This is a final exam. I would like somebody to write 5 pages for each question following the instructions below. Your answers should be from your own words after reading the course readings I have attached.
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unit_6.docxUnit Learning Objectives
After reading this unit, you will:
· Be able to explain how international institutions impart structure and organization to international law, monitor compliance with rules, and in some cases adjudicate and implement these rules.
· Be able to describe a variety of international institutions, and explain the different ways international organizations make decisions.
· Understand the importance of having a ‘nationality’ in international law for individuals, corporations and NGOs, the different ways nationality is acquired, and some of the complications in nationality.
Unit Plan and Summary
As we discussed in Unit 5, states are the most important actors in international law. This unit discusses Intergovernmental Organizations (IGOs) and International Regimes, which are next in rank to states in terms of legal competences. IGOs are institutions created by and for states, and they play important roles especially in the area of ‘soft’ international law. We also discuss the issue of nationality in international law, which determines the status, rights and responsibilities of individuals, corporations and non-governmental organizations in international law.
Outline
1. Nature, Types & Role of International Institutions in International Law
2. The Individual in International Law: Nationality & the Rights of Aliens
3. Corporations & Foreign Investments, and NGOs
Readings
· Slomanson, William R. “ Individuals and Corporations .” In Fundamental Perspectives on International Law, 191-230. 5th ed. Belmont, CA: Thomson/Wadsworth, 2007.
Key Concepts
· Institutions & Organizations
· Intergovernmental Organizations (IGOs)
· International Regimes
· Transnational Corporations (TNCs)
· International Non-Governmental Organizations (INGOs)
· Nationality
· Jus Soli
· Jus Sanguinis
· Naturalization
· Dual Nationality
· Indelible Allegiance
· Effective Link
· Expatriation
· Stateless Persons & Refugees
· Rights of Aliens
· Imputability & the Minimum International Standard
· Procedural & Substantive Justice
· Corporate Nationality: Domicile, Ownership & Control
Nature, Types & Role of International Institutions 1
All institutions are comprised of rules, principles, or norms, 2 Institutions impart a degree of durability, cohesiveness, and stability to activities and relationships. International institutions are manifest in different ways ranging from more tangible organizations to less tangible general institutions (or settled practices) such as the institutional practices of seovereignty which we discussed in Unit 3. The focus of this unit is on international organizations.
Organizations are discrete, ordered, and systematically arranged systems of rules, roles, and decision-making procedures. They are the most recognizable forms of institutions because they are often housed in buildings and have administrative offices, personnel and official letterheads. However, the most distinctive feature of organizations as institutions is that they most clearly structure behavior according to well-defined roles arranged in a hierarchical administrative or management structure known as a bureaucracy. Organizations’ administrative structures (which vary in complexity) develop rules and procedures for making and implementing decisions, performing specific tasks, monitoring regulations, and providing a continuous system for decision-making. 3 In contemporary international relations, the most prominent organizations in the public sphere are intergovernmental organizations such as the United Nations (UN), the International Monetary Fund (IMF), and the International Civil Aviation Organization (ICAO). In the private sphere, there are non-profit international non-governmental organizations (INGOs) such as Amnesty International and Human Rights Watch; and for-profit Transnational corporations (TNCs) such as Microsoft Corporation. In addition, a number of ‘hybrid’ organizations exist that are neither wholly public nor private such as the International labor Organization (ILO).
Intergovernmental Organizations (IGOs)
An IGO is an organization established by formal or informal agreement between the governments of two or more states to pursue their common interests in a variety of issue-areas. The earliest recorded IGOs in the modern state system include the Rhine Commission (1815), the International Telegraphic (now called Telecommunications) Union (ITU, 1865), and the Universal Postal Union (UPU, 1874), which were created to harmonize and standardize procedures for functional transactions such as river transport, communications, and postage. The first multi-purpose IGO was the League of Nations, established in 1924. By the beginning of the 1900s about 30 IGOs had been created, the number had risen to over 2000 by 2010. We can classify IGOs in terms of the formality of the organization’s rules and operating structures, and the degree of universality of membership.
Formal & Informal IGOs
Formal IGOs are created by explicit agreement among states and can be either treaty- or non-treaty-based.
