LAW, JUSTICE AND DEVELOPMENT WEEK 2011

CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

Maurizio Ragazzi, Sr. Counsel, International Law (LEGEN)November 16, 2011 Washington DC

LJD LAWJUSTICE andDEVELOPMENT

Setting the Stage

Treaty Law 101

A Case from the Philippines

Message for operational lawyers

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS? 2

Back to school: Treaty Law 101

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS? 3

Courtesy of Steve and Jemma Copley

4

Treaty Law 101

1. What is a Treaty?

(a) an international agreement, (b) between [states/international organizations],(c) governed by international law, (d) in written form,(e) in a single instrument or in related instruments,(f) whatever its particular designation.

(Arts. 2(1)(a) of the 1969 and 1986 Vienna Conventions.)

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

5

Treaty Law 101 2. The INTERNATIONAL obligation to observe a treaty

Article 26 Pacta sunt servandaEvery treaty in force is binding upon the parties to it and must be performed by them in good faith.

Article 27 Internal law and observance of treatiesA party may not invoke the provisions of its internal law as justification for its failure to perform a treaty…

(1969 and 1986 Vienna Conventions)

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

6

Treaty Law 101 3. The INTERNAL obligation to observe a treaty

(a) The practical dimension of the problemthe main practical questions… are answered not by reference to the doctrine but by looking at what the rules of various national laws and of international law prescribe. (OPPENHEIM’s.)

(b) The rule of construction for ambiguous caseswhere domestic legislation is passed to give effect to an international convention, there is a presumption that Parliament intended to fulfil its international obligations. (BROWNLIE.)

(c) The alternative systems for clear cases(i) giving the treaty priority over all laws, (ii) giving it priority over all prior laws, and (iii) giving priority to all laws over the treaty. (HOLLIS.)

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

7

Treaty Law 101

4. An emerging judicial practice?

It is emerging judicial practice to abandon the lex posterior derogat priori rule, which allows prior treaty norms to be superseded by subsequent contrasting national legislation, in favour of criteria that guarantee the primacy of the international norm. (ZICCARDI CAPALDO.)

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

8

Food for Thought: A Case from the Philippines

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

Courtesy of Dibaer

9

Supreme Court decision, June 2007

What is a loan agreement under Philippines law? Does it prevail over national law?

(a) Procurement guidelines/Philippines procurement law.

(b) Treaties/executive agreements under Philippines law.

LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT

10

The message for operational lawyers

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

11

The message for operational lawyers

What should the (overwhelmed) operational lawyer do?

(a) Suggest a supplemental letter?

(b) Rely on the legal opinion?

(c) Keep the eyes open?

Those involved with the negotiation of a treaty need to assure themselves that if their state should become a party there will be no domestic legal obstacle to its full implementation. (AUST.)

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS?

Cheers!

mragazzi@worldbank.org

LJD WEEK 2011 CONFLICT BETWEEN AN INTERNATIONAL FINANCIAL AGREEMENT & THE BORROWER’S DOMESTIC LAW : WHICH ONE PREVAILS? 12