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In this article, the terms "agreement" and "contract" are used interchangeably. 2 J.N. Hyde, Permanent Sovereignty over Natural Wealth and Resources, 50 A.J.LL. 854, 1956, at p. 862. See the Legal Opinion of M. Flory (to the Government of Kuwait) in the Kuwait v. Alllinoil arbitration, in the Memorial of the Government of Kuwait (the pleadings are available in the Squire Law Library, University of Cambridge). See also G. Delaume, IsciD Arbitration in Practire, International Tax and Business Lawyer, Vol. 2, No. 1, 1984, p. 58, at p. 65; A. Pellet, Le droit international du developpement, 2nd edition, Presses Universitaires de France, 1978; H. Thierry, J. Combacau, S. Sur and C. Vallee, Droit international public, Montchrestien, Paris, 1979, Chapter XII; K.S. Carlston, International Role of Concession Agreements, 52 Northwestern U.L. Rev. (1957-1958), pp. 629-634. The term "concession" is derived from the Latin "concessio", indicating in Roman law specific grants by public authorities to individuals including that of immunity from employment on public works. The Roman "concessio" may be claimed to be not only etymologically but also conceptually the ancestor of the modem concession. For an interesting discussion, see Peter Fischer, Historic Aspects of International Concession Agreeinetits, in C.H. Alexandrowicz (ed.), Studies in the History of the Law of Nations, Grotian Society Papers, 1972, pp. 222-261.
5 Aramrn1'.SaudiAr�il)ia, 27 I.L.R. 117, at p. 157. 6 D.P. O'Connell, Economic Concessions in the Lath, of State Succession, 27 EVIL (1950), p. 93, at p. 93. H. Moslcr, Wirtsrhaftskorraessionen bei Anderungen der Staatshoheit, eine !1ölkerrechtliche Stlldie sum Holreitsmechsel urul z1Ir Ho[¡eitsa1lsiilHlllg auf fremden Staatsgebiet, Kohlharnrner, 194ft, at p. 79. 1 R. Geiger, 77m Unilateral Change of Economic Development Agreements, 23 LC.L.Q. 73, 1974, at p. 74. It has been criticized by Detter De Lupis that the use of the term "economic development agreement" goes too far the other way: developing nations may then feel that the exploitation, for example, of natural resources is only in their interest and the foreign investor is actually carrying on his enterprise as economic aid, a viewpoint which is surely unrealistic; see Ingrid Detter De Lupis, Finance and Protection of 1111'est'IICllts ill Developing Countries, Ashgate, Aldershot, Hampshire, 1987, pp. 42-43. However, EDAS provide channels for the transfer of technology (see generally F. Cairncross, Technoloqy and Economic Development, The British Gas Technology White Papers No.5, British Gas, 1992), increase employment and professional training of indigenous workers, provide revenue to the economy of the host country and stimulate other economic activities and domestic entrepreneurship; they may therefore contribute to a great extent to the economic growth of the host country. P. Fischer, in Rudolf L. Bernhardt and Rudolf L. Bindeschedler (eds.), Encyclopedia of Public International hnv, Elsevier, Amsterdam, 1985, Vol. 8, at p. 100. See also Th.T.E. Huang, Some International Aspects of the Sticz Canal Question, 51 A.J.I.L. (1952), p. 289. r� T. Daintith, The Leqal C[¡araaeroj'PetrolculII: A Comparative Study, Centre for Energy, Petroleum & Mineral Law & Policy, University of Dundee, Scotland, 1981, pp. 185-199; Giuditta Cordero Moss, Contract or Liceiice? R��1Ilatioll of Petroleum Investment in Russia and Foreign Legal Advice, 16 Jerntt 2, 1998, p. 186, at pp. 187-191. 11 see generally Zhiguo Gao, International 1'etrolennr Contracts: Current Tre1lds and Neo Directions, East-West Center, Honolulu, Hawaii, 1994, Chapter 3, and also at pp. 201-202. 12 Ibid., pp. 29 et seq. U Daniele Barberis, Neqotiating Minirrg Agreements: Past, Present and I'1It1lfC Treiids, Kluwer Law International, The Hague, 1998, at p. 42.
11 See Privately Financed Infrastructure Project: Draft Chapters n/ a 4qislatii,e Guide on Privately Finances Infrastrurture Project, Report of the Secretary General, United Nations Commission on International Trade Law, Thirty-third session, New York, 12 June-7 July 2000, United Nations General Assembly, UN Doc. A/CN.9/471/Add.l, paras. 10 and 14. '' The present article uses the terms "concession", "economic development agreement", "investment agreement" and "concession contract" or, more loosely, "State contract" interchangeably because it is the objective content that is important, not the form of the particular legal instrument or the terminology employed to describe it, and, especially, all these terms belong to the same tamily of economic development agreements as far as the object is concerned. "' See generally for numerous agreements (types and forms) P. Fischer, (ed.), A Collection of International Concessions and Related Instruments, Contemporary Series, Vols. 1-7, Oceana Publications Inc., London, (1975-1978); Barren''.'' Basic Oil Lrrup and Concession Contracts (different areas), Petroleum Legislation, New York (hereinafter Barrow's Collection ); M. Al Otaiba, Tlre Petroleum Co"œssioll Agreements of the ('71iitcel .4m/' �N)ft'f�('.<, Routledge Kegan & faul, London, 1982; OPEC Collection: Selcrted Documents of thc International Petroleum Industry, Vicnna, 1967-1968 and 1972-1978, (hereinafter Ovec Collection ). 17 See Fischer; Barrow's Collection: A] Otaiba; and Ovec Collection, all ibid. For the related cases, see, for example: Oil Concessions: Saudi Arabia v. Aranico, 27 I.L.R., pp. 117 et seq.; Snpplrire International Ltti. v. National Iranian Oil Co. (Sapyhire), Award of 15 March 1963, 35 LL.R. 136 (1963); Te.vaco v. Libya (react)), Award of 19 January 1977, 17 LL.M. 1 (1978), 53 I.L.R. 389 (1979); Britislr Petroleum v. Libya, Award of 10 October 1973, 53 I.L.R. 297 (1979); Liamco r. Libya (Lialllco), Award of 12 April 1977, 20 I.L.M. 1 (1981); Kuwait v. Arninoil, 21 I.L.M. 976; Orridrntnl nf Pakistan v. 77re Islamic Republic of Pakistan, Icsil) Case No. Attts/87/4; ,4(;/J' SpA v. Government of the People's Republic of the Congo, 1(:SID Case No. Al� B/77/ Award of 30 November 1979, 21 I.L.M. 726 (1982), 67 I.L.R. 318 (1984); Tesoro Petroleum Corporation v. Government of Trinidad and Ics1i) CaseNo. Cot�c/83/1, 1 Icsil) Rev.-F.I.L.J. 340 (1986). Bauxite Mining Concessions: Alron Minerals of Jamaica, Inc. v. Government of Jnnrnica, 1('.Sil) Case No. ARB/74/2. 4 Y.B. Comll1. Am. 206 (1979); Kauer Bauxite Company v. Government of Jamaica, ICSID Case No. ARH/74/3; ReYl/oldsJal/1aica Mines Ltd. alld Reynnlds Metals Company v. Government of Jamaica, ICSID Case No. ARn/74/4. Gold mining concessions: Ballro American Resources, Inc. and Soricte Aurifre du Kivu et du Manienra S.A.R.L v. Denrocratir Republic of the C1IIgo, Icsin Case No. AitB/98/7, Award of 1 September 2000; Sociètè d'Exploitatioll des Millcs d'Or de Sadiola SA, v. Republic of Mali, ICSIF)Case No. Alu!/01 IS, Award of25 February 2003. Mining Enterprises: Autoille Cloetz and others v. Republic of Burundi, Icsid Case No. Attts/95/3, Award of 10 February 1999; Snriete d'InvestiAation de Rerherche et d'Exploration Miniere v. Burkina Faso, lesll) Case No. ARIJ/97/ I, Award of 19 January 200(1. '" For ewmple, Agreement between Consortium Croul'emellt L.E.S.I.-DII'E."TA alld A(�eria, ICSID Case No. AikB/03/8, Award of 10 January 2005 (concerning construction of a dam); Agreement between Autnpista Concesionada do Venezuela, C.�l. and Bolivariatr Republic of Venezuela (Autopista), 1(:sll) Case No. AtiB/00/5, Award of 23 September 2003 (concerning the construction of a highway system); AnF Group Inc. v. United States of America, 1(:Sii) Case No. ARU(AF)/00/1, Award of 9 January 2003 (concerning a highway construction project). '`' For example, Agreement between the Delagna Bay Railway Co. and Portugal, see the Arbitral Award in Moore, Digest of Int. Law, Vol. 6, p. 647. Compare the following cases: Barcs-Pakrac Railway (1934), 3 U.N.R.I.A.A. 15G9; Zeltti,eg-Wo!fsbe�q and Unlerdrauhurg-Woellarr Railways (1934 and 1938), 3 U.N.R.LA.A. 1795; Buzau-Nehoiasi Railway (Germany v. Rumania) (1939), 3 U.N.R.I.A.A. 1827; (all involving transportation enterprises). 211 For example, Mihaly International Corlmratiorr v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. Arto/00/2, Award of 15 March 2002 (conceming a power project); Metaldad Coryoration v. United Mexican States, 1(:sij) Case No. A0.13(AF)97/1, Award of 30 August 2000 (concerning a waste disposal enterprise); Azinian and others v. United Mexican States, ICSID Case No. ARB(AF)97/2, Award of 1 November 1999 (concerning a waste
disposal enterprise); Atc Capitol Partners, Inc. and CJsc Tema Real Estate Company v. Republic 4 Kazakhstan, Icsm Case No. AA13/01/6 (concerning construction of a residential housing complex); Agreements Between the Government of Gabon and Société Serete S.A., ICSID Case No. ARlJ/76/1 (concerning the construction of a matemity ward); Aqreement between Societe Ouest Afn'caine des Betons Industriels �0,4B� and State of Senegal (5().4Bt), ICSID Case No. Atm/82/1. 6 ICSID Rev.