1. Treaty-based formal IGOs derive their authority directly from the provisions of constituent treaties that create them (usually referred to as ‘charters’, ‘statutes’, or ‘articles of agreement’). Examples include the UN Charter (1945), the Articles of Agreement of the IMF (1945) and World Bank (1945), and the Rome Statute (1997) of the International Criminal Court (ICC).
2. Non-treaty based formal IGOs are not created directly by a constituent treaty, but indirectly to give effect to the provisions of an existing treaty. Examples include some of the functional commissions that are part of the UN system such as the Commission on Sustainable Development (CSD) created in 1992.
All formal IGOs (treaty and non-treaty) have well-developed administrative structures (often called ‘secretariats’) that provide continuous mechanisms for making and implementing decisions. Although membership in formal IGOs is normally limited to states, there are a number of important exceptions such as the International Labor Organization (ILO) whose membership includes states and non-state representatives of employer associations and labor unions.
States create informal IGOs through informal agreements, and some informal IGOs come into existence through an extension or modification of a formal IGO’s mandate. For example, the Development Assistance Committee (DAC) is a fairly loose association of major aid donor states that are also members of the formal Organization for Economic Coorperation and Development (OECD). Other informal IGOs are created by a sub-set of actors with similar interests within the wider setting of a formal IGO; for example, the Group of 77 (G77) is an informal grouping of developing countries created within the UN system. Another group of informal IGOs is associated with periodic conferences and summits held at the level of heads of state/government or at the ministerial level. These meetings may be established under the auspicies of an existing IGO, or may operate autonomously. Examples of the former include the UN sponsored World Population Conference held every 10 years since 1974, the UN Conference on the Environment and Development (UNCED) held every 5 years since 1992, the Paris and London Clubs for debt reschedulling chaired by the IMF, and the Consultative Groups in development finance chaired by the World Bank.
Universal & Regional IGOs
Universal or global IGOs draw their membership from all the world’s major regions, and normally the only criterion for accession is that members be recognized sovereign states. One exception is the WTO, which has permitted a few ‘economies’ that are not widely accepted as sovereign states to join the organization. For example, China agreed to have Taiwan (Chinese Taipei) join the WTO in January 2002, shortly after China joined in December 2001; and Hong Kong, China (which joined in January, 1995) continues to retain its separate seat in the WTO. 4 As of March 2013, the most universal IGO was the UN (more specifically the UN General Assembly) with 193 member states out of 194 recognized sovereign states (see box 1 below), followed by the IMF (188), World Bank (187) and WTO (159). 5
Regional IGOs, by contrast, have more selective and restrictive memberships. Regionalism is a difficult term to define because it usually connotes not only geographic proximity but also a sense of cultural, economic, political, and organizational cohesiveness. 6 Some regional organizations are defined mainly in geographic terms, even though there may be additional and more specific criteria for membership. For example, full membership in the EU, the African Union (AU, formerly the Organization of African Unity, OAU), and the OAS is limited to states in Europe, Africa, and the Americas, respectively (the EU has associate members outside of Europe). There are also sub-regional IGOs, where states form smaller groups to pursue their common interests such as the Western European Union (WEU), the Economic Community of West African States (ECOWAS), and the Association of South East Asian Nations (ASEAN).
Regional IGOs can also be based on selective criteria other than geography. Some regional IGOs join states with common interests stemming from historical, cultural, or linguistic linkages, a common ideology or world view, or shared resources. For example, the Commonwealth is a regional IGO comprised of the UK and many of its former colonies in Africa, Asia, and the Americas; La Francophonie has brought together France and other countries (including former colonies) where French is a dominant language (although some non-francophone states such as Albania and Macedonia have recently become full members); the Non-Aligned Movement was formed in 1961 during the height of the Cold War by states that were not part of the Western or Eastern alliances; and the Islamic Conference brings together states from around the world where Islam is a dominant religion. Other regional IGOs promote specific interests of states. For example, the OECD was formed to promote cooperation and further the interests of mainly developed market-oriented states.
Box 1
[Diagram of UN system goes here]
A formal Universal IGO: The United Nations
The United Nations (UN) was founded on October 24, 1945 with 51 members, and the membership grew to 193 states in 2012, making it the most universal international organization. Its key principles include sovereign equality, non-intervention, non-aggression, and respect for the political independence and territorial integrity of member states. Its constituent treaty (the UN Charter) is the single most authoritative document in international law with universal applicability.
