Exposé. Theme: Full Protection and Security in International Law. Dissertation Area: International law. Dissertant:

Transcription

1 Exposé Theme: Full Protection and Security in International Law Dissertation Area: International law Dissertant: Cand. jur. Finnur Magnusson LL.M. (Vienna) Supervisor: o. Univ.-Prof. Dr. August Reinisch LL.M (NYU)

2 1. Introduction This Exposé will describe in what way a study on the standard of full protection and security will be conducted with the purpose of acquiring the title of Doctor iuris at the University of Vienna. The proposed title of the doctoral thesis will be Full Protection and Security in International Law. 2. The study s research topic The standard of Full Protection and Security in international law is in principle based upon a rather simple idea. In theory a state is obliged to take active measures to protect a foreign investor and his property and other interest, including his investments, from adverse effects which may stem from activities of the host state itself or from third parties. However, in practice this obligation turns out to be a complex matter hedged in by limitations and caveats. The standard of Full Protection and Security can be divided into two main parts depending on the nature of the obligation which the state owes to the alien in question. The first part includes the obligation of a state to provide protection and security by the use of its police powers in cases where the investor or the investor s interests are threatened. The second part concerns the state s obligation to provide further protection going beyond the sphere of police protection, in particular availability of a legal system or legal security in terms of stability of the investment climate in which the investor operates. It is proposed that the aforementioned parts of the standard be researched and studied by answering the following two groups of questions: 1) What is the nature of the full protection and security standard when a state has to ensure police protection for the investor and his investment? What is the due diligence principle and its substantive components and what are the obligations which the state has to fulfil in order to provide full protection and security? 2) What is the nature of the full protection and security standard within the context of providing protection and security which entails more than police protection for the physical safety of an investment? If such an obligation must be honoured by the state, what does that imply? 3. Purpose and legal methodology The main purpose of the study will be to collect relevant legal sources and analyse and define the standard of full protection and security within the context of the two groups of questions mentioned above. 2

3 The study will be based on a legal methodology to determine the substantive content of the standard and to which extent it provides protection for investors. The said legal methodology will examine the main sources of international investment law bilateral investment treaties, customary international law and arbitral awards which determine the content of the standard and greatly affect its application in practice. The analysis with regard to these sources of law will not be limited to whether a consistent practice can be found, but also to see how substantive elements of individual sources of law influence the assessment of whether the standard has been breached. Various bilateral investment treaties between countries will be examined and the evolution of customary international law described. With regard to the judgments and arbitral awards the study will not differentiate between various precedences depending on which jurisdiction they stem from as long as they shed a light on the substantive content of the standard. Hence, the study is not to be understood as a comparative study, even though it is based on judgments from the Permanent Court of Justice, 1 decisions of claims commissions established in Central-America in the 1920 s, 2 International Court of Justice, 3 Iran-US Claims tribunal 4 or tribunals established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. 5 These judgments and awards will, as other sources of law, be assessed in order to serve the purpose of understanding the nature of the full protection and security standard and its content. The importance of treaty practice cannot be underestimated when describing the standard. This is due to the fact that the standard has a longer history in treaty law than other standards, e.g. the standard of fair and equitable treatment (hereinafter FET standard), as it was incorporated in many FCN treaties which predate bilateral investment treaties which today provide the modern treaty framework used in applying the standard. 1 Chorzów Factory Case (Merits), 1928 PCIJ, Ser. A, No Well known cases, such as the Neer case will be discussed. However, I also intend to discuss other cases, which are usually not included, but are relevant to the protection of foreigners in the context of the full protection and security standard, such as e.g. Great Britain (L. Buckingham) v United Mexican States, Great Britan-Mexican Claims Commission Award rendered 3 August 1931, 5 RIAA (1931) E.g. Case concerning Elettronica Sicula SpA (ELSI), (US v Italy), Decision rendered 20 July 1989, ICJ Rep. (1989) 15 and Case concerning United States Diplomatic and Consular Staff in Tehran, (US v Iran), ICJ Rep. (1980) 3. 4 Surprisingly, the Iran-US Claims tribunal did not apply the 1955 Treaty of Amity, Economic Relations, and Consular Rights between the US and Iran when deciding on compensation in disputes between private entities and the state of Iran. However, the International Court of Justice did not hesitate to refer to it when arguing that Iran had violated a clause obliging a state to provide constant protection and security to nationals of the other state. See C.N. Brower and J.D. Brueschke, Iran-United States Claims Tribunal, Martin Nijhoff Publishers 1998, p , and Case concerning United States Diplomatic and Consular Staff in Tehran, (US v Iran), ICJ Rep. (1980) 3. 5 Various arbitral awards will be discussed, such as AAPL v Sri Lanka, Award, 27 June 1990, 30 ILM (1991); AMT v Zaire, Award, 21 February 1997, 36 ILM (1998) 1531, and TECMED v Mexico, Award, 29 May 2003, 43 ILM (2004) and many more. 3

