Developments in international law, prepared by the Editorial Staff of International Legal Materials
The American Society of International Law April 12, 2006
On March 15, 2006 the Committee of Ministers adopted the Convention on the avoidance of statelessness in relation to state succession (the “Convention”).
The Preamble notes that “the European Convention on Nationality (ETS No. 166), opened for signature in Strasbourg on 6 November 1997, contains only general principles and not specific rules on nationality in case of state succession,” and that “with regard to statelessness in relation to state succession, other international instruments either do not have a binding character or do not address some important issues.”
Article 1 of the Convention defines state succession to mean the “replacement of one state by another in the responsibility for the international relations theory.” Signatory states shall “take all appropriate measures to prevent persons, who at the time of the state succession, had the nationality of the predecessor state, from becoming stateless as a result of the succession.” Therefore, “a successor state shall grant its nationality to persons who, at the time of the state succession, had the nationality of the predecessor state, and who would have become stateless as a result of the state succession” – if one of two conditions is met:
the individuals were habitually resident in the territory of the successor state, or
the individuals had an appropriate connection with the successor state.
The rules of proof of the Convention state that “a successor state shall not require proof of non-acquisition of another nationality before granting its nationality to persons who were habitually resident on its territory at the time of the state succession and who have or would become stateless as a result of the state succession.”
The Convention stipulates that “[d]isputes relating to the interpretation or application of the treaty shall primarily be settled through negotiation.”
The Appellate Body upheld the conclusions of the Panel, which held that it did not have discretion to decline to exercise jurisdiction in the matter and that Mexico’s measures did not constitute measures “to secure compliance with laws or regulations” within the meaning of Article XX(d) of the GATT 1994.
The United States brought a complaint against Mexico concerning certain tax measures and bookkeeping requirements imposed by Mexico on soft drinks and other beverages that use sweeteners other than cane sugar.
The United States claimed that the challenged measures are inconsistent with paragraphs 2 and 4 of Article III of the General Agreement on Tariffs and Trade 1994 (GATT 1994). Paragraph 2 of Article III of the GATT 1994 reads in pertinent part:
“The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied… to like domestic products.”
Paragraph 4 reads in pertinent part:
“The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of al laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.”
At the Panel proceedings, Mexico asked the Panel to dismiss the matter for lack of jurisdiction and “to recommend to the parties that they submit their respective grievances to an Arbitral Panel under Chapter Twenty of the NAFTA.” In the alternative, Mexico stated that its measures were justified under Article XX(d) of the GATT 1994. The Panel stated that it could not decline to exercise jurisdiction in a case properly before it,” because that would “diminish the rights of the complaining Member under the DSU and other WTO covered agreements.” The Panel concluded that Mexico’s measures violated several provisions of the GATT 1994, such as Article III:2, Article III:4, and that these measures were not justified under Article XX(d) of the GATT 1994. To that effect it stated that “the challenged tax measures are not justified as measures that are necessary to secure compliance by the United States with laws or regulations which are not inconsistent with the provisions of the GATT 1994.”
Before the Appellate Body, Mexico only challenged the Panel’s findings on jurisdiction and the ruling regarding Article XX(d), but not the findings under Article III of the GATT. Mexico argued that the WTO Panel should have refrained from exercising jurisdiction, because the United States’ claim was inextricably linked to a broader dispute under NAFTA rules, which could not be enforced by the WTO Appellate Body. In that respect, Mexico cited the Permanent Court of International Justice’s (“PCIJ”) case in Factory at Chorzow, in which the PCIJ held that “one party cannot avail himself of the fact that the other has not fulfilled some obligation, or has not had recourse to some means of redress, if the former party has, by some illegal act, prevented the latter from fulfilling the obligation in question, or from having recourse to the tribunal which would have been open to him.” In addition, Mexico requested the Appellate Body to find that its tax measures were justified under Article XX(d) of the GATT 1994, because the measures were necessary “to secure compliance” by the United States of its obligations under the NAFTA. In that respect, Mexico argued that there was no basis in the wording of Article XX(d) of the GATT 1994 to exclude action taken to enforce international treaty obligations.
The United States argued that the Panel had no discretion to decline to exercise jurisdiction. The Appellate Body found that Mexico’s request regarding jurisdiction effectively meant that the Appellate Body was to determine whether the United States had breached its obligations under the NAFTA, and that there was “no basis in the DSU for panels and the Appellate Body to adjudicate non-WTO disputes.”
