Good faith

Questions that we will investigate What is the meaning of good faith? What is the function of this principle?

Good faith in the law of treaties Art. 26: “Every treaty in force is binding upon the parties to it and must be performed by them in good faith.” Art. 31(1): “A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”

Navigational and Related Rights (2009) What is the ordinary meaning in the 1858 Treaty of ”comercio”? Art. 31 of the VCLT confers a discretion on the interpreter How is that discretion to be exercised?

OECD Commentaries as interpretative aids Model adopted in 1963, revised in 1977 and in 1992 Changes of the commentaries every two to three years What Commentaries shall be used for the interpretation of tax treaties? Linderfalk/Hilling: This question cannot be dealt with conclusively by categorically adopting the or the other approach?

The concept of reference Singular reference: ”I like this ice-cream.” General references: ”I met with some friends yesterday. I really like them.” Generic reference: ”I like ice-cream.” ”I like being with friends.”

Nicaragua Case Nicaragua files an application with the ICJ on 9 April 1984 The US declaration of 1946: ”[This declaration shall] remain in force for a period of five years and thereafter until the expiration of six months after notification may be given to terminate this declaration.” The US notification of 6 April 1984: ”[T]he aforesaid declaration shall not apply to disputes with any Central American State or arising out of or related to events in Central America, any of which disputes shall be settled in such manner as te parties to them may agree.”

The relevance of good faith What is the effect of the notification of 6 April 1984? ICJ Statute, Art. 36(2): “The states parties to the present Statute may at any time declare that they recognize as compulsory ipso facto and without special agreement, in relation to any other state accepting the same obligation, the jurisdiction of the Court in all legal disputes concerning …” Court concludes: ”Just as the very rule of pacta sunt servanda in the law of treaties is based on good faith, so is also the binding character of an obligation assumed by unilateral declaration.” (para 60) The principle of good faith requirtes that reasonable notice be given; from 6 to 9 April 1984 would not amount to a reasonable time. (para 63)

Good faith and abuse of rights Art. 300 of UNCLOS: “Good faith and abuse of rights. States Parties shall fulfil in good faith the obligations assumed under this Convention and shall exercise the rights, jurisdiction and freedoms recognized in this Convention in a manner which would not constitute an abuse of right.”

Phoenix Action v The Czech Republic (2009) Art. 25 of the 1965 ICSID Convention: “the jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State … and a national of another State”. The Tribunal: “the Claimant’s initiation and pursuit of this arbitration is an abuse of the system of international ICSID investment arbitration. If it were accepted that the Tribunal has jurisdiction to decide Phoenix’s claim, then any pre-existing national dispute could be brought to an ICSID tribunal by a transfer of the national economic interests to a foreign company in an attempt to seek protections under a BIT.”

A theory of good faith Good faith is relevant to treaty interpretation Why? Good faith is relevant to the abuse of rights doctrine

The doctrine of acquiescence: Qualified inaction A state remained inactive although normally a protest or action would have been expected

M/V Saiga Case, sep op Wolfrum At the time of arrest, Saiga did not have the nationality of St Vincent and the Grenadines, but … It could not now object to the admissibility of the claims made by St Vincent and the Grenadines “By remaining inactive in this respect and by negotiating the conditions of the bank guarantee to be submitted by Saint Vincent and the Grenadines for the release of the ship and by finally accepting the bank guarantee Guinea accepted Saint Vincent and the Grenadines as the flag State. It would be contrary to good faith if Guinea were now allowed to reverse its position; it is barred from invoking the lapse of registration between the expiry of the Provisional Certificate of Registration and the issuing of the Permanent Certificate of Registration.”