Developments in international law, prepared by
the Editorial Staff of International Legal Materials
The American Society of International Law February 28, 2004
International
Centre for Settlement of Investment Disputes (ICSID) (Decision
on Objections to Jurisdiction): SGS Société Générale
de Surveillance S.A. v. Republic of the Philippines,
Case No. ARB/02/6(January 29, 2004)
The Tribunal
concluded that SGS had not presented a case for expropriation
under international law, however it found that some of
SGS's claims brought pursuant to the Philippines-Swiss
Bilateral Investment Treaty (BIT) were admissible. The
Tribunal concluded that while claims for breach of the
BIT arising from the contract were admissible, the BIT
nevertheless did not override an exclusive jurisdiction
clause contained in the contract that it found to be binding
on the parties. The Tribunal stayed the proceedings pending
the determination of the amount payable by the Philippines,
a determination that could be made either by agreement
of the parties or by a decision of the Philippine courts.
In August 1991, SGS, a Swiss
company, concluded an agreement, the "CISS Agreement"
with the Republic of the Philippines ("the Philippines")
concerning the provision of services in order to improve
customs clearance and processing in the Philippines. A
dispute arose between the parties concerning alleged nonpayment
of invoices by the Philippine Bureau of Customs.
Among the issues were (1)
whether a contract for the provision of services performed
in significant part outside the territory of a host State
(the Philippines) may nonetheless constitute an investment
in its territory in terms of the BIT, (2) whether the
"umbrella clause" of the BIT gives the Tribunal
jurisdiction over essentially contractual claims and (3)
whether the Tribunal should exercise jurisdiction in the
present case notwithstanding the exclusive jurisdiction
clause in the contract between SGS and the Philippines
Bureau of Customs.
According to SGS, the Philippines'
failure to make certain payments under the CISS Agreement
constituted: (1) failure to protect SGS's investment by
subjecting it to unreasonable measures in violation of
Article IV(1) of the BIT; (2) failure to ensure fair and
equitable treatment of SGS's investment, in violation
of Article IV(2) of the BIT; (3) violation of Article
X(2) of the BIT, requiring the Philippines to observe
payment obligations under the CISS Agreement with regard
to investments by SGS; and (4) a measure tantamount to
expropriation in violation of Article VI(1) of the BIT.
The Philippines argued, inter
alia, that the dispute was of a purely contractual
nature, that the Swiss-Philippines BIT specifically provided
that ICSID procedures only applied to international dispute
claims, and that nothing in the BIT indicated an intention
to override the provisions of the contract, nor previous
obligations with respect to "specific investments".
The Philippines' further objections to jurisdiction concerned
the territorial limitation of investment under Article
II of the BIT, which requires that "investments"
be located in the "territory of one Contracting Party."
On this ground the Philippines argued that the services
performed by SGS outside the Philippines had to be excluded
from ICSID jurisdiction.
As to whether SGS's investment
could be considered within the territory of the Philippines,
the Tribunal noted that under the CISS agreement, the
"focal point of SGS's services was the provision,
in the Philippines, of a reliable inspection certificate
for the Philippines Bureau of Customs to assess and collect
revenue," and the operations were organized and conducted
in Manila, therefore the investment was within the Philippines.
The Tribunal found that the
mere non-payment of invoices by the Philippines did not
amount to an expropriation under the terms of the BIT.
It noted that there had been no law or decree enacted
by the Philippines attempting to expropriate or cancel
the debt, nor had the Philippines’ acts resulted
in acts "tantamount to expropriation." In terms
of the coverage of the BIT's umbrella clause, the Tribunal
held that SGS's claims for non-payment of invoices fell
under Article X(2) which provides that "[e]ach Contracting
Party shall observe any obligation it has assumed with
regard to specific investments in its territory by investors
of the other Contracting Party." However, the
Tribunal noted that the exclusive jurisdiction clause
contained in the contract was not "a mere acknowledgment
of a jurisdiction already existing by virtue of the non-derogable
law of the host State", but rather, a "contractual
stipulation to accept the exclusive jurisdiction"
of the Philippine courts that is "binding on the
parties."
