Presentation on theme: "1 of 39 Lecture 3 DISPUTE SETTLEMENT Topics covered: Settlement of Disputes Through Diplomacy Disputes in the International Court of Justice Disputes."— Presentation transcript:
1 of 39 Lecture 3 DISPUTE SETTLEMENT Topics covered: Settlement of Disputes Through Diplomacy Disputes in the International Court of Justice Disputes in the International Center for the Settlement on Investment Disputes Disputes in Municipal Courts Immunities of States from Municipal Court Jurisdiction Choosing the Law to Apply in a Dispute in a Municipal Court Refusal of a Municipal Court to Exercise Jurisdiction
2 of 39 A. THE SETTLEMENT OF DISPUTES 1.Disputes may be settled a.By diplomacy b.By litigation 1)States or IGOs v. states or IGOs - in: a)International courts (such as International Court of Justice) b)International arbitration tribunals (usually ad hoc tribunals) c)Municipal courts (rarely)
3 of 39 A. THE SETTLEMENT OF DISPUTES 1.Disputes may be settled (cont.) b.By litigation (cont.) 2)Private persons v. private persons, states, or intergovernmental organizations a)International arbitration tribunals (such as International Center for the Settlement of Investment Disputes tribunals) b)Municipal courts
4 of 39 B. SETTLEMENT OF DISPUTES THROUGH DIPLOMACY 1.Diplomacy: The process of reconciling the parties to a disagreement by negotiation, mediation, or inquiry. a.Negotiation: The process of reaching an agreement by discussion. b.Mediation: The use of a third party who transmits and interprets the proposals of the principal parties, and sometimes, advances independent proposals. c.Inquiry: The determination of a disputed fact or facts by an independent third party.
5 of 39 C. INTERNATIONAL COURT OF JUSTICE 1.Jurisdiction of the ICJ a.Contentious Jurisdiction: power of court to hear disputes between states. 1)Prerequisite: states parties must recognize the Court's jurisdiction. a)Most commonly done on an ad hoc basis. b)Sometimes these agreements are made permanent by: i.Inclusion in a bilateral treaty. ii.Unilateral declarations made by each of the parties (called "optional clause" or Art. 36(2) declaration).
6 of 39 C. INTERNATIONAL COURT OF JUSTICE 1.Jurisdiction of the ICJ a.Contentious Jurisdiction: power of court to hear disputes between states. 1)Prerequisite: states parties must recognize the Court's jurisdiction. a)Most commonly done on an ad hoc basis. b)Sometimes these agreements are made permanent by: i.Inclusion in a bilateral treaty. ii.Unilateral declarations made by each of the parties (called "optional clause" or Art. 36(2) declaration).
7 of 39 C. INTERNATIONAL COURT OF JUSTICE ii.Unilateral declarations made by each of the parties (called "optional clause" or Art. 36(2) declaration). (cont.) Rule of Reciprocity: Art. 36(2) of the Court's Statute only requires that a state respond to a suit brought against it if the state bringing the suit has also accepted the jurisdiction of the Court. oWhere both states have limited the jurisdiction that they will recognize, the ICJ only has power to decide a case to the extent that both states have agreed to the same sort of matters.
8 of 39 C. INTERNATIONAL COURT OF JUSTICE ii.Unilateral declarations made by each of the parties (called "optional clause" or Art. 36(2) declaration). (cont.) Self-judging Clauses (or "Connally Reservations"): allow a state to exclude from its acceptance of optional clause jurisdiction any matter which it later determines is within its own domestic jurisdiction. oValidity of self-judging clauses is questionable.
9 of 39 C. INTERNATIONAL COURT OF JUSTICE 1.Jurisdiction of the ICJ (cont.) b.Advisory Jurisdiction: power of ICJ to give opinions about issues of international law at the request of the UN or its specialized agencies. 1)Cases will be rejected if they have the effect of making a state a party to a dispute without its consent.
10 of 39 C. INTERNATIONAL COURT OF JUSTICE 1.Jurisdiction of the ICJ (cont.) c.Judgments 1)Decisions of ICJ are binding between the parties and with respect to a particular case only. a)Stare decisis does not apply b)Judgment is final and without appeal. i.ICJ will interpret a judgment, ii.ICJ may revise a judgment within 10 years if a request is made within 6 months of the discovery of some new relevant fact.
