International Law in Brief

International Law In Brief

Developments in international law, prepared by the
Editorial Staff of International Legal Materials
The American Society of International Law
January 29, 2003


JUDICIAL AND SIMILAR PROCEEDINGS

REPORTS AND OTHER DOCUMENTS

BRIEFLY NOTED

From the Editors

The ILM Office is pleased to welcome Ms. Ruth Teitelbaum, who has joined the staff as a new ILM Managing Editor. Ms. Teitelbaum holds a J.D. from the George Mason University School of Law and a LL.M. from the University of California, Berkeley, Boalt Hall School of Law. Ms. Teitelbaum used to serve as an Assistant Counsel at the International Centre for Settlement of Investment Disputes, Washington, DC.

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JUDICIAL AND RELATED DOCUMENTS

International Centre for Settlement of Investment Disputes (ICSID) (Additional Facility): ADF International v. United States of America (In the Matter of an Arbitration under Chapter Eleven of the North American Free Trade Agreement), Case No. ARB (AF)/00/1 (January 9, 2003)

The Tribunal denied the investor?s claims for violations of Chapter Eleven of NAFTA, basing its decision on the procurement reservations and exceptions found in NAFTA Article 1108 in addition to the Notes of Interpretation by NAFTA?s Free Trade Commission concerning the minimum standard of treatment under international law of NAFTA Article 1105(1) released on July 31, 2001.

The facts underlying the dispute concern a federally-funded Springfield Interchange highway project in Virginia. ADF International (?ADF?), a Canadian company that sub-contracted to supply steel for the project, was subsequently precluded from supplying its steel components due to the imposition of domestic use requirements by the Virginia Department of Transportation (VDOT). ADF challenged, inter alia, the ?Buy America? requirements of the Federal Highway Administration Regulations, as well as their administration by the VDOT.

The Tribunal found no violation of the national treatment requirements of Article 1102. It further determined that Virginia?s Springfield Interchange Project constituted ?procurement by a Party? within the meaning of Article 1108, and was therefore entitled to protection under the reservations and exceptions to national treatment, most favored nation treatment and performance requirements set forth in Article 1108 sections (7)(a) and (8)(b). The Tribunal also held that the U.S. measures in question were not in violation of NAFTA Article 1105(1) in light of the NAFTA Free Trade Commission?s Notes of Interpretation.

Click here for the decision.

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International Court of Justice (ICJ): Case Concerning Sovereignty over Pulau Ligitan and Pulau Sipadan (Indonesia/Malaysia), No. 102 (December 17, 2002)

The ICJ ruled that the sovereignty over two islands off the northeast coast of Borneo belongs to Malaysia.

In September 1998, Indonesia and Malaysia submitted their dispute relating to the sovereignty over the islands of Pulau Ligitan and Pulau Sipadan to the Court pursuant to a Special Agreement that both parties had ratified earlier the same year. In March 2001, the Philippines sought to intervene in the case, on the grounds that this was necessary in order to "preserve and safeguard" their historical and legal rights with respect to the territory of North Borneo. In its judgment of October 23, 2001, the Court held that the Phillippines failed to establish an interest of a legal nature that would justify the intervention (see the November 6, 2001 ILIB).

On the merits, the ICJ first held that neither Indonesia nor Malaysia had a treaty-based title to the islands in dispute. The Court then examined whether any of the parties could hold the title to the islands based on effectivités, or acts constituting a "relevant display of authority which leave no doubt as to their specific reference to the islands in dispute as such." The Court held that the effectivités relied upon by Indonesia lacked the requisite intention and will to act in a sovereign capacity. As to the evidence submitted by Malaysia, the Court found that the measures Malaysia had taken to, inter alia, regulate and control the collection of turtle eggs on Ligitan and Sipadan and the establishment of a bird reserve on Sipadan "must be seen as regulatory and administrative assertions of authority over the territory which is specified by name." The Court concluded that these and some other activities undertaken by Malaysia, although "modest in number," cover a considerable period of time and "show a pattern revealing an intention to exercise State functions in respect of the two islands in the context of the administration of a wider range of islands."

Click here for the Merits.

Click here for the Declaration of Judge Oda.

Click here for the dissenting opinion of Judge Ad Hoc Franck.

