German Yearbook of International Law / Jahrbuch für Internationales Recht: Vol. 27 (1984) [1 ed.] 9783428458226, 9783428058228

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G E R M A N Y E A R B O O K OF I N T E R N A T I O N A L Volume 27

LAW

GERMAN YEARBOOK OF INTERNATIONAL LAW J A H R B U C H FÜR INTERNATIONALES R E C H T

Volume 27 · 1984

founded by

RUDOLF LAUN

· HERMANN VON MANGOLDT

Editors: Jost Delbrück · Wilhelm Α . Kewenig · Rüdiger W o l f rum Assistant Editors: Klaus Bockslaff · Michael Koch Institut für Internationales Redit an der Universität K i e l

DUNCKER

& HUMBLOT

/

BERLIN

The Editors and the Institut

für Internationales

Recht

do not make themselves in any way responsible for the views expressed by contributors

This Yearbook may be cited: G Y I L 27 (1984)

Communications should be addressed to: The Editors German Yearbook of International Law Institut für Internationales Recht an der Universität K i e l Olshausenstrasse 40/60 D-2300 K i e l 1

A l l rights reserved © 1985 Dundter & Humblot, Berlin 41 Printed 1985 by Vollbehr u. Strobel, Kiel, West-Germany .ISBN

3-428-05822-4

CONTENTS In Memoriam Ralph F. Fuchs

9 Articles

Patterns of Authority in International Law

EDWARD H . BUEHRIG: KLAUS BOCKSLAFF:

1981/82:

A Case History . . . .

38

Α. V. L O W E : International Law Issues Arising in the "Pipeline" Dispute: The British Position

54

The European Community and the U S Pipeline Embargo: Comments on Comments

72

M. MEESSEN: Extraterritoriality of Export Control: A German Lawyer's Analysis of the Pipeline Case

97

Private Law Effects of Foreign Export Controls — An International Case Report

109

C. A. OBEYESEKERE: International Economic Co-operation Through International Law: The IMF Agreement and the Recognition of Foreign Exchange Control Regulations

142

VAGTS:

The Pipeline Controversy: An American Viewpoint

28

. .

DETLEV

F.

The Pipeline Affair of

11

PIETER J A N K U Y P E R :

KARL

JÜRGEN BASEDOW:

STANLEY

G. E. DO NASCIMENTO International Law

Ε SILVA:

The Influence of Science and Technology on 196

Safeguards in International Economic Organizations in Times of Crisis — with Special Reference to the European Economic Community

ALBRECHT W E B E R :

CHRISTOPH V E D D E R :

212

The International Olympic Committee: An Advanced

Non-Governmental Organization and the International Law C O R D - G E O R G HASSELMANN: D O

We Need New

IAEA

Safeguards?

"Observers Signatory of the Final Act" in the International Seabed Auhority's Preparatory Commission

233 259

T U L L I O TREVES:

303

6

Contents

JANUSZ SYMONIDES:

The Legal Status of the Enclosed and Semi-Enclosed Seas

Der Kampf um die Falkland-Inseln — Völkerrechtliche und europarechtliche Aspekte (with English Summary)

315

M E I N H A R D SCHRÖDER:

ZULEEG: Vertragskonkurrenz im Völkerrecht. Teil I I : Verträge zwischen beliebigen Völkerechtssubjekten (with English Summary ) . . .

334

MANFRED

LUDWIG GRÄMLICH:

367

Diplomatie Protection Against Acts of Intergovernmental

Organs

386 Note and Comment The Concepts of Peace and War in International Law . . .

429

L. J A H N : Applying International Law to the Downing of Korean Air Lines Flight 007 on September 1, 1983

444

H E L M U T RUMPF: INGRID

Reports Die Rechtsprechung des Internationalen Gerichtshofes in den Jahren 1983 und 1984

459

Die Tätigkeit des Nordischen Rates im Jahre

483

KLAUS D I C K E :

WULF HERMANN:

DIETMAR BACHMANN /

HANS-HEINRICH GRONAU:

1983

. . .

.

Die Europäischen Gemein-

schaften im Jahre 1983 H E N D R I K ESCHER:

499

Die Tätigkeit des Europarates im Jahre 1983

525

Documentation European Communities: Comments of the European Communities on the U. S. Regulations Concerning Trade with the U.S.S.R

554

Book Reviews DELBRÜCK: Friedensdokumente aus fünf Jahrhunderten — Abrüstung, Kriegsverhütung, Rüstungskontrolle (Kimminich)

563

MACDONALD / JOHNSTON: The Structure and Process of International L a w (Wolf rum)

566

Theory and Practice of H u m a n Rights (Riedel)

568

BÖCKERSTETTE: Aporien der Freiheit und ihre Aufklärung durch K a n t RITTERBAND: Universeller Menschenrechtsschutz und völkerrechtliches Interventionsverbot

Contents VASAK: The International Dimensions of H u m a n Rights MIEHSLER / PETZOLD: European Convention on H u m a n Rights. Texts and Documents ERCMAN: European Convention on H u m a n Rights: Guide to Case L a w MAIER: Europäischer Menschenrechtsschutz. Verhandlungen des 5. Internationalen Kolloquiums über die Europäische Menschenrechtskonvention DRZEMCZEVSKI : European H u m a n Rights Convention in Domestic L a w ERMACORA/ N O V A K /TRETTER:

Die

Europäische Menschenrechtskonvention

in

der

Rechtsprechung der österreichischen Höchstgerichte *

VAN LIER: Acid Rain and International Law (Nascimento e Silva)

580

LAURSEN: Toward a N e w International Marine Order (Wolf rum)

581

DIETL: Dictionary of Legal, Commercial and Political Terms.

Part I I : German —

English (Riedel)

583

PAENSON: English — French — Spanish — Russian Manual of the Terminology of Public International Law (Peace) and International Organizations (Delbrück)

. . . .

OXMAN / CARON/BUDERI: The Law of the Sea: U.S. Policy Dilemma (Wolfrum) RAHMSDORF: Ordnungspolitischer Dissens und europäische Integration (Dicke) CZEMPIEL/LINK: Interventionsproblematik

aus politikwissenschaftlicher,

.

584

.

.

585

.

.

587

völkerrecht-

licher und wirtschaftswissenschaftlicher Sicht (Bockslaff) WALLACE: Legal Control of the Multinational Enterprise (Bockslaff)

589 590

WESTREICHER: Der Grundsatz der Gegenseitigkeit in den Handelsbeziehungen zwischen Industrie- und Entwicklungsländern (Stoll)

592

Books Received

594

List of Contributors

598

In Memoriam Ralph F. Fuchs March 8 r 1899 — February 7,1985 Ralph F. Fuchs, Professor Emeritus of Law at Indiana University School of Law, died on February 7, 1985 at Bloomington/Indiana, USA. Present and former members and students of the Institute of International Law at the Christian-Albrechts-Universität at Kiel are deeply saddened by the loss of a distinguished legal scholar, a dedicated and demanding teacher, and a warmhearted close friend whose forth-right, kind and caring personality has become an integral part of the fond memories of the K i e l law students studying at Indiana University School of L a w as participants of the Indiana University — K i e l University exchange program. M r . FUCHS received a broad academic education in law and economics which later was clearly reflected in his scholarly work, mainly centering around administrative law, particularly the regulation of economic enterprise, but also including extensive writings on antitrust, labor, and constitutional law. H e held Bachelor of Arts and Bachelor of Laws degrees from Washington University in St. Louis, Mo., a Ph.D. i n economics from the Brookings Graduate School, and a J.S.D. from Yale University. Before joining the Indiana University Law School Faculty in 1945, M r . Fudos served at several governmental offices — among them the US Attorney General and the US Solicitor General — , and he also was a member of the Federal Task Force on the Administrative Procedure Act. I n 1960—61 M r . Fuchs shared his rich experience w i t h the Indian Law Institute in N e w Delhi and on his return was a welcome guest at the K i e l Institute. H i s practical experience had a significant effect on M r . Fuchs 3 scholarly writings which excelled by candor and an impressively lucid style as well as their theoretical and practical relevance. The same characteristics marked M r . Fuchs y achievements as an academic teacher. Those of us who have attended his classes and seminars have been deeply impressed by the meticulous coverage of the subjects taught, the demand for excellence and last but not least his objectivity, on the one hand, and his personal care for his students, on the other. M r . Fuchs* merits as an academic teacher were publicly recognized by honoring him w i t h the Distinguished Teaching A w a r d of Indiana U n i versity.

10

In Memoriam Ralph F. ïudos

Many of us w i l l remember M r . Fuchs y friendly "come i n " when calling on his office, and his never ending readiness to help foreign students in adapting to the new environment at I . U . L a w School. His personal care was extended from his office to his home at 1410 E. University St. where generations of exchange students enjoyed the w a r m hospitality of M r . Fuchs and his wife Annetta. After his retirement in 1969 M r . Fuchs kept a keen interest in his field. H e served as a Visiting Professor at his alma mater i n St. Louis where he also received an honorary Doctor of Laws degree in 1978. U n t i l a few months before his death M r . Fuchs regularly attended his office at I . U . Law School and continued his scholarly work as well as his personal and academic guidance of the exchange students from the K i e l Institute. We shall remember Ralph F. Fuchs w i t h high esteem and deep gratitude. Jost Delbrück

ARTICLES

Patterns of Authority in International Law Edward H . Buehrig Politics in the twentieth century has wrought death, destruction, and flight into homelessness on a scale unsurpassed. I n other respects too, the twentieth century has been unprecedented. Technology penetrates every aspect of life: health, transportation, communication, and production (for war and for peace) ever more ingenious and profuse. N o less consequential than the technical applications of science are its philosophical implications. Challenged and confused, traditional ways of comprehending the human odyssey react w i t h fundamentalist fervor. What, then, has been the effect of such tremendous flux — material, philosophical and political — on the allocation of authority i n the twentieth century? Furthered and exacerbated by t w o world wars, vast shifts of power and authority have radically changed the political landscape w i t h i n and among nations. Since century's beginning, the number of states has more than tripled. But that is not the whole story; international upheaval bespoken by the map is further compounded by turmoil at the domestic level. Among the governments at century's turn only a few still exist unchanged. Following the first World War, a new round of governments fared no better. N o r have today's postwar plethora of governments. Many have been replaced not only once but twice or thrice. Yet, despite all, the Western State System still constitutes the basic pattern of authority. Harbinger of an emerging secularism, the System originated in Europe and next spread to the United States and the N e w World. N o w encompassing the non-western world as well, its triumph — at least in outward appearance — is complete. I t is a simple system. Concerned w i t h jurisdictional prerogatives, i t confines authority w i t h i n territorial limits and posits equality as between territorial entities. Fundamental to classical international law, these principles are still basic to today's allocation of authority. As in the past, international law — poorly suited to deal w i t h matters of substance — favors the separateness rather than the interdependence of states. T o be sure, the traditional preference for purely jurisdictional questions has given ground t o the increasing com-

12

Edward H. Buehrig

plexity of international relations. Yet the skeletal framework remains unchanged; the traditional law is still point of departure for any inquiry into today's pattern of authority. Examination turns first to the inner nature of the territorial entities to which authority is attributed; second, to the challenge posed by ideology to the secularism inherent i n international law's assumptions about the nature and allocation of authority; and third, to the characteristic features of international organization as the institutional response to the growing interdependence of states. I. That international law should cling to its initial emphasis on the separateness of authorities is not due to cultural lag alone. Sluggish movement toward the combination of authorities, or the superimposing of higher authority, reflects something more. I t comports w i t h the great diversity among the some 160 members of the international community: the vast differences, for example, between the Soviet Union and Great Britain, the United States and Mexico, or Japan and China. Paradoxically, the function of international law is not only to p u l l the w o r l d together but to keep unlike things apart. Too much centralization would be as hazardous as too little. A t the inception of the Western State System the unity of Christendom was sacrificed to its pacification. I f territorial authorities equal to each other were then a help to toleration, how much more so are they in a w o r l d that has only just crossed the threshold of a common existence. International law has accommodated a succession of extreme differences among its units of authority. A t the outset i t abandoned religious conformity as a test of legitimacy. I t then weathered the transition from dynastic to democratic rule. Today international law — profligate of statehood's unique privileges — encompasses regimes of every variety, outgrowths not only of Western but of all civilizations. H i g h l y permissive, qualifications for membership i n the international community — even as regards such essentials as size of population and territory and efficacy of administration — have grown less rather than more strict. To be sure, a substratum of acceptable behavior is attempted through treaty-law defining basic human rights. But, w i t h the exception of the European Convention on the Protection of Human Rights and Fundamental Freedoms, instruments for disciplining governments in this regard are ineffectual. Indeed, sovereignty can and does shield misconduct of monstrous proportions. Idi Amin endangered neither Uganda's membership in the international community nor his own prerogatives as head of state. N o t surprisingly, boundaries between entities of such great diversity — even enmity — are not explicable in terms of general and uniform law. One goes, not to jurisprudence, but to history for an understanding of the political map.

Patterns of Authority

13

True, territorial disputes for the most part admit the possibility of judicial settlement — on the basis, however, of rules not of universal but local applicability, such as terms of a treaty registering diplomatic compromise or a peace settlement. Nation-state is a notion of only limited relevance — for most states a misnomer. Moreover, where nationhood exists, the elements of cohesion are nowhere the same — encompassing American heterogeneity no less than Japanese homogeneity. Nation-state is a political, not a legal, concept. The same difficulty of juridical precision afflicts the term self-determination. So broad a license to statehood is more permissive than regulative. Its prominence as the initial provision of the United Nations Covenant of C i v i l and Political Rights ( " A l l peoples have the right to self-determination. B y virtue of the right they freely determine their political status and freely pursue their economic, social and cultural development.") accords w i t h the period of decolonization, whereas today's climate has changed. Expediency now favors territorial integrity. The very arbitrariness of Africa's political map, reflecting (as does the map of L a t i n America and the Middle East) the different sovereignties and administrative divisions of the colonial era, prompted the members of the Organization of African U n i t y — once they were independent — to pledge "respect for the sovereignty and territorial integrity of each memberState and for its inalienable right to independent existence." II. Neither term, neither nation-state nor self-determination, however undemanding of legal precision, affords rationale enough to explain even so much as the map of Western Europe. Even there, where the Western State System began — even after many wars fought over territorial questions — boundaries fall short of harmonious alignment w i t h self-determination. Moreover, religion and politics still mingle, dramatically so i n Poland. But no longer is religion critically important (Northern Ireland being an exception) to the international allocation of authority. Catholicism has, perforce, retreated before nationalism, indeed n o w welcomes the latter as ally against communism. Diminished in power and authority, the Church nonetheless must be counted as a member of today's international community. Sovereignty attaching to the Pope and to the Vatican C i t y is further manifest i n such immunities from territorial authority as inhere i n the Church's bureaucracy and properties, and i n the diplomatic status of representatives sent and received by it. Like the Church — sharing w i t h i t essentially the same privileges and immunities — the United Nations too has personality under international law, though, unlike the Church, its status is bequeathed not by history but by treaty. Yet, however unwritten the Church's sovereignty, the United Nations cannot but envy its ability to keep up the struggle w i t h territorial authority.

14

Edward H. Buehrig

O f course, in the West the Church has long since given ground in a transition both fundamental and traumatic: from universal authority based on God, to parochial authority territorially confined among equals based on the People. International law is consonant w i t h the secularism inherent i n the latter notion, that of popular sovereignty, whereas, by virtue of the universalism inherent i n doctrinal truth, i t is at odds w i t h religious assumptions about the nature of authority. Even so, ideology has not ceased to challenge territorial rule. Traditional religion is a potent force i n the Middle East, while communism aspires to a new universalism of its own. The map of the w o r l d is deceptive. Different colors separated by boundary lines fail to register the tremendous tensions w i t h i n and across borders over the question of who has license to do what where. I n the Middle East the suggestion of nation-states conveyed by the variously colored entities is particularly misleading. People there, however sophisticated about their past, cannot escape its tyranny. Identity, based from time immemorial on religion, resists the secular homogenization of nationalism. For centuries past, the certitudes of orthodoxy, whether Christian, Judaic, or Islamic, served not only to assuage cosmic anxiety but constituted the very foundation of society's governance. I n the West, transition to secular, territorial authority was facilitated by a political philosophy that already in Medieval times had sought to distinguish between — and to placate — the realms of the spiritual and the secular. But such a distinction is alien to the East, all of whose great faiths — jealous guardians over the whole of life — have regarded politics as religion incarnate. Instead of submitting to the discipline of territorial authority, the religious (and ethnic) mosaic of the Middle East modes the "national" boundaries so recently superimposed upon i t : none dating before the first, most since the second, W o r l d War. Theories are formed and constitutions devised seeking to reconcile the philosophy and institutions of a past era to the modalities of the Western State System. But w i t h indifferent success. The skepticism and tolerance essential to pluralistic politics (whether domestic or international) is i n short supply. A l l governments — w i t h i n and across their borders — are caught in treacherous waters. T w o of them, the Lebanese and the Iranian, have foundered. Failing to build a regime outside religion, the former collapsed into chaos, while the latter succumbed to the tyranny of fundamentalism. I n Lebanon, territorial gave way to personal jurisdiction through implosion. I n Iran the opposite occurred. There the Shi'ite faith — secure enough at home to persecute rival religions — scoffs at territorial confinement, proclaims solidarity w i t h fellow believers abroad, and preaches common allegiance among all persons possessed of the truth. Other governments in the Middle East — all vulnerable to the fate of a Lebanon or an Iran — nervously watch their populations and husband

Patterns of Authority

15

military power against threats internal and external, while the wealthy among them warily purvey their largess. International law is a poor fit; today's tenuous allocation of authority in the Middle East portends more turmoil i n the future, not less. International law fits poorly elsewhere as well. Communist truth, to be sure, is not metaphysical but w o r l d l y ; however, like religion, i t too collides w i t h territorial authority. Proclaimed as science, it depicts the historical process as eventuating in such justice and harmony as to render sovereignty anachronistic, causing the state to wither away. But not before a final clash w i t h the Western State System — such as began w i t h the Bolshevist revolution. The scenario assigns one last role to authority. N o longer a prop holding privilege and exploitation in place, it becomes the instrument for liquidating the old order: legitimized not by subterfuge — neither by God nor People — but by the Proletariat. So based, the Comintern served as general staff of world revolution. Erected on the loyality and obedience of believers, this supranational organization exercised personal jurisdiction and was subversive of territorial rule. However, long before its demise in 1943, the Comintern was corrupted by Russian nationalism. After the war, the Cominform — much truncated in membership and function — attempted a common focus anew, only to be frustrated by nationalism in its turn — notably by Tito . Meanwhile, Moscow, as cynosure of the faithful, succeeds in attracting the loyalty of some parties beyond its military control. Others, however, have apostasized, but not just from nationalism. I t is not alone separate national identities that characterize Euro-communism. Equally significant is its yielding to the pluralistic politics of the West — so radical a concession to democratic procedures as to arouse suspicion of maneuver for tactical advantage. Yet, ineluctably, the pretensions of proletarian dictatorship invite ridicule. T o claim the right of suppression against one's opponents in the name of a correct reading of history is arrogant conceit, while submission to Moscow's direction is demeaning, suggestive less of sincerity than expediency. For its part, Moscow, albeit grudgingly, tolerates autonomy in its sister parties, even to some degree those of Eastern Europe. International meetings of communists, resembling less than ever councils of religion, now conform more nearly to the modalities of the international conference, that artifact of tlie Western State System characterized by representation along national lines among equals. O n the plane of government-to-government relations (outside Eastern Europe), Moscow does not resist but champions the doctrine of equality. W i t h

16

Edward H. Buehrig

legalistic rigor — guardian as it were of the classical purity of the Western State System — i t exploits international law's bias favoring the separateness, not the interdependence, of states. Even i n Eastern Europe the formalities are those of diplomatic relations between independent states. I n short, communism comes o f f second best; as between it and the Western State System, the latter is the Procrustean bed. But there is tension. Claim to historical truth, even i f waning i n intellecual persuasion, still, perforce, serves communist regimes as their badge of legitimacy. Central to this function is the positing o f two worlds, qualitatively different — such as is inherent in religious thought. Traditional Islamic law is quite explicit: Dar-al-Islam designates that part of the w o r l d that has submitted to the w i l l of God, Dar-al-Harb that part yet to know salvation, literally the Realm of Peace and the Realm of War. A similarly invidious distinction — the "peace zone" as against the "imperialist camp" — attributes a difference between the communist and non-communist worlds, a difference that cannot be resolved by policy since i t turns on historical process beyond the reach of subjective intent. Moreover, truth is sacrosanct; apostacy cannot be condoned. The juridical effect of such an ideologically differentiated w o r l d is evident i n the Brezhnev Doctrine. Czech sovereignty is subordinated to the larger w o r l d of socialism and, specifically, to the Soviet Union as the guiding force of w o r l d revolution. Beyond the ideological gloss that communism places on Russian domination of Eastern Europe, its impact on the Western State System has occurred i n other ways less explicit. T o deny the justice of non-communist authority attributes an enmity to the two worlds that is ineradicable, that enhances fear and condones suspicion, and that erodes the law's inhibitions. The shocking deterioration i n the institution of diplomacy since the first W o r l d War — the subordination of means to ends — is owing to causes deeper than the temptations afforded by the revolution in electronics alone. III.

Political ferment has not failed to revive the historically familiar norm of ideologically based authority. However, the recrudescence of fundamentalist religion does not seriously challenge the Western State System, nor does communism's latter-day universalism. Meanwhile, the cause of w o r l d federalism stumbles not only from lack of fervent belief but from a diversity too great for i t to encompass. Yet the complexities of global interdependence have not been without response. Public international organization endeavors to tackle them institu-

Patterns of Authority

17

tionally: from the standpoint of the international system as a whole. A t t r i t i o n takes its toll, but meanwhile new organizations form. The net result is a constantly increasing number, now some 300 or more (universal, regional, and bilateral). The phenomenon — interposed as i t were to rescue territorial authority from the consequences of the scientific age — does not challenge, but supports, the Western State System. The structure is ramshackle; yet, however circumspectly international organizations thread their way w i t h i n the interstices of territorial authority, some among them — along w i t h governments and private entities — are important actors on the international scene. We are witness to a lateral expansion of the international community that includes public international organizations along w i t h states. Through the instrumentality of the headquarters agreement, the host country withdraws enough sovereignty to allow international organization autonomous control over its precincts, while the privileges and immunities accorded the international civil servant afford further insulation against territorial authority. International organization enters into formal agreements w i t h states, others of its kind, and private parties. Before national courts it has access as plaintiff, while i t is immune to suit as defendant. So defined, membership in the international community — coordinate w i t h that of states — affords a point of departure of considerable versatility. Unlike the state, international organization is not self-generating, nor is it, like the Church, a fixture of history. Such authority as i t wields depends ultimately on the agreement of states. Judicial settlement of disputes is binding on the parties, but only by virtue — i n one form or another — of their prior consent. The Statute of the W o r l d Court does not itself — without supplementary action on the part of its members — provide for compulsory jurisdiction. H i g h l y conservative i n other respects as well, the Court admits only states as parties in contentious cases, excluding both private entities and international organizations. Yet international law does not preclude flexibility i n these matters. W i t h either government or the European Commission on H u m a n Rights acting as surrogate, private grievances may be brought before the European Court of H u m a n Rights; government as defendant, however, is obliged to respond only by virtue of having previously so opted through a provision contained i n the founding treaty. O n the other hand, members of the European Community are subject without qualification to the compulsory jurisdiction of the Court of Justice of the European Community in the broad range of matters treated i n the Community's founding treaties. Most advanced of all international courts, its jurisdiction is not only compulsory; parties w i t h standing before i t include, along w i t h states, organs of the European Community, corporate entities, and natural persons.

2 GYIL 27

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Edward H. Buehrig

Adjudication is international organization's most authoritative act. Legislation trails considerably behind. O f course, numerous treaties legislative in character are negotiated i n the context of the United Nations and other international organizations, e. g., the Convention on the Status of Refugees or the L a w of the Sea Treaty. They bind, however, not by the authority of international organization, but through ratification by the signatories. There is, to be sure, the phenomenon of legislative effect by indirection. Through custom and usage, an exclusive economic zone has emerged from the United Nations Conference on the L a w of the Sea, even though the treaty so providing is not yet i n effect. Quite different i n procedure from that of treaty, the General Assembly resolution — though typically no more than recommendatory — can also be legislative in character. The two-thirds rule governing voting on "important questions" in today's Assembly differs importantly from the League's unani m i t y rule: minimal dissent can no longer thwart decision. Indeed, the corporate character thus afforded i n the making and execution of policy is the single most important difference between Covenant and Charter. Included w i t h i n the scope of majority vote is the allocation of rights and duties i n the f u l l legislative sense. By resolution, the General Assembly has allotted sovereignty and governed territory. A u t h o r i t y to do so has been (1) delegated by governments, or in other circumstances, (2) claimed as inherent. The future of Italy's African colonies was decided by the General Assembly: independence for Libya by 1 January 1952, independence for Somaliland after an interval of Italian administrative responsibility under the Trusteeship System, and federal association of Eritrea w i t h Ethiopia. The power to do so was conferred by the Italian peace treaty i n the event — which materialized — that the victorious powers failed to settle the matter among themselves. The General Assembly's task in the case of West N e w Guinea was different: not to legislate sovereignty, but — at the behest of the Dutch and Indonesian governments — to govern territory. This i t did for a period of seven months through the instrumentality of the United Nations Temporary Executive Authority ( U N T E A ) . Avoidance of direct transfer of the disputed territory propitiated Dutch chagrin and helped to promote the fiction that Indonesian succession accorded w i t h Papuan wishes. Serving essentially as a face-saving device, yet U N T E A exercised full territorial rule — executive, legislative, and judicial — from October 1962 to M a y 1963. As successor to the rights and duties of the League of Nations under the mandates system, the United Nations approached the Palestine question on the assumption of inherent authority to allocate sovereignty and exercise territorial rule. Though express articulation of the assumption was avoided, the General

Patterns of Authority

19

Assembly's comprehensive resolution of 29 November 1947 was, in form and detail, an attempt to reallocate authority in Palestine by legislative act. Partition provided for a Jewish and an Arab state and, pending their formation, for territorial rule by the United Nations on an interim basis. Jerusalem and its environs were to be permanently under United Nations sovereignty — i n anticipation of which a constitution was drafted by the Trusteeship Council for adoption by the General Assembly. I f the resolution of 29 November 1947 had succeeded, so ambitious a precedent would have redounded greatly to the prestige and authority of the United Nations. Actually i n M a y 1948 the General Assembly retreated all the way from legislation to a strategy of mediation, which — between truce and peace treaty — was successful in achieving agreed-upon armistice lines. But they did not hold. I n time, moreover, the innovation of the United Nations peacekeeping force lost its impact. Increasingly, American diplomacy burdened itself w i t h a role conceived originally as the responsibility of the international community acting through the United Nations. Retrospectively, unwillingness t o make explicit claim to legislative authority in the Palestine case was remedied when, in the parallel case of Southwest Africa, an Advisory Opinion of the W o r l d Court (1971) backed the termination of South Africa's mandate by General Assembly resolution (1966). The Assembly went a step further when i t empowered the Council for Namibia — a subsidiary organ of its creation — to arrange for a constitution and, pending independence, t o administer the territory. Actually the Council has never set foot in Namibia; South Africa bars the way. Meanwhile, however, i t has asserted a presence in the international community by issuing travel documents to Namibians and attaining associate membership i n various international organizations. Frustated both as legislator and mediator, the United Nations has nonetheless — through General Assembly majority — become heavily involved as a partisan of the Palestinian and Namibian causes, bestowing observer status on both the Palestine Liberation Organization and the Southwest African Peoples Organization. I t is a question, however, whether the taking of sides serves t o enhance prestige when majority vote is incapable of wielding the authority that i t invokes. I n a less strict sense, legislation is quite w i t h i n the means of an international body: not as authority to allocate rights and duties among subjects of international law, but in the sense (known also to domestic legislatures) of management over a bureaucracy created, financed, and instructed by majority vote. The European Parliament is such a body, but only in the limited degree to

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Edward H. Buehrig

which i t has authority over budgetary questions, for thus, only by indirection — despite its name and election by popular vote — does i t have any control over policy. The structure, powers, and procedures of the Community's governing apparatus rest directly and exclusively on the founding treaties (as amended). The General Assembly of the United Nations affords a considerable contrast. By two-thirds vote it decides the amount and purpose of all expenditures. N o less consequential is the authority conferred upon it by Article 22 of the Charter to establish subsidary organs. Naturally, among such are bodies internal to the Assembly's own operation, such as the International Law Commission or the Advisory Committee on Administrative and Budgetary Questions, while, external to itself, the Assembly positions agents i n diplomatic contact w i t h governments: Count Folke Bernadotte , for example, as mediator i n the question of succession to British authority i n Palestine. Such entities remain in direct association w i t h the General Assembly. More significant as a legislative act is the creation of corporate beings by resolution in lieu of treaty. The General Assembly can, of course, as readily abolish such entities as create them, but, even i f less firmly established than their treaty counterparts, they are highly autonomous. Sharing the privileges and immunities of the parent organization, each has its own executive and secretariat, its own budget and means of making policy, and the legal capacity to enter into relations w i t h other participants in international relations. Such an entity governed West N e w Guinea, while in the Palestinian and Southwest African cases territorial authority was similarly assigned to subsidiary organs — though in the former instance unsuccessfully, and, until now at least, in the latter instance as well. Resolution-based international agencies span a wide range of functions. A t opposite ends on a continuum are territorial rule and the purely deliberative role of such a body as the United Nations Conference on Trade and Development. I n between is the rendering of benefits. A function common to administrative agencies both international and domestic, some benefits (speaking domestically for the moment), like a postal service, are available for the paying, while others, like information on the weather, simply for the taking. Another k i n d of benefit can at the same time serve as a potent strategy of governance. Discretionary on the part of the benefactor, i t induces actions through reward in contrast to the inhibitory sanctions characteristic of criminal and c i v i l law. I n short, i t achieves its effect by dangling the carrot. Thus the American federal system leaves education to the exclusive authority of the states; i n this area Washington is powerless to prescribe rights and duties. Yet, through the conditional grant, in this, as in many other areas in recent

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years — areas in which the federal government cannot command but only induce — Washington's influence has grown beyond all precedent. Analogous to government benefits, those rendered by international administrative agencies are also of t w o kinds. Some, like the research on international organizational problems conducted by the United Nations Institute for Training and Research, or that pursued b y the United Nations University on problems of global concern are nondiscriminating as to beneficiaries, while others, like the technical assistance provided by the United Nations Development Programme, differentiate among recipients, and thus the benefit is discretionary. The latter — the discretionary benefit — is capable of exerting a more than passive influence on international relations. Being conditional, i t requires reciprocity of the client on pain of initial refusal or subsequent withdrawal of a benefit. Financial benefits purveyed at the discretion of the W o r l d Bank and the International Monetary Fund make these insitutions the most powerful of the benefit-rendering international agencies. Both weigh heavily i n the world of diplomacy and, at the domestic level, in the fiscal and monetary policies of their clients. Needing a high degree of identity and independence, both are treaty-based. Moreover, the Monetary Fund performs a quasi-legal regulatory function which only a constitutional treaty is capable of specifying and legitimizing. (As is true likewise of the General Agreement on Trade and Tariffs, and also of a body such as the European Commission, whose regulations in certain matters are binding i n international law.) The presumption that resolution-based agencies can prescribe domestic law — in the process of disposing of former League of Nations mandates — does not hold for international law. Paradoxically, at the international level legal injunction is not available to the resolution-based agency. Through the conditional benefit, however, i t can become a point of tension — a political nexus — between its discretion and a client's demands. The leverage thus afforded is considerable in the example of the United Nations H i g h Commissioner for Refugees ( U N H C R ) , while like potential — in different circumstances — is to little avail i n the case of the United Nations Relief and Works Agency for Palestine Refugees ( U N R W A ) . The latter, a subsidiary organ founded by the General Assembly in 1949, provides welfare, health care and education for Palestine refugees on a large scale (e.g., the educational system comprises more than 300,000 pupils and some 9,500 teachers). Though normally governmental, these tasks are performed by U N R W A without benefit of territorial authority (e. g., without its own police power) except for the exclusive control that i t asserts over its own administrative installations. As for personal jurisdiction, U N R W A has none

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over its clients. Over its own staff, on the other hand, i t asserts that degree of control vouchsafed to it by virtue of the international c i v i l servant's functional independence from territorial authority. The legal status of U N H C R is no different. I t too is limited i n jurisdictional scope, both territorial and personal. Legal advantage cannot, therefore, account for U N H C R ' s frequent success in dealing w i t h refugee situations compared to the persistence of the Palestine refugee problem. The differential between the agencies is partly psychological. Whereas the Palestine refugees have never been reconciled to exile, refugees falling to U N H C R ' s jurisdiction typically welcome solutions other than repatriation. The agencies also differ i n bargaining power. U N R W A provides extensive services at its own expense; yet, thrown into the breach of a desperate situation without prior commitments and understandings w i t h the host governments, i t struggles constantly to maintain a footing — its leverage further diminished by United Nations' acceptance of the Palestine refugees as its own responsibility. For its part, U N H C R also operates in highly charged situations; however, minimizing direct involvement, i t depends on voluntary agencies and governments to carry out the concrete tasks of relief, rehabilitation, repatriation, and resettlement. A l o o f from actual operations, U N H C R serves as financier, coordinator and catalyst on its own terms. IV. Such as then existed, international organizations prior t o the first W o r l d War were hardly of a character to pose the question of legal personality. Serving merely to facilitate diplomatic contact, they lacked corporate capacity even as regards internal matters such as budget and personnel: the Universal Postal Union was run by officials supplied and housed by the Swiss government, while still other secretariats were provided by governments i n rotation. International adjudication had not yet been institutionalized — the Hague Permanent Court of Arbitration was neither permanent nor a court. The multilateral legislative treaty was not unknown, but, even as management over a bureaucracy, there was no suggestion of legislative capacity inhering i n international organization as such. Benefits were rendered; however, the strategy of the conditional benefit was as yet unthinkable. Needless to say, states alone were regarded as subjects of international law. The League of Nations made a quantum leap. Largely through custom and usage — w i t h some textual help from the Covenant — the evolution of an international personality came to be acknowledged. I n function, too, the League differed radically from its precursors. Under w h i p o f the first W o r l d War, Article X proclaimed international organization's purpose t o be nothing less

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than peace itself. Yet, while on other grounds the League gained recognition as a subject of international law, corporate capacity in the carrying out of collective security was hardly discernible, neither as regards sanctions against aggression, peaceful settlement of disputes, nor control over armaments. The latter was relegated to diplomacy no different i n format from the prewar conferences at the Hague. O n the other hand, pacific settlement was the special responsibility of the Security Council as a body. However, no decision was possible — in no event action binding on disputants — short of unanimous vote: except for obligatory abstention i f a Council member was a party. The World Court was established as a permanent institution capable of governing itself, but its jurisdiction over disputes was subordinated to the sovereignty of its members. Article X of the Convenant — the third prong of collective security's threepronged thrust — was regarded by Woodrow Wilson as the centerpiece of a new world order, yet i t aroused the very misgivings that gave substance to the Senate's rejection of the Versailles Treaty. N o r did i t escape critical scrutiny by planners of the United Nations, who envisaged departure from Article X in t w o respects: one less exacting in obligation, the other more so. The Article's promise to preserve — not just to respect — territorial integrity and political independence The Members of the League undertake to respect and preserve as against external aggression the territorial integrity and existing political independence of all members of the League. was regarded as an imprudent underwriting of the status quo inasmuch as shifts in sovereignty and the rise and fall of governments are the very stuff of history. Exception was also taken to Article X ' s second and concluding sentence. Anticlimatic after the sound of trumpets i n the opening sentence, i t was, in any event, regarded as too weak: " I n case of any such aggression or i n case of any threat or danger of such aggression, the Council shall advise upon the means by which this obligation shall be fulfilled." The Council, i n short, was without corporate authority; i t remained for each member of the League to decide whether aggression had occurred and, i f so, to assess its own obligation in the premises. Picking up where Wilson left off, the United Nations Charter returned to the pursuit of collective security. Seeking to improve on the past, the ambition was to constitute a center of authority w i t h enough force to maintain order, yet flexible enough to accommodate change. A r t f u l l y phrased, paragraph 4 of Article 2 of the Charter ( " A l l Members shall refrain i n their international relations from the threat or use of force

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against the territorial integrity or political independence of any state, or in any other manner inconsistent w i t h the Purposes of the U n i t e d Nations."), while i t outlaws force as a unilateral instrument of policy, allows for its legitimacy in either of two circumstances. Force is consistent w i t h the purposes of the United Nations i f used in self-defense, or as a sanction duly authorized by the Security Council. (The peacekeeping force, i t must be noted, is not coercive and is not a sanction, nor is i t in the sole purview of the Security Council to the exclusion of the General Assembly. Establishment of such a force is yet another example of legislative enactment of a subsidiary organ.) O f course, the right of individual self-defense is axiomatic — a right that Article 51 of the Charter need hardly have reiterated. Associated w i t h it, however, is a concept hitherto unknown to international l a w : the right, not of individual, but of collective self-defense. Inclusion of this novelty in Article 51 was designed to exempt enforcement action by the Organization of American States from the requirement of prior authorization by the Security Council. But the exemption could not escape more general application. "Collective self-defense" also serves to remove N A T O and the Warsaw Pact from the surveillance of the Security Council. Thus military alliance, the very antithesis of collective security, having been ejected through one door, reenters in disguise through another. Invocation of sanctions is the responsibility of the Security Council. T o that end the Council, unlike its League counterpart, is an avowed corporate body. Unanimity is never the rule among its fifteen members, but only a majority of nine. By such vote — i f all five permanent members concur — resort to economic sanctions (e. g., against Rhodesia) binds all members of the United Nations (Article 41), while, similarly, Article 42 confers corporate character on the Council in the use of force. Facilitation of the latter sanction is envisaged in Article 43. There the Security Council is seen as party to agreements whereby governments place armed contingents permanently at its disposal. These, under the Council's direction — w i t h the advice and assistance of the M i l i t a r y Staff Committee — were to weigh i n the balance of international politics as a deterrent, or, failing to forestall aggression then to defeat it. But the concurrence of the five permanent members necessary to so equip the Security Council has never been attainable. The agreements have not materialized; the M i l i t a r y Staff Committee has languished; and questions "relating to the command of such forces" that were to be "worked out subsequently" have never had to be faced. I n lieu of such infrastructure, the United States was deputized by the Security Council to organize resistance to N o r t h Korean aggression, while, i n still other circumstances, force has been used unilaterally w i t h no color of authority whatsoever from the Security Council. Intervention

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in Vietnam and Afghanistan was — allegedly at least — at the invitation of the respective governments. Peaceful change is no less relevant to collective security than order. I n t i m ately related, they pose a dilemma that the Charter resolves i n favor of order: the erection of corporate structure to that end has little counterpart on the side of pacific settlement. To endow the Council thus — primarily as policeman — may seem to be the wrong or, in any event, the more difficult alternative. Yet, the outcome of the past forty years would hardly have been different had pacific settlement been more highly structured. Indeed, failing as the arbiter of force in international politics, the Security Council is doubly palsied as midwife to change. Decision by the Security Council in "procedural matters" is by affirmative vote of any nine members. Otherwise a permanent member retains the veto, unless i n the matter of pacific settlement it is itself a disputant. Council responsibility then takes precedence, obliging the permanent member to abstain. Otherwise, there is no corporate nexus between the Security Council and pacific settlement. Even as regards legal disputes, the Council can only recommend that the parties go to the W o r l d Court. As regards political disputes — disputes that seriously challenge the status quo — the Council's competence — again — is limited to making recommendations: under Article 36 recommendations as to methods of settlement, or, in the circumstances of Article 37, recommendations as to substance. However, though the Council cannot decree resort to judicial settlement in legal disputes or, in political disputes, impose terms of settlement, it does not follow — assuming consensus among the permanent members of the Council — that the Charter precludes all possibility of effecting peaceful change. As a political body, the Council can admit considerations of justice — or of compromise, or even expediency — into such substanstive recommendations as it might choose to make, while at the same time posing threat of sanctions against a recalcitrant's resort to force. T w o omissions in the Charter look in this direction. By refusing to define aggression, the Charter maximizes the Council's judgmental discretion, while at the same time (departing pointedly from Article X of the League Covenant) i t neglects to oblige the Council to preserve territorial integrity and political independence. Despite the centrality of peace in Convenant and Charter alike, this is as close as international law comes to a pattern of authority aimed at accommodating order and change. O f course, i t does not follow that their blending w o u l d be any better assured by a Security Council possessed of greater corporate capacity. Mere juridical nicety is a variable of little weight in today's riven world. We must conclude that collective security, more than elusive, is illusory.

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V. What have the extraordinary circumstances of the 20th century meant for the international pattern of authority? Still basically intact in its fundamental assumptions of territorial authoriy among equals, the Western State System has proliferated in membership beyond all prediction, has withstood the ideological challenge of communism, and, even i f annoyed, is not seriously threatened by fundamentalism. Meanwhile, two w o r l d wars have greatly stimulated attempts at institutional reform; but not i n a manner to change the basic principles of the traditional law. H a r d l y a radical departure, yet international organization represents a collective approach to common problems. W h a t of its effects? Federalism world-wide is unattainable. Yet the world's vulnerability to disaster is not owing simply to such lack, nor, by the same token, would institutions even as advanced as those of federalism afford certain guarantee of peace and prosperity. Circumstance and policy must also be taken into account. Whether over and above institutional arrangements or i n defiance thereof, they intervene in international (and domestic) affairs for better or for worse. The contrast is striking between the world since 1945 and the unmitigated disaster — economic and political — of the interwar period. To be sure, today's is a violent world, yet the past four decades have enjoyed overall stability and have k n o w n periods of economic dynamism. These years have also seen marked progress i n the institutional approach to international relations. Matters of trade, investment, monetary liquidity, communications, transportation, health and much else have been addressed by a variety of international organizations: among others, by the European Community and the United Nations system. T o an extent these advances have entailed injunctions of international law, while at continuum's other end is cooperation without legal obligation. Emphasized here has been the important area i n between, the area of the conditional benefit, financial and otherwise. Treating problems thus — systemically — international organization constitutes a new dimension i n international relations, but i t cannot alone be credited w i t h today's improvement over the earlier period. Its bearing on economic and technical matters has been substantial. Yet, recalling that the main assault at San Francisco was on politics per se, one cannot but note how small the effect of the United Nations on the incidence of violence among nations. N o r , compared t o the balance of terror, can one give much credit to the United Nations for preventing the many localized eruptions from coalescing into a general explosion.

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The international system is highly complex, so much so that its workings cannot be known w i t h very much confidence. I t is enough to say that law and organization are variables i n a system whose fortunes turn as well on the chance of circumstance and the problematical nature of policy, both diplomatic and military. A

Bibliographical

Note

The Tentative Proposals submitted by the United States to the British and the Russians in July 1944 for consideration at the Dumbarton Oaks Conversations represent the m i d w a y point in American drafts of a prospective United Nations: midway between earlier drafts designed (in comparison to the League Covenant) t o close, or greatly narrow, gaps in international authority to deal w i t h armaments, pacific settlement, and sanctions and the Charter's final giving up on the attempt, except for what remained of the Security Council's corporate authority w i t h respect to sanctions. A n account of the Tentative Proposals — before, during and after Dumbarton Oaks — is given in my chapter, "Charter Dilemma: Order versus Change," in Lepawsky , Buehrig , Lasswell (eds.), The Search for W o r l d Order, N e w Y o r k 1971. The Palestine question has dogged the United Nations from the outset — w i t h baleful effect. Following the abortive legislative strategy, further attempts by the Organization to deal w i t h the matter have declined i n aspiration and influence, while, still more regretably, enmities over Palestine have spread w i t h corrosive effect to the whole of the United Nations. For the considerable impact of the Palestine question on the fortunes of the United Nations, see my article, The U N , the US and Palestine, in: The Middle East Journal vol. 33 (1979), 435—443. I treat the subsidiary organ as a legislative act of international organization in: The Resolution-Based International Agency, in: Political Studies vol. 29 (1981), 217—231 while U N R W A in particular — a resolution-based agency unique even among its k i n d — is the subject of m y book, The U N and the Palestinian Refugees: A Study in N o n territorial Administration, Bloomington 1971.

The Pipeline Affair of 1981/82: A Case History Klaus Bockslaff When President Reagan on December 30, 1981 announced his decision 1 to restrict the export of U.S.-origin oil and gas equipment and technology as well as to suspend all licensing of controlled exports to the Soviet Union, he 1 Federal Register (Fed.Reg.) vol. 47 (1982) 141 (Jan. 5, 1982) reprinted in: International Legal Materials ( I L M ) vol. 21 (1982), 859. The pipeline affair has been widely discussed by different authors. Apart from the articles in the present volume by Detlev Vagts , The Pipeline Controversy: A n American Viewpoint, in: German Yearbook of International Law ( G Y I L ) vol. 27 (1984), 38—53; A.V.Lowe , International Law Issues Arising in the "Pipeline" Dispute : The British Position, in: G Y I L v o l . 2 7 (1984), 54—71; Pieter Jan Kuyper, The European Community and the U S Pipeline Embargo, Comments on Comments, in: G Y I L v o l . 2 7 (1984), 72—96; Karl Matthias Meessen t Extraterritoriality of Export Control: A German Lawyer's Analysis of the Pipeline Case, in: G Y I L vol. 27 (1984), 97—108; Jürgen Basedow , Private L a w Effects of Foreign Export Controls — A n International Case Report, in: G Y I L vol. 27 (1984), 109—141; see e. g. the comments made by:

Bernhard Audit , Extraterritorialité et commerce international: L'Affaire du Gazuduc Sibirien, in: Revue Critique de D r o i t International Privé vol. 72 (1983), 401—434; James R. Atwoody The Export Administration Act and the Dresser Industries Case, in: Law and Policy in International Business (Law and Pol'y in I n t ' l Bus) vol. 15 (1983), 1157—1161; Jürgen Basedow y Das amerikanische Pipeline Embargo vor Gericht, in: Rabeis Zeitschrift für ausländisches und internationales Privatrecht vol. 47 (1983), 147—172; Th. de Boer / R. Kotting , Der niederländische Richter und das US-Gasröhren-Embargo, in: D i e deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts [1984], 108—112; Brian G.Brunsvold / James M. Bagarazzi , Licensing Impact of Foreign Policy Motivated Retroactive Reexport Regulations, in: Case Western Reserve Journal of International L a w (Case W . Res. J. I n t ' l L.) vol. 15 (1983), 289—328; James M. Däubler , US-Embargo und deutsches Unternehmensrecht, in: Zeitschrift für Reditspolitik vol. 15 (1982), 285—288; Margaret Doxey , International Sanctions in Theory and Practice, in: Case W . Res. J. I n t ' l L. vol. 15 (1983), 273—288; Α. V. Lowe , Public International Law and the Conflict of Laws: The European Response to the United States Export Administration Regulations, in: International and Comparative L a w Quarterly vol. 33 (1984), 515—530; Daniel Marcus , Soviet Pipeline Sanctions: The Extraterritorial Application of U.S. Export Controls, in: Law and Pol'y in I n t ' l Bus. vol. 15 (1983), 1169—1179; Homer Moyer / Linda Mabry, Export Controls as Instruments of Foreign Policy, in: Law and Pol'y in I n t ' l Bus vol. 15 (1983), 1—171; Roberts B. Owen , Extraterritorial Application of U.S. Trade and Financial Controls: Freezings, Vestings, Embargos, etc., in: Wirtschaft und Recht vol. 35 (1983), 142—153; Gary H. Perlow , Taking Peacetime Trade Sanctions to the Limit: The Soviet Pipeline Embargo, in: Case W . Res. J. Int'l. L. vol. 15 (1983), 253—272; David Z. Vance , Challenge to the Validity of Department of Commerce Regulations Restrrcting the Export of O i l and Gas Equipment and Technology to the Soviet Union — Temporary Restraining Order Denied, in: Tex. I n t ' l L . J . vol. 18 (1983), 203—219; Alexander Vida , L a dépendence technologique européenne. Une etude sur l'embargo: L'affaire du gazuduc sibérien, to be published in 1985 by Librairies Techniques, Paris; Jerome J. Zaucha , The Soviet Pipeline Sanctions: The Extraterritorial Application of U.S. Export Controls, in: Law and Pol'y in Int'l. Bus. vol. 15 (1983), 1169—1179.

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reacted primarily to the imposition of martial law on the Polish people and the prohibition of the Solidarity Union on December 13, 1981. 2 The situation in Poland, however, was only a last factor of increasing American concern about the political situation i n the Eastern Bloc and the trade relations of many West-European countries w i t h the Soviet Union. This was especially true for the "Siberian natural gas pipeline project", a project that has strongly been criticized not only by American politicians for a long time. 3 The project itself, which had been planned since 1978 and whose contracts were signed early in 1981 between various West-European companies and Soviet trading entities consists of a great variety of different agreements. These agreements fall into three major categories 4: The sales of equipment and pipelines to the USSR by mainly West-European firms (among them the contracts pertinent in the present case); the financing of these exports to the Soviet U n i o n by West-European banks and the delivery of gas from the Soviet U n i o n in order to compensate for the earlier exports. Among those contracts for the sale of equipment were those for the famous turbines. I n this context four different groups of contracts relating to turbines and at least three different groups of parties should be distinguished: Firstly V / O Machinoimport a Soviet trade organisation, secondly a West-European consortium consisting of the French company Creusot-Loire S. A . and the German company Mannesmann Anlagenbau A G (referred to the "Consort i u m " ) , thirdly a number of independently acting West-European corporations. W i t h reference to the concluded contracts the following distinctions can be made 5 : Firstly , the "General Contract" between V / O Machinoimport, and the Consortium for the delivery of 22 pipeline gas turbine compressor stations for the Soviet — West-European gas pipeline. Under this General Contract CreusotLoire S. A . and Mannesmann were obliged to coordinate, guarantee, and 2 Radio Address to the Nation by President Reagan on November 13, 1982, East-West Trade Relations and the Soviet Pipeline Sanctions, reprinted in: I L M vol. 22 (1983), 349— 350 (349). 3

Robert Held , Das politische Für und Wider des deutsch-sowjetischen Erdgas-Röhrengeschäfts, in: Frankfurter Allgemeine Zeitung, July 24, 1981, 3; Wilfried Prewo, The Pipeline: White Elephant or Trojan Horse?, in: W a l l Street Journal, September 28, 1982; the project has originally been a Soviet-American project under the name of "Northstar", see: Axel Lebahn, D i e "Jamal-Erdgasleitung" UdSSR-Westeuropa im Ost-West-Konflikt, in: Außenpolitik vol. 34 (1983), 256—280 (263). 4

Jürgen Basedow (note 1), 148. Pre-Hearing Statement of the U.S. Department of Commerce; I n the matter of CreusotLoire S.A., Respondent; Case N o . 683; submitted by Sherman E. Unger y 9; this General Contract names the consortium as the "Seller", V / O Machinoimport as the "Buyer" and the other firms (e. g. Dresser France or AEG-Kanis) as the "Suppliers". 5

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provide a number of inspections and quality control services for various separate suppliers in the construction of the stations. Secondly , the "Supply contracts" for the delivery of the necessary amount of turbines. These contracts were concluded between V / O Machinoimport, the Consortium and various West-European companies. Among these companies were 6 Dresser (France) which contracted for 21 compressors, N u o v o Pignone of Italy, a »subsidiary of the state owned Ente Nazionale Idrocarburi (57 turbines), AEG-Kanis Turbinenfabrik G m b H (47 turbines), John Brown Engineering Co. (21 turbines). Their contractual obligation was to build the turbines, excluding components such as the blades for the rotors, which were to be supplied by the U.S. firm General Electric under a sub-contract w i t h the European firms. Under the same contracts the consortium between Creusot-Loire and Mannesmann Anlagenbau was responsible for inspection, testing, documentation, certification prior to shipment, delivery, payment, installation, field testing, and the training of Soviet personnel. 7 Thirdly , under a different contract between Creusot-Loire and Machinoimport the French firm was to supply 42 compressors. Creusot-Loire performs a dual function w i t h i n the contractual constructions, in that it is at same time a member of the Consortium and a supplier of turbines. Fourthly , in a further separate contract w i t h V / O Machinoimport the French company Alsthom-Atlantique promised to deliver 40 sets of rotor blades to the Soviet Union. Those 40 sets were planned to be used as spare parts. For these rotor blades the French company Alsthom is the only company in the w o r l d w i t h a license from the American company General Electric to manufacture them. 8 The license agreement between General Electric (G. E.) and AlsthomAtlantique contains nearly the same clause which can be found i n most license agreements between General Electric and her West-European licensees. This clause reads as follows 9 : " . . . to facilitate the furnishing of data under this agreement, Alsthom hereby gives its assurance in regard to any General Electric origin data « David Brand, Europe Faces Tough Pipeline Choices, W a l l Street Journal, August 24, 1982. 7 Reply to Appeal from Initial Decision; I n the matter of Dresser (France) S.A., Respondent; Case N o . 632, submitted by Sherman E. Unger, General Counsel, U.S. Department of Commerce, 8. 8 David Brand (note 6). 9 Reprinted in: "Breach of Contract", The W a l l Street Journal, July 7, 1982; cited by Basedow (note 4), 160; country group Y includes the Soviet Union, products under code letter A include rotor components. Another example of these "Export Control Clauses" is reprinted by Lebedoff / Raievski (note 1), 487, note 27.

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that unless prior authorization is obtained from the U.S. Office of Export Administration, Alsthom w i l l not knowingly . . . export to any country group any direct product of such technical data i f such direct product is identified by the code letter A . Alsthom further undertakes to keep itself fully informed of the regulations (including amendments and changes thereto) and agrees to comply therewith." The issuance of such a license is regarded as an export of technology subject to authorization of the "Office of Export Administration ( O E A ) " . The authorizations are granted by the O E A under the condition of the incorporation of the clause in the contract. 1 0 The technology for those 21 turbines tobe manufactured by Dresser (France) was provided by Dresser Clark Division, located i n Olean, N e w Y o r k , of Dresser Industries, a United States company, under a licensing agreement between Dresser Industries (Texas) and Dresser (France). 11 Those to be built by Creusot-Loire S. A . are based on U.S.-origin technical data obtained from the U.S. firm Cooper Industries. Creusot-Loire has obtained the technical data for the construction under a license agreement dated September 10, 1981. Under this license agreement Creusot-Loire must pay royalties to Cooper Industries and has agreed to abide by U.S. export control regulations (Art. 8.5). 12 The turbines made by other companies were based on technical data from General Electric, a U.S. corporation. I n particular those turbines manufactured by AEG-Kanis i n the Federal Republic of Germany were built under a Manufacturing Associate Agreement w i t h General Electric. By this agreement AEG-Kanis is required to pay General Electric for each turbine produced. 18 AEG-Kanis acquired the know-how and the right to produce these turbines nearly twenty years ago and has sold hundreds of them to various customers, even to the Soviet Union. 1 4 O n l y the rotor blades of the G. E. designed turbines were delivered by that company and not built by AEG-Kanis itself. Klaus H. Zander / Michael Bischof f, Übersicht über gesetzliche Grundlagen und Anwendungsbereich US-amerikanischer Exportrestriktionen, in: Recht der Internationalen Wirtschaft vol. 28 (1982), 778—784 (780). 11 Reply to Appeal from Initial Decision; I n the matter of Dresser (France) S.A., Respondent; Case N o . 632, submitted by Sherman E. Unger , U.S. Department of Commerce, 8. 12 Pre-Hearing Statement of the U.S. Department of Commerce; I n the matter of CreusotLoire S.A., Respondent; Case N o . 633, submitted by Sherman E. Unger, 16—17. 13 Appeal of AEG-Kanis Turbinenfabrik G m b H from Order Temporarily denying Export Privileges . . .; I n the matter of AEG-Kanis Turbinenfabrik G m b H ; Case N o . 637; Appeal; submitted by Wilmer , Cutler & Pukering for AEG-Kanis, 6. 14 Comments of AEG-Kanis Turbinenfabrik G m b H regarding the Amendment of O i l and Gas Controls to the USSR, August 20, 1982, 3.

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AEG-Kanis had ordered rotors for the turbines for the USSR and has even received four of those units from General Electric before December 30, 1981. 15 The same is true for John Brown and N u o v o Pignone. Together, they all had received 21 of the ordered rotor components before the December sanctions were imposed. Dresser (France) S. A . is incorporated under French law. I t is owned, however, apart from a very few shares, by Dresser A . G. (Vaduz), a Liechtenstein corporation. Dresser A . G. (Vaduz) is owned completely by Dresser Industries located i n Dallas, Texas. Dresser (France) is effectively managed and controlled from the headquarters of its parent company. Dresser Industries, Dallas, and its U.S. subsidiaries, not Dresser (France) were responsible for the technology in question. 16 AEG-Kanis is incorporated in the Federal Republic of Germany under German law. I t is neither owned nor controlled by United States firms or citizens. A t the time of the conclusion of these contracts AEG-Kanis was part of the German corporation AEG-Telefunken, a German owned and controlled corporation. W i t h the exception of Dresser (France) the other corporations directly involved in the Soviet gas pipeline were not American controlled or owned. When the various contracts between the West-European firms and the Soviet trading entities were concluded, no American restrictions existed for the delivery of the turbines or other products involved to the Soviet Union. AEG-Kanis had even sought information from the American authorities on this matter and were assured that there were no restrictions. This was the contractual and factual situation, when President Reagan retroactively extended the American export controls to foreign licensees and foreign subsidiaries of U.S. companies on June 22, 1982. H e had earlier unsuccessfully tried during the summit in Versailles (June 1982) to convince his colleagues from the West-European countries to take embargo measures against the Soviet U n i o n w i t h respect to the pipeline contracts. Based on Sec. 6 of the Export Administration A c t of 1979 the Department of Commerce amended Sections 376.12, 379.8 and 385.2 of the Export Administration Regulations. 17 These amendments extended the existing U.S. controls on the export and the re-export of goods and technical data relating to o i l and gas exploration, exploitation, transmission and refinement. " op. cit., 4. ιβ Post-Hearing Brief of U.S. Department of Commerce; I n the matter of Dresser (France) S.A., Respondent; Case N o . 632, submitted by Sherman E. Unger , 46. « Interim Rule of June 22, 1982, Fed. Reg. vol. 47 (1982), 27250, reprinted in: I L M vol. 21 (1982), 864 seq.

The Pipeline Affair:

A Case History

33

Firstly, they forbid the re-exportation of the machinery of U.S. origin by persons w i t h i n a third country without the permission of the U.S. Government. Furthermore, any person subject to the jurisdiction of the United States is required to obtain written authorization by the Office of Export Administration for the export or re-export of pertinent machinery to the USSR. I n this context the definition of when a person is subject to the jurisdiction of the United States includes even corporations, irrespective of their place of incorporation or area of activity, which are owned or controlled by U.S. firms. Finally, the amendments forbid all persons whether in the U.S. or in a foreign country to export or re-export pertinent products to the USSR, the production of which is based on U.S. technical data, i f —

a w r i t t e n assurance to obey the regulations was required under the U.S. export regulations at the time when the data were exported;

—

the recipient of the U.S. technical data has agreed to abide by U.S. export regulation;

—

the licensee has to pay royalties or other compensation for the use of the technical data concerned, regardless of the date of exportation from the U.S.

Violations of these regulations can be punished according to Sec. 11 of the Export Administration A c t w i t h fines up to $ 100.000,—, imprisonment up to 10 years and the cancellation of export licenses. Following the amendment of the U.S. Export Regulations the WestEuropean governments, whose companies were involved, protested against the American steps taken. I n its first reaction the British government stated that the amended Export Administration Regulations were damaging to the trading interests of the United Kingdom. I n the beginning of August 1982 the British government ordered the British companies involved 1 8 not to comply w i t h the American embargo. 19 These counter-measures were based on the British Protection of the Trading Interests A c t of 1980. 20 Based on an Ordonnance 21 the government in France confiscated those products manufactured for 18

These companies are: John Brown Engineering Limited; Smith International ( N o r t h Sea) Limited; Baker O i l Tools (United Kingdom) Limited; A A F Limited. 19 Protection of Trading Interest (US Reexport Control) Order 1982, reprinted in: I L M vol. 21 (1982), 851—852. 2 0 Reprinted in: I L M vol. 21 (1982), 834—839; this act represents the British reactions to other American assertions of extraterritorial jurisdiction expecially in international antitrust case, the latest one of them being the disputes about the Westinghouse affair, see the exchange of note between the United States and the United Kingdom, reprinted in: I L M vol. 21 (1982), 840—850. 2 1 Ordonnance no. 59/63 du 6 janvier 1959, relative aux réquisitions de biens et de services, Dalloz 1959, 212; Dalloz Bulletin Législatif 1959, 364.

3 GYIL 27

34

Klaus Bockslaff

the pipeline and shipped them to the Soviet U n i o n in fulfilment of the commercial contracts of the French corporations. 22 While the Italian government announced that the existing contracts would be fulfilled, the Government of the Federal Republic of Germany, which does not have legislative means comparable to the French or the British, opposed the U.S. embargo and encouraged the German corporations to fulfill the contracts. When the European corporations started to ship the turbines to the Soviet Union, 2 3 the United States Department of Commerce reacted to these alleged violations of the E x p o r t Regulations by issuing a number of orders temporarily denying export privileges to the majority of the West-European corporations involved. 2 4 I n various administrative actions before the Hearing Commissioner of the U.S. Department of Commerce these corporations challenged the validity of the American regulations and the orders temporarily denying export privileges on various grounds. One argument of the corporations is that the June 22 Regulations exceed the President's authority under the Export Administration A c t of 1979 and are therefore invalid. The corporations argue, that Congress has not authorized the President to impose new restrictions on the use of previously exported commodities or technical data expecially when exported by foreign nations.

22

Basedow (note 4), 152; for a discussion of such a possibility under German law, see: Däubler (note 1), 285 et seq. 23 Three compressors, which had been manufactured by Dresser (France) were loaded on board the vessel "Borodine" at Le Havre and shipped to Riga on August 26, 1982, see: Reply to Appeal in the matter of Dresser (France) (note 7), 10; the actions against John Brown, a soviet freighter left Glasgow with turbines manufactued by John Brown for Leningrad on September 9, 1982, see: U.S. Penalises John Brown Over Pipeline as Judge Upholds Sanctions for Dresser, The W a l l Street Journal, September 10, 1982. 24

These corporations were: Dresser (France) S.A.; Order of August 26, 1982, as modified by the order of September 7, 1982; Fed.Reg. vol. 47 (1982), 39708—39710; reprinted in: I L M vol. 21 (1982), 1099—1100; in the modification the Department of Commerce limited the application of the order to U.S.-origin oil and gas goods and technology; Nuovo Pignone S.p.A.; Order of September 4, 1982; Fed. Reg. vol. 47 (1982); 39708—39710; reprinted in: I L M vol. 21 (1982), 1100—1101; John Brown Engineering L T D ; Order of September 9, 1982; Fed.Reg. vol. 47 (1982) 40205—40206; reprinted in: I L M vol. 21 (1982), 1101—1102; Creusot-Loire S.A.; Order of August 26, 1982, as modified by the order of September 23, 1982; Fed.Reg. v o l . 4 7 (1982), 42392; reprinted in: I L M vol. 21 (1982), 1102—1103; A E G Kanis Turbinenfabrik G m b H ; Order of October 5, 1982; Fed. Reg. vol. 47 (1982), 44603— 44605; reprinted in: I L M vol. 21 (1982), 1103—1104; Mannesmann Anlagenbau A G ; Order of October 5, 1982; Fed.Reg. vol. 47 (1982), 44603—44605; reprinted in: I L M vol. 21 (1982), 1104—1105.

The Pipeline Affair : A Case History

35

The West-Europeans in particular challenged the alleged retroactive effect of these regulations. 25 Along w i t h this major line of argumentation w i t h i n the American legal system i t was further claimed that the Regulations would violate basic principles of public international law, because there is no accepted jurisdictional basis for application of the pipeline regulations. 26 Neither the territorial nor the "effect" principle could serve as a basis for the assumption of jurisdiction, because none of the acts prohibited took place i n the United States or had any effects there. 27 The "nationality" principle could not justify the application of the Regulations to the companies, none of them being incorporated in the United States. 28 The "nationality" principle furthermore could not be linked to the U.S.-origin of goods or technical data, because international law recognizes only the nationality of natural or legal persons, not of goods or know-how. 2 9 Even i f one could apply the balance-of-interest approach that has been included in Sec. 403 of the D r a f t Restatement of Foreign Relations L a w of the United States 30 , the interests of the West-European nations involved outweigh those of the United States and must therefore prevail. 3 1 The authority of the President to condition the privilege of future exports on the observance of restrictions as to the destinations to which goods and technical data may flow was not questioned. However, the v a l i d i t y of the inclusion of clauses in private contracts i n which non-U.S. companies are obliged to follow even future changes of U.S. policy occurring after respective contracts have been concluded is strongly opposed. " I f a Government i n law and fact 25 Comments of AEG-Kanis Turbinenfabrik G m b H regarding the Amendment of oil and gas controls to the USSR before the Department of Commerce, International Trade Administration, submitted for AEG-Kanis by Lloyd N. Cutler , et al ., 9; Klaus C. Engelen, Fragezeichen hinter Reagans Sanktionen, Handelsblatt, September 1, 1982; Basedow (note 4), 161. 26 AEG-Kanis Comments (note 25), 25; Comments of the European Communities on the U.S. Regulations Concerning Trade w i t h the USSR ( E E C Comments), submitted by the Commission of the European Communities, reprinted in: I L M vol. 21 (1982), 891—904 (893) and in the present volume 554—562. 27 AEG-Kanis Comments (note 26), 26; E E C Comments (note 26) para. 13; some commentators suggest that the β effect n principle that has been developed in international antitrust law is not applicable to conflicts of the present kind; Compagnie Européenne de Pétroles S.A. v. Sensor Nederlands B.V. (note 4), 146. 28 AEG-Kanis Comments (note 25), 28; E E C Comments (note 26), para. 9; Bernard (note 1), 410. 29

Audit ,

AEG-Kanis Comments (note 25), 29; E E C Comments (note 26), para. 9.

3° AEG-Kanis Comments (note 25), 30. 31 AEG-Kanis Comments (note 25), 32; E E C Comments (note 26), 23; the various companies have claimed that they might lose money not only because of their non-preformance of the present contract, but of other contracts as well, which are not related to the Soviet-Union (John Brown), for AEG-Kanis there was even the fear of having to close down the factory.

3·

Klaus Bockslaff

36

systematically encourages the inclusion of such submission clauses in private contracts the freedom of contract is misused in order to circumvent the limits imposed on national jurisdiction by international l a w " . 8 2 Jurisdiction to regulate the conduct w i t h i n the territory of another state cannot be granted in private contractual agreements. The arguments of the West-European corporations were rejected by the U.S. Department of Commerce. The Department argued, that the June 22 Regulations are lawful because they are consistent w i t h the authority of the Export Administration A c t . 8 3 Regulation covering re-export of U.S. goods or technical data clearly advise exporters and foreign importers prior to export from the U.S. that subsequent shipment w i l l be subject to controls in effect at the time of re-export (15 C.F.R. § 374.12). The export from foreign countries of foreign products incorporating U.S.-origin parts or components are also subject to the Regulations of U.S. controls that are i n effect at the time the foreign products are exported to other countries. 34 "Congress did not intend that the United States remain powerless to prohibit shipment of sophisticated or high technology goods to a country, simply because a U.S. company had already licensed foreign firms to produce those goods outside the United States." 35 The United States may exercise jurisdiction over the controlled foreign subsidiaries of U.S. firms analogous to the jurisdiction over its own nationals. 36 The test of ownership and control is reasonable and consistent w i t h international law. I t emphasizes substance over form and focuses on the realities of actual control and direction of the company rather than technicalities. Finally, the defense of foreign governmental compulsion is not relevant to these proceedings. 37 These were some of the most important legal arguments made during administrative actions brought by several companies. O n November 16, 1982, President Reagan decided to lift the sanctions against the West-European 32 E E C Comments (note 26), para. 11; the inclusion of the submission-clauses in the license agreements has in fact been asked for by the O E A in order to obtain an additional legal argument, based on an contractual obligation, see: ]ander / Bischoff (note 10), 780. 38 U.S. Department of Commerce, Reply to Appeal from initial decision of Hearing Commissioner denying motion to vacate temporary denial order, in the matter of Dresser (France) S.A. (Respondent), submitted by Sherman Ε . Unger , General Counsel, 17. 34

Reply to Appeal (note 33), 42. Reply to Appeal (note 33), 43.

36

Reply to Appeals (note 33), 47 with reference to Schwarzenberger J Brown , Manual of International Law (1976), 115; Brownlie , Principles of International L a w (1979), 309 (substantial and bone fide connection); Vervijl , International L a w in Historical Perspective (1972),

112. 37 Reply to Appeal (note 33), 54.

The Pipeline Affair:

A Case History

37

corporations. 38 A t that time written decisions of the administrative actions were conveyed in t w o cases. The Hearing Commissioner's initial decision on Dresser France's motion to vacate was given on September 30, 1982. A n appeal was subsequently made to the Assistant Secretary for Trade, who gave his judgement on November 1, 1982. 39 The Hearing Commissioner's initial decision on Creusot-Loire's motion to vacate was rendered on October 29, 1982. I n an action brought i n the District Court in Washington D . C. Dresser Industries Inc. challenged again the validity of the sanctions and asked for a temporary restraining order blocking the sanctions that were imposed on Dresser (France). 40 This order was refused by Judge Joyce Green on the grounds that Dresser Industries had not shown that they had been adversely affected by the sanctions. 41 Further written decisions before any American court or Administrative Tribunal are not k n o w n to the author at the present moment. The only written decision on the subject of the pipeline affair in West-Europe was rendered by a Dutch court in the case Compagnie Européenne des Petroles S. A. v. Sensor Nederland 5. V . 4 2

38

Radio Adress to the N a t i o n (note 2). Revision of Export Controls Affecting the U.S.S.R. and Poland, Fed. Reg. vol. 47 (1982), 51.858—51.860. 39 Decision and Order of Assistant Secretary for Trade Administration on Appeal of Hearing Commissioner's Denial of Motion to Vacate August 26, 1982, Temporary Denial Order, in the Matter of Dresser (France) S.A., Appellant, November 1, 1982. 40 Dresser Industries v. Baldrige , N o . 82—2385 (D.D.C. filed Aug. 23, 1982); this case is discussed in some detail by Vance (note 1), passim. 41 W a l l Street Journal (note 23). 42

The decision of the District Court at The Hague has been published in a German translation in: RabelsZ vol. 47 (1983), 141—147.

The Pipeline Controversy: An American Viewpoint Detlev F. Vagts One of the few positive aspects of the pipeline affair is the stimulus it gave to lawyers of the nations affected to initiate a dialogue about the pertinent jurisdictional questions. 1 Representing an American perspective, a writer should perform three functions: 1) to explain how the embargo came and went in terms of the internal United States situation, 2) to outline the general U . S. position on the international law and to evaluate its strength as applied to this affair and 3) to indicate how the next controversy might be better managed, particularly in terms of the capacity of international law and lawyers to make a contribution. I. T h e S o u r c e s o f t h e E m b a r g o i n U . S. I n s t i t u t i o n s A word of explanation is called for in asking the reader to follow me in looking at matters relating to the internal U . S. law and politics of the embargo. I t is not my intention to inflict upon a foreign audience detailed knowledge of the U . S. law that generated President Reagan's action. Yet i t would be a mistake to see the embargo as an action that simply emerged full blown from a "black box" as the engineers say. The embargo came — and went — because of a set of rather contradictory policies and interests that made themselves felt through a rather special set of institutions. I n order to evaluate the U.S. position and think about arrangements that might moderate the impact of the next controversy one has to enter, a few feet at least, into the labyrinth of U.S. politics. I f in fact U.S. policy emerged from a simple decisive unity of nation and leadership, there w o u l d be little hope that arguments about international law would have any effect upon it. The t r u t h is that the U.S. system was poised in a rather delicate balance between forces that pushed 1 For the product of one set of such conferences, at Ditchley, England, see: Douglas Rosenthal J William Knighton, National Laws and International Commerce; The Problem of Extraterritoriality, London 1982; for the product of another at Zurich, Switzerland, see: Symposium, The European Business World and the Extraterritorial Application of United States Economic Regulation, in: Wirtschaft und Recht, vol. 35 (1983), 68—247.

The Pipeline Controversy:

An American Viewpoint

39

towards action and away from it. I n that balance international law can make a difference. To begin w i t h interests. The U.S. population has a large, i f unsteady, concern about the power of the U.S.S.R. and its possible use adversely to the U.S. position. One can trace the ups and downs of this anxiety from the fear of Stalinism in the 1940s and '50s that attracted much of the nationalism that had been evoked by Hitlerism, through the detente of the 1960s and early 1970s, and into the current harsher mood. A perception of greatly increased Soviet military might and a willingness to use i t in Afghanistan and, through surrogates, in Africa and the Middle East is widespread in the American populace. I t is coupled w i t h anxiety about the perceived decline in U.S. power and influence, dramatized by the humiliation of the Viet-Nam misadventure. Additionally, an important ethnic group was specifically aggrieved by the Soviet Union's involvement in repression in Poland. There is thus a widespread desire i n America for some action or at least some show of force. Running i n the opposite direction is a general longing to be relieved of the fear of Soviet expansionism and the costs of trying to cope w i t h it. And, in particular, there is an interest on the part of a substantial element of the business community in conducting profitable trade w i t h the Soviet Union and in not undermining the competitive position of U.S. business in third countries. These interests find their expression in U.S. political institutions. I t must be remembered in particular that the U.S. Constitution establishes a rather complex system of separation of powers without a close counterpart i n Europe. 2 Candidates for office must respond to the electorate's concern about the balance of power between the United States and the Soviet Union, even while playing on i t for political gain. On the other hand, the more specific interests of business elements find their expression through channels less overt than the public opinion polls; lobbyists and lawyers know the w a y to the people who possess power and to the means of persuading them. The first institutional reflector of the national interests is the Congress. Congress has in theory great constitutional authority over foreign affairs and particularly foreign trade. Its use of that power has varied over the years. The period since the 1960s has been characterized by an attempt to take back authority delegated to Presidents and, in many eyes, abused and overextended by them. Congress has for many years recognized that it simply cannot dictate every detail of export regulation. Its successive versions of the legislation, 2 For a good review of American constitutional law as it affects the making of foreign policy, see: Louis Henkin , Foreign Affairs and the Constitution, Mineola 1972. Selected cases and other materials are assembled in Henry Steiner / Detlev Vagts , Transnational Legal Problems, 2nd edition, Mineola 1976, 101—176, 531—636.

40

Detlev F. Vagts

whether entitled Export Control A c t or Export Administration Act, have left great authority in the executive brandi. 3 A t the same time Congress has sought to convey general instructions, sometimes rather contradictory in character, to the bureaucracy. 4 One message is that the slowness and burdensomeness of the process of licensing exports are bad for U.S. competitiveness in the export markets. Another is that the President should remain free to react when national security is concerned. M a n y other general messages are also conveyed. Congress' specific reaction to the pipeline situation was characteristic. The House of Representatives considered a b i l l to undo what the President had done but failed to pass i t by a vote of 206 to 203. 5 Very likely a b i l l to authorize specifically what the President did would also have failed to pass. Since the episode faded from sight there have been some proposals for legislation that would l i m i t the Export Administration Act's reach. 6 Congress has some openness to arguments about the international law relating to jurisdiction. That is evidenced b y an amendment to the Sherman A c t i n 1982 which tried t o cut back the outward reach of American antitrust jurisdiction, even while i t reafirmed its adherence to the "effects" doctrine. 7 Although Congress has not usefully addressed the question of jurisdiction in its Export Control legislation i t has authorized restrictions on powers, goods, and technology " w i t h i n the jurisdiction of the United States." 8 I t may thereby 3 United States Code appendix (U.S.C. app.), vol. 50, §§ 2401—2420. Interestingly, the Act is included in a volume dealing with war and national emergency rather than the one on foreign trade. The terminology was changed from "Export Control* to "Export Administration" when the 1969 Act, Statutes at Large vol. 83, 841, superseded the 1949 version. 4 U.S.C. app. vol. 50 § 2401 (Congressional Findings), § 2402 (Congressional Declaration of Policy). 5 For the history of congressional reaction to the President's moves, see: Homer M oyer / Linda Mabry, Export Controls as Instruments of Foreign Policy, in: Law and Policy in International Business (Law & Policy in I n t ' l Bus.) vol. 15 (1983), 1—171 (73). 6 The status of U . S. legislation when this article is published is problematical since Congress continues to debate the issue and to pass brief extensions of the Act. 7 T h a t amendment was contained in the Export Trading Company Act of 1982 designed to assist U.S. firms to compete in export markets. I t appears as United States Code (U.S.C.) vol. 15, § 6a. I t provides that the antitrust laws do not apply to conduct involving commerce with foreign nations unless it has a "direct, substantial and reasonably foreseeable effect" on such commerce. 8 U.S.C. app. vol. 50, § 2405 authorized the President to prohibit or curtail for foreign policy reasons the exportation of any goods, technology or other information subject to the jurisdiction of the United States or exported by any person subject to the jurisdiction of the United States. § 2404 contains the same authorization for national security controls. § 2415 defines a "United States person" subject to controls. For a general review of these controls, see: Harold Berman I JohnGarson, United States Export Controls — Past, Present and Future, in: Columbia Law Review vol. 67 (1967), 791—890. A more recent work, focusing on foreign policy controls is Kenneth Abbott , Linking Trade to Political Goals: Foreign Policy Export Controls in the 1970s and 1980s, in: Minnesota Law Review vol. 65 (1981), 739—889.

The Pipeline Controversy:

An American Viewpoint

41

have silently approved long-standing executive regulations which assisted various forms of outreach under fact heading. The executive brandi, then, is at the center of the play of forces. While ultimately a single signature, the President's, appears at the bottom of the order a number of agencies had a voice i n formulating the outcome. One infers that the Department of State, headed by Alexander Haig and then George Shultz , was highly skeptical of the embargo. I t was necessarily sensitive to the danger this action posed to U.S. relationships w i t h European allies. The Department is regularly accused of being "client-oriented", which is simply a way of noting that one of its functions is to make sure U.S. policy-makers are aware of a proposed action's repercussions among foreigners who have no vote. The reaction of the Department of Commerce can scarcely have been enthusiastic about an action w i t h such negative consequences for its business clientele. The Defense Department, and the President himself, together w i t h the White House staff gave primacy to the need to make a strong gesture against Soviet policies. The fragility of that primacy is evidenced by the rather prompt reversal of the embargo. There are many lawyers involved in the process through which the executive comes to its conclusion. They are not independent actors because they are essentially lawyers for the particular agency that employs them. They cannot be regarded as independent authorities on law, particularly international law. The office of the Legal Adviser to the State Department 9 is probably the most sensitive to international law arguments. I t knows that i t w i l l have the burden of defending the U.S. action in foreign quarters. I t is also the most clearly aware that actions by the United States w i l l be taken by other states as evidence of international custom and may in some cases be turned against us when the positions of states are reversed. Other legal agencies are further removed from international repercussions and closer to domestic policies. Finally, one looks to the courts. Under U.S. law international law, whether embodied i n custom or in treaty, is part of the law of the land. 1 0 Still, i t is plain that the U.S. government has the power to supersede either a treaty or a customary international law rule as far as its legal effect w i t h i n the country is concerned. 11 A U.S. court, then, must follow the final expression of the w i l l 9

For a description of that office, see: Richard Bilder , The Office of the Legal Adviser: The State Department Lawyer and Foreign Affairs, in: American Journal of International Law ( A J I L ) vol. 56 (1962), 633—684. 10 As to treaties this is affirmed in U.S. Constitution art. V I . As to customary international law, see: The Paquete Habana, 175 United States Supreme Court (U.S.) 677 (1900). See generally Restatement (Revised) Foreign Relations Law of the United States, § 135 (tent, draft no. 1, 1980). 11 See, e. g., Diggs v. Schultz , 470 Federal Reporter, Second Edition (F. 2d) 461 (D.C.Cir.

42

Detlev F. Vagts

of the other two brandies and cannot say to the President, as i t can where the action contravenes the constitution, "stop, you are violating a higher law." The courts have, however, repeatedly stated that they w i l l construe U.S. laws so as not to violate international obligations i f such an interpretation is fairly possible. 12 I n issues relating to international jurisdiction the courts have often found the relevant statutes quite barren of useful indications as to the intent of Congress. For example, one maritime statute applied to "any seaman", thus literally covering a Chinese sailor on a Chinese j u n k in Chinese territorial waters. 13 The Supreme Court there felt free to read the statute i n the light of traditional international understandings about the allocation of jurisdiction i n maritime questions. I n other cases Congress has given some, but generally rather crude indications of its intentions. The antitrust laws, for example, apply to actions restraining "foreign commerce." 14 That still leaves room for creativity on the part of the judiciary in deciding what that means. Increasingly U.S. courts have been applying concepts derived from private international law (conflicts) to the process of applying such general laws to specific cases.15 The pipeline embargo, however, arose in the context of a very particularized executive action that made it quite clear what the executive meant to cover. Thus the courts had little interpretive room to use in this case. Given that the President's action is w i t h i n the authority which Congress could, and did, delegate to him there is also no issue of validity for the courts to decide. Understandably, the U.S. courts played little role in the pipeline affair. 1 6 1972), Certiorari (cert.) denied, 411 U.S. 931 (1972); The Over the Top, 5 F. 2d 838 ( D . Conn. 1925). 12 See Restatement (note 10)) at § 134, citing Justice Marshall in Murray v. Schooner Charming Betsy , 6 U.S. (2 Crandi) 64, 118 (1804) and Lauritzen v. Larsen , 345 U.S. 571 (1953). See also Geofroy v. Riggs , 133 U.S. 258 (1890). is Lauritzen v. Larsen (note 12). 14 U.S.C. vol. 15, § 1 (contracts or combinations in restraint of trade with foreign nations), § 2 (monopolization of such trade or commerce). See also § 6a, described in note 7. is Timberlane Lumber Co. v. Bank of America NT & S.A., 549 F. 2d 597 (9th Cir. 1976); Mannington Mills , Inc. v. Congoleum Corp., 595 F. 2d 1287 (3d Cir. 1979). Leading academic advocacies of a conflict of law approach to clashes of regulatory statutes and policies are Andreas Lowenfeld, Public Law in the International Arena; Conflict of Laws, International L a w and Some Suggestions for their Interaction, in: Recueil des Cours (RdC) vol. 163 (1979 I I ) , 311—444; Donald Trautman, The Role of Conflicts Thinking in Defining the International Reach of American Regulatory Legislation, in: Ohio State Law Journal vol. 22 (1961), 586—627. I t should be remembered, that with the exception of some situations governed by treaty obligations, conflicts of law is national law and states have no international law obligations to frame them in one way or another.

16 One case that might have resolved a few of the issues was terminated while appeals within the Department of Commerce were still pending. In the Matter of Dresser (France) S. Α., terminated, Federal Register vol. 47 (1982), 52, 490. A n attempt to obtain court review was dismissed as premature, Dresser Indus. Inc. v. Baldndge , 549 Federal Supplement (F. Supp.) 108 ( D . D . C . 1982).

The Pipeline Controversy:

II.

United

States

An American Viewpoint

International

Law

43

Theory

While the United States is sometimes regarded as having a wholly separate and eccentric view of the international law of jurisdiction, closer inspection suggests that i t is not that far apart from continental views. I t is worthwhile stepping back in time a bit to trace the general courses of development on the t w o sides of the Atlantic. I take as my starting point 1927. That is the date of the S. S. LotuSy the sole venture of the world court into this field. 17 That case, i n effect, started by assuming the primacy of a semiterritorial basis of jurisdiction, the law of the flag of the vessel on which the accused person stood and acted. 18 I n one view i t also legitimated the "effects" basis of jurisdiction by saying that Turkey was not constrained by international law from taking jurisdiction when i t was the state whose flag flew over the vessel i n which the impact was felt. The outcome of the Lotus leaves many issues unsettled. I t does not deal w i t h cases involving less directly physical or less specifically aimed impacts. I t left dangling the status of the "passive persona l i t y " principle, according to which the nationality of the victim is a basis for jurisdiction. Several dissenters felt the question was relevant because Turkey had relied upon that basis. 19 They would have decided against that principle. Furthermore, the case did not directly deal w i t h the "universality" or "nationality" bases which were not at stake there. I n general, however, the Lotus case is consistent w i t h an analysis of jurisdiction under which the concept of territoriality is at the center but several other bases are permissible. The general state of the theory as of 1927 is captured by an article written by a Belgian professor, Maurice Bourquinr 0 He, too, starts w i t h territoriality but states: One can say that no legal system holds strictly to the principle of territorial jurisdiction. A l l , to different degrees, regard themselves as authorized to punish certain acts perpetrated beyond the frontiers of the state. I n the first instance, Bourquin refers to international crimes, such as piracy, and to crimes committed abroad by nationals. H e adds that the United States 17

Permanent Court of International Justice (P.C.I.J.) Series A N o . 10 (1927), 1 et seq.

18

N o t e that the Geneva Convention on the H i g h Seas of 1958, United Nations Treaty Series vol. 450 (1958), 82—167, in art. 11 (1) overruled Lotus by providing that the exclusive right to institute criminal proceedings would be in the state of the flag or of the accused's nationality. The same solution is found in Article 97 of the D r a f t Convention on the Law of the Sea signed in 1982. U . N . Doc. A/Conf. 62/122, reprinted in: International Legal Materials ( I L M ) vol. 21 (1982), 1261 et seq. The Lotus (note 17), especially the dissenting opinions of Judge Weiss (40) and Judge Finlay (55—58). 2 0

(164).

Crimes et délits contre la sûreté des états étrangers, in: R d C vol. 16 (1927 I ) , 117—246

44

Detlev F. Vagts

and the United Kingdom, unlike Continental states: reject any other derogation from the principle of territorial competence. I n fact by 1927 the United States had moved away from the rigor of its territorialist views. The classic U.S. position was exemplified by the rejection in 1886 of the Mexican assertion of jurisdiction over one Cutting who had published a libel on the U.S. side of the Rio Grande frontier w i t h an impact on a Mexican individual. 2 1 The American Banana case i n 1909 had also stated the concept of exclusive territoriality, though w i t h the qualification that Congress could act otherwise. 22 But, precisely i n 1927, the Supreme Court decided t w o cases that moved outwards. I n Sisal Sales 23 i t approved the prosecution of parties who had met and agreed w i t h i n the United States to do things in Mexico to restrain imports of hemp into the United States. I n Ford 2A i t sustained the conviction of British subjects who joined in a conspiracy to import liquor from Canada to the United States i n violation of the then U.S. prohibition laws. By 1935 the U.S. theory was ripe for statement in the H a r v a r d Research, a codification project undertaken by a group of scholars under the auspices of the Harvard L a w School. 25 That project set forth five principles on the basis of which a state could assert jurisdiction. I t attempted to codify the practice of states generally and not just that of the United States. Its bibliography and notes show an effort to be thorough i n the treatment of non-American practice and theory. Thus by 1935 the American theory was firmly established as rejecting a limitation to pure territoriality. I t had become quite different from the British view which Professor Bourquin had regarded as basically identical. 26 After 1935 America's involvement in w o r l d affairs became more and more intense. The cases before the courts mounted in complexity and importance. 21 John B. Moore , A Digest of International Law, vol. I I , Washington 1906, 228—242. Moore , who was in 1887 in the Department of State, was one of the dissenters in the Lotus case. 22 American Banana Co. v. United Fruit Co., 213 U.S. 347 (1909). 2 3 United States v. Sisal Sales Corp., 274 U.S. 268 (1927). 2 * Ford v. United States, 273 U.S. 593 (1927). 25 Research in International Law under the Auspices of the Faculty of the Harvard Law School: Jurisdiction with Respect to Crimes, Supplement to the American Journal of International Law vol. 29 (1935), 439 et seq. Prof. Manley Ο. Hudson of the Faculty, and of the Permanent Court was director of the program and Prof. Edwin Dickinson of California was reporter for the jurisdiction project. 26 For a recent statement of the British view of international jurisdiction, see: Α. V. Lowe, Blocking Extraterritorial Jurisdiction: The British Protection of Trading Interests Act, 1980, in: A J I L vol. 75 (1981), 257—282 (262—267); A.V.Lowe, International Law Issues Arising in the "Pipeline" Dispute: The British Position, in: German Yearbook of International Law ( G Y I L ) vol. 27 (1984), 54—71.

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45

I n particular, the antitrust cases extended and solidified the effects learning. 27 By the time another group of scholars tackled the codification task and produced the Restatement of Foreign Relations L a w i n 1962—1965, 28 the United States had a more developed and somewhat more aggressive posture on outreach in economic crime cases (especially in the antitrust field) than did European states.29 That case law grew even more in volume between 1965 and 1980 when the reporters for a new revised Restatement began to w o r k on the topic. 8 0 The case law by now was less concentrated on antitrust law, w i t h many cases arising in the fields of securities and commodities market regulation, 8 1 trading w i t h the enemy, boycotts, etc? 2 I t is hard for me to summarize fairly and briefly what happened in Europe between 1927 and the present but I believe i t fair to say that European trends were nôt too clearly distinct from the American. European writers tended to use general formulae not sharply different from the Americans. 83 European courts did apply "effects" 27

The classic case was United States v. Aluminium Co. of America , 148 F. 2d 416 (2d Cir. 1945), written by a most distinguished Judge, Learned Hand . For extensive scholarly treatment of antitrust jurisdiction see: James Atwood / Kingman Brewster, Antitrust and American Business Abroad, 2nd edition, Colorado Springs 1981, chapter 2, 5—7. 28 Restatement (Second) Foreign Relations Law of the United States § 18 (1965). Note that Restatements are published under the Authority of the American Law Institute, a wholly private non-governmental body. They are in form similar to a code, with annotations and comments. They would remind a German lawyer of an edition of the Bürgerliches Gesetzbuch (BGB) annotated by a group of professors. Their authority derives from that of of the reporters who were hired to draft them and from the three-tiered review process that subjects them to extensive criticism and debate. 2 * See note 27. 30 Restatement of Foreign Relations Law of the United States (revised) § 402 (tent, draft no. 2 1981) is the key section on the bases of jurisdiction. The process by which the revised Restatement is being produced parallel those involved in the 1965 edition, see note 28. The author is one of the associate reporters. si See, e. g., ITT v. Vencap Ltd., 519 F. 2d 1001 (2d Cir. 1975); tfmcfc v. Drexel Firestone , Inc., 519 F. 2d 974 (2d Cir. 1975); ITT v. Cornfeld , 619 F. 2d 909 (2d Cir. 1980); Leasco Data Processing Equipment Corp. v. Maxwell , 468 F. 2d 1326 (2d Cir. 1972). 32 For a summary of the boycott experience and American Law, see: Henry Steiner , International Boycotts and Domestic Order: American Involvement in the Arab-Israeli Conflict, in: Texas Law Review vol. 54 (1976), 1355 et seq. The U.S. anti-boycott law, 50 U.S.C. app. § 2407 has itself extraterritorial operation. 33 See, e. g., Werner Meng, Neuere Entwicklungen im Streit um die Jurisdiktionshoheit der Staaten i m Bereich der Wettbewerbsbeschränkungen, in: Zeitschrift für ausländisches öffentliches Recht und Völkerrecht vol. 41 (1981), 469—512. As to Switzerland see the Hadjette Case, Entscheidungen des Schweizerischen Bundesgerichtes vol. 93 I I (1967), 192 et seq., with comment, in: Frank Visdoer, The United States Jurisdictional Concepts Viewed from Abroad, in: Wirtschaft und Recht vol. 35 (1983), 97—113. O n the reach of the European Community antitrust laws, see: / . M. Bischof f / R.Kovar, L'application du droit communitaire aux enterprises établies à l'extérieur de la Communauté, in: Journal du D r o i t International vol. 102 (1975), 675—727. See, generally, Bernard Audit, Extraterritorialité et commerce international: L'Affaire du Gazoduc Sibirien, in: Revue Critique de D r o i t International Privé (Rev. Crit. de Droit I n t ' l Privé) vol. 72 (1983), 401—434 (406), that United States had a jurisdictional basis for its action.

Detlev F. Vagts

46

jurisdiction (or something like it) in a number of antitrust cases although less extensively than on the part of the U.S. courts. Thus in 1984 an international court looking at U.S. and continental precedents would find a generally similar conceptual framework as to jurisdictional bases being used on both sides of the Atlantic. Quite a different course of development — i f it can be called that — has been taken w i t h regard to the law governing conflicts of jurisdiction. Here one must distinguish between two arguments (1) that the state asserting the jurisdiction does not have a legitimate basis, w i t h i n the terms o f the previous paragraphs, for doing so and (2) that, while the state asserting the jurisdiction has a legitimate basis, its exercise would be inappropriate for other reasons including particularly the law and policy of some other state. The latter subject is underdeveloped in public international law. As to matters covered by private national commercial or civil law courts and commentators have long been trying to develop agreed upon choice of law principles for cases in which national laws competed or conflicted. 34 There had never been thought to be a choice of law issue w i t h respect to criminal cases; a state either had jurisdiction to enforce its own laws; i f it did not no other state would. 3 5 When economic regulation cases came on the scene, particularly antitrust cases, they tended to be classified along w i t h the criminal cases. O f course, some of them such as the Sherman A c t cases involved crimes. 36 Attempts have, since then, been made to fashion an international law l i m i t to extraterritorial jurisdiction. The most straightforward and plausible rule w o u l d be one that i f the state of the territory where the action i n question takes place countermands the order of a state exercising jurisdiction on some other basis the territorial state's command prevails. That rule was proposed as Article 14 of the Harvard Research Codification and referred to as "obviously just." 3 7 Such a rule tends to reflect the power relationship in such situations. The coercive effect of the territorial state's commands is apt to bear harder on the affected individuals than is that of the more remote sovereign. There is a certain amount of practice that supports such a rule in the sense that courts and other agencies in the United States have on various occasions receded from commands they had given when the territorial sovereign reacted 34 For a comparative review of conflicts developments, see: Symposium, The Influence of Modern American Conflict Theories on European Law, in: American Journal of Comparative Law vol. 30 (1982), 1—146. 35 Steiner / Vagts (note 2), 854. 36

The Sherman Act now makes violations a felony involving serious fines and imprison-

ment. 37

H a r v a r d Research (note 25), 616.

