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Law and Business Reviewof the Americas

VOLUME 21 FALL 2015 NUMBER 4

TABLE OF CONTENTS

ARTICLES

The Effects of Section 1504 of the Dodd-Frank Act:Disclosure of Payments by Resource Extraction IssuersKurt T. Miller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371

PMI v. Uruguay: Public Health and Arbitration Intertwinedand UnderminedKeegan Warren-Clem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395

Kazemi Estate v. Islamic Republic of Iran and the Doctrine ofState Immunity Under Canadian LawChristopher Cornell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

ARBITRATION CONFERENCE

Mock Arbitration: CIArb Caribbean Branch CentennaryConferenceChristopher Malcolm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425

REPORTS

The Automotive Rules of Origin Controversy That StalledTrans-Pacific Partnership NegotiationsElise LeGros . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451

Competing Paradigms of Immigrant Human Rights inAmericaVienna Flores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459

Canada-Cuba RelationsClifton Beech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477

should ensure that the significance of a con-Editorial and Submission Policies:tribution would be apparent to readers

This journal is a quarterly, professional outside the specific expertise. Special termspeer-reviewed publication produced by the and abbreviations should be clearly definedSouthern Methodist University Dedman in the text or notes.School of Law’s International Law Review Accepted manuscripts will be edited, ifAssociation (and its Law Institute of the necessary, to improve the journal’s effec-Americas), as well as the Section of Interna- tiveness of communication. If editingtional Law and Practice of the American should be extensive, with a consequentialBar Association). The journal relies on the danger of altering the meaning, the manu-ongoing cooperation of the SMU School of script will be returned to the author for ap-Business, the SMU Departments of Eco- proval before type is set. Alternatively, thenomics and Political Science, and the manuscript may be returned to the authorLondon Forum of International Economic to address the deficiencies. In all events, theand Financial Law at the Centre for Com- editors reserve the right, after discussionmercial Law Studies at Queen Mary Col- with the author, to change its acceptance de-lege, University of London. cision, or to move a publication from one is-

sue to a later or earlier issue. The editorsAims and Publication Policy:will not accept unsolicited student-writtensubmissions, nor will they consider articlesThis journal addresses the legal, business,or reports that have been, or are to be, pub-economic, political and social dimensions oflished elsewhere, or materials prepared forWestern Hemispheric integration effortsone’s clients or business promotion.(e.g., NAFTA, FTAA, MERCOSUR, etc),

Manuscripts submitted for publicationtheir implementation, their future evolve-should be submitted in duplicate with ament and expansion, and their overall im-cover letter summarizing the contents to:pact on doing business in the Americas.

The journal will combine practical and pol-Editor-in-Chieficy implications of these integrationLAW AND BUSINESS REVIEW OF THE AMERICASprocesses. As such, it will cover not onlySouthern Methodist Universitymatters of immediate concern and interest,Dedman School of Lawbut also matters respecting reform of legal,P.O. Box 750116business, economic, political and socialDallas, Texas 75275-0116structures (including human rights, gender,[email protected], and environmental issues) within the

various countries in the Western Hemi- At the time the manuscript is submitted,sphere. Subject matter concerning other re- written assurance must be given that the ar-gional integration efforts in the world and ticle has not been published, submitted, orvarious other comparative topics in the in- accepted elsewhere. The author normallyternational trade and investment areas will will be notified of acceptance, rejection oralso be addressed, from time to time. need for revision within 8-12 weeks.

However, topics of particular concern to Manuscripts may range from 6,000 tothe journal will include: (1) free trade, direct 10,000 words (approximately 20-30 pages ininvestment, licensing, finance, taxation, la- length). However, longer articles are ac-bor, environmental, litigation and dispute cepted based upon topic, quality, and spaceresolution, and organizational aspects of availability. The title of the article shouldNAFTA and other specific integration ef- begin with a word useful in indexing and in-forts and their specific implementation. For formation retrieval. Text and endnotespractical reasons, English is used as the lan- should be double-spaced. All endnotesguage of communication; (2) subject matter should be numbered in sequential order, asinvolving economic, legal, political and so- cited in the text. Unless for good reason ac-cial integration, and reform effects in Latin ceptable to the editors, endnotes for legaland Central America and in the Caribbean articles should conform to The Bluebook,Basin; and (3) FTAA implications. Uniform System of Citation (18th ed, 2005;

online version 2008). For non-legal articles,Article Submission:the citations should be internally consistentwithin the given article. Authors shouldThe editors will consider for publicationsubmit short biographical data, including hismanuscripts by contributors from any coun-or her affiliation; an abstract summarizingtry. Articles will be subjected to a profes-the manuscript (not to exceed 150 words).sional peer-review procedure. Authors

ISSN 1571-9537

THE INTERNATIONAL LAW REVIEW ASSOCIATIONAn Association of The International Lawyer and Law and Business Review of the Americas

SOUTHERN METHODIST UNIVERSITY DEDMAN SCHOOL OF LAW

2015-2016 STUDENT EDITORIAL BOARD

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THE INTERNATIONAL LAWYER LAW AND BUSINESS REVIEW OF THE AMERICASJUSTIN HANNA BRANDT ROESSLER ALYSSA ORTIZ JAMISON JOINER

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Articles Editors

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—Editorial Base—Southern Methodist University Dedman School of Law

Dallas

Law and Business Review of the Americas

Honorable Editor-in-Chief

PROFESSOR ROBERTO MACLEAN

President, SMU – LIA

Co-Editors-in-Chief

JOSEPH J. NORTON DIEGO C. BUNGE

SMU-Dallas UBA-Buenos Aires

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Colombia SMU-Dallas Brasil

—BOARD OF SENIOR PROFESSIONAL EDITORS—

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LUIGI MANZETTI (POLI.SCI.)

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—ADVISORY BOARD—

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ChairGLENN P. HENDRIX

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Latin American & Caribbean International Corporate Counsel MexicoCommittee Committee Committee

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—External Representatives—

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OFFICIAL CITATIONLAW & BUS. REV. AM. FALL 2015

Nothing herein shall be construed as representing the opinions, views or actions of the AmericanBar Association unless the same shall have been first approved by the House of Delegates or theBoard of Governors or of the Section of International Law and Practice of the Associationunless first approved by the Section or its Council.

Southern Methodist University Dedman School of Law’sLaw Institute of the Americas

(formerly SMU Centre for NAFTA and Latin American Legal Studies)*

Established in 1952, the LAW INSTITUTE OF THE AMERICAS at SouthernMethodist University Dedman School of Law was originally designed to promotegood will and to improve relations among the people of the Americas throughthe study of comparative laws, institutions and governments respecting theAmerican Republics, and to train lawyers in handling legal matters pertaining tothe nations of the Western Hemisphere. Today, in reviving the institution, theLaw Institute of the Americas comprises meaningful academic research, teachingand programs pertaining to the “NAFTA/FTAA processes” and other WesternHemispheric integration efforts; to Latin and Central American law and judicialreform, particularly focusing on Argentina, Brazil, Chile, Guatemala, Mexico,Peru and Venezuela; and to a more limited extent, to Canadian legal issues,particularly as they interrelate to the NAFTA/FTAA. The Law Institute of theAmericas also is concerned with increasing (regional and hemispheric) legal andeconomic interconnections between the “NAFTA/FTAA processes” andEuropean and Asia-Pacific integration activities.

The officers of the Institute are as follows: the Honorable Roberto MacLean,President; Professor Joseph J. Norton, Executive Director; and Professor GeorgeMartinez, Associate Executive Director. The Institute is also supported bydistinguished group of Professorial Fellows, Senior Research Scholars,Professional Fellows, and Student Research Fellows.

As the Institute focuses primarily on issues pertaining to the North AmericanFree Trade Agreement and the pending Free Trade Area of the Americas, andthe broader economic, political, legal, and social integration processes underwayin the Western Hemisphere, Law and Business Review of the Americas is one ofthe International Law Review Association of SMU. Other parties of the journalare the Cox School of Business, the SMU Departments of Economics andPolitical Science, the London Forum, and the American Bar Association Sectionof International Law and Practice.

* From 1952 through the early 1970’s, the name was the Law Institute of the Americas: in1993, it was reactivated as the Centre for NAFTA and Latin American Legal Studies;and in 1998, it returned to its original name. For further detailed historical informationon the Law Institute of the Americas, please refer to the Law Institute of the Americas’website at http://www.law.smu.edu/lia.

Articles

THE EFFECTS OF SECTION 1504 OF THE

DODD-FRANK ACT: DISCLOSURE OF

PAYMENTS BY RESOURCE

EXTRACTION ISSUERS

Kurt T. Miller*

I. INTRODUCTION

THIS article focuses on the statutory requirements and delayed im-plementation of Section 1504 of the Dodd-Frank Wall Street Re-form and Consumer Protection Act (Dodd-Frank). Section 1504

of Dodd-Frank, also known as the Cardin-Lugar Amendment, instructsthe Securities and Exchange Commission (SEC) to promulgate rules re-quiring resource extraction issuers to include in an annual report infor-mation relating to any payment made by the issuer, or by a subsidiary oranother entity controlled by the issuer, to a foreign government or theU.S. Federal Government for the purpose of the commercial develop-ment of oil, natural gas, or minerals.1 The disclosure rule mandated bySection 1504 is designed to protect those who invest in oil and miningcompanies, as well as address the “resource curse” that plagues many de-veloping economies dependent on resource extraction, by creating in-creased regulatory transparency.2

More specifically, this article addresses the policy considerations infavor of and against Section 1504, and how the new regulatory and disclo-sure regime compares to the practices that existed prior to its enactment.This article further examines, through the SEC’s heavily litigated pro-posed rules and delayed enactment, Section 1504 to determine whether itwill be effective in meeting its purpose of (1) increased protection andtransparency for investors, and (2) providing information important tocitizens of developing economies dependent on resource extraction seek-ing to hold their governments accountable for extraction revenue.3 The

* Of Counsel, Freeman Mills PC; J.D. 2015, SMU Dedman School of Law; B.B.A.McCombs School of Business 2012, University of Texas.

1. See Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No.111-203, § 1504, 124 Stat. 1376, 2220–2222 (codified at 15 U.S.C. § 78m(q) (2010)).

2. See Daniel M. Firger, Note, Transparency and the Natural Resource Curse: Exam-ining the New Extraterritorial Information Forcing Rules in the Dodd-Frank WallStreet Reform Act of 2010, 41 GEO. J. INT’L L. 1043, 1048–50 (2010).

3. Letter from Benjamin L. Cardin, Senator, U.S. Senate, to Mary Shapiro, Chairwo-man, SEC (Dec. 1, 2010), available at http:// www.sec.gov/comments/df-title-xv/specialized-disclosures/specializeddisclosures-94.pdf.

371

372 LAW AND BUSINESS REVIEW OF THE AMERICAS [Vol. 21

lack of transparency among companies and financial institutions warrantsdiscussion because it was one of, if not the, primary causes of the GlobalFinancial Crisis of 2008.4 With that in mind, Congress is charged withdoing everything in its power to improve transparency in the system andprevent another similar crisis.5

Part II of this article discusses the background behind Section 1504 andthe regulatory environment before Section 1504 was enacted. Part II de-votes significant time to the issues and problems that brought about Sec-tion 1504. It also examines Dodd-Frank’s overall goals andmethodologies to provide a foundation for my analysis and give contextto the sweeping reforms ushered in through Dodd-Frank following theGlobal Financial Crisis of 2008.

Part III, in turn, analyzes Section 1504 itself. It examines how and whythe section was incorporated into Dodd-Frank, what the law requires, andwhat its implications are for consumers, governments, and internationaloil companies. Part III also examines conflicting policy perspectives ondifferent portions of Section 1504 and the SEC’s subsequent proposedrules.

Part IV discusses the legal challenges and major case law stemmingfrom Section 1504. In particular, it examines (1) American PetroleumInstitute’s suit against the SEC that successfully challenged the SEC’srule requiring public disclosure of payments made to foreign govern-ments in connection with the commercial development of oil, natural gas,or minerals; and (2) Oxfam America, Inc.’s recent suit against the SECthat sought to compel the SEC to issue a revised and finalized resourceextraction disclosure rule—something the SEC has yet to do even thoughits mandated deadline under Section 1504 of Dodd-Frank expired morethan three years ago. Part IV also addresses the significance of the SEC’scontinued delay in promulgating a finalized rule as a result of the abovelitigation, and the delay’s implications for both extraction issuers and pro-ponents of the law.

Part V examines multiple countries’ proposed or adopted internationalrules modeled after Section 1504. It also discuss how those internationallaws and the SEC’s impending final revised rule risk creating a patchworkof international regulation where no clear “world standard” exists, thuscreating additional compliance costs and legal issues for larger extractionissuers.

Finally, Part VI draws together my conclusions and makes modest rec-ommendations about how this issue should be resolved. Simply put, toachieve the expressed Congressional objective of making payments by ex-tractives companies to governments more transparent, the SEC should

4. FIN. CRISIS INQUIRY COMM’N, THE FINANCIAL CRISIS INQUIRY REPORT: FINAL

REPORT OF THE NATIONAL COMMISSION ON THE CAUSES OF THE FINANCIAL AND

ECONOMIC CRISIS IN THE UNITED STATES, at xix (2011) [hereinafter FINANCIAL

CRISIS INQUIRY REPORT], available at http://fcic.law.stanford.edu/report.5. See id.

2015] EFFECTS OF SECTION 1504 DODD-FRANK ACT 373

produce a strong Section 1504 revised final rule requiring public, project-level reporting by companies, with no categorical exemptions. This arti-cle and its accompanying research should contribute to the already-ex-isting literature, case law, and proposals about Section 1504. In the end,this article’s goal is to determine how well-suited Section 1504 is to ac-complish its goals and how expeditiously, if ever, final revised disclosurerules should be put into place by the SEC.

II. BACKGROUND

This section briefly discusses the collapse of U.S. financial markets dur-ing the Global Financial Crisis of 2008, the historical events that pavedthe way for Dodd-Frank, Dodd-Frank’s general goals and methodology,and the pre-Section 1504 regulatory environment that existed beforeDodd-Frank.

A. BRIEF DISCUSSION OF THE GLOBAL FINANCIAL CRISIS OF 2008

The Global Financial Crisis of 2008 has been described as the worstfinancial crisis since the Great Depression.6 While the events leading upto the crisis started to unfold years before, “it was the collapse of thehousing bubble—fueled by low interest rates, easy and available credit,scant regulation, and toxic mortgages—that was the spark that ignited astring of events, which led to a full-blown crisis in the fall of 2008.”7 Fur-thermore, the overall losses were compounded by the “exponentialgrowth in financial firms’ trading activities, unregulated derivatives, andshort-term ‘repo’ lending markets.”8 Shortly after the financial crisis be-gan, nearly $11 trillion in household wealth disappeared and many retire-ment accounts and savings accounts were decimated.9

In May 2009, Congress created the Financial Crisis Inquiry Commis-sion (FCIC) to “examine the causes, domestic and global, of the currentfinancial and economic crisis in the United States.”10 The FCIC’s find-ings, released in January 2011, provide informative conclusions aboutwhat caused the Global Financial Crisis of 2008.11 The conclusions mostsignificant to this article’s analysis of Section 1504 were the following: (1)“A combination of excessive borrowing, risky investments, and lack oftransparency put the financial system on a collision course with crisis;”and (2) “There was a systemic breakdown in accountability and ethics.”12

Regarding the general lack of transparency in financial markets, theFCIC found that “[w]ithin the financial system, the dangers of this debt

6. Id. at xv.7. Id. at xvi.8. Id. at xvii.9. Id. at xv.

10. Fraud Enforcement And Recovery Act of 2009 (FERA), Pub. L. No. 111-21,§ 5(a), 123 Stat 1617, 1625 (2009).

11. See FINANCIAL CRISIS INQUIRY COMMISSION REPORT, supra note 4, at xv–xxviii.12. Id. at xix, xxii.


were magnified because transparency was not required or desired.”13

Furthermore, when discussing the breakdown of accountability and eth-ics, the FCIC noted that “[t]he soundness and the sustained prosperity ofthe financial system and our economy rely on the notions of fair dealing,responsibility, and transparency.”14 These systemic failures—along withcountless others—ultimately led Congress to pass Dodd-Frank.15

B. GENERAL GOALS & METHODOLOGY OF DODD-FRANK

In reaction to the Global Financial Crisis of 2008 and in an attempt toavoid (or at least delay) another large-scale financial crisis, Congresspassed Dodd-Frank on July 21, 2010.16 Dodd-Frank’s mission, set forth inits first lines of text, is “to promote the financial stability of the UnitedStates by improving accountability and transparency in the financial sys-tem, to end ‘too big to fail,’ to protect the American taxpayer by endingbailouts, to protect consumers from abusive financial services practices,and for other purposes.”17 As discussed later in the article, at least aportion of Section 1504 is best described as one of the “for other pur-poses” found in Dodd-Frank’s introduction.

Dodd-Frank marked an extensive change to the previous regulatorystructure, a shift that many declared as “the greatest legislative change tofinancial supervision since the 1930s.”18 It created multiple new agenciesand removed others to streamline the regulatory process, increased over-sight of systemically risky institutions, amended the Federal Reserve Act,and promoted greater overall transparency.19 Davis Polk & WardwellLLP estimates that Dodd-Frank will, at a bare minimum, require regula-tors to create 243 rules, conduct 67 studies, and issue 22 periodic re-ports.20 But little of that effect was felt immediately because Congressdesigned Dodd-Frank to become effective in stages, with a majority ofthe rulemaking taking place over the six to months following itsenactment.21

C. PRE-SECTION 1504 REGULATORY ENVIRONMENT

Prior to Section 1504, few transparency rules aimed at extraction indus-

13. Id. at xx.14. Id. at xxii.15. Id. at xxii–iii.16. 124 Stat. at 1376.17. Id.18. Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act,

Enacted into Law on July 21, 2010, DAVIS POLK (July 21, 2010), http://www.davispolk.com/sites/default/files/files/Publication/7084f9fe-6580-413b-b870-b7c025ed2ecf/Preview/PublicationAttachment/1d4495c7-0be0-4e9a-ba77-f786fb90464a/070910_Financial_Reform_Summary.pdf.

19. Dechert LLP, Executive Summary: Dodd-Frank Wall Street Reform and ConsumerProtection Act, AM. BANKERS ASS’N, http://www.aba.com/Issues/RegReform/Pages/RR_ExecSummary.aspx (last visited Jan. 18, 2016).

20. Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act,Enacted into Law on July 21, 2010, supra note 18, at ii.

21. Id. at i.


tries existed.22 Additionally, most of the initiatives that were in placewere voluntary and lacked depth and specificity, as well as specific penal-ties or sanctions for a violation.23 Arguably the most popular and wide-spread pre-Section 1504 program was the Extractive IndustryTransparency Initiative (EITI).24 The EITI is a “coalition of govern-ments, companies, and civil society working together” to “promote openand accountable management of natural resources” to “strengthen gov-ernment and company systems, inform public debate, and enhancetrust.”25 Participants who implement the EITI standard agree to ensurefull disclosure of taxes and other payments made by oil, gas, and miningcompanies to governments.26

Before the adoption of Section 1504, thirty-six countries implementedor were committed to implement the EITI.27 But the United States andmany other influential countries had not yet committed to participate.Critics pointed to three major flaws.28 First, the EITI was (and still is)voluntary in nature, which allowed the governments of those countriesthat could benefit the most from the initiative to avoid its requirementsby simply declining to join.29 Second, the EITI required countries to re-port payments only on an aggregate, countrywide basis rather than a dis-aggregate basis that could account for payments by individualcompanies.30 As a result, the aggregated revenue data was often too gen-eral to be useful when comparing countries.31 Third, there were no pen-alties or sanctions for violating the initiative’s commitments other thanpublic removal from the EITI.32 This less-than-ideal regulatory environ-ment paints the backdrop upon which Section 1504 was enacted.

Against the backdrop of this pre-Section 1504 regulatory environment,the next section of this article discusses the enactment Section 1504’s en-actment, text, and competing policy perspectives.

III. SECTION 1504

This portion of the article focuses on Section 1504’s drafting and enact-ment, and the legal requirements created by its final text. It also ad-

22. See Branden Carl Berns, note, Will Oil and Gas Issuers Leave U.S. Equity Marketsin Response to Section 1504 of the Dodd-Frank Act? Can They Afford Not To?,2011 COLUM. BUS. L. REV. 758, 770–772 (2011).

23. Id.24. Id.25. What is the EITI?, EXTRACTIVE INDUS. TRANSPARENCY INITIATIVE, http://eiti.org/

eiti (last visited Jan. 18, 2016).26. Id.27. Berns, supra note 22, at 770.28. Id. at 770–71.29. Id. at 771.30. Letter from Kyle Isakower, Vice President of Regulatory & Econ. Policy, and Pat-

rick T. Mulva, Chairman of Corporate Fin. Comm., Am. Petroleum Inst., to theSEC 4 (Oct. 12, 2010), available at http://www.sec.gov/comments/df-title-xv/specialized-disclosures/specializeddisclosures-27.pdf.

31. Id.32. See Firger, supra note 2, at 1067.


dresses the competing policy perspectives both in favor of and against theSEC’s promulgation of a strong revised final rule. To be clear, Section1504 of Dodd-Frank is a statutory provision created and adopted by Con-gress. Through Section 1504, however, Congress mandated the SEC topromulgate and enforce regulatory rules. The controversy at issue cen-ters on the initial final rules released by the SEC in 2012, not whetherSection 1504 itself should be repealed. That said, the SEC’s initial finalrules tracked Section 1504’s language. What’s more, they were vacatedby the U.S. District Court for the District of Columbia (discussed ingreater detail below). So the main issue now is how Section 1504’s lan-guage should be interpreted and enforced. With that in mind, the de-tailed analysis of Section 1504 in the following paragraphs is intended toprovide context for the current controversy surrounding the rulespromulgated by the SEC.

