International Law in Brief

International Law In Brief

November 8 - 19, 1999
Developments in international law, prepared by the
Attorney-Editors of
International Legal Materials
The American Society of International Law


Treaties and Other International Agreements

Bahrain-U.S.: Treaty between the Government of the United States of America and the Government of the State of Bahrain Concerning the Encouragement and Reciprocal Protection of Investment (done at Washington, September 29, 1999)

On September 29, 1999, the United States and Bahrain signed the first U.S. bilateral investment treaty ("BIT") with a Gulf state.

The BIT applies to every kind of investment owned or controlled directly or indirectly by a national or a company. Art. 1(d).  The definition is illustrated by a list of six groups of specific rights, which is not exhaustive. Id.  Under certain circumstances, each party has the right to deny to a company of the other party the benefits of the BIT if nationals of a third country own or control the company. Art. 12.  The BIT covers investments existing prior to or at the time of its entry into force. Art. 16.1.

Subject to certain exceptions, the host nation is obliged to accord foreign investors the better of either national treatment or most-favored nation treatment. Arts. 2, 4.  The treatment of foreign investors must be at least that required by international law. Art. 2.3.  The Parties agree to provide effective means of asserting claims and enforcing rights, and must ensure the publication of laws, regulations, practices and decisions pertinent to foreign investments. Arts. 2.4, 5.

Under the BIT, host countries may expropriate foreign investments provided that the taking is done: 1) for a public purpose; 2) in a non-discriminatory manner; 3) upon payment of prompt, adequate, and effective compensation; and 4) in accordance with due process of law.  Art. 3.1.  Compensation must be paid without delay and be equivalent to the fair market value of the expropriated investment immediately before the taking. Art. 3.2.  Compensation must also be fully realizable and freely transferable. Id.

The BIT provides that, subject to certain limitations, the Parties have the right to transfer payments in a freely useable currency at the market rate prevailing on the date of transfer. Art. 4.2.  Under certain conditions, returns in kind are also permitted. Art. 5.3.

The Parties agree not to impose any performance requirements as a condition of the establishment, expansion or maintenance of foreign investments. Art. 6.  Subject to its immigration laws, each Party shall permit the free movement of workers of the other Party in connection with their foreign investments. Art. 7.

Dispute settlement mechanisms are established both for inter-governmental disputes, Art. 10, and for controversies between host countries and investors. Art. 9.  The latter can be submitted, inter alia, for settlement by binding arbitration by the International Centre for Settlement of Investment Disputes (ICSID) in accordance with the UNCITRAL Arbitration Rules. Art. 9.3.

As a general matter, no provisions of the BIT shall impose obligations with respect to tax matters. Art. 13.  The BIT does not preclude a Party from applying measures necessary for the maintenance of international peace and security, or the protection of its own essential security interests.  Additionally, the BIT does not preclude a Party from prescribing special formalities in connection with foreign investments provided that such formalities do not impair the substance of any of the rights established by the treaty. Art. 14.  GI

Editor's note: It is anticipated that this BIT will be sent to the Senate for advice and consent in early 2000.

 

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Judicial and Other Decisions

European Commission of Human Rights: The Former King of Greece, Princess Irene and Princess Ekaterini v. Greece,  Report of the Commission, Application No. 25701/94 (Adopted October 21, 1999)

The former King of Greece, who fled the country soon after the military coup in 1967, and other members of the former royal family ("Applicants") alleged violations of their rights to peaceful enjoyment of their possessions protected under Article 1 of Protocol 1 to the European Convention on Human Rights ("Convention").  In 1994, the Greek Parliament passed Law 2215/1994 ("1994 Law") which, inter alia, declared that the Greek State is the owner of the Applicant's moveable and immovable property.  The Applicants' subsequent challenge of the constitutionality of the 1994 Law was dismissed by the final decision of the Special Supreme Court.

The European Commission of Human Rights unanimously concluded that there had been a violation of Article 1 of Protocol 1 to the Convention.

The Greek Government ("Government") argued that the 1994 Law was merely a confirmation of the "existing constitutional position" regarding the former royal property that had been established by a 1973 expropriation decree during the military regime.  In the Government's view, the complaint was inadmissible because the alleged violation of the Convention occurred before Greece recognized the right of individuals to petition in 1985. Para. 64.  Furthermore, the Government argued that the former royal property could not be the subject-matter of this complaint because it has always had a special, "quasi-public" character, and therefore does not fall within the concept of property protected under the Convention. Para. 65.  Alternatively, the Government argued that the transfer of the property satisfied the principle of legality, the principle of fair balance between the demands of the general interest of the community and the obligation of the State to protect the individual's rights, as well as the principle of equitable compensation provided under the Convention. Paras. 70-74.

In response, the Applicants argued that the expropriation decree was never valid law because it had been issued by an unconstitutional military dictatorship and was repealed after its fall.  Therefore, the Applicants concluded that the Government was acting in bad faith by arguing that they were deprived of their property before the 1994 Law. Paras. 75-78.  In addition, the Applicants argued that Greek civil law did not recognize any special character for the property in question. Para. 82.  Finally, the Applicants argued that the compensation for the interference was disproportionate, and that the interference itself did not serve the public interest but was motivated by a political and personal antipathy towards the royal family. Paras. 83-90.