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47

strongly. 38 That has been particularly the case where serious criminal penalties were threatened so that the affected party was caught in a crossfire between sovereigns. Still, one is a bit uncomfortable about the rule. I t gives considerable room for "strategic" maneuvers by the affected party. There is always the possibility that the party has procured the seemingly unfavorable action by other state because i t hoped to deter the first state (or did not obtain a permission that w o u l d have been granted i f sincerely sought). Then there would have to be an exception t o the rule at least in cases of bad faith, a rather delicate issue for the deciding agency. There might also have to be a subrule that where the interest of the territorial state in the activity was trivial its order should not prevail. O n the other side, the "territory first" rule is not inclusive enough; i t does not disable a state from issuing an order to take effect in another state that has not bothered to issue a countermanding rule even though the first state has a very marginal interest in the situation and is stretching its basis of jurisdiction to the maximum. The other possible rule is one of "reasonableness". Actually, several variations of a reasonableness rule have been suggested by writers and by national courts. 39 Those variations, such as those in the tentative version of the Restatement of U.S. Foreign Relations Law, tend to go only so far as to list what factors should be considered i n evaluating that reasonableness. Given the multiplicity and variety of the actual and possible conflicts that would have to be decided under such a rule, i t w o u l d be hard to be more precise than that. The problem of the administration of a rule such as this is formidable. The International Court of Justice not only has not had enough cases to have been able to indicate how the rule should be applied but, given current international relations, is not likely to do so. 40 Therefore, the task would have to be consigned to some more specialized international agency, or left to the nationalistic judgments of national tribunals or worked out more or less ad hoc by diplomatic negotiations.

38 See, for example, the outcomes, as modified, in the Swiss Watchmakers antitrust case set forth in: Steiner / Vagts (note 2), 1040—1047, and the I C I - D u p o n t antitrust case, ibid. at 1029—1040. 39 The section dealing with balancing in the Revised Restatement is § 404; compare the version in the 1965 text at § 40. 40 One of the other problems with referring the matter to the International Court of Justice is the presence there of judges from outside the affected Atlantic area. Heinnch Gattiker, Foreign Policy Objectives and the Extraterritorial Application of Law, in: Wirtschaft u. Recht vol. 35 (1983), 154—161 (159). I t is now possible to arrange for adjudication by a panel of that court.

Detlev F. Vagts

48 III.

The Theories

Applied:

The Pipeline

Case

The next step in our analysis is to look i n more detail at the pipeline case through the lens of international law theory to see how far that theory dictates a clear resolution of the controversy. The first part of the process is to examine the bases of jurisdiction used to justify U.S. action. The second part replicates the question whether, i f an adequate basis for U.S. action is found, international law provides a means of mediating the conflicting U.S. and European interests in this case. Essentially, the United States relied upon three bases, none of them quite squarely w i t h i n the traditional bounds of the jurisdictional rules. The first is an extension of the nationality concept to cover corporate subsidiaries organized and established i n other countries. The second is a claim based on the origin of the goods, backed by contractual commitments by the purchases. The third is a similar claim based on the origin of the technology. U.S. export control regulations have categorized some corporations, along w i t h some natural persons, as "persons subject to the jurisdiction of the United States." 41 The corporations that fell into that class are those that are controlled directly or indirectly by U.S. citizens, i n particular those whose stock is majority owned by U.S. nationals. I n so providing these rules run in parallel w i t h various other U.S. regulations. 42 The first question posed by these rules is whether i t is satisfactory at all to treat corporations as nationals for this purpose. International law does treat corporations as nationals for claims purposes, for instance, and there may be said to be a fairly general agreement as to the appropriateness of such characterization. 4 3 Still, the jurisdiction issue is a special one, and it could be argued that the metaphor equating individual nationals and corporations for jurisdiction purposes does not work. A state is entitled to regulate its individuals because of a quite special bond between them. Nationality, from whatever ideological perspective i t is seen, is a strong relationship. A state protects and 41 See note S. 42 F o r a review of such treatments of corporations see: Robert Thompson , United States Jurisdiction over Foreign Subsidiaries: Corporate and International Law Aspects, in: Law & Policy in I n t ' l Bus. vol. 15 (1983), 319—399. Thompson argues that the place of incorporation, siège, Sitz, etc. are too formal to be important in jurisdictional tests. T o a large extent we agree. While I think that corporate nationality is too well established to ignore in the first stage, that of finding a jurisdictional link, I do not regard such a nationality by itself as an important factor if one gets to the point of doing a balancing test.

« E.g., The Barcelona Traction Case, 1970 I.C.J. Rep. 4; F. A. Mann, The Protection of Shareholders' Interests in the Light of the Barcelona Traction Case, in: A J I L vol. 67 (1973), 259—274; Ph. Francescakis , Lueurs sur le droit international des sociétés de capitaux: L'arrêt Barcelona Traction de la Cour internationale de Justice, in: Rev. Crit. de D r o i t Int'l Privé vol. 59 (1970), 609—664.

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An American Viewpoint

nurtures the individual citizen; i t bestows rights on him or her. I n return the individual owes loyalty to that state even when abroad. That loyalty may include obligations to pay taxes, to return at its call to perform civic or military duties and to obey its law even when abroad. 44 Can i t be said that such a bond exists between the United States and one of its corporations, Exxon or General Motors, for example? Perhaps the idea is best understood by regarding such a corporation as an aggregate of individuals, investors, managers and other employers. Each of them has a nationality w i t h the corresponding duties. Collectively they have a duty to deal w i t h corporate matters i n the way commanded by the state. Their action in incorporating under the laws of a state may be seen as ratifying that obligations. The concept of corporate nationality and the corresponding bases for jurisdiction can then be seen as a collectivization of individual obligations. I n the argumentation about the pipeline boycott, and its predecessor, European critics seem basically to accept the corporate citizen metaphor. Where they clash w i t h the American view is i n rejecting the basis for classification. The problem typically involves subsidiaries of U.S.-based corporations which are in turn incorporated abroad and have their Sitz or siège social in a country other than the United States. For conflicts of law purposes those tests have long prevailed over a control or shareholder nationality test. 45 The opinion of the International Court of Justice in the Barcelona Traction 46 case denies that the shareholders' nationality is an adequate basis for extending diplomatic protection to a corporation. That ruling is often taken as determining corporate nationality for other purposes as well. This need not be so. The Court acknowledged the possible artificiality and technicality of the place of incorporation/headquarters of management test. 47 I t regarded those as acceptable costs in the light of the greater certainty and clarity i n international affairs provided by the test and the ability of corporate planners to adjust to the rules. Similarly, the fact that conventions of establishment and treaties of friendship, commerce and navigation classify corporations' nation44

For American authority see: Blackmer v. United States, 284 U.S. 421 (1932) (American citizen can be called home to testify); Cook v. Tait, 265 U.S. 47 (1924) (American citizen can be taxed on foreign income though resident abroad). Although the practice of other states varies — most of them do not tax non-resident citizens — these claims by the United States would not be generally resisted by other states. 45 For studies of corporations in conflicts of law see, e. g., Yves Loussouarn, L a Condition des Personnes Morales en Droit International Privé, in: R d C vol. 96 (19591), 447—550; Elwin Latty, Pseudo-Foreign Corporations, in: Yale Law Review vol. 65 (1955), 137—173. But for purposes of excluding foreign firms for sensitive business or for asserting foreign exchange controls as to overseas investments France has used a "control" classification, Bernard Audit (note 33), 414. 4 * [1970] I.C.J. Rep. 4. 4 7 Id. at 46—49.

4 G Y I L 27

49

Detlev F. Vagts

50

ality according to the place of incorporation may not be determinative of the issue i n another context. I t is b y no means clear that in as practical and substantive an area as the law of economic warfare such a formalistic approach as these is required. I t seems likely that a state is free to categorize as its nationals corporations that are owned and controlled by its nationals and then to subject them to its commands. Alternatively, one could say that a state has the power to give direction to its nationals who have authority inside the parent corporation, especially as they act w i t h i n the state. That jurisdiction would encompass the power to have the officers of the parent exercise their lawful voting control over the subsidiary. 48 I n conclusion, an American lawyer tends to conclude that international law does not forbid the United States to exercise jurisdiction over subsidiaries abroad owned and controlled by corporations that are unmistakably American. What of jurisdiction based on the origin of goods? This is a basis not accounted for on the Harvard Research or the successive Restatements. I t necessarily did not figure in the early analysis which focused on criminal jurisdiction. I t seems even more passive than the "passive personality" principle. I t is acknowledged that a state has in a sense jurisdiction — both judicial and legislative or regulatory — over things located in its territory. What that really means to a lawyer is that a state has the right to deal w i t h the legal relations between people as they relate to objects w i t h i n the territory even when those people are outside the territory. Jurisdiction means the power to make changes i n legal relations; only people have legal relations. 49 I n a sense this is a variation on the effects test — a person outside of state X b y owning or claiming rights as to property in X creates an effect in X . The American jurisdictional claim in the pipeline case asserts that i t can be deduced from that proposition that when a state allows a person to remove property from its territory i t can impose conditions on that removal which must be honored even though they diminish that person's freedom to act outside state X . Useful international law precedents are hard to come by. I t does seem to be the case that a state's power to exclude an alien from its territory does not carry w i t h i t the right to impose inhumane conditions on entry. 5 0 Some authority under the Calvo Clause suggests that there are limits to a state's power to extract 48 49

See Thompson , note 42.

Thus a popular first year American casebook, Lon Fuller , Basic Contract Law, St. Paul 1947, 96, defined a "right in rem* as a "right against 'the world* or against persons indiscriminately while a right "in personam" is a "right against a particular person or group*. so Rodriguez-Fernandez v. Wilkinson , 505 F. Supp. 787 ( D . Kan. 1980) aff'd, 654 F. 2d 1382 (10th Cir. 1981) (international law forbids prolonged detentions of aliens though not lawfully admitted).

The Pipeline Controversy:

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51

bargains. 51 A l l of this suggests but does not establish that a state may require exporters to obtain specified assurances from buyers as to what they w i l l do w i t h the goods when they receive them. The state that imposes such requirements may enforce them insofar as its own territorial powers extend; as we shall see, it cannot demand that other states cooperate in their inforcement. The claim of jurisdiction over technology seems a peculiarly strained extension of the claim of jurisdiction over property. Ideas seem to have no nationality though every new idea arises in the mind of some person who usually has a nationality. They hardly even seem to be property although technology may have that status for some purposes in municipal legal systems.52 Again, the more realistic way of stating the issue seems to be to focus on the element of contract, the contract under which the possessor of the technology agrees to convey i t to the other party. Again there appears to be no obstacle under international law to the state w i t h jurisdiction over the possessor of the information saying to that firm "you must not transfer i t to a foreign firm without getting the following agreement from i t . " Again, that command is not entitled to cooperation from other states. Thus i t does seem t o this writer that the United States action i n the pipeline case did fall w i t h i n the scope of U.S. jurisdiction to regulate. The next section explores the more difficult issues as to whether the United States should have refrained from its exercise of that jurisdiction because of other factors such as the contrary interests and commands of other sovereigns. The outcomes of that contest hinge on what one takes to be the governing principle. Under the rule that the sovereign of the territorial scene of the action prevails, those European states that, through special statutes or the operation of their general rules of contract law, commanded European firms to make the promised deliveries to the USSR had the right to do so. The United States, correspondingly, was under an obligation not to punish Americans for participating i n or permitting actions so required. This legal theory has a reciprocal relationship w i t h the facts. The fact that in the pipeline case the United States receded from its declared rule and did not punish people for disobeying, helps to create law even though i t refrained from acknowledging a duty to recede. I t repeats the outcome of the Fruehauf trailer case i n 1965, and a number of other export control and antitrust cases of the past, in which 51 Donald Shea, The Calvo Clause, Minneapolis 1955. The major arbitral decision w i t h regard to the clause is United States of Amène a ( North Am. Dredging Co.) v. United Mexican States , United Nations Reports of International Arbitral Awards vol. 4 (1926), 26, before the bilateral claims commission. 52 The term "intellectual property" (propriété intellectuelle) has wide currency internationally as in the W o r l d Intellectual Property Organization.

4*

52

Detlev F. Vagts

the United States made such concessions.53 Reciprocally, i t can be seen as following the rule already established. From a balancing of interests perspective, the outcome is more troubling. N o agency ever came to a rational, reasoned, distinterested dispassionate conclusion that the U.S. interests at stake were less important or less closely connected than those of Europe. As we have seen, the United States had significant contacts w i t h the situation. The goals of the American policy were, from a U.S. view, important. They related to the maintenance of an international strategic balance between the t w o superpowers, to the containment of Soviet expansionism in Afghanistan and the reversal o f oppressive measures in Poland. 5 4 Whether or not one agrees w i t h the measures or the motivations one needs to understand that they were serious i n U.S. eyes; economic warfare is serious business. O n the other hand, economic warfare by definition is divisive. A t least one state is sharply opposed to the actions undertaken by the other; third states occupy varying positions of neutrality. I n this situation, the European states not only disagreed about the level of pressure to be put on the Soviet Union but had sharply different views of the economics of the pipeline to-be and resented what they perceived as paternalistic i n the U.S. approach. Thus there is not the shared sense of common interest that underlies the condemnation of universal crimes or even the joint concern about Soviet expansionism that led to the creation of C O C O M and the relatively close coordination of national embargoes that characterized C O C O M ' s early years. 55 A further divisive force was the strong element of retroactivity, the fact that U.S. rules had permitted the re-export of the items i n question throughout the period in which commitments involving that re-export were being made. 56 The failure to agree may have been too strongly based on substantive differences to have been repairable through better institutions and procedures. Still, the episode leaves one w i t h a sense that the future is going to have more rough passages involving extraterritoriality issues that could be resolved less painfully i f a more satisfactory mechanism were i n place. I t would be clearly 53 See: Fruehauf Corp. v. Massardy , La Gazette du Palais, Paris, 1965 I I , 86—90; an English summary is reprinted in: I L M vol. 5 (1966), 476. Analyzed in: William Craig, Application of the Trading with the Enemy Act to Foreign Corporations Owned by Americans, in: H a r v a r d Law Review vol. 83 (1970), 579—601, the antitrust episodes described in note 38. 54 e . . . (T)he United States has a grave interest in its ability to enforce those regulations which are in its view, essential to the accomplishment of important foreign policy objectives". Dresser Indus. Inc. v. Baldridge , 549 F. Supp. 108, 110 ( D . D . C . 1952). 55 For an earlier view of C O C O M and international cooperation in export controls see: Harold Berman / John Garson (note 8), 834—842. 56

O n the retroactivity element, see: Jürgen Basedow , Das amerikanische Pipeline-Embargo vor Gericht, in: Rabeis Zeitschrift für ausländisches und internationales Privatrecht vol. 47 (1983), 161—172.

The Pipeline Controversy:

An American Viewpoint

53

unwise to suggest that future disputes be referred to any existing or plausibly imaginable adjudicatory tribunal; the material would plainly not lend itself to resolution by third party decision. I t is difficult to see a case law developing that would relieve the adjudicators of the burden of making ad hoc decisions. N o r does one imagine that a retreat on the part of the United States is likely to resolve all or even a majority of the disputes that the future holds in store. I f the U.S. Congress passes a law forbidding retroactive applications and otherwise sends a message to the executive to be cautious, that action may reduce the number of cases. But it w i l l not eliminate them, because cases of real crisis will, now and then, emerge and the U.S. w i l l be united behind vigorous executive action not desired in Europe. O n the other hand, diplomacy on the part of the executive has not in the past prevented episodes and is not too likely to do better consistently in the future. The U.S. courts do not have a solid footing from which to call a halt to the executive's actions. Perhaps the optimum arrangement available would be a standing international committee on jurisdictional controversies representing the major industrial states likely to become embroiled in such disputes. The members should be persons of some independence and stature. A standing body might be able to approach each episode early in the game before lines had been drawn and could bring to bear the accumulated experience of prior episodes, which seemed at times during the pipeline situation to have been forgotten. I t is unlikely that the states in question would confer the power to make binding, final decisions on any such body but findings and recommendations from a body so organized and staffed ought to carry substantial weight w i t h governments. I n effect such a body might do what C O C O M is evidently not able to accomplish. The stakes are high because both, the United States and Europe would suffer i f disagreements at the margin were to demolish the structure of collaborative efforts to restrict the flow of goods and technology to the Soviet Union in those cases where those flows might genuinely contribute to acceleration of the arms race and the grasping of a strategic advantage by a state which, as the continuation of N A T O testifies, is still regarded by all of us as a danger.

International Law Issues Arising in the "Pipeline" Dispute: the British Position Α . V . Lowe I.

Introduction

The British Secretary of State for Trade and Industry began a recent speech to the U n i t e d States Chamber of Commerce and Washington Export Council by referring to the long-standing friendship between Britain and the United States and to . . . the most persistent source of tension between us: your [sc. United States] claims to be able to impose your laws on people in other countries, inside their o w n homes and their businesses — what we call extraterritoriality and what over here is sometimes referred to soothingly as 'Conflicts of Jurisdiction'. 1 Problems of extraterritoriality have arisen between the United Kingdom and the U n i t e d States i n many episodes2 during the years since the articulation of the 'effects' doctrine b y Judge Learned Hand i n the Alcoa case3 i n 1945. A m o n g these episodes, the 'Pipeline* dispute has an exceptional importance i n legal history, i n addition to its undoubted political significance in the context of relations between European States and the United States in their dealings w i t h the Soviet bloc. This importance lies in the presentation during the dispute of a statement of the European position which not only discussed the issues of customary international law i n unusual detail, but was also remarkable in that i t apparently represented the agreed view of the European Community States on those issues. That statement, the European Community Note and Comments of 12 August 1982 4 (hereafter, European Community Comments), made clear 1 Speech by the R t . H o n . Norman Tebbitt M . P., 8 February 1984, attached to Department of Trade and Industry Press Notice Ref. 73, 8 February 1984, 2. 2 For brief reviews of the major episodes see, e. g., A. H. Hermann , Conflict of National Laws w i t h International Business Activity: Issues of Extraterritoriality, London 1982; A.. V . Lowe , Blocking Extraterritorial Jurisdiction: The British Protection of Trading Interests A c t 1980, in: American Journal of International Law ( A J I L ) vol. 75 (1981), 257—282. 3 United States v. Aluminium Co. of America , 148 Federal Reporter, Second Edition (F. 2 d ) 416 ( 2 d Cir. 1945); the relevant passage is reproduced in A. V.Lowe , Extraterritorial Jurisdiction, Cambridge, England 1983, 1—2. 4 Reproduced in: International Legal Materials ( I L M ) vol. 21 (1982), 891—904, and also in the present volume, 554—562.

The "Pipeline" Dispute: The British Position

55

that the 'Pipeline' dispute was essentially a disagreement over fundamental legal principles, rather than a disagreement over the political expediency of the United States approach to the Soviet pipeline project. The European Community Comments express a view of the legality of the United States claims which is very close to that which has been advanced by the British Government. Parts of the Comments are less easily reconciled w i t h the practice of some other European authorities, such as the European Commission 5 and the German Federal Cartel Office. 6 The European Community and German viewpoints are discussed elsewhere in this symposium. The purpose of this paper is to set out the British view of the 'Pipeline' dispute. A Memorandum on the dispute sent by the British Government to the United States Department of State emphasised that the issues arising . . . must be seen in the context of a longstanding disagreement between [Her Majesty's Government] and certain other national governments on the one hand, and the United States on the other about the proper boundaries of national jurisdiction. 7 That disagreement arises at almost every stage of the legal argument advanced in support of the United States extraterritorial claims. Rather than attempt an historical narrative, this paper adopts an analytical approach and seeks to explain the British position on each of the legal issues arising. I n doing so, the paper w i l l draw on statements of the British position made in a variety of contexts during the course of the longstanding disagreement' w i t h the United States. II. T h e L e g a l

Issues

1. The Burden of Proof The first issue which has to be decided in any jurisdictional dispute is where the burden of proof lies. One answer to that question was given b y the majority of Judges in the Permanent Court of International Justice i n the Lotus case.8 There i t was said that: 5 Compare the Comments (paragraph 12) concerning the 'effects' doctrine with, e. g., the European Commission's Eleventh Report on Competition Policy, Brussels 1982, 36. 6 Compare the Comments (paragraph 12) concerning the 'effects' doctrine with, e. g., the opinion of the Federal Cartel Office in the Philip Morris / Rothmans case, 24 February 1982, discussed in David J. Gerber , The Extraterritorial Application of the German Antitrust Laws, in: A J I L vol. 77 (1983), 765—783 (776—779). 7 Bntish Government , [Memorandum] West Siberian Pipeline: U S Export Administration Regulations and Related U S Department of Commerce Proceedings, attached to N o t e 177, 18 October 1982, to the United States Department of State, reprinted in: Lowe (note 3), 212—214 (214). 8 [1927] Permanent Court of International Justice Reports (PCIJ), series A , N o . 10, 4—108.

Α. V. Lowe

56

Far from laying down a general prohibition to the effect that States may not extend the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure of discretion which is only limited in certain cases by prohibitive rules. 9 This view amounts to a presumption in favour of the legality of claims to extraterritorial legislative or prescriptive jurisdiction (as opposed to jurisdiction actually to enforce laws which, as the Lotus judgment recognized, is i n principle confined to the territory of a State). 10 Such a presumption is still said by some regulatory agencies to exist. 11 I t might also be thought that the novel American claims to jurisdiction over goods and technology of United States origin, advanced in the 'Pipeline dispute, must rest upon some such supposed freedom of legislative action. However, this is not certain. The United States appears to have rejected such a presumption in some contexts. For example, in protesting against Greek claims to jurisdiction over United States nationals based on the 'passive personality* principle, the United States seems to have made no attempt to prove the existence of a rule of international law prohibiting such claims. 12 Moreover, the Lotus case itself and arguments in favour of a presumption of legality for extraterritorial legislative jurisdiction have been so widely and heavily criticised on grounds of legal principle and logic 1 3 that i t would be difficult to rest any claim upon the presumption alone. The British view, however, appears to be that there is no such presumption, and that i t is for States claiming extraterritorial jurisdiction to prove their right to it. Thus, for instance, when the British Attorney-General intervened as amicus curiae i n the case of Rio Tinto Zinc Corporation v. Westingbouse Electric Corporation and addressed the House of Lords on the question of extraterritoriality, he stated that: N o authority supports the United States claim to exercise penal jurisdiction over the actions outside the United States of non-United States nationals or companies of another country's nationality. 1 4 » Ibid., 19. ίο Ibid., 18—19. 11 See, e. g., the views of the Federal Cartel Office in its Reply to the Joint Statement of Appeal against its Preliminary Decision of 24 February 1982 {Philip Morris / Rothmans), 19 November 1982. 12 See, e. g., Arthur W. Rovine (ed.) Digest of United States Practice in International L a w 1973, Washington D . C. 1974, 197—198; Eleanor C. McDowell, Digest of United States Practice in International Law 1975, Washington D . C. 1976, 339—340. 13 See, e. g., J. W. Bndge, The Law and Politics of United States Foreign Policy Export Controls, in: Legal Studies v o l . 4 (1984), 2—29 (8); Lowe (note 2), 262—263; F.A.Mann, Studies in International L a w , Oxford 1973, 26; and see the literature cited in Manley O. Hudson, World Court Reports, vol. 2, Washington D . C. 1935, 20—21. " [1978] Appeal Cases (A. C.) 547, 589—595 (594).

The "Pipeline Dispute: The British Position

57

N o attempt was made to adduce evidence of a rule of international law specifically forbidding the United States claims; nor has the United Kingdom ever made such an attempt in the course of its many communications protesting against United States jurisdictional claims. Similarly, the European Community Comments state that the United States measures at issue in the 'Pipeline' dispute . . . are unlawful since they cannot be validly based on any of the generally accepted bases of jurisdiction in international law. 1 5 Here, too, the assumption is that extraterritorial claims are valid only in so far as they can be shown to rest upon a legal basis which positively establishes the validity of the claim. I t would therefore follow from general principles of law that the burden would be upon the State claiming the right to exercise extraterritorial jurisdiction to prove the existence of a recognized legal basis for its claim.1® Permissible bases of jurisdiction are, like other rules and principles of customary international law, the creatures of State practice — of "international custom, as evidence of a general practice accepted as l a w " , as article 38 (1) (b) of the Statute of the International Court of Justice puts it. This has an important consequence. Because customary international law is essentially consensual in nature emergent rules can only bind States which have accepted them, either expressly or by acquiescence. As Judge M osier has written: The question as to whether a rule whose existence is clearly established can be applied even to States which had expressly opposed it during the course of its creation has been answered in the negative. 11 Thus, persistent objection to an emergent rule excepts the objecting State from the binding force of the rule. This was recognized by the International Court in its rejection of a British argument that N o r w a y was bound by an alleged rule limiting closing lines across bays to a maximum of ten miles: . . . the ten-mile rule would appear to be inapplicable as against N o r w a y inasmuch as she has always opposed any attempt to apply it to the Norwegian coast. 18 Similarly, claims to extraterritorial jurisdiction to which the United Kingdom has persistently objected would not be binding on (or, to use the term borrowed 15

EEC-Comments (note 4), paragraph 30. D. P. O'Connell,

International Law, vol. 2, 2nd. ed., London 1970, 1097.

17

Judge Herman Mosler , The International Society as a Legal Community, Alphen aan den Rijn 1980, 118, Cf. Α. V. Lowe , D o general rules of international law exist?, in: Review of International Studies vol. 9 (1983), 207—213. is [1951] International Court of Justice Reports I.C.J. Rep., 116 (131).

58

Α. V. Lowe

from the French, opposable to) it. This, as w i l l be seen, is a point of considerable importance in the context of the United States jurisdictional claims. Broadly speaking, the United Kingdom accepts only t w o main bases of jurisdiction — territoriality and nationality 1 9 — and i t is to these that attention is now turned. 2. Territoriality

as a Basis of Jurisdiction

Territoriality is, of course, accepted as a basis of jurisdiction. The British Government has made clear its view of this basis of jurisdiction. The longstanding belief of the British Government is that territorial principles of jurisdiction should govern in the field of economic competition. Such principles minimize the likelihood of international friction in an area in which conduct that may be discouraged or illegal in one country may be legal or even encouraged (or compelled) i n another. A restriction against extraterritorial jurisdiction also provides businesses w i t h greater certainty about the obligations to which they are subject, thus creating a more stable economic environment conducive to trade and investment. 20 Made in the context of antitrust proceedings, that statement is equally applicable in the context of export controls. The obvious corollary of this view, in terms of the behaviour of businesses, is drawn from i t : . . . the British Government has consistently taken the position that British enterprises engaged in transnational business operations should comply w i t h the laws and governmental policies of the countries i n which they transact business.21 This point has been made in more general terms by referring to "the primacy of the laws and policies of the territorial State" over claims to extraterritorial jurisdiction. 2 2 I t is obvious that the United States could not properly claim jurisdiction over business operations w i t h i n the United Kingdom on the basis of the 19 See, e. g., the British Government's Aide-Memoire to the Commission of the European Communities, 20 October 1969, concerning the Dyestuffs case ( I C I v. Commission) reprinted in: E. Lauterpacht , British Practice in International Law 1967, London 1969, 58—59 (59) and Lowe (note 3), 144—147 (146). Cf., the EEC-Comments (note 4), paragraph 4. 20 Washington Public Power Supply System v. Western Nuclear Inc., Amicus curiae brief of the Government of the United Kingdom, 22 October 1982, 6—7. 21 In re Uranium Antitrust Litigation, amicus cunae brief of the Government of the United Kingdom, 3 August 1979, reproduced in: Lowe (note 3), 157—174 (157). 22 Note N o . 174, 4 September 1981, from the Government of the United Kingdom to the United States Department of State, reprinted in: Lowe (note 3), 152—155 (154). Cf., the comments of the Attorney-General in Rio Tinto Zinc Corporation v. Westinghouse Electric Corporation, ibid., 170—171 and [1978] A . C . 594—595.

The "Pipeline" Dispute: The British Position

59

territorial principle i n its strictest form. I t is, however, generally admitted that the principle is flexible, and can be used to found jurisdiction over activities which are not wholly, but partly, committed w i t h i n the territory. The existence of, and limits upon, this extended notion of territoriality were evident in the 1969 British aide-memoire in the Dye stuff s case.23 There i t was said that in cases of conspiracy, jurisdiction existed i f the conspiracy was formed w i t h i n the territory, and similarly i f the conspiracy was formed outside the territory and the persons proceeded against had done things w i t h i n the territory in pursuance of the conspiracy. Such cases w o u l d be examples of 'subjective and 'objective' territoriality, respectively. Their essence lies in the fact that, i n the case to which they apply, the intraterritorial and extraterritorial elements of the conduct over which jurisdiction is asserted are — to use the words of the International Court in the Lotus case — "legally, entirely inseparable, so much so that their separation renders the offence non-existent." 24 I n this, they are quite different from claims to jurisdiction based upon the more remote repercussions or effects of conduct which underlie the "effects" doctrine. Indeed, the point has been well made that such cases are " . . . arguably about where the act takes place or is completed rather than about effects." 25 I n the 'Pipeline' dispute, the acts of the British companies which were the subject of the American regulations whose international legality was disputed by the British Government, took place in the United Kingdom. They clearly fell outside the territorial principle, even in its extended "subjective" or "objective" forms. Furthermore, it was evident that they could not be brought even w i t h i n the scope of the "effects" doctrine, because they had no direct, forseeable or substantial effect upon United States trade or commerce, such as would be required for the application of that doctrine. 26 Moreover, even i f the "effects" doctrine had been applicable on the facts, i t could not lawfully have been invoked against British companies i n the face of objections from the British Government. That Government has persistently objected to the use of the "effects" doctrine, 27 and as a matter of basic international law that doctrine is not opposable to the United Kingdom.

23

British aide-memoire in the Dyestuffs

2 4

Lotus case (note 8), 30.

case (note 19).

25 British Minister of Trade Peter Rees M . P., speech, Extraterritoriality: The British Position, Royal Institute for International Affairs, Chatham House, London 21 October 1982, text appended to Department of Trade Press Notice Ref. 470. 21 October 1982, 2. se EEC-Comments (note 4), paragraph 13. 27 See, e.g., the statements reprinted in Lowe (note 3), 145, 146—147, 159, 170, 177; and see the text above, at notes 17, 18.

Α. V. Lowe

60 3. Nationality

as a Basis of Jurisdiction

A p a r t from territoriality, the only other basis of jurisdiction generally recognized by the British Government is nationality. This recognition could be the result of one of t w o views. I t could be based on the view that the manner in which States treat their nationals, including the way in which they exercise jurisdiction over them, is a domestic matter outside the ambit of international law: or, i t could be based on the view that international law itself specifically allows and regulates the use of nationality as a jurisdictional linking point ("Anknüpfungspunkte", i n Dahm's terminology 2 8 ). The British Government has repeatedly argued that there are limitations upon the use of the nationality of corporations as a linking point, and appears not to regard i t as an aspect of a State's freedom in relation to the treatment of its nationals. A t least in relation to corporations ( w i t h which these jurisdictional disputes are almost exclusively concerned), this view is common, even among States claiming extensive jurisdiction. As Gillian Triggs has written, such States . . . have been concerned, not w i t h the technical concept of nationality under traditional rules of international law, but w i t h deciding whether an assertion of jurisdiction in any particular case is appropriate in the circumstances. 29 The British view of nationality as a basis of jurisdiction is closely related to its view of territoriality as the governing jurisdictional principle in economic matters. The consequence — and perhaps the intention — of both is to ensure that business activity w i t h i n the United Kingdom is under the effective control of the laws of the United Kingdom. Thus, while the right of a State to use nationality as a basis of jurisdiction is unquestioned, the British Government has taken the view where foreign corporations incorporate subsidiaries in the United Kingdom those subsidiaries are in principle to be regarded as legal entities separate from their parent companies (a point forcefully made in the Dyestuffs aide-memoire 30) and to be regulated by British law. Specifically, the British Government has stated, in correspondence concerning the application of the United States Export Administration Act to the British company 3 M United Kingdom L t d , that i t does . . . not accept that it is consistent w i t h the principles of international law for one State to assert that a corporation possesses the nationality 28 See the discussion of Dahm's theory in Attorney-General of the Government of Israel v. Eichmann , International L a w Reports vol. 36 (1961), 5—344 (50). 29 Gillian Triggs , State Jurisdiction over Corporations: The Nationality Principle at International Law, Canberra 1982, 30. The European Community Comment seem to take a different view (note 4), paragraph 7. 30 British aide-memoire in the Dyestuffs case (note 19).

The "Pipeline" Dispute: The British Position

of that State merely by virtue of the nationality of the proprietors of its capital. I n the view of H e r Majesty's Government, the nationality of a corporation is determined by its place of incorporation. 3 1 Assertions of jurisdiction by the United States over foreign subsidiaries of American companies and, a fortiori , over foreign companies in which United States citizens own some shares, but not enough to make the companies subsidiaries of American businesses, have been criticized as an "objectionable practice". 3 2 British practice accords w i t h this insistence upon the legal separateness of parent and subsidiary. For example, the Monopolies Commission noted in one of their reports that " . . . we have no power to require evidence from the overseas members of the Roche group." 3 3 I t seems that the British Government's position on jurisdiction over subsidiaries might be more flexible than the statements recorded above suggest. I n a diplomatic Note concerning amendments to the United States Export Administration A c t the British Government suggested that the amendments should provide for jurisdiction over foreign subsidiaries only where the subsidiaries were unable to rebut a presumption that they were as a matter of fact controlled by a United States parent in respect of the specific operations which were the subject of proceedings under the A c t . 3 4 I t was expressly stated in that Note that this suggestion, intended to minimise the jurisdictional conflicts which would almost inevitably arise under the Export Administration Act, was without prejudice to the fundamental objections of the British Government to measures purporting to control the actions of non-United States companies operating outside the United States. Nonetheless, the suggestion is not inconsistent w i t h the basic British position. Asking whether the American parent was in fact controlling the subsidiary in relation to the acts i n question can be seen as simply another way of asking where the parent company was acting. I f the subsidiary was essentially a passive instrument of the parent the acts should be regarded as the acts of the parent, conceived w i t h i n the territory and executed overseas. To seek to control those overseas acts, committed by the 31 N o t e N o 174 of 4 September 1981 from the Government of the United Kingdom to the United States Department of State, reprinted in: Lowe (note 3), 152—155 (152). 32 By the Secretary of State for Trade, in the second reading debate on the Protection of Trading Interests Bill: Parliamentary Debates (Hansard) House of Commons Official Report (5th Series), vol. 973, column 1537, 15 November 1979. 33

Monopolies Commission , A Report on the Supply of Chlordiazepoxide and Diazepam, House of Common Paper 197, (1972—73), London 1973, paragraph 208. C/., the summary of the British position in Organisation for Economic Co-Operation and Development , International Investment and Multinational Enterprises: Responsibility of Parent Companies for their Subsidiaries, Paris 1980, 105—110. 34 N o t e N o . 226, 18 November 1977, from the Government of the United Kingdom to the United States Department of State, reprinted in: Lowe (note 3), 148—149 (148).

61

62

Α. V. Lowe

parent through the instrumentality of the passive subsidiary, w o u l d i n principle be a permissible exercise of 'subjective' territorial jurisdiction. This would, of course, turn upon the actual "passivity" of the subsidiary: the whole point of the distinction between parent and subsidiary insisted upon in British practice is that subsidiary companies may well be as a matter of fact independent of parent companies to which they are tied as a matter of l a w . 3 5 Even i f jurisdiction over subsidiaries were exercisable on the basis of their passive execution of their parents' instructions, or — more controversially — on the basis of the ascription of the nationality of their parent company or major shareholder to them, i n contravention of the approach adopted by the International Court in the Barcelona Traction case,36 there w o u l d be limitations upon the manner in which that jurisdiction could properly be exercised. I t has been said that: The view of H e r Majesty's Government is that while i t may be legitimate i n certain circumstances for a State to exercise jurisdiction over its nationals in respect of their activities in the territory of another State, i t may only do so, consistent w i t h the principles of international law, i f i t sufficiently takes account of the effect on the interests of that other State consequent on the exercise of that jurisdiction. 3 7 This view was expounded in a little more detail by a British Trade Minister in a speech in 1982, when he said . . . we [sc. the United Kingdom] regard companies incorporated i n the United Kingdom as having British — not United States or any other — nationality, even i f they are 1 0 0 % foreign owned . . . [ E ] v e n where nationality is a legitimate basis for extraterritorial jurisdiction i t must remain subject to the primacy of the law and policies of the territorial State [ i ] t is for each State to determine the economic policies applying to persons and companies in its territory. 3 8 The reference to laws and policies is significant. United States laws defer to some extent to the positive requirements of foreign laws compelling actions which incidentally violate United States law. This defence of foreign sovereign compulsion may operate to prevent the imposition of sanctions for breadi of the United States law. 3 9 But in countries which, like the U n i t e d Kingdom, 35

The European Court of Justice has taken a similar view: see, e.g., BMW v. Commission cases 32, 36—82/78, [1979] European Court of Justice Reports ( E C R ) , 2435—2497 (2475— 2476). * · [1970] I . C J . R e p . 3—357. s? The N o t e of 4 September 1981 (note 31), 152. 3 ® Speech by the British Minister of Trade Peter Rees, M . P. (note 25), 6. 39 See, e. g., Société Internationale v. Rogers, 357 United States Supreme Court 197 (1958); In re Westinghouse Uranium Contracts Litigation , 563 F. 2 d 992 (1977); Note, Foreign

The "Pipeline" Dispute: The British Position

63

organise their economies on laisser-faire lines such compulsion is rare: businesses are generally given freedom, but not required by law, to adopt business policies of their choice. However, the giving of this freedom, although not backed by any legislative mandate, is nonetheless a deliberate government policy, and is no less deserving of respect from foreign courts than are dirigiste policies. This point has been made repeatedly in communications w i t h the United States, which has sometimes argued 40 that where British law does not specifically require a given course of conduct there exists a legislative vacuum into which United States law may step, penalising that conduct. That argument has been emphatically rejected. The British Government has stated that the argument . . . appears to rest on the assumption that United States jurisdiction may apply i n other countries unless there is a specific provision [sc. the other country's l a w ] to the contrary. This is unfounded i n international law and H e r Majesty's Government absolutely reject i t . 4 1 This objection relates not only to the enforcement of United States laws against businesses i n Britain, but also to the very existence of laws purporting to have such application. Laws are commonly obeyed without the necessity for their being enforced through the courts: as has been observed " . . . the mere existence of United States regulations purporting to have extraterritorial effect may well bear adversely upon United Kingdom companies." 42 The implication of these views for the 'Pipeline dispute are clear. Companies incorporated i n the United Kingdom are British. They are subject to the primacy of British territorial jurisdiction in so far as their activities w i t h i n the United Kingdom are concerned. Even the existence of a sizeable United States shareholding i n them would not change their British character as the United States Government and Supreme Court seem, indirectly, to have conceded i n the Sumitomo case.43 A n d even were jurisdiction on the basis of nationality to Nondisclosure Laws and Domestic Discovery Orders in Antitrust Litigation, in: Yale L a w Journal vol. 88 (1979), 616—628. 40 E. g., in a diplomatic communication from the Department of State to the British Government, dated 30 June 1981, reprinted in: Lowe (note 3), 150—152, (151). 41 N o t e N o . 82, 31 March 1981, from the Government of the United Kingdom to the United States Department of State, reprinted in: Lowe (note 3), 149—150, (150). Cf., the N o t e of 4 September 1981 (note 31), 154. 42 Note of 4 September 1984 (note 31), 155. 43 Sumitomo Shoji America , Inc. v. Avagliano (1982), reproduced in: I L M vol. 21 (1982), 790—797. The amicus curiae brief submitted by the United States Government in that case is reproduced in: ibid., 629—651. Cf., the discussion by the Dutch court in Compagnie Europeene des Petroles S. A. v. Sensor Nederland Β. V., reprinted in translation in: I L M

64

Α. V. Lowe

be exercisable over them — which i t was not — that exercise would be restricted by the primacy of British territorial jurisdiction which is itself a corollary of the sovereignty of the United Kingdom and its right of self-determination in respect of activities w i t h i n its territory. The United States could not properly compel businesses incorporated i n the United Kingdom to act in a manner inconsistent w i t h the declared policies of the British Government. The nationality principle afforded no greater warrant for the imposition of the United States embargo upon British companies than did the territorial principle. 4. Jurisdiction

over Goods

The most far-reaching and novel of the jurisdictional claims in issue in the 'Pipeline' dispute was the claim to regulate the re-exportation to the Soviet Union of goods of United States origin and the exportation or re-exportation to the Soviet Union of goods manufactured outside the United States but directly derived from technical data of United States origin. The disposition of such goods was regulated even when they were owned by and i n the possession of companies not themselves subject to the jurisdiction claimed by the United States, as discussed in the previous section. This must have been recognized as a speculative claim when i t was advanced by the United States. H a d other States accepted or acquiesced in it, the claim could have begun its passage into the corpus of international law. 4 4 I n the absence of such acceptance, this novel claim could not properly be enforced. The British Government did not accept the claim. I n a Memorandum concerning the 'Pipeline' dispute and addressed to the United States Department of State, i t was said that . . . the United Kingdom does not accept that the jurisdiction of the United States can legitimately extend to the control of activities of companies in other countries i n respect of their exports manufactured in those countries incorporating parts or technology of United States origin, once such goods or technology have been sold from the United States. Goods have no national identity which overrides changes of ownership of those goods. 45 The European Community Comments were similarly dismissive, asserting that Goods and technology do not have any nationality and there are no known rules under international law for using goods or technology vol. 22 (1983), 66—74 (71—73), for a critical remark to this case see: Jürgen Basedow , Das amerikanische Pipeline-Embargo vor Geridit, in: Rabeis Zeitschrift für ausländisches und internationales Privatrecht vol. 47 (1983), 161—172. 4 4

See Bridge (note 13), 8 — 9 ; and cf. the text above, at note 17.

45

British memorandum (note 7), 214.

he "Pipeline" Dispute: The British Position

65

situated abroad as a basis of establishing jurisdiction over the persons controlling them. 46 The burden of proof lies, as was shown above, on those challenging this view: it is a burden which appears impossible to discharge i n the case of this extraordinary jurisdictional claim, which is w h o l l y unsupported by State practice. 5. Submission to Jurisdiction

by Private

Agreement

The United States regulations also purported to apply to foreign businesses which had agreed, in contracts made w i t h private concerns i n the United States for the supply of goods or technology, to abide by U n i t e d States Export Administration regulations. I n as much as such provisions were included in the private contracts at the insistence of the United States authorities, they could be summarily dismissed as an attempt by the United States to p u l l itself up by its own bootstraps. They were assertions of jurisdiction by the United States authorities though the passive medium of the American businesses: they were not freely-negotiated contractural terms. A n d i f the United States lacked jurisdiction to impose such terms upon the foreign parties through the usual processes of legislation, they could claim no wider jurisdiction by insisting that the American parties incorporate the terms i n their contracts. Though i t might be argued that submission to United States jurisdiction was part of the price of the goods, such arguments of policy cannot negate the effect of the rules of international law. I n any event, i t could as well be argued that the loss of control by the United States authorities was part of the price which had to be paid for finding foreign buyers for the goods. Even i f such 'submission clauses' had been freely negotiated b y the parties to the contracts, i t is arguable that they would be ineffective to extend United States jurisdiction. They do not represent a short-hand method for incorporating the terms of a Statute into the contract as is the case where, for example, the provisions of legislation concerning the carriage of goods b y sea are incorporated into a contract, for in such a case the terms incorporated would be those of the law as it stood at the time of incorporation. 4 7 I n the 'Pipeline' dispute United States law at the time that the contracts were made did not forbid re-exports to the Soviet Union. N o r do they merely determine the precise mode of performance of the parties' contractual obligations inter se, i n the way that the currency regulations of a law freely chosen b y the parties might determine the currencies in which a contract debt might be discharged. Rather, they purport to subject one party to the laws of a State not itself a party to the contract — to provide a saddle on which the public laws of that 46 EEC-Comments (note 4), paragraph 8. See / . H. C. Morns , T h e Conflict of Laws, 2nd ed., London 1980, 218.

5 GYIL 27

66

Α. V. Lowe

State may ride and direct the actions of the submitting party. As such, i t is likely that an English court would refuse to enforce the submission clauses on the ground that to do so would be to enforce a public law of a foreign State. 48 The British Government was emphatic i n its rejection of submission clauses as a device for extending jurisdiction. I t informed the United States that . . . a provision in a contract between t w o private parties providing that an overseas party w i l l observe the law of the United States i n regard to any re-export of items of United States origin is not capable of replacing or overruling the national law of the country concerned. A n y attempt by a State to further the use of such clauses i n private contracts concluded by its nationals for the purposes of extending the jurisdiction of the State would be objectionable. 49 The European Community as a whole has been equally clear in its rejection of this device: . . . such "Submission Clauses" cannot confer on the United States export controls a valid jurisdictional reach which they would not otherwise have. 50 6. Conclusions on International

Law

Arguments

The result of the foregoing arguments, which had been consistently advanced by the United Kingdom over many years before the eruption of the 'Pipeline' dispute, was a rejection of all the possible grounds upon which the United States attempts to regulate the exportation or re-exportation of goods from the United Kingdom to the Soviet Union could be based. The United Kingdom is, of course, a Member State of the European Community, and must be taken to have assented to the arguments set out i n the European Community Comments. Those comments, as w i l l be evident, reinforce this long-standing British view of the jurisdictional issues raised in the dispute. Legal rights are not always exercised. The British Government could have acquiesced in the imposition of the United States export embargo. The Government did not. The British response was swift and firm. The final section of this paper describes that response and the reasons for it. 48

See F. A. Mann, Prerogative Rights of Foreign States and the Conflict of Laws, reprinted in: F. A. Mann, Studies in International Law, Oxford 1973, 492—514. This article was referred to by Lord Denning M. R. in Attorney General of New Zealand v. Ortiz [1982] 3 A l l England Law Reports 432—468 (437). This question is discussed in more detail in Α . V . Lowe , Public International Law and the Conflict of Laws: The European Response to the U . S. Export Administration Regulations, in: International and Comparative L a w Quarterly vol. 33 (1984), 515-^530 (519—527). 49 British memorandum (note 7), 214. 50 Aide Memoire from the European Community and its Member States to the United States Administration, 14 March 1983, reprinted in: Lowe (note 3), 215—219 (217).

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7. The British Response The British Government was faced w i t h an attempt to prevent John Brown Engineering Ltd., from fulfilling its contractual obligation to deliver gas turbines to the Soviet U n i o n — an obligation not only lawful at all times under the law of the United Kingdom, but also lawful under United States law at the time when i t was entered into. I t responded by invoking the Protection of Trading Interests Act and ordering the British companies concerned not to comply w i t h the United States embargo. The Protection of Trading Interests Act 1980 51 is a successor to the Shipping Contracts and Commercial Documents A c t 1964, the first British statute designed to counter excessive jurisdictional claims by foreign States. The 1980 A c t provides for four main kinds of counter-measure. First, under Section 1 there are powers exercisable in relation to any requirement or prohibtion which is imposed on any person carrying on business i n the United Kingdom under the law of a foreign country for the purpose of regulating or controlling international trade, and which is damaging to the trading interests of the United Kingdom. H a v i n g designated such foreign measures by an order under section 1 (1), under section 1 (3): The Secretary of State may give to any person in the United Kingdom who carries on business there such directions for prohibiting compliance w i t h any such requirement or prohibition as aforesaid as he considers appropriate for avoiding damage to the trading interests of the United Kingdom. Section 2 of the A c t provides for the issuing of prohibition on compliance w i t h demands for the production of documents and information required by overseas courts and authorities. Sections 5 and 6 deal w i t h foreign multiple damages awards, such as the treble damages awards in United States antitrust cases: section 5 prohibits their enforcement in British courts; and section 6 creates a statutory right for British businesses to recover through the British courts from the original plaintiff the non-compensatory portion of a multiple damages award in cases where, broadly speaking, the foreign court making the original award was claiming excessively wide jurisdiction. I n the 'Pipeline dispute the British Government invoked the powers under section 1 of the 1980 Act. O n 30 June 1982 the Secretary of State made an order 5 2 under section 1 (1), stating that section 1 of the A c t applied to specified 51 1980 Chapter 11, reproduced in: I L M vol. 21 (1982), 834—839, and Lowe (note 3), 187—192. For detailed discussions of the Act see D. L. Jones, Legislative Attempts to Protect Trading Interests, in: Commonwealth Law Bulletin vol. 8 (1982), 353—378; Lowe (note 2). 5 2 Statutory Instrument 1982 N o . 885, 30 June 1982, reprinted in: I L M vol. 21 (1982), 852, and Lowe (note 3), 193.

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parts of the United States Export Administration Regulations, under which the 'Pipeline' embargo had been imposed. This order had no immediate practical effect: i t merely enabled the Secretary subsequently to prohibit British businesses from complying w i t h those parts of the Export Administration Regulations designated in it. The United States Government was informed of the order, and the matter was discussed at a meeting in Washington i n July 1982 between British Trade Minister, Peter Rees M . P., and United States Commerce Secretary Baldridge. 5* At that meeting the British Minister expressed his Government's "strong objection" to the United States measures. O n 19 and 26 July 1982, British ministers signalled in Parliament their intention to invoke further provisions of the Protection of Trading Interests A c t i f the problem were not resolved. 54 The United States did not shift its position, and on 2 August 1982 the British Secretary of State for Trade, Lord Cock field ,announced that he had used his powers under section 1 (3) of the 1980 A c t and issued directions to John Brown Engineering Ltd., Smith International ( North Sea) Ltd., Baker w i t h the American embargo. 55 The British companies obeyed the directions: failure to do so w o u l d have been punishable as a criminal offence. 56 Six turbines were shipped from Britain to the Soviet U n i o n on 9 September 1982, and as a result the United States authorities ordered the temporary suspension of export privileges to John Brown Engineering Ltd., the company responsible, and certain of its subsidiaries. 57 The British Government responded on 10 September 1982 by expressing its regret at the United States action, and by ordering t w o further British companies, the Walter Kidde Company and the Andrew Corporation , not to comply w i t h the United States embargo. 58 As the temperature of the dispute increased so, one imagines, did the intensity of the discussions between the United States and the European countries 011 Tools (United Kingdom) Ltd., and AAF Ltd., forbidding them to comply concerned. O n 13 November 1982, President Reagan announced that consultations between the "industrialised democracies" of the Western Alliance had resulted that morning in agreement upon a plan of action providing for stronger and more effective measure concerning trade w i t h the Soviet Union, 53 House of Commons Official Report (6th series) vol. 28 column 7, 19 July 1982. 54 Ibid., column 14, 19 July 1982; House of Lords Official Report (5th series) vol. 434 column 21, 26 July 1982. 55 The directions are not published. They were announced in: House of Lords Official Report (5th series), vol. 434 columns 544—545, 2 August 1982. 56 Protection of Trading Interests Act 1980, section 3. 57 See Department of Trade Press Notice Ref. 417, 10 September 1982. The United States Order Temporarily Denying Export Privileges to John Brown Engineering Ltd is reproduced in: I L M vol. 21 (1982), 1101—1102.

58 Department of Trade Press Notice Ref. 417, 10 September 1982.

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and that consequently the unilateral American sanctions were being lifted. 5 9 While the details of that plan of action are not known, i t seems clear that efforts to co-ordinate the transfer of technology to the Soviet bloc were made in C O C O M , the informal co-ordinating committee, meeting in Paris, to which Japan and each N A T O country apart from Iceland and Spain sends a representative. I t is reported that C O C O M began revising its list of controlled products in October 1982, and there seems to have been a tightening of controls in the United Kingdom during 1983. 60 American concern at the prospect of Western Europe becoming dependent upon gas from the Soviet Union, which also influenced the 'Pipeline' embargo, seems to have been at least partly assuaged by an agreement reached at a ministerial meeting of the International Energy Agency on 9 M a y 1983, urging members to monitor the security of their gas supplies and examine alternatives to increased imports from the Soviet Union. 6 1 The response of the British Government, in its actions and in its statements to the United States — both those made on its own behalf and those i n which i t joined other Member States of the EEC — was remarkably decisive. The reasons for this seem to fall into two categories. First, there were crucial issues of principle at stake. The European Community Comments trenchantly observed that the practical impact of the United States regulations was that . . . European Community companies are pressed into service to carry out United States trade policy towards the USSR, even though these companies are incorporated and have their registered office w i t h i n the Community which has its own trade policy towards the USSR. The public policy ("ordre public ") of the European Community and of its Member States is thus purportedly replaced by United States public policy . . . e 2 The basic question was, who is to determine the trade policy of the United Kingdom? To this there is only one answer, as the United States recognized in an analogous case when i t acted to prevent the conscription of its own companies to further the Arab boycott of Israel. 63 This is not a matter of 59 The Presidential announcement is reprinted in: I L M vol. 22 (1983), 349—350, and the Orders lifting the sanctions are reprinted in: ibid., 350—361; see further, K. W. Dam, Extraterritoriality and Conflicts of Jurisdiction, in: Department of State Bulletin July 1983, Washington D . C. 1983, 48—52 (50—52). 60 The Economist (London), 17 December 1983, 55—56 (55).

The Economist (London) 14 M a y 1983, 81—82 (81). EEC-Comments (note 4), paragraph 10. es Public Law 95—52, Export Administration Amendments of 1977, reproduced in: I L M vol. 16 (1977), 909—921 (917—920). 62

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. V. Lowe

doctrinaire adherence to conservative jurisdictional criteria. I t goes right to the heart of the principles of sovereignty and self-determination which are the inescapable consequences of the division of the globe into legally independent sovereign States. 64 The excessive jurisdictional claims not only undermine these fundamental concepts on the international plane but also, in preventing elected Governments from pursuing their own policies, attack the very democratic rights of the electorates of those Governments to choose their own national policies which the United States was seeking to uphold, in the face of Soviet attempts to determine the policies of the Polish Government, when it imposed the 'Pipeline' embargo. I n this country, decades of conflict over United States jurisdictional claims had resulted in the enactment of a statute which provided the British Government w i t h a ready store of counter measures. They were to hand and were used swiftly, as they w i l l no doubt be used against any future jurisdictional encroachments upon British sovereignty. 65 There were also more immediate practical reasons for British action. First, as the Prime Minister observed "The question is whether one very powerful nation can prevent existing contracts from being fulfilled." 6 6 Retroactive legislative is objectionable in principle; and preventing the fulfilment of contractual obligations undertaken by British companies, lawful at all times under British law and lawful under United States law at the time that they were made, would inevitably undermine confidence in the ability of British exporters to abide by their contracts. Secondly, Lord Cockfield noted that " . . . there are a large number of jobs at risk i f in fact the embargo were obeyed by companies in this country. This is one of the major reasons why we have taken the action that we have." 6 7 T h i r d l y , Lord Cockfield spoke for many Europeans when he said . . . one might be more than a little surprised that, at a time when the American Government have imposed this export embargo, they should also continue to ship large quantities of grain to the Soviet Union, and we think that i t is quite inequitable that the American Government should do this while expecting its allies to bear the brunt of sanctions against the Soviet Union in the pipeline case.68 64 See, e. g., the Charter of Economic Rights and Duties of States, U . N . General Assembly Resolution 3281 ( X X I X ) , articles 1, 2, reproduced in: I L M vol. 14 (1975), 251—265 (254— 255); D r a f t U N Code of Conduct on Transnational Corporations (1982), articles 6—9, reproduced in: I L M vol. 22 (1983), 192—206 (193—194). 65 The Protection of Trading Interests Act was used most recently in the Laker antitrust litigation see: Statutory Instrument 1983, N o . 900, 23 June 1983. 66 House of Commons Official Report (6th series), vol. 26, column 1045, 1 July 1982. 6 7 House of Lords Official Report (5th series) vol. 434, column 546, 2 August 1982. 68 Ibid. A n d see the interesting arguments of / . W. Bridge on the legal consequences of this "lack of even-handedness", BHdge (note 13), 20—22.

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I t sometimes seems to Europeans as i f the United States, in its welcome and determined attempts to resolve the jurisdictional conflict, has placed too much emphasis upon the techniques of private international law. Devices such as the 'balancing of interests' test may work well in the context of jurisdictional conflicts w i t h i n federal states, where issues of sovereignty are not at stake. But the w o r l d is not like this. America's allies are independent sovereign States, w i t h their own laws and policies and responsibilities to their electorates; and i f the United States — to borrow a phrase from Camus — enters into a struggle for (jurisdictional) empire w i t h the concepts of provincial politics, i t cannot hope to succeed. That said, there appears to be a high level of willingness and ability to co-operate w i t h the United States i n co-ordinating relations w i t h the Soviet bloc. The United Kingdom, for example, has imposed extensive controls on exports to the east under its Import, Export and Customs Powers (Defence) Act 1939, 69 and doubtless remains w i l l i n g to adjust those controls in the light of C O C O M discussions. I t has recently been reported that the United States, in revising its Export Administration A c t . . . may be prepared to reach an accommodation w i t h the other [sc. western] countries, under which it would expect them to use fully their own "enforcement standards." 70 Such an accommodation would be a welcome and healthy development.

69

2 & 3 Geo. 6 Chapter 69; Controls are imposed by order: see Statutory instrument 1981 N o . 1641, as amended by 1982 Nos. 1446, 1556; 1983 Nos. 1006, 1266; 1984 N o . 90. ™ The Times (London), 5 M a y 1984, 23.

The European Community and the US Pipeline Embargo: Comments on Comments Pieter Jan Kuyper I.

Introduction

From the moment the American measures of June 22, 1982 were taken u n t i l the moment they were lifted, it has never been made clear i f i t was up to the European Community alone to react t o these measures or i f i t was w i t h i n the competence of the Member States to do so. The Member States concerned (primarily France, Germany, Italy, and the United Kingdom, because their firms were the principal contractors and most important sub-contractors) tended to regard the measures, which contained rules claiming to regulate the behaviour of companies incorporated i n these Member States, primarily as an infringement of their sovereignty. This was a very touchy question, i n particular for France and the United Kingdom, which both had a history of serious clashes w i t h the United States over the extraterritorial effects of its export controls as well as its anti-trust laws. 1 I n Germany the experience of the socalled "Röhrenembargo" of the early sixties 2 came to life again. O n the other hand the U.S. measures clearly affected the common commercial policy of the European Economic Community (EEC), as proclaimed in Article 113 of the EEC-Treaty. I n March 1982 the EEC Council of Ministers had decided that in reaction to the behaviour of the USSR in the Polish crisis of December 1981, a certain restriction of imports from the Soviet U n i o n was called for. 3 This policy of import restriction was now counteracted by the American measures which in fact restricted the export opportunities to the 1 For France: the Fruehauf case, cf. Fruehauf c. Massardy , Decision of M a y 22, 1965, La Gazette du Palais, Paris[1965 I I ] , 86—90; for a comment on this case see e.g.: William L. Craig, Application of the Trading with the Enemy Act to Foreign Corporations owned by Americans: Reflections on Fruehauf v. Massardy , in: Harvard L a w Review vol. 83 (1969— 70), 579—601. For the U K the most recent example before the pipeline embargo was the Westinghouse uranium litigation, see Rio-Ttnto Zinc v. Westinghouse Electric , 2 Weekly L a w Reports 1978, 81—129 (House of Lords). 2 This affair is described in detail by: Eugen Langen, Außenwirtschaftsgesetz, München 1968, § 7 A W G , note 5. 3 Regulation (Reg.) 596/82, Official Journal of the E C (O.J.) vol. 25 (1982), L 72/15.

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USSR of European companies, opportunities which had been left open by the EEC Council of Ministers in the framework of the common regime on exports. 4 Actually the four most concerned Member States have continually worked both on their own and together w i t h the Commission and other Member States in the Community framework. I t is an example of how the big Member States sometimes prefer to treat (certain aspects) of an international problem w i t h i n the Community framework w i t h a view to giving their position greater weight vis-à-vis t h i r d States. Since the question as to whom — the Community or the Member States — had exclusive competence in this matter was studiously avoided, it turned out to be possible to let this ambiguous situation subsist to the benefit of all concerned. Although we w i l l have to return to the problem of competence in greater detail later in this paper, the reader should be aware of this situation of "creative ambiguity" from the beginning in order to be able better to understand the train of events. O n the day the US measures were made public the EEC Council of Ministers of Foreign Affairs was in session; i t declared right away that the American measures were contrary to international law and unacceptable to the European Communities. This declaration was confirmed on June 28th, 1982 by the European Council of Heads of State and Government. 5 A t the same time, the four Member States most affected by the US measures were undertaking a number of individual and common actions. I n all four of them — France, Germany, Italy, and the United Kingdom — ministerial declarations were made to the effect that the contracts w i t h the USSR had to be carried out. On June 30, the United Kingdom took the first concrete steps in this direction by declaring the Protection of Trading Interests A c t 1980 applicable to the US measures of 30 December 1981 and 22 June 1982.® This implied that, i f necessary, the Secretary of State for Trade could compel British companies to ignore the American measures and to proceed w i t h the export to the USSR of the products concerned. Moreover, legal experts of the four most affected countries met and tried to arrive at a common protest to the US authorities or at least at a common position w i t h respect to the American measures and their incompatibility w i t h international law. The results of this meeting must have been meagre, for they were never published or presented to the US authorities. 4 Reg. 2603/69, O.J. Special Issue 1969, 590 and Reg. 1934/82, O.J. vol. 25 (1982), L 211/1. 5 Bulletin of the European Communities (Bull.EC) 6—1982, points 1.5.2 and 2.2.44. 6 Protection of Trading Interests (US Re-export Control) Order 1982, Statutory Instrument 1982, N o . 882; reprinted in: International Legal Materials ( I L M ) vol. 21 (1982), 852 et seq.

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I n the meantime certain initiatives were being developed w i t h i n the European Commission. These initiatives were developed partly spontaneously w i t h i n the services of the Commission and partly in response to pleas from the European (in particular the German) steel and heavy machine industry which traditionally has very close ties to the Commission. 7 O n July 1 the Commission presented an analysis of the US export controls to the Committee of Permanent Representatives (Coreper) and made a number of proposals: 1) A protest should be lodged w i t h the State Department as quickly as possible; 2) A comprehensive legal demarche should be presented to the US authorities before 21 August 1982, the final date for offering comments to the measures which for the first t w o months of their existence had a provisional character 8 ; 3) These comments should be drafted by a working group which would be empowered to receive information on the precise contractual position of the European companies concerned vis-à-vis their American partners and which would also look into the possibilities offered by national laws to counteract the American regulations 9 ; 4) Furthermore, the group was to look into the possibilities of specific counteraction at Community or national level; the group could also co-ordinate the comments which European companies were undoubtedly going to lodge w i t h the US authorities parallel to the Community comments. These proposals were approved by Coreper and on July 14, 1982 a firmly worded aide-mémoire was handed to the State Department jointly by the Commission's Washington representative and the Danish ambassador (Denmark holding the Presidency of the Council at that time). 1 0 This aide-mémoire which had been drafted by the Commission and approved by the Coreper was primarily directed at the way in which the American regulation of 22 June frustrated the execution of existing contracts. I t was pointed out that in the long run this could have adverse effects on the commercial relations between the US and Europe, in particular where trade i n technology was concerned. Furthermore the aide-mémoire stated that the extension of US export controls to foreign corporations because they were 7 This is so, because of the internal steel crisis measures taken within the framework of ECSC, the E C - U S negotiations on a limitation of exports agreement which were going on at the time, and the discussions on the specific problems of the A E G concern. 8 Text of the Measures in: I L M vol. 21 (1982), 864—866 (865). 9 Cf. Protection of Trading Interests Act 1980, reprinted in: Α. V. Lowe (ed.), Extraterritorial Jurisdiction, Cambridge 1983, 187—192. 10 Agence Europe of July 25, 1982, N o . 3412.

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subsidiaries of US companies or were "controlled i n fact" by American companies, citizens or residents was not in conformity w i t h international law. Moreover, it rejected the notion, inherent in the US regulations, that US technology or American produced components carried American jurisdiction w i t h them, wherever they went. Finally it was pointed out that the American measures could have very serious economic effects in Europe and that this could undermine Western stability and cohesion. The legal points of this aide-mémoire were later developed in the Comments which were drawn up by the working group. This was in principle a Commission (not a Council) working group consisting of Commission civil servants who met from time to time w i t h legal experts from the Member States. However, in the last stages of its activity it functioned almost as a Council group to the extent that Coreper was unlikely to raise problems after the legal experts had agreed, or agreed to disagree, on a particular point. The w o r k i n g group restricted itself largely to the drafting of a legal commentary on the American measures of June 22. Its co-ordinating role w i t h the European companies which also filed comments w i t h the US authorities before the deadline of 21 August remained limited; drafts were exchanged w i t h some of those concerned, but that was all. A text was finalized in the working group in early August of 1982 and accepted, w i t h a few minor modifications, by Coreper on August 10. O n August 12, a Note which again summarized the political and economic objections to the US measures accompanied by the legal Comments 11 was presented to the Department of State jointly by the Danish ambassador and the acting head of the Community Delegation i n Washington w i t h the request that these documents be transmitted to the Department of Commerce, being the competent department for the Export Administration Regulations. Even after President Reagan had lifted the contended measures in October 1982, 12 some of the points of principle remained a bone of contention between the European Community and the USA. For it turned out that the Export Administration A c t (EAA) was to expire on October 1, 1983. The proposed renewal of this A c t provided the Community once again w i t h an opportunity to voice its opposition to those aspects of the A c t which had habitually been used by US authorities to extend its application to foreign incorporated subsidiaries of US companies and to foreign corporations handling goods of US origin or technology. Accordingly on March 14, 1983 the European Com11 The N o t e and the Comments (EEC-Comments) appear in Lowe (note 9), 197—211. The Comments also appear in I L M vol. 21 (1982), 891—904 and also in the present volume, 554—562. 12 See I L M vol. 22 (1983), 349—350.

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munity and its Member States 13 presented the State Department w i t h an Aide-memoire covering the issues mentioned above and pleading for amendments to the renewed Export Administration A c t . 1 4 I n the following discussion of the August Comments we w i l l from time to time also refer to the Aidememoire of March 1983, when that is conducive to a better understanding of the position of the European Community. II.

The Comments

of the E u r o p e a n

Community

1. General The Comments are announced as comments of the European Community , an entity which does not really exist. I t was obviously impossible to speak in the plural of the European Communities, as is usual, because the ECSC and Euratom were legally not competent to send such a note. I n particular the classical interpretation of Article 71 ECSC-Treaty by the Member States, according to which the Member States are largely free to conduct their own commercial policy w i t h respect to coal and steel products, would stand in the w a y . 1 5 O n the other hand i t was probably politically impossible to present the Comments on behalf of the European Economic Community, since doing so would have suggested that this Community was exclusively competent to make the démarche , as long as one was not willing to mention the Member States as co-authors. 16 The present formula is a diplomatic way out of this dilemma. The Comments are split into two main sections, apart from the introduction and the conclusion. The first one discusses the American measures from the perspective of international law and the second is concerned w i t h these measures under US law. I t is perhaps not altogether insignificant that problems are discussed in one rather than in the other of these sections. I n this connexion it is remarkable that the sub-section "Conflicts of Jurisdiction and Accommodation of Interests" is grouped in the latter section, suggesting that balancing of interests, according to the European Community, is an American legal technique which does not (yet) belong to international law. 1 7 I f one regards it as one of the main points of the Lotus decision 18 that states enjoy a considerable measure of freedom to extend their legislative jurisdiction 13

Note that the Member States are now co-authors of this démarche. Reprinted in Lowe (note 9), 215—219. 15 See on this question and for a different opinion: Robert C. Fischer , Der Umfang der Befugnis der Europäischen Gemeinschaft zum Abschluß von Handels- und Assoziierungsabkommen, in: Die Außenbeziehungen der Europäischen Gemeinschaft, Kölner Schriften zum Europaredit, Band 25, Köln 1975, 1—27 (9—10). 14

16 17 18

See note 13 and accompanying text. See further below note 83 and accompanying text. [1927] Permanent Court of International Justice Reports ( P C I ) , Series A , N o . 9.

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to persons and events outside their territory unless prohibitive rules in certain cases impose limits on this extension 19 , the comments do not quite follow this approach. Their analysis under international law is not in terms of the prohibitive rules which have been transgressed by the US measures, but in terms of the generally accepted bases of jurisdiction have which been infringed or at the least improperly applied. 2 0 O n the other hand from time to time the comments make implicit reference to general prohibitive rules which are of a nature so as to l i m i t pretensions to jurisdiction, such as the rule of non-interference (better: non-intervention) i n the internal affairs of the Community and the rule on abuse of rights and connected concepts. 21 The comments, perhaps as a result of differing views w i t h i n the group of experts, are thus of a slightly hybrid nature. Although precisely because of the compromise nature of the Comments one should not make too much of the way in which they are arranged 22 , we w i l l follow the Comments closely in our analysis. 2. The Territoriality

Principle

Under this heading the comments strenuously argue that the territoriality principle is a fundamental notion of international law, in particular insofar as it concerns the regulation of the social and economic activity in a State or w i t h i n an organization such as the Community. 2 3 Apart from the fact that this paragraph contains an implicit — and for Western countries rather unusual — reference to U N resolutions and declarations on socio-economic self-determination 2 4 , this is a statement w i t h which it is almost impossible to disagree, as long as no greater light is shed on what the territoriality principle is supposed to mean. The explanation given by the note, i. e. "the notion that a State should restrict its rule-making in principle to persons and goods w i t h i n its territory and that an organization like the European Community should restrict the applicability of its rules to the territory to which the Treaty setting it up applies" gives some help, but does not clarify to what extent it includes 19 Ibid., 10. I n 1927 the Court probably believed that these prohibitive rules could be found ("in certain cases*) in specific treaty provisions; nowadays one should also include rules of customary international law and general principles of law among such prohibitive rules. 20 The same is true of the aide-memoire of 14 March 1983, (note 14). 21 See paragraphs 10 and 11 of the EEC-Comment (note 3) in particular. 22 Contra: A.V.Lowe , Public International Law and the Conflict of Laws: The European Response of the United States Export Administration Regulations, in: International and Comparative Law Quarterly vol. 33 (1984), 515—530. 23 EEC-Comments (note 9), paragraph 11. 24 Cf. Article 1 of the Charter of Economic Rights and Duties of States, U N Doc. G A / RES/3281 ( X X I V ) , reprinted in: I L M vol. 14 (1975), 251 et seq.

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so-called "objective territoriality". 2 5 Since all Member States seem to apply "objective territoriality" in one w a y or another, one can hardly assume that the Community wished to exclude it by this statement. The crucial question is how far one may go in extending "objective territoriality". I f the Community were only prepared to go far enough, i t is quite possible that even the US government live w i t h what is said in the comments' paragraph on the territoriality principle. The conclusion of that paragraph, viz. that the American measures clearly infringe the territoriality principle, is t o a certain extent a truism and a rhetorical device in order to make i t perfectly clear that on the basis of no possible interpretation of the territoriality principle could the American measures be justified. For this conclusion at least i t does not matter whether "objective territoriality" is included or not. 3. The Nationality

Principle ; US Subsidiaries

The part dealing w i t h the nationality principle forms the core of the Community's comments. First of all, it rejects the assertion of legislative jurisdiction over U.S. subsidiaries incorporated in one of the Member States. According to the definition of the Export Administration Regulations a "person subject to the jurisdiction of the United States" includes: A n y partnership, association, corporation, or other organization, wherever organized or doing business, that is owned or controlled 2 6 by —

any person wherever located, who is a citizen or resident of the US,

—

any person actually w i t h i n the US,

—

any corporation organized under the law of the US. 2 7

According to the Comments this is contrary to recognized principles of international law, in particular as they have been laid down i n the Barcelona Traction

case.28

This is probably too narrow an interpretation of that case. I n Barcelona Traction the International Court of Justice implicitly seems to recognize that certain principles of company law as recognized by civilized nations have to be applied in international law i n order to determine the nationality of companies for the purpose of diplomatic protection. 2 9 25 f o r a definition of the objective territorial principle, see Lotus-case (note 18), 23. 2 6

"Controlled (in fact)* according to most U S regulatory definitions means that a U S company or citizen owns 25 °/o or more of the shares, if the other shareholdings are less than that percentage. 27 Section 385. 2 (c) Export Administration Regulation, in: U.S. Federal Register vol. 47 (1982), 51858—51861, reprinted in: I L M (note 8), 351. 2 9 [1970] International Court of Justice Reports (I.C.J. Rep.), 3. 29 Ian Brownlie, Principles of Public International Law, 3rd ed., Oxford 1979, 19.

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I t seems a fair assumption that the country which has a dominant interest in exercising legislative jurisdiction over the company also has a dominant interest in its diplomatic protection. The implicit parallel drawn between the t w o by the Community would therefore seem to be justified. As to the criteria for determining corporate nationality, the Court indeed argues that t w o classical criteria have found general acceptance, i. e. the place of incorporation and the place of the registered office. These criteria have been "confirmed by long practice and numerous international instruments". 30 However, the Court does not quite stop there, as the Comments seem to imply. I t recognizes that other criteria are being used, such as "siège social", centre of management or control and nationality of the majority of the shareholders. The Court says: " N o absolute test of genuine link has found general acceptance". 81 This seems to be in contradiction w i t h what the court said earlier about the place of incorporation and the place of the registered office, but the point here may well be that these criteria, though generally recognized, cannot be regarded as absolute or sole criteria for determining the nationality of companies. This is confirmed by the Court's conclusion: "Sometimes links to one state have to be weighed against those of another". 8 2 Even i f one were to accept this broader interpretation of Barcelona Traction as statement of present day international law of the nationality of companies, the American measures in the pipeline embargo do not stand the test, for they impose a criterion (i . e. "owned or controlled") that has not found general acceptance as an absolute test and they do not allow a weighing up of the different criteria mentioned by the Court. 3 3 Quite apart from the issue of the interpretation of the Barcelona Traction case, i t has been argued that the European Community, its Court of Justice and its Member States practise the same techniques for asserting jurisdiction as the US in the pipeline case. The case law of the European Court i n the Dyestuffs cases34 and in other antitrust cases35 and other examples of what is called " l i f t i n g the corporate veil" in the Member States, are adduced as arguments. 30 Barcelona Traction case (note 28), 42. I t is not clear if the Court regards this as evidence of international custom or as international acceptance of national principles of law. si Ibid. 32 Ibid. 33 Cf. Stanley J. Marcuss / Eric L. Richard , Extraterritorial Jurisdiction in United States Trade L a w : The Need for a Consistent Theory, in: Columbia Journal of Transnational Law (Colum. J. Transnat'l L.) vol. 20 (1981), 439—483 (457). 34 Case 48/69, ICI v. Commission , [1972] European Court of Justice Reports ( E C R ) , 619. 35 Case 6/72, Continental Can & Europemballage v. Commission , [1973] E C R , 215, points 14—16 and Cases 6—7/73, CSC & ICI v. Commission , [1974] E C R , 223.

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I n order to deal w i t h this argument one has to analyze the Dyestuffs cases carefully. I t turns out that what the Court did in those cases was: imputing the behaviour of a subsidiary w i t h i n the territorial jurisdiction of the E E C to the parent company outside the EEC territory if, and as far as, the parent can be deemed to have acted through its subsidiary or in unity w i t h i t . 3 6 I n this way the Court could arrive at the conclusion that the parent company has in fact acted within the Community territory. Therefore the application of the so-called "unity-of-the-concern approach" amounts in reality to an indirect application of the territoriality principle. Robert Thompson has gone a step further; i n a recent article 3 7 he has argued that " l i f t i n g the corporate veil" is accepted i n the company law of all major industrialized nations. H e therefore arrives, among others, at the following conclusions. Using the separate identity of the subsidiary to shield i t from the jurisdiction of the state of incorporation of the parent is inconsistent w i t h the national law of most states. A n d i t has not been generally accepted as a rule of international law through either agreement or custom. 38 The latter assertion is difficult to quarrel with, although Thompson may be neglecting the possibility that, i f his assertion that "lifting the corporate veil" in certain cases is common to all major legal systems is correct, i t may be part of the general principles of national corporate law which the Court applied, or at least referred to, in the Barcelona Traction case.39 However, before we go any further along this road, it is necessary to analyze in somewhat greater detail Thompson's approach to " l i f t i n g the veil". His most important conclusions in this connexion seem to be: National legal systems recognize corporations as separate from their shareholders in order to achieve a variety of purposes. I f the separateness of the entity is being asserted for reasons contrary to the purpose in permitting the entity's creation, established doctrine in the United States and many other countries provides for the disregarding of the entity. 4 0 And: . . . There is strong precedent . . . both in the United States and abroad, which permits the corporate entity to be disregarded where necessary to prevent fraud, where statutory policy would be frustrated, or where corporate privilege is being abused. 41 se Case 48/69 (note 34), points 125—146 and Cases 6—7/73 (note 35), points 36—41. 37

Robert B. Thompson , United States Jurisdiction over Foreign Subsidiaries : Corporate and International L a w Aspects, in: Law and Policy in International Business ( L a w & P o l ' y I n t ' l Bus.) vol. 14 (1983), 319—400. se Op. cit., 374. 39 Barcelona Traction case (note 28), 34, 37. 40 Thompson (note 37), 366. « Op. cit., 367—368.

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This is completely consistent w i t h the conclusion of the I.C.J. in Barcelona Traction: The wealth of practice . . . accumulated on the subject i n municipal law indicates that the veil is lifted, for instance, to prevent the misuse of the privileges of legal personality, as i n certain cases of fraud or malfeasance, to protect t h i r d persons such as creditor or purchaser, or to prevent the evasion of legal requirements or obligations. 42 I n virtually all cases dicussed by Thompson , ignoring the separate entity of a corporation amounts to making the shareholders or the mother company accountable for acts or debts of the company concerned, because the separate entity is being used for purpose which are not legitimate from the point of view of the function of limited liability. The corporate veil is thus pierced in order to reach those higher up in the corporate structure (parent company, shareholders) w h o can be held responsible for the illegal behaviour of the separate corporate entity. The technique followed by the European Court of Justice in the Dyestuffs and other antitrust cases is virtually identical. However, US legislation purporting to subject foreign incorporated subsidiaries of US companies to US jurisdiction is something quite different. Instead of going up the corporate hierarchy i n order to hold the parent company accountable for the actions of the subsidiary, because these amounted to an abuse of the separate entity or to an infringement of the local law induced by the parent, US legislation goes down the corporate ladder i n order to subject the foreign subsidiary directly to American law. This is not even comparable to " l i f t i n g the v e i l " i n enemy property cases, i n which the I.C.J, indicated that i t might be w i l l i n g to uphold the technique, but which it deemed inapplicable in the Barcelona Traction situation. 43 I t is submitted that the classical technique of "lifting the corporate veil" (going up the corporate hierarchy), which is primarily a judicial method, is not comparable to the US legislative technique of including foreign subsidiaries of US companies directly w i t h i n the ambit of its laws. Something may be said for the latter method of " l i f t i n g the v e i l " , i f i t could be shown that, as in the classical method, there was fraud or evasion of legal obligations incumbent on the parent company. This is precisely the proviso made by the President of the District Court of The Hague i n his by now well-known Sensor ruling. 4 4 However, i n the case in point he d i d not find the slightest evidence that 42

Barcelona Traction case (note 28), 40. Ibid.; Contra : Thompson (note 37), 379. 44 Compagnie Européenne des Pétroles v. Sensor Nederland , President District Court The Hague, Sept. 17, 1982, English translation i n : I L M vol. 22, 66—74 (73); German translation in: Rabeis Zeitschrift für ausländisches und internationales Privatrecht vol. 47 (1983), 141— 147 w i t h a note b y Jürgen Basedow. «

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Sensor had been set up or used by its American parent company in order to circumvent the pipeline embargo. I t would seem that the reaction of the European Community to the US pipeline measures might have been more circumspect i f i t could have been shown, much in the same way as the European Court of Justice showed that ICI had acted through its subsidiary and thereby infringed European law, that US companies were acting through their European subsidiaries i n order to evade the US embargo. The point is, of course, that this was impossible given the fact that companies like Dresser France had concluded their pipeline contracts before the US embargo as European companies, independently of their US parents and as part of a deal between quasi-public bodies i n the USSR and Western European countries. 45 Moreover, assuming that intent to evade US trade controls through foreign subsidiaries could be shown, w h y should not the US parent company be made directly responsible instead of extending jurisdiction to the foreign subsidiary? T o sum up: although the interpretation given by the Comments to the Barcelona Traction case is too narrow, the US measures cannot really be reconciled even w i t h a broad interpretation of that case; insofar as "piercing the corporate veil" has been assimilated into international law, i t is not i n the form as practised in the US export administration regulations. 4. The Nationality

Principle;

US Origin

Goods and Technology

The part of the E C Comments dealing w i t h the nationality principle also attacks the US measures insofar as they subject European companies to US jurisdiction because they deal i n US origin goods or employ US origin technology. This is perceived as an attempt to give some k i n d of 'American nationality' to these goods and technology. The response to this is decidedly un-Z,oi#5-like 46 ; i t is said that goods and technology have no nationality and that there are no known rules unter international law for using goods or technology situated abroad as a basis of establishing jurisdiction over the persons controlling them. T w o court cases from H o n g Kong and Belgium are adduced as confirmation of the assertion that American jurisdiction does not follow US origin goods once they have been discharged in the territory of another country. The Belgian case (Moens v. Ahlers et al.)47 is probably the stronger one, because i t 4 5 See: Klaus Bockslaff , The Pipeline Affair of 1981/82: A Case History, in: German Yearbook of International Law vol. 27 (1984), 28—37. 46 See note 18 and accompanying text. 47 Also cited as Moens v. Mankiewicz & Hamburg-America Line, Commercial Tribunal Antwerp, in: Reditskundig Weekblad vol. 30 (1966—67), kol. 360—363. For a discussion in English of this case, see: Comment, Western European Sovereignty and American Export and Trade Controls, in: Colum. J. Transnatl L a w vol. 9 (1970), 109—139 (115).

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very bluntly rejects the right of the US government (which had intervened i n the case) to forbid the shipping company to deliver goods discharged i n Antwerp to the holder of the b i l l of lading. 4 8 The Hong-Kong case (American President Lines v . China Mutual Trading Co.) 4 9 , although affirming the same principle, namely that once discharged and placed in a local warehouse a US origin cargo is no longer subject t o US jurisdiction, was at least partly based on a restrictive construction of the US regulations. Thus the possibility was left open that i f the regulations had been framed in broader fashion they might have been applicable. The EEC Comments thus arrive at the conclusion that the US measures of June 22, 1982 cannot be justified under the nationality principle. The Comments continue, however, w i t h arguments which tend to show that the United States has also acted against some basic principles of international law which might be said to be in the nature of prohibitive rules limiting legislative jurisdiction as mentioned i n the Lotus case. These arguments also have more of a legal policy flavor than the other points raised i n the international legal part of the Comments. 5. Clash of Public Policies ? First of all, i t is pointed out that the effect of the American measures is to enlist European companies in the service of US export policy towards the USSR, even though these companies are incorporated and have their registered office in, and export from, the European Community which has its own trade policy towards the USSR 5 0 . This is an implicit reference to the fact that the European Community i n its reaction to USSR involvement in the Polish crisis decided to restrict certain USSR imports into the Community 5 1 , but not Community exports to the USSR. This provides the basis for the assertion in the Comments that in this way the public policy of the European Community and of its Member States is replaced by United States public policy and that this forms an unacceptable interference in the affairs of the European Community. I t is not surprising that the Comments speak of the 'public policy' (ordre public) of the Community; particularly in the field of foreign trade, where «

Rechtskundig Weekblad (note 47), kol. 362. American President Lines v. China Mutual Trading Co. Ltd ., [1953] American Maritime Cases 1510 (Hong Kong Supreme Court), reprinted in: Andreas Lowenfeld , Trade Controls for Political Ends, N e w Y o r k 1977, 63, and discussed in: Comment (note 47), 111. 49

5 a

EEC-Comments (note 11), paragraph 11.

si See Reg. 596/82 (note 3).

6*

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the Community competence is exclusive, it is the Community rather than the Member States which must be deemed to have a public policy. The term 'public policy' (ordre public) is being used in a positive sense and implicitly the claim is made that w i t h i n the territory of the Community the Community's public policy should prevail over the public policy of a foreign power. This is consistent w i t h the prevailing doctrine in private international l a w 5 2 . However, i f one takes a hard look at the way in which the concept of public policy is applied here, i t must be admitted that it is used in a rather restricted sense. I f public policy had been used in a broad sense, as a truly international public policy 5 3 , perhaps the drafters of the Comments would have had to recognize that the public policy of the USA and the Community was identical, namely 'punishment' of the Soviet Union for its part in the Polish events. A difference in implementation, i. e. through import restrictions (Community) or through export controls (USA), seems hardly sufficient to speak of a true public policy divergence. I t is likely, therefore, that the drafters of the Comments were thinking of more fundamental differences in implementation of the t w o sets of trade measures in particular of the habitual extension of jurisdiction accompanying such measures in the U S A . 5 4 I n the final analysis the public policy argument means to say the same thing as is said directly further on in the Comments: The interest of the European Community in regulating the foreign trade of the nationals of the Member States in the territory to which Community Treaties apply is paramount over any foreign policy purposes that a third country may have. 55 6. Abuse of Rights ? The Comments also deal w i t h the phenomenon of 'submission clauses ', i. e. clauses included i n licensing and other supply contracts w i t h US corporations which oblige the foreign licensee or the foreign buyer to abide by US export control regulations and sometimes even by the amendments thereto which have been passed after the conclusion of the contract. 5® The inclusion of such 52 Battifol / Lagarde, Droit International Privé, Tome 1, Paris 1981, 411; Kösters/ Dubbink, Internationaal Privaatredit, Ζ wolle 1968, 329—331. 53 O n international public policy or public policy of the international community, see: Ralph Zacklin, The Challenge of Rhodesia, International Conciliation N o . 575 (Nov. 1969). 54 See also section I I , 8 below. 55 EEC-Comments (note 11), paragraph 23. se Bockslaff (note 45), 31; see also Geric Lebedoff / Caroline Raievsky, A French Perspective on the U S ban on the Soviet Gas Pipeline Equipment, in: Texas International Law Journal vol. 18 (1983), 483—507 (487, fn. 27).

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clauses is encouraged by the US authorities and i n many cases i t is even a pre-condition for an export license for industrial property and / or for products w i t h high-technological content. The Comments view this practice from t w o perspectives. First, the US is reminded of its own aversion of voluntary submission to foreign boycotts and embargoes as exemplified i n Section 8 of the Export Administration Act. This is the anti-foreign boycott provision of that Act, the insertion of which was inspired by the effects w i t h i n the US of the Arab boycott of Israel. The Comments very carefully avoid any parallel between the pipeline embargo and the Arab boycott of Israel — and correctly so 57 — but nevertheless the US is confronted w i t h its own policy of Section 8 E A A and told to do unto others as i t would want to be done by. Secondly, and perhaps more interestingly, the Community advances a k i n d of abuse of rights argument against the above-mentioned practice. The question is: does the practice of encouraging or even enjoining the parties to certain contracts to include submission clauses give rise to normal and perfectly valid choice of law clauses or is indeed 'the freedom of contract (being) misued in order to circumvent the limits imposed on national jurisdiction by international law' 5 8 ? Although prima facie submission clauses may be valid and enforceable from a conflict of law perspective 59 , in the final analysis rules of private international law must be in conformity w i t h the public international law of jurisdiction 6 0 . Therefore, i t is important to consider i f from the perspective of public international law there is an abuse of right, or rather an abuse of competence.61 I f we regard the abuse of competence not as a subjective notion, inspired by manifest bad faith, but as an objective phenomenon 62 , it is determined by the following factors. 57 This is smart, not only from a politcal perspective, but also because of the extraterritorial effects of the antiforeign boycott provisions, w i t h which the Community did not necessarily agree, cf. Stanley J. Marcuss , Extraterritoriality: U S Antiboycott Law and the Foreign Corrupt Practices Act, in: Law & PoPy I n t ' l Bus vol. 15 (1983), 1135—1146 (1137). 58 EEC-Comments (note 11), paragraph 11. 59 Lowe (note 22), 520. 6 0 F.A.Mann, The Doctrine of Jurisdiction in International Law, in: Recueil des Cours de l'Académie de Droit International de la H a y e ( R d C ) vol. 111 (1964 I ) , 9—161 (19); Derek W. Bowett, Jurisdiction: Changing Patterns of Authority over Activities and Resources, in: British Yearbook of International Law vol. 53 (1982), 1—26 (3). 61 For Gezina van der Molen "abus de droit", "détournement de pouvoir* and "excès de pouvoir" coïncide in international law, cf. Gezina H. J. van der Molen, Misbruik van Redit in het Volkenrecht, in: Opstellen op het gebied van redit, staat en maatschappij aangeboden aan Prof. Dr A. Anema / Prof . Dr P. A. Diepenhorst, Amsterdam 1949, 266—305 (295); but see also Alexandre-Charles Kiss, L'abus de droit en droit international, Paris 1953, 191—192, 194—196. β2 Elisabeth Zoller, La bonne foi en droit international public, Paris 1977, 115—122.

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—

The competence concerned is not exercised i n conformity w i t h the (social) purpose which i t is supposed to serve.

—

I n this way the competence of another state is infringed and damage is caused thereby.® 3

Considering the American practice of encouraging submission clauses, one may say that the purpose of choice of law clauses in international contracts is to avoid any uncertainty about the applicable law and i n this w a y to facilitate interpretation of the contract and solution of any conflicts between the parties that might arise. A government certainly has the competence to stimulate its human and corporate citizens to stipulate the choice of its law i n their contracts i f i t believes that this w i l l help them better to solve disputes concerning these contracts. However, i f the choice of law clauses impose the selection of a system of public law on foreign natural and corporate persons the goal pursued by the State is no longer to enhance the solution of conflicts between the parties to the contract but the extension of its own legislative jurisdiction. I t is quite likely that the competence of other states is infringed and damage is caused to them. I n the pipeline case the competence of the European Community to regulate its external trade was infringed and considerable damage was caused to companies incorporated i n the Member States by the application of the submission clauses. I n this connexion i t is interesting that whether an act or an exercise rights depends on the circumstances, 'une adéquation équilibrée' between of the international community. 6 4

to note that Elisabeth Zoller has argued of competence constitutes and abuse of that is to say on whether or not there is the goals pursued by a State and those

Thus the use of submission clauses for the purpose of extending one's jurisdiction w i t h a view to 'punish' the Soviet Union, a goal perhaps not shared to the same degree by the international community as a whole may amount to an abuse of rights but the same use of submission clauses i n uranium supply contracts i n order to prevent proliferation of nuclear weapons, a goal which is perhaps more generally accepted i n international society, does not amount to such an abuse. One may well ask i f in this way we are not moving away from the objective notion of abuse of rights or abuse o f competences (i. e. the détournement of a right or competence from its inherent purpose) and moving towards a k i n d of 68

Kiss (note 61), 184; Zoller (note 62), 120. According to Kiss the damage to the victim state must be greater than the advantage for the abusing state. ·* Zoller (note 62), 120—121.

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review of the exercise of rights and competences in the light of international ius cogens' or some public policy of the international community 8 5 .

c

We w i l l stop our speculation here and merely note that i f one accepts w i t h such authors as Gesina van der Molen, Lauterpacht 66, Kiss and Zoller that the doctrine of abuse of rights or competences is part of international l a w 6 7 , the Comments of the European Community do indeed correctly expose such an abuse of competence on the part of the U S A . 6 8 7. Other Bases of Jurisdiction Under this heading the Comments briefly discuss the possible applicability of the protective principle and the effects doctrine. These are said to be bases of jurisdiction which 'have found less than general acceptance under international law', whereas for good reasons both are rejected as being not applicable in this case. Thus the affirmation that they have found less than general acceptance becomes some sort of obiter dictum . That the affirmation was nonetheless made is a consequence of a certain divergence of views over the protective principle and the effects doctrine w i t h i n the EEC. States w i t h a longstanding tradition of opposition to the effects docrtine — and to what they regard as excessive applications of the protective principle — , such as the United Kingdom 6 9 , and to a lesser extent France and the Nederlands 70 , were probably afraid that a mere rejection because of non-applicability in this case might give rise to the idea that their rejection would no longer be regarded as total. O n the other hand the Commission and Germany, both proponents of a moderately applied effects doctrine, could not agree to a total rejection of « ββ

Cf., Zacklin (note 53).

Hersdo Lauterpacht , The Function of Law in the International Community, Oxford 1933, 286—306. 67 There are, of course, also well-known opponents: / . D. Roulet , Le caractère artificiel de la théorie de Tabus de droit en droit international public, Neuchâtel 1958; Georg Schwarzenberger , Uses and Abuses of the "Abuse of Rights" in International Law, in: Grotius Society Transactions vol. 42 (1956), 147—179. es Duane D.Morse / Joan S. Powers, U S Export Controls and Foreign Entities: The Unanswered Questions of Pipeline Diplomacy, in: Virginia Journal of International Law vol. 23 (1983), 537—567 (563) draw an interesting parallel to the U S position on the Calvo clause: rights of the U S and its nationals cannot be waived by contractual commitment to foreign entities. · · The U K ' s aversion is well documented, see: Lowe (note 9), 138—185. 70 France's aversion is less clear-cut, see for example Berthold Goldman, Les champs d'application territoriale des lois sur la concurrence, in: R d C vol. 128 (1969 I I I ) , 631—729 (666) and Lowe (note 9), 116—118. For the Netherlands: Article 39 of the Wet Economische Mededinging (Economic Competition Act), reprinted in: Lowe (note 9), 123, but the recent W e t Melding Buitenlandse Boycotmaatregelen (Foreign Boycotts Notification Act), Stb. 1984, 215, is based on a moderate effects doctrine.