The UN’s main purposes are to maintain international peace and security, develop friendly relations among states based on equal rights and self determination of peoples, achieve solutions to social and economic problems, and advance respect for human rights. The UN is a highly complex multi-purpose organization, which can be viewed as a federation of organizations that provides a framework for joint decision-making, coordination, and collaboration among a number of constituent umbrella organs and a network of affiliated agencies (which are also IGOs). As the UN diagram shows, six central ‘organs’ form the core of the UN system – the General Assembly, Security Council, Economic and Social Council (ECOSOC), Trusteeship Council, International Court of Justice (ICJ), and Secretariat.
The General Assembly is the main deliberative organ of the UN. Each UN member state is represented in the General Assembly and has one vote. The Security Council, which has the primary role in international security matters, has fifteen members; five are permanent (China, France, Russia, UK, USA), and ten are rotating and sit for two-year terms. Only the permanent members can block, or veto, a resolution on substantive issues. Absent a veto, resolutions require an affirmative vote of nine, and these resolutions are binding on all UN members. The ECOSOC is under the overall authority of the General Assembly and coordinates most UN economic and social activities, while the Trusteeship Council was formed to assist former colonies known as trust territories achieve independence. The ICJ is the main judicial organ of the UN, and the Secretariat carries out the administrative and substantive work of the other organs and is headed by a Secretary General who serves a renewable five-year term.
The UN system also includes a network of over 30 affiliated IGOs with varying degrees of autonomy called specialized agencies, and functional offices and commissions, which address a wide range of international issues and provide technical assistance and expertise to deal with international problems. The specialized agencies such as the IMF, World Bank and the World Health Organization (WHO) are autonomous organizations created by separate treaties and affiliated with the UN. The functional offices and commissions by contrast are not autonomous organizations because they report directly to one or more of the UN’s central organs such the General Assembly, ECOSOC or Security Council. Examples include the new Human Rights Council (HRC) created in 2006 to promote human rights as a key purpose listed in the UN Charter, and the Commission on Sustainable Development (CSD) created in 1992.
Box 2
A Formal Regional IGO: The European Union (EU)
The European Union (EU) is a regional IGO that promotes economic, political, and social cooperation and integration among its 25 member states. In 1951, six Western European states formed the European Coal and Steel Community (ECSC) to integrate their coal and steel industries as a means of promoting a lasting peace between France and Germany. The ECSC was so successful that in 1957 the six members formed the European Economic Community (later renamed the European Community or EC) to integrate their entire economies, and EC membership steadily grew to 12 member states by 1986. In 1992 the Maastricht Treaty introduced new forms of cooperation among the members in areas such as defense and “justice and home affairs,” and the EC’s name was changed to the EU. The EU membership has increased to 25, with 10 Central and Eastern European states the latest to join in 2004.
Economically, the EU is the most integrated of the regional trade agreements. EU members are not only part of a free trade area, but they also have a common external tariff toward outside countries, and relatively free movement of labor and capital among the members. Furthermore, 12 EU members are part of an Economic and Monetary Union with a common currency – the Euro. Politically, decision-making in the EU has characteristics of supranationality where some binding decisions are made above the level of national governments, unlike many other IGOs where decisions are made by agreement and cooperation among governments. (See chapter 3 for more on decision-making in international institutions). State governments continue to play a crucial role in the EU, and the supranational label applies only to certain EU institutions and policies.
The most important institutions are the EU Commission, Parliament, and Court of Justice. As the EU’s executive arm, the Commission represents and upholds the interests of the EU as a whole. It proposes legislation, policies and programs of action, and implements decisions of the EU Parliament and Council. The European Parliament is the EU’s directly elected legislative arm, and the members of the Parliament sit in Europe-wide political groups rather than national blocs. The Court of Justice ensures compliance with and consistency of EU law, and has more supranational authority than the ICJ in the UN system. The most important EU intergovernmental body is the Council of the European Union (formerly known as the Council of Ministers), a legislative arm of the EU that represents the member states. The Council and European Parliament share legislative power and responsibility for the budget; and the Council also concludes international agreements that the Commission has negotiated. The similarly named European Council is the highest-level policy making body in the EU which meets about four times a year at the heads of government and state level to address overall EU policy. In sum, the EU is a complex regional IGO with supranational characteristics.
