978-0132718974 Chapter 2 Solution Manual Part 1

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State Responsibility and Environmental Regulaon

I. Text Materials

Introduction

It has long been a basic principle of international law that a state that causes an injury to a foreign

citizen (national) is responsible to the national’s state for the harm done, but not to the national.

This responsibility follows from the basic idea of international law as the law of nations.

The chapter considers when a state is responsible, what the standard of responsibility is, what

defenses states have against allegations of mistreatment, and what steps aliens and foreign

businesses can take to minimize potential losses.

The chapter examines the insurance programs that states and IGOs have established to protect

companies that invest internationally. The chapter also examines the international legal

obligations of states to protect the environment and considers the responsibilities states have to

curtail pollution and protect natural resources.

State Responsibility

To establish that a state is responsible for an injury to an alien or foreign business, there must be

(1) “conduct consisting of an action or omission attributable to the State under international law,”

and the conduct must (2) “constitute a breach of an international obligation of the State.” In the

Positivist view of international law, responsibility adjudged by another state or an international

tribunal can only be of consequence where a sovereign agrees that it is not the sole judge of its

responsibility toward others.

Doctrine of Imputability – It states that a state is only responsible for actions that are imputable

(attributable) to it.

The usual interpretation of this theory is that the state is responsible for acts done by officials

within their apparent authority. This includes (1) acts within the scope of officials’ authority and

(2) acts outside their scope of authority if the state provided the means or facilities to accomplish

the act.

Thus, states are responsible both for mistaken actions and even for actions done contrary to

express orders or even the internal laws of the state.

Case 2-1: Sandline International Inc. v. Papua New Guinea

Facts: A Papua New Guinea (PNG) revolutionary movement cut off power to a mine on

State Responsibility and Environmental Regulation

Issue: Is PNG liable for its failure to perform the terms of the contract?

Holding: Yes.

Law: “An agreement between a private party and a state is an international, not a domestic,

Explanation: PNG pled that the contract violated Section 200 of the PNG Constitution and that

Order: Sandline is awarded damages for breach of contract.

Nonimputable Acts – Because states are only responsible for actions taken by their officials,

they are not responsible for the acts of private persons, acts of officials of other states or

international organizations, or acts of insurrectionaries within their own territories. However, this

fact overlooks the growing body of law and reality when it comes to state-sponsored or supported

terrorism.

Terrorism

Terrorism is the sustained clandestine use of violence—murder, kidnapping, threats, bombings,

torture, or some combination of these—for a political purpose. Terrorism does not require

sponsorship by a state, but states have often sponsored terrorism. State responsibility for terrorism

is often limited to helping other states bring terrorists to trial.

Efforts to deter terrorism have led to the adoption of the Tokyo Convention of 1963 and the

Montreal Convention of 1971 on the hijacking and sabotage of civilian aircraft; to the 1973

Convention on crimes against diplomats and the 1979 Hague Convention on hostage taking; and

to the 1988 Convention for the Suppression of Unlawful Acts Against the Safety of Maritime

Navigation. These conventions classify certain kinds of acts as international crimes that are

punishable by any state regardless of the nationality of the criminal or the victim or the locality of

the offense. They do not, however, impose liability on states that participate in state terrorism.

Most domestic terrorism legislation does not impose liability on states for terrorism. The

Anti-terrorism and Effective Death Penalty Act of 1996 grants U.S. federal courts jurisdiction to

hear suits against foreign states and their officials and creates a private cause of action for

personal injuries and death resulting from state-sponsored terrorist attacks.

Case 2-2: Flatow v. The Islamic Republic of Iran

State Responsibility and Environmental Regulation

Facts: Alisa Flatow, a U.S. citizen, was killed in Israel by a suicide bomber. The Shaqaqi faction

Issues: (1) Does the court have jurisdiction? (2) Is there a cause of action?

Holdings: (1) Yes. (2) Yes.

Law: The U.S. Antiterrorism and Effective Death Penalty Act of 1996 creates subject matter

Explanation: (1) This suicide bombing was an extrajudicial killing as it was not authorized by a

Order: Defendants are jointly and severally liable for Flatow’s death.

Fault and Causation – The case law and most law writers suggest that a country is responsible

Standard of Care

Once a court or other tribunal decides that a state is connected to an action, it has to determine the

criteria it is to be judged by. Two criteria have appeared in the case law: the international standard

(or sometimes the international minimum standard) and the national standard.

