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a. Rights of individuals or businesses who 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?

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 is Based on International Law

Commerce cannot be totally emancipated from international

law as a consequence of the cross-border relationships it
engenders. Trade transactions are also irrevocably tied to
regional law and various international provisions.


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 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."

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a. Defined: A state is only responsible for actions which are imputable or

attributable to it.
1) Usual interpretation of this: A state is responsible for acts done by officials
within their express and 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.
Case 2-1. Youmans v. United Mexican States


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a. States are not responsible for the

acts of:
1) Private persons.
2) Officials of other states.
3) Officials of international
organizations.
4) Insurrectionaries.
Case 2-2. Home Missionary Society
Case


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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.
Case 2-3. The Kummerow and Fulda Cases


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have been established by case law:
a. The "national standard."
b. The "international standard" (or sometimes the
"international minimum standard").

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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. Criticisms:
1) There would be no protection for aliens if nationals are ill-treated.
2) If the rule is 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.


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a. Note: 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 a crime or a tort.
a) Examples of crimes: Serious breaches of international peace that
--
1] deny peoples the right of self-determination,
2] fail to safeguard human life and dignity, or
3] injure the environment.

b) Examples of torts:
1] Expropriation (or nationalization) of the property of aliens
and foreign businesses, and
2] Denial of justice.

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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.

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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
(uritish Petroleum Case (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) "Prompt compensation" means immediate payment in cash.
b) "Adequate" compensation means "the value of the undertaking at the
moment of dispossession, plus interest to the day of judgment."
c) "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

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d) 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 uarcelona Traction, Light, and Power
Company, Ltd. (Second Phase)

e) Final note: despite the Third World's objections, the western

contries' interpretation of the meaning of expropriation is nearly
uniformly followed.

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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.
a) Note: this view is nearly uniformly followed.
Case 2-7. Chattin v. United Mexican States

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against them:


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a. Defined: Because the plaintiff is a person who is 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.
c. Effect of waiver by an injured person.
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 effect.

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a. This is a corollary of the requirement of standing.

b. Defined: A claim can be asserted by a state only on behalf of
its own nationals.
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.

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a. Nationality must be based on a "genuine link" with the sponsoring state

and not "bare" nationality.
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).
Case 2-8. Case Concerning uarcelona Traction, Light, and Power Company,
Ltd. (Second Phase)

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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.
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 to a private
person).
4) There has been excessive delay.

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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 misconduct makes it ineligible for
relief.

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a. Restitution in kind.
b. Satisfaction.
c. Compensatory damages.
Case 2-9. Re Letelier and Moffit


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a. International property insurance.

b. International casualty insurance.
c. Insurance for overseas employees.
d. "Political risk" ("noncommercial") insurance.

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a. Private insurers - primarily in France, Netherlands, UK, and

US, such as:
1) Foreign Credit Insurance Association (in US).
b. National governments (for political risk insurance), such as:
1) US Overseas Private Investment Corporation.
c. Intergovernmental organizations (for political risk
insurance):
1) Multilateral Investment Guaranty Agency.


  



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a. 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."
b. Programs run by OPIC:
1) Finance program.
a) OPIC may participate as a medium- to long-term project lender.
b) For small businesses involved in small projects, OPIC can participate as a
direct lender.
c) For larger investors involved in larger projects, OPIC can facilitate
commercial lending by providing investment guarantees for commercial
bank loans.

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2) Political risk insurance
program.

a) Risks covered:
1] Expropriation or confiscation.
Case 2-10. In the Matter of
Reverse Copper and urass, Inc.
and Overseas Private Investment
Corporation
2] Currency inconvertibility or
transfer risk.
3] Various risks associated with
political violence.


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a. Created in the mid-1980s by the World Bank.

b. Opened for business in 1987.
c. Functions similarly to national programs, such as OPIC.
1) Exception: It operates under the political oversight of both
capital- exporting and capital-importing states.


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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.

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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 ²
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.

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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."
b) Various conventions deal with more particular problems of
ocean pollution.

Case 2-11. Werkgroep Noordzee et al. v. Minister for Public

Health And Environmental Matters

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2) Air Pollution.

a) Most conventions relate to the

regulation of ozone emissions.

b. Product Regulations.

1) Various conventions seek to regulate:

a) Toxic waste.
b) Nuclear materials.