Box 3
A Formal Regional IGO: The African Union (AU)
The African Union (AU) was officially launched in 2002 to foster closer economic and political ties among African states and promote their peace, security, and development. The AU replaces the Organization of African Unity (OAU, established in 1963) as the main continental organization. In September 1999, the OAU Heads of State and Government (the highest decision making organ) issued the Sirte Declaration, which called for a new continental organization to replace the OAU. A Constitutive Act in 2000 provided a two-year transition period, and the new Union was launched in 2002 with 53 member states. The creation of the AU was a response to important global and regional changes, which the OAU institutions could not adequately address. These changes included the end of the Cold War, the impact of globalization, the deepening of Africa’s economic crisis and its marginalization in the global economy, and the emergence of new patterns of warfare and insecurity. The AU has an elaborate organizational structure loosely similar to the EU. Key AU institutions include an Assembly of Heads of State and Government (the highest decision making organ), Executive Council, African Commission, Permanent Representatives Committee, African Parliament, an Economic and Social Council, and a Peace and Security Council; and there are plans to create an African Court of Justice.
International Regimes
International Regimes are “sets of implicit or explicit principles, norms, rules and decision-making procedures around which actors’ expectations converge in a given area of international relations.” 7 The key to identifying regimes is continued interaction among actors (beyond signing an agreement) based on defined roles in pursuit of particular goals. Although IGOs are often embedded in regimes, they may exist independently of each other; i.e., some regimes consist of an IGO and a related complex of rules and roles, while others do not. An example of a regime with an IGO at its centre is the Nuclear Non-Proliferation Regime (box 4); and example of a regime without an IGO is the regime dealing with ozone depletion, which was forged on the basis of the 1987 Montreal Protocols on Substances that Deplete the Ozone Layer. Like IGOs, regimes may be formal or informal, global or regional.
Box 4
A Formal, Universal Regime: The Nuclear Non-Proliferation Regime
This regime was forged on the basis of the 1968 Non-Proliferation Treaty (NPT), which is in turn part of a broader diffuse body of rules in international law dealing with arms control and disarmanent. 8 The nuclear non-proliferation regime developed norms, principles, rules and decision making procedures to govern the peaceful use of nuclear energy and prevent the spread of nuclear technology for military purposes. States with nuclear weapons (nuclear weapons states, NWS) when the treaty was signed in 1968 agreed not to transfer nuclear weapons devices or weapons technology to non-nuclear weapons states (NNWS), and to take measures to reduce their nuclear weapons stockpiles. In turn, the NNWS agreed to forego the right to acquire nuclear weapons, although they could develop nuclear technology for peaceful purposes.
At the core of the regime is an IGO, the International Atomic Energy Agency (IAEA), which is part of the UN system and has extensive powers to monitor and verify compliance with standards for the use of nuclear energy established by the NPT. As of 2013, 189 states were parties to the NPT.
Role of IGOs & Regimes in International law
As Unit 5 noted, IGOs and international regimes are part of international law, because they assist states in making law and impart organization and structure to rules. IGOs (and regimes with IGOs) employ four types of rule-making procedures.
1. Majority voting where each member state has one vote of equal weight and decisions pass by a simple or an absolute majority. An example is the UN General Assembly.
2. Weighted voting where member states have unequal votes based on a formula related to the institution’s activities (such as level of financial contribution). Examples include the IMF and World Bank Boards of Governors and Executive Boards.
3. Negative voting or the use of a veto, where some member states can block the passage of a resolution. An example is the veto power of the five permanent UN Security Council members.
4. Consensus decision-making where a decision is passed without a formal vote, if no member present at the meeting objects to the decision. Most major IGOs with plenary bodies (organs where all members are represented) such as the World Trade Organization (WTO) Ministerial Conference and UN General Assembly rely increasingly on consensus decision-making.
The term supranationality (above the state) has traditionally referred to IGOs with authority to make decisions that bind member states. The European Union (EU) provides the most advanced model of supranational decision-making in contemporary international law; and the UN Charter gives the Security Council authority to pass international security resolutions that are binding on all UN members. Unlike the EU, however, Security Council decisions or resolutions are not law making, but reactions to violations of international laws on security matters as specified in the UN Charter. In this regard, Security Council resolutions simply affirm the rules of the UN Charter.
The supranational designation, like the distinction between hard and soft law, however, is not clear-cut. Member states must transfer some sovereign authority to an IGO if it is to qualify as supranational. Although an IGO such as the EU acquires this authority directly through provisions in its constituent treaty, any state that ratifies a treaty is in fact delegating part of its sovereign authority to make unilateral decisions.
