The Calvo Clause: A problem of inter-American and international law and diplomacy

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  1. The Primary Applicability of National Law and the Role of International Law
  2. Epub The Calvo Clause: A Problem Of Inter American And International Law And Diplomacy

As a rule, such claims will be governed by national law. Despite the fact that individuals may enjoy rights under international law—and apart p. We do, however, observe certain developments set in motion by scholars, states, and non- governmental organizations attempting to fill this lacuna in international law. There are legitimate arguments in support of the proposition that it may be desirable in some circumstances for corporations to become direct bearers of international human rights obligations, especially where host Governments cannot or will not enforce their obligations and where the classical international human rights regime, therefore, cannot possibly be expected to function as intended.

The Primary Applicability of National Law and the Role of International Law

Moreover, there are no inherent conceptual barriers to States deciding to hold corporations directly responsible, either by extraterritorial application of domestic law to the operations of their own firms or by establishing some form of international jurisdiction. But these are not propositions about established law; they are normative commitments and policy preferences about what the law should become and that require State action for them to take effect. Therefore, the following remark made by the ICSID Tribunal in the investment treaty award Sempra Energy International v Argentine Republic , cannot be said to accurately depict the present state of the law.

In discussing the issue of legitimate expectations under international law, the tribunal observed:.

Apart from the question of investment risk, it is alleged that there was, inter alia , the expectation that the investor would bear any losses resulting from its activity, work diligently and in good faith, not claim extraordinary earnings exceeding by far fair and reasonable tariffs, resort to local courts for dispute settlement, dutifully observe contract commitments, and respect the regulatory framework.

In light of the fact that the Argentina—United States BIT does not appear to include any relevant substantive obligations on the part of the investor, it appears that such counterclaim would need to be based on national law, and not the treaty—as the tribunal suggested. Such an approach would be consistent with that of other arbitral tribunals considering non-contractual counterclaims brought by host states against investors. We have seen that arbitrators apply national law to the merits of the dispute when the parties have so agreed. When the tribunal may have recourse to both national and international law, considerations of host state sovereignty and territorial control over foreign investors and investments have led tribunals and scholars to hold and argue that national law should be of primary applicability.

The importance of the principle of sovereignty notwithstanding, it is submitted that a decision to apply national law to the merits ought to depend more on the national nature of the claim at hand than any automatic sequential primacy of national law. Also non-contractual claims may be based on and consequently governed by national law.

Moreover, in light of the fact that investors generally do not have any obligations under international law, non-contractual counter- claims presented by a host state against an investor would be based in and governed by national law.

State Responsibility - Ahmer Bilal Soofi - President - RSIL

Indeed, in several cases ICSID tribunals in particular, but also the Iran—United States Claims Tribunal, have concluded that national law should primarily be applied to the merits of the dispute in the absence of an agreement by the parties to the contrary. When a tribunal holds that national law should primarily apply to the dispute—for any of the reasons set out earlier: party autonomy, host state sovereignty, nature of the claim—international law may still apply to the merits of the dispute.

Indeed, it is for that very reason that it is appropriate to use the terminology of primary applicability. In this section, we will see that international law may apply indirectly, through the applicable national law Section 3. Since international law applies as a function of the national law itself—i.

Several states consider international law part and parcel of their law. Such disregard would have the undesirable consequence that the parties would be faced with one application of national law in the national courts of the host state, and another by the arbitral tribunal, as the former would be bound to respect international law as part of its law and the latter not. States differ with regard to the extent to which they incorporate international law; and investors should therefore be warned against relying on the automatic application of international law via national law. England, for instance, does not consider treaties part of its domestic law.

A second variation is that several states will not apply an international norm in case of a conflicting national norm.

However, in case of a conflict between a national norm and customary international law, it appears that a Dutch court will grant priority to the former. Finally, we note the special role of international jus cogens norms in the domestic legal order, a topic that is treated differently by various states. This is particularly relevant to the case of Argentina, whose constitutional framework and doctrine have traditionally admitted the direct application of international law whenever feasible and, at least since the constitutional reform undertaken in , expressly providing for the principle that international treaties preempt provincial and federal law.

