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Lecture 2STATE RESPONSIBILITY

andENVIRONMENTAL

REGULATION Topics covered:

• State responsibility • Standards of Care that states must observe • Objections states can raise to claims of breach • Relief that persons can obtain from states • Insurance that persons can purchase • Environmental regulations

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INTRODUCTION TO STATE RESPONSIBILITY

a. Rights of individuals or businesses who enter a foreign country:

1) Traditional "law of nations" rule: the states of the world imposed on each other the requirement to respect each other's citizens.

a) State responsibility for injuries to aliens is now a recognized rule of customary international law.

2) The current debate -- a) What is the responsibility?b) How it is to be enforced?

A. STATE RESPONSIBILITY

1. Proof Requirements to establish that a state is responsible for an injury to an alien or foreign business:

a. There must be "conduct consisting of an action or omission ... attributable to the state under international law.“

b. The conduct must "constitute . . . a breach of an international obligation of the state."

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A. STATE RESPONSIBILITY

2. Doctrine of Imputability a. Defined: A state is only responsible for

actions which are "imputable" or attributable to it.

1) Usual interpretation: A state is responsible for acts done by officials within their express and apparent authority.

a) This includes: i. Acts within the scope of an official's

authority.ii. Acts outside their scope of authority if the

state provided the means or facilities to accomplish the act.

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A. STATE RESPONSIBILITY

3.Non-imputable Acts a. States are not

responsible for the acts of:

1) Private persons.2) Officials of other

states.3) Officials of

international organizations.

4) Insurrectionaries.

JUDGE JUDY READY TO RULE--

Case: Home Missionary Society Case: +Court +Facts +Legal Significance +Parties +Rational+Issue +Result

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A. STATE RESPONSIBILITY

4. Fault and Causation a. Fault: A state is responsible for injuries to

aliens regardless of fault. 1) There is no requirement to show culpa (fault) by

the state (either through knowledge or negligence).

2) Reason for rule: It is too difficult to prove a lack of proper care by a state.

b. Causation: Courts do look to see if a state or its officials actually caused the injury.

JUDGE JUDY READY TO RULE--

Case: Flatow v. The Islamic Republic of Iran: +Court +Facts +Legal Significance +Parties +Rational+Issue +Result

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B. STANDARD OF CARE

1. Two Criteria for Determining How a State is Supposed to Act have been established by case law:

a. The "national standard.“b. The "international standard" (or

sometimes the "international minimum standard").

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B. STANDARD OF CARE

2. The National Standard a. Standard favored by Third World countries

(especially the Latin-American countries before World War II and the Afro-Asian countries since).

b. Defined: A state should treat an alien exactly as it treats its own nationals -- no more, no less.

c. Criticisms: 1) There is no protection for aliens if nationals are ill-

treated.2) If the rule is carried to its extreme, it would mean

that aliens should be given the same privileges (voting, health care, etc.) as nationals -- both absurdities.

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B. STANDARD OF CARE

3. The International Standard a. Note: Standard of care favored by

major Western countries.b. Defined: While states have no

obligation to admit aliens to their territory, once they do so, they must treat them in a civilized manner.

1) Failure to do so can be classified as either a crime or a tort.

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B. STANDARD OF CARE

3. The International Standard (cont.)b. 1) Failure to do so can be classified as either a

crime or a tort. (cont.)a) Examples of crimes: Serious breaches of

international peace that -- i. deny peoples the right of self-determination,ii. fail to safeguard human life and dignity, oriii. injure the environment.

b) Examples of torts: i. Expropriation (or nationalization) of the property of

aliens and foreign businesses, andii. Denial of justice.

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B. STANDARD OF CARE

4.Expropriation a. Defined: The

taking of property of private persons by a state.

b. The right of states to expropriate foreign property is universally recognized.

1) Analogous to the municipal law right of eminent domain.

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B. 4. Expropriation (cont.)

c. Western countries treat expropriation much as they treat eminent domain: It is proper so long as it is done for a legitimate "public purpose" and if the state pays prompt, adequate, and effective compensation (British Petroleum Case (Arbitration Tribunal 1974)).

1) Meaning of the "public purpose" element: It is only a requirement not to discriminate against a particular class of foreigners.

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B. 4. Expropriation (cont.)

c. Western countries (cont.)2) Meaning of "prompt, adequate, and effective

compensation."a) "Prompt compensation" means immediate

payment in cash.b) "Adequate" compensation means "the value

of the undertaking at the moment of dispossession, plus interest to the day of judgment.“

c) "Effective compensation" means that the recipient of the compensation must be able to make use of it.