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principle which, moreover, they deemed unnecessary. The wording that was finally used is merely a statement of the obvious. W i t h respect to the effects doctrine, it is well-known that the U K opposition to i t is so virulent that there can be no 'general acceptance' of the doctrine. 7 1 This is a handicap the Commission w i l l have to overcome in any case, i f i t ever is t o base an antitrust decision on a pure application of the effects doctrine. 7 2 I t certainly does not spell a change of policy on the part of the Commission. 8. The Amendments

under US Law

Under this heading the Comments discuss the US measures from different perspectives, which w i l l each be briefly commented below.

four

First 'US reactions to measures similar to the June 22 Amendments' are discussed. Here the Comments return to the anti-foreign boycott provisions of Section 8 of the E A A 7 3 . Whereas earlier on Section 8 was used to illustrate w h y the US should have realized that the European Community looks askance at the attempt t o organize 'voluntary submission' to US boycotts of t h i r d countries, i t is here, being advanced in order to buttress the rejection of what is called the mobilization of European Community Companies for US foreign policy purposes. I n this connexion i t is even argued that the June 22 measures 'would appear to be even more far-reaching than a boycott which might give rise to the application of the anti-boycott provision' 7 4 . Although the w o l d 'intervention' is mentioned nowhere i n this part of the Comments, i t is clear that this is what the argument is all about. The Comments are saying in effect that the US have regarded foreign boycotts w i t h side-effects w i t h i n their territory as some sort of intervention and have armed themselves against i t by adopting the anti-foreign-boycott provisions and that therefore they should expect that the Community w i l l similarly regard the side-effects of US boycotts as intervention in its internal affairs. I t has been shown above that the argument of 'unacceptable interference in the affairs of the European Community' was also made i n connexion w i t h the ousting of the public policy of the Community b y that of the U n i t e d States. 75 I t may be useful to reflect on the question of whether the US 71 The words "general acceptance* are here used in a non-tedinical sense; it is quite conceivable that the effects doctrine would be "generally accepted" within the meaning of Article 38 of the Statute of the Court, but not accepted by the U K which would remain a "persistent objector". 72 The Commission adheres to the effects doctrine, 8th Report on Competition Policy, 13—14, but has not yet applied it in its pure form. 73 See above note 57 and accompanying text. 74 EEC-Comments (note 11), paragraph 15. 7 5

Op. cit., paragraph 10.

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measures of June 1982 constitute interference or intervention i n the affairs of the European Community. This is linked to the more general problem of intervention through economic measures. 76 For the sake of simplicity we leave to one side the question of whether the US measures vis-à-vis the USSR are a mere retorsion, a counter-measure justified by breach of an erga omnes rule, or an illict intervention, and we concentrate on the effects on third states and the Community. I t is assumed that the qualification of the US measures in relationship to the target state does not influence their qualification in relation to third states and the Community. I f the criteria developed by Meessen for non-interference (Niditeinmischung) in the field of international competition law are accepted, i t should be considered to what extent export regulation is part of the zone of interference (Einmischungszone) and i f the intensity of the interference (Einmischungswirkung) is sufficient 77 . On both counts the conclusion would be positive. First, since the Community has actively legislated in the field of foreign trade and in the field of exports in particular, the American measures fall w i t h i n the zone of interference. The fact that the Community legislation does not provide for the k i n d of export restrictions imposed by the US makes no difference, according to Meessen's criteria 7 8 . Secondly, as to the intensity of the interference which, according to Meessen, should amount to a significant disruption ('erhebliche Störung') in the exercise of public powers ('staatliche Funktionen') 7 9 , we have seen that the Community claims that the US measures hinder the normal implementation i f its public policy in the field of commercial policy. However, i f one prefers to rely on U N declarations, such as the Declaration on Principles 80 and the Charter of Economic Rights and Duties 8 1 , for the definition of illicit intervention by economic means, i t should be shown that the US measures result in the subordination of the exercise of sovereign rights 7 6 Cf. Detlev Christian Dicke , Die Intervention mit wirtschaftlichen Mitteln im Völkerrecht, Baden-Baden 1978, where it is convincingly demonstrated that economic coercion is contrary to international law, only if it amounts to illegal intervention. 77 Cf. Karl Matthias Meessen, t Völkerrechtliche Grundsätze des internationalen Kartellrechts, Baden-Baden 1975, 219 et seq. 7 ® Op.cit., 221. 7 ® Op. cit., 227. so U N Doc. A/Res/2625 ( X X V ) of 24/10/1970, principles 1 and 3 (4).

« U N Doc. A/Res/3281 ( X X I X ) of 12/12/1974, arts. 1 and 32. See also Christian Tomuscbaty Die Charta der wirtschaftlichen Rechte und Pflichten der Staaten, in: Zeitschrift für ausländisches öffentliches Recht und Völkerrecht vol. 26 (1976), 444—491 (456—457).

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to such an extent that the inalienable right to choose one's political, economic, social or, cultural system is abridged. 82 I t can be argued that the disruption of the EEC's legislation in the field of commercial policy amounts to the subordination of sovereign rights. I t is doubtful, however, i f this leads to the abridgement of the rights to establish a political or economic system of one's own choice; export policy is hardly of such an overwhelming importance. The conclusion may be drawn that whether or not the US measures constitute an illegal intervention in the affairs of the European Community depends on one's perspective on the contested question of economic intervention. Some doubt that such intervention is legitimate. However, the parallel drawn i n the Comments w i t h Section 8 of the E A A may be apt to the extent that the European Community must have the same right to defend itself w i t h i n its o w n territory against the objectionable consequences of US embargo regulations as the US had to fend off the consequences of the secondary and tertiary boycott of Israel by the League of Arab States. Secondly, the Comments consider 'Conflicts of Jurisdiction and Accommodation of Interest'. As was already noted above, i t is not without significance that the balancing tests of Paragraph 40 of the Second Restatement, Foreign Relations L a w of the United States 83 , and of the Timberlane 84 and Mannington Mills 85 cases are discussed as manifestations of US law. Obviously the Community does not agree that these tests are (already) part of positive international law. The Comments make a link between such balancing tests and the criteria which the President has to apply under Section 6 (b) of the E A A before imposing, expanding or extending foreign policy export controls, because some of these criteria are more or less in the nature of balancing tests. Therefore, according to the Comments, the restraint inherent in the balancing tests applied by the US courts should have been observed already at the rulemaking stage. 86 I t is also interesting to note that this subsection of the Comments takes a rather favorable position w i t h respect to the D r a f t T h i r d Restatement of the US Foreign Relations law, in particular because '(i)t does away w i t h the rather artificial distinction between the right to assert a juris82 Cf. Kuyper / Mulders J Van Rijn , Enkele juridische aspecten van de Arabische boycot van Israel, in: Nederlands Juristenblad vol. 53 (1978), 456—464 (457—458). 83 Restatement (Second) of the Foreign Relations Law of the United States, St. Paul 1965,

116. Timberlane Lumber Companie v. Bank of America , 549 Federal Reporter, Second Edition (F. 2 d ) 597 (1976); reprinted in: Lowe (note 9), 15—31. es Mannington Mills Inc. v. Congoleum Corporation , 595 F. d 1287 (1979); reprinted in Lowe (note 9), 31—45. 86 EEC-Comments (note 11), paragraph 19.

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diction to prescribe and restraint in exercising i t . ' 8 7 I t is unlikely that this w i l l carry much weight w i t h the American authorities, who i n the person of the Legal Advisor to the Department of State have taken a rather negative stance on the D r a f t T h i r d Restatement 88 . Since his objections are of such a nature — in particular the argument that the draft charges courts w i t h tasks such as assessing interests at an international level which are better performed by the diplomatic arm of the executive — that they might very well be shared by the governments of the Member States and the Commission, the ultimate stance of the Community on the D r a f t T h i r d Restatement may still be subject to change. Thirdly, the Comments also discuss the 'criteria under Section 6 (b) of the Export Administration A c t ' and effectively assert that some of these criteria have not been fulfilled. The controls are unlikely to achieve their foreign policy purpose: non-observance of criterion 1. The reaction of other countries has been insufficiently taken into account: infringement of criterion 3. The probable negative effects on the export performance of the US have not been taken into account, in particular the long term consequences for American industry's reputation as a reliable supplier have been neglected: criterion. 4 is ignored. 89 What the Comments are really saying here is that the President had not done his homework. That is a strong assertion, but probably correct. Moreover, the Comments themselves and other protests 90 may have played a role in convincing the President that a reassessment of his policy in the light of these criteria was indicated 91 . Finally, in their discussion of the pipeline measures under American law the Comments raise the problem of 'compensation for damage resulting from United States measures'. 92 Such compensation was not provided for i n the US measures. The Comments here draw a parallel w i t h the law of eminent domain; i f regulatory legislation amounts in practice to taking o f property, the law of eminent domain applies and compensation is obligatory. This is also recognized by the US Supreme Court. 9 3 I t is extremely doubtful, however, to what extent this doctrine is applicable in the domain of foreign trade. The Community Comments are not altogether unaware of the 8 7 Op. cit., paragraph 22. 88 D r a f t Restatement (Third), Foreign Relations L a w of the United States, para. 403. 8® Conflicts of Jurisdiction and the Draft Restatement, Remarks by Davis R. Robinson before the International Division of the D . C. Bar, on July 6th 1983 (mimeo). 90 For example by the American Chamber of Commerce and various other U S export groups. 91 See his statement upon lifting the sanctions, in: I L M vol. 22 (1983), 349—350. 92 EEC-Comments (note 11), paragraph 27—29. 93 The Comments mention Goldblatt v. Town of Hempstead , 369 United States Supreme Court Reporter (US) 590 (1962).

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problem, for in a footnote an old Supreme Court case is cited as indicating that Fifth Amendment rights may be difficult to assert insofar as US external trade is involved. 9 4 The problem is connected w i t h the question of whether there exists a 'right to foreign trade' in the United States or whether is merely a privilege. For there can be compensation only i f there is deprivation of a right and not of a mere privilege. A l l indications are that as of today the US Congress and the judiciary still regard foreign trade as a privilege that can be w i t h d r a w n 9 5 ; hence also 'withdrawal of export privileges' as one of the most feared administrative sanctions under the E A A . Although probably aware of the difficulties under US law in claiming compensation for measures nullifying contracts in international trade, and certainly aware of similar difficulties under the law of some of the Member-States 9®, the Community obviously believed it worthwhile to make this point, primarily as an argument de lege ferenda. 9.

Conclusion

As has been said above, the Comments are of a somewhat hybrid character in the sense that they seem to be based primarily on an anti-Lotus approach, whereas Lotus-like elements are also thröwn i n 9 7 . The mainstrand i n the Comments is the argument that the US measures of June 22, 1982 cannot be validly based on international law rules about legislative jurisdiction, but there are also parts which seem to argue that the US measures transgress prohibitive rules. The assessment of the Community's Comments, therefore, w i l l depend on one's perspective. For someone who is opposed to the approach taken by the Permanent Court of International Justice to the question of the limits of legislative jurisdiction or for someone who believes that Lotus has been superseded by later developments in the law of jurisdiction, the Comments are likely to be convincing and satisfactory, except for those passages where there is a hint of deviation from this line. For those who are convinced that Lotus is still the most authoritative statement on jurisdiction available without 94

Buttfield v. Stranahan , 192 US 470 (1904). Cf. Comment, The Export Administration Act of 1979: Latest Statutory Resolution of the "right to Export" vs. National Security and Foreign Policy Controls, in: Colum. J. Transnat'lL. vol. 19 (1981), 255—290 (208); Werner Hein , Economic Embargoes and Individual Rights under German Law, in: Law & Pol'y I n t ' l Bus. vol. 15 (1983), 401—423. 96 I n the Netherlands the I n - en Ultvoerwet ( I m - and Export Act) does not protect the right to export; according to oral information the position is the same in the U K . I n the Federal Republic of Germany especially the right to export is protected by the Außenwirtschaftsgesetz and Art. 2 I of the Grundgesetz, see: Hein (note 95), 403. 97 Above note 18 and accompanying text. 95

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having been affected to a great extent by subsequent state practice, the Comments are probably somewhat less convincing. T w o prohibitive rules of international law capable of setting limits to legislative jurisdiction have been advanced in the Comments: the prohibition of intervention and the prohibition of abuse of law. However, as has been demonstrated above, there must be some doubts whether the American measures constitute an illegal intervention in the affair of the European Community. Moreover, although it has been shown that the US measures form an abuse of competence, this is true only for certain aspects of these measures. 98 I t is the author's conviction that insufficient research has been done so far to decide w i t h any degree of certainty whether or not the Lotus decision has been set aside by subsequent developments i n international customary law. Therefore, our final assessment of the Comments must necessarily remain inconclusive and it remains to be seen whether the Community w i l l stay w i t h the anti-Lotas approach or further develop the Lotus-like elements in its reasoning. However, there is no doubt that States and other international persons, who are competent to do so according to their constituent instruments, may take legislative measures enabling them to fend off the undesired internal consequences of foreign embargoes or boycotts, or other economic legislation. Even i f such consequences were perfectly legal under international law (under the Lotus test or any other test), it would seem that the territorial sovereign (or functional sovereign in the case of an international organization) is entitled to counteract what it may regard as socially undesirable factual effects. Leaving to one side for the moment the problem of how to solve the clashes of jurisdiction resulting from such blocking statutes, we w i l l finish this article w i t h some speculation on the legal feasibility of a Community blocking statute. Before moving on to that issue, i t is possible to say that the fact that the Comments were made is in itself of quite some importance. I t is the first time that the Community has taken such an explicit stance on a point of general customary international law. So far the Community had mainly restricted itself to positions related to its participation i n international conventions or organizations. I t should be interesting to see what contribution the Community can make to the further development of international law (both through the creation of practice and the participation i n codificatory conferences). I t should be equally interesting to watch the reaction of Member States and non-Member States alike to an almost inevitable development i n the direction 98 But see Meessen (note 77), 211 on the theories of Rehbinder and Bär , who regard the necessity of a sufficient link between a country claiming jurisdiction and the legal relationship over which jurisdiction is claimed as an expression of the prohibition of the abuse of rights.

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of greater Community participation in the process of codification and development of international law. III.

Towards

a Community

Blocking

Statute?

From the vantage point of Community law there can be hardly any doubt that the E E C Council has the competence to adopt a Community blocking Regulation. As has been shown in the introduction, the American measures taken during the pipeline crisis clearly interfered w i t h the common commercial policy, in particular the common export policy. There are hardly any restrictions left on exports from the Community except for export of petroleum products, propane and butane from all Member States, and of a number of listed products from listed Member States; furthermore the Member States may operate export controls on strategic goods in conformity w i t h Article 223 of the EEC Treaty. Products intended for the construction of· the Yamal pipeline were not i n one of those three categories. Hence their export to the USSR was free; and yet in most cases their export from the Community was restricted by dint of the US measures. I f the Community is to guarantee the freedom of its exports in conformity w i t h its common export policy, i t must be competent under Article 113 of the EEC Treaty to pass a blocking Regulation in the field of external trade. This is an exclusive competence and the Member States which have a blocking statute on the books are no longer competent to use i t in the field of foreign trade." They may still be allowed to apply such blocking statutes where i t concerns the giving up of information to foreign authorities or where their national competition policies are i n danger of being nullified by measures of a foreign state (in contradiction to cases where Community competition policy is at stake) 100 , but certainly not i n the field of the common commercial policy. The application of the Protection of Trading Interests A c t by the United Kingdom during the pipeline crisis, therefore, probably constitutes an infringement of British obligations under the Treaty; the same can be said of the promulgation of the French requisition decree. 101 This is not just formalism, for the national application of blocking statutes may bring about an inequality in export conditions between different Member States. This is best illustrated by the pipeline case itself. I t is quite probable that British and French companies would have been in a better position to push 99 But see the aide-memoire on the renewal of the E A A , note 14 above, which was made in the name of the Community and the Member states. 100 Cf. Case 14/68, Walt Wilhelm (1969), E C R 1.

. 1 0 1 Ordre de requisition de services, 23 Août 1982; ζοργ supplied by E C Commission, in: Lowe (note 9), 35—36.

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through their exports to the USSR and not suffer seriously adverse consequences in the USA than the Italian and German companies, because the position of the former would have been buttressed by the protection of trading interests orders and requisition orders. I n the past US courts have usually respected such government orders as acts of state or as foreign sovereign compulsion and they have accordingly refrained from imposing the sanctions of U.S. law in such cases. Although these past cases are largely restricted to the field of antitrust, there are no prima facie reasons w h y the doctrine of foreign sovereign compulsion would not apply to U.S. export controls. 102 However true compulsion is indispensable, mere moral suasion does not suffice to shield foreign companies from the sanctions of American l a w . 1 0 3 Hence German and Italian companies, whose governments had applied political armtwisting in order to convince them to honor the pipeline contracts but did not dispose of blocking statutes, would have been i n no position to claim foreign sovereign compulsion, whereas the British and French companies would have been able to do so and thereby to place themselves in a better position. The unequal position of the German and Italian companies on the one hand and the French and British on the other never became an issue, because President Reagan lifted the embargo, but in principle it is clearly contrary to an export policy based on uniform principles as prescribed in Article 113 EEC Treaty. Alternatively i t might also be regarded as a difference between the provisions laid down by law regulation or administrative action i n Member States' which leads to a distortion of competition i n the common market. 1 0 4 According to Article 101 EEC Treaty the Commission may consult the Member States about the elimination of this distortion and, i f this leads to no result, propose a harmonization directive to the Council. I n its March 1983 demarche on the renewal of the Ε A A , the Community hinted at the possibility of the adoption of a Community blocking regulation, when i t said: I f the unacceptable practices referred to above continue, i t may be necessary to consider means by which the effects on persons doing business in the Community of the extraterritorial application of US export controls might be countered. 105 102 But see Morse I Powers (note 63), 564—565. 103 104

See Mannington

Mills v. Congoleum Corp. (note 85).

This is a specific, not a general distortion, cf. Pipkorn , in: Von der Groeben et al, Kommentar zum E W G Vertrag, Baden-Baden 1983, vol. I , 1730 et seq. 105 Aide-mémoire of the European Community, 14 M a r d i 1983, section 17, reprinted in: Lowe (note 9), 215—219 (218).

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However, nothing has been heard about a possible Commission proposal since then. This is regrettable. There is presently considerable interest i n the US to come to some kind of accommodation on the question o f extraterritorial exercise of jurisdiction. The time would seem to be propitious for negotiations on this problem between the US, the Community and other interested states. Some sense of urgency might be introduced into such negotiations, i f i t appeared that the Community was seriously thinking of arming itself w i t h a blocking statute covering the extraterritorial application of US export controls.

Extraterritoriality of Export Control: A German Lawyer's Analysis of the Pipeline Case K a r l M . Meessen I. E x t r a t e r r i t o r i a l i t y : One Among Several T r o u b l i n g Aspects The December 1981 regulations had little impact. The really difficult phase of the Pipeline controversy began when the June 1982 regulations were adopted. The latter regulations sought to prevent the delivery of pipeline equipment to the Soviet U n i o n by various West European enterprises i f the equipment contained U.S. made components, i f i t contained components produced in Europe under U.S. licences, or i f the West European firms selling the equipment were controlled by U.S. nationals. Each of the three alternate conditions clearly amounted to an assertion of extraterritorial jurisdiction. Since the United States i n post-war history did not apply extraterritorial jurisdiction for the first time, a sensibilized European public focused criticism on that aspect of the case. But there were other troubling aspects as well: the contracts the regulations purported to cover were concluded well ahead of June 1982, and the specially produced equipment was scheduled for delivery w i t h i n t w o months' time. Furthermore, the prospect of bringing about a substantial change of the Soviet attitude toward Poland was virtually nonexistent six months after martial law had been imposed by General Jaruzelski . Even i f understood as a "signal of disenchantment" the measures were taken somewhat late. The issue of extraterritoriality can only be examined i f i t is separated from those additional aspects of retroactivity and of ineffectiveness that were present i n the Pipeline case but that need not be present i n every instance of exercising extraterritorial jurisdiction in the field of export control. Assuming that the June 1982 regulations were neither completely ineffective nor operated retroactively, the very extraterritorial applicability o f those regulations might be seen i n a less critical light. I n any case, i t would be premature to regard the termination of the Pipeline case as confirming an alleged rule of customary international law prohibiting any extraterritoriality of export control.

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98 II.

Pipelines

Put

Into

Perspective

Jurisdictional rules of customary international law have to be based on state practice. But, to the knowledge of the author, no systematic report of elements of extraterritoriality i n the practice of export control has yet been produced. 1 I t would require a team of scholars (and detectives) to remove the camouflage and to establish the reality of export control which is often hidden under considerable disguise. H a r d evidence could not be provided here either. But, to put the Pipeline case into perspective, i n the following at least some questions w i l l be raised which might give some plausibility to the author's view that there have been and still are instances of extraterritoriality i n the field of export control law other than attempting to prevent the sale of pipeline equipment to the Soviet Union (or of French trucks to China): What measures were, for example, taken under the Rhodesian embargo in order to prevent reexports of embargoed goods to Rhodesia from those states which were not bound by, or not prepared to comply w i t h , the respective resolution of the U . N . Security Council? 2 H o w d i d the Arab states prevent oil to be reexported from Belgium to the Netherlands when they imposed an embargo on the latter state (and the U n i t e d States) after the Jom K i p p u r war? 3 Which restrictions are to be observed when C O C O M goods are exported to states which are not members of C O C O M ? 4 Does the Soviet U n i o n i n any way make sure that the M I G planes i t sells to some countries of the T h i r d World, are not reexported to N A T O states or to Israel? A n d what about the end-use of nuclear plants? After receiving information that a chemical plant supplied by a German firm to Iraq was used to produce poisonous gas instead of pesticides, the German government embargoed such exports to Iraq. 5 What would happen i f a German exporter now applied for a licence to export such a plant to another Arab state which is, however, closely cooperating w i t h Iraq? 1 The most comprehensive study probably is: Andreas F. Lowenfeld, Trade Controls for Political Ends, 2nd ed., N e w York 1983; cf. also Homer E. Moyer / Linda A. Mabry, Export Controls as Instruments of Foreign Policy, in: L a w and Policy in International Business (Law &: Policy in I n t ' l Bus) vol. 15 (1983), 1—171; for a recent analysis see Luzius Wildhaber, Export, Trade and Financial Controls, in: Extraterritorial Application of Laws and Responses Thereto, International L a w Association, Seminar of M a y 11—12, 1983, to be published. 2 Robert Renwick , Economic Sanctions, Cambridge, Mass. 1981. s Jordan J. Paust / Albert P. Blaustein , Arab O i l Weapon — A Threat to International Peace, in: Richard B. Lillich (ed.), Economic Coercion and the N e w International Economic Order, Charlottesville 1976, 123—152. 4 For a general survey: Andrew J. Pierre , The Global Politics of Arms Sales, Princeton 1982; cf. also John F. Murphy I Arthur T.Downey, National Security, Foreign Policy and Individual Rights: The Quandary of United States Export Controls, in: International and Comparative Law Quarterly vol. 30 (1981), 791—834. 5 Der Spiegel, no. 32, August 6, 1984, 23.

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Sure enough, a rotorblade is different from a fighter plane, but, as the example of the diverted use of the chemical plant demonstrates, any classification is difficult and to what extent i t matters remains to be seen. A t present the only point is, that state practice of extraterritoriality appears to be more widely spread than is often assumed. III.

The A n t i t r u s t

Approach

Antitrust jurisdiction has substantially contributed to establishing extraterritoriality as an issue of international law. There seems to be some tacit understanding that other issues of extraterritoriality should be approached the same way, that is the antitrust way. I n the field of antitrust law, i t has proved to be helpful to make a distinction between the basis of jurisdiction and the exercise of jurisdiction.® I t w i l l also be made here: Examining the basis of jurisdiction under international law one w o u l d have to ask whether a state is entitled to take up such a matter at all. O r to put i t in a negative form: A state has no basis of jurisdiction i f i t would, under no circumstance, be entitled to regulate a certain matter. Rules on the basis of jurisdiction exclusively consist of criteria that describe the connections of certain facts to certain states. The question therefore is: Which connecting factor, such as place of conduct, nationality, etc., provides for a sufficient basis of jurisdiction? I f there is a sufficient basis of jurisdiction, a state is by no means free to take any measures i t likes to take. Under an additional jurisdictional test, i t has to be ascertained whether a state having a basis of jurisdiction may exercise that jurisdiction by taking this or that measure. The rules on the exercise of jurisdiction are more complex. The connecting factors establishing a basis of jurisdiction matter again, but, i n addition thereto, i t may be asked whether other states would also have a basis of jurisdiction and how these other states w o u l d view the measures envisaged by the first state. I f one state has only a weak basis of jurisdiction, i t w o u l d be obliged to yield jurisdiction entirely to another state that has a stronger basis of jurisdiction. I n the absence of such rules of "primary jurisdiction", states have to allow for an equal chance to other states to exercise their jurisdiction. A t least i n the field of antitrust law, the sovereign equality of states is maintained by a balancing of interests rule.

6 Karl M. Meessen, Antitrust Jurisdiction Under Customary American Journal of International Law ( A J I L ) vol. 78 (1984), references.

7·

International Law, in: 783—810 w i t h further

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IV. B a s i s o f J u r i s d i c t i o n R e g a r d i n g Foreign-State-to-Foreign-State Exports To be sure, i f an enterprise is exclusively owned by foreigners and i f i t produces goods abroad, using foreign technology, and i f i t then exports those goods to another foreign state, there would be no connecting factor that could possibly justify domestic regulation of such a transaction. But the question is whether, in a case involving foreign-state-to-foreign-state exports, a basis of domestic jurisdiction is given, i f either the goods, or the technology, or the control of the enterprise is domestic. As w i l l be remembered, precisely those connecting factors were referred to under the June 1982 regulations in the Pipeline case. Regulating the reexport of goods that have originally been exported from the domestic state could hardly be regarded as a priori unreasonable. 7 I f a selection of states of ultimate destination is to work at all, some control of reexports has to be conceded. Foreign states that are, in principle, opposing trade under such conditions would be free to refuse the import. N o undue burden appears to be imposed upon them. The same would apply to restrictions connected to licences. Otherwise licencing would provide for a handy instrument of circumventing any restriction imposed on the export of goods: Instead of producing the rotorblades w i t h i n the United States they w o u l d be produced abroad under U.S. licence and then sold to the state of prohibited destination. State practice is likely to reveal that, in fact, those two connecting factors are not that unusual, subject, however, to t w o qualifications: Firstly, i t may not be easy to find examples for such measures of extraterritorial export cont r o l outside the field of either highly sensitive goods (e. g. military equipment) or multilaterally agreed embargoes (e. g. the one imposed on Rhodesia). Secondl y , the techniques of export control vary. The direct regulation of foreign transactions, as i n the Pipeline case, is less frequent than imposing restrictions on the domestic exporter or licensor in order to reach the same regulatory goal by means of private law. The purpose of the regulations and of their techniques would only be relevant in establishing a basis of jurisdiction i f the field of export control law could be broken down into two or more distinct categories, such as national security and foreign policy controls, controlling the sale of arms and of other 7 For a reformulation to that effect of F. A. Mann's theory of "reasonably close contact" (The Doctrine of Jurisdiction in International Law, Recueil des Cours vol. I l l (1964 I ) , 1—162 (49/50), see: Meessen, International Law Limitations on State Jurisdiction, in: Extraterritorial Application of Laws and Responses Thereto, International Law Association, Seminar of M a y 11—12, 1983, to be published.

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goods, or rules on the re-export of goods related to the domestic exporter and rules directed at the same time against the foreign importer (who also is a potential reexporter). The above or other categories suffer from considerable artificiality. A t t r i b u t i o n of cases to the one or the other category would reveal frequent overlap. The criteria of purpose and technique should therefore be referred to the less formalistic rules governing the exercise of jurisdiction in whose context they matter indeed as regards the final assessment of the legality of a specific measure of export control. Tentatively, it may therefore be submitted that there is a basis for jurisdiction for regulating foreign-state-to-foreign-state exports i f the regulations relate to goods exported from the regulating state or are produced under its licence.8 The t h i r d connecting factor referred to in the Pipeline case — imposing restrictions on exports from foreign corporations controlled by U.S. nationals — touches upon a highly sensitive issue of international economic law. Measures of export control do not appear but occasionally to have been openly directed against foreign corporations under domestic control. Quite often, however, informal pressure was exercised on the domestic parent corporation to instruct foreign subsidiaries to observe certain domestic regulations of export control law. 9 Parent corporations, especially those depending on state contracts, tend to be responsive to such informal pressure. Whether instances of formal or informal regulation of foreign conduct of foreign corporations under domestic control have occurred outside the United States, w o u l d have to be examined. To be sure, there were instances i n which foreign states, partly w i t h , partly without success, opposed U.S. attempts to influence the conduct of U.S. controlled foreign corporations 10 . A state protesting in one case is, 8 Similarly e. g. Stanley J. Marcuss / Eric L. Ridoard , Extraterritorial Jurisdiction in United States Trade L a w : The Need for a Consistent Theory, in: Columbia Journal of Transnational Law vol. 20 (1981), 439—483 (477 et seq.); Bernard Audit , Extraterritorialité et commerce international, L'Affaire du Gasoduc Sibérien, in: Revue Critique de Droit International Privé vol. 72 (1983), 401—434 (422); asserting a violation of international law because of lack of domestic contacts cf. e.g.: Note and Comments of August 12, 1982 (EEC-Comments), reprinted in the present volume, 554—562; affirming the same view in an obiter dictum : President of the "Rechtbank D e n H a a g * , Judgment of September 17,1982, Compagnie Européenne des Pétroles S.A. v. Sensor Nederland Β. V., English translation reprinted in: International Legal Materials ( I L M ) vol. 22 (1983), 66—74; German translation in: Rabeis Zeitschrift für ausländisches und internationales Privatrecht vol. 47 (1983), 141—147 with an — in that respect — affirmatory annotation by Jürgen Basedow, loc. cit. y 147—172 (167). 9 Robert B. Thompson, United States Jurisdiction Over Foreign Subsidiaries: Corporate and International Law Aspects, in: Law Sc Policy in I n t ' l Bus. vol. 15 (1983), 319—399; cf. also Gunnar Adler-Karlsson, Western Economic Warfare 1947—1967, Stockholm 1968, 137; James Irvine Whitcomb Corcoran, The Trading W i t h the Enemy Act and the Controlled Canadian Corporation, in: M c G i l l Law Journal vol. 14 (1968), 174—208 (181). 10 The classic case prior to the Pipeline case was: Fruehauf c. Massardy, Cour d'Appel de Paris, Judgment of M a y 22, 1965, Gazette du Palais [1965 I I ] , 86—90; for the history and

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however, as the experience of international antitrust tells, not precluded from adopting the criticized attitude i n another case when the facts are reverse. Regulatory interests of the state taking such a measure of extraterritoriality cannot be denied entirely. Foreign subsidiaries could offer an easily accessible w a y to circumvent any domestic measures of embargo law. To some extent, the domestic state could, however, be expected to control the outflow of the know-how rather than taking recourse to using the corporate links to foreign corporations. But such control w o u l d not work, i f the know-how is exported by simply sending expert personnel abroad, nor w o u l d i t work, i f the reason for taking measures of embargo law comes up after the technology has been transferred abroad. Furthermore, any general restraint regarding the export of technology would surely not be i n the interest of the states complaining about U.S. measures. Regulating foreign-state-to-foreign-state exports by domestically controlled foreign corporations does not appear to be entirely unreasonable. A connecting factor, though a rather weak one, is given. Especially in a serious matter of national security, i t w o u l d not be understood i f domestically controlled foreign corporations were granted complete discretion as to whether they complied w i t h domestic regulations or not. The situation is entirely different, i f the foreign home state of the corporation objects to its corporate nationals being used as fifth columns. But a rule depending on the attitude of another state would no longer be one on the basis of jurisdiction but on its exercise. The problem w i l l therefore be discussed i n that context. As regards the basis o f jurisdiction i t is submitted that there may be situations i n which domestic control of foreign corporations establishes a sufficient domestic contact to regulate foreign-state-to-foreign-state exports. 11 O r to put i t even more provocatively: i n the Pipeline case, the United States had a basis of jurisdiction, at least i n the view of this German lawyer — others might disagree. But whether the U n i t e d States was permitted to exercise its jurisdiction the way i t has exercised i t under the circumstances of the Pipeline case, remains to be examined i n the following section. V. E x e r c i s e o f J u r i s d i c t i o n i n C a s e s of C o n c u r r e n t Jurisdiction Whenever a state extends its export control law to foreign-state-to-foreignstate transactions, t w o or more states w i l l have a basis for jurisdiction: the the background of the case see Lowenfeld (note 1), 93 et seq.; reporting similar incidents: Marcuss / Richard (note 8), 467; Stanley J. Marcuss / Dale P. Butland , Reconciling National Interests in the Regulation of International Business, in: North-Western Journal of International L a w and Business vol. 1 (1979), 349—362 (354); Financial Times, January 12, 1984. 11 Similarly: Audit (note 8), 416/417; Thompson (note 9), 357; differing e. g. EEC-Comments (note 8), para. 7.

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state taking the extraterritorial measures and the state whose exports are directly concerned. Sudi situations of concurrent jurisdiction are governed b y the rules regarding the exercise of jurisdiction which may require the one or the other state to refrain from exercising its jurisdiction entirely or in part under some compromise solution. As has been indicated above, the first type of rule to be looked for is a rule of primary jurisdiction. The applicability of such rule would have to be preceded by a request of one of the states having a basis of jurisdiction. Thus, in the present context of regulating foreign-state-to-foreign-state exports, i t would have to be asked whether the state from which the export is to take place (henceforth: exporting state), could demand that the state regulating that export on the ground of one of the above connecting factors (henceforth: regulating state) refrain from such exercise of its jurisdiction. I n answering that question, the different types of connecting factors as referred to i n the Pipeline case, w i l l have to be distinguished. I f a regulating state proceeds solely on the basis of domestic control of a foreign corporation, the exporting state would, i t is submitted, be entitled to claim a better right of jurisdiction. One of the terms of setting up a corporation in a certain territory was to abide b y local law. Piercing the corporate veil is a rare exception and is used only i n cases such as the treatment of enemy property. 1 2 The codes of conduct regarding multinational corporations also stress the preponderance of local l a w . 1 3 Otherwise sovereign equality w o u l d indeed by undermined by home states of multinational corporations making use of the power of corporate control. State practice appears to reflect such rule of primary jurisdiction. I t is significant that foreign states that have protested such measures pursued those protests w i t h considerable insistency. A n d i t is also quite revealing that regulating states exercising such pressure have preferred to do so informally. The objectionable fifth column effect is not present i n cases i n which the regulating state proceeds itself on the basis of having the goods in question exported or of having provided the technology to produce them abroad. I f i n those cases the exporting state could annihilate the regulating state's right to make use of its basis of jurisdiction, that very basis would have no value 12 See Restatement of the Foreign Relations Law of the United States (Revised), Tentative D r a f t N o . 2, 1981, § 216, Comments b and c and Reporters' Note 5. 13 O E C D Guidelines for Multinational Enterprises of June 21, 1976, reprinted in: I L M vol. 15 (1976), 967—984; U N G A R e s . 35/63 (Dec. 5, 1980), adopting the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, U N Doc. T D / R B P / C O N F / I O (May 2, 1980) reprinted in I L M vol. 19 (1980), 813—823, see especially sec. D (1); Draft U . N . Code of Conduct on Transnational Corporations, Official Records of the Economic and Social Council, 1983, Supplement N o . 7 (E/1983/17/Rev. 1), Annex I I , 12—27, reprinted in I L M vol. 23 (1984), 626—640, see especially nos. 6—8, 55.

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whatsoever. Theoretically i t would need just one third state, that is a state other than the regulating state and the target state of the embargo measures, to object to the regulating state's exercise of jurisdiction. The objecting state would thereby attract all the goods destinated for export to the target state. Such a role of "embargo heaven" might seem quite attractive to the one or to the other state but that does not necessarily mean that that role is supported by an international law rule of primary jurisdiction. Pending a thorough study of state practice that yields different evidence, i t is therefore submitted that objections of the reexporting state usually prevail over jurisdiction exclusively based on domestic control of foreign corporations, but that priority of the reexporting state is not automatically established i f the regulating state proceeds on the basis of having the goods or the technology exported at an earlier stage. Since, i n the Pipeline case, the European states did indeed object, the assertion of jurisdiction based on the t h i r d of the connecting factors must now be stated to be violative of international law. Whether jurisdiction could be exercised on the basis of the other t w o connecting factors w i l l have to be examined under the following more complex rule regarding the exercise of jurisdiction. I n the field of antitrust law, a balancing of state interests is required to the effect that the state planning to take measures of antitrust law has to refrain from taking them or to reduce their extraterritorial impact, whenever the interests of foreign states that are likely to be impaired have greater weight than its own regulatory interests. 14 Assertions of extraterritorial jurisdiction were the subject of many diplomatic controversies and/or judicial decisions, the outcome usually being in accordance w i t h , and reflective of, the balancing rule. Thus, in that field of law, i t was possible to produce the necessary evidence. Whether, i n export control, proof for the existence of a corresponding rule of customary international law could be brought, is a question that cannot be answered here. I t would require an even more penetrating study of state practice than is necessary to establish the sufficiency or insufficiency of connecting factors. But, since the more general principle of sovereign equality is, of course, also applicable in the field of export control, it may be permitted to assume, for the purposes of this paper, that an international law requirement of balancing state interests has to be observed in the exercise of export control jurisdiction as w e l l . 1 5 I n the following, therefore, possible interests of the regulating state and of the exporting state w i l l be identified and compared. 14

Meessen (note 6), 802 et seq. w i t h further references; cf. also Meessen, Völkerrechtliche Grundsätze des internationalen Kartellrechts, Baden-Baden 1975, 173—251. is For a similar approach see Audit (note 8), 417 et seq.; Marcuss / Richard (note 8), 480 et seq.; Thompson (note 9), 361, 400; cf. also Donald T. Trautman , The Role of Conflicts Thinking in Defining the International Reach of American Regulatory Legislation, Ohio State Law Journal vol. 22 (1961), 586—627 (619 et seq.).

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Basic interests of the regulating state might already be derived from the fact that the goods were exported from that state's territory. Under today's conditions of w o r l d trade and of international division of labour, the mere fact of earlier export means little by itself. Its weight w o u l d depend on a number of other factors such as whether the goods represent sophisticated technology and should not be passed into the hands of unfriendly states, whether the policy reasons underlying the embargo are of great importance to the regulating state, and of course, whether the measures are at all likely to reach the regulatory goals they are supposed to reach. W i t h i n the exporting state the basic interest is again defined by the very connecting factor which is that that state is the direct exporter. The weight of that fact w i l l have to be assessed by additional considerations. The political and economic relations between the exporting state and the target state have to be taken account of. Furthermore, retroactivity would matter at this point. The reliability of the exporting state as a trading partner is at stake, and claims for reparation of injuries would have to be faced. Even the techniques of export control may be relevant in defining those interests of the exporting state that are likely to be injured: direct regulation of a foreign-state-toforeign-state export may be viewed as generally challenging the exporting state's legal authority. The challenge w o u l d at least be less repugnant, though probably equally effective, i f the regulating state limits its measures to requiring the domestic exporter to include certain clauses regarding the end-use of the exported products into its contract w i t h the foreign importer (who is the potential reexporter). I n antitrust law, the balancing rule has sometimes been criticized for being extremely difficult to handle if it comes to a comparison of conflicting state interests. Theoretically that point is well taken. But experience shows that, i n practice, a comparison of interests leads more easily to satisfactory results than could be expected. Surely, the same criticism w i l l be raised again when the balancing rule is to be applied in the field of export control. Whether in practice i t w i l l operate as smoothly as in antitrust law remains to be seen. Sometimes resolutions of international organisations may call for embargo measures and thereby provide a common point of reference regarding the regulatory goals. Sometimes, however, one might remember George Ball's observation: " Y o u r evil embargo, our p u r i t y of purpose". 1 6 But even then the balancing might work, as the Pipeline case demonstrates: I n that case, the weight of U.S. interests was characterized by the foreseeable and probably foreseen ineffectiveness of the belated measures. Furthermore, i t was quite significant that the U.S. House of Representatives itself came N e w York Times, M a r d i 21, 1974, 41.

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close to recognizing the preponderance of European interests when a b i l l calling for the suspension of the measures was defeated by the narrow margin of 206:203. Assuming that the extraterritorial measures had been taken right after the promulgation of martial law and assuming further that, at that time, the contracts on the supply of equipment w i t h the Soviets had not yet been signed, there would still be a number of factors in favour of the European side: The United States used its small share — i n terms of goods and technology exported — as a lever to block or delay a huge transaction which was of long term importance to several European states. T o be sure, the U.S. government and the European governments differed on the merits of the deal. Whereas the United States was afraid that Europe might become dependent on the Soviet energy supply and that i t might provide the Soviet Union w i t h a regular yield for the sale of gas in the amount of several billion U.S. dollars per year, the Europeans hoped that that money would mostly be spent to buy European industrial products. As regards energy policy, the attitude in Europe was and still is that a drain on Soviet resources is preferable to one on N o r t h Sea resources. Also i t was felt that some diversification of supply w o u l d diminish dependency on Middle East supply. The European position could by no means be dismissed as being evidently mistaken. A n d , after all, i t was for the Europeans to decide upon their energy policy. The very fact, therefore, that the U.S. measures were primarily at the expense of third states, that is the European states, was casting doubt on the U.S. government's own assessment of the merits of its measures against the Soviet Union. That type of considerations regarding the substance puts into second rank any reference to formal positions, such as blocking statutes that can unilaterally be produced and removed at any time. 1 7 Thus, even i f the aspects of retroactivity and of ineffectiveness are not included in the comparison of interests, attempting to regulate foreign-stateto-foreign-state exports i n the Pipeline case was contrary to the international law rule of primary jurisdiction as regards the measures based on U.S. control of foreign corporations and contrary to the international law rule of balancing state interests as regards the measures based on earlier U.S. exports of goods and technology. VI.

Double

Standard

in F a v o u r

of T h i r d

States?

The U.S. embargo was directed against the Soviet Union. I t was the Soviet U n i o n that was supposed to alter its attitude as regards the internal situation 17 See the discussion of the U.S.-Canadian Memorandum of Understanding of M a r d i 9, 1984, in: Meessen (note 6), 806.

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i n Poland. I n the context of the pipeline controversy, the Soviet Union, therefore, clearly was the target state. Great Britain, France, I t a l y and the Federal Republic o f Germany had the role of third states. As has been pointed out above, the U.S. measures impaired the rights of those third states, no matter whether the traditional approach focusing on the bases of jurisdiction or the more flexible one emphasizing rules regarding the exercise of jurisdiction is adopted. But what about the Soviet Union? Apparently, i t has never been argued that the June 1982 regulations infringed upon the rights of the target state, i. e. the Soviet Union. T o be sure, the Soviet Government had the West Europeans to fight for its cause and i t might not have felt any need to make legal points. But did the states that were the target states at earlier occasions ever t r y to fend off an embargo on legal grounds? And, i f so, have they been successful? The answer, at least to the latter question, is likely to be no. Partly, the reluctance to state straightforward rules of international law i n favour of the target state may be due to the assumption that situations of self-help were present. Partly, however, that reluctance has to be seen in the light of a general feeling of unease when formulating any international law rule on economic coercion. Following the outlawing of military intervention, attempts were made to establish rules prohibiting economic intervention as well. But those attempts have not really been successful. The wording of the respective resolutions of the General Assembly of the United Nations never lost a definite touch of ambiguity. 1 8 A n d , in the doctrine of international law, the prevailing proposition is that economic coercion may in principle amount to illegal intervention, but a clear indication as to the criteria of illegality has never been given. 19 Does the luke-warm position of general international law regarding economic coercion finally shed some doubt on the standard that, according to the above discussion, has to be observed vis-à-vis third states? O r is there a double standard of international law under which third states enjoy a better right than target states? is Cf. e. g. U N Doc. A/RES/2625 ( X X V ) , Declaration on Principles of International Law concerning Friendly Relations and co-operation among States in accordance with the Charter of the United Nations (24 October 1970), reprinted in: I L M vol. 9 (1970), 1292—1297; U N Doc. A/RES/2131 ( X X ) Declaration on the Inadmissibility of Intervention and Interference in the Internal Affairs of States (9 December 1981). 19 Bernd Lindemeyer, Schiffsembargo und Handelsembargo, Baden-Baden 1975; Richard B. Lillich (ed.), Economic Coercion and the N e w International Economic Order, Charlottesville 1976; Detlev Chnstian Didke, D i e Intervention mit wirtschafdidien Mitteln im Völkerrecht, Baden-Baden 1978; Brun-Otto Bryde, Die Intervention mit wirtschaftlichen Mitteln, in: Festschrift für Hans-Jürgen Schlochauer, B e r l i n - N e w Y o r k 1981, 227—245, Wilhelm A. Kewenig, Die Anwendung wirtschaftlicher Zwangsmaßnahmen im Völkerrecht, Berichte der Deutschen Gesellschaft für Völkerrecht vol. 22 (1982), 7—29.

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Answering that question would require further research. Hypothetically, i t is submitted that a double standard may be found to exist. I f so, it would be in line w i t h the strong legal position enjoyed by neutral states in times of war. State practice may indeed have developed a greater degree of consistency as regards respecting the sovereignty of third states and of neutral states, whereas, in an open military or economic conflict, practice tends to be more varied thus setting the common denominator on the basis of which legal rules may develop at a much lower level. I f such double standard is found to exist, the United States could have proceeded against the Soviet Union in complete conformity w i t h international law by avoiding any extraterritorial effect upon t h i r d states. I n that case, the economic expenses of the measures would solely have had to be borne by U.S. exporters, by U.S. farmers growing grain for instance. The European governments would have had no reason to complain. Theoretically, legality could also have been maintained by directing the measures against European states as well which would then have acquired the role of target states. Fortunately, and for good reasons, this did not happen.

Private Law Effects of Foreign Export Controls - An International Case Report Jürgen Basedow Table of Contents I . Introduction I I . Types of Export Restrictions I I I . "Enforcement" and "Effects" of Foreign Export Restrictions 1. Government Claims — Enforcement 2. Private Litigation — Effects I V . Evasion Contracts 1. Claims for Delivery and Damages a) The Conflicts approach b) The immorality approach c) The public policy exception d) Summary 2. Claims for Consideration 3. Insurance Claims a) The implied warranty of the lawful adventure b) Extraterritorial effects c)

Summary

4. Contention of Transferred Rights V . Compliance Contracts 1. Excuse of Nonperformance a) The effects approach b) Typical issues c) N o public policy exception d) Extraterritorial effects? e)

Summary

2. Specific Contract Clauses a) Contractual allocation of the export prohibition risk b) Contractual incorporations of reexport prohibitions V I . Conclusion: The European Perspective

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110 I.

Introduction

The U.S. pipeline embargo of 1982 1 has once again brought into focus the economic, political and legal issues arising from the regulation of foreign trade and its use for political ends. While I have given some tentative answers t o various questions posed b y the embargo elsewhere 2, this paper is meant to elaborate on one particular aspect, i. e. the effect granted to export restrictions (embargoes i n a wider meaning) in the courts of a foreign country. That a court has to deal w i t h foreign export regulations may appear as a rather remote consequence of their enactment. I t seems that the commercial world, interested in free trade, ^ o u l d prefer the direct attack of regulations i n the restricting country alleging a lack of legal basis under the municipal law or a breach of international obligations. Lobbying for foreign government action which tries to counteract the export restrictions may also be of some avail. A l l this explains the preponderant attention that lawyers pay to the issues of domestic foréign trade regulation, public international law, and "blocking" legislation. However, sudi a direct challenge often remains unsuccessful or is dispensed w i t h as hopeless or overly timeconsuming; for political reasons, many foreign states refrain from "clawing back". Thus, individual traders are often left high and d r y ; whether they decide to infringe or abide by the regulation, in any case the prohibition of an export is an additional burden and risk for both preexisting and subsequent contracts. This risk may become the object of litigation in the courts of the country prohibiting the export, but also in a foreign court. While many issues w i l l be the same i n all jurisdictions, foreign courts are faced w i t h the peculiar question whether and to what extent they are supposed or allowed to give effect to the foreign export prohibition by virtue of their own conflict of laws rule. I t is this particular aspect that the following paper w i l l attempt to shed light on, separating i t from similar topics which conflict theorists use to discuss under the comprehensive headings o f "self-limited rules of l a w " , "lois

1 See: Klaus Bockslaff , The Pipeline Affair of 1981/82: A Case History, in: German Yearbook of International Law ( G Y I L ) vol. 27 (1984), 28—37, and the extensive treatment by Alexander Vida , La dependence technologique européenne. Une étude sur l'embargo: L'affaire du gazoduc sibérien, to be published in 1985 by Librairies Techniques, Paris. For Soviet reactions, see the following articles: Ο . V. Kozhevnikov / Ρ. S. Smirnov y East-West-Trade and Economic Cooperation and U.S. Discriminatory Measures; M. M. Boguslavskii I L. A. Lialikova / A. G. Svetlanov , U.S. Export Laws and International Private L a w : original Russian versions in Sovetskoe gosudarstvo i pravo 1983, no. 3; English translations in: Soviet L a w and Government vol. 22 (1983), 59—72 and 73—84. 2 Jürgen Basedow , Das amerikanische Pipeline-Embargo vor Geridit, in: Rabeis Zeitschrift für ausländisches und internationales Privatrecht {RabelsZ) vol. 47 (1983), 141—172.

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d'application immédiate", "Eingriffsnormen", "leggi di applicazione necessaria". 8 The latter categories embrace a great variety of regulations reflecting widely differing economic and social concerns: besides the export restrictions there are import restrictions, revenue laws, currency exchange controls, mandatory provisions governing labor relations, antitrust laws, expropriations, consumer protection statutes, penal laws, regulations affecting social security, and many others. The comprehensive treatment of such regulations may have helped, i n the past, to recognize the limits of the classical conflicts method i n modern private international relations. Today, the traditional approach which more or less nationalized the international case, subjecting i t to the one proper law, the lex causae, gives way to a more detailed analysis: i t is clear that various jurisdictions may claim application of their laws to an international case regardless of the proper law. Once this has been perceived, there is little to be expected i n terms of precise results from a legal method which lumps together the vast number of those regulations which mark the rule of law i n modern society and the welfare state. The more promising, though perhaps tiresome, approach is to insulate the various forms of state regulation and qualify the effect that export restrictions, currency exchange controls, consumer protection statutes, etc. are given abroad. This method may bring about specific conflict rules which reflect the values and interests that inspire particular areas of international relations. For example, the observance of foreign exchange regulations under A r t . V I I I 2 b) of the Bretton Woods Agreement 4 can be explained, inter alia by the nature of currency which is an artifact of a national economy. Insofar all national currencies are equal, and all states share the concern for their own currency. Therefore, on the basis of reciprocity, the member countries of the International Monetary Fund could take upon themselves the obligation to respect foreign currency control regulations which are consistent w i t h the 3 The X I International Congress for Comparative Law, Caracas 1982, treated the subject in section I I Β 2 (Private International Law) under the name "The Rules of L a w restricting their own sphere of applicability". See the reflections of the general reporter François Rigaux , Les règles de droit délimitant leur propre domaine d'application, in: Annales de droit de Louvain vol. 43 (1983), 285—331 (308—312) and the German national report by Kurt Siehr , N o r m e n mit eigener Bestimmung ihres räumlich-persönlichen Anwendungsbereichs im Kollisionsrecht der Bundesrepublik Deutschland: RabelsZ vol. 46 (1982), 357—383 (377 seq.); Kurt Lipstein , Inherent Limitations in Statutes and the Conflict of Laws, in: International and Comparative Law Quarterly (I.C.L.Q.) vol. 26 (1977), 884—902 (889—891 and 897 et seq.). 4 Articles of Agreement of the International Monetary Fund, Signed at Washington on 27 December 1945, United Nations Treaty Series ( U N T S ) vol. 2, 39 et seq.; Bundesgesetzblatt (BGBL) 1952 I I , 637 et seq.; cf. Dieter Martiny in: Münchener Kommentar zum Bürgerlichen Gesetzbuch vol. 7, München 1983, vor Art. 12, no. 422 et seq., further references before no. 375.

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Agreement. W i t h export restrictions, the position is different. Goods are not produced by nations, but rather ascribed to single producers, owners and sellers. The interests of a country restricting exports are not a priori shared by foreign states. Similar, though less conspicuous differences exist between export and import restrictions. While the former are exhausted once the illicit crossing of the border is terminated, the enforcement of the latter only starts at this moment. I n political perspective, import restrictions are often designed to protect domestic markets, and thereby pursue an objective accepted by many states doing the same. A lot of export restrictions, however, are viewed abroad as a withholding of commodities and a deprivation of foreign trade benefits. These differences cannot go unnoticed i n the conflict of laws. The outlined approach implies an inquiry into the policies that shape a particular field of international relations, i n this case foreign trade regulation, infra I I . I t is also necessary to discuss the various kinds of effect that a foreign export regulation may produce in domestic courts from case to case, infra I I I . The following analysis w i l l separate t w o sorts of situations: attempts to evade preexisting export prohibitions, infra I V , and cases of compliance w i t h such restrictions, whether preexisting or supervening, infra V . Our findings w i l l finally be related to a convention adopted by the EEC countries which codifies a rule on the subject, infra V I . II. T y p e s

of E x p o r t

Restrictions

The cornerstone of the contemporaneous w o r l d trade order is the G A T T 5 . I t incorporates principles which, as a whole, were designed to restore free trade after W o r l d War I I . Among them figures the general prohibition of non-tariff trade barriers in A r t . X I which provides in section 1: " N o prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party . . . " While this provision seems to establish the freedom of trade as the basic rule, critics have drawn attention to the number of exceptions which "is so large that practically any export control measure undertaken can be justified by a G A T T provision" 6 . 5

General Agreement on Tariffs and Trade as Adopted on 30 October 1947, U N T S vol. 55, 187 et seq.; BGBl. 1951 I I , 173 et seq. and Supplement Volumes I — I I I . For a description of G A T T , see: Ernst-Ulrich Petersmann, International Governmental Trade Organizations — G A T T and U N C T A D , in: International Encyclopedia of Comparative Law, vol. 17, Tübingen 1981, chapter 25 I , 4—25 (12); Wolfgang Fikentscher , Wirtschaftsrecht vol. 1, München 1983, 255—260. For the counterpart and reinforcement of the free trade principles in the EEC-Treaty (artt. 30—37), see: Manfred A. Dauses, Dogmatik des freien Warenverkehrs in der Europäischen Gemeinschaft, in: Redit der Internationalen Wirtschaft ( R I W ) 1984, 197—206. « Michael Rom, Export Controls in G A T T , in: Journal of World Trade L a w (J.W.T.L.) vol. 18 (1984), 125—154 (127).

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I n the present context i t suffices to mention some of those specific rules which permit export restrictions. Though all of them are worded in such a way as to be interpreted as reservations of national action taken in the interest of domestic concerns, they are of different character. I t is certainly in the national interest of the exporting country that A r t . X I 2 a) allows temporary export restrictions in the case of "critical shortages of foodstuffs or other products essential to the exporting contracting party". 7 The same is true w i t h regard to the security exceptions in A r t . X X I . This provision supplies the legal basis for the cooperation of Western countries i n the Coordinating Committee ( C O C O M ) which decides on the list of those strategic goods that may not be exported to the USSR and its allies. 8 Also, many embargoes in the strict meaning, i. e. discriminatory export prohibitions against certain states, have been levied under A r t . X X I , though sometimes w i t h rather doubtful arguments®. But there are other export restrictions which are neither discriminatory against particular foreign states nor aimed at exclusively national purposes. Indeed, many of the general exceptions of A r t . X X belong to this group of internationally minded restrictions , e. g. the "measures necessary to protect human, animal or plant life or health" 1 0 as well as "measures imposed for the protection of national treasures of artistic, historic or archaeological value". 1 1 The public policy concerns are more than exceptions to the general and inter7 I n Czarnikow Ltd. v. Rolimpex , [1978] 1 A l l England Law Reports ( A l l E R ) 81 (C.A.), [1978] 2 A l l E R 1043 ( H . L.), the English courts had to deal w i t h a Polish export restriction of this type concerning sugar. 8 American embargoes of this type were dealt with by the West German Federal Court in Bundesgerichtshof ( B G H ) , 21.12.1960, see: Entscheidungen des B G H in Zivilsachen ( B G H Z ) 34, 169 et seq. and B G H , 24. 5.1962, Neue Juristische Wochenschrift ( N J W ) vol. 15 (1962), 1436; for the Coordinating Committee ( C O C O M ) cooperation see: Andreas F. Lowenfeld , Trade Controls for Political Ends, N e w York 1977, 10—13; Harold J. Berman / John R. Garson , United States Export Controls — Past, Present, and Future, in: Columbia Law Review (Colum.L.Rev.) vol. 67 (1967), 791—890 (834—842), Simone Courteix , Le comité de coordination des échanges est-ouest ( C O C O M ) , in: Annuaire de l'U.R.S.S. et des pays socialistes européens 1976—77, 411—419. 9 Rom (note 6), 145 et seq. 10 Various decisions have dealt with the validity of contracts violating the U.S. import prohibition of liquor, in England Foster v. Driscoll [1929] 1 Kings Bench Reports (K. B.) 470 C.A. (contract void); in France, Cour de cassation, chambre des requêtes (Cass. Req.) 28. 3.1928, Recueil général des lois et des arrêts (S.) 1928 I 305 note J.-P. Niboyet (contract valid); in Germany Landgericht (LG) Berlin I I I 2.11.1928, D i e deutsche Rechtsprechung auf dem Gebiete des Internationalen Privatrechts (IPRspr.) 1929 N r . 13 (contract void). For an Indian import restriction on cocaine see: Reichsgericht ( R G ) 24.6.1927, Juristische Wochenschrift (J.W.) 1927, 2288, with note by Hoeniger ; IPRspr. 1926—27 N r . 15. 11 Export prohibitions of art objects were dealt with in A.-G. of New Zealand v. Ortiz , [1982] 3 A l l E R 432 (QJB.D. and C.A.), [1983] 2 A l l E R 93 ( H . L . ) ; in Germany: B G H 22.6.1972, N J W vol. 25 (1972), 1575 et seq., with note by FredeHc A. Mann; in I t a l y : Tribunale Torino 25.3.1982, in: Rivista di Diritto Internazionale Privato e Processuale (Riv. dir. int. priv. proc.) vol. 18 (1982), 625.

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nationally convened rule of free trade; they do not only give way to unhampered national restrictions. Much more, they mark areas which are, i n the judgment of the international community, not fit to be left to the hazards of free trade, because its inherent benefits are outweighed by dangers menacing higher values. I n legal terms, one can speak of a subject-matter limitation of the free trade dogma. For indeed, many G A T T member states have committed themselves i n international conventions to prohibiting certain exports and / or respecting foreign export prohibitions. Specific trade regulations of such a kind, designed to stop the transfrontier flow of commodities, can be found for fissionable materials and related equipment 12 , for narcotic drugs 18 , for endangered animal and plant species14, and for cultural property 1 5 . A l l of these treaties give evidence of trade sectors where international commerce is perceived as potentially harmful. Most export prohibitions enacted i n conformity w i t h the conventions mentioned above pursue objectives which are highly valued in both export and import countries. But in some cases the concerns of the importing country clearly prevail , when i t comes to the adoption of export restrictions. Thus, the barriers i n the drug trade primarily serve the public health in the country or countries of destination. A n the so-called voluntary export restraints which are sometimes implemented by export prohibitions shall, above all, protect the importing countries and their ailing industries against an avalanche of superior foreign products. 1 6 12 Treaty on the Non-Proliferation of Nuclear Weapons, Done at London, Moscow and Washington on 1. 7.1968, U N T S vol. 729, 161 et seq.; BGBl. 1974 I I , 785; see artt. I and I I I . See: Jorge A. Aja Espil, E l desarrollo nuclear y la no proliferaciôn in: Anuario Juridico Interamericano 1980, 72—86, Simone Courteix, Le contrôle de la prolifération des armes nucléaires, in: M c G i l l Law Journal vol. 28 (1982—83), 591—607. 13 Single Convention on Narcotic Drugs, Done at N e w Y o r k on 30. 3.1961, as amended in U N T S vol. 520, 151; BGBl. 1977 I I , 111; see artt. 21, 31, 32; see also the Convention on Psychotropic Substances, alone at N e w Y o r k on 23. 2.1971, BGBl. 1976 I I , 1977, see artt. 8, 12, 13 and Ursula Wassermann , U N Convention on Drugs, in: Journal of World Trade Law vol. 5 (1971), 573—577. 14 Convention on International Trade in Endangered Species of W i l d Fauna and Flora, Done at Washington on 3 . 3 . 1 9 7 3 , BGBl. 1975 I I , 775; see artt. I I I — I X ; see: "Convention on International Trade in Endangered Species of W i l d Fauna and Flora", in: L a w and Policy in International Business vol. 6 (1974), 1211—1227; Wockenfoth , Vollzug des Washingtoner Artenschutzübereinkommens, in: D e r Betrieb 1983, 1699. 15 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, Done at Paris on 14.11.1970, U N T S vol. 823, 231 et seq.; see artt. 3, 6, 11, 13. See: Kurt Siehr , Kunstraub und das internationale Recht, in: Schweizerische Juristen-Zeitung (SJZ) 1981, 189—197 and 207—211 (195—197). 16 For details see Lowenfeld, International Economic Law vol. 6 — Public Controls on International Trade, N e w Y o r k 1979, 179—254; Walter Werner, Selbstbeschränkungsabkommen im Außenhandel, München 1984; cf. also Rom (note .6), 140—142; Fileentscher (note 5),

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The analysis of the international court practice vis-à-vis foreign export restrictions must take into account the differing thrust of these regulations and their relation to the policies of the forum. I t is submitted that some decisions which appear contradictory at first sight are compatible i f explained that way. III. " E n f o r c e m e n t " and "Effects" of Foreign E x p o r t Restrictions That the courts of one country do not enforce the penal laws of another is an established principle of private international law. 1 7 The same applies to tax matters though the observation of Lord Mansfield , C. J. that "no country ever takes notice of the revenue laws of another" 1 8 nowadays is questioned as an early overstatement 19 . The legal nature of foreign export prohibitions is doubtful: do they concern customs affairs and therefore fall into the category of revenue laws 2 0 or to do they belong to the criminal laws on behalf of the penal sanctions that the relevant foreign statutes provide for infringements? 21 I n A.-G. of New Zealand v. Ortiz Lord Denning, , M, R. struggled w i t h a third category imported from civil l a w systems22, i. e. foreign public laws. H e held that such foreign pulic laws may also not be enforced in England. 23 This 248 et seq. and 305—308. I n the case of Ospig Textilgesellschaft v. Hauptzollamt Bremen (no. 7/83), the Court of the European Communities dealt with customs problems resulting from agreements of the E E C w i t h third countries which restrict textile imports and are safeguarded on the exporting countries' side by export licensing and on the Community side by import licensing, see the decision of 9. 2.1984, R I W vol. 30 (1984), 228. 17 Huntington v. Attrill , 146 United States Supreme Court Reports (U.S.) 657 at 668—669 (1892); Huntington v. Attrill [1893] Appeal Cases ( A . C . ) 150 (156—157) ( P . C . 1892, Ont.); see Kutner , Judicial Identification of "Penal Laws* in the Conflict of Laws, in: Oklahoma Law Review (Okla.L.Rev.) vol. 31 (1978), 590—634 (591); B G H 1.6.1954, N J W vol. 7 (1954), 1086; Karin Comils , D i e Fremdrechtsanwendung im Strafrecht, Berlin und N e w Y o r k 1978, 121 ;Lombois, D r o i t pénal international, Paris 1971, 401 no. 351; Enrique Pecourt Garcia, La ley penal extranjera ante el juez del foro, in: Revista espanola de derecho internacional vol. 23 (1970), 9—18. is Holman v. Johnson [1775], 98 English Reports (Eng.Rep.) 1120 (1121); in France cf. Cour de Cassation, diambre civile (Cass.civ.) 3. 7.1928, Clunet vol. 56 (1929), 385 with note by J. P. Regazzoni v. Sethia [1958] A . C . 301, at 321 by Viscount Simonds and at 329 by Lord Somervell of Harrow; for a critical assessment of the territorial application of revenue laws see Klaus Vogel, Der räumliche Anwendungsbereich der Verwaltungsrechtsnorm, Frankfurt 1965, 200 and 425—429. 20 This approach was apparently taken by Viscount Simonds in Regazzoni v. Sethia [1958] A . C . 301 (321—322). 21 For this qualification, see: Adener, L . J . in A.-G. A l l E R 432 (467). 22

of New

Zealand v. Ortiz , [1982] 3

Imported by Frederic A. Mann, Prerogative Rights of Foreign States and the Conflict of Laws, in: Transactions of the Grotius Society vol. 40 (1955), 25. 2 3 [1982] 3 A l l E R 459.

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conclusion is shared by continental jurisdictions 24 which have less difficulty w i t h public laws, considering them as a category embracing acta iure imperii of all kinds. 1. Government Claims — Enforcement What types of action constitute an enforcement forbidden under that rule? First, this refers to criminal prosecution. Though apparently no state has ever brought an indictment in a foreign court for illegal exports, there is no doubt that the claim to and the enforcement of criminal punishment are in principle limited to the territory of the prosecuting state. 25 Furthermore states cannot claim the restitution of goods exported i n violation of their laws in a foreign court. A n exception is made where the foreign state had acquired title to the goods w i t h i n its own territory, i. e. before the goods were exported; but in this case the action lies to protect the foreign state as owner of the goods and not as a foreign sovereign interfering w i t h the rights of private owners by export prohibitions. I n the case of King of Italy v. Marquis Cosimo de Medici Tornaquinci the defendant had brought historical documents from the Medici archives to England to put them up for sale at Christie's in London. The documents which included letters written by and to Lorenzo Magnifico , were partly owned by the Kingdom of I t a l y and partly by the defendant. Their export was prohibited under Italian legislation 20 , and the Italian government now asked for an injunction to foreclose the auction. Peterson , J. granted the injunction w i t h regard to the documents owned by the Kingdom of I t a l y , but refused i t for the others. H e put the question, "whether there was any probability, at the trial of the action, that these documents, apart from the State papers, would be ordered to be returned to Italy. H e did not think that the Court would undertake such a burden." Moreover, he argued that the export prohibition had exhausted its effects as soon as the papers had left I t a l y . 2 7 24 B G H 17.12.1959, B G H Z vol. 31, 367 (371); Gerhard Kegel , Internationales Privatrecht, fourth edition, München 1977, 504; Klaus Vogel, Book review (Schurig , Kollisionsnorm und Sachrecht, Berlin 1981), in: Zeitschrift für ausländisches öffentliches Recht und Völkerrecht ( Z a ö R V ) vol. 44 (1984), 204—209 (207—208); Henri Batif fol / Paul Lagarde, D r o i t international privé vol. 1, seventh edition, Paris 1981, 295—296; Pierre Mayer, Les lois de police étrangères, in: Clunet vol. 108 (1981), 277—345 (311); René van Rooij, D e positie van publiekrechtelijke regels op het terrein van het internationaal privaatrecht, VGravenhage 1976, 142—146 and 162; Edoardo Vitta, Diritto internazionale privato vol. 1, Torino 1972, 12—19 (13); Riccardo Monaco, L'efficacia della legge nello spazio, ed. 2, Torino 1964, 80. 25 Klaus Garthe, Der Anwendungsbereich des öffentlichen Außenwirtschaftsrechts, Göttingen 1973, 42. 26 For the Italian law on the point, see: Leonardo Mazza , Opere d'arte (contrabbando), in: Enciclopedia del diritto vol. 30, Milano 1980, 277—310. 27 34 Times Law Reports (T.L.R.) 623 at 624 (1918) Ch.

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A similar reasoning was followed by the English Court of Appeal i n the case of A.-G. of New Zealand v. Ortiz. The N e w Zealand government claimed restitution of Maori carvings which had illegally been taken out of the country and thereby, under N e w Zealand law, been forfeited. The Court of Appeal reserved the decision of the H i g h Court and dismissed the case on the ground — inter alia — that this was a claim for the enforcement of foreign public or penal law. 2 8 The forfeiture was regarded as having taken place after the export, i. e. outside N e w Zealand; as an extraterritorial confiscation i t was therefore deemed to be of no effect in England. 2 9 I n apparent contrast to these decisions the Tribunale di Torino granted restitution in the case of Repubblica delÎEcuador v. Danusso. Here, the defendant had bought various objects of pre-hispanic origin in Ecuador and carried them from that country to Italy. Under the laws of Ecuador, these objects were not allowed to be exported and belonged to a category of chattel owned in common by the national community and by private persons who retain the possession of the objects. Thus, the p l a i n t i f f unlike the government of N e w Zealand in A.-G. of New Zealand v. Ortiz asserted a title the acquisition of which had already been accomplished when the objects were still in Ecuador, and the Italian court had to respect this vested right under its conflict of laws rule. 3 0 I n addition the court referred to the 1970 Paris Convention against illicit trade in cultural property 3 1 which is in force in both I t a l y and Ecuador. But the function of this argument was a negative one: it explained that the restitution award did not violate Italian public policy. I t follows from these decisions that insofar as restitution has been granted it was based on the foreign government's title and not on a claim to enforce sanctions for illegal export. Though the decisions reported above may be reconciled under the aspect of territorial effects of foreign acts of state affecting property, they reflect different policies. The Italian decision is inspired by reciprocity: how can I t a l y expect foreign countries to return its own art treasures exported i n violation of its laws i f i t does not help to suppress the clandestine trade in art objects of foreign origin? 32 This consideration, 28 A.-G. of New Zealand v.Ortiz, [1982] 3A11ER 450 C.A., at 459—460 by Lord Denning, M R , and at 466—467 by Lord Justice Ackner. The House of Lord only discussed the question whether N e w Zealand law had to be interpreted such as to provide for forfeiture in this case. 20 Lord Denning, M R , op. cit., 456. 30

See: art. 22 disposizioni preliminarie al Codice civile and Tribunale Torino 25. 3. 1982, in: Riv.dir.int.priv.proc. vol. 18 (1982), 625 (631—632). 31

Op. cit., 634, and for the Convention, cf. note 15. 2 Tribunale Torino 25. 3.1982, Riv.dir.int.priv.proc. vol. 18 (1982), 625 (634) of solidarity and collaboration among states . . 3

e

. . . spirit

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shared i n A.-G. of New Zealand v. Ortiz by Staughton, J. in the Queen's Bench Division 3 3 , was rejected in the Court of Appeal as "too sanguine" by Lord Denning , M. R. I n a rather embarrassing way, he continued that this purpose "must be achieved by diplomatic means. Best of all, there should be an international convention on the matter . . . " 3 4 , as i f such an instrument had not existed for more than twelve years (supra, part I I ) . The surprising looseness of the opinion at this point suggests that the judge was not dissatisfied w i t h his final result which amounts to a removal of foreign law restraints on the London art market, the biggest i n the world. I t owes its importance inter alia to courts of law which keep raised the banner of free trade in art objects regardless of the protectionist tendencies in international law. W i t h regard to foreign reexport prohibitions enforcement attempts might also adopt the following form: the foreign government might apply for a restraint order which prohibits a domestic company from selling or carrying the respective goods to a certain destination. Such cases apparently have never come to the courts which would probably dismiss them in the absence of international conventions to the contrary. 3 5 I t is perhaps for this reason that the United States, instead of going to the courts, seek the assistance of the local customs authorities to prevent reexports which are illicit under American law. Thus, in November 1983, Hamburg customs officials arrested a computer system which, having lawfully been exported from the United States to South Africa, had been transshipped there w i t h the destination USSR via Hamburg, thereby violating U . S. export regulations. 36 2. Private Litigation

— Effects

So far, only foreign government claims have been discussed. Whether one can speak of "enforcement" of foreign export prohibitions is much more difficult to decide when those foreign regulations are raised in, and purported to influence the outcome of, private litigation between individuals or companies. O f course, a private party may act as a sort of agent of the foreign government. For example, the petition for a restraint order in the reexport cases might be made by the U.S. exporter i f his contract w i t h the foreign importer 3 3

[1982] 3 A U E R 432 (451). 34 [1982] 3 A l l E R 451 (460).

35 W i t h regard to government claims in general, see: Ignaz Seidl-Hobenveldern , Voraussetzungen für die Anwendbarkeit ausländischen öffentlichen Rechts, in: Revista espafiola de deredio internacional vol. 25 (1972), 349—359 (354) w i t h further references; contra Rainer Frank, öffentlich-rechtliche Ansprüche fremder Staaten vor inländischen Gerichten, in: RabelsZ vol. 34 (1970), 56—75 (64). 3β Cf. "Washington: Ein 'Spionage-Coup* verhindert", in: Frankfurter Allgemeine Zeitung 2 1 . 1 2 . 1 9 8 3 , 2.

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contained a clause subjecting the latter to the U.S. reexport prohibitions 3 7 . But it is very likely that a court outside the United States would not regard this relief as a contractual remedy, but instead would refuse it as an "enforcement in disguise" of foreign public laws. For the very aim of such a petition is the prevention of transfrontier commodity flows which is also the direct purpose of the foreign prohibition. Usually, claims other than for enforcement are at stake: the p l a i n t i f f may sue for damages that he has suffered because the defendant, abiding by an export prohibition, did not carry out the promised delivery. O r , in case the export has taken place, the exporter may charge his consideration, while the defendant importer alleges the illegality of the contract. I t may also be questioned whether such illicit exports can transfer title. Finally, ancillary contracts, maritime insurance contracts in particular, may be affected by a foreign export prohibition. I n these situations domestic courts w i l l either give effect to or disregard the foreign export prohibitions. Whatever they do, it has nothing in common w i t h enforcement since it does not concern the actual movement of the goods which is the principal object of export prohibitions. O f course, a court decision sends out signals to the foreign government which w i l l evaluate i t as "friendly" or "unfriendly". 3 8 The judgment may also produce or remove incentives felt by individual traders to circumvent the export prohibition. But i t neither stops nor otherwise interferes w i t h the flow of commodities. Therefore the rule prohibiting the enforcement of foreign penal, tax and public laws no longer applies. 39 Instead we have to make up our minds on the effect that public law provisions have on private law and there is no clearcut rule that steers through these troubled waters. IV.

Evasion

Contracts

That parties contract for a delivery prohibited at the time when the contract was concluded is a very common occurrence in international trade. I n most cases these contracts are not affected by illegal intentions since the parties have agreed by express or implied terms to subject delivery to the 37 For sudi clauses cf. Basedow (note 2), 160; Karl F. Kreuzer, Parteiautonomie und fremdes Außenwirtschaftsrecht, in : Peter Schlechtriem / Hans G. Leser [eds.], zum Deutschen und Internationalen Schuldrecht, Tübingen 1983, 89—111 (92); Geric Lehedoff / Caroline Raievski, A French Perspective on the United States Ban on the Soviet Gas Pipeline Equipment, in: Texas International L a w Journal (T.I.L.J.) vol. 18 (1983), 483—507 (487, note 27). 3 8 Cf. Garcke (note 25), 59. 39 François Rigaux , Droit public et droit privé dans les relations internationales, Paris 1977, 183—184.

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condition that an export licence can be obtained. 40 A party may even undertake an absolute warranty to procure a permit; yet, delivery without a permit has not been promised. Such a guarantee amounts to nothing more than the acceptance of the risk that the licence might be refused. The distribution of risks resulting from the agreed compliance w i t h foreign export prohibitions w i l l be discussed below at V . Sometimes, however, parties do not take into account the preexisting trade restrictions as data which frame the setting of their transaction. They rather try to circumvent them and promise unconditional delivery in spite of the impossibility of procuring an export licence. I f the agreement contravenes the export regulations o f the forum state, courts, without having regard to the proper law of the contract, w i l l treat i t as tainted and refuse to enforce obligations flowing from i t . 4 1 Policies such as the discouragement of illegal conduct or the maintenance of the courts' respectable reputation w i l l support this solution. 42 But how do courts react towards the violation of foreign trade restrictions where such policies are perceived as less urgent? 1. Claims for Delivery

and Damages

a) The Conflicts approach: The most conclusive test would be a suit for specific performance of a contract, i. e. for the delivery of goods prohibited under a foreign export control legislation. Apparently, such a case has never been decided. However, a similar situation may arise where the seller initially agreed to carry out the illicit export, but after some reflection repudiated the contract and was therefore sued for damages. The decisions of such claims are less conclusive since the foreign export prohibitions are concerned w i t h the stop of commodity flows and not w i t h redress between private individuals. Yet, the compensation cases have created precedents which w i l l guide the adjudication of delivery claims. I n Regazzoni v. Sethia , the defendant had agreed to sell and deliver to the appellant jute bags. Both parties, contemplating that the bags should be shipped 40 See Philippe Kahn> L a vente commerciale internationale, Paris 1961, 350, who cites an extremely complex clause proposed by the Economic Commission for Europe of the United Nations; for a broad discussion, cf. also David M. Sassoon, C J . F . and F.O.B. Contracts, second edition, London 1975, no. 198 and 387. 41 For the analogous effects that the violation of domestic import prohibitions produces on import contracts, see Wulf-Henning Roth, Z u r Anwendung der §§ 134 und 306 BGB bei Importverboten, in: Praxis des internationalen Privat- und Verfahrensrechts (IPRax) [1984], 76—79 (77). 42

For the treatment of illegal and immoral agreements in general, cf. Arthur von Mehren, A General V i e w of Contract, in: International Encyclopedia of Comparative Law vol. 7, Tübingen 1980, chapter 1, section 40.

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from India to Genoa for resale in South Africa, were aware that the Indian government had prohibited the export of jute from India to South Africa in order to retaliate against the racial discrimination of the Indian population in that country. The defendants repudiated the contract, and the plaintiffs claimed damages for non-delivery. The House of Lords dismissed the suit, "since an English court w i l l not enforce a contract, or award damages for its breach, i f its performance would involve doing an act in a foreign and friendly State which violates the law of that State. This principle is based on public policy and international comity". 4 3 I t is questionable, whether comity would not have been served more efficiently by awarding damages to the plaintiff. Such an award would have produced a deterrent effect on potential sellers in future cases while the House of Lords decision takes all risks off their shoulders: they can repudiate the contract whenever it gets too hot for them. I have to concede, however, that the courts of the prohibiting state themselves w i l l usually strike down the contract just as the House of Lords did. The principle formulated by the House of Lords expresses a choice of law rule for the foreign prohibition which English courts w i l l pay heed to only insofar as acts in the foreign state are concerned. Viscount Simonds called particular attention to this aspect and stressed "that it may well be that different considerations w i l l arise and a different conclusion w i l l be reached i f the law of the contract is English and the contract can be wholly performed in England or at least in some other country than that whose law makes the act illegal". 4 4 Whether foreign legislation which violates basic principles of justice and morality of the forum w i l l be applied in the same way, remains doubtful 4 5 . b) The immorality approach: I n 1960, the Bundesgerichtshof (BGH) was faced w i t h the following case: t w o West German companies had entered an agreement under which the defendant had to deliver 100 t of borax to the plaintiff. The borax was produced in Germany from basic material imported from the United States which granted export licences on the condition that no borax be shipped to socialist countries. The parties who knew that the final destination of the borax was Rostock / East Germany, connived to conceal this by selling the goods c.i.f. Copenhagen. However, U.S. law required every 43 [1958] A . C . 301 (302) (H.L.). 44

Ibid., 318; the same principle is enunciated as flowing from a "universal ordre public" by Anton Heini, Die Anwendung wirtschaftlicher Zwangsmaßnahmen im internationalen Privatrecht, in: Berichte der Deutschen Gesellschaft für Völkerrecht (BDGesVR) vol. 22 (1982), 37—53 (50). 45

Cf. Lord Reid (note 43), 325 : " I can imagine a foreign law . . . of such a character that we would regard an agreement to break it as meritorious; see also Lord Somervell of Harrow (note 43), 330.

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subsequent buyer in the line of trade to sign a so-called enduse statement which contained an obligation not to ship the merchandise to ports of the Warsaw Pact. When the buyer refused to sign, the seller declined to deliver the borax and was consequently sued for damages for breach of contract. The B G H rejected the claim holding that the contract provided for immoral conduct. The immorality was seen first in the intention to cheat the U.S. export administration for the purpose of procuring an export licence, and second in the violation of West German interests concerned w i t h the maintenance of peace and freedom, and protected by the U.S. embargo. Therefore, the contract was void under § 138 of the German C i v i l Code (Bürgerliches Gesetzbuch, BGB). 4 6 These arguments call for some observations. The deceit of foreign government agencies can only be regarded as immoral i f one assumes a priori that their decisions are of some relevance to the case at hand. But suppose the court had rejected the U.S. reexport prohibition because of its extraterritorial effect; in that case the judges would certainly not have bothered about the fraud. Insofar, the immorality approach is inconsistent and leads to a vicious circle since i t presupposes its purported rsults. 47 The more coherent theory adopted by the House of Lords and other common law jurisdictions decides first on the application or not of the foreign prohibition which is then treated, at a second stage, just like a prohibition of the forum state whose violation makes the contract illegal. 48 « B G H 21.12.1960, B G H Z 34, 169 (176—177). 47 Mayer (note 24), 309; the immorality approach was rejected by Trib. Genova 2 9 . 1 . 1 9 5 5 , Temi genovese 1955, 239 (246—247) in a case concerning the violation of foreign currency restrictions. The court held that only the violation of Italian law could taint the causa of the contract; foreign laws may be given effect only insofar as they render impossible the performance of the contract. O n the other hand, the immorality approach has been approved in some jurisdictions though in cases concerned w i t h foreign prohibitions other than export prohibitions. See for Austria Oberster Gerichtshof ( O G H ) 3. 3. 1931, Entscheidungen des österreichischen Obersten Gerichtshofes in Zivil- und Justizverwaltungssachen (SZ) 13/76 (Polish import prohibition on German furs); for Belgium see the opinion of the AttorneyGeneral Hayoit de Termicourt (note 64) ; for France see H. Batiffol , note on Tribunal civil de la Seine (Trib.civ.Seine), 4. 1. 1956, Revue critique de droit international privé (R.C.D.I.P.) vol. 45 (1956), 680—683 (682) (Spanish currency restrictions; the court voided the contract as illicit, not immoral); for Switzerland see Bundesgericht (BG) 28. 2. 1950, Entscheidungen des schweizerischen Bundesgerichtes (BGE) 76 I I , 33 (41—42); while the evasion of foreign drug trade prohibitions would make the contract immoral, foreign currency restrictions do not have this effect; see also the authors cited below (note 53). 48 See Regazzoni v. Sethia (n. 43); for Canada see Walkerville Brewing Co. v. Mayrand [1928] 4 Dominion Law Reports (D.L.R.) 500 (Ont.S.Ct.); reversed [1929] 2 D . L . R . 945 (Ont.A.D.). Defendant had promised to use his wharf exclusively for the shipping and warehousing of plaintiff's liquor which was destined to be smuggled into the U.S.A. When defendant opened the wharf to other breweries, plaintiff asked for an injunction which the trial judge refused on grounds of public policy. The Appellate Division reversed, inter alia laying stress on the territorial limitation of the U.S. prohibition; see also: Note, H a r v a r d L a w Review (Harv.L.

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A second criticism concerns the legal basis of the decision, i.e. § 138 BGB. I f the proper law of the contract had not been German law, the decision would probably not have differed though perhaps based on the general public policy exception of art. 30 of the introductory law of the C i v i l code (Einführungsgesetz zum Bürgerlichen Gesetzbuch, EGBGB). 4 9 This shows that the considerations as to the effect of the foreign embargo are entirely independent of any choice of law rules pertaining to other parts of the contract. The export prohibitions are not w i t h i n the scope of the proper law. 5 0 The court's assessment that the U.S. reexport prohibition protected the interests of the Federal Republic raises the question whether the court really gave effect to foreign regulations or rather enunciated an own, German policy. O f course, national interests may be formulated in the light of action taken by allied or friendly foreign states.51 But still, this would be part of the domestic political process of the forum state, and the policies thus shaped by a court would be municipal policies rather than comity considerations. T o bring this argument to a point one can say that the B G H did not apply foreign law, but its own. c) The public policy exception: The only caveat of the decision purports that foreign trade restrictions would not be given effect i f enacted for improper reasons or designed to curtail the competitive position of German companies. I n the light of other cases, this statement may be broadened to a general public policy exception: i f a foreign export restriction, e. g. a trading w i t h the enemy prohibition is directed against German interests, courts w i l l not take it into account to strike down a contract. 52 Rev.) vol. 42 (1928—29), 436—437; in a U.S. case concerning the violation of a sister state liquor prohibition, Justice Holmes made the proposition "that an agreement to break the laws of a foreign country would be invalid", Graves v. Johnson, 30 Northeastern Reporter ( N . E . ) 818 (819) (Mass. 1892); to the same effect in a case concerning the smuggling of electronic components into Mexico see: International Aircraft Sales , Inc. v. BetanCourt , 582 South Western Reporter, Second Series (S.W. 2d) 632 (635) (Tex.Civ.App. — Corpus Christi, 1979). 4» Cf. R G 21. 10. 1921, Niemeyers Zeitschrift für Internationales Recht vol. 32 (1924), 452 (453); contra, stressing the relevance of the proper law, see: Yvon Loussouam, note under Trib.civ. Seine 4. 1. 1956, in: Revue trimestrielle de droit commercial vol. 10 (1957), 503—504. 50 See, e. g., Bernard Audit , Extraterritorialité et commerce international. L'affaire du gazoduc sibérien, in: R.C.D.I.P. vol. 72 (1983), 401—434 (431); Kreuzer (note 37), 106—110; apparently contra Ole Lando , Kontraktstatuttet, third edition, Kobenhavn 1981, 254; see also below (note 115). 51 Cf. Bernhard Grossfeld / C. Paul Rogers , A Shared Values Approach to Jurisdictional Conflicts in International Economic Law, in: I . C . L . Q . vol. 32 (1983), 931—947. 52 R G 22. 12. 1916, Beiträge zur Erläuterung des deutschen Rechts, begründet von Grucbot vol. 61 (1917), 460; contract to smuggle out of Sweden a cargo of linseed oil in violation of Swedish trade embargo against Germany; the contract was held to be valid because the * export prohibition of foreign states, caused by the war and directed against German

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d) Summary: A three-tiered rule results from these cases: (1) Courts w i l l not enforce contracts i f their performance involves acts in a foreign state which violate the laws of that state. Insofar, effect w i l l be given to foreign export prohibitions of territorial application. I t may be argued, however, that the territorial limitation should be defined rather by the situs of the goods than by acts of performance committed i n the prohibiting state or by the domicile of the parties. 53 (2) Courts w i l l not give effect to those regulations which are directed against the national interest of the forum state. (3) Even beyond the limits of territoriality, effect may be given to export prohibitions which help to enforce the forum state's own policies. 2. Claims for Consideration Rule (1) outlined above makes no difference between the various claims that might arise from the same contract. Just like damages claims for nondelivery, suits brought for the payment of the consideration for illicit exports should be dismissed. However, courts seem to be somewhat reticent to draw such an inference. I t was drawn by a Texas court in the case of International Aircraft Sales, Inc. v. Betancourt 54. But in this case, foreign import restrictions were evaded and the considerations arising in that context may differ. I n 1921, the Reichsgericht had to decide on the claim for payment resulting from a sales contract. I n violation of Dutch war trade prohibitions, cattle had been delivered into Belgium which was occupied by German troops in the relevant year of 1916. Judgment was passed for the seller on the ground that the Dutch prohibition could not be given effect because it was directed against interests will not be protected by German courts." I n the same sense, referring to the English Trading with the Enemy Act of 1914, cf. R G 28. 6.1918, R G Z 93,182; see also Heini (note 44), 50. 53

Though with different theoretical approaches and sometimes without reference to export prohibitions, this conclusion is shared by many writers, see e. g. Dieter Medicus , Allgemeiner Teil des BGB, Heidelberg 1982, no. 658; in Switzerland see Theo Guhl, in: Hans Merz / Max Kummer (eds.), Das schweizerische Obligationsrecht, ed. 7, Zürich 1980, 41; in Austria see Heinz Krejci, in: Peter Rummel [ed.] Kommentar zum Allgemeinen Bürgerlichen Gesetzbuch, vol. 1, Wien 1983, § 879 no. 24; François Rigaux (note 39), 193—194. For the territorial limitation, see Ole Lando , Contracts, in: International Encyclopedia of Comparative Law, vol. 3, Tübingen and Alphen a/d Rijn 1976, chapter 24, section 206; Walther J. Habscheid, Territoriale Grenzen der staatlichen Rechtsetzung, in: BDGesVR vol. 11 (1971), 47—76 (71); Gerhard Kegel, in: Soergel / Siebert [eds.] Bürgerliches Gesetzbuch, vol. 8, eleventh edition, Stuttgart 1984, V o r Art. 7 E G B G B no. 396. 54

582 S.W. 2d 632 (Tex.Civ.App.-Corpus Christi, 1979).

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Germany which was in a state of emergency and consequently in urgent need of food supplies. 55 While the public policy exception of rule (2) may help to explain this judgment, i t had no impact on the 1937 decision of the French Court of appeal of Colmar. The defendant, a Jewish refugee of German nationality had commissioned the French p l a i n t i f f to smuggle out of Germany his money and jewels which he had not been allowed to take w i t h him. The plaintiff was arrested and imprisoned in Germany. After his release he charged the defendant w i t h the expenses which he had incurred for various purposes such as the redemption of his confiscated car and his liberty. The court found for the plaintiff holding the contract to be valid since the German prohibition was of a political nature and therefore of purely territorial application. I t also rejected the defendant's argument that the p l a i n t i f f had acted at his own risk. 5 6 Here, a qualification to rule (1) seems to emerge, though admittedly supported by rather faint authority. The foreign export prohibition appears to affect only the obligations of the party who has pledged to overcome that prohibition, and not this person's contractual rights. I n favour of this solution, one may argue that these rights do not encroach upon the foreign prohibition which is exclusively concerned w i t h the flow of commodities and must therefore be upheld. 5 7 The effects of the court practice can be stated in the following terms: whoever agrees to violate a foreign export prohibition may reap the benefits of such an agreement without incurring its particular risks. 58 The stimulus provided for the evasion of foreign export prohibitions is manifest. I t squares little w i t h the alleged considerations of comity to which courts so often refer. I f the rules stated are actually observed, a consistent policy behind them could rather be the free trade dogma enshrined in the G A T T . Its ban on export restrictions (see above part I I ) may explain w h y courts perhaps subconsciously provide private l a w incentives to those who contract to circumvent foreign export controls. They should, however, realize the limits of the free trade dogma and minimize those incentives in areas where export prohibitions are internationally recognized. Thus, for example, the illicit export of art objects should not entitle the exporter to claim the purchase price abroad.

R G 21. 10. 1921, in: Niemeyers Zeitschrift für Internationales Recht vol. 32 (1924), 452. sc Cour d'appel Colmar 16. 2. 1937, Dalloz, Recueil périodique et critique (D.) 1939 I I , 25 (32) note Edouard Silz. 57 Such one-sided private law sanctions of legal prohibitions are wellknown in contract law, see von Mehren (note 42), section 41. 58 See the comment above after note 43.

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3. Insurance Claims a) The implied warranty of the lawful adventure: Shippers tend to take insurance coverage even for the transport of commodities which must not be exported under the laws of the exporting country. Insofar as such prohibitions are unknown to the underwriter as they usually w i l l be, they increase the risk that he has envisaged. The economic balance of the insurance contract, i. e. the risk-premium relation, may be distorted, because the goods are possibly subjected to arrest and confiscation by the exporting state. This explains the internationally accepted rule that coverage in general can be obtained only for lawful adventures. They are defined by both domestic and foreign relevant laws, though the latter are sometimes given effect w i t h hesitation. 59 I n addition to the contractual explanation outlined above courts often base their decisions on considerations of international comity. I n 1962, the B G H refused to enforce an insurance policy covering the transport of boric acid from the U.S. West Coast via N e w Y o r k to Hamburg where a transshipment was planned for Poland. 6 0 A t that time, the export o f boric acid to Socialist countries was prohibited under the laws of the United States which garnished the shipment at N e w Y o r k . A suit brought by a bank holding the bills of lading against the insurer was dismissed by the B G H . The court argued that insurance of a carriage which was illicit under both U.S. law and § 138 B G B 6 1 was immoral and therefore void under the same § 138 BGB since i t was designed to shift the high risks of illegal conduct. A similar line of thought was followed by the same court in 1972. 62 The plaintiff had acquired a policy covering the transport of art objects from Nigeria to Hamburg. This export was prohibited by Nigerian law. When six bronze statues were lost during the voyage the p l a i n t i f f sued the insurer for indemnity. The court realized that, contrary to the U.S. embargo, the Nigerian export prohibition did not protect German interests. But i t follows from a basic persuasion of the international community as reflected by the 59 See section 41 of the English Marine Insurance Act, 6 Edw. 7 c. 41 and cf. Arnould , Law of Marine Insurance and Average, sixth edition by Midoael J. Mustill / Jonathan C. B. Gilman, London 1981 vol. 2, no. 744—748, see also vol. 1, no. 97 for express agreements to the contrary; Leslie J. Βuglass y Marine Insurance and General Average in the United States, second edition, Centreville 1981, 33; René Rodière , Assurances, in: René Rodière / Jean Calais-Auloy, Assurances et ventes maritimes, Paris 1983, 350—352; Hans Joachim Enge , Transportversicherung, in: Walter Grosse / Heinz Leo Müller-Lutz / Reimer Schmidt [eds.], Versicherungsenzyklopädie vol. 6, Wiesbaden 1976, 1—345 (35). eo B G H 24. 5. 1962, N J W vol. 15 (1962), 1437 etseq; Monatsschrift für Deutsches Recht vol. 16 (1962), 719, 888 note Karl Sieg. 61

The Court referred to its previous decision in the borax case, (note 46). β2 B G H 22. 6. 1972, N J W vol. 25 (1972), 1575 etseq. with note by Frederic

A.

Mann.

