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
July 3, 2003


TREATIES, AGREEMENTS AND RELATED DOCUMENTS

JUDICIAL AND SIMILAR PROCEEDINGS

BRIEFLY NOTED

TREATIES, AGREEMENTS AND RELATED DOCUMENTS

United Nations (U.N.): International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (Adopted by General Assembly Resolution 45/158 of December 18, 1990) (July 1, 2003)

The International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (?The Convention?), aimed at preventing and eliminating the exploitation of migrant workers, entered into force on July 1, 2003. According to Article I(2) of the Convention, the Convention applies during the entire migration process of migrant workers and their families, including ?preparation for migration, departure, transit and the entire period of stay and remunerated activity in the State of employment as well as return to the State of origin or the State of habitual residence.? Among several of the human rights protections set forth for migrant workers and their families in the Convention, Article 8 provides that migrant workers and their families shall be free to leave any State, including their State of origin; Article 9 provides that the right to life of migrant workers and their families shall be protected by law; and Article 10 provides that no migrant worker or his or her family shall be subject to torture or to inhuman and degrading treatment or punishment.

Compliance with the Convention will be reviewed by the Committee on the Protection of the Rights of All Migrant Workers and Members of Their Families, a panel consisting of 10 experts to be elected by the State parties.

Click here for the Convention.

Click here for the ratification status of the Convention.

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U.S.-Chile Free Trade Agreement (FTA) (Final Text) (June 6, 2003)

The United States signed the final text of the U.S.-Chile FTA on June 6, 2003. 003. The U.S.-Chile FTA sets forth a free trade zone and affirms the parties? existing rights under the WTO and other existing agreements. In addition, the agreement sets forth, inter alia, provisions on market access, rules of origin, telecom, labor, environment, competition, investment and dispute resolution.

Article 10.4 (Minimum Standard of Treatment), paragraph (1), of the U.S.-Chile investment chapter provides:

?Each party shall accord to investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security? and further provides, ?For greater certainty, paragraph 1 prescribes the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments. The concepts of ?fair and equitable treatment? and ?full protection and security? do not require additional substantive rights.?

In addition, the investment dispute resolution chapter provides that ?the tribunal shall have the authority to accept and consider amicus curiae submissions from any persons and entities in the territories of the Parties and from interested persons and entities outside the territories of the Parties.?

Click here for the Agreement.

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U.S. - Singapore Free Trade Agreement (May 6, 2003):

The final text of the agreement includes provisions on rules for financial services, rules on eliminating duties on bilateral trade, rules of origin, and a chapter on investment. The Agreement?s provision on the minimum standard of treatment for investment is similar to the U.S.-Chile Agreement. The U.S.-Singapore Agreement likewise provides that the tribunal shall have the authority to accept and consider amicus curiae submissions from any persons and entities in the territories of the Parties and from interested persons and entities outside the territories of the Parties.

Click here for the Agreement.

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JUDICIAL AND RELATED DOCUMENTS

North American Free Trade Agreement (NAFTA) Arbitral Tribunal: Loewen Group, Inc. and Raymond L. Loewen v. United States (Final Award) (ARB[AF]/98/3) (June 26, 2003)

The Tribunal upheld the United States? motion to dismiss for lack of jurisdiction and dismissed all claims brought by the Loewen Group, Inc. and Raymond Loewen (?Loewen? or ?the Claimants?). The Tribunal upheld the United States? motion to dismiss based on the lack of diversity of nationality between the Claimant and the United States, and further held that Loewen?s failure to pursue domestic remedies precluded a violation of customary international law and a violation of NAFTA Chapter Eleven.

The dispute arose out of a commercial litigation between Loewen, a Canadian company with a U.S. subsidiary and O?Keefe, a Mississippi funeral home company. The litigation resulted in a judgment by a trial court in Mississippi in which, according to Loewen, the trial judge allowed O?Keefe?s lawyers to make repeated prejudicial and irrelevant remarks concerning, inter alia, Loewen?s foreign nationality and race. The Mississippi jury awarded O?Keefe $500 million in damages, which included $75 million in damages for emotional distress and $400 million in punitive damages. Under Mississippi law, an appeal bond of 125% of the judgment was a condition for staying the execution of the judgment, unless there was good cause to reduce the bond. Both the Mississippi trial court and the Mississippi Supreme Court refused to reduce the appeal bond and therefore required Loewen to post a $625 million bond within seven days of the judgment in order to appeal. Loewen argued that it was forced to settle the case for $175 million and sought compensation for damages for breach of Chapter Eleven of NAFTA. Loewen claimed, inter alia, that the trial court?s conduct and the Mississippi Supreme Court?s arbitrary refusal to reduce the bond requirement resulted in a violation of NAFTA Article 1105, which sets forth a minimum standard of treatment for investments of foreign investors. Loewen further argued that the United States was liable under NAFTA for Mississippi?s breaches under NAFTA Article 105, a provision which requires that the NAFTA parties ensure that all necessary measures are taken in order to give effect to the provisions of NAFTA.