4 It is also important to mention that, although the thesis will focus in particular on these sources of law, other sources will also be analyzed. Thus, scholarly writings will play a major role in analyzing the nature of the standard and its scope in particular cases. 4. Substantive issues concerning the standard of Full Protection and Security Various substantive issues need to be dealt with concerning individual elements of the standard. The first issue relates to the sources of law which the standard rests upon. It is necessary, when dealing with the sources of international investment law, to assess their independence vis-à-vis the sources of international law. Therefore, the classical theory of the system of source of international law will be discussed and the issue of whether international investment law has developed such distinct characteristics that it can be considered independent enough to be considered a self-contained system of source of law. 6 This part of the thesis will, needless to say, include a historical discussion providing a description on how international investment law has evolved from classical international law. Having established whether and to what extent international investment law has evolved, it will become necessary to discuss the sources of international investment law. The sources, which are generally considered to be treaty law, customary law and arbitral awards, will be discussed and the many questions arising out of the nature of each source of law individually and collectively such as: (1) How important is the formulation of the standard in bilateral investment treaties when individual cases are adjudicated? (2) Is the standard an independent one or is it a part of customary international law or general international law? (3) How do arbitrators use other arbitral awards when assessing the substantive elements of the standard in an investment treaty? and (4) What is the nature of the relationship between treaty law and customary international law do treaty law and customary international law confront each other in practice or is there an interrelationship between these sources of laws in arbitral practice? Other issues unrelated to the different sources of law and their interdependence will produce the core of the thesis. The content of the standard will be described and include a discussion on the substantive elements of the standard, such as what can be considered a standard in international law and what the substantive elements of full and protection entail. Numerous examples will be discussed from the treaty practice of individual states. It will be necessary to discuss these issues taking into account the principles contained in the Vienna Convention on the Law of Treaties. In this context it will be necessary to discuss the standard s scope of application, namely to which extent the standard provides protection. 6 See e.g. R. Dolzer and C. Schreuer, Principles of International Investment law, OUP 2008, p A discussion on the comments of other writers will be discussed, such as International Law Commission Fragmentation of International Law: Difficulties arising from the Diversification and Expansion of International Law, Report of the Study Group of the International Law Commission (Koskenniemi C), UN Doc A/CN4/L682, 2 April

5 Issues will be discussed relating to e.g. (1) whether the standard only provides basic protection for the investment of foreign investors, such as police protection, or whether the protection extents to additional areas, including legal protection 7 and (2) whether the investment has to have been damaged by a private actor or whether the state can be considered an actor in this context. 8 This part of the thesis will also provide for an opportunity to distinguish between the standard and other standards of treatment. 9 That is of considerable importance, especially with regard to the FET standard, to prevent an overlap of standards. 10 Any protection is rendered meaningless if an investor can not identify what kind of behaviour can be construed as violations of the standard and what the ramifications of a breach of the standard entail. Therefore, the main breaches of the standard will be discussed Main parts of the study and chapters covering various issues The study will be divided into three parts. The first part will focus on the historical evolution of the full protection and security standards. The second part will explore the sources and content of the full protection and security standards. The third part will discuss the violations of the standard, their implications and boundaries of states obligations. It should be noted that this research proposal contains the preliminary results of legal research on the standard of full protection and security in international law research which has been conducted for the purpose of concluding this proposal and to prepare for further legal research on individual aspects of the aforementioned standard. The three parts and numerous chapters which are described below are subject to changes, amendments and additions, as the research progresses further. 7 See G. C. Moss, Full Protection and Security, in A. Reinisch (ed.), Standards of Investment Protection, OUP 2008, p This question is relevant due to the many different circumstances which can arise, such as armed conflict with revolutionary forces in AAPL v Sri Lanka, Award, 27 June 1990, 30 ILM (1991) or demonstrations in TECMED v Mexico, Award, 29 May 2003, 43 ILM (2004). 9 The awards in Wena Hotels Ltd v Arab Republic of Egypt, Award, 8 December 2000, 6 ICSID Reports 89, and Occidental Exploration and Production Co. v Ecuador, Award, 1 July 2004, 12 ICSID Reports 59, will be discussed and how the arbitrators equated the standard of full protection and security with the FET standard. 10 Whereas the full protection and security standard has in some cases been equated with the FET standard (see note 9), other cases can be found where a distinction was been made between the two standards, cf. e.g. Azurix Corp. v The Argentine Republic, Award, 14 July 2006 and Jan de Nul N.V. et al v Egypt, Award, 6 November See for government actions AAPL v Sri Lanka, Award, 27 June 1990, 30 ILM (1991) and AMT v Zaire, Award, 21 February 1997, 36 ILM (1998) 1531, but attack by large crowds Wena Hotels Ltd v Arab Republic of Egypt, Award, 8 December 2000, 6 ICSID Reports 89. 5

