Chapter 2 Outline
Chapter 2 – State Responsibility
and Environmental Protection
1. Introduction
a. Rights of individuals or businesses that enter a foreign country.
1) Traditional “law of nations” rule: The states of the world imposed on each other the requirement to respect each other’s citizens.
a) State responsibility for injuries to aliens is now a recognized rule of customary international law.
2) The current debate:
a) What is the responsibility?
b) How it is to be enforced?
A. STATE RESPONSIBILITY
1. Proof Requirements to establish that a state is responsible for an injury to an alien or foreign business:
a. There must be “conduct consisting of an action or omission attributable to the state under international law.”
b. The conduct must “constitute a breach of an international obligation of the state.”
2. Doctrine of Imputability
a. Defined: A state is only responsible for actions that are imputable or attributable to it.
1) Usual interpretation of this: A state is responsible for acts done by officials within their apparent authority.
a) This includes:
1] Acts within the scope of an official’s authority.
2] Acts outside their scope of authority if the state provided the means or facilities to accomplish the act.
a] The acts may be:
(1) Based on mistakes.
(2) Done contrary to express orders.
2) Some old case law provides a contrary view: That a state is not responsible for acts that are manifestly ultra vires.
Case 2-1. Sandline International Inc. v. Papua New Guinea
3. Non-imputable Acts
a. States are not responsible for the acts of:
1) Private persons.
2) Officials of other states.
3) International organizations.
4) Insurrectionaries.
Case 2-2. Home Missionary Society Case
b. Terrorism:
1) Defined: Sustained clandestine use of violence for a political purpose.
2) International treaties require states to cooperate in apprehending and trying terrorists.
3) National legislation generally does not impose liability on states for terrorism.
a) Exception: U.S. Antiterrorism and Effective Death Penalty Act of 1996.
Case 2-3. Flatow v. The Islamic Republic Of Iran
4. Fault and Causation
a. Fault: A state is responsible for injuries to aliens regardless of fault.
1) There is no requirement to show culpa (fault) by the state (either through knowledge or negligence).
2) Reason for rule: It is too difficult to prove a lack of proper care by a state.
b. Causation: Courts do look to see if a state or its officials actually caused the injury.
B. STANDARD OF CARE
1. Two Criteria for Determining How a State is Supposed to Act have been established by case law:
a. The “national standard.”
b. The “international standard” (or sometimes the “international minimum standard”).
2. The National Standard
a. Standard favored by Third World countries (especially the Latin-American countries before World War II and the Afro-Asian countries since).
b. Defined: A state should treat an alien exactly as it treats its own nationals — no more, no less.
c. Criticism:
1) There would be no protection for aliens if nationals were ill-treated.
2) If the rule were carried to its extreme, it would mean that aliens should be given the same privileges (voting, health care, etc.) as nationals — both absurdities.
Case 2-4. Cantero Herrera v. Canevaro & Co.
3. The International Standard
a. Standard of care favored by major Western countries.
b. Defined: While states have no obligation to admit aliens to their territory, once they do so, they must treat them in a civilized manner.
1) Failure to do so can be classified as either crimes or torts.
a) Examples of crimes: “Serious breaches of international peace that deny peoples the right of self-determination, that fail to safeguard human life and dignity (e.g., slavery, genocide, and apartheid), or that injure the environment are international crimes” (International Law Commission’s 1979 Draft Articles on State Responsibility).
b) Examples of torts:
1] Expropriation (or nationalization) of the property of aliens and foreign businesses.
2] Denial of justice.
4. Expropriation
a. Defined: The taking of property of private persons by a state.
b. The right of states to expropriate foreign property is universally recognized.
1) Analogous to the municipal law right of eminent domain.
c. Western countries treat expropriation much as they treat eminent domain: It is proper so long as it is done for a legitimate public purpose and if the state pays prompt, adequate, and effective compensation (BP Exploration Co. v Libya (Arbitration Tribunal 1974)).
1) Meaning of the public purpose element: It is only a requirement not to discriminate against a particular class of foreigners.