As for ICSID tribunals, representatives present during the drafting of the ICSID Convention commented on the possibility that international law could be applied when the applicable national law incorporates international law as part of its law. The Austrian delegate pointed out that some states, such as her own, would not have difficulties with respect to the application of international law since international law is embodied in the national law.

The indirect application of international law in ICSID arbitration is supported by arbitral practice. With respect to the United States, US courts may directly apply both treaty provisions and customary international law. In practice, the application of the Treaty of Amity has been justified on the basis that it was not only international law, but also part of the law of Iran and the United States.

In his concurring opinion to the award in American International Group, Inc.

It also appears that the Treaty of Amity is part of the municipal law of both the United States and Iran. United States Constitution, Art. VI, cl. Accordingly, in cases such as this case, which involve matters that are the subject of the Treaty of Amity, that Treaty is the most, if not the only, appropriate law to apply. While customary international law is not part and parcel of Iranian law, it may be applied directly by US courts. In no award, however, has the tribunal ever applied this source of international law on the basis that it is part of US law.

Another way in which national courts give effect to international law in the national legal order is through applying the principle of consistent interpretation, whereby a rule of national law is construed in light of international law. The argument can be made that investment tribunals should always seek to construe national law in an international-law-friendly manner, and not only where the applicable national law so provides. While it is unclear whether these considerations influenced the arbitrators, this approach appears to have been adopted in Tradex Hellas S. First, arbitral tribunals may and do apply international law to the dispute when the national legal order in question incorporates international law.

Secondly, in all cases, arbitrators are advised to construe national law in light of relevant international law. When national law primarily governs the claim, international law could still apply in a corrective fashion either because national law contains lacunae or due to a conflict between a particular national norm and an international norm. However, this corrective role of national law is subject to several restrictions.

First, the situation may occur that the parties have agreed to the application of a particular national law that contains lacunae, or gaps. In several early awards, tribunals have found the national law of the host state inadequate to deal with the various issues at hand; and as a consequence, they have proceeded to apply international law, principles of justice, and principles common to various states other than the law of the host state.

While such practice does not p. I need not set out the evidence before me about the origin, history and development of Islamic Law as applied in Qatar or as to the legal procedure in that country. I have no reason to suppose that Islamic Law is not administered there strictly, but I am satisfied that the law does not contain any principles which would be sufficient to interpret this particular contract.

European Food S. Starmill S. Multipack S. Whether legal under Egyptian law or not, the acts in questions were the acts of Egyptian authorities […]. These acts, which are now alleged to have been in violation of the Egyptian municipal legal systems, created expectations protected by established principles of international law. A determination that these acts are null and void under municipal law would not resolve the ultimate question of liability for damages suffered by the victim who relied on the acts. If the municipal law does not provide a remedy, the denial of any remedy whatsoever cannot be the final answer.


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It is possible that a national law may have gaps. In such a situation, a differentiation should be made between situations in which the parties have agreed to the sole application of national law and those in which the tribunal may have recourse to both national and international law, either because of a party agreement to that effect or because the parties have not reached an agreement on the applicable law.

Where the parties have agreed to the sole application of national law, and that law contains lacunae, we have seen that the ICSID Convention prohibits the finding of a non liquet.

Epub The Calvo Clause: A Problem Of Inter American And International Law And Diplomacy

In any event, it is clear that arbitrators should not reach the conclusion that there are gaps in applicable national law too swiftly. It is only for those particular parts of the dispute where a true lacuna exists that a tribunal would be authorized to apply international law. First, the national law in question must be understood broadly to include both its statutory and judicially illuminated law, as well as its own mechanisms for filling lacunae. In the absence of usage his sentence shall be issued according to principles of Islamic Legislation.

And in the absence of Islamic Legislative provisions applicable thereto the judge shall rule in accordance with natural law provisions and rules of justice. If the parties are found to have agreed on the application of national law, such a choice should be upheld. Otherwise, the party autonomy would lose its meaning. Secondly, to the extent that the tribunal in SPP sought to distil a principle of general validity, the statement that international law should apply in case the national legal order does not contain a remedy, may be criticized on the basis that the absence of a remedy is not necessarily a lacuna; rather, it may represent a decision not to regulate a certain matter or to regulate it in a different way.

If it does and, as part of its law, has decided not to grant remedies in such matters then there is no remedy, as none is provided in the law that must be applied. Only in such cases would an application of international law be warranted.