Developments in international law, prepared by the Editorial Staff of International Legal Materials
The American Society of International Law January 5, 2007
Claimants LG& E possess a shareholding interest in three gas distributing companies in Argentina. Both the United States and Argentina are parties to the Convention on the Settlement of Investment Disputes (ICSID Convention). The Bilateral Investment Treaty (BIT) between the U.S. and Argentina entered into force October 20, 1994.
The dispute arose out of the Argentine economic crisis in the 1980s. A component of the government’s recovery plan was to privatize a number of government monopolies including Gas del Estado, S.E., the national natural-gas transporter and distributor. Under the government’s program, domestic and foreign investors could buy shares in newly-created private corporations. A “Gas Law” enacted in 1992 and its regulations required transportation and distribution tariffs to be calculated in U.S. dollars and be converted to Argentine pesos. From February 1997 to March 1999, LG&E bought interests in three of the newly privatized companies. In the late 1990s Argentina experienced another economic crisis, resulting in strikes involving millions of workers, an unemployment rate of 25%, school closings, and the resignation of five presidential administrations in one month. On January 6, 2002, the Argentine Congress enacted the “Public Emergency and Foreign Exchange System Reform Law” which eliminated the conversion of tariffs from dollars to pesos.
LG&E requested ICSID to arbitrate the dispute alleging that Argentina had violated the BIT. LG&E sought the tribunal to find Argentina in breach of its treaty obligations, to order Argentina to pay all costs and fees of the arbitration, totaling $248 million, or $268 million if the tribunal found that there was expropriation, in addition to compound pre-award and post-award interest and costs. Argentina contended that it did not violate the treaty, and requested the tribunal to dismiss LG&E’s claims and hold it liable for costs. In the alternative, Argentina asserted that the circumstances required the application of the state of necessity defense, thereby exempting it from liability for treaty violations.
The tribunal examined whether the economic measures Argentina implemented violated its obligation under the BIT to give “fair and equitable treatment” to LG&E’s investment. While the treaty does not define these terms, the tribunal defined the standard to be comprised of the host state’s consistent and transparent behavior, free of ambiguity and including the duty to grant and maintain a stable and predictable legal framework necessary to fulfill the justified expectations of the foreign investor. The tribunal thus concluded that Argentina violated the fair and equitable provision in the BIT. The tribunal however, accepted Argentina’s claim of necessity and excused it from liability for any breaches of the BIT between December 1, 2001, when the government announced it would freeze funds, and April 26, 2003, with the election of President Kirchner. It held that Argentina must pay LG& E damages for the violations of the treaty falling outside the period of the state of necessity. The damages and interest will be determined during the next phase of the arbitration.
Boumedienne v. Bush, (D.C. Cir., December 29, 2006)
On December 29, 2006, Judges Sentelle and Randolph of the United States Court of Appeals for the District of Columbia, refused to allow seven former federal jurists from filing an amicus brief in the consolidated appeals of Boumedienne v. Bush, and Al Odah v. Bush, (see International Law in Brief November 22, 2006: U.S.: Amicus Brief of Former Federal Judges on Military Commissions Act), because they used the term “judge” in the brief. This is contrary to Advisory Opinion No. 72, Committee on Codes of Conduct, Judicial Conference of the United States, which prohibits the term “judge” from being used in the courtroom or in papers involved in litigation before them to describe a former judge, unless the designation is needed to accurately depict someone’s status at a time relevant to the lawsuit.
In a dissenting opinion, Judge Rogers would permit the former jurists to file their amicus brief, because, in accordance with Federal rule of Appellate Procedure 29(a), both parties consented to the filing of the brief, and the briefs of former judges and other amici can be of assistance to courts. Judge Rogers cites to the then Judge Alito’s opinion of Neonatology Assocs., P.A. v. Comm’r, 293 F.3d 128, 133 (3d Cir. 2002), that not permitting an unopposed motion to file may create the appearance of viewpoint discrimination.