A. THE DRAFTING AND SUBSEQUENT ADOPTION OF SECTION 1504

Many commentators question the placement of Section 1504 withinDodd-Frank.33 For that reason, it is important to understand the originsof the text and how it came to be included in Dodd-Frank. Section 1504is based on the proposed Energy Security Through Transparency Act(Transparency Act) originally introduced in Congress in September2009.34 The bill was introduced and sponsored by Senator Lugar (forhimself and Senators Cardin, Schumer, Wicker, Feingold, andWhitehouse), but was never enacted.35 While Section 1504 of Dodd-Frank is more limited in scope, it is conceptually similar to the disclosurerequirements proposed in the Transparency Act.36

The Transparency Act discussed a broad range of policy concerns, in-cluding (1) promoting good governance in extractive industries tostrengthen national security and foreign policy, and contribute to a betterinvestment climate for businesses in the United States; (2) providing de-velopment assistance to countries suffering from the “resource curse,”(i.e., the tendency of countries that derive a significant portion of reve-nues from natural resources to have higher poverty rates, weaker govern-ance, higher rates of conflict, and a poorer development record); (3)improving the transparency of revenue payments to governments to en-able citizens “to hold their leaders more accountable”; (4) the “growingconsensus among oil, gas, and mining companies that transparency in rev-enue payments is good for business [because] it improves the businessclimate in which they work and fosters good governance and accountabil-ity”; and (5) increasing the availability of information to help sharehold-

33. See Paul Hilton, Dodd-Frank Provisions Applicable to Resources Companies Oper-ating Internationally: Resource Extraction Disclosure Under Section 1504 of theDodd-Frank Act, 59 ROCKY MTN. MIN. L. INST. 18-1, 18-4 to -5 (2013).

34. Id.; Energy Security Through Transparency Act of 2009, S. 1700, 111th Cong. § 1(2009).

35. S. 1700.36. Id.; Hilton, supra note 33, at 18–4.


ers of public companies “assess financial risk, compare payments fromcountry to country, and assess whether such payments help to create amore stable investment climate.”37 These same policy considerations un-derpin Section 1504 and were considered by the SEC in its rulemakingprocess in implementing Section 1504.38

According to the Congressional Record, Senators Lugar and Cardininserted Section 1504, also known as the Cardin-Lugar Amendment, intoDodd-Frank during the late stages of conference negotiations.39 SenatorDodd remarked on its late insertion, noting that

[b]ecause we have not yet been able to hold hearings on this measurethis year—something which I had hoped to do in the Banking Com-mittee once we had completed this historic financial reform mea-sure—I am not sure we have all the precise details and the languageexactly right, but the thrust is exactly right and, therefore, in myview, the amendment by Senators Cardin and Lugar ought to beadopted.40

Senator Dodd additionally explained that “[w]e can work on the details,if we have to, later on, but we should not miss this opportunity providedby this legislation to make this historic contribution to something that notonly benefits investors here at home but might make a huge difference inthe wealth and opportunity in these countries.”41 On the recommenda-tion of Senator Dodd and others, Section 1504 was quickly adopted withlittle debate.42 The above quotes demonstrate the relative ease in whichthe Lugar-Cardin Amendment was examined, considered, and adopted.43

B. CONDUCT & ACTIONS REQUIRED BY SECTION 1504

Section 1504 of Dodd-Frank Act was signed into law on July 21, 2010.44

Dodd-Frank amended “Section 13 of the Securities Exchange Act of 1934(15 U.S.C. 78m).”45 Section 1504, titled “Disclosure of Payments by Re-source Extraction Issuers,” requires the SEC to:

[n]ot later than 270 days after July 21, 2010 . . . issue final rules thatrequire each resource extraction issuer to include in an annual reportof the resource extraction issuer information relating to any paymentmade by the resource extraction issuer, a subsidiary of the resourceextraction issuer, or an entity under the control of the resource ex-

37. S. 1700.38. See 156 Cong. Rec. S3794, 3815 (daily ed. May 17, 2010) (statement of Sen. Rich-

ard Lugar).39. 156 Cong. Rec. S3794, 3815 (daily ed. May 17, 2010) (statement of Sen. Ben

Cardin).40. 156 Cong. Rec. S3794, 3818 (daily ed. May 17, 2010) (statement of Sen. Chris

Dodd).41. Id.42. 156 Cong. Rec. S3794, 3819 (daily ed. May 17, 2010) (statement of Presiding Of-

ficer Sen. Mark Warner and Sen. Chris Dodd).43. Id.44. 124 Stat. at 1376.45. Id. at 2220.


traction issuer to a foreign government or the Federal Governmentfor the purpose of the commercial development of oil, natural gas, orminerals, including–(i) the type and total amount of such paymentsmade for each project of the resource extraction issuer relating to thecommercial development of oil, natural gas, or minerals; and (ii) thetype and total amount of such payments made to each government.46

The “Definitions” subsection of 15 U.S.C. 78m(q) is specific in itsdescription of key terms.47 For instance, a “‘resource extraction issuer’”is an issuer that: “(1) is required to file an annual report with the [SEC];and (2) engages in the commercial development of oil, natural gas, orminerals.”48 In addition, “‘commercial development of oil, natural gas,or minerals’ includes exploration, extraction, processing, export, andother significant actions relating to oil, natural gas, or minerals, or theacquisition of a license for any such activity, as determined by the[SEC].”49 And “‘foreign government’ means a foreign government, a de-partment, agency, or instrumentality of a foreign government, or a com-pany owned by a foreign government, as determined by the [SEC].”50

But perhaps most specific of all is “‘payment,’” which means “a paymentthat is (1) made to further the commercial development of oil, naturalgas, or minerals, and; (2) not de minimis.”51 “‘Payment’” expressly in-cludes “taxes, royalties, fees (including license fees), production entitle-ments, bonuses, and other material benefits, that the [SEC], consistentwith the guidelines of the Extractive Industries Transparency Initiative(to the extent practicable), determines are part of the commonly recog-nized revenue stream for the commercial development of oil, natural gas,or minerals.”52

The section further dictates that[t]he interactive data standard shall include electronic tags that iden-tify, for any payments made by a resource extraction issuer to a for-eign government or the Federal Government – (i) the total amountsof the payments, by category, (ii) the currency used to make the pay-ments, (iii) the financial period in which the payments were made,(iv) the business segment of the resource extraction issuer that madethe payments, (v) the government that received the payments andthe country in which the government is located, (vi) the project ofthe resource extraction issuer to which the payments relate, and (vii)such other information as the [SEC] may determine is necessary orappropriate in the public interest or for the protection of investors.53

Additionally, the Act requires that “[t]o the extent practicable, the [SEC]shall make available online, to the public, a compilation of the informa-

46. 15 U.S.C. § 78m(q)(2)(A) (2010).47. See id. § 78m(q)(1).48. Id. § 78m(q)(1)(D).49. Id. § 78m(q)(1)(A).50. Id. § 78m(q)(1)(B).51. Id. § 78m(q)(1)(C)(i).52. Id. § 78m(q)(1)(C)(ii).53. Id. § 78m(q)(2)(D)(ii).


tion required to be submitted under the rules issued under [Section78m(q)(2)(A)].”54

Moreover, in affirmation of one of its overall objectives, Section78m(q)(2)(E), titled “International transparency efforts” states that, “[t]othe extent practicable, the rules issued under [Section 78m(q)(2)(A)]shall support the commitment of the Federal Government to interna-tional transparency promotion efforts relating to the commercial develop-ment of oil, natural gas, or minerals.”55 Finally, Section 78m(q)(2)(F)provides that the final rules “shall take effect on the date on which theresource extraction issuer is required to submit an annual report relatingto the fiscal year . . . that ends not earlier than [one] year after the date onwhich the [SEC] issues final rules under [Section 78m(q)(2)(A)].”56

On September 12, 2012, the SEC promulgated final rules that generallytracked the language of Section 1504.57

Consistent with the [congressional record] and in light of the struc-ture, language, and purpose of the statute, the final rules do not pro-vide any exemptions from the disclosure requirements. As such, thefinal rules do not include an exemption for certain categories of issu-ers or for resource extraction issuers subject to similar reporting re-quirements under home country laws, listing rules, or an EITIprogram. The final rules also do not provide an exemption for situa-tions in which foreign law may prohibit the required disclosure. Inaddition, the final rules do not provide an exemption for instances inwhich an issuer has a confidentiality provision in an existing or futurecontract or for commercially sensitive information.58

Given the nature of Section 1504 and the SEC’s initial final rules, thenext section of this article discusses the policy perspectives both in favorof and against Section 1504.

C. POLICY PERSPECTIVES IN FAVOR OF SECTION 1504

The majority of policy perspectives that seem in favor of a strong SECfinal rule based on Section 1504 focus on the benefits of greater trans-parency for investors and improved accountability for impoverished citi-zens in resource rich countries.59 Commentators also tout the ancillarybenefit that a strong Section 1504 would have on the Extractive Industry

54. Id. § 78m(q)(3)(A).55. Id. § 78m(q)(2)(E).56. Id. § 78m(q)(2)(F).57. See Disclosure of Payments by Resource Extraction Issuers, 77 Fed. Reg. 56,365

(Sept. 12, 2012) (to be codified at 17 C.F.R. pts. 240 & 249).58. Id. at 56,368.59. See EITI, IMPLEMENTING EITI FOR IMPACT: HANDBOOK FOR POLICY MAKERS

AND STAKEHOLDERS 3–4, 144–45 (Anwar Ravat & Sridar P. Kannan eds., 2012)available at https://eiti.org/files/Implementing%20EITI%20for%20Impact_Handbook%20for%20Policy%20Makers%20and%20Stakeholders.pdf.


Transparency Initiative and other similar programs.60

1. Greater Transparency Benefits Investors

A large number of institutional investors—and the investing commu-nity as a whole—have voiced support for a strong Section 1504-based fi-nal rule that establishes disclosure requirements consistent with otherjurisdictions, such as the European Union (EU).61 For the better part ofa decade, investors representing more than $6 trillion in assets undermanagement have sent letters to the SEC recommending it reissue astrong Section 1504 final rule.62 The group of leading investors also en-couraged the SEC to “continue its vigorous defense of the Section 1504rules as it responds to the U.S. District Court’s decision [in AmericanPetroleum Institute et al. v. Securities and Exchange Commission].”63

Within their comment, these large institutional investors argued that[p]ayment disclosure regulations, such as Section 1504 and the Euro-pean Union Transparency Directive, play a critical role in encourag-ing greater stability in resource-rich countries, which benefits boththe citizens of those countries and investors.”64 Furthermore, the in-vestors noted that “[i]t is in the interest of investors and companiessubject to both the U.S. and EU requirements that the reporting ob-ligations in these jurisdictions are as uniform as possible. Consistentand predictable regulations may lower compliance costs and enhancethe salience of disclosures.65

In addition to possibly lowering compliance costs, uniform disclosurerequirements under Section 1504 will provide investors all over the worldwith the information they need to better assess the potential risks andrewards of an investment.66 Most international exploration and develop-ment projects for oil and natural gas are multi-billion dollar operationsand lease bonuses and royalty payments often costs millions of dollars.67

With that in mind, everyday investors want to know where their money isgoing and how it is being used.68 Pre-Section 1504, most of this informa-tion was subject to confidentiality agreements negotiated by the parties.69

60. See Letter from Patrick Mulva, Vice President & Controler, ExxonMobil Corp., toComm’rs, SEC. 2 (Oct. 25, 2011), available at http://www.sec.gov/comments/s7-42-10/s74210-112.pdf.

61. See Daniel Kaufmann, Transparency in Natural Resources: Why is the U.S. PlayingCath Up?, BROOKINGS (June 9, 2014, 12:14 PM), http://www.brookings.edu/blogs/up-front/posts/2014/06/09-transparency-natural-resources-kaufmann.

62. See Letter from Columbia Ctr. on Sust. Inv. to Mary Jo White, Chairwoman, SEC2 (Oct. 30, 2015), available at http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-93.pdf.

63. See Letter from Investors to Mary Jo White, Chairwoman, SEC, at para. 2 (Oct.30, 2015), available at http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-93.pdf.

64. Id. para. 4.65. Id. para. 3.66. Disclosure of Payments by Resource Extraction Issuers, 77 Fed. Reg. at 56,399.67. Id. at 56,400.68. Id. at 56,398.69. Id. at 56,399.


With a strong Section 1504-based disclosure rule in place, investors willhave more power to hold the companies they invest in accountable, whichin turn will force them to manage their financial resources morediligently.70

2. Increased Accountability for Impoverished Citizens in Resource-RichCountries

Similar to the benefits investors receive from increased transparencyand disclosure in extraction-related industries, impoverished citizens inresource-rich countries tremendously benefit from strong Section 1504-based regulations by having access to information that allows them tobetter keep their countries’ leaders accountable for large payments fromextraction-related activities.71 On April 14, 2014, a group of 544 civil so-ciety organization, from 40 countries around the world, united by PublishWhat You Pay Coalition’s International Director, Marinke Van Riet,wrote a letter to the SEC to “urge [the SEC] to re-issue an implementingrule for the Dodd-Frank Wall Street Reform and Consumer ProtectionAct (Section 1504) that aligns with the EU Accounting and TransparencyDirectives, with no country exemptions and full public disclosure of pay-ments, without delay.”72 The groups represented included “humanrights, faith-based, anti-corruption and environmental” organizationsfrom countries “rich in natural resources, but blighted by corruption, con-flict and poverty.”73 In their comment, these civil society organizationsargued that “[g]reater transparency of extractive industry revenues willreduce natural resource related corruption and conflict, and help ensurethese resources are transformed into lasting public benefits.”74

The comment further argues that including project-level reporting willbring the greatest benefit to citizens in resource-dependent countries—noting that transparency requirements are even more important in areaswhere local revenue-sharing agreements are in place.75 For example, inthe Democratic Republic of Congo, there are national laws that requiretwenty-five percent of tax revenues from mining projects to go back tothe province, and fifteen percent to go back to the local territory wherethe development took place.76 “Similarly in the Philippines, indigenouscommunities have a legal right to a minimum of [one percent] of royaltiesfrom mining in their ancestral domains.”77 But in each of these countriesand regions, the local citizens likely never collect the full amount they are

70. EXTRACTIVE INDUS. TRANSPARENCY INITIATIVE, supra note 59, at 69.71. See Letter from Marinke Van Riet, Int’l Dir., Publish What You Pay Coal., to

Mary Jo White, Comm’n, SEC, at para. 2 (Apr. 14, 2014), available at http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissu-ers-32.pdf.

72. Id. para. 1.73. Id. para. 2.74. Id.; see also Letter from Patrick Mulva to Comm’rs, supra note 60, at 2.75. See Letter from Marinke Van Riet to Mary Jo White, supra note 71, para. 2.76. Id. para. 8.77. Id. para. 9.


owed because there is no way for them to know how much taxes or royal-ties are being generated given the lack of transparency.78

An additional example of the “resource curse” negatively affecting, orat least failing to benefit, impoverished citizens in resource-rich countriescan be found in Nigeria.79 The citizens of Nigeria, sub-Saharan Africa’slargest oil producer, are painfully aware of the consequences of the lackof transparency in the extractives industry.80 According to Faith Nwad-ishi, Nigerian National Coordinator for Publish What You Pay, “[i]n re-source-rich countries with weak institutions, like Nigeria, corruption isalready a significant risk,” and “[w]hen oil, gas and mining projects gener-ate billions of dollars in revenue in secrecy, they end up fueling corrup-tion.”81 As an example of this corruption, Ms. Nwadishi states that,“Nigeria was missing $20 billion of oil revenues [last year] while its citi-zens suffered from poverty.”82 And for reasons like these, Publish WhatYou Pay argues that project-level transparency is necessary in Section1504.83 Next, I will discuss the beneficial impact a strong Section 1504final rule could have on the Extractive Industry Transparency Initiative.

3. Beneficial Impact on the Extractive Industry Transparency Initiative

In addition to the benefits of greater transparency for investors andincreased accountability for impoverished citizens in recourse-rich coun-tries, an ancillary benefit of a strong Section 1504 rule would be the bene-ficial impact it would have on the EITI. When Section 1504 was adopted,it was not intended to replace the EITI.84 Instead, it was intended tocomplement the EITI and magnify its positive effects.85 More countrieswill be encouraged to join the EITI because disclosed payment informa-tion will be made available for countries not yet signed up to the EITI.86

The availability of this payment information may allow transparencyadvocates to demonstrate that part of the process is already underwayand that the government must match those efforts with the remainingcomponents of national EITI implementation.87 Many commentatorsalso argue that, in these cases, Section 1504 will “create a precedent and

78. Id.79. See Jana Morgan, SEC announces plan to implement landmark oil, gas and mining

transparency law Sen., investors and transparency advocates urge the SEC to takeaction before end of 2014, PUBLISH WHAT YOU PAY, para. 10 (May 27, 2014),http://pwypusa.org/sites/default/files/Press_Release_Rulemaking_Scheduled_May_27_2014.pdf.

80. See id.81. Id.82. Id.83. Id.84. Id.85. 156 CONG. REC. S3817 (daily ed. May 17, 2010) (statement of Sen. Cardin).86. The Cardin-Lugar Amendment (Dodd-Frank 1504), PUBLISH WHAT YOU PAY,

available at http://www.publishwhatyoupay.org/about/stock-listings/cardin-lugar-amendment-dodd-frank-1504.

87. Id.


provide the necessary first step toward transparency.”88 A strong Section1504-based SEC final rule would “create a flow of high-quality financialdata for inclusion in EITI reports” and would ensure that payment infor-mation data is available from each extractive company that operates in aregion.89 According to transparency advocates, one of the biggest weak-nesses of the EITI thus far has been the difficulty of obtaining paymentinformation from large companies operating in EITI implementing coun-tries.90 A strong Section 1504 final rule would make it harder, if not im-possible, for companies to dodge the disclosure requirements.91 In thenext portion of this article, I will discuss the policy perspectives against astrong Section 1504-based SEC final rule.

D. POLICY PERSPECTIVES AGAINST SECTION 1504

Policy perspectives against a strong SEC final rule based on Section1504 center on the massive amount of additional compliance issues thatare created with the new Section 1504 requirements and the possiblecompetitive advantage countries and companies that are not required toreport to the SEC could gain by not being required to disclose this cur-rently classified information.92 Additionally, many commentators areconcerned that the law wrongly infringes on foreign countries’ laws andcontracts that contain confidentiality provisions and prohibit the disclo-sure of the type of information Section 1504 mandates.93

1. Compliance Costs

One of the biggest issues commentators have with a strong, no categor-ical exceptions, project-by-project structured Section 1504 rule is that itwill likely create a substantial amount of initial and ongoing compliancecosts.94 While the pundits debate the time, personnel, and monetary bur-dens created by the requirements of the rule, the SEC itself, based on itsestimates, believed that the original rule would cost U.S. issuers aboutone billion dollars in initial compliance cost, with ongoing compliancecosts between $200 million and $400 million annually.95 If correct,“[t]hese estimates would make Section 1504 one of the most costly rulesin history and it only applies to one industrial sector.”96 Therefore, thequestion for many people becomes, do the socio-political and trans-

88. Id.89. Id.90. Id.91. See 156 CONG. REC. S3817, supra note 85.92. Am. Petroleum Inst. V. SEC, 953 F. Supp. 2d. 5, 21 (D.D.C. 2013).93. Id. at 12.94. Id. at 21.95. Disclosure of Payments by Resource Extraction Issuers, 77 Fed. Reg. 56,365,

56,398 (Sept. 12, 2012)(to be codified at 17 C.F.R. pts. 240 & 249).96. Brigham A. McCown, Oil and Gas Payment Disclosure May Harm Investors,

FORBES ENERGY, para. 9 (March 22, 2013, 10:27 AM), available at http:// www.forbes.com/sites/brighammccown/2013/03/22/oil-and-gas-payment-disclosure-may-harm-investors/.


parency benefits of Section 1504 outweigh the costs imposed by therule?97

Furthermore, the burdens of increased disclosure are likely to be thehighest on larger, more diversified companies because they conduct oper-ations in many countries simultaneously and have multiple projects in op-eration within any given year.98 For example, ExxonMobil’s VicePresident and Controller, Patrick T. Mulva, submitted a comment letterto the SEC estimating that the cost to ExxonMobil of implementing Sec-tion 1504 would exceed $50 million and that “[t]he cost and extent of thisshould not be underestimated, as some observers who are not familiarwith the reality of financial reporting systems appear to have done.”99

Additionally, Royal Dutch Shell’s (Shell) comment letter to the SECstated that, given Shell’s expansive operations in over ninety countries, itbelieved that “integrating such detailed project reporting requirementsinto our current financial reporting and control systems could cost hun-dreds of millions of dollars.”100 Thus, the cost of compliance is likely tobe substantial for almost every extraction issuer affected by the rule.101

The next portion of this article will discuss the possible competitive ad-vantage companies who are not required to satisfy Section 1504 require-ments might achieve when competitors are forced to disclose proprietarypayment information and they are not.

