JURI 4640: International Law I The International Legal Process
Professor Bodansky University of Georgia School of Law

Home

Syllabus

Assignments/Readings

Documents

Exam Archive

Glossary

Links

Class 16:
UN General Assembly Resolutions: Expropriation of Foreign Property

Assignment

Read the materials below as well as pages 70-74 and 81-99 of the Casebook. Consider the questions at the end of this web page.

Background

Since 1946, the UN General Assembly (UNGA) has adopted approximately resolutions. About 70 or 80 of these purport to express general rules of conduct for states; many of these are styled "declarations" or "charters" and some were the product of years of debate and negotiation.

UN General Assembly resolutions are generally not considered "formal sources" of law. At the San Francisco conference, which adopted the UN Charter, only one state voted to give the General Assembly general legislative powers. The General Assembly may make binding decisions on a few specified questions – for example, the budget of the United Nations. But otherwise its resolutions (whatever their label) have the status of "recommendations." (UN Charter article 10)FN1

Nevertheless, UNGA resolutions are often cited in support of asserted norms of customary international law. Consider the following discussion from Filartiga v. Pena-Irala, 630 F.2d 876 (2d Cir. 1980), about whether customary international law prohibits torture:

The 1975 Declaration [on the Protection of all Persons from Torture] provides that "where it is proved that an act of torture or other cruel, inhuman or degrading treatment or punishment has been committed by or at the instigation of a public official, the victim shall be afforded redress and compensation, in accordance with national law." This Declaration, like the [Universal] Declaration of Human Rights before it, was adopted without dissent by the General Assembly.

These UN declarations are significant because they specify with great precision the obligations of member states under the Charter. Since their adoption, "members can no longer contend that they do not know what human rights they promised in the Charter to promote." Moreover, a UN declaration is, according to one authoritative definition, "a formal and solemn instrument, suitable for rare occasions when principles of great and lasting importance are being enunciated. . .. Accordingly, it has been observed that the Universal Declaration of Human Rights "no longer fits into the dichotomy of `binding treaty' against `non-binding' pronouncement but is rather an authoritative statement of the international community.". . . Thus, a Declaration creates an expectation of adherence, and "insofar as the expectation is gradually justified by State practice, a declaration may by custom become recognized as laying down rules binding upon the States.". . . Indeed, several commentators have concluded that the Universal Declaration has become, in toto, a part of binding, customary international law.

Consider also the Declaration of Legal Principles Governing the Activities of States in the Exploration and Use of Outer Space, which the UN General Assembly adopted unanimously in 1973. In the subcommittee that discussed the resolution, the US representative stated:

Some delegations had argued that only an international agreement signed by Governments would be legally binding. International agreements were not, however, the only sources of law [in the Statute of the ICJ]. . . When a General Assembly resolution proclaimed principles of international law . . . and was adopted unanimously, it represented the law as generally accepted in the international community.

In contrast, the French representative stated:

While supporting the principles set forth in the draft declaration, . . . the latter could not be looked on as more than a statement of intention; legal obligations stricto sensu could only flow from international agreements, and an international law of outer space had yet to be created.

A number of theories are possible of the legal effect of General Assembly resolutions:

1. No Effect – Some positivists take the very strict view that resolutions are only recommendations and have no legal effect. In their view, resolutions should not be given much weight, since states don't take UN votes very seriously and often delegates lack instructions on how to vote. Resolutions are more an exercise of rhetoric than lawmaking.
   
   
2. Interpretations of the UN Charter – Some resolutions may be interpretations of the UN Charter by the member states of the UN. Article 31(3)(A) of the Vienna Convention on the Law of Treaties provides that, in interpreting a treaty, account should be taken of "any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions." At the 1945 San Francisco Conference which drafted the UN Charter, a committee report noted that the General Assembly would be competent to interpret the Charter. Such competence is "inherent in the functioning of any body which operates under an instrument defining its functions and powers." In the committee's view, interpretations that were "generally accepted" would be binding on member states.
   
