By Dr Antoine P. Martin

Attempts to limit the jurisdiction and reach of ICSID seem to be progressing as South American states’ efforts to foster regional cooperation through a new regional organisation (regrouping Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela) gain in precision.

Given the numerous investment claims brought by foreign investors against South American States lately, governments have thought about setting rules for an alternative investment protection and dispute settlement mechanism in which greater consideration would be given to sovereign and regulatory needs (see our previous post on Venezuela’s withdrawal from ICSID), and where appeal and precedents mechanisms would be put in place. Following the entry into force of the ‘Unión de Naciones Suramericanas’ (UNASUR) constitutional statutes in 2011 (for a chronology, see this very informative piece by the IIS), the famous EFE Press Agency indicated in Mid April that efforts towards the creation of a dispute settlement centre are becoming more concrete.

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Further arguments in the Kiobel case on the liability of transnational corporations under ATCA were presented yesterday (28th February 2012) before the US Supreme Court. The case was commented a moment ago on this blog (see here as well as the ATCA / ATS tags for more comments)  and it seemed at the time that the Court was reluctant to aknowledge the existence of a principle of corporate liability under international law. Well, it seems that the argument persists.

For those interested in the debate, a very informative post by Lyle Denniston can be found on the SCOTUSblog:

” When Justice Anthony M. Kennedy, in the opening minute of a Supreme Court argument, tells a lawyer that his entire case is in jeopardy, it is extremely difficult for even an experienced counsel to recover.   And, though he tried, Venice, Calif., attorney Paul L. Hoffman did not appear on Tuesday to have resuscitated his argument that foreign corporations should be held to account in U.S. courts for human rights abuses in foreign lands.  At least a majority of the Justices looked notably unconvinced […]”

Better late than never, here is a post on the recently published report of a WTO Panel on the dispute between the United States, the European Communities and Mexico against the People’s Republic of China. The dispute –which official transcripts are available here– flows from forty measures restricting the exportation of raw materials including certain forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc. The complainants identified the following as four types of restraints that China imposes on the exportation of these raw materials: (1) export duties; (2) export quotas; (3) export licensing; and (4) minimum export price requirements.

An interesting aspect of this claim is that China defended its export restriction policy by emphasising the essential impact of those measures on their economic development (sovereignty of natural resources was used here as the major legal argument), resource conservation and environmental protection. This, of course, was rather interpreted by the complaining parties as purely protectionist measures breaching China’s commitments under WTO rules.

Note: this post only provides a summary of the main arguments of the parties and the related findings of the Panel, it does not provide an extended analysis of the case.

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In line with our previous posts on the evolution of corporate liability under ATS (See the list of the comments here), it is worth noting that the United States Court of Appeals for the District of Columbia Circuit has rendered a decision on the John Doe v Exxon Mobil Corporation on the 8th of July. The decision interestingly seems to confirm the decision rendered on July 11th 2011 by the US Court of Appeal for the 7th Circuit in Boimah Flomo (see here).

Contracting with the Indonesian government, Exxon Mobil and its subsidiaries operated a large natural gas extraction and processing facility in in 2000–2001. Eleven villagers filed a complaint in 2001 alleging that murder, torture, sexual assault, battery, and false imprisonment committed by the Indonesian military could be attributed to Exxon under the Alien Tort Statute (“ATS”) and the Torture Victim Protection Act (“TVPA”) because they were committed by a unit dedicated only to Exxon’s facilities and placed under Exxon’s authority (p5).

Corporate liability as a new type of claim (Sosa v Alvarez Machain argument)

The Exxon Court first rejected the Sosa tribunal’s finding that ATS tribunals should not recognize private claims under federal common law for violations of any international law norm which did not exist when paragraph 1350 was enacted (See here). “The fact that the law of nations provides no private right of action to sue corporations”, it held, “addresses the wrong question and does not demonstrate that corporations are immune from liability under the ATS”(p56).

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A decision on the Boimah Flomo case was reached on July 11th 2011 by the US Court of Appeal for the 7th Circuit (The decision can be found here). It is worth mentioning because it significantly contradicted the findings of the Indiana’s District Court which dismissed the claim on the ground that the plaintiffs had “failed to establish a legally cognizable claim because no corporate liability exists under the ATS” (See my previous note here). The case is also noteworthy because of its conclusions on child labour.

