Developments in international law, prepared by the Editorial Staff of International Legal Materials
The American Society of International Law April 28, 2006
Treaty between the United States of America and the Oriental Republic of Uruguay concerning the Encouragement and Reciprocal Protection of Investment (November 4, 2005)
The bilateral investment treaty (“BIT”) between the Oriental Republic of Uruguay and the United States is the first BIT to be concluded after 1999, and it is the first treaty that has been negotiated on the basis of the 2004 Model BIT (BIT).
In departure from the Model BIT, the BIT clarifies that the definition of “investment” shall not include claims to payment that are immediately due and result from the sale of goods or services. Annex B, which clarifies that customary international law standards are applicable to the obligation of States with respect to expropriation, is in accordance with the Model BIT. Annex F of the BIT clarifies the Parties’ shared understanding concerning the application of national treatment and most-favored-nation treatment obligation to measures of a Party relating to financial institutions. According to Annex F, Investor-State arbitration is not available for national treatment and most-favored-nation treatment claims concerning a measure of a party relating to an investor or covered investment in a financial institution in its territory that is authorized to do business and regulated or supervised as a financial institution under domestic law.
Under Article 24 of the BIT, an investor may seek arbitration of a claim under several potential mechanisms, including that of the International Center for Settlement of Investment Disputes.
The BIT was transmitted to the United States Senate for advice and consent on April 4, 2006.
In February 2004 Barbados initiated arbitration proceedings relating to its maritime boundary with the Republic of Trinidad and Tobago (“Trinidad and Tobago”) pursuant to Article 286 of the 1982 United Nations Convention on the Law of the Sea (“the Convention”). The award issued by the Tribunal, which was constituted under Annex VII to the Convention, represents the first maritime boundary arbitration award under the Convention.
Trinidad and Tobago contested the jurisdiction of the Tribunal maintaining that the “pre-conditions to arbitration” under Article 283 (1) of the Convention providing for an exchange of views prior to the initiation of arbitration had not been met. However, if there was jurisdiction, Trinidad and Tobago submitted that this should extend to delimitation of any overlapping areas of outer continental shelf. In view of the fact that the dispute had been preceded by negotiations which had begun in the year 2000 concerning the delimitation of the maritime boundary and “associated problems of fisheries in waters potentially affected by the delimitation,” the Tribunal found that it had jurisdiction to delimit, by the drawing of a maritime boundary, the continental shelf, including the outer continental shelf, and exclusive economic zone (the “EEZ”) appertaining to each of the Parties in the waters where their claims to these maritime zones overlapped. However, the Tribunal found that the dispute submitted to arbitration did not give it jurisdiction to issue a substantive decision in respect of an appropriate fisheries regime.
Initially the Tribunal reiterated that factors usually relied upon for delimitation purposes are, inter alia, the geographical considerations, such as the configuration of the respective coastlines, the coastal length, and resource-related criteria, such as for example the fisheries conducted by a party in dispute. The Tribunal then went on to explain the two-step approach followed in order to determine the line of delimitation: “First, a provisional line of equidistance is posited as a hypothesis and a practical starting point…The second step accordingly requires the examination of this provisional line in the light of relevant circumstances, which are case specific, so as to determine whether it is necessary to adjust the provisional equidistance line in order to achieve an equitable result.”
As to the delimitation in the west, Barbados submitted that the equitable solution would be not to follow the provisional equidistance line, but to extend the delimitation further south in order to take into account “the fact that Barbados fisherfolk have traditionally fished by artisanal methods in the waters off the northwest, north and northeast coasts of the island of Tobago.” In that respect the Tribunal held that the evidence did not prove Barbados’s contentions and therefore determined that the equidistance line in the west should be the line of delimitation between Barbados and Trinidad and Tobago. Barbados’s claim to a right of access to fish in that area was found to be outside the Tribunal’s jurisdiction, because such acclaim fell outside the scope of the dispute submitted to the Tribunal and because Article 297(3) (a) of the Convention stipulates that sovereign rights with respect to the living resources in the EEZ do not fall under the obligatory jurisdiction of a tribunal constituted under Annex VII of the Convention.
