Developments in international law, prepared by
the Editorial Staff of International Legal Materials
The American Society of International Law February 28 , 2005
International Centre
for the Settlement of Investment Disputes (ICSID): Plama
Consortium Limited v. The Republic of Bulgaria, Decision
on Jurisdiction (February 8, 2005)
Plama Consortium Limited is a company incorporated in Cyprus. The ownership
of the company was in dispute between the parties,
and the tribunal reserved some of its conclusions on
the matter for the merits phase of the dispute. The
Claimant’s request for arbitration alleged that
the Bulgarian government deliberately interfered with
its investment, an oil refinery in Bulgaria.It
claimed that Bulgaria’s measures were in violation
of the ECT and that, by virtue of the ECT, Bulgaria
had consented to ICSID Arbitration. Bulgaria argued
that due to numerous factors, including pending litigation
and disputed ownership of Plama Consortium Limited
among parties who are not parties to the ECT, it is
uncertain whether an ECT national was in control of
the company during the time period relevant to its
claims. Promptly after receiving the claimant’s
request for arbitration, Bulgaria sent a letter to
ICSID in which it claimed to be exercising its right
under Article 17(1) of the ECT to deny the advantages
of the ECT to the claimant. Bulgaria claimed that when,
on the basis of Article 17(1) of the ECT, a Contracting
Party rightfully denies the advantages of Part III
of the ECT to an investor, the ECT cannot be invoked
for dispute resolution at ICSID. Bulgaria further argued
that the claimant had misrepresented its ownership
to Bulgarian authorities.
The Tribunal concluded, inter alia, that “whatever the eventual
merits of the Respondent’s ‘misrepresentation’ case
(which is denied by the Claimant), it remains the case
that the Claimant was an “Investor” under
Article 1(7) ECT: it is irrelevant who owns or controls
the Claimant at any material time.”It
further concluded that even if the parties’ agreement
regarding the purchase of Nova Plama (the Bulgarian
oil refinery) were invalid due to misrepresentation
by the Claimant, “the agreement to arbitrate
remains effective.”
The Tribunal also examined the Claimant’s alternative argument that Bulgaria
had consented to submit the dispute to ICSID arbitration
by virtue of the MFN clause in the Bulgaria-Cyprus
bilateral investment treaty (“BIT”). Although
the Bulgaria-Cyprus BIT provides only limited access
to international arbitration, namely ad hoc tribunals
to determine the amount of compensation to be made
following expropriation, the Claimant argued that the
MFN clause in the Bulgaria-Cyprus BIT encompassed dispute
settlement of other BITs entered into by Bulgaria.
In this regard, it relied on the Maffezini case
in which the tribunal observed that “dispute
settlement arrangements are inextricably related to
the protection of foreign investors, as they are also
related to the protection of rights of traders under
treaties of commerce.” The Tribunal found that
the MFN clause at issue did not encompass dispute settlement,
noting that “Contracting States cannot be presumed
to have agreed that [dispute settlement] provisions
can be enlarged by incorporating dispute resolution
provisions from other treaties negotiated in an entirely
different context.”
International
Criminal Tribunal for the Former Yugoslavia (ICTY)
(Appeals Chamber):The Prosecutor v. Miroslav Kvocka, Mladjo Radic,
Zoran Zigic and Dragoljub Prcac (February 28, 2005)
The events giving rise to this appeal relate to the incidents in three camps
established in 1992 at the Omarska and Trnopolje villages
and at the Keraterm factory, in northwest Bosnia and
Herzegovina.
Miroslav Kvocka participated in the operation of the Omarska camp and was convicted
by the Trial Chamber, as a co-perpetrator of the joint
criminal enterprise of the Omarska camp, of persecutions
under Article 5, as well as murder and torture under
Article 3 of the Statute of the Tribunal (“the
Statute”). He was sentenced to seven years’ imprisonment.
Dragoljub Prcac and Mladjo Radic were convicted of
the same crimes and received a sentence of five and
twenty years’ imprisonment respectively. Zoran
Zigic, who worked for a short period of time in the
Keraterm camp, was also convicted of persecutions,
torture and murder and received a sentence of twenty-five
years’ of imprisonment, which was also based
on co-perpetration of the joint criminal enterprise.