   
3. Expressions of opinio juris – UNGA resolutions that purport to state legal rules could be viewed as expressions of opinio juris. In this regard, Oscar Schachter of Columbia Law School has commented:

   When all the States in the United Nations declare that a State norm is legally binding, it is difficult to dismiss that determination as ultra vires – or reduce it to a recommendation – because it was made by the General Assembly. The fact is that the declaration purports to express the opinio juris communis, not a recommendation. . . .

   The . . . question is whether the assertion in good faith by all States that a norm is legally binding is sufficient to validate the norm as law even though State practice is negligible or inconclusive. International lawyers differ on the answer. Some maintain that at least in some matters the opinio juris communis, articulated in a declaration, is sufficient to qualify the norm as a customary law. Others consider that the opinio juris must relate to State practice as an essential element of a conclusion that the norm constitutes law. The point is important for our problem. If opinio juris – as expressed in resolutions – is itself sufficient, new law may be created by agreement of States manifested in their approval of a law-declaring resolution. This has been called "instant custom," an unfortunate phrase which sounds self- contradictory and may be misleading. The fact remains that several resolutions have asserted rules or principles of general international law when practice was negligible or inconclusive and these resolutions have been regarded as sufficient evidence of the legal character of the norm asserted.FN2

4. State practice – Votes on resolutions could be considered a type of state practice. Sloan, for example, has argued:

   Unless one takes the extreme, and untenable position that only physical acts constitute practice, General Assembly resolutions which are collective pronouncements of States must be considered a part of State Practice. Dr. Akehurst defines State practice as "any act or statement by a State from which views about customary law can be inferred; it includes physical acts, claims, declarations in abstracto (such as General Assembly resolutions), national laws, national judgments and omissions."

   State practice may be evidenced either in declarations of general principle or in resolutions dealing with particular cases. The latter, when they involve the application of legal rules and principles, are even more clearly precedents. A condemnatory resolution adopted by 150 States might be compared to 150 diplomatic protests, although the cumulative impact would be different depending on the circumstances.

   With respect to declarations of general principle, it may be objected that practice, to be constitutive of custom, must relate to a specific claim or dispute. It is doubtful if State practice was ever so narrowly confined. . . .FN3

5. Material sources of international law – Resolutions may be "material sources" of international law – that is, they may help to create new norms of international law, either by influencing state practice and therefore contributing to the emergence of customary norms,FN4 or by leading to the adoption of a treaty. The latter process is perhaps the more important of the two. Often, states prefer not to negotiate treaties immediately, but instead seek to develop norms in a two-step process, starting with a declaration. Thus, for example, the Universal Declaration of Human Rights preceded the two covenants on human rights; similarly, the Declaration on the Elimination of Torture preceded the Torture Convention. Because resolutions are not legally binding, norms can be formulated less precisely and with fewer qualifications. States are able to proceed incrementally, adopting binding norms only after they have been initially "vetted" in a resolution.

6. Evidence of customary international law – Resolutions may be evidence of customary international law. As Schachter points out,

   [viewing resolutions as evidentiary] would be compatible with the basic principle that such resolutions are not binding in the sense that treaties or judicial judgments are legally binding on the parties. However, it recognizes that interpretations and declarations of law by the [General] Assembly are official expressions of the governments concerned and consequently are relevant and entitled to be given weight in determinations of the law in question. By characterizing them as "evidentiary" we invite an assessment of the pertinent data. We would assess the degree and character of support received in the United Nations and the relation if any of the asserted rule to an underlying Charter or customary law principle. Moreover, relevant State practice and opinio juris manifested outside of the United Nations would be considered.FN5

7. A new type of source of international law – States have generally not considered resolutions to be a new source of international law, in addition to those listed in Article 38 of the ICJ Statute. But some scholars have taken a more expansive "solidarist" view that resolutions express the will of the world community. Professor Louis Sohn, for example, has written:

   . . . [T]he United Nations has made possible the creation of "instant international law." Many traditional international lawyers have not reconciled themselves yet to this new approach and some legal advisors of Foreign Offices still like to raise doubts about the true nature and effect of such Declarations. But it is quite obvious that most States have found this new procedure quite useful and are willing to apply it whenever they are confronted with important issues of interpreting the basic rules of the Charter of the United Nations or of developing new law for new areas made accessible by modern science and technology. In a rapidly changing world the United Nations has found a method, albeit restricted by the rule of unanimity or quasi-unanimity, to adapt the principles of the Charter and the rules of customary international law to the changing times with an efficiency which even its most optimistic founders did not anticipate.FN6