2. Possible Competitive Advantage for Non-Section 1504 Companies

An additional policy perspective against Section 1504 is that the publicdisclosures required by companies subject to Section 1504 may create asubstantial disadvantage because competitors will have access to proprie-tary information such as costs, investments, and lease payments withouthaving to disclose this information themselves.102 According to the SEC,over 1,100 companies will be covered by the information disclosure re-quirements under Section 1504, including a majority of the most profita-ble international oil companies (e.g., Chevron, Exxon, BP, Shell andTotal), the largest global mining companies (e.g., Rio Tinto, Vale andBHP Billiton) and certain state-owned entities (e.g., Petrobras, Sinopecand Petrochina).103

But most of the state-owned oil companies and some of the largest oilcompanies in the world, in countries such as Russia, China, Iran, andVenezuela do not operate under SEC regulation, thus, they are not sub-

97. Id. para 13–14.98. See Letter from Patrick Mulva to Comm’rs, supra note 60, para. 2.99. Id. para. 3.

100. Letter from Martin Brink, Royal Dutch Shell to Meredith Cross, Sec. & Exch.Comm’n, Dir. para. 24 (Oct. 25, 2010) (on file with author), available at http://www.sec.gov/comments/df-title-xv/specialized-disclosures/specializeddisclosures-33.pdf.

101. Id. para. 24.102. Q&A: Company Disclosures Under Dodd-Frank Sec. 1504, NATURAL RESOURCE

GOVERNANCE INSTITUTE para. 24 (Aug. 27, 2012), http://www.resourcegovernance.org/news/qa-company-disclosures-under-dodd-frank-section-1504.

103. Id. para. 24.


ject to the Section 1504 disclosure requirements.104

Therefore, many people in the oil and gas industry, including theAmerican Petroleum Institute (a lobbying group comprised of many ma-jor U.S. oil and gas companies) are concerned that non-U.S. companies,such as Russia’s Gazprom, who are not required to disclose informationunder the proposed rules of Section 1504, could use the data to outma-neuver U.S. companies in contract negotiations.105 According to thosepundits, “[t]he rule would have put U.S.-listed firms at an insurmountabledisadvantage to state-owned firms, which are information black holes andmost likely to do backroom deals with tyrants.”106 While the potentialcompetitive disadvantages of Section 1504 are likely not insurmountable,they do provide important perspectives that need to be carefully consid-ered as the SEC promulgates a revised final Section 1504 rule.

2. Host Country Legal and Contractual Issues

In addition to the potentially large compliance costs and the possiblecompetitive advantages for non-Section 1504 companies, Section 1504creates host-country legal and contractual issues that will likely requirerenegotiating and redrafting a large number of contracts.107 Addition-ally, many industry executives note that confidentiality agreements mayprevent oil and gas companies from disclosing information to third par-ties concerning their arrangements to purchase oil or gas from host coun-tries.108 Thus, disclosures to the SEC under Section 1504 could create apotential breach of contract if these matters are not addressed inadvance.109

Additionally, multiple countries, such as Angola, Cameroon, China,and Qatar, have laws that forbid disclosures.110 And to this point, theSEC has resisted requests to include an exemption for companies that arecontractually prevented from disclosing payments made to host govern-ments.111 Therefore, many companies, including Shell, are concernedthat their existing contracts currently prohibit disclosure of Section 1504payment information and renegotiation to amend all of the currentlyvalid contracts would be costly.112 This area likely requires additionalexamination by Congress and the SEC to determine what the appropriaterevised final rule should include.113 The next portion of this article will

104. Id. para. 16–17.105. The SEC’s Pro-Putin Rule, THE WALL ST. J. para. 2–3 (May 11, 2014, 7:03 PM),

http://www.wsj.com/articles/SB10001424052702304518704579523982321856704.106. Id. para. 4.107. See Letter from Martin Brink to Meredith Cross, supra note 100, para. 14.108. See id. para. 8.109. See id.110. Disclosure of Payments by Resource Extraction Issuers, 77 Fed. Reg. 56,365,

56,370 (Sept. 12, 2012) (to be codified at 17 C.F.R. pts. 240 & 249).111. Id. at 56,472.112. See Letter from Martin Brink to Meredith Cross, supra note 100, para. 14.113. See id. supra note 100, para. 20.


discuss the legal challenges and major case law that has arisen as a resultof Section 1504.

IV. IMPORTANT CASE LAW & ADMINISTRATIVE DELAY

This portion of the article will focus on the significant legal cases thathave transpired as a result of the inclusion of Section 1504 in the Dodd-Frank Act.114 Given that the Act was created and adopted by Congressbut requires the rulemaking to be done separately by the SEC, lawsuitshave been filed successfully challenging the validity of the SEC’s finalrule, as well as a relatively new lawsuit that seeks to end the SEC’s longdelay in promulgating a revised final rule.115 Additionally, this section ofthe article will discuss the implications regarding the SEC’s major delayin issuing revised final rules and examine similar international rules thathave been adopted since Section 1504 was signed into law.116

A. AMERICAN PETROLEUM INSTITUTE V. SEC

In American Petroleum Institute v. Securities and Exchange Commis-sion, industry associations brought an action to challenge the SEC’s rulerequiring public disclosure of payments made to foreign governments inconnection with the commercial development of oil, natural gas, or min-erals.117 The Court of Appeals had dismissed the associations’ simultane-ously filed petition challenging the rule for lack of subject matterjurisdiction.118 After both parties cross-moved for summary judgment,the U.S. District Court for the District of Columbia granted the plaintiff’smotion and denied the defendant’s motion.119 In an opinion dated July 2,2013, the court held the following: (1) The SEC’s interpretation of Dodd-Frank Act in promulgating rule was not entitled to deference; (2) TheSEC misread Dodd-Frank Act to mandate public disclosure of the re-ports, and thus, the agency’s action was invalid; (3) The SEC’s denial ofan exemption for countries prohibiting payment disclosure was arbitraryand capricious; and (4) Vacatur of the rule was an appropriate remedy.120

The court provided multiple explanations and rationales to justify itsholding. The court noted that the SEC’s interpretation of Section 1504“was not entitled to deference, where [the] SEC did not exercise its ownjudgment, but instead considered itself bound by statute to require publicfiling of the reports.”121 Additionally, the court provided that becausethe SEC’s rule was based “on its misreading of the statute to mandatepublic disclosure . . . [the] agency’s action was invalid.”122 The court con-

114. See Am. Petroleum Inst., 953 F. Supp. 2d at 5.115. See id.116. See Letter from Martin Brink to Meredith Cross, supra note 100, para. 25.117. See Am. Petroleum Inst., 953 F. Supp. 2d at 5.118. See id.119. See id.120. Id.121. Id. at 13.122. Id. at 13–14.


cluded that “the statute said nothing about the ‘public’ filing of reports,the statute’s public availability requirement was limited to a compilationof information, and the Exchange Act as a whole used the word ‘report’to refer to disclosures made to SEC alone.”123 Furthermore, the courtnoted that, “if disclosing some of the information publicly would compro-mise commercially sensitive information and impose high costs on share-holders and investors, then the [SEC] may selectively omit thatinformation from the public compilation.”124 These conclusions centeredon the wording of the statute including “to the extent practicable,”125

meaning it should only be done if realistic under the circumstances.Finally, after finding the SEC’s rule invalid for the reasons listed above,

the court concluded that vacatur of the rule “was the appropriate rem-edy” because the “issuers had not yet been required to make disclosuresunder the rule, so no disruption would result from vacatur, the rule’s defi-ciencies were grave enough to warrant vacatur, and the SEC offered vir-tually no argument against vacatur.”126 In conclusion, while theAmerican Petroleum Institutes’ lawsuit was only successful in getting theSEC’s rule vacated based on a few minor technicalities, the ruling hasbeen instrumental in delaying the implementation of another version of aSection 1504-based rule to this date.

B. OXFAM AMERICA, INC. V. SEC

In response to the ruling in the American Petroleum Institute case ana-lyzed above, and the SEC’s lack of promulgating a revised final rule,Oxfam America, Inc. (Oxfam) brought a lawsuit against the SEC on Sep-tember 18, 2014, seeking to compel them to issue a revised final rule im-plementing Section 1504 of the Dodd-Frank Act.127 This civil action wasbrought under the Administrative Procedure Act, 5 U.S.C. § 706(1),which provides a remedy to “compel agency action unlawfully withheldor unreasonably delayed.”128

According to its complaint, Oxfam “is a nonprofit international devel-opment and relief organization dedicated to finding lasting solutions topoverty and related injustice.”129 Additionally, “[a] core mission ofOxfam America is to advance resource revenue accountability around theworld, engaging with resource extraction issuers, governments and inter-national organizations, as well as with local communities and civil societyorganizations to promote responsible and accountable stewardship of

123. Id.124. Id. at 14.125. Id. at 22.126. Id. at 24–25.127. Oxfam Am., Inc. v. SEC, No. 14-13648-DJC, 2015 WL 5156554 (D. Mass. Sept. 2,

2015).128. 5 U.S.C. § 706(1) (2006).129. Oxfam America Complaint at 13, Oxfam Am., Inc. v. SEC, No. 1:14-CV-13648 (D.

Mass. Sept. 2, 2015).


revenues from extractive resources.”130 In its lawsuit, Oxfam alleges that,“[b]y vacating and remanding the 2012 final rule to the SEC, the DistrictCourt [in American Petroleum Institute] restored the status quo beforethe 2012 final rule took effect.”131

Oxfam challenges the SEC’s lack of final rule promulgation based onits organization’s interest in combating the resource curse facing manycitizens of countries with minerals, as well as its interest as an owner ofthe securities of several resource extraction issuers that would be subjectto a revised final rule implementing Section 1504.132 Additionally,Oxfam notes that “[a]ccess to the disclosures mandated by Section 1504would allow Oxfam America to better assess investment risks associatedwith extractive industry payments to governments.”133

In its complaint, Oxfam claims it “is directly injured by the SEC’s fail-ure to issue a final rule by the statutory deadline” and that “[t]he infor-mation that would be disclosed pursuant to Section 1504 would be ofdirect value to Oxfam America, both as a shareholder and as an organiza-tion with a mission to advance accountability in the management of ex-tractive resource revenues around the world.”134 In addition, Oxfamclaims that its “inability to access information that would otherwise bedisclosed pursuant to Section 1504 is directly traceable to the SEC’s un-lawful failure to issue a final rule by the statutory deadline” and thatOxfam’s “injury can only be redressed by an order from this Court com-pelling the SEC’s prompt performance of its obligation to issue a finalrule pursuant to Section 1504.”135 While this lawsuit has yet to be fullyadjudicated, it represents a growing number of challenges to the SEC’sfailure to issue a revised final rule. And, as will be further discussed inthe next section, there are an increasing number of negative implicationsresulting from the SEC’s continued delay in issuing a final revised rule.

C. IMPLICATIONS OF THE CONTINUED DELAY

The SEC’s continued delay in promulgating a revised final rule createsnegative consequences for both extraction industry issuers and propo-nents of Section 1504 who are waiting for the beneficial effects of themandatory disclosures to be realized. Moreover, the continued delay alsoincreases the risk of creating an international patchwork of regulation,with many additional disclosure and compliance issues, because multiplecountries are currently adopting rules that model the SEC original rule,while the SEC is considering changes that could affect the original disclo-sure requirements for companies in the United States. Furthermore,larger companies whose subsidiaries and affiliates operate in multiple se-

130. Id. at 4.131. Id. at 3.132. Id. at 5.133. Id.134. Id. at 17.135. Id. at 19–20.


curities markets face the potential challenge of having to manage andtailor disclosures to multiple different regions of operations, which willcreate more compliance and legal related expenses.

Extraction industry issuers are also negatively affected because theyare currently stuck in limbo—not knowing what the final disclosure re-quirements will be—and the SEC only continues to tell issuers to standbyand monitor the developments closely, without providing any clarityabout when a new rule will be implemented or what the final revised rulewill look like.136 Thus, issuers are unsure whether they should begin im-plementing portions of the law to get a head start on compliance efforts,or if they should stick their head in the sand and wait until a revised ruleis promulgated.

Similarly, proponents of Section 1504 are stuck waiting for the benefi-cial effects of the mandatory disclosures to be realized and still do nothave any payment information to help investors and citizens almost fiveyears after Congress enacted Section 1504 in 2010. Meanwhile, theUnited States is also falling behind as a world leader in transparency ini-tiatives. In 2010, Congress created what is becoming the world standardtoday. And while other countries have followed our perceived lead, thecurrent lengthy delays by the SEC in promulgating a final revised rulenegatively affects our early initiatives. Countries that drafted andadopted laws based on the United States’ Section 1504 standards are nowwondering how their laws will match up against the SEC’s revised finalrule. The next section of this article will further discuss the multiple Sec-tion 1504-type international rules that have been recently enacted.

V. SIMILAR INTERNATIONAL RULES

This portion of the article will examine similar international rules thathave been proposed or adopted since Section 1504 was signed into law.“In enacting Section 1504, Congress sought to have the United States setthe “global standard” in the field of extractive industries payment disclo-sure.137 Congress intended for the standard set by Section 1504 to be themodel for other jurisdictions’ extractive payments disclosure regula-tions.”138 This intended objective can be inferred from the congressionalrecord discussing Section 1504 and the short statutory deadline forpromulgating a final rule provided for in Section 1504. To that end, theSEC’s 2012 final rule, even though it was later vacated and remanded, hasalready made a substantial contribution to the development of a globaltransparency standard. Many other countries and jurisdictions, for exam-ple, have made significant progress in passing transparency laws modeledafter Section 1504 and the SEC’s 2012 original final rule.

136. Letter from Royal Dutch Shell to S.E.C. (Oct. 25, 2010), https://www.sec.gov/comments/df-title-xv/specialized-disclosures/specializeddisclosures-33.pdf.

137. Oxfam America Complaint, supra note 129, at 11; see also 156 CONG. REC. S3316(daily ed. May 6, 2010) (statement of Sen. Cardin).

138. Oxfam America Complaint, supra note 129, at 11.


“On June 12, 2013, the European Union adopted new transparency re-quirements for extractive companies that were expressly based on theSEC’s 2012 final rule.”139 The provision requires full disclosure of allpayments above $100,000 on a project-by-project basis.140 The Parlia-ment was successful in removing “the ‘tyrant’s veto’ from the draft legis-lation—a clause exempting companies from the reporting requirementswhere the host country’s criminal law bans such disclosure.”141 The Eu-ropean Union’s requirements also go beyond Section 1504 by expandingthe disclosure requirements to also cover large, privately owned firms andcompanies operating in the logging sector.142 The legislation instructs theEuropean Commission to consider extending the rules to more industries.“The European Union’s member-states are now obliged to transposethese requirements into national law within 24 months.”143

In response to the new transparency requirements adopted by the Eu-ropean Union, the United Kingdom, on December 1, 2014, passed an oil,gas, and mining transparency law that made “the European Union’s Ac-counting Directives the law of the land in the United Kingdom with theEuropean Union’s Transparency Directives to follow soon.”144 “The Ac-counting Directives require large public companies incorporated in theEU to report their payments—which includes Shell, BP, Total, AngloAmerican, and others.”145 Whereas, “the Transparency Directives re-quire companies listed on EU-regulated stock exchanges to report theirpayments, including Gazprom and Sinopec.”146

Furthermore, Canada is making great strides in its transparency initia-tives and disclosure requirements as well.147 On December 16, 2014, theExtractive Sector Transparency Measures Act became law after receivingroyal assent by Canada’s governor general.148 The Act requires all enti-ties involved in the commercial development of oil, gas or minerals, inCanada or elsewhere, to report payments greater than C$100,000 made todomestic or foreign governments annually and to make the information

139. Id.140. Oil, gas, mineral and logging firms obliged to disclose payments to governments,

EUR. PARL. NEWS (Dec. 6, 2013), available at http://www.europarl.europa.eu/news/en/news-room/content/20130607IPR11387/html/Oil-gas-mineral-and-logging-firms-obliged-to-disclose-payments-to-governments.

141. Id.142. Id.143. Oxfam America Complaint, supra note 129, at 11.144. Id.145. UK Passes Historic Transparency Law For Oil, Gas And Mining Companies,

OXFAM AMERICA (Dec. 1, 2014), http://www.oxfamamerica.org/press/uk-passes-historic-transparency-law-for-oil-gas-and-mining-companies/; see also The Reportson Payments to Governments Regulations 2014, 2014 No. 3209 (UK), http://www.legislation.gov.uk/uksi/2014/3209/contents/made.

146. OXFAM AMERICA, supra note 145.147. Id.148. Alan Ross et al., 2014 in Review: Top 10 legislative and regulatory changes for the

Canadian Oil and Gas Industry, BLG (Feb. 2, 2015), http://www.blg.com/en/newsandpublications/publication_3971.


contained in those reports public.149 The new law applies to companieslisted on a Canadian stock exchange, as well as entities that have a placeof business in Canada, do business in Canada, or have assets in Canada, ifthey meet two of the three thresholds for at least one of their two mostrecent financial years: (i) at least C$20 million in assets, (ii) at least C$40million in revenue, and (iii) an average of at least 250 employees.150 Af-ter deliberating whether exemptions from the reporting standards shouldbe allowed, “such as in circumstances where the standards conflict withlaws that prohibit disclosure of the required information or conflict withcontractual provisions regarding confidentiality, the Consultation Paperproposed that no exemptions from the reporting standards begranted.”151 Furthermore, failure to comply with the Extractive SectorTransparency Measures Act can trigger substantial penalties—up toC$250,000 per day.152

Thus, while the United States, with the SEC’s 2012 final rule, was suc-cessful in spurring many other countries into action, many commentersnow believe that the United States risks falling behind and weakening theextraction issuer transparency movement if the SEC continues to delayissuing a revised final rule.153 As many other countries adopt their ownrules for resource extraction issuers, a revised final rule by the SEC thatis materially different than the 2012 rule presents a large risk of creating aglobal patchwork of regulation—where rules and requirements differfrom country to country—which would require expensive micromanage-ment compliance procedures. Additionally, if the SEC does not issue arevised final rule within the next few months, many believe that Con-gress’ intent that the United States be one of the world-leaders in trans-parency and disclosure initiatives will be frustrated. Next, in the finalsection of this article, I will draw together my conclusions and make mod-est recommendations.

VI. CONCLUSION & RECOMMENDATIONS

This section will explore the SEC’s proposed timeline for initiating Sec-tion 1504 revised rulemaking, as well as discuss conclusions and modestrecommendations based on the original congressional intent outlined inSection 1504. According to the Office of Information and RegulatoryAffairs, the SEC plans to initiate revised rulemaking for Section 1504—the second attempt at writing new rules for oil, gas and mining companiesto disclose what they pay governments for their natural resources—by

149. Alan Ross, supra note 148; see also Extractive Sector Transparency Measures Act,S.C. 2014, c 39, s 376, s 1–30.

150. Extractive Sector Transparency Measures Act, supra note 149, at s 8.151. Podowski & Poirier, Increasing Transparency in the Extractive Industry: The Cana-

dian Approach, WHO’S WHO LEGAL (Jan. 2015), http://whoswholegal.com/news/features/article/31977/increasing-transparency-extractive-industry-canadian-approach.

152. Extractive Sector Transparency Measures Act, supra note 149, at s 24.153. Oxfam America Complaint, supra note 129, at 10–11.


October 2015.154 But this agenda is not binding and provides no guaran-tee that final rules will be adopted in 2015. And given the substantialdelays to this point, it is possible that the non-binding deadline could befurther delayed. But depending on the outcome of Oxfam America’s2014 lawsuit, a revised rule is likely to be created within the next year.The last section of this article will discuss modest recommendations andthe reasoning behind them.

Recommendations: In order to achieve the expressed Congressional ob-jective of making payments by extractives companies to governmentsmore transparent, the SEC should produce a strong Section 1504 revisedfinal rule requiring public, project-level reporting by company, with nocategorical exemptions. This revised rule would include most of the samerequirements as the original rule, with an expressed public disclosure re-quirement. But given the holding in American Petroleum Institute v.SEC, the SEC may have to include justifications and fact-findings in itsrevised rule to support its position and to show that the revised final ruleswere based on the SEC’s own judgment—instead of relying solely onwhat the SEC thought the statute mandated.155 Moreover, Congressshould amend Section 1504 to clearly define “to the extent practicable”and address whether the resource extraction payment reports must bemade public and what exemptions, if any, should be given. These actionswill make the rules more clear and mitigate potential lawsuits that chal-lenge the new rule and its effects.

In order to demonstrate the Congressional intent of Section 1504, agroup of “13 senior Senators, including the original co-sponsors of thelegislation and the Chair of the Senate Banking Committee, sent a letterto the SEC on May 1, 2014, reminding the agency of the statutory dead-line and calling for a release of strong final rules this year.”156 Within theletter, the senators noted that “[p]rompt enactment of a robust rule willhelp protect U.S. investors, promote U.S. national and energy security,and create more stable operating environments for American busi-nesses.”157 In fact, industry participants are beginning to request strongmandatory disclosure requirements to benefit their business.158 “Largepublic companies, such as Newmont Mining, Rio Tinto, Statoil, and Tul-low Oil, have publicly emphasized the benefits their companies receivefrom increased transparency.”159

154. Oxfam America’s Motion for Summary Judgment at 6, Oxfam Am., Inc. v. SEC,No. 1:14-CV-13648 at 6 (D. Mass. Sept. 2, 2015).

155. Am. Petroleum Inst., 953 F. Supp. 2d at 5 (D.D.C. 2013).156. Timeline For Oil, Mining Sunshine Rule Puts The US Behind On Global Trans-

parency, Oxfam (May 28, 2014), http://www.oxfamamerica.org/press/timeline-for-oil-mining-sunshine-rule-puts-the-us-behind-on-global-transparency/; see also Let-ter from 13 Senators to the SEC (May 1, 2014), http://www.sec.gov/comments/df-title-xv/resource-extraction-issuers/resourceextractionissuers-41.pdf.

157. Letter from 13 Senators to the SEC, supra note 156.158. Id.159. Congress calls on SEC to release extractives transparency rule is year, OXFAM (June

12, 2014), http://www.oxfamamerica.org/press/congress-calls-on-sec-to-release-extractives-transparency-rule-this-year/.