The Appellants (Kvocka, Radic, Zigic, and Prcac) raised common grounds of appeal
relating to the requirements of a joint criminal enterprise,
all of which were rejected by the Appeals Chamber.
The Appeals Chamber granted Kvocka’s appeals
as to the murders of Ahil Dedic and Ismet Hodzic, but
upheld his conviction for murder, as it upheld the
convictions for the murders of Mehmedalija Nasic and
Becir Medunjanin. Furthermore, the Appeals Chamber
granted Kvocka’s appeal with respect to his convictions
of rape and sexual assaults because the Trial Chamber
failed to determine whether they occurred during Kvocka’s
period of employment at the Omarska camp. Radic submitted, inter
alia, that with respect to his conviction for persecution
as a crime against humanity his discriminatory intent
had not been proven and that he only reluctantly served
in the camp and did not share the goal of the discriminatory
policy. The Appeals Chamber noted that it was not unreasonable
for the Trial Chamber to infer the intent from his
knowledge of the persecutory nature of the crimes and
his knowing participation in the system of persecution
pervading camp. None of Radic’s appeals were
granted and his conviction was upheld. Zigic challenged, inter
alia, his conviction “for the crimes committed
in the Omarska camp generally” with respect to
persecution, murder, and torture. The Appeals Chamber
noted that Zigic held no official position in the Omarska
camp, and that his involvement amounted to several
visits to the camp. Although noting that a person need
not have any official function in the camp to be held
responsible as a participant in the joint criminal
enterprise, the Appellate Chamber stated that in the
present case of “opportunistic visitors”,
a substantial contribution to the overall effect of
the camp is necessary to establish responsibility under
the joint criminal enterprise doctrine. Finding that
no reasonable trier of fact could conclude that Zigic
participated in a significant way in the functioning
of the camp, it overturned the conviction of the crimes
committed in this camp “in general”. Prcac’s
grounds of appeal were all dismissed.
All sentences were affirmed as imposed by the Trial Chamber.
World Trade Organization
(WTO) Panel Report: United States-Countervailing Duty
Investigations on Dynamic Random Access Memory Semiconductors
(DRAMS) from Korea, (February 21, 2005)
The WTO Panel concluded that the U.S. Department of Commerce’s (“DOC”) Final
Subsidy Determination, the U.S. International
Trade Commission’s (“ITC”) Final
Injury Determination, and the Final Countervailing
Duty Order based on the above determinations,
were inconsistent with Articles 1, 2 and 15.5 of
the Agreement on Subsidies
and Countervailing Measures(“SCM” Agreement).
The dispute arises out of a countervailing duty investigation carried out by
the U.S. on imports of Dynamic Random Access Memory
Semiconductors (“DRAMS”) and Memory Modules
containing DRAMS from Korea. Korea alleged that the
DOC’s determination of the existence of a countervailable
subsidy, the determination of material injury by the
ITC, and the resulting countervailing duty order against
DRAMS from Korea, were inconsistent with certain U.S.
obligations under the SCM Agreement and the GATT 1994.
The Panel noted that, in light of Article 11 of the Understanding on
Rules and Procedures Governing the Settlement of
Disputes(“DSU”)and Appellate Body jurisprudence, its standard of review
was not a de novo review, but rather, one “to
determine whether the DOC and ITC evaluated all relevant
factors, and provided a reasoned and adequate explanation
of how the facts support their determination….we
shall determine whether an objective and impartial
investigating authority, looking at the same evidentiary
record as the DOC and ITC, could properly have reached
the same conclusions as did those agencies.”
At issue, inter alia, before the Panel was whether financial contributions
by Korean private creditors were “entrusted” or “directed” by
the Korean government to provide subsidies to Hynix,
a leader in the Korean semiconductor industry, within
the meaning of Article 1.1 (a)1(iv) of the SCM Agreement.
