had’.Footnote 98
The economic and political importance of the British asiento has been well established by historians.Footnote 99 They have also shown that what British investors once called ‘the feather and flower of our trade’Footnote 100 did not live up to expectations, and have spent quite some time explaining ‘the utter failure of the South Sea Company . . . to fulfil the terms of the asiento’.Footnote 101 But they have overlooked the dispute settlement mechanism – to what extent did it ferment the ‘deep and abiding distrust’Footnote 102 that characterized Anglo-Spanish relations? There are records where the company accused judges-conservators of partisanship, saying that they were ‘of little service and often oppressors instead of protectors of the Company's privileges’.Footnote 103 At the same time, the company complained that other tribunals persisted in claiming jurisdiction over slave trade cases; consequently, ‘the Judge Conservator's power is almost wholly annihilated, though the Company at the same time pays them very considerable salarys’.Footnote 104
More studies would be needed to assess the role of the dispute settlement mechanism. From the viewpoint of British investors sitting in London, it may be true that the adjudication of disputes merely confirmed their ‘sense of grievance and injustice’.Footnote 105 But it could also be the case that when judges-conservators ruled over disputes in the colonies, they were careful to strike a balance between all the interests at stake.Footnote 106 As for the Junta del asiento, it resolved many administrative, financial, and technical disputes arising from the slave trade operation, ruling sometimes in favour of the asentistas,Footnote 107 sometimes against them.Footnote 108 The Junta also had to advise the king upon highly sensitive cases involving illicit commerce done by the South Sea Company and illegal seizures of the company's vessels by guarda costas (i.e., privately fitted ships that received remuneration from the sale of the prizes they captured). Besides, one should be reminded that the running of the asiento was hindered by military conflicts between England and Spain. When hostilities broke out in 1718, 1726, and again in 1727, most of the company's effects were confiscated by Spanish officials and employees were expelled from America. These matters were resolved by means of diplomacy instead of adjudication.Footnote 109
The 1713 Asiento Treaty marks the peak of the slave trade's international arbitration system.Footnote 110 The turn to international commercial arbitration culminated in the Asiento Treaty concluded between Britain and Spain, which provided for the appointment of private judges and the creation of an appellate body. The South Sea Company did not need to use diplomatic protection as a means of vindicating its rights. A parallel judicial procedure had been created all the way through to adjudicate slave trade-related disputes. By that time, judges-conservators had become key actors in the slave trade operation, both in the colonies and on the Iberian Peninsula. Their remuneration was a cost the South Sea Company agreed to bear; in fact, their salaries were the highest salaries paid by the company – more than those received by factors (or agents), guards, physicians, attorneys, etc.Footnote 111 Evidence suggests that judges-conservators from past asientos remained in place, so that a small pool of legal experts gradually came to enjoy significant influence on the running of the slave trade.
5. Conclusion
What can we learn from this moment in history? First of all, it comes as a reminder that the slave trade was a legal system through and through. This is a much-needed reminder since the question of slavery has had a particular resonance among international lawyers. The abolition of the slave trade has often been presented as ‘the most successful episode ever’Footnote 112 in the history of international law. International lawyers still tend to look at slavery in terms of its abolition, thereby suggesting that international law stepped in only to abolish the slave trade in the nineteenth century.Footnote 113 This gives an excessively positive view of the law (and of lawyers), as if they always stood on the side of today's humanitarian sentiments. Such a view is not only naïve, it is also harmful. In reality, legal rules and institutions are often created to advance the purposes of ambitious men who have made possible and perpetuated some of the worst injustices – injustices that we, lawyers, might not see (or want to see) when they are being committed.