The Tribunal noted that it
did not fully agree with the conclusions reached by the
SGS v. Pakistan Tribunal (See 42 ILM 1289)
"on issues of interpretation of arguably similar
language in the Swiss-Philippines BIT."
European
Court of Human Rights (ECHR): Timofeyev v. Russia
(no. 58263/00) (October 23, 2003)
The European Court of Human
Rights (“the Court”) unanimously decided that
there has been a violation of Article 6 § 1 of the Convention
for the Protection of Human Rights and Fundamental Freedoms
(“the Convention”) and Article 1 of Protocol
No. 1. Further the Court decided that the applicant may
claim to be a “victim” for the purposes of
Article 34 of the Convention.
The application was submitted
by Mr. Nikolay Vasilyevich Timofeyev, a Russian national,
who was born in 1948 and lives in Orsk (Russia). On March
17, 2000 Mr. Timofeyev lodged the application against
Russia with the Court under Article 34 of the Convention.
In 1981, criminal charges
were brought against Mr. Timofeyev for dissemination of
anti-Soviet propaganda. The police searched his home and
confiscated a radio, audio recordings, books, newspaper
clippings and manuscripts in connection with his unlawful
activity. In April 1982, Mr. Timofeyev was found not guilty
on the ground of insanity and was placed in a mental asylum.
In 1986, Mr. Timofeyev’s mental health had improved
and he was released. In September 1992, the Orenburg Regional
Public Prosecutor’s Office issued a statement to
acknowledge that the applicant had been unlawfully persecuted
by the State and reinstated in his rights.
From 1995 to 1997 Mr. Timofeyev
tried unsuccessfully to recover the property that had
been confiscated from him. In 1998 and 2001 the Leninskiy
District Court of Orsk ordered to pay him compensation
for the property and legal costs. On December 18, 2001
the bailiff closed the enforcement proceedings because
the award had been credited to the applicant’s bank
account on November 30, 2001. The applicant challenged
this decision in court claiming that he had not received
the money. On February 15, 2002 the Levinskiy District
Court established that there was insufficient evidence
that the sum had been paid and annulled the bailiff’s
decision. By letter of October 18, 2002 Mr. Timofeyev
informed the Court that he had not received the money
awarded. This was disputed by the Government in a letter
of October 31, 2002 informing that the award of June 29,
2001 had been paid to the applicant on November 30, 2001.
The Court noted that the judgment
of July 22, 1998, which became final on December 8, 1998
remained unenforced at least until November 30, 2001.
The delays in the execution process were caused by the
bailiffs’ unlawful actions, numerous adjournments
due to interference of supervisory-review authorities
and the obscurity of the judgment. The Court held that
Article 6 § 1 of the Convention secures
to everyone the right to have any claim relating to his
civil rights and obligations brought before a court or
tribunal. It further stated that the right would be illusory
if a Contracting State’s domestic legal system were
to allow a final binding decision to remain inoperative
to the detriment of one party. According to the Court
it would be inconceivable that Article 6 § 1 of the Convention
should describe in detail procedural guaranties afforded
to litigants. Therefore the execution of a judgment given
by any court must be regarded as an integral part of the
trial for the purposes of Article 6. Accordingly the Court
found that there has been a violation of Article 6 § 1
of the Convention.
Article 1 of the Protocol No. 1
provides that “Every natural person is entitled
to the peaceful enjoyment of his possessions. No one shall
be deprived of his possessions except in the public interest
and subject to the conditions provided for by law and
by the general principles of international law.”
The Court held that a “claim” can constitute
a “possession” within the meaning of Article
1 of Protocol No.1 to the Convention if it is sufficiently
established to be enforceable. (Burdov
v. Russia) The Court further held that Mr. Timofeyev
did not receive from the State the judgment debt as soon
as it became enforceable or, at least within the time-limit
set in domestic law. Accordingly the Court found a violation
of Article 1 of the Protocol No.1.
World Trade Organization (WTO):
European Communities v. United States (Case No.
04-0743) (February 24, 2004)
The Panel held that the European
Community may suspend obligations under GATT 1994 and
the Anti- Dumping Agreement against imports from the United
States. The European Communities must ensure that the
application of this suspension is quantified, and does
not exceed the quantified level of nullification or impairment
it has sustained as a result of the 1916 Act.