In terms of the delimitation in the east, Trinidad and Tobago objected to the method of equidistance, while Barbados asserted that that principle remained applicable throughout the delimitation process. The Tribunal did not find it necessary to depart from the equidistance approach, although it stressed that this did not mean that the “equidistance line is an absolute line that is not subject to adjustment.” Trinidad and Tobago claimed a major adjustment of the equidistance line to the north. In support of its claim, Trinidad and Tobago invoked, inter alia, the effect of the delimitation for the region as a whole. To that effect Trinidad and Tobago explained that it had concluded an agreement with Venezuela in 1990, which granted Venezuela access to the Atlantic, and that this access would be impeded by an equidistance line delimitation. The Tribunal concluded that, while the line resulting from the 1990 agreement was not binding on Barbados or any third State, it did represent a legally binding limit on the southernmost possible extension of Trinidad and Tobago’s maritime territory. According to the award, the delimitation line and the line of Trinidad and Tobago’s southernmost limit meet at Trinidad and Tobago’s maritime territory limit: a point that is precisely 200 nautical miles from Trinidad and Tobago’s easternmost land territory. As a result, notwithstanding the Tribunal’s acceptance of jurisdiction to delimit the outer continental shelf, no such delimitation was necessary. The delimitation in the east mostly followed the equidistance line, although the Tribunal made some minor adjustment in order to account for the coastal frontage abutting directly upon the area subject to delimitation.
Finally, the Tribunal determined that Trinidad and Tobago is under an obligation “to negotiate in good faith and conclude an agreement that will accord fisherfolk of Barbados access to fisheries within the Exclusive Economic Zone of Trinidad and Tobago.”
The International Criminal Tribunal for Rwanda (the “Tribunal”) found Paul Bisengimana guilty of murder, extermination, and crimes against humanity for his complicity in attacks on individuals at Ruhanga Protestant Church and School.
The Tribunal found that his involvement was not necessarily direct in nature, but that his presence during the attacks combined with his failure to stop them and his stature in the area as the bourgmestre were enough to encourage others to take part in the attacks. Bisengimana entered into a plea agreement whereby he plead guilty to the above crimes. The Tribunal still endeavored, however, to undertake a description of the elements of the crimes and the facts of the events to demonstrate why Bisengimana is guilty. The Chamber found that the attack at Musha Church was extermination because it was “launched against Tutsi civilians on discriminatory grounds, was widespread and resulted in a large number of victims…” The Chamber further found that Mr. Bisengimana was responsible for another set of attacks at Ruhanga Protestant Church even though he was not present because he had reason to know of the attacks and he did not takes steps required of him to protect the people. The Tribunal considered several mitigating circumstances including Bisengimana’s guilty plea, good conduct in detention, genuine desire to apologize and assist in the process, and his family situation. The Chamber sentenced him to 15 years imprisonment with credit for time already served.
United Kingdom High Court of Justice-Queen’s Bench Division (Commercial Court): The Republic of Ecuador v. Occidental Exploration & Production Co. (March 2, 2006)
The High Court of Justice (“the Court”) rejected the Republic of Ecuador’s (“Ecuador”) request to set aside the arbitral award, which awarded Occidental Exploration & Production Co. (“Occidental”) refunds on VAT payments made in relation with local purchases and on the import of goods made in connections with export activities. The arbitration was conducted pursuant to the UNCITRAL Arbitration Rules, and London was the designated place of arbitration. In the arbitration award, Occidental was awarded damages for, inter alia, breach of the national treatment and fair and equitable treatment of the BIT.