6 PART I The Full Protection and Security Standard and its historical evolution 1. INTRODUCTION 1.1 Subject of the study and methodology 1.2 A summary of the substance and structure of the study 1.3 The use of categories 2. THE HISTORY OF THE STANDARD OF FULL PROTECTION AND SECURITY 2.1 Introduction 2.2 Protection of nationals abroad the breakdown of consensus 2.3 Codification of Friendship, Commerce and Navigation treaties 2.4 The emergence of bilateral investment treaties 2.5 The success and failure of multilateral instruments 2.6 Regional instruments 2.7 Non-governmental initiatives 2.8 Conclusion PART II The sources and content of the Full Protection and Security Standard 3. SOURCES OF THE FULL PROTECTION AND SECURITY STANDARD 3.1 Introduction 3.2 Sources of international law 3.3 Sources of international investment law General International investment treaties Customary international law Arbitral awards General principles of law 3.4 The status of international investment law within the sphere of public and private law 3.5 Conclusion 4. THE CONTENT OF THE STANDARD OF FULL PROTECTION AND SECURITY 4.1 Introduction 4.2 Conceptual issues substantive elements of the standard 4.3 The meaning of state actors and private actors 4.4 The Due diligence principle and obligations of the host state 4.5 The standard s scope of application 4.6 Does the standard overlap with other investment standards? 4.7 Conclusion 6

7 5. INTERPRETATION OF THE STANDARD OF FULL PROTECTION AND SECURITY 5.1 Introduction 5.2 General considerations as regard interpretation 5.3 Interpretation in practice 5.4 Does the host state s level of development affect interpretation? 5.5 Conclusion PART III Violations of the standard, their implications and outer boundaries of states' obligations 6. VIOLATIONS OF THE STANDARD AND ITS RAMIFICATIONS 6.1 Introduction 6.2 Disparate behaviour constituting a violation of the standard 6.3 Violations of the standard 6.4 Legal effects of violating the standard 6.5 Conclusion 7. EMERGENCY, NECESSITY AND FORCE MAJEURE 7.1 Introduction 7.2 Outer limits of a state s obligation to protect an investment 7.3 Conclusion 8. SUMMARY OF FINDINGS AND CONCLUSIONARY REMARKS 6. Time plan and funding My estimate is that the subsequent legal research will be continued over the next 1-2 years. The work has and will progress in the following manner: (1) Ergänzungsprüfungen completed (November 2009) (2) Composition and submission of the Exposé (February-March 2010) (3) Completion of coursework required with the exception of presenting the doctoral study for discussion (March-June 2010): a. VO Rechtswissenschaftliche Methodenlehre (2 SWS). b. SE od. KU zur Judiaktur- oder Textanalyse (2 SWS). c. 2 Seminare, davon eines verpflichtend aus dem Dissertationsfach (4 SWS). d. Lehrveranstaltungen aus dem Dissertationsfach oder dem Bereich der Wahlfächer (6 SWS). (4) Research and composition of the doctoral thesis (March 2009-May 2011). (5) Public defence (a defence in October 2011 will be pursued). I am funding my studies by myself. I refer to the Anmeldung des Dissertationsthemas und Bekanntgabe der Betreuer, page 2. 7

8 7. Authorities used during the research (in chronological order) 7.1 Books A. Roth, The minimum standard of international law applied to aliens, A.W. Sijthoff s Uitgeversmaatschappij N.V. (1949). R. Wilson, The International Law Standard in Treaties of the United States (1952). C.N. Brower and J.D. Brueschke, Iran-United States Claims Tribunal, Martin Nijhoff Publishers (1998). M. Sornarajah, The International Law on Foreign Investment, Cambridge University Press (2004). R. D. Bishop, J. Crawford and W. M. Reisman, Foreign Investment Disputes Cases, Materials and Commentary, Kluwer Law International (2005). R. Bishop, J. Crawford and W.M. Reisman, Foreign Investment Disputes Cases, Materials and Commentary, Kluwer Law International (2005). R. Dolzer and C. Schreuer, Principles of International Investment Law, Oxford University Press (2008). I. Brownlie, Principles of Public International Law, Oxford University Press (2008). A. F. Lowenfeld, International Economic Law, 2nd ed., Oxford University Press (2008). C. Binder, U. Kriebaum, A. Reinisch and S. Wittich (eds.), International Investment Law for the 21st Century Essays in honour of Christoph Schreuer, Oxford University Press (2009). 7.2 Articles E. Root, The Basis of Protection to Citizens Residing Abroad, 4 AJIL 517 (1910). E.M. Borchard, Basic elements of diplomatic protection of citizens abroad, 7 AJIL 497 (1913). J. Goebel Jr., The International Responsibility of States for Injuries sustained by Aliens on account of Mob Violence, Insurrections and Civil Wars, 8 AJIL 802 (1914). A. Nussbaum: The Arbitration Between the Lena Goldfields Ltd and the Soviet Government, 36 Cornell Law Quarterly 31. J.P. Bullington, Problems of International Law in the Mexican Constution of 1917, 21 AJIL 685 (1927). L. Shawcross, The Problems of Foreign Investment in International Law, Académie De Droit International collected courses of the Hague Academy of International law, Vol. 102 (1961). F.A. Mann, British Treaties for the Promotion and Protection of Investments, 52 British Y.B. Int l Law, (1981). K.J. Vandevelde: The Bilateral Investment Treaty Program of the United States, 21 Cornell Int l L.J. 201 (1987). 8