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North American Free Trade Agreement (NAFTA) Chapter Eleven Tribunal: United Parcel Service v. Canada (Award on Jurisdiction) (November 22, 2002)

The Tribunal ruled on Canada?s challenge to jurisdiction over claims brought by UPS pursuant to Article 1116(1) of Chapter Eleven. At issue was the scope of jurisdiction in Article 1116(1) over anti-competitive behavior obligations under Chapter Fifteen of NAFTA. The Tribunal upheld partial jurisdiction and determined that UPS could not bring in all claims based on anti-competitive behavior through the investor-State arbitration door, but rather, only those anti-competitive measures which were also in breach of the substantive provisions of NAFTA Chapter Eleven, Section A. In addition, the Tribunal limited UPS?s ability to bring claims under Chapter Eleven for anti-competitive measures by finding that such measures could not be considered in breach of the minimum standard of treatment under international law prescribed by Article 1105(1).

The dispute involves UPS?s claim that Canada Post Corporation (Canada Post), a government-authorized monopoly in Canada, engaged in anti-competitive conduct in violation of NAFTA Chapter Eleven Articles 1102 (National Treatment), 1105 (Minimum Standard of Treatment), and Chapter Fifteen Articles 1502(3)(a) and 1503(2) (Monopolies and State Enterprises).

The resolution of the issue turned on the Tribunal?s analysis of the relationship between Article 1116 of Chapter Eleven, which sets forth certain jurisdictional provisions for bringing investor-State claims, and Articles 1503(2) and 1502(3)(a) of Chapter Fifteen, both concerning the obligations of state enterprises and monopolies. The question in dispute was whether the cross-referencing between these provisions meant, as argued by Canada, that only simultaneous violations of Chapter Fifteen and Chapter Eleven could fall under the scope of Chapter Eleven?s investor-State arbitration mechanism. The Tribunal?s analysis also addressed the relationship between Chapter Fifteen and Article 1105 of Chapter Eleven, in addition to the relationship between Chapters Eleven, Fifteen and the NAFTA Objectives set forth in Article 102(1). The Tribunal?s analysis explored the question of whether anti-competitive measures could constitute a violation of the minimum standard of treatment of Article 1105(1), and whether violations of Chapter Fifteen, which were alleged to be in violation of obligations such as transparency set forth in the Objectives of Article 102(1), could be brought before a Chapter Eleven Tribunal.

Although the Tribunal agreed with UPS that the obligations under Chapter Eleven should be read in light of the NAFTA Objectives of Article 102(1), it found that such objectives were specified through the jurisdictional requirements of Article 1116, the scope of which was limited to violations of Chapter Eleven and to those violations of Chapter Fifteen which were also violations of Chapter Eleven. The Tribunal further determined that the minimum standard of treatment set forth in Article 1105 could not be expanded to include a prohibition of anti-competitive measures. The Tribunal therefore held that it was incumbent upon UPS to demonstrate, by means of an amended statement of claim, that its claims regarding Canada Post?s anti-competitive behavior are based on a provision of Section A of Chapter Eleven other than Article 1105.

Click here for the decision.

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United States (U.S.) Court of Appeals for the Ninth Circuit: Deutsch v. Turner Corporation, No. 00-56673p (January 21, 2003)

The U.S. Court of Appeals for the Ninth Circuit ruled that California Code of Civil Procedure section 354.6, which provides for a private right of action for claims involving the Second World War slave and forced labor victims, is unconstitutional.

The appeal involved a number of consolidated claims for slave and forced labor endured in the hands of German and Japanese corporations during the Second World War. All of the Plaintiffs used section 354.6 as the primary basis for bringing their suits. Section 354.6 was passed in 1999, and it entitles any Second World War slave or forced labor victim to a right to bring actions "on or before December 31, 2010" to recover compensation (see the August 30, 1999 ILIB for more details regarding the adoption of section 354.6).

The Ninth Circuit held that section 354.6 is "impermissible because it intrudes on the federal government's exclusive power to make and resolve war, including the procedure for resolving war claims." The Ninth Circuit noted that the U.S. Constitution allocates the foreign affairs powers, including the war powers, among various federal government branches, while it expressly prohibits states from exercising the same powers. The Ninth Circuit also noted that the U.S. Supreme Court has long recognized the supremacy of the federal government in the area of foreign affairs, and that it held that even in the absence of a controlling treaty or a federal statute, a "state may violate the constitution by 'establish[ing] its own foreign policy'."