In January 2001, the Tribunal dismissed some of the grounds for the United States? objection to competence and jurisdiction, and joined an additional hearing on further grounds for objection by the United States to the hearing on the merits. Following written submissions on the merits, the United States filed a motion to dismiss for lack of jurisdiction in January 2002, on the grounds that, due to the reorganization of the Claimants? company under the U.S. Bankruptcy Code, the Claimants were now owned and controlled by a U.S. corporation and therefore lacked diversity of nationality required under NAFTA Chapter Eleven. Since the motion to dismiss for lack of jurisdiction was brought at a time when the Tribunal?s consideration of the merits was already under way, the Tribunal included in its final award its reasons for dismissing Loewen?s claims on the merits.

As to the nationality question, Loewen argued that NAFTA Articles 1116 and 1117 only required diversity at the time of submission of the complaint, but imposed no requirement that the diverse nationality continue until resolution of the dispute. The Tribunal disagreed, observing that NAFTA?s silence on the continuity of nationality gave rise to the application of customary international law which required continuous national identity from the date of the events giving rise to the claim through the date of the resolution of the claim.

Addressing the merits of Loewen?s claims under Chapter Eleven, although the Tribunal stressed that a NAFTA Chapter Eleven Tribunal could not entertain, ?in the guise of a NAFTA claim,...what is in substance an appeal from a domestic judgment, ? it found that the Mississippi trial and its verdict were ?clearly improper and discreditable and cannot be squared with minimum standards of international law and fair and equitable treatment.? However, the Tribunal held that because the trial court proceedings were only part of the judicial process available to the parties, the rest of the judicial process and its availability to Loewen had to be examined in order to determine whether a breach of Article 1105 has occurred. In this regard, the Tribunal found that the Mississippi trial judge?s decision not to lower the amount of the bond required for appeal did not result in a violation of NAFTA Article 1105.

The Tribunal found that NAFTA Article 1121, which requires the claimant to waive any domestic court proceedings based on the same claim prior to submitting a claim to a NAFTA Tribunal, did not altogether eliminate the principle of exhaustion of local remedies under customary international law:

?[a]lthough the precise purpose of NAFTA Article 1121 is not altogether clear, it requires a waiver of domestic proceedings as a condition of making a claim to a NAFTA tribunal. One thing is, however, reasonably clear about Article 1121 and that is that it says nothing expressly about the requirement that, in the context of a judicial violation of international law, the judicial process be continued to the highest level. Nor is there any basis for implying any dispensation of that requirement. It would be strange indeed if sub silentio the international rule were to be swept away. And it would be very strange if a State were to be confronted with liability for a breach of international law committed by its magistrate or low-ranking judicial officer when domestic avenues of appeal are not pursued, let alone exhausted. If Article 1121 were to have that effect, it would encourage resort to NAFTA tribunals rather than resort to the appellate courts and review processes of the host State, an outcome which would seem surprising, having regard to the sophisticated legal systems of the NAFTA Parties.?

The Tribunal observed that Loewen failed to present evidence showing why a settlement agreement was the only reasonable course available, as opposed to other options, such as pursuing the appeal despite the risk of execution on its assets, filing a writ of certiori to the U.S. Supreme Court or immediately filing for bankruptcy under the U.S. Bankruptcy Code. The Tribunal concluded that based on the evidence presented, Loewen failed to pursue available domestic remedies, and that, as a consequence, there was no violation of customary international law, nor a violation of NAFTA for which the United States could be held liable.

Click here for the decision.

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Supreme Court of Mexico: Decision on the extradition of Ricardo Miguel Cavallo (June 10, 2003)

The Supreme Court of Mexico upheld Spain?s request for extradition of former Argentine navy captain, Ricardo Miguel Cavallo, thereby dismissing Cavallo?s appeal.

In late August 2000, Cavallo was captured in Mexico pursuant to an arrest warrant issued by Judge Baltasar Garzón of Spain who charged Carvallo with, inter alia, torture, terrorism and genocide committed during Argentina?s military dictatorship in the years 1976-1983.