9 J.W. Salacuse, BIT by BIT: The Growth of Bilateral Investment Treaties and Their Impact on Foreign Investment in Developing Countries, 24 Int l Law 655 (1990). K. Zemanek, The Legal Foundations of the International System, Académie De Droit International collected courses of the Hague Academy of International law, Vol. 266 (1997). C. Yannaca-Small, Fair and Equitable Treatment Standard in International Investment Law, OECD (2005). G. C. Moss, Full Protection and Security, in A. Reinisch (ed.), Standards of Investment Protection, Oxford University Press (2008). J. Paulsson, Awards And Awards, in A.K. Bjorklund, I.A. Laird and S. Ripinsky (eds.), Investment Treaty Law, Current Issues III; Remedies in International Investment Law Emerging Jurisprudence of International Investment law, British Institute of International and Comparative Law (2009). 7.3 Treaties Numerous treaties, old and new, will be reviewed for the purposes of the doctoral study. This study will include FTC treaties, such as: Treaty of Amity and Commerce Between the United States and France, concluded on February 6, 1778; Convention of Friendship, Commerce and Extradition between the United States and Switzerland concluded on November 25, 1850; and Convention of Friendship, Commerce and Extradition between the Argentine and the United States of July 27, In addition, numerous BITs will be researched and analyzed for the purpose of the study, including the German-Pakistan BIT, UK-Sri Lanka BIT, Australia-India BIT, Austria-Mexico BIT, US-Argentine BIT, US-Armenia BIT etc. Currently about 100 BITs have been reviewed but it is uncertain how many will have been reviewed after the study has been concluded. 7.4 Judgments of courts and awards of tribunals Neer v The United Mexican States, IV RIAA (1926). Chorzów Factory Case (Merits), 1928 PCIJ, Ser. A, No. 17. Great Britain (L. Buckingham) v United Mexican States, Great Britan-Mexican Claims Commission Award rendered 3 August 1931, 5 RIAA (1931) 286. Case concerning United States Diplomatic and Consular Staff in Tehran, (US v Iran), ICJ Rep. (1980) 3. Case concerning Elettronica Sicula SpA (ELSI), (US v Italy), Decision rendered 20 July 1989, ICJ Rep. (1989) 15. AAPL v Sri Lanka, Award, 27 June 1990, 30 ILM 577 (1991). AMT v Zaire, Award, 21 February 1997, 36 ILM 1531 (1997). Wena Hotels Ltd v Arab Republic of Egypt, Award, 8 December 2000, 6 ICSID Reports 89. 9

10 Lauder v Czech Republic, UNCITRAL Arbitration, Award 3 September CME v Czech Republic, UNCITRAL Arbitration Award of 13 September Mondev International Ltd v United States of America, ICSID Case (Additional Facility) No. ARB(AF)/99/2, Award of 11 October 2002, 42 ILM 85 (2003). ADF Group Inc v United States of America, ICSID Case (Additional Facility) No. ARB(AF)/00- /1, Award of 9 January 2003, 6 ICSID Reports 470. TECMED v Mexico, Award, 29 May 2003, 43 ILM 133 (2004). Occidental Exploration and Production Co. v Ecuador, Award, 1 July 2004, 12 ICSID Reports 59. Azurix Corp. v The Argentine Republic, Award, 14 July Vivendi v Argentine Republic, ICSID Case No. ARB/97/3, Award of 20 August Jan de Nul N.V. et al v Egypt, Award, 6 November Other UNCTAD, World Investment Report: The Triad of Foreign Direct Investment, (New York and Geneva, United Nations, 1991). UNCTAD, Investment Provisions in Economic Intergration Agreements, (New York and Geneva, United Nations, 2006). 10