Evolving Norms of Expropriation

(a)     Background on State Responsibility for Expropriation of Foreign-Owned Property

"The treatment of aliens (or, more accurately, the treatment of the nationals of other states) is as controversial a subject as any in international law. The controversy stems from a difference of approach between those states that consider that there is an `international minimum standard' of treatment which must be accorded to aliens by all states irrespective of how they treat their own nationals, and those that argue that aliens may only insist upon `national treatment,' i.e. treatment equal to that given by the state concerned to its own nationals. Generally speaking, developed states follow the `international minimum standard' approach while the developing states favor `national treatment.' At the turn of the century, the latter states consisted mainly of Latin American states; more recently they have been joined by most of the post-colonial Afro-Asian states. The USSR, at least before recent events, rejected the `international minimum standard' also. The support for both points of view makes it difficult to determine many rules of international law in this area."FN7

Expropriation is the compulsory taking of private property by a state. It is "a phenomenon that has become especially important in international law with the spread of socialism and the emergence of the post-colonial state. If the typical nineteenth century case was the occasional taking of the property of a single foreigner in the context of a particular project or dispute, today it is the general expropriation by law of enterprises with a view to their public management in the national interest. It is normally in this last context that the twentieth century term `nationalization' is used."FN8

While it is generally agreed that expropriation is permissible under international law, developed states have argued that it must meet several requirements, in particular: (1) expropriation must be for a public purpose; (2) it must not discriminate between nationals and non-nationals; and (3) adequate compensation must be paid. With respect to the latter, the United States has consistently asserted that, under international law, compensation for expropriation must be "adequate, prompt and effective." This has become known as the "Hull formula," in recognition of its assertion by Secretary of State Hull in his exchanges with the Mexican Minister of Foreign Relations in 1938 (excerpted below).

Latin America countries, in contrast, have argued for what has became known as the Calvo Doctrine, after the 19th-century Argentine writer and diplomat who elaborated it. The Calvo Doctrine holds that: (a) international law requires the host State to accord only national treatment to aliens; (b) national law governs the rights and privileges of aliens; (c) national courts have exclusive jurisdiction over disputes involving aliens, who may therefore not seek redress by recourse to diplomatic protection by their country of nationality; and (d) international adjudication is inadmissible for the settlement of disputes with aliens.

The differing points of view between developed and developing states can be seen in a dispute in the 1930s between the US and Mexico arising from a Mexican expropriation of US-owned farm land. The US argued that Mexico was obligated under international law to provide compensation, while Mexico argued that its duty to pay compensation was determined by Mexican not international law.

Secretary of State Hull to the Mexican Ambassador, July 21, 1938: During recent years the Government of the United States has upon repeated occasions made representations to the Government of Mexico with regard to the continuing expropriation by Your Excellency's Government of agrarian properties owned by American citizens, without adequate, effective and prompt compensation being made therefor. . . . We cannot question the right of a foreign government to treat its own nationals in this fashion if it so desires. This is a matter of domestic concern. But we cannot admit that a foreign government may take the property of American nationals in disregard of the rule of compensation under international law. . . .

Mexican Minister for Foreign Affairs Hay to the American Ambassador, August 3, 1938: . . . My government maintains, on the contrary, that there is in international law no rule universally accepted in theory nor carried out in practice which makes obligatory the payment of immediate compensation or even deferred compensation, for expropriations of a general and impersonal character like those which Mexico has carried out for the purpose of redistribution of the land. . . . Nevertheless, Mexico admits, in obedience to her own laws, that she is indeed under an obligation to indemnify in an adequate manner; but . . . that the time and manner of such payment must be determined by her own law. . . . The republics of our continent have let their voice be heard since the first Pan American Conference, vigorously maintaining the principle of equality between nationals and foreigners, considering that the foreigner who voluntarily moves to a country which is not his own, in search of a personal benefit, accepts in advance, together with the advantages which he is going to enjoy, the risks to which he may find himself exposed. It would be unjust that he should aspire to any privileged position.