Indeed, the notion that international law is binding on states entails a derogation of sovereignty, because the reciprocity underpinning international obligation limits unilateral action. In this sense, international law creates a paradox for the concept of sovereignty: it is simultaneously ‘of’ the state (i.e., created by states) and ‘above’ the state (i.e., binding on states). Since treaties create most formal IGOs, the members delegate some of their sovereign authority to make unilateral decisions.
Thus, although many IGOs do not have formal supranational authority, they help develop, adjudicate, and execute international law through the elaboration of principles, standards, and programs of action. IGOs often have mechanisms for developing and applying regulations, a review process to monitor compliance, and an arbitration/adjudication process to settle disputes.
For example, the WTO makes binding decisions in trade disputes; the International Civil Aviation Organization (ICAO) makes authoritative rulings on passenger airline flight paths and aviation safety standards; the International Telecommunications Union (ITU) assigns radio frequencies; the International Labor Organization (ILO) evaluates members’ labor standards to ensure compliance with its rules; and the World Health Organization (WHO) develops international health regulations and standards that are binding on members.
Some IGOs also have legal authority to make executive policy decisions on behalf of (but nominally in consultation with) member states. The IMF and World Bank, for example, have lending programs with policies and conditions that recipient states must follow.
The Individual In International Law
As noted in Unit 5, international law places all of humanity into five categories based on territorial supremacy. To recapitulate, the categories, in descending order of importance, are:
1. Heads of State and Government
2. Extraterritorial individuals (Diplomats and Consuls). These are the official representatives of one state to another state.
3. Resident aliens (non-nationals living in a foreign state)
4. Nationals of a state living in their own state.
5. Stateless persons.
We focus here on individuals and groups in the 3rd, 4th and 5th categories whose status, rights and protections revolve aroundnationality (the rights and protections afforded heads of state/government and diplomats are examined in Units 7 and 8).
Nationality of Individuals in International law
A national is a person who owes permanent allegiance to a state. Nationality is the bond that unites individuals with a given state, identifies them as members of that state and enables them to claim its protection. Nationality also subjects them to the performance of certain duties as their state may impose upon them.
Criteria governing nationality and citizenship vary among countries and each state in international law is at liberty to decide who can be its nationals. Hence, the criteria for nationality are largely an issue for states’ domestic or municipal laws. However, a limited number of international laws (some general, some particular) do regulate aspects of nationality.
Acquisition of Nationality
Nationality may be acquired in several ways:
1. by place of birth (jus soli);
2. by parental lineage (jus sanguinis);
3. by naturalization
Jus Soli (Law of the Soil)
By general agreement (customs) any individual born on the territory of a given state of parents who are nationals of that state becomes a national of that state. Some countries, for example, Canada, USA and UK, apply this rule to cover cases where the mere birth of a child in the state's territory, irrespective of where the parents are from, confers nationality on that child. There are exceptions based on comity rather than custom – for example, the children of foreign diplomats born in a state that practices jus soli may not automatically acquire the latter’s nationality.
Jus Sanguinis (Law of the blood)
Other states (for example in continental Europe and Africa) adhere primarily to the civil law principle according to which a child's nationality follows that of its parents regardless of where that child was born. Other countries (e.g., Ghana) apply both jus soli and jus sanguinis.
Thus, there is a possibility of conflict between these two principles. For example, a child born to French parents in the US would be a French national under jus sanguinis, and an American national under jus soli. In the US, that child would be considered a US national; in France that child would be considered a French national; and in Ghana, that child would hold dual nationality – he/she would be a national of both the US and France.
Naturalization (immigration and permanent residence)
This is a process whereby a person voluntarily becomes a national of a state. Although normally involving an individual, naturalization can also apply to groups and collectives. For example, the people in Western Togoland became Ghanaian citizens when Western Togoland joined Ghana in 1964-65; after reunification of Germany in 1991, the nationals of former East Germany acquired German nationality. Regulations governing admission for the purposes of naturalization are purely domestic and therefore, not subject to the application of international law. However, collective naturalization may be governed by international law when it is based on treaty provisions (e.g., cession of territory.)
Individuals may also acquire nationality through marriage or by adoption.