Korea raised the issue of whether, in order to find
that a private entity is entrusted or directed by the
government to make a financial contribution, an investigating
authority must demonstrate an explicit and affirmative
government action addressed to that particular private
body, entrusting or directing a particular task or
duty. The Panel found that, in accordance with the
Vienna Convention on the Law of Treaties, the ordinary
meaning of the words “entrust” and “direct” required
that the government action must delegate (in the case
of entrustment) or command (in the case of direction),
and that an affirmative act was required, however such
act did not need to be an explicit government action
addressed to a particular entity in order to be considered
a subsidy within the meaning of the SCM agreement.
It noted in this regard that leaving discretion to
a private body was not necessarily at odds with entrusting
or directing the private body. However, it found that
a finding of entrustment or direction must be based
on affirmative acts going beyond the simple exercise
of shareholder rights.
The applicants, both Uzbek nationals, are members of an opposition party in
Uzbekistan. Both applicants were arrested in Turkey
and were suspected of homicide and other crimes. The
Republic of Uzbekistan (“Uzbekistan”) requested
their extradition under a bilateral treaty. The applicants
claimed that political dissidents in Uzbekistan were
arrested by the authorities and subjected to torture
and prison. Rejecting their arguments, the Turkish
courts ordered their extradition. On March 18, 1999,
the Chamber of the Court decided to communicate to
the Turkish Government that, in light of Rule 39 of
the Rules of the Court (interim measures), Turkey should
not extradite the two applicants before the meeting
of the relevant Chamber of the Court, which was to
take place in March 23, 1999. On March 19, 1999, Turkey
issued an order for the extradition of the two applicants,
who were handed over on March 27, 1999.In
Uzbekistan the applicants were sentenced to twenty
and eleven years’ imprisonment respectively.
The applicants argued, inter alia, that Turkey, by extraditing them,
breached Articles 3, and 6, and 34 of the Convention.
The ECHR stated that Article 6 (right to a fair trial)
of the Convention was not applicable to the proceedings
in Turkey, and that there was no violation with respect
to the proceedings in Uzbekistan. As to Article 3 of
the Convention (prohibition of torture), the ECHR found
that there must be “a real risk” that the
applicants will be subjected to treatment proscribed
by Article 3, and that, due to the lack of specific
allegations made by the applicants, there was not sufficient
evidence to establish such a violation. However, the
ECHR held that there was a violation of Article 34
of the Convention, under which the states have the
obligation not to “hinder in any way the effective
exercise” of the right to bring a claim before
the ECHR. The ECHR determined that the applicants’ rights
were infringed, because the “level of protection
which the Court was able to afford the rights which
they were asserting under Articles 2 and 3 of the Convention
was irreversibly reduced” through the extradition.
However, the question then turned to whether the ECHR
had the power to order binding interim measures. The
ECHR, in noting the vital role of interim measures
in avoiding irreversible situations, concluded that
the failure to comply with the interim measures in
such a case undermines the effectiveness of the rights
of the individual to launch a complaint and therefore
constituted a breach of Article 34 of the Convention.
Accordingly, Turkey, by failing to comply with the interim measures indicated
by the ECHR, violated its obligations under Article
34 of the Convention.
The ECHR overturned a previous decision of the Chamber, according to which
there had been no violation of Article 10 of the Convention.
The ECHR held that “the imposition of a prison
sentence for a press offence will be compatible with
journalists’ freedom of expression as guaranteed
by Article 10 of the Convention only in exceptional
circumstances.” The two applicants, both journalists,
published an article alleging that officials of the
city of Constanta had accepted bribes for entering
into a contract with a private company. The Court of
First Instance sentenced the applicants to seven months’ imprisonment
for insult and defamation and prohibited the applicants
from working as journalists for the period of one year.
Moreover, the Court of First Instance disqualified
the applicants from exercising certain civil rights.
On appeal, this sentence was confirmed and an application
by the Procurator-General to the Supreme Court to have
the judgments quashed also failed. However, the applicants
did not serve their sentence because they were granted
a Presidential pardon, which also applied to the disqualification
from exercising civil rights.
The ECHR determined that the measures taken by the courts in Romania were prescribed
by law and also pursued a legitimate aim, namely the
protection of the reputation of the person against
whom the allegations had been made. The question at
issue was whether the interference with the right had
been “necessary in a democratic society”.