Secretary Hull to the Mexican Ambassador, August 22, 1938: . . . The Government of the United States merely adverts to a self-evident fact when it notes that the applicable and recognized authorities on international law support its declaration that, under every rule of law and equity, no government is entitled to expropriate private property, for whatever purpose, without provision for prompt, adequate and effective payment therefor. In addition, clauses appearing in the constitutions of almost all nations today, and in particular in the constitutions of the American republics, embody the principle of just compensation. These, in themselves, are declaratory of the like principle in the law of nations.FN9

(b)    Developments Since World War II

In the period following World War II, the traditional doctrine of state responsibility for expropriation of foreign property came under increasing attack from newly-independent developing states. As one third world commentator noted:

The law of responsibility . . . is not founded on any universal principles of law or morality. Its sole foundation is custom, which is binding only among states where it either grew up or came to be adopted. It is thus hardly possible to maintain that it is still part of universal international law. Whatever the basis of obligation of international law in the past, when the international community was restricted to only a few states, . . . the birth of a new world community has brought about a radical change which makes the traditional basis of obligation outmoded.

(c)    UN General Assembly Resolutions on Expropriation

In the 1960s, the dispute about whether states are obligated to pay compensation for expropriation of foreign-owned property became the subject of numerous debates in the UN General Assembly. In 1962, the UN General Assembly, by a vote of 87 to 2 with 12 abstentions, adopted Resolution 1803 on Permanent Sovereignty over Natural Resources, which provided that:

4. Nationalization, expropriation or requisitioning shall be based on grounds or reasons of public utility, security, or the national interest which are recognized as overriding purely individual or private interests, both domestic and foreign. In such cases the owner shall be paid appropriate compensation, in accordance with the rules in force in the State taking such measures in the exercise of its sovereignty and in accordance with international law. In any case where the question of compensation gives rise to a controversy, the national jurisdiction of the State taking such measures shall be exhausted. However, upon agreement by sovereign States and other parties concerned, settlement of the dispute should be made through arbitration or international adjudication.

the application of the principle of nationalization as carried out by States, as an expression of their sovereignty in order to safeguard their natural resources, implies that each State is entitled to determine the amount of possible compensation and the mode of payment, and that any disputes which might arise should be settled in accordance with the national legislation of each State carrying out such measures.

Article 2, para. 2

Each State has the right: . . . (c) to nationalize, expropriate or transfer ownership of foreign property, in which case appropriate compensation should be paid by the State adopting such measures, taking into accounts its relevant laws and regulations and all circumstances that the State considers pertinent. In any case where the question of compensation gives rise to a controversy, it shall be settled under the domestic law of the nationalizing State and by its tribunals, unless it is freely and mutually agreed by all States concerned that other peaceful means be sought on the basis of the sovereign equality of States and in accordance with the principle of free choice of means.

TEXACO OVERSEAS PETROLEUM ET AL. V.
LIBYAN ARAB REPUBLIC

International Arbitral Award, Jan. 19, 1977

[In 1973 and 1974, Libya nationalized the rights, interests and property of several international oil companies in Libya. The companies claimed that the Libyan action violated deeds of concession granted to them by the Libyan Government. The companies, invoking the arbitration clause in the deeds of concession, requested the President of the International Court of Justice to appoint an arbitrator to hear the dispute. Libya objected, arguing that the nationalizations were acts of sovereignty, not subject to arbitration. Rejecting this contention, the President selected an arbitrator, Professor Rene-Jean Dupuy of France. Libya did not take part in the subsequent proceedings.

[On January 19, 1977, the Arbitrator issued his decision, holding that the deeds of concession were binding on Libya and that Libya had breached its obligations under the deeds. In reaching this decision, the Arbitrator considered Libya's argument that, under the U.N. resolutions on permanent sovereignty over natural resources: (1) Libya had the sovereign right to nationalize its natural resources, and (2) disputes relating to nationalizations were governed by the domestic law of the State concerned. In the following passage, the Arbitrator discussed the legal force of U.N. resolutions generally and the resolutions on sovereign rights over natural resources in particular:]

80. This Tribunal has stated that it intends to rule on the basis of positive law, but now it is necessary to determine precisely the content of positive law and to ascertain the place which resolutions by the General Assembly of the United Nations could occupy therein.