11 of 39 C. INTERNATIONAL COURT OF JUSTICE 1.Jurisdiction of the ICJ (cont.) c.Judgments (cont.) 2)Compliance with ICJ judgments 1)Theoretically: Security Council may take "measures to give effect to the judgment.“ 2)Practically: there is no way to force a state to comply with a judgment. 3)Usually: judgments are complied with voluntarily.
12 of 39 D. WORLD TRADE ORGANIZATION DISPUTE SETTLEMENT PROCEDURES 1.The World Trade Organization (WTO) implements and enforces international agreements regulating international trade. a.Regulatory agreements include: 1)General Agreements on Tariffs and Trade 2)General Agreement on Trade in Services 3)Agreement on Trade-Related Aspects of Intellectual Property Rights b.WTO dispute settlement process is governed by: 1)Understanding on Rules and Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding or DSU)
13 of 39 D. WORLD TRADE ORGANIZATION DISPUTE SETTLEMENT PROCEDURES 2.DSU procedures a.WTO member states are encouraged to resolve disputes by consultation. b.If consultation fails, a member may ask the WTO to establish a Dispute Settlement Panel. c.Both during consultation and after a Panel has been established, the disputing member states may seek the assistance of the third party states in the form of good offices, conciliation, or mediation.
14 of 39 D. WORLD TRADE ORGANIZATION DISPUTE SETTLEMENT PROCEDURES 3.DSU organs a.Dispute Settlement Body is responsible for: 1)Establishing Panels. 2)Adopting reports of the Panels and the Appellate Body. 3)Monitoring the implementation of rulings and recommendations. 4)Authorizing the suspension of trade concessions and other WTO obligations.
16 of 39 D. WORLD TRADE ORGANIZATION DISPUTE SETTLEMENT PROCEDURES 4.Enforcement a.Dispute Settlement Body may ask a noncomplying party to pay compensation or allow an injured party to retaliate. b.The decisions of the Panels and the Appellate Body establish legal precedent. 1)Caveat: this precedent is very flexible -- subsequent Panels and the Appellate Body are free to deviate form earlier rulings as they believe it is necessary to do so.
JUDGE JUDY READY TO RULE-- Case: Shell v. R.W. Sturge, Ltd.: +Court+Facts+Legal Significance +Parties+Rational +Issue+Result
18 of 39 E. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) 1.In 1965 the World Bank sponsored the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention), which created ICSID. a.Purpose of the Convention: To encourage private investment in underdeveloped countries by providing a reliable mechanism for impartially resolving disputes between an investor and the country of investment. b.Signatories: Three-quarters of the countries of the world.
19 of 39 E. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) 2.Constituting an ICSID Arbitration Tribunal a.Requirements: 1)The state where the investment is being made (the host state) and the state of which the investor is a national (the home state) must both be parties to the Washington Convention. 2)The host state must have notified ICSID of the class or classes of disputes that it considers arbitrable. a)The dispute must be a legal dispute arising out of on an investment.
20 of 39 E. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) 2.Constituting an ICSID Arbitration Tribunal (cont.) a.Requirements (cont.): 3)The investor and the host state must both consent to ICSID jurisdiction. a)Investor must be a "national of another contracting state."
21 of 39 E. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) 2.Constituting an ICSID Arbitration Tribunal (cont.) b.Unilateral withdrawal is ineffective. c.Effect of consenting to ICSID arbitration: the litigants agree to exclude all other remedies. 1)The case cannot be tried in a municipal or another international tribunal. 2)The investor may not ask its home state for diplomatic protection. a)The host state can require that all local remedies be exhausted before the dispute can be taken to ICSID.
22 of 39 E. INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID) 3.ICSID Awards a.ICSID awards are binding and contracting states agree to comply with them. 1)Any review of the award by the courts of the state party to a particular dispute is considered to be in noncompliance with the award. b.The tribunal itself can review an award either to interpret it or to revise it. c.Appeal is allowed to an ad hoc committee which has the power to annul an award.