The ECHR reiterated the margin of appreciation given
to the states in assessing the “pressing social
need” for an infringement. However, the ECHR
also pointed out that the supervision would not be
limited to ascertaining whether the respondent state
exercised its discretion reasonably, carefully and
in good faith. Rather, the ECHR will determine whether
the state “struck a fair balance” between
the protection of freedom of expression and the protection
of the reputation of those against whom allegations
have been made. In light of the severity of the accusations,
which were likely to render the city official criminally
liable, and the lack of a sound factual basis of the
accusations, the ECHR confirmed the existence of a “pressing
social need.” However, the ECHR considered the
imposition of a prison sentence for a “classic
case of defamation” to be disproportional. Likewise,
the ECHR found the disqualification from the exercise
of civil rights and the prohibition from working as
journalists to be disproportional, and therefore concluded
that there was a violation of Article 10 of the Convention.
DECLARATIONS,
RESOLUTIONS AND OTHER DOCUMENTS
United Nations (U.N.)
Security Council: Progress Report of the Secretary-General
on the United Nations Mission of Support in East Timor,
S/2005/99 (February 18, 2005)
The U.N. Secretary-General’s
report was submitted pursuant to Security Council resolution
1573 (2004) of November 16, 2004, in which the Security
Council decided to extend the mandate of the United Nations
Mission of Support in East Timor (UNMISET) for a final
period of six months until May 20, 2005. The report,
covering the period from November 10, 2004 to February
16, 2004, notes that Timor-Leste’s overall situation
has remained stable despite some instances of clashes
between the military and the police. It noted that local
elections were held successfully in a couple of districts,
and that voting turnout was high.
The report noted that Timor-Leste’s National Parliament has strengthened
the country’s legal framework through the adoption
of significant legislation, including the law on the
Council of State, and that additional laws are being
considered, among them draft statutes of the public
prosecutor. It observed that the government of Timor-Leste
has made efforts to meet its human rights treaty obligations,
however, abuse of police power has rarely been taken
up by the public prosecutor for institution of criminal
proceedings, and that the tendency to use police powers
to deal with political opposition remains a concern.
The report stated that since its last report, Timor-Leste’s Serious Crimes
United has made significant progress towards achieving
justice for crimes committed in 1999, having filed
an additional 13 indictments, including the suspected
murderers of two local United Nations staff members
on the day of the popular consultation. It noted that
the new indictments concentrated on the organizers
of the violence and the most egregious direct perpetrators
of murder. In addition, five serious crimes cases were
heard by the Court of Appeal of Timor-Leste.
In terms of the relations between Timor-Leste and Indonesia, the report notes
that despite improved relations between the two countries,
no further progress was made on the delineation of
the land border between Indonesia and Timor-Leste,
and it is unlikely that a final agreement can be concluded
by the end of the UNMISET mandate.
International Criminal Tribunal for the Former Yugoslavia (ICTY): Motion to Withdraw Denied for Milosevic’s Counsel
(February 7, 2005)
The President of the International Criminal Tribunal
for the Former Yugoslavia (ICTY) affirmed the Registrar’s
denial of the assigned counsel’s request to withdraw
from the Milosevic case. Milosevic, who throughout
the proceedings insisted on his right to represent
himself, had been assigned counsel in September 2004
due to his deteriorating medical condition. The assigned
counsel then moved to have this decision of the Trial
Chamber reversed, but the Appeals Chamber affirmed
the appointment of counsel. Following the Registrar’s
denial of the motion to withdraw, this decision was
then reviewed by the President of the ICTY.
U.S. Bankruptcy Court for the Southern District of Texas: In
re Yukos Oil Company (February 25, 2005)
U.S.
Bankruptcy Judge Letitia Clark dismissed the bankruptcy
case filed by Yukos, stating that the issue belonged
in a forum that included the participation of the Russian
government. Yukos, by filing a Chapter 11 bankruptcy
case in the Houston court, was trying to protect its
assets from the auction initiated by the Russian authorities
due to Yukos’ tax debts. However, the Russian authorities proceeded with the auction in December
2004, and the Yukos subsidiary was sold to the then
little known Baikal Finance Group. On February 11,
2005, Yukos sued the companies involved in the auction
in the U.S. courts for over $20 billion.
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