81. . . . This Tribunal wishes first to recall the relevant passages for this case of Resolution 1803 (XVII) entitled "Permanent Sovereignty over Natural Resources," as adopted by the General Assembly on 14 December 1962:

* * * *

"4. In cases [of nationalization or expropriation] the owner shall be paid appropriate compensation, in accordance with the rules in force in the State taking such measures in the exercise of its sovereignty and in accordance with international law. . . ."

Although not quoted in the Libyan Memorandum, . . . Resolution 3281 (XXIX), proclaimed under the title "Charter of Economic Rights and Duties of States," and adopted by the General Assembly on 12 December 1974, should also be mentioned . . . .

Substantial differences . . . exist between Resolution 1803 (XVII) and the subsequent Resolutions as regards the role of international law in the exercise of permanent sovereignty over natural resources. . . . [T]his Tribunal is obligated to consider the legal validity of the above-mentioned Resolutions and the possible existence of a custom resulting therefrom.

83. The general question of the legal validity of the Resolutions of the General Assembly has been widely discussed. . . . This Tribunal will recall first that, under Article 10 of the U.N. Charter, the General Assembly issues only "recommendations," which have long appeared to be texts having no binding force and carrying no obligations for the Member States . . . .

Refusal to recognize any legal validity of United Nations Resolutions must, however, be qualified according to the various texts enacted by the United Nations. These are very different and have varying legal value, but it is impossible to deny that the United Nations' activities have had a significant influence on the content of contemporary international law. In appraising the legal validity of the above- mentioned Resolutions, this Tribunal will take account of the criteria usually taken into consideration, i.e., [1] the examination of the voting conditions and [2] the analysis of the provisions concerned.

(1)    Examination of the Voting Conditions

84. With respect to the first point, Resolution 1803 of 14 December 1962 was passed by the General Assembly by 87 votes to 2, with 12 abstentions. It is particularly important to note that the majority voted for this text, including many States of the Third World, but also several Western developed countries with market economies, including the most important one, the United States. The principles stated in this Resolution were therefore assented to by a great many States representing not only all geographical areas but also all economic systems.

From this point of view, this Tribunal notes that the affirmative vote of several developed countries with a market economy was made possible in particular by the inclusion in the Resolution of two references to international law . . . . The reference to international law, in particular in the field of nationalization, was therefore an essential factor in the support given by several Western countries to Resolution 1803.

85. On the contrary, it appears to this Tribunal that the conditions under which Resolutions 3171 (XXVII), 3201 (S-VI) and 3281 (XXIX) (Charter of the Rights and Duties of States) were notably different:

• Resolution 3171 was adopted by a recorded vote of 108 votes to 1, with 16 abstentions, but this Tribunal notes that a separate vote was requested with the respect to the paragraph [concerning nationalization]. . . . As a consequence of this roll-call, this paragraph was adopted by 86 votes to 11 (Federal Republic of Germany, Belgium, Spain, United States, France, Israel, Italy, Japan, The Netherlands, Portugal, United Kingdom) with 28 abstentions . . . .

  Thus, the specific paragraph concerning nationalizations, disregarding the role of international law, not only was not consented to by the most important Western countries, but caused a number of the developing countries to abstain.
  
  

• Resolution 3201 was adopted without a vote by the General Assembly, but the statements made by 38 delegates showed clearly and explicitly the position of each main group of countries. The Tribunal should therefore note that the most important Western countries were opposed to abandoning the compromise solution contained in Resolution 1803.
  