-F.LLJ. 119 (1991) (concerning urban development in the form of housing construction); Agreement between Spp (Middle East) Ltd. and Arab Republic of Egypt (Spp), Icsm Case No. Aizu/84/3, 3 ICSID Reports, 1995 (concerning hotel construction); Agreement between the Republic of Tunisia and Ghaith R. Pharnon, 1(:sij) Case No. Attt3/86/1 (concerning tourist and holiday resort projects); Agreement between the Goi,emmetit of Morocco and Holiday Inns S.A./üccidental Petroleum Corporation, ICSID Case No. ARB/72/1, Decision of 1 July 1973 (concerning a joint venture to build and operate hotels). See also the following cases: United Dredging Co. (U.S.A. v. Alexico) (1927), 4 U.N.R.LA.A. 263 (oral contract for dredging services): Heirs of H.F. Rtidlo#' (U.S.A. v. Venezuela) (1904), 3 Whitcrnan, Damages 1864 (building and operation of public market); L.A. Oliva (Italy v. Venezuela) (1904), 3 Whiteman, Damages 1865 (construction of a "pantheon" in a cemetery); Mobil Oil Corporation, Mobil Petroleum Company, Inc. and Mobil Oil New Zealand Limited v. New Zealand Government (Mobil v. New Zealand, ICSID Case No. Atu3/87/2 (concerning a synthetic fuels project). =r For example, Manufacturing and Sales Aqreement between Raytheon Manu/acturing Company and Pabbrica Italian Raddrizzatori Apparecchi Radioloqici, Italy, 18 July 1952 (see the case relating to this agreement decided by the Ic] between the United States and Italy: the Case concerning Elettronica Sicula S.p.A. (ELÇJ), Icj Judgment of 20 July 1989, 84 I.L.R. 311 and Iq Reports (1989), p. 15; and see also the U.S. Memorial submitted to the Icj on 15 May 1987); The Sugar Agreement between the Democratic Republic of the Sudan and Lonrho Ltd. (English Co.), 1972 (joint venture). For related cases, see Seditex Engineerirrg Berntungsyesellschaft fiir die Textilindustrie m.b.H. v. Madagascar, IC511J Case No. CONc/94/1, Commission Report issued on 19 July 1996 (concerning a textile enterprise); American Mamrfartrrring & Trading, Inr. v. Democratic Republic of the Congo, ICSID Case No. AR13/93/1, Award of21 Febr-uary 1997 (concerning a manufacturing and trading enterprise); Societe Ltd. Benvenuti & Borfant Sri v. Government of the People's Republic of the Congo, ICSID Case No. APB/77/2, Award of 8 August 1980, 21 I.L.M. 740 (1982) and 67 I.L.R. 345 (1984) (concerning production of plastic bottles for domestic consumption); Kliicktier Irtdustrie- Anlagen GmbH, Kliicktier Beige, S.A. and Kliicktier Hnndelmaatsdrapij Camerounaise des Engrais (SOCA.\1E) (Kl6ckiier), ICS11J Case No. A�/81/2, Award of21 October 1983, 10 Y.B. Corm. Arb. 71 (1985), and the Decision annulling the Award signed by the ad hoc Committee on 3 May 1985, 1 ICSID Rev.-F.IL.J. 89 (1986) (concerning construction of a chemical plant); Atlarrtic Triton Comparry Linrited P. People Revolutionary Republic of Guinea, 1(:sll) Case No. Atts/84/1, Award of 21 April 1986, 11 Y.B. Comm. Arb. 215 (1986) (concerning a contract for the conversion of vessels into fishing vessels and the training of crews); Colt Industries Operating Corp., Firenrrns Divisions v. Govemment o(the Republic 4 Korea, ICSID Case No. Ax.B/84/2. (concerning technical and licensing agreements for the manufacturing of weapons); Mobil v. New Zealand, supra, footnote 20 (concerning a synthetic fuels project). See generally G. Kalmanoff, Manufacturing in Developine Countries, 10 Columbia]. J. Transnat'1 L. 303, 1971. 22 For example, Rahad Irrigation Project, Supply Contracts between the Democratic Republic of the Sudan and Sir Malcolm MacDonald & Partners, Cambridge, 1976; Contract between the Saudi Ministry of Agriculture and Water (Riyadh Additional Water Supply) and Sir Malcolm MacDonald Partners, Cambridge. For related cases, see Tradex Hellas S.A. v. Republic of Albania, ICSID Case No. ARH/94/2, Award of 29 April 1999 (concerning an agricultural enterprise); l7re Liberian Eastern Timber Corporation (LeTCO), Letro Lumber Industry Coryorntion (Lcrc) v. Governnuent of the Republic of Liberia ( LETco), Icsin Case No. ARB/83/2, Award of 31 March 1986, 26 I.L.M. 647 (1987) (concerning forestry exploitation); Asian Agriculture Products Limited v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/87/3, (concerning a shrimp-fanning joint venture); Societe Adriano Csardella S.p.A. v. Government of Cote d'lvoire, ICSID Case No. AikB/74/1, Award of 29 August 1977 (concerning production of fibers for export). 23 For example, Bechtet's Programme Management Services Agreement with the Royal Commission for Jubail and Yanbu, 1976, Saudi Arabia. For related cases, see SEDITE,3(, supra, footnote 21 (concerning management contract for the operation of a cotton mill). See also M.Z. Brooke, Selling Management Services Contracts in Irrterrrational Business, Thomson Learning, London and New York, 1985; Hcgstal and Newport, Manaqement Contracts: Main Features and Design Issues, World Bank, Washington, D.C., 1987; Darfoor, The Concept of Management Contracts in Mirre Rehabilitation: The Case of the State Gold Mining Corporation in Ghana, 6 Raw Materials Rep. (1989), pp. 199-207; United Nations Centre on Transnational Corporations, A�jf�ff�tt� Contracts in Developing Countries: An Analysis of Their Substantive Proiisions, Ur�clc, United Nations, New York, 1983, UN Sales No. ST/CTC/27; Y.P. Gai and T.C. Choong, Management Contracts and Public Enterprises in Developing Countries, ICPE Monograph Series No. 20, 1987.
24 See Privately Financed Infrastructure Projects, supra, footnote 14, para. 19; United Nations Industrial Development Organization, Guidelines for Infrastntcture Development through Build-Operale-Transfer (BOT) Projects, UNIDO Publications, Sales No. UNIDO.95.6.E; Infrastructure for Developnreru, Oxford University Press, New York, 1994. 2S Piero Bernardini, Development Agreements with Host Governments, in R. Pritchard (ed.), Economic Development, Forefgn ¡'IVestmel1t and the l.aw, Kluwer Law International, The Hague, 1996, p. 161, at p. 162. 21, A.A. Fatouros, Government Guarantees to Foreign Investors, Columbia University Press, New York, 1962, at p. 233. See A.F.M. Manimzzaman, The New Generation ofEnergy and Natural Resource Development Agreements: Some Refections, 11 JENRL 207, 1993; Barberis, supra, footnote 13, pp. 142-157; Pritchard (ed.), supra, footnote 25, p. 161; Bernard Taverne, An Introduction to the Regulation of the Petroleum Industry: Laws, Contracts and Conventions, Graham & Trotman and Martinus Nijhoff, The Hague, 1994, at pp. 16-29. =" For an explanation of these varieties, see A.B.Z. Abadeer, Natural Resources Contracts Between LDc Governments and Foreign Companies: With Reference to tlre Egyptian Case, Ph.D. thesis, Graduate School, Boston University, (U.M.I. Dissertation Service), 1993, at pp. 68-122. 2" See Saudi Arabia v. Aramco, sl1pra, footnote 17, at p. 160.
'° Id. 31 See, for a recent example, the public works contract called "Construction of the Karanrch Dam Project" between the Joint Venture, made up of the two companies (as Contractor), i.e. Salini Construttori S.p.A. (Italy) and Italstrade S.p.A. (Italy), on the one hand, and the Ministry of Water and Irrigation-Jordan Valley Authority (as Employer), on the other (1993). See the dispute that arose between the parties in Salini Construttori S.y.A. and Italstrade S.Ir.A, v. the Hasliepiiiie Kingdom ofJordall (Salini), ICSID Case No. An.H/02/13, Decision on Jurisdiction of 15 November 2004; available at: <www.worldbank.org/icsid/cases/salini-decision.pd6. See generally G. Westring, Construction and Management Coiitracts, in N. Horn, C.M. SchmitthotT andJ.S. Marcantonio (cds.), Tile Transnational Law of International Commercial Transactions, Kluwer, Devcntcr and Boston, 1982, pp. 175-189. 12 See Peter L. Booen, The Three Mnjor Nem Fmic: Rookc, Vol. 17 (Part I), 2000. See also generally B. Meopham, F.LD.LC. Conditions cf Contract, 1986; E.C. Corbett, FiDIC 4tli-A Practical Legal Guide, International Federation of Consulting Engineers, Geneva, Switzerland, 1991; I.N. Duncan Wallace, The International Civil Engineering Contract, 1974 (1980 Supplement). 33 B. von HotFmann, International Construction Arbitration, in P. Sarcevic (ed.), Essays on International Commercial Arbitration, Nijhoff, Dordrecht, 1989, p. 223, at pp. 227-229. 34 See P. Hillerbrandt, Economic 1'heory and Construction Industry, 2nd edition, MKll1illiaTl. London, 1985; The World Bank, The Construction Industry: Issues and Strategies for Developing Countries, Washington, D.C., 1984, pp. 3 and 11. 35 E.I. Walker-Arnott, Tie Channel Tunnel Concession, 24 I.B.L. 12, 1996, at p. 13. See also M.E. Schneider, New Swish Trans-Alpine Rail Project: What, 24 LB.L. 26, 1996. '6 Esin Orucu, Cunseil rl'etat: 77te Frencit Layer 4 Turkish Administrative Law, 49 I.C.L.Q. 679, July 2000, at p. 698: "Build-operate-transfer contracts are considered public service concession contracts."
.\7 See A. Catranis, 1riiisfi,r of Tec6rrnloqy to Dcneloying Countries, Revue Hellenique de droit international, 1985-198fi, pp. 67-70; K. Khan, The Transfer of technology and Petroleum Development ill Developing Co 1111 tries: With Special Ref·rerra· to Trinidad and Tobryn, 4 JENRL (1986), p. 10; H.S. Zakariya, 7Yans/ir of Technology Under Petroleum Development Contracts, 16 J.W.T.L. 3, May/June 1982, p. 207; Y. Omorogbe. The Lctal Framework �� Policy for Technology Development in Nigeria, 3 R.A.D.LC. 156, 1991; G. Cabanellas, Jr., Applicable Law under International Transfer of Technology Regulations, International Review of Industrial Property and Copyright Law, 1984, pp. 39 et set.; D. Kokkini-Iatridou, Contracts for the Tr<3f�/<'r of Technology, an unpublished report for The Hague Zagreb Colloquium, 1985, pp. 31-76. 38 V. Korah, Knou�-haw Licensing Agreements and tlre EFT Competition Rules Re,tulation 556/89, Esc Publishing, Oxford. U.K. 1989. The characteristics ofa licensing agreement have been described thus: "Licensing is a process by which the holder of some form of intellectual property (licensor) such as a patent, copyright, or trademark- each of which is a form of intellectual property that requires formal registration with an appropriate government body-or unpatented trade secrets and commercial processes (sometimes referred to as know-how) gives permission to another person (licensee) to make use of the property. The licence is normally stated for a term of years or, in certain instances, for the life of the licensee. In return, the licensee uses the property and pays the licensor royalties for that use." W.F. Fox, Jr., International Commercial Agreements, Kluwer, The Hague, 1988, at pp. 62- 63. See also C. Oman, Nev Forms of International Investment in Developing Countries, Development Centre of the Organisation for Economic Co-operation and Development, Paris, 1984, at p.15. .\4 D.F. Vagts, Dispute-Resolution Mechanisms in International Business, 203 Hague Recueil des Cours 17, 1987-m, at p. 27; sec also C.W. Hyun, Legal Aspect of Technology Licensing in dre Republic of Koren, 27 Columbia J. Transnat'l L. 53, 1988; M. Blakcncy, Legal Aspects of the Transfer of Technology to Developing Countries, Esc: Publishing, Oxford, U.K., 1989.
