On June 16, the United States Supreme Court (SCOTUS) (Sculpture of Contemplation of Justice at the US Supreme Court, above left, credit) issued its judgment (penned by Justice Antonin Scalia) in Republic of Argentina v. NML Capital Ltd., affirming the Second Circuit Court of Appeals decision holding that the Foreign Sovereign Immunities Act (FSIA) did not immunize Argentina from postjudgment discovery of information sought by judgment creditor NML Capital Ltd. in regard to Argentina’s extraterritorial assets. Despite its broad waiver of sovereign immunity in its bond indenture agreements, Argentina had argued that the broad scope of discovery procedures in aid of execution of judgments was limited by principles of sovereign immunity. (Opinion of the Court, p. 5). The Second Circuit had held that “in a run of the mill execution proceeding….the district court would have been within its discretion to order the discovery from third-party banks about [Argentina’s] assets located outside the United States.” (Opinion of the Court, p. 5). From a textual reading of the conferral of immunities under the FSIA (§ 1604, 1606, 1609, 1610, 1611), the Court declared “there is no third provision forbidding or limiting discovery in aid of execution of a foreign-sovereign judgment debtor’s assets.” (Opinion of the Court, p. 8).The SCOTUS judgment thus enables NML to ask for information from third parties on Argentina’s global assets, so as to determine which of these assets could be subject to execution to satisfy a judgment debt of around $2.5 billion. The holdout creditors constitute around 7% of the total bondholder debts (about $1.5 billion remaining owed to the holdouts), with the 93% majority of bondholders having participated in restructurings in 2005 and 2010 where they accepted around 70% haircuts in their credits due. Read the rest of this entry…
Republic of Argentina v. NML Capital Ltd.: The Global Reach of Creditor Execution on Sovereign Assets and The Case for an International Treaty on Sovereign Restructuring
In a post earlier this week, I considered the implications of the European Court of Human Right’s (ECtHR) recent just satisfaction judgment in Cyprus v. Turkey for the inter-state application filed by Ukraine against Russia (see press release announcing interim measures order here). In the present post, I would like to make two short points about the implications of the ECtHR’s 2004 judgment in Ilaşcu v. Moldova and Russiafor the situation in Crimea (see previous post on this issue by Philip Leach). First, there are indications that the ECtHR’s approach in Ilaşcu to responsibility of the State for territory seized from it by force will be applied to Crimea not only in the Court but, perhaps, in the UN human rights organs as well. And, second, Ilaşcu, especially considered alongside Cyprus v. Turkey, reinforces the position that the passage of time does not, under modern international law, cure the unlawfulness of a change of boundaries effected by use or threat of force.
Responsibility notwithstanding lack of effective control
Ilaşcu was a case brought against two States, one of which could not (and still cannot) exercise effective control in the whole of its territory. The Court’s determination that “the Moldovan Government… does not exercise authority over part of its territory, namely that part which is under the effective control of the [separatist movement]” (para. 330) stated the obvious; but the conclusion that followed was not so obvious. The Court concluded that…
“even in the absence of effective control over the Transdniestrian region, Moldova still has a positive obligation under Article 1 of the Convention to take the diplomatic, economic, judicial or other measures that it is in its power to take and are in accordance with international law to secure to the applicants the rights guaranteed by the Convention” (para. 331).
To hold Moldova responsible for territory beyond its effective control would seem to raise problems of fairness. And, yet, the holding is, at least in a general way, in accord with the rule under which the injured State, too, is obliged not to recognize or aid in the consolidation of a situation created by a gross breach of a fundamental rule Read the rest of this entry…
The forthcoming G20 Leaders’ Summit on 5-6 September 2013 (pictured above left, credit) will expectedly focus on US President Barack Obama taking advantage of bilateral and multilateral talks at this forum to press the case for intervention in Syria to other world leaders.
Against the urgency of proposed Syrian intervention, however, the Summit does promise to take up quietly equally urgent issues on global economic and regulatory governance. What would be of interest to international lawyers is the Summit’s upcoming consideration of the September 2013 G2O/OECD High-Level Principles of Long-Term Investment Financing by Institutional Investors. These Principles proclaim to
“help policy makers design a policy and regulatory framework which encourages institutional investors to act in line with their investment horizon and risk-return objectives, enhancing their capacity to provide a stable source of capital for the economy and facilitating the flow of capital into long-term investments. The principles address regulatory and institutional impediments to long-term investment by institutional investors and aim to avoid interventions that may distort the proper functioning of markets.”