To better assess and address the concerns of industry participants af-fected by Section 1504, “Revenue Watch Institute and Columbia LawSchool conducted a joint study of over 100 oil and mining contracts be-tween local governments and extractive companies.” “The study foundthat ‘many companies maintain confidentiality rules around contractterms chiefly as a matter of habit’ and ‘most deals include few matters ofgenuine commercial sensitivity.’”160 The results of the study also con-firmed that most “confidential” or “proprietary” information wouldlikely already be public information or “would be of such minimal com-petitive value that, with the exception of references to future transactionsand trade secrets (for which Section 1504 does not require disclosure),they would not cause substantial harm to an issuer’s competitive posi-tion.”161 “This is likely because the most sensitive information for extrac-tion issuers, specifically geological data, costs, and profits, is not coveredby Section 1504.”162

Furthermore, the threat of a competitive disadvantage is less significantif the final disclosure rules are adopted with universal or near-universalcoverage of international oil companies and publically listed national oilcompanies.163 “Under this scenario, national oil companies would be lim-ited to a handful of partners if they wished to avoid public disclosure” ofSection 1504-type payment information.164 And, as discussed above,many international countries have already adopted laws and initiativessimilar or more rigorous than Section 1504 and the SEC’s original rule.165

Therefore, it is likely that any potential advantage gained by non-Section1504 companies will be mitigated by wide-scale adoption that naturallyeliminates most of the opportunities non-Section 1504 companies wouldhave had to gain a competitive advantage.166

In conclusion, while the costs should be considered carefully, a Section1504-based revised final rule requiring public, project-level reporting byeach company, with no categorical exemptions, is likely the best way toachieve the expressed Congressional objective of making payments by ex-tractives companies to governments more transparent. Moreover, at thispoint, the United States needs to maintain the universal standard that isbeing adopted all over the world and avoid creating a global patchworkregulatory environment. No market participants want the additional con-fusion of being listed on two securities exchanges and having to keeptrack of two different reporting requirements. Furthermore, a relativelyweak revised final SEC rule, which included categorical exemptions and

160. Branden Carl Berns, Will Oil and Gas Issuers Leave U.S. Equity Markets in Re-sponse to Section 1504 of the Dodd-Frank Act? Can They Afford Not to?, 2011COLUM. BUS. L. REV. 758, 789 (2011), citing Peter Rosenblum & Susan Maples,Contracts Confidential: Ending Secret Deals in the Extractive Industries 17 (2009).

161. Id. at 789–790.162. Id. at 790.163. Id.164. Id.165. Id. at 794.166. Id. at 809.


did not require public disclosures, would result in much of the same com-pliance costs and would significantly reduce the positive impacts of therule that Congress intended for investors and impoverished citizens inresource-rich countries.

PMI V. URUGUAY: PUBLIC HEALTH AND

ARBITRATION INTERTWINED

AND UNDERMINED

Keegan Warren-Clem, JD, LLM*

ABSTRACT

The pending matter between cigarette manufacturer Philip Morris Inter-national (PMI) and the nation of Uruguay is the seminal case on the use ofinternational investment treaty arbitration to alter public health measureslargely thought to be a legitimate exercise of a state’s police power. But thecase threatens to disrupt the concept of national police power, which givescountries an implied right to regulate in the public interest. This paperanalyzes the public health tenets that should influence the resolution ofPMI v. Uruguay, and includes notes on tenets of international investmentarbitration that are particularly amenable to modification in a way thatpromotes the public health and welfare.

TABLE OF CONTENTS

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396II. PROCEDURAL HISTORY OF PMI V. URUGUAY . . . . . 396

III. THE URUGUAYAN REGULATIONS AT ISSUE . . . . . . . 398IV. COMPARING THE REGULATIONS WITH THE

GLOBAL, REGIONAL, AND NATIONAL PUBLICHEALTH SCHEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399

V. THE GOALS OF INTERNATIONAL INVESTMENTARBITRATION AND THIS ARBITRAL TRIBUNALVS. PUBLIC HEALTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404

VI. EFFECTS OF PMI v. URUGUAY ON PUBLICHEALTH REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405

VII. ARBITRAL DOCTRINE NEED NOT DISFAVORPUBLIC HEALTH LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407

VIII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409

* Keegan Warren-Clem, JD, LLM, was the inaugural Southern Illinois HealthcareMedical-Legal Partnership Master of Laws Fellow. A former Equal Justice WorksFellow, she is now an Adjunct Professor at The University of Texas School of Law.Keegan is also a practicing attorney, the founding Legal Champion of Austin Med-ical-Legal Partnership. She is admitted to practice in Texas and is a member of theState Bar College, an honorary society of the most highly trained lawyers in Texas.In addition to holding an LL.M. in Health Law and Policy from Southern IllinoisUniversity, Keegan earned a J.D. from The University of Texas and a B.A. fromthe University of Arkansas. She thanks Jennifer Brobst for her support.

395


I. INTRODUCTION

THE pending matter between cigarette manufacturer Philip MorrisInternational (PMI) and the nation of Uruguay is the seminal caseon the use of international investment treaty arbitration to alter

public health measures largely thought to be a legitimate exercise of astate’s police power.1 Although investment treaties are “primarily con-cerned with attracting foreign investment by offering substantive protec-tions to foreign investors,” their potential chilling effect on nationalhealth policy regulations has been a cause for concern since at least thelate twentieth century.2 The disquiet stems from the protectionist natureof investment treaties because they seek to prevent otherwise appropriateaction that may directly or indirectly act as an expropriation of privateproperty for the state’s benefit.3

Thus, international dispute resolution mechanisms may prove a surpris-ing and effective jurisdiction for corporate attempts to eliminate or miti-gate the impact of health regulations on business, at least if PMIsucceeds. This paper analyzes the public health tenets that should influ-ence the resolution of PMI v. Uruguay. It begins with a brief backgroundof the case and laws at issue before turning to an examination of, andimplications for, the international public health schema, particularly inLatin America. Although it does not seek to elucidate other underlyinglegal doctrines at issue in the case, it does note several tenets of interna-tional investment arbitration that are particularly amenable to modifica-tion that would promote the public health and welfare.

II. PROCEDURAL HISTORY OF PMI V. URUGUAY4

On February 19, 2010, PMI filed a request for arbitration under thepurview of the International Centre for Settlement of Investment Dis-putes (ICSID) pursuant to the thirty-sixth article of the founding conven-tion of that organization.5 PMI asserted that Uruguay’s anti-tobacco laws

1. See, e.g., Rebecca Dreyfus & Juan Antonio Montecino, Philip Morris vs. Uruguay,FOREIGN POLICY IN FOCUS (Mar. 4, 2010), http://www.fpif.org/articles/philip_morris_vs_uruguay (“There is a wide array of support for such laws throughout theworld . . . [b]ut Philip Morris has not launched a lawsuit like this one before.”);Philip Morris Sues Uruguay Over Graphic Cigarette Packaging, NPR (Sep. 15,2014. 4:35 AM), http://www.npr.org/blogs/goatsandsoda/2014/09/15/345540221/philip-morris-sues-uruguay-over-graphic-cigarette-packaging (“The outcome ofthis case will set the tone for other countries.”).

2. Rahim Moloo & Justin Jacinto, Environmental and Health Regulation: AssessingLiability Under Investment Treaties, 29 BERKELEY J. INT’L L. 1, 2–4 (2011), availa-ble at http://ssrn.com/abstract=1663025.

3. Id. at 11.4. For the collection of documents related to this case, see Philip Morris Brands v.

Oriental Republic of Uruguay, ICSID Case No. ARB/10/7: Available Documents,INV. TREATY ARB., http://www.italaw.com/cases/460 (last visited Aug. 19, 2015)(giving links to all publicly available documents).

5. FTR Holding SA v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7,Request for Arbitration, ¶ 1 (Feb. 19, 2010) sub nom. Philip Morris Brands v.

2015] PMI V. URUGUAY 397

violated the Agreement between the Swiss Confederation and the Orien-tal Republic of Uruguay on the Reciprocal Promotion and Protection ofInvestments, a bilateral investment treaty (the Treaty).6 The American-based PMI was able to do so as a result of a 2001 transfer of its operationscenter from Rye Brook, New York, to Lausanne, Switzerland.7

The request for arbitration was registered on March 26, 2010, and oneyear later a three-person arbitral tribunal was constituted.8 The initialmeeting of the parties, held in May 2011, was telephonic and withouttranscript.9 By fall of that year, Uruguay had formally contested jurisdic-tion on three counts: (1) that PMI had not complied with a requirementthat at least eighteen months pass after initiation of an attempt to settlethe dispute amicably or through the domestic judicial system; (2) thatpublic health regulations were expressly and impliedly excluded from thepurview of the Treaty; and (3) that PMI was not an investor in Uruguayfor purposes of the Treaty because the corporation did not contribute tothe national economy in a positive manner.10

Over the next two years, a counter-memorial,11 reply,12 and rejoinder13

on jurisdiction were filed. The tribunal eventually found that it did in-deed have jurisdiction on July 2, 2013.14 A date for argument has not

Oriental Republic of Uruguay, available at http://www.italaw.com/sites/default/files/case-documents/ita0343.pdf [hereinafter Request for Arbitration]. For the or-ganic treaty text, see INT’L CTR. FOR SETTLEMENT OF INV. DISPUTES, Conventionon the Settlement of Investment Disputes Between States and Nationals of OtherStates art. 36, in ICSID CONVENTION, REGULATIONS, AND RULES (2006) [hereinaf-ter ICSID Convention], available at http://icsid.worldbank.org/ICSID/StaticFiles/basicdoc/CRR_English-final.pdf (establishing a three-step procedure for request-ing arbitration).

6. Request for Arbitration, supra note 5, ¶ 1. For the relevant treaty provision, seeAccord entre la Confederation suisse et la Republique orientale de l’Uruguay con-cernant la promotion et la protection reciproques des investissements [AgreementBetween the Swiss Confederation and the Oriental Republic of Uruguay on theReciprocal Promotion and Protection of Investments], Switz.-Uru., art. 10, Oct. 7,1988, available at http://www.sice.oas.org/Investment/BITSbyCountry/BITs/URU_Switzerland_f.pdf [hereinafter Treaty] (describing the procedure for resolving dis-putes between the contracting parties).

7. Our History, PHILIP MORRIS INT’L, http://www.pmi.com/eng/about_us/pages/our_history.aspx (last visited Aug. 21, 2015).

8. Case Details, INT’L CTR. FOR SETTLEMENT OF INV. DISPUTES, https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/casedetail.aspx?CaseNo=ARB/10/7 (lastvisited Aug. 21, 2015).

9. Id.10. Philip Morris Brands v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7,

Uruguay’s Memorial on Jurisdiction (Sept. 24, 2011), http://www.italaw.com/sites/default/files/case-documents/ita0346.pdf [hereinafter Uruguay’s Memorial onJurisdiction].

11. Case Details, supra note 8.12. Philip Morris Brands v. Oriental Republic of Uruguay, ICSID Case ARB/10/7,

Uruguay’s Reply on Jurisdiction (Apr. 20, 2012), http://www.italaw.com/sites/de-fault/files/case-documents/italaw1259.pdf.

13. See Philip Morris Brands v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7: Available Documents, supra note 4 (noting that the rejoinder is not public).

14. Philip Morris Brands v. Oriental Republic of Uruguay, ICSID Case ARB/10/7,Decision on Jurisdiction (July 2, 2013), available at http://www.italaw.com/sites/de-fault/files/case-documents/italaw1531.pdf [hereinafter Decision on Jurisdiction].


been set, but PMI filed a memorial on the merits in March 2014.15

III. THE URUGUAYAN REGULATIONS AT ISSUE

In 2009, Uruguay promulgated a series of measures designed to dis-courage tobacco use.16 PMI objected to three. First, the measures in-cluded a Presidential Decree that required eighty percent of the front andback panels of a cigarette package be filled with mandatory warning la-bels.17 The provision, which took effect December 12, 2009, increased aprevious order by the then-president, an oncologist, that the warningscover half of the packaging.18 The decree also continued a mandate thatthe warnings include images.19

One of the six images.

Front: Smoking, you stink. Smoking causes bad breath, tooth stains, and unpleasant odor.Back: Cigarettes slowly damage the senses of taste and smell.

Second, an ordinance issued on September 1, 2009, by the Ministry ofPublic Health required that six specific images be used.20 That provision

15. Case Details, supra note 8.16. Dreyfus & Montecino, supra note 1.17. Decree No. 287/009, art. 1 (June 15, 2009) (Uru.), available at http://archivo.presi

dencia.gub.uy/_web/decretos/2009/06/CM751.pdf.18. Id.; TODD WEILER, PHYSICIANS FOR A SMOKE FREE CAN., PHILIP MORRIS VS.

URUGUAY: AN ANALYSIS OF TOBACCO CONTROL MEASURES IN THE CONTEXT OF

INTERNATIONAL INVESTMENT LAW 4 (2010), available at http://www.smoke-free.ca/eng_home/2010/PMIvsUruguay/Opinion-PMI-Uruguay.pdf.

19. Decree No. 287/009, supra note 17, at art. 1.20. Ministerio de Salud Publica, Ordenanza Ministerial 466/2009, art. 1 (Sept.1, 2009),

available at http://www2.msp.gub.uy/andocasociado.aspx?3410,17644. For all siximages, see Ministerio de Salud Publica, Nuevos Pictogramas para la Presentacion


took effect February 14, 2010.21

Finally, another ordinance came out on September 1, 2009, and wentinto effect on February 28, 2010.22 It limited the use of a brand name to asingle line of products, such that products that might have been describedas “light” or “mild”—terms already banned—would constitute multipleproduct lines.23 Similarly, color-coding cigarette packaging as a proxy in-dicator of the same characteristics was prohibited; each product linecould have only one color.24

For its part, PMI complied with these regulations and selected “Marl-boro Red,” its full-strength cigarette, as its single product line inUruguay.25

IV. COMPARING THE REGULATIONS WITH THEGLOBAL, REGIONAL, AND NATIONAL

PUBLIC HEALTH SCHEMA

The World Health Organization (WHO) is the appropriate transna-tional organization from which to draw insight, because even its criticsacknowledge that it is the leader in global health policy.26 Moreover, al-most all formal interaction between health policy and international tradeoccurs through WHO,27 in part because it is comprised of representativesfrom almost every country and is considered the authority on all healthmatters for the United Nations.28 Additionally, WHO’s standards mightbe considered comparable to customary international law, in that they arethe accepted standard for global health policy.

WHO notes that “[t]here has long been recognition that [international]laws are a fundamental part of public health and global public health.”29

It cites four areas of international law applicable to global public health:(1) international trade laws, which govern the trade in pharmaceuticals;(2) international human rights law, which aims to protect the humanrights of individuals; (3) international environment law, which addressesenvironmental problems that have an impact on global health problems;

de Venta de Tabaco, http://www2.msp.gub.uy/andocasociado.aspx?3410,17643 (lastvisited Aug. 21, 2015).

21. WEILER, supra note 18, at 4.22. Id.23. Uruguay’s Memorial on Jurisdiction, supra note 10, ¶ 21–22.24. Id.25. Id. ¶ 22.26. See, e.g., Ilona Kickbusch, The Development of International Health Policies: Ac-

countability Intact?, 51 SOC. SCI. & MED. 979, 981 (2000) (claiming that WHO“reinvented itself from being a specialized agency that implemented a set of tech-nical programs to being a leader in health policy development”).

27. Kelly Lee et al., Bridging the Divide: Global Governance of Trade and Health, 373LANCET 416, 418 (2009).

28. See, e.g., WORLD HEALTH ORG., WORKING FOR HEALTH: AN INTRODUCTION TO

THE WORLD HEALTH ORGANIZATION 2 (2007), available at http://www.who.int/about/brochure_en.pdf (describing WHO’s global influence).

29. Trade, Foreign Policy, Diplomacy and Health: International Law, WORLD HEALTH

ORG., http://www.who.int/trade/glossary/story061/en/ (last visited Aug. 21, 2015).


and (4) international humanitarian law, which aims to protect the healthof combatants and non-combatants in times of armed conflict.30 Notice-ably absent is international investment—or other economy-related—law.

Nonetheless, in 2002, WHO, through its regional Pan American HealthOrganization (PAHO), began a dialogue with “key sub-regional stake-holders,” including the Central American Integration System (SICA), theAndean Health Agency (ORAS), and South America’s Common South-ern Market (MERCOSUR).31 Although the goal was to “scale up theaccess of the world’s poor to essential health services,”32 these organiza-tions represent regional integration efforts that typically revolve aroundthe economic priorities of the nations that are party to the agreement.

As a result, and with the encouragement of PAHO/WHO, recognitionof the role of economic policy on health has caused an increasing empha-sis on social initiatives throughout the Americas. Numerous suprana-tional collaborative public health policies of all varieties have arisenwithin Latin America specifically. For example, informal agreementspermit the portability of health care throughout the member nations ofMERCOSUR.33 Cooperation amongst these nations also allows health-care professionals to move from country to country, enhancing the availa-bility of medical services in needed areas.34 As might be expected,emergent care in particular is available to traveling non-nationals withoutregard to health insurance or other ability to pay.35 Indeed, the imagesselected by Uruguay were largely from a database created byMERCOSUR for the use of its member nations.36

There are formal agreements, too. In May 2014, Uruguay signed aMemorandum of Understanding establishing the world’s third “knowl-edge hub” under the WHO Framework Convention on Tobacco Control(FCTC); the group seeks collaboration amongst governmental and non-governmental experts in the implementation of the FCTC throughout the

30. Id.31. Macroeconomics and Health (CMH): Achievements Through September 2004,

WORLD HEALTH ORG. (Sept. 2004), http://www.who.int/macrohealth/action/up-date/achievements_paho/en/index.html.

32. COMM’N ON MACROECONOMICS & HEALTH, PAN AM. HEALTH ORG., THE CMHREPORT: ITS RELEVANCE FOR COUNTRIES OF THE LATIN AMERICA AND CARIB-

BEAN REGION 2 (2002), available at http://www.paho.org/english/hdp/hdd/ecs/cmh.pdf. For the CMH Report in its entirety, see COMM’N ON MACROECONOMICS &HEALTH, WORLD HEALTH ORG., MACROECONOMICS AND HEALTH: INVESTING IN

HEALTH FOR ECONOMIC DEVELOPMENT (2001), available at http://apps.who.int/iris/bitstream/10665/42435/1/924154550X.pdf.

33. ANDRE MEDICI & BERNARDO WEAVER BARROS, INTER-AM. DEV. BANK,HEALTH POLICIES AND ECONOMIC BLOCKS 22 (2006), available at https://publica-tions.iadb.org/bitstream/handle/11319/5292/Health%20Policies%20and%20Economic%20Blocks.pdf?sequence=1.

34. Ada Avila Assuncao et al., Recursos humanos e trabalho em saude: os desafıos deuma agenda de pesquisa [Human Resources and Health Care: Challenges of a Re-search Agenda], 23 CADERNOS DE SAUDE PUBLICA 193, 196 (2007) (Braz.).

35. Id.36. Uruguay’s Memorial on Jurisdiction, supra note 10, ¶ 137.


Americas.37 Just three months later, fourteen Latin American nationsattended the inaugural meeting with hopes that “[g]lobal tobacco controlwill profit greatly if government, civil society and international and re-gional experts are able to cooperate closely.”38

Important because it is the primary legal authority reflecting the globalpublic health understanding of tobacco regulations, “the FCTC is the firstinternational treaty negotiated under the auspices of WHO.”39 In a two-pronged approach, the FCTC emphasizes demand reduction strategies aswell as supply issues.40 Specific to the regulations at issue in PMI v. Uru-guay are the provisions of Article 11, which govern the packaging andlabelling of tobacco products through two overarching means. Article 11mandates that signatories outlaw any package wording that is “false, mis-leading, deceptive or likely to create an erroneous impression about [thecigarette’s] characteristics, health effects, hazards or emissions.”41 Ofparticular concern were phrases such as “light” and “mild” that suggestthat some cigarettes are safer than others42—exactly the ban that Uru-guay, a signatory, enacted.

Article 11 also requires that labels warn about the health effects ofsmoking.43 The warnings must cover at least thirty percent of the displayarea, though fifty percent is set as the ideal.44 Images are mere aspirationunder the FCTC, but, regardless, it is required that the labels rotate.45 Asnoted above, Uruguay opted to command the use of images on cigarettepackages; the same decision has now been made by over sixty nations,covering forty percent of the world’s population.46

Although Article 11 is less than one page long, three times it invokesnational authority to implement label specifications. In Uruguay the sup-port of national authorities already existed. Uruguay’s Constitution rec-ognizes public health as a “primordial right and supreme good,” makingpublic health regulation a legal mandate.47 The Uruguayan Supreme

37. Memorandum of Understanding Between the Convention Secretariat and the Minis-try of Public Health, Uruguay, WORLD HEALTH ORG., http://www.who.int/fctc/implementation/cooperation/mou_uruguay/en/ (last visited Aug. 21, 2015).

38. Eduardo Bianco, Uruguay’s FCTC Knowledge Hub Holds First Meeting, FRAME-

WORK CONVENTION ALLIANCE (Sep. 21, 2014), http://www.fctc.org/fca-news/opinion-pieces/183-news/1212-uruguay-s-fctc-knowledge-hub-holds-1st-meeting.

39. Foreword to WORLD HEALTH ORG., WHO FRAMEWORK CONVENTION ON TO-

BACCO CONTROL, at v (June 29, 2004), available at http://whqlibdoc.who.int/publications/2003/9241591013.pdf?ua=1.

40. Id.41. Id. at art. 11(1)(a).42. Id.43. Id. at art. 11(1)(b).44. Id.45. Id.46. CAN. CANCER SOC’Y, CIGARETTE PACKAGE HEALTH WARNINGS: INTERNATIONAL

STATUS REPORT 2 (4th ed. 2012), available at http://global.tobaccofreekids.org/files/pdfs/en/WL_status_report_en.pdf.

