LOGO Case Study PIL2009 Facebook.com Search PIL UIO 2009 Faculty of Law, University of Oslo Copyright reserved for this PPT

LOGO A concise introduction of the Case 2 Imperia has for a long period of time been particularly engaged in the protection of a species of small bears that are endemic to (i.e. only living within) the small island state of Micronia. Micronia’s population has until recently suffered from severe poverty. However, recently there were discoveries of valuable minerals on the island, and a number of international mining companies have started to explore the mineral resources. This has significantly improved the living conditions of the population. Due to the activities of the mining companies and the increasing development of infrastructure and the local tourist industry, the habitat of the small bears has been significantly reduced and the species has been reported to be close to extinction.

LOGO A concise introduction of the Case 2 The development in Micronia has received significant attention in Imperia, and its population has demanded that its authorities take action to prevent Miconia from taking acts that would threaten the survival of the species. Micronian authorities have warned Imperia that any action it may take would be regarded as an unlawful intervention in its internal affairs and that Micronia would take any measure available to prevent Imperia from implementing acts conceived as being contrary to Micronian interests. Many Imperian corporations have invested in Micronia, including in the mining and tourist industry. There is also a significant export of mineral resources from Micronia to Imperia. Both countries are parties to the World Trade Organization.

LOGO Diagram of the Case mining companies Small Bears Concept protection of a species of small bears Imperia Text Micronia Text Minerals An Industrialized country An Industrializing country

LOGO A Trilemma Economic Development Foreign Aid and Free Trade Environment

LOGO Legal Issues 2 We have four questions about this typical case We present and analyze them one by one

LOGO Question Provided that trade sanctions against Micronian minerals are in violation of Article XI of GATT, could such sanctions be justified under Article XX of the GATT?

LOGO Question 1 2 Article XX of GATT General Exceptions Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: (a)necessary to protect public morals; (b)necessary to protect human, animal or plant life or health; … (g)relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; …

LOGO Question 1 2 GATT Article XX on General Exceptions consists of two cumulative requirements. For a GATT-inconsistent environmental measure to be justified under Article XX, a member must perform a two-tier analysis proving: first, that its measure falls under at least one of the exceptions (e.g. paragraphs (b) to (g), two of the ten exceptions under Article XX) and, then, that the measure satisfies the requirements of the introductory paragraph (the “chapeau” of Article XX), i.e. that it is not applied in a manner which would constitute “a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail”, and is not “a disguised restriction on international trade”.

LOGO Question 1 2 GATT Article XI: Quantitative restrictions and licences Article XI of GATT imposes another type of limit on measures that a party can take to restrict trade. It prohibits the use of quotas, import or export licences, or similar measures related to the import or export of goods. This prohibition stems from the fact that such volume-based measures are more economically distorting than are price-based measures such as tariffs and taxes. Agricultural products currently benefit from an important exception to Article XI. Article XI might conceivably lead to conflicts with the trade mechanisms in some MEAs. For example, the Basel Convention and CITES impose licence or permit requirements for trade in the materials they control. To date these types of provisions in MEAs have never been challenged under trade laws.

LOGO Question Could a public statement warning the population of Imperia against travelling to Micronia because it would contribute to extinction of the small bears be regarded as a violation of international law?

LOGO Question 2 2 Legal texts used for this question: Convention on Biological diversity (CBD), article 11, p.1291: each contracting party shall, as far as possible and as appropriate, adopt economically and socially sound measures that act as incentives for the conservation and sustainable use of components of biological diversity.

LOGO Question 2 2 Rio Declaration on Environmental and Development, principle 2, p.1300: States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction.

LOGO Question 2 2 Draft Articles on Prevention of Transboundary Harm from Hazardous Activities, preamble, p.1874: bearing in mind the principle of permanent sovereignty of states over the natural resources within their territory or otherwise under their jurisdiction or control, bearing also in mind that the freedom of states to carry on or permit activities in their territory or otherwise under their jurisdiction or control is not unlimited.