2) Meaning of “prompt, adequate, and effective compensation.”
a) View of most Western states was set out by the plaintiff in its pleadings in the Anglo-Iranian Oil Co. v. Iran Case (Arbitration Tribunal 1977).
1] “Adequate” compensation means “the value of the undertaking at the moment of dispossession, plus interest to the day of judgment.”
2] “Prompt compensation” means immediate payment in cash.
3] “Effective compensation” means that the recipient of the compensation must be able to make use of it.
Case 2-5. ACSYNGO v. Compagnie de Saint-Gobain (France), SA
b) View of some Third World states:
1) Adequate compensation should not mean full market value.
2) Factors such as colonial domination should be taken into consideration.
Case 2-6. Case Concerning Barcelona Traction, Light, and Power Company, Ltd. (Second Phase)
5. Denial of Justice
a. Defined: “A denial, unwarranted delay or obstruction of access to courts, gross deficiency in the administration of judicial or remedial process, failure to provide those guarantees which are generally considered indispensable to the proper administration of justice, or a manifestly unjust judgment.”
b. Differing interpretations:
1) National standard advocates: Notions of justice are relative to each society.
a) Whether or not there has been a denial of justice with respect to a particular case requires an understanding of the judicial system of the society where the case arose.
2) International standard advocates: Justice is determined by principles common to all civilized states.
Case 2-7. Chattin v. United Mexican States
C. OBJECTIONS THAT STATES CAN RAISE TO COMPLAINTS BROUGHT AGAINST THEM
1. Lack of Standing
a. Defined: Because the plaintiff is a person not qualified to appear before the particular court, the case must be dismissed.
1) Note: In most international tribunals (e.g., the ICJ), only a state can file a complaint.
a) Complaints filed by a private person or an NGO would be dismissed for lack of standing.
b) States may sponsor suits on behalf of their nationals.
1] Rationale: The old Law of Nations idea that an injury to the citizen of a state is an injury to the state itself.
2] Effect: The state has full control over the action.
a] It can refuse to bring the complaint.
b] It can abandon it.
c] It can settle it adversely to the interests of its nationals.
2. Lack of Nationality
a. Defined: Because a claim can be asserted by a state only on behalf of its own nationals, a claim brought on behalf of a non-national must be dismissed.
1) Persons with a single nationality: May only have their cases sponsored by their national state.
2) Stateless persons: Cannot be sponsored by any state.
3) Persons with dual nationalities.
a) Traditional rule:
1] Either state can complain as to a third state.
2] Neither state can complain as to each other.
b) Recent rule: The state of which the individual has the “master” nationality (i.e., the one with which he has the most links) is allowed to bring a complaint against the other.
b. Effect of an injured person’s waiver of the right of his national state to bring suit on his behalf.
1) Calvo Clause: Requires an investor who seeks to establish a business operation in a foreign country to agree, in advance, that he, she, or it will not ask for the home state to intervene in any dispute with the host state.
2) Legally an individual’s waiver is ineffective.
3) Practically an individual’s waiver has some impact.
3. Lack of a Genuine Link
a. Defined: Because nationality must be based on a “genuine link” with a sponsoring state, a claim must be dismissed if it is brought on behalf of a national who only has “bare” nationality.
1) A “genuine link” is one that is “real” and “effective.” (The Nottebohm Case (International Court of Justice 1955).)
b. Companies must also have a genuine link with their sponsoring state.
1) Most common tests for corporate nationality:
a) Place of incorporation (in common law countries).
b) Siege social (in civil law countries).
4. Failure to Exhaust Remedies
a. Defined: Before an individual or business firm can seek the help of its home state in supporting a complaint of mistreatment, the individual or firm must exhaust all of the remedies available to him or it within the foreign state. If he or it fails to do so, the complaint must be dismissed.
1) Purpose of rule: To resolve problems at the lowest level and with the least use of the sovereign’s time.
b. Exceptions:
1) Adequate redress is clearly unavailable.
2) The requirement has been waived by treaty.
3) The injury was done directly to a state (rather than a private person).
4) There has been excessive delay.
Case 2-8. The M/V “SAIGA” Case (Merits)
5. Other Objections
a. Laches: A claim by the defendant state that a claimant delayed too long in bringing a claim.
b. Dirty hands: That the claimant’s own conduct makes it ineligible for relief.