The slave trade's legal regime is also instructive in two other ways.Footnote 114 First, it invites us to rethink the history of international arbitration in commercial and investment matters, and to pay closer attention to ‘private’ dimensions of formal and informal imperialism. When scholars claim that ‘international investor-state arbitration is now acknowledged by the international investment community as the standard means of last resort, at least judicially speaking, in resolving complex cross-border investment disputes in a globalized economy’,Footnote 115 history tells us that such institutional practice is not unprecedented. Back in the early modern period, public and private actors responded to the practical and judicial needs of an increasingly complex, bureaucratic and global trade by setting up a transnational arbitration mechanism. What is more, history tells us that this process was not inevitable, self-evident or even smooth. The alliance between the state and the merchants, in particular, was never an easy one. It was a relationship full of compromises and intense lobbying, in which each tried to draw the other into service. This becomes palatable when looking at the dispute settlement mechanism that was set up over time. This mechanism was neither the result of private power hegemony nor the result of a mutual conspiracy between the state and the merchants. Rather, it was the product of constant negotiations and shifting alliances, and also at times of outright hostility and suspicion between them – in other words, it was the product of a relationship ‘based less in mutual benefit than mutual dependence’.Footnote 116
Second, a study of the slave trade's legal regime allows us, in a mirroring effect, to question the idea that today's dispute settlement mechanism was conceived ‘as a means to depoliticize international investment law’.Footnote 117 One can often read that contemporary international investment arbitration was designated ‘to extricate investment disputes from national courts and gunboat diplomacy, entrusting them instead to a neutral law-bound process’Footnote 118 or, similarly, that it ‘offers a specialised and neutral forum to hear disputes arising between foreign investors and the host state of their investments’.Footnote 119 Such claims imply not only that private arbitration would be a more neutral avenue than domestic courts for investment-related issues, but also that relations between host states and private investors would be technical, located outside material values, political interests, and democratic debates. They presuppose that what goes on in international investment law is ‘business as usual’ and that the work of arbitration tribunals is a matter of legal dogma, i.e., they only make sure that legal relations between public and private actors can unfold normally.
This is clearly over-simplistic.Footnote 120 There is nothing neutral, normal or apolitical in investment law and adjudication. Relations between states and private investors are always thoroughly political: Investment treaties were typically signed between developed (capital-exporting) states and developing (capital-importing) states and most cases are still being brought by investors from capital-exporting states against capital-importing states.Footnote 121 What is more, investments affect vital activities or sectors for national societies, activities that have been – and still are – the object of debates. Indeed, disputes span a wide range of environmental, labour, and health issues (such as the non-extension of operating licences for waste disposal, the control and ban of harmful substances, the implementation of anti-tobacco policies . . .)Footnote 122 including constitutional issues relating to the scope of the legislator's emergency powers.Footnote 123 In such circumstances, to say that arbitration tribunals are ‘neutral’ is itself a political claim, a claim that seeks to normalize power relations and interests by leaving fundamental premises unseen and unquestioned. The process is ‘neutral’ only if we believe that freedom to invest, freedom to extract resources (including living species), and freedom to repatriate capital as understood and agreed upon by a network of private actors and national elites are ‘normal’ and sitting outside of politics. What the turn to arbitration tribunals makes possible is for such premises to remain unseen or untouched – they are never discussed, they are taken for granted and accepted as normal, inevitable, and even fair.
It is precisely the perversity of this normalization process that history brings to the fore. The arbitration mechanism that was put into place in the sixteenth, seventeenth and eighteenth centuries only made the slave trade more acceptable. Judges-conservators worked from within the system, they never questioned the legitimacy or legality of slavery.Footnote 124 The unspoken premise on which they worked was that human exploitation was ‘normal’. Human beings could be bought in Africa, carried on slave ships, and sold in the Americas – African slaves were, after all, a precious resource and one indispensable element of the triangular trade. It is only based on these premises that private judges could do their work and examine whether slave-trading activities respected the contractual conditions found in the successive asientos de negros. My point, to say it differently, is that the arbitration process only reinforced the logic of slave commodification. Take the high mortality rates during the Middle Passage. Oddly enough, it was the slaves’ humanness that was the problem: Slaves were not commodities like cotton or silver, they had to remain alive for the commerce to be lucrative. How did judges-conservators respond? They made sure that Spanish regulations on the carrying capacity of the ships were implemented, that sufficient amount of provisions be brought along, and that medical care be on board. Their objective was not to preserve life but to diminish the morality rate in a way that was not too costly for the benefits.
In short, arbitration tribunals do not constitute a ‘neutral’ forum sitting outside of ‘politics’. They address questions regarding the organization of economic life and the distribution of values that remain profoundly debated in the societies in which they operate. Whether in the slave trade of the sixteenth–seventeenth centuries or in the globalized economy of the twentieth–twenty-first centuries, arbitration tribunals allow far-reaching interventions in the lives of political communities.