Complications in Nationality
Complications in determining the nationality of individuals sometimes arise because of the wide variations in domestic laws governing nationality among states. For example, complications may arise where countries adopt both Jus Soli and Jus Sanguinis to determine nationality. The picture is further complicated where the parents of the child are themselves of different nationality. What about a child born on a vessel/airplane of a state outside that state’s territorial jurisdiction? Does this confer nationality? For some countries, the answer is "yes" for other countries, "no". In the effort to help sort out some of the possible complications in determining nationality, international law outlines the following:
Doctrine of Indelible Allegiance
Under this doctrine an individual cannot lose his/her nationality without the prior consent of the state whose nationality he/she possesses. Thus, states that follow this doctrine do not recognize the naturalization of their former nationals in other states. Examples of states that uphold indelible allegiance include France, Greece, Poland and Egypt.
Doctrine of Effective Link
To sort out the various conflicting rules governing nationality for international law purposes, the ICJ in the Nottebohm Case (Liechtenstein v. Guatemala, 1955) ruled that recognition of nationality in international law must entail an effective link or genuine bond between a state and its national. Effective link also applies to corporations and vessels.
Dual/Multiple Nationality
Dual/Multiple Nationality occurs when an individual possess two or more nationalities. This occurs because of differences in principles of jus sanguinis, jus soli and indelible allegiance.
Rules Governing Dual/Multiple Nationality in IL
[Source: Hague Convention on Conflict of Nationality Laws (1930)]
1. A person holding two or more nationalities could be regarded as a national by each of the states concerned
2. A state could not afford protection to one of its nationals against a state whose nationality that person also possessed.
3. In a third state, a person holding dual nationality should be treated as though s/he had only one.
4. A person possessing two nationalities acquired voluntarily was entitled to expatriate one of them, but only with the permission of the state whose nationality s/he desired to surrender.
Loss of Nationality
Nationality could be lost in the following ways:
1. Voluntary expatriation (renunciation of nationality)
2. By marriage: In the past, it was the practice of most states that a woman acquired the nationality of her husband (not vice-versa). Under this policy, an American woman who married a French man automatically became a French national (whether she wanted to or not) and lost her US nationality. In 1926 and 1933, Conventions on the Nationality of Women were drafted, which prohibited gender discrimination in the granting of nationality. Very few countries ratified these treaties.
3. Residence (especially for children). As far as children are concerned, the common practice is that a child born to parents of a particular state (or a child born in a particular state) but residing in a foreign country, has up to the age of majority to re-establish his/her nationality (i.e., the nationality of the parents).
4. Involuntary expatriation: Some states my strip a person of nationality if that person:
a. votes in foreign elections;
b. serves in a foreign army;
c. accepts a high office in a foreign country that is normally reserved for nationals of that country;
d. commits treason.
Statelessness
Statelessness denotes the lack of nationality. Two types of statelessness exist in international law:
1. Defacto Statelessness (Refugees): This refers to persons who do have a nationality but which does not offer them protection outside their own country. It may also refer to people who are involuntarily outside of their country because of violence/persecution. The more common term for defacto statelessness is refugee.
2. Dejure Statelessness: This occurs when an individual is stripped of nationality by his/her state.
Currently defacto statelessness is the more pressing issue and the scope of the problem immense. Worldwide over 33 million people are deemed refugees and thus as defacto stateless persons. (Note: This figure includes the so-called “domestic refugees” or internally displaced persons).
Traditionally, there were no widely accepted rules that offered protection to, or conferred rights (even derivative rights) on stateless people. A stateless person could only be protected in international law if that person acquired a nationality. The 1951 Convention relating to the Status of Refugees is the key international legal document in defining who is a refugee, their rights, and the legal obligations of states. The 1967 Protocol to the 1951 Convention removed geographical and temporal restrictions from the Convention.
The Office of the United Nations High Commissioner for Refugees (UNHCR), which was established in 1950, is the main IGO mandated to lead and co-ordinate international action to protect refugees and resolve refugee problems worldwide. Its primary purpose is to safeguard the rights and well-being of refugees.
The Rights of Aliens
Under traditional international law, concern for the rights of individuals was restricted to the rights of aliens - the nationals of one state resident in another state. Traditional customary international law established an international standard to regulate how states could treat resident aliens called the ‘Rights of Aliens”. This standard falls under the doctrine of State Responsibility, discussed in Unit 7.