23 of 39 F. SETTLEMENT OF DISPUTES IN MUNICIPAL COURTS 1.Introduction a.Jurisdiction: the competence of a municipal (or national) court to exercise the power to try a case. b.Immunity: The ability of a party (usually a state) to escape the jurisdiction of a court - such as: 1)Sovereign Immunity 2)Act of State (or non-justiciability)
24 of 39 F. SETTLEMENT OF DISPUTES IN MUNICIPAL COURTS 2.Jurisdiction in Criminal Cases a.Grounds (or justifications) given by municipal courts for assuming jurisdiction over international crimes: 1)Territoriality principle: A court has jurisdiction if the crime was committed within the forum state's territory. 2)Nationality principle: A court has jurisdiction if the crime was committed by a national of the forum state. 3)Protective principle: A court has jurisdiction if a national interest of the forum state was injured by the offender. 4)Universality principle: A court has jurisdiction if is has custody of the person who committed the crime. 5)Passive personality principle: A court has jurisdiction if the person injured was a national of the forum state.
25 of 39 F. SETTLEMENT OF DISPUTES IN MUNICIPAL COURTS 3.Jurisdiction in Civil Cases a.Jurisdiction over Persons 1)In personam jurisdiction exists when an individual or juridical person is physically present within the forum state. a)Individuals subject to in personam jurisdiction include: i.Nationals of the forum state (whether physically present or not). ii.Natural persons physically present within the state. iii.Natural persons domiciled in the state. iv.Natural persons who consent to a court's jurisdiction.
26 of 39 F. SETTLEMENT OF DISPUTES IN MUNICIPAL COURTS 3.Jurisdiction in Civil Cases a.Jurisdiction over Persons (cont.) 1)In personam (cont.) b)Juridical persons (e.g., business entities and foreign governments) which are subject to the in personam jurisdiction of a municipal court include: i.Domestic entities (e.g., companies incorporated or formed within the forum state). ii.Foreign entities if they both: - are recognized as juridical entities by the forum state. - give their consent to the jurisdiction of a court.
27 of 39 F. SETTLEMENT OF DISPUTES IN MUNICIPAL COURTS 3.Jurisdiction in Civil Cases a.Jurisdiction over Persons (cont.) 1)In personam (cont.) c)Individual and juridical persons may give their consent to the jurisdiction of a court: i.Expressly by: a] Appearing in court after a suit has commenced. b] Appointing an agent within a state to receive service of process. c] Agreeing to the personal jurisdiction of a particular court in a forum selection clause contained in a contract. ii.Impliedly by: a] Having "minimum" business contacts with the forum state.
28 of 39 F. SETTLEMENT OF DISPUTES IN MUNICIPAL COURTS 3.Jurisdiction in Civil Cases b.b. Jurisdiction over Property 1)In rem jurisdiction: The power of a municipal court to determine the ownership rights of persons as to property located within the territory of the forum state.
29 of 39 G. IMMUNITIES OF STATES FROM THE JURISDICTION OF MUNICIPAL COURTS 1.Sovereign or State Immunity a.Defined: Doctrine that domestic courts must decline to hear cases against foreign sovereigns out of deference to their roles as sovereigns. b.Foreign sovereigns today include all of the officials of a government. c.Scope of sovereign immunity. 1)Absolute sovereign immunity (not followed anywhere today) 2)Restrictive Sovereign Immunity doctrine a)A state is immune from suit in cases involving injuries that are the result of its governmental actions (juri imperii). b)A state is not immune when the injuries result from a purely commercial or nongovernmental activity (jure gestionis) d.A state may waive its immunity if it does so knowingly
JUDGE JUDY READY TO RULE-- Case: Alejandre v. Republic of Cuba (specialty case): +Court+Facts+Legal Significance +Parties+Rational +Issue+Result
31 of 39 G. IMMUNITIES OF STATES FROM THE JURISDICTION OF MUNICIPAL COURTS 2.Act of State Doctrine (or non- justiciability) a.Defined: A municipal court will decline to exercise jurisdiction over a foreign state when that state: 1)Performed an act that was an expression of its sovereign powers; and 2)Carried out that act within in its own territory.