;" "These services could be generally defined as the essential intellectual activities needed to optimize an investment in all its forms; the choices made, the technical process of its realization and its management ... These services generally fix the technology dimension of an investment project through the techno-economic specifications they produce for its civil engineering part, the materials to be used and the machinery and equipment to be purchased. More specifically engineering design services produce outputs such as prc-fcasibility and feasibility studies, preliminary and detailed engineering design, tender documents, evolution of bids, selection of suppliers and contractors, supervision of construction and erection work, maintenance, project management, personnel training, etc. Many of these services are multidisciplinary and technology-intensive. They require general and specialized engineering and other skills to produce the necessary outputs. Engineers are needed to select and evaluate technological altematives, economists to do private and social cost benefit analysis, financial analysts to examine the various aspects of project financing and scientists and ecologists to assess the environmental aspects." Y. Soubra, The Construction and Engineering Design Services Sector: Some Trade and Development Aspects, 23 J.W.T. 2, February 1989, p. 98. See. for the economic importance of engineering services for the development of different countries, Soubra, ibid., pp. 97-124; C.J. Kim, The Role of Technology in Economic Development: The Korea Case, in C.J. Kim (ed.), Business Laws in Korea: Investment, Taxation and Industrial Property, Panmun Book Co., Seoul, 1982, p. 693; O.A. Alegimenlen, Petroleum Development Technology Acqnisition: A Symmpsis of the Nigerian Experience, 3 R.A.D.I.C. 526, 1991. 41 UNCTC, supra, footnote 23, at p. 2.
42 A.D.M. McNair, The General Pn'ntiples of Law Recognized by Civilized Nations, 33 BYIL (1957), p. 1, at pp. 2-4. 43 O'(:onnell, supra, footnote 6, at p. 94. ra Snpra, footnote 17.
4S See /. Kuusi, The Host State and the TrallSl1atiollal Corporation, An Analysis rf Legal Relationship, Saxon House, Famborough, U.K., 1979, at pp. 59-60; F.V. Garcia-Amador, The Emerging International lam of Development: A New Dimension of International Economic Law, Oceana, Dobbs Ferry, New York, 1990, at pp. 164-166. See also K. Hossain, Law at?d Policy in Petroleum Development, Frances Pinter, London, 1979, at p. 217. Among those which are most common are provisions which require: training of nationals; local purchase of goods and services; supply of oil or gas to meet local requirements; and establishment of refinery or other processing plants or other industries. Sec also D.N. Smith and L.T. Wells, Jr., Negotiating Tliird World Mineral Agreements, l3allingcr, Cambridge, Massachusetts, 1975; M.M. Olisa, Corrrparisiou of Legislation Affectil1g Foreign Exploration of Oil and Gas Resources in Oil-Prnducing Countries, 10 Alberta L. Rev. 493, 1972. 46 Supra, footnote 17, at p. 455. 47 Supra, footnote 22, at p. 661. 48 15 Iran-U.S.C.T.R. 188, 1987, at p. 240.
4r) See United Nations General Asscmbly (UN(;A) Resolution 1803 (XVII), 14 December 1962; UN(;A Resolution 3281 (xxix), 12 December 1974. See also I. Brownlie (ed.), Basic Documents in International Law. 3rd edition, Oxford University Press, Oxford, U.K., 1983, pp. 230-249. 511 See generally A.F.M. Manimzzaman, State Contracts With Aliens: The Question f)/ Uf!t7<jff'm/ Change by the State in Contemporary Intcrnational Lau�, 9 Ins Arb. 4, December 1992, pp. 141-171; idem, supra, footnote 27. P. Weil, Problemes relati/s mix contrats passes entre un Etat et tell Partirulier, 128 Hague Recueil des Cours (1969), pp. 104-105; H. Cattau, 'The Law of Oil Concessions in the Middle East and North Africa, Parker School of Foreign and Comparative Law. Oceana Publications, Dobbs Ferry, New York, 1967, pp. 1 et serj. Compare J. Verhoeven, Contmts entre Etllts et Ressartusants d'nutres Etats, in Le wl1trat erononrique international: staGilite evolution, Bruyant Editions, Brussells, 1975, pp. 116, 122 and 150; Philippe Leboulanger, Les contrats entre etats et erunprises etrangeres, Economica, Paris, 1985, p. 8.
52 See, for example, Petroleum Exploration and Production Sharing Agreement Between Arab Republic of Egypt (A.R.E.) and Egyptian General Petroleum Corporation (E.G.P.C.) and Chevron Oil Company of Egypt, 22 February 1976, in Fischer (ed.), supra, footnote 16, Vol. it, pp. 377 et see.; Petroleum Concession Agreement Between the Arab Republic of Egypt, The Egyptian General Petroleum Corporation, The General Petroleum Company and The Egyptian Petroleum Development Company Ltd. (ErEnec:o), 16 June 1975, in Fischer (ed.), ibid., Vol. 1. See also generally A.R. Lucas, State Petroleum Corporations: The Legal Relationship u�ith the State, 3JENRL 81, 1985; V. Moorthy, The Malaysian National Oil Corporatioll-Is It a Government Instmmelltality, 30 1.c.L.Q. 638, 1981; P. d'Amarzit, Les Enterfnises Publigues Petrolieres et 1'approvisionnernent en Etie�qie de Ia Communaute Economigue Europeenne, Editions Technip, Paris, 1978, p. 145; A. Tupper and B. Doern (eds.), Public Corporations and Public Policy in Canada, Institute for Research on Public Policy, Montreal, Quebec, Canada, 1981; J. Bell, National Oil Companies: Quo liadis-The Need fnr National Oil Companies and their Relationship to Government and Industry, in Energy Iwu, Proceedings of the International Bar Association Banff Seminar, 1981, Vol. 1, p. 29. 53 Ignaz Scidl-Hohenveldern, Corporations in and under International Law, Grotius, Cambridge, U.K., 1987, at p. 55. s; See Salini, nrpra, footnote 31, especially at paras. 80-84; the International Chamber of Commerce (ice) case Westinyhouse et al. v. National Power Company (Philippine) F� the Republic 4the Philippines (Westinghouse), Case No. 6401/BGD, December 1991, Robert B. von Mehren, S. Lazareff, and C. Reymond (as Chairman), International Arbitration Report, Vol. 7, January 1992, pp. B-1, at B-52: "It is appropriate to apply Philippine law because the issues raised here-conceming the legal relationship of NNC (National Power Co.) to the Republic of Philippines-is a matter of the position of a State entity vis-a-vis the State itself, a subject governed by the law of the State in question." See also Ivan Szasz, Public Corporations as Parties to Arbitratioll: Procedural Aspects, in International Arbitration: 60 Years of Icc Arbitration-A L10k at the Future, Ic:C Publishing S.A., Paris, 1984, p. 213, at pp. 215 and 220. es See L.J. Bouchez, 77re 1'rospects for International Arbitration: Disputes Between States and Private Enterprises, 8 J. Int'l Arb. 81, 1991, at pp. 91-92; see also generally W. Friedmann (ed.), Public and Private Enterprise in Mixed Economies, Columbia University Press, New York, 1974; W. Friedmann and J.F. Garner (eds.), Government Enterprise: A Comparative Study, Columbia University Press, New York, 1970. 56 The Supreme Court of the United States of America observed that: "Increasingly during this century [the twentieth century], governments throughout the world have established separately constituted legal entities to perform a variety of tasks. The organization and control of these entities vary considerably, but many possess a number of common features. A typical government instrumentality, if one can be said to exist, is created by an enabling statute that prescribes the powers and duties of the instrumentality and specifies that it is to be managed by a board selected by the government in a manner consistent with the enabling law. The instrumentality is typically established as a separate juridical entity, with the powers to hold and sell property and to sue and be sued. Except for appropriations to provide capital or to cover losses, the instrumentality is primarily responsible for its own finances. The instrumentality is run as a distinct economic enterprise; often it is not subject to the same budgetary and personnel requirements with which government agencies must comply." First National City Bank v. Banco Para El Comercio Exterior de Cuba (First National City Bank), 462 U.S. 611, 624, 62(�627 (1983).