LOGO Question 2 2 According to the article 11 of the CBD, a state can warn its population about the probable extinction of species. A public statement can be made in order to warn people that travel to a country like Micronia, which contains the world’s only population of a small bear species. We can see that the Convention on Biological Diversity in its article 11 provides the possibility for a State to adopt sound measures that act as incentives for the conservation of biological diversity.

LOGO Question 2 2 The Draft Articles on Prevention of Transboundary Harm from Hazardous Activities, in its general principles, says that the freedom of states to carry on or permit activities in their territory or otherwise under their jurisdiction or control is not unlimited. So, a such public statement, taken by the State of Imperia, cannot be regarded as a violation of international law. The protection of environment is an international issue and each state has to contribute to its protection. So the sovereignty of the State can be limited in presence of a big issue as the protection of the environment.

LOGO Question 2 2 On the other hand, according to the Rio Declaration on Environmental and Development in its principle 2, it is clear that a State has the sovereign right to exploit its own resources pursuant to its own environmental and developmental policies, and the responsibility to ensure that activities within its jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction. The activities of the mining companies and the development of tourism do not cause damage to the State of Imperia. It is a national issue which concerns only Micronia. A public statement from a foreign country can be regarded as a violation of the sovereignty of the State concerned.

LOGO Question 2 2 The Draft Articles on Prevention of Transboundary Harm from Hazardous Activities in its general principles reminds us the principle of permanent sovereignty of states over the natural resources within their territory. So, it is also possible to consider the public statement of Imperia as a violation of international law, and a violation of the sovereignty of the State of Micronia. As advisor to the Imperial Ministry of Foreign Affairs, I would say that there is a dilemma between the sovereignty of the State of Micronia and the international protection of the environment. Considering the fact that these small bears only exist in Micronia, it is important to warn the population of Imperia, and from other states, of the effects of tourism on the environment of this small island. A public statement, which aim is to warn population about impacts of tourism on the wildlife of the island, cannot be regarded as a violation of international law.

LOGO Question Could a law punishing Imperian corporations investing in Micronia be regarded as a violation of international law?

LOGO Question 3 2 UN Charter of Economic Rights and Duties of States (UNGA Res XXIX 1974): Two perspectives: 1) Literal Interpretation 2) Purposive Interpretation

LOGO Question 3 2 1) Literal Interpretation: UN Charter of Economic Rights and Duties of States (UNGA Res XXIX 1974), Article 2: Each state has the right to: b) regulate and supervise the activities of transnational corporations within its national jurisdiction and take measures to ensure that such activities comply with its laws, rules and regulations, and conform with its economic and social policies… Transitional corporations shall not intervene in the internal affairs of the host State…

LOGO Question 3 2 2) Purposive Interpretation: UN Charter of Economic Rights and Duties of States (UNGA Res XXIX 1974): Article 30: The protection, preservation and enhancement of the environment for the present and future generations is the responsibility of all States. All States shall endeavour to establish their own environmental and developmental policies in conformity with such responsibility. The environmental policies of all States should enhance and not adversely affect the present and future development potential of developing countries. All states have the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction. All States should co-operate in evolving international norms and regulations in the field of the environment.

LOGO Question 3 2 Article 24: All States have the duty to conduct their mutual economic relations in a matter which takes into account the interests of other countries. In particular, all States should avoid prejudicing the interests of developing countries. Article 25: In furtherance of world economic development, the international community, especially its developed members, shall pay special attention to the particular needs and problems of the least developed among the developing countries…with a view to helping them to overcome their particular difficulties and thus contribute to their economic and social development Article 32: No State may use or encourage the use of economic, political or any other type of measures to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights.