On September 26, 2000, the
Dispute Settlement Body (“DSB”) adopted the
report of the Appellate Body and the report of the Panel
as upheld by the Appellate Body in this dispute. The United
States was supposed to bring the Anti-Dumping Act of 1916
into conformity with the DSB recommendations within a
reasonable period of time. The time limit was set for
July 26, 2001 and later extended until December 31, 2001.
On January 7, 2002 the European Community requested the
DSB to authorize it to suspend the application of obligations
under GATT 1994 and the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade
1994 (the “Anti-Dumping Agreement”). The United
States objected to the level of suspensions proposed by
the EC. On February 27, 2002 both parties requested the
Arbitrators to suspend the arbitration proceeding. However
on September 19, 2003 the EC requested the reactivation
of the arbitration proceedings.
The EC sought authorization
to a so-called “mirror” regulation. The EC
requested authorization to suspend the application of
obligations owing to the United States under the GATT
1994 Anti-Dumping Agreement in order to adopt an equivalent
regulation to the 1916 Act against imports from the United
States.” This was a result of the United States’
failure to bring the 1916 Act into conformity with WTO
agreements.
The United States argued,
inter alia, that the EC failed to provide any evidence
on the level of nullification or impairment arising
from the 1916 Act, or to propose any specific level of
suspension. The United States further argued that “Articles
22.4 and 22.7 of the Dispute Settlement Understanding
(“DSU”) do not permit the arbitrator or the
DSB to make a determination in the absence of such information.”
The Panel found that it is
not possible to determine the WTO-consistency of a request
for a “qualitatively equivalent” suspension
of obligations. Instead, it is necessary to determine
how such a suspension would be applied. If the suspension
were applied in such a manner that it was equal to the
level of nullification or impairment sustained by the
European Community as a result of the 1916 Act, then the
suspension would be “equivalent” under Article
22.4 of the DSU. If it were applied in such a manner that
it exceeded the level of nullification or impairment sustained
by the EC then the suspension would be punitive, which
is not permitted under Article 22.4. Further the panel
held that “arbitrators are explicitly prohibited
from ‘examin[ing] the nature of the concessions
or other obligations to be suspended.’”
Coalition
Provisional Authority: The Statute of the Iraqi Special
Tribunal for Crimes Against Humanity (December 10, 2003)
The Coalition Provisional
Authority has concluded the statute establishing the "Iraqi
Special Tribunal for Crimes Against Humanity." ("the
Tribunal") The Tribunal has jurisdiction over any
Iraqi national or resident of Iraq accused of 1) genocide;
2) crimes against humanity; 3) war crimes and 4) violations
of certain Iraqi laws. The Tribunal's jurisdiction extends
to crimes committed since July 17, 1968 and up until and
including May 1, 2003, in the territory of Iraq or elsewhere,
including crimes committed in connection with Iraq's wars
against Iran and Kuwait. This includes jurisdiction over
crimes against humanity committed against the people of
Iraq (including its ethnic groups) whether or not committed
in armed conflict. (Article 1). The statute provides that
war crimes shall include grave breaches of the Geneva
Conventions of August 12, 1949, in addition to other serious
violations of the laws and customs applicable in international
and armed conflict.
In terms of the organization
of the Tribunal, the Tribunal will consist of one or more
Trial Chambers, an Appeals Chamber, Tribunal Investigative
Judges and a Prosecutions department. The Trial Chambers
will be composed of permanent independent judges and independent
reserve judges, with each Trial Chamber having five permanent
judges, and the Appeals Chamber having nine judges. Article
4(d) provides that the Iraqi Governing Council may, if
it deems necessary, appoint non-Iraqi judges who have
experience in the crimes encompassed in this statute.
In terms of selection of judges, Article 5(b) provides
that Iraqi candidates for the Trial Chambers need not
be serving judges, but may be lawyers and jurists, while
Judges in the Appeals Chamber must be serving or former
judges.