47. See Constitucion de la Republica, art. 44 (Oct. 31, 2004) (Uru.), available at http://www.parlamento.gub.uy/constituciones/const004.htm (“El Estado legislara entodas las cuestiones relacionadas con la salud e higiene publicas, procurando elperfeccionamiento fısico, moral y social de todos los habitantes del paıs. [The


Court interpreted this clause when PMI attempted, almost simultaneouswith its investment arbitration action, to challenge the anti-tobacco mea-sures as unconstitutional under Uruguayan law.48 The case was unani-mously dismissed on its merits, with the court noting that “an essentialduty of the state [is] to adopt all measures it considers necessary to main-tain the collective health.”49

In addition to the constitutional duty, Uruguay cites the 1934 OrganicLaw of Public Health as authoritative in its jurisdiction memorial againstPMI.50 That law codifies the constitutional mandate, thereby laying thestatutory foundation for all public health regulation in the country.51 Thememorial is instructive for understanding the nation’s profferedpriorities:

The 1934 Organic Law reiterates the supremacy of public health, andprovides the Ministry of Public Health with full authority to take anymeasures it deems necessary to maintain the health of the popula-tion, and to control activities that harm or threaten to harm publichealth. In contrast to other Ministries, the Ministry of Public Healthneeds no additional legal authorization to regulate matters under itsauthority.52

Thus, the national understanding of public health in Uruguay can be sum-marized as prioritizing its interest in regulating public health and welfareabove all other national interests. And although the cigarette labelingrequirements were slowly implemented by previous administrations, thecurrent Uruguayan president, Jose Mujica, promotes the same messageglobally. In his eyes, the tobacco industry is “murderous.”53

On a more individual level, the three regulations in controversy areappropriate because they encourage smokers to consider quitting and dis-courage nonsmokers from starting. Negative graphic warnings are moreeffective at communicating the dangers of and preventing smoking thanthose that are textual or gain-focused.54 Additionally, even nonsmokers

State shall legislate in all matters related to public health and sanitation, ensuringthe physical, moral, and social well-being of all inhabitants of the country.]”).

48. Uruguay Court Dismisses Philip Morris Tobacco Challenge, BILATERALS.ORG

(Nov. 20, 2010) http://www.bilaterals.org/spip.php?article18529; see also Requestfor Arbitration, supra note 5, ¶ 8 (“The Claimants have sought to reach an amica-ble solution by way of consultations with the Respondent, as well as through ad-ministrative and legal action in Uruguay, but these attempts have so far provenfutile. Accordingly, the Claimants are compelled to pursue their rights by way ofarbitration.”).

49. Uruguay Court Dismisses Philip Morris Tobacco Challenge, supra note 48.50. Uruguay’s Memorial on Jurisdiction, supra note 10, ¶ 114.51. Id.52. Id.53. Press Release, Remarks by President Obama and President Mujica of Uruguay

Before Bilateral Meeting (May 12, 2014), http://www.whitehouse.gov/photos-and-video/video/2014/05/12/president-obama-s-bilateral-meeting-president-mujica-uruguay.

54. See e.g., Maansi Bansal-Travers et al., The Impact of Cigarette Pack Design,Descriptors, and Warning Labels on Risk Perception in the U.S., 40 AM. J. PREV.MED. 674, 678 (2011), available at http://www.ncbi.nlm.nih.gov/pmc/articles/


tend to equate both the descriptors and the colors of cigarette packagingas indicators of the health risk of smoking a particular type of cigaretterelative to others in the product line.55

Typical individual concerns regarding public health regulations gener-ally do not apply to cigarette labeling requirements. Notions of bodilyintegrity, autonomy of the person, and other civil rights are inapplicableto such supply-sided regulations. Nonetheless, because the graphics canbe considered, in the words of PMI, “highly shocking images that aredesigned specifically to invoke emotions of repulsion and disgust, evenhorror,”56 it is worth noting that even some smokers have found themdifficult to stomach.57 The revulsion has been great enough that somesmokers have reported flavor changes in cigarettes, a phenomenontermed by one public health official as a “psychological effect[ ] of mar-keting.”58 Still, to the extent that the graphics are educational, it is diffi-cult to argue that an individual right to ignorance exists and certainly tofurther assert that it should outweigh the public health concern for smok-ing cessation.

Finally, there is both a state and individual interest in economic stabil-ity and adequate employment. In taking on PMI, Uruguay challenged amajor employer and contributor to its economy. This is reflected in oneof PMI’s foundational claims regarding a reduction in sales and in thevalue of its Uruguayan subsidiary.59 The corporation thus correctly pre-dicted in its arbitration request60 that it would close the subsidiary’s man-ufacturing facility in Uruguay.61

To counter the loss to the individual worker and the economy at large,Uruguay instituted a program through which the former PMI employeesreceived training and employment as enforcers of its anti-tobacco regula-tions.62 The nation benefited from the reduced unemployment, the po-

PMC3108248/pdf/nihms291151.pdf; Deborah Sharf & William Shadel, GraphicWarnings are Scary, but Do They Work?, THE HEALTH CARE BLOG (Sept. 27,2014) http://thehealthcareblog.com/blog/tag/uruguay/ (citing three studies withfindings that images can have a negative emotional effect on both smokers andnonsmokers); but see Graphic Images ‘Don’t Deter Young Smokers’, BBC (Sept.13, 2013), http://www.bbc.com/news/health-23963559 (citing a study that found thatimages have no effect on deterring eleven- to sixteen-year-old smokers).

55. Bansal-Travers et al., supra note 54, at 680.56. Uruguay’s Memorial on Jurisdiction, supra note 10, ¶ 4.57. See, e.g., Michael Kozoil, Warning: Images May Harm Your Smoking Pleasure,

SYDNEY MORNING HERALD (Au.) (Dec. 8, 2012), http://www.smh.com.au/national/health/warning-images-may-harm-your-smoking-pleasure-20121207-2b0v3.html(quoting a smoker that a one Australian image is “pretty vile”).

58. Id.59. PMI’s Request for Arbitration, supra note 5, ¶ 87.60. Philip Morris deja Uruguay por la “excesiva” regulacion [Philip Morris Leaves

Uruguay Because of “Excessive” Regulation], PORTAL DIGITAL EL PAIS (Oct. 22,2011, 15:36), http://www.elpais.com.uy/111022/pnacio-601393/nacional/philip-mor-ris-deja-uruguay-por-la-excesiva-regulacion/.

61. PMI’s Request for Arbitration, supra note 5, ¶ 94.62. Ex-Philip Morris Workers Lead Uruguay Tobacco Crackdown, YAHOO! NEWS

(Jul. 29, 2014, 02:17), http://news.yahoo.com/ex-philip-morris-workers-lead-uru-guay-tobacco-crackdown-061716376.html.


tential increase in fines related to violations, and the positive health andeconomic outcomes that enforcement of the anti-tobacco regulationswere designed to effect.

V. THE GOALS OF INTERNATIONAL INVESTMENTARBITRATION AND THIS ARBITRAL TRIBUNAL

VS. PUBLIC HEALTH

The goals of international investment arbitration law are not under-mined by the notion of public health. Unlike domestic arbitration, whichfrequently concerns itself with asymmetrical contractual obligation, in-vestment treaty arbitration was created primarily to establish a neutral,depoliticized forum.63 Neutrality is of particular importance, because theresults of investment arbitration may have great impact on a nation’s en-tire citizenry.64 Not only may citizens, as taxpayers, be on the hook forlitigation expenses and unfavorable awards, but recourse to right an in-correct, politicized decision is impossible for citizens as a matter of law, asnonparties to the original agreement.65 Arguably, to the extent that in-ternational precedent exists, particularly in international fora, the resolu-tion of novel issues as in PMI v. Uruguay affects the entire world.

Although this arbitral panel consists of presumably neutral arbitra-tors,66 it is worth noting the background of the tribunal deciding PMI v.Uruguay. First, by rule, PMI and Uruguay each selected one of the threemembers, and then the two chosen arbitrators were to choose the third.67

PMI appointed a U.S. national, Gary Born, and Uruguay selected a na-tional of Australia, James Crawford; Mr. Born and Mr. Crawford wereunable to agree on a third tribunal member.68 Again by rule, the ICSIDSecretary-General was therefore charged with appointing the presidentof the tribunal.69 The Italian Piero Bernardini was chosen.70

The members of the tribunal have varied experience as ICSID arbitra-tors. Mr. Born has accepted appointments to twelve international invest-ment arbitration tribunals since 2006.71 Mr. Bernardini has participated

63. See Susan D. Franck, The Nature and Enforcement of Investor Rights Under In-vestment Treaties: Do Investment Treaties Have a Bright Future? 12 U.C. DAVIS J.INT’L L. & POL’Y 47, 70–73 (2005) (discussing the origins and purposes of invest-ment treaty arbitration versus domestic arbitration); Kelley Connolly, Say WhatYou Mean: Improved Drafting Resources as a Means for Increasing the Consistencyof Interpretation, 40 VAND. J. TRANSNAT’L L. 1579, 1597 (2007) (“[A]rbitration isstructured so that the parties select the arbitrators who are “required to renderdecisions in an ‘independent’ or ‘impartial’ manner.”).

64. Franck, supra note 63, at 75–77.65. Id.66. See ICSID Convention, supra note 5, at r. 1(3) (“The majority of the arbitrators

shall be nationals of States other than the State party to the dispute and of theState whose national is a party to the dispute . . . .”).

67. Decision on Jurisdiction, supra note 14, ¶ 13.68. Id. ¶ 14.69. Id. ¶ 13.70. Id. ¶ 14.71. Profile of Arbitrator Gary Born, INVESTMENT TREATY ARBITRATION, http://www

.italaw.com/arbitrators/gary-born (last visited Aug. 21, 2015).


in twenty-eight since 1999.72 But Mr. Crawford has no previous experi-ence as an arbitrator, having only served as an expert.73 A similar dichot-omy exists regarding professional background: Mr. Born is a privateattorney, a partner and chair of the International Arbitration practicegroup at the firm Wilmer Hale.74 The other two arbitrators are both aca-demics, with Mr. Crawford still a sitting professor who specializes in pub-lic international law at the University of Cambridge.75 Before becominga professor at Rome University,76 Mr. Bernardini established expertise ininternational trade law, oil and gas, joint ventures, and arbitration.77

How this integration of public, private, and academic perspectivesmelds is likely to affect the outcome of the case, especially because noneof the panel has a background in public health and only one member hasa history that suggests an affinity for matters of the public interest. Addi-tionally, the likely emphasis by Mr. Bernardini, as tribunal president, onensuring an arbitral goal of reaching a correct decision that reflects thelaw and the facts, perhaps in contrast to those who might argue that arbi-trators must engage in a bit of bargaining,78 may hamper the panel’s abil-ity to negotiate with each other.

VI. EFFECTS OF PMI V. URUGUAY ON PUBLICHEALTH REGULATION

Because this is a case of first impression, at least two of the findings onboth procedural and substantive jurisdictional issues are noteworthy fortheir potential impact on global health law and policy.

First, Uruguay argued that PMI’s interests in the country do not consti-tute an investment in any case, in part because they do not make positivecontribution to the development of the country.79 Although this readingis arguably inconsistent with the text of the Treaty, it does accord with theICSID convention preamble and some previous findings on the defini-tional issue.80 Nonetheless, the tribunal dismissed the objection, holdingthat the purposes of the ICSID Convention and the Treaty and the weight

72. Profile of Arbitrator Piero Bernardini, INVESTMENT TREATY ARBITRATION, http://www.italaw.com/arbitrators/piero-bernardini (last visited Aug. 21, 2015).

73. James Crawford, INVESTMENT TREATY ARBITRATION, http://www.italaw.com/ex-perts/james-crawford (last visited Aug. 21, 2015).

74. Attorney Profile of Gary Born, WILMER HALE, http://www.wilmerhale.com/gary_born/ (last visited Aug. 21, 2015).

75. Faculty Profile of Prof. James R. Crawford, UNIV. CAMBRIDGE, http://www.law.cam.ac.uk/people/academic/jr-crawford/19 (last visited Aug. 21, 2015).

76. Profile of Prof. Piero Bernardini, INT’L COUNCIL FOR COMMERCIAL ARBITRA-

TION, http://www.arbitration-icca.org/about/governing-board/ADVISORY-MEMBERS/Piero_Bernardini.html (last visited Aug. 21, 2015).

77. Expert Resume of Piero Bernardini, Inter Medical v. EBI Medical Systems (D.N.J.1995), 1995 WL 17892070.

78. INSIDE THE BLACK BOX: HOW ARBITRAL TRIBUNALS OPERATE AND REACH

THEIR DECISIONS 41–42 (Bernard Berger & Michael Schneider, eds., 2014).79. Uruguay’s Memorial on Jurisdiction, supra note 10, ¶¶ 154–55.80. See Decision on Jurisdiction, supra note 14, ¶¶ 178–180, 185–190, 204–209 (provid-

ing discussion on one such test); Preamble to ICSID Convention, supra note 5.


of authority support a more flexible understanding of what constitutes an“investment” for arbitration purposes.81

This is significant for public health regulation because the holding ren-ders difficult any future argument that seeks, on either jurisdictional con-dition precedent or merit-based grounds, the dismissal of a claim foundedon the harm that an industry causes. That is, the definition of the term“investment” is, by the guidelines of this tribunal in a case understood asseminal, so broad as to encompass all corporations doing business in acountry.

Second, there is an exception within the Treaty for public health regu-lation: “The Contracting Parties recognize each other’s right not to alloweconomic activities for reasons of public security and order, public healthor morality, as well as activities which by law are reserved to their owninvestors.”82 From Uruguay’s perspective, the issue should be a straight-forward application of national law: Because the public health is primaryto all else as a constitutional dictate, the nation could not legally haveentered into a Treaty that undermined and contradicted its domesticlaw.83 Thus, argued Uruguay, public health measures are exempted fromthe protections afforded to investors under the Treaty, because “[t]heright to regulate in the public interest, including for reasons of publichealth, is an inherent attribute of State sovereignty [that] exists indepen-dent of [the Treaty].”84

But as noted supra, the tribunal disagreed and found that Uruguay’sarguments were not a matter of jurisdictional condition precedent; rather,they went to the merits of PMI’s claim.85 It also found unconvincing Uru-guay’s constitutional argument, observing that “[t]he fact that Uruguay’sConstitution obliges the Government to adopt public health measures hasno bearing on whether the Respondent has breached its obligationsunder the [Treaty].”86

To the extent that international law may be understood as supreme to anational law, the tribunal’s determination on jurisdiction may be correct.But as against international law, national police power has increasinglyreigned supreme.87 For the tribunal to find otherwise sets a dangerousprecedent that could open states up to more claims that subjugate publichealth regulations to private economic concerns. At minimum, it sug-gests that investment treaties must be carefully worded to expressly per-mit exercise of the police power as it relates to the public health. It issignificant that such a doctrinal mechanism likely already exists in the

81. Decision on Jurisdiction, supra note 14, ¶ 209.82. Agreement Between the Swiss Confederation and the Oriental Republic of Uru-

guay on the Reciprocal Promotion and Protection of Investments, supra note 6, atart. 2(1).

83. See supra notes 47–53 and accompanying text.84. Uruguay’s Memorial on Jurisdiction, supra note 10, ¶¶ 102, 127–153.85. Decision on Jurisdiction, supra note 14, ¶ 166.86. Id.87. Moloo & Jacinto, supra note 2, at 1–2.


form of the non-precluded measure (NPM), discussed infra, which can beused to limit national liability to exceptional circumstances.88

Regardless, finessing the public health argument as a matter for themerits instead of addressing it as a condition precedent for substantivejurisdiction forces an inefficient use of resources. This is particularly truewhere, as in PMI v. Uruguay, the investor seems to be merely experi-menting.89 After all, even with very generous donations of money and in-kind support,90 Uruguay is forced to waste a significant amount of itsfinancial capital to defend itself. While PMI is expending money also, itdoes so as a choice, and the corporation surely anticipates not only re-couping its litigation costs, but also ultimately profiting from the pursuitof what it views as justice.

Unsurprisingly, then, it is widely believed that PMI’s legal strategy ispolitical and deliberate: The corporation has attacked cigarette labelingrestrictions before as a matter of unlawful expropriation instead of debat-ing the efficacy of the restrictions as a public health measure.91 As longas a corporation like PMI can effectively bully its way into a courtroom,the entire public health schema is at risk.

VII. ARBITRAL DOCTRINE NEED NOT DISFAVORPUBLIC HEALTH LAW

Non-precluded measures (NPMs) are treaty provisions designed tolimit a nation’s liability to extraordinary circumstances.92 Doctrinefavorable to public health would suggest NPMs be read by default to in-clude those that favor the overall health of a nation. Instead of the par-ties to a treaty opting into health-related NPMs, they should be requiredto explicitly opt out. The treaty, as a contract, would more accuratelyreflect the parties’ intent because it is unlikely that any nation means toprevent itself from taking care of its population. Moreover, our collectiveunderstanding of public health is influenced heavily by evolving technol-

88. See id. at 8–10 for a brief overview of the treatment of public health and environ-mental regulation within the international investment doctrine.

89. E.g., Mujica: La causa de Philip Morris es inmoral, PORTAL DIGITAL EL PAIS

(Apr. 8, 2012, 15:00), http://www.elpais.com.uy/120408/ultmo-635204/ultimo-mo-mento/mujica-la-causa-de-philip-morris-es-inmoral-/ (quoting Uruguayan Presi-dent Jose Mujica in his reflection that an empire like Philip Morris can afford topay attorneys and have an international hearing, but a small country cannot); seealso Matthew C. Porterfield & Christopher R. Byrnes, Philip Morris v. Uruguay:Will Investor-State Arbitration Send Restrictions on Tobacco Marketing up inSmoke?, 4 INV. TREATY NEWS 3, 5 (July 2011), available at http://www.iisd.org/pdf/2011/iisd_itn_july_2011_en.pdf (describing various challenges to health regulationsvia investment arbitration by the tobacco lobby).

90. See e.g., Uruguay Court Dismisses Philip Morris Tobacco Challenge, supra note 48(“Uruguay . . . received the support of billionaire New York Mayor, MichaelBloomberg, who through [Bloomberg] Philanthropies offered the country legal as-sistance and an expert panel of advisers in its fight against Philip Morris.”).

91. Porterfield & Byrnes, supra note 89, at 3.92. William W. Burke-White & Andreas Von Staden, Investment Protection in Ex-

traordinary Times: The Interpretation and Application of Non-Precluded MeasuresProvisions in Bilateral Investment Treaties, 48 VA. J. INT’L L. 307, 314 (2008).


ogy and scientific processes, such that what comprises appropriate healthregulation contemporarily may not be able to be foreseen at the time ofthe signing of a treaty. An opt-out health NPM would enable countriesto clarify the presumably universal desire to have the ability to recon-struct public health policy as science dictates.

Relatedly, more guidance from ICSID or similar supranational organi-zations would help to establish consistency in health regulations that fallwithin the realm of NPMs. It would also assist tribunals in achieving har-monious interpretations, eliminating the “root of inconsistency in the ar-bitral process.”93 After all, “[l]anguage generally poorly communicates aparty’s intentions and fails to fully captures[sic] the party’s meaning.”94

Inconsistency generates problems for investors and states alike where theformer is concerned with commercial risk, and the latter with economicdevelopment and foreign relations.95 Because “multilingual translationsonly compound the problem,” nations should “compil[e] key terminol-ogy . . . in their native language.”96

Second, most-favored nation (MFN) clauses are those that assure a na-tion-party to an investment treaty that its investors will receive terms thatare no less favorable than those granted to the investors of other nation-parties. MFN provisions generally apply to all components of a treaty.The application of MFN clauses to only substantive protections is notwithout controversy,97 but the MFN clause should never be applicable toprocedural requirements when the result is an end run around an NPM.While a question of fact may occasionally arise regarding what constitutesan NPM, and thus what would be an impermissible invocation of theMFN clause, enough authority exists to offer guidance. At minimum, thiswould include regulations promulgated in direct accordance with WHOguidelines as encapsulated in the FCTC, considered “one of the most rap-idly and widely embraced treaties in United Nations history.”98

A more expansive understanding would permit regulations enactedpursuant to regional integration efforts without concern for effect on pri-vate investors. WHO and other supranational collaboratives are, interms of health policy, the closest thing to international custom. MFNclauses sometimes incorporate customary international law expressly, butthey often do so implicitly.99 To hold the standards of WHO or a regional

93. Connolly, supra note 63, at 1588.94. Id. at 1610.95. Franck, supra note 63, at 57–58.96. Connolly, supra note 63, at 1610.97. See generally Mike McClure, Most Favoured Nation Clauses: No Favoured View on

How They Should Be Interpreted, KLUWER ARB. LOG (Jul. 25, 2011) http://kluwer-arbitrationblog.com/blog/2011/07/25/most-favoured-nation-clauses-%E2%80%93-no-favoured-view-on-how-they-should-be-interpreted/ (delineating the two pri-mary views on the application of MFN clauses).

98. About the WHO Framework Convention on Tobacco Control, WHO FRAMEWORK

CONVENTION ON TOBACCO CONTROL, http://www.who.int/fctc/about/en/index.html (last visited Aug 19, 2015).

99. See Porterfield & Byrnes, supra note 89, at 4 (“The most restrictive interpretationof [the MFN clause] (and the position that the United States has taken since 2002)


organization as automatic NPMs is consistent with international law as awhole. In other words, to restrict MFNs to substantive issues after otherhurdles have been cleared is appropriate in the context of public healthnorms.