On appeal Cavallo challenged the constitutionality of the 1978 extradition treaty and its protocol between Mexico and Spain, on several grounds, inter alia, that the treaty violated the guarantees of equality, security and protection of the law under Articles 1, 14, 16 and 19 of the Mexican Constitution. Cavallo argued that by requiring the requesting State to present facts giving only reasonable indication of the commission of a crime as opposed to finding probable cause, the extradition treaty violated the protections granted to criminal defendants under the Mexican Constitution. Cavallo also claimed that the acts of which he was accused were political crimes or military crimes, and that as a former member of the military, he was immune from prosecution by virtue of Argentina?s 1987 amnesty law. Cavallo further argued that Mexico could not interfere with the sovereignty of Argentina by extraditing him for crimes for which he was granted amnesty.

The Supreme Court of Mexico disagreed, finding that the extradition treaty and its protocol were duly ratified by the Mexican authorities and did not violate any provision of the Mexican Constitution. The Supreme Court found that pursuant to the 1978 extradition treaty, Mexico was under an obligation to extradite Cavallo and was without power to judge the competence of Spain?s criminal courts to try and sentence him. The Court observed that the only condition that Mexico could impose prior to extradition to Spain was that the Spanish courts afford the accused due process.

As to Cavallo?s claim that the acts were political crimes, the Court held that under Article 144 of the Mexican Federal Criminal Code, only acts such as sedition, insurrection, rebellion and conspiracy could fall under the category of political crimes. Moreover, the Court observed that acts of genocide were clearly prohibited under Article 149 of the Federal Criminal Code. The Court also found that the crimes for which Cavallo was accused could not be classified as military crimes, pursuant to Article 13 of the Magna Carta, because the crimes were not subject to military law, nor would Cavallo be judged before any military tribunal. In regard to Cavallo?s amnesty argument, the Court upheld the lower court?s reasoning that the Argentine amnesty law invoked by Cavallo was not applicable to the crimes subject to the extradition request. The Court observed that one State?s decision not to prosecute crimes of genocide did not prevent another State from prosecuting such crimes in accordance with international law and its domestic legislation.

The Mexican Supreme Court granted Cavallo?s extradition on the grounds of terrorism and genocide, but not on the grounds of torture, due to the fact that under Mexican law, the statute of limitations for prosecuting crimes of torture had passed.

On June 28, 2003 Cavallo was extradited to Spain.

Click here for the decision.

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United States (U.S.) Supreme Court: American Insurance Association et al. v. Garamendi, No. 02-7222 (June 23, 2003)

The Supreme Court reversed the Ninth Circuit Court of Appeals and declared California?s Holocaust Victim Insurance Relief Act of 1999 (HVIRA) unconstitutional, on the grounds that it interferes with the President?s conduct of the nation?s foreign policy and is pre-empted by executive agreements.

The background to the case concerns the confiscation of value or proceeds of life insurance of Jewish policy holders by the German Nazi Government and the failure of insurers to pay policies to survivors or heirs after the war. Despite certain compensatory measures taken by the German Government, many claimants were left out. Consequently, numerous class actions for restitution were brought in U.S. Courts by Holocaust survivors against companies doing business in Germany during the Nazi era. In 2000, President Clinton and the German Chancellor Schroeder negotiated and signed a Foundation Agreement with the aim of eventually resolving the matter. This agreement, which served as model for parallel agreements with Austria and France, provides that Germany will established and contribute funds to a foundation to compensate the companies? victims and as for insurance claims in particular, the agreement provides that the Foundation will work with the International Commission on Holocaust Era Insurance Claims (ICHEIC), which conducts negotiations with European insurers to provide information about and settlement of unpaid insurance policies. In 1999, the state of California adopted its own legislation against defaulting insurers. The HVIRA requires any insurer doing business in California to disclose information about all policies sold in Europe between 1920 and 1945 by the company itself or a related company and allows for the suspension of the license of those insurers who fail to comply with the disclosure requirements.

The District Court issued a preliminary injunction for the petitioners, several American and European insurance companies and the American Insurance Association, who were challenging the constitutionality of the HVIRA. On appeal, the Ninth Circuit rejected the District Court?s view that the federal foreign affairs power and the Commerce Clause would form a basis for the HVIRA?s unconstitutionality. On remand, the District Court issued a summary judgment for the petitioners on the grounds of a procedural due process violation. The Ninth Circuit reversed again and the Supreme Court granted certiorari.

The Supreme Court noted that the President has the authority to conclude executive agreements and that ?valid executive agreements are fit to preempt state law, just as treaties are, and if the agreements here had expressly preempted laws like HVIRA, the issue would be straightforward.? Since the executive agreements with Germany, Austria and France do not include preemption clauses, the Court found that the petitioners? preemption claims ?rest on asserted interference with the foreign policy those agreements embody.? The Court relied in its decision primarily on Zschernig v. Miller, 389 U.S. 429 (1968). It noted, however, that there was no need to answer the question of whether ?respect for the executive foreign relations power requires a categorical choice between the contrasting theories of field and conflict prevention evident in the Zschernig opinions.?