The National Standard of Care – Third World states (especially in Latin America before World

War II and in Asia and Africa after World War II) have often pressed for a national standard of

care.

A state should treat an alien exactly as it treats its own nationals—no better, no worse. But the

critics point out that this is not protection for aliens if the nationals are ill-treated; and if the rule

were carried to its extreme, it would mean that aliens should be given the same privileges (voting,

health care, etc.) as nationals.

Efforts by the Soviet Union to obtain support for a 1962 United Nations General Assembly

resolution that would have established “the inalienable rights of peoples and nations to the

unobstructed execution of nationalization, expropriation, and other measures” was defeated. The

role that foreign capital plays in development and the fear of offending states that extend

State Responsibility and Environmental Regulation

economic and other kinds of assistance were important factors in defeating the Soviet proposal.

On the other hand, the less developed countries generally have been unwilling to reject the

national treatment doctrine and sign treaties obliging them to pay just compensation if they

expropriate foreign investments.

The International Standard of Care – Favored by major Western countries, the international

standard of care says that although a country has no obligation to admit aliens to its territory, once

it does, it must treat them in a civilized manner. Failure to do so can be classified as either crimes

or torts.

In its 1979 Draft Articles on State Responsibility, the International Law Commission suggested

that state acts are international crimes if they seriously breach international peace, deny people

the right of self-determination, or fail to safeguard human life and dignity (e.g., slavery, genocide,

and apartheid).

The most common international tort is the expropriation or nationalization of aliens’ and foreign

businesses’ property. Denial of justice is also a common tort.

Expropriation – Expropriation or nationalization is the state’s taking or deprivation of the

property of foreigners. The right of states to expropriate foreign property is universally

recognized; in municipal law, the right of a government to “take” property for public purposes is

known as eminent domain.

Western countries regard expropriation, much as they regard eminent domain, as proper so long

as it is done for a legitimate public purpose and the state pays prompt, adequate, and effective

compensation. Some argue that the public-purpose element is required in expropriation cases,

others argue that it should be expressed only as a requirement not to discriminate against a

particular class of foreigners.

The meaning that the major Western industrial powers give to the phrase “prompt, adequate and

effective compensation” was succinctly stated by the plaintiff in its pleadings in the

Anglo-Iranian Oil Co. (United Kingdom v. Iran) Case. By “adequate” compensation is meant the

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

Prompt compensation means immediate payment in cash. Effective compensation means that the

recipient of the compensation must be able to make use of it.

Case 2-3: Acsyngo v. Compagnie De Saint-Gobain (France) S.A.

Facts: France had nationalized the stock in the French conglomerate Compagnie de Saint-Gobain

Issues: (1) Was the nationalization decree expropriatory or discriminatory? (2) Is a foreign

Holdings: (1) No. (2) No. (3) No.

State Responsibility and Environmental Regulation

Law: (1) A nationalization decree is not expropriatory if it provides for fair and adequate

Explanation: (1) Fair market price was paid. The only discrimination was between economic

Order: Case dismissed.

Denial of Justice – A denial of justice is said to exist “when there is 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. An error of a national court

which does not produce a manifest injustice is not a denial of justice.”

The states that advocate the application of a national standard emphasize that notions of justice

are relative to each society and that 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.

Case 2-4: Chattin v. United Mexican States

Facts: Chattin had been an employee of a Mexican railroad company. On July 9, 1910, he was

Issue: Had Chattin been denied justice?

Holding: Yes.

Law: Mexico’s treatment is to be tested by international standards.

Explanation: There was evidence of undue delay in allowing Chattin to respond to the

Order: Chattin was awarded $5,000 in damages.

State Responsibility and Environmental Regulation

Dissent: To require that a trial must have the sacred forms of the common law is to forget “that

the same goal is reached by many roads.” This claim should have been disallowed.

Objections

States can raise several objections to complaints brought against them, including lack of standing,

lack of nationality, lack of a genuine link, and failure to exhaust remedies.

Lack of Standing – A common objection states raise to being sued in international tribunals is

lack of standing. If a plaintiff is not qualified to appear before the particular court, the case must

be dismissed.

In most international tribunals, such as the ICJ, only a state can file a complaint. If a private

person or company were to appear as a plaintiff, the case would be dismissed for want of

standing. In these tribunals, the only way for the matter to be heard is for a state to sponsor the

suit of its national.