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a. World Charter for Nature adopted by General Assembly in 1982.

1) Only country that voted against the Charter: United States.

2) Basic principles:
a) Principal 1: "Nature shall be respected and its essential processes
shall not be impaired."
b) Principal 10(a): "Living resources shall not be utilized in excess of
their natural capacity for regeneration."
c) Principal 11: States need to establish procedures to control
"activities which might have an impact on nature.³

3) Several conventions that seek to implement the goals of the World

Charter of Nature have been adopted.

i
Environmental law revolves around a core theory that the earth has
limited resources that must be jointly enjoyed and cared for, regardless
of their physical presence in the territory of one State as opposed to
another.

Environmental law attempts to bring states into agreement on issues

such as desertification, sustainable development, biodiversity,
endangered species, hazardous materials, climate change and trans-
boundary pollution, all of which have been the subject of major
international treaties, such as the United Nations Convention on
Biological Diversity (CBD), the United Nations Convention to Combat
Desertification, and the Convention on International Trade in
Endangered Species.

ii
There are more than 500 international organizations that deal with a wide
variety of topics requiring international cooperation, including diplomacy,
trade, aviation, migration, development, and many, many others.

As with international law in general, these organizations are crucial to

managing globalization, but are controversial because of their impact on
state sovereignty.

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International law has traditionally been
based on the notion of state sovereignty,
but that concept has been breaking down
because of the globalization.

Interactions between states have become

more complicated, involving a wide array
of issues that require them to give up some
of their sovereignty in order to have
effective relations with each other.

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International law has begun to deal with issues traditionally inside
the borders of individual states, such as human rights. These
developments have become very controversial, however.
International law is often criticized for a lack of legitimacy. For
example, the law is shaped to a large degree by politics within the
international system. An action, though clearly illegal in terms of
international law, may go unpunished due to overriding political
considerations.

Since the UN Charter gives veto authority to five Security Council

members, who would presumptively veto any measures to enforce
international law against their own state, the legitimacy of an
organization with such unequal application of the law must be
questioned to a certain degree. When the most powerful players
determine the rules of the game, how legitimate can these rules be?
Furthermore, most of those countries are not democracies²China,
Russia, and others routinely and clearly violate international human
rights law, for example. Why are they allowed to help set what the
law is?

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Unelected bodies wield significant power in the formulation of
international law, from the UN Security Council to the dispute
settlement body of the WTO. They make decisions and
implement policy that can affect people around the world, but if
those people are unhappy with these decisions, or if the choices
made fail to reflect their interests, when the actors are in the
international system, the people affected rarely have the power to
hold them accountable. How can people trust international law
and international organizations when there is no direct connection
between them?

These questions are central to the question of whether the current

rules of international law, the way they are made, and the way
they are implemented, are a fair means of governing the world.

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The position of individuals under international law has
evolved significantly during the last century. More
commonly accepted than ever before is the idea that
individuals have both rights and responsibilities under
international law. Human rights law, for example, has tried
to establish that every person around the world has certain
basic rights that cannot be violated. At the same time,
individual accountability under international law has been
established, first at the Nuremburg trials and recently at the
International Criminal Tribunal for Yugoslavia and the
International Criminal Tribunal for Rwanda and the dawn
of the International Criminal Court, the first permanent
international institution to hold individuals responsible for
violations of the laws of armed conflict.

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Non-governmental organizations (NGOs), also called ³civil society´
organizations, are groups formed by individuals working across
national borders to affect public policy. Recent progress in
technology, coupled with globalization¶s emphasis on international
cooperation, has allowed the effectiveness of these organizations to
grow drastically. Individuals living in different countries can now
network with one another, and the Internet has permitted NGOs to
both obtain and publish information on an extensive level, previously
only available to states.

NGOs have had significant impact on environmental affairs, such as

Greenpeace¶s advocacy work on climate change, Amnesty
International¶s advocacy of human rights, and the International
Campaign to Ban Landmines, which won a Nobel Peace Prize for its
work in shaping a global treaty to prohibit use of landmines.

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a. Very few conventions (with only a small

number of parties) impose liability for
environmental damage.
1) Convention on Civil Liability for Nuclear
Damage of 1963.
2) International Convention on Civil Liability
for Oil Pollution Damage of 1969.

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