The Court held that there was a sufficiently clear conflict between the HVIRA and the President?s foreign policy, finding that whereas the former makes use of economic compulsion to further disclosures, the latter consistently encourages European Governments and companies to volunteer settlement funds and disclose policy information in preference to litigation or coercive sanctions. The Court found that the HVIRA thus ?undercuts the President?s diplomatic discretion and the choice he has made exercising it.? In the opinion of the Court the ?HVIRA comprises the President?s very capacity to speak for the Nation with one voice in dealing with governments to resolve claims arising out of WWII.? The court found that ?the fact of a common end hardly neutralizes conflicting means.? The Court furthermore held that even if there remained any doubt about the clarity of the conflict it would have to be resolved in the National Government?s favor, given that the State?s interest is weaker than the national interest.

The Supreme Court further rejected California?s submission that the McCarran-Ferguson Act and the U.S. Holocaust Assets Commission Act of 1998 allow such state legislation. In particular, the Court found that the McCarran-Ferguson Act, which addresses implied preemption by domestic commerce legislation ?cannot sensibly be construed to address preemption by executive conduct in foreign affairs? and that likewise the Holocaust Commission Act cannot be read as ?to condone state sanctions interfering with federal efforts to resolve claims?. Finally the court noted that Congress ?has done nothing to express disapproval with the President?s policy? and that ?given the President?s authority in the areas of foreign policy and national security, congressional silence is not to be equated with congressional disapproval.?

Justice Ginsberg, joined by Justices Stevens, Scalia and Thomas, delivered a dissenting opinion. The dissent not only distinguished Zschernig but also cases specifically dealing with preemption by executive agreements, finding that these cases did not support implied preemption. The dissent concluded that since the executive agreements at hand do not expressly target disclosure, they could not override the HVIRA.

Click here for the decision.

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Svea Court of Appeals (Sweden): Czech Republic v. CME Czech Republic (May 15, 2003)

The Svea Court of Appeals rejected the Czech Republic?s request for setting aside an arbitral award issued by an ad hoc tribunal in Stockholm (?Stockholm Tribunal?) under the UNCITRAL Arbitration Rules. The Stockholm Tribunal, established pursuant to the Bilateral Investment Treaty (BIT) between the Czech Republic and the Netherlands, had concluded that the Czech Republic was required to pay to CME US$269.814.000 in damages for breaches of the BIT. (For a summary of the Stockholm Tribunal?s award, see ILIB of April 22, 2003)

In its motion to set aside the award, the Czech Republic alleged, inter alia, that the Stockholm Tribunal failed to apply the law designated by the BIT, namely, Czech law and international law. The Court of Appeals found that the Stockholm Tribunal was not obliged to take into consideration Czech law to the extent claimed by the Czech Republic, observing that the Tribunal?s choice not to apply Czech Administrative law in its determination of liability did not mean that the Stockholm Tribunal disregarded Czech law. According to the Court of Appeals, the relevant issue for the Stockholm Tribunal was whether the Czech Media Council?s actions were in accordance with the BIT. The Court of Appeals found that the Stockholm Tribunal reached its decisions based on law, and correctly applied the sources of law stated in the choice of law clause of the BIT.

The Court of Appeals also rejected the Czech Republic?s res judicata claims. The Czech Republic alleged that CME was the same party as a U.S. national, Lauder, who was a minority shareholder with a controlling interest in CME, and who was a party to a London arbitration involving similar substantive issues as the arbitration case brought by CME in Stockholm under the Czech-Dutch BIT. The London Tribunal issued a final award in September 2001 in which it found that the Czech Republic was in breach of the Czech-U.S. BIT, but nonetheless rejected the claim on the grounds that it did not bring sufficient evidence demonstrating that the violation resulted in an interference with the claimant?s property rights. The Svea Court of Appeals observed that the identity between a minority shareholder, albeit a controlling shareholder, and CME did not mean that they were the same parties involved in the case.

The Svea Court of Appeals concluded that the Czech Republic was required to compensate CME for all litigation costs in accordance with Article 8 of the Swedish Code of Judicial Procedure. Finally, it held that its decision did not give rise to grounds for an appeal to the Supreme Court in accordance with section 43, second paragraph of the Arbitration Act of Sweden.

Click here for the decision.