Relying on sections 67 and 68 of the Arbitration Act, Ecuador claimed that the arbitrators exceeded their jurisdiction, because Article X of the bilateral investment treaty (the “BIT”) between Ecuador and the United States under which the arbitration was initiated excluded “matters of taxation.” In the alternative, Ecuador claimed that the arbitrators exceeded their powers in a way that constituted a “serious procedural irregularity” in the arbitral proceedings that resulted in a substantial injustice to Ecuador.
Article X of the BIT reads:
“1. With respect to its tax policies, each Party should strive to accord fairness and equity in the treatment of investment of nationals and companies of the other Party.
2. Nevertheless, the provisions of this Treaty, and in particular Article VI and VII, shall apply to matters of taxation only with respect to the following:
(a) expropriation, pursuant to Article III;
(b) transfers, pursuant to Article IV; or
(c) the observance and enforcement of terms of an investment Agreement or authorization as referred to in Article VI (1) (a) or (b), to the extent they are not subject to the dispute settlement provisions of a Convention for the avoidance of double taxation between the two Parties, or have been raised under such settlement provisions and are not resolved within a reasonable period of time.”
Although the Court held that the dispute before the arbitral tribunal between Ecuador and Occidental involved a “matter of taxation,” it found that the VAT payments “had reference to the performance of the obligations of the Contract” between Occidental and Ecuador. Therefore, the Court concluded that the arbitral tribunal acted within its jurisdiction. The Court also dismissed Ecuador’s alternative argument, holding that even if the tribunal had exceeded its powers, Ecuador was caused no “substantial injustice.”
International Center for Settlement of Investment Disputes (ICSID): Aguas Provinciales de Santa Fe S.A. and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic- Order in response to a Petition for Participation as Amicus Curiae (March 17, 2006)
The Tribunal rejected the Fundacion para el Desarrollo Sustentable’s (the “Foundation”) request for participation as amicus curiae in the proceedings. However, the Foundation was granted an opportunity to reapply for leave to make amicus curiae submission.
According to the Tribunal, the Foundation’s petition contained three distinct requests:
Access and presentation of oral arguments at the hearings in the case
Submissions in the form of amicus curiae briefs
Access to documents and other information in the case
The Tribunal held that it was unable to grant the request for access and presentation of oral arguments, because the ICSID Arbitration Rules (Rule 32(2)) provided for attendance of hearings only where both parties consented. In that regard it distinguished the factual situation from that of Methanex v. United States of America, which involved public hearings approved of by both parties.
Turning to the issue of the submission of amicus curiae briefs, the Tribunal concluded that Article 44 of the ICSID Convention granted it the power to admit amicus curiae submissions. That power was, in view of the Tribunal, subject to three “basic criteria:
a) the appropriateness of the subject matter of the case;
b) the suitability of a given nonparty to act as amicus curiae in that case, and
c) the procedure by which the amicus submission is made and considered.”
Although the Tribunal concluded that the case involved “matters of public interest” that would, in principle, allow for submissions of amicus briefs, it rejected the request in question because the Foundation’s petition did not provide enough information on the identity and background of the petitioners. In view of these conclusions, the Tribunal did not find it necessary to rule on the appropriateness of access to the documents.
United Nations Security Council: Resolution 1672 (Reports of the Secretary-General on the Sudan) (April 25, 2006)
The resolution is available on the Security Council website.
The United Nations Security Council, determining that the situation in Sudan continues to constitute a threat to international peace and security in the region, imposed sanctions on four individuals. The four individuals are Major General Gaffar Mohamed Elhassan, commander of the Western Military Region for the Sudanese Armed Forces; Sheik Musa Hilal, paramount chief of the Jalul Tribe in North Darfur; Adam Yacub Shant, Sudanese Liberation Army commander, and Gabril Abdul Kareem Badri, of the Movement for Reform and Development.
The measures were initially specified in Security Council Resolution 1591 (2005), which stated that individuals “who impede the peace process, constitute a threat to stability in
Darfur and the region, commit violations of international humanitarian or human
rights law or other atrocities” should be subject to sanctions such as the freezing of assets and travel restrictions.
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