Relatedly, penalties for willfully bringing a frivolous arbitration actionthat tends to harm the public health would discourage the likes of PMI,particularly when the evidence suggests the investor is merely experi-menting.100 The costs to a nation are simply too high when it is forced todefend itself for anything approaching a frivolous, health-harming action.And the downside does not stop there. Smaller states continue to be in aCatch-22 when it comes to investment treaties because, although the trea-ties bring investment monies and enhanced economic development, with-out the treaties the states would not be subject to dispute resolution by aninvestor. Instead, under the rules of the World Trade Organization, theinvestor’s home country would have to take up the matter. Here, thatwould have saved Uruguay considerable hassle because Switzerlandlikely would not have involved itself in the matter, as its anti-tobacco reg-ulations are not dissimilar from those in Uruguay.101 Not only, then, isthe public health undermined, but investment treaties and investmenttreaty arbitration are also weakened by allowing disputes like PMI’s to bebrought forth. Disallowing claims like PMI’s would strengthen the valueof the investment treaty and the role of arbitration as a just means ofdispute resolution between a state and a foreign investor.

A further adjustment in arbitral procedure might allow third-parties tointervene as amici where the proceedings are related to traditional publichealth regulations. Such a change would ensure that the gravity of thepublic policy concerns was accurately communicated.

VIII. CONCLUSION

Anti-tobacco regulations such as those promulgated by Uruguay fulfillthe aspirations of public health regulation on multiple levels of law andpolicy. WHO’s standards, while not specific to Uruguay, provide a usefulframework through which to view the components of health policy glob-ally. The standards also act as a control against which national efforts canbe measured. Uruguay’s national stance on cigarette labeling regulationis arguably more liberal than international policy, but it is not out of linewith international ideals and comports with regional transnational efforts.Individual liberties in public health are not diminished by cigarette-label-ing regulations.

is that it merely reflects the customary international law standard of protectionthat is already guaranteed to foreign investors under the right to the “minimumstandard of treatment” under international law.”).

100. See supra note 89.101. See Switzerland, TOBACCO LABELLING RESOURCE CTR., http://www.tobacco-

labels.ca/currentl/switzerl (last visited Aug. 19, 2015) (summarizing Switzerland’santi-tobacco regulations).


PMI v. Uruguay threatens to disrupt the concept of national policepower, which gives countries an implied right to regulate in the publicinterest. In particular, a win for PMI is one that necessarily favors privateeconomic interests over public health. Small concessions in arbitral doc-trine would not undermine international investment but would shift thepriority to one that supports national public health law.

KAZEMI ESTATE V. ISLAMIC REPUBLIC

OF IRAN AND THE DOCTRINE OF STATE

IMMUNITY UNDER CANADIAN LAW

Christopher Cornell*

THIS article looks at the Supreme Court of Canada’s recent deci-sion in Kazemi Estate v. Islamic Republic of Iran (Kazemi) outlin-ing to what extent Canadian law grants sovereign nations

immunity from suit in Canadian courts. Part I provides background in-formation on the case itself and the relevant law, while Part II discussesthe Supreme Court’s ruling and the dissent by Justice Abella. Part IIIdiscusses the potential for legislative changes in light of the Kazemi rul-ing, and Part IV concludes.

I. KAZEMI ESTATE V. ISLAMIC REPUBLIC OF IRAN:BACKGROUND LAW AND LOWER COURT RULINGS

A. THE MURDER OF ZAHRA KAZEMI

Zahra Kazemi, a photojournalist with dual Canadian and Iranian citi-zenship, was arrested at 5:40 PM on June 23, 2003, outside of Evin Prisonin Tehran while photographing a vigil held by family members of demon-strators imprisoned there after being arrested earlier that June.1 Kazemiwas arrested for allegedly taking photos of the prison wall, an act thatwould have been illegal as indicated by signs posted on the wall, and wastaken into the prison for questioning.2 Upon her arrest, Kazemi wasasked by prison officials to hand over her camera and film for examina-tion, and was told that if she did so, then she would be allowed to retrievethem the next day.3 Instead of complying with the request, Kazemi

* Christopher Cornell is an attorney and LL.M. candidate at the SMU DedmanSchool of Law. He graduated with a Juris Doctor from the SMU Dedman Schoolof Law in May 2015 and served as the Canada Reporter for the SMU InternationalLaw Review Association for the 2014–15 academic year. Prior to beginning lawschool he earned a Bachelor of Arts from Trinity University and a Master of Let-ters from the University of St. Andrews. Christopher would like to thank his fam-ily, friends, and professors for their continuing support of him in his academicendeavors.

1. IRAN HUMAN RIGHTS DOCUMENTATION CTR., IMPUNITY IN IRAN: THE DEATH OF

PHOTOJOURNALIST ZAHRA KAZEMI 6 (2d ed. 2006).2. Id.3. BBC News: Iran-A Murder Mystery (Worldwide Version) (BBC News television

broadcast Feb. 15, 2004) at 22:14, available at http://news.bbc.co.uk/2/shared/spl/hi/programmes/correspondent/transcripts/iran150204.txt.

411


opened her camera and exposed the film to light, making it impossible forthe prison officials to determine what she had been photographing andleading to her confinement in the prison.4

1. Kazemi’s Detention

Although the exact timeline of events is disputed, it is certain that, overthe next three days, Kazemi was interrogated at the prison by agents andofficials from at least three governmental bodies: the Public Prosecutor’sOffice, the intelligence unit of the Law Enforcement Forces, and the Min-istry of Intelligence and Security.5 On the night of June 26, 2003, threedays after her captivity and interrogations had begun, Kazemi, who hadbeen in good physical health before being arrested, complained that shewas feeling unwell and began to vomit, with blood visible in the vomit.6After an examination in the Evin Prison medical clinic, prison officialsdecided at 12:20AM on June 27th to transfer Kazemi to Baghiatollah Al-Azam Military Hospital.7 Upon arrival at the hospital, Kazemi, then in acoma, was examined by Dr. Shahram Azam and one of his femalenurses.8 Kazemi never regained consciousness and was taken off life sup-port on July 10, 2013, by Iranian authorities—without the consent ofKazemi’s mother or son—and subsequently died.9

2. Iranian Government Investigations

After Kazemi’s death, the Ministry of Culture and Islamic Guidanceissued a report indicating that Kazemi had suffered a stroke and died indetention.10 The next day, however, then Iranian President MohammadKhatami ordered a special presidential commission to look into the cir-cumstances of Kazemi’s death, clarify ambiguities that were arising, andpresent a report on the matter to both himself and the Iranian public.11

The presidential commission’s report concluded that Kazemi, at somepoint within twenty-four hours of her death, had been struck in the head,causing a skull fracture and associated injuries that ultimately lead to herdeath.12

4. Id.5. IRAN HUMAN RIGHTS DOCUMENTATION CTR., supra note 1, at 7.6. Id.7. Id.8. Richard Cleroux, Iranian Secret Police Tortured Woman To Death, Says Doctor,

TIMES (London), Apr. 1, 2005, at 43, available at http://www.thetimes.co.uk/tto/news/world/article1974102.ece.

9. IRAN HUMAN RIGHTS DOCUMENTATION CTR., supra note 1, at 8.10. Id. at 9.11. Id.12. MATN-E KAAMEL-E GOZAARESH-E HEY’AT-E VEEZHEYEH RA’EES JOMHOORI

BARAAYE RESEEDEGI BEH MASA’ALEH-YE FOT-EKHANOOM-E ZAHRA KAZEMI

[COMPLETE REPORT OF THE SPECIAL PRESIDENTIAL COMMITTEE TO INVESTIGATE

THE DEATH OF MRS. ZAHRA KAZEMI], 04/28/1382 [07/19/2003] 6 (Iran), translatedin IRAN HUMAN RIGHTS DOCUMENTATION CTR., IMPUNITY IN IRAN: THE DEATH

OF PHOTOJOURNALIST ZAHRA KAZEMI (2d ed. 2006).

2015] KAZEMI ESTATE V. ISLAMIC REPUBLIC OF IRAN 413

Not long after the presidential commission issued its report, anotherinvestigation was initiated under Article 90 of the Iranian Constitution,which mandates that the Iranian Majlis (parliament) investigate com-plaints filed against any of branch of the Iranian Government.13 Thecomplaint here was filed by Kazemi’s mother, Ezzat Ebrahimi.14 Theparliamentary commission offered no explanation for Kazemi’s death;rather, it concluded that she had possessed the proper credentials to en-gage in photojournalism, that she had not broken any Iranian laws whenphotographing the vigil outside Evin Prison, that her arrest itself violatedthe Iranian Constitution, and that she had been denied protections andrights guaranteed under the Iranian Constitution.15 But most of the re-port was dedicated to lambasting the actions of the Chief Prosecutor ofTehran, Saeed Mortazavi, who the parliamentary commission showed had(1) been behind the continued illegal detention of Kazemi after the intel-ligence services had ruled that she should be released; and (2) tried tocover up the circumstances of her confinement and death.16 The reportfurther stated that Mortazavi refused to comply with constitutionally andlegally authorized requests presented to him and his office, often by try-ing to argue that he was not legally required to comply.17 After two in-vestigations by the Iranian Government, it was clear that Zahra Kazemihad been killed by a strike to the head while in detention, the detentionitself had been unconstitutional, and the Tehran Prosecutors Office had—at the very least—attempted to cover up the circumstances aroundKazemi’s confinement and death because of the legal problems with herdetention.

3. The Trial of Reza Ahmadi

Despite several individuals being charged by Iranian authorities withKazemi’s murder at various times, the only person in Iran to stand trialwas Reza Ahmadi, a low ranking Intelligence Ministry official who hadbeen assigned to watch Kazemi during her detention, and who wascharged with Kazemi’s “semi-intentional killing.”18 Ahmadi’s June 2004trial was criticized from the start on many fronts, including by the Intelli-gence Ministry, which insisted that he was a scapegoat, and by Kazemi’smother, Ezzat Ebrahimi, who complained that she had filed her criminal

13. IRAN HUMAN RIGHTS DOCUMENTATION CTR., supra note 1, at 13.14. GOZAARESH-E KOMEESEEYON-E AASL-E NAVAD-E GHAANOON-E ASAASI-E

MAJLES-E SHORAAYE ISLAMI MARBOOT BEH ELAL VA AVAAMEL-E KOSHTEH

SHODAN-E KHANOOM-E ZAHRA KAZEMI AKKAAS VA KHABARNEGAAR-E IRANI

[REPORT OF THE PARLIAMENTARY ARTICLE 90 COMMISSION REGARDING THE

CAUSES AND PERPETRATORS OF THE KILLING OF THE IRANIAN PHOTOJOURNALIST,MS. ZAHRA KAZEMI], 08/07/1382 [10/29/2003] 1 (Iran), translated in IRAN HUMAN

RIGHTS DOCUMENTATION CTR., IMPUNITY IN IRAN: THE DEATH OF PHOTOJOUR-NALIST ZAHRA KAZEMI (2d ed. 2006) [hereinafter REPORT OF THE PARLIAMEN-

TARY ARTICLE 90 COMMISSION].15. See id. at 6–7.16. See id. at 4–8.17. See id. at 4–5.18. IRAN HUMAN RIGHTS DOCUMENTATION CTR., supra note 1, at 21–22.


complaint against the Public Prosecutor’s Office.19 Over the course ofthe trial, the judge refused to consider evidence from the IntelligenceMinistry and the Kazemi family’s lawyers that evidence in the case hadbeen tampered with and that initial witness reports stating that Kazemihad been injured by prison officials when she was arrested had been re-canted under duress.20 Further, the Kazemi family lawyers were barredfrom introducing valuable evidence, such as the parliamentary commis-sion’s report and the case file in its entirety.21 Due to a lack of evidence,the court acquitted Ahmadi.22

As no other suspects were charged, the court had to rule that the deathwas an accident likely caused by Kazemi falling and striking her headbecause of decreased blood sugar following a hunger strike.23 Since thetrial court ruling, Ahmadi’s acquittal was upheld at the intermediate ap-peals level, and the Supreme Court of Iran has ordered a new investiga-tion into the case because of procedural flaws and jurisdictional issueswith the original case.24 But, to date, no public report as to the results ofthe Supreme Court of Iran’s investigation, or even any evidence that theinvestigation took place, has emerged.

4. Doctor Azam’s Report

In April 2005, the Iranian Government’s claim that Kazemi’s only in-jury was the blow to her head was directly contradicted by her treatingphysician, Dr. Shahram Azam.25 Dr. Azam offered a distinct and morehorrific report on Kazemi’s physical condition upon arrival at his hospi-tal.26 According to Azam and his medical notes, Kazemi arrived withinjuries that included a fractured skull, broken nose, burst ear drum,crushed left toe, two broken fingers, three missing fingernails, deepscratches into her flesh, and missing skin indicative of her having beenflogged; injuries that, to Dr. Azam, “indicated it was organi[z]ed tortureand not an injury that caused her death.”27 While Dr. Azam, as a maledoctor, was not permitted to conduct an investigation of Kazemi’s genitalarea, an investigation by one of his female nurses concluded that Kazemihad been the victim of a “savage” and “‘very brutal rape.’”28 The ex-treme nature of Kazemi’s injuries, which were to some extent apparent to

19. Id. at 22.20. Id. at 23.21. Id. at 23–24.22. Id. at 24.23. Id.24. Iranian Court Reopens Kazemi Case, BBC NEWS, (Nov. 27, 2007, 7:09 PM), http://

news.bbc.co.uk/2/hi/middle_east/7115024.stm.25. Cleroux, supra note 8.26. Id. Dr. Azam had fled Iran in August 2004 with his family by feigning a need to

seek medical treatment in Finland before continuing on to Sweden, and later beinggranted asylum in Canada with the assistance of Kazemi’s son, Stephan Hachemi.Id.

27. Id.28. Id.; SHAHRAM AZAM, MEDICAL REPORT OF DR. SHAHRAM AZAM DESCRIBING

HIS EXAMINATION OF KAZEMI AT BAGHIATOLLAH AL-AZAM HOSPITAL, June 27,


her mother upon collecting her body, shed light on why Iranian Govern-ment officials forced Mrs. Ebrahimi to consent to the immediate burial ofher daughter’s body before any further investigation could be carriedout.29 With the information provided by Dr. Azam and Mrs. Ebrahimi inmind, it is reasonable to conclude that, after her arrest, Zahra Kazemiwas tortured, raped, and murdered by Iranian government officials whothen literally buried the evidence of those crimes by forcing Kazemi’smother to consent to an immediate entombment.

B. CANADIAN LAW ON STATE IMMUNITY

The Canadian law addressing the immunities of foreign states in Cana-dian courts is the State Immunity Act, a piece of legislation that went intoeffect in 1982.30 The State Immunity Act was enacted by the CanadianParliament to establish that under Canadian law foreign states were notabsolutely immune from suit in Canadian courts (as had been the caseunder previous common law precedent); rather, they were offered therestrictive immunities from suit provided by the Act itself.31 Under theState Immunity Act, a foreign state is immune from suit in Canadiancourts except (1) if the state voluntarily waves its immunity; (2) if the suitrelates to the commercial activities of the foreign state; (3) if the actionsof the state have led to any death, personal or bodily injury, or damage toor loss of property on Canadian soil; or (4) in court proceedings against astate for support of terrorism after January 1, 1985, if the state is on thelist of state supporters of terrorism issued by the Governor General inCouncil.32 The terrorism exception to the immunity of a foreign state is arecent addition to the State Immunity Act that was added in 2012 via theJustice for Victims of Terrorism Act.33 To date, the only foreign stateslisted by the Governor General in Council as sponsors of terrorism areIran and Syria, both of which were listed on September 7, 2012.34 Sounder the State Immunity Act, a foreign state effectively is immune fromsuit except when a potential suit relates to the state’s commercial activi-ties, when it has caused an injury on Canadian soil, or for any state sup-ported acts of terrorism committed after January 1, 1985, if the state inquestion is listed as a state supporter of terrorism by the CanadianGovernment.

2003, translated in IRAN HUMAN RIGHTS DOCUMENTATION CTR., IMPUNITY IN

IRAN: THE DEATH OF PHOTOJOURNALIST ZAHRA KAZEMI (2d ed. 2006).29. See REPORT OF THE PARLIAMENTARY ARTICLE 90 COMMISSION, supra note 14, at

3.30. H.L. Molot & M.L. Jewett, The State Immunity Act of Canada, 20 CAN. Y.B. INT’L

L. 79, 79 (1982).31. See id. at 79, 121.32. State Immunity Act, R.S.C. 1985, c. S-18, §§ 4–6 (Can.).33. Justice For Victims of Terrorism Act, S.C. 2012, c. 1, s. 2, § 4 (Can.).34. Order Establishing a List of Foreign State Supporters of Terrorism, SOR/2012-170

(Can.).


C. LOWER COURT RULINGS

1. The Quebec Superior Court Ruling

Following his mother’s death and Dr. Azam’s revelations, Kazemi’sson, Stephan Hashemi, filed a civil suit on July 29, 2006, in the QuebecSuperior Court—in both his personal capacity and as executor of hismother’s estate—against the Iranian Government, Ayatollah AliKhamenei, the Iranian Supreme Leader, Saeed Mortazavi, and Moham-mad Bakhshi, the Deputy Chief of Intelligence of Evin Prison at thattime.35 Citing the abuse suffered by Kazemi and its direct link to herdeath, the Kazemi estate sued for $5,000,000 for Kazemi’s pain and suf-fering and another $5,000,000 in punitive damages; Hashemi sued for$5,000,000 for the loss of his mother and the pain and suffering caused byit, $2,000,000 in punitive damages, an amount to be determined at trialsufficient to repatriate Kazemi’s remains to Canada and provide for aproper autopsy and reburial, and legal expenses.36 The Iranian defend-ants contested the validity of the action, citing the State Immunity Act,but the plaintiffs responded by arguing that several provisions of theState Immunity Act were unconstitutional, or alternatively, that the casewas allowed to proceed under the terms of the State Immunity Act.37

Hashemi’s claim centered on the fact that Canadian law allowed for asuit to be filed if, among other things, the damage caused to the plaintiffas a result of the defendants’ actions was suffered by the plaintiff in Ca-nada—in this case, Quebec. 38 The Kazemi estate argued that it would beimpossible for the claim to be fairly adjudicated in Iran, so it should alsobe heard in Quebec.39 Alternatively, the Kazemi estate contested, if theState Immunity Act validly and constitutionally barred the estate’s suit,then it should still be allowed to proceed because either (1) common lawand international law establish that torture is so heinous an act that itshould constitute an exception to the immunity afforded by the State Im-munity Act;40 or (2) the immunities offered to the Iranians under theState Immunity Act constituted unconstitutional violations of the Cana-dian Bill of Rights and Charter of Rights and Freedoms.41

The superior court ruled on January 25, 2011 that, as Hashemi alleged,he suffered injurious psychological trauma and pain and suffering whilein Canada as a result of the defendants’ actions, and that his claim couldproceed to trial under the provisions of Section Six of the State ImmunityAct.42 The court also held that Kazemi’s estate’s claim against all of thedefendants was barred by the State Immunity Act because her injuries

35. Estate of Kazemi v. Islamic Republic of Iran, 2011 QCCS 196, para. 2 (Can. Que.Sup. Ct.).

36. Id. para. 4.37. Id. paras. 6–7.38. See id. para. 26.39. Id. para. 28.40. See id. para. 37.41. Id. para. 155.42. Id. paras. 83, 92, 94.


occurred in Iran, not Canada.43 The Superior Court further ruled againstthe defendant’s other arguments by holding that (1) the State ImmunityAct was itself the sole source of Canadian law on state immunity, andthat neither common law nor international law principles were applica-ble44; and (2) the State Immunity Act was fully constitutional and thusmust be applied.45 In sum, the Quebec Superior Court determined thatthe State Immunity Act was both constitutional and the sole source ofCanadian Law on state immunity, and that Stephan Hashemi’s claimcould proceed under the provisions of the Act but those of his mother’sestate could not.

2. The Quebec Court of Appeal’s Ruling

Both the Iranian defendants and the Kazemi estate appealed the rul-ings against them, and the Quebec Court of Appeal issued its ruling onAugust 15, 2012.46 In its ruling, the Court of Appeal first upheld the Su-perior Court when it ruled that the State Immunity Act is the completecodification of Canadian state immunity law, and that no common law orinternational law is applicable in the field of state immunity as far as Ca-nada is concerned.47 The Court of Appeal then reversed the SuperiorCourt by ruling that, under Section Six of the State Immunity Act, if aninjury suffered in Canada is to be grounds for allowing a suit against aforeign state, it must be a physical injury.48 Hashemi’s claims of psycho-logical pain and suffering were therefore insufficient to allow his suit toproceed.49 Turning to whether all of the named defendants were pro-tected by state immunity, the Court of Appeal agreed with the SuperiorCourt that the State Immunity Act shielded each defendant from Cana-dian judicial review.50 The Court of Appeal also agreed with the Supe-rior Court’s ruling that the State Immunity Act was fully legal and did notinfringe upon any rights provided by the Canadian Bill of Rights or Char-ter of Rights and Freedoms. 51 In effect, the Court of Appeal ruled thatthe claims of both the Kazemi estate and Hashemi were barred by theimmunities provided to foreign states by the State Immunity Act.52

II. KAZEMI ESTATE V. ISLAMIC REPUBLIC OF IRAN: THESUPREME COURT OF CANADA’S RULING

Following the ruling of the Quebec Court of Appeal, both the Kazemiestate and Hashemi appealed their cases to the Supreme Court of Ca-

43. Id. paras. 93, 154.44. Id. para. 213.45. Id. para. 215.46. Estate of Kazemi v. Islamic Republic of Iran, 2012 QCCA 1449, paras. 13–14 (Can.