The Commission held that the Applicants had produced sufficient evidence to prove that they had acquired full ownership of the property, and that this was "in conformity with the common provisions of the civil law of property." Para. 93.  Furthermore, the Commission noted that since the 1994 Law constituted the legal basis for the interference with the Applicant's property, the principle of proportionality was the main issue. Para. 99.  The Commission held that the acts that the Government considered justifiable compensation for interference with the Applicant's property, such as the privileges afforded to the Applicants or tax exemptions, could not be regarded as the payment of compensation, "but could possibly be taken into account in order to make an accurate assessment of the applicant's claims for just satisfaction." Para. 104.  Therefore, the Commission held that the 1994 Law did not preserve a fair balance and imposed a considerable burden on the Applicants. BM
http://www.dhcour.coe.fr/eng/Report%20of%20King%20Constantine%20eng.htm

ICTY: Prosecutor v. Tadic, Sentencing Judgment (November 11, 1999)

The Trial Chamber noted that it was guided by the principles of retribution and deterrence in determining a proper sentence for Tadic. Para. 9.  Aggravating circumstances included Tadic's willing participation in the brutal treatment which further exacerbated the conditions in the camps established by the Bosnian Serb authorities, as well as Tadic's awareness of, and enthusiastic support for, the attack on the non-Serb civilian population of opstina Prijedor. Paras. 19-20.  The Trial Chamber rejected, as a mitigating circumstance, Tadic's action in providing the Prosecutor with some material relating to certain events in opstina Prijedor, because this did not meet the standard of substantial cooperation required by sub-rule 101(B)(ii). Para. 22,  Nevertheless, the Trial Chamber accepted the report of the Commanding Officer of the Detention Unit, who described Tadic as "a model detainee." Para. 23.

For the purpose of determining the appropriate sentence for Counts 29, 30 and 31, the Trial Chamber noted that, in accordance with the Erdemovic Appeal Judgment, a crime against humanity is a more serious offence than a war crime. Para. 29.  In addition, since the Appeals Judgment did not specify whether Tadic was held liable for torture or inhumane treatment (Count 8), the Trial Chamber decided to apply the principle which favors the defendant's position, and held Tadic liable for the lesser offence of inhumane treatment. Para. 31.

Finally, Tadic was sentenced to nine terms of imprisonment, ranging from six to twenty-five years, while "each of the sentences is to be served concurrently, both inter se and in relation to each of the sentences imposed in the Sentencing Judgment of July 1997." Para. 32G.

In a separate opinion, Judge Robinson argued inter alia that there was no basis for the conclusion that crimes against humanity were more serious than war crimes, because they both arise out of the same acts.  In addition, Judge Robinson stated that, instead of twenty years, the sentence for Count 1 (the killing of two Muslim policemen) should be twenty-five years, as was the sentence for counts 29, 30 and 31 (killing of five men in Jaskici), because the former was not a less heinous crime than the latter.  BM
http://www.un.org/icty/tadic/appeal/judgement/tadasj9911.htm

U.S. Supreme Court: Knight v. Florida, No. 98-9741 (On Petition for Writ of Certiorari to the Supreme Court of Florida); Moore v. Nebraska, No. 99-5291 (On Petition for Writ of Certiorari to the Supreme Court of Nebraska) (November 8, 1999)

Two prisoners from Florida and Nebraska who have each been on death row for more than twenty years, claimed that this delay was in violation of their rights under the Eighth Amendment and represented "cruel and unusual" punishment.  They asserted that Florida's and Nebraska's death penalty procedures were constitutionally defective and significantly contributed to the delay.

The Supreme Court denied granting petitions for certiorari.

Writing for the Court, Justice Thomas noted that there was nothing in the American constitutional tradition or in the Court's jurisprudence that supports the proposition that a defendant can avail himself of the "panoply of appellate and collateral procedures and then complain when his execution is delayed."  Otherwise, each new Eighth Amendment claim would further prolong collateral review and give every capital prisoner another ground on which to challenge and delay his execution.

In dissent, Justice Breyer noted that the jurisprudence both in the United States and in a growing number of foreign countries suggests that lengthy delays in administering the death penalty undermines its basic purposes of retribution and deterrence, and renders the ultimate execution inhuman, degrading or unusually cruel.  In addition, Justice Breyer observed that although the views of the foreign authorities are not binding, the "[w]illingness to consider foreign judicial views in comparable cases is not surprising in a Nation that from its birth has given a 'decent respect to the opinions of mankind.'"  Finally, Justice Breyer concluded that the delays caused by the State's failure to apply constitutionally sufficient procedures at the time of initial sentencing should not be charged against petitioners "in any constitutional calculus."  BM
http://supct.law.cornell.edu/supct/html/98-9741.ZA.html

U.S. Court of Appeals for the Fifth Circuit: Schlumberger Technology Corp., a.k.a. Sedco, Inc. v. United States, No. 98-20810 (November 5, 1999)

In 1966 Sedco, Inc., now part of Schlumberger Technology Corp. ("STC"), entered into a joint venture with Sonatrach, a state-owned Algerian company.  Under the terms of the agreement all disputes arising between the parties were to be settled by arbitration before a Swiss tribunal. In February 1984 a Swiss arbitral tribunal awarded Sedco nearly $26 million.  Sedco subsequently began enforcement proceedings in France because Sonatrach had no assets in Switzerland that could be attached. In September 1984 Sedco obtained an enforcement order from the French court granting provisional recognition of the award subject only to appeal.  The time for Sonatrach's appeal expired sometime after December 24, the date on which Sedco's final taxable year ended because of its merger into STC.