  
• The conditions under which Resolution 3281, proclaiming the Charter of Economic Rights and Duties of States, was adopted also show unambiguously that there was no general consensus . . . with respect to the most important provisions and in particular those concerning nationalization. Having been the subject of a roll-call vote, the Charter was adopted by 118 votes to 6, with 10 abstentions. The analysis of votes on specific sections of the Charter is most significant insofar as the present case is concerned. From this point of view, paragraph 2(c) of Article 2 of the Charter, which limits consideration of the characteristics of compensation to the State and does not refer to international law, was voted by 104 to 16, with 6 abstentions, all of the industrialized countries with market economies having abstained or having voted against it.
  
  

A first general indication of the intent of the drafters of the Charter of Economic Rights and Duties of States is afforded by the discussions which took place within the Working Group concerning the mandatory force of the future text. As early as the first session of the Working Group, differences of opinion as to the nature of the future Charter gave rise to a very clear division between developing and developed countries. [Developing countries] held the view that the draft Charter should be a legal instrument of a binding nature and not merely a declaration of intent. In contrast, [developed countries] expressed doubt that it was advisable, possible or even realistic to make the rights and duties set forth in a draft Charter binding upon States. . . .

The form of resolution adopted did not provide for the binding application of the text to those to which it applied, but the problem of the legal validity to be attached to the Charter of Economic Rights and Duties of States is not thereby solved. In fact, while it is now possible to recognize that resolutions of the United Nations have a certain value, this legal value differs considerably, depending on the type of resolution and the conditions attached to its adoption and its provisions. Even under the assumption that they are resolutions of a declaratory nature, which is the case of the Charter of the Rights and Duties of States, the legal value is variable. Ambassador Castañeda, who was Chairman of the Working Group entrusted with the task of preparing this Charter, admitted that "it is extremely difficult to determine with certainty the legal force of declaratory resolutions," that it is "impossible to lay down a general rule in this respect," and that "the legal value of declaratory resolutions therefore includes an immense gamut of nuances.". . . .

[Thus] . . . with respect to the first point [i.e., the circumstances under which the resolutions were adopted], the absence of any binding force of the resolutions of the General Assembly of the United Nations implies that such resolutions must be accepted by the members of the United Nations in order to be legally binding. In this respect, the Tribunal notes that only Resolution 1803 . . . was supported by a majority of Member States representing all of the various groups. By contrast, the other Resolutions mentioned above . . .. were supported by a majority of States but not by any of the developed countries with market economies which carry on the largest part of international trade.

(2)    Analysis of the Provisions Concerned

87. With respect to the second point, to wit the appraisal of the legal value [of the resolutions] on the basis of the principles stated, it appears essential to this Tribunal to distinguish between [a] those provisions stating the existence of a right on which the generality of States has expressed agreement and [b] those provisions introducing new principles which were rejected by certain representative groups of States [which implies that they consider them as contra legem], and have nothing more than a de lege ferenda value in the eyes of the States which have adopted them. . . .. With respect to the former provisions, which proclaim rules recognized by the community of nations, they do not create a custom but confirm one by formulating it and specifying its scope, thereby making it possible to determine whether or not one is confronted with a legal rule. As has been noted by Ambassador Castañeda, "[such resolutions] do not create the law; they have a declaratory nature of noting what does exist."

On the basis of the circumstances of adoption mentioned above and by expressing an opinio juris communis, Resolution 1803 seems to this Tribunal to reflect the state of customary law existing in this field. Indeed, on the occasion of the vote on a resolution finding the existence of a customary rule, the States concerned clearly express their views. The consensus by a majority of States belonging to the various representative groups indicates without the slightest doubt universal recognition of the rules therein incorporated. . . .

While Resolution 1803 appears to a large extent as the expression of a real general will, this is not at all the case with respect to the other Resolutions mentioned above. . . . In particular, as regards the Charter of Economic Rights and Duties of States, several factors contribute to denying legal value to those provisions of the document that are of interest in the present case.

• In the first place, Article 2 of this Charter must be analyzed as a political rather than as a legal declaration concerned with the ideological strategy of development and, as such, supported only by non-industrialized States.
  
  
• In the second place, this Tribunal notes that in the draft submitted by the Group of 77 to the Second Committee, the General Assembly was invited to adopt the Charter "as a first measure of codification and progressive development" within the field of the international law of development. However, because of the opposition of several States, this description was deleted from the text submitted to the vote of the Assembly. . . ..