Que. C.A.).47. Id. para. 42.48. Id. paras. 82–83.49. Id.50. See id. para. 97.51. Id. paras. 109, 120.52. See id. para. 122.


nada,53 which subsequently heard their appeals and issued its opinion onOctober 10, 2014.54

A. THE MAJORITY OPINION

The majority opinion in the case was authored by Justice Louis LeBel,who wrote for the entire Court, except for Justice Rosalie Abella.55 Jus-tice LeBel did not hide the Court’s feelings on the facts. The opinion’sfirst sentence reads: “The death of Ms. Zahra Kazemi in Iran was nothingshort of a tragedy.”56 But the next paragraph clarifies that, despite ZahraKazemi’s tragic death, Canadian law on the matter is straightforward:Iran and its officials are entitled to immunity, and neither Kazemi’s estatenor her son can sue in Canadian courts because of that immunity.57

The first issue addressed by LeBel was whether the State Immunity Actwas a complete codification of Canadian state immunity law, or if com-mon law or international law principles played a role. 58 LeBel held that,while immunity is itself a product of international law, the State Immu-nity Act is the complete codified source of authority regarding the law offoreign state immunity in Canada, and that principles from common lawor international law outside of the text of the Act are not applicable.59

The opinion notes that the decision as to any changes to the scope of stateimmunity law was the prerogative of the Canadian Parliament.60 To drivethis point home, LeBel pointed out that when the Justice For Victims ofTerrorism Act—the legislation establishing that terrorist acts can bebarred from immunity protections—was before Parliament, other pro-posed legislation that was ultimately not sanctioned by Parliament wouldhave similarly removed immunities afforded for acts of genocide, torture,or other grave crimes.61 LeBel effectively demonstrated that, for the pur-poses of Canadian law, there is a very narrow range of exceptions to theprinciple of foreign state immunity, and that all of those exceptions hadbeen codified by Parliament in the State Immunity Act. Yet he simulta-neously explained that Parliament could add additional exceptions to thelaw at any time.

The next issue LeBel addressed was whether agents of a foreign statecan be sued for acts of torture committed abroad. 62 LeBel began bymaking clear that, while torture is undoubtedly abhorrent and illegalunder Canadian law, the question before the court was “whether one can

53. Estate of Kazemi v. Islamic Republic of Iran, 2014 SCC 62, para. 1 (Can.).54. Mike Blanchfield, SCC Says Hashemi Can’t Sue Iran Over Mother’s Torture Death,

CTV NEWS (Oct. 10, 2014, 2:08 PM), http://www.ctvnews.ca/canada/scc-says-hashemi-can-t-sue-iran-over-mother-s-torture-death-1.2048146.

55. Kazemi Estate v. Islamic Republic of Iran, 2014 SCC 62 (Can.).56. Id. para. 1.57. Id. para. 2.58. Id. para. 31.59. Id. paras. 44–45, 54, 56.60. Id.61. Id. para. 44.62. Id. para. 53.


sue a foreign state in Canadian courts for torture committed abroad.”63

In the case of the pain and suffering alleged by Hashemi, LeBel statedthat Hashemi had no valid claim because (1) the underlying torts causinghis mother’s death did not occur in Canada;64 and (2) the injuries he al-legedly suffered were mental, and only physical injuries or mental injuriesarising from physical injuries were covered by the scope of the State Im-munity Act.65 Next, Lebel concluded that, for the purposes of the StateImmunity Act, Mortazavi and Bakhshi were covered by the immunity af-forded to foreign governments.66 Therefore, neither the Kazemi estatenor Hashemi could “avail themselves of a Canadian court in order to sueIran or its functionaries for Ms. Kazemi’s torture and death.”67 LeBelthen analyzed the relevant statutory protections afforded by the Bill ofRights and the constitutional protections afforded by the Charter ofRights and Freedoms, and concluded that the State Immunity Act vio-lated neither.68 And so all challenges to the State Immunity Act’s consti-tutionality failed.69

LeBel concluded the entire discussion explaining that Canadian foreignstate immunity law is a product of Parliament, and that considerations byit and the Government of the day require knowledge of “diplomacy andinternational politics and a careful weighing of national interests.”70

Though some actions taken by Parliament or the Government with re-gard to immunity can be subject to Charter scrutiny, the actual decisionsstill vest in the political branches of the Canadian government.71 Furtherelaborating on the political considerations, LeBel stated:

Parliament has the ability to change the . . . law on exceptions tostate immunity, just as it did in the case of terrorism, and allow thosein situations like Mr. Hashemi and his mother’s estate to seek re-dress in Canadian courts. Parliament has simply chosen not to do ityet.72

Because the State Immunity Act itself was constitutionally valid, andunder its provisions the Iranian defendants were all entitled to immunityfrom suit, the Supreme Court of Canada rejected the appeals of theKazemi estate and Stephan Hashemi, and upheld the ruling of the Que-bec Court of Appeal.73

63. Id.64. Id. para. 73.65. Id. para. 74–75.66. See id. para. 98. The plain text of the statute already afforded immunity to the

Iranian Government and Ayatollah Khamenei as its Supreme Leader. Id. para.184.

67. Id. para 110.68. Id. paras. 120, 167.69. Id.70. Id. paras. 169.71. See id. para. 170.72. Id. para. 170.73. See id. para. 171.


B. JUSTICE ABELLA’S DISSENT

The dissent by Justice Rosalie Abella revolved around an argumentgrounded in international law, asserting that, because Mortazavi andBakhshi allegedly committed torture, they were not protected by the pro-visions of the State Immunity Act, and thus could be forced to go totrial.74 Justice Abella began by acknowledging that the Iranian govern-ment and the Supreme Leader are undoubtedly covered by the immuni-ties of the State Immunity Act based on a plain reading of text.75 JusticeAbella argued that, under customary international law, states may grantimmunity to foreign officials, but that customary international law doesnot necessarily stop a state from denying immunity to foreign officialswho carried out or enabled acts of torture.76 She went on to argue that,because there is universal acceptance that torture should be prohibited,denying immunity to individual foreign state officials does not underminethe basic principle of non-interference with the sovereignty of individualstates that forms the basis of international law’s motivations for immunityprotections.77 Therefore, because Justice Abella reads the State Immu-nity Act’s immunities as inapplicable to officials of a foreign state whoengage in torture, she would have forced Mortazavi and Bakhshi to standtrial.78

It is worth noting that, in the majority opinion, Justice LeBel rejectedJustice Abella’s argument by stating that it defeats itself by concedingthat customary international law is developing towards holding that for-eign officials are not immune from charges related to torture, as opposedto such a holding already being a settled part of customary internationallaw.79 Justice LeBel then concluded that, because the idea that foreignofficials are not immune from charges related to torture is not settledcustomary international law, it cannot be used to interpret the State Im-munity Act; therefore, officials who committed torture would be shieldedby foreign state immunity under the Act.80

All in all, Justice Abella agreed with the majority that the Iranian gov-ernment and Ayatollah Khamenei were granted immunity from suit bythe State Immunity Act. She dissented, however, based on her belief thata developing customary international law norm would allow an exceptionto the Act for foreign officials who engaged in torture, and, as a result,force them to stand trial.

74. See id. paras. 229, 231 (Abella, J., dissenting).75. Id. para. 184.76. See id. para. 211.77. Id. para. 229.78. Id. para. 231.79. See id. para. 102 (majority opinion).80. Id.


III. THE PARLIAMENTARY RESPONSE TO KAZEMI ESTATEV. ISLAMIC REPUBLIC OF IRAN

After the Supreme Court of Canada ruled in Kazemi that Parliamentcould remove the immunity for foreign states and officials who engage intorture from the State Immunity Act, several groups and individualscalled upon Parliament, and by implication the then in power Govern-ment of Prime Minister Stephen Harper, to introduce and approve legis-lation removing immunity under the Act for torture conducted by foreignstates.81 Among those calling for changes to the State Immunity Actwere Hashemi’s lawyers and the then main opposition New DemocraticParty.82

Despite these calls, there has been just one legislative proposal: a pri-vate members bill83 by Liberal MP Irwin Cotler, a former Justice Ministerand Attorney General of Canada.84 On October 20, 2014, Cotler re-in-troduced into the House of Commons a bill he had initially proposed withmulti-party support in the prior Parliament to amend the State ImmunityAct to allow foreign states to be sued for any acts of genocide, crimesagainst humanity, war crimes, or torture—it was never voted on.85 Uponintroducing the bill, Cotler invited the Harper Government to take thebill on as its own legislation, which would all but guarantee its approval.86

Otherwise, Cotler’s low ranking on the list for consideration of privatemembers’ bills would, once again, likely cause the bill to die without be-ing voted on.87 Cotler’s fears were well-founded because no legislativeprogress was made on the bill after it was introduced and had its firstreading in the House of Commons, causing it to expire with the dissolu-tion of the 41st Parliament in August 2015.88 If enacted, Cotler’s bill—orsimilar legislation—would accomplish the simple legislative change theSupreme Court contemplated when it said in Kazemi that Parliamentcould modify the State Immunity Act to remove the immunities affordedto states who engage in torture. 89

81. See Zahra Kazemi’s Son Blocked By Supreme Court From Suing Iran, CBC NEWS

(Oct. 10, 2014, 2:55 PM), http://www.cbc.ca/news/politics/zahra-kazemi-s-son-blocked-by-supreme-court-from-suing-iran-1.2794468.

82. Id.83. Bill C-632: A Bill to Amend the State Immunity Act, 2013-14, H.C. Bill C-632

(Can.), available at http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=E&Mode=1&DocId=6729743&File=4.

84. The Honourable Irwin Cotler: Roles, PARLIAMENT OF CAN., http://www.parl.gc.ca/Parliamentarians/en/members/Irwin-Cotler%281785%29/Roles (last visited Mar.15, 2015).

85. House of Commons Debates, 41st Parl. 2nd Sess., Vol. 147 No. 128 (Oct. 20, 2014)at 8587 (Hon. Irwin Cotler) (Can.), available at http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=E&Mode=1&Parl=41&Ses=2&DocId=6730963.

86. Id.87. Id.88. Private Member’s Bill C-632, LEGISinfo, http://www.parl.gc.ca/LegisInfo/BillDe

tails.aspx?Language=E&billId=6252036&Mode=12 (last visited Jan. 29, 2015).89. See H.C. Bill C-632.


IV. CONCLUSION

In Kazemi, the Supreme Court of Canada (like the Quebecois courtsbefore it), was placed in an unenvious situation. Though various organsof the Iranian Government admitted that Zahra Kazemi was murderedwhile in their custody and the evidentiary record indicated a significantlydarker series of abuses before her death, Canada’s State Immunity Lawclearly held that Iran and its officials were entitled to immunity from suitin Canadian courts for those abuses. The justices, while cognizant of thehorrific circumstances surrounding Kazemi’s death, based their opinionson their reading of the relevant law, even though the outcome was onethat they themselves probably felt was undesirable. With that undesir-ability in mind, Justice LeBel set out exactly what the Canadian Parlia-ment would need to do to allow suits against states that tortureCanadians to progress in Canadian courts, pointedly citing the recent ex-ample of the amendment to the law banning immunity for acts of terror-ism. Hopefully the Canadian Parliament will act on the Cotler bill, orone like it, and grant Canadian victims like Stephan Hashemi the right tosue the persons and governments responsible for their suffering in Cana-dian courts.

Arbitration Conference

MOCK ARBITRATION: CIARB CARIBBEAN

BRANCH CENTENNARY CONFERENCE

Christopher Malcolm

TIME 10:25 a.m.MRS. JANET MORRISON: Good morning, ladies and gentle-

men. We are going to start the day’s session now. I am Janet Mor-rison and I am the day’s chair. It is with great pleasure that I am here thismorning on this historic occasion, what I have to do is merely to say con-gratulations to those who did the Accelerated Programme. I understandyou survived. Congratulations.

Welcome to all the other persons who are here from overseas andabroad. Ladies and gentlemen, welcome. The session will actually bechaired through Mr. Maurice Stoppi, for those who know him and I thinkall of us who do, he can just be described as the father of arbitration inJamaica and he has been a practicing arbitrator for the past 25 years. Hehas authored several local textbooks on the subject of Arbitration andAdjudication and he is the person who I think is most suitable to chairthis session which is dealing with the Mock International Arbitrationwhich is going to feature a Mock International Arbitration. I think this isthe first time any such effort has been put on in Jamaica and it is going tobe very useful in actually demonstrating what an arbitration is all about.Put it simply, it’s where the rubber hits the road. Without more adieu, Iknow our timetable; I am going to ask Mr. Stoppi to take over as thesession chair of the mock arbitration session. You will not hear from meagain until the end of the day when I do a wrap-up of the entire presenta-tion. It will be tight and short but in that wrap-up session, pull all thestrings together so that we come to a tight and tidy conclusion of thearbitration. So ladies and gentlemen, enjoy and have a great day, greatsession, Mr. Stoppi is going to come.

MR. STOPPI: Nice comments, things I accept with my utmost, I amhumbled, I accept with humility. It takes a lot of work to get throughtoday and this mock international arbitration I am assuming that all par-ticipants are present. I am thanking Janet for the nice things that she saidabout me and in doing so I accept it, it is quite—I accept that most hum-bly, with humility and modesty. Let us get immediately down to the busi-ness of things since time is not with us.

The first part of our presentation is between now and 12:30. Beforedoing so I want to pause just one minute to recognize the extraordinaryamount of work that the Programme Coordinator, Mr. Calvin Hamilton

425


has put in the mock arbitration, not quite so mock. On behalf of theChartered Institute I extend our congratulations and thanks.

Now, Madam Chairman, before I go into the details I would like topresent to you the panelists who are going to take us through this eventtoday. I will begin with—I will identify the persons first, as I do so per-haps you will be kind enough to stand so that you can be recognized. Thethree arbitrators who chair this Arbitration dispute, Ms. Rocio Dijon whoyou heard from earlier this morning and the two other arbitral membersare Professor John Rooney, who you also heard from earlier this morningand The Right Honourable Edward Zacca. O.J. CD.

Appearing for the Claimant will be Mr. Murray Smith and a short bi-ography will be given and their actual names and for the Respondent/Defendant whichever term you prefer, will be Calvin Hamilton.

Now, just briefly to tell you about the names that I have just men-tioned. Mr. Calvin Hamilton is a Senior lecturer at the UWI Faculty ofLaw at Cave Hill, Barbados and is a Member of the Caribbean ADRChambers. Ms. Rocio Dijon as you heard is Counsel for the ICC, Courtof International Arbitration.

Professor John Rooney is the head of the School of Law at the Univer-sity of Miami. He is the immediate Past-Chair of UNCITRAL and Past-Chair of the International Arbitration Law Committee and Inter-Ameri-can Bar Association of Miami. The Right Honourable, Sir Edward is re-tired Chief Justice of Jamaica 1994. He is the Retired President of theCourts of Appeal Cayman Islands, Bermuda, Turks and Caicos and amember of FSc Tribunal in Jamaica.

Mr. Murray Smith, who is appearing for the Claimant is the Principleof Smith Barristers and he has come all the way from Vancouver in Ca-nada and for the Tribunal Secretary is Mr. Lowel Morgan, who is a Fel-low of the Chartered Institute and Managing Partner of Nunes Schofieldand Deleon, Attorneys from Kingston. Mrs. Janet Morrison who youheard earlier immediately before me is the Senior Attorney in a Kingstonfirm of Attorneys Hart Muirhead and Fatta. The CEO for the Claimant,I say Claimant because the procedures are very much in terms of strictlydialogue, all the serious points and salient point in International Arbitra-tion but see CEO Chief Executive Officer of the Claimant in this case isMiss Grace Lindo I see here, for the Respondent Miss Tanya Dunn, MissGabriel Hosing, General Counsel for the Claimant, Claimant’s GeneralCounsel is Miss Stephanie Forte. I am sorry, that ladies and gentlementhat completes, oh yes, I should also add. I would like my representativesof the legal profession, I am not in the legal profession I came up throughthe rank of the construction industry and have seen some of my fellowcolleagues here this morning and since what I would like you to do beforeI hand over the actual work of the mock arbitration I just want to simplyoutline what we are about to see.

First thing I want to tell you is that a number of scripts have beenhanded to members, to you, ladies and gentlemen, I’m reliably informed,

2015] MOCK ARBITRATION 427

that they specific, again good authority, there are more copies so youshould get them very shortly so in the meantime I will share and follow asyou can.

Basically what we have is the script of the place basically being in text,three acts before lunch and three after lunch that is the suggested Pro-gramme. The first one is access to court, place of arbitration, process ofmeeting of Claimant and his legal advisers. The second meeting of thetribunal is to discuss procedures and the third one before lunch will bethe actual hearing including the sole witness, cross-examination of thatwitness and the 4 will be the tribunal’s deliberation of the award and 5and 6 will be concerned with the award itself.

One thing I should point out is that I mentioned that the first 3 acts willfinish at 12:30 so when we come back at one thirty we will deal with theacts in law. First is related only to short theory which I will chair. For thequestions and answers and when the times come I will suggest how thatprocess is to be conducted and after that we should be—which wouldtake us to roughly about 4:30. We can wrap up the proceedings of theentire day and we will hear from Janet.

Now as you all know the case that we are dealing with had to do with amanufacturer of wine and the selling of commercialization of the wine.Mr. Hamilton has asked me to—I have been requested by Mr. Hamiltonto advise the members here today because this is a mock arbitration therewill be no distribution of free samples of wine. Thank you.

(L A U G H T E R)MR. STOPPI: Next part of the proceedings. Madam Arbitrator thank

you.MR. HAMILTON: We go by Claimants and Claimant interview of the

potential arbitrator to determine whether or not to appoint that arbitra-tor so I think you should—the first scene will deal with the Claimantinterview of the potential arbitrator to determine the appropriateness forappointing that arbitrator, to determine whether or not that arbitrator isqualified to act as an arbitrator to the Tribunal. So what you will seeplaying out here Professor John Rooney being the potential arbitratorand the counsel, in-house counsel and outside counsel, arbitration coun-sel interviews Mr. Rooney to determine appropriateness as arbitrator.

MR. STOPPI: Thank you, Mr. Hamilton. Over to you, Mr. Rooney.SCENE ONEPROFESSOR JOHN ROONEY: (Description of experience) I have

worked in this field for a large part of my professional life. I have repre-sented both Claimants and Respondents in Arbitral Proceedings. I haverepresented parties in judicial proceedings as it relates to arbitration. Ihave served as both as co-arbitrator and as chair of the tribunal. In termsof numbers I will give you an approximate numbers in terms of the time Iserve as arbitrators, probably thirty to thirty-five.

MR. HAMILTON: That completes Scene One.(A P P L A U S E)


SCENE TWO(A P P L A U S E)

MR. HAMILTON: That ends scene two. And what was played outthere was the actual consultation that goes on, consultation that goes onbetween the CEO, persons responsible for legal affairs at the companyand the counsel with respect to the arbitrators or potential arbitrator, thisis exactly what will happen, they will make the decision, try to make thedecision, try to cover all the aspects of that profile for the arbitrator, totake into consideration potential issues that might arise in the arbitrationitself and also addressing questions which may or may not arise, the seatof the arbitration, that question about seat of arbitration is a crucial onebecause that is where if indeed we need to have a nationality of theaward, that’s the nationality, we need to find if the arbitration structurewe need is a place that is arbitration friendly and we need laws that aremodern and flexible and laws that persons arbitrating in that seat whomight not be familiar with that Jurisdiction laws, at least would be famil-iar with the arbitration laws in the sense these arbitration laws and prac-tices would be common throughout the universe or globally where you doarbitrations, I think that is crucial and that had come out there quite well.

Now this third scene. We go to the other side of the decide and this iswhere the Respondents now they have gotten wind of that interview andthe notes that in-house counsel made of that interview got to the ICC andthe ICC distributed that to the Respondent for the purposes of disclosureand fairness and the likes and you will see this role being found out thatthe interview actually took place and the content of the interview, howthey react to the knowledge of the content of that interview.

SCENE THREE(A P P L A U S E)

MR. STOPPI: That was how we decided doing it for lunch 12:30, whatwe have decided to do, we could do the first 3, we should continue. Let’sdo ACT 4.

Well actually what’s going to happen as you picked up from the lastscene there is a concern about what transpired in the interview and adecision has been made to file the challenge. So what you will be seeingthat playing out in Act 4 a panel established by the ICC to determineadmissibility and merits of the challenge.

MS. ROCIO DIJON: Just before we go a few points, how a challengeworks for the ICC. We are not regular a tribunal; please don’t think of usas that. At the ICC challenges are typically decided at the monthly ple-nary session of the court. Once a month there is a plenary session, thatcourt session involved 3 members. At the plenary session no member ofthe arbitral tribunal would be present to invite even if they are courtmembers. There are seventeen Vice-Presidents who discuss challenges,awards, opinions and these kinds of plenary session, the opinion and con-sultation with sort of a larger body of people that are there, furthermorewhen a challenge is decided two reports is to be prepared, one by the


team in charge of the file at the Secretariat and one by a court member.For example I filed one of my case, North American team, I would pre-pare sort of a report, this report summarizes the grounds for legal chal-lenge and makes a recommendation to the court in terms of probableground to deny the challenge on the basis of submissions and comments ifany is provided from the members of the tribunal itself and in additionone of the court members prepares a report as well with the recommen-dation that was read at the plenary session which involves a very briefand discussion during that monthly plenary session. As a matter of prac-tice, the rules on decisions and challenges do not include reasons. Rea-sons are not provided. Court has now provided two reasons one state theagreement and request of the parties so with that sort of contacts in mindwe will begin. This is a sort of smaller group and we are court membersright now on stage.