In its tax return for 1984, Sedco, an accrual basis taxpayer, did not include the arbitral award as income.  The IRS audited and assessed an amount due and penalties for this omission.  Sedco paid them and filed this suit for a refund.

Sedco argued that the accrual of the award in 1984 was improper because at that time the French enforcement order was still subject to appeal.  The district court granted summary judgment to Sedco.  The United States appealed.

Under U.S. tax law, as interpreted by the Fifth Circuit, "an accrual basis taxpayer . . . must report taxable income in the taxable year in which the last event occurs which unconditionally fixes the right to receive the income and there is a reasonable expectancy that the right will be converted to money."

On appeal, the Fifth Circuit had to determine whether a fixed right to receive exists with respect to a foreign arbitral award whose judicial confirmation is still subject to appeal in the jurisdiction in which enforcement is sought.  The Fifth Circuit affirmed the district court's decision holding that a taxpayer need not accrue a foreign arbitral award as income until the time to appeal judicial confirmation of the award expires.  The court based its conclusion on the different nature of arbitral awards vis-a-vis domestic judgments, which constitute an unconditional, fixed right to receive despite the potential of collateral attack when sought to be enforced in another state.  "[I]n the context of international arbitration," the Fifth Circuit said, "it makes sense to give the taxpayer the benefit of the doubt given the inherent difficulties associated with collecting foreign awards in foreign countries."  GI
http://laws.findlaw.com/5th/9820810CV0.html

 

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Reports and Other Documents

U.N. Security Council Resolution 1269 (October 19, 1999)

The Security Council unanimously adopted Resolution 1269 addressing international terrorism.  The Resolution states that the Security Council is deeply concerned about an increase in acts of international terrorism that endanger lives, peace and security, and condemns all such acts irrespective of motive. Paras. 1-2.  It emphasized the need to intensify the fight against terrorism by strengthening cooperation based on principles of the U.N. Charter, norms of international law, and in respect of human rights. Paras. 3-4.  The Resolution then declared that the Security Council would support the development of new international instruments to counter the threat of terrorism, and would contribute to the efforts combatting terrorism in all forms.  The resolution also reaffirmed that such efforts were essential to the maintenance of peace and security. Paras. 6, 7.

The Resolution contains seven specific articles.  Article 1 condemns all acts, methods, and practices of terrorism as criminal and unjustifiable, in particular those that threaten peace and security.  Next, all States are called upon to cooperate fully with international anti-terrorist conventions, and it was emphasized that there should be enhanced cooperation among states and regional organizations. Arts.  2,3.  Article 4 calls on all states to take steps to: 1) cooperate with one another to prevent and suppress terrorist acts, while protecting persons and bringing perpetrators of terrorism to justice; 2) prevent their territories from being used for financing and preparations for terrorism; 3) deny safe haven for those who plan, finance or commit terrorism; 4) ensure that asylum-seekers have not been participants in acts of terrorism; and 5) cooperate on administrative and judicial matters regarding terrorism.  The Security Council noted its willingness to take steps to counter terrorist threats to peace and security, and decided to remain seized of the matter. Paras. 6, 7.  AH
http://www.un.org/Docs/scres/1999/99sc1269.htm

 

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Briefly Noted

The BBC reports that three Scottish judges, Lord Sutherland, Lord Coulsfield, and Lord MacLean, have been named in the Lockerbie Scottish trial in the Netherlands. (See ILIB April 5-10, 1999 http://www.asil.org/ilib0209.htm#lockerbie) Lord Sutherland is to be presiding judge and Lord Abernethy is to participate in the deliberations and act as a substitute.  The trial is scheduled to begin February 2, 2000.  http://news.bbc.co.uk/hi/english/world/newsid_526000/526405.stm

Transparency International has released its 1999 Corruption Perception Index and a new Bribe Payers Index, which ranks nineteen leading export countries according to the degree to which their corporations are perceived to be paying bribes abroad. http://www.transparency.de/documents/cpi/index.html

The Hague Conference on Private International Law has just issued a revised and renumbered version of its Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Political Matters.  http://www.hcch.net/e/workprog/jdgm.html

 

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International Law In Brief - Copyright 2000 - The American Society of International Law
Editors:  Peter C. Hansen, Esq., David A. Levy, Esq.
Interns:  Matthew Casebolt, Adam Hill, Giuliano Iannaccone, Branislav Maric, Adv., Kaniah Whitehorn