89. Such an attitude is further reinforced by an examination of the general practice of relations between States with respect to investments. This practice is in conformity, not with the provisions of Article 2(c), . . . conferring exclusive jurisdiction on domestic legislation and courts, but with the exception stated at the end of this paragraph. Thus a great many investment agreements entered into between industrialized States or their nationals, on the one hand, and developing countries, on the other, state, in an objective way, the standards of compensation and further provide, in case of dispute regarding the level of compensation, the possibility of resorting to an international tribunal. In this respect, it is particularly significant in the eyes of this Tribunal that no fewer than 65 States, as of 31 October 1974, had ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, dated March 18, 1965.

90. The argument by the Libyan Government . . . is also negated by a complete analysis of the whole text of the Charter of Economic Rights and Duties of States.

From this point of view, even though Article 2 of the Charter does not explicitly refer to international law, this Tribunal concludes that the provisions referred to in this Article do not escape all norms of international law. Article 33, paragraph 2, of this Resolution states as follows: "2. In their interpretation and application, the provisions of the present Charter are interrelated and each provision should be construed in the context of the other provisions." Now, among the fundamental elements of international economic relations quoted in the Charter, principle (j) is headed as follows: "Fulfillment in good faith of international obligations."

Analyzing the scope of these various provisions, Ambassador Castañeda . . . formally stated that the principle of performance in good faith of international obligations laid down in Chapter I(j) of the Charter applies to all matters governed by it, including, in particular, matters referred to in Article 2. . . .

91. Therefore, one should note that the principle of good faith, which had already been mentioned in Resolution 1803, has an importance place even in the [Charter]. One should conclude that a sovereign State which nationalizes cannot disregard [its] commitments . . .: to decide otherwise would in fact recognize that all contractual commitments undertaken by a State have been undertaken under a purely permissive condition on its part and are therefore lacking of any legal force and any binding effect. From the point of view of its advisability, such a solution would gravely harm the credibility of States since it would mean that contracts signed by them did not bind them; it would introduce in such contracts such a fundamental imbalance because in these contracts only one party – the party contracting with the State – would be bound. In law, such an outcome would go directly against the most elementary principle of good faith and for this reason it cannot be accepted.

Questions

1. As of the late 1960s, did customary international law limit the right of states to expropriate foreign-owned property? If so, what were the applicable norms of international law? If not, was expropriation governed exclusively by national law?
   
   
2. Did the resolutions of the 1970s purporting to establish the New International Economic Order have any effect on customary international law? What are the arguments in favor of their having an effect? What are the arguments against? What factors did the arbitrator in the Texaco-Libya arbitration focus on?
   
   
3. If the NIEO resolutions did not create a new norm of customary international law, what were the norms of customary international law relating to expropriation as of 1975?
   
   
4. Since 1945, most investments disputes have been settled by lump sum settlements, under which one state agrees to pay another a lump sum in full satisfaction of outstanding claims. The recipient state then distributes the lump sum among its private claimants. These lump sum settlements have consistently been less than the "adequate, prompt and effective" compensation required by the Hull formula. On the other hand, most bilateral investment treaties since 1945 have incorporated the Hull formula. The value of both kinds of state practice was considered by the Iran-US Claims Tribunal in the Sedco Case:

   Assessment of the present state of customary law on this subject on the basis of the conduct of States in actual practice is difficult, inter alia, because of the questionable evidentiary value for customary law of much of the practice available. This is particularly true in regard to "lump sum" agreements between States (a practice often claimed to support the position of less than full compensation), as well as to compensation settlements negotiated between States and foreign companies. Both types of agreements can be so greatly inspired by non-judicial considerations – e.g., resumption of diplomatic or trading relations – that it is extremely difficult to draw from them conclusions as to opinio juris, i.e. the determination that the content of such statements was thought by the States involved to be required by international law. . . . The bilateral investment treaty practice of States, which much more often than not reflects the traditional international law standard of compensation for expropriation, more nearly constitutes an accurate measure of the High Contracting Parties' views as to customary international law, but also carries with it some of the same evidentiary limitations as lump sum agreements. Both kinds of agreement involve in some degree bargaining in a context to which "opinio juris seems a stranger."FN11

   Do you agree with this assessment?
   