In regard to rules of procedure
and evidence, Article 16 of the statute provides that
the President of the Tribunal shall draft rules and shall
be guided by Iraqi Criminal Procedure Law. The rules will
be adopted by a majority of the permanent judges of the
Tribunal.
Article 18 concerning investigation
and indictments provides that "the Tribunal Investigative
Judge shall initiate investigations ex-officio or on the
basis of information obtained by any source, particularly
from the police, and government and non-governmental organizations."
It also provides that any suspects questioned by an Investigative
Judge shall have the right to free legal assistance if
the suspect is without means to pay for a lawyer. It also
states that "[t]he suspect is entitled to have non-Iraqi
legal representation, so long as the principal lawyer
of such suspect is Iraq."
Coalition Provisional Authority (CPA):
Foreign Investment Order 39 and Order 46 (Amending Order
39) (September 19, 2003)
Pursuant to U.N. Security
Council Resolution 1483, the Coalition Provisional Authority's
("CPA") Order 39 on Foreign Investment ("Orders")
replaces all existing foreign investment law in Iraq,
and is designed to
"promote[ ] and safeguard[
] the general welfare and interests of the Iraqi people
by promoting foreign investment through the protection
of the rights and property of foreign investors in Iraq
and the regulation through transparent processes of matters
relating to foreign investment in Iraq."
Under the definitions section
of Order 39, foreign investment includes "investment
by a foreign investor in any kind of asset in Iraq, including
tangible and intangible property, and related property
rights, shares and other forms of participation in a business
entity, and intellectual property rights and technical
expertise" (subject to some limitations). The definition
of foreign investor includes: (a) a business entity constituted
or organized under the law of a country other than Iraq;
(b) a natural person who is (i) a national of a country
other than Iraq, (ii) a stateless person not residing
permanently in Iraq, or (iii) a national of Iraq residing
permanently outside Iraq; or (c) a business entity constituted
or organized by any of the above under the law of Iraq;
that is making or has made an investment in Iraq."
Section 4 of Order 39 provides
for national treatment of foreign investors. Section 6
of the Order states that foreign investment is permitted
in all regions of Iraq and in all economic sectors in
Iraq, with the exception of both indirect and direct foreign
ownership of the natural resources sector involving primary
extraction and initial processing, which are prohibited.
The Order further provides that it does not apply to banks
and insurance companies. Section 6 also states that foreign
investors are prohibited from engaging in retail sales,
unless at least 30 days prior to engaging in the retail
sales the foreign investor deposits $100,000 in a non-interest
bearing account in a properly licensed Iraqi bank located
in Iraq, in accordance with procedures issued by the Iraqi
Ministry of Trade.
Section 7 of Order 39, entitled "Implementing
Foreign Investment" states that a foreign investor
may implement foreign investment using, among other things,
freely convertible currencies or Iraqi legal tender, in
the following forms: "(a) establishing a wholly foreign-owned
business entity in Iraq, including as a subsidiary of
a foreign investor; (b) establishing a business entity
jointly with an Iraqi investor; (c) establishing a branch
office, as set forth in Section 5 herein; and (d) directly
acquiring an investment." In addition, it states
that a foreign investor shall be authorized to: "(a)
possess, use, and dispose of its investments; (b) manage
or participate in managing a business entity; (c) transfer
its rights and obligations to other persons in accordance
with the law; (d) transfer abroad without delay all funds
associated with its foreign investment, including: i)
shares or profits and dividends; ii) proceeds from the
sale or other disposition of its foreign investment or
a portion thereof; iii) interest, royalty payments, management
fees, other fees and payments made under a contract; and
iv) other transfers approved by the Ministry of Trade;
e) exercise any other authority conferred upon it by law.
Order 46 amends section 7(3) and 2 of Order 39, providing
that "The Minister of Trade, in direct consultation
with the CPA, shall properly issue regulations to assist
in the implementation of this Order, in coordination with
the Minister of Finance and the Minister of Planning."
The Order 39 is subject to
further revision by the Administrator, or to adoption/replacement
by an internationally recognized, representative Iraqi
government.
