ITLOS order Ghana to release Argentine navy ship

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On 15 December, the International Tribunal for the Law of the Sea (ITLOS) ordered Ghana to release the Argentine military training vessel ARA Fragata Libertad (see oral proceedings). NML Capital, an investment company focused on distressed debt based in the Cayman Islands and owned by Elliot Associates, a US hedge fund, had earlier obtained an order from the Ghana Superior Court of Judicature (Commercial Division) to attach the Libertad moored in the port of Trema to satisfy a judgment by a US District Court for payment on defaulted Argentine bonds. The Libertad was on an official goodwill mission in Ghana’s internal waters at the time of the attachment.

As Matthew Happold and Michail Risvas discussed in their earlier EJIL!Talk posts, the jurisdiction of ITLOS to grant provisional measures in this case was by no means assured. The main jurisdictional hurdle for Argentina was that Article 32 UNCLOS (“nothing in this Convention affects the immunities of warships and other government ships operated for non-commercial purposes’), seemed to preserve the immunity of warships under customary international law, rather than UNCLOS providing for such immunity. Under Article 288 UNCLOS, compulsory jurisdiction of the ITLOS under Article 287 UNCLOS is limited to disputes concerning the ‘interpretation and application‘ of the UNCLOS. Against this background, the unanimous order by ITLOS (including ad hoc Judge Mensah appointed by Ghana) of last week for the unconditional release of the Libertad was unexpected.

The ITLOS offered little reasoning in support of its order, especially insofar as the requirements for provisional measures were concerned. Only 21 out of a total of 108 paragraphs concern the reasons for the order; the remainder recounts the procedural history and the arguments of Argentina and Ghana. The order merely refers obliquely to the “circumstances of the present case”, and concludes, with no reasoning, that the situation was urgent so as to require it to issue provisional measures. Judge Paik, in his declaration took the view that “the Order should be clearer in terms of how Argentina’s requests meets the [requirements of urgency and irreparability]” (though taking the view that these requirements were satisfied on the facts).

On its own jurisdiction, the Tribunal considered that Article 32, in view of the formulation “nothing in this Convention affects the immunities of warships”, applied generally and was not limited to the territorial sea (Article 32 is found in Part II of UNCLOS on the territorial sea and contiguous zone). The ITLOS observed that “some of the provisions i.e. Article 32] may be applicable to all maritime areas (para. 64). This possibility was sufficient to found the Tribunal’s prima facie jurisdiction to order provisional measures.

The Tribunal fails to mention Article 288 UNCLOS – Ghana’s central jurisdictional objection was that even if there was a dispute between Argentina and Ghana, it concerned general international law, rather than the interpretation or application of UNCLOS. The Tribunal observed at the outset that without doubt general international law provides for the immunity of warships (a point on which Ghana agreed). In light of the objective of peaceful settlement of disputes in Article 279 UNCLOS (without discussing the import of the limitation to disputes “concerning the interpretation or application of this Convention”), the Tribunal considered provisional measures justified on the basis that the attachment endangered the friendly relations between Ghana and Argentina. The Tribunal seemed to place weight on the incident of November 7 in particular when port officials sought to move the Libertad to a different berth in Tema port, implementing a court order, and briefly cut off water and electricity to the ship. Argentina responded by ordering its sailors to display weapons on deck. During the hearing, Ghana expressed its “sincere regret about the unfortunate events of 7 November 2012″ and added that the “port authorities sought to enforce the High Court order incompliance with their domestic law obligation to do so.”

The purpose for ordering jurisdictional measures in this case appears to have been to avoid any aggravation or extension of the dispute. The jurisprudence of the ICJ is divided on whether this is a separate ground for ordering provisional measures. In the Frontier Dispute, the ICJ affirmed that provisional measures may be granted in such circumstances:

The Court] by virtue of Article 41 of the Statute [has] the power to indicate provisional measures with a view to preventing the aggravation or extension of the dispute whenever it considers that circumstances so require … Whereas, in particular, when two States jointly decide to have recourse to a chamber of the Court, the principal judicial organ of the United Nations, with a view to the peaceful settlement of a dispute, in accordance with Article 2, paragraph 3, and Article 33 of the Charter of the United Nations, and incidents subsequently occur which not merely are likely to extend or aggravate the dispute but comprise a resort to force which is irreconcilable with the principle of the peaceful settlement of international disputes, there can be no doubt of the Chamber’s power and duty to indicate, if need be, such provisional measures as may conduce to the due administration of justice.