On corporate liability

Establishing corporate liability was a major issue for the tribunal, which nonetheless provided a fairly clear reasoning and achieved a very acceptable conclusion. It overall rejected Firestone’s (the respondent) argument that “conduct by a corporation or any other entity that doesn’t have a heart-beat can never be a violation of customary international law, no matter how heinous the conduct” (p5), and by the same token clearly rejected the analysis of corporate liability provided in Kiobel, which it clearly deemed ‘incorrect’ (p6).

The Court overall suggested that there had to be a first time for litigation to enforce a norm, especially considering that there is no compelling reason to justify that corporations have rarely been prosecuted criminally or civilly for violating customary international law (p7-8)

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It’s official, Bin Laden is gone. But is it fine celebrating his death as the incarnation of ‘justice’ though? Along with this Jus ad Bellum (right to engage in a conflict), a Jus in Bello issue (justice in war) is also worth considering. Should terrorists be considered as outlaws and outrights to whom the due process of law should be denied because they use violence and killings as their main means of action? In other words, can terrorists be killed the way they kill, and can killing terrorists without any form of due process of law bring any form of constructive justice?

Lawful action?

John Bellinger (former legal adviser to the US State Department) describes what will probably be the US Government’s defence, i.e. that the killing will be characterised as lawful under domestic law and international law (see here).

First, as he notes, (i) US law through the Authorization to Use Military Force Act of September 18, 2001, authorizes the President to use “all necessary and appropriate force” against persons who authorized, planned, or committed the 9/11 attacks, and (ii) the killing is not prohibited by the assassination prohibition in Executive Order 12333 “because the action was a military action in the ongoing U.S. armed conflict with al-Qaeda and it is not prohibited to kill specific leaders of an opposing force [whilst] the assassination prohibition also does not apply to killings in self-defense”.

Second, he adds, “the executive branch will also argue that the action was permissible under international law both as a permissible use of force in the U.S. armed conflict with al-Qaeda and as a legitimate action in self-defense, given that bin Laden was clearly planning additional attacks”.

These arguments are however questionable, if only because the ILC Draft Articles on State Responsibility make it clear that an act deemed legal under domestic laws can infringe international standards and therefore be illegal under public international law. Article 51 of the UN Charter on the right to self-defence, for instance, does not expressly authorise extrajudicial executions or anticipatory strikes even though the US have relied on the latter as a main feature of their National Security Strategy (available here). Justifying the death of Bin Laden on the ground of anticipatory self-defence, as a result, would characterise it as an unlawful extrajudicial killing debatable under public international law.

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The decision of the ICSID tribunal on the GEA Group Aktiengesellschaft v. Ukraine case -ICSID Case No. ARB/08/16- was made publicly available on the 31st March (link at the end of the comment). The award is pretty straightforward and does not raise any major issue, but it nevertheless provides insights regarding the definition of ‘investments’, expropriation, the notion of fair and equitable treatment, and the issue of award enforcement (i.e. whether the refusal of a state to enforce a decision systematically amounts to a lack of due process and generates state responsibility). Overall, the decision is interesting because it clearly shows that investment tribunals do not systematically give undue deference to the interests of investors, whilst investment protections do not represent a right to be compensated for everything.

New Klöckner, a company acquired by GEA (the claimant) entered in an agreement with Oriana –a public but independent company– to provide 200.000 tons of fuel per year for conversion. The claimant eventually noticed that a significant quantity of finished product went missing, and a Settlement Agreement was signed whereby Oriana acknowledged being indebted. In addition, the parties agreed on a Repayment Agreement for US$27,6 million, to be paid in finished products rather than cash (at ¶47-55).

In 2001, an arbitral procedure was started before the ICC regarding the execution of the Repayment Agreement. This gave rise to further polemics because Oriana eventually objected to the recognition and enforcement of the award and questioned the tribunal’s jurisdiction and the validity of the various Agreements. Essentially, it argued that its own Vice President had no authority to sign the original Agreement, part of which had never approved by the Ukrainian authorities anyway (at ¶57-61). The ICC Appellate Court, as a matter of fact, confirmed that the agreement was not valid because it had been concluded by unauthorised persons, a point reiterated by Ukrainian Courts which refused to enforce the ICC original decision (at ¶65-69).

The claimant therefore started a procedure before the ICSID on the ground that the respondent failed to honour “repeated promises” (as to the payment of the products) and took “multiple steps” to ensure that no compensation would be paid, thereby breaching its investment commitments (at ¶86-87).

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