On December 23, 2006, the United Nations Security Council passed a Chapter VII sanctions resolution against Iran. The Security Council reaffirmed its commitment to the Nuclear Non-Proliferation Treaty, and recalled the rights of states to develop research for nuclear energy for peaceable purposes. It reiterated its serious concern over the numerous reports of the IAEA Director General and Board of Directors regarding Iran’s nuclear program, as well as its apprehension over aspects of Iran’s nuclear program that could have a military aspect. The resolution requires Iran to take steps to promote confidence in the peaceful aspects of its nuclear program. Iran must suspend all enrichment related and reprocessing activities, including research and development; and must also suspend work on all heavy water projects including the building of a research reactor. The Security Council decided that all states must take the necessary steps to prevent the sale, supply, or transfer, directly or indirectly from their territories or by their citizens of all items, materials, equipment, goods and technology which could contribute to Iran’s enrichment-related reprocessing or heavy water-related activities, or to the development of nuclear weapon delivery systems. The Security Council also decided that states must freeze the financial assets and economic resources of persons and entities that the Security Council lists in the resolution. The resolution exempts monies for food, rent, medicines and medical treatment from the scope of the economic sanctions.
United Nations Security Council Resolution 1738: Protection of Civilians in Armed Conflict (December 23, 2006)
In Resolution 1738, the Security Council reaffirms its earlier resolutions on the protection of citizens, United Nations personnel, and humanitarian workers in armed conflict. It confirms that parties to armed conflicts possess the primary duty to protect civilians. It highlights the international humanitarian law prohibition against attacks purposefully directed against civilians, and emphasizes the need for states to end the impunity for these acts. It reiterates that states parties to the Geneva Conventions have a duty to locate individuals who are alleged to have committed crimes against civilians, and try them in national courts, or hand them over to another concerned state. The Council emphasizes the need for states to adopt a wide-ranging strategy to address the root causes of armed conflict including promoting sustainable development, eradicating poverty, and promoting good governance, the rule of law, and protection of human rights. It condemns attacks against journalists and recalls that journalists should be treated as civilians in areas of armed conflict. It invites states that have not yet done so, to ratify the Additional Protocols to the Geneva Conventions as soon as possible.
United Nations Security Council Resolution 1733: Tribute to the Outgoing Secretary-General (December 22, 2006)
In Resolution 1733, the Security Council recognized Secretary-General Kofi Annan’s role in guiding the United Nations, and his work in seeking solutions to a number of conflicts and disputes around the world. It lauded the Secretary-General’s efforts at reorganizing and improving the operations of the United Nations system, and recognized his contributions to international peace, security, and development. Finally, the Security Council expressed its deep appreciation for Kofi Annan’s commitment to the principles contained in the United Nations Charter and to creation of amicable relations among nations.
United States Legislation: Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act of 2006 (P.L. 109-456) (December 22, 2006)
In the Democratic Republic of the Congo Relief, Security, and Democracy Promotion Act (the Act) includes a number of Congressional findings regarding the Democratic Republic of Congo (DRC) and its impact upon the rest of the continent of Africa. Congress stated that the chronic instability of the continent hampers counterterrorism efforts and poses heavy humanitarian and peacekeeping burdens. Because the DRC is located in the heart of Africa and touches all of the major regions of sub-Saharan Africa, ensuring its security and peace could have a profound impact upon the rest of the continent. The Act cites an Amnesty International study estimating that since 1998, some 40,000 women and girls were systematically raped and tortured in the DRC, with members of the security forces, the Forces Armes de la Republique Democratique du Congo (FARDC) and the Police Nationale Congolaise, committing the majority of the abuses
The Act states that it shall be United States policy to help promote and reinvigorate the political process in the DRC; to assist the DRC to meet the basic needs of its citizens including security, safety, health care, education, housing, and clean water and food; and to help stop the sexual violence against women and children. It requires the U.S. to work in tandem with other troop contributing nations to the UN Peacekeeping Mission in the DRC (MONUC), to enact and enforce laws preventing human trafficking and sexual abuse that meet international standards, and promote codes of conduct for the peacekeepers.
The Act requires the United States to “use its voice and vote” in the United Nations (UN) Security Council to address exploitation at MONUC by urging investigation and prosecution of perpetrators of sexual abuses, and to ensure that the recruitment of “child soldiers” in the DRC is stopped immediately. The Act authorizes $52 million in fiscal years 2006 and 2007 to perform its goals.
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