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Arbitral Award: In the Case Concerning the Delimitation of Portions of the Offshore Areas between the Province of Nova Scotia and the Province of Newfoundland and Labrador (March 26, 2002)

The boundary dispute between the two Canadian Provinces was referred to an arbitral Tribunal pursuant to the dispute settlement provisions of the Canada-Newfoundland Atlantic Accord Implementation Act (1987) and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act (1988) (The ?Accord Acts?). The Accord Acts contain identical provisions for dispute settlement, which provide the following:

(4) Where the procedure for the settlement of a dispute pursuant to this section involves arbitration, the arbitrator shall apply the principles of international law governing maritime boundary delimitation, with such modifications as the circumstances require.

More specifically, the Tribunal?s Terms of Reference required the arbitrators to apply the principles of international law for the determination of the maritime boundary delimitation as if Nova Scotia, Newfoundland and Labrador were States subject to the same rights and obligations as Canada.

Thus, in terms of applicable law, at issue was whether (1) the domestic law basis of title under the Accord Acts effectively replaced the international law basis of title for the purpose of applying the principles of international law under the arbitrators? Terms of Reference and (2) the reference to the ?same rights and obligations as the Government of Canada? required the Tribunal to apply the 1958 Geneva Convention to the determination of the maritime boundary, in view of the fact that Canada is a party to that Convention.

For Nova Scotia, on the one hand, the question of legal basis of title was critically important. It argued that whereas under international law ?the geographic correlation between coast and submerged areas off the coast is the basis of the coastal State?s legal title?, the provincial rights in the offshore areas ?arise exclusively by virtue of the Accords and their implementing legislation.? It further argued that the ?provincial rights are fundamentally at odds, as regards their nature and scope, with the exclusive sovereign rights of the continental shelf regime.? Newfoundland and Labrador, on the other hand, contended that the provincial entitlements could be treated as ?genuine continental shelf rights for the specific purpose of applying the international law of maritime boundary delimitation.? Newfoundland and Labrador further asserted that the legal fiction that the provinces were sovereign states and the legal assumption that ?the maritime zones at issue are either identical or substantially similar to those which the international law or maritime delimitation applies? were implicit in the statutory adoption of international law as the governing law and that on the basis of this legal fiction and assumption international law could be applied. The Tribunal admitted that the negotiated areas differ from the legal institution of continental shelf but the Tribunal found that it was bound by the unambiguous terms of the Terms of References and the Acts which mandate the Tribunal to apply international law.

In regard to the application of the 1958 Geneva Convention, and in particular its Article 6 on delimitation between opposite or adjacent coasts, Nova Scotia and Newfoundland both argued that it was not applicable but gave different reasons. Nova Scotia, on the one hand, asserted that it did not apply because the Accord Acts did not address the same rights, the same resources, the same uses and the same areas of the seabed that are subject to the Convention. Newfoundland, on the other hand, argued that the Convention did not apply because general principles of international law and not a lex specialis, such as the Convention, should apply. The Tribunal, however, rejected the arguments of both parties and concluded that the principles the Tribunal had to apply included ?the provisions of Article 6 of the 1958 Geneva Convention and the developments under customary international law that have been associated with the interpretation and application of Article 6.? The Tribunal further found that international law governing maritime boundary delimitation including Article 6 of the Geneva Convention, is ?flexible enough to allow the delimitation process to be carried through without further modification?.

Thus, turning to the actual process of delimitation, the Tribunal found that since the parties had to be treated as bound by Article 6 of the Geneva Convention, ?it is appropriate for the Tribunal to begin with the construction of a provisional equidistance line and to determine whether it requires adjustment in the light of special circumstances.? The Tribunal constructed such a provisional equidistance line in three stages: first, in an inner area bounded by the Scaterie Island-Lamaline Shag Rock, second, in an outer area extending from that closing line out to the outer edge of the continental margin and third, in the area from Carbot Strait northwestward in the Gulf of St. Lawrence. The Tribunal subsequently reached a final delimitation by adjusting the provisional line according to the special circumstances of each of the designated areas.

Document provided to the ILM office.

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BRIEFLY NOTED

United States - Cambodia Article 98 Agreement (June 27, 2003)

On June 27, 2003 the United States and Cambodia signed an Agreement which prevents Americans in Cambodia as well as Cambodians in the United States from being extradited to the International Criminal Court (ICC) in the Hague. This Agreement is based on Article 98 of the ICC Statute and is the 47th Agreement the United States has reportedly signed in order to exempt its nationals from the jurisdiction of the ICC.

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International Law In Brief (ILIB) - Copyright 2003 - The American Society of International Law (ASIL)
Editors: Elisabeth Handl, Ruth Teitelbaum, Scott Smith