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B. 4. Expropriation (cont.)

c. Western countries (cont.)2) Meaning of "prompt, adequate, and effective

compensation.“ (cont.)d) View of some Third World states:

i. Adequate compensation should not mean full market value.

ii. Factors such as colonial domination should be taken into consideration.

e) Final note: despite the Third World's objections, the western countries' interpretation of the meaning of expropriation is nearly uniformly followed.

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B. STANDARD OF CARE

5.Denial of Justice a. Defined: "A

denial, unwarranted delay or obstruction of access to courts, gross deficiency in the administration of judicial or remedial process, failure to provide those guarantees which are generally considered indispensable to the proper administration of justice, or a manifestly unjust judgment."

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B. 5. Denial of Justice (cont.)

b. Differing interpretations: 1) National standard advocates: Notions of

justice are relative to each society. a) Whether or not there has been a denial of justice

with respect to a particular case requires an understanding of the judicial system of the society where the case arose.

2) International standard advocates: Justice is determined by principles common to all civilized states.

a) Note: this view is nearly uniformly followed.

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C. OBJECTIONS that states can raise whensuits are brought against them include:

1.Lack of Standing 2.Lack of Nationality3.Lack of a Genuine Link4.Failure to Exhaust Remedies

C. OBJECTIONS that states can raise whensuits are brought against them include:

1. Lack of Standing a. Defined: Because the plaintiff is a person who

is not qualified to appear before the particular court, the case must be dismissed.

1) Note: In most international tribunals (e.g., the ICJ), only a state can file a complaint.

a) Complaints filed by a private person or an NGO would be dismissed for lack of standing.

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C. 1. Lack of Standing (cont.)

b. States may sponsor suits on behalf of their nationals

1) Rationale: The old Law of Nations idea that an injury to the citizen of a state is an injury to the state itself.

2) Effect: The state has full control over the action. a) It can refuse to bring the complaint.b) It can abandon it.c) It can settle it adversely to the interests of its

nationals.

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C. 1. Lack of Standing (cont.)

c. Effect of waiver by an injured person. 1) Calvo Clause: Requires an investor who seeks

to establish a business operation in a foreign country to agree, in advance, that he, she, or it will not ask for the home state to intervene in any dispute with the host state.

2) Legally an individual's waiver is ineffective.3) Practically an individual's waiver has some

effect.

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C. OBJECTIONS that states can raise whensuits are brought against them include:

2. Lack of Nationality a. This is a corollary of the requirement

of standing.b. Defined: A claim can be asserted by

a state only on behalf of its own nationals.

1) Persons with a single nationality: May only have their cases sponsored by their national state.

2) Stateless persons: Cannot be sponsored by any state.

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C. OBJECTIONS that states can raise whensuits are brought against them include:

3. Lack of a Genuine Link a. Nationality must be based on a "genuine link"

with the sponsoring state and not "bare" nationality.

b. Companies must also have a genuine link with their sponsoring state.

1) Most common tests for corporate nationality: a) Place of incorporation (in common law

countries),b) Siege social (in civil law countries).

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C. 2. Lack of Nationality (cont.)

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

3) Persons with dual nationalities. a) Traditional rule:

i. Either state can complain as to a third state.ii. Neither state can complain as to each other.

b) Recent rule: The state of which the individual has the "master" nationality (i.e., the one with which he has the most links) is allowed to bring a complaint against the other.

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C. OBJECTIONS that states can raise whensuits are brought against them include:

4. Failure to Exhaust Remedies a. Defined: Before an individual or

business firm can seek the help of its home state in supporting a complaint of mistreatment, the individual or firm must exhaust all of the remedies available to him or it within the foreign state.

1) Purpose of rule: To resolve problems at the lowest level and with the least use of the sovereign's time.

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C. 4. Failure to Exhaust Remedies (cont.)

b. Exceptions: 1) Adequate redress is clearly unavailable.2) The requirement has been waived by treaty.3) The injury was done directly to a state (rather

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

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C. OBJECTIONS that states can raise whensuits are brought against them include:

5. Other Objections a. Laches: A claim by the defendant

state that a claimant delayed too long in bringing a claim.

b. Dirty hands: That the claimant's own misconduct makes it ineligible for relief.

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D. RELIEF

1.Several Kinds of Relief Can be Obtained from States for Injuring an Alien

a. Restitution in kind.b. Satisfaction.c. Compensatory

damages.

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E. INSURANCE

1.Kinds of insurance available to foreign investors:

a. International property insurance.

b. International casualty insurance.

c. Insurance for overseas employees.

d. "Political risk" ("noncommercial") insurance.

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E. INSURANCE2. Sources:

a. Private insurers -  primarily in France, Netherlands, UK, and US, such as:

1) Foreign Credit Insurance Association (in US).b. National governments (for political risk

insurance), such as: 1) US Overseas Private Investment

Corporation.c. Intergovernmental organizations (for political

risk insurance): 1) Multilateral Investment Guaranty Agency.