Coalition
Provisional Authority (CPA): Regulation 8-Delegation of
Authority Regarding an Iraq Property Claims Commission
(January 14, 2004), Statute of the Iraq Property Claims
Commission (January 15, 2004)
Pursuant to U.N. Security
Council Resolutions 1483 and 1511 (2003), and "recognizing
that as a result of Ba'athist policies" of the former
regime, "large numbers of people from different ethnic
and religious backgrounds in Iraq have been uprooted and
forced to move from their properties" and "many
individuals have conflicting claims to real property,
resulting in instability and occasional violence"
the Administrator of the Coalition Provisional Authority
(CPA) promulgated a regulation which delegates authority
to the Iraqi Governing Council for the establishment of
the Iraq Property Claims Commission (“IPCC”).
This delegation of authority
provides that the Governing Council must ensure that all
procedures of the IPCC are in compliance with all other
regulations and orders of the CPA. It states that the
CPA shall oversee the distribution of funds for claims
resolution provided by the Development Fund for Iraq,
by the Coalition or by other donor States.
The Statute of the Iraq Property
Claims Commission applies to claims arising between July
17, 1968 and April 9, 2003. It provides that the IPCC
will be composed of judges and established as a separate
chamber of the Iraqi Court of Cassation, in addition to
regional commissions. Section Four, entitled "General
Principles" provides, inter alia, that any
properties that were confiscated or seized, or on which
liens were placed by the former government (not in the
ordinary course of commercial business), but with title
remaining in the name of the original owner, shall be
returned to the original owner. It also provides that
any properties seized, the title of which were transferred
to the Government of Iraq and not sold to a third party,
shall be returned to the original owner. It further provides
that any properties confiscated by the government that
were used as mosques or other places of worship, shall
be returned to the appropriate waqfs (religious
endowments) connected to such uses or to the appropriate
holders of title to such properties prior to their confiscation.
Article 11 of the Statute
provides that all claims must be filed by December 31,
2004. Any claims concerning properties within the jurisdiction
of the IPCC Statute filed after December 31, 2004 may
be referred to the Iraqi Court system, which shall apply
the principles included in the IPCC statute.
Click here
for Regulation 8 on Delegating Authority.
The International
Criminal Tribunal for Rwanda (ICTR) Judgment (February
25, 2004)
The International Criminal
Tribunal for Rwanda convicted Samuel Imanishimwe, former
military commander in Rwanda to 27 years in prison after
convicting him on six counts of genocide, crimes against
humanity and serious violations of Article 3 Common to
the Geneva Conventions and of Additional Protocol II.
Two other accused, André Ntagerura, former Minister of
Transport and Communications and Emmanuel Bagambiki, former
Prefect of Cyangugu, were acquitted of similar charges.
In the case of those acquitted the Tribunal held that
the Prosecutor did not prove the allegations beyond a
reasonable doubt.
German
Supreme Civil Court (Bundesgerichtshof): Diplomatic law
- property foreclosure (May 28, 2003)
The Bundesgerichsthof (“the
Court”) held that real property owned by a foreign
sovereign State and used solely for diplomatic purposes
enjoys protection under German law. According to the Court,
the question whether such real estate is governed by German
law or not is a matter of international law, according
to Article 25 Grundgesetz (Constitution) and § 20 (2)
Gerichtsverfassungsgesetzes (Constitution of the Courts).
The Court held that the determination of the property’s
main purpose is difficult and may lead to misapplication,
therefore international law requires the broad application
of this rule. Accordingly any property, including embassy’s
real estate, used for consular or diplomatic mission is
inviolable (Art. 22 of the Vienna Convention on Diplomatic
Relations and Art. 31 of the Vienna Convention on Consular
Relations).
U.S. Brings
First Charges Against Guantanamo Inmates:
The United States charged
two suspected al Qaeda members Mr. Ali Hamaz Ahmed Sulayman
al Bahul of Yemen and Ibrahim Ahmed Mahmoud al Qosi of
Sudan with conspiracy to commit war crimes. These two
men, described as close associates and former bodyguards
for al Qaeda leader Osama bin Laden, will be brought before
a military tribunal for trial. They are the first prisoners
detained in Guantanamo Bay who will face criminal charges.