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12 7

1970 Paris Convention 6 3 that every nation w i l l i n g to protect its cultural heritage is entitled to foreign assistance. Consequently the court held the export to be unlawful under § 138 BGB and therefore not fit to be insured. b) Extraterritorial effects: The contractual and the comity approach may lead to different results w i t h regard to policies covering a carriage which is necessary for, but performed prior or subsequent to the illegal border crossing and outside the prohibiting state. Since there is no risk of seizure in such cases, considerations of contractual balance are not opposed to insurance coverage. I n 1936, the Court of Appeal of Brussels therefore upheld an insurance contract covering a transport of diamonds from Lourenço Marques (Mozambique) to Antwerp, though the diamonds had previously been smuggled out of South Africa and the transport to Belgium including the insurance had been, from the very beginning, planned as a necessary part of the scheme. The court stressed that the policy "was neither concerned w i t h an act of smuggle to be performed by the insured nor of a nature such as to charge the insurer w i t h the risk of confiscation of the smuggled diamonds". 64 W i t h regard to a foreign import prohibition, a similar result was reached by the French Cour de cassation i n 1928. A policy covered the carriage of liquor to a point on the H i g h Seas off the coast of the United States, where the goods were meant to be transshipped and smuggled into the U.S.A. The shipment fell victim to pilferage and judgment was passed against the insurer to pay indemnity. The court argued that the liquor trade was entirely lawful i n France, and the contract could not be tainted by acts contemplated for the time subsequent to its performance. Therefore the insurance contract was valid "on the only condition that the situation had been brought to the insurer's knowledge" as it had been in the case.65 This reasoning again stresses the prevailing attention that courts pay to the maintenance of the contractual balance. For considerations of comity would probably require to void the insurance policies which are ancillary to the prior or subsequent violation of foreign trade restrictions. 66 Thus, they would give 63 See above at note 15; on this aspect of the decision, see Albert Bleckmann, Sittenwidrigkeit wegen Verstoßes gegen den ordre public international, in: Z a ö R V vol. 34 (1974), 112— 132. Cour d'appel de Bruxelles 13. 5. 1936, La Belgique judiciaire 1937, 4 (19); see also the opinion of the Attorney-General at 10—11 who stresses that an export contract violating the laws of the exporting country may be void because of a "cause immorale". es Cass. req. 28. 3. 1928, S. 1928 I 305 (307) note J.-P. Niboyet. ββ See the critical note of Niboyet (note 65), 306; cf. also L G Berlin I I I 2. 11. 1928, IPRspr. 1929 N r . 13; the facts of this case were almost identical w i t h those submitted to the Cour de cassation (note 65). However, the policy provided for a transport to Canada or the Bermuda Islands, and the insurer did not know that the liquor was to be smuggled into the U.S. from a point off the coast of Long Island. Whereas the court laid weight on the

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extraterritorial effect to those regulations without asking whether such effects are claimed by the foreign l a w . 6 7 For example, the Brussels Court of Appeal stated that South African law was not opposed to the transport of diamonds from Mozambique to Belgium, even though the diamonds had been smuggled out of South Africa. A n d i f South Africa had claimed such extraterritorial effects, i t would have lacked the power to enforce them; therefore, the reasoning of the court that the insurer was not burdened w i t h the risk of confiscation, would still hold true. c) Summary: The following rules emerge: (1) Insurance contracts covering transports that violate foreign export prohibitions w i l l be voided. (2) They w i l l be voided only insofar as the exporting state has the power to enforce its prohibitions, i. e. insofar as that state may garnish and confiscate the goods. This power does not exist w i t h regard to such transports that are entirely carried out outside the territory of the prohibiting state. (3) I t is doubtful whether there is an additional public policy exception in the sense that insurance policies w i l l be upheld i f they violate a foreign law which in turn violates the public policy of the forum state. 68 What matters is not the foreign law by itself which may be repugnant on the face, but its effect in the case at hand. A n d it is difficult to conceive a case where the striking down of a marine insurance policy under a foreign law violates the public policy of the forum. 4. Contention

of Transferred

Rights

Some export regulations invalidate the transfer of rights effected by illicit exports. This pertains to certain export prohibitions w i t h regard to art objects already mentioned (part I I I ) , but also to those prohibitions implied by the state monopoly for foreign trade in socialist countries. Litigation has arisen in the field of intellectual property. I n 1959, the Cuban composer Cabrera had transferred his copyright for I t a l y to Southern Music, an Italian company. A year later, Cuba enacted a retroactive statute requiring government licences for all contracts concerning immorality of the adventure, § 138 BGB, it might also have voided the contract for the deceit of the insurer. β7 β Päpstlicher als der Papst", cf. Seidl-Hohenveldern (note 35), 352. 68 See Arnould (note 59), end of no. 745: "The scope of this exception is uncertain, but it is plainly a rule of limited application."

Private Law Effects

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copyright. When Cabrera failed to obtain such a licence for the Italian contract, he sold his copyright for the Italian market again to another Italian company, Ariston. Without success, Ariston sued Southern Music for infringement of its copyright. The Court of Appeal of M i l a n held that the first contract had already transferred the copyright abroad where i t was out of the purely territorial reach of the Cuban statute. 69 A similar reasoning was followed by the B G H i n 1975. The plaintiff had purchased the copyright for the novel "August 1914" from the Russian author Solzhenitsyn i n Switzerland. This publisher brought suit for infringement of copyright against the defendant who published the same book i n Germany. The defendant's argument that the p l a i n t i f f could not acquire the copyright due to the Soviet state monopoly for foreign trade was rejected by the court. I t was said that the monopoly could produce only territorial effects regardless of the proper law of the contract. 70 I t results that intellectual property rights, like the title to movables, are rooted in the territory. The principles developed w i t h regard to foreign expropriations and other acts of state affecting property therefore apply mutatis mutandis. 71 V.

Compliance

Contracts

1. Excuse of Nonperformance I n the regular case, parties to an international transaction, though perhaps contemplating an export prohibition, w i l l not plan to break it. Instead, they w i l l hope that a preexisting prohibition be cancelled, that new restrictions w i l l not supervene, or that an export licence may be obtained notwithstanding the restrictions. I n short, they are dealing w i t h uncertainty, a typical feature of contracts. 72 I f their expectations fail and the export definitely turns out to be illegal, litigation w i l l invariably hinge upon the same issue: which party has to bear the consequences? Or, put in terms of pre-contractual anticipations: who has to bear the risk of an export prohibition? While this question is often the object of particular contract clauses (see below at 2) it appears useful first to outline the state of the law i n the absence of such agreements. The fact situations submitted to adjudication resemble one another; the promisor declares that he is unable to carry out delivery because 69 Corte d'appello di M i l a n o 18. 2. 1966, i n : Riv.dir.int.priv.proc. vol. 3 (1967), 86. 70 B G H 16. 4. 1975, B G H Z 64, 183; IPRspr. 1975 N r . 118. 7 1 See supra, at notes 2 9 — 3 0 and Peter Behrens, Rechtsfragen i m chilenischen Kupferstreit, in: RabelsZ vol. 37 (1973), 394—434 (417—433). 72 Charles Fried, Contract as Promise, Cambridge, Mass. 1981, 59.

9 GYIL 27

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of the export prohibition, and the promisee sues h i m for damages caused by the non-delivery, or, i n rare cases, for specific performance. Both claims raise the legal question whether performance was excused. a) The effects approach: The conceptual framework from which courts approach this question varies in comparative perspective. Common law jurisdictions sometimes handle the issue under the doctrine of supervening illegality as a separate excuse, and sometimes under an all-embracing theory of frustration. 73 I n French law, non-delivery w i l l be excused i f the export prohibition constitutes "force majeure", art. 1148 Code civil; and i n German as well as Italian law, i f the prohibition entails an impossibility of performance which is not imputable to the promisor, § 275 BGB and art. 1256 Codice civile. 74 However, whether these different starting points are relevant to the outcome of a single case, appears doubtful. 7 5 The decisions of various jurisdictions that have come to my knowledge rather suggest that courts evaluate the particular aspects of the individual case without paying much attention to the theoretical basis. While i t has never been doubted that an export prohibition of the forum state can discharge the obligation to deliver 7 6 this effect was i n i t i a l l y refused to foreign prohibitions. Early American decisions have flatly, though obiter, stated that "foreign laws or embargoes do not furnish an excuse". 77 But today, these judgments may be regarded as overruled both in the U n i t e d States and in European countries. What now matters to the prevailing opinion, is not the grant of an excuse by a foreign sovereign, but the factual impediment that the 73 John D. Calamari / Joseph M. Perillo, The Law of Contracts, second edition, St. Paul, Minnesota 1977, 486—487 and 495—496; G.C.Cheshire / C.H.S.Fifoot, L a w of Contract, ninth edition by M. P. Furmston , London 1976, 360—361, 545 and 552. 74 For a country-by-country analysis of the relevant rules see Matti Kurkela , Comparative Report on Force Majeure in Western Europe, Jyväskylässä 1982; for a comparative analysis including the Hague (1964) and Vienna (1980) Uniform Sales Laws, see: S. P. De Cruz , A Comparative Survey of the Doctrine of Frustration, in: Legal Issues of European Integration 1982, part I I , 51—68. 75 I n the same sense, see: Harold J. Berman, Excuse for Nonperformance in the Light of Contract Practices in International Trade, in: Colum.L.Rev. vol. 63 (1963), 1413—1439 (1422). 76 See e.g. Re Anglo Russian Merchant Traders and John Batt & Co. (London), [1917] 2 K.B. 679 (C.A.), R G 15. 11. 1918, J.W. 1919, 103; Cass.req. 27. 1. 1947, Juris-Classeur périodique (J.C.P.) 1947 I V , 55. See also the decision of the Foreign Trade Arbitration Commission of the U.S.S.R. of 19. 6. 1958 in the case of Jordan Investments Ltd. v. Soiuznefteksport, in: RabelsZ vol. 24 (1959), 540 (in Russian and English). 77 Krulewitch v. National Importing and Trading Co., Inc., 186 West's N e w Y o r k Supplement (N.Y.S.) 838 (840) (1921); Tweedie Trading Co. v. James P. McDonald , 114 Federal Supplement (F.) 985 (988) ( S . D . N . Y . 1902). For the later development which was very little concerned with the problem, see the annotation of C. T. Foster, Modern Status of the Rules Regarding Impossibility of Performance as Defense in Action for Breach of Contract, in: 84 Annotated Law Reports (A.L.R.) 12—115 (47—48), sect. 7 c (1962).

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131

foreign prohibition puts in the way of performance. 78 O n the stage of effects, foreign and domestic prohibitions i n fact move on an equal footing. This has explicitly been recognized by the American U n i f o r m Commercial Code; i n § 2—615 (a) i t provides that "delay in delivery or non-delivery . . . is not a breach of . . . a contract for sale i f performance as agreed has been made impracticable by . . . compliance in good faith w i t h any applicable foreign or domestic governmental regulation or order whether or not i t later proves to be invalid." b) Typical issues: European courts, too, have declared on various occasions that foreign export prohibitions, as a restraint of prices may excuse nonperformance. 79 These decisions have mainly been concerned w i t h the interpretation of contracts and not w i t h the conflict of laws. A first step has often been to ascertain which party had taken upon himself to provide the export licence; this question is usually answered by way of inference from the agreed delivery term of the contract, see infra 2. I n many cases i t w i l l be an issue whether that party has done his best to procure the permit. Another question raised in connection w i t h the sale of generic goods regarded the agreed origin of the commodities and the possibility of performing the contract w i t h goods of different provenance. For example, a French company had sold 1200 telephone poles to a Dutch buyer when the French government prohibited the export in 1920. The Dutch court of appeals in 's-Hertogenbosch held that this prohibition amounted to "overmacht" (force majeure) since the parties' correspondence showed that they had contemplated telephone poles of Alsatian origin; therefore, the seller was under no obligation to procure himself foreign trunks. I t is submitted that the French prohibition would not have served as a valid excuse in a subsequent contract concluded by the Dutch buyer for the resale of the poles, since the following buyers i n the distribution chain normally need not be aware of the foreign export control risk when contracting w i t h a domestic seller. 80 78 "Application of foreign law as fact*, see: Grossfeld / Rogers (note 51), 945; in the same sense Annie Toubiana , Le domaine de la loi du contrat en droit international privé, Paris 1972, 121—122; van Rooij (note 24), 227. 7 » Czarnikow Ltd. v. Rolimpex. , [1978] 1 A l l E R 81 (C.A.), [1978] 2 A U E R 1043 ( H . L.) where a Polish export prohibition on sugar was held to excuse performance under a contract clause; . R G 13. 11. 1917, R G Z 91, 260; R G 28. 6. 1918, R G Z 93, 182; Cass.req. 5. 11. 1894, Clunet vol. 22 (1895), 134 where the performance of a contract for the sale of Russian grain was excused by a Russian export prohibition; Corte di cassazione (Cass.) (Italy) 10. 6. 1938 no. 1969, Foro Italiano 1939 I , 571 note Virgilio Andrioli; H o f 's-Hertogenbosch 8. 1. 1924, Nederlandse Jurisprudence (N.J.) 1924, no. 617. 80 See Hof's-Hertogenbosch (note 79); for the subsequent contracts, cf. Calamari / Penllo (note 73), 496 w i t h further references; contra : C. Wieland y Zur Lehre von der Unmöglichkeit der Erfüllung von Lieferungsverträgen, in: Zeitschrift für Schweizerisches Recht vol. 58 (1917), 457—466 (460).

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Many foreign trade restrictions are temporary i n nature; whether they excuse performance is questionable i n some cases. I n 1915, the Supreme Court of Austria had to deal w i t h a claim for delivery of 4000 kg of wool promised under a sales agreement the performance of which was proscribed by a German export prohibition. The court considered that the contract did not provide for a precise date of delivery and that the German embargo was expected to be lifted in the near future. Therefore, i t did not entail definite impossibility of performance. 81 c) N o public policy exception: Since courts only look at the factual impossibility of performance brought about by the prohibition i t is consequent that they do not make an exception of foreign embargoes which are directed against the forum state. A t least German and Italian courts have taken this attitude which is submitted to be the right one insofar as the prohibiting state has the power to enforce its embargo and to foreclose delivery. I n 1918 the Reichsgericht rejected the public policy exception i n the following case: an English company had sold quebracho extract to a German buyer, when the First W o r l d War broke out and performance was prohibited under the British Trading w i t h the Enemy Act. The buyer's claim for damages was dismissed on the ground that the British prohibition made performance impossible. A t a first stage the court held that the British Act was contrary to German interests and could therefore not be applied. But in the eyes of the court, application was not the issue raised i n the case; rather, impossibility of performance was regarded as a finding of fact and not of law. 8 2 I n 1938, the Italian Corte di cassazione excused a French seller who had not performed his contract w i t h an Italian buyer, on similar grounds. The non-delivery was due to a League of Nations embargo which was designed to retaliate against I t a l y for its invasion of Ethiopia. Again the court found that impossibility of performance could be brought about by foreign government acts hostile to the forum state. 88 I n America, the case of David v. Veitscher Magnesitwerke Actien Gesellschaft is cited to support the opposite view. The former Jewish manager of an Austrian company sued his employer for the agreed retirement payments. A l l rights of Jews to obtain such pensions had however been extinguished by a 81 O G H 16. 3. 1915, Sammlung von zivilreditlichen Entscheidungen des k. u. k. Obersten Gerichtshofs, begründet von Julius Glaser und Josef Unger, fortgesetzt von Josef Schey und Heinrich Stépan ( G 1 U N F ) vol. 18, no. 7357.

82 R G 28. 6. 1918, R G Z 93, 182 (183—184); according to Zweigert the German court practice is isolated in this respect, see: Gerhard Kegel / Hans Kupp / Konrad Zweigert, Die Einwirkung des Krieges auf Verträge, Berlin 1941, 11—12; but see note 83; it is approved by Heini (note 44), 46. 83 Cass. 10. 6. 1938, no. 1969, Foro it. 1939 I , 571 note Virgilio Andrioli.

Private Law Effects

of Foreign Export Controls

N a z i order. The Supreme Court of Pennsylvania refused to excuse nonperformance under that decree which i t found "dishonest and brutal, and contrary to the natural dictates of justice". But the court also made i t clear that this was a case of extraterritorial effects which it would not grant to a repugnant law. 8 4 I t is submitted that the true rationale of the decision lies in the character of money obligations performance of which cannot become impossible in the legal sense; the obligor may always have or acquire new assets in the forum state which may serve for recovery. This is different w i t h regard to, and the David decision is no authority for, the export of goods situated in the prohibiting country. 8 5 d) Extraterritorial effects? As a factual result of the foreign prohibition, impossibility or impracticability of performance can only be achieved to the extent that the foreign state is actually able to enforce its export restrictions. Thus, the foreign prohibition can produce its discharging effect only w i t h i n certain territorial limits. I n the first place, this pertains to all goods situated in the exporting country. They are subject to the absolute power of the foreign government which may stop export operations at any time. The only possible doubt may arise when the prohibition is enacted for commercial reasons, i. e. to protect the interests of the party to the contract which is a national, perhaps even a state-owned company of the prohibiting country. 8 6 Though such a prohibition may effect impossibility of performance, i t w i l l not be regarded as an extraneous event to the contracting parties likely to discharge the obligation to deliver. 87 But what about goods situated outside the prohibiting state? I n such circumstances, this state w i l l not be able to take hold of the goods, but it may put pressure on one or both parties who face civil, administrative, or criminal sanctions i f they violate the export prohibition and honour the con8 * 35 Atlantic Reporter, Second Series (A. 2d) 346 (350—351) (Pa. 1944); see also Foster (note 77), 47; 17 American Jurisprudence, Second Edition (Am.Jur. 2d), Contracts § 420 (1964). 85 For this difference, cf. the decision of the Swiss Supreme Court, B G 8. 10. 1935, BGE 61 I I , 242 (247—249). 86 For an ample discussion of the related problems, see Jordan Investments Ltd. v. Soiuznefteksport, decision of the Foreign Trade Arbitration Commission of the U.S.S.R. of 19.6.1958, in: RabelsZ vol. 24 (1959), 540 (in Russian and English); Czarnikow Ltd. v. Rolimpex, [1978] 1 A l l E R 81 C.A.; [1978] 2 A l l E R 1043 H . L.; Harold J. Berman , Force Majeure and the Denial of an Export Licence under Soviet L a w : A Comment on Jordan Investment Ltd. v. Soiuznefteksport, in: RabelsZ vol. 24 (1959), 449—469, reprinted, with minor changes in: Harv.L.Rev. vol. 73 (1959—60), 1128—1146; Bernd von Hoffmann, Staatsunternehmen im internationalen Privatrecht, in: B D G e s V R vol. 25 (1983) 35—74 (60— 65 >· 87

Under German and Italian law, impossibility would be imputed to the obligor; under French law, only extraneous events can constitute force majeure; common law courts would probably apply the theory of self-induced frustration, see the reference in note 73—74.

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tract. W i l l such hardship suffice to excuse non-delivery? Most court decisions indicate that it w i l l not. When the Reichsgericht had to decide on the export of Argentine quebracho extract by an English company, i t excused performance without even seeing the issue of extraterritorial effects of the British Trading w i t h the Enemy A c t . 8 8 I t could have been raised, since the English company was doing business i n Buenos Aires, and apparently had contracted through its Argentine subsidiary. Therefore, the decision seems of doubtful authority; for i f the court had considered that the German buyer might enforce his claim i n the courts of Argentina, it would probably not have regarded delivery as impossible. I n America President Lines v. China Mutual Trading Co., appellants had carried 61 drums of chemicals from San Francisco to H o n g K o n g where the goods unloaded and stored in a warehouse on their behalf. Based on a U.S. embargo against the People's Republic of China they refused their assent when respondents who were the consignees of the shipment claimed delivery. The courts of Hong Kong construed the U.S. regulations such as not to embrace goods that had already been discharged in a port outside the United States, though the U.S. Department of State had sent letters to the opposite effect. The narrow interpretation was supported, inter alia , by the argument that the U.S. embargo encroached upon the owner's rights to the goods and was confiscatory. A wide interpretation giving extraterritorial effects to the U.S. regulations could not possibly be intended, since it would "create an incursion into the sovereign rights of H o n g K o n g " . 8 9 I n the recent past, the most conspicuous case of extraterritorial trade regulation concerned the U.S. embargo of the Soviet gas pipeline connecting Siberian gas fields w i t h Western Europe. 90 I t was enacted when a Dutch company wholly owned by American capital had already contracted w i t h a French buyer for the delivery of seismographic equipment destined for the pipeline construction i n the U.S.S.R. The Dutch seller declared to be restrained from delivery by the U.S. embargo, and the French company applied for an injunction ordering specific performance. The President of the District Court of The Hague found for the plaintiffs on the grounds that the extraterritorial reach of the U.S. embargo violated public international law and that there

88 R G 28. 6. 1918, R G 2 93, 182. 89

American President Lines v. China Mutual Trading Co., [1953] Hong Kong Law Reports 38 (46 and 49) Orig. Jur., [1953] Hong Kong Law Reports 111 (122) App. Jur. For a general survey, see: M.E. De Orchis, Restraint of Prince — The Carrier's Dilemma When Trouble Brews at Foreign Ports, in: European Transport Law vol. 15 (1980), 3—15. 90

See above note 1.

Private Law Effects

of Foreign Export Controls

was no sufficient connection between the case at hand and the United States which could justify the application of the U.S. regulation. 91 The decision has been criticized for putting the seller into the squeeze of conflicting obligations, a duty t o deliver under Dutch law and a duty not to deliver under U.S. law, both enforced by heavy sanctions. I n this view the threat of a foreign punishment should not be questioned as to its legitimacy, but should be taken as a datum which renders performance overly burdensome for the seller and therefore excuses non-performance. A court should only order delivery where i t can be effected by a simple attachment of the goods, i. e. in cases where the seller need not co-operate any more in the production or assembly. The exception is based on the presumption that the seller's passive compliance w i t h the attachment cannot trigger the foreign punishment. 92 Though this proposition appears to be the ultimate consequence of the effects approach outlined above 93 , i t is not. I t depends on the assumption that the prohibiting foreign state w i l l actually enforce its sanctions even when delivery is mandated by the local court. But would the courts of the prohibiting country not refrain from punishment under an international law standard of reasonableness that is designed to adjust the conflict of jurisdictions? 94 A n d would the order of the local court not be regarded as an imposition of duress which excuses the illicit reexport? Since these questions do not receive clear-cut answers, i t is not possible to equalize the foreign threat of punishment w i t h an actual and definite burden hindering delivery. The foreign indictment is only a more or less probable event, and the degree of probability inter alia depends 91 President van de Rechtbank VGravenhage 17. 9. 1982, Rechtspraak van de W e e k / K o r t Geding 1982 no. 167; German translation in: RabelsZ vol. 47 (1983), 141 et seq. with a note by Jürgen Basedow ; French translation in: Rev.crit.dr.int.priv. vol. 72 (1983), 473 et seq. with the comments of Audit (note 50), 401; English translation in International Legal Materials ( I L M ) vol. 22 (1983), 66 et seq. 92 Th. M. de Boer l M. Kotting , President Wijnholt vs. President Reagan, in: Nederlands Juristenblad 1982, 1177—1186 (1182—1183); idem , D e r niederländische Richter und das US-Gasröhren-Embargo, in: I P R a x vol. 4 (1984), 108—112. 93 See the text following note 77. 94 For this proposition, cf. Section 403 of the Restatement of the Foreign Relations Law of the United States (Revised), Tentative D r a f t no. 2 (1981), cited by Harold Mater , Extraterritorial Jurisdiction at a Crossroads: A n Intersection Between Public and Private International Law, in: American Journal of International L a w ( A J I L ) vol. 76 (1982), 280—320 (300—301); see also Andreas Lowenfeld , Intervention in the conference on "Economic Sanctions as an Instrument of U.S. Strategic and Foreign Policy", in: Journal of Comparative Business and Capital Market Law vol. 6 (1984), 55-80 (75—76); Audit (note 50), 417—421; ibid ., La loi française et les conflits de souverainetés, in: L a loi française et l'activité internationale des entreprises — Numéro spécial of Revue de jurisprudence commercial 1984, 86—98 (92); DuanD. Morse / Joan S. Powers, U.S. Export Controls and Foreign Entities: The Unanswered Questions of Pipeline Diplomacy, in Virginia Journal of International Law vol. 23 (1982—83), 537—567 (564—567); for further references, see Basedow (note 2), 166 at note 73.

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on the action taken by the local court. Therefore, the Hague decision was consistent w i t h the effects approadi. I t is certainly true that i t may have cast the seller into a conflict of obligations. But such conflicts, though deplorable, cannot be avoided altogether. I t is of course open to debate whether they should be imposed by a court or rather by the legislative and executive branches as demonstrated in Great Britain. 9 5 But this issue relates to the separation of powers under the national constitution and not to the conflict o f obligations as such. I n the cases reported so far, compliance w i t h the foreign trade prohibition always encroached upon the right of contractual consignees of the goods. But i t may also hurt the interests of minority shareholders or employees of the company that abides by the foreign embargo. I n such cases, a court may, at their request, place the company under receivership to guarantee that its contracts are honoured. This decision was taken by the Court of appeals of Paris when a French truck producer, who was controlled by a U.S. company, decided to comply w i t h a U.S. embargo and to supply no more trucks to China. 9 6 Though the court ruling did not touch any issue of international law i t implicitly states the territorial limitation of the American regulation, and i t is submitted that the court would have rejected the force majeure exception i f the Chinese buyers had sued for specific performance. 97 e) Summary: Foreign export prohibitions, even though not reconcilable w i t h the public policy of the forum state, may excuse non-performance of a contract, but this only insofar as the respective goods are situated i n the prohibiting country. 2. Specific Contract Clauses Contract clauses dealing w i t h foreign trade regulation exist in great variety. 9 8 Without attempting an exhaustive treatment, we have to distinguish t w o basic types: first, clauses which allocate the duty to procure an export licence 05 See the Protection of Trading Interests Act, 1980 chapter 11, and the Protection of Trading Interests (US Reexport Control) Order, 1982, Statutory Instruments 1982 no. 885, for a reprint see Basedow (note 2), 151 at note 18. For other blocking statutes, see: Α. V. Lowe , Extraterritorial Jurisdiction, Cambridge 1983, 79 et seq. »β Cour d'appel de Paris 22. 5. 1965, J.C.P. 1965 I I , 14274 bis; see William Laurence Craig, Application of the Trading W i t h the Enemy Act to Foreign Corporations Owned by Americans: Reflections on Fruehauf v. Massardy, in: Harv.L.Rev. vol. 83 (1969—70), 579— 601; under German law, the same solution has been proposed by Wolfgang Däubler, U S Embargo und deutsches Unternehmensrecht, in: Zeitschrift für Rechtspolitik 1982, 285—288. 97 See: Lebedoff / Raievski (note 37), 501—502. 98 See: Karl-Heinz Böckstiegel, Vertragsklauseln über nicht zu vertretende Risiken im internationalen Wirtschaftsverkehr, in: R I W vol. 30 (1984) 1—9 ( 7 — 9 ) ; Kahn (note 40) 349—351; Jean Virole, Incidence des mesures d'embargo sur les contrats internationaux, in: Droit et Pratique du Commerce International vol. 7 (1981), 311—331 (319 et seq.).

Private Law Effects

of Foreign Export Controls

and which may also deal w i t h the consequences of export prohibitions, assigning this risk to one party or the other; second, clauses binding a party to comply w i t h reexport prohibitions that otherwise would not be applicable. a) Contractual allocations of the export prohibition risk: The first type essentially concerns the basic delivery terms. When parties to an international sales contract fix a place of delivery they usually intend that the acts of performance which have to be carried out before this point are w i t h i n the seller's responsibility whereas the buyer has to take care of the later acts. This principle is reflected by the definitions that the International Chamber of Commerce has worked out in the Incoterms 1953." Since delivery under an f.a.s.-contract takes place before the goods pass the tackle of the ship, the seller has only to render the buyer . . . assistance i n obtaining any export licence . . . " ; it is not his duty to procure the permit. 1 0 0 Under f.o.b., c.i.f. or c.&i.-contracts, however, where delivery coincides w i t h the loading of the goods on board the ship, the seller must "at his own risk and expense obtain any export licence . . . " 1 0 1 . Quaere , whether this interpretation is correct for those f.o.b.-contracts which do not indicate the final destination of the goods. Here, the seller lacks the necessary information that might be required to cope w i t h embargo regulations of the exporting country. 1 0 2 Therefore, a specific clause discharging him from his obligation under the f.o.b. clause should be agreed. 103 Clauses allocating the risk of export prohibitions may be short and simple like the Incoterm definitions; but they may also adopt a lengthy and detailed character 104 . Especially the short clauses raise the question whether they cover all possible or only the foreseeable cases of export prohibitions. Put in other terms: does the seller, under a c.i.f.-contract, absolutely warrant to obtain a 99

Publication no. 274 of the International Chamber of Commerce; see Frédéric Werner ' Metis, D i e Incoterms — Ausgabe 1980, Wien 1982. ιοο See Incoterms 1953, FAS clause A 3.

Eisemann !

ιοί See Incoterms 1953, F O B clause A 3, C & F clause A 3, C I F clause A 3. 102 See the oscillating opinions of the English courts, reported by Sassoon (note 40), no. 371—381; for U.S. law, cf. Berman (note 86), RabelsZ vol. 24 (1959), 464—465 (note 27), Harv.L.Rev. vol. 73 (1959—60), 1141—1142; for German law, see the arbitration awards of Schiedsgericht der Hamburger freundschaftlichen Arbitrage 15. 12. 1959, 11. 4. 1962, 21. 3. 1972 as well as Schiedsgericht des Waaren-Vereins der Hamburger Börse e . V . 20. 4. 1970 all published in Kuno Straatmann / Peter Ulmer (eds.), Handelsrechtliche SchiedsgerichtsPraxis vol. 1, K ö l n 1975, Ε 4b no. 4, Ε 4d no. 1, 4a and 7 with note by Franz Hubert Timmermann. While these awards do not question the seller's duty to procure an export licence the rigor of the Incoterm definition is mitigated by the interpretation of Eisemann / Metis (note 99), 102—103. 103 Such clauses are often adopted by the parties, cf. Jean Calais-Auloy, Rodière / Calais-Auloy (note 59), 484 and 551.

Ventes, in:

104 See the example cited by Kahn (note 40), 350—351; Virole (note 98), 320—327.

138

rgen Basedow

licence or w i l l he be discharged in case of unforeseeable embargoes etc.? While English law seems to take the latter stand, it is submitted that there should not be a force majeure exception to contract clauses which intend to deal w i t h force majeure situations. The opposite view sacrifices clarity and commercial benefits of clauses which are designed to do away w i t h the former uncertainty. 1 0 5 b) Contractual incorporations of reexport prohibitions: Clauses of the second type have raised some disputes i n connection w i t h the U.S. embargo of the Soviet gas pipeline. They differ from what has been discussed so far since they are not concerned w i t h the non-performance of the contract. They rather presuppose its performance and l i m i t the buyer's right to dispose of the goods delivered, or produced on the basis of technical data transferred, under the contract subjecting h i m to present and future reexport controls. 106 Insofar as regulations requiring such clauses extend the jurisdiction of the prohibiting state over foreign nationals doing business abroad they are of doubtful validity under rules of public international law, and a foreign state may simply reject them as incursions on its sovereignty. But is a reaction that is possible under public international law also appropriate under private international law? T h a t such clauses should not be given effect in a foreign court has been supported by the argument that they tend to create a conflict o f jurisdictions and thus, a conflict of obligations for private business.107 That need not be the case, however. U.S.A. reexport prohibition may affect v i t a l interests of the forum state, as i t did i n the case of the pipeline embargo, but i t may also be entirely indifferent to that country. W h y should a court not give effect to i t in the latter case, provided that compliance was agreed upon? N o r can I agree w i t h the further argument that such clauses do not reflect private interests and are only adopted under a kind of duress. 108 O f course, the United States often grant export licences on the condition that the foreign purchaser promises to abide by U.S. reexport prohibitions; thereby, they put pressure on the foreigners to accept such clauses. But this is far from duress since there is nothing illegal about the threat to refuse the permit. After 105 I n the same sense, see Berman (note 102), contra Sassoon (note 40) no. 387 for the English law. *oe See above at note 37; such clauses are not limited to the foreign trade of the U.S. I n a case concerning the export of British N o r t h Sea oil the following clause had been agreed upon: „Destination free but always in line w i t h exporting country's Government policy. United Kingdom Government policy at present does not allow delivery to South Africa". The Swiss buyer wanted to reexport the oil to Israel which was embargoed by the United Kingdom before delivery had been carried out, cf. Bulk Oil (Zug) AG v. Sun International Ltd., [1983] 1 Lloyd's Rep. 655 Q.B. (Com.Ct.), [1984] 1 A U E R 386 C.A. 107 See Kreuzer (note 37), 108—109. los Kreuzer (note 37), 109.

Private Law Effects

of Foreign Export Controls

all, the rejection of the said clauses should be limited to cases where they turn out to violate the public policy of the forum state. A more rigid verdict might provoke the U.S. government to grant less export licences than at present and would thereby curtail international commerce. Though it seems a paradox, the limited recognition of the U.S. restrictions may favour free trade. The crucial point is not the validity of the incorporation clauses, but rather the kind of effects that they may produce i n a court outside the prohibiting country. They seem to be pretty limited. I t has already been said that a court w i l l probably not enforce the foreign reexport prohibition by restraint orders. 109 I t is further submitted that contracts for the illicit reexport w i l l only be voided, i f they violate the own national interests of the reexporting state which are independent of any private contractual arrangements; this seems to be the lesson taught by the German borax case (supra part I V 1 b). A n d i t finally appears doubtful whether the seller's promise vis-à-vis a third party not to effectuate certain reexports can excuse the performance of such reexport contracts. What the clause may furnish is a justification for the concellation of the contract containing the clause in the case of illicit reexport. 1 1 0 VI.

Conclusion:

The

European

Perspective

The findings of the preceding analysis can only be summarized in a rather crude statement. Foreign export prohibitions w i l l not be enforced, but may be given effect i n domestic courts provided that the case at hand has a territorial connection w i t h the prohibiting state. I f they violate the public policy of the forum state they w i l l be taken into account only insofar as they produce factual consequences for goods situate in the prohibiting state. The precise meaning of "effects" varies w i t h regard to the different fact situations. The same applies to the "territorial connection" though it is fair to generalize that the goods have to be situate in the prohibiting country. The general rule set out above is reflected by A r t . 7 (1) of the EEC-Convention on the L a w Applicable to Contractual Obligations opened for signature in Rome on June 19, 1980 1 1 1 . Under this provision, . . . effect may be given to the mandatory rules of the law of another country w i t h which the situation has a close connection, i f and in so far as, under the law of the latter country, those rules must be applied 1 W

See supra at note 37.

110

R. B. Ferguson , British Companies and America's Pipeline Embargo, in: The Scots Law Times 1982, 281—286 (285). m Official Journal of the E C vol. 23 (1980), L 266/1—19 of October 9, 1980, reprinted in English and German, in: RabelsZ vol. 46 (1982), 196—221. The convention has not yet come into force.

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rgen Basedow

whatever the law applicable to the contract. I n considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or nonapplication. A r t . 7 (1) has encountered much criticism. The latter may have provoked the adoption of art. 22 which reserves the right not to apply art. 7 (1) to all contracting states. I t is not my purpose to add to the general debate which appears, I repeat, too abstract to clarify the l a w . 1 1 2 I rather intend to ask whether art. 7 (1) can encompass and explain the case law w i t h regard to foreign export prohibitions explored in this paper. The answer is affirmative. The various criteria that have guided the courts are in fact contained i n art. 7 (1). This is true w i t h regard to the requirement that the foreign mandatory rules actually claim application. The marine insurance cases have shown that courts w i l l not give effect to foreign prohibitions that do not claim such application to the insured transport. 1 1 3 Also, the irrelevance of the proper law of the contract has clearly been demonstrated. Cases like Regazzoni v . Sethia or the German borax case 114 indicate that courts give effect to export prohibitions which are not part of the lex causae. O n the other hand, no evidence supports the view that an export prohibition w i l l be applied exclusively on the ground that it is part of the proper law of the contract. 1 1 5 I f art. 7 (1) lays down the further condition of a "close connection" between the case and the foreign state, this requirement may house the territorial limitation which foreign export prohibitions have been subjected to in cases concerning damages, marine insurance, transferred rights, and impossibility of performance. 116 Finally, art. 7 (1) squares w i t h the results of this paper as to the remedies; not "enforcement" w i l l be granted, but "effects * may be given. 1 1 7 W i t h regard to export prohibitions, art. 7 (1) may therefore be characterized 112 See the text following note 3, supra. For the general debate, cf. ϋΐήώ Drobnig , Comments on Art. 7 of the D r a f t Convention, in: Bernd von Hoffmann / Ole Lando / Kurt Siehr [eds.], European Private International L a w of Obligations, Tübingen 1975, 82—86; Michael Coester , Die Berücksichtigung fremden zwingenden Rechts neben dem Vertragsstatut, in: Zeitschrift für vergleichende Rechtswissenschaft vol. 82 (1983), 1—30; Ian F. Fletcher, Conflict of Laws and European Community Law, Amsterdam, N e w Y o r k and Oxford 1982, 169—172; Paolo Mengozzi, N o r m e di applicazione necessaria e progetto di Convenzione C E E sulla legge applicabile alle obbligazioni contrattuali, in: Archivio giuridico Filippo Serafini vol. 197 (1979), 3—41; Mayer (note 24), 307 et seq. in particular; see also the ample discussion in: Frédênc-Edouard Klein / Frank Vischer (eds.), Colloque de Bale sur la loi régissant les obligations contractuelles, Basel and Frankfurt 1983, 207—248. n * See above I V 3 b. 114 See above at notes 43 and 46. 115 As suggested by Lawrence Collins and Frank Vischer with regard to foreign mandatory rules in general, see: Klein / Vischer (note 112), 208 and 227; see also above at note 50. n® See above, parts I V 1 d, I V 3 c, I V 4 and V 1 e. 117 See above, part I I I .

Private Law Effects

of Foreign Export Controls

as a restatement of the preexisting case law. The provision is definitely not "revolutionary in the sense that i t does not presently represent the law i n any of the signatory states" 118 , though it is admitted that the academic treatment of the underlying issues has been neglected in some countries. 119 Since the international case law on foreign export prohibitions so neatly fits under art. 7 (1), i t is difficult to see w h y foreign public law and thus, foreign export controls, should not fall into its scope. 120 This proposition does not only fail to explain the practical relevance of such an exclusion which would not change the case l a w ; i t also interprets an international convention in the light of the civil law distinction between private and public law which is unfamiliar to common law jurisdictions 1 2 1 and sometimes difficult to handle in practice. 122 Finally, the restatement character of art. 7 (1) does not warrant the reservation under art. 22 that has been suggested in Germany 1 2 8 .

118 Collins in Klein (note 112) 230.

/ Visaher (note 112) 208; contra Ulrich Drobnig

in Klein / Vwc&er

119 For example in Italy, see Edoardo Vitta , L a Convenzione C.E.E. sulle obbligazioni contrattuali e l'ordinamento italiano, in: Riv. dir. int. priv. proc. vol. 17 (1981), 837—852 (843); see however Giuseppe Cassoni , Osservazioni sulla rilevanza delle norme imperative straniere nelPordinamento italiano, in: Giurisprudenza italiana, 1979 I V , 81—89. 120 For this proposition see the intervention of Kegel on the paper submitted by Kreuzer, in Schlechtnem / Leser (note 37), 111; Allan Philip , Mandatory Rules, Public Law (Political Rules) and Choice of Law in the E.E.C. Convention on the Law. Applicable to Contractual Obligations, in: P. M. North (ed.), Contract Conflicts, Amsterdam, N e w York and Oxford 1982, 81—110 (84—87).

121 P. M. 122 Paris

See the critique of David Jackson , Mandatory Rules and Rules of "Ordre Public", in: North (note 120), 59—79 (64). See e. g. for foreign price regulations the note of Philippe Kahn under Cour d'appel de 13.7.1982, Clunet vol. 110 (1983), 383 at 387—388.

123 See the comment of the Bundesrat on the private international law reform bill, in: Bundesrat, Drucksache 222/83 (Beschluß, 1. 7.1983) 10, and for a general criticism, "Kodifikation des deutschen Internationalen Privatrechts" — Stellungnahme des Max-PlanckInstituts für ausländisches und internationales Privatrecht zum Regierungsentwurf von 1983, in: RabelsZ vol. 47 (1983), 595—690 (668—670).

International Economic Co-operation Through International Law: The IMF Agreement and the Recognition of Foreign Exchange Control Regulations* Stanley C. A . Obeyesekere Α.

Introduction

Those engaged in international sales are familiar w i t h the currency risks present when the cost o f goods is computed i n one currency and paid for in another, and how those risks can be minimised. Yet the risks involved in a contract w i t h a foreign resident which later turns out to be unenforceable are often disregarded, i n spite of the likely consequences being more serious. Complications can easily arise, not through any formal invalidity of the contract, but due to its unenforceability owing to the failure of either party to comply w i t h the appropriate exchange control regulations. The contract may be 'illegal·, 'invalid', 'void' or 'unenforceable' according to the system of law of which the infringed regulations form a part, and as a result, according to a specialized branch of international law which may be called the international law of exchange control ( I L E C ) , i t may be 'unenforceable' in other legal systems. The final outcome may well be the denial of a remedy in any legal system. There was a general rule in private international law that, as is the case w i t h penal 1 and revenue laws, 2 one State does not recognize or enforce the exchange * This essay is a revised and updated version of a paper bearing the title "The International Monetary Fund and the International L a w of Exchange Control" presented by the author in 1978 at a series of international financial law seminars conducted by the late Professor Clive Parry at the University of Cambridge. ι For the U K , see Huntington v. Attrill [1893] Appeal Cases (A.C.) 150 (P.C.). See also the arguments adduced by Frankman's counsel in Frankman v. Anglo-Prague Credit Bank (London Office) [1948] 1 A l l England Law Reports ( A l l E R ) 337 (ΚJB.), [1948] 2 A l l E R 1025 (C.A.), and Zivnostenska Banka v. Frankman [1949] 2 A l l E R 671 (H.L.). For the U S A , see The Antelope 23 United States Supreme Court Reports (U.S.) (10 Wheaton) 66 (1825); Wisconsin v. Pelican Ins. Co. 127 U.S. 265 (1888); and Bollade v. Société Générale Pour Favoriser etc. 33 West's N e w Y o r k Supplement, Second Edition ( N Y S 2d) 986 (N.Y.S.C. App. Div., 1942), leave to appeal denied 35 N Y S 2d 717. 2 For the U K , see Holman v. Johnson [1775] 1 Cowperts Reports (Cowp.) 341, 98 English Reports (Eng. Rep.) 1120 (K.B.); and Government of India , Ministry of Finance

Recognition of Foreign Exchange Control Regulations

controls of another. 3 This rule was modified by Article V I I I , Section 2 (b) of the Articles of Agreement of the International Monetary Fund (hereinafter, the "Fund Agreement"). 4 The provision, which has a significant impact on international business transactions of private parties, reads: Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member maintained or imposed consistently w i t h this Agreement shall be unenforceable in the territories of any member. I n addition, members may, b y mutual accord, co-operate in measures for the purpose of making the exchange control regulations of either member more effective, provided that such measures and regulations are consistent w i t h this Agreement. I t has evoked interest not only because of the change i t has brought about in I L E C but also because of the many complexities that are packed in the few words of its first sentence. For these reasons, Article V I I I , Section 2 (b) has been the subject of more litigation throughout the w o r l d 5 and more discussion (. Revenue Division ) v. Taylor [1955] 1 A U E R 292 (H.L.). For the U S A , see State of Colorado v. Harbeck 133 N o r t h Eastern Reporter ( N E ) 357 ( N . Y . C . A . , 1921); City of Philadelphia v. Cohen 230 N Y S 2d 188 ( N . Y . C . A . , 1962); and Province of British Colombia v. Gilbertson 597 Federal Reporter, Second Edition (F 2d) 1161 (C.A. 9th Cir., 1979). For Canada, see US v. Harden [1963] 41 Dominion Law Reports, Second Series ( D L R 2d) 721 (S.C., 1963); and Re Reid [1970] 17 Dominion Law Reports, Third Series ( D L R 3d) 199 ( C . A . Br. Col., 1970). For Australia, see Bath v. British and Malayan Trustees Ltd . [1969] 2 N e w South Wales L a w Reports ( N S W R ) 114 (N.S.W.S.C., 1969). See also Re Gibbons 30 International Law Review ( I L R ) 24 (High C. Eire, 1980); Scottish Nation Ordiestra v. Thompson's Executor [1969] Scots Law Times (SLT) 325 (Outer House, Scotland); and Ilgovski v. Shprinski , Annual Digest (1941/42), 24 (S.C., Palestine). 3 See in general Allgemeine Elektrizitätsgesellschaft (Berlin) und andere v. Journaliag A. G., Clarus , 64 I I Entscheidungen des schweizerischen Bundesgerichtes (BGE) 88 (Swiss Federal Tribunal, Civil Chamber, 1938); Irving Trust Co. v. De^iic^-^i/^nmc&e Telegraphengesellschaft 22 N Y S 2d 581 (N.Y.S.C., 1940), Cermak v. Bata Akciova Spolecnost 80 N Y S 2d 782 (N.Y.S.C., 1948); and In re Theresie Liebl's Estate 106 N Y S 2d 715 (Surr. C., 1951). See also Boucher v. Lawson 95 Eng. Rep. 53 (K.B., 1734); and the arguments adduced against the banks in Zivnostenska Banka v. Frankman (note 1); and Kahler v. Midland Bank Ltd. [1949] 2 A U E R 621 ( H . L . ) ; and Arthur Nussbaum, Public Policy and Political Crisis in the Conflict of Laws, in: Yale Law Journal (Yale L.J.) vol. 49 (1940), 1027—1058 (1042). 4 For the U K , seeiFrankman v. Anglo-Prague Credit Bank (note 1), 342; and Zivnostenska Banka v. Frankman (note 1), 675 {Lord Simonds). For the U S A , see Perutz v. Bohemian Discount Bank in Liquidation 110 N Y S 2d 446 (N.Y.S.C. App. D i v . , 1952), reversed 110 N E 2d 6, 7—8 ( N . Y . C . A . , 1953). See also Stephen v. Zivnostenska Banka 140 N Y S 2d 323, 326—327 (N.Y.S.C., 1955). 5 For the U K , see Frankman v. Anglo Prague Credit Bank, London Office (note 1); Kahler v. Midland Bank (note 3); Sharif v. Azad [1966] 3 Weekly Law Reports ( W L R ) 1285 (C.A.); United City Merchants (- Investments ) Ltd. et al v. Royal Bank of Canada et al (hereinafter, the Glass Fibres case) [1979] 2 Lloyd's List L a w Reports (Li. L.R.) 498 (QB), modified [1981] 3 W L R 242 (C.A.), reversed [1982] 2 W L R 1039 ( H . L . ) ; Wilson , Smithett and Cope Ltd. v. Terruzzi [1975] 2 A l l E R 649, reversed [1976] Q B 683 (C.A.); and Batra v. Ebrahim, in: The Times, London, 3rd M a y 1977, p. 11 (C.A.). The U S cases include Perutz v. Bohemian Discount Bank (note 4); In re Sik's Estate 129 N Y S 2d 134 (Surr. C.,

144

Stanley C. A. Obeyesekere

in the legal profession 6 than anything else i n the Fund Agreement. A n attempt w i l l be made to study the recent case law and determine to what extent and under what circumstances Article V I I I supercedes the old rules, and requires I M F members to recognize foreign exchange control regulations. B. T h e P r e - I M F

Period

I t is useful to begin by discussing w h y the provision was incorporated in the Fund Agreement. I n the pre-IMF era, many legal techniques were used to prevent one State from recognizing the exchange controls o f another. Some1954); Stephen v. Zivnostenska Banka (note 4); de Sayve v. de la Valdene 124 N Y S 2d 143 (N.Y.S.C., 1953); In the matter of Heddy Brecher-Wolff, Title Claim N o . 41668, Docket N o . 1698 (1955); Southwestern Shipping Corp. v. National City Bank of New York 173 N Y S 2d 509 (N.Y.S.C., 1958), affirmed 178 N Y S 2d 1019 (N.Y.S.C. App. Div., 1959), reversed 190 N Y S 2d 352 ( N . Y . C . A . , 1959); Estate of Stoich , State of Oregon v. Kolovrat et al 349 Pacific Reporter, Second Series (P 2d) 255 (S.C. Oregon, 1960), reversed Kolovrat v. Oregon 81 Supreme Court Reporter (S.Ct.) 922 (S.C., 1961); Pan American Life Insurance Co. v. Blanco 362 F 2d 167 (C.K. 5th Cir., 1966); Confederation Life Assn. v. Ugalde 151, Southern Reporter (So) 2d 315, (Dist. C.A. Fla., 1963), modified 164 So 2d 1, (S.C. Fla., 1964), cert. den. 379 U.S. 915, (S.C., 1964); Banco do Brasil v. A.C. Israel Commodity Co. Inc. 215 N Y S 2d 3 (N.Y.S.C., 1961), affirmed 239 N Y S 2d 872 ( N . Y . C . A . , 1963); Banco Frances e Brasileiro S.A. v. John Doe No. 1 etal 355 N Y S 2d 145 (N.Y.S.C. App. D i v . , 1974), 370 N Y S 2d 534 ( N . Y . C . A . , 1975); Zeevi & Sons Ltd . v. Gnndlays Bank (Uganda) Ltd. 356 N Y S 2d 892 (N.Y.S.C. App. Div., 1974), affirmed 371 N Y S 2d 892 ( N . Y . C . A . , 1975); and Weston Banking Corp. v. Turkiye Garanti Bankasi A.S. 446 N Y S 2d 6 7 — 7 0 (N.Y.S.C. App. div., 1982), affirmed in part 456 N Y S 2d 684—693 ( N . Y . C . A . , 1982). For France, see Statni Banka and Banque d'État Tchécoslovaque v. Englander , I L R vol. 47 (1974), 157 (C.A. Aix-en-Provence, 1966); Constant v. Lanata , in: Revue Critique de D r o i t International Privé (R.C.D.I.P.) L I X (1970), 464 (Cassation, 1969); Achour v. Perrot etal , Clunet 105 (1978), 99 (C.A. Reims, 1976); and Daiei Motion Picture Co v. Ζαν'ιώα , Clunet 103 (1976), 687 (Cassation, 1972). For the Federal Republic of Germany, see Lessinger v. Mir au, I L R vol. 22 (1955), 725 (Schleswig-Holsteinisches Oberlandesgericht, 1954); Clearing Dollars case I L R vol. 22 (1955), 730 et seq. (Landgericht Hamburg, 1954); and Fed. S.C. judgement of 21.12. 76 I I I 2 R 83/74, in: Sir Joseph Gold , The Fund Agreement in the Courts: Part X I V (note 6), 599. See also Emek v. Bossers and Mouthaan , I L R vol. 22 (1955), 722 et seq. (Commercial Tribunal Courtrai, Belgium, 1953); and White v. Roberts [1949] 33 H o n g Kong Law Reports 231 (S.C.). 6 These include Keith L. Baker , Enforcement of Contracts Violating Foreign Exchange Control Laws, International Trade Law Journal (Int'l Trade L.J.) vol. 3 (1977), 247—283; Brian D. Beglin , United States Enforcement of Foreign Exchange Control Laws — A Rule in Transition?, in: N e w Y o r k University Journal of International Law and Politics (N.Y.U.J. I n t ' l L. &: Pol.) vol. 10 (1978), 535—568; Fernando C. Campos, Extraterritorial Effect of Foreign Exchange Controls in International Transactions, in: Philippine L a w Journal vol. 34 (1959), 555—587; J. A. Chandler, Exchange Control and the International Monetary Fund, University of Western Australia Law Reports ( U . W . Australia L.R.) vol. 12 (1976), 566—570; Georges-René Delaume, De l'élimination des conflicts de lois en matière Monétaire réalisée par les Statuts du Fonds Monétaire International et de ses limites, Clunet vol. 81 (1954), 332—379; Albert Dicey / John Morns, Conflict of Laws 9th ed., London 1973, vol. 2, 919— 923, and Dicey / Morns, 10th ed., London 1980, vol. 2, 1023—1031; Philippe Drakidis, D u caractère 'non exécutoire* de certains 'contracts de change': d'après les Statuts du Fonds Monétaire 1 International, in: R.C.D.I.P. vol. 60 (1970), 363—400; Francois Gianviti,

Recognition of Foreign Exchange Control Regulations

145

times the courts found that the law which governed a contract or its performance according to the private international law of the forum was not the law of which certain exchange controls formed a part, 7 and one often wondered whether the courts had been led to this result in order to avoid recognizing that the exchange controls had an effect on the case. Sometimes the courts simply held that the recognition of the exchange controls of another State, even where they were part of the governing law under the lex fori , was against the forum's ordre public, 8 A n d often foreign exchange controls were labelled Reflexions sur l'article V I I I Section 2 (b) des Statuts du Fonds Monétaire International, in: R . C . D . I . P . vol. 63 (1973), 471—487 and 629—661; Gold , The Fund Agreement in the Courts: Parts I — V I I , Washington 1962; Gold , The Fund Agreement in the Courts: Parts V I I I — X I , Washington 1976; and Gold Parts X I I , X I I I , X I V , X V , X V I , X V I I and X V I I I that appear in: I M F Staff Papers vol. 24 (1977), 193—231, vol. 25 (1978), 343—367, vol. 26 (1979), 583—611, vol. 27 (1980), 601—624, vol. 28 (1981), 411—436, vol. 28 (1981), 728—759 and vol. 29 (1982), 647—681 respectively. See also Gold , The Fund Agreement in the Courts, Vol. I I , Washington 1982, which reproduces Parts V I I I to X V I I together with some other articles by him in one convenient volume; Gold , The Cuban Insurance Cases and the Articles of the Fund, I M F pamphlet series N o . 8, Washington 1966, 21—52; Gold , The I M F and Private Business Transactions, I M F pamphlet series N o . 3, Washington 1965, 20—31; Patrick Jouillard, L a Nullité d'un Contract de Change Conclu en Violation de L'article V I I I - 2 - b des Statuts du Fonds Monétaire International, Juris-Classeur Périodique (JCP) (1971 I ) , 2399 et seq. ; Elias Krispis , Money in Private International Law, Recueil des Cours (RdC) (1967 I ) , 195—306; Philine R. Lachman, The Articles of Agreement of the International Monetary Fund and the Unenforceability of Certain Exchange Contracts, Netherlands International Law Review ( N . I . L . R . ) vol. 2 (1955), 148—166; N. P. Madsen-Mygdal, The Bretton Woods Agreement Article V I I I , Section 2 (b), Nordisk Tidsskrift for International Ret og Jus Gentium vol. 25 (1955), 63—77; Frederick A. Mann, The Legal Aspects of Money 3rd ed. Oxford 1971, 431—450, and Mann,, 4th ed. Oxford 1982, 372—400; Vjekoslav Meichsner , The Legal Interpretation of Article V I I I , Sec. 2 (b) of the International Monetary Fund Agreement, I . L . A . Report of its 47th Conference, held at Dubrovnik (1956), 311—318; Stanley D. Metzger , Exchange Controls and the Commercial Treaty, in: Metzger , Law of International Trade: Documents and Readings (1966) vol. 1, 144—164; Bernard S. Meyer , Recognition of Exchange Controls after the I M F Agreement, in: Yale L . J . vol. 62 (1953), 867—910 (880—910); Ivan Meznencs , Application of Foreign Exchange Laws by Foreign Courts, in: Acta Juridica Academiae Scientiarum Hungaricae vol. 5 (1963), 43—78 (62—74); Nussbaum, Exchange Controls and the International Monetary Fund, in: Yale L. J. vol. 59 (1950), 421 etseq (425—430); Adolf F. Schnitzer , The Legal Interpretation of Article V I I I , Section 2 (b) of the Bretton Woods Agreement, I . L . A . Report of the 47th Conference (1956), 299—310; M. R. Shuster , The Public International Law of Money, Oxford 1973, 140—156; and John S. Williams , Extraterritorial Enforcement of Exchange Control Regulations Under the International Monetary Fund Agreement, in: Virginia Journal of International Law (Va. J. Int'l. L.) vol. 15 (1975), 319—396. ? Goodman v. Deutsche A.T.G. 2 N Y S 2 d 80 (N.Y.S.C., 1936); and Graumann v. Treitel [1940] 2 A l l E R 188 (K.B.). For a p o s t - I M F example see: Rossano v. Manufacturers Life Insurance Co. [1963] 2 Queen's Bench (QB) 352. See also the West Berlin C.A. judgment of 11th July 1961, Die deutsche Rechtsprechung auf dem Gebiet des internationalen Privatredits (IPRspr.) 1966—67, N o . 190 and X. v. Zagreb Bank , I L R vol. 26 (1958 I I ) , 232 (S.C. Austria, 1958). 8 Α. Ε. (Berlin) und andere (note 3). For p o s t - I M F examples, see Zeevi & Son v. Grindlays Bank (Uganda) Ltd. (note 5); and Irving Trust Co. v. Mamidakis , in Gold , The Fund Agreement in the Courts: Part X I V (note 6) 604, 606.

10 GYIL 27

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Stanley C. A. Obeyesekere

"revenue" 9 , "penal" 1 0 , "confiscatory" 1 1 , " p u b l i c " 1 2 or " t e r r i t o r i a l " 1 8 laws, and therefore not entitled to recognition. C. T h e

IMF

Era

W i t h the adoption of the Fund Agreement i t was felt that the old attitude towards the recognition of foreign exchange controls was outmoded. I t was one thing to disregard foreign exchange controls when they were not regulated under I L E C 1 4 and might indeed be motivated by considerations other States cannot be expected to condone. I t was quite a different thing when an international regime was created i n exchange control matters under which i t was agreed on the circumstances in which States might impose or maintain exchange controls, 15 and according to which they were required to assist each other. I f I M F members had obstinately continued in the attitude of the past, this would have amounted to a willingness to co-operate i n restricting the imposition and maintenance of exchange controls while reserving f u l l freedom to l i m i t the obligations such co-operation entails. A t least one early commentator has attacked Article V I I I , Section 2 (b) on the ground that it encouraged and perpetuated exchange controls. 16 This seems unlikely as Article I clearly states that i t is one of the objectives of the Fund 9

Cermak v. Bata AS. (note 3). For more recent pronouncements, see the N . Y . C . A . majority opinion in the Banco do Brasil case (note 5) and Regina v. Governor of Pentonville Prison Ex parte Khubchandani , The Times, London, 15th February 1980, 25 (QB). For a contrary view see Kahler v. Midland Bank (note 3); and In Re Helbert Wagg [1956] Chancery Division Reports (Ch.) 323. See also the minority opinion in the Banco do Brasil case (note 5). 10 Paris C.A. judgement of 30th June 1933, Clunet vol. 60 (1933), 963. u Maren v. Fischer 65 N Y S 2d 892 (N.Y.S.C., 1946). ι 2 See in general the German S. C. judgement of 18th June 1890, Juristische Wodiensdirift (J.W.) [1890], 280. 13 Paris C. A. judgement of 30th June 1933 (note 10). 1 4 The classical position was succinctly put by the Permanent Court of International Justice (P.C.I.J.) in the Serbian Loans Case: I t is indeed a generally accepted principle that a State is entitled to regulate its own currency. P.C.I.J. Series A Nos. 820/21, 1—89 (44). I t follows from this principle that a State was free to, inter alia , impose exchange controls, since the regulation of its currency was an aspect of sovereignty over which each State had, prima facie , complete power and control. For some possible limitations to this power even under non-treaty international law see: Shuster (note 6), 76—91; and Wilhelm A. Kewenig, Exdiange Control, the Principle of Nondiscrimination and International Trade, in: Buffalo Law Review vol. 16 (1967), 377—413 (387—389). 1 5 This does not mean that exchange restrictions cannot be imposed for 'security-strategic' reasons. Indeed under the present I M F framework, it appears to be easier to both impose and maintain exchange restrictions for 'security-strategic' reasons rather than for 'economicfinancial' reasons, see: text at notes 169 to 176. But whether member States are obliged to accord recognition to non-economic restrictions is quite another matter, see: text at notes 61 to 75. ie Nussbaum (note 6), 425.

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147

Agreement to rid the world of exchange restrictions among members. 17 Although this purpose and the provisions which give effect to i t 1 8 envisages the elimination of these restrictions, the Fund Agreement authorizes the retention or introduction of restrictions on payments and transfers for current international transactions in certain limited circumstances. 19 I t also recognizes the right of members to exercise such controls as are necessary to regulate international capital movements, 20 subject, however, to certain safeguards. 21 Although the right of members to apply exchange control regulations whenever and i n whatever form they think fit no longer exists, a member's exchange controls have international justification i f they are consistent w i t h the Fund Agreement. I t follows that i t should not be possible for the courts of other members to pass their own judgement on these regulations and refuse them recognition. The Fund Agreement establishes an exchange control régime, and participants of the régime are expected to co-operate w i t h each other as regards exchange control regulations that are w i t h i n the competence of the I M F . The repudiation of the old policy and substitution of a new one was expressly formulated i n Article V I I I , Section 2 (b). The I M F has, i n accordance w i t h Article X X I X , 2 2 interpreted the first sentence of this provision, particularly those aspects of it having an impact on private international law: The meaning and effect of this provision are as follows: 1. Parties entering into exchange contracts involving the currency of any member of the Fund and contrary to the exchange control regulations of that member which are maintained or imposed consistently w i t h the Fund Agreement w i l l not receive the assistance of the judicial or administrative authorities of other members in obtaining the performance of such contracts. That is to say, the obligations of such contracts w i l l not be implemented by the judicial or administrative authorities of member countries, for example by decreeing performance of the contracts or by awarding damages for their non-performance. 2. By accepting the Fund Agreement members have undertaken to make the principle mentioned above effectively part of their national law. This applies to all members, whether or not they have availed themselves of the transitional arrangements of Article X I V , Section 2. 17 See Art. 1 (iv) at note 59. is Articles V I and V I I I . See Art. V I I I , Sec. 2 (a) and Art. V I I , Sec. 3 (b). See also Art. X I V , Sec. 2 particularly as it read prior to the Second Amendment. 20 Art. V I , Sec. 3. 21 Ibid. 22 This was Art. X V I I I of the original Bretton Woods Agreement.

1

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148

A n obvious result of the foregoing undertaking is that i f a party to an exchange contract of the k i n d referred to in Article V I I I , Section 2 (b) seeks to enforce such a contract, the tribunal of the member country before which the proceedings are brought w i l l not, on the ground that they are contrary to the public policy {ordre public) of the forum, refuse recognition of the exchange control regulations of the other member which are maintained or imposed consistently w i t h the Fund Agreement. I t also follows that such contracts w i l l be treated as unenforceable notwithstanding that under the private international law of the forum, the law under which the foreign exchange control regulations are maintained or imposed is not the law which governs the exchange contract or its performance. 23 Since then, Article V I I I , Section 2 (b) has been the subject of a growing worldwide jurisprudence. D.

Scope of A r t i c l e

VIII,

Section

2(b)

Doubts may rise as to whether the obligations of Section 2 (b) apply only to current international transactions or to capital transfers as well. 2 4 This is because the whole of Section 2 bears the somewhat misleading caption "Avoidance of Restrictions on Current Payments". There is little doubt that the drafters of the original Fund Agreement were just as concerned to guarantee the freedom of members to control capital movements as they were to ensure that members would not restrict payments and transfers for current international transactions, except when the latter type were authorized under it. Therefore, i t would be ridiculous to impart a greater international effect to restrictions on current transactions than to those on capital transfers. 25 Doubts may also exist as to whether the modification of the par value system effected by the Second Amendment affected the scope of this provision. This is largely because Article V I I I , Section 2 (b) was originally intended to support 23 Emphasis supplied. Executive Board Decision N o . 446—4 of 10th June 1949, Selected Decisions of the International Monetary Fund, 9th Issue, I M F 1981, 201—202: hereinafter, Selected Decisions. 24 The term "current transactions" is defined in Art. X X X (d) of the Fund Agreement. For a useful discussion of the distinction, see / . G. Evans , "Current and Capital Transactions: H o w the Fund Defines Them", Finance and Development vol. 5 (1968), 30—35. 25 See notes 20 and 21 and accompanying text. See also Gold , International Capital Movements Under the Law of the International Monetary Fund I M F Pamphlet Series N o . 21 (1977), 30; Gold / P.R.Laâman, "The Articles of Agreement of the International Monetary Fund and the Exchange Control Regulations of Member States: a Note on the Moojen Decision", Clunet vol. 89 (1962), 666 et seq., (677—78). W i t h reference to the caption of Art. V I I I , Sec. 2, it has been said that "although the inaccuracy is probably irrelevant legally, it does not evoke much confidence in the accuracy of the draft": Nussbaum (note 6), 426. I t is regrettable that the wording was not modified when the Articles were amended for the second time in 1976 (effective, 1978).

Recognition of Foreign Exchange Control Regulations

par values established under the Fund Agreement by declaring contracts unenforceable i f they concerned the purchase and sale of currencies at inconsistent exchange rates. However, Sir Joseph Gold , who has made a detailed analysis using materials from the recently published volumes of the "Collected Works" of John Maynard Keynes , provides many reasons as to w h y such a conclusion is likely to be untenable. 26 I t has been suggested that whether treaties require legislation to be fully effective and enforceable depends upon the constitutional law of each State. 27 While monists are unlikely to agree, dualists may suggest that the obligations in Article V I I I , Section 2 (b) are not binding per se upon individual members unless they have been enacted as national law. But the debate between monists and dualists is of less practical importance to the question at hand since nearly all member States have given specific legal effect to the first sentence of Article V I I I , Section 2(b) (and to Article I X , Sections 2 to 9 which cover privileges and immunities to be conferred on the I M F and its staff) through their individual "Bretton Woods legislation". 2 8 A related issue is whether the I M F is an inter-State organization or an inter-governmental one. I t has been suggested by some that there exists a fundamental and not merely a technical difference between organizations founded on an inter-governmental treaty and those based on a treaty between States.29 While the latter type "embraces in its membership the totality of the institutions of member States", the former category encompasses "merely their executive agencies". 80 Therefore, the obligations of inter-governmental constituent instruments may not be binding on all organs of member States but only on their 26 See: Gold , A N o t e on the History of the Drafting of Article V I I I , Section 2 (b), in: Gold , vol. I I (note 6), 429—438. 27 See: Mann, Conflict of Laws and Public Law, in: R d C vol. 132 (1971 I ) , 109—196 (170).

28 For the U S A , see Sec. 11 of Public L a w N o . 171 (Bretton Woods Agreements Act) 59 United States Statutes at Large (Stat) 512—517, 22 United States Code (U.S.C.) sec. 286 (h) (1976), which specifies that Art. V I I I , Sec. 2 (b) shall have the force of law. For the U K , see Sec. 3 (1) of the Bretton Woods Agreements Act (1945) together with the Bretton Woods Agreements Order in Council of 1946 Statutory Rules Orders (Stat. R. O.), 1946, N o . 36. For India, see The International Monetary Fund and Bank Act, (Act N o . 43 of 1945) the relevant part of which is reproduced in: H. Auf rieht, Central Banking Legislation vol. I , ( I M F Monograph series 1, 1961), 385—87. Aufricht ys two volumes also contain the Bretton Woods legislation of several other States. However, in a few States, Art. V I I I , Sec. 2 (b) is not given specific legal effect as being a part of municipal law: (c./. the French Acts of 26. Dec. 1945, Journal Officiel 27 Dec. 1945, 8590). This is often because treaty law is, in any event, a part of the law of the land: see note 48 and accompanying text. 29 For a detailed analysis see Stanley C. A. Obeyesekere , The Distinction Between 'InterGovernmental* and 'Inter-State' Treaties and Organizations: the International Monetary Fund Agreement, in: Indian Journal of International L a w vol. 22 (1982), 439—447. 80 C. Wilfried Jenks, Constitutional Problems of International Organizations, Yearbook of International Law (B.Y.I.L.) vol. 22 (1945), 11—72 (18).

British

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Stanley C. A. Obeyesekere'

governments. 31 The original Fund Agreement which was adopted at the Bretton Woods Conference was cast in a form intermediate between inter-governmental and inter-State. 32 While this confusing nomenclature remained intact after the First Amendment, attempts were made during the Second Amendment to rectify this deficiency. According to an I M F commentary on the Second Amendment the replacement of the term "government" by "country" was "intended to reflect that countries and not governments are members of the F u n d " . 3 3 But the changes effected in this regard were less than thorough. 3 4 Nevertheless, from the viewpoint of legal validity, i t is probable that an inter-governmental agreement is as much a treaty binding upon all the organs of the States whose governments are parties to i t as is an inter-State one, where practice clearly demonstrates that the signatories have conducted treaty obligations over a reasonable period of time in that belief and without complaint. 3 5 Y e t reference to the agents rather than the principals as the contracting parties merits slight commendation. I t is doubtful whether all the obligations construed by the I M F as falling w i t h i n Article V I I I , Section 2 (b), either through an official interpretation of the provision under Article X X I X or in some other manner, 36 are binding upon member States.37 I t is conceivable that such an interpretation could either

si Ibid. 32

For example Art. I I , Sec. 1 referred to "original members" as those "countries" represented at Bretton Woods and accepting membership before 1946, while Sec. 2 stated that "governments of other countries" were also eligible for membership. Emphasis supplied. 33 Emphasis supplied. Proposed Second Amendment to the Articles of Agreement of the International Monetary Fund: a Report by the Executive Directors to the Board of Governors, in: International Legal Materials ( I L M ) vol. 15 (1976), 501—546 (505). 34 For a detailed survey see: Obeyesekere (note 29) 444—446. One of the provisions requiring modification (Art. X X X I , Sec. 2 (a) ) is reproduced in note 55. 35 Owing to these reasons, in this essay, the I M F organization.

has been treated as an inter-State

36

Apart from the formal interpretations under A r t . X X I X , there are written decisions of Executive Directors interpreting individual provisions of the Fund Agreement that were not reached by virtue of A r t . X X I X . I n addition, interpretations may result through the decisions and resolutions of the Board of Governors as well as by the practical construction of the Fund Agreement, since the I M F ' s staff render legal opinions on many questions arising under the Agreement: see generally Bye-Laws Rules and Regulations, 38th Issue ( I M F , 1st July 1981); and Selected Decisions (note 23). 37

See in general James E. S. Fawcett , The Place of L a w in an International Organization, in: B.Y.I.L. vol. X X X V I (1960), 321—342; Gold , Interpretation by the International Monetary Fund of its Articles of Agreement, International and Comparative L a w Quarterly (I.C.L.Q.) vol. 3 (1954), 256—276; Gold , Interpretation by the International Monetary Fund of its Articles of Agreement I I , in: I . C . L . Q . vol. 16 (1967), 289—329; Gold , Interpretation by the Fund, I M F Pamphlet Series N o . 11 (1968); Gold , Amendment and Variation of Their Charters by International Organizations, in: Gold , Legal and Institutional Aspects of the International Monetary System: Selected Essays, Washington 1979, 319—351; Ervin P.

Recognition of Foreign Exchange Control Regulations

narrow down the scope of the provision 3 8 or make it considerably wider than many member States understood it to mean. This is quite different to modifying the scope of Article V I I I , Section 2 (b) by amending it under Article X X V I I I , which is likely to be somewhat more difficult since the concurrence of three fifths of the members having eighty five percent of the total voting power is required to bring any proposed amendment into effect. 89 Another interesting feature of the Fund Agreement is that i t is the I M F itself, and not any outside authority like the International Court of Justice, which determines the legality of any interpretation and the obligations of members under any provision of the Fund Agreement as i t is interpreted by the I M F . 4 0 These may have been the considerations that prompted many commentators to take the view that the powers o f interpretation of the I M F are implicitly limited by Article X X I X (a), according to which w [ a ] n y question of interpretation of the provisions of this agreement arising between any member and the Fund or between any members of the Fund shall be submitted to the Executive Board for its decision . . . " 4 1 Therefore, it has been suggested that the I M F has no authority to, inter alia , pronounce upon disputed questions of fact, resolve general questions of international law, veil an amendment t o the Fund Agreement in the form of an interpretation, 42 or engage i n legislation under the guise of interpretation. 43 Hence, interpretations which go beyond these limitations are ultra vires and have no force or effect. 44 However, there is little doubt that the interpretation

Hexner , Interpretation by Public International Organizations of their Basic Instruments, in: American Journal of International Law ( A J I L ) vol. 53 (1959), 341—370; and Mann, The Interpretation of the Constitutions of International Financial Organizations, in: B.Y.I.L. vol. X L I I I (1968—69), 1—19. 38 Meyer has highlighted that the Executive Board Decision N o . 446—4 which interprets Art. V I I I , Sec. 2 (b) (see text at note 23) has just this effect: "The interpretation . . . clouds one point through use of the language 'Parties entering into exchange contracts . . . w i l l not receive . . . assistance*. The provision, however, reads 'Exchange contracts . . . shall be . . . unenforceable* wording which makes clear that unenforceability may be urged in an action not involving the parties." See text accompanying notes 207 to 210. 39 For a possible attempt to transform the I M F from an inter-governmental to an interState organization by modifying the format of new membership resolutions see: Obeyesekere (note 29), 439—440. 40 A r t . X X I X (b). See in general Walther R d C vol. 79 (1951 I I ) , 515—709 (589).

Hug ,

The Law of International Payments,

41

According to Art. X X I X (b) it is probable that such a decision w i l l automatically become final and conclusive unless a member appeals to the Board of Governors within three months from the date of the decision. I f an appeal is lodged in time to the Board of Governors, the decision of the Board of Governors 'shall be final*. The usual practice of the Board of Governors in matters reserved for its determination is to act in accordance w i t h the recommendations made by the Executive Directors. 42 Mann (note 37), 16. 43 Meyer (note 6), 883. 44

Nussbaum, Money

in the Law

National

and International , N e w Y o r k , 1950, 529.

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of Article V I I I , Section 2 (b), 4 5 despite its shortcomings, 46 is well w i t h i n the powers of the I M F . Whether the courts are bound in advance by Article X X I X and other I M F interpretations remains a matter of controversy. According t o Professor Mann, the courts and other judicial tribunals of members are not bound in advance by I M F interpretations. Therefore, "whether or not an interpretative decision by the Governors is or is not legally correct may freely be considered and pronounced upon . . . b y any municipal tribunal, provided its decision does not constitute a breach of obligation w i t h i n the meaning of the Article X V . . . " 4 7 Campos suggests that the issue is dependent upon the role accorded t o treaty law within the municipal law system of each member State, thereby introducing a dualist element to the controversy. I f so, members like France and the United States, where treaty law is the law of the land, can no longer resort freely to concepts like ordre public to avoid the obligations under the Fund Agreement. 48 But this may depend on whether the condition of reciprocity is satisfied. 49 45

See text at note 23. ® See text at notes 207 to 210. 47 Note 37, 17. Art. X V referred to preceded A r t . X X V I of the Second Amendment. For the relevant part of Art. X X V I see text at note 58. 4 ® Campos (note 6), 582. See also Gold , The Interpretation by the International Monetary Fund of its Articles of Agreement (note 37), 273. According to Meyer , I M F interpretations are binding on the US as Congress clearly understood their binding effect (note 6), 883—884. Similarly, Parker suggests that the oral arguments the U S adduced based on what is now Art. X X I X in Case Concerning Rights of Nationals of the United States of America in Morocco (1952) International Court of Justice Report (I.C.J. Rep.) 176 implies that it would be bound by such an interpretation, see. S. E. Parker , The International Monetary Fund: Public and Private International Law Aspects, N o r t h Carolina Law Review vol. 47 (1969), 836—861 (856). The relevant extracts of the U S and French arguments have been reproduced by Hexner (note 37), 351—352. Alexandrowicz appears to suggest that I M F interpretations are binding not only on member States like France, Fed. Rep. of Germany and the U S but also on the U K . H e seems to be, however, more emphatic of the fact that "interpretations of Executive Directors are binding on international tribunals and other agencies as being acts issued under the provisions of treaties" (emphasis supplied), see: Charles H. Alexandrowicz , World Economic Agencies, London 1962, 201 n. 76. This is presumably because agencies like international tribunals are usually bound to determine cases in accordance with public international law, c. / . A r t . 38, sec. 1 of the I.C.J. Statute. 4

49 The general position under French law is that a . . . the provisions of a treaty have the force of law in France subject to the condition of reciprocity under the 1958 constitution, see: Gold (note 26), 666 and Ladtman (note 6). I t is conceivable that French courts may seek to ascertain whether reciprocity exists in the State whose exchange controls are involved concerning the applicability of I M F interpretations before giving effect to interpretations that favour the recognition of foreign exchange controls. For a more general account of the significance of reciprocity in German law when recognising foreign exchange controls under Art. V I I I , Sec. 2 (b) see: Hannes Schneider , Problems of Recognition of the Carter Freeze Order by the German Courts, in: International Business Lawyer vol. 9 (1981), 103—104. For a study of the likely significance of reciprocity before U S courts see Nussbaum (note 44), 545; and British Columbia v. Gilbertson (note 2), where the C . A . 9th Cir. suggested that a foreign revenue law may have been enforced had there been reciprocity. For a similar

Recognition of Foreign Exchange Control Regulations

However, the position seems to be somewhat less certain in England, 5 0 even though the courts are likely to regard an I M F interpretation as having 'a strong persuasive authority' as to what the correct meaning of the interpreted provision should be. 51 Williams , who also favours Mann's thesis, suggests nevertheless that "[where] a court or other tribunal has found on its own that an interpretation is legally correct, i t should be bound to apply that interpretation by the obligations of the Fund Agreement and not by the force of its own determination". 5 2 O n the other hand, Sir Joseph Cold has expressed the view that Article X X I X interpretations bind the forums of member States in advance. 53 H e attempts to substantiate this proposition w i t h case l a w 5 4 and suggests that when under Article X X X I , Section 2 (a) each member gives suggestion respecting Brazilian exchange control laws that were in issue in the Banco do Brasil case (note 5) see: R. K. Baker , Extraterritorial Enforcement of Exchange Regulations, Stanford Law Review vol. 16 (1963), 202—209 (209). However, the requirement of reciprocity offers scope for abuse by either party. For a useful example of the Soviet practice of international economic law, see George Ginshurgs , Soviet International Trade Contracts and the Execution of Foreign Commercial Arbitral Awards, in: Donald Barn / William Butler / George Ginshurgs (eds.), Contemporary Soviet L a w : Essays in Honour of John N . Hazard, The Hague 1974, 195, 199—200. For a critical account of the likely consequences of 'reciprocity' respecting Art. V I I I , Sec. 2 (b) see: Gold (note 62), 422—423. 50 Mann expresses doubt about whether the interpretation of Art. V I I I , Sec. 2 (b) is binding upon the English courts, even though the provision itself has been given the force of law in England, see: Mann, The Private International Law of Exchange Control under the International Monetary Fund Agreement, in: I.C.L.Q. vol. 2 (1953), 97—107 (104 note 37). See also Mann (note 37), 15—16. For a more general survey see Mann, Enforcement of Treaties by English Courts, Transactions of the Grotius Society vol. 44 (1958 and 1959), 29—62. 51 Dicey / Morris , 10th ed. (note 6), 1027. See also Meznerics , (note 6), 65. 52 Note 6, 332. 53 However, he draws a distinction between interpretations under Art. X X I X and other interpretations (details in note 36) and suggests that the latter types have only a persuasive effect, see: Gold, Interpretation by the Fund (note 37), 32. 54 Op. cit., 31—42. Four are U S decisions while the other is from Luxembourg: International Bank for Reconstruction and Development and International Monetary Fund v. All America Cable and Radio Inc., The Western Union Telegraph Company, Federal Communications Commission Docket N o . 9362, 8 Pike and Fisher's Radio Regulations, Second Edition ( R R 2 d ) , 927 (944—945, 951); South Western Shipping Corporation v. National City Bank of New York (note 5), 522—523; the Banco do Brasil case (note 5), 874; Theye y Ajuria v. Pan American Life Insurance Co., 154 So 2 d 450, 453 (C. A . Louisiana, 1963), reversed (on other grounds) 161 So 2 d 70—75 (S.C. Louisiana, 1964); and Société fFilature et Tissage ex Jourdain ν. Epoux Heynen-Bintner, I L R vol. 22 (1955), 727, 728 (Tribunal d'Arrondissement de Luxembourg (Civil), 1st Feb. 1956). See also Moojen v. Von Reichert (C.A. Paris, 20th June 1961) reprinted in: Gold , The Fund Agreement in the Courts, Washington 1962, 143, 144, and Bills of Exchange case (Bundesverfassungsgericht, Fed. Rep. of Germany, 27th April 1970) reprinted in: Gold, The Fund Agreement in the Courts (1976) (note 6), 72, 76. Here the Supreme Court noted that its understanding of the meaning of the term 'unenforceable' in Art. V I I I , Sec. 2 (b) was in accourd with the I M F ' s official interpretation of 20th June 1949. For an example of a request for assistance made by a member's court to the I M F see Loeffler-Behrens v. Beermann, text at notes 146 and 147. I t is worth noting that such requests could lead to interpretations of the Fund Agreement.

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. Obeyesekere

an undertaking to carry out all its obligations, 55 i t means carrying them out according to the way these obligations are interpreted by the I M F under Article X X I X (a). 56 I n determining whether a proposed municipal court ruling would constitute a breach of obligation or not under the Fund Agreement as interpreted by the I M F , i t is submitted that the court is at liberty to examine whether or not the I M F has exceeded its authority through the interpretation under consideration. 57 T o suggest that a court has not the power to do so is tantamount to suggesting that member States have relinquished their sovereignty in such an important area of economics to such an extent that they no longer have the ability to either examine the validity of an I M F interpretation or contest an interpretation's validity before an international tribunal like the International Court of Justice. Such a conclusion cannot be easily implied unless there is clear and unequivocal evidence to suggest that this was in fact the intention of the member States. This does not mean that I M F interpretations are to be disregarded. There is little doubt that they have a strong persuasive effect in ascertaining the meaning of a provision i n the Fund Agreement, so much so that they may even be presumed to be legally valid, so that the burden of proving that they are not w i l l rest on the party contesting their validity. I t should also be borne in mind that i f a member "persists in its failure to fulfil any of its obligations under [the Fund] Agreement, that member may be required to withdraw from membership in the F u n d " . 5 8 I n ascertaining whether a court's ruling on an I M F interpretation w i l l constitute a breach of obligation or not, i t is necessary to assess the interpretation i n the light of the purposes of the I M F as laid down in Article I which clearly states that "the [ I M F ] shall be guided in all its policies and decisions by the purposes set forth" in i t . 5 9 The Fund Agreement reveals that the functions of the I M F are essentially those that can be legitimately described as economic. 60 55 A r t . X X X I , Sec. 2 ( a ) states that "[e]ach government on whose behalf this agreement is signed shall deposit w i t h the Government of the United States of America an instrument setting forth that it has accepted this Agreement in accordance with its law and has taken all steps necessary to enable i t to carry out all of its obligations under this Agreement". 50 Gold , Interpretation by the International Monetary Fund of its Articles of Agreement (note 37), 273. See also Lachman (note 6), 155. What is significant is that the courts of the United States, Luxembourg, France and the Fed. Rep. of Germany gave some recognition to interpretations under Art. X X I X (a) although these States have not incorporated this provision as a part of their national laws through their individual Bretton Woods legislation. 57 See text at notes 42 to 44. 58 A r t . X X V I , Sec. 2 (b). 59 See Article I of the Fund Agreement. 60 This was also the basis under which the Executive Board decided to treat exchange restrictions imposed for broadly speaking 'security-strategic' purposes differently to those imposed for 'economic-financial' purposes, see text at note 173.

Recognition of Foreign Exchange Control Regulations

A n interpretation having a direct bearing on Article V I I I , Section 2 (b) is Executive Board Decision N o . 144 (52/51) interpreting Article V I I I , Section 2 (a). 6 1 The decision involves the procedure for notifying exchange restrictions imposed for purposes that are essentially non-economic. I t drew considerable attention recently during the litigation involving the Iranian Assets Control Regulations of the United States. 62 Were the courts of member States obliged under Article V I I I , Section 2 (b) to accord recognition to the United States exchange restrictions that were clearly imposed in accordance w i t h the procedure prescribed by Decision N o . 144 (52/51)? 63 H a d the matter not been settled by diplomatic means, the British courts, along w i t h the courts of some other member States w o u l d have been confronted w i t h the unenviable task of examining whether Decision N o . 144 (52/51) when read in conjunction w i t h the obligations under Article V I I I , Section 2 (b) obliged them to treat the contracts under which Bank Markazi Iran had deposited funds in various banks located in their jurisdictions as unenforceable. This would have required an examination of the broader question whether the I M F has the authority to compel member States to give effect to exchange restrictions imposed by one member against another for essentially political, military, security or strategic purposes, on the basis that to do so would be a part of a member's obligations under Article V I I I , Section 2 (b). 6 4 The British courts have in the past shown a distinct preference to recognize exchange restrictions imposed for economic purposes and distinguish these from those imposed for non-economic 61

The decision appears in text at note 173.

62

See generally C. H. de Pardieu, The Carter Freeze: Specific Problems Relating to the International Monetary Fund, in: International Business Lawyer (Int'l Bus. Lawyer) vol. 9 (1981), 97 etseq; Richard W. Edwards , Jr., Extraterritorial Application of the U S Iranian Assets Control Regulations, in: A J I L vol. 75 (1981), 870—902; F. Gianviti, L a blocage des avoirs officiels iraniens par les états — unis (executive ordre du 14 novembre 1979), in: R . C . D . I . P . vol. 70 (1980), 279—303; Gold, The Articles of Agreement and the U S Freeze of Assets, in: Gold, The Fund Agreement in the Courts: Vol. I I (note 6), 360; and Natalie A. Simon, The Iranian Assets Control Regulations and the International Monetary Fund: Are the Regulations 'Exchange Control Regulations'?, in: Boston College International and Comparative Law Review I V (1981), 203—223. β» See also text at notes 94 to 96, 107 to 117, 136, 137, and 156 to 161. 64

Such an enquiry can take place only based on the assumption that this was the IMF's intention under Decision N o . 144 (52/51). As to whether this was in fact so is by no means certain. I t could, for instance, be argued that the Decision was designed to overcome the impasse that existed at the time it was made (during the Korean war) due to the nonavailability of legislative jurisdiction for a member State which had accepted Art. V I I I obligations to impose exchange restrictions affecting especially current international transactions for reasons other than those specifically contained in Art. V I I I , Sec. 2 (a) (see note 166) which are, in addition, based on primarily non-economic considerations, rather than to force other members into taking sides in an inter-State dispute which does not involve them, by compelling their courts to give effect to economic sanctions imposed by one of the disputants against another on the basis that to do otherwise would violate a member's obligations under Art. V I I I , Sec. 2 (b).

Stanley C. A. Obeyesekere

156

purposes. According to the famous dictum of Justice Upjohn Wagg & Co. Ltd.,

in Re Helbert

. . . this court is entitled to be satisfied that the foreign law is a genuine foreign exchange law, i. e. a law passed w i t h the genuine intention of protecting its economy . . . and is not a law passed ostensibly w i t h that object, but in reality w i t h some object not i n accordance w i t h the usage of nations. While every State is in the best position to know what measures of control are best suited to its particular needs, and must be allowed much latitude in its choice of control weapons, there are limits in the recognition to be afforded to such legislation. . . 6 5 H a d the Iranian Assets Control cases come up for trial before the British courts, it is the writer's belief that an investigation on the lines suggested by Justice Upjohn should have been w i t h i n the power of the courts and not inconsistent w i t h Article V I I I , Section 2 (b) obligations. Indeed the Fund Agreement makes it clear that the functions of the I M F are almost exclusively w i t h i n the economic sphere. 66 I n any investigation i t would be necessary to emphasise the distinction between 'legislative jurisdiction' under Decision N o . 144 (52/51) and what may be generally called 'enforcement jurisdiction' under Article V I I I , Section 2 (b). 6 7 While these are not mutually exclusive categories, it is by no means certain that the availability of 'legislative jurisdiction' necessarily implies an obligation on the part of other members to give effect to those exchange control regulations regardless of the procedure adopted to impose them and the predominant purpose for or circumstances under which they were imposed. W h a t can be observed is t h a t Decision N o . 144 (52/51), which coincided w i t h the United States' imposition of exchange controls against the People's Republic of China and N o r t h Korea, was in part a declaration by the I M F that it was not the appropriate forum to either evaluate the merits or determine the legality under international law o f exchange controls imposed for essentially political, military, security or strategic purposes 68 which are different from those imposed for essentially 'economic-financial' purposes. 69 Indeed the US measures have been compared to the sequestration of enemy property in 65

Note 9, 351—352. The case involved German exchange control regulations of 1933 passed six years prior to the commencement of the Second W o r l d War. The court's findings were that the exchange controls were introduced for economic considerations and were justifiable on economic grounds at the relevant time. 66

See note See note other member 'unenforceable'. «8 See: Gold 67

69

59 and accompanying text. 64. W h a t is required under Art. V I I I , Sec. 2 (b) is that exchange controls of States be recognized and not necessarily enforced , as the term used is (note 62), 376.

For some of the unforeseen consequences that could result if a view favouring the need to give effect to non-economic restrictions is preferred, see: Edwards (note 62), 896—897.

Recognition of Foreign Exchange Control Regulations

time of war, which need not be accorded recognition as exchange controls by 'neutrals' because its purpose is punitive rather than defensive. 70 One cannot deny that there can at times be a multiplicity of motives for having exchange control regulations not all of which are either economic or non-economic. 71 This has made Sir Joseph Gold point out some of the shortcomings of an approach favouring the ascertainment of motive by courts. 72 While it would be reasonable to suggest that i t is not essential that exchange controls be found to be motivated solely by clearly economic considerations i n order to be recognized under Article V I I I , Section 2 (b) (due t o the obvious practical difficulties such an approach would entail), courts should have the liberty to determine whether the regulations under consideration are imposed primarily for non-economic purposes or not, and accord recognition only t o those imposed for primarily economic purposes. 78 Such an examination w i l l have the desirable effect of allowing the courts of member States that degree of latitude necessary to refuse having to automatically give effect to what are clearly politically or strategically motivated economic sanctions having an extraterritorial effect. 74 I f exchange controls are imposed in accordance w i t h the procedure laid down in Decision N o . 144 (52/51) there is then a presumption that these regulations are primarily non-economic i n nature. The courts cannot disregard the fact that Article V I I I , Section 2 (b) was designed to generate economic co-operation among member States. Nowhere is i t shown that the provision was designed in order that it may be used by one State as a device whereby it can cripple the economy of an unfriendly State by compelling other I M F members to assist it in implementing its economic sanctions. I t is necessary that the scope of Article V I I I , Section 2 (b) be curtailed on these lines i f we are to prevent member States who wish t o maintain cordial relations w i t h all parties to a dispute from being compelled to adopt an unacceptable position due to considerations that have little bearing on the aims 7

° See: Gianviti (note 62), 291—294. See also note 157. See: Jozef Swidrowski , Controls on External Economic Transactions, in: University of Toledo Law Review vol. 12 (1981), 183—208 (190—191). 72 Gold (note 62), 412—413. 73 For a suggestion that if a law is to be classified as an exchange control regulation for I M F purposes it should be motivated exclusively by economic considerations see: Simon (note 62), 222—223. 74 For a contrary view favouring assistance under Art. V I I I , Sec. 2 (b) if a member had legislative jurisdiction to impose non-economic exchange controls under public international law, see: Gold (note 62), 423. While he is critical of those opposed to rendering assistance under Art. V I I I , Sec. 2 ( b ) (see 409—413, 415—418 et seq.) he provides little analysis to substantiate his own conclusion. His conclusion may be due to a belief that any exchange control regulation imposed for even non-economic purposes, so long as it is in conformity w i t h public international law, deserves the active support of the international community. Considering Sir Joseph's close connections and continuing influence in the I M F ' s legal department this may be indicative of the IMF's general views on the matter. 71

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and objects of the I M F . Therefore, i f the I M F were t o interpret that the obligations under the Fund Agreement include having to accord recognition to exchange control regulations that are motivated by essentially non-economic considerations as well, this is unlikely to help i n depicting it as a neutral or non-political organization. 75 Indeed, where necessary, the courts should investigate and ascertain the legality of an I M F interpretation, but exercise great caution i n executing this function so that an interpretation w i l l be disregarded only i f it is found to be blatantly defective. 75a Finally, the comprehension between Article V I I I , Section 2 (b) and private international law is of particular importance for the understanding of the exchange control cases to be discussed. Profossor Mann is of the view that "customary international law allows each State to devise its own system of private international law and thus to determine the extent to which the 75

I t must be borne in mind that exchange controls imposed for primarily non-economic purposes are accorded a considerable degree of 'preferential treatment' when compared with those imposed for primarily economic purposes (see text at notes 174 to 176) on the ground that the I M F is not a a n appropriate forum for discussion" of the propriety of such laws: see text at note 173. I t is for broadly similar reasons it is suggested that the Fund Agreement is not the appropriate treaty for making obligatory the recognition of exchange controls found inappropriate for discussion by the I M F . Members may at times be tempted to give priority to considerations of expediency when confronted with a tragic experience like the imprisonment of their diplomatic personnel. A n y clear violation of international law deserves condemnation. Nevertheless, the courts of other members must be at liberty to determine the issues at hand free of obligations compelling them to either recognize or enforce exchange controls imposed for essentially noneconomic purposes. Members must also bear in mind that when deciding on suitable 'reprisals' designed to redress a wrong, they must take special care not to implicate international institutions like the I M F . Long term considerations, like the pressing need to demonstrate that the I M F is non-political (see note 191) must take precedence over short term national objectives. For writings of several Americans expressing concern over US economic sanctions imposed in the past, see note 193. I t may be argued that the proposed result may affect the effectiveness of economic sanctions imposed at a multilateral level under the auspices of the United Nations, rather like those imposed in compliance w i t h U . N . Security Council resolutions against what was then Rhodesia. A distinction must be drawn between economic sanctions imposed unilaterally by a State and those imposed multilaterally under the United Nations Charter. What must be borne in mind is that States are obliged to implement U . N . sanctions not due to their obligations under the Fund Agreement, but owing to what is contained in the U . N . Charter, see: Art. 41 of the Charter. While I M F members are probably bound to give extraterritorial effect under A r t . V I I I , Sec. 2 (b) to sanctions imposed in compliance with U . N . Security Council resolutions (see also A r t . 6 of the Agreement Between the U . N . and the I M F of 15th N o v . 1947) the position is less clear concerning their obligations to recognize sanctions imposed under U . N . General Assembly resolutions. I t is probable that resolutions which are unanimous or near unanimous would have a strong persuasive effect. I n the event of a clear conflict between membership obligations under the United Nations Charter and the Fund Agreement, in view of the fact that the United Nations is the foremost international organization having the widest possible State membership, it would seem inevitable that a State's obligations under the Charter ought to override its obligations under any other treaty. 75a See text at notes 42 to 44.