37 The NAFTA was signed by the three Heads of Government of Canada, the United States and Mexico on 17 December 1992 and entered into force on 1 January 1994; NAFTA Text, including supplemental agreements, Ccn, 1994. e8 International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 14 October 1966, reprinted in 60 A.J.LL. 892, 1966, and in 4 I.L.M. 532, 1965; also available at: <www.worldbank.org/icsid/basicdoc/partA.htm�. 5' Karl H. Bockstiegel, Arbitration and State Enterprise, Kluwer Law and Tax Pub., 1984, p. 14. See generally M.G. Klapp, The Sovereign Entrepreneur Oil L'vliries in Adl'al/œd atitt Lens Developed Capitalist Countries, Cornell University Press, Ithaca, New York, 1987. For example, the National Iranian Oil Company (Nioc) in Iran, the National Oil Company in Iraq, the Egyptian General Petroleum Corporation in Egypt, La Societe Nationale pour la recherche, la production, la transformation et la commercialisation des Hydrocarbures in Algeria, and the National Resources Authority in Jordan, etc. See H.S. Zakariya, State Petroleum Companies, 12 J.W.T.L., 1979, p. 481; about the Abu Dhabi National Oil Co., see A. Suleiman, 7he Oil Experience of the United Arab Emirntes, 6 JENRL 1, 1988, at pp. 9 et seq. h2 An issue arose in the Anmm case, supra, footnote 48, at pp. 240-241, in the context of a stabilization clause. The Claimant argued that the clause applied to Iran as a party, though not directly as a party, to the Khemco Agreement through its controlled entity National Petrochemical Co. (Npc). which was actually a party to the agreement. Article 21, para. 2 of the Agreement concerned provides that: "Measures of any nature to annul, amend or modify the provisions of this Agreement shall only be made possible by the mutual consent of NW : and AMOCO." According to the Claimant, the term "measures" in this context refers to legislative or regulatory measures. The Iran-United States Claims Tribunal noted that "such an interpretation is not easily reconcilable with the terms of Article 21, however, which mentions '(m)easures of any nature' and distinctly state that such measures 'shall only be made possible by the mutual consent of Npc and Amoco', neither of which has power to take legislative or regulatory measures." In view of the plain language, Article 21, para. 2 thus appeared to be a guarantee provision against unilateral changes by one party and did not necessarily impose an obligation on the Government of Iran as the latter was not a party to the Agreement. In the Tribunal's view, the said provision of the Article certainly created obligations for Npc and Anaoco, continuing the preceding conclusions that they were the only parties to the Khemco Agreement. Thus, the Tribunal concluded that Article 21, para. 2 bound only the parties to the Khemco Agreement, namely Npc and AMOCO, and it only prohibited unilateral measures by Npc or AMoco to "aunul, amend or modify" the provisions of the Khemco Agreement. Since Iran was not a party to the Khemco Agreement, the Tribunal did not find that it contained any "stabilization" clauses binding on Iran (at p. 241). Compare the Concurring Opinion of Judge Brower in this case, at pp. 295-296. In his Opinion, Judge Brower, having noted
the stabilization clause in the Topco (Texaco) and Libyan Concession Agreement where there was specific mention of the Government of Libya as a party to the Agreement, commented that: "I see no material distinction necessarily resulting from the fact that Libya itself was a party to the complete agreement containing these clauses, whereas Iran was not a party as such to the Khemco Agreement. In either case, the adjudicative task is to determine on the basis of the entire record whether the sovereign undertook a binding legal obligation." (at p. 296, footnote 15). It is suggested that in order to avoid difficulties, parties should provide unequivocally in express terms in the contract whether the State enterprise acts as a representative of the State with all the consequences that follow from the State's being a party or, on the contrary, as a distinct entity. The status of the State enterprise as a party should be clarified in the contract with regard to every possible legal question that may arise. 61 Sec generally Thomas Walde and Patricia Woutcrs, State Respollsibility ill n Lihcralised World Eronomy: Stnte, Privileged and Suhnational Authorities under the 1994 Energy Charter Treaty, 28 Netherlands Yearbook of International Law, 1996, p. 143, at p. 172; Richard Happ, Dispute Settlcment Under the Enerqy Charter Treaty, 45 German Yearbook of International Law, 2002, p. 351, at pp. 353-356. 64 SPP, supra, footnote 20, at p. 45.
"5 Ibid., p. 79. �� Ibid., p. 96. For similar issues that recently arose before an English court but where the Court had to decide on a different tack, see Svenska Petroleum Exploration AB v. Government o(the Republic, of Lithuania and Another, Queens Bench Division (Commercial Court) [2005] EwHC 9 (Connnn), [2005] All. E.R. (D) 15 Van). OR Pierre Lalive, Arbitration with Foreign States or State-Colltrolled Entities, in Southwestern Legal Foundation, International and Comparative Law Center, Private Investors Abroad, Bender, New York, 1989, Chapter 9, at p. 9-8. The question whether a sovereign nation should be bound by the signature of its instrumentality was raised before the U.S. Fifth Circuit Court in Bridas v. Turknrenistan, 345 F.3d 347 (5th Cir. 2003), where the Court found that the Turkmen government was not a party, as a non-signatory, to the joint venture (JV) agreement which contained the arbitration clause in issue, despite the fact that the Arbitral Tribunal concluded that: "The Claimants were entitled to have a legitimate expectation that what was represented and guaranteed to them in the JV Agreement would be fulfilled. Only the Government could perform these requirements. It saw fit to have them included in the JV Agreement, by Presidential Decree it confirmed that the requisite approvals and consents were in place to conduct operations ... 'based on the conditions established in the �JV Agreement]' and it saw fit to have the most important of them guaranteed with its consent. It cannot now resile from these facts or from the conclusion to which they lead: the Government is bound by the contractual commitments that only it could perform." Bridas v. Turkmenistan, First Partial Award, 24 June 1999, at 19, reprinted in Mealey's International Arbitration Report, Doc. No. 05-011026-012A. 19 5 ICSID Rev.-F.1.L.]. 139, 1990, at p. 141. 70 Lalive, supra, footnote 68, at pp. 9-6 and 9-14; Georges R. Dclaumc, 17,e Pyramids Stanrl-Tlre Pharaohs Can Rest in Peace, IcsiD Rev.-F.LL.J. 231, at pp. 259-260.
71 For example, the Ministerial Decree of the Kingdom of Saudi Arabia No. 58 of 17/1/1383 A.H. (corresponding to February 1963), which prohibited the Government and all Saudi Public Corporations from submitting either to a foreign law, the jurisdiction of foreign courts or to foreign arbitration; quoted in Zaki Mustafa, Public Corporations as Parties to Arbitratioll-AII Arab Perspective, in International Arbitration: 60 Years of Icc Arbitration, supra, footnote 54, p. 245, at p. 248. �= See Bellteler v. Etat Beige, 10 Y.B. Conm Arb. (1985), pp. 37-38. �j Sec Framatorne S.A. et al. v. Asoc (hramatome), Clunet, Journal du droit international (1984), p. 58. �� See the Calakis C:ase, 2 June 1966, Clunet, Journal du droit international (1966), p. 648. �s See Framatome, sugar, footnote 73. 76 K-H. B6ckstiegel, The Rulers Applicable in International Commercial Arbitration Involving States or State Controlled Enterprises, in International Arbitration: 60 Years of Icc Arbitration, suyra, footnote 54, p. 117, at p. 129. 77 Bockstiegel, sura, footnote 59, at pp. 34-35; see also BGE 76 m 60, where it was held that, according to Polish law, the Polish National Bank was distinct from the State and could not be held responsible for the latter's liabilities. Sec also the Westinghouse case, sura, footnote 54, at pp. 97-99.
�s See Knapp, in C.M. Schmitthoff(ed.), Sources of the Law of International T·rade, London, 1964, p. 61; see also N.G. Lichtenstein, Leqal Implications of China's Economic Reforms, llcSID Rev.-F.1.L.]. 289 (1986), at pp. 298-300; W.E. Butler, 77re State Monopoly of Foreign Trade and Family of Socialist Legal Systems, 2 Conn. J. Int'l L. 215, 1987; J.B. Quigley, The Soviet Foreign Trade Monopoly, Ohio State University Press, Columbus, Ohio, 1974; H.J. Berman and G.L. Bustin, T7ic Soviet System of Foreign Trade, 7 Law & Pol'y. Int'l Bus. 987, 1975; N. Spulber, The Soviet- Block Foreign Trade System, 24 Law & Contemporary Problems 420, 1959; S. Szaszy, State Trading Activities in Hungary, 20 Vanderbilt L. Rev. 393, 1967; D. Campbell, Legal Aspects of Doing Business in Eastern Europe and the Soviet Union, International Business Series, Vol. 8, Kluwer Law International, The Hague, 1986; P.B. Maggs, Direct Contracts by Soviet Organizations in International Economic Relations, in F.J.M. Feldbrugge (ed.), The Disrinctiveraess of Soviet Law, Martinus Nijhorf. Dordrecht, 1987, p. 183; Contemplating Comecon, A Guide to East/West Trade, pp. 5—6; East European Trade Council, Eastern Europe, A Business Profile, 4th edition, EETC, London, 1989; Y. Bulakh, The Self-Supporting Principle in a Foreign Trade Association, 3 Foreign Trade 30, 1985; P. Danton de RoufF�gnac, Doing Business in East Europe, Pitrnan, Avon, U.K., 1990. See also H.R. Zheng, China's Civil and Cornnrercial Law, Butterworth Legal Publishers, Singapore, 1988, at p. 322: "The current economic reform has significantly reformed the relationship between the government and enterprises. The excessive State control over enterprises was blamed for the inefficiency of State-owned enterprises. It has already become the Party's [the Chinese Communist Party] basic policy to ensure that the government be appropriately separated from enterprises and that enterprises enjoy sufficient business autonomy. After the current reform is fully implemented, 'various governmental departments will in principle no longer directly run enterprises.' The government will mainly provide long-term and across-the-board strategic planning and adjustment. Its control over enterprises will take the form, primarily, of enacting and enforcing economic laws and appointments of leaders in major enterprises. In recent years, direct control by competent departments has greatly decreased, whereas the regulatory power of the State through the Administration of Industry and Commerce has significantly increased." (footnotes omitted). 11 See 1. Fiezere, T7ie Soviet State Enterprises, Budapest, 1974, pp. 29-30, 69, and 81; P. Rabinovich, The Legal Status 4 Soviet Foreign Trade Organizations in View of New Soviet 4qislatioii, 15 Int'l Lawyer 233, 1981; O.S. Ioffe, Law and Economy in USSR, 7 Harvard L. Rev. 1591, 1982; N. Wooding, Business in the Ussa and Eastern Europe- Prospects and Problems, [1990] Vol. u, No. 2, Europe 2000, pp. 63-66; N. Louis et al., Doing Business in the USSR, Kogan Page Ltd., London, 1990, pp. 38-64; S. Pisar, The Communist System of Foreign-Trade Adjudication, 72 Harvard L. Rev. 1409, 1959, pp. 1426-1427; P.S. Smimov, Changes in the Legal Status of Soviet FTOS, 4 Journal of US-Usslz Trade and Econ. Council 23, 1978; G. Burdeau, 77ic Evolution of Business Law in the IJsstt, E. Euro. Bus. L., 1991, p. 2; W.E. Butler, Perestroika and Entnprem�urship, 1 Soviet & E. Euro. Bus. Bull. 1, 1991; M.I. Braginskii, Legal Norms of Entrepreneurial Activity in the USSR, 1 Soviet & E. Euro. Bus. Bull. 20, 1991. "" In Wintershall A.G. et al. v. T7ie Govenimetit of Qatar, 28 I.L.M. 795 (1989), at pp. 811-812, the arbitrators held, on evidence, that the Qatar General Petroleum Corporation was not distinct from the Government of Qatar since it acted as an agent of the latter. There is a trend to disregard the separation between the State and a State- owned enterprise in specific circumstances. It is extremely difficult to provide a criterion for universal application for this purpose. Again, it would depend much on specific circumstances which may prove the presence of the State behind the corporate veil of its controlled enterprises. The doctrine of "disregard of legal entity" in the United Kingdom and the United States (see M. Wormser, Piercing the Veil oftlie Corporate Entity, 12 Columbia L. Rev. 496, 1912; North Arlirrgtan Medical Building Inc. v. Sanchez Construction Co., 86 Nev. 515, 520, 471 p. 2d. 240, 243 (1970); see also In re Investigation of World Arrangements relating to Petroleum, 13 FRD 280, 291 (1952); see series of U.S. cases cited by Bockstiegel, supra, footnote 76, p. 117, at note 32) and oVDurch^riff' in the Federal Republic of Germany (see BGH 3.10.1951 BGHZ 3, 316 et seq.; BGH 3.7.1953 BGHZ 10, 205 et seq.; K-H B6ckstiegel, Der Durchgr�auf den Staat, Frankfurt, 1992, especially pp. 9 et seq.; Wiedemann, Gesellschahsrecht, 1980, Vol. 1, pp. 22 et seq.) and Switzerland (see OG Zurich, 19.2.1958, SJz 1958, 199 et seq.; BG.10.5.1950, BCE 76 III 60 et seq.) are examples of such a lifting of the corporate veil under specific exceptional circumstances in national law. 81 See B. Audit, Transnational Arbitration and State Contracts: Findings and Prospects, The Hague Academy Centre for Studies and Research in International Law and International Relations, 1987, at pp. 89 and 91.