The Ninth Circuit distinguished the provisions of section 354.6 from the Holocaust Victim Insurance Relief Act ("HVIRA"), which requires insurers doing business in California to file certain information about any insurance policies that they or companies "related" to them sold in Europe and that were in effect between 1920 and 1945. The Ninth Circuit noted that HVIRA primarily concerned commercial, and not foreign affairs relations, and that it was not, on its face, directed to any particular foreign country. In addition, the Ninth Circuit stressed that HVIRA is a "forward-looking regulatory statute" that represents "merely a reporting requirement," and does not impose obligations on European insurance companies to pay insurance policy claims.

Click here for the decision.

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World Trade Organization (WTO) Appellate Body Report: United States ? Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R and WT/DS234/AB/R (January 16, 2003)

The WTO Appellate Body partially upheld the Report of the WTO Panel, finding the U.S. Continued Dumping and Subsidy Offset Act of October 28, 2000 ("CDSOA"), also known as the Byrd Amendment, to be ?a non-permissible specific action against dumping or a subsidy? in violation of Article 18.1 of the WTO?s Antidumping Agreement (ADA) and Article 32.1 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement). (See October 1, 2002 ILIB)

The CDSOA provides that duties assessed by the U.S. Department of Treasury pursuant to the imposition of anti-dumping, countervailing duty orders or a finding under the Antidumping Act of 1921 on foreign imports shall be distributed on an annual basis for qualifying expenditures to affected domestic companies producing like domestic products. (Section 754(a) of the Tariff Act)

The Appellate Body upheld the Panel?s finding that there was a ?direct and unavoidable connection? between the determination of dumping/subsidies and CDSOA offset payments, resulting in a ?specific action in response to dumping? in violation of Article 18.1 of the ADA and Article 32.1 of the SCM Agreement. The Appellate Body also observed that in order ?[t]o be in accordance with the GATT 1994, as interpreted by the SCM Agreement, a response to subsidization must be either in the form of definitive countervailing duties, provisional measures or price undertakings, or in the form of multilaterally-sanctioned countermeasures resulting from resort to the dispute settlement system.? The Appellate Body concluded that the CDSOA?s did not correspond to any of these requirements.

The Appellate Body reversed and amended part of the Panel?s earlier findings regarding Article 5.4 of the ADA and Article 11.4 of the SCM Agreement, the provisions of which require that investigating authorities determine whether applications for the initiation of anti-dumping or countervailing duty investigations are ?made by or on behalf of domestic industry.? The Panel had previously found that the CDSOA provided an incentive for U.S. companies to initiate more antidumping applications which undermined the purpose of Article 5.4 of the ADA and Article 11.4 of the SCM Agreement. The Appellate Body disagreed, finding that neither Article 5.4 of the ADA nor Article 11.4 of the SCM Agreement contained any requirement that an investigative authority examine the motives of domestic producers to support anti-dumping and countervailing duty applications.

On January 27, 2003, the WTO Dispute Settlement Body adopted the Appellate Body Report and the Panel Report as amended by the Appellate Body on January 16, 2003.

Click here for the decision.

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REPORTS AND OTHER DOCUMENTS

Council of the European Union: Situation Regarding Iraq (January 27, 2003)

The Ministers for Foreign Affairs of the European Union member states urged the Iraqi authorities to engage in "full and active cooperation" with UNMOVIC (i.e., U.N. Monitoring, Verification and Inspection Commission) and the IAEA (i.e., International Atomic Energy Agency). The Ministers stressed that the Iraqi authorities "must, as an imperative, provide the inspectors, without delay, with all additional and complete information on questions raised by the international community." The Ministers expressed their deep concern about the situation in Iraq, noting that the U.N. Security Council Resolution 1441 (see the November 11, 2002 ILIB for the summary of the Resolution) gives an "unambiguous message that the Iraqi Government has a final opportunity to resolve the crisis peacefully.?

Click here for the provisional version of the statement.