Recognition of Foreign Exchange Control Regulations

monetary laws of foreign States are applicable w i t h i n its boundaries". 76 O n the other hand, as regards the private international law aspects of exchange control, i t has been suggested that "the clear effect [of Article V I I I , Section 2 (b)] is to remove exchange restrictions from the realm of private international law into conventional or treaty international l a w " . 7 7 Although the rule of Article V I I I , Section 2 (b) is independent of traditional private international law, (it has not become the sole rule. The private international law rules of the forum that deal w i t h the identification and application of the governing law remain in reserve, to be applied i f the provision does not require the unenforceability of a particular contract. I f a contract is not unenforceable, the forum is not bound to treat it as enforceable. The forum may find that under its private international law the governing law is a particular law, which w i l l then be applied, and the application of this law may include the recognition of any exchange control regulations that happen to be a part of i t . 7 8 E. I n t e r p r e t a t i o n o f A r t i c l e V I I I , by N a t i o n a l Courts

Section

2(b)

As the I M F interpretation provides inadequate help in clarifying the numerous and novel issues contained in Article V I I I , Section 2 (b), the courts are obliged to interpret the provision, and determine its scope.79 A n y suggestion that, in the light of Article X X I X of the Fund Agreement, it is undesirable for a court to express its view is without justification. 80 I n fulfilling that task i t should take into account that a fundamental purpose of the I M F is " t o promote international monetary co-operation". 8 1 When respecting the international purpose of an agreement entered into by a large majority of the family of States, the House of Lords observed in Tothergill v. Monarch Airlines that "our courts w i l l have to develop their jurisprudence in company w i t h the courts of other countries from case to case". 82 There is today little doubt that ™ Mann, Money in Public International Law, R d C . vol. 96 (1959 I ) , 1—125 (75—76). See in general Mann (note 50), 97—107; and Delaume (note 6). 77 Campos (note 6), 582. 78 C.f. De Beéche v. South American Stores [1935] A . C . 148 (H.L.). See generally Dicey / Morns , 10th ed. (note 6) vol. 2, 1024—1026. 79 For contents of the interpretation see text at note 23. I t is quite clear that the interpretation is not exhaustive, see: Gold , Interpretation by the Fund (note 37), 43—44. 80 The courts initially showed a reluctance to construe the sentence, see: Kahler v. Midland Bank [1948] I A l l E R 811, 819 ( C . A . ) ; and Cermak v. Bata Akciova Spolecnost (note 3), 785. However, in more recent years they have shown a greater willingness to interpret it, see: Sharif v. Azad (note 5), 1293; and the Banco do Brasil case (note 5), 873—874. si Article I (i). 82 [1980] 3 W L R 209, 234 (Lord Scarman ). The case concerned the interpretation of the Carriage by A i r Act 1961 which gave effect to the Warsaw Convention of 1929. For developments in the U K concerning Art. V I I I , Sec. 2 (b) that are broadly in line with Lord Scarman* s view, see text at notes 219 to 223.

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the text should be construed as a multilateral treaty and be liberally interpreted in accordance w i t h well established rules of public international law. 8 3 Similarly, when interpreting a statute giving effect to a treaty or to specified provisions of one (e. g. Article V I I I , Section 2 (b) of the Fund Agreement) " i t is legitimate to look at the source in order to resolve ambiguities i n the legislation which has made these treaty or convention provisions part of the ordinary municipal law of the country". 8 4 jI. Exchange Contracts The term "exchange contracts" is un technical and a diversity of views have been expressed respecting its scope. When construed narrowly i t may mean contracts whereby one currency is exchanged or sold for another. 85 Professor Mann has proposed a somewhat broader interpretation and suggested that the term covers contracts where the currency of a member State is the consideration for the delivery of goods or services. 80 The same author has later subsumed this under a still wider interpretation according to which "exchange contracts" encompass all contracts "which in any way affect a country's exchange resources". 87 This view appears to have met the approval of a majority of writers. 88 However, the courts are somewhat less certain whether 83 See generally Sir lan Sinclair , The Vienna Convention on the Law of Treaties, Manchester 1973, 69—76. 84 Fothergill v. Monarch Airlines (note 82), 239 (Lord Roskill). The relevant U S and U K statutes are listed in note 28. The House of Lords recently unanimously affirmed that a [ t ] h e Bretton Woods Agreements Order in Council 1946, made under the Bretton Woods Agreements Act 1945, gives the force of law in England to Article V I I I , Section 2 (b) of the Bretton Woods Agreement", see: Glass Fibres case (note 5), 1049 (Lord Diplock). See also Zivnostenska Banka v. Frankman (note 1), 676 (Lord Simonds). 85 Support for this view is derived from Chandler (note 6), 569; a former edition of Dicey , Conflict of Laws (7th ed., 1958), 923—924; Hug (note 40), 629; Nussbaum (note 6), 426—427; Nussbaum (note 44), 542—543. I t is also supported by a number of court decisions, several of which are of an earlier period: Emek v. Bossers and Mouthaan , (note 5), 722; the Pinball Machines case, in: Gold , The Fund Agreement in the Courts (note 6), 1—9 (Hanseatisches Oberlandesgericht, 1959); Banco do Brasil v. A.C. Israel Commodity Co. (note 5), 872, 874, 876; Zeevi & Sons v. Gnndlays Bank (Uganda) Ltd. (note 5), 892, 900 (Judge Cooke); and Wilson , Smithett & Cope Ltd. v. Terruzzi (note 5), 683, 714 (Lord Denning ), 715 (Ormrod L.J.)> 722 (Shaw L.J.). The facts of the following cases made a narrow interpretation adequate: White v. Roberts (note 5); S.W. Shipping Corp. v. Nat. City Bank of New York (note 5); Constant v. Lanata (note 5); Batra v. Ebrahim (note 5); and the Glass Fibres case (note 5), 1050 (H.L.). See also generally Re United Railways of Havana and Regia Warehouses Ltd. [1961] A . C . 1007, 1059 (Lord Radcliffe). 8β F.A.Mann , The Exchange Control Act, 1947, in: Modern L a w Review vol. 10 (1947), 411—419 (418). 87 Mann, 3rd. ed. (note 6), 441. This was first mooted by Mann in: Money in Public International Law, B.Y.I.L. X X V I (1949), 259—293 (279). 88 See: Dicey / Morris , 10th ed. (note 6), 1029; J.E.S. Fawcett, The International Monetary Fund and International Law, in: B.Y.I.L. X L (1964), 32—76 (43); Gold (on

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161

this broad interpretation or a narrower one is to be preferred. Recent decisions of European courts favour a broad interpretation. 89 For sometime the British position was also very much the same, the Court of Appeal having preferred a liberal construction in Sharif v. Azad. 90 But in the Terruzzi case the same court favoured the narrow interpretation, holding that a contract between an Italian speculator and a dealer in the London metal exchange calling for payment i n sterling was not an exchange contract and therefore not subject to Article V I I I , Section 2 (b). 9 1 The dictum in Terruzzi about exchange contracts in disguise 92 was recently applied by the House of Lords i n the Glass Fibres case which involved an overinvoiced sales contract and a letter of credit both of which were expressed i n US dollars concerning the shipment of machinery by a British company to a Peruvian one. The court, while overruling the Court of Appeal judgement and holding that Article V I I I , Section 2 (b) was applicable, stated that the question whether i t is a monetary transaction in disguise is not a question of construction of the contract, but one of substance of the transaction to which enforcement of the contract would give effect. 93 I t is of interest to speculate as to how these precedents may have been applied had the Bank Markazi Iran cases come up for trial before the English courts. 94 I f not for the diplomatic settlement this would have been a distinct numerous occasions), see for example, The I M F and Private Business Transactions (note 6), 25; Meyer (note 6), 887; Williams (note 6), 344. See also Krispis (note 6), 288—289; and F. Gianviti, Le contrôle des changes étranger devant le juge national (suite et fin), in: R . C . D . I . P . vol. 69 (1980), 659—703 (667—674). 89 For France, see Datei Motion Picture Co. v. Ζαν'ιώα , in: Gold , The Fund Agreement in the Courts: Part X I I (note 6), 194; and Moojen v. Von Reichert , R.C.D.I.P. vol. 51 (1962), 67 (C.A. Paris, 1961). For Fed. Rep. of Germany see East German Hog Sides case, in: Gold , The Fund Agreement in the Courts (1976) (note 6), 72; and Bills of Exchange case (note 54). 9

° N o t e 5, 1289—1290 (Lord Denning),

1293 (Diplock L. ].).

91

See note 85. Therefore, it is not surprising that the Italian courts refused to recognise and enforce the English judgement, see: M i l a n Court of Appeal judgement of 10 June 1977; Rivista di diritto internazionale privato e precessuale 1979, 271; affirmed, Corte di Cassazione judgement of 13 April 1981, ibid. 1981. 92 N o t e 5, 714 (Lord Denning). 93

N o t e 5, 1050—1051 (Lord Diplock). However, the House of Lords favoured, although in obiter , the narrow construction of 'exchange contracts' expressed in the Terruzzi case. 04

See Iranian Assets Litigation Reporter 16th M a y 1980, 790—802. While the Iranian Assets Control Regulations of the U S Treasury prohibited defendant banks from complying with English court orders to perform acts in England, the extraterritorial reach of the U S regulations were questionable under international law: c.f. Rio Tinto Zinc Corp. v. Westinghouse Electric Corp. [1978] A . C . 547 (H.L.). See also the references listed at note 255. Therefore the English courts need not have given effect to this exercise of extraterritorial jurisdiction unless required to do so by Art. V I I I , Sec. 2 (b) of the Fund Agreement and the national legislation implementing this provision, see: note 28.

11 GYIL 27

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possibility, partly because some of the jurisdictional objections earlier outlined were not put forward by the Iranian Bank. 9 5 Bank Markazi predictably argued that the deposit contracts were not "exchange contracts" w i t h i n the meaning of the provision. 9 6 I t claimed that i t merely wished to exchange the currency of deposit (eurodollars) for identical currency (eurodollars) and was not requesting an exchange of US dollars for British pounds or Iranian rials. Although under a liberal interpretation i t could have been argued that the contracts affected not only Iran's exchange resources but those of the United States and the United Kingdom as well, the narrow construction recently favoured by the House of Lords is likely to have resulted in this point being determined i n Bank Markazi's favour. Likewise, there is no U n i t e d States decision which unequivocally supports a liberal interpretation. O n the contrary, dicta in the Banco do Brasil case favours the adoption of a narrow interpretation. 9 7 Some of the so-called Cuban insurance cases also i m p l y limitations, although of another kind. The language in some opinions suggest that the test of an exchange contract is whether i t calls for payment in a currency other than that of the forum or perhaps other than the currency of the State whose law governs the contract under private international l a w . 9 8 The only virtue of the tests that restrict the scope of the term "exchange contracts" is their mechanistic character. Otherwise, they have little relevance to the objective of Article V I I I , Section 2 (b). For US courts to hold in the Cuban cases that they w i l l enforce the insurance contracts providing for payment i n US dollars because these are not exchange contracts disregards the fact that they are undeniably exchange contracts when viewed by the member where the obligor-defendent resides. That member's foreign exchange resources w i l l be directly affected by such a verdict. Unfortunate consequences could flow from the use of private international law rules as well. For example, allowing the lex loci contractus to determine whether an exchange contract is before the court makes the application of Article V I I I , Section 2 (b) depend largely on the w i l l of the contracting parties. These restrictive interpretations are contrary to the objective of Article V I I I , Secion 2 (b) under which international recognition should be accorded t o regulations controlling the w i l l of contracting parties where this is necessary for the defense of member currencies, so long as the conditions i n the provision are satisfied. 95

See note 64 and text at notes 61 to 75.

· · Iranian Assets Litigation Reporter, 16th M a y 1980, 792—793. 97 Note 5, 873—874. This was later quoted with approval by Judge Cooke in the Zeevi case (note 5), 900. 9 ® See Pan American Life Insurance Co. v. Rai} 156 So. 2 d 785, 786 ( D . C . Fla., 1963) and Theye y Ajuria v. Pan American Life Insurance Co., (note 54), 74.

Recognition of Foreign Exchange Control Regulations

163

The word exchange in the expression exchange contract should be understood in the same way as in the expression exchange controlIn the words of Sir Joseph Gold : Exchange contracts are contracts between a resident and non-resident calling for a payment or transfer i n currency, whether domestic or foreign, from the standpoint of the member whose exchange control regulations are contravened, that can affect its balance of payments. 1 0 0 I t should, however, be noted that since Article V I I I talks about contracts, i t does not intend a general recognition of exchange controls. Consequently, Article V I I I , Section 2 (b) does not a p p l y to currency measures concerning payments arising ex delicto , or from quasi contracts, or from unilateral legal acts, or directly ex lege. 101 2. Involve

the Currency

A t least three views have been put forward as to the proper interpretation of this phrase. I n the narrowest sense i t may mean that a currency is involved only i f the contract deals w i t h "international media of payment". 1 0 2 A n equally narrow interpretation was favoured by the Supreme Court of Austria when i t suggested that a transfer of assets from w i t h i n the territory of the State imposing the exchange control regulation is necessary to involve its currency. 108 A wider proposition has been put forward by Lord Denning who was of the view that a contract which was contrary to exchange control regulations enacted to prevent the depreciation of a currency would involve that currency. 104 Another wide interpretation has been proposed by Mann who 99 Meidosner (note 6), 313—314. For a contrary view see Judge Nordstrom , I.L.A. Report of the 47th Conference (1956), 280. 100 The Fund Agreement in the Courts: Part X I V (note 6), 608. 101

Hans Auf rieht , The Fund Agreement: Living Law and Emerging Practice, Princeton 1969, 15. For accord, although not based on the Proceedings and Documents of the United Nations Monetary and Financial Conference, Bretton Woods, N e w Hampshire, July 1—22, 1944 (Washington D.C., U.S. Dept. of State Publication 2866, 1948), hereinafter Bretton Woods Proceedings, see: Mann, 3rd ed. (note 6), 440. See generally the Glass Fibres case, text at note 93; K. Lipstein , Note, in: Cambridge Law Journal (C.L.J.) vol. 35 (1976), 203—205 (204); Meichsner (note 37), 333; and Lachman (note 6), who suggests that 'exchange contracts' are wider in scope than 'exdiange transactions' and include even the barter of commodities (156) although not obligations of a unilateral character (arising from torts, wills, judgements etc.) as the term restricts the scope of the provision to arrangements of a consensual character (158). For the general undesirability of treating the Bretton Woods Proceedings as the travaux préparatoires of the Fund Agreement see: Fawcett (note 37), 333. 102 This view is supported by Nussbaum (note 44), 542—544. This was quoted with approval in the Banco do Brasil case (note 5), 874 and by the Hanseatisches Oberlandesgericht in the Pinball Machines case (note 85). 103 χ, y. Zagreb Bank (note 7), 232. 104 Β at τ a v. Ebrahim (note 5).

ir

Stanley C. A. Obeyesekere

164

has suggested that the currency of a member is involved i f the contract affects the member's exchange resources. 105 Finally it has been suggested by Gold that this criteria be subsumed by the still wider proposition, namely, the currency of a member would be involved where a transaction affects the member's balance of payments. 106 Although the Iranian Assets litigation involving Article V I I I , Section 2 (b) 1 0 7 was not judicially determined, preliminary hearings provide a useful insight to some of the issues at hand. The deposit contracts o f Bank Markazi Iran w i t h brandies and subsidiaries of US banks were denominated in US dollars. While this would appear to 'involve the currency' of the United States, Bank Markazi argued in the London litigation that this was not the case since the contracts called for payment in eurodollars, an accounting unit not issued by the United States, but rather a sui generis form of 'quasi-money' created by commercial banks outside that State. 108 I t highlighted the fact that the issuance of eurodollars is not controlled by US authorities, including the Federal Reserve System, but that eurodollars are instruments created by the defendant banks that are valued by reference to the US dollar, but are not dollar deposits. 109 I n other words, the contracts were outside America's economic sphere. 110 Likewise, it has been said that "the eurodollar market is a mere account market rather than a money market", 1 1 1 and that from a strictly legal viewpoint "Eurocurrency is not a currency". 1 1 2 However, i t can be argued that while the "proximate means of payment w i t h i n the Eurocurrency system is ' M I ' in the form of . . . demand deposits, . . . the ultimate means of 105 See: Mann, The Legal Aspects of Money, 2nd ed., Oxford 1953, 382. This view was adopted by the Hamburger Landgericht in the Clearing Dollars case (note 5), 730. This was also the basis in Moojen v. Von Reichert (note 89). See also Mann, The Legal Aspects of Money, 3rd ed. (note 6), 442—443, where he suggests that a member's currency is involved where the transaction under consideration has "economic effects" within the "financial area" of that member. A change of residence could result in the severance of the economic connection with a financial area, see: Pan American Life Insurance Co. v. Rai) 164 So. 2d 204 (C.A. Fla., 1964). See also Gold , The Cuban Insurance Cases and the Articles of the Fund (note 6), 27 and 33. Gold also suggests (at p. 28) that a member's currency would be 'involved' if the exchange control regulations that are infringed control transactions of its residents or transactions dealing with assets within its territory. Others favouring a wide interpretation include Fawcett (note 88), 43—44; Krispis (note 6), 290—293; Meyer (note 6), 888—889; and Williams (note 6), 345, 349—351. ioe Gold , The Fund Agreement in the Courts: Part X I V (note 6), 590 and 601. 107 For the significance of Art. V I I I , Sec. 2 (b) in this regard see notes 61 to 75. See also notes 94 and 95. 108 For a brief account of the important legal characteristics of eurocurrencies in general see Mann, 4th ed. (note 6), 61—62 and 193—195. ιοβ Iranian Assets Litigation Reporter, 16th M a y 1980, 790. no F. Gianviti

(note 62), 287.

m Mann, 4th ed. (note 6), 194. us Op. cit. 61.

Recognition of Foreign Exchange Control Regulations

payment among the American correspondents is federal funds". 1 1 3 But Gianviti has expressed some doubt suggesting that the deposit contracts involving France could have been performed in francs i f necessary, and that there was no stipulation in the contracts that France was not the place of performance. 114 The defendant banks argued that i t was a customary banking practice to execute payments of eurodollar deposits through transfers in accounts w i t h banks located in the United States, and usually through the Clearing House Interbank Payments System (CHIPS) in N e w Y o r k . 1 1 5 Even i f this were the case, i t has been suggested that US exchange resources were not involved because the total claims by non-residents against US residents remained the same, the ownership of claims merely being transferred from one non-resident to another. 1 1 6 The contention is of particular relevance where foreign branches and subsidiaries of US banks are able to meet their contractual obligations w i t h resources located outside the United States. However, it would depend also on whether foreign branches and subsidiaries of US banks are US 'residents' in the sense that their assets can be treated as a part of US exchange resources. I t is of interest to note that under I M F practice for statistical purposes foreign branches and subsidiaries are treated as residents of the States where they are located. 117 But i t must be pointed out that in Vishipco Line v. Chase Manhattan Bank , N. A. the US Court of Appeal stated that unless a deposit contract expressly provides that the monies are payable only in the State where payment is received, the US head office "accepted the risk that i t would be liable elsewhere [including in the US, as was the case here] for obligations incurred by its branch", because "US banks by operating abroad through branches rather than through subsidiaries, reassure foreign depositors that their deposits w i l l be safer w i t h them than they would be through locally incorporated banks". 1 1 8 While the arguments adduced in the us Ronald I. McKinnon , The Eurocurrency Market, Princeton 1977, 13. See also Gold (note 62), 400 n. 72. 114 N o t e 62, 299—300. us Iranian Assets Litigation Reporter, 6th June 1980, 968—975. I f this were accepted by the U . K . courts, it would have fallen within the ruling of the De Beéche case (note 78) where Viscount Sankey stated that "the law of [the U K ] w i l l not compel the fulfilment of an obligation whose performance involves the doing in a foreign country of something which the supervenient law of that country has rendered it illegal to do" (156). ne Gianviti (note 62), 284—285. However, see Edwards (note 62), 893, who argues forcefully that if 'effect on the exchange resources' is the crucial test, e i t is not merely changes in the size of exchange resources and liabilities but also changes in their composition that must be considered*. For an analysis to substantiate this contention see pp. 893—894. For a critique of Edwards' definition of "involved" see Gold (note 62), 403—408. 117 While this is a convenient custom for the purpose of collecting balance of payments statistics some doubt has been expressed as to whether it should be developed into a legal rule, see: Edwards , op. cit., 894. ne 660 F. 2d. 854, 863 (2d Cir., 1981). The courts added, e [ a ] bank which accepts deposits at a foreign branch becomes a debtor, not a bailee, with respect to its depositors" :

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Iranian assets cases may have had an influence upon this verdict, i f this development gains wide acceptance, i t may make i t somewhat less difficult (although by no means certain) to justify a construction that deposit contracts made w i t h foreign branches of US banks involve the exchange resources of the United States. 119 Diverse views have been expressed about the meaning of the term currency i n this provision. Nussbaum! s suggestion that a State's exchange control regulations w i l l fall w i t h i n this provision only i f that State's own currency is involved, appears to have been favoured recently by the Appellate Division of the N e w Y o r k Supreme Court i n Weston Banking Corporation v. Turkiye Garanti Bankasi . The court lay emphasis on the fact that the contract (a promissory note) was expressed i n Swiss francs and not in Turkish lira and held, " [ t ] h e Bretton Woods Agreement is inapplicable since repayment of the note does not involve the use of Turkish currency contrary t o Turkish control regulations". 1 2 0 Lachmann, who prefers a wider construction, lays emphasis on the fact that the provision refers to the involvement of the currency of any member . I t is interesting to note that not even this otherwise more liberal interpretation w i l l offer much comfort to a member placed in a position similar t o what Turkey faced: i f a contract calls for the payment of a sum of Swiss francs, as Switzerland is not a member of the I M F , no member currency is " i n v o l v e d " . 1 2 1 Mann, w h o prefers the adoption of an even wider interemphasis added, p. 864. Compare this with Manas Y Pineiro v. Chase Manhatten Bank 434 N Y S 2d 868—872 (N.Y.S.C., 1980). il» See also "Revised Basle Concordat on Bank Oversight Clarifies the Division of Supervisory Roles", in: I M F Survey vol. 12 N o . 13 (11 July 1983), 201—204, which contains a summary of the report of the Committee on Banking Regulations and Supervising Practices (the "Basle Committee") setting out proposals for the division of responsibilities between parent and host "authorities" respecting foreign "establishments" of banks, where branches are distinguished from subsidiaries and treated differently. While the report is not legally binding even on the twelve industrialized States that comprised the Basle Committee, it contains "recommended guidelines of best practices in this area, which all members have undertaken to work towards implementing according to the means available to them" (202). While the responsibilities of host and parent authorities are said to be both "complementary and overlapping" (203) there is little doubt that the full implementation of the report w i l l considerably extend the authority of the parent's State. I t is quite evident that these proposed modifications to international banking law are due in part to a belief that the activities of foreign branches of domestic banks involve the resources of the parent's State. However, it is likely that those that may be broadly described as 'host States' will object to any attempt at extending the authority of others that may be described as 'parent States' in this manner. 120 Note 5, 69. However, on appeal, the N e w Y o r k Court of Appeals preferred to base its judgement on less contentious grounds: see text at note 134. Nussbaum 3s views are found in Nussbaum, Exchange Controls and the International Monetary Fund (note 6), 427—428. 121

Lachman (note 6), 159. However, it can be argued that where the Swiss franc is the money of account, such contracts could affect a member's exchange resources and its balance of payments thereby "involving" its currency.

Recognition of Foreign Exchange Control Regulations

16 7

pretation, suggests that the term "currency" should be construed in the broad economic sense rather than in a strict legalistic sense, so as to include gold, securities, movables and even land. 1 2 2 For reasons similar to those favouring a broad interpretation of the term "exchange contracts", i t would be preferable to construe the phrase "involve the currency" also in a broad economic sense. Failure t o do so could render the desirable consequences of a wide interpretation of "exchange contracts" nugatory. 1 2 3 3.

"Of Any Member " and "Of That Member "

The Fund Agreement provides that a State becomes a member of the I M F 1 2 4 from the date of deposit of its instrument of acceptance of obligations pertaining to I M F membership. 125 Voluntary withdrawal from membership takes effect on the date written notice of withdrawal is received at the IMF's principal office. 126 While it does not explicitly cover a member required to withdraw by Board decision, 127 i t is reasonable to assume that the relevant date would be that of the Board decision unless some other date is specifically provided i n such decision. The phrases of any member and of that member mean that the State whose exchange controls are the subject of the dispute must be an I M F member at the date enforcement is sought. Thus in Stephen v. Zivnostenska Banka National Corporation although Czechoslovakia was an I M F member at the time of conclusion of the exchange contract, the court, noting that Czechoslovakia had subsequently left the I M F , stated: N o valid reason currently exists to frustrate our public policy . . . and thereby allow Czechoslovakia t o take advantage o f the privileges of Fund membership when it is no longer a member. 128 O n the other hand, i f on the date of enforcement the State whose exchange control regulations are involved is an I M F member, the provision applies even 122 The Legal Aspects of Money 3rd ed. (note 6), 443. A broad interpretation was favoured by the Paris C.A. in Moojen v. Von Reichert (note 89). 123 Meyer (note 6), 889, who favours a wide interpretation of "exchange contracts", reaches the conclusion that the words "involve the currency" are superfluous. H e suggests that the meaning of this sentence would be better expressed thus: "Contracts involving exchange which are contrary to the exchange control regulations of any member . . .".

i 2 * For a study on whether States or governments are members of the I M F and the likely significance of the membership composition see Obeyesekere (note 29). 125 A r t . X X X I , Sec. 2 (b). 126 A r t . X X V I , Sec. 1. 127 Art. X X V I , Sec. 2 (b). 128 N o t e 4, 326.

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though the State was not a member at the time the exchange contract was concluded or even when proceedings were instituted. 1 2 9 Some writers have expressed the view that Article V I I I , Section 2 (b) has brought about a change which not only affects the recognition of exchange control regulations of member States but also of non-member States. 130 There has, so far, been very little support for such a proposition in case l a w . 1 3 1 Courts seem to have treated the recognition of exchange control regulations as one of the privileges of I M F membership. Therefore, they have shown a distinct reluctance t o accord recognition to exchange control regulations of non-members, including ex-members. 132 A more questionable result was readied in Basse v. Janda where the Court of Appeal of Aix-en-Provence arrived at the incorrect finding of fact that while Czechoslovakia had participated at the Bretton Woods Conference, i t had not subsequently joined the I M F . O n appeal, the 129 Mann (note 6), 444. 130 a i t i s a l s o the manifest intention of the Fund to make this position universal, and in unmistakeable terms have extended its application even to non-members": Campos (note 6), 587. See also Meznerics (note 6), 73, who takes the position that the recognition of foreign exchange control regulations cannot now be said to be contrary to public policy so long as the law of which they form a part is the governing law under private international law. O n the other hand, ScÄmizer is of the view that A r t . V I I I , Sec. 2 (b) must be incorporated into the municipal law of a State if that State's exchange control regulations are to be treated as consistent w i t h the Fund Agreement: Schnitzer (note 6), 807. This is probably because 'consistency* w i t h the Fund Agreement implies a reciprocity rule: Nussbaum (note 6), 429. The effect of such a position upon non-members is self-explanatory. 131 See White v. Roberts (note 5), 282 where the Hong Kong Supreme Court felt bound under A r t . V I I I , Sec. 2 (b) to accord recognition to the exchange controls of the People's Republic of China at a time when that State was not an I M F member. However, the legal position of the People's Republic before it recently became an I M F member was sui generis. The United States in 1950 adopted exchange restrictions concerning the making of payments and transfers by its nationals to nationals in that part of China controlled by the People's Republic, in contrast to the US-recognized Republic of China (Taiwan). Cuba, who was then a member, adopted similar restrictions in 1951. The I M F treated these actions as applying restrictions on transactions with one of its members, since Taiwan was an I M F member and claimed de jure auhority over all of China. After detailed consideration these restrictions were approved by the I M F retroactively, see Margaret G. de Vries / J. Keith Horsefieldy The International Monetary Fund: 1945—1965, Washington 1969, hereinafter History: 1945—65, vol. 2, 259. This results in an anomalous situation on the basis of which it is possible to speculate that the H o n g Kong court was obliged to recognize the exchange controls of the People's Republic. See also French v. Banco Nacional de Cuba, 295 N Y S 2 d 433, ( N . Y . C . A . , 1968), where in his dissenting opinion Judge Keating observed that while the Cuban exchange controls under consideration were inconsistent with the Fund Agreement, the exchange control regulations of a non-member or a former member may be valid under international law if they were not inconsistent w i t h the Fund Agreement (443). 132 f o r the U S A , see Stephen v. Zivnostenska Banka (note 4), 326; Pan American Life Insurance Co. v. Blanco (note 5); and Pan American Life Ins. Co. v. Lorido 154 So 2 d 200 (Fla. C.A., 1963). See also Irving Trust Co. v. Mamidakis (note 8), where the court stated that in the absence of treaty provisions to the contrary, U S courts have not enforced foreign exchange controls of other nations "because those controls are contrary to our professed faith in the free enterprise system".

Recognition of Foreign Exchange Control Regulations

Court of Cassation felt unable to interfere w i t h this finding of fact and, as a result, the finding of law that the effects of the exchange control regulations of Czechoslovakia could not be recognized in France was declared to be correct. 183 4. Which are Contrary The recent N e w Y o r k Court of Appeal judgement in the Weston Banking Corporation case offers a clear illustration of the importance of proving that the fulfilment of an exchange contract w i l l be contrary to a member's exchange control regulations. The defendant, Turkiye Garanti Bankasi , contended that Turkish law forbids payment of a promissory note designating t h a t payment shall be made in Swiss francs at a N e w Y o r k office of an American bank. The court, having examined the copies of the pertinent Turkish laws, gave judgement to the plaintiff since "the record is devoid of any indication that the regulations on which defendent relies are applicable to this note". 1 3 4 I t is important to determine at what point of time an exchange contract has to be contrary to the exchange control regulations of a member State for such a contract to be unenforceable. While Mann is of the view that the date of the contract should be the relevant time, Gold and some others appear to support the time of performance thesis. 135 The practical implications of this dispute have been recently highlighted in the litigation pertaining to the Iranian Assets Control Regulations. The deposit contracts, at the time they were made, were not contrary t o any US exchange restrictions. However, by the time performance was sought, the contracts were clearly contrary to them. Therefore, which of the t w o views may be favoured by the courts was bound to play a crucial part. The wide acceptance of Gold's view was probably why counsel for Bank Markazi acknowledged that i f Article V I I I , Section 2 (b) was applicable to the proceedings, 136 the relevant date should be the time of performance. 137 *33 R.C.D.I.P. vol. 58 (1968), 661. Perhaps obligations under the Fund Agreement ought to override procedural limitations imposed by national legal systems. For a U K judgement supporting such a belief see text at notes 219 to 223. 134 Note 5, 689. 135 Gold, The Fund Agreement in the Courts (1962) (note 6), 62—66; Delaume (note 6), 353—357; and Lachman (note 6), 160—161. For the consistency of this statement with the Bretton Woods Proceedings see Gold, op. cit., 63—64. However, he seems to favour the 'time of suit* in The Fund Agreement in the Courts (1976) (note 6), 85, but returns to his original position (i. e. 'time of performance') in The Fund Agreement in the Courts: Part X I V (note 6), 588. For Mann* s view, see Mann, 3rd ed. (note 6), 445; and 4th ed. (note 6), 377—379. 136 Their objections to the applicability of Art. V I I I , Sec. 2 (b) were centred around the view that the deposit contracts concerned were not 'exchange contracts' (see text at notes 94 to 96) and that they did not 'involve' the U S currency (see text at notes 108 to 110). 137 See generally: Iranian Assets Litigation Reporter, 6th June 1980, 968—975. (Paris proceedings).

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. Obeyesekere

I t is desirable that the interests of a member State be determined based on current circumstances. Past circumstances, including those that existed at the date of the contract or at the time of suit, may have changed i n a number of ways. A party to a contract may change his residence so that exchange control regulations that were applicable at the time of contract cease to apply to him any longer. 1 8 8 Likewise, the I M F may approve or cease t o approve the relevant control. Also, exchange control regulations that existed at the time of contract may have been modified or abrogated, or new controls may have been subsequently imposed. 139 I f at the date of its conclusion the contract was contrary to the exchange control regulations, their repeal w o u l d not render what was unlawful, lawful. But this does not affect the enforceability or unenforceability of the contract, which is what Article V I I I , Section 2 (b) is concerned w i t h . I f modifications subsequently made or consent subsequently granted eliminates the original inconsistency w i t h the exchange control regulations, the contract may be in conformity w i t h the existing regulations so as to render it enforceable. Should a court assist in enforcing a contract which at the time of its conclusion was lawful but later contravenes newly imposed exchange control regulations that are in force at the time performance is sought? M a n y writers are of the view that a court should not assist in enforcing a contract under these circumstances. 140 However inequitable a view favouring unenforceability may seem t o be, such a result is inevitable i f the primary concern of the provision is the protection of the exchange resources of member States. 141 138 See Pan American Life Insurance Co. v. Blanco (note 5), where it was held that Cuban exchange control regulations could not affect the litigants who were not only outside Cuban territory but were also refugees. See also Fed. Rep. of Germany Federal S.C. judgement of 8th March 1979 in: Gold , The Fund Agreement in the Courts: Part X V (note 6), 612, 617; Austrian Oberste Gerichtshof judgement of 30th April 1953, Clunet vol. 84 (1957), 1014 et seq. ; Pan American Life Insurance Co. v. Raij (note 105); and Theye y Ajuria v. Pan American Life Ins. Co. (note 54), 74 where weight was attached to the severance of the litigants economic ties with the State whose exchange controls were involved. 139 See in general, Brill v. Chase Manhattan Bank 220 N Y S 2 d 903 ( N . Y . S . C . App. D i v . , 1961). Here the plaintiff lawfully bought a dollar cheque in Cuba by surrendering pesos, thereby concluding an enforceable exchange contract. H e smuggled it out of Cuba, thus acting contrary to Cuban laws, and sued upon it in N e w Y o r k after the Cuban authorities vested the assets and liabilities of the Chase branch in H a v a n a w i t h the National Bank of Cuba. Although the N e w Y o r k Supreme Court awarded summary judgement to Brill, the order was vacated by the Appellate Division on the ground that the transaction was contrary to Cuban exchange control regulations.

1 4 0 C.f. Gold (note 135).

(note 135); and Schnitzer (note 6), 304. For a contrary view see

Mann

141 C. f. the facts in the De Beéche case (note 78). What is less clear is whether the same degree of assistance must be accorded by the courts of member States if the exchange controls are imposed solely for 'security-strategic' purposes in accordance with Decision N o . 144 (52/51). See generally text at notes 60 to 75.

Recognition of Foreign Exange Control Regulations

5. Exchange Control

Regulations

Exchange control regulations were described by the United States International Claims Commission in The Tabar Claim (No. 3) in the following manner: Exchange controls usually follow a general pattern whereby residents, nationals as well as non-nationals, must surrender their foreign exchange, gold and foreign securities; foreign currency must not be exported, and domestic currency must not be exported or imported; non-resident creditors cannot have the sum owed transferred, irrespective of the currency involved, and rates for foreign exchange and gold are fixed by Government decree. 142 Broadly speaking, the term means control over the foreign exchange earnings and disbursements of a State. The nature and extent of this control varies from State to State depending upon the balance of payments position and diverse other factors. When confronted w i t h an argument based upon Article V I I I , Section 2 (b) the courts are obliged to enquire whether the law under consideration is in fact an exchange control regulation. 143 However, it does not follow that all monetary laws passed w i t h the genuine intention of protecting a State's economy are exchange control regulations. Therefore, in de Sayve v. de la Valdene 144 a N e w Y o r k court held that the French statutes involved were monetary laws defining the French currency and could not be characterized as exchange control regulations. As a result, Article V I I I , Section 2 (b) was declared to be inapplicable so that the court could rely on public policy to refuse recognition of the French monetary statutes. 145 Similarly, all foreign exchange regulations need not be exchange control regulations. I n Loeffler-Behrens v. Beermann 146 some doubt arose about the character of the relevant Brazilian decrees. The Oberlandesgericbt (Court of Appeals) of Karlsruhe, Federal Republic of Germany, which had approached the I M F for a clarification as to whether the Brazilian statutes fell w i t h i n the scope of Article V I I I , Section 2 (b), held: . . . [ T ] h e Brazilian foreign exchange regulations relevant t o the case 142 I L R vol. 20 (1953), 242. 143 See text at notes 65 to 75. ι « Note 5, 153—154. 1 4 5 I n this respect see G. R. Delaume , Gold and Multiple Currency Clauses in Public and Private International Law, Washington D . C. 1954, 64, where he suggests that "laws introduced cours force and exchange control regulations are different in character, although both are intended to protect the . . . economy". 146 I P Rspr., 1964 and 1965, N o . 194 (Karlsruher Oberlandesgeridit decision of 15th Dec. 1965). For a useful account of the case see Gold , The Fund Agreement in the Courts (1976) (note 6), 118.

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172

before the court are not opposed to a judgement ordering the defendant to pay US dollars or Deutsche marks, because they are not 'exchange control regulations' w i t h i n the meaning of Article V I I I , 2 (b). . . . This is to be inferred from the information provided by the Deutsche Bundesbank and by the Legal Department of the International Monetary Fund. 1 4 7 Exchange control regulations must also be distinguished from exchange restrictions . This distinction between the t w o concepts has been succinctly put by Professor Fawcett: A l l exchange restrictions are a form of exchange control, but not all exchange control is restrictive of international payments. 148 Hence exchange restrictions, like exchange surrender requirements, are a genus of the species exchange control regulations. I t is a concept narrower than exchange control regulations, because there are controls which merely require the observance of certain procedures before payments are made, and do not necessarily hinder payments. The I M F , in its operations, lays emphasis on the distinction between exchange control regulations and exchange restrictions, and attempts to prohibit only the latter. According to the Executive Board Decision of 1st June 1960: The guiding principle in ascertaining whether a measure is a restriction on payments and transfers for current transactions under Article V I I I , Section 2, is whether i t involves a direct governmental limitation on the availability or use o f exchange as such. 149 Thus, an exchange control regulation w i l l be a restriction on payments " i f certain payments are prohibited, limited, or unduly delayed". 1 5 0 The I M F is, therefore, more likely t o be concerned w i t h those aspects of an exchange control system which constitute 'a real interference' rather than 'a mere nuisance' to the making of financial settlements for current international transactions. 151 I t has been pointed out, respecting exchange surrender requirements, that "since the prohibition of Article V I I I , Section 2 (a) extends only to the making of payment, a member is not prevented from regulating the receipt of payments" 1 5 2 . I t therefore retains the important power to require its exporters 147

Ibid. Emphasis supplied.

i « Note 88, 42. 149

Emphasis supplied; Decision N o . 1034-/60/27, Selected Decisions (note 23), 209—210. « ο Gold , The Fund Agreement in the Courts (1976) (note 6), 4—5. 151 f o r the distinction between "current international transactions" and "capital transfers", see / . G. Evans (note 24). 152 This is despite the fact that it is the term "restrictions" and not "controls" which appears in the headings of both Articles V I I I , Sec. 2 and X I V , Sec. 2.

Recognition of Foreign Exchange Control Regulations

to accept payment in only specified currencies. 153 However, i t is conceivable that the specification of currencies in which payment can be received may sometimes amount to a "discriminatory currency arrangement" contrary to Article V I I I , Section 3. I t is significant that the obligations of Article V I I I , Section 2 (b) are wider, as the term used therein is "exchange control regulations". 1 5 4 Therefore, i t is possible to recognize exchange control regulations imposed in order to bring pressure to bear on the balance of payments of a State as a sanction under a resolution of the United Nations. 1 5 5 While such a procedure would ensure the existence of a broad consensus of the family of nations, i t is doubtful whether the need for a general consensus is a mandatory requirement. For example, the I M F recently 'approved' the Iranian Assets Control Regulations of the United States even after the US had officially declared they were being used as an economic sanction. 156 Although the US exchange controls were based primarily on strategic considerations rather than ' w i t h the genuine intention of protecting its economy' 157 the English courts would have had to consider recognizing them had the Iranian assets cases come up for judicial determination. 1 5 8 H a d the English courts felt obliged t o accord recognition t o the US legislation, bearing in mind that even monetary laws designed essentially (often exclusively) to protect a member State's economy need to be recognized i f they are not exchange control regulations, 159 while exchange control regulations imposed primarily for strategic (as opposed to economic) considerations have to be recognized, it may have somehow seemed that a fair balance had not been struck in the interpretation of this phrase, 160 especially when viewed in the light of the economic objectives of the Fund Agreement. 161 153 Emphasis supplied: Shuster (note 6), 144. The relevant part of Art. V I I I , Sec. 2 ( a ) is reproduced in note 166. 154 A. Jayagovind , The International Legal Regime of Currency Convertibility, in: Indian J.I.L. vol. 13 (1973), 550—575 (553). 155 Gold , The Fund Agreement in the Courts: Part X I V (note 6), 609. For example, exchange restrictions respecting current international transactions involving Rhodesia (as it then was) which was treated by the I M F as a territory of the UnitJed Kingdom, imposed pursuant to several U N Security Council resolutions, were approved under Executive Board Decision N o . 144 (52/51). 156 Edwards (note 62), 872. 157 Per Upjohn / . , quoted in text at note 65. A congressional staff report has questioned the economic justification for the 'freeze': see Staff of House Committee on Banking, Finance and Urban Affairs, 97th Congress, 1st Session, I r a n : The Financial Aspects of the Hostage Settlement Agreement (Comm. Print 1981), 3—5, 12—14 and 43, quoted in Edwards , note 62, 871 note 8. 158 For some objections on jurisdictional grounds that could have been raised by Bank Markazi although some were not, see text at notes 61 to 75. 15® See text at note 144. leo This had made one writer suggest that if a law is to be classified as an 'exdiange control regulation* for Art. V I I I , Sec. 2 (b) purposes, it should be one which has been

7

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6. Maintained

or Imposed

I t has been suggested that the term maintained refers to exchange control regulations which were in force when the Fund Agreement took effect on 27th December 1945. 1 6 2 I t would perhaps be more accurate to suggest that the term should be taken to refer to the privilege a member has t o continue to apply those restrictions on payments and transfers for current international transactions it had been applying at the time i t joined the I M F , without the necessity of approval by the I M F , i f the member decided t o avail itself of the transitional arrangements of Article X I V . For this reason, "maintained" precedes "imposed" in the text of the original Bretton Woods Agreement and after the First Amendment, whereas logically, "imposed" should precede "maintained". 1 6 3 Article V I I I , Section 2 (b) gives retroactive application to these exchange control regulations. 164 A n exchange contract could also become contrary to exchange control regulations after its making either as a result of the introduction of regulations or the modification of regulations in force at the time a member joins the I M F or the modification o f regulations introduced subsequently. The introduction of regulations is clearly covered by the word imposed. I t has been suggested that the modification of regulations must also be covered by this w o r d since, from the practical viewpoint, there is no difference between the introduction and alteration of regulations. 165 This view can be supported by reference t o the transitional arrangements contained in Article X I V , Section 2 which uses both "maintain" and "adopt". I t is worth noting that while both "maintained" and "imposed" appear i n Article X I V , Section 2 of both the original Fund Agreement and after the First Amendment, the term "imposed" has been deleted from this provision during the Second Amendment which came into force on 1st A p r i l 1978. Similarly, imposed exclusively for economic considerations: see note 73. For the present writer's views see text at note 73. lei Indeed, as the law presently stands, there may be benefits to be derived by attempting to construct an exchange restriction as being one for 'military and security' needs rather than for 'economic and financial' needs: see text at notes 169 to 171. See however text at notes 61 to 75. i® 2 Mann 3rd ed. (note 6), 446; Nussbaum (note 44), 543; Williams (note 6), 356. i®3 See in general Gold , The Fund Agreement in the Courts: Part X I I (note 6), 209. For a suggestion that 'maintained' may have been intended to include the manner in which the regulation is administered, see the Terruzzi case (note 5), 696. i® 4 Mann, op. cit., 446; and Williams , op. cit., 356. ι® 5 Gold, The Fund Agreement in the Courts (note 6), 66. See also / . S. Williams, Foreign Exchange Control Regulations in the N e w Y o r k Court of Appeals: J. Zeevi and Sons Ltd. v. GHndlays Bank ( Uganda ) Ltd., in: Cornell International L a w Journal (Cornell I.L.J.) vol. 9 (1976), 239 et seq, 246—247 where he suggests that the term covers both 'applied' and 'adopted'.

Recognition of Foreign Exchange Control Regulations

after the Second Amendment, a member which avails itself of the transitional arrangements may only maintain and adopt restrictions on current international transactions "that were in effect on the date on which it became a member". This is a considerable restriction on the freedom of members, particularly those "whose territories had been occupied by the enemy". Prior t o the Second Amendment they could also "introduce where necessary restrictions on payments and transfers for current international transactions". I n addition, the restrictions so introduced could not only be maintained but also be adopted by them. Whether the amendment has retroactive effect is doubtful. I f i t has, i t means that these members can no longer maintain, let alone adopt, restrictions on current international transactions that were not in effect when they became members. I n any case i t is possible that in future, they too, like all other members, w i l l be subjected to the disciplines of Article V I I I , Section 2(a) respecting the introduction o f exchange restrictions affecting current international transactions. After these amendments the term "imposed" i n Article X I V , Section 2 was in a sense redundant. This is probably w h y it has been deleted from the provision. Therefore, i t is surprising that provisions like Article V I I I , Section 2 (a) continue to give Article X I V , Section 2 as one of the exceptions to the requirements contained therein for the imposition of exchange restrictions on current international transactions. 166 What this means 166 According to Art. V I I I , Sec. 2 ( a ) , e [s]ubject to the provisions of Article V I I , Section 3 (b) and Article X I V , Section 2, no member shall, without the approval of the Fund, impose restrictions on the making of payments and transfers for current international transactions" (emphasis supplied). A r t . V I I I , Sec. 3 states that e [ n ] o member shall engage in . . . any discriminatory currency arrangements or multiple currency practices . . . I f such arrangements and practices are engaged in . . . the member concerned shall consult with the Fund as to their progressive removal unless they are maintained or imposed under Article X I V , Section 2 . . (emphasis supplied). Art. V I I I , Sec. 4 deals with obligations of convertibility of foreign held balances and sub-section (b) (ii) of it also suggests that exchange controls may be imposed under A r t . X I V , Sec. 2 which favoured those members who were affected by the hostilities during the Second World War, most of whom have already moved from the transitional phase on to accepting the obligations of A r t . V I I I , Sections 2, 3, and 4: see Art. X I V , Sec. 1. Therefore, what has been amended is of little practical value to them. But, in practice, it was the economically less developed States that had recourse to it. Despite this, there may have been other considerations that motivated the change, such as a move towards a greater uniformity of obligations: see generally Gold (note 248). O n the other hand, it may have been due to pressure from members like the U S who campaign for the reduction of the grounds for the imposition of exchange restrictions, especially those based on 'economic-financial' considerations: see generally Edwards (note 62), 890—891. W h a t is, however, rather more confusing is that A r t . X I V , Sec. 2 continues to be given as an exception in Art. V I I I , Sections 2 (a), 3, and 4 whereby exchange controls can be imposed under it even though the term "imposed" has been removed from Art. X I V , Sec. 2 during the Second Amendment. Therefore, whether Art. X I V , Sec. 2 members can continue to lawfully impose exchange controls without I M F approval (Art. V I I I , Sec. 2 (a) ) is less certain than it was prior to the Second Amendment. I t is interesting to note that Sir Joseph Gold has recently made a statement suggesting that under the Second Amendment "these same transitional arrangements continue to be available, but they are

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today for Article V I I I , Section 2 (b) purposes, is by no means certain. According to a recent statement of Sir Joseph Gold , [t]he Fund . . . has not interpreted what is meant by legislative jurisdiction for the purpose of Article V I I I , Section 2 (b). N o r does i t examine the existence of legislative jurisdiction when approving exchange restrictions that require approval in order to be consistent w i t h the Articles. The effect is that i f the existence of legislative jurisdiction is challenged in a legal proceeding, it w i l l be the function of the court t o decide the question of legislative jurisdiction as a question of interpretation of the Articles and to apply the interpretation t o the exchange control regulations that are in issue. 167 The full impact of the recent amendments to Article X I V , Section 2, including their effects, i f any, on Article V I I I , Section 2 (b) obligations has still t o be determined by the courts of member States. The procedure favoured by the I M F is an interesting development in that it allows a member State greater flexibility to impose exchange restrictions requiring I M F approval, without engaging in a microscopic analysis of the legislative jurisdiction i t has to impose them under the Fund Agreement. Nevertheless, the I M F retains the right to approve exchange restrictions requiring approval. This policy presumably enables the I M F to adopt a more flexible approach and consider the exchange restrictions in question in the light of economic realities, rather than be constantly restricted by legal technicalities, in ascertaining whether or not to approve them. I t is hoped that courts would likewise approach the question of legislative jurisdiction not as though they were 'abstract questions of interpretation' 1 6 8 but in the light of economic realities. I f there were to be a marked divergence between the IMF's views, based presumably on economic criteria, and those of the courts of member States, grave injustice could ensue. A n attempt has recently been made to draw a clear distinction between exchange restrictions based on 'economic' and 'financial' considerations and those based on "military and security needs". 169 The broad argument is that no longer tied to a transitional period": Gold , Professor Verwey, the International Monetary Fund, and Developing Countries, in: Indian J.I.L. vol. 21 (1981), 497—512 (508) (emphasis supplied). The statement is unhelpful to the extent that it ignores the removal of the term "imposed" during the Second Amendment and does not tell us why this amendment was effected. 167 The Fund Agreement in the Courts: Vol. I I (note 6), 378. ice See text at note 177. I t would be ludicrous to suggest that Sir Joseph has advocated two different standards of interpretation, a broad one to determine consistency and a narrow one to determine legislative jurisdiction, especially in view of the fact that the two are closely related to one another. lee Edwards (note 62), 873—876.

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177

the I M F should have greater authority concerning restrictions based on 'economic' and 'financial' criteria because of its expertise i n these fields. O n the other hand, members should have greater freedom t o impose and maintain exchange restrictions for 'military' and 'security' reasons since the expertise of the I M F does not extend to strategic considerations. 170 This is said to be i n accord w i t h the "compromise" reached under Decision N o . 144 (52/51) which was achieved after extensive consideration of United States restrictions against the People's Republic of China and N o r t h Korea. 1 7 1 The Executive Board Decision N o . 144 (52/51) of 14th August 1952 which interprets Article V I I I , Section 2 (a) 1 7 2 reads as follows: A r t . V I I I , Sec. 2 (a), i n conformity w i t h its language, applies t o all restrictions on current payments and transfers, irrespective of their motivation and the circumstances i n which they are imposed. Sometimes members impose such restrictions solely for the preservation of national and international security. The Fund does not, however, provide a suitable forum for discussion of the political and military considerations leading to actions of this kind. I n view of the fact that i t is not possible to draw a precise line between cases involving only considerations of this nature and cases involving, in whole or in part, economic motivations and effects for which the Fund does provide the appropriate forum for discussion, and the further fact that the Fund must exercise the jurisdiction conferred by the Fund Agreement i n order to perform its duties and protect the legitimate interests of its members, the following policy decision is taken: 1. A member intending t o impose restrictions on payments and transfers for current transactions that are not authorized by Article V I I , Section 3 (b) or Article X I V , Section 2 of the Fund Agreement and that, i n the judgement of the member, are solely related t o the preservation of national or international security, should, whenever possible, notify the Fund before imposing such restrictions. A n y member may obtain a decision of the Fund prior to the imposition of such restrictions by so indicating i n its notice, and the Fund w i l l act promptly on its request. I f any member intending to impose such restrictions finds that circumstances preclude advance notice to the Fund, i t should notify the Fund as promptly as circumstances permit, but ordinarily not later than 30 days after imposing such restrictions . . . Unless the Fund informs the member w i t h i n 30 days after receiving notice from the member that i t is not satisfied that such 170

Executive Board Decision N o . 144 (52/51). See text at note 172.

History: 1945—65 (note 131), vol. I , 275—276. See also generally note 131. 172 Art. V I I I , Sec. 2 (a) is reproduced at note 166.

1

GYIL 27

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Stanley C. A. Obeyesekere

restrictions are proposed solely to preserve such security, the member may assume that the Fund has no objection to the imposition o f the restrictions. 2. The Fund w i l l review the operation of this decision periodically and reserves the right to modify or revoke, at any time, the decision or the effect of the decision on any restrictions that may have been imposed pursuant to i t . 1 7 3 The outcome of this interpretation would seem t o be that while prior consent is not essential to validate exchange restrictions imposed solely for what may be broadly described as 'security-strategic' purposes, a member imposing them affecting current international transactions would be obliged to notify the I M F as soon as possible. Also, at least in theory, the I M F has the power to declare that any restriction so notified is not intended for the sole purpose of preserving security. I n practice, its powers may be somewhat limited, especially when dealing w i t h its principal shareholders. For example, while 'preserving security' may have been the principal purpose of the US Iranian Assets Control Regulations, it is difficult to accept that this was the sole purpose. However, the position today is likely to be not substantially different respecting the imposition of exchange restrictions for 'economic-financial' purposes. 174 But substantial differences continue t o exist concerning their maintenance. While the I M F has little opportunity to examine the reasonableness of 'security-strategic' restrictions, Article X I V , Section 3 provides i t w i t h ample opportunity to scrutinise from time to time the reasonableness of 'economicfinancial' restrictions. 175 This has made Edwards observe that "unlike approvals of restrictions adopted for economic reasons, which normally carry a time limit and require affirmative I M F action for renewal, approvals of security restrictions do not carry a time l i m i t " . 1 7 6 7. Consistently with this Agreement Sir Joseph Gold has, on previous occasions, suggested that courts should not approach matters concerning consistency "as i f they were abstract questions of interpretation" 1 7 7 and that the only safe way to settle the question of 173

Emphasis added. Selected Decisions (note 23), 203—204. Gold , text at note 167. 175 See Art. X I V , Sec. 3 of the Fund Agreement which bears the title Action of the Fund relating to Restrictions. Art. X X V I , Sec. 2 (a) deals with compulsory withdrawal. However, Sir Joseph Gold has taken much trouble to stress that in practice the I M F has never either made representations or gone on to declare a member ineligible to use its general resources: see: Gold (note 62), 414. Nevertheless it cannot be denied that the liberalisation of the economy including the relaxation of exchange controls is often a part of I M F conditionality for the availability of its resources. See also the text at note 191. 1 7 « Note 62, 874. 177 The Fund Agreement in the Courts: Part X V (note 6), 208. 17 4

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179

consistency is to request a certificate from the I M F confirming same. 178 The I M F has offered to advise whether any given exchange control regulation is maintained or imposed consistently w i t h the Fund Agreement. 179 I n response to this offer the I M F has often been approached for and furnished advice on the consistency of specific regulations w i t h the Fund Agreement. 180 Statements from the I M F have not only been given judicial notice, but considerable weight has been attached to them so that they have influenced the final outcome of several cases.181 There appears to have been some doubt as to whether prior I M F consent is required to make an exchange control regulation consistent w i t h the Fund Agreement. Sir Joseph Gold has, on an earlier instance, expressed the view that exchange control regulations which amount to restrictions on payments or transfers for current international transactions "cannot be introduced consistently" w i t h the Fund Agreement unless they are approved by the I M F , thereby perhaps suggesting that prior approval may be required for even the initial introduction , and not only the later maintenance , of such regulations. 182 While several speak of the need for I M F approval as an essential requisite for consistency w i t h the Fund Agreement, none have suggested that prior I M F approval is a mandatory requirement. 183 I n practice, i t is the Executive Board 1 7 8 The Fund Agreement in the Courts: Part X V I I (note 6), 732. 179 Decision N o . 446—4 of 10 June 1949. For the relevant quotation in full, see text accompanying note 23. 180 See Gold , The Cuban Insurance Cases and the Articles of the Fund (note 6), 38. Similarly, in Datei Motion Picture Co. Ltd. v. Zavidora (Paris C . A . 4th Div. of 14th M a y 1970) (note 5), the company relied on a letter from the General Counsel of the I M F which said that the Japanese exchange control regulations did not contain any provision inconsistent with the Fund Agreement, see: Gold , The Fund Agreement in the Courts: Part X I I (note 6), 195. See also the Glass Fibres case, text at note 199. 181 See Pan American Life Insurance Co. v. Blanco 221 F. Supp. 219, 224—225, ( S . D . Fla., 1963). This decision influenced many others pertaining to the same exchange control regulations. See however Southwestern Shipping Corporation v. National City Bank of New York (note 5), which was decided upon different considerations. I n Loeffler-Behrens v. Beermann (note 146), a court of a member State for the first time approached the I M F with a formal request for a finding as to whether certain monetary laws of another member State (Brazil) fell within the scope of Art. V I I I , Sec. 2 (b). The views expressed in the IMF's reply, according to which the Brazilian law did not fall within the scope of "exchange control regulations", was an important part of the court's ratio decedendi: see text at note 147.

ι82 Gold , The Fund Agreement in the Courts: Part X I I (note 6), 223. See, however, text at note 167. 183 Hug (note 40), 595; Aufriebt, Exchange Restrictions under the Fund Agreement, in: Journal of World Trade L a w (J.W.T.L.) vol. 2 (1968), 297—323 (319). See also Gold, The Cuban Insurance Casés and the Articles of the Fund (note 6), 38, where he goes on to suggest that if a State has adopted A r t . V I I I obligations, its exchange control regulations would only be consistent i f the Fund has approved these under A r t . V I I I , Sec. 2 (a). For States that are bound by the transnational arrangements contained in Art. X I V , Sec. 2, see: Gold, The Fund Agreement in the Courts (1962) (note 6), 82.

12*

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that decides whether or not to approve exchange restrictions, and not the Board of Governors. 184 This is normally done by consensus. However, i f a formal vote is taken a simple majority of the weighed votes cast w o u l d be required. 185 Although the practice is the same for both economic and security restrictions, when the latter type is involved the Board is obliged to notify its objections, i f any, w i t h i n the relatively short space of t h i r t y days. The Iranian Assets Control dispute highlighted the point that the consistency of security restrictions w i t h the Fund Agreement cannot be deliberated w i t h i n such a short period of time. 1 8 6 I n view of the fact that there is no 'middle legal ground between approval and non-approval under Article V I I I , Section 2 (a)' 1 8 7 i t may have been preferable i f there was no time l i m i t at a l l . 1 8 8 Although i t is commonly believed that the consistency of an exchange control regulation w i t h the Fund Agreement depends upon whether i t is maintained for balance of payments purposes or not, the view has been expressed that tt [t]he provision refers to exchange control regulations without any limitation resulting from their purpose". 1 8 0 The motive for exchange control regulations can be as diverse as the desire to accord protection to either an infant industry or a food crop, or to conserve the limited foreign exchange resources available for the purpose of purchasing essential supplies like basic food, clothing and fuel, or to support the ties of a currency area or indeed to destabilise the economy of an unfriendly State on grounds of security. Where economic motives predominate, there is often a combination of them even when one is to protect the balance of payments. However, as we have seen, restrictions imposed for security reasons have to be "solely" for that purpose. I f an exchange restriction affecting current international transactions is imposed for economic reasons, the I M F conducts numerous enquiries for various purposes in the course of its activities, 1 9 0 during which time pressure can be 184 By-Laws Rules and Regulations (note 36), Sec. 15, and Rules H - 4 and H - 5 (pp. 12, 32). 185 For an account of the weighted voting system based on quotas, see: Gold , Weighted Voting Power: Some Limits and Some Problems, in: A J I L vol. 68 (1974), 687—708; Gold , Voting Majorities in the Fund: Effects of the Second Amendment of the Articles, I M F Pamphlet Series, N o . 20 (1977); Jacob S. Drey er / Andrew Schotter, Power Relationships in the International Monetary Fund, the Consequences of Quota Changes, in: Review of Economics and Statistics vol. 62 (1980), 97—106. 186 For the table of events that took place within the space of thirty days, see Gold (note 62), 367—368. 187 Op. cit., 368. 188 This would enable the I M F to consider the issues involved more thoroughly in sensitive disputes between members, rather than leave behind an impression of partiality. I t is to be noted that the Executive Board refused to accede to the request made by the governor of the Central Bank of Iran for an extension of the thirty day period by thirteen more days. 18» Gold, The Fund Agreement in the Courts: Part X V (note 6), 614. 190 See in general Jean van der Mensbrugghe, Consultations W i t h the Fund, in: Fund and Bank Review vol. 2 (1965), 90—96. See also note 175 and accompanying text.

Recognition of Foreign Exchange Control Regulations

exerted on the member concerned to dismantle the restrictions. According to Sir Joseph Gold , [the IMF's] findings are based on both subjective and objective elements. A member may announce its motive, but i t may refrain. I f i t does not declare that its intention in applying exchange control regulations is, or is not, to manage its balance of payments, the Fund w i l l give the declaration the benefit of any reasonable doubt, but the Fund reserves the right to satisfy itself about the member's actual motive by taking account of objective facts. I n this enquiry, the Fund may give weight to the effect of the regulation on the members balance of payments and the exchange rate o f its currency . . . the member's domestic and external conditions or policies that help to explain its choice of regulations, expectation as to the duration of the regulations, and the prevailing practice among members in applying regulations of the kind in issue for balance of payments or for other reasons. 191 But i f the restriction is one which has been imposed for 'security-strategic' purposes, the ability of the I M F to apply pressure on the member w i t h a view 191 The Fund Agreement in the Courts: Part X V (note 6), 615. Some of the "subjective elements" referred to have been the object of much criticism, mainly on the grounds that they are based on conservative and often less than unbiased economic theories that are themselves not necessarily foolproof. See generally John Williamson , Economic Theory and International Monetary Fund Policies, in: Karl Brunner I Allan H. Meitzer (eds.), Monetary Institutions and the Policy Process, being: Carnegie — Rochester Conference on Public Policy vol. 23 (1980), 255—278, (Amsterdam, 1980); Nicholas Kaldor y Devaluation and Adjustment in Developing Countries, in: Finance and Development vol. 20 N o . 2 (June 1983), 35—37 and rejoinder by Bahram Nowzad (p. 37); Cheryl Payer , The Debt Trap: The I M F and the Third World, N e w York 1974; and Amiya K. Bagchi , The Political Economy of Underdevelopment, Cambridge 1982, 137—146. But, considering the enthusiasm of some (quite often governments) to attribute everything unpleasant to "imperialist / capitalist conspiracies", sometimes with a view to divert public attention from their own misdeeds, there is likely to be more protests against I M F policies than otherwise. I t is unfortunate that there is still no comprehensive and systematic critical analysis of I M F policies written from a 'middle-of-theeconomics profession' position that provides a basis for evaluating the criticisms levelled at the I M F . For a recent defence of some significant I M F policies see: Sir Joseph Gold , Political Considerations are Prohibited by Articles of Agreement when the Fund Considers Requests for Use of Resources, in: I M F Survey vol. 12 N o . 10 (23rd M a y 1983), 146—148. However, as to why the I M F in particular (and, to a lesser extent, the World Bank) cannot be treated as an entirely non-political organization see Y . Yakota , Non-Political Character of the World Bank, in: Japanese Annual of International Law vol. 20 (1976), 39—64 (45). See also Lord Kahn , Historical Origins of the International Monetary Fund, in: A. P. Thirlwall (ed.), Keynes and International Monetary Relations, London 1976, 3—35 (24—25). The recent U.S. litigation paving the way for the U.S. to make its vital $ 8.4 bn ( £ 5.7 bn) contribution to the I M F strengthened further the ability of Congress to influence I M F Policy through the U.S. executive director of the I M F , even though the final version of the bill which became law has been considerably diluted and does not require him to vote against I M F loans to either 'communist dictatorships' or 'states practicing apartheid': see: Stewart Fleming, Congress puts I M F under the microscope, in: Financial Times 29 November, 1983, 4.

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to dismantling i t is considerably reduced. 192 I t is possible that the difference in treatment accorded to exchange restrictions based on 'economic-financial' considerations and those on 'security-strategic' considerations is a reflection of the power structure w i t h i n the I M F . 1 9 3 However, bearing in mind that the I M F adopts a policy of examining exchange restrictions that require approval regardless of the legislative jurisdiction of the member imposing them, thereby making i t possible for it to take into account economic considerations rather than be strictly guided by the rule of l a w , 1 9 4 it cannot be said (unless practice suggests otherwise) that the I M F is totally insensitive to the problems faced by its economically less developed members who may often be compelled to impose exchange restrictions for 'economic-financial' considerations. There has been a lack of uniformity in the judgements of courts dealing w i t h the requirements for consistency w i t h the Fund Agreement. While several have taken the position that consistency w i t h the Fund Agreement should be implied, 1 9 5 especially i f the regulation under consideration is " o f a k i n d which is internationally fairly commonplace in the field . . . " , 1 9 β in Emek v. Bossers and Mouthaan the Commercial Tribunal of Courtrai, Belgium held that the

192 See text at notes 174 to 176. 193 i n view of the continuous friction that exists between the U S and her allies concerning the extraterritoriality of U S public laws incorporating economic sanctions (the dispute concerning the supply of equipment for a giant Soviet pipeline is a current example) some may venture to suggest that the attitude of the I M F is a reflection of the influence of its principal shareholder who is not nearly as dependent as most other members on international trade. For writings in U S journals, many of which express concern over unilateral U S economic sanctions, see: Andreas F. Lowenfeld , . . . Sauce for the Gander: The Arab Boycott and U S Political Trade Controls, in: Texas International Law Journal (T.I.L.J.) vol. 12 (1977), 25—39; Ernest B. Johnston , Jr ., Foreign Policy Export Controls, in: Bulletin of the U.S. Department of State vol. 82, N o . 2063 (June 1982), 55—57; Stephen B. Cohen, Conditioning U S Security Assistance on H u m a n Rights, in: A J I L vol. 76 (1982), 246—279; Antonia Cassese, Foreign Economic Assistance and Respect for Civil and Political Rights: Chile — a Case Study, in: T.I.L.J. vol. 14 (1979), 251—263; E.Gordon / C. Lichtenstein, The Decision to Block Iranian Assets Re-examined, in: Int'l Lawyer vol. 16 (1982), 161—186; Steven E. Carlson, Expropriated Property, Foreign Assets, and Sovereign Immunity: Legal Obstacles to United States — China Trade Relations, in Col. J.T.L. vol. 15 (1976), 254—276; and Clive Parry, Defining Economic Coercion in International Law, in: T.I.L.J. vol. 12 (1977), 1—4. However, it must be said that the publication of some of these scholarly writings, although balanced, would have been permitted only within a system that allows free expression. See also Rxdoard Nations, Who's in Charge Here?, Far Eastern Economic Review (F.E.E.R.) 7th A p r i l 1983, 28—29 (re U S controls over exports to China, that have since been largely dispensed with, see: Richard Nations, Raising the Barriers, F.E.E.R. 16th June 1983, 16—18 and Gary K. Bertsch, United States Export Controls: The 1970's and Beyond, in: J.W.T.L. vol. 15 (1981), 67—82). 194 See text at note 167. 195 See the Clearing Dollars case (note 5), 731; the Terruzzi Fibres case (note 5), 504. 196 The Terruzzi

case, op. cit. 696.

case (note 5), 693; and Glass

Recognition of Foreign Exchange Control Regulations

requirement of consistency "can only have legal validity after confirmation by the International Monetary F u n d " . 1 9 7 A question which the courts have, so far, not considered is whether the entire statute which contains the infringed exchange control regulation ought to be consistent w i t h the Fund Agreement so as to conform t o the requirements of Article V I I I , Section 2 (b). The Secretary of the I M F , acting under the authority of the Executive Board, made the following statement respecting the Peruvian legislation that was under consideration: Article One and T w o of Decree L a w N o . 18275 and Article Seven o f Decree Law N o . 18891 d i d not, in themselves, involve any measures that were subject to approval by the Fund under Article V I I I , during the period referred to. These articles o f the Decree laws were consistent w i t h the Fund's Articles and would not be rendered inconsistent by any necessity for the Fund's approval of other provisions of the Decree laws. 1 9 8 This is a clear indication that, according to I M F practice, what is required under Article V I I I , Section 2 (b) is the consistency of the provisions infringed by the exchange contract w i t h the Fund Agreement. I t matters little whether other provisions of the same statute are consistent or not. Finally, there appears to be some doubt as to who should prove 'consistency' or 'inconsistency' w i t h the Fund Agreement. I n the Glass Fibres case the English court rejected the objection of inconsistency w i t h the Fund Agreement by referring to the dictum in the Terruzzi case according to which, in the absence of evidence to the contrary, courts should not assume that a member State administers its exchange control regulations in a manner contrary to the Fund Agreement. 199 This would amount to a presumption favouring the consistency of the exchange control regulations w i t h the Fund Agreement, thereby transferring the burden of proof on to he w h o alleges inconsistency. But he who relies on Article V I I I , Section 2 (b) necessarily asserts that exchange controls are maintained or imposed consistently w i t h the Fund Agreement, and perhaps ought t o bear the burden of proving this fact. Matters pertaining to the proof of foreign law are largely of a procedural nature, and their solutions no doubt differ considerably from State to State. 200 Nevertheless, the courts 107 Note 5, 724. i»8 The statement was made in response to an enquiry from the lawyers of a defendent in the Glass Fibres case, see: Gold, The Fund Agreement in the Courts: Part X V (note 6), 620. ι»» Note 5, 504 (QB). 200 See generally John R. Schmertz, Jr., The Establishment of Foreign and International L a w : A Procedural Overview, in: V a . J. Int'l L. vol. 18 (1977—78), 697—723; Ian A. Hunter, Proving Foreign and International Law in the Courts of England and Wales, in: Va. J. Int'l L. vol. 18 (1977—78), 665—696; and Brigitte Herzog, Proof of International Law and Foreign Law Before a French Judge, in: V a , J. Int'l L. 18 (1977—78), 651—663.

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should take into account that a rather queer situation w o u l d ensue i f an I M F member w i l l , by the Fund Agreement, be made to respect exchange control regulations which are in fact a breach of the same Agreement. 8. Shall be Unenforceable I t has been suggested that the term unenforceable , as i t is used in this context, means "ineffective", "invalid", or " v o i d " i n the forum but not "illegal". 2 0 1 There is also another view, probably first expressed by Andre van Campenhout , which suggests that "unenforceability" here has basically the same meaning as the traditional concept of "unenforceability" in Anglo-American l a w . 2 0 2 Support for the second view can be derived from the Bretton Woods Proceedings which show that the sponsors of this provision were the British and US delegations. But the veracity of this proposition is by no means certain. As Delaume points out: . . . l'article V I I I , section 2 (b) ne saurait être interprété a là lumière des seuls concepts juridiques propres au droit anglo-américain. Tous les principes généralement reconnus en matière d'interprétation des traités diplomatiques s'y opposent. 203 A proposed amendment which would have made disagreeable contracts an 'offence' instead of simply 'unenforceable' was rejected. 204 Unenforceability was the lowest common denominator among legal consequences which at the same time would secure the collaboration among members that was being sought. 205 The aim of the provision was to ensure that the exchange control regulations of one member w i l l be recognized, under the appropriate circumstances, by the judicial and administrative authorities of other members. I n order to make this collaboration effective, i t was not necessary that other members should regard the contracts in question as illegal or invalid. I f other 201 Mann, 3rd ed (note 6), 448. 202 Andre Campenhout , United States: International Monetary Fund Agreement and Foreign Exchange Control Regulations, in: American Journal of Comparative Law ( A . J . Comp. L.) vol. 2 (1953), 389—392 (391). 203 Note 6, 340. Similarly, according to Lachman, a [ a ] l t h o u g h the agreement was drafted in the English language it is the result of careful deliberations by delegations of numerous nationalities. I t is, therefore, not to be assumed that in voting for this provision the representatives at the Bretton Wood Conference intended their national law systems to incorporate a legal concept developed by one particular legal system, which would perhaps be incompatible w i t h or at least unknown to legal systems of different origin": (note 6), 162. See also the Hamburger Landgericht decision in the Clearing Dollars case (note 5). 204 Documents 236 and 307 of Bretton Woods Proceedings (note 101). See also MadsenMygdal (note 6), 68—69, 76; Nussbaum (note 6), 426, 429; and the Banco do Brasil case (note 5), 874—875 {per Burke /.). 205 See in general Mann, International Monetary Co-operation, in: B.Y.I.L. vol. X X I I (1945), 251—258 (254); and Gold , The Fund Agreement in the Courts (1962) (note 6), 62.

Recognition of Foreign Exchange Control Regulations

members were required to do this, they might even be attaching a more severe legal consequence to a breach o f exchange control regulations than the member having those regulations. 206 O n the other hand, i t has been pointed out that the Executive Board Decision N o . 446—4 of 1949 interpreting Article V I I I , Section 2 (b) has unwittingly restricted the scope of the provision still further through its use of language. 207 According to i t " [pjarties entering into exchange contracts . . . w i l l not receive . . . assistance . . . " 2 0 8 The provision, however, reads a [e]xchange contracts . . . shall be . . . unenforceable", thereby making i t clear that unenforceability may be urged in an action not involving the parties to the contract. I f not, the provision could easily be circumvented by an assignment to a third party who would then be free to enforce i t . 2 0 9 Therefore, i t has been suggested that a [ s ] i n c e the phrasing of the interpretation appears inadvertent, it is not to be expected that the courts w i l l limit Article V I I I , Section 2 (b) to actions between parties to the contract". 2 1 0 Since unenforceability is a negative concept it is not obligatory for a member to take any positive action to enforce another's regulations. Therefore, as has been recently demonstrated, i n the absence of further co-operation between foreign and Commonwealth States, whether under the second limb of Article V I I I , Section 2 (b) or otherwise, an English court is not obliged t o extradite an offender to be tried for the breach of Ghanayan exchange control regulations. 2 1 1 Similarly, one member is not obliged to procure payment to another member which the latter's regulations purport to vest, 212 even though the same regulations may render unenforceable the contract under which the funds are 206

However, for some curious consequences of the Australian Banking (Foreign Exchange) Regulations of 1974, see text at note 225. 207 Meyer (note 6), 894—895. 208 Emphasis supplied. See text accompanying note 23. 209 For a case that disallowed an assignment designed to contravene foreign exchange control regulations see South Western Shipping Corporation v. National City Bank of New York (note 5), 522—523. See also In the Matter of Heddy Brecher Wolff (note 5), and Banco Nacional de Cuba v. Chase Manhattan Bank 505 F. Supp. 412 (S.D.N.Y., 1980), affirmed 658 F 2 d 875 (2 d Cir., 1981). For a case that allowed such an assignment see Indonesian Corporation P. T. Escomptobank v. Ν. V. Assurantie Maatschappij de Nederlanden van 1845 40 I.L.R. 7 (Neth. S.C., 1964). See also Empresa Cubana Exportadora, Inc. v. Lamborn & Co. 652 F 2 d 231 (2 d Cir., 1981). 210 Meyer (note 6). 211 Regina v. Governor of Pentonville Prison , Ex Parte Khubchandani , note 9. See however Kahler v. Midland Bank (note 3), 629 (Lord Normand) where exchange restrictions were clearly distinguished from revenue laws and penal laws. See also In re Lord Cable (deceased) [1977] 1 W L R 7, 13, 23—24 (Ch. D . ) . 212 See the facts of Solicitor for the Affairs of His Majesty's Treasury v. Banker's Trust Co. 304 N . Y . 284, 107 N e 2d 448 ( N . Y . C . A . , 1952). The case was dismissed on procedural grounds.

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186

held. Again, the concept of unenforceability necessarily implies that performance is still incomplete and can be enforced. The term "unenforceable" also means that the validity of the contract is unimpaired although i t w i l l not be enforced. This result has made one commentator suggest that " . . . i f a party can enforce a contract by self help, he may do so, and in any aotion against him may set up the defence that the contract authorized the self help action taken". 2 1 3 The distinction between unenforceability on the one hand and concepts like illegality and invalidity on the other is not one of mere academic significance. I t is of fundamental importance because the concept o f unenforceability makes it possible for the courts to base their decisions on the facts as they exist when enforcement of a contract is sought. 214 O n the other hand, invalidity would require the courts t o make their determination on the basis of facts when the contract is entered into. As discussed above, 2 1 5 Article V I I I , Section 2 (b) is concerned not w i t h the facts as they were, but as they are at the time of enforcement of an exchange contract. I t is for this reason that the underlying validity of a contract is of paramount importance. The Bank Markazi litigation offers a recent example of the need for a clear understanding of this distinction, one which was acknowledged by the counsel for the Iranian bank. 2 1 8 The position under Article V I I I , Section 2 (b) is significantly different to that under English common law. According to the common law principle, any contract which was intended or designed to achieve an object that was illegal according to the laws of a foreign and friendly State and / or contrary to English public policy, was invalid and void ab initio? 11 However, as the Court of Appeal recently observed in the Glass Fibres case, " . . . the Bretton Woods Agreement lays down the standard — or requirements — o f comity in the area of exchange control which it covers" and, t o that extent, " . . . Article V I I I , Section 2 (b) displaces the common law principle." 2 1 8 213 Meyer (note 6), 894. 214 I n Sharif v. Azad (note 5), 789—790, the Court of Appeal explicitly ruled 'unenforceable* is not equivalent to 'illegal*. 215 See text at notes 135 to 141.

216 See generally proceedings).

Iranian Assets Litigation Reporter,

that

6th June

1980, 968—975. (Paris

217 Foster v. Driscoll [1929] 1 K B 470 (C.A.). See also Regazzoni 490 (C.A.), affirmed [1958] A C 301 (H.L.).

v. Sethia [1956] 2 QB

218 Note 5, 259 {per Stephenson L.J.). H e then proceeded to dissect the transaction and observed that a [ i ] f the exchange contracts were illegal it would be harder to confine the contamination to a part only of the sales contract and to enforce the other part . . idém , 261. This view was recently approved by the House of Lords in the same case: [Unenforceability]does not have the effect of making an exchange contract that is contrary to the exchange control regulations of a member State other than the United Kingdom into a contract that is "illegal" under English law or render acts undertaken

Recognition of Foreign Exange Control Regulations

Even i f the Anglo-American meaning were to be accorded to the term "unenforceable", it has been suggested that it does not have t o be introduced w i t h all its attendant features, 219 which include the need for a litigant to plead unenforceability so as to enable the court to consider i t . 2 2 0 I n other words, i f he does not rely on the defence, whether intentionally or accidentally, the court w i l l not consider unenforceability. 2 2 1 I t is for this reason that the judgement of the Court of Appeal in Batra v. Ebrahim is of special significance. Here Lord Denning , in declaring that the exchange contract under consideration which was contrary to Indian exchange control regulations was unenforceable in England, noted: I f the transactions were illegal it was the duty of the court t o take the point. A n appellate court should take the point of illegality of its own initiative, i f not taken by the judge at trial . . . 2 2 2 The modification brought about by this judgement to the common law position is commendable. When the Fund Agreement is not invoked by either party the courts should apply it ex officio so that any transaction which falls within the scope of Article V I I I , Section 2 (b) becomes ipso facto unenforceable. The effects of Batra v. Ebrahim have been incorporated in Halsbury's Laws of in this country in performance of such a contract unlawful. Like a contract of guarantee of which there is no note . . . in writing it is unenforceable by the courts and nothing more . . . (Lord Diplock, 1050). For reasons favouring the dissection of foreign exchange transactions see Mann, 3rd ed. (note 6), 442. For a critique of such dissection see Gold , The Fund Agreement in the Courts (note 6), 50. I t is of interest to note that the House of Lords recently showed its willingness to dissect a transaction under the appropriate circumstances (although the term "severability" was expressly omitted): the Glass Fibres case (note 5), 1050 (Lord Diplock). 2ie Gold , op. cit., 77. See also Mann, 3rd ed. (note 6), 448. 220 For example, an older edition of Dicey / Morris , Conflict of Laws, 8th ed., 1967, 900 stated that the contract is valid, although a party can plead that the contract is not binding upon him. See also Madsen-Mygdal (note 6), 75. 221 For some adverse effects which may result if such a position is adopted and for a discussion respecting the proof of foreign law see Delaume (note 6), 357—361. I t is to avoid such a result that Mann argues that the reference to unenforceability in Art. V I I I , Sec. 2 (b), must be interpreted to mean invalidity, see: note 201 and accompanying text. T o overcome sudi an obstacle, at least one court has gone to the extent of ispecifically declaring that the special Anglo-American meaning does not apply to the term, see: the Clearing Dollars case (note 5), 731, where the Hamburger Landgericht declared that . . . since the facts come within Article V I I I , Section 2 (b), the purchase contract concluded between the parties is ineffective. This follows from the term 'unenforceable'. While in Anglo-American law this word has a specific significance and refers to contracts which are valid but with respect to which the debtor may plead that they have no binding force, such an interpretation cannot be placed on the word, 'unenforceable' since more than 40 nations, which do not all come within the sphere of Anglo-American law, have adhered to the Agreement; moreover, it should not be left to the parties themselves to decide whether they wish to invoke exchange control regulations which exist in the public interest. 222 Note 5.

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England. 223 While the exchange contract had been illegal under Indian exchange control regulations, the decision of the court perhaps did not and indeed need not have rested upon this ground. I n other words, the position should have been no different had the Indian statute made the exchange contract merely unenforceable. As was observed in the Glass Fibres case, future considerations of equity may also be better served by a declaration of unenforceability. 2 2 4 The desirability of determining a transaction contrary to the exchange control regulations of a member State as being merely unenforceable is itself sometimes not free from difficulty. For instance, unlike the Indian exchange controls discussed above which declare transactions that contravene them to be illegal, regulation 45 of the Banking ( Foreign Exchange ) Regulations of Australia of 1974 provides thus: N o act or thing done, or contract or other transaction entered into, is invalid or unenforceable by reason only that the provisions of these regulations have not been complied w i t h . 2 2 5 This untypical regulation, which reverses the previous position that contracts were invalid i f the exchange control regulations had been infringed, raises an important question. Should a contract which is enforceable i n Australia, although in breach of its exchange control regulations, be unenforceable in territories of other I M F members? I t appears as though the answer should be in the negative, since i t would seem illogical to expect other members to attach more drastic legal consequences.226 Similarly, it is unlikely that member States like Australia have any legal obligation under the Fund Agreement to legislate whereby contracts contrary to their exchange control regulations shall at least be unenforceable. O n the other hand, contrary to what an authority of international monetary law has suggested,227 for Article V I I I , Section 2 (b) to provide for the international unenforceability of a contract, it does not have to be void under the laws of which the infringed exchange control regulation forms a part: i t has merely to be unenforceable. 223 Halsbury's Laws of England: Annual Abridgement, 1977, London 1978, 453 para 1906. Furthermore, this aspect of Batra was recently quoted with approval by the House of Lords in the Glass Fibres case (note 5), 1050 (Lord Diplock). Such a step is very much in line with the view expressed by Lord Scarman , see: text at note 82. See in general Delaume (note 6), 341; Meznerics (note 6), 70—71; and Schnitzer (note 6), 302. 224

For the relevant quotations see note 218. See also text accompanying notes 214 and 215. 5 Chandler (note 6), 570. 226 However, the matter is not free from all doubt, since the I M F may on its own initiative request a member to impose exchange controls under certain circumstances, see: Art. V I , Sec. 1 (a). For an example of a situation where the I M F may encourage the imposition of exchange controls affecting even current international transactions see Stephen A. Silard , Money and Foreign Exchange, in: International Encyclopaedia of Comparative Law vol. X V I I , The Hague 1975, 50. The absence of any penalty for their infringement could render even these controls ineffective. 22

22

7 Nussbaum (note 6), 429.

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9.

Territories

189

of Any Member

The last phrase of the first sentence of Article V I I I , Section 2 (b) is "shall be unenforceable in the territories of any member". I n discussing the territoriality of the provision it must be borne i n mind that a member accepts the Fund Agreement not only on behalf of itself but also in respect of its dependent territories: By their signature of this Agreement, all governments accept it both on their own behalf and in respect of all their colonies, overseas territories, all territories under their protection, suzerainty, or authority, and all territories in respect of which they exercise a mandate. 228 Therefore, although H o n g Kong is not a member of the I M F , being a dependent territory of the United Kingdom, its Supreme Court had little doubt about its obligations in White v. Roberts which involved the exchange controls of the People's Republic of China, 2 2 9 which, at the time of the decision, was treated by the I M F as a part of the territory of the Republic of China (Taiwan) which was a member State. 230 I t is possible for a constitutional change to take place between the date the contract is entered into and the date performance is sought. This would have been the position in Kharagjtsingh v. Sewarajsingh 281 but for the fact that the contract was executed prior to the litigation. Surinam was a colony of the Netherlands at the time of contract, but had become an independent member of the I M F prior to the institution of legal proceedings in the Netherlands Antilles. 2 3 2 O n the other hand, in the Pinball Machines case,233 the Oberlandesgericht of Hamburg rightly held that the exchange control regulations in force in the Saar territory were foreign laws. 2 3 4 Regions like H a w a i i and the Netherlands Antilles are component parts of member States. They must, therefore, be distinguished from the dependent territories of members. As observed before, under Article X X X I , Section 2 (g) a member also accepts the Fund Agreement "on its own behalf". Moreover, Article V I I I , Section 2 (b) speaks of the "territories" of a member, which in 228 Art. X X X I , Sec. 2 (g). 229 Note 5. 230 See text at note 131. 231 Netherlands S.C. decision of 12th Jan. 1979. See Gold , The Fund Agreement in the Courts: Part X V I I (note 6), 752. 232 As with the requirements for 'consistency' the deciding factor should be the constitutional position prevalent at the time performance is sought. 233 Note 85. 234 Under the agreement of 27th October 1956 between the Fed. Rep. of Germany and France, the economic reintegration of the Saar Territory with the F.R.G. had been postponed. I n the meantime, French exchange controls continued to apply to the Saar Territory.

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itself ought to include regions having a constitutional status similar to the Netherlands Antilles. Finally, Article V I I I , Section 2 (b) relates to the unenforceability of exchange contracts in the territories of other member States. I n other words, the provision does not extend to the territories of the member whose exchange control regulations have been infringed. To include that member's territories under the provision would be superfluous, since almost invariably the legal consequences in the respective member's territory w i l l be more severe than unenforceability. 2 8 5 F.

Conclusion

Set forth above is a descriptive analysis of the background, interpretation, and application of the first sentence of Article V I I I , Section 2 (b) of the Fund Agreement. Through this provision the I M F has attempted t o unify the treatment foreign exchange control regulations receive i n the courts and other tribunals of member States. One important reason for the existence of numerous views respecting each and every phrase of the provision is its present lack of clarity. I t is, therefore, unfortunate that the I M F did not endeavour to clarify its meaning during the Second Amendment to the Fund Agreement which was recently effected. 236 This provision, which affects the rights of private citizens of member States more than any other, should be made clearer by the issuance of an appropriate interpretation from the I M F . This would certainly enhance the effectiveness of the Fund Agreement. 2 3 7 Such would be the outcome, despite the likelihood of courts showing a reluctance to be bound in advance by an I M F interpretation. They are, nevertheless, likely to attach great weight to it. But the present interpretation is not only defective, 238 it is also inexhaustive, 239 so much so that i t has been said that it is "little more than a re-statement of the provisions of the Article in slightly different language". 240 The study of case law suggests that courts everywhere are gradually accepting the transition that has taken place w i t h regard to the recognition , 235

See, however, the Australian regulations in the text at note 225. 36 For text, see I L M vol. 15 (1976), 546 et seq. 287 For some reasons why a more exhaustive interpretation of this sentence has not been attempted see Gold , Interpretation by the Fund (note 37), 44. I t is submitted that further consideration should be given to the question whether it is desirable to clarify some important concepts in the provision through the interpretative process w i t h a view to establishing uniform positions in this field of international economic co-operation. Clarity and uniformity, whenever possible, are likely to contribute to more effective international collaboration and thereby to the orderly development of I L E C . 2

23

® See Meyer (note 38). se Gold , Interpretation by the Fund (note 37), 43. 2 .162 W i t h respect to containment and surveillance t w o structural obstacles must be overcome. First, how is i t possible to contain, i f the flow of material is more or less continuous? Secondly, i f surveillance measures are of any meaningful use then they have to be installed in the cascade area. This however would be nearly as intrusive as having inspectors visiting them. T o overcome these problems, several studies have been undertaken, most of them under the guidance of the I A E A . Notable among them is the "Hexapartite Safeguards Project", which started in 1980 and has studied the possibilities of adequate safeguards for the gas centrifuge enrichment plant. 1 6 3 A t the end of ιβο I A E A Safeguards Glossary (note 80), 25, para. 100, Table I V . O T A (note 19), 209. 162 Krass et al. (note 142), 49; Κ. Taylor , Penetration Monitoring as a Potential Safeguards Measure, in: Nuclear Safeguards Technology (note 16), vol. I., 337—346 (338). i«3 F. Brown , The Hexapartite Safeguards Project: A review by the Chairman, in: Nuclear Safeguards Technology (note 16), vol. I I , 491—504. For other suggestions, see, Krass et al. (note 142), 49, 50.

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1982, the three following observations emerged as possible guidelines for future safeguards of enrichment plants: (1) The principle of material accountancy remains the basic safeguarding strategy; (2) containment and surveillance devices need to be improved. Their basic rôle remains to ensure that all nuclear material pass through the key measurement points; (3) the concept of limited frequency, unannounced inspector access to the cascade halls itself should be adopted, though further examination is needed. This concept w o u l d mean routine access to each cascade hall w i t h an agreed average frequency, and, where access is permitted, w i t h one or t w o hours of notification. I n November 1983, the I A E A Director General was able to announce that this concept had been accepted. 164 This does not, however, change the overall conclusion that, as for now, enrichment plants are not safeguardable to an extent sufficient for the standard set up in I N F C I R C / 1 5 3 , para. 28, as quantified by the I A E A . 1 6 5 The most in-depth analysis of this issue summarizes that both technical and institutional obstacles must be overcome before genuine confidence can exist that enrichment facilities and their product can be monitored w i t h confidence. 166 Recognizing that safeguards procedures for reprocessing plants, enrichment plants, and other facilities that handle very large flows of nuclear material are still at the experimental stage, new ideas and concepts have been developed, one of which is the "near-real time material accountancy". I t is intended to "potentially improve the sensitiveness and the timeliness of material balance information" 1 6 7 . This concept consists basically of two elements: —

The measurement or estimation of in-process physical inventory at frequent intervals;

—

the statistical evaluation of the resulting sequential material balance data.

I t is aimed at making the physical operation more transparent, and thereby to increase the detection probability. While it is still under examination such an approach would seem to require an almost unlimited access by the inspectors H. Blix, addressing the U . N . General Assembly on November 4, 1983, U N Doc. A/38/ P V . 45, p. 18; 1W > Krass etal. (note 142), 48, 50, 52, 53. Internally, the I A E A admits that safeguards approaches for enrichment plants are still not developed enough to attain the Agency's inspection goals. ιββ Op. cit., X V I . 167 Bahm (note 139), 71; Bödege etal. (note 123), 350. For the following, I have drawn on papers submitted to the I A E A Symposium on Safeguards 1982 by / . Lovett et al., K. Ikawa etal., D. Gupta, and A. G. Hamlin published in: Nuclear Safeguards Technology (note 16), vol. I , 487—554.

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to all kinds of information regarding the technical process i n the facilities; 1 ® 8 a fact which has led to questions whether this would still be compatible w i t h overall I A E A objectives. 169 T o sum up, it is apt to say that neither existing safeguards practice nor approaches under consideration are yet developed enough to fulfil the I A E A detection goals i n bulk handling facilities; i. e. in those facilities where the concern for proliferation is at its highest level. I n other words, the easier the diversion to a given type of nuclear facility the less safeguardable i t seems to be. The I A E A maintains that where it is unable to live up to its o w n goals this is mostly due to its limited resources. 170 While shortages in manpower and financial resources are certainly one of the important impediments in the implementation of safeguards, this must, however, not be confused w i t h the realization that existing concepts and safeguards approaches are not able to detect the diversion of a few kilograms of plutonium or H E U w i t h i n the timeframe of 7 days to 1 to 3 months respectively in existing or planned reprocessing and enrichment plants, regardless of how great the Agency's resources are. I n addition, even if inspections at reprocessing plants were without any technical problems and continuous, the question must be asked, what happens after the reprocessing process is completed, after the plutonium is separated? This is the critical moment, for now the material is weapon usable. N o t surprisingly, many doubt that i t is at all possible to safeguard plutonium and highly enriched uranium, regardless of how safeguards are designed and implemented. 171 Speaking for others, N R C Commissioner Gilinsky warns that these materials can be fabricated into bombs so rapidly that we cannot count on any inspection system discovering a diversion i n time to permit action to be taken by other states to prevent the bombmaking. I n short, these materials cannot be protected by I A E A safeguards. 172 Kausdo concludes that because safeguards for sensitive facilities are always unsatisfactory, they are eventually a political rather than a technical problem. ιββ D. Gupta , International Workshop on the near-real-time-accountancy measure, Nuclear Safeguards Technology (note 16), vol. I , 513—540 (535). ιββ V. Osten (note 68), 114.

in:

170 See, for instance, Blix (note 5); Griimm (note 16), 10: Experience shows a clear correlation between manpower available and goals attained." For similar views, see, Agu / Iwamoto (note 139), 16. 17 1 Hans Gerd Kausch , D i e internationale friedliche Nutzung der Kernenergie i m System des Niditverbreitungsvertrages, in: Jost Delbrück (ed.), Völkerrecht und Kriegsverhütung, Berlin 1979, 259—274 (262, 263); A. Wohlstetter, Möglichkeiten zur Verlangsamung und Begrenzung der Ausbreitung von Nuklearwaffen, in: E A vol. 32 (1977), 234—248. Gilinsky, in: Hearing (note 2), 101.