12 See Report of the Working Group of the UN International Law Commission (1999), Chapter vn (Annex), "Jurisdictional Immunities of States and Their Property" (hereinafter InC' Report 1999); available at: <www.un.org/law/ile/reports/1999/english/chap7.htnp. ri' Brownlic notes that a certain number of States, such as Brazil, Bulgaria, China, the former Czechoslovakia, Ecuador, Hungary, Japan, Poland, Portugal, Sudan, Syria, Trinidad and Tobago, the former U.S.S.R. and Venezuela, still accept the principle of absolute immunity; Ian Brownlie, Principles of Public International Law, 5th edition, Oxford University Press, Oxford, U.K., 1998, at p. 331, footnote 31. 84 See generally the IL(- Report 1999, supra, footnote 82; also Brownlie, ibid., at pp. 330-332. ss See, for example, Hazel Fox, The Law of State Immunity, Oxford University Press, Oxford, U.K., 2004; Andrew Dickinson, Rae Lindsay and James P. Looman, State Irnrrumity-Selected Materials and Commentary, Oxford University Press, Oxford, U.K., 2004; Burkhard Hess, ']lie International Law Commissiou's Draft Convention on the jurisdictional Immunities of States and 7 heir Property, 4 E.J.I.L. 269, 1993, at p. 280; (�.5. Varges, Defining a Sovereign for Immunity I'urposes: Proposals to Amend the International Law Association Draft Convention, 26 Harvard J. Int'l L. 103, 1985; James R. Crawford, Execution of Judqments and Foreign Sovereign Immunity, 75 AJ.I.L. 820, 1981; idem, International Law and Foreign Sovereiqn.s: Distinguishing Immune Transactions, 54 Byil (1983), p. 75; J.B. Brooke, The International Law Association Draft Convention on Foreign Sovereign Immunity: A Comparative Approach, 23 Virginia J. Int'l L. 635, 1983; G.M. Badr, State Immunity: An Analytical and Prognostic View, Martinus Nijhoff, The Hague, 1984; Christoph H. Schreuer, State Immunity: Some Recent Developments, Grotius, Cantbridge, U.K., 1988; S. Scharitkul, llllll1llllitics of Fore(R" States Before National Authorities, 149 Hague Recueil 87, 1976-1; Ian Sinclair, The Law of Sovereiyn Immunity, Recent Developments, 167 Hague Recueil 113, 1980-u; G.R. Delaurme, Economic Development and Sovereign Immunity, 79 AJ.I.L. 319, 1985; Alexander Orakhelashvili, State Immunity and International Public Order, 45 German Yrbk. Int'l L. 227, 2002.
11 Schreuer, ibid., at pp. 137-139. 87 Article 2(l)(b)(iii), Draft Articles on Jurisdictional Immunities of States and Their Property, 27 February 2003, A/AC.262/L.4/Add.l; see Report of the Ad Hoc Committee on Judsdictional Immunities of States and Their Property, 24-28 February 2003, UNGA Official Records, Fifty-eighth Session, Supplement No. 22 (A/58/22); available at: (www.un.org/law/jurisdictionalimmunities>. xx See generally Schreuer, supra, footnote 85, at pp. 93 et seq.; Brownlie, sura, footnote 83, at pp. 333-335. 89 Audit, supra, footnote 81, at p. 89. See First National City Bank, supra, footnote 56: "Due respect for the actions taken by foreign sovereigns and for principles of comity between nations leads us to conclude-as the courts of Great Britain have concluded in other circumstances-that government instrumentalities established as juridical entities distinct and independent from their sovereign should nonnally be treated as such." In C. Czarinkow v. Rolimpex, [1979] AC 351, 364, [1978� 3 W.L.R., 274, Lord Wilberforce said: "State-controlled enterprises, with legal personality, ability to trade and to enter into contract of private law, though wholly subject to the control of their state, are a well-known feature of the modern commercial scene. This distinction between them, and their governing State, may appear artificial: but it is an accepted distinction in the law of England and other states." In the Westinglrouse case, supra, footnote 54, at B-52-B-53, pp. 97-99, the Inc Tribunal observed: "Npc (National Power Company) was in the period relevant to the instant dispute a public corporation wholly owned by and subject to the control and direction of the Philippine Government. Under its Charter, it served a national purpose as the primary agency of the Government in the development of sources of power generation and in the provision of electric production and distribution. As a public corporation, it was subject to public audit, its employees were civil servants and its principal officers and board of directors were appointed by the Government. The Republic (of the Philippines) had certain control ofNpc's finances and could guarantee its bonds. Npc was, in short, a typical example of a governmental entity or instrumentality established in corporate form that is often used by countries to develop and manage sectors of their economy such as public utilities. [Electricity being a key factor in the development of national economies, in many countries the State controls the production and/or distribution of electricity. The Tribunal notes that State control of electricity is especially strong when nuclear power is involved, and throughout the world the construction and operation of nuclear power plants has been a matter of State concern]." The Tribunal continues : "Public corporations of this type have, as a United States Supreme Court case
relied upon by Claimants states, '[sleparate legal personality as "an almost indispensable aspect'" of their existence. [First National City Bank v. Bnnco Pnrn El Cornercio Exterior de Cuba, 462 U.S. 611, 625 (1983)]. As such, they can sue and be sued; they do not have the same governmental immunity as a sovereign; and they have limited liability. [see 462 U.S. at 625-26]. They have their own management, keep their own records and enter into their own contracts. If they were viewed as mere alter egos of their governments, their purpose would be frustrated." " The Tribunal then concludes: "The logical and practical foundation of the Banco Para decision, which establishes a presumption that the foreign public corporation 'is to be accorded separate legal status,' (462 U.S. at 628) is so strong, and rests on such a thorough analysis of relevant American, English and international precedents and commentary, that we have little doubt that the aforementioned presumption is a generally accepted principle of international law that would be recognized by the courts of the Philippines." " 90 Germany, Federal Supreme Court, 7 June 1955, BGHZ 18,1 (9,10); Federal Constitutional Court B VerfGE 64, 1, also LL.R. 65, p. 215; Holland, Cabolent v. National Iranian Oil Co., Court of Appeal, The Hague, 28 November 1968, 47 I.L.R. 138 and 9 I.L.M. 152 (1970). France, Cass. Civ., 1 October 1985, Semaine Juridique, 1980, No. 20566, with note Synvet, (or Clunet, 1986, 170, with note Oppetil; or Rev. Crit., 1986, 527, with note Audit). See also Bockstiegel, supra, footnote 59, at pp. 39-40. '� See in Re Prejudgment Garnishment Against National Iranian Oil Co., 1981, 77 A.J.LL. 159, 1983; see also generally Moses A. Kimuli, The Application of the Doctrine of Foreign Sovereign /State Immunity to Public Corporations, LAWASIA, 1986, p. 31, especially at pp. 33-37. 9z See, for example, the European Convention on State Immunity (1972), Article 27; Sovereign Immunity Act 1978 (U.K.), Section 14; International Law Association Draft, Article LB. v3 See, for example, Foreign Sovereign Immunity Act 1976 (U.S.), Section 1603; Foreign State Immunities Acts 1985, Section 3; ILC Draft Articles, in ILc Report 1999, supra, footnote 82, at p. 6, Article 2, para. 1(b), refonnulated and suggested provision to the United Nations General Assembly.
4' See Fox, supra, footnote 85, pp. 272-303; Dickinson ct al., supra, footnote 85, pp. 81-193; B6ckstiegel, supra, footnote 59, at. p. 39; see also G.R. Delaume, Soverer;qn Immunity and Transnational Arbitration, in J.L).M. Lew (ed.), Contemporary Problems in International Arbitration, 1986, p. 313; H. Fox, Sovereign Immunity and Arbitration, in Lew (ed.), ibid., p. 323; G. Bernini and A.J. Van den Berg, The Enforcement of Arbitral Awards against a State: The Problem of lmnntnity from Execution, in Lew (ed.), ibid., p. 33; G.R. Delaume, State Contracts and Transnational Arbitration, 75 A.J.LL. 784, 1981. See also in the recent works of the ILC, he Final Dra_ft Articles and Commentary on Jurisdictional Immunities of States and 711Cir Property (1991), Yrbk. IL(: (43rd session), Vol. II, Part 2, p. 13; Report of the Ad Hoc Committee (ILC) on Jurisdictional Immunities of States and Their Property, supra, footnote 87; Jurisdictional Irnmunities of States and Their Property, Doc.A/CN.4/410 and Add. 1-5 (incorp. Doc. A/CN.4/410/Add.l/Corr.l), in Yrbk. In: (1988), Vol. n, Part 1; Document of the 40th Session A.CN.4/SER.A/1988.Add. 1 (part i), pp. 45 ct seq.; Yrbk. It c: (1989), Vol. u, (Report of the Commission to the UNGA on the work of its 41st Session), Doc. A.CN.4/SEn.A/1989/Add.l (part 2) (Chapter vi), pp. 97-121, United Nations, New York. 95 Article 2(2), Draft Articles on Jurisdictional Immunities of States and Their Property (27 February 2003, A/AC.262/L.4/Add.l); see Report of the Ad Hoc Committee on Jurisdictional Immunities of States and Their Property, ibid. Sec the AIPN Website at: <www.aipn.org>. See Report of the Ad Hoc Committee on Jurisdictional Immunities of States and Their Property, supra, footnote 87, Annex u, "Understandings with respect to certain provisions of the draft articles", providing with respect to Article 17 that: "The expression 'commercial transactions' includes investment matters." 9N Philip Weems and Michael Bolton, Higltlights of Key Revisions-2002 AlPN Model Form International Operating Agreement, [2003] I.E.L.T.R., Issue 6, p. 169, at p. 183. "" See Arab Repuhlic of Egypt v. Cinetelevision International, 1979, 65 I.L.R. 425, 1984, at p. 430. See Schreuer, supra, footnote 85, at pp. 134-143; Sinclair, supra, footnote 85, at pp. 218-242 (case-law cited therein); L.J. Bouchez, 'T7ie Nature and Scope of State Immul1ity Forn Jurisdictiol1 and ExeCtlth"" 10 N.Y.I.L. 3, 1979; Brownlie, supra, footnote 83, at p. 347, footnote 113; Draft Articles 18 and 19, Yrbk. ILC (1991), pp. 56-59; see also ILC Report 1999, supra, footnote 82, para. 108. See also the U.K. State Immunity Act (1978), §13(4); the Australian Foreign State Immunities Act (1985), §§30 and 32; the Canadian State Immunity Act (1982), §11. 1.