LOGO Question 3 2 The UN Declaration on Permanent Sovereignty over Natural Resources (UNGA Res (XVII)) also supports this: Article 5. The free and beneficial exercise of the sovereignty of peoples and nations over their natural resources must be furthered by the mutual respect of States based on their sovereign equality. Article 7. Violation of the rights of peoples and nations to sovereignty over their natural wealth and resources is contrary to the spirit and principles of the Charter of the United Nations and hinders the development of international co- operation and the maintenance of peace.

LOGO Question 3 2 Conclusion: purposive vs. literal interpretation? The conflict here highlights the tension of a state’s ability exercise its sovereignty in an international context without infringing on another state’s sovereignty: Imperia with regards to its right to dictate laws to Imperian corporations, and Micronia with regards to its right to further develop its country while making full use of its natural resources.

LOGO Question 3 2 Question 3 Presentation Notes: There is nothing in this Charter which explicitly prohibits countries from placing sanctions on its own corporations in relation to trade. In fact, Article 2 affirms Imperia’s right to regulate transnational corporations in order to conform with its social policies. Thus, this article would allow Imperia to take measures such as punishing Imperian corporations investing in Micronia on the basis of requiring such corporations to conform with the states’ environmental policy. When reading the Charter as a whole – and especially Article 30, Imperia’s desire to punish Imperian corporations that invest in Micronia, comes into conflict with Micronia’s claim to state sovereignty in making decisions that enable its development. Particularly important is that the environmental policies of all States should enhance and not adversely affect the present and future development potential of developing countries. Thus, even though Imperia’s proposed law could be legitimate, this law would also be contrary to the spirit of this Charter on Economic Rights and Duties of States, particularly if such actions adversely affect present and future development of Micronia. Moreover, further reading of the Charter suggests it is the responsibility of developed countries to aid developing countries in areas of economic and environmental development. Other provisions that support this ‘purposeful’ interpretation of the Charter include Articles 24, 25 and 32. While imposing punishments on Imperian corporations investing in Micronia would not be an explicit violation of international law, its actions could be seen as a violation of the spirit and principles of the UN Charter. As an advisor to the Foreign Affairs ministry of Imperia, I would suggest that since Imperia has heavily invested in Micronia, such a law would not be economically beneficial for either country. A better way to ensure the protection of Micronian bears and uphold a purposive interpretation of the Charter would be to work together with Micronia to develop and implement environmental safety and protection policies. This would give effect to the state interests of both countries, while minimally affecting the others’ state sovereignty.

LOGO Question Could a law punishing any corporation, i.e. regardless of its nationality, investing in Micronia be regarded as a violation of international law?

LOGO Question 4 2 Question 4 is strongly co-related to question 3, the only difference is concerned with the Nationality of the companies. According to the given case both Imperia and Micronia are member states of WTO, under WTO framework, a law punishing any corporations from a member state would violate the free trade principle. But the issue here is Could a law punishing a corporation from non-WTO member state?

LOGO 2 Although a none-WTO member state shall not be bound by GATT agreement, according to UN Charter, all states are bound by some universal principles under this Charter! Art 2 points out as the following Question 4

LOGO 2 UN Charter Art 2 Fundamental Principles 1The Organization is based on the principle of the sovereign equality of all its Members. 2 All Members shall settle their international disputes by peaceful means. 3 The Organization shall ensure that states which are not Members of the United Nations act in accordance with these Principles so far as may be necessary for the maintenance of international peace and security. 4 Nothing contained in the present Charter shall authorize the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any state or shall require the Members to submit such matters to settlement under the present Charter; but this principle shall not prejudice the application of enforcement measures under Chapter Vll. Question 4

LOGO Question 4 2 Firstly, General Assembly resolution 1803 (XVII) of 14 December 1962, "Permanent sovereignty over natural resources“ is one legal resource to solve this problem Legal resources: General Assembly resolution 1803 (XVII) of 14 December 1962, "Permanent sovereignty over natural resources" Legal Literature: Sovereignty over Natural Resources: Balancing Rights and Duties By Nico Schrijver. The book are found in a Swedish library,or you can access the book on the Internet