With respect to Article XX(d) of the GATT 1994, the Appellate Body stated that the “central issue raised in this appeal is whether the terms ‘to secure compliance with laws and regulations’ in Article XX(d) of the GATT 1994 encompass WTO-inconsistent measures applied by a WTO Members to secure compliance with another WTO Member’s obligations under an international agreement.” The term “laws and regulations” was found to include rules of the domestic legal system, including rules deriving from international agreements that have been incorporated into the domestic legal system of a WTO member, but not international obligations of a member other than that invoking the provision. Finally, the Appellate Body noted that Mexico’s interpretation would allow WTO Members to adopt WTO-inconsistent measures based upon a unilateral determination that another member has breached its WTO obligations, in contradiction with Articles 22 and 23 of the DSU and Article XXII:2 of the GATT 1994.
The arbitration panel determined that Ecuador had not breached the provisions of the Bilateral Investment Treaty (BIT) with Canada in failing to refund value-added taxes (“VAT”) to EnCana, a Canadian company.
Pursuant to the laws of Ecuador, manufacturers could seek a VAT refund paid on goods produced in Ecuador for export. Two Canadian subsidiary oil companies, who had contracts with the Ecuadorian state oil agency for the exploration and exploitation of oil and gas within the territory of Ecuador, initiated arbitration proceedings pursuant to the UNCITRAL rules for a refund of the VAT. The two companies argued that prior to a change in the laws, they had been entitled to the VAT. The Ecuadorian government argued, however, that the VAT only applied to manufacturing companies and that oil companies did not qualify as a manufacturers. The Ecuadorian government further argued that the oil companies were already receiving the equivalent of a VAT refund because the contracts the oil companies negotiated with Ecuador were supposed to include all costs.
The arbitration panel held EnCana’s claims, except for those made under Article VIII (expropriation) of the BIT, were outside of the jurisdiction of the tribunal. The panel rejected the claim regarding indirect expropriation unanimously. On the claim of direct expropriation, the panel was split. The majority held that Ecuador had not breached its obligations under the BIT. In that respect, Mr. Horacio Grigera Naón appended a dissenting opinion. Ecuador was responsible for reimbursing EnCana for the deposit in the amount of $330,267.44. Otherwise, each party was required to bear its own costs.
This arbitration arose out of events consequent upon the reorganization and privatization of the Czech bank system. Saluka Investments BV (“Saluka”), which acquired shares of the Czech state-owned bank IPB, claimed a violation of Article 5 (deprivation of investment) and Article 3 (fair and equitable treatment) of the bilateral investment treaty (“BIT”) between The Netherlands and the Czech Republic (the “Respondent”).
The Respondent, inter alia, asserted that Saluka failed to meet the definition of an investor under the BIT, because it was merely an agent for the parent corporation Nomura, which, not being a Dutch corporation, could not benefit from the BIT. The Tribunal concluded that the Respondent, by adopting measures of forced administration, did not violate Article 5 of the BIT, as the measure was “valid and permissible as within its regulatory powers, notwithstanding that the measure had the effect of eviscerating Saluka’s investment.” The Tribunal did, however, find that the Respondent had violated Article 3 of the BIT, which reads: “1. Each Contracting Party shall ensure fair and equitable treatment to the investments of investors of the other Contracting Party and shall not impair, by unreasonable or discriminatory measures, the operation, management, maintenance, use, enjoyment or disposal thereof by those investors.
2. More particularly, each Contracting Party shall accord to such investments
full security and protection which in any case shall not be less than that
accorded either to investments of its own investors or to investments of
investors of any third States, whichever is more favourable to the investor
concerned.”
In terms of the Respondent’s obligations to “fair and equitable treatment” under the BIT, the Tribunal concluded that the Respondent, “without undermining its legitimate right to take measures for the protection of the public interest, …assumed an obligation to treat a foreign investor’s investment in a way that does not frustrate the investor’s underlying legitimate and reasonable expectations.” All of the four major banks in the Czech Republic, IPB was one of them, were facing problems of “bad debt” stemming from loan policies regarding non-performing loans. While the other banks received assistance from the state, IPB did not. The Tribunal found that there was no reasonable justification for the differential treatment and pronounced a violation of Article 3 of the BIT. Furthermore, the Tribunal found that the Respondent violated its obligations to “fair and equitable treatment” by frustrating IPB’s and the shareholders’ good faith efforts to resolve the bank’s crisis. In that respect the Tribunal also concluded that this conduct constituted a violation of the Respondent’s “no-impairment” obligation under Article 3.1 of the BIT.
The Tribunal reserved the questions of redress for the breach as well as the question of costs for a later point. The arbitration was conducted pursuant to the UNICTRAL Rules and the registry services were performed by the Permanent Court of Arbitration in The Hague.