""' See J.R Crawford, Execution of Judgments and Foreign Sovereign Immunity, 75 A.J.I.L. 820, 19R1, at pp. 820-869; J.-F. Lalive, 84 Hague Recueil 279, 1953-m; Bouchez, ibid., at pp. 17-32. 101 Sec Böckstiegcl, supra, footnote 59, at pp. 44-45 and 50-51. For example, when in 1965 enforcement of the Arbitration Award was sought in the well-known Sapplrire case against the National Iranian Oil Company, supra, footnote 17, the District Court of The Hague disregarded the legal separation between Nioc and the Iranian State because, in the view ofthe Court, Nioc had granted the concession in the respective concession contract and had, in doing so, performed a function jure imperii so that it could claim immunity; Bockstiegcl, ibid., p. 44. A French Decision concerning the enforcement of the Liamto Award against Libya seems to have been based on the assumption that State corporations share with the State a responsibility for acts jure imperii; T(;i Paris, 5 March 1979, I'rocureur de Ia Republique v. Socihé Li.1.\lco, 106 Clunet 857 (1979), note Oppetit. r°2 See Stena Rederi AB v. Coriiisi6ii rie Contratos del Conrite Gjecutivo (general rlel Sindicato Revoluriormrio de Trabajadores Petroleros de la Reptiblica Mexicana SC, United States, Court of Appeals, Fifth Circuit, 1 1 February 1991; also 767 l7rirrl Averrue Assoriates and Another v. Permanent Mission ol'tite Republic of Zaire to the United Nations, Second Circuit, 4 March 1993, 99 LL.R. 195; Poxavorth v. Permanent Mission of the Republic of Uganda to the United Naliolls, United States, District Court, Southern District of New York, 6 July 1992, 99 I.L.R. 138; The Russian Federation v. Pied Rich B. V., Supremo Court ofThe Netherlands, 28 May 1993, N.Y.I.L., 1994, p. 512; P.c. Vall der Linden v. The Government of the United States qfanierica (Dept. c)fNaiy), Rotterdam District Court, The Netherlands, 18 April 1996, N.Y.I.L., 1997, p. 344; Iraq v. Dumex, Civil Court of Brussels, Belgium, 27 February 1995, 106 LL.R� 284; Zaire v. D'Hoop and Atiother, Civil Court of Brussels, Belgium, 9 March 1995, 106 I.L.R. 294; Condor and Filvem v. Mirrister of Justice, Constitutional Court of Italy, 15 July 1992, 101 I.L.R. 394. 1111 Bockstiegel, supra, footnote 59, at pp. 38-39: "Sometimes, even if not expressly dealt with in the contract, the general conception and structure of the contract as well as conclusions from specific contractual clauses may permit the definition of 'areas of responsibility' for each of the parties. If impossibility of performing certain contractual obligations is then due to causes within one of these areas of responsibility, the respective party may be held responsible for non-tulfilment or at least for damages even if thc respective cause is not due to that party's fault. Commercial contracts very often hold a party responsible without the need to prove fault of that party simply because, in the view of the contractual parties, certain risks are in any case located or placed with one party." Sometimes State interventions may be provided in the definition o(forœ majeure in the contract.
1"4 For instance, in a leading case decided by the English House of Lords in 1978, "Rolimprx" was not regarded on evidence as an organ of the Polish State, and thus it could, in fact, claim force majeure in that case, 2 All. E.R. (1978) 1043, Court ofAppeal, 26 May 1955, 1 All. E.R. (1955) 81; see also Becker, 10 N.Y.U.J. Int'l L. and Politics, 1978, pp. 447 et seq. For an interesting and critical treatment of the case, see A.H. Hermann, Disputes hetween States and Foreign Companies, in Lew (ed.), supra, footnote 94, p. 250, at pp. 251-253; Lasok, 44 M.L.R. 249, 1981, p. 255. See also a similar result in Blount Bros. Corp. v. Iran, 10 Iran-U.S.C.T.R. 56, 1986-r, at p. 75. In another decision of the English Court of Appeal, in the Playa Largn case, (1983) LI. L.R. 171, which concerned the Cuban State corporation Cubazucar, the same principle was followed. On 27 September 1973, Cuba enacted legislation freezing all Chilean property. Consequently, Cubazucar was precluded from perfonning a contract for the sale of sugar concluded with a Chilean corporation. The Court of Appeal could not see "any crucial differences between Rolimpex and Cubazucar". Cubazucar was not a department of the Cuban State, so it could claim force mnjeure. But see Atisa v. Aztec, [1983] 2 Lloyd's Report 579; see also Hermann, op. cit., at pp. 253-254. 1115 In a recent appeal case against an arbitral award, République Arahe d'Egypte v. Southern Pacific and S.P.P., the Paris Court of Appeal held that the Egyptian General Organization for Tourism and Hotels was endowed with legal personality separate from the State. It was an autonomous entity, had a separate budget and was subject to the accounting rules ot privam enterprises. The French Cour de Cassation in its Decision of 6 January 1987 upheld the l7ecision of the Court of Appeal; Paris Cour d'Appel, 12 July 1984, see note B. Goldman, Clunet (1985), at pp. 129 et see.; Revue de 1'Arbitrage (1986), No. 1, p. 75; 23 I.L.M. 1084 (1984); Cour de Causation. 6 January 1987, Revue de 1'Arbitrage (1987), No. 4, p. 469; Clunet (1987), p. 638; for discussion and criticism, see A. Redfern, Jurisdiction Denied: The Pyramid Collapses, (1985) J.B.L. 15; see also M. Sornarajah, 5 J. Int'l Arb. (1988), pp. 111-112. Compare the Decision by the French Supreme Court of 15 April 1970, Recueil Dalloz 1971, Jurisprudence, p. 107, as quoted in 7 Y.B. Conum. Arb. 90 (1982); G. Delaume, 1 innsnntinnnl Contracts r. Appendix IIi, Booklet E, Release 87-1, Occana, Dobbs Ferry, New York, issued April 1987, pp. 198-202; Lalive, supra, footnote 68, p. 9-1. l')6 Böckstiegel, supra, footnote 59, at pp. 37-48, irlem, supra, footnote 76; Bouchez, supra, footnote 55, at p. 92. See also Jordan Investment Ltd. v. Sojuzneft Exporl, 53 A.J.I.L. 800, 1959, 27 I.L.R. 631; Czamikow v. Rolimpex, supra, footnote 89.
z See Bouchez, ibid., at p. 92. But see Karaha Bodas Company, L.L.C. v. Perusahmm Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), 190 F.Supp.2d 936 (S.D. Tex. 2001), 2001 U.S. Dist., Lexis 23079: in the course of the Asian financial crisis that severely affected Indonesia, the Government of Indonesia issued a Presidential Decree on 27 September 1997 indefinitely postponing the project which Karaha Bodas was still carrying on, along with more than 70 other government-related infrastructure projects, and a second Presidential Decree, dated 10 January 1998 indefinitely postponed them, despite a brief reprieve after the first one. The jorce majeure clause ("Government Related Event") in the contracts concerned was cunningly drafted in a way that only Karaha Bodas could claim the defence offorce majeure and neither Pertarnina nor PLN could claim that an act of the Government of Indonesia could be deemed to before majeure preventing one of thcm from performing. IOH See Sovtorgfiot v. The "King Edgar", Recueil des decisions de la Commission d'arbitrage maritime (of the U.S.S.R.), Editions du commerce extérieur, Moscow, 1934, p. 13. '°9 The Attilio Regulo, 14 Ann. Dig. 323, 1947. 110 Article 22(2). "' A.Z. El Chiati, Protection of Investment in the Context of Petroleum Agreements, 204 Hague Recueil des Cours 9, 1987-m, at p. 35 (para. 13). 112 See Z.A. Kronfol, Protection of Foreig/1 Investment, A.W. Sijhoff, Leiden, 1972, Chapter 1, pp. 13-29. 113 See generally C.F. Amrrasinghe, Local Remedies in International Law, Grotius, Cambridge, U.K., 1990; idem, Whither the Local Remedies Rule? 5 ICSID Rev.-F.LL.J. 292 (1990).
� See Seidl-Hohcnveldcrn, supra, footnote 53, pp. 7-12: "As international law grants to each State the right to proffer diplomatic protection to its nationals, a corporation, in order to obtain diplomatic protection would have to prove that it possessed the nationality of the State concerned. Nationality is sometimes seen as a mutual bond of loyalty existing between a State and its citizens, and diplomatic protection as a product of this bond." (at p. 7). "International law restricts the right of a State to grant diplomatic protection to its own nationals, corporations should qualify as nationals of a State, in spite of the absence of a bond of mutual loyalty between the protecting State and the corporation thus protected." (at p. 8). "International law admits that a State may consider a corporation as its national. As with natural persons, international law imposes certain limits on the right of a Statc to bestow its nationality on a corporation. It may do so only if the corporation is either established under its law, or has its seat, centre of management or exploitation there, or is controlled by shareholders who are nationals of the State concerned." (Id.) In the context of corporate claims concerning lump sum settlement practice, it has been noted by Lillich that "there arc four different tests to determine nationality namely, the place of incorporation, which is the old Common Law approach that is still followed by Great Britain and Canada; secondly, the headquarters approach that is followed by Austria; thirdly, the control or predominant interest approach, taken for instance by the Swiss agreements; and lastly, the rather unique US approach, which is the place of incorporation plus a 50% US shareholder requirement-a requirement that also is found in the provisions of the Claims Settlement Agreement with Iran." He then added : "[I]t is very hard to say which one of these tests prevails. There is certainly a consensus here that there has to be some kind of link between the State that is bringing the claim on behalf of the corporation and the corporation itself" R. B. Lillich, Lump Sum Agreements: Standards T7ierein and Impact T6ereof, in D.C. Dicke (ed.), Foreiqn Investment in the Present and a New International Ecouomic Order, University Press, Fribourg, Switzerland, 1987, p. 239, at p. 244. Within the framework of the Icso> Convention, supra, footnote 58, the nationality of a corporation is determined on the basis of its siege social or place of incorporation; see G.R. Dclaume, ICSID Arhitration, in Lew (ed.), supra, footnote 94, p. 23, at p. 28. With respect to companies, the 1957 Draft Convention for the Mutual Protection of Private Property Rights in Foreign Countries, Article ii(b) and (c), provides that their nationality is to be detemiined on the basis of any of three tests, namely, establishment under a State's laws, establishment of the company's seat within a State's territory, and holding of control or of a dominant interest by a State's nationals; Fatouros, supra, footnote 26, pp. 131-132. See also C. Staker, Diplomatic Protection of Private Business Companies: Deterlllilling Corporate Personality for International Law Purposes, 61 BY[L (1990), p. 155. See I. Brownlie, Princiyles 4Public International Law, 4th edition, Oxford University Press, Oxford, U.K., 1990, at p. 495. t See generally A.F.M. Maniruzzaman, Expropriation 4Ali"" Property and the Principle of Non-Discrimination in International Law on Foreign Investment: An Overview, 8 J. Transnat'l L. & Pol'y., Fall 1998, No. 1, pp. 57-77. See J.H. Herz, 35 A.J.LL. 243, 1941, at p. 259, note 66; see also the Canevaro case, Permanent Court of Arbitration, inJ.B. Scott (ed.), The Hague Court Reports, Vol. 1, at p. 285, 6 A.J.LL. 746, 1912, U.N.R.LA.A., Vol. XI, p. 397; the Cadenhead case (1914), 8 A.J.I.L. 663, 1914; and the Standard Oil case (1926), 8 BYIL (1927), p. 156, 22 A.J.LL. 404, 1928, U.N.R.I.A.A., Vol. n, p. 781, at p. 794. 1 llf It should be noted that those supporting the national treatment principle are not necessarily committed, as is sometimes suggested, to the view that municipal law has supremacy over international law. It is possible to contend that, as a matter of intemational law, the standard of treatment is to be defined in terms of equality under the local law. 119 See A.H. Roth, The Minimum Standard of International Law Applied to Aliens, Leiden, 1949, p. 88; Herz, supra, footnote 117, at p. 260; see also American Law Institute, Restateruerrt, Second, Foreign Relations Law eJ the L7nited States, pp. 501-507; O. Schachter, International Law in Theory and Practice: General Course in Public International Lam, 178 Hague Recueil des Cours (1982-v), pp. 314-321.