LOGO Permanent sovereignty over natural resources 2 1. The right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the State concerned. 2. The exploration, development and disposition of such resources, as well as the import of the foreign capital required for these purposes, should be in conformity with the rules and conditions which the peoples and nations freely consider to be necessary or desirable with regard to the authorization, restriction or prohibition of such activities. 3. In cases where authorization is granted, the capital imported and the earnings on that capital shall be governed by the terms thereof, by the national legislation in force, and by international law. The profits derived must be shared in the proportions freely agreed upon, in each case, between the investors and the recipient State, due care being taken to ensure that there is no impairment, for any reason, of that State's sovereignty over its natural wealth and resources. 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.

LOGO Permanent sovereignty over natural resources 2 5. The free and beneficial exercise of the sovereignty of peoples and nations over their natural resources must be furthered by the mutual respect of States based on their sovereign equality. 6. International co-operation for the economic development of developing countries, whether in the form of public or private capital investments, exchange of goods and services, technical assistance, or exchange of scientific information, shall be such as to further their independent national development and shall be based upon respect for their sovereignty over their natural wealth and resources. 7. Violation of the rights of peoples and nations to sovereignty over their natural wealth and resources is contrary to the spirit and principles of the Charter of the United Nations and hinders the development of international co-operation and the maintenance of peace. 8. Foreign investment agreements freely entered into by or between sovereign States shall be observed in good faith; States and international organizations shall strictly and conscientiously respect the sovereignty of peoples and nations over their natural wealth and resources in accordance with the Charter and the principles set forth in the present resolution.

LOGO Question 4 2 Secondly, Resolutions adopted by the General Assembly 3281 (XXIX). Charter of Economic Rights and Duties of States is another legal basis to solve this legal problem

LOGO Charter of Economic Rights and Duties of States 2 Resolutions adopted by the General Assembly 3281 (XXIX). Charter of Economic Rights and Duties of States Chapter 1 Fundamentals of International Economic Relations Sovereignty, territorial integrity and political independence of States; Sovereign equality of all States; Non-aggression; Non-intervention; Mutual and equitable benefit; Peaceful coexistence; Equal rights and self-determination of peoples; Peaceful settlement of disputes; Remedying of injustices which have been brought about by force and which deprive a nation of the natural means necessary for its normal development; Fulfillment in good faith of international obligations; Respect for human rights and international obligations; No attempt to seek hegemony and spheres of influence; Promotion of international social justice; International co-operation for development; Free access to and from the sea by land-locked countries within the framework of the above principles.

LOGO Charter of Economic Rights and Duties of States 2 Resolutions adopted by the General Assembly 3281 (XXIX). Charter of Economic Rights and Duties of States Article 7 Every State has the primary responsibility to promote the economic, social and cultural development of its people. To this end, each State has the right and the responsibility to choose its means and goals of development, fully to mobilize and use its resources, to implement progressive economic and social reforms and to ensure the full participation of its people in the process and benefits of development. All States have the duty, individually and collectively, to co-operate in eliminating obstacles that hinder such mobilization and use.

LOGO Question 4 If a WTO member state have some problem with a none-WTO state,how to deal with the dispute? Now we have to refer to bilateralism ILC draft articles on prevention of trans-boundary harm from hazardous activities can be a good reference

LOGO Question 4 ILC draft articles on prevention of transboundary harm from hazardous activities Dispute settlement 2. Failing an agreement on the means for the peaceful settlement of the dispute within a period of six months, the parties to the dispute shall, at the request of any of them, have recourse to the establishment of an impartial fact-finding commission. 6. The Commission shall adopt its report by a majority vote, unless it is a single- member Commission, and shall submit that report to the parties to the dispute setting forth its findings and recommendations, which the parties to the dispute shall consider in good faith.

LOGO 2 So Sovereignty of a state should be respected at any circumstances From my perspective, we have to strike the balance between Free Trade and Environment Protection Question 4

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