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E. INSURANCE

3. The United States Overseas Private Investment Corporation (OPIC).

a. Mission: To "mobilize and facilitate the participation of US private capital and skills in the economic and social development of less developed friendly countries and areas.“

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E. 3. The United States OverseasPrivate Investment Corporation (OPIC). (cont.)b. Programs run by OPIC:

1) Finance program. a) OPIC may participate as a medium- to long-

term project lender.b) For small businesses involved in small

projects, OPIC can participate as a direct lender.

c) For larger investors involved in larger projects, OPIC can facilitate commercial lending by providing investment guarantees for commercial bank loans.

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E. 3. The United States OverseasPrivate Investment Corporation (OPIC). (cont.)b.Programs run by OPIC: (cont.)

2) Political risk insurance program.

a) Risks covered: i. Expropriation

or confiscation.ii. Currency

inconvertability or transfer risk.

iii. Various risks associated with political violence.

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E. INSURANCE

4. Multilateral Investment Guaranty Agency (MIGA)

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

b. Opened for business in 1987.c. Functions similarly to national

programs, such as OPIC. 1) Exception: It operates under the political

oversight of both capital- exporting and capital-importing states.

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F. ENVIRONMENTAL PROTECTION

1. Origins of international environmental protection laws.

a. UN Conference on the Human Environment convened in 1972.

1) Conference issued Stockholm Declaration is a list of principles, including Principle 21."States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other states or of areas beyond the limits of national jurisdiction."

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F. ENVIRONMENTAL PROTECTION

1. Origins of international environmental protection laws. (cont.)

b. United Nations Environment Program (UNEP) established by General Assembly in 1972.

1) Activities of UNEP: a) Monitoring the earth’s environment. b) Drafting international and regional treaties. c) Adopting recommended principles and

guidelines.

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F. ENVIRONMENTAL PROTECTION

1. Origins of international environmental protection laws. (cont.)

c. UN Conference on the Environment and Development (UNCED) convened in Rio de Janeiro in 1992.

1) Rio Declaration on the Environment and Development adopted.

a) Reaffirmed the principles of the Stockholm Declaration — especially Principle 21.

b) Added new principles:

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F. 1. Origins of internationalenvironmental protection laws. (cont.)

c. UNCED (cont.)1) Rio Declaration on the Environment and Development

adopted. (cont.)b) Added new principles: (cont.)

i. Principle 4: "In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it."

ii. Principle 15: States should follow a "Precautionary approach" in protecting the environment (i.e., where there are "threats of serious or irreversible damage," action to correct the problem should not be delayed merely because there is a "lack of scientific certainty" that injury will result).

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F. ENVIRONMENTAL PROTECTION

1. Origins of international environmental protection laws. (cont.)

c. UN Conference on the Environment and Development (cont.) 

2) Agenda 21 adopted. a) Establishes developmental and environmental

goals for the international community. i. Developmental goals: to promote sustainable and

environmentally friendly growth. ii. Environmental goals: to prevent pollution and to

conserve and protect the earth’s natural resources.

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F. ENVIRONMENTAL PROTECTION

2. Regulation of Pollution. a. Sectoral Regulations.

1) Marine Pollution. a) UN Convention on the Law of the Sea imposes on

all states the obligation "to protect and preserve the marine environment."

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

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F. ENVIRONMENTAL PROTECTION

2. Regulation of Pollution. (cont.)a. Sectoral Regulations. (cont.)

2) Air Pollutiona) most conventions relate to the regulation of

ozone emissions.

b. Product Regulations1) Various conventions seek to regulate:

a) Toxic waste.b) Nuclear materials.

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F. ENVIRONMENTAL PROTECTION

3. Protection of Natural Resources a. World Charter for Nature adopted by General

Assembly in 1982. 1) Only country that voted against the Charter: United

States.2) Basic principles:

a) Principal 1: "Nature shall be respected and its essential processes shall not be impaired.“

b) Principal 10(a): "Living resources shall not be utilized in excess of their natural capacity for regeneration.“

c) Principal 11: States need to establish procedures to control "activities which might have an impact on nature.”

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F. ENVIRONMENTAL PROTECTION

3. Protection of Natural Resources (cont.) a. World Charter for Nature adopted by General

Assembly in 1982. (cont.)3) Several conventions that seek to implement the goals of

the World Charter of Nature have been adopted.

4. Liability for Environmental Damage a. Very few conventions (with only a small number of

parties) impose liability for environmental damage. 1) Convention on Civil Liability for Nuclear Damage of

1963.2) International Convention on Civil Liability for Oil

Pollution Damage of 1969.

Indemnity Clause