120 J.L. Brierly, The Law of Nations, 6th edition, edited by Sir Humphrey Waldock, Oxford University Press, Oxford, U.K., 1963, at p. 276. 121 Manimzzaman, supra, footnote 116. 122 Brownlie, supra, footnote 115, at p. 525. Although the standard of national treatment proposes equality of treatment for aliens, there are many matters, such as political rights, particular types of employment, etc., where inequality of treatment is maintained. In matters of taxation and exchange control, the rules of international law also authorize at least a measure of discrimination between aliens and nationals of the host State; ibid, at pp. 524 and 525. 123 Brownlie,, ibid., at p. 526; see also J. Williams, International Law and Property of Aliens, 9 BYm (1929), p. 1, at pp. 20 and 25; A.O. Adede, '77;f Minimum Standards in a World of Uisparities, in R.St. Macdonald and D.M. Johnston (eds.), 77if Structure and Pracess ofinternational Law: Essays in Legal Philosophy Doctrine and 771eory, Martinus Nijhoff, The Hague, 1983, p. 1001; Brierly, stipra, footnote 120, at pp. 279-280. '24 See Yrbk. ILC (1957), Vol. U, p. 112; see also P. Jessup, A Modern Law of Nations, Macmillan, New York, 1984, pp. 94-122; idem, 46 Columbia L.R. (1946), pp. 903-928; R. Lillich, Ditties of States Regarding Civil Right of Aliens, 161 Hague, Recueil des Cours (1978-m), pp. 329-442; idelll, The Human Rights of Aliens in Contemporary International Laud, Manchester University Press, Manchester, U.K., 1984; 1. Delupis, Finance and Protection of Investments in Developing Countries, Cower Press, Epping, U.K., 1973, at p. 67. 125 Compare Brownlie, supra, footnote 115, pp. 527-528. 126 See B. Cheng, International Protection of Human Rights, at p. 170. 127 For example, the Patiet,ezys-Saldiitiski-� Railway Judgment, 1939, P.C.1.]., Series A/B, No. 76, p. 4; Hi si, supra, footnote 21. Traditionally, such diplomatic intervention by the home State of an alien on his behalf is permissible provided that all local remedies have been exhausted and the alien has attempted to have justice done in the local courts. However, the obligation to seek justice in the courts of a State only exists if there arc any "effective" local remedies to exhaust. In other words, diplomatic protection or intervention usually follows denial ofjusticc. 121 An alien has, under general international law, a right to be compensated, whereas a national does not have such a right. In many countries, nationals may enjoy this right of compensation, perhaps even guaranteed under their constitution, but it is not (in the case of nationals) a right guaranteed by international law. See also the Case ofLithgow and others, 102 Eur. Ct. H.R., Series A, 1986, summarized in 81 At.1.1-. 425, 1987 and 75 I.L.R. 439, in which one British national and nine companies incorporated and registered in the United Kingdom argued that their compensation under the Aircraft and Shipbuilding Industries Act was inadequate and hence a violation of Article 1, para. 1 of Protocol No. 1 of 20 March 1952 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, 4 November 1950, 213 U.N.T.S. 221, which provides that "Injo one shall be 1.j��_�"L"" �H""'''' ,..J ......�...., '.'_'T"\
deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles ofinternational law" (at p. 262). The Court's holding that this right, and the consequent right to "prompt, adequate, and effective" compensation, is inapplicable to nationals was consistent with earlier rulings of the European Commission on Human Rights. The Court referred in particular to a resolution of the Committee of Ministers of the Council of Europe (Res. (52)1 of 19 March 1952) when the Protocol was opened for signature, stating that "the general principles of international law, in their present connotation, entail the obligation to pay compensation to non-nationals in cases of expropriation". The Court also pointed out that in the context of expropriation there might well be good reasons for distinguishing between nationals and aliens so far as compensation was concerned. See, for an exhaustive discussion on this and other cases, M. Mendelson, 'f1,e United Kingdom Nationalisation Cases and the European Convention on Human Rights, Bvn (1986), p. 33, especially pp. 44-52. l2Y See C. Himmawan, The Foreign Investment Process in Indonesia, 1980; T.M. Radhic, S. Hartono, J. Barmawi and N. Yasuda, Corporation and Law in AsEAn· Countries-Witlr Special Reference to Indonesia, 1986, at pp. 52-56. DO Case Concerning the Barcelona Traction, Light and Power Co. Ltd. (Barcelona Traction), Icl Reports (1970). 131 Ibid., para. 70; see also L.C. Caflisch, The Protection of Corporate Investments Abroad in the L(�ht of the Barcelona Traction Case, 31 ZaoRV (1971), pp. 162-196; R.B. Lillich, The Frigidity of Barcelolla, 65 AJ.I.L."532, 1971. 132 Barcelona Traction, ibid., para. 92. 133 Ibid., at pp. 135-136 (Judge Tanaka), pp. 352-353 (Judge Riphagan). See also A.A. Fatouros, Transnational Enteyrise in the Law of State Responsibility, in R. Lillich, (ed.), International Law of State Responsibility for Injuries to Aliens, University Press of Virginia, Charlottesveillc, 1983, pp. 34 et seq. See Lillich, ibid., at pp. 524 et seq. See also Fiji, supra, footnote 21, Ie] Reports (1989), p. 15; in this case, the claim was brought to the Ie) by the United States on behalf of a U.S. corporation, Raytheon, the sole shareholder in a Italian company called Elettronica Sicula Company, against Italy for a series of actions undertaken by the latter against that company. However, the case was brought under the 1948 Treaty of Friendship, Commerce and Navigation between Italy and the United States.
�35 See the B-S'7 case, ibid., at p. 86, (Judge Oda's Separate Opinion). 136 Recent bilateral investment protection treaties between States are providing this safeguard. See the ICSID Collection of these treaties in The Investment Lnws of the World; available at: <www.worldbank.org/icsid/treaties/ treaties. hum; also available at: <ita.law.uvic.ca/invcstmcnttrcaties.htm>. In special arrangements for dispute settlement, shareholders of one nationality can be empowered to bring claims on behalf of companies of another nationality in which they have an interest. Thus, the Claims Settlement Declaration between the United States and Iran defined "claims of nationals" as "including claims that arc owned indirectly by such nationals through ownership of capital stock or other proprietary interests in juridical persons, provided that the ownership interests of such nationals collectively were sufficient at the time the claim arose to control the corporation or other entity". Iran-United States Claims Settlement Declaration, Article vu(2), 1 Iran-U.S.C.T.R. 9. See also UNCTC, Bilateral Investment Protection Treaties, S.T./C.T.C./65, 1988; Bilateral Investment Treaties for Promotion and Protection af Investment, Collection of the World Bank, Washington, D.C.. l37 Thus, in the American Asian Company, etc. v. Indonesia case, the American Asian Company was an Indonesian company owned by a United States national. The Government of Indonesia contested thejurisdiction of the ICSIL) over the case. It insisted that such local subsidiary companies could not expect the preferential treatment enjoyed by foreign corporations and should therefore submit to the jurisdiction of Indonesian law; 23 I.L.M. (1984), 351 et scg. See also A.F. Abbott, Latin American and International Arbitration Conventions, 17 Harvard Int'l L.J. 131, 1976; J.T. McLaughlin, Arbitration and Developing Countries, 13 Int'l Lawyer 211, 1979. 118 For Chinese practice, see E. Lee, Commercial Disputes Settlement in China, Lloyd's ofLondon, London, 1985, at pp. 23-24; J. Cohen, 7/<t' Role of Arbitration in Economic Cooperation with China, in Michael J. Moscr and Jesse T.H. Chang (eds.), Foreign Trade Investment and the Law in the People's Republic of China, 2nd edition, Oxford University Press, Hong Kong, 1987, p. 508. 13y ICSID Convention, supra, footnote 58. t40 The rationale for this exception has been explained as follows: "There was a compelling reason for the last provision. It is quite usual for host States to require that foreign investors carry on their business within their territories through a company organized under the laws of the host country. Ifwe admit that this makes the company technically a national of the host country, it becomes readily apparent that there is a need for an exception. If no exceptions were made for foreign-owned but locally incorporated companies, a large and important sector of foreign investment would be outside the scope of this Convention." A. Broches, 'I1,e Convention on the Settlement of Investment Disputes Between States and Nationals of other States, 136 Hague Recueil des Cours 331, 1972, at pp. 358-359.