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Consequently, effective political sanctions have to accompany the technical improvements. 173 Thus it is possible to summarize that the safeguards approach mainly based on material accountancy is not sufficient for bulk handling plants. I n practice, the idea to shift the main focus in this area from material accountancy to containment and surveillance has not been fully explored. Would it not help, the proponents of such an approach ask, to make sure that every item under safeguards is permanently and physically observed, even i f we do not know exactly how much nuclear material is being handled? Obviously, these proposals are not welcome by facility operators as they are expensive and burdensome. They have however the advantage of being technically feasible and might provide a greater likelihood of detection. Montmollin and Gupta address the I A E A approach of setting detection and inspection goals when they conclude: However the goals are ordered, the problem remains: the Agency accepts the proposition that the system should detect a one-bomb diversion within conversion time, at the same time acknowledging that that is not feasible in situations of greatest concern. The elaborate hierarchy of goals serves only to separate what is technically and what is operationally infeasible . . . The Agency's rationalization . . . only confirms the wide gap between expectations and performance, w i t h a consequent loss of confidence in the entire institution. 1 7 4 Apart from the most important question of whether the Agency is trying to safeguard the unsafeguardable, there are other problems related to the implementation of safeguards. First of all, the situation of the individual inspector is far from satisfactory. 175 The working and living conditions, while on duty, are very poor. The job is accompanied by a fear of personal physical harm or even death once they should come across a diversion. I n addition, the inspector has to be approved by the country he shall inspect; the country can veto every inspector that i t does not want. I n fact, more and more states require that the inspector speaks the language of the country and that his home country accepts inspection on its nuclear activities likewise. 1 7 6 This has led to rejections of whole categories of inspectors. The results of such a practice are retaliatory discrimination by member states, distortions i n the recruiting pattern and ineffective deployment of inspectors in the field. 177 Over the last 173 Kausch (note 171), 263. 174 De Montmollin

/ Gupta (note 20), 51.

175 O T A (note 19), 213. 17« S I P R I , Safeguards (note 17) 43, 44. 177 Report by the Comptroller General, Obstacles to U.S. Ability T o Control and Track Weapons-Grade Uranium Supplied Abroad. U.S. General Accounting Office/ID-82-21, August 2, 1982, 33.

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years, the designation of inspectors has become one of the more important problems in safeguards implementation. Very often, inspections are carried out by only one inspector. A l l this cannot but enhance the potential risk of inspector fallibility. 1 7 8 The tendency of states to restrict the access of the inspectorate in order to protect technological and industrial/commercial secrets has come close to a point where satisfactory inspection is almost impossible to achieve. 179 The protection of these secrets is a precondition to the acceptance of safeguards by states, and is provided for i n I N F C I R C / 1 5 3 . This must, however, be done in a well balanced way in order not to undermine the credibility of the whole safeguards system. Very often, the design of the particular facility hinders effective inspections. Nuclear plants have been and are in part still being built without taking into account the physical requirements needed for the implementation of safeguards. While the Agency has already developed certain guidelines for use by facilities designers, they are, u n t i l now, limited to light water reactors. 180 The effectiveness of I A E A safeguards depends on the timeliness and completeness of design information, accounting records and reports submitted by the states. 181 I n many cases, they are insufficient w i t h respect to the information they contain and arrive w i t h great delay, too late to trigger any reaction. 182 A further problem is created in that these documents and the way they are set up are not standardized. Thus, the inspector always encounters different methods of making up the material balance. 183 As has been shown above, the operator's measurement uncertainty is of utmost importance for any evaluation of a M U F . Nevertheless, several states are still far behind in providing the Agency w i t h such data despite an I N F C I R C / 1 5 3 obligation to do so. 1 8 4 I n many cases the safeguards agreements and Facility Attachments need an updating i n order to enable the Agency to use improved «safeguards techniques and instruments. While the technical means of verification — for instance, cameras and seals — are permanently improved, i t has been observed that due to a lack of suitable equipment, a "substantial amount of material, including H E U , is in a form that is currently unmeasurable". 185

178 Goldblat

(note 127), 174.

17» Kausch , (note 171), 263. 180 Bahm (note 139), 70, 71, providing as well a list of objectives of design guidelines. 181 Agu / Iwamoto (note 139), 22. 182 Cf. Gilinsky , in: Hearing (note 2), 39. 183 See, I N F C I R C / 1 5 3 para. 55 requiring that at least the measurements themselves "on which the records used for the preparation of reports are based shall either conform to the latest international standards or be equivalent to such standards." 184 I N F C I R C / 5 3 , para. 32 (b). 185 Report by the Comptroller General (note 177), 31.

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Less than satisfactory is the fact that information gathered by the inspectors very often arrives at the Agency w i t h great delay thereby reducing to zero the chances of effective reaction in case a diversion is detected. The increase in size and complexity of nuclear facilities and of the quantities of fissionable material they process has been a major problem for the I A E A . The 1970s were a period of unprecedented nuclear expansion. The number of power reactors under safeguards rose from 10 in 1970 to 126 i n 1980; the number of bulk handling facilities rose from 4 to 49. I t is, in this context, doubtful, whether the Agency due to lacking resources is still in a position to adequately safeguard nuclear material and facilities. I n 1981, only about 45 % of the actual routine inspection efforts could be implemented. Finally, while the N P T requires the safeguarding of the entire activity w i t h i n the state party to it, IAEA's safeguards are still oriented at individual facilities or other locations of nuclear material. Safeguards have never been applied on an integral state basis, as required by I N F C I R C / 1 5 3 , para 81. This enables a state w i t h many nuclear facilities to escape detection by using a "partitioning" diversion strategy, i. e. diverting small amounts from many facilities. Montmollin and Gupta observe in this context: The result is, the larger a State's nuclear program, there is relatively less assurance as to the State's activity in spite of the efforts expended to safeguard the larger number of facilities. 186 b) Evaluation Based on Goals Outlined i n Part I I I n the following, a few observations shall be brought forward relating to the question of how the existing I A E A safeguards system is able to live up to the goals outlined at the beginning of this paper, to the extent to which they have not already been addressed in the previous section. I t has very often been said that the real problems start where safeguards end. 1 8 7 Reference is thereby made to the fact that states, believed to be of greatest proliferation concern, are still outside the N P T - I A E A framework. The lack of universality is one of the major deficiencies. The blame is not only to be put on the I A E A safeguards system, but on the international community as a whole. U p to now, states have not been effectively treated discriminatorily for not accepting I A E A safeguards. 188 I n fact, i t has been observed that [t]he main reason w h y the N P T has not yet gained universal acceptance is that non-parties have had no incentives to join i t : they have been ΐ8β De Montmollin I Gupta (note 20), 51. 187 Grümm (note 16), 12; H. Blix , letter to the N e w Y o r k Times, February 19, 1982. 188 See, for example the willingness of France and the United States to cooperate with India, International Herald Tribune, November 24, 1982.

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supplied w i t h nuclear equipment and material under the same and sometimes even more advantageous conditions than the parties. 189 T w o other factors likewise contribute to this situation. First of all, the distinction w i t h i n the N P T between nuclear-weapon and non-nuclear-weapon states coupled w i t h the failure of the nuclear-weapon states to live up to their commitment in A r t . V I N P T to stop vertical nuclear proliferation. Likewise, the acceptance by few nuclear-weapon states of I A E A safeguards on some of their nuclear activities might enhance the technical development of safeguards implementation. 1 9 0 I t has however, no direct impact on horizontal or vertical non-proliferation. Secondly, from the viewpoint of a non-nuclear-weapon state it is not altogether convincing w h y i t w i l l not enjoy the fullest cooperation in nuclear trade even i f i t accepts fullscope IAEA-safeguards. There exists a conceptual contradiction between the request on behalf of nuclear-weapon states that all others should accept safeguards, and the London Guidelines set up by nuclear supplier states in order to restrict nuclear trade to certain items, materials and facilities. Whatever the overall non-proliferation framework, safeguards as presently designed are only "ex post facto means of detection" 1 9 1 . They can neither physically prevent diversion of nuclear material for military purposes nor predict the future policy of a given country. 1 9 2 The I A E A cannot hinder a state to use enrichment and reprocessing facilities acquired under safeguards agreements and to use Pu and enriched uranium built up w i t h i n the limits of the safeguards agreement to rapidly manufacture nuclear weapons following abrogation of these agreements. 193 While the I A E A has the authority to ask states to comply w i t h its obligations and the safeguards agreements, i t has no power to force them. 1 9 4 A refusal to let declared facilities and nuclear material be submitted to safeguards leaves the Agency w i t h only very limited means of reactions. Likewise, i t is beyond the authority of I A E A inspectors to search out for undeclared material or facilities. Hence, current safeguards are by no means comprehensive and self-enforcing. Rather, they depend on the 18» S I P R I , Yearbook 1981, 309. 190

See, Hearings on Technical Aspects of Nuclear Safeguards, Subcommittee on Energy Research and Production of the Committee on Science and Technology (cited: Hearing), House of Representatives, 97th Congress, 2nd Session, August 3, 4,1982. 191 Sanders (note 63), 74. 192 Grümm (note 16), 12; Blix (note 5). !93 A. R.W. Wilson, A Nuclear Fuel Supply Cooperative: a W a y out of the Non-Proliferation Debacle, in: S I P R I , Nuclear Energy (note 118), 251—259 (252). A r t . X N P T permits each contracting party, to withdraw from the Treaty upon a three-month notice "if it decides that extraordinary events, related to the subject matter of the Treaty, have jeopardized the supreme interests of its country." U p to now this has never happened and is very unlikely to occur in the future. ι » 4 Rodney W. Jones, Strategic Response to Nuclear Proliferation, in: The "Washington Quarterly vol. 6 (1983) 89—98 (92).

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cooperation between state and Agency. Compared to the goals developed in the first part of this paper, these limitations do not appear to be deficiencies. They are nothing but reflections of what is possible. Equally relevant is the question of whether IAEA's safeguards systems are able to create confidence and to reduce, thereby, the incentive for states to divert. Are they, one has to ask, really acceptable and credible ? First of all, safeguards still based on I N F C I R C / 6 6 are insufficient because they lack the most important criteria of mandatory full-scope coverage. N o assurance is given as to whether a state that accepts " o n l y " I N F C I R C / 6 6 safeguards w i l l accept them on all future activities likewise. The I N F C I R C / 6 6 system therefore does not create confidence. To the contrary, expectations based on the existence of de-facto-full-scope safeguards are illusive, misleading, and therefore dangerous. The subsequent remarks w i l l relate to safeguards based on I N F C I R C / 1 5 3 only. I A E A safeguards seem to be acceptable to a great number of states. Almost all of the 121 states party to the N P T have entered safeguards agreements w i t h the Agency, even though some of them are reluctant to promote their implementation. States tend however to accede to international treaties and to accept safeguards more willingly i f the intrusion into their national sovereignty is kept at the lowest level; i. e. the less effective, and therefore credible the safeguards are, the greater the chance for their broad acceptance. H o w credible then are the I A E A safeguards? A l l those technical and conceptual deficiencies described in the previous part clearly undermine the credibility of the whole safeguards system. This is especially the case w i t h I A E A ' s inability to adequately safeguard Pu and H E U , or reprocessing and enrichment plants respectively, especially i f expectations are created to the contrary. The repeated statement that no anomaly has been detected which would indicate a diversion is of less significance i f verification at locations of greatest concern is incomplete. A n essential element of the safeguards system, and indispensable for its credibility is the existence of a reliable and effective communication system. The communication between inspector and Agency has already been referred to. While this is primarily a technical problem, the communication between Agency and states is more political. The basic questions here refer to when an alarm should be sounded and what k i n d of information shall be transmitted to the Board of Governors and to the public at large. Credibility of the safeguards system and the early prevention of the manufacture of nuclear weapons stand against the respect for the internal affairs of the member states and against the fear of the detrimental consequences of repeated false alarms. I t has been questioned whether states w i l l receive comprehensive notifications of a suspected diversion in time to consider appropriate reactions. 195 I n an effort 195

See, the Chairman of the U.S. Nuclear Regulatory Commission ( N R C ) , Palladino , in a

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not to offend any of its member states, the Agency reveals to the public, in its Annual Report, only the most general information w i t h respect to the question that lies at the core of the whole safeguards system, i. e. whether or not a state has diverted nuclear material for military purposes. I n its Annual Report for 1982, the Agency simply states that i t " d i d not detect any anomaly which would indicate the diversion of a significant amount of safeguarded nuclear material" 1 β β . N o t h i n g is said, however, regarding how the Agency came to this conclusion. The reader of the Report has no indication of how the safeguards are implemented. For instance, whether or not all states live up to their reporting obligations; whether or not inspectors have been admitted whenever the state was supposed to let them in; whether problems emerged from surveillance or containment measures. H o w reliable were the seals? The Report mentions " t w o cases where the Agency was unable to draw conclusions" and that " i n those cases there has been significant progress since the end of 1982" 1 9 7 . A l l details are left to speculations. I n short, the Annual Report alone does not give the information needed for a reliable evaluation of the compliance of states w i t h their non-proliferation commitments. 198 While the general public is left w i t h the Annual Report, governments receive from the Board of Governors an annual Safeguards Implementation Report (SIR). Though this report is far more specific than the Annual Report, i t still does not point out specific violations or abrogations related to individual states. Instead, implementation problems are generally addressed so as to focus the attention o f the reader to areas where improvements are needed. I t was this practice that, among other things, led the chairman of the U.S. Nuclear Regulatory Commission ( N R C ) , Palladino , to complain that . . . the N R C has little or no safeguards information in making its export determination under the Nuclear-Non-Proliferation A c t , 1 9 9 and that . . . the N R C receives little specific information about the application of I A E A safeguards i n particular countries or at specified facilities. Accordingly, as a general matter, we do not know whether the I A E A is achieving its safeguards objectives i n a specific country or at a specific facility. 2 0 0 letter to members of the U.S. Congress on November 27, 1981: "We are not confident that the member states would be notified of a diversion in a timely fashion." 19 ® I A E A Annual Report 1982 (note 3), para. 303. ibid. 198 See, Report by the Comptroller General (note 177), 28: "Details on IAEA's ability to meet its own timely detection goals for H E U at facilities it has inspected are not available to the public." i " Palladino (note 195). 200 Palladino , in: Hearing (note 10), 157.

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The U.S. Office of Technology Assessment agrees: Evaluating the effectiveness of the Agency's safeguards is rendered difficult because information about critical I A E A procedures and policies are either not available outside the Agency or are classified by the Agency as Safeguards Confidential. For example no information is available on the Agency's site specific diversion analysis, the allocation of its inspection effort, the reliability and performance of its surveillance and N D A equipment, the effectiveness of the different State Systems of Accounting and Control. 2 0 1 N R C Commissioner Gilinsky wonders w h y the annual SIR, which contains no safeguards confidential information, is treated as a classified document. 2 0 2 This report is not classified to protect secrets of one country against the curiosity of another, for all member states receive a copy. The only one who is kept from reading i t is the public. Gilinsky continues: "The only way to make sense out o f this is to see that IAEA's chief function is to make nuclear commerce acceptable, not to protect i t . " 2 0 3 This conclusion is based on lack of information as much as on the inadequacy of the technical safeguards procedures. I f a diversion cannot be detected w i t h a certain likelihood, i f this is not communicated to the public, and if, despite this, nuclear trade is based on and defended w i t h "a reliable safeguards system", then one cannot but agree w i t h Gilinsky. The need for confidentiality (as expressed in I N F C I R C / 1 5 3 , para. 5) has been explained w i t h reference to national security and economic competition. However, none of these considerations is sufficient to justify the existing degree of secrecy. I n fact, a point has been reached where national security is more endangered than fostered by keeping nearly everything related to safeguards under classification. The secrecy starts on an international level when the I A E A refuses to give adequate information to its member states and continues on a national level where governments keep away from the public that information which comes from the I A E A . 2 0 4

201 O T A (note 19), 207. 202 Gilinsky , in: Hearing (note 2), 39. 203 Ibid. 204 See, the correspondence of Representatives Dingeil, Ottinger , and Senator Hart with the N R C (November 27, 1981 — March 18, 1982); N R C Commissioner Bradford, in: Hearing (note 10), 160: "Congress* ability to appraise [the adequacy of the safeguards] is currently being severly undercut by the quality and untimeliness of the information provided to you from the executive branch." Kratzer, in: Hearing (note 10), 49, explains that I N F C I R C / 1 5 3 , para. 5 "establishes no requirement or authorization for the Agency to withhold information concerning the nature and extent of its own verification activities.*

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I t is questionable whether I N F C I R C / 1 5 3 para. 37 is a major loophole i f i t permits that states are allowed to exempt from safeguards up to one kilogram of Pu; i. e. approximately 20 % o f what is needed to build a bomb. The assumption behind this rule is that this amount, even i f taken together w i t h other material escaping control on other grounds, w i l l not significantly advance any country's nuclear weapon potential and w i l l , at the same time, save the state and the Agency much bookkeeping. 205 Similarly, I N F C I R C / 1 5 3 , para. 14 allows the state to use nuclear material for military non-explosive purposes (e. g. submarine propulsion) without having safeguards applied. While the credibility of I N F C I R C / 1 5 3 would certainly be enhanced i f such a suspension were not permitted, i t is unrealistic to believe that states would accept safeguards application on those military activities. I n addition, this exemption is very strictly limited, so that a consequent implementation would leave little room for circumvention. 20 6 The Israeli attack on the Iraqi reactor has evidenced another problem to which a solution is not provided for in I N F C I R C / 1 5 3 : The Iraqi government declared after the attack that it could not guarantee the security of any inspectors on the facility site due to the radioactive contamination, and, on another occasion, that inspections were not possible because the plant to be inspected was situated in a war zone in the war between Iran und I r a q . 2 0 7 I f the need for acceptability is overstressed, credibility can easily suffer. A n analysis of global readiness, however, shows that several certain nuclear-weapon states and non-nuclear-weapon states still refuse I A E A safeguards on all their nuclear activities. Considering the repetitious accusations these countries have to face for such refusal, i t might be an indication of a certain degree of effectiveness, and therefore credibility, of I A E A safeguards practice. Similarly, the resolution of the Pakistan Kanupp reactor issue as the only reported unsatisfactory event i n the history of I A E A safeguards shows that the I A E A is in a position to deal w i t h such types of problems in co-operation w i t h the state under safeguards. I n recent years, and especially after the Israeli attack, a trend of increasing politicization has emerged, resulting in an increased criticism by states which can endanger the I A E A and its safeguards programme. This, in turn, leads all too often to calls to reduce the financial contributions to the Agency, the general notion being " w h y pay i f we only get the blame?" There is a clear link 205 Szasz (note 76), 92, 93. 20β C / . , op. cit., 94, 95. 207 Franz J. Klein , D i e internationalen Auseinandersetzungen über die Grundprinzipien der Kernenergiepolitik seit der indischen Kernexplosion, in: Kaiser / Klein (note 13), 65—86 (77). Five months elapsed between the Israeli attack and the first possible inspection by the I A E A .

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between the financial means the Agency can afford on safeguards and their effectiveness. Thus, increasing politicization w i l l eventually not only damage the essential sense of co-operation but w i l l lead to less effectiveness of the whole safeguards system. Grümm pointed to the paradoxical result that more than 90 % of the effort of the Inspectorate is concentrated on facilities which operate in countries w i t h a firm political commitment not to proliferate. The remaining effort is devoted to facilities in countries that have not made that commitment, and finally, the facilities representing a real proliferation risk are not at all accessible to inspections. 208 This, however, is only a necessary consequence of the maxim to treat member states indiscriminatorily. A n y evaluation regarding an a priori likelihood of proliferation w o u l d seriously reduce the acceptability of the whole system. 2. Policy

Recommendations

The final part of this paper is devoted to some suggestions of how to improve the current system of I A E A safeguards. These recommendations refer to policy decisions more than to specific technical proposals. 209 (1)

Universality

should be achieved to the greatest possible extent.

The universal adherence to one safeguards system is a function of its usefulness as a confidence-building measure. A l l states w i t h nuclear activities shall therefore be urged to join the N P T and to accept I A E A safeguards. 210 What is needed is an effort to improve the overall non-proliferation situation and, simultaneously, a permanent improvement of the safeguards system. Universality relates to the adherence to the N P T , and to the choice of the safeguards system. I n other words, all non-nuclear-weapon states, regardless of whether or not they are party to the N P T should accept safeguards based on I N F C I R C / 1 5 3 . The I N F C I R C / 6 6 is simply inadequate to serve as an effective and confidence creating instrument. (2) The IAEA mitments.

safeguards system needs a fresh round

of supportive

com-

Unless member states express their full support to the I A E A and its safeguards system, i t w i l l be impossible to convince other states to join it. 208 Grümm

(note 16), 12.

209 The question whether a nuclear fuel cycle should include plutonium and highly enriched uranium is not the topic of this evaluation. I t is, however, well known that, for instance, a conversion of a research reactor from H E U to non-weapons-usable L E U would reduce existing safeguards problems in this area. 210 A n example for a totally opposite viewpoint can be found in Zuberi

(note 36), 44.

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The lack of support w i l l , in addition, result in greater difficulties in the implementation of safeguards and thereby lessen its effectiveness. Support is needed on several levels first of which is political support. Secondly, support is also needed by increasing manpower, financial contributions and scientific-technical co-operation efforts. Quantitative and qualitative changes i n the peaceful uses of nuclear energy over the last years require an augmentation of resources even i f the current standards of safeguards are to be maintained. N o n - p r o l i feration depends on safeguards. Effective and reliable safeguards are expensive. Compared to the risk at stake, these costs are minute. I n the area of safeguards, it is, to a certain extent, possible " t o buy confidence". More resources are the only way to prevent a situation where the greater the assessed risk of proliferation the less inspection effort is devoted to i t . 2 1 1 Increased contribution by member states, must be matched by enhancement o f the managerial effectiveness of the Department of Safeguards of the I A E A . 2 1 2 Finally, every attempt shall be undertaken to curb the increasing politicization. The Annual General Conference of the I A E A is not an extension of the United Nations General Assembly. Politicizing even the most technical questions damages the whole system without furthering the cause of any single country. I n a political environment, the I A E A must remain an institution of technical competence; " i t must take account of politics while avoiding becoming too political" 2 1 3 . (3) Activities within the nuclear fuel should clearly be stated.

cycle which are not safeguardable

I f safeguards can effectively be applied only to a low-enriched nuclear fuel cycle, excluding the production and use of H E U and Pu, then no false illusion should be created w i t h regard to the scope of safeguards that are applied. I n this context, it is fair to say that inadequate safeguards are only better than no safeguards at all i f no false impression of security is created. 214 By the same token, however, the Agency should more assertively exercise its full rights as defined in the agreements, particularly in situations where questions have been raised about possible non-compliance. 215 W i t h respect to the application of I N F C I R C / 1 5 3 a major shift is suggested from the facility approach to an approach looking at the state as a whole. 2 1 6 A non-diversion result of safeguards 211 Report by the Comptroller General (note 177), 34. See, however, v. Pander (note 38), 407, believing that economical feasibility should be one of the major principles in any safeguards system even i f this meant to limit its effectiveness. Similar, v. Preuschen (note 4), 56, giving the peaceful and economic use of nuclear energy priority over safeguards objectives. 212 Stanley Foundation (note 17), 15. 2 *3 S I P R I , Safeguards (note 17), 56. 214 Ibid. 215

Stanley Foundation (note 17), 16. *« De Montmollin / Gupta (note 20), 52.

2

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effort is of no value unless it is based on a finding that accounts for all the state's materials. W i t h respect to undeclared facilities and materials, a solution can only be found by convincing the state politically that it is in its own interests to declare them and thereby motivating the state to do so. (4) The implementation

of INFCIRC/153

needs to be improved .

(a) The Safeguards Agreement O l d safeguards agreements and facility attachments, especially those for online fuel power reactors have to be updated, especially where the Agency wants to use improved techniques and instruments. 217 (b) Material Accountancy As the design of the facilities affects the ease or difficulties of I A E A ' s verification activities, consultations between the Agency and the operators at a very early stage towards a control-oriented planning of the facility are imperative. 2 1 8 The I A E A should enhance its efforts in developing guidelines for the design of large facilities. I n the long run, acceptance of these guidelines could become a precondition for any assistance by other states in the construction of a nuclear plant. Likewise, existing design information requires permanent up-dating. States should be encouraged to report to the Agency on time. A delay in handing in records and reports not only slows down the process of verification, but also reduces the effectiveness of the whole safeguards system by running counter to the goal of timely detection. The I A E A might consider making public the delay if countries do not hand in their records and reports after they have been asked to do so at least three times over a certain period of time. As the whole system of material accountancy is based on the completeness of records and reports w h i d i are easily verifiable by the Agency, the I A E A should have the authority to prescribe the standard, form and extent of this data. Likewise, the Agency w i l l not be in a position to fully assess the data provided by a state unless i t is accompanied by the operator's measurement uncertainty data. The further development of near-real time material accountancy seems to be a step into the right direction, especially for large plants. 2 1 9 This can be supplemented by increasing the number of Material Balance Areas in those facilities and the number of inventories taken, in order to accomplish whatever inspection goals are chosen.220 217 Grümm

(note 16), 6; Blix (note 5).

218 Cf. Higinbotham

(note 145), 191; v. Preuschen (note 4), 120; Blix (note 5).

21» Taylor (note 162), 338. 220 V. Osten (note 68), 114.

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(c) Containment and Surveillance W i t h more and more complex technologies involved, the role of containment and surveillance measures w i l l increase. They therefore have to be permanently improved. 2 2 1 They must be independent i n the sense that i t would be impossible for any potential diverter to circumvent them without detection. As detection is the first step towards the prevention of the assembly of a nuclear weapon, the reliability of the physical control at all in- and outputs needs to be approximately 100%. I n addition, procedures must be developed that would permit timely re-verification of inventories in case surveillance measures fail or in case their results are inconclusive. (d)

Inspection

The repeated refusal of states in past years to accept designated inspectors has slowed i f not impeded the implementation of safeguards. Therefore, it seems t o be appropriate for the I A E A to fully exert its rights under I N F C I R C / 153, para. 9; i. e. to consider such repeated refusals " w i t h a view to appropriate action." There is no need to change the general concept of I N F C I R Q 1 5 3 which requires the consent of the state concerned. However, instead of having the states set up their restrictive practice and conditions for the acceptance of inspectors, the Agency should either carry out the appropriate actions referred to in I N F C I R C / 1 5 3 , para. 9, or develop a set of clear parameters by which a state can refuse to accept a designated inspector. As an "appropriate action" one might think of making public the repeated refusal. The minimum policy the Agency should pursue is to ask the refusing country to state its reasons for not accepting the designated inspector. The rejection must be the exception, not the rule. Because of the increasing complexity of the technology to be inspected and because of the political delicacy of inspections, especially i f the inspector comes across a diversion, i t is essential that inspectors be extremely well trained. A highest level of professional competence is a prerequisite for reliable safeguards. 222 For the same reasons, inspectors should never be sent alone. Emphasis shall be placed on how to improve the overall working conditions for the inspectors. Furthermore, i t w o u l d reduce the risk of inspector fallibility i f their employment were not limited to a set period of time. 2 2 8 T o increase the effectiveness of all inspection efforts, and in light of the limited resources, the inspections should be planned more effectively. This 221 O T A (note 19), 20, 206; Taylor (note 162), 338; ν . Osten (note 68), 117. 222 O T A (note 19), 213; Stanley Foundation (note 17), 20. Among other things, the establishment of an academy for prospective inspectors has been suggested, L. Manning Muntzing , American Nuclear Society, in: Hearing (note 190). 223 Cf. v. Preusdoen (note 4), 82.

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could be achieved by, inter alia , establishing resident inspection offices. 224 I n addition, better coordination of all inspections w i l l reduce travel time and thus enhance resource management. As far as the accessibility is concerned, i t should be reiterated that the I A E A Statute provides for "access at all times to all places and data". States should be more forthcoming in granting the inspectors more access in order to create more confidence. The Agency, on the other hand, should not ask for more access than it needs to effectively fulfil its tasks under the safeguards agreement. 2 2 5 W i t h respect to reprocessing and enrichment plants continuous inspection seems to be necessary and consistent w i t h I N F C I R C / 1 5 3 . For enrichment plants, some formula w i l l have to be found under which the inspectors can enter the cascade area. 226 Finally, every effort should be made in order not to suspend inspection activities because of war or because of any other external, non-safeguards-related factors. (e) Analysis and Evaluation The policy of secrecy must be terminated and should be replaced w i t h the greatest possible openness. There should be a redefinition of what must be treated confidentially and what not. The current practice is counterproductive and dangerous. Information about the Agency can be revealed. Information about individual countries should be treated differently. Supplier states should seek bilateral agreements w i t h the recipient state that the Agency w i l l be allowed to reveal certain information to the supplier state only to enable it to continue its export policy. The prospect of more public reports can be an incentive for countries to comply w i t h safeguards requirements. 227 T o improve communications in case a diversion is detected, a " H o t - L i n e " between the I A E A Director General and the president of the U N Security Council or the U N Secretary General should be established and used. To arrive at quick and reliable results, the data transmitting infrastructure from the inspection site to the Agency should be updated. 2 2 8 Since a high rate of false alarms can be as detrimental to the cause of non-proliferation as a high probability of non-detection, measures should be developed to clarify whether a sounded alarm is in fact genuine. Likewise, a system might be elaborated in case a false alarm has been sounded i n order to l i m i t the damage. A similar 224 V. Osten (note 68), 117; S I P R I , Safeguards (note 17), 40. T w o sudi offices have alreadybeen established. 225 See, I N F C I R C / 1 5 3 , para. 79. 22β O T A (note 19), 208; A. Krass etal

(note 142), 46, 91.

227 i n 1982, the I A E A started a discussion on the feasibility of enhancing the transparency of its verification efforts by making the Safeguards Implementation Report public. 228 y . Osten (note 68), 117.

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Cord-Georg Hasselmann

proposal is that the Director General should report more frequently to the Board of Governors the anomalies found by the inspectorate. 229 One of the most important improvements is the re-evaluation of quantitative goals. I t has been said that "quantitative goals are of paramount importance. They form the tie that links purpose, expectations, and performance, and they are the basis for safeguards-technical design" 2 3 0 . As the current goals are, in many fields at least, not attainable, the credibility of the whole system w i l l gradually diminish. 2 3 1 I t has been proposed that these goals be oriented towards what is technically feasible, and at inspection frequencies that are politically acceptable. 232 Others place the greatest emphasis on that "they must support findings based on a common level of assurance w i t h regard of each State as a whole" and, at the same time, be balanced against "the constraints of feasibility and resource limitations" and that they "relate to assurance, rather than fixed values defined by the potential consequences of a threshold level of diversion" 2 3 3 . V.

Conclusions

Do we need new I A E A safeguards? N o . The system of I N F C I R C / 1 5 3 is structurally able to create confidence among nations by ensuring that an impermissible diversion of nuclear material w i l l be detected w i t h a great likelihood and in time to prevent the assembly of a nuclear weapon. This assessment cannot, however, be extended to the application of safeguards on reprocessing and enrichment plants. They are, at present, unsafeguardable, and i t is doubtful whether they w i l l ever be. More attention should be paid to containment and surveillance measures where material accountancy does not lead to satisfying results. A n even broader application of I N F C I R C / 1 5 3 should be advocated as well as an improved implementation of the system. I n several instances, an unsatisfactory implementation has severely damaged the reputation of the I A E A safeguards. W i t h a renewed understanding of the role and the limits of international safeguards, the urgently needed mutual confidence among nations can be created and maintained. The groundwork exists. What is needed now is not a deus ex machina that suddenly relieves us from all nuclear threats but a political w i l l to stop the proliferation of nuclear weapons. I f this w i l l exists then there w i l l be no major problem stemming from safeguards. 229 Cf. Stanley Foundation (note 17), 19. I n 1982, about 406 anomalies or discrepancies were found. I A E A Annual Report 1982 (note 3), para. 303 (b). 230 De Montmollin / Gupta (note 20), 51, 52. 231 v. Osten (note 68), 116. 232 Op. cit., 116, 117; similar Krass etal. (note 142), 91. 233 De Montmollin / Gupta (note 20), 52.

'Observers Signatory of the Final Act" in the International Seabed Authority's Preparatory Commission Tullio Treves 1. Resolution I adopted by the T h i r d United Nations Conference on the L a w of the Sea "for the establishment of the Preparatory Commission for the International Seabed Authority and for the International Tribunal for the L a w of the Sea" 1 is particularly noteworthy for the provision i t contains on participation in the Preparatory Commission. Paragraph 2, after having stated that The Commission shall consist of the representatives of States and of Namibia, represented by the United Nations Council for Namibia, which have signed the Convention or acceded to it. adds, in a second sentence that The representatives of signatories of the Final A c t may participate fully in the deliberations of the Commission as observers but shall not be entitled t o participate in the taking of decisions. This provision, which creates a new species of participants in international organs, was the result of a compromise between t w o opposing positions that emerged during the negotiations at the Conference. 2 According t o one of these positions, participation in the Preparatory Commission had to be restricted to States having signed the Law of the Sea Convention. According t o the other, all States having signed the Final Act of the Third United Nations Conference ι U N Doc A / C O N F . 62/L. 121, annex 1; reprinted in: The Law of the Sea — Official Text of the United Nations Convention on the Law of the Sea with Annexes and Index, Final Act of the Third United Nations Conference on the Law of the Sea, Introductory Material on the Convention and the Conference, United Nations Publication, Sale N o . E. 83. V . 5, N e w Y o r k 1983, 175 etseq. 2 See the discussions in the Conference's First Committee held on the 19th and 20th of March 1981, in: Third United Nations Conference on the Law of the Sea, Official Records, X V , 71—78, and also para. 12 of the Report of the Chairman of the First Committee of 16 A p r i l 1981, U N Doc. A / C O N F . 62/L. 70, 149. See also Tullio Treves , La decima sessione della Conferenza sul diritto del mare, in: Rivista di diritto internazionale (Riv. dir. int.) vol. 65 (1982), 24—55 (38—39); idem , La sessione conclusiva della Conferenza su diritto del mare, in: Riv. dir. int. vol. 66 (1983), 383—422 (401—402).

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Tullio Treves

on the Law of the Sea should be entitled to participate fully in the Preparatory Commission. The first position was supported mainly, but not exclusively, by developing States. The main idea behind it was that only States having given some sign of commitment albeit modest to the Convention by signing it, ought to be entitled t o participate, before the entry i n t o force of the Convention, in the framing of the main international institutions to be created: the International Seabed Authority and the International Tribunal for the L a w of the Sea. Moreover, the States holding this position thought that making participation in the Preparatory Commission contingent on signature of the Convention would be a great incentive for States to sign. The second position was held especially by certain industrialized States. They argued, on the one hand, that i n complex political systems mere signature of a convention of the magnitude of that on the law of the sea requires internal procedures that may be long, and that, in view of the need for the Preparatory Commission to start its work as soon as possible and w i t h the participation of the same industrialized States, i t would have been as unwise t o wait for their signature as it w o u l d have been to start the work of the Commission without them. On the other hand, these States argued that the work of the Preparatory Commission was more akin to that of a continuation of the Conference than t o that of a provisional application of the Convention. Thus all States having participated in the Conference, as evidenced by their signature of the Final Act, should participate in the elaboration of the rules, regulations and procedures and of the practical arrangements necessary to complete the work of the Conference before the entry into force of the Convention. The negotiations on Resolution I , during which these arguments were discussed, were conducted under three more or less conscious assumptions. The first was that the Convention would eventually be adopted by consensus, or at least by a very wide majority including all main powers and groups. The second, closely linked to the first, was that the process of signing the Convention would be relatively slow and that at least many months or a few years would be necessary to reach a number of signatures close to that of the States having given their consent to the adoption of the Convention at the Conference. The t h i r d assumption was that the tasks of the Preparatory Commission would be limited to those set forth in Resolution I , i. e. preparing for the proper functioning of the A u t h o r i t y and of the Tribunal from the moment of the entry into force of the Convention. A l l three assumptions proved false. First, as it is well known, on the 30th of A p r i l 1982 the Convention was not adopted by consensus, but w i t h the

Observers Signatory of the Final Act

305

opposition of the United States and w i t h the abstention of 17, mainly industrialized, States.3 Second, the process of signature was unusually quick: A t Montego Bay on the 9th of December 1982 the very day of the opening to signature, 117 States signed, joined by 15 others as at the 19th of March 1984.4 Third, the tasks of the Preparatory Commission were broadened and made immediately operative by Resolution I I , which gives the Commission important functions w i t h i n the framework of the protection of the preparatory investments made i n pioneer activities relating to polymetallic nodules. 5 Thus, the compromise formula reached at the Conference, according to which signatories of the Final A c t would, on the one hand, "participate fully in the deliberations of the Commission", but, on the other hand, would do so "as observers" and without being "entitled to participate i n the taking of decisions", became the key provision concerning the participation in the Commission of the small group of States that has not signed the Convention but intends, for various reasons, including that of contributing to making the Convention more acceptable through wisely elaborated rules, regulations and procedures for the Authority and for pioneer investments, to contribute in making the new regime of seabed mining more acceptable. This group of States includes Belgium, the Federal Republic of Germany, I t a l y and the United Kingdom. 2. Once the Preparatory Commission met, on the 15th of March 1983, one of the problems facing i t was to incorporate the principle contained in the compromise formula of article 2 of Resolution I into the Rules of procedure which it had to prepare. The Rules of procedure to be followed in the Preparatory Commission, pending the adoption of its o w n Rules of procedure, were those of the T h i r d United Nations Conference on the L a w o f the Sea. Their application was prescribed by A r t . 4 of Resolution I . However, according to this provision, such application had to be "mutatis mutandis" . The presence of signatories o f the Final Act as observers was, undoubtedly, i n the light of A r t . 2 of Resolution I , a new element as compared to the situation prevailing 3 U N Doc. A / C O N F . 62/SR. 182, 8. 4 U N Doc. L O S / P C N / I N F . 4 of the 20th of March 1984. 5 O n this Resolution, which is included in Annex I to the Final Act of the Third U N Conference on the Law of the Sea, reprinted in: The Law of the Sea (note 1), 177—182, see: Tullio Treves , La protection des investissements préparatoires et la resolution N o . 2 de la Conference sur le droit de la mer, in: Annuaire français de droit international vol. 28 (1982), 851—872; Wolfgang Hauser , The Legal Regime for Deep Seabed Mining under the Law of the Sea Convention, Frankfurt 1983, 48—51; for the question of the binding force of Resolution I I , see e.g.: Rüdiger Wolf rum, Contribution during the discussion at the symposium "Das neue Seerecht", in: Jost Delbrück (ed.), Das neue Seerecht — internationale und nationale Perspektiven, Veröffentlichungen des Instituts für Internationales Redit, Bd. 89, Berlin 1984, 245—246.

20 GYIL 27

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at the T h i r d U N Conference on the Law of the Sea. Thus, i t seemed reasonable to argue that the delegations of these signatories should have a much more important role in the deliberations of the Preparatory Commission than that of simple observers. The preparation of the Rules of procedure of the Preparatory Commission was dominated by the problems of the status of the signatories of the Final A c t : not only as far as the rules being elaborated were concerned, but, and perhaps especially, regarding the elaboration o f the rules. The position i n this negotiation of the signatories of the Final A c t was rather strong for substantial as well as procedural reasons. As regards the substantial aspect, i t was widely perceived among members of the Preparatory Commission that the full involvement of the industrialized States non-signatories of the Convention would be a way to encourage them t o review their position. As far as procedure was concerned, the Rules of procedure of the T h i r d L a w of the Sea Conference prescribed that before resorting to voting, all efforts at reaching a consensus were to be made. This gave a strong means of pressure t o those signatories of the Convention, such as France, the Netherlands and Japan, who insisted in giving the signatories of the Final Act as important a role as possible. Notwithstanding this, the road for attributing the observers mentioned i n A r t . 2 of Resolution I their full role in the elaboration of the Rules of procedure was not an easy one. I n the first phase of its work for 1983 the Preparatory Commission virtually never met in plenary. A l l work was conducted in informal meetings of the regional groups and in "informal consultations" of the Chairmen of these groups under the Chairmanship of the Interim Chairman, the Special Representative of the Secretary-General of the United Nations, and, after his election, under the chairmanship of the Chairman of the Commission. W i t h i n the five Regional groups much work was done i n this phase on the preparation of the Rules of Procedure. The full participation of observers signatory of the Final A c t to these deliberations was never questioned in the "Western European and Other States" Group, the group that included most of these observers. I n the other groups the problem apparently never arose because of the minimal number of such observers present in these groups. Difficulties arose when a first "informal consultation" meeting was proposed for developing an agreement on the Rules of procedure. I t was proposed that each regional Group participate i n this meeting w i t h a small group o f its member States. When i t transpired that the Western European and Others Group intended to include in its delegation one of the observers under para-

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graph 2 of Resolution I , opposition arose from various quarters and the consultations could not be held. During the second part of the 1983 session i t was decided that negotiations on the Rules of procedure would be held in a Working Group of limited composition. The informal consultations between the Regional Groups on the participation in the Working Group by the observers signatories of the Final A c t proved extremely difficult. The compromise reached at the end was the following: each regional group was to be represented in the Working Group by a certain number of delegations, one of which could be an observer. I t was nonetheless admitted that observers could follow a principle of rotation, to be applied by indicating at the beginning o f each meeting which observer delegation would participate. This arrangement proved difficult to accept for at least some of the observers signatories of the Final Act. This dissatisfaction opened the way to a practice of rotation of the observers during the meetings. Whenever one of them wished to take the floor, the observer that held the observers' seat by rotation w o u l d give up his place. This practice was not resisted by the other delegations and indicated a radical change i n the atmosphere of the Preparatory Commission as regards the observers signatory of the Final Act. This change of atmosphere was evidenced by the businesslike development of the negotiation and by the reasonable solutions that were adopted. 3. The negotiations on the Rules of procedure, conducted w i t h i n the aforementioned W o r k i n g Group, and, on some aspects, in informal consultations between the Chairmen of the Regional Groups under the chairmanship of the Chairman of the Commission, had six basic documents to consider. The first was a set of draft Rules of procedure prepared by the Secretariat. 6 The other five were the documents containing f u l l sets of proposed Rules of procedure presented by the Eastern European Socialist States7, by the Western European and Other States8, by the Asian Group 9 and by the African Group 1 0 , as well as a paper, presented by the Latin American Group 1 1 , which contained a series of amendments t o the Secretariat's paper. As far as the role of observers was concerned the Secretariat's proposal d i d not focus too much on it, trying to keep as neutral as possible on this controversial subject. Significant indications on the different positions under discussion came from the proposals of the Regional Groups, especially from β U N Doc L O S / P C N / W P . 1 of 21 M a r d i 1983. 7 U N Doc L O S / P C N / W P . 3/Rev. 1 of 18 August 1983. s U N Doc L O S / P C N / W P . 5 of 31 M a r d i 1983. β U N Doc L O S / P C N / W P . 10 of 23 August 1983. io U N Doc L O S / P C N / W P . 11 of 23 August 1983. n U N Doc L O S / P C N / W P . 9 of 22 August 1983.

20'

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those of the Eastern and Western European as well as of the Latin American States. The document of the "Western European and Other States" endeavoured to put observers signatories of the Final A c t as much as possible — though w i t h i n the limits of paragraph 2 of Resolution I — on the same plane as Member States. I t tried, however, to reserve this position only to those observers signatories of the Final Act that, being States or international organizations, were potential full members of the Convention. I n other words, this document tried to draw a line between this category of signatories of the Final A c t and the national liberation movements which were entitled to sign the Final Act, and have in fact done so, but who are not entitled to sign the Convention. According to this document, for instance, the first category of signatories of the Final Act, was to be represented by accredited delegations, while for the second category designation of representatives was considered appropriate. 12 The purpose of insisting on such a distinction was that of assimilating as much as possible observers signatories of the Final Act to full members of the Commission. The Eastern European Socialist States' document supported the opposite point of view. I t tried to distinguish as much as possible the position of full members from that of the observers signatories o f the Final Act. Thus, for instance, only the representatives of full members were to be accredited and the number of delegations required to have a quorum was indicated in terms of full members while the Western Group proposed that also observers signatories of the Final A c t had to be included. The same distinction was carried on in the proposals on other matters, such as points of order, adjournment of the debate, closure of the debate, etc. 1* The Latin American Group explained in its document the rationale to be followed in drafting the Rules of procedure. (. . .) the rules of procedure should be so formulated as to ensure respect for the principle that decision-making is limited to the signatories of the Convention. Accordingly, where the rule involves the process of decisionmaking, the right should be limited to representatives and members and should not extend to other representatives. W i t h this in mind — the document continues — it was considered necessary to find appropriate language so as to ensure that in circumstances of decision-making references would be confined to representatives of members and members of the Preparatory Commission. 14 12 U N Doc L O S / P C N / W P . 5, rule 2. is U N Doc L O S / P C N / W P . 3/Rev. 1, rules 4, 5, 17, 23, 24, 25 and 26. 14 U N Doc L O S / P C N / W P . 9, para. 13.

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This formulation of the policy to be followed is a fair indication of the direction followed by the negotiations. From the proposals of the Regional Groups, and, even more so, from difficulties encountered in determining the position of the observers signatory of the Final Act in the negotiating process concerning the Rules of procedure, the main points of contention appeared to be the two following. First, did the "taking of decisions", from which observers signatories of the Final Act are excluded under Resolution I , include decisions on procedural matters, or only decisions on substance? Second, what was the precise meaning to be given to the w o r d "participate" in paragraph 2 of Resolution II? I n other words, where did full participation " i n the deliberations" end and where did participation " i n the taking of decisions" begin? The importance of these problems appears very clearly i f one considers that in the Law of the Sea Conference, and also, prospectively, in the Preparatory Commission, most negotiations are conducted in various kinds of subsidiary organs, informal groups, informal consultations etc., and that these negotiations are considered as essential aspects of a process leading to the taking of decisions by consensus. I n the following t w o paragraphs we w i l l consider in turn, together w i t h some less controversial matters, these t w o major aspects of the problem in the light of the solutions set forth in the Rule of procedure adopted by the Preparatory Commision and also in the light of the lack of solutions that one finds in these rules as far as certain aspects are concerned. 4. The Rules of procedure adopted by the Preparatory Commission 15 repeat, in Rule 2, the second sentence of paragraph 2 of Resolution I of the T h i r d United Nations Conference on the Law of the Sea, according to which signatories of the Final Act of the Conference may practicipate fully in the deliberations as observers but shall not be entitled to participate in the taking of decisions. The meaning of this sentence is clarified to a certain extent i n the other rules adopted. A first aspect seems t o emerge from a comparison between Rule 2 and Rule 3. The latter rule concerns observers other than the signatories of the Final Act. According to paragraph 3 of this rule, Upon the invitation o f the Chairman of the Preparatory Commission or a Special Commission, as the case may be, such observers may participate on questions w i t h i n the scope of their competence but shall not be entitled to participate in the taking of decisions. U N Doc L O S / P C N / 2 8 of 23 November 1983, also reproduced in: International Legal Materials vol. 22 (1983), 1352—1367.

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Moreover, according to paragraph 4, the Secretariat shall distribute written statements submitted by such observers, provided however that such statements are w i t h i n the scope of their competence and related to the work of the Preparatory Commission. These statements shall be distributed only in the languages and quantities in which they are made available. The absence of any such rule for observers signatory o f the Final Act seems to indicate that the limitations contained therein do not apply to them. Consequently, they may participate in all questions considered by the Preparatory Commission and submit proposals and amendments on the same footing as the full members. This appears clear from Rule 28 on proposals and amendments where no distinction is made as far as who is entitled to submit them is concerned. The practice so far followed seems to confirm this conclusion. Observers signatory of the Final A c t have obtained some satisfaction as to the rules on the modalities of representation, but they did not obtain the full assimilation to members they aspired to as regards the quorum and the questions linked to the taking of decisions on procedural matters. As to representation, the Rules of procedure provide that while full members shall be represented by accredited delegations, whose credentials are to be examined by the Credentials Committee, observers (including, however, those not having signed the Final Act) shall be represented by accredited or designated representatives. 16 I f the observer chooses t o send designated representatives, no consideration by the Credentials Committee is necessary. As far as the quorum is concerned, the presence o f observers signatory of the Final A c t was considered irrelevant, 1 7 even though i t was argued that for the opening of a meeting what is required is the presence of a sufficient number of the delegations entitled to take part in its deliberations, while other rules apply for the taking of decisions. Thus, the position of the "Western European and Others" Group of States was not accepted. Coming now to various examples, considered by the Rules, for the conduct of business in the meetings — such as points of order, adjournment of debate, closure of debate, suspension or adjournment of the meeting — the Rules of procedure provide that the representatives of all delegations can move for the adoption of such decisions, and thus also observers signatory of the Final A c t . 1 8 However, only representatives of members may appeal against the Chairman's ruling on a point of order. 19 Moreover, decisions on the appeal, as well as 16

Ibid., rule 4, para. 2. 17 Ibid., rule 16. « U N Doc L O S / P C N / 2 2 , rules 22, paras. 1, 23, 24, 25. 19 Ibid., rules 22, paras. 2, 23, 24, 25.

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decisions on the adjournment and closure of the debate, and on suspension or adjournment of meetings, shall also be taken only by representatives of members. 20 The problem, upon which there was room for disagreement, was whether observers entitled t o participate fully in the deliberations could be included in the t w o delegations which may speak in favour of, or in the t w o that may speak against motions for adjournment or closure of the debate or for suspension or adjournment of a meeting. This was solved by excluding their participation in this process. According to the relevant rules, only representatives of members may speak for or against the adoption of these procedural motions. The principle set forth in the rules mentioned above about particular decisions on matters of procedure is also contained in a rule concerning decisions on procedural matters in general. According to paragraph 1 of Rule 34 "except as otherwise specified in these rules, decisions of the Preparatory Commission on all matters of procedure shall be taken by a majority of the representatives present and voting". Rule 33 provides that for the purposes of these rules, the phrase "representatives present and voting" means representatives of members present and casting an affirmative or negative vote. As it appears clearly from these and the other rules we have considered, the Preparatory Commission has adopted a rather wide interpretation of the "decisions" from the taking of which observers signatories of the Final A c t are excluded. The interpretation — which would not have been unreasonable — according to which only decisions on substance are included in this notion, was not accepted. 5. The most difficult problem of drafting provisions in the Rules of procedure on the position of observers entitled to participate fully in the deliberations but not in the taking of decisions was posed by the taking of decisions by consensus. Indeed, as far as decision-making by vote was concerned, there were no difficulties: rules excluding observers signatory of the Final Act both from the voting and from the requirements for the quorum for voting were easily agreed upon. But what k i n d o f rules could be adopted for a decision-making process that culminates in the adoption of decisions without objection in a meeting formally convened, though not necessarily formal, and developed through a number of consultations, informal meetings, etc.? 21 20 For some developments and bibliography, M. Giuliano Internazionale, vol. 1, 2nd. ed., Milano 1983, 105—106. si U N Doc L O S / P C N / 2 2 , rules 35, 36, 39, 40.

/ T. Scovazzi / T. Treves , Diritto

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The starting position of some member States of the Preparatory Commission was that since informal consultations similar devices are created in order to facilitate the reaching of consusus, they should be regarded as an integral part of the decision-making process. Consequently, observers signatory of the Final A c t had to be excluded from all the non-plenary bodies of the Commission. A reflection of this attitude was the objection raised when the participation of an observer in the delegation of the "Western European and Others" Group to an early round of consultations convened on the Rules of procedure was proposed. The position of the observers signatory to the Final A c t as well as that of a wide group of members of the Commission, mostly but not exclusively from States of the Western Group, was that all debates and activities taking place in groups w i t h restricted participation were part o f the "deliberations" of the Preparatory Commission. As the final approval of decisions belongs t o the Plenary of the Preparatory Commission, observers signatory of the Final A c t would only have to be excluded from the adoption o f these decisions, by vote or by consensus, when proposals developed in informal or subsidiary organs come to the Plenary. N o t all of the questions implied in these t w o opposite positions were solved i n the Rules of procedure. However, the only rule adopted on these matters gives full satisfaction to the observers signatory of the Final Act. According to Rule 10, para. 3, The Special Commissions and other subsidiary bodies o f the Preparatory Commission shall be open t o all members and t o all observers under rule 2. Through this, full participation of the observers signatory of the Final Act is insured not only i n the four Special Commissions t o which most of the substantive work of the Preparatory Commission is entrusted, but also in any subsidiary -body that might be established in the future. Thus the more restrictive solution foreshadowed by the agreement on the composition of the W o r king Group for the establishment of the Rules of procedure considered above was abandoned. I t is, however, possible to foresee difficulties in the application of this rule in certain cases. The borderline between "subsidiary bodies" and even less formal fora for negotiations, such as "informal consultations" of various kinds, is indeed very difficult to draw. The other fundamental aspect regarding decision-making by consensus in the Preparatory Commission not regulated in the Rules o f procedure was the determination of the point where "deliberations" end and the "taking of decisions" begins. Taking into account the general practice in the making of

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decisions by consensus i n international organs as well as the rules on procedural decisions examined above, we can make the following observations. The making of proposals and participation in debates on these or other proposals as well as the submitting of amendments, belong to the "deliberations". This seems difficult to deny, and is confirmed both by the above quoted Rule 28 on proposals and amendments and by the practice followed so far by the Preparatory Commission. Various proposals have been submitted by observers signatory of the Final Act, albeit in association w i t h members 22 , and on numerous instances the observers signatory of the Final Act have taken the floor on the same level as the full members in the debate on proposals under discussion. When the moment of crystallizing the decision by ascertaining whether there is consensus comes, then, and only then, does the position of observers signatory of the Final Act become different from that of full members. I t would seem inherent in the non-participation of such observers in the taking of decisions that they cannot, by voicing their objection, preclude a decision from being taken b y consensus. Observers signatory of the Final Act can certainly make comments on the decisions taken. These comments, however, are different in nature from the statements that full members of the Preparatory Commission may make. As practice of decision-taking by consensus in international conferences and organizations shows, the latter statements have the effect of qualifying in various ways the consensus reached and especially the degree to which the State that makes them considers itself bound by the decision. These effects cannot be attributed to declarations made by States for whom, in any case, the decision is not binding. I t cannot be excluded, however, that such statements of the observers signatory of the Final Act serve a different purpose from that of l i m i t i n g the scope of the decision taken. They could aim at unilaterally binding the observer to some decisions or aspects of decisions taken by the Preparatory Commission. I n this case they could have legal effects. 6. The situation of observers signatory of the Final Act of the T h i r d United Nations Conference on the Law of the Sea is something new, especially because of the importance given to the subject and of the elaboration i t has found i n the Rules of procedure of the Preparatory Commission. Indeed, some situations in which observers enjoy a similar status can be found in internatio22 This is the case of the proposals submitted by the "Group of seven" industrialized countries which includes full members as France, Japan and the Netherlands and observers signatory of the Final Act as Belgium, Federal Republic of Germany, Italy, United Kingdom; see U N Docs. L O S / P C N / W P . 13 and add. 1 and corr. 1 of 26 August 1983, U N Doc L O S / P C N / W P . 17 of 20 March 1984 and U N Doc L O S / P C N / W P . 18 of 21 March 1984.

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nal practice. 23 But these precedents are rather sparse. I t is more interesting to ask whether the position of observers signatory of the Final Act in the Preparatory Commission can serve as a precedent for future developments in practice. I t would seem that this or similar solutions for allowing participation in deliberations without participation in the taking of decisions may prove useful in some circumstances. For instance, in the discussions currently held about participation i n a Conference to be convened according to the United Nations General Assembly's Resolution 38/139 of 19 December 1983 for the adoption of a Convention on Treaties between States and International Organizations and between International Organizations, the most delicate problem is to determine to what extent international organizations can participate. The interest of involving the organizations in a conference on such a subject is evident. The International L a w Commission i n its commentary to the D r a f t Articles approved by i t in 1982 pointed out that i t is hardly conceivable that international organizations w i l l not be associated in some way w i t h the drafting of the convention in question. 24 Indeed the problem of involving the organizations i n the planned codification Conference is being actively discussed w i t h i n the framework of the United Nations, even though at the time of the w r i t i n g of this paper (summer 1984) no decision has yet been taken. States, however, seem to agree that the t w o extreme solutions, i. e. that of giving the Organizations full voting rights and that of giving them only the traditional position of observers, are not viable for a Conference on Treaties between States and International Organizations and between International Organizations. Thus, solutions between these t w o extreme ones are being sought. Among those mentioned in informal discussions, one finds not only the idea of a two-tiered structure, in which the participation of International Organizations would take place in a separate chamber and perhaps w i t h a somewhat limited influence on the final decisions, but also solutions according t o which International Organizations would have the right to participate i n the discussions and also to make proposals or amendments (on their own, or, according to some, w i t h the sponsorship of a State) but w o u l d have no right t o participate in the decision-making process. I t seems evident that these solutions are directly influenced by the rule of para. 2 of Resolution I of the T h i r d United Nations Conference on the Law of the Sea and by the practice i t has generated. 23 Cf. Eric Suy , The Status of Observers in International Organizations, in: Recueil des Cours vol. 160 (1978 I I ) , 79—177 (123—149). 24 Report of the International Law Commission on the work of its thirty-fourth session, in: U N Doc A/37/10, 24.

The Legal Status of the Enclosed and Semi-Enclosed Seas Janusz Symonides I. T h e Q u e s t i o n o f t h e E n c l o s e d and Sem i - Ε n c 1 o sed in the D o c t r i n e of I n t e r n a t i o n a l Law Prior to the T h i r d Conference on the Law of the Sea, the enclosed and semi-enclosed seas had belonged principally to the study of the law of nations, and then only as a marginal issue, while remaining alien t o the positive law. The term was used in t w o meanings, first to denote a certain geographical reality or situation, and second, w i t h an intention to construe or advance a thesis about a special legal status for these areas. I n either case the doctrine remained far from homogenous and not free from contradictory opinions. A rough survey of attitudes i n this field is usually enough to observe how views differ over such a basic question as the geographical conditions necessary to call a sea enclosed or semi-enclosed. According t o M. Sibert 1 when ocean waters penetrate deep into the mainland we are dealing w i t h the inner sea. I f , as is the case w i t h the Dead Sea, the Caspian Sea, or the A r a l Sea, there is no connection w i t h the ocean, then they are called enclosed seas, or — conversely — inner non-enclosed seas when such a connection exists as e. g., the Black Sea, the White Sea, or the Baltic Sea. What C. Colombos lists under the heading "inland seas" are waters both connected and those without connection to the open seas.2 I n Soviet literature the term "enclosed sea" generally covers both waters surrounded by land of t w o or more states without a connection to the open sea, and waters surrounded by the territories of t w o or more states and connected to the open seas by a strait or a channel which constitutes a waterway leading solely to the shores of the coastal states.3 Soviet literature on the 1

Marcel Sibert , Traité de droit international public, vol. 1, Paris 1951, 739. C. John Colombos , The International Law of the Sea, sixth revised edition, London 1967, 191—192. 3 5. B. Molodtzov , in: Mezhdunarodnoe pravo, Moscow 1957, 222; also V. A. Radyonov , in: B.V. Levin / G.P. Kaluzhnaia (eds.), Mezhdunarodnoe pravo, Moscow 1960, 175; A.S. Bahov , Voenno-morskoi mezhdunarodno-pravovoi spravodinik, Moscow 1956, 53 etseq. 2

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subject mainly uses the term "enclosed seas" although "semi-enclosed sea* is at times employed a well w i t h respect to e. g., the Black Sea, or the Baltic 4 ; the term "regional sea" is equally seldom used.5 P. Staynov's complex classification of marine areas defines a semi-enclosed sea as a water basin situated on the same level as an ocean w i t h which i t is connected by a strait narrower than 24 miles and surrounded by a small number of states.® As far as Polish literature is concerned, the term "semi-enclosed sea" as a rule refers to waters surrounded by the territory of t w o or more states and connected to the open seas by outlets such as the Baltic Sea or the Black Sea.7 Eventually, one and the same basin, e. g., the Caspian Sea is classified under the following headings: internal sea, land-locked sea, enclosed sea, or even a lake 8 ; the Baltic, in turn, is sometimes referred to as internal sea, land-locked sea, enclosed sea, semi-enclosed sea, or a regional sea. However, in spite of all the terminological differences which nonetheless were not irrelevant in attempts to discern between enclosed and semi-enclosed seas during the T h i r d U N distinguished three kinds of enclosed seas: 1) totally closed by the territories of two or more states and without a connection to the open seas; 2) a sea surrounded by the territory of two or more states with a connection to other seas through one or several narrow straits, the regime of which is regulated in an international convention e. g., the Blade Sea or the Baltic; 3) seas surrounded by the territory of one or more states and linked with other seas like the Japan Sea but lacking an appropriate convention; in G. / . Tunkin (ed.), Mezhdunarodnoe pravo, Moscow 1974, 291, seas connected with other seas are called enclosed seas. 4

F. I. Kozhevnikov

(ed.), Mezhdunarodnoe pravo, Moscow 1964, 232.

5

S. A. Malinin , Κ voprosu ο pravovoi klasifikacyi vodnih prostranstv, in: Informatcyonnyi sbornik — Morskoe pravo i praktika 1960, no. 46, 13—19 put forth a term "regional sea* and defined four conditions which it ought to fulfil: 1) specific coastal line; 2) coast's attachment to a limited number of states whose territories surround the sea; 3) limited access to that sea i. e., narrow entrance; 4) lack of international sea lanes. 6 Petko Staynov , Establishment of a Special International Statute of the Semi-enclosed Seas, in: Bulgarian Association of International Law, Studies on International Law, vol. I I , 29—40 (29—30). His classification includes: the open sea, territorial sea, inner sea, inland sea, lakes, bays and semi-enclosed seas. The Mediterranean is excluded from the last category since it has two natural outlets, Gibraltar and the Dardanelles, and it is surrounded by a large number of states. 7

Janusz Gqsiorowski, Wspôlczesny status prawny stref rybolôwstwa morskiego na Morzu Baltyckim (The Contemporary Legal Status of Marine Fishing in the Baltic Sea), in: Wybrane zagadnienia prawa morskiego (The Law of the Sea: Selected Problems), Instytut Morski, Gdansk 1980, 68; Wojciech Gôralczyk , La mer Baltique et les problèmes de coopération des États riverains, in: Revue générale du droit international public ( R G D I P ) vol. 84 (1980), 269—283 (271); Janusz Symonides , Legal Status of the Baltic Straits, in: Polish Yearbook of International Law vol. I V (1971), 119—146 (132). 8

Juraj Andrassy, Mezhdunarodnoe pravo, Zagreb 1976, 149; Ludwik Gelberg , Problemy prawne wspôlpracy paôstw bahyckich (The Cooperation of the Baltic States: Legal Problems), Wroclaw - Warszawa - Krakôw - Gdansk 1976, 101, footnote 1.

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Conference on the L a w of the Sea, the doctrine has consistently stressed since the beginning of the seventies that both the enclosed and semi-enclosed seas are relatively small basins surrounded by the territories of two or more states. As concerns the legal consequences of specific geographical location of the enclosed or semi-enclosed seas, there exist two general approaches. The first — the dominant one — holds that the very geographical location alone has no legal consequences whatsoever, while the status of such basins is defined by whether they are surrounded totally, including the shores of the outlet, by one state or by two or more states. I n the former case, such basins are considered by law to be internal waters, while in the latter case they are considered to be open seas.9 Another standpoint, chiefly represented in the socialist doctrine, proceeds from the assumption that in the case of a basin surrounded by several states and connected to the open seas by a waterway leading exclusively to their territories, there occurs a specific community of interests between the coastal states concerned. I t is so because these states are interested in determining the legal status of the basin, which would guarantee security and eliminate a threat or use of force against them. This objective can be achieved through, above all, preventing access to foreign warships. Recalling past precendents 10 , international agreements as well as geographical location, the Soviet writers advanced a v i e w 1 1 that both the Baltic and the Black Sea enjoy a special legal status. However, the nature of that theory was 9 L. Oppenheim / H. Lauterpacht, International Law, eighth edition vol. 1, London 1955, 588; Milan Bartos, Medzhdunarodno yavno pravo. vol. II,Belgrade 1956, 165 etseq.; Colombos (note 2), 192 etseq.; Sibert (note 1), 740. O f course under art. 7 of the First Geneva convention of 1958, when an outlet connecting enclosed or semi-enclosed sea belongs to only one state this outlet may not be wider than 24 miles. 10 As far as the Baltic is concerned its special legal regime was established during the Seven Years War. I n 1759, Russia signed a convention with Sweden, under which parties undertook to protect the Baltic against war operations. Also in conventions signed by Russia and Denmark and Sweden in 1780 the parties agreed to close the Baltic to foreign warships. The secret articles of the 1781 treaty between Russia and Prussia declared the Baltic to be a closed sea, the Treaty banned all military activity in the sea but left the Baltic open to all merchant ships. Although both special and secret articles of the treaty on armed neutrality concluded by Russia and Denmark in 1800, declared the Baltic to be a closed sea for ever, in practice its neutrality ended at the beginning of the 19th century; see: Remigiusz Bierzanek , Morze otwarte ze stanowiska prawa miçdzynarodowego (The H i g h Sea: A n International Law Approach), Warszawa 1960, 287 etseq.; Gelberg , (note 8), 13. The Black Sea used to be an internal sea of the Ottoman Empire and thereby closed to all foreign navigation until Russia gained access to it in 1774. Under subsequent treaties of 1841 and 1856 the Black Sea's straits were opened to merchant ships but remained closed to warships. The 1923 treaty of Lausanne removed definitely all obstacles to navigation in the Black Sea. 11 E. A. Korovin (ed.), Mezhdunarodnoe pravo, Moscow 1951, 309; A. D. Keillin, Sovetskoe morskoe pravo, Moscow 1954, 61; V . I . Lissowski, in: Mezhdunarodnoe pravo, Kiev 1955, 145; idem, Mezhdunarodnoe pravo, Moscow 1957, 222; i dem, Mezhdunarodnoe pravo, Moscow 1960, 175.

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principially one of a claim or a postulate de lege ferenda , and as such had not been confirmed by the law of the sea.12 The only semi-enclosed sea w i t h certain agreed limitations on the freedom of navigation w i t h respect to warships from without that basin is the Black Sea. The 1936 Montreux Convention 1 3 provides that the joint tonnage of ships belonging to non-Black Sea states i n the Black Sea cannot exceed thirty thousand, and under some conditions, forty-five thousand tonnes. The total tonnage of foreign ships in transit in the straits cannot exceed fifteen thousand tonnes. What is worth noting and what the Soviet doctrine duly stressed 14, is that certain limitations of the freedom of navigation i n the Black Sea stem from the legal status of the straits and not that of the sea itself, and additionally, that such a solution has not been determined either chiefly or exclusively by the geographic factor but rather by a set of geopolitical elements. N o r were these limitations accepted by the Black Sea states only — some states from without that basin are also parties to the Montreux Convention. I n this understanding, this solution is not at variance w i t h the law of the sea, i t is also accepted by the international community. The Convention on the L a w of the Sea states in its Part I I I , art. 35 that its provisions do not affect the legal regime of the straits " i n which passage is regulated i n whole or i n part by long-standing international conventions i n force specifically relating to such straits". The special status of semi-enclosed seas was discussed during the 1958 Geneva Conference but a proposal to include in the convention the following text: "for certain seas a special régime of navigation may be established for historical reasons or by virtue of international agreements" 15 was withdrawn and the question of the enclosed and semi-enclosed seas found no reflection in the Geneva Convention. 12 The special status of the Baltic Sea and the Black Sea has been questioned, see: Bartos , (note 9), 165 etseq.; William E. Butler , The Soviet Union and the Law of the Sea, Baltimore and London 1971, 116 etseq.; Kazimierz Grzybowski, The Soviet Doctrine of Mare Clausum and Politics in Black and Baltic Seas, in: Journal of Central European Affairs vol. 19 (1954— 55), 344 etseq.; H. A. Keinhemeyer, D i e sowjetische Zwölfmeilenzone in der Ostsee und die Freiheit des Meeres, Köln 1955, 122 etseq.; T. Milan , Mare Clausum Balticum and the Law of the Sea, in: Osteuropa Redit vol. 21 (1975), 103—118. 13 League of Nations Treaty Series vol. 173, 213, a German translation is reprinted in: Jost Delbrück (ed.), Friedensdokumente aus fünf Jahrhunderten, Kehl am Rhein 1984, 1005—1013. 14 A. F. Wysocki, Chornoe morie, mezhdunarodno-pravovye voprosy, Kiev 1979, 102 etseq.; P. W. Sawaskow , Ο pravovom rezhime zamknutih i poluzamknutih morei, in: Mezhdunarodnopravovye problemy Mirovogo okeana na sovremiennom etape, Moscow 1976, 128. « U N Doc. A / C O N F . 13/C. 2/L. 26 submitted by Ukraine and Romania, U N Conference on the Law of the Sea, Official Records, vol. I V , 123.

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While the discussion that was going on during the fifties and the sixties unsuccessfully attempted to couple the question of the enclosed and semi-enclosed seas w i t h restrictions on the warships freedom of navigation, the ideas that surfaced during the seventies reached further out toward a serious restriction of other freedoms of the high seas as well. L. Alexander for example, thought that states bordering semi-enclosed seas have the right to l i m i t not only the navigation of foreign warships but also of special vessels such as tankers; he also pondered the exclusion of the freedom of marine scientific research, restrictions on fishing, and decentralisation of the combating of marine pollution. 1 6 P. Staynow argued that new technologies of exploitation of marine natural resources, a growing threat of pollution and greater interdependence of the neighbouring states have together culminated i n a total change of their positions. I n view of this fundamentally new situation and in conformity w i t h the clause rebus sic stantibus he advanced a review of the old formula of mare liberum toward reconciling international conventions on the high seas w i t h the new approaches to the exploitation of the semi-enclosed seas. H e added, however, that such a change cannot by any means be reached by the coastal states alone without the consent of the other states from without such basins. 17 These ideas were paralelled by a drive towards expansion of the definition of the semi-enclosed seas to cover such large basins as the Mediterranean or the Caribbean Sea. 18 A l l this began to threaten a breakdown of the universal law of the sea into unrelated parts, and its substitution w i t h several systems of regional norms. Negative and dangerous consequences of such a turn have been perceived by the international community all too clearly to muster a firm criticism and a rejection during the Third Conference on the Law of the Sea. II.

The Q u e s t i o n of the Enclosed and S e m i - E n c l o s e d Seas at t h e T h i r d U N Conference o n t h e L a w o f t h e Sea The discussion on the enclosed and semi-enclosed seas during the Conference 19 began at its Caracas session — mostly w i t h i n the Second Committee,

16 Lewis M. Alexander, Special Circumstances : Semi-enclosed Seas, in: John King Gr amble / Giulio Pontecorvo (eds.), Law of the Sea: The Emerging Regime of the Oceans, Proceedings of the Eight Annual Conference of the Law of the Sea Institute, June 18—21, 1973, U n i versity of Rhode Island, Cambridge 1974, 201—215 (210—211). Staynov (note 6), 32. The requirement to recognize or express consent by the third party also plays an essential role in the implementation of disarmament concepts which affect semi-enclosed seas. As regards the Baltic the idea that "the Balitc is a sea of peace" was put forward by Poland and the G D R in 1957 in a declaration of the t w o governments, see: Zbiôr Dokumentôw — Recueil de Documents no. 617 (1957), 1435. 18 Madjid Bencbikh , La mer Méditerranée, mer semi-fermée, in: R G D I P vol. 84 (1980), 284—297, Jean-François Pulvenis , La mer des Caraïbes, in: R G D I P vol. 84 (1980), 310—327. 19 Although point 17 dealing with the enclosed and semirenclosed sea was on the agenda

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although from time to time it was discussed during plenary meetings as well. The discussion centered around three points: whether the provisions relating to the enclosed and semi-enclosed seas should be incorporated in the future convention; what should be the essence of the enclosed and semi-enclosed seas; and whether it could affect the rights of states from w i t h i n these basins. Thirteen states 20 expressed their views during the debate in the Second Committee in August 1974, France and Greece were against including the provisions on the enclosed and semi-enclolsed seas into the future convention. /. P. Queneudec of France stressed that the very term "enclosed and semienclosed seas" was not a traditional concept of international law and said that it seemed to be an exceptionally vague geographical notion lacking appropriate legal rules. Its inclusion in the law of the sea could ultimately lead to a resuscitation of the old Roman formula of mare nostrum w i t h the consequent risk of establishing a mare clausum. The Greek representative likewise pointed out that numerous problems are bound to arise i f such a vague idea without a legal definition was incorporated into the future convention. The majority of states which took the floor during the plenary debate 2 1 or in the Second Committee voiced no objections to the problem being given special consideration. Consequently, relevant decisions have been introduced into the Informal Single Negotiating Text ( I S N T ) drafted by the Chairman of the Second Committee. The problem of whether i t was proper to include articles on the enclosed and semi-enclosed seas in the convention recurred sporadically during informal discussions at the Second Committee, particularly during its fourth, fifth and seventh sessions. However, during the tenth session in March 1980, the Federal Republic of Germany proposed to delete all of its I X t h part which was devoted to this question. 22 of the Committee for Peaceful Uses of Sea-bed and Ocean Floor beyond the Limits of National Jurisdiction no concrete proposal had been submitted in its Second Subcommittee to deal with the problem in a comprehensive manner; Cf. 1973 Report of the Committee U N Doc. A/9021 and Corv. 1 and 3; only Turkey and Uruguay raised the question in draft articles on the breadth of the territorial sea U N Doc. A / A C . 138/SC. I I / L . 16, and U N Doc. A / A C . 138/SC. I I / L . 24. 20 These were the following: Iran, Israel, Denmark, Sweden, Thailand, France, Iraq, G D R , Turkey, USSR, Greece, Algeria, People's Democratic Republic of Yemen, see: Third United Nations Conference on the L a w of the Sea, Official Records, vol. I I , 273—278. 21 Among others, the following states took the floor during a plenary session on enclosed and semi-enclosed seas: Trinidad, Tobago, Cuba, Finland, Libya, Denmark, the Netherlands, Thailand, Turkey, see: Third U N Conference on the Law of the Sea, Official Records, vol. I , respectively 71, 115, 130, 136, 140, 148, 168—169. 22 Informal Proposal by the Federal Republic of Germany, Part. I X . Enclosed and semienclosed seas'. Delete Part. I X (articles 122 and 123). C. 2 Informal M e e t i n g / 6 1 , 21 March, 1 9 8 0 / . Proposals to delete articles on enclosed and semi-enclosed seas were also advanced during the seventh and eight sessions of the Third Conference.

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As regards the content of the decisions on the enclosed and semi-enclosed seas, the view was fairly widespread that the relevant articles, besides the definition, should focus on cooperation of the coastal states; another thing was that the scope of the articles was perceived differently. The initial stage of the T h i r d U N Conference also saw proposals to adopt solutions which w o u l d inevitably lead to a substantial limitation upon other states.23 Significant here were the Libyan proposals submitted during the plenary session to recognize the resources of the semi-enclosed seas as the heritage of the coastal states; the Mediterranean, which is a semi-enclosed sea, should be a sea of peace, free from any foreign fleets that might threaten the security and health of the coastal peoples. 24 This subject was also present in the Iranian proposal 25 concerning articles on the enclosed and semi-enclosed seas submitted i n Caracas. The Iranian document included an explicit statement that the general norms of the future convention should apply to the enclosed and semi-enclosed seas in a manner consistent w i t h the special characteristics of these seas and the needs and interrests of their coastal states. The proposal did not explain the meaning of the "special characteristics" of those seas nor did i t specify the needs and interests of the coastal states or name the decision-makers. Instead, what i t did implicate seriously threatened the rights of other states, the more so in that it envisaged the adoption of regional rules and standards regarding protection against pollution and made marine scientific research conditional upon the consent of the coastal states. Also disputable was the Turkish proposal 26 to extend i n a manner consistent w i t h equity the application of the general provisions set out i n the other chapters of the Convention (relating to the territorial sea and the economic zone) to the enclosed and semi-enclosed seas. This entailed a danger of such a modification or interpretation of the fundamental norms of the law of the sea which would substantially jeopardize the interests of the entire international community. Attempts at impairing the rights of the third party encountered firm opposition right from the beginning of the Conference. The Soviet representative Ρ. Barabolyz explicitely stated 27 that the Soviet U n i o n would not accept any 23 The view expressed by Bernard H. Oxman , The Third United Nations Conference on the Law of the Sea: the 1977 N e w Y o r k Session, in: American Journal of International L a w ( A J I L ) vol. 72 (1978), 57—83 (80) that the Conference allegedly never heard proposals designed to restrict freedom of navigation on semi-enclosed seas does not quite conform to the facts. 24 The Third United Nations Conference on the Law of the Sea, Official Records, vol. I , 133. 2 5 U N Doc. A / C O N F . 62/C. 2/L. 72. 2β U N Doc. A / C O N F . 62/C. 2/L. 56. 27 The Third U N Conference on the Law of the Sea, Official Records, vol. I I , 277.

21 GYIL 27

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special regime benefiting any state in waters that had traditionally been used by all countries for international shipping on a basis of equity. Specific solutions to problems must be arrived at by agreement between the coastal states concerned without prejudice to the legitimate interests of other countries of the world. Designed to remove any doubts over this issue, the Informal Single Negotiating Text drafted by G. Pohl in Geneva in M a y 1975, included article 135 stating that: "The provisions of this part [concerning the enclosed and semienclosed seas] shall not affect the rights and duties of coastal or other States under other provisions of the present convention and shall be applied in a manner consistent w i t h those provisions". Although the article was not at all criticized, i t was omitted i n the Revised Single Negotiating Text (RSNT) drafted by A. Aguilar. The reasons behind this move were not explained though i t may be assumed that he had thought the article redundant as too obvious. This standpoint failed to find universal support and subsequent sessions saw proposals to restore the omitted article or include in its place a better wording. The amendments were submitted at the sixth and the seventh sessions28 but passed unnoticed, while A. Auguilar's text was not further improved and, ultimately, was included in the Convention. Part I X concerning the enclosed and semi-enclosed seas includes t w o articles: Article 122 which carries the definition, and Article 123 which deals w i t h cooperation of states bordering enclosed or semi-enclosed seas. III. D e f i n i t i o n o f t h e E n c l o s e d a n d S e m i - E n c l o s e d

Seas

A n answer to the question about the enclosed and semi-enclosed seas was attempted as early as the Caracas session. I r a n proposed 29 to distinguish between these t w o notions, and the term "enclosed sea" would refer to "a small body of inland waters surrounded by t w o or more states which is connected to the open seas by a narrow outlet", while "semi-enclosed sea" would refer to "a sea basin located along the margins of the main ocean basins and enclosed by the land territories of t w o or more states". Iraq's proposal 30 defined the semi-enclosed sea only as "an inland sea which is surrounded by t w o or more states, which may provide a corridor of the 2 8 Restoration of article 135 was consistently supported by Iraq, while Algeria, Libya, Romania, Turkey and Yugoslavia proposed to include a phrase stating that provisions of this part shall not impair the rights and duties of other states as provided for in this convention. Such a wording was better than the clumsy text of article 135. 2

» U N Doc. A / C O N F . 62/C. 2/L. 72. so U N Doc. A / C O N F . 62/C. 2/L. 71.

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high seas between opposite or adjacent states and which is connected w i t h the other parts of the high seas by a narrow outlet". The Soviet delegate's speech81 also included elements of a definition. Stressing the necessity of making clear distinctions between the enclosed and semienclosed seas, he pointed out that in the former case we are dealing w i t h comparatively small seas without an outlet to the ocean and not serving international shipping routes in the broadest sense. The Chairman of the Second Committee, G. Pohl, contributed the following definition to the Informal Single Negotiating Text: "For the purposes of this part, the term "enclosed or semi-enclosed sea" means a gulf, basin or sea surrounded by two or more States and connected to the open seas by a narrow outlet or consisting entirely or primarily of the territorial seas and exclusive economic zones of two or more coastal States". Despite serious criticism, this definition survived subsequent versions drafted by the Conference to be finally included in the text of the Convention. The reservations w i t h regard to the definition concerned the fact that i t failed to distinguish between the enclosed and semi-enclosed seas, joining them instead in a rather artificial manner 32 . I t should be noted, however, that lack of a clear-cut dividing line between those t w o terms carries little practical significance if only because Part I X of the Convention does not envisage a separate treatment of those categories, while the provisions of Article 123 apply in equal measure to either of them. What could partly justify the Chairman of the Second Committee is the fact that a widely recognized scientific definition of the enclosed and semi-enclosed seas is still wanting, while the two terms are interchangeable. Therefore, what constitutes a more serious reservation is that the definition confuses geographical criteria w i t h the legal ones and, lastly, that i t is in effect too broad. The internal incoherence of the definition derives from the fact that i t employs geographical notions such as "bay, basin, or a sea surrounded by t w o or more states and connected to another sea or ocean by a narrow outlet" on the one hand, while at the same time falling back on legal institutions in the parts saying that the enclosed and semi-enclosed seas may consist entirely or primarily of "the territorial seas and exclusive economic zones of t w o or more coastal states". 31 32

The Third U N Conference on the Law of the Sea, Official Records, vol. I I , 277.

Although the Iranian proposal included some unprecise notions such as "inland waters", a sea basin", "main ocean basins" it offered a point of departure for a separate definition of the two categories of seas. I t also enabled exclusion of the Mediterranean from the category of semi-enclosed seas.

21·

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The discussion stressed that the possibility of considering a marine area consisting mainly (i. e., in more than half) of the territorial waters and exclusive economic zones to be a semi-enclosed sea does not correspond to any geographical reality but creates a superficial legal notion whose scope of geographical applicability is hard to determine. 38 The proposals put forth during the sixth and the seventh sessions aimed at narrowing down the definition and making it homogenous. Finland, among other states, proposed the following wording 3 4 : 1. . . . the term "enclosed or semi-enclosed sea" means a gulf, basin or sea surrounded by t w o or more States and connected to the open seas w i t h one or more narrow outlets. Paragraph 2 of the Finnish proposal clarified that that definition did not apply to spacious sea basins which separate continents and which themselves include a number of semi-enclosed seas. This reservation was evidently designed to exclude the Mediterranean from the rules of Part I X of the Convention. The proposals of Iraq and the group of Arab states similarly reflected a drive to narrow down the definition. Their amendments stressed that a semienclosed sea is a gulf or sea which is not big enough to allow marine areas to be established and the activity provided for in the convention to be conducted. I n other words only such seas could be labelled "semi-enclosed sea" where the coastal states cannot establish exclusive economic zones or the continental shelf i n their full dimension owing to the lack of sufficient space. T o remove any doubts in this respect, Iraq's proposal — likewise the Finnish one — states that the definition does not apply to big marine basins which are located between continents and which themselves include several semi-enclosed seas. The Soviet Union also sought to narrow down the definition and exclude large sea basins — not only the Mediterranean — and its amendment defined enclosed and semi-enclosed seas35 as "a gulf or a small sea running deep inland surrounded by t w o or more states and connected to the open seas by one or more narrow outlets". 33 Benchikin (note 18), 289, retorts that being legitimate institutions, as they are, the territorial sea and the exclusive economic zone have their precise geographical dimensions (12 and 200 miles). This argument does not undermine the basic doubt, namely, that under the convention it w i l l be possible to speak about the existence of an enclosed or semienclosed sea even in the case where there is no sea or bay in the geographic meaning but what exists is only a recession of the coastal line. 34 Informal proposal of amendments negotiating text of 27 June, 1977.

to

Part I X ,

35 Submitted during an informal session of the U N Doc. C. 2 / Informal Meeting / 13.

second part of the revised

Second Committee,

April

27,

single 1978,

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Yet another version was presented by the EEC, which proposed to understand the "narrow outlet" as one situated entirely w i t h i n the territorial waters of one or more states. I n this context mention is due to the informal suggestion by Algeria, Iraq, Libya, Romania and Yugoslavia 3 6 which proposed to use only one term "semienclosed seas" 37 and to supplement the definition w i t h a phrase that the term may apply to a gulf, basin or a sea deemed to have "special characteristics". Although the proposals to narrow down the definition came from various groups of states, both the developing and the developed ones, the Chairman judged that none of them w o n sufficient support and, ultimately, neither proposal had been considered. As a result, the adopted definition is far from precise and the number of seas which may be qualified as semi-enclosed is hard to determine. I t was estimated during the discussion at the Second Committee that they might range from forty to fifty. I t is characteristic that the negotiations attempted — without success as it later turned out — to somehow restrict the area of semi-enclosed seas by clearly stressing that the problem concerned relatively small seas; at the same time no consideration was given to the fact that they could be limited so to speak from the opposite end of the matter i. e., by generally excluding minor gulfs which should by no means be regarded as seas owing to their small area. A concept representing a similar tendency was offered by L. Alexander who proposed that semi-enclosed seas fulfil the following criteria: they should not be smaller than 50 thousand square miles; 50 per cent of their circumference should be made of land; the breadth of their connection w i t h the open seas should not exceed 20 per cent of their entire circumference. Further study prompted a condition that their coast belong to t w o or more states. H e presented a list of 26 seas, later reduced to 23, which could qualify as semienclosed seas under the above criteria. The biggest among them was the Mediterranean (865 thousand sq. miles), the Bering Sea (661 thousand sq. miles), the Caribbean Sea (566 thousand sq. miles) and the Gulf of Mexico (464 thousand sq. miles). The smallest one was the G u l f of Aden (58 thousand sq. miles). 36 37

Proposal submitted on 1 September, 197S, U N Doc. C. 2 / Informal Meeting / 18 / Rev. 1.

A proposal to abandon the term "enclosed sea" was worth recognition because in a situation where in the text there is only one and at that a broader definition, it naturally covers the enclosed seas as well. I t is also possible to argue that the first part of the definition included in the convention concerns enclosed seas and the second part covers semienclosed seas. 38 Alexander (note 16), 201 etseq.; idem , Regional Arrangements in the Oceans, in: A J I L vol. 71 (1977), 84—109 (90—91).

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The definition adopted by the Convention is far from perfect; its weak point — rightly stressed by B. Vukas 39 — is that i t allows ocean gulfs to be treated as semi-enclosed seas. I t seems that on the basis of the Finnish, Soviet and the Arab states' proposals a definition both narrower and more precise could have been elaborated. The effect of such an excessive broadness of the definition goes beyond Part I X of the Convention. I f , under art. 70, one of the elements needed to recognize a state as a geographically disadvantaged one is its bordering on an enclosed or semi-enclosed sea than a broad qualification of those seas inevitably increases the number of states which may claim their "geographically disadvantaged" location. IV. T h e P r i n c i p l e o f C o o p e r a t i o n between States B o r d e r i n g the Enclosed or S e m i - Ε n c 1 ο sed Seas The specific situation of the semi-enclosed seas connected w i t h their relatively small area, small depth, little salinity, a limited exchange of waters w i t h the high seas accompanied by growing pollution mainly from the surrounding land threatening the marine environment, which constitutes a very sensitive ecosystem, lay at the root of a necessity for cooperation between the coastal states and make their inter-dependence in the exploitation and protection of the living resources against pollution an obvious matter, which the Conference never called into question. The Article 123 of the Convention sums up the proposals: States bordering on enclosed or semi-enclosed seas should cooperate w i t h each other i n the exercise of their rights and i n the performance of their duties under this Convention. T o this end they shall endeavour directly or through an appropriate regional organization: a) to coordinate the management, conservation, exploration and exploitation of the living resources of the sea; b) to coordinate the implementation of their rights and duties w i t h respect to the protection and preservation of the marine environment; c) to coordinate their scientific research policies and undertake where appropriate joint programmes of scientific research i n the area; d) to invite, as appropriate, other interested states or international organizations to cooperate w i t h them i n furtherance of the provisions of this article. 39 Budislav Vukas , Enclosed and Semi-enclosed Seas, The N e w L a w of the Sea, in: Iranian Review of International Relations, [1978], 171—196 (188).

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The essence of this article is the principle of cooperation, the right and duty of states bordering on enclosed or semi-enclosed seas to participate in this cooperation. Interpretations of the legal consequences of this article sometimes call into question whether i t strictly imposes on states the legal duty to cooperate 40 . These doubts are the outcome in part of the change introduced into the text of this article by the Chairman of the Second Committee, A. Aguilar. The Informal Single Negotiating Text ( I S N T ) drafted by G. Pohl in 1975 opened w i t h a sentence including a phrase "states shall cooperate". During the next session in 1976 some states among them i. e., Mexico, Tunisia and Turkey, submitted a proposal supported by a number of delegations to substitute the word "shall" w i t h the word "should" and thereby somewhat weaken the degree of obligation. I n the Revised Single Negotiating Text (RSNT) of 1976, A. Aguilar made the correction. 41 I t seems that although the change actually weakened the binding force of the obligation to cooperate i t did not remove the obligation as such because the word "shall" was not substituted w i t h the word " m a y " or the phrase "at their discretion". Moreover, the doubt seems also to be removed by the second sentence of Article 123 which explicitly imposes the duty to coordinate the activity w i t h respect to exploration of the living resources, protection of the environment and scientific research. What are the consequences and how should the principle of cooperation be understood? Undoubtedly, no duty to conclude international agreements against the interests and the w i l l of any coastal state can be inferred from the principle. But it cannot be doubted that a state cannot refuse to participate in good faith i. e.y w i t h the intention to reach an agreement. N e x t , what can be inferred from the idea of cooperation is the fact that activity detrimental to the legitimate interests of other states should be banned. 42 This concerns, in the first place, management of living resources and 40 Günther Jaenicke , Cooperation in the Baltic Area, in: Choon-ho Park (ed.), The Law of the Sea in the 1980s, Proceedings of the Fourteenth Annual Conference of the Law of the Sea Institute, October 20—23 1980 in Kiel, H a w a i i 1983, 493—513 (509). 41 I n the Introduction to the R S N T he explained that he had made the change in response to a postulate to make less binding the coordination of activity on enclosed and semi-enclosed seas. The Third United Nations Conference on the Law of the Sea, Official Records, vol. I V , 171. Later on South Korea proposed for that matter to restore the word "shall" in place of "should", U N Doc. C. 2 / Informal Meeting / 59. 42 I t can be noted that article 87 para. 2 of the convention provides in respect of the high seas that freedom of the high seas should be exercised by all states with due regard for the interests of other states. This requirement is particularly important with respect to enclosed and semi-enclosed seas. The United Arab Emirates voiced the opinion that it should be explicitly stated that the aim of cooperation in preservation of the living resources ought to be their protection against over-exploitation. The amendments of some coastal states included and additional qualification of cooperation - namely that that equirement be applied in a manner consistent with equity. Iraq proposed to conclude agreements on exploitation of the

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the protection of the marine environment. Excessive fishing, mismanagement of living resources by one coastal state in its economic zone, is not insignificant for the neighbouring states. This interdependence is common to the entire area of the high seas and is especially pronounced in the case of enclosed and semienclosed seas. The analysis of Article 123 leads to the conclusion that it takes into account the degree of interdependence of states in the three areas of their activity. Hence in the case of l i v i n g resources the scope of cooperation covers the widest area because it is the states' duty to coordinate management, protection, exploration and exploitation. As regards protection of the marine environment what is to be coordinated is the exercise of rights and duties of the coastal states. Coordination is least felt in the sphere of scientific research, where i t embraces only the policies and joint research programmes, where appropriate. Cooperation and coordination practically boil d o w n to international cooperation both bi- and multilateral, initiation of joint actions, conclusion of international agreements and participation i n the activities of regional organizations by states i n their respective basins. N o state bordering the enclosed or semi-enclosed sea may be excluded from cooperation. Provisions of Part I X concerning cooperation between states bordering the enclosed or semi-enclosled seas neither grant them any special additional rights which would constitute a departure from the generally binding rules nor are a vehicle of restricting — by means of regional agreements — the rights of a third party. 4 3 The law of the sea is a whole and Article 123 speaks solely about cooperation in the exercise of the rights and duties of the coastal states under this convention. I n no w a y does it provide a licence for changing universal norms through agreements or the activities of regional organizations. Local or regional norms may only complement or develop the universal norms. According to Article 123 para, d), cooperation is open and cannot be directed against the interests of a t h i r d party because it envisages inviting other states to participate in this cooperation. I t is worth noting as a side remark on the negotiations over the text of Article 123 that while postulates to restrict the freedom of navigation of third states on the enclosed or semi-enclosed seas could at times have been heard in the doctrine preceeding the T h i r d U N Conference on the L a w of the Sea or even as late as the Caracas session, they gradually disappeared during subsequent sessions only to be replaced by a reverse trend. living resources designed to find an equitable solution to the fishing problems of the neighbouring states. « Jaenidee (note 40), 510.

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States bordering the semi-enclosed seas, and especially those dealing w i t h the issue44, such as Algeria, Yugoslavia, Iraq, Libya, Romania and Turkey as well as Finland submitted proposals designed to guarantee freedom o f navigation there. They sought to guarantee freedom of navigation and overflight in outlets connecting the semi-enclosed sea w i t h other seas as well as to safeguard such freedom on the entire basin beyond the territorial seas. For example, Iraq suggested guaranteeing all ships and aircraft the right of free transit in straits used for international navigation connecting semi-enclosed seas w i t h open seas. The question was tackled more broadly in the project submitted by Algeria, Yugoslavia, Libya, Romania and Turkey, which mentioned unimpeded navigation and overflight in outlets connecting semi-enclosed seas w i t h other seas. While navigation in straits is settled elsewhere in the Convention, the question of unimpeded freedom of navigation in outlets which may be wider than 24 miles went beyond the issue of straits alone and won considerable support 4 5 similarly to the requirement that islands, artificial islands, constructions and installations in the semi-enclosed seas did not affect the régime of freedom of navigation. A telling illustration of how views evolved in this matter was the Finnish project which formulated the duties of states bordering the enclosed and semienclosed seas and included among them respect for the interests of international navigation. These proposals were not adopted in the text to avoid repetition, as the rights, duties and guarantees they mention have already been taken account of and have ensued from the other provisions of the convention; nonetheless they are another sound proof of how the perception of the concept of enclosed and semi-enclosed seas is reflected in the new law of the sea. H o w far are the provisions about cooperation of states bordering the enclosed and semi-enclosed seas being implemented? Does practice correspond to Article 123? A short survey of the current situation in some basins may provide a provisional answer to these questions. 46 44

Poland periodically participated in the works of that group especially during the fifth and sixth sessions of the Third Conference on the Law of the Sea. 45 I n fact that proposal brought nothing substantially new since the exclusive economic zones enjoy the freedom of navigation. What is more, it contained a dangerous assumption that freedom of navigation could be impeded within the economic zones. As late as the X l t h session Iraq submitted an informal amendment adding a new paragraph which guaranteed freedom of navigation through waterways within the semi-enclosed seas, U N Doc. A / C O N F . 62/L. 110. 48

General information on regional cooperation quoted after Douglas M. Johnston , The Environmental Law of the Sea, Berlin 1981, and JanLopuski / Janusz Symonides, Miçdzynarodowc Organizacje Morskie (International Maritime Organizations), Gdansk 1978.