However, the ICJ was unwilling to order provisional measures on this ground in Pulp Mills on the River Uruguay case (Judge Buergenthal favoured relying on a separate ground of avoiding aggravating or extending the dispute). Conversely, the Court relied on this rationale in Georgia v Russian Federation and Costa Rica v Nicaragua.

In their joint separate opinion, Judges Cot and Wolfrum took issue with the ITLOS’s cavalier approach to provisional measures, while agreeing with the operative part of the Tribunal’s order. The overall aim of their separate opinion was to limit the implications of the Tribunal’s order to this particular case. They took the view that the order did not take sufficient account of the ICJ’s settled jurisprudence on provisional measures, and they saw no reason to depart from that jurisprudence.

After noting that the ITLOS was issuing provisional measures in relation to a dispute pending before another international forum – the Annex VII tribunal, which implied that there was a need to exercise a degree of comity towards that tribunal, the two judges underscored in their separate opinion that the more clarity on the threshold for provisional measures was desirable. They placed particular emphasis on Article 288, limiting jurisdiction to the interpretation or application of the Convention – which they highlight was part of the compromis in return for compulsory dispute settlement under Part XV UNCLOS:

Any attempt to broaden the jurisdictional powers of the Tribunal and that of arbitral tribunals under Annex VII going beyond what is prescribed in article 288 of the Convention is not in keeping with the basic philosophy governing the dispute settlement system of the Convention. It undermines the Understanding reached at the Third UN Conference on the Law of the Sea, namely that the dispute settlement system under the Convention will be mandatory but limited as far as its scope is concerned. This limitation is not only reflected in the wording of article 288 of the Convention but equally in Section 3 of Part XV enumerating various limitations and exceptions. In our views this fundamental consideration has not been taken into account by the Order in interpreting Article 32.

They also underscored the need to distinguish issues of jurisdiction from applicable law – on which the Order fell short. Without consent, provisional measures infringed the sovereign rights of the respondent (para. 14). In their view, the immunity of warships in internal waters was not incorporated into UNCLOS. The ICJ’s jurisprudence pointed to the need to scrutinize the grounds advanced by the applicant state for provisional measures, and to “compare the jurisdictional basis with facts on which the claim of the applicant was based” (para. 13). An abstract evaluation was insufficient, and limited but careful scrutiny of the jurisdictional basis for provisional measures was required.

UNCLOS was based on the principle, reflected in many of its provisions, that the coastal state has sovereignty over internal waters. They find support for this conclusion in the legislative history of the Convention, the 1930 Hague Conference and the 1928 Stockholm Resolution of the Institut de droit international. They reject the Order’s presumption that “all activities of the coastal state in its internal waters and its ports are governed by the Convention and accordingly come under the jurisdiction of the Tribunal” (para. 34). As a result, they disagreed with the Order’s interpretation of Article 32 UNCLOS, on both the ground that it provides for immunity of warships and that it applies to internal waters.

Article 32, they explain, takes the immunity of warships for granted: “article 32 constitutes a reference rather than the regulation itself (para. 41). “It simply takes the immunity of warships as a fact.” (para. 50). Its basis was in customary international law, rather than in UNCLOS. They also concluded that Article 32 prima facie applies only in the territorial sea, rather than all maritime spaces.

Instead, they grounded the Tribunal’s jurisdiction on estoppel, finding that Ghana, due to various contradictions in its position, was estopped from objecting to the ITLOS’s jurisdiction: “Ghana, having given official assurances to Argentina as to the visit of the ARA Libertad in the port of Tema, cannot object today to a procedure ensuring implementation of the assurances” (para. 58). Argentina had not even relied on estoppel in its memorial or in the oral hearing. By contrast, Judge Rao pointed out in his separate opinion, that estoppel or waiver cannot “in and by itself afford a basis on which prima facie jurisdiction of the Annex VII tribunal might be funded” (para. 12).

Another salient issue in the case was that the government of Ghana had supported Argentina’s position in the domestic proceedings that the Libertad enjoyed immunity from enforcement. The government certified that the attachment of the ship would be in breach of sovereign immunity and interfered with the orderly conduct of Ghana’s international relations. Notwithstanding, the Court issued an order of attachment. Before the ITLOS, Ghana argued that it could not simply disregard the order of its domestic courts – to do so would violate its separation of powers and undermine the rule of law in Ghana. The ITLOS, however, did not accept that this argument could defeat Ghana’s international obligations. Under international law, Ghana was also responsible for all its organs, including its courts.