D. RELIEF
1. Kinds of Relief that can be obtained from states for injuring an alien:
a. Restitution in kind.
b) Satisfaction.
c) Compensatory damages.
Case 2-9. Re Letelier and Moffitt
E. INSURANCE
1. Insurance Defined: contractual commitment from insurer to indemnify an insured against specific contingencies and perils.
2. Private Insurers
a. Offer wide range of insurance products to multinational enterprises, including —
1) International property insurance.
2) International casualty insurance.
3) Coverage for overseas employees.
4) Specialty coverage:
a) Kidnap, ransom, and extortion insurance.
b) Sabotage and terrorism insurance.
c) Political risk insurance.
b. Multinational insurers are the very large insurance companies in Europe and North America, such as —
1) British Trade Indemnity Group.
2) Foreign Credit Insurance Association (in New York City).
3. National Investment Guaranty Programs
a. Most developed countries provide insurance (especially political risk insurance) when it is unavailable or too expensive from private insurers.
b. The United States Overseas Private Investment Corporation (OPIC).
1) Mission: To “mobilize and facilitate the participation of US private capital and skills in the economic and social development of less developed friendly countries and areas.”
2) Programs run by OPIC:
a) Finance program.
1] OPIC may participate as a medium- to long-term project lender.
2] For small businesses involved in small projects, OPIC can participate as a direct lender.
3] For larger investors involved in larger projects, OPIC can facilitate commercial lending by providing investment guarantees for commercial bank loans.
b) Political risk insurance program.
1] Risks covered:
a] Expropriation or confiscation.
b] Currency inconvertibility or transfer risk.
c] Various risks associated with political violence.
4. Multilateral Investment Guaranty Programs
a. Traditional view of schemes to develop such a program: It would be “highly unlikely to attract the support of a significant number of less developed countries [which] would be loath in many cases to limit their freedom of action with respect to property acquired during the colonial period.”
b. Multilateral Investment Guaranty Agency (MIGA).
1) Created in the mid-1980s by the World Bank.
2) Opened for business in 1987.
3) Functions similarly to national programs, such as OPIC.
a) Exception: It operates under the political oversight of both capital-exporting and capital-importing states.
F. ENVIRONMENTAL REGULATION
1. Origins of international environmental protection laws.
a. UN Conference on the Human Environment convened in 1972.
1) Stockholm Declaration is a list of principles, including Principle 21:
“States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other states or of areas beyond the limits of national jurisdiction.”
b. United Nations Environment Program (UNEP) established by General Assembly in 1972.
1) Activities of UNEP:
a) Monitoring the earth’s environment.
b) Drafting international and regional treaties.
c) Adopting recommended principles and guidelines.
c. UN Conference on the Environment and Development (UNCED) convened in Rio de Janeiro in 1992.
1) Rio Declaration on the Environment and Development adopted.
a) Reaffirmed the principles of the Stockholm Declaration — especially Principle 21.
b) Added new principles:
1] Principle 4: “In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it.”
2] Principle 15: States should follow a “Precautionary approach” in protecting the environment (i.e., where there are “threats of serious or irreversible damage,” action to correct the problem should not be delayed merely because there is a “lack of scientific certainty” that injury will result).
2) Agenda 21 adopted.
a) Establishes developmental and environmental goals for the international community.
1] Developmental goals: to promote sustainable and environmentally friendly growth.
2] Environmental goals: to prevent pollution and to conserve and protect the earth’s natural resources.
2. Regulation of Pollution.
a. Sectoral Regulations.
1) Marine Pollution.
a) UN Convention on the Law of the Sea imposes on all states the obligation “to protect and preserve the marine environment.”
Case 2-10. Southern Bluefin Tuna Cases: Provisional Measures
b) Various conventions deal with more particular problems of ocean pollution.
2) Climate and Air Pollution.
a) UN Framework Convention on Climate requires member states to work towards “stabilization of atmospheric concentrations of greenhouse gases at levels that would prevent dangerous [man made] interference with the climate system….”