Under this standard, although each state was free to establish its own criteria for the admission of aliens, once admitted, the state concerned was obligated to confer certain rights on its resident aliens. Any state that failed to meet this standard was in violation of international law and the government representing that state of the injured alien had the right to extend its diplomatic protection and make a claim against the offending state in order to seek redress. However, for a state to press a claim on behalf of one of its nationals living abroad, it must first establish that that individual is indeed its national.
Thus, although this body of rules was designed to protect resident aliens as individuals, the defendant state's duties were owed, not to the injured alien as an autonomous individual with international legal personality, but to his/her state. In this way, the rights of the alien were not direct but derived by virtue of his/her being represented by a state. The rationale is that the claimant state itself suffered injury when one of its nationals was injured abroad. Two key sets of principles establish the ‘Rights of Aliens”:
Imputability
A state is liable only for the acts against aliens that are committed by people acting in an official capacity (at all levels of government), such as police officers, soldiers, government employees, etc. A state is liable for these official acts only if those acts are imputable or attributable to the state. In other words, a state cannot be held responsible for an injury to an alien committed by a private individuals acting in their private capacity. Under certain conditions, a state can be held liable for the acts of private individuals where:
a. The state deliberately encourages such acts
b. The state fails to take reasonable measures to protect foreigners
c. The state fails to punish the offenders
d. The state denies procedural justice: Failure to provide the alien access to means to seek redress for an injury. Procedural justice refers to due process (e.g. the right to an attorney, innocent until proven guilty, absence of coercion, etc) in contrast to substantive justice (which refers to the actual punishments and sanctions in the event that a violation of law has occurred).
The Minimum International Standard (MIS)
This refers to the principle that an alien is entitled to certain rights irrespective of the living standards and standards of justice in the country he/she resides in. This issue is highly contentious because it rejects the notion that an alien enters a country of his/her own volition and therefore, should not expect to be treated differently from how nationals of that country are treated.
Several countries, mostly Western countries, argue that there is a MIS that applies to all countries irrespective of their level of socio-economic development or type of political and legal systems. Other countries, mostly in the south, argue that there is no such MIS exists - there is only a national standard in which an alien should be treated no differently (no better no worse) than the nationals of that country. In contemporary international law, the existence of the MIS has been upheld in the rulings of the ICJ.
If the problem with the MIS is that it appears to treat aliens better than nationals of a given state, the defense of the MIS is that states should treat their own nationals better, not to treat aliens worse. Indeed, the essence of contemporary Human Rights in international law is to extend the idea of a MIS, which currently only applies to protection of aliens, to the protection of all individuals irrespective of nationality and status and place of residence. We discuss Human Rights in Unit 11.
The idea of a MIS, however, is very vague and ill defined with very few specific rules to establish accurately the standard. Existing rules are based on customs and no treaty has codified these rules. Despite this lack of clarity, there appears to be some agreement that the MIS will be violated where an alien is killed, imprisoned, tortured, has his/her property confiscated or looted with imputability and with a denial of procedural justice. Hence, the MIS applies primarily to Procedural Justice rather than Substantive Justice.
Corporations & Foreign Investment
As with individuals, private organizations (for profit and non-profit) are also assigned a nationality in international law and corporations enjoy the same status as that of a national of a state. It is important to note that in domestic law, not all business enterprises enjoy legal personality. The legal personality of a business enterprise refers to that enterprise possessing juristic competence that is separate from that of the individuals who own the corporation. For example, a business enterprise in the form of apartnership does not possess legal personality in domestic law. Each of the partners is liable for costs/damages should the company fail. In a limited liability enterprise, the corporation as a whole has a legal personality that is distinct from that of its owners (shareholders) or its managers.
Corporate Nationality
There are several ways of determining corporate nationality, which are complicated especially for large Transnational Corporations (TNCs):
1. Domicile: A corporation’s nationality is established by the place/country where it is legally incorporated.
2. Ownership: Nationality of the corporation is established by the nationality of its owners/ principal shareholders
3. Control: Corporate nationality is established by the location of its head office, or the nationality of those who run the corporation – the top executives responsible for day-to-day management, or the place where its principal operations are carried out.