32 of 39 H. CHOOSING THE GOVERNING LAW 1.Municipal Courts apply the laws of other states because this the fair thing to do. a.Rationale: To have a court in another country apply different laws would discourage international exchanges of all kinds.
33 of 39 H. CHOOSING THE GOVERNING LAW 2.Choosing the Law a.Courts use "choice of law" or "conflict of law" rules to determine if they should apply their own laws or the laws of another state in settling civil disputes. b.This involves a two-step procedure: 1)If the parties to a dispute have agreed to the application of the laws of a particular country, the court will apply those laws. a)The agreement of the Parties may appear in: i.A "choice of law" clause. ii.Statements made to the court.
34 of 39 H. CHOOSING THE GOVERNING LAW 2.Choosing the Law (cont.) b.This involves a two-step procedure: (cont.) 2)If the parties have not agreed as to which laws should apply (either expressly or impliedly), then the court (depending on the state it is located in) will determine for itself which laws it should apply by: a)Following statutory dictates, b)Using the "most significant relationship" test. c)Using the "governmental interest" test.
35 of 39 H. CHOOSING THE GOVERNING LAW 3.Statutory Choice of Law Provisions a.Commonly found in civil law countries in: 1)Statutory codes (usually). 2)International treaties (occasionally). b.Common basis of these provisions: Vesting of rights doctrine. 1)Defined: A court is to apply the law of the state where the rights of the parties to a suit vested (i.e., where they legally became effective).
36 of 39 H. CHOOSING THE GOVERNING LAW 3.Statutory Choice of Law Provisions (cont.) c.Rules for determining vesting. 1.The general case: The law of the place where the act occurred shall govern. 2.For example, for a dispute involving the interpretation of a contract: a)The law of the place where the contract was made governs questions of validity. b)The law of the place where the contract was to be performed governs questions of performance. CONTRACTS
37 of 39 H. CHOOSING THE GOVERNING LAW 4.Most Significant Relationship a.Defined: A court is to apply the law of the state which has the most "contacts" with the parties and their transaction. 1)General factors that a court will consider in all cases are (in essence): a)Which law best promotes the needs of the international system? b)Which state's law will be furthered the most by applying it to the case at hand? c)Which law will best promote the underlying policies of the legal subject-matter area involved? 2)Specific factors that a court considers depends on the kind of case that is before it.
38 of 39 H. CHOOSING THE GOVERNING LAW 5.Governmental Interest a.If asked to make a choice of law, a court using this test will look to see which state has a legitimate interest in determining the outcome of the dispute. 1)If only the forum state has an interest: the court will apply the forum state's law. 2)If both the forum state and another state or states have some legitimate interest: then the forum's laws should be applied, as the court obviously understands those interests better. 3)If only one other state has an interest: the court will apply that state's law.
JUDGE JUDY READY TO RULE-- Case: Bank of India v. Gobindram Naraindas Sadhwani & Others: +Court+Facts+Legal Significance +Parties+Rational +Issue+Result
41 of 39 I. REFUSAL TO EXERCISE JURISDICTION 1.Forum Non Conveniens Doctrine a.Defined: A court may refuse to exercise its power to hear a case when it believes that it would be fairer and more convenient for the case to be decided elsewhere. 1)Factors the court will consider are: a)Private interests of the parties (e.g., the ease and cost of access to documents and witnesses). b)Public interest factors (e.g., the interests of the forum state, the burden on the courts, and the notion of judicial comity).
42 of 39 J. PROVING FOREIGN LAW 1.Presumptions a.Courts are held to know the law that applies in their own state. b.Courts are held to know the rules of international law. c.Courts are assumed not to know the law of foreign states. 1)The parties must prove foreign law as a fact.
43 of 39 K. RECOGNITION OF FOREIGN JUDGMENTS 1.Foreign court judgments: a hearing will be held by a court asked to convert a foreign judgment into a local judgment. a.Common consideration: Did the foreign court have jurisdiction before handing down its judgment? b.Other considerations depend on the country. 2.Foreign arbitral awards: a.Treated like domestic judgments in courts in states that are parties to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. b.Otherwise, must be converted into a foreign judgment in the state where the arbitration takes place, and then that judgment is treated like any other foreign court judgment.