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I n the Baltic Sea — and not without reason d i d the Third Conference approach i t as a region of model cooperation — in the sphere of the protection of l i v i n g resources all the Baltic states signed in Gdaήsk in 1973, and subsequently ratified, the Convention on Fishing and Conservation of the L i v i n g Resources in the Baltic Sea and the Belts 47 . The Convention came into force i n 1974, and its objective is the protection and rational management of the Baltic's living resources through an organized appropriate fishing and coordination of scientific research. The Convention established the International Baltic Sea Fishery Commission w i t h the task of supervising the living resources and fisheries of the area mentioned in the document. The protection of the living resources, besides some sub-regional agreements, is served by the Agreement on the Protection of Salmon in the Baltic Sea of 1962 48 further changed by the 1972 protocol. 4 9 I t established the Baltic Sea Salmon Standing Committee. Cooperation designed to combat pollution in the Baltic is based on the Convention on the Protection of Marine Environment of the Baltic Sea Area 5 0 signed in Helsinki in 1974 and in force since 1979. Ratified by all the Baltic states, the Convention established the Baltic Marine Environment Protection Commission w i t h the task of supervising the implementation of the Convention's provisions, adopting recommendations, controlling the level of pollution and supporting scientific and technical research. Scientific cooperation outside the framework provided for in the Baltic Conventions is conducted by international non-governmental organizations: the Conference of Baltic Oceanographers and the Committee of Baltic Marine Biologists. W i t h respect to the Black Sea, international cooperation between its coastal states has particularly flourished i n the field of the protection of living resources. 51 As early as 1958, the Soviet Union and Bulgaria concluded an agreement on scientific research of the biology of Black Sea fish, and on the 47 Bundesgesetzblatt of the Federal Republic of Germany (BGBl) 1976 I I , 1564, reprinted in: W. E. Burhenne, International Environmental Law, Berlin 1974, N o . 973:68; O n cooperation in the Baltic Sea, see: Gôralczyk (note 7), 272—283 (269 etseq.)', Andrezej Straburzynski, Konwencje baltyckie jako wzorzec rozwiazan regionalnych (The Baltic Conventions as a Model for Regional Solutions), in: Aktualne problemy miedzynarodowego prawa morza (Current Problems of the Law of the Sea), Gdaôsk 1975, 105—125; Jerzy Vonau, Rola rozwiaznan regionalnych w nowym prawie morza na przykladzie wspôlpracy panstw nadbaltyckich (The Role of Regional Solutions in the N e w Law of the Sea on the Example of Cooperation between the Baltic States), in: Aktualne problemy prawa morza (Current Problems of the L a w of the Sea), Gdansk 1976, 274—290; Gelberg (note 8), passim. Jürgen Koschwitz, Das Ubereinkommen über den Schutz der Meeresumwelt des Ostseegebietes, in: Jahrbuch für Internationales Recht (JIR) vol. 18 (1979), 223—240. 48 BGBl. 1965 I I , 1115, reprinted in: Burhenne (note 47), N o . 962:95. 49 Reprinted in: Burhenne (note 47), N o . 972:06. so U N Legislative Series ST/LEG/SER. B/18, 518; BGBl. 1979 I I , 1230, reprinted in: International Legal Materials ( I L M ) vol. 13 (1974), 546; Burhenne (note 47), N o . 974:23. si Wysotski (note 14), 112—119.

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exchange of experience in fishing technology. I n 1959, Bulgaria, Romania and the Soviet Union signed the Convention on the fisheries in the Black Sea 52 . I t entered into force in 1960, and its objective is the protection and proper management of the living resources, covering all kinds of fish in the basin caught for commercial purposes. The Convention founded the Mixed Commission for Black Sea Fisheries, which sets protective measures, elaborates principles of fishing, coordinates scientific research plans and pools data. The states of the N o r t h Sea have also promoted the protection of the marine environment. A n agreement on cooperation in combating oil pollution was signed in 1969 53 , and amended in 1972. Extensive oil drilling in the area prompted, in 1977, a convention on civil responsibility for damage ensuing from oil pollution caused by the exploration and exploitation of the mineral resources in the sea-bed54. The Convention established a special committee. Since 1963, the scientific cooperation between the N o r t h Sea coastal states has been promoted by the N o r t h Sea Hydrographie Commission. I t is an intergovernmental organization to support and promote knowledge in the field of hydrography and other related areas, cooperation to enhance the effectiveness and security of international navigation. Cooperation of the Mediterranean Sea states 55 in the field of the protection of living resources is being organized by the General Fisheries Council for the Mediterranean, set up on the basis of an agreement of 1949 56 , amended in 1963 and in 1976. The Council's w o r k concerns problems of fisheries in the Mediterranean, the Black Sea and their connecting waters, and deals w i t h questions of proper utilization of their living resources. The pollution problems have been taken up in four agreements by the coastal states: the 1976 Convention on the Protection of the Mediterranean Sea against Pollution 5 7 ; the 1976 Protocol on Cooperation against O i l Pollution and other harmful Substances in Cases of Emergency 58 , the Protocol on Preventing Pollution from 52

Conventions concerning Fishing in the Black Sea. United Nations Treaty Series ( U N T S ) vol. 377 (1960), 203, reprinted in: Burhenne (note 47), N o . 959:51. 53 Agreement for Co-operation in Dealing with Pollution of the N o r t h Sea by Oil, U N T S vol. 704 (1969), 3; BGBl. 1969 I I , 2067, reprinted in: I L M vol. 9 (1970), 359; Burhenne (note 47), N o . 969:43. 54 I L M vol. 16 (1977), 1451; Burhenne (note 47), N o . 977:33. 55 Since attempts to limit the definition of the enclosed and semi-enclosed seas failed at the Third Conference, then pursuant with art. 122 of the Convention the Mediterranean should be granted that qualification. I t should apply also w i t h regard to the Caribbean, see: Pulvenis (note 18), 310. 56 Agreement for the Establishment of a General Fisheries Council for the Mediterranean, U N T S vol. 490 (1964), 444, reprinted in: Burhenne (note 47), N o . 949:72. 57 U N Legislative Series S T / L E G / S E R . B/19, 459, reprinted in: I L M vol. 15 (1976), 290. 58 Protocol concerning Co-operation in Combating Pollution of the Mediterranean Sea by O i l and other Harmful Substances in Cases of Emergency, U N Legislative Series S T /

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Ships and Aircraft of 1976 59 , and the Protocol on the Protection of the Mediterranean from Land of 1980 60 . Scientific cooperation is furthered by the International Commission of the Scientific Exploration of the Mediterranean Sea. Established in 1919, this international organization sponsors scientific research in the Mediterranean and supports, develops and coordinates scientific research projects conducted by its member states. States bordering on the enclosed and semi-enclosed seas can cooperate not only w i t h i n the framework of regional organizations but also through universal organizations such as the United Nations Environment Programme ( U N E P ) , which has elaborated special programmes of action in the field of the protection and conservation of the marine environment for, among others, the Mediterranean, the Caribbean and the Persian Gulf. The regional fisheries commissions of the U N Food and Agriculture Organization (FAO) also deal w i t h the protection of fisheries i n some enclosed and semi-enclosed seas.81 I n some cases, adoption of certain norms w i t h respect to the enclosed and semienclosed seas may ensue from provisions of a universal convention. The International Maritime Organization ( I M O ) Convention on Marine Pollution from Ships 62 of 1973 provides for a stricter protection regime for "special regions" including such enclosed and semi-enclosed seas as the Mediterranean, the Baltic Sea, the Black Sea, the Red Sea, the Persian G u l f and the Oman Gulf. 6 8 The examination of the progress, scope and nature of cooperation among the States bordering the semi-enclosed seas leads to a conclusion that in many cases they have substantially gone beyond the provisions on cooperation contained in Article 123. Suffice i t to mention that the convention neither lists nor requires the coastal states to conduct cooperation in any special way such as L E G / S E R . B / 1 9 , 468, reprinted in: I L M vol. 15 (1976), 306; the protocol provides for the establishment of the Regional Oil-Combating Centre for the Mediterranean. Its objective is to enlarge the potential and facilitate cooperation of the coastal states in the field of combatting all oil pollution, especially in emergency situations, which would seriously threaten the marine environment. 59 Protocol for the Prevention of Pollution of the Mediterranean Sea by Dumping from Ships and Aircrafts, U N Legislative Series ST/LEG/SER. B/19, 473, reprinted in: I L M vol. 15 (1976), 300; Burhenne (note 47), N o . 976:14. 60 Protocol for the Protection of the Mediterranean Sea against Pollution from the Landbased Sources, reprinted in: I L M vol. 19 (1980), 869; Burhenne (note 47), N o . 980:37. 61 Multilateral cooperation of the Carribean states is organized by the Western Central Atlantic Fishery Commission ( W E C A F C ) , called to life by the resolution of the F A O Council of November 1973. Poland is a member of the Commission. 62 International Convention for the Prevention of Pollution from Ships, reprinted in: I L M vol. 12 (1973), 1319; Burhenne (note 47), N o . 973:84. 63 Adoption of a stricter regime i. e., further-going restrictions affecting not only the third party but also the coastal states ensue also from the provisions of the universal agreement. Therefore they are not discriminatory.

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by means of agreements, accords or regional organizations. Coordination of activities under Article 123 may be achieved through such informal measures as consultation, exchange of information and unification of laws, which as a rule are already being carried out. The provisions of regional agreements do not include any regulations concerning a special or privileged treatment of the coastal states or impairing the rights of a third party. Generally these conventions are not restrictive; on the contrary, they are open to any state interested in implementing their objectives and tasks. 64 However, a substantial advancement of the regional cooperation notwithstanding, Article 123 cannot be considered irrelevant. What it offers is a kind of a boost toward making further improvements in cooperation between states bordering the enclosed and semi-enclosed seas. But whether there can be any progress in this field — considering that the neighbouring states often have different socio-political systems und belong to opposing politico-military groupings — depends not on the convention's provisions but, above all, on the general climate in international relations. The fact that substantial accomplishments in cooperation between the Baltic states belong to the period of détente speaks convincingly in favour of that thesis.

64 I n the case of the Baltic Sea, both art. X V I I , para. 2 of the Gdansk Convention, and art. 26 para. 1 of the Helsinki Convention lay open the possibility of access for all states concerned. This is a telling illustration of the evolution of the concept of enclosed and semi-enclosed seas advanced prior to the Third Conference on the Law of the Sea.

Der Kampf um die Falkland-Inseln — Völkerreditlidie und europarechtliche Aspekte — Meinhard Sdiröder I. T a t s a c h e n

und

Argumente

Die Falkland-Inseln gehören seit 1833 als „dependent territory" zum britischen Staatsverband. Sie werden aber auch von Argentinien beansprucht. Bis heute gelang es nicht, den Souveränitätsstreit entsprechend den GA-Resolutionen 2065 ( X X ) und 3160 ( X X V I I I ) i m Wege direkter Verhandlungen zwischen den beiden Staaten auszuräumen. Vielmehr kam es in der Vergangenheit immer wieder zu Zwischenfällen, die den Streit zeitweilig verschärften. Ein erneuter Zwischenfall in der zweiten Märzhälfte des Jahres 1982, bei dem es um das Aufenthaltsrecht argentinischer Staatsbürger auf dem Archipel Südgeorgien ging, führte nach kurzer Eskalation am 2. 4. 1982 zur Besetzung der FalklandInseln, zwei Tage später auch Südgeorgiens durch argentinisches M i l i t ä r 1 . A m 7. 4. 1982 — zwei Tage nach Auslaufen der britischen Flotte — erklärte der britische Verteidigungsminister mit W i r k u n g vom 12.4.1982 eine 200sm-Zone rund um die Falkland-Inseln zur maritimen Ausschlußzone. V o m angegebenen Zeitpunkt an sollte jedes argentinische Kriegsschiff und Hilfsschiff in dieser Zone als feindlich betrachtet und entsprechend behandelt werden. Weitere zur Selbstverteidigung erforderliche Maßnahmen behielt sich Großbritannien ausdrücklich vor. Argentinien reagierte am folgenden Tag, indem es seinerseits eine 200 sm-Zone um die Falkland-Inseln sowie entlang seiner Küste zum südatlantischen Operationsgebiet bestimmte. M i t Wirkung vom 30. 4.1982 1 Zum Hergang im einzelnen (audi soweit er hier nicht behandelt wird): Dokumente zum Konflikt um die Falkland-Inseln, Europa-Archiv ( E A ) 19 (1982), D 473—508; Charles Rousseau, Chronique des Faits Internationaux, Revue Générale de Droit International Public 86 (1982), 724—773. Aus der Sicht Großbritanniens: Britain and the Falklands Crisis — A Documentary Record prepared for the Foreign and Commonwealth Office by Reference Services, Central Office of Information, November 1982. Aus der Sicht Argentiniens: Die argentinischen Rechte auf die Malvinas-Inseln, Georgias del Sur- und Sandwich del Sur-Inseln, Presidencia del la Naciôn, 1982; aus sicherheitspolitischer Sicht: Jozef Goldblat / Viktor Millan, The Falklands / Malvinas conflict — a spur to arms build-ups, S I P R I Yearbook 1983, 467—527; zur Geschichte des Konflikts: FHtz Leo / Olga Mingo Hoff mann, Sovereignty in Dispute: The Falklands/Malvinas 1493—1982, Boulder / London, 1984; Jörg Fisch, The Falkland Islands in the European Treaty System 1493—1833, German Yearbook of International Law ( G Y I L ) 26 (1983), 105—124; zur Literatur allgemein: Lawrence Freedman, Bridgehead revisited: the Literature of the Falklands, International Affairs 59 (1983), 443—452.

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erklärte Großbritannien die am 7. 4. 1982 verhängte maritime Ausschlußzone zur totalen Ausschlußzone für Schiffe und Flugzeuge aller A r t , die zur Unterstützung der rechtswidrigen Besetzung der Falkland-Inseln operierten. A m 3. 5. 1982 versenkten die britischen Streitkräfte den argentinischen Kreuzer „General Belgrano" außerhalb der 200 sm-Zone um die Falkland-Inseln. A m gleichen Tage wurde der britische Zerstörer „Sheffield" von einer Rakete getroffen und sank. Daraufhin weitete Großbritannien einige Tage später seine Ausschlußzone bis auf 12 sm vor die argentinische Küste aus. Ebenso dehnte Argentinien das von ihm bestimmte militärische Operationsgebiet erneut aus. I n den folgenden Wochen gelang es den britischen Streitkräften, die FalklandInseln zurückzuerobern. A m 14. 6. 1982 unterzeichnete der Befehlshaber der argentinischen Truppen auf den Falkland-Inseln eine Erklärung, in der er sich mit seinen Truppen dem britischen Befehlshaber ergab. Etwa einen Monat später akzeptierte Großbritannien die argentinische Erklärung eines de factoWaffenstillstandes, um die Rückgabe von ca. 600 Kriegsgefangenen an Argentinien zu ermöglichen. A m 22. 7. 1982 hob es die i n den militärischen Auseinandersetzungen verhängte Ausschlußzone auf. Gleichwohl wurde die argentinische Regierung aufgefordert, darauf zu achten, daß ihre See- und Luftstreitkräfte auch künftig eine Grenze von 150 sm rund um den Archipel nicht überschreiten, damit Mißverständnisse und Zusammenstöße aus Unachtsamkeit vermieden werden. Der zivilen L u f t - und Seefahrt wurde ebenfalls nahegelegt, diese Grenez nicht zu passieren. Drei Fischerboote, die sich nicht daran hielten, wurden Anfang August 1982 von britischen Streitkräften zur sofortigen U m kehr gezwungen. Den unmittelbaren Anstoß zur „friedlichen" Besetzung der Falkland-Inseln gab — so die argentinische Einlassung 2 — die Bedrohung argentinischer Staatsangehöriger auf dem Archipel Süd-Georgien: Großbritannien habe Kriegsschiffe abkommandiert, um den angeblich rechtswidrigen Aufenthalt der Argentinier zu beenden. M i t dieser britischen Aggression sei die Geduld Argentiniens erschöpft gewesen, zumal auch die bis in die jüngste Zeit hinein ergebnislosen Verhandlungen zur Ubergabe der Inseln deutlich gemacht hätten, daß Großbritannien nicht gewillt sei, den argentinischen Souveränitätsansprüchen Rechnung zu tragen und die rechtswidrige Kolonialherrschaft aufzugeben. Seinen Souveränitätsanspruch leitet Argentinien aus historischen Rechten ab, die Spanien durch die Entdeckung, effektive Besetzung und geographische Abhängigkeit der Inseln zum südamerikanischen Kontinent erworben haben soll. N u r i m Rahmen dieses Anspruchs akzeptiert es die Berücksichtigung der 2 Vgl. zum folgenden insbesondere die Rede des stellvertretenden argentinischen Außenministers im Sicherheitsrat am 21. 5.1982, U N Doc. S/PV. 2360, 12—32.

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Interessen der Falkländer. Ein eigentliches Selbstbestimmungsrecht soll den Falkländern dagegen nicht zustehen, weil sie kein „ V o l k " , sondern nur eine „Bevölkerung" bildeten. Diese Rechtslage schließt nach Ansicht Argentiniens eine legitime Selbstverteidigung britischer Interessen durch Militäreinsatz aus. Bezweifelt w i r d auch, daß das Selbstverteidigungsrecht für koloniale Gebiete in gleicher Weise in Anspruch genommen werden kann wie für das britische Mutterland. Jedenfalls konnte dieses Recht nicht mehr geltend gemacht werden, nachdem der Sicherheitsrat m i t der Resolution 502 (1982) v o m з. 4.1982 die sofortige Einstellung der Feindseligkeiten verlangt hatte und Argentinien dem nachgekommen war. Völkerrechtswidrig soll schließlich die Verhängung einer Ausschlußzone und die Versenkung des argentinischen Kreuzers „Belgrano" außerhalb dieser Zone sein. Großbritannien 3 hält demgegenüber den britischen Besitz an den Falkland-Inseln für unanfechtbar, die argentinische Besetzung der Inseln für einen aggressiven A k t , der gegen A r t . 2 (3), 2 (4) und 37 der U N - C h a r t a verstößt. Diese Bestimmungen sollen audi auf unselbständige Territorien i m Sinne des A r t . 73 U N - C h a r t a anwendbar sein. Die britische Reaktion habe zunächst darin bestanden, i n Ubereinstimmung mit der Resolution 502 (1982) den Rückzug der argentinischen Truppen zu erreichen. D a dies nicht möglich gewesen sei, seien die notwendigen Maßnahmen der Selbstverteidigung i m Sinne des A r t . 51 U N - C h a r t a ergriffen worden. Bereits am 10. 4. 1982 hatten die Außenminister der Europäischen Gemeinschaft im Rahmen der Europäischen Politischen Zusammenarbeit aus Solidarität mit Großbritannien beschlossen, gegenüber Argentinien eine Reihe von Maßnahmen zu treffen und diese so bald wie möglich durchzuführen. So wurde m i t Wirkung vom 16. 4. 1982 die Einfuhr aller Erzeugnisse argentinischen Ursprungs in die Gemeinschaft ausgesetzt — ausgenommen solche Waren, deren Einfuhr bereits bewilligt oder deren Lieferung schon vor dem 16. 4. vereinbart bzw. in Gang gesetzt worden war. Weitergehende britische Sanktionen sollten von dieser Ausnahme nicht berührt werden. Die entsprechende EWG-Verordnung und der die EGKS-Güter erfassende Beschluß der i m Rat vereinigten Vertreter der Mitgliedstaaten ergingen einstimmig und waren zunächst bis zum 17. 5. 1982 befristet. A m 18. 5. 1982 wurde die Maßnahme um weitere 7 Tage, am 24. 5. 1982 unbefristet verlängert 4 , und zwar jeweils 3 Vgl. zum folgenden die Rede des britisdien Vertreters im Sicherheitsrat am 21. 5.1982, U N D o c . S/PV 2360, 32—51, wiedergegeben in: Britain and the Falklands Crisis (Anm. 1), 77 ff. 4 Fundstelle der EPZ-Erklärung vom 1 0 . 4 . 1 9 8 2 : EG-Bulletin 4/82, 7 f.; Fundstelle der Rechtsakte vom 16.4., 18.5. und 2 4 . 5 . 1 9 8 2 : V O (EWG) N r . 877/82 und Beschluß 82/221/ EGKS, ABl. E G L 102, 1 u. 3; V O ( E W G ) N r . 1176/82 und Beschluß 82/320/EGKS, ABl. E G L 136, 1 u. 2; V O (EWG) N r . 1254/82 und Beschluß 82/324/EGKS, ABl. E G L 146, 1

и. 2.

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mit einem Stimmenverhältnis von 7 : 3 5 . Italien und Irland motivierten ihre ablehnende H a l t u n g mit innenpolitischen Gründen, erklärten aber die Bereitschaft, ihrerseits geeignete Maßnahmen ergreifen zu wollen, um etwaige, durch ihr Ausscheren bedingte Handelsverzerrungen zu vermeiden. Dänemark war nur bereit, nationale Embargomaßnahmen zu verhängen, um die Rechte seines Parlamentes zu wahren. Ratspräsident Leo Tindemans rechtfertigte die am 21. 6.1982 wieder aufgehobene Embargomaßnahme vor dem Europäischen Parlament u. a. damit, daß die „moralische" Macht der Europäischen Gemeinschaft i m Falle bewaffneter Auseinandersetzungen nicht genügend Gewicht besitze. Die einzige Macht der Gemeinschaft sei die wirtschaftliche. Sie müsse i n der N o t zugunsten Großbritanniens eingesetzt werden 6 . Argentinien seinerseits bezeichnete den Einfuhrstop als völkerrechtswidrige, m i t der U N - C h a r t a und dem G A T T nicht vereinbare Aggression. Die nachfolgenden Überlegungen unternehmen den Versuch, die prinzipielle Bedeutung des Falkland-Konflikts an ausgewählten völkerrechtlichen und europarechtlichen Problemkreisen zu demonstrieren 7 . Die Auswahl ist durch den mitgeteilten Sachverhalt und die Argumente der Konfliktparteien bestimmt. II.

Im

Hintergrund: Kontroverse Konzeptionen der t e r r i t o r i a l e n Souveränität 1. Die britische Position

Der britisch-argentinische Konflikt um die Souveränitätsrechte an den Falkland-Inseln ist bereits vor der Krise des Jahres 1982 mehrfach und ein5

Zum folgenden Werner Meng, D i e Kompetenz der E W G zur Verhängung von Wirtschaftssanktionen gegen Drittländer, Zeitschrift für ausländisches öffentliches Recht und Völkerrecht (ZaöRV) 42 (1982), 780—803 (788). 6 Verhandlungen des Europäischen Parlaments, Sitzungsperiode 1982/83, Sitzungsberichte vom 19.—23. 4.1982, ABl. E G Anhang N r . 1—284, 162. — Fundstelle für die Aufhebung: V O ( E W G ) N r . 1577/82 und Beschluß 82/413/EGKS, ABl. E G L 177, 1 u. 2. 7

Bisherige Stellungnahmen aus völkerrechtlicher Sicht: Rousseau (Anm. 1), passim ; Elizabeth Young , Falklands Fall-out, The W o r l d Today, September 1982, 327—330; Rosalyn Higgins, Letter to the Times vom 29. 4.1982; Hermann Weber, Recht und Gewalt im Südatlantik. D e r Streit um die Falkland-Inseln (Malvinen) als Völkerrechtsproblem, V e r einte Nationen 3/1982, 77—82; Dieter Blumenwitz, Falkland oder Malvinas? D e r britischargentinische Streit um die Inselgruppe im Südatlantik aus der Sicht des Völkerrechts, Zeitschrift für Politik 29 (1982), 318—330; Wolfgang Wagner, Der Konflikt um die FalklandInseln — Ein Streit um die hergebrachte Weltordnung, Ε A 17 (1982), 509—516; Albrecht Randelzhofer, D e r Falkland-Konflikt und seine Bewertung nach geltendem Völkerrecht, E A 38 (1983), 685—694; ferner Detlev Christian Dicke, Der Streit um die Falkland-Inseln, in: Recht und Staat im sozialen Wandel, Festschrift für Scupin, 1983, 429 ff. Stellungnahmen aus europarechtlicher Sicht: Thomas Bruha, Handelsembargo gegen Argentinien durch E W G Verordnung, Deutsches Verwaltungsblatt (DVBl.) 1982, 674—682; Meng (Anm. 5), passim.

2

GYIL 27

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gehend gewürdigt worden 8 . Soweit nach diesen Untersuchungen der bessere Rechtstitel für Großbritannien streitet, w i r d das Ergebnis aus der Konsolidierung eines ursprünglich anfechtbaren Titels durch „actual continous and peaceful display of state authority" abgeleitet 9 . Die Zuweisung der Souveränität folgt damit überkommenen, spätestens seit dem Palmas-Schiedsspruch etablierten Regeln. Ihre innere Rechtfertigung liegt in dem berechtigten Vertrauen auf die Beständigkeit des an den Inseln erlangten Besitzes, nachdem sich Argentinien als Souveränitätsprätendent über Jahrzehnte der offenen Darstellung der britischen Souveränität verschwiegen hatte 1 0 . A n diesem Ergebnis ändert auch die Tatsache nichts, daß die FalklandInseln von den Vereinten Nationen als Problem der Dekolonisierung behandelt werden. Die einschlägigen Resolutionen 2065 ( X X ) und 3160 ( X X V I I I ) nehmen zwar die Dekolonisierungsresolution 1514 ( X V ) in Bezug. Sie fordern aber nur bilaterale Verhandlungen zur Beilegung des Souveränitätsstreits. Eine Dekolonisierungspflicht m i t dem Ziel der Eingliederung der Inseln in den argentinischen Staatsverband w i r d Großbritannien nicht auferlegt 11 . Die Eingliederung kann erst das Ergebnis der Verhandlungen sein. Inwieweit dabei ein Selbstbestimmungsrecht der Falkländer berücksichtigt werden muß, läßt sich der zum Verhandlungsmaßstab erhobenen Dekolonisierungsresolution 1514 ( X V ) ebensowenig zuverlässig entnehmen wie der Deklaration über die freundschaftlichen Beziehungen der Staaten (Res. 2665 ( X X V ) Prinzip e) ). Der Konflikt zwischen Territorialanspruch und Selbstbestimmungsrecht bleibt jeweils letztlich ungelöst 12 . Auch das Gutachten des I G H im Westsaharafall 18 läßt sich für eine Bevorzugung des einen oder anderen rechtlichen Gesichtspunkts nicht eindeutig i n Anspruch nehmen 14 .

8 Vgl. Julius Goehel, The Struggle for the Falkland-Islands, Port Washington / London 1927 (Nachdruck 1982); Hermann Weber , Falkland-Islands oder „Malvinas", Frankfurt am M a i n 1977; Bernd Hillekamps, D e r Streit um die Falkland-Inseln, Diss. Köln 1978, jeweils m. w. Nachweisen. » Vgl. Weber (Anm. 8), 101, 124 f.; I. C. J. Metford, Falklands or Malvinas? Introduction, in: Goebel (Anm. 8), I X ff. ( X X I I ) ; Blumenwitz (Anm. 7), 325; Rousseau (Anm. 1), 735. 10 Siehe hierzu Jörg Ρ. Müller, Vertrauensschutz im Völkerrecht, Berlin 1971, 52, 56 f. 11 Deshalb kann offenbleiben, ob und unter welchen Voraussetzungen überhaupt eine Dekolonisierungspflicht besteht — dazu etwa: Ian Brownlie, Principles of International Law, 3rd ed., Oxford 1979, 594 f.; Rosalyn Higgins, The Development of International Law through the Political Organs of the U N , London 1963, 90; Meinhard Schroder, Völkerrecht durch Vereinte Nationen, in: Rüdiger Wolf rum / Norbert J.Pnll / Jens A. Brückner (Hrsg.), H a n d buch Vereinte Nationen, München 1977, 503 ff. (507). 12 Vgl. Hillekamps (Anm. 8), 191 ff.; Weber (Anm. 7), 79; Hans von Mangoldt, Die Westiranfrage und das Selbstbestimmungsrecht der Völker, Z a ö R V 31 (1971), 197—245 (224 f.). 13

International Court of Justice Reports (I.C.J. Reports) 1975, 31—37. 14 Siehe Hillekamps (Anm. 8), 201 f.

339

Der Kampf um die Falkland-Inseln

2. Die argentinische Position Wie erwähnt, begründet Argentinien seinen Souveränitätsanspruch auf die Falkland-Inseln m i t einem historisch-geographischen Erwerbstitel. M i t dieser Argumentation hat es breite Zustimmung bei der O A S 1 5 , den blockfreien Staaten 16 , der UdSSR und der Volksrepublik China 1 7 , bis h i n zur französischen Regierung 18 gefunden. Deshalb und weil sie das herkömmliche Konzept der territorialen Souveränität i n einem entscheidenden Punkt i n Frage stellt, kommt der argentinischen Position über den Streitfall hinaus Gewicht zu. Eine der Kernaussagen zur territorialen Souveränität i m Palmas-Schiedsspruch lautet: International law, the structure of which is not based on any super-State organisation, can not be presumed to reduce a right such as territorial sovereignty, w i t h which almost all international relations are bound up, to the category of an abstract right, without concrete manifestations 19 . Die damit aufgestellte Voraussetzung der territorialen Souveränität fällt, wenn historische Rechte, die sich aus der Rechtsnachfolge i n spanischen Kolonialbesitz ergeben sollen 20 , den besseren Rechtstitel verschaffen als effektive Herrschaft. Die territoriale Souveränität ist dann nur noch ein nudum ius, die weitere Folge, daß die historisch gewachsene Territorialordnung, w e i l vorgeblich auf bloßer (kolonialistischer) Machtentfaltung beruhend, disqualifiziert und i n Frage gestellt werden darf 2 1 . Der tiefere Grund für dieses Konzept liegt auf der Hand: Es geht um die D o k t r i n , daß i n M i t t e l - und Südamerika legitimerweise nur Staaten präsent sein dürfen, die Nachfolger des spanischen oder portugiesischen Reiches sind 2 2 . I n diesem Zusammenhang verdient zunächst die sogenannte Monroe-Doktrin Beachtung, die auf eine Jahresbotschaft des gleichnamigen Präsidenten der U S A vom 02.12.1823 zurückgeht und besagt, daß der amerikanische Kontinent fortan nicht mehr Gegenstand der Kolonisation durch europäische Mächte sein 15 Vgl. Resolution I des 20. Konsultativtreffens der Außenminister der O A S vom 28.4. 1982, wiedergegeben in: Dokumente zum Konflikt um die Falkland-Inseln, E A 19 (1982), D 489—490. 16

Vgl. die Schlußerklärung der Tagung des Koordinationsbüros der blockfreien Staaten auf Ministerebene vom 5. 6.1982, wiedergegben in: E A 19 (1982), D 504—506. 17 Vgl. Wagner (Anm. 7), 510. 18

Vgl. Rousseau (Anm. 1), 735 m. Fn. 22.

i» Palmas-Schiedsspruch, Z a ö R V 1 (1929), Teil 2, 3—55 (17). 20 Die Rechtsnachfolge ist übrigens zweifelhaft — dazu Weber Hillekamps (Anm. 8), 110 ff.; Blumenwitz (Anm. 7), 325.

2'

2 1

Entsprechende Befürchtungen bei Young (Anm. 7), 328 f.

22

Vgl. zuletzt Young

(Anm. 7), 327.

(Anm.

8), 70 ff.

(85) ;

Meinhard Sr öder

340

dürfe. 2 3 Argentinien hat deshalb wiederholt aber erfolglos die Vereinigten Staaten aufgefordert, die D o k t r i n , deren Auslegung und Anwendung sich diese vorbehalten haben, gegen England ins Feld zu führen. 24 Ein Einfluß auf die rechtliche Substanz der argentinischen Position kann der Monroe-Doktrin jedoch auf keinen Fall zugesprochen werden. Wenn man dieser eher als außenpolitische Grundsatzerklärung zu verstehenden D o k t r i n gegen starke Einwände 2 5 überhaupt Rechtscharakter beimessen w i l l , dann handelt es sich bestenfalls um regionales amerikanisches Völkerrecht, das einer europäischen Macht nicht entgegengehalten werden kann. 2 6 Der der Monroe-Doktrin innewohnende Gedanke, den amerikanischen Kontinent gegenüber überseeischen Mächten abzuschotten, die als „raumfremde Mächte" empfunden werden, kommt auch darin zum Ausdruck, daß Argentinien ein Selbstbestimmungsrecht der Falkländer ablehnt. 27 Deren erklärter Wille, weiter zu Großbritannien zu gehören, soll unbeachtet bleiben, weil die Falkländer nicht die wahren Einwohner der Insel seien, sondern eine kleine Siedlergruppe darstellten, die die rechtmäßige argentinische Bevölkerung vertrieben habe. 28 Das Argument, die Falkländer seien nicht die wahren Einwohner, sondern eine „importierte, fremdkörperartige" Gruppe, erscheint angesichts der langen Ansässigkeit der Falkländer und angesichts der Tatsache, daß die Besiedlung des gesamten amerikanischen Kontinents nicht anders als durch Einwanderung erfolgte, wenig überzeugend. 29 Auch die zahlenmäßige Größe der Gruppe der Falkländer kann nicht zu einer Verweigerung des Selbstbestimmungsrechts führen. Z w a r stößt die Anwendung des Selbstbestimmungsrechts bei abnehmender Größe der fraglichen Gruppe irgendwann auf eine Grenze der Absurdität. 3 0 Angesichts zahlreicher M i k r o staaten, die mit Sitz und Stimme in den Vereinten Nationen vertreten sind 3 1 , und angesichts des in der Generalversammlung betonten unveräußerlichen Selbstbestimmungsrechts des Volkes von St. Helena 8 2 , das mit 4.000 Einwoh23 S. Hans Kruse, Stichwort „Monroe Doktrin", in: Karl Strupp / H ans-Jürgen Schlochauer (Hrsg.), Wörterbuch des Völkerrechts, Band 2, Berlin 1961, 548—550 (548); dazu bereits Alexandre Alvarez , Le Droit International Américain, 1910, S. 143 f. 24

Hillekamps (Anm. 8), 127; Gérard Cohen Jonathan, Les Iles Falkland (Malouines), Annuaire Français de Droit International 18 (1972), 235—262 (239). 25 Hillekamps (Anm. 8), 128; Kruse (Anm. 23), 550. 2

« Hillekamps

(Anm. 8), 128.

27

Report of the Special Committee on the Situation with regard to the Implementation of the Declaration on the Granting of Independence to Colonial Countries and Peoples, U N G A O R 19th Session, Annexes, Annex N o . 8, U N Doc. A/5800/Rev. 1, 437. 2® Ausführungen des argentinischen Vertreters im Special Committee (Anm. 27), 436—437. 2® Hillekamps (Anm. 8), 187; Miguel Antonio Sandoez, Seif Determination and the Falkland Islands Dispute, Columbia Journal of Transnational L a w 21 (1983), 557—584 (580). 30 Rupert Emerson, Self-Determination, American Journal of International Law ( A J I L ) 65 (1971), 459—475 (469). 32

Hillekamps (Anm. 8), 188. Thomas M. Franck / Paul H off mann, The Right to Self-Determination in Very Small

Der Kampf um die Falkland-Inseln

341

nern — gemessen an den Verhältnissen der meisten anderen Staaten — auch nicht wesentlich größer ist als die 2.000 Mitglieder umfassende Gruppe der Falkländer, erscheint eine Verweigerung des Selbstbestimmungsrechts aus Gründen der Größe der Bevölkerung nicht haltbar. 33 V o n größerer Bedeutung ist demgegenüber der Hinweis auf A r t . 6 der Resolution 1514 34 , der nach Auffassung Argentiniens das Selbstbestimmungsrecht der Falkländer ausschließen soll. 35 Die Beachtung dieser Resolution ist den Streitparteien von der Generalversammlung aufgetragen worden. 3 6 A r t . 6 der Resolution 1514 bestimmt, daß jede Bestrebung, die sich gegen die nationale Einheit oder die territoriale Integrität eines Landes richtet, m i t den Zielen und Grundsätzen der Charta der Vereinten Nationen unvereinbar ist. Dies sei in dem Sinne auszulegen, daß das Selbstbestimmungsrecht dann gegenüber einem Territorialanspruch weichen müsse, wenn es dazu führe, die rechtswidrige Kolonisationslage zu perpetuieren. 37 Da die Falkländer ihr Selbstbestimmungsrecht aller Voraussicht nach zugunsten Großbritanniens ausüben würden, wäre dadurch die angenommene Dekolonisationspflicht gehindert. 38 Die Resolutionen zum Falkland-Konflikt scheinen ebenfalls davon auszugehen, daß ein Selbstbestimmungsrecht der Falkländer nicht gegeben ist, weil lediglich davon die Rede ist, daß eine Streitbeilegung die „Interessen" der Bewohner im Auge haben solle, ohne allerdings explizit auf A r t . 6 der Resolution 1514 einzugehen. 39 Demgegenüber weist die Resolution i m ähnlich gelagerten Fall Gibraltar eine dem A r t . 6 der Resolution 1514 entsprechende Klausel und einen ausdrücklichen Verweis auf diese auf. 4 0 Gegen die Heranziehung des A r t . 6 der Resolution 1514 w i r d eingewandt, daß nach der Entstehungsgeschichte nur die der Dekolonisation nachfolgenden Sezessionsbestrebungen innerhalb unabhängig gewordener Länder gemeint gewesen seien.41 Obwohl für diese Lesart der zeitliche Zusammenhang m i t Sezessionsbestrebungen in Places, N e w Y o r k University Journal of International Law and Politics 8 (1975), 331—386 (384). 33 Hillekamps (Anm. 8), 189; Frank I Hoffman (Anm. 32), 383; Sanchez (Anm. 29), 579. 34 Declaration on the Granting of Independence to Colonial Countries and Peoples, A / R E S 1514 ( X V ) , 14.12.1960. 35 Sanchez (Anm. 29), 563; Report of the Special Committee (Anm. 27), 437; vgl. auch Eckart Klein , Vereinte Nationen und Selbstbestimmungsrecht, in: Dieter Blumenwitz / Boris Meissner (Hrsg.), Das Selbstbestimmungsrecht der Völker und die deutsche Frage, Köln 1984, 107—122 (117 f.). 36 GA/Res 2065 ( X X ) , U N G A O R 20th Session, Supplements, Supplement 14, 57. 37 Vgl. Sanchez (Anm. 29), 566. 38 Vgl. Hillekamps (Anm. 8), 192; Sand?ez (Anm. 29), 566. 30 Sanchez (Anm. 29), 571. 4 ° U N D o c . A/RES/2353, Preamble, para. 5, U N G A O R 22th Session, Supplement 16, U N Doc. A/6716, 53; Sanchez (Anm. 29), 570. 41 Hillekamps (Anm. 8), 194; Frank / Hoffmann (Anm. 32), 370; vgl. Sanchez (Anm. 29), 565.

Meinhard Sr öder

342

A f r i k a spricht, ist daraus für die Auslegung des A r t . 6 kein zweifelsfreier Hinweis zu gewinnen. 42 Ein Einwand gegen die argentinische Argumentation ergibt sich vielmehr auf grundsätzlicher Ebene. Soll nämlich das Selbstbestimmungsrecht der Falkländer zugunsten der Wiederherstellung der vor der als Kolonisation empfundenen englischen Besiedlung 1833 bestehenden territorialen Ausdehnung Argentiniens weichen, w i r d der Bezugspunkt von Selbstbestimmungsrecht und Dekolonisation von einem Kolonialvolk zu einem Kolonialgebiet verlagert. 43 Nicht mehr ein unter fremder Unterjochung, Herrschaft und Ausbeutung stehendes V o l k , sondern ein vorkolonialer Gebietsanspruch 44 wäre der Ausgangspunkt von Selbstbestimmungsrecht und Dekolonisation. 45 Ob dies der Bedeutung des Selbstbestimmungsrechts als Menschenrecht, das unabhängig von der territorialen Zugehörigkeit besteht 46 , gerecht wird, erscheint sehr fraglich. 47 Außerdem verdient die Tatsache Beachtung, daß die Dekolonisation, die ursprünglich vom Selbstbestimmungsrecht eines Volkes ausging 48 , sich nun gegen ein solches Selbstbestimmungsrecht wenden soll. I m Kontext der Abwehr „raumfremder Mächte" steht schließlich die Berufung auf die geographische Nachbarschaft der Falkland-Inseln. 4 9 Sie begleitet im Sinne eines souveränitätsbegründenden Arguments die Geschichte der FalklandInseln von Anbeginn 5 0 . I n der für Inseln bedeutsamen Variante der sogenannten Kontiguität gibt sie bestenfalls einen unvollkommenen Souveränitätstitel, ein gewisses Reservierungsrecht 51 , das Argentinien durch zusätzliche Souveränitätsakte, die den Anforderungen an eine effektive Herrschaftsausübung genügten, hätte konkretisieren müssen. 42 M i t Hinweis auf die Kongokrise und Biafra, (Anm. 29), 569. « Hillekamps (Anm. 8), 192. 44

«

Hillekamps

(Anm.

8),

194; Sandoez

Frank / Ho ff mann (Anm. 32), 370: „pre-colonial claims to sovereignty". Frank / Hoffmann (Anm. 32), 370; Hillekamps (Anm. 8), 192.

46 Cohen Jonathan (Anm. 24), 253; Hillekamps (Anm. 8), 196; Eisuke Suzuki, SelfDetermination and World Public Order: Community Response to Territorial Separation, Virginia Journal of International L a w 16 (1976/76), 779—862 (827); s. audi das Gutachten des I G H im Westsaharafall, I.C.J. Reports 1975, 42; Klein (Anm. 35) 122; vgl. Rosalyn Higgins, The Development of International L a w through the Political Organs of the United Nations, London 1963, 99 ff. 47 S. Karl Josef Partsch, Stichwort „Selbstbestimmungsrecht", in: Wolf rum / Pnll I Bruckner (Hrsg.) (Anm. 11), 392—395 (394); Emerson (Anm. 30), 459 ff., 462 ff.; vgl. Hans Kelsen, The Law of the United Nations, N e w Y o r k 1951, 51 f.; Higgins (Anm. 46), 104 f. 4 ® Vgl. Partsch (Anm. 47), 394; Hillekamps (Anm. 8), 198; Thomas M. Frank , The Stealing of the Sahara, A J I L 70 (1976), 694—721 (709 f.). 4

» Vgl. schon Alvarez

5 0

(Anm. 23), 143.

Siehe hierzu Charles Calvo, Le D r o i t International, 3rd ed., vol. 1, Paris 1880, 327.

51 Vgl. Georg Sdowarzenherger , A Manual of International L a w , 4th ed., vol. 1, London 1960, 116; Charles Rousseau, Droit International Public, Tome I I I , Paris 1977, 194 f.; zum ganzen auch Daniel O'Connell, International Law, 2nd ed., vol. I , London 1970, 419 ff.

Der Kampf um die Falkland-Inseln

III.

Argentiniens 1. Problem

Schritt

einer friedlichen

in

die

343 Gewalt

Streitbeilegung

Der Versuch Argentiniens, seinen angeblichen Souveränitätsanspruch m i t Gewalt durchzusetzen, illustriert erneut, wie wenig effizient die Pflicht zur friedlichen Streitbeilegung (Art. 2 (3), 33 UN-Charta) in Konflikten ist, i n denen sich die eingenommenen Rechtspositionen mehr oder weniger unversöhnlich gegenüberstehen und überdies m i t den Ressentiments belastet sind, die sich aus dem Kontext der Dekolonisierung ergeben. Es h i l f t in einem solchen Falle wenig, die Streitparteien mit dem IGH an die Verpflichtung zu erinnern, to enter into negotiations w i t h a view to arriving at an agreement and not merely to go through a formal process of negotiation . . .; they are under an obligation so to conduct themselves that the negotiations are meaningful which w i l l not be the case when either of them insists on its procession without contemplating any modification of i t 5 2 . Dieser Verpflichtung Rechnung zu tragen fällt i m übrigen schwer, wenn der Verhandlungsmaßstab (in concreto: die Dekolonisierungsresolution 1514 ( X V ) und die Falkland-Resolutionen 2065 ( X X ) sowie 3160 ( X X V I I I ) ) so beschaffen ist, daß er jeder der Parteien die Möglichkeit gibt, an ihrer Position festzuhalten und der anderen Seite die Verantwortung für das Scheitern der Verhandlungen zuzuschieben.53 — Was die gerichtliche Austragung des K o n fliktes angeht, so kann man der argentinischen Seite sicher den V o r w u r f machen, es zeuge von bemerkenswerter Mißachtung des Völkerrechts, daß sie den Streit bisher nicht dem IGH unterbreitet hat. 5 4 Es bleibt aber zu bedenken, daß Souveränitätsfragen immer auch Machtfragen sind, zu deren Entscheidung durch Richterspruch nach wie vor wenig Neigung in der Staatenwelt besteht, und daß solche Fragen immer auch die Versuchung einseitiger gewaltsamer Durchsetzung implizieren. So kann es nicht überraschen, daß die an Argentinien und Großbritannien gerichtete Aufforderung des Sicherheitsrates v o m 1.4.1982, Gewalt zu unterlassen und weiterhin nach einer diplomatischen Lösung zu suchen55, nicht mehr verhindern konnte, daß Argentinien die Falkland-Inseln in einem scheinbar günstigen Augenblick militärisch besetzte. 2. Der argentinische

Rechtsbruch

Die Besetzung der Falkland-Inseln ist als „Friedensbruch", „bewaffnete Intervention" und „flagrante Verletzung des internationalen Rechts" verurteilt 52 N o r t h Sea Continental Shelf Cases, I.C.J. Reports 1969, 47. 53 Vgl. Hillekamps (Anm. 8), 198 ff. 54 Vgl. einerseits Rousseau (Anm. 1), 733, andererseits Weber (Anm. 8), 130 ff. 55 Vgl. das Statement des Präsidenten des Sicherheitsrates, abgedr. in: Dokumente Konflikt um die Falkland-Inseln (Anm. 15), D 477.

zum

344

Meinhard Sr öder

worden. 5 6 Dem ist i m Ergebnis zuzustimmen, wenngleich einige Bemerkungen zur Erläuterung und Präzisierung hinzugefügt werden sollen. a) Die Einlassung Argentiniens, die Besetzung der Inseln sei „friedlich" gewesen, trägt zur Beurteilung der Frage, ob der Militäreinsatz vom 2. 4. 1982 legal oder illegal war, nichts bei. Durch das umfassende Gewaltverbot der U N - C h a r t a ist die Unterscheidung zwischen friedlicher und militärischer Besetzung nicht mehr aussagekräftig. 57 Auch die Feststellung des Sicherheitsrates in der Resolution 502 (1982), die argentinische Invasion habe einen Friedensbruch bewirkt, schließt nicht notwendig das Urteil der Völkerrechtswidrigkeit ein, obschon Feststellungen nach A r t . 39 der U N - C h a r t a in der Regel auch zur Völkerrechtswidrigkeit führen werden. 5 8 Außer Betracht bleiben kann schließlich der Hinweis Argentiniens auf den Schutz seiner Staatsangehörigen. Die Auseinandersetzungen u m das Aufenthaltsrecht der Argentinier auf den Inseln haben lediglich den letzten Anstoß für die Rückeroberung vorgeblich argentinischen Territoriums gegeben. Der umstrittene gewaltsame Schutz von Staatsangehörigen i m Ausland 5 9 ist daher kein eigenständiger Gesichtspunkt in der Beurteilung des argentinischen Vorgehens. b) Bemerkenswert ist, daß die argumentative Rechtfertigung der Inselbesetzung rechtlich unpräzise gehalten ist. D a r i n zeigt sich nicht nur die Schwäche der Position des Rechtsbrechers, sondern auch der Versuch, in der Staatengemeinschaft unter Verwendung eingängiger Topoi, wie „britische Aggression", „Wiederherstellung der nationalen Ehre" 6 0 , „Beseitigung der ungerechten kolonialen Situation" 6 1 , u m Verständnis für das eigene Vorgehen zu werben, selbst wenn dieses rechtswidrig sein sollte. 5 6 So Res. 502 (1982) des Sicherheitsrats vom 2. 4.1982 (Friedensbruch), deutsche Fassung in: Dokumente zum Falkland-Konflikt (Anm. 15), D 484; Erklärung der Außenminister der Zehn im Rahmen der europäischen politischen Zusammenarbeit vom 2. 4. und 10. 4. 1982 (bewaffnete Intervention, Verletzung des internationalen Rechts), abgedr. in: Bulletin der Europäischen Gemeinschaften 4/1982, 7; im gleidien Sinne: Blumenwitz (Anm. 7), 326; Wagner (Anm. 7), 512 f.; Weher (Anm. 7), 80. 57 Midoael Bothe, Occupation, Pacific, in: Rudolf Bernhardt (ed.), Encyclopedia of Public International Law ( E P I L ) , 8 Instalments, Amsterdam, N e w Y o r k , Oxford 1981—1984, 4 (1982), 67—69 (68). 58 Verdross I Simma, Universelles Völkerrecht, Berlin 1976, 142. — Nicht unbedenklich daher Blumenwitz (Anm. 7), 326: die Res. 502 (1982) „reflektiere die Rechtslage"; nicht haltbar: Heinrid) Kipp, Friedensbruch, in: Strupp / Schlochauer (Anm. 23), Bd. 1, 1960, 585: die Feststellung des Friedenbruchs impliziere die Aufhebung des Friedenszustandes als Folge eines kriegerischen Angriffs. 5» Hierzu zuletzt: Ulrich Beyerlin, Humanitarian Intervention, in: E P I L 3 (1982), 211—215; Albrecht Randelzhof er, Use of Force, in: E P I L 4 (1982), 265—275 (273). eo So der argentinische Staatspräsident Galtieri in der Fernsehrede vom 2. 4.1982, wiedergegeben in: Dokumente zum Konflikt um die Falkland-Inseln (Anm. 15), D 478 f. 61 Vgl. die argentinische Stellungnahme zur Resolution des Sicherheitsrats 502 (1982), die Erklärung der argentinischen Regierung zur H a l t u n g der Vereinigten Staaten vom 30. 4 . 1 9 8 2 und des argentinischen Staatspräsidenten vom 1 5 . 6 . 1 9 8 2 , wiedergegeben in: Dokumente zum Konflikt um die Falkland-Inseln (Anm. 15), D 485 f., 493—495 (495) und 507.

Der Kampf um die Falkland-Inseln

345

I m einzelnen ist zur vorgetragenen Argumentation zu bemerken: Aus naheliegenden Gründen fehlt eine ausdrückliche Berufung auf das Selbstverteidigungsrecht i m Sinne des A r t . 51 der UN-Charta. Für eine Selbstverteidigungsmaßnahme im üblichen Sinne fehlte der Besetzung nämlich der Defensivcharakter. Sie sicherte nicht etwa eine bereits ausgeübte Rechtsposition vor einem bewaffneten A n g r i f f Großbritanniens, sondern war das M i t t e l zur gewaltsamen Durchsetzung des angeblichen Souveränitätsanspruchs. Als solche verstieß sie gegen das heute bestehende Verbot gewaltsamer Selbsthilfe. 62 Daran ändert auch die britische „Aggression" nichts, die in der Entsendung v o n Kriegsschiffen zum Zwecke der Beendigung des rechtmäßigen Aufenthalts argentinischer Staatsangehöriger gelegen haben soll. Sie läßt das Faktum, daß Gebietsansprüche gewaltsam durchgesetzt werden sollten, unberührt. Der Vorwurf, Großbritannien führte keine ernsthaften Verhandlungen und sei zur Ubergabe der Inseln nicht gewillt, insinuiert ein völkerrechtswidriges Verhalten, die Besetzung der Inseln erscheint als bewaffnete Repressalie. 63 Auch insoweit fehlt es freilich an der ausdrücklichen Behauptung, man sei zur Anwendung der Repressalie berechtigt gewesen — offensichtlich i m Bewußtsein der Tatsache, daß bewaffnete Repressalien heute m i t Recht weithin auf A b lehnung stoßen. 64 Die Bezugnahme auf die Beseitigung der ungerechten kolonialen Situation führt unterschwellig die These von der erlaubten Gewaltanwendung in kolonialen Befreiungskämpfen 65 ein und erstreckt sie auf einen neuartigen Sachverhalt. Nach bisherigen Maßstäben gibt es nämlich in bezug auf die FalklandInseln keinen Befreiungskampf, an dem sich Argentinien beteiligen könnte: Argentinien selbst befindet sich nicht mehr in kolonialer Abhängigkeit. Ein gewaltsam durchsetzbares Selbstbestimmungsrecht ist spätestens m i t der Erlangung der argentinischen Unabhängigkeit konsumiert worden. 6 6 H i n z u kommt, 62 Vgl. allgemein Wilhelm Wengler, Das völkerrechtliche Gewaltverbot, Berlin 1967, 15 ff. — Speziell zum Falkland-Konflikt: Blumenwitz (Anm. 7), 326. 68

Vgl. audi Blumenwitz

(Anm. 7), 327.

64

Vgl. Eckart Klein, Nationale Befreiungskämpfe und Dekolonisationspolitik der Vereinten Nationen: Zu einigen völkerrechtlichen Tendenzen, Z a ö R V 36 (1976), 618—653 (645 f.). 65

Z u diesen Wengler (Anm. 62), 36 ff.; Wilhelm Kewenig, Gewaltverbot und noch zulässige Machteinwirkung und Interventionsmittel, in: Wilfned Sdoaumann (ed.), Völkerrechtliches Gewaltverbot und Friedenssicherung, Baden-Baden 1971, 175—217 (208 ff.); Klein (Anm. 64), 644 ff.; K. Skubiszewski, Use of Force by States, in: Max Soerensen (ed.), Manual of Public International Law, N e w Y o r k 1968, 739—842 (771 ff.); Randelzhof er (Anm. 59), 272; Henn-Jüri Uibopuu, Wars of National Liberation, in: E P I L 4 (1982), 343—346; aber audi: Völkerrecht, Lehrbuch (der D D R ) , Berlin (Ost) 1982, Bd. 2, S. 188 ff. 66

Vgl. Blumenwitz (Anm. 7), 326, und allgemein zur Konsumierung des Selbstbestimmungsrechts nach Erlangung der Unabhängigkeit: Leland M. Goodrich / Edvard H ambro / Anne P. Simons, Charter of the United Nations, 3 ed., N e w Y o r k 1969, 34.

Meinhard Sr öder

346

daß sich nicht die Bevölkerung des strittigen Inselgebietes gegen den britischen „Kolonialherrn" erhob, sondern ein dritter Staat sich das Gebiet gewaltsam einverleiben wollte. 6 7 Eine Situation, in der die gewaltsame Unterstützung kolonialer Befreiungskämpfe durch Drittstaaten diskutiert werden könnte 6 8 , lag deshalb nicht einmal i m Ansatz vor. IV.

Die britische

Reaktion

1. Probleme des Selbstverteidigungsrecbts a) Nach Darstellung Großbritanniens hat dessen Militäreinsatz i m Südatlantik zunächst bezweckt, Argentinien in Ubereinstimmung m i t der Resolution 502 (1982) zum Rückzug seiner Truppen von den Falkland-Inseln zu bewegen. Offenbar soll die genannte Resolution des Sicherheitsrates zumindest für die erste Etappe der gewaltsamen Auseinandersetzungen die Ermächtigungsgrundlage für die getroffenen Maßnahmen abgeben. 69 Dem muß widersprochen werden, ohne daß auf die Frage, ob Resolutionen der Vereinten Nationen Staaten überhaupt zur Gewaltanwendung legitimieren können 7 0 , genauer einzugehen ist. Selbst wenn Resolutionen des Sicherheitsrates diese W i r k u n g prinzipiell zukommen könnte, war doch die i n concreto maßgebliche Resolution 502 nicht geeignet, zugunsten Großbritanniens einen Tatbestand erlaubter Gewalt zu schaffen. Sie fordert zwar in Punkt 2 den Rückzug der argentinischen Truppen, gibt aber zugleich in Punkt 3 auch Großbritannien auf, den Souveränitätsstreit friedlich zu lösen und dabei die Ziele und Prinzipien der Charta zu beachten. Rechtlich beachtliche Ansatzpunkte dafür, daß Großbritannien sich unter Außerachtlassung von Punkt 3 (und übrigens auch Punkt 1, der von der Einstellung der Feindseligkeiten spricht) als „ V o l l strecker" der Rückzugsforderung des Sicherheitsrates betrachten konnte, enthält die Resolution 502 nicht. 7 1 Andererseits kommt ihr aber auch keine Sperrwirkung für die Ausübung des Selbstverteidigungsrechts i m Sinne des A r t . 51 der U N - C h a r t a zu, wie Argentinien behauptet hat. V o n einer solchen Sperrwirkung kann nur die Rede sein, wenn und soweit der Sicherheitsrat Zwangsmaßnahmen gegen den Friedensbrecher verhängt und die Maßnahmen ihre W i r k u n g tun. 7 2 Dementsprechend w i r d mit Recht bezweifelt, ob die schlichte 67

Darauf weist zutreffend "Wagner (Anm. 7), 509 hin. Hierzu: Karl Doehnng, Das Selbstbestimmungsredit der Völker als Grundsatz des V ö l kerrechts, in: Berichte der Deutschen Gesellschaft für Völkerrecht H e f t 14 (1974), 7—56 (38 mit Leitsatz 25, 50); Rudolf Bernhardt, Diskussionsbeitrag, ebd., 73 f.; Jochen A. Frowein, Diskussionsbeitrag, ebd., 85; Uihopuu (Anm. 65), 345. β» I n diesem Sinne auch die Deutung bei Weher (Anm. 7), 80/81. ™ Hierzu Kewenig (Anm. 65), 195 ff. 71 So im Ergebnis auch Weher (Anm. 7), 81. 7 - Vgl. Verdross l Simma (Anm. 58), 242. 68

347

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Anordnung eines Waffenstillstandes durch den Sicherheitsrat jede weitere A k t i o n der Selbstverteidigung unzulässig macht. 73 Z u Zwangsmaßnahmen des Sicherheitsrates ist es auch i n der Falkland-Krise nicht gekommen. Die Resolution 502 hat nicht nur keinen Rückzug Argentiniens bewirkt, vielmehr eine Ausdehnung der argentinischen Besetzung auf Südgeorgien am 4. 4.1982 nicht verhindern können. Auch die am 26. 5.1982 verabschiedete Resolution 505, die die früheren Resolutionen i m wesentlichen bestätigte und den Generalsekretär der Vereinten Nationen u m weitere Vermittlungstätigkeit ersuchte 74, hat keine W i r k u n g gehabt. Ein Resolutionsentwurf vom 4. 6. 1982 scheiterte am Veto der U S A und Großbritanniens. 75 Bei dieser Sachlage war Großbritannien, unbeschadet weiterer noch zu klärender Tatbestandsvoraussetzungen, zur Selbstverteidigung i m Sinne des A r t . 51 U N - C h a r t a berechtigt. 76 b) Was die tatbestandlichen Voraussetzungen des Selbstverteidigungsrechts anlangt, so hat die Falkland-Krise einen bisher kaum erörterten Aspekt ins Bewußtsein gehoben — die Frage nämlich, welche Rechtspositionen gegen einen bewaffneten A n g r i f f gewaltsam verteidigt werden können. Die Diskussion darüber stand in der Falkland-Krise unter dem Vorzeichen der Dekolonisierung. So hat Argentinien bekanntlich bezweifelt, daß das Selbstverteidigungsrecht für Kolonialgebiete in gleicher Weise in Anspruch genommen werden könne wie für das Mutterland. I n diesem Zusammenhang ist die vor einiger Zeit geführte Diskussion über Gewaltverbot, Dekolonisation und Selbstbestimmung von Belang, die sich in den Resolutionen über Dekolonisation 7 7 , die freundschaftlichen Beziehungen zwischen Staaten 78 und über die Definition der Agression 79 niedergeschlagen und daneben auch die Genfer Konferenz zur Weiterentwicklung des humanitären Kriegsrecht 80 beeinflußt hat. Der eine wichtige Aspekt dieser Diskussion, die Erhebung der Dekolonisationskonflikte in den Rang „internationaler" Streitigkeiten 81 m i t der Folge der Anwendbarkeit des Völkerrechts, insbesondere des Gewaltverbots und des humanitären Kriegsrechts, trägt zur Lösung 7 3 Michael Bothe, Das Gewaltverbot im allgemeinen, in: Wilfried 11—31 (20 f.).

Sdoaumann (Anm. 65),

74 7

Text in: Dokumente zum Konflikt um die Falkland-Inseln (Anm. 15), D 502. 5 Vgl. Rousseau (Anm. 1), 741 f.

76

Siehe hierzu Rosalyn Higgins, Letter to the Times vom 29. 04.1983.

77

U N D o c . A / R E S . 1514 ( X V ) , v. 14.12.1960; s. Klein

(Anm. 64), 623.

7

® U N D o c . A / R E S . 2625 ( X X V ) , v. 24.10.1970.

7

» U N D o c . A / R E S . 3314 ( X X I X ) , v. 14.12.1974; s. Klein (Anm. 64), 630.

80

Georges Abi-Saab, Wars of National Liberation in the Geneva Conventions and Protocols, Recueil des Cours 165 (1979 I V ) , 353—445; Robert Ε. Gorelide, Wars of National Liberation: Jus ad Bellum, Case Western Reserve Journal of International Law 11 (1979), 71—93 (87); Klein (Anm. 64), 636. 81 Klein (Anm. 64), 643.

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des vorliegenden Falls, in dem sich von Anfang an in Argentinien und Großbritannien zwei Völkerrechtssubjekte gegenüberstanden, nichts bei. Von größerer Bedeutung für eine mögliche Einschränkung des Selbstverteidigungsrechts Großbritanniens sind demgegenüber Versuche, die Balance des zunächst beiden Seiten gleichgewichtig auferlegten Gewaltverbots zugunsten derjenigen zu verschieben, die in einem nationalen Befreiungskrieg für ihr Recht auf Selbstbestimmung kämpfen. Dies geschieht zum einen dadurch, daß den Kolonialmächten eine selbständige Gewaltenthaltungspflicht auferlegt w i r d . 8 2 Zum anderen gibt es Tendenzen, die Gewaltanwendung i m Dienste von Selbstbestimmung und Dekolonisation zu rechtfertigen 83 , so daß i m Umkehrschluß das Selbstverteidigungsrecht in gleichem Maße eingeschränkt w i r d . Wenn nämlich Gewalt gegen den Kolonialherrn m i t dem Ziel der Befreiung erlaubt ist, so kann der Kolonialherr selbst sich nur in der Position des permanenten Aggressors befinden. Derartige Überlegungen, die auf den bedenklichen Versuch der Wiedereinführung eines ius ad bellum hinauslaufen 84 , brauchen jedoch nicht weiter verfolgt werden, weil die Situation eines nationalen Befreiungskampfes in bezug auf Falkland nicht vorlag. 8 5 Gewichtiger ist die i m Schrifttum geäußerte Ansicht, A r t . 51 biete keine Handhabe zur Verteidigung der territorialen Souveränität, wenn diese alsbald aufgegeben werden solle und nur noch der Modus von Ubergabebedingungen zu behandeln sei. So habe Großbritannien schon vor Ausbruch der Falkland-Krise des Jahres 1982 zu erkennen gegeben, daß es zur Aufgabe der Souveränität bereit sei und Argentinien entsprechende Vorschläge unterbreitet. Von dieser Haltung sei es auch in der Krise nicht prinzipiell abgerückt. 86 I n der Tat hat Großbritannien noch am 17. 5. 1982 den Vorschlag einer vorläufigen britisch-argentinischen Vereinbarung vorgelegt, die eine Interimsverwaltung der Falkland-Inseln durch einen vom Generalsekretär der Vereinten Nationen bestellten Administrator vorsah. 87 Die Souveränitätsfrage sollte dadurch nicht präjudiziert, vielmehr als Gegenstand künftiger Diskussionen offengehalten werden. Die britische Initiative scheiterte vordergründig an den unterschiedlichen Vorstellungen der beteiligten Staaten über die Befugnisse des Administrators und die Einbeziehung Südgeorgiens in die Vereinbarung,

82 Z . B . : Art. 4 der Resolution 1514 (Anm. 77); Klein (Anm. 64), 644. 83 Vgl. Gorelick (Anm. 80), 72 ff.; Klein (Anm. 64), 623 ff. 84 S. zuletzt Jost Delbrück, Abrüstung — Rüstungsbeschränkung — Rüstungssteuerung — Kriegsverhütung, in: ders. (Hrsg.), Friedensdokumente aus fünf Jahrhunderten, Kehl am Rhein 1984, Bd. 1, 1—33 (11); im selben Band: Karl-Ulnch Meyn, Kriegsverbot und Gewaltverbot, 35—72 (41). 85 S. o. S. 341—342. 8β So Weber (Anm. 7), 81. 8' Text in: Britain and the Falklands-Crisis (Anm. 1), 59 ff.

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im Kern jedoch an der argentinischen Position, der zufolge die Souveränitätsrechte sogleich auf Argentinien übergehen sollten. 88 Der prinzipielle Konflikt über die Souveränitätsfrage ist folglich auch auf dem Höhepunkt der FalklandKrise des Jahres 1982 bestehen geblieben. D a m i t w i r d deutlich, welche Konsequenzen der Ausschluß des britischen Selbstverteidigungsrechts in dieser Situation hätte: Er impliziert, daß derjenige, dessen territoriale Souveränität gewaltsam verletzt worden ist, auf diese praktisch vorzeitig und tatenlos verzichten muß, obschon das Ergebnis der Verhandlungen über die Souveränitätsfrage nach wie vor offen ist. Der Rechtsbrecher würde unverdient mit der Versagung des gegnerischen Selbstverteidigungsrechts belohnt. Er brauchte streng genommen gar nicht mehr über den Souveränitätswechsel zu verhandeln. Diese, an die bloße Bereitschaft zur Souveränitätsaufgabe geknüpften Folgen stünden im Widerspruch zu A r t . 2 (3) UN-Charta. Der Ausschluß des Selbstverteidigungsrechts kann allenfalls in Betracht gezogen werden, wenn der Souveränitätswechsel bereits feststeht und nur noch Details der Ubergabe des Territoriums offengeblieben sind. Von derartigen „ M i n i m a l i a " kann indessen in der Falkland-Frage bis heute nicht die Rede sein. c) Selbstverteidigungsmaßnahmen nach A r t . 51 U N - C h a r t a müssen verhältnismäßig sein. 89 I n Anbetracht der ungelösten Souveränitätsfrage w a r jedenfalls die Rückeroberung der Insel m i t dem Ziel der Wiederherstellung des status quo als solche nicht unverhältnismäßig. Das gilt selbst dann, wenn man in Betracht zieht, daß Großbritannien die Wirkung der gegen Argentinien verhängten Wirtschaftssanktionen 00 nicht abgewartet, also nicht versucht hat, die Wiederherstellung seiner territorialen Souveränität m i t wirtschaftlichen Mitteln zu erreichen. 91 Dabei ist einerseits zu berücksichtigen, daß Wirtschaftssanktionen, wie die Erfahrungen mit der Teheraner Geiselaffäre, Afghanistan und Polen erneut gelehrt haben, im allgemeinen nur begrenzt wirksam sind. Andererseits bestand angesichts der harten Haltung Argentiniens in der Souveränitätsfrage und der Siegesstimmung nach der überraschend gelungenen Besetzung der Inseln keine hinreichend begründete Erwartung, daß allein 88 Dazu den Gegenvorschlag Argentiniens, in: Dokumente zum Konflikt um die FalklandInseln (Anm. 15), D 497 f.; British Government Paper of 20 M a y 1982, in: Britain and the Falklands-Crisis (Anm. 1), 62 ff.; Speech by Airs. Thatcher opening the Houses of Commons', 6th Debate on the Falklands-Crisis on 20 M a y 1982, ebenda, 67 f f.; Erklärung des Generalsekretärs der Vereinten Nationen vom 21. 5.1982, ebenda, 73 ff.; ferner Rousseau (Anm. 1), 743. 89

Vgl. statt vieler: Luzius Wildhaber, Gewaltverbot und Selbstverteidigung, in: Wilfried Schaumann (Anm. 65), 147—173 (153, 156). — Entsprechendes gilt für das lus in hello: Josef Kunz, Kriegsrecht im allgemeinen, in: Strupp / Schlochauer (Anm. 23), 354—359 (355); Frits Karlshoven, War, Laws of, in: E P I L 4 (1982), 316—322 (317); a. A . (ohne Begründung): Blumenwitz (Anm. 7), 328. 90 9

Zu den damit verbundenen EG-rechtlichen und völkerrechtlichen Fragen unten S. 358 ff.

1 So Weber (Anm. 7), 81.

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wirtschaftlicher Druck zur Wiederherstellung des status quo ausreichen könnte. Eine andere Frage ist, ob die einzelnen zur Rückeroberung der Falkland-Inseln eingesetzten britischen Maßnahmen verhältnismäßig waren. Sie muß für jede Maßnahme gesondert beurteilt werden. Grundsätzliche Aspekte w i r f t sie nicht auf. Deshalb ist sie nicht weiter zu verfolgen. 2. Die Festlegung maritimer

Sperrzonen während der

Kampfhandlungen

a) Die von offizieller britischer Seite zunächst als „maritime exclusion zone" (12. 4.1982), später als „total exclusion zone" (30. 4. 1982) bezeichneten Maßnahmen 92 sind unterschiedlich interpretiert worden. Das britische Verteidigungsministerium spricht in der deutschen Fassung seiner Bilanz zur FalklandKampagne von „Seesperrbereichen verschiedener Ausdehnung". 9 8 Die D o k u mentation des Europaarchivs zur Falkland-Krise gibt den Begriff „exclusion zone" mit „Kriegszone" wieder. 94 Mehrfach war auch von einer (See-)Blockade die Rede. 95 Die genannten Kennzeichnungen treffen den Charakter der britischen Maßnahme nur zum Teil. V o n einer Blockade kann schon im Hinblick auf die rein militärischen Folgen der Verletzung des Sperrbereichs — die Behandlung als feindliches Schiff, A n g r i f f und Versenkung durch die britischen Seestreitkräfte — nicht gesprochen werden. 9 6 Ein Blockadebruch hätte demgegenüber bewirkt, daß Schiff und Ladung nach Durchführung eines staatlichen Prisenverfahrens eingezogen werden könnten. 9 7 Entscheidet man sich für die Deutung als „Sperrbereich", so ist eine Differenzierung geboten, die in den vorliegenden Stellungnahmen durchweg fehlt: Die am 12. 04. 1982 wirksam gewordene „maritime" Ausschlußzone bezog sich auf argentinische Kriegs- und Hilfsschiffe. Zeitlich gesehen steht sie am Anfang des Falkland-Konflikts, als der Hauptteil der britischen Einsatzkräfte eben erst auf den Weg gebracht worden war und militärische Auseinandersetzungen noch gar nicht stattfanden. Ziel und Zweck war offensichtlich, die 92 I m ersteren Sinne die Ankündigung vom 7.4.1982, im zweiten Sinne diejenige vom 28. 4.1982, beide wiedergegeben in: Britain and the Falklands-Crisis (Anm. 1), 38 und 43. Die Falklands-Kampagne — eine Bilanz, 1982, Rdnr. 103, 104; ebenso Weber (Anm. 7),

81. m E A 1982, D 485; Blumenwitz (Anm. 7), 327 spricht vom „Kriegsgebiet." Vgl. Rousseau (Anm. 1), 757; Weber (Anm. 7), 81 und die Rede des stellvertretenden argentinischen Außenministers (Anm. 2). 95

96 Vgl. allgemein: Jürgen Schmitt, Die Zulässigkeit von Sperrgebieten im Seekrieg, Ham^ bürg 1966, 73; speziell zu Falkland: Rousseau, op.cit., 757. 97 Vgl. nur Friedrich Berber, Lehrbuch des Völkerrechts, Bd. I I (Kriegsrecht), 2. Aufl., München 1969, 189 ff; Ludwig Weber, Blodcade, in: E P I L 3 (1982), 47—51.

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argentinischen Seestreitkräfte von den besetzten Falkland-Inseln fernzuhalten und die Entschlossenheit Großbritanniens zum militärischen Eingreifen zu dokumentieren, um die damals noch andauernden Bemühungen um eine friedliche Streitbeilegung zu unterstützen. 98 b) Bei der Beurteilung der „maritimen" Ausschlußzone muß berücksichtigt werden, daß die zur Sperrgebietspraxis des Zweiten Weltkrieges vorliegende Literatur 9 9 hier nicht einschlägig ist, weil nicht die Schiffahrt allgemein, sondern nur argentinische Marineeinheiten betroffen waren. Insofern als sich diese Ausschlußzone gegen Argentinien richtet, kann zur Rechtfertigung das den Voraussetzungen nach gegebene100 Selbstverteidigungsrecht Großbritanniens sprechen. 101 Gegen die für Selbstverteidigungsmaßnahmen zu fordernde 102 Verhältnismäßigkeit bestehen keine Bedenken. 103 Z u m einen handelt es sich nämlich nur um die bloße Androhung militärischer Maßnahmen und zum anderen bestand die Absicht lediglich darin, die weitere Verfestigung der argentinischen Stellungen durch Nachschub über See während der noch andauernden Bemühungen um eine friedliche Streitbeilegung zu unterbinden. Eine Verletzung der Rechte neutraler Staaten, deren Wahrung auch dem Selbstverteidigung übenden Staat obliegt 1 0 4 , ist nicht ersichtlich. Bedenken könnten sich aber ergeben, wenn die m i t der Erklärung der Zone angedrohten militärischen Kampfhandlungen generell verboten wären. Soweit diese Meinung früher vereinzelt vertreten worden ist 1 0 5 , war dem m i t dem Hinweis auf die Konventionen zum Seekriegsrecht zu begegnen. 106 Heute könnte man ein solches generelles Verbot der militärischen Nutzung der See vielleicht dem A r t . 88 der Seerechtskon98 Vgl. Rede der britischen Premierministerin im Unterhaus vom 14. 4.1982, Europa Archiv 1982, D 487—489 (488). 99

Jürgen Schmitt (Anm. 96); Reinhold Schenk, Seekrieg und Völkerrecht, K ö l n / B e r l i n 1958, 69—128; E. Schmitz, Sperrgebiet im Seekrieg, Z a ö R V 8 (1938), 641—671 ; Karl Zemanek, Sperrgebiet, in: Strupp / Schlochauer (Anm. 23), 286—287; Hans-Jürgen Schlochauer, war zones, in: E P I L 4 (1982), 337—338; Skubizewski (Anm. 65), 773; Friedrich A.v. d. Heydte, Völkerrecht, Bd. 2, K ö l n 1960, 314 f; Ulrich Scheuner, Seekriegsrecht, in: Strupp / Schlochauer, (Anm. 23), 229—237 (235); C. John Colombos, International Law of the Sea, 6th ed., London 1967, 528—531; D. P. O'Connell, The Influence of L a w on Sea Power, Manchester 1975, 162—168; Erik Castrén, The President Law of W a r and Neutrality, Helsinki 1954. 100 S. o., S. 347—350. 101

R. P. Barston / P. W. Birnie , The Falkland Islands / Isias Malvinas conflict — a question of zones, Marine Policy 7 (1983), 14—24 (20); Randelzhofer (Anm. 7), 687; a. A . Weber (Anm. 7), 81. 102 Brun-Otto Bryde, Self-Defence, in: E P I L 4 (1982), 212—214 (213) m. w. N . 103 Randelzhofer (Anm. 7), 687; Barston / Birnie (Anm. 101), 20. 104 Vgl. Verdross ! Simma (Anm. 58), 648; Philip Kunig, War, Theatre of, in: E P I L 4 (1982), 331—334 (332). 105 Uwe Jenisd ?, Das Recht zur Vornahme militärischer Übungen und Versuche auf Hoher See in Friedenszeiten, Hamburg 1970, 53 m. w. N . ιοβ op. cit., 54.

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vention der Vereinten Nationen 1 0 7 entnehmen. Unabhängig von der Frage der Geltung ist jedoch der in A r t . 88 SRK benutzte Begriff des friedlichen Gebrauchs gemäß A r t . 301 SRK auszulegen. 108 Diese Bestimmung ähnelt stark dem A r t . 2 Abs. 4 S V N 1 0 9 und bestimmt i m wesentlichen, daß die Staaten sich im Sinne eines „friedlichen Gebrauchs" solcher Gewaltdrohung oder -anwendung enthalten sollen, die unvereinbar m i t der Satzung der Vereinten Nationen sind. Selbstverteidigungsmaßnahmen sind daher durch das Gebot der friedlichen Nutzung der Hohen See gemäß A r t . 87 SRK nicht ausgeschlossen.110 Anders zu beurteilen ist die Ausdehnung der Ausschlußwirkung auf Schiffe aller Nationalitäten durch Einführung der „totalen" Ausschlußzone am 30. 04. 1982. Solche, die gesamte Schiffahrt betreffenden Zonen sind i n Kriegsund Friedenszeiten unter verschiedenen Bezeichnungen häufig praktiziert worden. 1 1 1 Das von England während des Ersten Weltkrieges beanspruchte „Kriegsgebiet", das sich über die gesamte Nordsee erstreckte und die noch ausgedehntere „totale Blockade" Englands durch Deutschland i m Zweiten Weltkrieg waren Elemente des Handelskrieges, die eine Anpassung des überkommenen Seekriegsmittels der Blockade an die geänderten seestrategischen Gesamtumstände darstellt. 1 1 2 Dem Schutz der übrigen Schiffahrt dienen demgegenüber sogenannte Warnzonen im Zusammenhang m i t Manövern, Schießübungen oder gar Kernwaffenversuchen, die besonders nach dem Zweiten Weltkrieg vermehrt praktiziert wurden. 1 1 3 Diese werden im Grundsatz, auch bei Berücksichtigung der neuen Seerechtskonvention, für rechtmäßig erachtet, 107 U N D o c . A / C O N F . 62/122, vom 07.10.1982, abgedruckt in: Renate Platzöder / Wolfgang Graf Vitzthum, Seerecht — Law of the Sea (Textausgabe), Baden-Baden 1984, 69—348. 108 Wilhelm Karl Geck, D i e Schiffahrtsfreiheit von Kriegsschiffen nach U N C L O S I I I , in: Rudolf Bernhardt / Wilhelm Karl Geck (ed.), Völkerrecht als Rechtsordnung. Internationale Gerichtsbarkeit. Menschenrechte, Festschrift für Hermann Mosler, Berlin / Heidelberg / N e w York 1983, 280—349 (294); Rüdiger Wolf rum, Restricting the Use of the Sea to Peaceful Purposes: Demilitarization in Being?, G Y I L 24 (1981), 200—241 (214). 109 Geek (Anm. 108), 294; Wolfrum

(Anm. 108), 215.

no Cede (Anm. 108), 295. m Als erstes derartiges Sperrgebiet werden die 1904 während des Krieges mit Rußland von japanischer Seite erklärten „defensive sea areas" angesehen, Schmitt (Anm. 96), 15—44; in der Nachkriegszeit sind insbesondere die Verhängung einer Quarantäne durch die U S A während der Kuba-Krise 1962 und die auf Veranlassung des Sicherheitsrats durchgeführte Kontrolle des Rhodesienembargos durch englische Marineeinheiten im Jahre 1965 zu nennen, vgl. Rolf Ottmüller, Die Anwendung von Seekriegsrecht in militärischen Konflikten seit 1945, Frankfurt/M. 1978, 151—179 und 199—218; ferner die Aufzählung bei Barston ! Birnie (Anm. 101),

18. u 2 D a z u insgesamt, Sdomitt (Anm. 96), 45—56; Schenk (Anm. 99), 88; beide erwägen deshalb mit ablehnendem Ergebnis, die Zulässigkeit der Sperrgebiete mit einer Rechtsänderung aufgrund gewandelter Umstände zu begründen: Schmitt, 108 ff.; Schenk, 88 f. us Barston I Birnie (Anm. 101), 18; Jenisch (Anm. 105).

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353

da die Freiheit der Hohen See auch die militärische Nutzung umfasse. 114 Schwieriger ist hingegen die Beurteilung der Sperrzonen im Kriegsfall. Dies hat seinen Grund darin, daß das Seekriegsrecht sich nicht in dem Maße entwickelt hat wie das allgemeine Seerecht, da es bei den drei Seerechtskonferenzen nach dem Zweiten Weltkrieg jeweils ausgespart blieb. 1 1 5 Die aus dem Zweiten Weltkrieg geläufigen Sperrgebiete waren aber schon mit dem herkömmlichen Seekriegsrecht nicht vereinbar, weil dieses nur das Instrument der Blockade, aber keine Sperrgebiete kannte. 1 1 6 Überdies war die Einschränkung der Freiheit der Meere — etwa auch eine Seeblockade — nur gestattet, wenn der eine diesbezügliche Erklärung abgebende Staat im Sinne des Effektivitätsprinzips auch in der Lage war, eine dementsprechende tatsächliche Beherrschungswirkung auszuüben. Dies war bei den weitläufigen Sperrgebieten während der Weltkriege aber nicht der Fall. 1 1 7 Deswegen scheitert auch eine Rechtfertigung dieser Praktiken im Wege der Rechtsanalogie zur Seeblockade. 118 Der Annahme der Entstehung entsprechenden Völkergewohnheitsrechts stehen die vielfältigen Proteste anderer Staaten entgegen. 110 Eine Sperrgebietspraxis, die der der beiden Weltkriege entspricht, ist deswegen rechtswidrig. 120 D a m i t ist jedoch noch nichts darüber ausgesagt, ob Sperrgebiete überhaupt verboten sind. Ein Ansatzpunkt für die Zulässigkeit eng auf das Gebiet tatsächlicher K a m p f handlungen begrenzter Sperrgebiete läßt sich vielleicht daraus herleiten, daß auch zu Friedenszeiten auf den Raum tatsächlicher Gefährdung beschränkte Warnzonen zu militärischen Zwecken anerkannt sind. 1 2 1 Die darin zum Ausdruck kommende Berechtigung, militärische Aktivitäten zu Lasten anderer Nutzungsarten zu entfalten, muß auch im Kriegsfall gelten und zur Erklärung von Warnzonen ermächtigen. Die Zulässigkeit solcher begrenzter Sperrgebiete könnte sich auch auf eine Regel des Völkergewohnheitsrechts stützen, die bestimmt, daß neutrale Schiffe den Bereich aktueller Kampfhandlungen zu meiden haben und erforderlichenfalls von den Kriegsführenden aus diesem Gebiet verwiesen werden können. 1 2 2 Ob der Bestand dieser in ihrem Entstehen

Geck (Anm. 108), 295; /erwcfr (Anm. 105), 70, 106, 126; ϋΐήώ Scheuner, Entwicklungen im Seekriegsredit seit dem zweiten Weltkrieg, in: Hans Peter Ipsen / Karl-Hartmann Necker (Hrsg.), Recht über See, Festschrift für Rolf Stödter, Hamburg / Heidelberg 1979, 287—313 (306). us Scheuner (Anm. 114), 288. ne Zemanek (Anm. 99), 287. 117 Schenk (Anm. 99), 111. ne Schmitt (Anm. 99) 73. ne Schmitt (Anm. 99), 106; Schenk (Anm. 99), 96; a. A. Karl Zemanek, W a r Zones, in: E P I L 4 (1982), 337—338 (338). 120 Schmitt (Anm. 99), 122; Schenk (Anm. 99), 98 m . w . N . ; Scbeuner (Anm. 114), 297. 121 Vgl. O'Connell (Anm. 99), 164. 122 Schmitt (Anm. 99), 66; Schenk (Anm. 99), 71; Colombos (Anm. 99), 528.

23 GYIL 27

354

Meinhard Sr öder

auf die Zeit vor dem Ersten Weltkrieg zurückgeführten Regel 123 durch den Verlauf der allgemeinen Seerechtsentwicklung besonders nach dem Zweiten Weltkrieg beeinflußt worden ist, läßt sich nicht m i t Bestimmtheit sagen. Allerdings ist zu berücksichtigen, daß das Seekriegsrecht jeweils ausgeklammert blieb, so daß einiges für eine unveränderte Fortgeltung spricht. I m Gegensatz zu den Warnzonen ist diese Regel möglicherweise auch weitergehend, weil Ausgangspunkt nicht nur die Gefährdung Unbeteiligter ist, sondern darüber hinausgehend auch die Behinderung der Kriegführenden als weiterer Akzent hinzukommt. 1 2 4 Deshalb enthält diese Konstruktion ausdrücklich auch ein Verweisungsrecht gegenüber eindringenden Schiffen, das notfalls m i t Waffengewalt 1 2 5 ausgeübt werden kann. Insgesamt erscheinen solche Sperrgebiete durchaus zulässig. 126 Ihre räumliche Ausdehnung w i r d teilweise am Maßstab der tatsächlichen Gefährdung neutraler Schiffe gemessen127, der an die Stelle des herkömmlichen seekriegsrechtlichen Erfordernisses der effektiven Beherrschung getreten sein soll. 1 2 8 Teilweise w i r d als Kriterium auch die Beeinträchtigung der Kampfhandlungen genannt, die nur i m unmittelbaren Operationsgebiet gegeben sein soll. 1 2 9 I n jedem Fall wären solche Sperrzonen also nur i m unmittelbaren Bereich der aktuellen militärischen Operation zulässig, weswegen sie auch „Operationszonen" genannt werden. 1 3 0 Ob die totale Ausschlußzone i n diesem Rahmen zulässiger Sperrgebiete blieb oder darüber hinausging, ist aufgrund der unklaren Sachlage schwer zu ermitteln. Jedoch scheint die erhebliche Ausdehnung und die zeitlich unbefristete Erklärung, die in keinem klaren Zusammenhang mit dem sich ändernden Kampfgeschehen steht, zu Zweifeln Anlaß zu geben. 131 Insofern sind die Proteste der Sowjetunion und Frankreichs 132 nicht klar von der H a n d zu weisen. c) Sicherer ist die rechtliche Beurteilung der Versenkung des argentinischen Kreuzers „Belgrano" 20 Seemeilen außerhalb des britischen Sperrbereichs. Die Rechtmäßigkeit läßt sich auf folgende Gesichtspunkte stützen: Die gesamte 123 Schmitt (Anm. 99), 66. 124

Schmitt (Anm. 99), 66, mit einem Hinweis auf das — allerdings nicht ratifizierte — Haager Funktelegraphieabkommen von 1923, das ein Verweisungsrecht der Kriegsführenden gegenüber mit Funk ausgerüsteten neutralen Schiffen vorsah, falls diese die militärischen Operationen behinderten; dazu audi: Colomhos (Anm. 99), 528. 125 Schenk (Anm. 99), 71; Schmitt (Anm. 99), 66; Colomhos (Anm. 99), 528; einschränkend: O'Connell (Anm. 99), 167. 12* O'Connell (Anm. 99), 167. 127 Zemanek (Anm. 119), 338; O'Connéll

(Anm. 99), 167.

128 Zemanek, op. cit. 129 Schmitt (Anm. 99), 67; Schenk (Anm. 99), 71. 130 Vgl. O'Connell (Anm. 99), 164. " ι Vgl. Schenk (Anm. 99), 90. 132 F ü r Argentinien vgl. die Rede des stellvertretenden Außenministers (Anm. 2); für die Sowjetunion den Hinweis bei Rousseau (Anm. 1), 752.

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355

Hohe See ist in bewaffneten Konflikten Schauplatz von Kampfhandlungen. 1 3 3 Schon deshalb dürfte dem maritimen Sperrbereich grundsätzlich keine Beschränkung für militärische Operationen zukommen. 1 3 4 Überdies hatte sich Großbritannien bei Verhängung der Sperrzone ausdrücklich das Selbstverteidigungsrecht i m Sinne des A r t . 51 U N - C h a r t a vorbehalten. Ein irgendwie gearteter Vertrauenstatbestand zugunsten Argentiniens im Sinne einer Beschränkung der Kampfhandlungen auf den Sperrbereich war damit explizit ausgeschlossen. Schließlich ist darauf hinzuweisen, daß die Versenkung in dem von Argentinien bestimmten südatlantischen Operationsgebiet stattfand. Nach dem Grundsatz der Reziprozität konnte das argentinische Operationsfeld auch als Kampfzone von Großbritannien in Anspruch genommen werden, mit der Folge, daß fragliche Kriegsschiffe i n ihm angegriffen und versenkt werden durften. Die Beurteilung der Versenkung der „Belgrano" als Einzelmaßnahme bedarf jedoch noch der Verhältnismäßigkeitsprüfung. 135 Anders als bei der Repressalie richtet sich der Maßstab der Verhältnismäßigkeit bei einer Selbstverteidigungsmaßnahme nicht nach der Schwere der erlittenen Völkerrechtsverletzung, sondern danach, was zur Durchsetzung oder Verteidigung der betroffenen Rechtsposition notwendig ist. 1 3 6 Teilweise w i r d die Verhältnismäßigkeit von Maßnahmen im Sinne von A r t . 51 U N - C h a r t a auch als Exzessverbot aufgefaßt. 137 Ein so verstandener Verhältnismäßigkeitsgrundsatz, der den Staaten einen weiten Spielraum zubilligt und nur äußerste Grenzen festlegt, kann nicht zu einer detaillierten Abwägung aller Umstände führen, die hier aufgrund der begrenzten Sachverhaltskenntnis auch gar nicht zu leisten wäre. I h m ist, jedenfalls hier, m i t der Feststellung Genüge getan, daß die Versenkung des Kreuzers sich plausibel m i t der Bedrohung der i m Sperrbereich operierenden britischen Seestreitkräfte begründen ließ, ohne daß dabei ein derartiges, grobes Mißverhältnis zu beobachten wäre, wie es angesichts der weit zu ziehenden Grenzen zur Annahme einer Verletzung des Verhältnismäßigkeitsgrundsatzes erforderlich wäre. 1 3 8 iss Georg Schwarzenberger, International Law, vol. I I , The L a w of Armed Conflict, London 1968, 67; Yoram Dinstein, Sea Warfare, in: E P I L 4 (1982), 201—212 (201). Blumenwitz

(Anm. 7), 328; im Ergebnis audi: Rousseau (Anm. 1), 758.

135

S. o.S. 349; vgl. Waldemar A. Stoff, Kommentierung zu A r t . 35 des 1. Zusatzprotokolls zu den Genfer Konventionen, in: Michael Bothe / Karl Joseph Partsch / Waldemar A. Sol f, N e w Rules for Victims of Armed Conflicts, D e n Haag, Boston, London 1982, 192—198. ΐ3β Bryde (Anm. 102), 213; O'Connell (Anm. 99), 64. 137 Randelzhofer (Anm. 7), 681; Ove E. Bnng, The Falkland Crisis and International Law, in: Nordisk Tidsskrift for International Ret vol. 51 (1982), 129. Vgl. Jost Delbrück , Proportionality, in: E P I L 7 (1984), 396—400; Myres S. McDougal / Florentino P. Feliciano, Law and Minimum Public Order, N e w Haven 1961, 241—244. 138 Vgl. Britain and the Falkland-Crisis (Anm. 1), 14; D i e Falklands-Kampagne (Anm. 93), Rdnr. 110; so audi Barston / Birnie (Anm. 101), 22; Randelzhofer (Anm. 7), 681; Blumenwitz (Anm. 7), 328; a. A . Weber (Anm. 7), 81.

23'

Meinhard S dor öd er

356

3. Die Einrichtung einer 150 sm-Grenze um die Falkland-Inseln nach Beendigung der Kampfhandlungen Die im Juli 1982 bekanntgegebene Einrichtung einer 150 sm-Grenze um die Falkland-Inseln hat bisher kaum Aufmerksamkeit gefunden. Sie erinnert an die in der Staatenpraxis häufiger nachweisbaren Sicherheitszonen, durch die Uferstaaten für sich in Anspruch nehmen, die L u f t - und Schiffahrt auch in der Anschluß- bzw. Wirtschaftszone aus Gründen der nationalen Sicherheit zu kontrollieren oder zu beschränken 139 . Seerechtlich haben solche Zonen in Friedenszeiten keine Basis. I n concreto mag freilich in Betracht gezogen werden, daß der britisch-argentinische Waffenstillstand vom 14. 6. 1982 die aktiven Feindseligkeiten nicht endgültig beendet hat, zumal Argentinien seine Absicht zur gewaltsamen Einverleibung der Falkland-Inseln auch danach nicht aufgegeben hat 1 4 0 . Man könnte deshalb behaupten, das für bewaffnete K o n flikte zum Teil zugestandene Recht zur Kontrolle der Luft-und Schiffahrt 1 4 1 habe zugunsten Großbritanniens über den 14. 6. 1982 hinaus bestanden und deshalb die Etablierung der 150sm-Zone gerechtfertigt. Nichtsdestoweniger gelten die für Sperrzonen hervorgehobenen Unklarheiten der Rechtslage audi hier: Infolge der mit ihr verbundenen Beschränkung der argentinischen L u f t und Seeschiffahrt erweist sich nämlich auch die 150sm-Zone als eine i m Vergleich zur Sperrzone zwar mildere, aber zeitlich nicht beschränkte „Seenahme". Diesbezügliche Bedenken werden sogar noch in anderer Richtung verstärkt. Die 150sm-Zone kommt bei der hier vorgenommenen Betrachtung einer Maßnahme der präventiven Selbstverteidigung gleich. Solche Maßnahmen lassen sich aber, wenn überhaupt, nur rechtfertigen, wenn sie unmittelbar bevorstehende Gefahren abwehren sollen und einer überwältigenden Notwendigkeit der Verteidigung entspringen 142 . A u f entsprechende Umstände hat Großbritannien die 150sm-Zone nicht gestützt, sie vielmehr nur mit der Vermeidung von Mißverständnissen begründet. Abgesehen davon bestehen erhebliche Zweifel, ob derartige Umstände unabhängig von der britischen Regierung der 150sm-Zone objektiv bestanden, selbst wenn man fortdauernde Aggressionsabsichten Argentiniens annimmt. Insgesamt bestehen demnach erhebliche Bedenken gegen die Zulässigkeit der 150sm-Zone. Folgerichtig gilt dies auch für die gewaltsame Vertreibung dreier Fischerboote aus dieser Zone i m August 1982.

139 Vgl. Brownlie 1980, 327 f., 381 f.

(Anm. 11), 217; Rousseau, Droit International Public, Tome I V , Paris

140 Siehe Blumenwitz 141

(Anm. 7), 328.

I n diesem Sinne Georg Dahm, Völkerrecht, Bd. 1, Stuttgart 1958, 672; Brownlie, " 2 Verdross I Simma (Anm. 58), 239; Wildhaber (Anm. 89), 153.

a. a. O.