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Regional Initiative on Iraq (Egypt, Iran, Jordan, Saudi Arabia, Syria and Turkey): Joint Declaration (January 23, 2003)

The Ministers of Foreign Affairs of the countries comprising the Regional Initiative on Iraq called on the Iraqi leadership to "move irreversibly and sincerely towards assuming their responsibilities in restoring peace and stability in the region." The Ministers expressed their common resolve for attaining a peaceful solution to the Iraqi issue, noting that the countries of this region "do not wish to live through yet another war and all its devastating consequences." The Ministers noted that the Iraqi people have suffered most from two consecutive wars, as a result of which the entire region remains "plagued" by the political uncertainties and economic problems.

The Declaration requests Iraq to, inter alia, continue cooperation with the UNMOVIC (i.e., U.N. Monitoring, Verification and Inspection Commission) and the IAEA (i.e., International Atomic Energy Agency), and to demonstrate a "more active approach in providing Iraq's inventory of information and material concerning her capabilities of weapons of mass destruction (WMD) in full conformity with the [U.N.] Security Council Resolution 1441." The Declaration also requires Iraq to confirm its commitments under relevant U.N. Security Council resolutions regarding ongoing monitoring and verification, and to "embark on a policy that will unambiguously inspire confidence to Iraq's neighbours."

Click here for the declaration.

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United Nations (U.N.) Security Council: Resolution 1456 (High-Level Meeting of the Security Council: Combating Terrorism), S/RES/1456 (January 20, 2003)

The U.N. Security Council, meeting at the level of Ministers of Foreign Affairs, reaffirmed that terrorism represents one of the most serious threats to peace and security, which can only be defeated by a "sustained comprehensive approach involving the active participation and collaboration of all States, international and regional organizations, and by redoubled efforts at the national level." The Security Council expressed its concern over a "serious and growing danger" of terrorist access to and use of nuclear, chemical, biological and other potentially deadly materials, and stressed a need to strengthen controls of these materials. The Security Council also noted that it has become easier for terrorists to exploit sophisticated technology, communications and resources for their criminal objectives.

The Security Council called on all states to take "urgent action to prevent and suppress all active and passive support to terrorism," and comply with all relevant Security Council resolutions. The Security Council also called on all states to become a party, "as a matter of urgency," to all relevant international conventions and protocols relating to terrorism. The Security Council requested that states assist each other in the process of prevention, investigation, prosecution and punishment of terrorist acts, as well as to cooperate closely to "implement fully the sanctions against terrorists and their associates, in particular Al-Qaeda and the Taliban and their associates." The Security Council stressed that states must ensure that any measure they undertake in combating terrorism conforms with their obligations under international law.

Click here for the Resolution.

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BRIEFLY NOTED

News from ICJ:

The International Court of Justice announced that it is set to deliver its decision on the Application for Revision of the Judgment of 11 July 1996 in the Case concerning Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Yugoslavia), Preliminary Objections (Yugoslavia v. Bosnia and Herzegovina). The Court will deliver the judgment on Monday, February 3, 2003, at 3 p.m. at the Peace Palace in The Hague. Click here for the related press release.

On January 22, 2003, the Court announced that it had concluded the public hearings on the request for the indication of provisional measures submitted by Mexico in the case concerning Avena and other Mexican Nationals (Mexico v. United States of America). The Court will deliver its decision in the coming weeks. Click here for the related press release.

On January 20, 2003, the Court announced that it will hold public hearings in the case concerning Oil Platforms (Islamic Republic of Iran v. United States of America) from February 17 to March 7, 2003. Click here for a detailed schedule of the hearings.

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Joint IAI-ASIL Conference: "Annulment of ICSID Awards ? The Impact of Recent Decisions" Washington, DC (April 1, 2003)

Organizers: International Arbitration Institute/American Society of International Law
Contact: Emmanuel Gaillard or Nanou Leleu-Knobil
International Arbitration Institute c/o Shearman & Sterling
114, avenue des Champs-Elysees
75008 Paris FRANCE
Phone: 33-1-53-89-70-0; Fax: 33-1-53-89-70-70; Email: nleleuknobil@shearman.com

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International Law In Brief (ILIB) - Copyright 2003 - The American Society of International Law (ASIL)
Editors: Ruth Teitelbaum, Branislav A. Maric, Scott Smith