The relief granted by the ITLOS may also raise eyebrows. Though the ITLOS did not grant the full relief requested by Argentina in this provisional measures phase (including a salute to the Libertad when leaving the port), the unconditional release, “comes close, in substance, to the principal relief sought” by Argentina (Declaration Judge Paik, para. 8).  There is a fine line between virtually resolving the dispute and preserving the rights of the parties for the determination on the merits. The ITLOS, and Judge Paik, took the view that the unconditional release of the Libertad did not affect the rights or prejudice the rights of Ghana. This conclusion was based on Ghana and Argentina agreeing on the substantive question of immunity – and hence only the rights of the private party to the domestic proceedings, NML, were affected by the unconditional release of the vessel.

Notwithstanding this formal position, Ghana now faces a difficult choice. Thus far Ghana has reserved its position. It took “careful note of the Tribunal’s Order” and promises to “carefully consider the Tribunal’s Order with a view to ensuring that it is given effect, having regard to the requirements of the Constitution and the country’s international obligations.” It also expressed its regret that the matter had come to ITLOS in the first place. NML also dug in its heels, declaring that it was completely inappropriate for the International Tribunal for the Law of the Sea to attempt to interfere with orderly proceedings of the independent judiciary of Ghana.”

Ghana could comply with the order of ITLOS and release the Libertad promptly. This would mean violating an enforceable order of a domestic court while an appeal against that order is still pending in the domestic legal system. The consequences may not be limited to Ghana’s legal system. NML could request arbitration under the Ghana-UK BIT and bring a claim based on denial of justice against Ghana. The alternative is for the government of Ghana to let the domestic legal proceedings run their course (a hearing in the appeal is expected for January), thereby breaching its international legal obligation to accord immunity to the Libertad and defy the ITLOS order. Viewed from the perspective of compliance, the ITLOS’s broad reading of its jurisdiction on provisional measures is not without risks for the Tribunal.

For Argentina, by contrast, the successful request for provisional measures to ITLOS was an unqualified success. While it remains embroiled in a high-stakes dispute with NML in New York about the proper interpretation of the pari passu, the ITLOS gave it reason to celebrate. Hernán Lorenzo, Argentina’s economics minister, duly proclaimed victory in Argentina’s fight against vulture funds.

Should Ghana release the Libertad, the ship will receive a hero’s welcome in Buenos Aires. Once the Libertad has left the port of Tema, this particular asset will sail into the sunset, beyond the reaches of the Ghana’s courts. NML will not get another bite at this particular asset. In that sense, the provisional measures go very far. Nevertheless, the long-running war of attrition between Elliot Associates/NML and Argentina is bound to continue in courts around the world, wherever Argentine assets may be found.

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Daniel says

December 18, 2012

The result of this case, if not its explicit reasoning, suggests that it continues the Saiga No. 2 line of cases essentially interpreting art. 388 as providing jurisdiction for disputes concerning matters related to the convention (with claims founded in the convention or in customary law of the sea), and not just disputes concerning the interpretation and application of the convention, as the text would suggest.

Marcelo Kohen says

December 18, 2012

Dear Michael,
I find your comment very unbalanced. As a matter of course, having being counsel in this case, I will abstain from any comment of the order. What I can tell you is that, if NML tries to invoke a purported violation by Ghana of the Ghana/UK BIT because of Ghana having complied with ITLOS order, I am perfectly ready to work for Ghana and I will expect the same result we obtained in ITLOS last Saturday!

Interested observer says

December 18, 2012

Dear Prof Kohen
I am intrigued to know how you find the comment unbalanced. It seems a fairly straightforward report on the decision, and raises some other interesting points besides. All in all, this has been a fascinating case to observe.
Ps Apologies for the anonymity.

Phu Nguyen says

December 19, 2012

Thank you, Michael, for such an interesting post.

I believe that except Argentine, ITLOS judges and Ghana are not experienced in multi-level and multi-forum litigations and may not imagine that such Order will send Ghana facing an BIT claim from a different legal instrument in a completely-different arena.

I hope you will write more on this as well as the Order's possible impact on the terms of future sovereign bonds.