Der Kampf um die Falkland-Inseln

357

4. Gesamturteil I m Falkland-Konflikt des Jahres 1982 war Argentinien in der Position des Rechtsbrechers. Dieser These Wagners 143 w i r d man zustimmen können. Verbleibende Unsicherheiten gelten der Frage, ob der argentinische Schritt in die Gewalt einen Krieg vom Zaun gebrochen hat und welche Folgen dies für den „britischen Gegenschlag" hatte 1 4 4 . Was diesen anlangt, so ist die Behauptung, er habe die hergebrachte Ordnung gerettet 145 , schwerer zu begründen. Das liegt namentlich daran, daß die britischen Aktionen überwiegend auf Hoher See stattfanden, und damit in einem Raum, der nach 1945 nur ausnahmsweise Schauplatz bewaffneter Konflikte gewesen ist, dessen maßgeblicher Normenbestand sich folglich als unsicher und unangepaßt darstellt 1 4 6 . V. D a s A r g e n t i n i e n e m b a r g o der E u r o p ä i s c h e n Gemeinschaft Der Falkland-Konflikt liefert neues Anschauungsmaterial für den Versuch, das Wirtschaftspotential der Europäischen Gemeinschaft zugunsten politisch und militärisch verbündeter oder der Mitgliedstaaten einzusetzen 147 . Nicht zufällig hat Ratspräsident Tindemans das Embargo vor dem Europäischen Parlament vor allem als Solidaritätsakt mit wirtschaftlichen M i t t e l n charakterisiert 1 4 8 . 1. Völkerrechtliche

und europarechtliche

Fragestellungen

Die rechtliche Beurteilung des Argentinienembargos hat eine europarechtliche und völkerrechtliche Komponente. Zu beiden Problemkreisen habe ich vor einigen Jahren aus Anlaß des Iranembargos in diesem Jahrbuch bereits Stellung genommen 149 . Zur völkerrechtlichen Seite des Argentinienembargos ergeben sich keine wesentlich neuen Aspekte. Eine Verletzung des Gewaltverbotes, das nach wie vor auf den Einsatz militärischer Gewalt begrenzt ist 1 5 0 , scheidet von vornherein aus. Von einer verbotenen Intervention m i t wirtschaftlichen Mitteln könnte nur die Rede sein, wenn das Embargo „Eingriffscharakter" gehabt und 143 Wagner (Anm. 7), 510, 511. 144 Hierzu Rousseau (Amn. 1), 749f.; Blumenwitz (Anm. 7), 327; Geck (Anm. 108), Fn 137a. 145 Wagner (Anm. 7), 513, 514. ΐ4β Vgl. Scheuner (Anm. 114), 305, 313. 147 Vgl. Meng (Anm. 5), 782. 148 S. Anm. 6. 14® Meinhard Schröder, Wirtschaftssanktionen der Europäischen Gemeinschaften gegenüber Drittstaaten — dargestellt am Beispiel des Iranembargos, G Y I L 23 (1980), 111—125. 150 Wilhelm Kewenig, Die Anwendung wirtschaftlicher Zwangsmaßnahmen im Völkerrecht, in: Berichte der Deutschen Gesellschaft für Völkerrecht, H e f t 22 (1982) 7—29 (12 f.).

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zu einer Einmischung in ausschließliche Angelegenheiten Argentiniens geführt hätte 1 5 1 . Die erste Voraussetzung ist bei Embargomaßnahmen kaum zu bejahen 1 5 2 . A n der zweiten Voraussetzung fehlte es, weil das Embargo dem Ziel diente, Argentinien nach dem Bruch des Gewaltverbotes wieder zu völkerrechtskonformem Verhalten zu bewegen. Dabei durfte auch die Gemeinschaft auf die argentinische Verletzung des Gewaltverbotes i m Wege der N o t h i l f e reagieren 153 . Schließlich wurden weder das G A T T 1 5 4 noch — infolge der Ausnahmeklausel für A l t k o n t r a k t e 1 5 5 — bestehende Handelsverträge mit Argentinien verletzt. Demgegenüber ist die gemeinscbaftsrechtliche Zuständigkeit zur Verhängung von Wirtschaftssanktionen nach wie vor umstritten, weil sich M o t i v und I n strumentarium der Sanktionen unter dem Blickwinkel der Kompetenzverteilung zwischen der Gemeinschaft und den Mitgliedstaaten nicht zu decken scheinen 156 . Während die Motive für das Argentinienembargo auf dem Gebiet der Außen- und Sicherheitspolitik liegen, die prinzipiell in der Zuständigkeit der Mitgliedstaaten verblieben sind, weist das Instrumentarium — die Einfuhrregelung — auf eine Gemeinschaftszuständigkeit. Abweichende Ansichten zu dem früher eingenommenen Standpunkt 1 5 7 , aber auch der Umstand, daß in der Falkland-Krise drei Mitgliedstaaten aus dem Gemeinschaftsembargo ausgeschert sind, werfen neue Schlaglichter auf die Kompetenzfrage. 2. Die gemeinschaftsrechtliche Zuständigkeit für Wirtschaftssanktionen gegenüber Drittstaaten a) Einigkeit besteht darüber, daß die Gemeinsdiaftsrechtskompetenzfrage nicht unter Hinweis auf Absprachen im Rahmen der Europäischen Politischen Zusammenarbeit (EPZ) beantwortet werden kann. Es ist zwar richtig, daß Wirtschaftssanktionen der Gemeinschaft wegen ihres außen- und sicherheitspolitischen Motivs die maßgebliche Prägung im Rahmen der EPZ erhalten und von den Organen der Gemeinschaft verbindlich umgesetzt werden. Dabei bleiben aber die Gemeinschaftsorgane an die ihnen durch die Gründungsverträge verliehenen Zuständigkeiten gebunden. Absprachen i m Rahmen der 151 Z u dieser Fragestellung bereits Schröder (Anm. 149), 122 und Kewenig, op. cit., 14 ff., insbes. 17. 152 Schröder (Anm. 149), 122.

153 154 155 richte

Einzelheiten bei Schröder (Anm. 149), 122 und Meng (Anm. 5), 795 Anm. 65. Näheres s. Anm. 149, 123 f.; Kewenig (Anm. 150), 19. Vgl. Kewenig (Anm. 150), 20 f. und Claus D. Ehlermann, Diskussionsbeitrag, in: Be(Anm. 150), 68; Meng (Anm. 5), 783 f.

ΐ5β Zutreffendr Gert Nicolay sen, Autonome Handelspolitik der Europäischen Wirtschaftsgemeinschaft, in: Ingo von Münch (ed.), Staatsrecht — Völkerrecht — Europarecht, Festschrift für Hans-Jürgen Sdilodiauer, Berlin 1981, 855—876 (874); Meng (Anm. 5), 791. 157 Vgl. namentlich Bruha (Anm. 7), 674 ff. und Meng (Anm. 5), 780 ff.

359

Der Kampf um die Falkland-Inseln

Europäischen Politischen Zusammenarbeit können eine schaftszuständigkeit weder ersetzen noch begründen 158 .

fehlende

Gemein-

b) Nachdem schon 1980 gegenüber dem Iran und 1982 gegenüber der UdSSR Wirtschaftssanktionen der Gemeinschaft i m ersten Fall ins Auge gefaßt, im zweiten Fall praktiziert worden sind 1 5 9 , standen i m Falkland-Konflikt zum dritten M a l Embargomaßnahmen gegen einen Drittstaat zur Debatte. Dieser Umstand hat zu prinzipiell naheliegenden Überlegungen darüber geführt, ob die in den drei erwähnten Fällen zutage getretene Gemeinschaftspraxis zuständigkeitsbegründend oder -klärend herangezogen werden k a n n 1 6 0 . Überlegungen dieser A r t sind nach dem derzeitigen Stand der Entwicklung bei der Auslegung der A r t . 113 und 224 E W G V anzusiedeln. Die Diskussion um Wirtschaftssanktionen hat sich in allen Fällen innerhalb der Gemeinschaft in diesem Rahmen bewegt. A u f das Verfahren nach A r t . 235 E W G V , auf eine formlose Vertragsänderung oder punktuelle Vertragsdurchbrechung wollte man sich offenbar nicht einlassen 161 . Deshalb ist nur zu prüfen, ob eine die Voraussetzungen des A r t . 31 Abs. 3 b W V K erfüllende Praxis in der Anwendung der A r t . 113 und 224 E W G V vorliegt; bejahendenfalls, ob diese Praxis als „erstrangiger Auslegungsfaktor" bei der Interpretation des E W G Vertrages berücksichtigt werden kann 1 6 2 . Die i m Schrifttum unter dem Blickwinkel von Wirtschaftssanktionen der Gemeinschaft geführte Diskussion u m den Inhalt der A r t . 113 und 224 E W G V könnte sich dann weitgehend erübrigen. Was die Anwendbarkeit der in der W V K niedergelegten Auslegungsregeln auf Gemeinschaftsrecht anlangt, so ist ihr mit einer pauschalen Verwerfung nicht mehr beizukommen 163 . Die traditionellen Maximen der völkerrechtlichen Vertragsauslegung, nach denen der Wille der Vertragsparteien vorrangig zu berücksichtigen und Bindungen i m Zweifel zugunsten der Freiheit der Partner restriktiv zu interpretieren waren, sind in der W V K zugunsten objektiver, 158 Otto Harnier, Vorbem. zu den Art. 137 bis 198, Rdnr. 29 in: v.d. Groeben 1 Boeckh / Thiesing / Ehlermann, Kommentar zum EWG-Vertrag, 3. Aufl., Baden-Baden 1983; Reiner von Borries, Europarecht von A — 2 , 1982, Stichwort : Europäische politische Zusammenarbeit, 149 f.; speziell zum Argentinienembargo: Bruha (Anm. 7), 678 f. — Unbefriedigend: Jörn Pipkorn, in: Bengt Beutler / Roland Bieber / JörnPipkorn I Jochen Streil (ed.), D i e Europäische Gemeinschaft, 2. Aufl., Baden-Baden 1982, 489 F N 386. 15» Einzelheiten bei Meng (Anm. 5), 783—786. 160 Bruha (Anm. 7), 679 ff.; Meng (Anm. 5), 791 f. 161 Wie hier Meng, op.cit.; weitergehende Erwägungen bei Bruha, op.cit. 162 Z u Art. 31 Abs. 3 b W V K neuestens: Wolfram Karl, Vertrag und spätere Praxis im Völkerrecht, Berlin/Heidelberg 1983, insbesondere 184 ff. 163 So jüngst noch: Oliver Jacot-Guillarmod, Droit Communautaire et Droit International Public, 1979, 43.

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360

teleologischer Auslegungsfaktoren in den Hintergrund getreten 164 . Dadurch haben sich die für das Völkerrecht und Gemeinschaftsrecht maßgebenden Auslegungsprinzipien angenähert 165 . Ob deshalb nur noch punktuelle A b weichungen bestehen 166 , mag dahinstehen. I n keinem Falle darf aber die Berücksichtigung der in der W V K niedergelegten Auslegungsregeln in Widerspruch zu den Besonderheiten des zwischenstaatlichen Organisationsrechts geraten. Diese in A r t . 5 W V K vorgezeichnete und „Eigentümlichkeiten des Gemeinschaftsrechts" angemessene Forderung zwingt dazu, jede einzelne völkerrechtliche Auslegungsregel — und somit audi A r t . 31 Abs. 3 b W V K — auf ihre Vereinbarkeit mit Gemeinschaftsrecht zu überprüfen. Dieser Test fällt in concreto negativ aus. A r t . 31 Abs. 3 b W V K konserviert die Bedeutung der staatlichen Souveränität in der Vertragsgestaltung. Er bewahrt den Vertragspartnern das Recht zur authentischen Interpretation. Sie sind nach wie vor die Herren der Verträge 1 6 7 . Die Übertragung dieses Prinzips auf zwischenstaatliche Organisationen hängt entscheidend davon ab, ob eine Organisation nach dem geschriebenen und ungeschriebenen Inhalt ihrer Gründungsakte gegenüber der Gesamtheit ihrer Mitgliedstaaten eine derart konkrete Selbständigkeit erworben hat, daß ein vom Standpunkt der Staaten unabhängiger W i l l e gebildet werden kann 1 6 8 . Unter solchen Bedingungen sind die Mitgliedstaaten nicht mehr Herren der Gründungsverträge. Sie dürften insbesondere dann vorliegen, wenn die zwischenstaatliche Organisation über ein eigenes Gericht verfügt, das die „Verfassungsmäßigkeit" des m i t der Organisation zusammenhängenden Handelns überprüfen kann 1 6 9 . A u f den Gerichtshof der Europäischen Gemeinschaften t r i f f t dies ohne weiteres zu. Er kann auch einstimmig gefaßte Beschlüsse der anderen Gemeinschaftsorgane und das Verhalten der Mitgliedstaaten auf die Übereinstimmung mit dem Gemeinschaftsrecht überprüfen 1 7 0 . A u f derselben Linie liegt das 2. Defrenne-Urteil: H i e r w i r d die langjährige vertragsmißachtende Praxis der Mitgliedstaaten und der Kommission als rechtlich irrelevant für die Auslegung des A r t . 119 E W G V angesehen 171 . Somit spricht alles dafür, daß eine „spätere" Vertragspraxis der 164 Rudolf Bernhardt, Zur Auslegung des Europäischen Gemeinschaftsrechts, in: Wilhelm Georg Grewe / Hans Rupp / Hans Schneider (ed.), Europäische Gerichtsbarkeit und nationale Verfassungsgerichtsbarkeit, Festschrift für Hans Kutscher, Baden-Baden 1981, 17—24 (19 f.). ιβδ Bernhardt, op. cit., 21; Bruha (Anm. 7), 681.

ιββ So Albert Bleckmann, Europarecht, 3. Aufl., Köln 1980, 88. ιβτ Bernhardt (Anm. 164), 21. Überzeugend Karl

(Anm. 162), 347.

ie® Karl (Anm. 162), 348. " ο Bernhardt (Anm. 164), 21. " Ι E U G H RS. 43/75, Slg. 1976, 455—493 (473). — Zur Einschätzung dieses Urteils auch Georg Ress, Wechselwirkungen zwischen Völkerrecht und Verfassung bei der Auslegung völkerrechtlicher Verträge, in: Berichte der Deutschen Gesellschaft für Völkerrecht, H e f t 23 (1982), 7 — 5 9

(26 m i t F N

89).

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Mitgliedstaaten oder der politischen Organe der Gemeinschaft bei der Interpretation der Gemeinschaftsverträge nicht zuständigkeitsklärend oder -begründend berücksichtigt werden k a n n 1 7 2 . H i n z u kommt, daß die bei den Wirtschaftssanktionen bisher zutage getretene Gemeinschaftspraxis nicht die nach A r t . 31 Abs. 3 b W V K notwendige Übereinstimmung der Mitgliedstaaten aufweist. Das Iranembargo konnte 1980 erst gar nicht auf der Grundlage des A r t . 113 E W G V beschlossen werden, weil Frankreich, Italien und Dänemark die Auffassung vertraten, der polititische Charakter der Sanktion erlaube nur eine mitgliedstaatliche Koordination im Rahmen der EPZ auf der Basis des A r t . 224 E W G V 1 7 3 . Zwei Jahre später kam das Embargo der Gemeinschaft gegen die UdSSR, gestützt auf A r t . 113 E W G V , zwar zustande, aber nur um den Preis, daß Griechenland vom räumlichen Anwendungsbereich ausgenommen und Dänemark Zugeständnisse bei der vom Embargo erfaßten Warenliste gemacht wurden 1 7 4 . I m Falkland-Konflikt schließlich akzeptierte Dänemark A r t . 113 E W G V nur vorübergehend als Handlungsgrundlage. Den Embargoverlängerungen hat es wegen des zwischenzeitlich erlassenen nationalen Embargogesetzes ebensowenig zugestimmt wie Italien und Irland, die nur zu Konsultationen nach Art. 224 E W G V bereit waren 1 7 5 . V o n einer „einstimmigen" Haltung der Mitgliedstaaten in bezug auf die Auslegung der A r t . 113, 224 E W G V kann somit keine Rede sein. Auch aus diesem Grunde scheidet die bei den Embargomaßnahmen eingeschlagene Praxis als Auslegungsfaktor aus 176 . c) A r t . 113 E W G V verbürgt der Gemeinschaft eine „Gestaltungsmacht", kraft derer sie die Inhalte der gemeinsamen Handelspolitik „ i n offener Perspektive" bestimmen kann. Dazu gehören auch Wirtschaftssanktionen 177 . Diese Auslegung hat im Schrifttum überwiegend Zustimmung gefunden 178 . Die Gegenmeinung bestreitet, daß nach dem gewöhnlichen Sprachgebrauch sowie unter teleologischen Gesichtspunkten von Handelspolitik noch die Rede sein könne, wenn sicherheitspolitische Motive und Ziele für den Einsatz des handelspoliti172 "Wie hier Bernhardt (Anm. 164); ders., Diskussionsbeitrag, in: Berichte (Anm. 171), 94; Bruha (Anm. 7), 781 f.; zurückckhaltend auch Ress, op.cit25; offengelassen von Meng (Anm. 5), 782. 173 Vgl. Ernst Ulrich Petersmann, Internationale Wirtschaftssanktionen als Problem des Völkerrechts und des Europarechts, Zeitschrift für vergleichende Rechtswissenschaft 80 (1981), 1—28 (6 f.). 174 Einzelheiten bei Meng (Anm. 5), 785. «5 Vgl. Meng, op. cit., 788, 792. 176

Übereinstimmend Meng, op. cit., 792; i. E. Bruha (Anm. 7), 682 unter I V .

1 7 7 Näheres Schröder (Anm. 149), 114 ff. 178 Petersmann (Anm. 173), 19 ff.; Nicolaysen (Anm. 156), 874, 876; Meng (Anm. 5), 792 ff.; Ernst / Beseler, in: v. d.Groeben / Boeckh / Thiesing J Ehlermann (Anm. 15S), Art. 113, Rdnr. 52.

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sehen Instrumentariums ausschlaggebend waren. 1 7 9 Demgegenüber ist festzuhalten, daß A r t . 113 E W G V mit gutem Grunde nicht auf Ziel und M o t i v der Handelspolitik abstellt. Die internationalen Handelsbeziehungen spielen sich seit jeher im Rahmen der politischen Großwetterlage ab und sind deshalb immer mehr oder weniger vom außerökonomischen K a l k ü l bestimmt 1 8 0 . Warum sollte also gerade die Gemeinschaft nicht befugt sein, Handelsbeziehungen zu Drittstaaten unter politischen Vorzeichen aufzunehmen oder (vorübergehend) abzubrechen? Der einzig tragfähige Grund könnte darin liegen, daß die Gemeinschaft bei der Verhängung von Wirtschaftssanktionen in eine ausschließliche Zuständigkeit der Mitgliedstaaten einbrechen würde. Wie die bisherige Sanktionspraxis gezeigt hat, steht damit das Verhältnis von A r t . 113 zu A r t . 224 E W G V zur Debatte. Außerhalb des Anwendungsbereichs von A r t . 224 E W G V ist die Gemeinschaft seit dem Ende der Übergangszeit ausschließlich für Wirtschaftssanktionen zuständig 181 . d) Eine die Gemeinschaftskompetenz ausschließende W i r k u n g kommt A r t . 224 E W G V nicht zu. Ausschlaggebend für dieses Ergebnis ist, daß die Mitgliedstaaten, selbst wenn eine Situation eintritt, in der autonomes Handeln nach A r t . 224 E W G V i n Frage käme, nach Möglichkeit i m Wege der Koordination Funktionsstörungen des Gemeinsamen Marktes vermeiden sollen. Der weitgespannte Anwendungsbereich und das unterschiedliche nationale Instrumentarium sicherheitspolitisch motivierter Wirtschaftssanktionen 182 sind in besonderem Maße geeignet, Verzerrungen des Gemeinsamen Marktes zu bewirken. Dementsprechend w i r d von den Mitgliedstaaten v o r allem ein gemeinsames Vorgehen erwartet, das, weil durch A r t . 224 E W G V inhaltlich nicht festgelegt, auch i n einer gemeinschaftlichen Maßnahme nach A r t . 113 E W G V bestehen kann. 1 8 3 Ein „prinzipieller Kompetenzausschluß der E W G " 1 8 4 kann daher von A r t . 224 E W G V nicht beabsichtigt sein. 185 Eine andere Frage ist, ob sich aus der Sicht des A r t . 224 E W G V für die Ausübung der Gemeinschaftskompetenz spezielle Modalitäten m i t Rücksicht auf das besondere Gewicht ergeben, da5 die sicherheitspolitischen Interessen der Mitgliedstaaten beanspruchen können. 1 8 6

179 Bruha (Anm. 7), 677. 180 Vgl. audi Meng (Anm. 5), 794 und Ulnch Everling, Das Europäische Gemeinschaftsredit im Spannungsfeld von Politik und Wirtschaft, in: Grewe etal. (Anm. 164), 155—189 (171). 181 Meng (Anm. 5), 801. 182 Vgl. Meng, op.cit.,

795 und Petersmann (Anm. 173), 25 f.

183 Ebenso: HeinHch Matthies, in: v. d. Groeben / Boeckh / Thiesing / Ehlermann, (Anm. 158), Art. 224, Rdnr. 4. 184 So Bruha (Anm. 7), 678. 185 Ubereinstimmend: Petersmann (Anm. 173), 21 f.; Nicolaysen (Anm. 156), 875 f.; Meng (Anm. 5), 798, 799. 18® Vgl. Schröder (Anm. 149), 117.

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Gesichert dürfte inzwischen sein, daß für einen Sanktionsbeschluß der Gemeinschaft nicht Einstimmigkeit gefordert werden kann, vielmehr auch Mehrheitsentscheidungen zulässig sein müssen. Die beim Iranembargo zunächst für essentiell gehaltene einstimmige Unterstützung seitens der Mitgliedstaaten 1 8 7 ist bei der zweimaligen, mehrheitlich beschlossenen Verlängerung des Argentinienembargos vom rechtlichen Standpunkt zutreffend aufgegeben worden. A r t . 224 E W G V garantiert zwar den Mitgliedstaaten unter den hier genannten Voraussetzungen die Freiheit, ihre Sicherheitsinteressen auf die ihnen geeignet erscheinende Weise abzuwehren. Er verbietet indessen nicht, daß die Gemeinschaft bei Wahrung dieser Freiheit ihre nach A r t . 113 E W G V bestehende Sanktionskompetenz ausschöpft, und sei es auch durch Mehrheitsbeschluß. 188 Andererseits zehrt die Ausübung der Gemeinschaftskompetenz nicht das Recht der Staaten auf, unter den Voraussetzungen des A r t . 224 E W G V autonome Maßnahmen zu ergreifen. Insoweit muß zwischen dem Ziel, etwaigen Funktionsstörungen des Gemeinsamen Marktes vorzubeugen, und der Kompetenz, Maßnahmen zur Aufrechterhaltung oder Wiederherstellung der Sicherheit in den Mitgliedstaaten zu treffen, unterschieden werden. Der Gemeinschaft ist nur die Aufgabe, den Gemeinsamen M a r k t zu gewährleisten, übertragen. U m derentwillen darf sie handeln. Die Sicherheit der Mitgliedstaaten kann und darf sie hingegen nicht in eigene Regie übernehmen. Weder die isolierte Betrachtung der A r t . 113 und 224 E W G V noch die Gesamtschau kann hier zu einer Kompetenzverlagerung führen, zumal sich Inhalt und Intensität der von der Gemeinschaft beschlossenen Sanktionen nicht ohne weiteres mit den Sicherheitsinteressen der M i t gliedstaaten decken müssen. Anders formuliert: Die Mitgliedstaaten können, soweit eine der in A r t . 224 E W G V genannten Situationen auf sie zutrifft, nicht zu Wirtschaftssanktionen gezwungen werden, die ihren vitalen Sicherheitsinteressen widersprechen 189 . Die Gemeinschaft darf „ i n einer A r t umgekehrten Gemeinschaftstreue" situationsgerechtes Handeln der Mitgliedstaaten in den Fällen des A r t . 224 E W G V nicht erschweren 190 . Deshalb bleibt es dem von einer Situation des A r t . 224 E W G V betroffenen Mitgliedstaat unbenommen, stärkere oder schwächere Wirtschaftssanktionen als sie die Europäische Wirtschaftsgemeinschaft beschlossen hat, ja selbst gar keine Sanktionen zu ergreifen, wenn er dies mit seinen Sicherheitsinteressen für besser vereinbar hält. 1 9 1 Dieser Rechtslage entsprach A r t . 2 Abs. 2 der V O 877/82 (EWG) v o m 16. 4. 1982 1 9 2 , der Großbritannien gestattete, auch in bereits titulierte oder i n ι » 7 Vgl. Schröder (Anm. 149), 118. 188 i m Ergebnis ebenso Meng (Anm. 5), 798. 18» i»o i»i 192

Meng (Anm. 5), 800. Matthies (Anm. 183), Rdnr. 3. Meng (Anm. 5), 800. Vgl. Anm. 4.

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der Auslieferung befindliche Warenpartien einzugreifen, um die argentinische Bedrohung abzuwehren. Demgegenüber läßt sich die von Dänemark nach dem 15. 5. 1982 in Anspruch genommene Befugnis zu nationalen Wirtschaftssanktionen nicht mehr auf A r t . 224 E W G V stützen. I h r liegen keine Sicherheitserwägungen, sondern die von Dänemark seit jeher verfoditene, gleichwohl irrige Auffassung zugrunde, die Gemeinschaft sei für Wirtschaftssanktionen gegenüber Drittstaaten überhaupt nicht zuständig. 198 Was schließlich die „innenpolitischen Gründe" für das autonome Vorgehen Irlands und Italiens nach dem 17.5. 1982 anlangt, so dürften auch sie die Grenze einer noch vertretbaren Auslegung der Tatbestände des A r t . 224 E W G V 1 9 4 überschreiten. Sie sind eher dem Bereich bloßer Opportunitätserwägungen als dem belangvollen Bestreben zuzuredinen, aus Gründen der nationalen Sicherheit im britischargentinischen Konflikt neutral zu bleiben 195 . 3. Schlußbemerkung V o n einer klaren Kompetenzabgrenzung bei Wirtschaftssanktionen, wie sie hier vorgeschlagen w i r d , ist die Praxis noch weit entfernt. Das kann man tadeln, muß sich dabei aber bewußt bleiben, daß der Einsatz des handelspolitischen Instrumentariums zu politischen Zwecken ein Stück Außenpolitik zu Lasten der Mitgliedstaaten vergemeinschaftet. Es ist deshalb kein Zufall, wenn einzelne Mitgliedstaaten die Sanktionskompetenz der Gemeinschaft überhaupt bestreiten, sich einer von der Gemeinschaft beschlossenen Sanktion nur mit Vorbehalten anschließen oder Sonderrechte in Anspruch nehmen, die mit A r t . 224 E W G V nichts zu tun haben. Die Gemeinschaft sollte dennoch audi in Zukunft von ihrer Sanktionskompetenz Gebrauch machen, dabei allerdings um ein möglichst einheitliches Sanktionsniveau bemüht sein. Je geringer der insoweit von den Mitgliedstaaten getragene Konsens, um so schwächer das Gewicht der Gemeinschaft in internationalen Konflikten. Unter diesem 196 Blickwinkel sind mehrheitlich beschlossene Sanktionen nicht unbedingt glücklich. (Der Beitrag wurde 1983 abgeschlossen).

193 Übereinstimmend Meng (Anm. 5), 802. m Z u dem für Art. 225 Abs. 2 E W G V wichtigen Auslegungsspielraum aus der Sicht des betroffenen Mitgliedstaates vgl. Schröder (Anm. 149), 119 f. 195 Vgl. audi Meng (Anm. 5), 800, 802. ΐ9β Meng (Anm. 5), 799 kommt zu einer generell positiven Einschätzung, weil er nur die innergemeinschaftliche Bedeutung von Mehrheitsentscheidungen in Betracht zieht.. Insoweit mag man ihm zustimmen.

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Summary The article comments the Falklands conflict in 1982 under international and European Community Law. 1. Since 1833 Britain remained in open, continuous, effective and peaceful possession, occupation and administration of the Falkland Islands. The facts set out the basic for legal title on the part of the United Kingdom to the Falkland Islands. Therefore Argentine, attempting to restore a pretended sovereignty over the Islands by military force, did violate A r t . 2 (4) U N Charter. A title which could vindicate the resort to military force, namely participation in a colonial fight, did not exist. 2. The British military response to the Argentine invasion cannot be justified by reference to Resolution 502 or 505 of the U N Security council. O n the other hand both Resolutions did not take away United Kingdoms right of self-defence under A r t . 51 U N Charter because the Security Council had not chosen to take measures to maintain international peace and security of its own. The right of self-defence could be exercised though the metropolitan territory of the United Kingdom had not been attacked by Argentine. Selfdefence works also w i t h respect to colonial dependences. Even taking into account that negotiations concerning the sovereignty over the Islands had taken place between the conflicting parties in 1982, the British right of selfdefence was not excluded: A t no time a definite transfer of territorial sovereignty to Argentine had been accepted by the United Kingdom. Taken as a whole the recovery of the Islands complied w i t h international law. 3. Seen from its extension the (maritime) exclusion zone established during hostilities and finally extended to 12 nautical miles from the Argentine continental territory can be held legal. As to the restrictions imposed upon the civil navigation and aviation the compliance w i t h international law is more doubtful. The legality of exclusion zones has always been disputed. Hence the law as i t stands seems to be uncertain. The same is true for the zone established 150 nautical miles around the Falkland Islands after the cessation of hostilities. O n the other hand, judging the sinking of the cruiser General Belgrano outside the exclusion zone is less difficult. Exclusion zones do not restrict the theatre of sea-warfare which covers also the high seas. Moreover, the United Kingdom established the exclusion zone expressly under reserve of her right of selfdefence. So she could plausibly proceed to sink the cruiser which threatened her naval forces from outside the exclusion zone. A n other argument would be that, following the principle of reciprocity, the United Kingdom could claim the Argentine theatre of operations for herself and therefore sink hostile ships in it.

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4. The embargo imposed by the European Community on Argentine complied w i t h international law. Since A r t . 2 (4) U N Charter does not cover economic sanctions a violation of this Article is excluded. Moreover the embargo d i d not constitute an illegal intervention into internal affairs of Argentine. I t attempted to redress the international legal order which had been disregarded by Argentine. The G A T T rules as well as existing commercial treaties have been observed. The compliance of the embargo w i t h European Community law is still doubtful. The practice of the Community and its Member States up to present is not homogenous. From an interpretation of Arts. 113 and 224 of the EEC Treaty i t should be concluded that A r t . 113 confers on the Community the competence to enact economic sanctions even for merely political reasons. Nevertheless under the emergency situations dealt w i t h in A r t . 224 both the Community and the Member States are competent to enact sanctions. I n such case a Member state may enact stronger or weaker national measures or completely abstrain from sanctions. Regarding the Falklands crisis Denmark had no competence to enact unilateral sanctions against Argentine. As to Eire and I t a l y i t is more than doubtful that they could proceed unilaterally merely on grounds of "political reasons."

Vertragskonkurrenz im Völkerrecht Teil Π: Verträge zwischen beliebigen Völkerrechtssubjekten Manfred Zuleeg I. S t a n d

der

Entwicklung

Die Wiener Vertragsrechtskonvention ( W V K ) 1 findet nach ihrem Artikel (Art.) 1 nur auf Verträge zwischen Staaten Anwendung. D a A r t . 6 W V K jedem Staat ohne Einschränkung die Fähigkeit zuerkennt, Verträge zu schließen, können Staaten im Sinne der Konvention nicht die von einem Staat abhängigen Territorialverbände sein, mögen sie auch als Staaten bezeichnet werden; denn ihre Befugnis zum Vertragsschluß leitet sich vom übergeordneten Verband ab. Die Wiener Vertragsrechtskonvention enthält daher nur Regeln, die für Verträge souveräner Staaten gelten. 2 Darunter befinden sich auch Regeln für die Vertragskonkurrenz. Sie sind aufgrund Vertragsrechts für die Staaten verbindlich, die der Wiener Vertragsrechtskonvention beigetreten sind 3 . Für andere souveräne Staaten gibt die Konvention gewohnheitsrechtliche Regeln wieder, die den Bereich der Vertragskonkurrenz beherrschen. 4 Die International L a w Commission ( I L C ) , der die wesentlichen Vorarbeiten für die Wiener Vertragsrechtskonvention zu verdanken sind, beschäftigte sich seit 1970 mit einem weiteren Vertragsentwurf, der die Regeln für Verträge internationaler Organisationen niederlegen soll. A u f ihrer 34. Sitzung gelang es der K o m mission nunmehr, ihre Verhandlungen abzuschließen und einen Vertragstext vorzulegen, der sich im wesentlichen an die Wiener Vertragsrechtskonvention 1 Deutsche Übersetzung: Bundesgesetzblatt (Österreich) 1980, N r . 40, 775—824; zu solchen Kodifikationsverträgen: Wilhelm Karl Geck, Völkerrechtliche Verträge und Kodifikation, in: Zeitschrift für ausländisches öffentliches Recht und Völkerrecht ( Z a ö R V ) 36 (1976), 96—146. 2

Zur Eigenart souveräner Staaten Herrn-]uri Uihopuu, International Legal Personality of Union Republics of U.S.S.R., in: The International and Comparative Law Quarterly 24 (1975), 811—845 (827); freilich sind die Übergänge zu abhängigen Territorialverbänden fließend, wie Chris N. Okele, Controversial Subjects of Contemporary International Law, Rotterdam 1974, 23—31, aufzeigt. 3 D i e W V K ist am 2 7 . 1 . 1 9 8 0 für die Staaten in Kraft getreten, die sich der Konvention angeschlossen haben; die Bundesrepublik Deutschland hält sidi bislang fern. 4 Manfred Zuleeg, Vertragskonkurrenz im Völkerrecht. Teil I : Verträge zwischen souveränen Staaten, in: German Yearbook of International Law ( G Y I L ) 20 (1977), 246—276.

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anlehnt. 5 Der Vorschlag stützt sich auf Gewohnheitsrecht, das für alle Völkerrechtssubjekte Geltung beansprucht. 6 M i t dem Entwurf ist ein weiterer Fortschritt in Richtung auf die Kodifikation des Rechts der Verträge erzielt. Die Diskussion innerhalb der I L C entzündete sich hauptsächlich an den Rechten und Pflichten eines Mitgliedstaats aus Verträgen der internationalen Organisation und am Verfahren, die Gültigkeit oder die Abänderung eines völkerrechtlichen Vertrags oder ähnliche Rechtslagen festzustellen. Z u r Rechtsstellung der Mitgliedstaaten i m Falle des Vertragsschlusses der internationalen Organisation fügte die I L C einen A r t . 36 bis in die Vorlage ein, der keinen Vorläufer in der Wiener Vertragsrechtskonvention hat. 7 I m Rahmen des Rechts völkerrechtlicher Verträge gilt hier die besondere Aufmersamkeit der Vertragskonkurrenz, weil davon die Einheit der Völkerrechtsordnung abhängt. Die Hauptmasse des Völkerrechts besteht aus Verträgen, zwischen denen Kollisionen auftreten können. A n der Ausgestaltung des Völkerrechts durch Verträge sind nicht nur souveräne Staaten beteiligt; vor allem die internationalen Organisationen tragen in wachsendem Maße dazu bei 8 . Die Beschränkung der Wiener Vertragsrechtskonvention auf Verträge zwischen den ursprünglichen Trägern der Völkerrechtsordnung diente lediglich zur Vereinfachung. Etwaige Schwierigkeiten aus der minderen Handlungsfähigkeit anderer Völkerrechtssubjekte sollten ausgeklammert bleiben. Freilich hat sich im Laufe der Beratungen in der I L C herausgestellt, daß die Bedenken weitgehend unbegründet waren, zumindest was die internationalen Organisationen anbelangt. Es gab kaum Anlaß, von den Regeln der W V K abzuweichen.9 Die Dauer der Vorarbeiten sollte nicht zu der Annahme verleiten, daß eine Einigung schwer zu erzielen gewesen wäre. Der Grund für die lange Zeitspanne ist vielmehr in dem Umstand zu suchen, daß sich die I L C mit einer Reihe von Projekten zu befassen hatte. Bereits bei der Wiener Vertragsrechtskonvention hat sich allerdings herausgestellt, daß die darin enthaltenen Regeln für die Vertragskonkurrenz unvollständig sind. Für den jetzt ausgearbeiteten Entwurf gilt dies erst recht, sind doch einige Besonderheiten der Vertragsbeziehungen internationaler Organi5 Report of the I L C on the work of its 34th session 1982, in: General Assembly Official Records ( G A O R ) , 37th Session, Supplement N o . 10 (A/37/10) (hereafter cited: Report). β Okele (Anm. 2), 222 f.; vgl. auch Albert Bleckmann, Zur Verbindlichkeit des allgemeinen Völkerrechts für internationale Organisationen, in: Z a ö R V 37 (1977), 107—121 (108) zum Inhalt der W V K ; Michael Bothe, Die Stellung der Europäischen Gemeinschaften im Völkerrecht, in: Z a ö R V 37 (1977), 122—137 (128). 7 Z u allem: Stephen C. McCaffrey , Current Developments: The Thirty-fourth Session of the International L a w Commission, in: American Journal of International Law ( A J I L ) 77 (1983), 323—338 (325—328). 8 Okele (Anm. 2), 192 f. « MacCaffrey (Anm. 7), 325.

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sationen nicht berücksichtigt. 10 Es erscheint daher angebracht, die Untersuchung zur Vertragskonkurrenz i m Völkerrecht fortzuführen, 1 1 um das Recht zu erweitern, das für internationale Organisationen g i l t 1 2 . Unter den anderen Völkerrechtssubjekten leisten abhängige Territorialverbände (Gliedstaaten eines Bundesstaats,13 Protektorate und Kolonien) einen nennenswerten Beitrag zur Ausgestaltung des vertraglich niedergelegten Völkerrechts. D a sie keine grundlegend abweichende Betrachtung erfordern, sind die Regeln der Vertragskonkurrenz für die von diesen Völkerrechtssubjekten abgeschlossenen Verträge mit einzubeziehen. II. A n w e n d u n g d e r R e g e l n zwischen souveränen

für Verträge Staaten

Die wichtigsten Diskussionspunkte zum Recht der Verträge internationaler Organisationen innerhalb der I L C betreffen nicht die Vertragskonkurrenz. M a n kann deshalb davon ausgehen, daß nach Ansicht der Kommissionsmitglieder i m Grundsatz die Regeln für Verträge zwischen souveränen Staaten auf Verträge beliebiger Völkerrechtssubjekte anwendbar sind. Das ist i n der Tat der passende Ausgangspunkt; denn die Zuordnung zu den Völkerrechtssubjekten läßt auf Gemeinsamkeiten schließen. A r t . 5 W V K spricht einem Vertrag, der die Gründungsurkunde einer internationalen Organisation bildet, eine herausgehobene Stellung i m Verhältnis zu anderen Verträgen souveräner Staaten ab. 1 4 Der Gleichrang läßt sich freilich nicht ohne weiteres auf Verträge anderer Völkerrechtssubjekte übertragen. Es liegt vielmehr nahe, daß dem Gründungsvertrag einer internationalen Organisation i m Verhältnis zu den Verträgen, die diese Organisation abschließt, Vorrang gebührt. Außerdem bestehen bei internationalen Organisationen starke Bindungen an die Mitgliedstaaten, die Kompetenzen der Organisation sind beschränkt. Dies steht einer engen Verknüpfung m i t der Wiener Vertragsrechtskonvention nicht i m Wege, bedingt aber jeweils eine Uberprüfung, ob die Regel für souveräne Staaten auf andere Völkerrechtssubjekte ausgedehnt 10 Der Berichterstatter innerhalb der I L C klammerte spezielle Fragen der Vertragskonkurrenz ausdrücklich aus, siehe, 4th Report Paul Reuter, United Nations ( U . N . ) Doc. A / C N 4/285, in: Yearbook of the I L C ( Y B I L C ) 1975 I I , 25—44 (43). 11 12

«

Z u m ersten Teil: Zuleeg (Anm. 4), passim. Zur Völkerrechtsfähigkeit internationaler Organisationen: Okele (Anm. 2), 181—191. Okele (Anm. 2), 35—43.

14 Geraldo Eulalio do Nascimento e Silva, Le facteur temps et les traités, in: Recueil des Cours 154 (1977 I ) , 215—297 (243, 247 f.), w i l l hingegen Gründungsverträgen weltumspannender internationaler Organisationen Vorrang vor anderen Verträgen zubilligen; dagegen Ferenc Majoros, Les conventions internationales en matière de droit privé, I I : Le droit des conflits de conventions, Paris 1980, 53.

24 GYIL 27

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werden kann 1 5 . Bei abhängigen Territorialverbänden ist ebenfalls deren eingeschränkte Rechtsstellung zu berücksichtigen. Vorbehaltlich einzelner Abweichungen gelten daher die folgenden Regeln für Verträge zwischen beliebigen Völkerrechtssubjekten. 16 Klauseln eines Vertrags über das Verhältnis zu anderen Verträgen vermeiden bzw. lösen den Konflikt, wenn sie den anderen Vertrag vorgehen lassen. Beansprucht eine Vertragsklausel den Vorrang des Vertrags, in dem sie steht, w i r d ein Konflikt nur vermieden bzw. gelöst, wenn nicht der andere Vertrag seinerseits den Vorrang begehrt. Treffen zwei Verträge mit Vorranganspruch aufeinander, sind die Vertragsklauseln zur Behebung des Konflikts nicht imstande. A r t . 30 (2) W V K kennzeichnet Vertragsklauseln, die einen anderen Vertrag vorgehen lassen.17 I n der I L C hielt Usbakov die Übernahme dieser Regelung auf Verträge internationaler Organisationen nicht für zufriedenstellend, weil nicht genügend zwischen Staaten und internationalen Organisationen unterschieden werde, schlug aber keine Änderung vor. 1 8 Der Vorbehalt zugunsten von A r t . 103 der Satzung der Vereinten Nationen in A r t . 30 (1) W V K blieb im jetzt vorliegenden Entwurf aufrechterhalten, wanderte aber in einen Absatz 6 als eigenständige Bestimmung. I n der I L C wurden Zweifel laut, ob internationale Organisationen an A r t . 103 der Satzung der Vereinten Nationen gebunden sein könnten, 19 ohne daß dies seinen Niederschlag im E n t w u r f gefunden hätte. Klauseln über besondere Arten der Revision eines Vertrags schließen i m Zweifel die Abänderung durch gewöhnlichen völkerrechtlichen Vertrag aller Vertragsparteien nicht aus. Klauseln über die Laufzeit eines Vertrags stehen i m Zweifel einer einvernehmlichen Beendigung zu einem früheren Zeitpunkt nicht im Wege. Klauseln über die Geltung eines Vertrags auf unbestimmte Zeit oder für immer, über die Voraussetzungen der Beendigung oder Suspension begründen lediglich eine Selbstbindung, von der sich Vertragsparteien durch einstimmige Übereinkunft lösen können. 2 0 Die einschlägigen Regeln in A r t . 39, 40, 54 (b), 57 (£), 59 W V K sind i m Entwurf für internationale Organisationen diesen Völkerrechtssubjekten in der Formulierung angepaßt und in A r t . 39 (2) um die Bestimmung erweitert, daß 15 Report of the I L C on the work of its 33rd session 1981, in: G A O R , 36th Session, Supplement N o . 10 (A/36/10) und in: Y B I L C 1981 I I , Teil 2, 117. 16 Zuleeg (Anm. 4), 274 f.; siehe audi Τ. Ο . Elias, The Modern Law of Treaties, Leiden 1974, 54—58; Ignaz Seidl-Hobenveldern , Völkerrecht, 4. Auflage, Köln, Berlin, Bonn, München 1980, 100 f. (Rdn. 318—321). 17 Zuleeg (Anm. 4), 251 f.

18 Y B I L C 1981 I , 167. ι 0 Report (Anm. 5), 81. so Zuleeg (Anm. 4), 253—255.

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im Völkerrecht

371

die Zustimmung einer internationalen Organisation zu einem Abänderungsvertrag den maßgeblichen Vorschriften dieser Organisation unterliegt. Dieser Zusatz ist i m Grunde überflüssig. Beim Fehlen von Vertragsklauseln ist i m Falle gleichzeitigen Abschlusses durch dieselben Vertragspartner auf den Satz lex specialis derogat legi generali zurückzugreifen, wenn sich die Verträge nicht durch Auslegung miteinander i n Einklang bringen lassen. Bei aufeinanderfolgendem Abschluß gilt der Satz lex posterior derogat legi priori, soweit sich Bestimmungen der Verträge entgegenstehen. Maßgeblich ist der Zeitpunkt der Annahme des Vertragstexts. Die lex posterior-Regel kommt erst dann zum Zuge, wenn sich Widersprüche zwischen den Verträgen nicht durch Auslegung ausschließen lassen. Der Satz lex specialis derogat legi generali ist zu berücksichtigen. Das Völkerrecht gebietet nicht, daß Form und Verfahren eines abändernden oder aufhebenden Vertrags der Form und dem Verfahren bei Abschluß des früheren Vertrags entsprechen müßten. 2 1 Der Inhalt von A r t . 30 (3), 59 W V K , die diese Regeln enthalten, fand Eingang in den E n t w u r f für internationale Organisationen. Nach dem Kommentar des Spezialberichterstatters Reuter gibt es kein Prinzip des „acte contraire", das für den Änderungsvertrag dieselbe Form wie beim ursprünglichen Vertrag verlangt. 2 2 Beim Fehlen von Vertragsklauseln ist ein Konflikt zwischen Verträgen unter divergierenden Vertragspartnern weder nach dem Satz lex prior derogat legi posteriori noch nach dem Satz lex posterior derogat legi priori noch nach einer Kombination von Grundsätzen zu lösen. 23 Vielmehr gilt das Prinzip der politischen Entscheidung des Völkerrechtssubjekts, das sich widersprechenden vertraglichen Verpflichtungen ausgesetzt sieht. 24 Die gängigen Grundsätze können allenfalls ein Hilfsmittel für Gerichte sein, um herauszufinden, welchem Vertrag das verpflichtete Völkerrechtssubjekt den Vorzug gibt. 2 5 Ebensowenig wie in der Wiener Vertragsrechtskonvention ist i m Entwurf für internationale Organisationen eine Regel lex prior derogat legi posteriori enthalten. Bei zunehmender Zahl von Vertragsparteien ist i m Falle des Konflikts der jüngere Vertrag maßgeblich. I h m gehören alle Vertragsparteien des älteren 21 Zuleeg (Anm. 4), 256—259. 22 Report (Anm. 5), 98. 23 I n diesem Sinne auch Ignaz Seidl-Hohenveldern, Widersprüchliche völkerrechtliche Verpflichtungen vor internationalen Rechtsprechungsorganen, in Ottoarndt Glossner / Walter Keimers (Hrsg.), Festschrift Martin Luther y München 1976, 179—190 (183). Für ein Gemisch verschiedener Prinzipien spricht sich do Nascimento e Silva (Anm. 14), 244, aus; ähnlich jetzt auch Majoros (Anm. 14), 21—53, der die Flexibilität der Vertragskonkurrenz hervorhebt. 24 Ubereinstimmend Seidl-Hohenveldern (Anm. 23), 185. 25 Zuleeg (Anm. 4), 259—269.

24·

372

Manfred, Zuleeg

Vertrags an und noch zusätzlich eine oder mehrere weitere Vertragsparteien. Die durch beide Verträge gebundenen Völkerrechtssubjekte bringen den Willen zum Ausdruck, an der früheren Regelung nicht mehr festzuhalten. Sollten die Verträge gleichzeitig abgeschlossen werden, richten sich die Rechte und Pflichten nach dem Vertrag mit der größeren Zahl von Parteien. 26 Die Wiener Vertragsrechtskonvention schweigt zu dieser Fallgestaltung und dementsprechend auch der E n t w u r f für internationale Organisationen. Nehmen nicht alle Vertragspartner eines früheren Vertrags an einem i n Widerspruch dazu stehenden späteren Vertrag teil, geht der frühere vor. Die Vertragspartner des zweiten Vertrags können sich nicht darauf berufen, gegenüber einem außenstehenden Völkerrechtssubjekt gebunden zu sein, das dem ersten Vertragswerk nicht angehört. Der Grundsatz pacta sunt servanda entfaltet v o l l seine Wirksamkeit. 2 7 A r t . 31 und 41 des Entwurfs für internationale Organisationen stimmen m i t den gleich numerierten A r t i k e l n der Wiener Vertragsrechtskonvention, welche den Vorrang des früheren Vertrags i m Kollisionsfall festlegen, überein. Die harmonisierende Auslegung 28 völkerrechtlicher Verträge unter divergierenden Vertragsparteien entnimmt einem Rechtsakt Gesichtspunkte für die Auslegung, der für einen Teil der beteiligten Völkerrechtssubjekte res inter alios acta darstellt. Die Rechtfertigung dafür liefert der Grundsatz der Einheit der Rechtsordnung. Die harmonisierende Auslegung kann an beiden i n Konkurrenz stehenden Verträgen ansetzen. 29 A r t . 31—33 des Entwurfs für internationale Organisationen wiederholen zur Auslegung lediglich den Text der Wiener Vertragsrechtskonvention, die eine harmonisierende Auslegung nicht einmal andeutet. M a n kann dieses Vorgehen aber als Regel des Völkerrechts betrachten, die für die Beziehungen der Parteien gilt. 3 0 Keine Regel der Vertragskonkurrenz, die den Vorrang eines Vertrags gegenüber einem anderen begründet, führt zur Nichtigkeit des zurücktretenden Vertrags. Unwirksamkeit eines Vertrags ist nur dann die Rechtsfolge eines anderen Vertrags, wenn dieser einen früheren Vertrag unter Beteiligung aller Vertragsparteien aufhebt. 3 1 Der Entwurf für internationale Organisationen bringt dazu nichts Neues. 2β Zuleeg (Anm. 4), 269. 27 Zuleeg (Anm. 4), 269—271. 28 Do Nascimento e Silva (Anm. 14), 252, stellt fest, daß häufig dieser Ausweg gewählt wird, um einen Konflikt zu vermeiden. 2» Zuleeg (Anm. 4), 271—274. so Zuleeg (Anm. 4), 273 f. si Zuleeg (Anm. 4), 248—251.

Vertragskonkurrenz

bei

im Völkerrecht

III. B e s o n d e r h e i t e n internationalen Organisationen

1. Konkurrenz Organisation

von Verträgen einer internationalen zu Verträgen der Mitgliedstaaten

A r t . 6 des Entwurfs eines Vertragsrechts für internationale Organisationen legt zugrunde, daß diesen das Recht zum Vertragsschluß zustehen kann; der Umfang der Befugnis bestimmt sich nach den maßgeblichen Regeln für die internationale Organisation. Die Fähigkeit zum Vertragsschluß richtet sich also nach dem Gründungsstatut einschließlich seiner Änderungen und Ergänzungen. 32 Daraus folgt, daß der Gründungsvertrag i m Innenverhältnis Vorrang vor Verträgen der internationalen Organisation genießt. 83 I m Außenverhältnis legt der Gründungsvertrag nur den Umfang der Kompetenz für die internationale Organisation fest. 34 Bindet sidi eine internationale Organisation vertraglich, ohne daß ihr das Gründungsstatut die Kompetenz dazu verliehen hätte, handelt die Organisation ultra vires. 35 Als Rechtsfolge könnte die Nichtigkeit des v o m Gründungsvertrag nicht gedeckten Vertrags der Organisation eintreten. 3® Stehen Möglichkeiten des Rechtsschutzes offen, soll genügen, daß der Rechtsakt einer internationalen Organisation für ungültig erklärt w i r d . 3 7 Zugunsten außenstehender Vertragspartner mildert indessen der Grundsatz des Vertrauensschutzes die Schärfe der Rechtsfolge ab. 3 8 N u r bei offensichtlicher Verletzung der Kompetenzregeln sollte die Rechtsfolge der Nichtigkeit oder der Verniditbarkeit eintreten. 39 Die Strenge der Regelung w i r d ferner durch die Lehre v o n den „implied powers" herabgesetzt, die eine stillschweigende Ermächtigung ausreichend sein läßt. 4 0 32 Bothe (Anm. 6), 127; Werner Meng, Das Recht der Internationalen Organisationen — eine Entwicklungsstufe des Völkerrechts, Baden-Baden 1979, 66, der von der Beleihung der internationalen Organisationen mit dem Recht zum Vertragsschluß spricht. 33 Meng (Anm. 32), 200, für die Europäische Gemeinschaft. 34 Meng (Anm. 32), 201. 35 Ignaz Seidl-Hohenveldern, Das Recht der Internationalen Organisationen einschließlich der Supranationalen Gemeinschaften, 3. Auflage, K ö l n / Berlin / Bonn / München 1979, 221 f. (Rdn. 1507, 1511). 3 « So Bothe (Anm. 6), 134. 37 So jedenfalls Ebere Osieke, The Legal Validity of U l t r a Vires Decisions of International Organizations, in: A J I L 77 (1983), 239—256. 38 Jörg P. Müller, Vertrauensschutz im Völkerrecht, Köln, Berlin 1971, 192 f.; im Ansatz anerkannt durch den International Court of Justice ( I C J ) : Certain Expenses of the United Nations, Advisory Opinion of 20 July 1962, I C J Reports 1962, 151 ff. (168).

3» Seidl-Hohenveldern (Anm. 35), 225 (Rdn. 1516). 40 Meng (Anm. 32), 182 f.

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Die D D R forderte i n ihrer Stellungnahme zur geplanten Konvention über das Vertragsrecht internationaler Organisationen, darin klar und unmißverständlich auszudrücken, daß die von den Mitgliedstaaten aufgestellten Regeln einer internationalen Organisation Vorrang vor allen Verträgen haben, an denen die internationale Organisation teilnimmt. 4 1 Dieser Erwartung entsprach die I L C nicht. I m übrigen könnte man aus der dominierenden Stellung der Mitgliedstaaten herleiten, daß auch andere als die zum Gründungsstatut zählenden Verträge den von der internationalen Organisation befugtermaßen abgeschlossenen Verträgen vorgehen. Dem steht jedoch entgegen, daß die Mitgliedstaaten der internationalen Organisation eine selbständige Existenz verschafft haben, die aufgrund der verliehenen Kompetenzen zum Vertragsschluß dritten Völkerrechtssubjekten gegenüber wirksam wird. Diese sollten darauf vertrauen können, daß die Mitgliedstaaten nicht die Einhaltung eines Vertrags der internationalen Organisation durch einen kollidierenden Vertragschluß vereiteln. Das spricht dafür, die allgemeinen Regeln anzuwenden. Daraus entspringt ein Qualifikationsproblem, wenn nicht eindeutig zu erkennen ist, ob ein Vertrag zur Änderung oder Ergänzung des Gründungsvertrags bestimmt ist. 2. Vertragschluß internationaler Organisationen mit einem oder mehreren Mitgliedstaaten Schließt eine internationale Organisation einen völkerrechtlichen Vertrag m i t einem oder mehreren Mitgliedstaaten ab, gilt es, das Verhältnis zum Gründungsvertrag festzulegen. 42 Sind alle Mitglieder beteiligt, kann man i m K o n fliktsfalle davon ausgehen, daß das Gründungsstatut unter Einbeziehung der internationalen Organisation abgeändert worden ist. Sind nicht alle Mitgliedstaaten Partner des Vertrags, unterliegen die vertragschließenden Parteien dem Gründungsstatut, an das der staatliche Partner ebenfalls gebunden ist. Der Vertrag hat nur innerhalb der Organisationskompetenz Wirksamkeit und t r i t t hinter alle Regeln des Gründungsvertrags zurück. 43 Dies hat vor allem für Sitzstaatsabkommen und Verträge über Vorrechte und Befreiungen Bedeutung.

41 Y B I L C 1981 I I , Teil 2, Annex I I , 184 f. 42

D i e Bundesregierung begrüßt es, daß dieser Fragenkreis aus dem geplanten Ubereinkommen über das Vertragsrecht internationaler Organisationen ausgeklammert bleibt, weil er weitgehend in den internen Bereich der internationalen Organisationen falle; die I L C betrachte das Vertragsrecht zutreffend unter dem Blickwinkel der Drittwirkung ( Y B I L C 1981 I I , Teil 2, Annex I I , 186). D i e schwedische Regierung hält ein besonderes Normregime bei Verträgen zwischen einer internationalen Organisation und einem oder mehreren Mitgliedstaaten für angebracht (op. cit., 189). « Meng (Anm. 32), 67 f.

Vertragskonkurrenz

3. Bindung der Organisation

im Völkerrecht

an Verträge der Mitgliedstaaten

a) Gegenstand der Vertragskonkurrenz Die Bindung eines Völkerrechtssubjekts an Verträge, die von anderen Völkerrechtssubjekten abgeschlossen worden sind, gehört grundsätzlich nicht zum Redit der Vertragskonkurrenz. Deshalb ist A r t . 36 bis des Entwurfs eines Vertragsrechts internationaler Organisationen, der die Bindung der Mitgliedstaaten an Verträge der Organisation betrifft, nicht Gegenstand dieser A b handlung. Erörtert man hingegen die Bindung der internationalen Organisation an Verträge der Mitgliedstaaten, muß man sich mit der Frage auseinandersetzen, ob diese in der Lage sind, sich faktisch einer vertraglichen Verpflichtung zu entziehen,, indem sie die zur Erfüllung notwendigen Kompetenzen i m Wege eines Gründungsvertrags auf eine internationale Organisation übertragen. Bejaht man die Bindung der internationalen Organisation an die Verträge der Mitgliedstaaten, t r i t t eine Kollision mit dem Gründungsvertrag nicht auf. Das Recht der Vertragskonkurrenz schließt folglich dieses Problem ein. b)

Rechtslage

Enthält das Gründungsstatut eine Klausel, die zu einer Bindung der internationalen Organisation an früher abgeschlossene Verträge der Mitgliedstaaten führt, erübrigen sich weitere Überlegungen. Allerdings ist es eine Frage der Auslegung, ob eine Klausel, die früher abgeschlossene Verträge der Mitgliedstaaten unberührt läßt, eine Bindung der internationalen Organisation herbeiführt. Eine derartige Klausel ist i n A r t . 234 Absatz 1 des Vertrages zur Gründung der Europäischen Wirtschaftsgemeinschaft (EWGV) zu finden. Zunächst vertrat der Gerichtshof der Europäischen Gemeinschaften (EuGH) die A u f fassung, daß sich A r t . 234 E W G V darauf beschränke, die Rechte dritter Staaten aus früheren Übereinkünften zu garantieren. 44 I n der Zwischenzeit zieht der E u G H jedoch A r t . 234 des Vertrages zur Gründung der Europäischen W i r t schaftsgemeinschaft ( E W G V ) auch heran, um im Zuständigkeitsbereich der Europäischen Wirtschaftsgemeinschaft (EWG) eine Bindung der Gemeinschaft an vor 1958 geschlossene Verträge zu begründen, denen alle Mitgliedstaaten angehören. 45 44 E u G H (Urteil vom 27. 2.1962), Rechtssache (Rs.) 10/61 (Kommission/Italien), Sammlung (Slg.) V I I I 5 (22 f.). 45 E u G H (Urteil vom 12.12.1972), verbundene Rs. 21—24/72 (International Fruit Company/Produktschap voor Groenten en Fruit), Slg. X V I I I 1219 (1227), für das G A T T ; (Urteil vom 19.11.1975), Rs. 38/75 (Nederlandse Spoorwegen/Inspektor der Einfuhrzölle und Verbrauchssteuern), Slg. 1975, 1439 (1450), für die Baseler Abkommen über die Zusammenarbeit auf dem Gebiete des Zollwesens und über das Zolltarif schema; dazu im einzelnen Ernst-Ulrido Petersmann, in: Hans von der Groeben / Hans von Boeckh / Jochen Τ hiesing l Klaus-Dieter Ehlermann (Hrsg.), Kommentar zum EWG-Vertrag, Band I I , 3. Auflage, BadenBaden 1983, Artikel 234, Rdn. 10—14.

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Zur Bindung der Europäischen Gemeinschaft an die Rechte aus der Konvention zum Schutze der Menschenrechte und Grundfreiheiten und deren Zusatzprotokollen beschreitet der E u G H einen anderen Weg 4 6 . Das Gericht betrachtet die in der Konvention niedergelegten Menschenrechte und Grundfreiheiten nach dem Beitritt Frankreichs als Ausdruck allgemeiner Rechtsgrundsätze innerhalb der Gemeinschaft, 47 ohne sich auf A r t . 234 E W G V zu stützen. D i e Erklärung dafür ist in dem Umstand zu suchen, daß die Europäische Konvention zum Schutze der Menschenrechte und Grundfreiheiten ausschließlich für Staaten gilt, mithin eine Bindung der Gemeinschaft formal ausgeschlossen ist 4 8 . Mehr und mehr bezieht der E u G H auch andere völkerrechtliche Abkommen, an denen die Mitgliedstaaten teilhaben, i n seine Rechtsprechung mit ein. Er t u t dies auf pragmatische A r t und Weise, indem er die herangezogenen Verträge nicht als schlechthin verbindlich für die Gemeinschaft betrachtet, sondern daraus Anhaltspunkte für die Ausgestaltung der Rechtsordnung der Gemeinschaft entnimmt. Unter diesen Umständen kommt es nicht darauf an, ob alle oder einige Mitgliedstaaten oder gar nur ein Mitgliedstaat dem Vertrag angehört. 49 Weist das Gründungsstatut keine Vertragsklausel auf, die sich ausdrücklich oder i m Wege der Auslegung mit der Bindung der internationalen Organisation an die völkerrechtlichen Verträge befaßt, die von den Mitgliedstaaten abgeschlossen worden sind, ist nicht anzunehmen, daß der Gründungsvertrag stillschweigend die Verpflichtungen der Mitgliedstaaten an die Organisation weitergeben wollte. 5 0 Für einen allgemeinen Bindungswillen finden sich i n der Staatenpraxis keine Anhaltspunkte. Ohne Rücksicht auf den Willen der Vertragsparteien ist die Weitergabe nur noch dann denkbar, wenn es eine Regel des Völkergewohnheitsrechts gibt, die internationale Organisationen auf Verträge ihrer Mitgliedstaaten m i t dritten Völkerrechtssubjekten verpflichtet. Die Sdiaf48 Siehe Reinhard Riegel, Aktuelle Probleme des europäischen Gemeinschaftsrechts in der Rechtsprechung des E u G H nach dem Beschluß des BVerfG vom 24. 5.1974 (2 B v L 57/71), in: Archiv des öffentlichen Rechts 102 (1977), 410—440 (427). 47 E u G H (Urteil vom 14.5.1974), Rs. 4/73 (Nold/Kommission), Slg. X X 491 (507); (Urteil vom 28.10.1975), Rs. 36/75 (Rutili/Minister des Inneren), Slg. 1975, 1219 (1232); (Urteil vom 13.12.1979), Rs. 44/79 (Hauer/Rheinland-Pfalz), Slg. 1979, 3727 (3745 f.); (Urteil vom 2 6 . 6 . 1980), Rs. 136/79 (National Panasonic/Kommission), Slg. 1980, 2033 (2057). 48 Hans-Werner Rengeling, Grundrechtsschutz in den Europäischen Gemeinschaften: Beitritt der Gemeinschaften zur Europäischen Menschenrechtskonvention?, in: Europarecht (EuR) (1979), 124—137 (127—129); ihm folgend: Bengt Beutler, Grundrechtsschutz, in: Groeben / Boeckh / Thiesing / Ehlermann (Anm. 45), 1461—1499, Rdn. 48. 49 Umfassende Darstellung bei Pierre Pescatore, Die Rechtsprechung des Europäischen Gerichtshofs zur innergemeinschaftlichen Wirkung völkerrechtlicher Abkommen, in: Rudolf Bernhardt / Wilhelm Karl Geck / Günther Jaenicke / Helmut Steinberger (Hrsg.), Völkerrecht als Rechtsordnung, Internationale Gerichtsbarkeit, Menschenrechte, Festschrift Hermann Mosler y Berlin, Heidelberg, N e w Y o r k 1983, 661—689. so Bleckmann (Anm. 6), 119.

Vertragskonkurrenz

3 77

im Völkerrecht

fung einer internationalen Organisation w i r d häufig mit der Staatennachfolge gleichgesetzt. 51 Der Nachfolgestaat ist an Verträge seines Vorgängers nicht gebunden. 52 Freilich beruht dieser Grundsatz auf dem Selbstbestimmungsrecht der Völker, 5 3 das für internationale Organisationen nicht gilt. Dennoch läßt sich die Regel auf die Gründung internationaler Organisationen übertragen. M a n befürchtet zwar, daß sich die Mitgliedstaaten durch die „Flucht in die internationale Organisation" ihrer völkerrechtlichen Verpflichtungen entledigen könnten, 5 4 aber die Handlungsfähigkeit der internationalen Organisation wiegt schwerer. Wollte man sie mit allen vertraglichen Verpflichtungen der Mitgliedstaaten belasten, wäre sie weitgehend eingeschnürt. H i n z u kommt, daß sich die Staaten allenfalls faktisch, nicht aber rechtlich aus ihren vertraglichen Verpflichtungen lösen können, es sei denn, die Vertragspartner sind einverstanden. 55 I n einer Rechtsordnung, die von einer Vielzahl souveräner Träger am Leben erhalten w i r d , können faktische Zuwiderhandlungen durch eben diese Träger nur unvollkommen bekämpft werden. Immerhin sind die enttäuschten Vertragspartner nicht völlig hilflos. Sie müssen versuchen, über Verhandlungen, Retorsionen und gegebenenfalls Repressalien auf den verpflichteten Staat einzuwirken, um die Einhaltung des Vertrags doch noch sicherzustellen. Der verpflichtete Staat muß dann seinerseits bemüht sein, auf die internationale Organisation — notfalls i m Verein mit den anderen Mitgliedstaaten — Einfluß zu nehmen, um seine Verpflichtungen erfüllen zu können. Der Organisation steht es frei, sich den bestehenden Bindungen zu unterwerfen, soweit das i m Rahmen des Handlungsspielraums liegt, den ihr die Mitgliedstaaten zugebilligt haben. Ob alle oder nur einzelne Mitgliedstaaten vertraglich gebunden sind, ist dabei unerheblich. 4. Das Verhältnis von Verträgen zur autonomen Rechtsordnung einer internationalen

Organisation

a) Gegenstand der Vertragskonkurrenz Besitzt eine internationale Organisation das Recht, eine autonome Rechtsordnung zu errichten, leitet sich die Befugnis dazu aus dem Gründungsstatut ab. Der zugrundeliegende völkerrechtliche Vertrag ist zugleich die Verfassung für die autonome Rechtsordnung. Diese besteht aus dem Gründungsstatut, dem 51

So z. B. Paul Guggenheim, Traité de droit international public, Band I , Genf 1953, 462. Wilfried Fiedler, Die Konvention zum Recht der Staatensukzession, in: G Y I L 24 (1981), 9—62 (41), unter Berufung auf Artikel 16 der Vienna Convention on Succession of States in Respect of Treaties. 53 O p . cit., 42. 54 Bleckmann (Anm. 6), 11 f. 55 Rudolf Bernhardt, Die Europäische Gemeinschaft als neuer Rechtsträger im Geflecht der traditionellen zwischenstaatlichen Rechtsbeziehungen, in: EuR (1983), 199—215 (204 f.). 52

• Manfred Zuleeg

378

primären Recht und aus den von den Organen geschaffenen Rechtsnormen, dem sekundären Recht. 56 Beide Gruppen zusammen werden kurz als Organisationsrecht bezeichnet. Es ist eine Frage der Vertragskonkurrenz, wie das Recht, das auf der Grundlage eines völkerrechtlichen Vertrags von den O r ganen der Organisation gesetzt wird, zu anderen völkerrechtlichen Verträgen steht. 57 b)

Verträge der Mitgliedstaaten

Geben souveräne Staaten Kompetenzen an eine internationale Organisation ab, können sie den Gründungsvertrag und das von der Organisation erlassene Recht mit Vorrang vor mitgliedstaatlichem Recht ausstatten. 58 I m Innenverhältnis erfaßt der Vorrang dann auch die innerstaatliche Geltung völkerrechtlicher Verträge, die der Mitgliedstaat abgeschlossen hat. I m Außenverhältnis kann sich der Staat indessen nicht auf diesen Vorrang berufen, um sich von seinen völkerrechtlichen Verpflichtungen zu befreien. Ein souveräner Staat besitzt unbeschränkte Vertragsschließungsbefugnis (Art. 6 W V K ) . Der Gründungsvertrag einer internationalen Organisation steht anderen Verträgen i n seiner Wirkung gleich ( A r t . 5 W V K ) und ist daher nicht imstande, die M i t gliedstaaten ihrer Fähigkeit zu berauben, mit dem Gründungsvertrag unvereinbare Verträge abzuschließen. 59 Die Folge davon ist, daß es in der H a n d des souveränen Staats liegt, den Einklang m i t dem Recht einer internationalen Organisation herbeizuführen. Europäisches Gemeinschaftsrecht ist daher trotz des Vorrangs vor mitgliedstaatlichem Recht nicht in der Lage, völkerrechtliche Verträge der Mitgliedstaaten auszuschließen, die dem Gemeinschaftsrecht inhaltlich zuwiderlaufen. c) Verträge der Organisation Schließt die internationale Organisation völkerrechtliche Verträge ab, bestimmt sich das Verhältnis zur autonomen Rechtsordnung der Organisation nach den Regeln über das Verhältnis von Völkerrecht zu staatlichem Recht. Das Völkerrecht überläßt es den Staaten, wie sie ihre völkerrechtlidien Pflichten erfüllen, wenn vertraglich nichts anderes festgelegt worden ist. Bei internationalen Organisationen verhält es sich genauso. Demgemäß stehen der Organisation wie den Staaten auch zwei Methoden zur Verfügung, wenn der Vertrag 5e Siehe dazu die Referate von Rudolf Bernhardt und Herbert Miehsler, Qualifikation und Anwendungsbereich des internen Rechts internationaler Organisationen, in: Berichte der Deutschen Gesellschaft für Völkerrecht, H e f t 12, Karlsruhe 1973, 7—46 (9 f.) und 47—83 (64—72). 57 Vgl. Meng (Anm. 32), 186, 190. 58 Grundlegend: E u G H (Urteil vom 15.7.1964), Rs. 6/64 (Costa/E.N.E.L.), Slg. X 1251 (1269—1271). 5® Ebenso Seidl-Hohenveldern (Anm. 23), 184, für die Europäische Gemeinschaft.

Vertragskonkurrenz

im Völkerrecht

i m Inneren der Organisation Rechtswirkungen entfalten soll. Entweder erklärt die Organisation den Vertragsinhalt zum intern geltenden Recht oder sie setzt ohne Verknüpfung mit dem Vertrag Organisationsrecht, das den Anforderungen des Vertrags gerecht wird. Ob die Anordnung interner Geltung des Vertrags als Transformation oder als Adoption zu konstruieren ist, hat i n der Praxis keine Auswirkungen. 60 Für das Verhältnis des i m Kompetenzbereich der Organisation geltenden Vertragsrechts zum Organisationsrecht entwickelt die Organisation eigene Kollisionsnormen. 61 Der E u G H folgt einer pragmatischen Linie und verschafft völkerrechtlichen Verträgen der Europäischen Gemeinschaft im internen Bereich die zur Erfüllung notwendigen Rechtswirkungen, ohne nachzuforschen, ob die Geltung angeordnet worden ist oder nicht; lediglich die Veröffentlichung des Vertragstextes ist i n analoger Anwendung des A r t . 191 E W G V erforderlich. 62 Intern müssen sich die völkerrechtlichen Verträge der Europäischen Gemeinschaft am primären Gemeinschaftsrecht messen lassen.68 I m Verhältnis zum sekundären Gemeinschaftsrecht genießen diese Verträge hingegen Vorrang. 6 4 d)

Sonstiges Völkervertragsrecht und Organisationsrecht

I m Verhältnis zu Verträgen, die weder von einem oder mehreren Mitgliedstaaten noch von der Organisation abgeschlossen sind, richtet sich die Lösung einer Kollision mit dem Organisationsrecht nach dem Gründungsvertrag der internationalen Organisation. 65 T r i t t er zurück, erstreckt sich diese Regelung auf das abgeleitete Recht, das von den Organen geschaffen worden ist (Sekundärrecht). Dieses geht einem beliebigen völkerrechtlichen Vertrag vor, wenn der Gründungsvertrag (Primärrecht) Vorrang genießt. 5. Konkurrenz

der Organisationsrechte

I m Verhältnis des Organisationsrechts zweier internationaler Organisationen zueinander kann es zu Konflikten kommen, wenn dieselben Personen als Adressaten angesprochen sind. Allerdings fällt es schwer, dafür Beispiele zu finden, die sich auf Einzelne beziehen, weil die Europäische Gemeinschaft mit der weitgehenden Durchgriffswirkung ihres Rechts eine einmalige Position 60 Manfred Zuleeg, Abschluß und Rechtswirkung völkerrechtlicher Verträge in der Bundesrepublik Deutschland, in: Juristische Arbeitsblätter 15 (1983), 1—6 (6). ei Meng (Anm. 32), 194. 62 Pescatore (Anm. 49), 680—687, der diese Haltung als Monismus bezeichnet. es Meng (Anm. 32), 200 f.; Meinhard Schröder, in: Groeben / Boeckh / Thiesing ! Ehlermann (Anm. 45), Art. 228, Rdn. 30. 64 Op.cit., Rdn. 31; Jürgen Schwarze, in: Groèben / Boeckh / Thiesing J Ehlermann 45), Art. 210, Rdn. 23; Zuleeg, in: op.cit., Art. 1, Rdn. 18. « Meng (Anm. 32), 190.

(Anm.

380

Manfred Zuleeg

innehat. So ist in erster Linie die Lösung des Konflikts für den Staat von Bedeutung, der Mitglied zweier internationaler Organisationen ist, die ihn sich widersprechenden Pflichten unterwerfen, etwa aus einer Richtlinie der Europäischen Gemeinschaft und einem verbindlichen Rechtsakt einer anderen Organisation. D a sich das organgeschaffene Recht von den Gründungsverträgen ableitet, kann man auf die Regeln für die Konkurrenz dieser Verträge zurückgreifen. 66 Soweit allerdings die zeitliche Reihenfolge eine Rolle spielt, wäre es nicht sachgerecht, auf den Zeitpunkt des Abschlusses der Gründungsverträge abzustellen. Das jüngere Recht hat die Vermutung für sich, den tatsächlichen U m ständen besser zu entsprechen als das ältere und einen höheren Entwicklungsstand aufzuweisen. Daher sollte der Zeitpunkt des Erlasses der kollidierenden Rechtsnormen maßgeblich sein, i m angeführten Anwendungsfall also die Zeit des Erlasses der Richtlinie und des Rechtsakts der anderen Organisation. Dies gilt allerdings nur dann, wenn an der später gegründeten Organisation alle Mitgliedstaaten der bereits bestehenden oder weniger beteiligt sind. Gehört der später gegründeten Organisation hingegen mindestens ein Mitgliedstaat an, der im Verhältnis zur früher gegründeten Organisation ein Drittstaat ist, scheidet die Regel lex posterior derogat legi priori aus; denn dieser Staat kann von den anderen Mitgliedstaaten verlangen, sich unbedingt an das Organisationsrecht zu halten, das für ihn wie für seine Vertragspartner gilt. Für den Adressaten der sich widersprechenden Rechtsnormen zweier internationaler Organisationen kommt dann das Prinzip der politischen Entscheidung zum Zuge. Der nach zwei Seiten verpflichtete Staat muß sich entschließen, welchem Organisationsrecht er den Vorzug gibt.

bei

IV. B e s o n d e r h e i t e n abhängigen Territorialverbänden

1. Konkurrenz von Verträgen eines abhängigen Territorialverbands zu Verträgen des beherrschenden Staats Abhängige Territorialverbände wie Gliedstaaten eines Bundesstaats, Protektorate oder Kolonien können vom souveränen Staat, dem sie unterstehen, m i t der Fähigkeit ausgestattet werden, völkerrechtliche Verträge abzuschließen.67 Geraten diese in Konflikt mit Verträgen, die der beherrschende Staat abgeschlossen hat oder später abschließt, bedingt die Vorherrschaft des souveränen Staats, in einer bestimmten Fallgestaltung von den allgemeinen Regeln abzuweichen. T r i f f t dieser eine Übereinkunft mit Staaten oder anderen Völker68 87

Ebenda. Okele (Anm. 2), 43—50.

Vertragskonkurrenz

im Völkerrecht

rechtssubjekten, die zugleich Vertragspartner des abhängigen Territorialverbands sind, gebührt dem Vertrag der Vorrang, dem der beherrschende Staat angehört. M a n kann davon ausgehen, daß sich die Vertragsparteien bewußt sind, m i t einem beschränkt handlungsfähigen Völkerrechtssubjekt zu kontrahieren. Treten sie vorher oder hinterher in vertragliche Beziehungen zum beherrschenden Staat, erkennen sie dessen Willen an. Seine Durchsetzungskraft i m Innenverhältnis zum abhängigen Territorialverband kehrt sich damit nach außen. Bei divergierenden Vertragsparteien gilt dies nur für diejenigen, die sowohl mit dem beherrschenden Staat als auch mit dem abhängigen Territorialverband in einem Vertragsverhältnis stehen. Dies sei am Beispiel der Bundesrepublik Deutschland erläutert. Die Länder haben nach A r t . 32 Abs. 3 Grundgesetz (GG) unter den dort genannten V o r aussetzungen die Befugnis, völkerrechtliche Verträge abzuschließen. T r i t t nun das Land Baden-Württemberg mit der Schweiz in völkerrechtliche Vertragsbeziehungen ein, weiß die Regierung dieses Staates, daß das Land keine volle Handlungsfähigkeit auf internationaler Ebene besitzt. Widerspricht ein Vertrag, dem die Bundesrepublik Deutschland und die Schweiz angehören, dem Vertrag m i t dem Land Baden-Württemberg, muß dieser dem Vertrag mit der Bundesrepublik Deutschland, dem beherrschenden Staat für Baden-Württemberg, weichen. A u f den Zeitpunkt des Abschlusses der beiden Verträge kommt es nicht an. Ist an dem Vertrag zwischen der Schweiz und Baden-Württemberg noch ein weiteres Völkerrechtssubjekt beteiligt, das keine Vertragspartei des zwischen der Schweiz und der Bundesrepublik Deutschland bestehenden Vertrags ist, gelten die Verpflichtungen gegenüber Baden-Württemberg uneingeschränkt. 2. Beherrsdhungsvertrage I m Gegensatz zur Rechtslage bei internationalen Organisationen gründet sich die Rechtsstellung eines abhängigen Territorialverbands nicht notwendig auf einen völkerrechtlichen Vertrag. Daher gehören der Umfang der Vertragsabschlußkompetenz wie auch die Bindung des abhängigen Verbands an Verträge des beherrschenden Staats nur dann zur Vertragskonkurrenz, wenn die Abhängigkeit auf einen völkerrechtlichen Vertrag zurückgeht. Für die Zwecke dieser Abhandlung sollen solche Verträge kurz Beherrschungsverträge genannt werden. Der Begriff schließt Verträge über den Zusammenschluß zu einem Bundesstaat ein. 68 Ist der Umfang der Vertragsabschlußkompetenz i n einem Beherrschungsvertrag niedergelegt, verdient der Vertragspartner eines abhängigen Terri68

D a z u op. cit., 39.

Manfred Zuleeg

382

torialverbands nicht weniger Vertauensschutz als der einer internationalen Organisation. Uberschreitet der Verband seine Kompetenz, richtet sich die Gültigkeit des Vertrags danach, ob der Vertragspartner die mangelnde Kompetenz kannte oder aus dem Beherrschungsvertrag erkennen konnte. Die Mitgliedstaaten einer internationalen Organisation entlassen diese durch den Gründungsvertrag in eine selbständige Existenz. Hingegen zwingt ein Beherrschungsvertrag den untergeordneten Territorialverband in eine abhängige Stellung. Der beherrschende Staat verschafft sich dadurch die Möglichkeit, vertragliche Verpflichtungen, die er selbst eingegangen ist, gegenüber dem abhängigen Verband durchzusetzen. Das Völkerrecht rückt die Abhängigkeit in den Vordergrund, wie daraus hervorgeht, daß sich Bundesstaaten nicht auf ihre föderale Struktur berufen können, um die Erfüllung völkerrechtlicher Verpflichtungen zu verweigern (Art. 27 W V K ) . A u f den Inhalt des Beherrschungsvertrags kommt es also nicht an. Daher bedarf es keiner Bindung des abhängigen Verbands an Verträge des beherrschenden Staats. Dieser muß auch ohne entsprechende Klausel i m Beherrschungsvertrag den abhängigen Verband anhalten, völkerrechtlichen Verpflichtungen des beherrschenden Staats nachzukommen. Eine Bindung des beherrschenden Staats an die Verträge des nunmehr beherrschten Territorialverbands läßt sich nicht generell aus den Beherrschungsverträgen ableiten. Die Verwirklichung der Rechte dritter Völkerrechtssubjekte hängt davon ab, ob i m Beherrschungsvertrag oder auf andere Weise Vorkehrungen getroffen worden sind, um den beherrschten Territorialverband i n die Lage zu versetzen, früher eingegangene Verpflichtungen zu erfüllen, oder einen gleichwertigen Zustand herzustellen. Ein Beispiel dafür bildet das Protektorat Frankreichs über Marokko. 6 9 V.

Zusammenfassung

Die gewohnheitsrechtlichen Regeln über die Vertragskonkurrenz für Verträge zwischen souveränen Staaten gelten i m Grundsatz auch für Verträge zwischen beliebigen Völkerrechtssubjekten. Der von der I L C ausgearbeitete Entwurf eines Ubereinkommens über Verträge internationaler Organisationen enthält nur einen Teil dieser Regeln. Der Gründungsvertrag internationaler Organisationen einschließlich seiner Änderungen und Ergänzungen genießt i m Innenverhältnis Vorrang vor Verträgen der internationalen Organisation, i m Außenverhältnis bestimmt er lediglich den Umfang der Organisationskompetenz. Kompetenzwidrig abgeschlos69 I C J , Rights of Nationals of the United States of America in Marocco, Judgment of August 27th, 1952, I C J Reports 1952, 176 ff. (184).

Vertragskonkurrenz

im Völkerrecht

sene Verträge der internationalen Organisation sind nur dann nichtig oder zumindest vernichtbar, wenn dem oder den Vertragspartnern kein Vertrauensschutz gebührt. Andere Verträge der Mitgliedstaaten unterliegen i m Verhältnis zu Verträgen der internationalen Organisation den allgemeinen Regeln. Verträge der internationalen Organisation mit allen Mitgliedstaaten lassen sich im Falle des Konflikts mit dem Gründungsvertrag als Abänderungsverträge ansehen. Sind nicht alle Mitgliedstaaten beteiligt, werden die Verträge vom Gründungsvertrag mitsamt seinen Abänderungen und Ergänzungen beherrscht. Bestehende vertragliche Verpflichtungen können nicht verhindern, daß ein Staat durch den Gründungsvertrag für eine internationale Organisation an diese Kompetenzen abgibt und dadurch nicht mehr imstande ist, seinen vertraglichen Verpflichtungen gegenüber den außenstehenden Vertragspartnern nachzukommen. Eine Lösung der Kollision über die Bindung der internationalen Organisation an Verträge der Mitgliedstaaten setzt eine entsprechende Klausel i m Gründungsvertrag oder die Bereitschaft der internationalen Organisation zur Übernahme vertraglicher Verpflichtungen der Mitgliedstaaten i m Rahmen der ihr eingeräumten Handlungsbefugnis voraus. Ist die autonome Rechtsordnung einer internationalen Organisation mit Vorrang vor dem Recht der Mitgliedstaaten ausgestattet, sind völkerrechtliche Verträge der Mitgliedstaaten i m Innenverhältnis umfaßt. I m Außenverhältnis genießt Organisationsrecht jedoch keinen Vorrang. Das Verhältnis völkerrechtlicher Verträge einer internationalen Organisation zu ihrem Organisationsrecht richtet sich nach den Regeln für das Verhältnis von Völkervertragsrecht zu staatlichem Recht. Für eine Kollision des Organisationsrechts mit völkerrechtlichen Verträgen, denen weder die internationale Organisation selbst noch ein Mitgliedstaat angehört, ist der Gründungsvertrag der internationalen Organisation maßgeblich. Treten Konflikte zweier Organisationsrechte für die Adressaten auf, ist auf die Regeln für die Vertragskonkurrenz der Gründungsverträge zurückzugreifen. Spielt die zeitliche Reihenfolge eine Rolle, kommt es für das organgeschaffene Recht (sekundäre Recht) auf dessen Erlaß an. Ist an der später gegründeten Organisation ein Staat beteiligt, der nicht Mitgliedstaat der früher gegründeten Organisation ist, gilt das Prinzip der politischen Entscheidung. Unterhalten abhängige Territorialverbände vertragliche Beziehungen zu Völkerrechtssubjekten, die auch mit dem beherrschenden Staat vertraglich verbunden sind, geht im Konfliktsfalle der Vertrag mit dem souveränen Staat ohne Rücksicht auf die zeitliche Reihenfolge vor.

384

Manfred Zuleeg

Die Kompetenz eines abhängigen Territorialverbands zum Vertragsabschluß unterliegt i m völkerrechtlichen Verkehr dem Grundsatz des Vertrauensschutzes. Für die Erfüllung vertraglicher Verpflichtungen des beherrschenden Staats durch den abhängigen Territorialverband ist i m Außenverhältnis nicht der Beherrschungsvertrag, sondern die abhängige Stellung des untergeordneten Territorialverbands entscheidend. Der Beherrschungsvertrag ist nicht so auszulegen, daß er generell bestehende völkerrechtliche Verpflichtungen des nunmehr beherrschten Territorialverbands auf den beherrschenden Staat überträgt.

Summary The rules of customary law concerning conflicts of treaties concluded bysovereign states, are in principle to be extended to treaties concluded by any subject of international law. The draft of a Convention on Treaties of International Organizations elaborated by the International L a w Commission contains these rules only in part. The treaty constituting an international organization (constituting treaty) including its modifications and supplements enjoys internally preeminence over treaties concluded by the international organization. W i t h respect to t h i r d parties, the constituting treaty only delimitates the competences of the organization. I f a treaty is concluded ultra vires by an international organization, the treaty is v o i d or voidable unless the other party is protected by the principle of estoppel. Treaties of the member states other than the constituting treaty are governed by the general rules in relation to treaties of the international organization. Treaties of an international organization w i t h all the member states must be regarded as a modification of the constituting treaty in case of conflict. I f the organization is only contracting w i t h one or more member states, the constituting treaty prevails including its modifications and supplements. Existing contractual obligations do not prevent a state from transferring competences to an international organization by means of the constituting treaty, thus impairing its ability to fulfil the contractual obligations to the party of the former treaty. A solution to the conflict by way of binding the international organization to treaties concluded by the member states is only possible i f the constituting treaty contains a clause to this effect, or i f the international organization is ready to accept contractual obligations of the member states w i t h i n the competences of the organization.

Vertragskonkurrenz

im Völkerrecht

385

The precedence of an autonomous legal order of an international organization over the internal legal order of a member state comprehends treaties concluded by the member states. Externally, the legal order of the organization does not take precedence. The relation of treaties concluded by an international organization to its own legal order corresponds to the rules concerning the relation of international to domestic law. I f neither the international organization nor a member state adheres to a treaty, a conflict w i t h the legal order of the organization is to be treated as a conflict w i t h the constituting treaty. I f conflicts between t w o legal orders of international organizations arise, the solution is to be found i n the rules governing the conflicts of the constituting treaties. Should the solution depend on the temporal succession, secondary law ranges according to the time of its promulgation by the organs of the organization. The principle of the political decision applies i f a state is only a member of the later founded organization. Dependent territorial entities such as members of a federal state, protectorates and colonies, may be subjects of international law; i f they are contracting w i t h other subjects of international law, and a conflict arises as to a treaty of the dominating state, this treaty prevails. The principle of estoppel extends to the competence of a dependent territorial entity i n favor of contracting parties. I f domination is based on a treaty (domination treaty), this treaty does not necessarily establish the duty of the dependent territorial entity to fulfil treaty obligations of the dominating state to t h i r d parties. Nevertheless, the dominating state has to ensure i n any event that the dependent entity does not contravene the obligations for the dominating state. The domination treaty is not to be interpreted in the sense that generally existing obligations under international law of the now dominated entity are transferred to the dominating state.

25 GYIL 27

Diplomatie Protection Against Acts of Intergovernmental Organs* Ludwig Grämlich I.

Introduction

1. I n the European-Atlantic area at least, the concept of diplomatic protection has been k n o w n as one of the most essential elements of public international law for many centuries. 1 I n its traditional form which was worked out primarily by eminent legal scholars like Hugo Grotius 2 and Emeric de Vattel zy diplomatic protection means the right of a State to grant every k i n d of shelter and assistance to its nationals who are injured by acts of foreign States not in conformity w i t h the law of nations. From this point of view, diplomatic protection may be described as a positive aspect of the rules on State responsibility. 4 Since the international person w i l l be regarded as being thereby violated in its o w n rights, too, 5 this entity is free to take various means of protecting itself against the wrong-doer w i t h i n the legal limits of attitudes generally allowed by public international law. 6 D u r i n g the last decades of the nineteenth century i n particular, diplomatic protection by home countries took the form of military intervention, 7 and went as far as * A n earlier German version of this study was delivered in the course of m y habilitation proceedings as a lecture addressed to the H i g h Faculty of Law at Würzburg University on June 6, 1983. 1 Cf., e. g., Lassa Oppenheim / Hersh Lauterpacht, International Law, Vol. I : Peace, 8th ed., London et al. 1955,645,686—687, and 786; for a more recent study, see, D. Kokkini-Iatridou / P.J.I.M. de Waart, Foreign Investment in Developing Countries: Legal Personality of Multinationals in International Law, in: Netherlands Yearbook of International Law (Neth.YB.Int.L.) vol. 14 (1983), 87—131 (124—128). 2 D e Jure Belli Ac Pacis, Leipzig 1758 (first published in 1625), vol. I I , ch. 25. 3 Le Droit des Gens, Tübingen 1959 (first published in 1758), vol. I I , ch. 5, secs. 64, 65. 4 Manuel Diez de Velasco , L a protection diplomatique des sociétés et des actionnaires, in: Recueil des Cours (RdC) vol. 141 (1974 I ) , 87—186 (93); Georg Dahm, Völkerrecht, vol. I — I I I , Stuttgart 1958—1961, vol. I : 524, vol. I I I : 247. 5 Cf., Karl Doehring, D i e Pflicht des Staates zur Gewährung diplomatischen Schutzes, Köln, Berlin 1959, 19—25; François Rigaux, Droit public et droit privé dans les relations internationales, Paris 1977, 8—9; Dahm (note 4), vol. I I I : 253—258. 6 Wilhelm Karl Geck, Keyword: Diplomatischer Schutz, in: KarlStrupp / H ans-Jürgen Schiodoauer (eds.), Wörterbuch des Völkerrechts, vol. I , Berlin 1960, 379—387 (384). 7 Cf., Knut Krakau, Lateinamerikanische Doktrinen zur Realisierung staatlicher Unabhängigkeit und Integrität, in: Verfassung und Recht in Ubersee ( V R Ü ) vol. 8 (1975), 117—144 (118—119).

Diplomatie Protection Against Intergovernmental

Organs

outright invasion of the territories of some newly independent states i n L a t i n America. This k i n d of state behaviour was by no means held t o be illegal at those times. 8 I t may be no great surprise then, that international law jurists in the southern part of the western hemisphere developed a different doctrine of the right of diplomatic protection. The origin of the new way of thinking can without much difficulty be traced back to Carlos Calvo , an Argentine diplomat and scholar. 9 I n his view, the basic legal principles of independence and sovereign equality of States only justifies the conclusion that there is no generally recognizable concept of diplomatic protection; 1 0 at the very least, however, the exercise of any such right would have to be severely restricted in scope as well as in character. 11 The new doctrine soon became accepted as a rule of municipal law in certain Latin American States and was enacted partly as a constitutional provision, 1 2 and elsewhere as a mere statutory norm 1 3 . To corroborate the effects of the Calvo doctrine i n every individual case, "waiver" clauses were inserted into many contracts between a Calvoist State and foreign private persons 14 stipulating a prohibition on the invocation of diplomatic protection. Notwithstanding such efforts, Calvo's theory never gained more than regional acceptance in those countries where i t was first elaborated. 15 8 See, e. g., Julius Hatschek , Völkerrecht, Leipzig, Erlangen 1923, 396—398. See, Krakau (note 7), 119—129, for a detailed description of the development and application of this doctrine. 10 See further references in op. cit., 120 note 13. 11 /. e., limiting diplomatic protection to cases where an outright denial of access to the courts without inquiring into the merits of the suit has occured. O n this restrictive view, see, Amos Hershey , The Calvo and Drago Doctrines, in: American Journal of International L a w ( A J I L ) vol. 1 (1907), 26—45 (32—33 and 43). 12 A compilation of the relevant norms can be found in the study by Giselber Foeth , Investitionen in Lateinamerika, Frankfurt/Main 1979, 333—339. 13 See, for example, art. 3 of the Law to Promote Mexican Investment and to Regulate Foreign Investment, enacted Feb. 7, 1973 (for an English version, see, Kenneth R. Simmonds / Michael Wallace Gordon [eds.], Multinational Corporations L a w — Mexico and Central America, Dobbs Ferry, N . Y . 1983 etseq., B. 2. a., 1—13). 14 Cf.y Lucius C. Caflisch, La Protection des Sociétés Commerciales et des Intérêts Indirects en Droit International Public, La H a y e 1969, 87; Henry J. Steiner / Detlev F. Vagts, Transnational Legal Problems: Materials and Text, 2nd ed., Mineola, N . Y . 1976, 522—530; Sigurd Beyer, Der diplomatische Schutz der Aktionäre im Völkerrecht, Baden-Baden 1977, 145—148; Luzius Wildhaber, Multinationale Unternehmen und Völkerrecht, in: Berichte der Deutschen Gesellschaft für Völkerrecht (BerGesVR) vol. 18 (1978), 7—71 (46); Ian Brownlie, Principles of Public International Law, 3rd ed., Oxford 1979, 546—547. 15 I t did not remain without any legal effects, however, i n that aliens as well as nationals of the State concerned are bound by their contractual stipulation and must therefore try earnestly to gain every available assistance from the local authorities prior to any diplomatic action; see, e.g., Hans-]oa