   
5. A review in 1985 of arbitral awards showed that there has been "little (if any) retreat in the level of protection to foreign investment afforded by tribunals since the 1965 Restatement."FN12 More recently, a 1991 review of the decisions of the Iran-US Claims Tribunal (which was established as part of the settlement of the Iranian hostages crisis) and the International Centre for the Settlement of Investment Disputes (ICSID) showed that, with one exception, every arbitral tribunal that had considered the issue from 1971 to 1991 had "affirmed that customary international law requires a state expropriating the property of a foreign national to pay the full value of that property measured, where possible, by the market price. . . . Although no tribunal has expressly invoked the Hull formula, the result has been the same. . . ."FN13 How do you explain the conclusion of arbitral tribunals that the Hull formula is part of customary international law? Is this conclusion supported by state practice? What is the role of arbitral decisions as a source of customary international law?
   
   
6. In the Nicaragua case, the International Court of Justice relied almost exclusively on General Assembly resolutions in its discussion of the use of force and intervention – in particular, the Declaration on the Principles of Friendly Relations (Res. 2625) and the Resolution on the Definition of Aggression (Res. 3314). The Court stated:

   The effect of consent to the text of such resolutions cannot be understood as merely that of a "reiteration or elucidation" of the treaty commitment undertaken in the Charter. On the contrary, it may be understood as an acceptance of the validity of the rule or set of rules declared by the resolution by themselves.FN14

   This has led one commentator to respond that the Court's approach will enhance

   the importance of express negative votes in international organizations . . . if the state is not fully satisfied that every provision of a proposed resolution, separately and literally applied, is acceptable to it. In effect, the decision changes General Assembly resolutions from a step in the evolution of international law to the end result of that process. . . .

   . . . [T]his approach creates a substantial shift in responsibility for decisions. International treaties, creating new international law, have traditionally been negotiated in international conferences, signed, subjected to careful review both in the executive branch and in the legislature, and finally submitted for ratification. An equal obligation can apparently be created, under the Court's new theory, when a representative to an international organization permits a resolution to pass by consensus, failing to record an express negative vote. This is an act of a much lower official, preceded by much less consideration of the obligations incurred, confined almost exclusively to the executive branch and made without opportunity for public review or comment. Whether states are willing to accept this expanded view of the binding effect of resolutions remains to be seen.FN15

Footnotes

FN1    In contrast, the Security Council may make binding "decisions" which all UN members "agree to accept and carry out." (UN Charter art. 25)

FN2    Oscar Schachter, International Law in Theory and Practice, 179 Rec. des Cours 114-21 (1982-V).

FN3    Sloan, General Assembly Resolutions Revisited, 58 Brit. Y.B. Int'l L. 39 (1987).

FN4    As one writer observes, "it is clear that [UN] resolutions do shape international practice, and practice ... shapes law." (Bothe 79)

FN5    Oscar Schachter, International Law in Theory and Practice, 179 Rec. des Cours 114-21 (1982-V).

FN6    Bos, ed., The Present State of International Law and Other Essays 39, 52 (1973).

FN7    D.J. Harris, Cases and Materials on International Law 493-94 (4th ed. 1991).

FN8    Id. at 524.

FN9    This dispute, along with other similar disputes, was resolved by an agreement, under which Mexico agreed to pay $40 million in annual investments, in settlement of claims totaling more than $350 million.

FN10    Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 428-29 (1964).

FN11    10 Iran-US Claims Tribunal 180, 184-85 (1986).

FN12    Gann, Compensation Standard for Appropriate Compensation, 23 Colo. J. Transnat'l L. 615, 616 (1985).

FN13    Patrick Norton, A Law of the Future or a Law of the Past? Modern Tribunals and the International Law of Expropriation, 85 Am. J. Int'l L. 474, 488 (1991).

FN14    186 ICJ 100, para. 188.

FN15    Fred L. Morrison, Legal Issues in the Nicaragua Opinion, 81 Am. J. Int'l L. 160, 162 (1987).