The Principles are designed to complement existing international ‘soft’ standards and guidelines such as, among others, the United Nations Principles for Responsible Investment, the Santiago Principles for Sovereign Wealth Funds, the OECD Principles for Public Governance of Public-Private Partnerships, and the OECD Guidelines on Multinational Enterprises.
Institutional investors – particularly sovereign-owned or controlled entities – pose unique questions of international responsibility and the attributability of their conduct to their sovereign owners or sponsors. The Principles tacitly accept that institutional investors are not mere passive financiers given their long-term investment horizons and activities across different States. To this end, the Principles call upon States to ensure that institutional investors are “adequately regulated and supervised, taking into account their specificities and the risks they face, and in line with relevant international standards” (Principle 1.6). The institutional investor likewise has the responsibility to “identify, measure, monitor, and manage the risks associated with long-term assets as well as any long-term risks – including environmental, social, and governance risks” (Principle 3.4). Read the rest of this entry…
The Maastricht Principles and Extraterritorial Obligations in the Area of ESC Rights: A Response to Margot Salomon
The Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights, and the legal Commentary to them, are incredibly rich and progressive materials for which the drafters, including Margot Salomon (whose EJIL:Talk! post on the Maastricht Principles can be found here), deserve all credit. The space allotted to me is too short to discuss the entire document. Therefore, I have decided to limit myself to making two ‘jurisdictional’ observations: one relating to the link between the concepts of human rights jurisdiction and state responsibility, and the other relating to the link between human rights jurisdiction and the principles of jurisdiction under public international law.
(1) It is remarkable that the Maastricht Principles do not draw a direct link between concept of human rights jurisdiction and the concept of state responsibility. The Commentary to Principle 11 (the principle that concerns state responsibility) explicitly states in this respect that ‘[t]he question of state responsibility is distinct from that of jurisdiction as defined in Principles 9 and 10’ – but then does not go on to indicate how both questions actually differ from each other. As a result, Principles 9 and 10 on jurisdiction seems to be floating in mid-air, although they may clearly animate the conditions under which states incur responsibility, as in fact elaborated on in the remainder of the Principles. In my view, there is a clear link between the notions of jurisdiction and state responsibility, and the drafters may have wanted to address it. Read the rest of this entry…
The Maastricht Principles on Extraterritorial Obligations in the Area of Economic, Social and Cultural Rights: An Overview of Positive ‘Obligations to Fulfil’
Margot E. Salomon is Senior Lecturer, Centre for the Study of Human Rights and Law Department, London School of Economics. She was a member of the 6-person drafting committee that prepared the Maastricht Principles and co-author, along with the other committee members, of the accompanying Commentary.
This week Human Rights Quarterly published the 86-page legal Commentary to the Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights. The Maastricht Principles were developed over a two-year period between 2009 and 2011 and subsequently adopted by human rights experts at a meeting in September 2011 convened by Maastricht University and the International Commission of Jurists. Signatories include current and former members of UN human rights treaty bodies, former and current Special Rapporteurs of the Human Rights Council, along with academics and legal advisers of leading non-governmental organizations.
The Maastricht Principles are built upon two key conceptual foundations. First, that international human rights law requires that States, when conducting themselves in a way that has real and foreseeable effects on human rights beyond borders, must ensure that they respect and protect rights, as well as in some circumstances, fulfil rights. Second, international law, most pointedly in the area of economic, social and cultural rights, demands prescriptively that States act to realize rights extraterritorially, through ‘international assistance and cooperation’. The aim of the Principles is to enunciate the legal parameters in which these obligations are to be discharged (for an overview of the Principles generally, see Salomon and Seiderman, Global Policy Journal, November 2012) The aim of the Commentary is to set out the legal authority for the Principles.
A 6-person committee was convened to prepare an advanced set of Principles for negotiation, discussion and adoption. One challenge faced by the drafting committee was that much of the extant international jurisprudence regarding extraterritorial obligations, whether emanating from UN treaty bodies, regional human rights courts, or scholarly legal commentary, applied to these obligations in respect of civil and political rights. With its focus on socio-economic rights in particular, the emerging thread (common to both sets of rights) recognized by the Maastricht Principles is that an individual will be considered to fall within the jurisdiction of a State when that State exercises authority or effective control over territory or persons on foreign territory. Read the rest of this entry…