Catan et al. v. Republic of Moldova and Russian Federation (Oct. 19, 2012)
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The Grand Chamber of the European Court of Human Rights has ruled in Catan et al. v. Republic of Moldova & Russian Federation that Moldova did not violate Article 2 of Protocol No. 1 (right to education) to the European Convention on Human Rights, but that the Russian Federation violated the applicants' right to education because it failed to fulfill its obligations under the Convention.
The applicants are children and parents from the Moldovan community in Transdniestria (also called Transnistria)—a breakaway territory located on a strip of land between the River Dniester and the eastern Moldovan border with Ukraine and known as the Moldovan Republic of Transdniestria ("MRT")—who complained about the effects of a language law adopted in 1992 by the MRT regime. The language law states that "Moldavian" must be written with the Cyrillic alphabet and that the use of the Latin alphabet may amount to an offense. In 1994, MRT authorities forbade the use of the Latin script in schools, and in 2004, they began closing down all schools using the Latin script. The applicants' schools were affected by these measures.
Since the schools are located within Moldovan territory, the Court first analyzed whether the case falls within the jurisdiction of the Republic of Moldova. While the Court agreed that "Moldova has no authority over the part of its territory to the east of the River Dniester, which is controlled by the 'MRT,'" the Court stressed—relying on an earlier judgment dealing with illegal detention in the MRT territory (Ilascu et al. v. Moldova & Russia)—that Transdniestria falls within Moldova's jurisdiction because "Moldova was the territorial State, even though it did not have effective control over the Transdniestrian region.'" (In Ilascu, the Court held that Moldova had a duty under Article 1 of the Convention to "secure to everyone within their jurisdiction the [Convention] rights and freedoms," but that this was "limited in the circumstances to a positive obligation to take the diplomatic, economic, judicial or other measures that were both in its power to take and in accordance with international law.")
The Court saw no reason to distinguish this case from Ilascu:
Although Moldova has no effective control over the acts of the "MRT" in Transdniestria, the fact that the region is recognised under public international law as part of Moldova's territory gives rise to an obligation, under Article 1 of the Convention, to use all legal and diplomatic means available to it to continue to guarantee the enjoyment of the rights and freedoms defined in the Convention to those living there.
Citing Article 1 of the Convention, which requires all contracting parties to "secure to everyone within their jurisdiction the rights and freedoms" of the Convention, the Court stressed that "the exercise of jurisdiction is a necessary condition for a Contracting State to be able to be held responsible for acts or omissions imputable to it which give rise to an allegation of the infringement of rights and freedoms set forth in the Convention." And while a "[s]tate's jurisdictional competence under Article 1 is primarily territorial," "acts of the Contracting States performed, or producing effects, outside their territories can constitute an exercise of jurisdiction within the meaning of Article 1," but "only in exceptional cases." The Court acknowledged that it has recognized a number of "exceptional circumstances capable of giving rise to the exercise of jurisdiction by a Contracting State outside its own territorial boundaries," including "when, as a consequence of lawful or unlawful military action, a Contracting State exercises effective control of an area outside that national territory." According to the Court, where "such domination over the territory is established, it is not necessary to determine whether the Contracting State exercises detailed control over the policies and actions of the subordinate local administration." What matters is that "the local administration survives as a result of the Contracting State's military and other support entails that State's responsibility for its policies and actions."
Applying these principles to the present case, and relying on its findings in Ilascu, the Court observed that "the authorities of the Russian Federation contributed both militarily and politically to the establishment of the separatist regime" and "the 'MRT' survived by virtue of the military, economic, financial and political support given to it by the Russian Federation," remaining under the "effective authority, or at the very least under the decisive influence, of Russia." Accordingly, the Court concluded that the applicants came within the jurisdiction of the Russian Federation for purposes of Article 1 of the Convention. With respect to Moldova, the Court concluded that the Moldovan government "made considerable efforts to support the applicants" by ensuring that new premises and necessary equipment were made available to the students after the forcible closure of schools by MRT authorities. The Court found that the Moldovan government thus "fulfilled its positive obligations in respect of these applicants," and that there was no violation of Article 2 of Protocol No. 1 by Moldova.
The Court order Russia to pay each applicant 6,000 euros in respect of non-pecuniary damage and 50,000 euros for costs and expenses to all the applicants jointly.
NML Capital, LTD. et al. v. Republic of Argentina (Oct. 26, 2012)
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U.S. Court of Appeal for the Second Circuit has affirmed the district court's grant of summary judgment in favor of bondholders of Argentina's defaulted bonds. The Court concluded that Argentina violated the equal treatment provisions (also known as the Pari Passu Clause) when it continued to make payments to holders of its restructure debt while refusing to make payments to plaintiff bondholders. The Court remanded the case to the district court to determine the exact payment formula to be applied in calculating future payments to the bondholders, and the impact the injunctive relief ordered by the district court may have on third parties and intermediary banks.
Argentina began issuing debt securities in 1994, and plaintiffs are purchasers of the Fiscal Agency Agreement ("FAA") bonds. When Argentina defaulted on the FAA bonds in 2001, its President declared a "temporary moratorium" on principal and interest payments on more than $80 billion of its public external debt, including the FAA bonds. This moratorium has been renewed every year since through legislation, and Argentina has made no principal or interest payments on the defaulted debt. Argentina initiated an exchange offer in both 2005 and 2010, allowing FAA bondholders to exchange their defaulted bonds for new unsecured and unsubordinated external debt; in exchange, the participants agreed to waive various rights and remedies available under the FAA.
Plaintiffs declined the exchange and sued Argentina, alleging breach of contract and seeking injunctive relief, including specific performance of the FAA equal treatment provision, which prevents Argentina from discriminating against FAA bonds in favor of other unsubordinated, foreign bonds. The district court granted plaintiffs summary judgment and enjoined Argentina from making payments on debt issued pursuant to its 2005 and 2010 restructurings without making comparable payments on the defaulted debt. The Court of Appeals agreed, holding that the equal treatment provision in the bonds bars Argentina from discriminating against plaintiffs' bonds in favor of bonds issued in connection with the restructurings. According to the Court of Appeals, Argentina violated that provision by ranking its payment obligations on the defaulted debt below its obligations to the holders of its restructured debt.