'41 As to the nature of such agreement between the parties, an issue arose in the case of Hnliriny ]tins /Occidental Petraleurn Corporation v. T7ic Government ol-,Vforocco; see supra, footnote 20. As the Tribunal noted: "33. The question arises, however, whether such an agreement must be expressed or whether it may be implied. The solution which such an agreement is intended to achieve constitutes an exception to the general mle established by the Convention, (i.e., the Convention does not apply to disputes between a Contracting State and one of its nationals) and one would expect that parties should express themselves clearly and explicitly with respect to such a derogation. Such an agreement should therefore normally be explicit. An implied agreement would only be acceptable in the event that the specific circumstances would exclude any other interpretation of the intention of the parties, which is not the case here." See P. Lalive, Tlie First "World Bank" Arbitration (Holiday hitis v Morrocco) — Some Legal Problems, 51 Bvu, (1980), p. 123. See also Arno Asia et nl. v. The Republic of Indonesia, 23 I.L.M. 351 (1984). Recent bilateral investment protection treaties deal in advance with the question of agreement between the host State and the company. Such treaties usually provide that if a company is incorporated under the laws of one Contracting Party but the majority of shares are owned or the company is controlled by nationals or companies of the other Contracting Party, the company shall be treated for the purposes of the Convention as a company of the other Contracting Party; see, for example, Agreement for the Promotion and Protection of Investments, 22 July 1975, Great Britain-Northern Ireland-Singaporc, 1975, Gr.Brit. T.S. No. 151 (Cmnd. 6300), Article 8(1). ta= Several Icam tribunals have considered the Article 25(2)(b) exception: Holiday Inns, ibid., see Lalive, ibid.; Antur Asia, ibid; Kliickiter, supra, footnote 21; LeTCO, supra, footnote 22; -So.tB7. supra, footnote 20; Cable Televsion of Nevis Ltd. "lid Cable Television of Nevis Holdings Ltrl. v. Fedemtion 0( Sl Kitts itid Nevis, 13 Icsil) Rcv.-F.I.Lj. 328; Vacuum Salt Prorlucts Ltd. v. Government n% the RepuHlir o% Ghana, 4 ICSH) Reports 329; American Manufacturing and Trading Inc. v. Republic of Zaire, 12 Int. Arb. Report, April 1997, A-1. See also C.B. Lanmn, Jrtrisdiction of the International Centre for Settlement o% Investment Disputes, 6 Icam Rev.-F.I.L.J. 462 (1991), at pp. 469-473; C.M. Koa, The International Bank for Reconstruction and Development and Dispute Resolution: Conciliating and Arbitrating with China through the International for Settlement of Investment Disputes, 24 N.Y.U.J. Int'l L. & I'ol'y. 439, 1991, at pp. 451-462; S. Toope, Mixes International Arbitration, (�rotius, Cambridge, U.K., 1990, pp. 223-233; M.D. Rowat, Multilateral Approaches to Improving investment Climate of Developing Countries: The Cases of IcsiD and MICA, 33 Harvard J. Int'l L. 103, 1992, at pp. 109-111; Amazu A. Asouzu, International Commercial Arbitration and African States, Cambridge University Press, Cambridge,, U.K., 2001, pp. 271-300; C.F. Amerasinghe, Interpretation of Article 25(2)(b) of the ICSID Convention, in R.B. Lillich and C.N. Brower (eds.), International Arbitration irt the 21st Century: Towards "Judicialization" or Uniformity, Transnational Publishers Inc., Ardsley, New York, 1994, p. 223. 143 See Anglo-Iranian Oil Co. Case (Jurisdiction), 1(.�j Reports (1952), p. 93, at p. 112.
�" McNair, siipra, footnote 42, at p. 3. ra5 See G.A. Bcrmann, Contracts Between States and Foreigrr Nationals: A Reassessment, in H. Smit, N.M. Galston and S.L. Levitsky (eds.), Intemational Contracts, M. Bender, New York, 1981, p. 183. t46 See generally Emmanuel Gaillard and John Savage (eds.), Foudrard, Gaillard, Coldman on International Commercial Arbitration, Kluwer law International, The Hague, 1999, at pp. 35-61; Yvon Loussouarn and J. Denis Bredon, Droit du Commerce International, Paris, No. 511, 1969. French jurists, in characterizing international contracts, consider the nature of the economic operation of the contract. If the operation involves the life of international economy, the contract is regarded as an international contract; see K.S. Carlston, International Agreements and Contracts in the Field of Petroleum , Selected Readings Oil Protection by Law of Pril'ate Foreign bivestinelits, Bender, Albany, New York, 1964, at p. 63. ra� P. Barraz, The Legal Status of Oil Concessions, 5 J.W.T.L., 1971, p. 609, at p. 615; sec also Mahnoush H. Arsanjani, International Regulation of Internal Resources: A Study of Lav and Policy, University Press of Virginia, Charlottesville, Virginia, 1981, at pp. 192-197; A. Briggs, The Formation of International Contracts, 2 L.M.C.L.Q. 192, 1990. raH Peter Nygh, Autonomy in International Contracts, Clarendon Press, Oxford, U.K., 1999, at p. 51. 149 P. Mayer, Droit intenrational prive, 4th edition, Montchrestien, Paris, 1991, sec. 696. See also Gaillard and Savage, supra, footnote 146, at pp. 35-61. rsn G.W. Ray, Law Governing Contracts between States and Foreign Nationals, in Proceedings of the 1960 Institute on Private Investments, Albany, New York, 1960, p. 14. 151 Revere Copper v. Opic, 17 I.L.M. 1321, 1978 and 56 LL.R. 276. 152 Ibid., at pp. 271-272. In Mojzesz Lubelski v. State of Burundi, the Ice Tribunal, while characterizing the concession agreement concerned as an "international contract", stated as follows: "Enfin il convient de prcciscr que le dit contrat est un contrat international les elements d'extrancite etant ici: la conclusion du contrat a 1'etranger, la qualite de citoyen etranger d'un des co-contractants, ]'exportation de 1'or et du diamant faisant l'objet de la concession, admission de devises etrangeres comme monnaie du contrat et, surtout, la reference a une jurisdiction arbitrale intemationalc. Ce qui fait passer nettement au second plan les elements d'autorité de la concession, ce au profit de ses elements contractuels." ("Finally, it serves to define the said contract as an international contract that the following elements of forcignness are present: the conclusion of the contract in a foreign place; the presence of a foreign citizen as one of the parties to the contract; the export of gold and diamonds as the object of the contract; the admission of foreign monetary instruments as the currency of the contract; and, above all, the reference to an international arbitraljusrisdiction. This passes directly to the second stage of the elements of the concession, that to the profit of the contractual elements." Editor's translation) Ice Award of30 October 1968, Jurisprudence du Port d'Anvers, 1969, p. 82, at p. 90.
153 Hyde, supra, footnote 2, at p. 862. 154 J. Hyde, 105 Hague Recueil des Cours 270, 1962, at p. 322. See also K.S. Carlston, Law and Organization in World Society, University of Illinois Press, Urbana, Illinois, 1962, at p. 11. 155 Supra, footnote 143. 116 Ibid., at p. 112. In the Araitico case, supra, footnote 17, at p. 162, Aramco maintained that "because of its international connection, the oil concession must be 'delocalized' and assimilated to an international treaty, governed by the law of Nations", but the Tribunal rejected such contention, saying: "As the Agreement of 1933 has not been concluded between two States, but between a State and a private American corporation, it is not governed by public international law." (p. 165 et seq.) 157 See, for example, Sapphire, supra, footnote 17; Te:eaco, supra, footnote 17: and Revere, supra, footnote 151. 1SS See A.F.M. Maniruzzaman, State Contracts in Contemporary International Lath: Monist versus Dualist Controversies, 12 European Journal of International Law, No. 2, 2001, pp. 309-328; idern, International Developmenl Law as Applicable Law to Economic Development Agreements: A Prognostic View, 20 Wisconsin Int'l L.J., No. 1, Winter 2001, pp. 1-56.
151 See a recent confirmation of the rule in Autopista, supra, footnote 18, the Award published (extracts) in 22 A.S.A. Bulletin 3, September 2004, p. 544, especially at p. 554; the Award is also available on the ICSID Website at: <www.worldbank.org/icsid>. 1H1 Baxter, in Proceedings of the American Society of International Law, I960, p. 117, at p. 118. 161 Compare H. Batitl�ol,�Arbitration Clauses (Concluded Between French Government-owned Enterprises and Foreign Private Parties, 32 Columbia J. Transnat'1 L., 1968. 162 See Pelissier dn Basset v. A�qiers Laud and Warehouse Co., 17 May 1927, Gaz. Pal. n, 153. '6; A. Verdross, Quasi-International Agreements and International Ecnnomic Transactions, 18 Y.B.W.A. 230, 1964, at p. 240. 1(,., Peter Fischer, as mentioned in 1. Seidl-Hohenveldern, The 71",ory o_f Quasi-International and Partly International Agreements, 11 Rev. Bel. de Droit Int'l 567, 1975, at p. 570. 165 P.C. Jessup, Transnational Lao, Yale University Press, New Haven, Connecticut, 1956; Fatouros, supra, footnote 26, p. 287. D.A. Ijalaye, Extension of Corporate in International Law, Oceana Publications, Dobbs Ferry, New York, 1978, pp. 165-168. 166 See generally A.F.M. Maniruzzaman, The Lex Mercatoria and International Contracts: A Challenge for International Commercial Arbitration? 14 Amelican University Int'l L. Rev., No. 3, 1999, pp. 657-734; Roy Goode, Herbert Kronke, Ewan McKendrick andjeffrey Wool (eds.), Transnational Commercial Law: International Instruments and Commentary, Oxford University Press, Oxford, U.K., 2004; K.P. Bcrgcr (cd.), The Practice of Tml1.\'IIaticmal Law, Kluwer Law International, The Hague, 2001; idea, Transnationalisation of International Investment Contracts with Particular Rcferertce to Natural Resources Industry, 22 JENRL 1, 2004. 1'7 Supra, footnote 20, and 9 U.N.R.I.A.A., p. 250.
168 Long Island Water Supply Co. r. Brooklyn, 166 U.S. 685. 169 See the Opinion in The United States of America an behalf of Michael J . Malamatinis, Emmanuel f. Maltiniatiiiis aud Berthn Malnrnatinis v. The Republic of Turkey, in K. Nielsen, AtpiericatilBritisli Claims Arbitration (1926), p. 177; German Interests in Polish Upper Silesia Case (1926), P.C.1j., Series A., No. 17; NonraQiarr Shipounrers Cairns (1922), 1 U.N.R.LA.A. 307. '70 Rosalyn Hig�·ins, Problems and Process: International Law and How We Use It, Clarendon Press, Oxford, U.K., 1994, p. 140. 4 4 U.N.R.I.A.A, pp. 714-715. See also West v. Ml/ltibal1co Cornenuex, S.A., 807 F.2d 820, 826 and 830-831 (9th Cir. 1987). 172 The majority in that case confined itself to finding that, in the circumstances, the cancellation was not arbitrary. See also the Norwegian Shipo"'"crs' Claims case, supra, footnote 169, pp. 324-325 and 328-334; the Tilloct) case, 1 U.N.R.LA.A., pp. 395-399; and the Shufeldt Claim, 2 U.N.R.LA.A., p. 1101. 1.
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