Lack of Nationality – An objection related to lack of standing is lack of nationality. Although a

state may bring a complaint in an international tribunal on behalf of one of its own nationals, it

may not do so on behalf of any other person.

This rule is easily applied with respect to persons with a single nationality and to stateless persons

(the first have a claim if they are sponsored by the state of their nationality; the second cannot be

sponsored by any state).

Its application becomes more complex, however, with dual nationals. The traditional rule is that

either state can complain to a third state; but between the two, neither can complain. A new rule

evolved that allows the state of which the individual has the master nationality (i.e., the one with

which he/she has the most links) to complain against the other.

Effect of an Injured Person’s Waiver on the Right of His National State to Bring Suit on His

Behalf: The 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 its home state to intervene

in any dispute with the host state.

According to the ICJ, “A claim belongs to a state and not to an individual; therefore, any attempt

of waiver by the individual is ineffective.” As a practical matter, however, Calvo Clauses do have

some impact.

Lack of a Genuine Link – A person whose suit is being sponsored by a state in an international

tribunal must be a real and bona fide national of that state. That is, the person’s nationality must

be genuine and not based on a token relationship. If it is based on a token or insignificant

relationship, the opposing state can raise an objection of a lack of a genuine link to the sponsoring

state.

For companies, the ability of a state to sponsor a complaint depends on the particular company’s

nationality. States have a wide variety of national rules that define the nationality of a company.

Regardless of these tests, international tribunals now require that a company have a genuine link

with its sponsoring state.

State Responsibility and Environmental Regulation

Failure to Exhaust Remedies – Before an individual or business firm can seek the help of its

home state in supporting a complaint of mistreatment by a foreign state, the individual or firm

must exhaust all of the local remedies available to it within the foreign state. Failure to exhaust

remedies is thus an objection that the foreign state may raise in an international tribunal. As is the

case in municipal law, the requirement that complainants must exhaust their local remedies serves

to resolve problems at the lowest level and with the least use of a sovereign’s time.

There are exceptions to the rule. If an adequate remedy is clearly unavailable, if the requirement

to exhaust a person’s remedies is waived by treaty, if the injury was done directly to a state (rather

than to a private person), or if the defendant state has delayed excessively in granting a remedy,

the requirement is excused.

Case 2-5: The M/V Saiga Case (Merits)

Facts: The M/V Saiga sold “gas oil” to fishing vessels in Guinea’s exclusive economic zone

(EEZ). The Guinean Navy arrested it and its master and crew the next day outside the EEZ. The

master was charged with importing taxable goods without declaring them and it brought criminal

charges. The trial court found him guilty, and the Court of Appeal affirmed. He was fined and the

Issues: (1) Is there a genuine link between the Saiga and SVG? (2) Had the master exhausted his

Holdings: (1) Yes. (2) Yes. (3) No.

Law: (1) The UNCLOS requirement that there must be a genuine link between the ship and its

Explanation: (1) Guinea produced no evidence to show that a genuine link was lacking. (2) The

Order: SVG is entitled to reparations for the injuries it has suffered.

Other Objections – A defendant state may also argue that a claimant delayed too long in

bringing a claim (this is called laches) or that the complainant is tainted with dirty hands.

Relief

Several kinds of relief can be obtained from states for injuring an alien. International tribunals

have awarded restitution in kind, satisfaction, and compensatory damages.

Case 2-6: Re Letelier and Moffitt

State Responsibility and Environmental Regulation

Facts: Despite Chile’s assertion of sovereign immunity, a U.S. trial court held that Chile was

Issue: What constitutes reparation?

Holding/Law: The appropriate remedy for an ex gratia payment is a reparation. Reparation must,

Explanation: In calculating reparations for the injuries done, this Commission considered the

Order: The heirs of the victims were awarded U.S. $2,611,892.

Separate Opinion: (1) International law does not allow for the award of punitive damages (to

punish a party for wrongdoing). Also, any excessive award, which is equivalent to an award of

punitive damages, would be wrong. (2) International law requires that damages be proximate to

the causal act. Remote damages would not be proper. (3) The remedy of “satisfaction” usually

requires a determination of responsibility. Since the Commission was not allowed to determine

responsibility, satisfaction cannot be granted. Additionally, satisfaction is only appropriate in

disputes between states, and not in cases involving individuals.