Problems in Determining Corporate Nationality
Several problems may arise in determining corporate nationality especially for TNCs. For large corporations many of which are joint-stock companies that sell shares on international stock markets, a thorny problem of distinguishing between ownership, domicile and control may exist. For example, a corporation may be incorporated in Canada (domicile); have 80% of its stockholders in the USA (ownership), and its senior management (CEO, etc) may be from another country. Is that corporation a Canadian corporation? Currently, most countries employ the criterion of control, rather than domicile or ownership as the key test of a corporation's nationality. However, the practice is not consistent.
For enterprises without domestic legal personality, the firm as a whole cannot be assigned a nationality in international law. Instead, the nationality of the individuals who own the firm is what determines the nationality.
Jurisdiction over Foreign Corporations
The rules governing jurisdiction over alien corporations are in many respects similar to those that apply to alien individuals (Rights of Aliens). In general, only public (state-owned) non-commercial properties are included under the immunities granted under (Restrictive) sovereign immunity (discussed in Unit 7).
Given the concerns expressed about the activities of TNCs in developed and developing countries there have been attempts in the past 40 years to develop specific rules to regulate the international activities of TNCs, to protect host/receiving countries, and to protect the investments of corporations.
Rules to Protect Foreign Investments
Perhaps the most basic international law rule that protects foreign investment is the principle of state responsibility. As with injuries to aliens (imputability and the MIS) a state is responsible, either through an act of commission or omission, for injuries to alien properties. This, however, does not preclude that state from enacting regulations to govern how foreign corporations operate in its terrority.
Many states regulate TNC investment (also known as Foreign Direct Investment -- FDI) through ‘investment codes’ which, for example, restrict the areas into which FDI can operate (e.g., defense-related industries); the requirement that a certain percentage of the corporation should be locally-owned; and rules on the repatriation of profits. However, as with alien property, a foreign corporation may be expropriated and its properties/assets confiscated by the host state if that corporation violates the domestic regulations of the host state. This right is governed by the customary rules of ‘Eminent Domain’.
‘Eminent Domain’
Although states have a duty to respect foreign property, they also have a right to derogate from this principle when the interests of that state dictate (e.g., in times of war or national crisis). Expropriation of FDI is subject to the following rules or conditions:
1. Only governments of sovereign states may expropriate.
2. The property must be within that state’s territorial jurisdiction.
3. Expropriating government must be recognized by the home state of the foreign corporation.
4. Expropriation must not be in violation of any treaty.
5. Expropriation must be accompanied by appropriate compensation. (The amount of compensation is determined by capacity to pay).
6. Expropriation must not be discriminatory (i.e., the same rules of expropriation should apply equally to local and foreign firms).
7. Expropriation can only be justified for reasons of national security, public safety/utility, or national interest.
When expropriation of FDI occurs without compensation, it is known as nationalization, which is illegal. Prominent cases of nationalizations include the USSR’s actions after the 1917 Bolshevik revolution and the Cuban nationalizations after the revolution in 1959.
Nationalization/threat of nationalization emerged as a tool used by governments to control the activities of TNCs. In response, two prominent sets of rules were developed in in 1966 and 1986 under the auspices of the World Bank. A third attempt in 1997 to establish a global regime to offer a broader set of protections and rights for FDI via the Multilateral Agreement on Investment (MAI) sponsored by the OECD, failed.
The first was the creation of the International Centre for the Settlement of Investment Disputes (ICSID) in 1966. ICSID is an affiliate of the World Bank and provides facilities and mechanisms for settling investment disputes (e.g., compensation) through conciliation or arbitration. The ICSID addressed only disputes over investment and thus the issue of investment guarantee was, prior to 1985, carried out purely by the sending state providing guarantees to its nationals investing abroad. However, in 1985, the World Bank also established the Multilateral Investment Guarantee Agency (MIGA). All World Bank member states are obligated to provide guarantees against the arbitrary expropriation of FDI.
Rules to Protect Host/Receiving State
Developing countries tried in 1974 to codify rules to protect receiving states and to control FDI. The UN General Assembly passed resolutions in 1974 as part of the ‘Charter of Economic Rights and Duties of States’ (CERDS) outlining more stringent controls over FDI. The CERDS was part of the New International Economic Order (NIEO) negotiations launched in 1974. Since CERDS is a resolution passed by the General Assembly it does not carry the same weight as a treaty. Several issue or area specific and regional treaty documents have also been ratified, establishing codes for the regulation of MNC investment. For example in 1976, the OECD developed a code for the conduct of TNCs, and in 1981 the WHO-UNICEF code was drafted.