The issue before the House of Lords was “whether the crime of aggression, if established in customary international law, is a crime recognized by or forming part of the domestic criminal law of England and Wales.”
Shortly before the US-led invasion of Iraq, people in the United Kingdom protested against that planned invasion. During these protests, some of the demonstrators entered military facilities in order to obstruct military operations. For example, one group of demonstrators trespassed on a military port, where the individuals chained themselves to tanks or reconnaissance vehicles in order to halt the loading of vessels bound for the Middle East. The demonstrators were charged with aggravated trespass or criminal damage. The appeals of 20 individuals were consolidated, as they raised common issues.
In support of their defense, the appellants argued that their conduct was legally justified because they acted in order to “impede, obstruct or disrupt the commission of that crime” of aggression, which they believed the United Kingdom to be committing by participating the invasion of Iraq in March 2003.
In terms of their defense the appellants relied on section 3 of the 1967 Act, which reads:
“(1) A person may use such force as is reasonable in the circumstances in the prevention of crime, or in effecting or assisting in the lawful arrest of offenders or suspected
offenders or of persons unlawfully at large.
(2) Subsection (1) above shall replace the rules of the common law on the question when force used for a purpose mentioned in the subsection is justified by that purpose.”
The appellants therefore submitted that:
customary international law is part of the domestic law of England and Wales
crimes in customary international law are – without need for any domestic statute or judicial decision- recognized and enforced by the domestic law of England and Wales
The Court of Appeal had ruled that the crime of aggression was not a crime in the sense of that provision and therefore excluded that provision as a possible defense.
Lord Bingham of Cornhill dismissed the argument of the Crown that the crime of aggression lacked “the certainty of definition required of any criminal offence”, stating that it would be “unhistorical to suppose that the elements of the crime were clear in 1945 but have since become in any way obscure.” However, Lord Bingham of Cornhill disagreed with the appellants on the issue of how crimes recognized in customary international law are recognized and enforced by the domestic law of England and Wales in the case where there is no domestic implementation. Lord Bingham of Cornhill also rejected the appellants’ contention that “crime” in section 3 of the 1967 Act covered crimes recognized under customary international law.
Lord Hoffmann stated in his opinion that “[t]here is no doubt that this [the crime of aggression] is a recognised crime in international law.” In that respect, he mentioned the decisions of the International Military Tribunal at Nuremberg, and Article 5 of the Rome Statute of the International Criminal Court. However, Lord Hoffmann also concluded that the crime of aggression was not a crime in English domestic law, inter alia because this would contravene the democratic principle, according to which Parliament has to prescribe the conduct which will be regarded as an offence. Lord Hoffmann also stated that, in his view, the conduct of the appellants could not have been justified, even if the crime of aggression were incorporated in domestic law and if the United Kingdom had in fact committed that crime by participating in the invasion of Iraq, because the state holds the monopoly on the use of force.
The appeals were dismissed by a unanimous decision.
Organization for Economic Co-Operation and Development (OECD): Declaration on Integrating Climate Change Adaptation into Development Co-Operation (April 4, 2006)
The Governments of OECD Member countries issued a declaration on climate change, which states, inter alia, that “both adaptation and greenhouse gas emissions are required to respond to climate change”, and that these measures are required in both developed and developing countries. They further declared that they will work to:
“better integrate change adaptation in development planning and assistance.”
“assist developing country partners in their efforts to reduce their vulnerability to climate variability and climate change”
“improve the relevance and usability of information on impacts of climate variability and climate change, so that it can be used appropriately by development practitioners.”
Finally, the Governments invite the OECD to “examine the role of adaptation policies and technologies, inter alia in agriculture and soil management; water, fisheries, and coastal management; forest management; and disaster risk management in reducing adverse impacts of climate change in a developing country context.
United Nations Security Council: Resolution 1664 (The Situation in the Middle East) (March 29, 2006)
The United Nations Security Council requested the Secretary-General to negotiate an agreement with the Government of Lebanon “aimed at establishing a tribunal of an international character based on the highest international standards of criminal justice.” The tribunal will have the purpose of bringing to justice those responsible for the terrorist bombing that killed, among others, former Lebanese Prime Minister Rafiq Hariri.
United Nations General Assembly: Adoption of Human Rights Council (March 15, 2006)
The United Nations Member States approved the establishment of a new Human Rights Council, which will replace the Commission on Human Rights. The resolution was adopted by 170 votes in favor to 4 against, with 3 abstentions. The election of the members of the Human Rights Council will be held on May 9, 2006.
Click here for the ASIL Insight on the Human Rights Council.
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