MR. STOPPI: I would like to say it was a wonderful job.(A P P L A U S E)

MR. STOPPI: Calvin you just wish to -will you allow me? We dohave—so since the proceedings are just heard and are still fresh in yourminds, you recollect fresh things that may have come to you during thecourse of the previous proceedings I think it would—if we ask our per-formers to form a small panel to ask questions from the audience. AskCalvin Hamilton, Professor John Rooney and Mr. Murray Smith, 3 gen-tlemen occupy the rostrum. Very remiss of me, we do need a rose to sitbetween the thorns; she would be kind enough to join the panel. We havegot a limitation.

PROFESSOR JOHN ROONEY: Possible to hear us like this.DR. MALCOM: You can project, you can use that mike.MR. STOPPI: Those asking questions kindly stand and give your

names while you ask your questions. Thank you.MR. DEAN BARROWS: I would like to ask a question with regards

to the challenge to the ICC from the Caribbean. Does parties sitting orselected arbitrator appeal directly to the ICC for failure of potential arbi-trators or potential arbitrators failure to disclose, is that one of the rea-sons? Should we go all the way to the ICA in England or is there alocal—could we appeal to our local body in the Caribbean?

MS. ROCIO DIJON: In terms of arbitration ICC Rules, it is adminis-tered by a case management team, so there are nine in total, seven inParis, one in New York and one in Hong Kong. The court session aredone via video conferences, you make that challenge to the team incharge of the file and that goes to a court session, it doesn’t go sort of tosomeone in London or someone in Jamaica, you have arbitration underthe ICC Rules that challenge is decided by the ICC Courts which is com-posed of eight different nationalities from different countries.

MR. DEAN BARROWS: I was just speaking of access.


PROFESSOR JOHN ROONEY: Every time that you would have anICC Arbitration you would have someone assigned to your case and sothat would be the person who received the communication.

MR. DEAN BARROWS: Thank you.JUSTICE GAFOOR: Good morning. I am Anthony Gafoor. I just

wanted to raise a point of procedure that if the ICC Court is faced withdetermining a challenge, is there evidence that where the arbitrationchallenged would either be brought in or invited to come in to be inter-viewed or to be given an opportunity to make a statement or response tothe challenge?

MS. ROCIO DIJON: There is no opportunity for any sort of oral com-munication. There is opportunity once to file that challenge, once it isfiled it is final, it is sent to all parties and we are given a time limit withinwhich to comment, written form.

PARTICIPANT: I think probably the logical next question if one partyis dissatisfied with the decision of the court then what happens next, canthat party appeal the decision and if so to whom or would you wait untilthe award is given and then apply to have it not imposed?

PROFESSOR JOHN ROONEY: I think on the first instance youmight look to the law and I think almost it’s certainly in the UnitedStates, if you have a doubt as to the impartiality of the arbitrator thecourt will not interfere with that decision, in other words it will take thatto the end, in that time you will have an opportunity under our statutelaw to challenge established by Law, one of statue evidence, impartialityor corruption and the other thing National Law, so important in our lawfor example we have this little peculiarity, if you challenge the arbitratorfor lack of impartiality in attendance the court will not interfere but wehave a couple of cases attack arbitrators for lack of qualification, i.e. 5years of experience in a service industry, we have some cases in the USwhere the court has entertained that but it’s a general proposition forindependence and impartiality, the court will not interfere. Once againyou need to go before the judge before whom you ask that question.

MR. STOPPI: Calvin Hamilton. Just to add. Go ahead.MS. ROCIO DIJON: So in terms of access to court, you can’t appeal

the decision, as a general matter parties rarely ask for reconsiderationthat only recourse is if you have new elements involved, if it exists thecourt may be invited to reconsider but as a general matter no, you couldfile 10, 15 challenges, there is one challenge, 12 times rejected each time ithappens in practice.

MR. HAMILTON: I actually had an ICC matter which was seated inLondon where a decision of the court was actually taken to the EnglishCourts, we challenged the decision by the English Courts, we lost it but insome occasions it’s done and it came out in the role played that we did.There was a comment that I made to my client that I indeed that this issomething that we want to consider if indeed the Jurisdiction in which weare sitting will allow any such appeal or challenge directly to the Court,


challenge of a decision made by the ICC, for example, I made a specificreference to the UNCITRAL Rules, Article 13(3) of the UNCITRALRules does speak to possibility of challenging an institution as I thinkJohn mentioned, you would have to look at the law of the site to deter-mine whether that would be allowed, well most courts would not usurpthe position of the institution. They would say that’s where you decidedit or the rules that you have adopted the fact that it’s unfavourable toyou, they wouldn’t really intervene.

MR. MURRAY SMITH: I just like to add that since we are celebratingthe Centenary Chartered Institute of Arbitrators, this topic of introduc-ing partiality and impartiality has been the subject of much discussion inthe international literature and conferences like this around the world, asa result the Chartered Institute prepared what are called practice guide-lines for interviewers and the prospective arbitrators. This document wasprovided to the participants in the training Programme that we had overthe last 2 weeks. The last Charter, couple of materials I will just mentionwhat the guidelines do and identify its great service I think provided bythe Chartered Institute is to go through and look, first of all the debate is,then to look at some of the other references or sources or law or author-ity such as the ADA, Code Of Ethics in Commercial Disputes and theChartered Institute Guidelines then go on and the proposed guidelinesthat actually will be followed by any party and that whenever they canafter each guideline the guideline with the reference to something in theliterature such as article by Reid and something that was written, so agreat source if you have any challenge. As I said it is a subject of consid-erable debate to the point where one of the leading authorities in theworld on arbitration matters (John Poolson) has suggests that they shouldnever be party appointed arbitrators that all arbitrators should be inde-pendently appointed, much conversation at various conferences I have acouple of questions. First one, Sir Edward get to that point, first Ithought I would ask John and Calvin for their thoughts on whether it issomething different said in his comments in the role play about loss ofcredibility but I am wondering if we could take it to a very practical leveland ask experienced arbitrators, what is the practical effect of havingwhat I am going to call a ‘homework’ on the tribunal? If you are theChairman or co-arbitrator perhaps you can do the chair and Calvin dothe co-arbitrator, what’s your action when a party has appointed some-body who is obviously partial to their interest?

MR. HAMILTON: Of course we start from the premise that the guidethat breaks the deadlock is the chair; obviously his opinions need to betaken into account. Obviously if there is a bias arbitrator then naturalhuman reaction behaviour he will give you would not attribute muchcredibility to what he or she do. I had an arbitration in Switzerland pre-cisely that happen when one of the arbitrators appointed by the Respon-dent was obviously bias and had obviously read documents prior tocoming or at the beginning of the arbitrator because he came with some


knowledge of facts and figures because we didn’t see the submission sothe question was obvious, how did he know and that was the first dead-lock and throughout the proceedings he confirmed that indeed he hadbeen talking to the parties and he had been developing strategies. Theother members of tribunal didn’t take anything that he did seriously andanything he did say we were skeptical and we were challenging with howdo you know that because we don’t have that fact, he himself realizedthat he has overplayed his and hand and indeed in that situation the cred-ibility was gone.

MR. MURRAY SMITH: So you will have to be careful what you wishfor John. What about as the chair, how do you appear control as chair ifthere an obvious bias on tribunal.

PROFESSOR JOHN ROONEY: I think it is a sort of correction. Isaid to a certain extent I believe that it is a sort of correcting mechanism.If you have two arbitrators on the panel, one is the chair and the other isthe party appointed, you take seriously demanding they should act impar-tially and independently in the face of conduct to the contrary by one ofthe three arbitrators, the real danger is that that person’s opinions be-come marginalized and eventually irrelevant during the discussion in thearbitration to a large extent, so I think that answers the comment Calvinmade, we have to be very careful what you wish for because if you picksomeone for example if as the in the case of Calvin’s arbitration, the arbi-trator basically agrees to hear arguments, to review documents, can oneof the arbitrators—shouldn’t at all do anything? What ultimately hap-pens is the two arbitrators understand what’s going on, devalue the posi-tion of the arbitrator so from having the mutual, independent, impartialperson who really will sit and judge on the merits of a case, you are push-ing the tribunal to perhaps a two to one decision, maybe not, the positionthe arbitrator takes is a practical one borne out but you run the risk of aperson being marginalized.

MR. STOPPI: Tony did you want to say anything?MR. HAMILTON: That’s exactly my point and I am saying then as far

as the tribunal is concerned internally you have got a two to one from thebeginning, it’s a problem. You don’t have a tribunal of 3.

MR. MURRAY SMITH: It goes to the heart of the integrity of theprocess. Another question by me. I was interested in the ruling of theICC Panel and some of us may agree or disagree with that ruling but weare all lawyers and we need metrics in order to gauge whether somethingis right or wrong and so my question essentially is for Justice Zacca, theCaribbean Branch, what is the standard that a court will apply where thisarbitration is in Jamaica, the challenge would be a Jamaican Court and inCanada for example, historically we had a very strict test for bias, it wascalled the reasonable apprehension of bias test, if you believe the slight-est hint of something was amiss that was something that the courts wouldsanction. A number of cases then came along, recently came to the En-glish Court of Appeal where they said, well we are not going to apply that


reasonable apprehension of bias test anymore. We are going to apply areal danger of bias and you can see how interesting the language is, it is amore than a bit higher thresh hold for the challenging party to meet inorder to meet, achieve the disqualification for lack of impartiality. I amwondering if I am not putting you on the spot if you could speak to thatin the Jamaican context.

MR. ZACCA: So far as Jamaica is concerned we have an ArbitrationLaw which provides for an appeal against anyone on a point of law and itseems to me, leaving aside the International Arbitration Rules and thingslike that, if an Arbitrator is appointed by one party, it is clear that thatarbitrator is in fact bias and in fact an award comes down even if it’s aunanimous award, it would seem to me that the losing party would beable to appeal to the Court of Appeal in Jamaica on the basis that one ofthe arbitrators was bias and in such circumstances it would seem to methat the award would be vacated, I would think, I am not sure what ordercould be made after that, I don’t think Court of Appeal should allow suchan order to stand.

MR. MURRAY SMITH: We should go back to letting people askingquestions.

MS. ANN RYAN ROBERTSON: I would just like to follow up onsomething that the judge said and also John Rooney and that as it relatesto ICC Guidelines, have one list for what needs to be disclosed and notdisclosed, a red list, a waiver red list and orange list and a green list asJohn said that has taken almost self-law which you need to be extremelycareful. For example there is not a single State in the United States inwhich the court have followed those guidelines in making those determi-nations whether those awards should be set aside for reasons, howeverlong, long ago particular guidelines standard to judge whether or notthere was actually an appearance of impartiality is what makes the differ-ence. So you need to be careful about your Jurisdiction and not assumethat just because you have complied with the guidelines that you areprotected.

MS. VALERIE GORDON: Yes. Good afternoon. My name is ValerieGordon. To be very practical, is there a cost associated with the appeal-ing to the ICC Challenging the Arbitrator? And if a party continues tochallenge despite the decision of the ICC, are damages awarded or arethere any penalties in cases like that?

MS. ROCIO DIJON: I will answer your first question. There is no costto file a challenge. The cost you pay the final fee $3,000 and then the sortof costs are based on the amount dispute, this means that an ad valorembasis the arbitrators are not paid hourly rates, rule on the website you canput your amount dispute 5 million so arbitrator come out sort of a num-ber of giving you the range, this doesn’t include arbitrators expenses, youcan get how much arbitration may cost, any additional cost possible join-der of a party, that’s also $3,000, procedures there are no additional costsin perspective, final file this will be reconsidering filing additional chal-


lenges hence parties can do as they please, it’s their arbitration, theyhave a right to file challenges or not effect proceedings, clearly the tribu-nal can take that into consideration when fixing costs, attorneys business,that is the discretion of tribunal.

MR. MAURICE STOPPI: As I said in my introduction we are—from along legal stand point it seems that this could enlarge the question ofwhether arbitrations should be decided by 3 arbitrators or by two arbitra-tors and in terms of local practice Commercial Arbitrator. Another as-pect of how impartiality is treated on the basis certainly from myexperience that it is almost totally impossible especially if one lives in anespecially enclosed society like in Jamaica, be free of any bias whatso-ever. The conscious or unconscious inconceivable, any arbitrator closelysocial to anyone from that point of view it seems that there could be someconsideration given, the concept, yes we know that arbitrators are bias.We hope they are not too bias. We hope they are not too obvious be-cause of their professional commitment and so if the final decision is notleft to an umpire or referee who is external as in this case presumably byconsideration. So silence means consensus, there are no more questions.

MS. ROCIO DIJON: I mean outside the rules clearly provide for a solearbitrator Tribunal bound by new revision of laws that may or may notallow for an umpire.

PROFESSOR JOHN ROONEY: I would second that. I would—I alsojust want to mention a point which I made earlier today, what we aretalking about here is the internal governance of the arbitration, which isthe ICC, the institution, they will make a decision, court will make a deci-sion with respect to challenges based on our experience, I think and men-tioned, as I mentioned before statute determines how you may challengeawards. Statute One ground is evident impartiality or corruption on thepart of the arbitrators that is a different standard in terms of its articula-tion in terms of what ICC states. Only point is that the ICC is concerneddirectly with that standard applying its rule impartiality and indepen-dence, but as a lawyer you always need to once the award is issued thepanel by the principle no longer has any power whatsoever and only sur-viving instrument award might be presented to another body for a possi-ble vacatur or set aside annulment and that body may operate underexactly this, the same rules. And also when you make aside Ministry ofJustice noted the possibility of Jamaica adopting Modern Law. The NewYork Convention contain seven grounds, non-recognition, seven groundsthe Model Law Article 34 adopts six of those. 5 grounds, sole grounds forattack on an award, Model Law Jurisdiction, the legal seat of the arbitra-tion, you know that you are not going to necessarily have that surprisethat you might have in the United States where the articulation hasgrown for attacking award is different than the Article 5, your conventionwere Jamaica to adopt Modern Law or those from Modern Law jurisdic-tion when that seat of the arbitration grounds for attack award same de-fence to recognition enforcing that you found in Article 5. I think that’s


important, that’s not identify with 5 what we find in the Modern Law theArbitration articulation in the latest modification ICC Rules, so you wantconsistency you want to be able to rely want to sin Modern Law Jurisdic-tion consistency way and you also have those cases that the court to lookto see how other Jurisdictions have done so Jamaica adopt 2000 amendedversion of a section of Law that basically says court should keep in mindInternational Character of the Law in uniformity in this application whichmight give added weight to what you might find.

MS. ROCIO DIJON: Three small points for the afternoon. One is thatthe arbitration proceedings can challenge the file, that’s not clear in termsof process. Continues, two statistically in 2004, 66 challenges were filed,only 6 of which were accepted, that’s consistent with sort of historic statis-tics there are many, many more challenges filed and accepted. In myspecialty procedure list to be successful, that sort of goal to actually—procedural unfairness and 3 just to a point of clarification, Nationality ofJamaica ICC Arbitration in terms of the sole arbitrator where the partiesare picking, that person can be any of nationality including that any oneof the parties where the court appoints someone, not from either nation-ality unless the party agrees within a certain time period that can be saidin an American case involving American party and Jamaican party, soyou have that liberty of selecting. That’s all from me.

MR. STOPPI: Thanks very much. There are no other questions. Wecan adjourn for lunch. Let us thank the participants.

(A P P L A U S E)We will return at 1:30.Time 1:35 P.M.MR. STOPPI: Ladies and gentlemen, may I have your attention please.

We have decided a slight change of the programme. I understand allmembers have had copies of the award; am I correct in that assumption?What we probably do is to read, digest, study the award that has beengiven and that would take us up to about 2:15; so that would give us like20 minutes. At 2:15 we will recommence the normal proceedings. Thankyou ladies and gentlemen.

May I have your attention. We are now back from lunch and to con-tinue with the presentation of The Mock International Arbitration. Wedid see 1, 2, 3, 4, before lunch, what we are going to do now, unlike thecinema where you have to wait till the end to find out, everybody knowswhat the award is, what we are going to do now is to see a presentation ofhow the award was arrived at by the panel and the process of examina-tion and cross-examination of the witness. On conclusion of that I aminformed that there will be a panel upon the platform here followingwhich there will be the question and answer session. So that’s the pro-gramme, ladies and gentlemen for the rest of today and rest of the arbi-tration. So I hope everyone is totally enthralled up to now. We prefer todefer. Thank you.


MS. ROCIO DIJON: Thank you very much. Just right now we areonto Act 5, which is the hearing phase followed by deliberations wherewe will discuss the process in the context of the award, right at the end.Just to give you a brief of what will happen now. Now we will have cross-examination and the relevant Article 22 which refers to conduct of thearbitration. 22 says:

“The Arbitration Tribunal and the parties shall make every effort toconduct the arbitration in an expeditious and cost-effective manner,having regard to the complexity and value of the dispute.”

So this is a general obligation on the parties. It could be a hearing, itcould not be hearing it could be based on written submissions; it is up tothe tribunal and the parties to decide the important things to establish thefacts of the case. This is Article 25:

“One shall proceed within as short a time as possible to establish thefacts of the case by all appropriate means.”

Part two says:“after studying written submissions of the parties and all documentsrelied upon, the arbitral tribunal shall hear the parties together inperson if any of them they so requests or, failing such a request, itmay of its own motion decide to hear them.”

So here is the situation there will be a hearing and you have an excerptof the hearing with you now. So we are no longer just court members weare the tribunal and we are sitting as International Arbitrators, with thatwe will begin.

(ACT 5)MS. DIJON: That ends the session.

(A P P L A U S E)There are two elements here and one is sort of in terms of arbitral

procedure and two is questioning and a sort of quick warm-up from Cal-vin and the interaction in the Arbitration in a formal cross-examinationand two if you could offer a script in essence a more active tribunal. Wecould have just sit there and say something and be more involved in rela-tion to the panels’ perspective, do they want to help the party uncover orthey want it as it is presented? It really depends on the Arbitrator’s phi-losophy and John will give you preview of that.

PROFESSOR JOHN ROONEY: Actually following upon that I thinkthe reference to the ICA Rules on the Taking of Evidence. If the Chair iscorrect that we have no indication that it appears in the order but what Iwill notice is that when you were dealing with International Arbitrationand in organizing your hearings if you are dealing with counsel on eitherside the issue is likely to come up. So the point being that you need to beaware that there first of all exists these items on the evidence and thenyou need to develop a position with respect to whether you want them ornot. If I was sitting in another jurisdiction where we need to apply themand it turns out upon the review of your work that was favorable to our


client that counsel for the other side began to object to a number ofpoints that were clearly resolved in our favour in the Rules but moreimportantly counsel actually wrote an article on the idea of the Taking ofEvidence, recommended that they not be adopted but unfortunately hedid agree to adopt them and to his detriment, the point is that when therules are important in the first instance because they exists and becausethey exists you need to know that they exist and what the content is. Andsecond you will notice that Mr. Smith indicated, Oh, I don’t think weneed the procedural order but we should be guided by them, you shouldtake them into account. Sometimes the tribunal will take a position thatwe are going to use the rules and guidelines and we are not going to usethem as findings. I personally generally have a problem because I thinkthat counsel is entitled if they ask for and is given guidelines. The gui-dance simply means that okay, we are involve here, we are not going todo it and I think you should be entitled to do that and I have seen situa-tions where the tribunals have offered to accept the guidelines and coun-sel will say I prefer your position to whether you are going to use them ornot which brings us to another question which often comes up especiallyin what I would call the beginning of the career, more advocated as arbi-trators, your condition is a great difference given to the arbitrators whichyou need to remember that arbitrators make decisions which might havean unfavourable consequence or make mistakes so when you have anobjection as to ruling, in other words don’t let it sit there, don’t refrainfrom making an objection and offend the arbitrators because at the endof day if the award is not favourable to your clients and they would wantto have a basis for any review that might be possible. But this is what Iam saying treat with difference but understand your final objection basi-cally that objective basically you need to know what the arbitrators aredoing and why they are doing it. And if my recollection is correct in therules I believe unless the party agrees to the contrary, you—Mr. Hamil-ton would have been entitled to take your objections in his direct andthen he would be crossed coming from the parties in international arbi-tration he will have to agree that the witness statement will strictly neces-sary stick to re-examination. In that case that’s what happens here thewitness is presented, the witness is asked to confirm the statement, mis-takes, etc. and it is adopted at that point in time, tribunal is just to give ageneral description of what they are going to say or not, witness tenderedto the other party for cross-examination it depends on the Jurisdictionand depending on the arbitrator. The question of the scope of that cross-examination would come up so once you have the witness here counselcan ask the witness any question or is counsel restricted to the scope ofthe witness statement, just get it clarified. In other words earlier whenyou talk to the arbitrator because there are different opinions on that hasthat as well. The other thing your re-direct after cross is restricted to thescope of the cross-examination. One arbitration where the witness on theother side which is the crucial witness made a terrible mistake in the wit-ness statement and to make a long story short I didn’t cross-examine the


other side. Now that was a horrible mistake, stock of documents ready,basically to rehabilitate and the arbitrator after I said no questions thentendered the witness to the council that offers the witness rules that theonly questions he can ask in the scope of cross is on the content of thewitness statement, if there is no cross, there is no question. Okay. Trulythat’s an interesting point. No questions. So you never know, point isbasically, we are all litigators, know the importance of procedures, rules,IBA Rules, special rules in procedures only need to know, if you don’tknow, of course we get into problem.

PATICIPANT: One last question. Have you had a situation where anarbitrator is asked to question a witness that wasn’t called for cross bycounsel, do you believe witness A, B, C, D, E, F, G .

PROFESSOR JOHN ROONEY: You know I haven’t but it’s certainlycontemplate arbitrator have the power to listen to testimony even if noother parties offer them because I think probably a couple of the vacationearlier my career might in fact be useful as a tribunal we did exercise thepower, there was one case in which one of the parties was basically familymembers, two members so far as family and only one of them appearedfor testimony as it turned out the testimony for both get recorded so therule do permit them. Just to say permit arbitrator to require experttestimonies.

MS. DIJON: With that we move onto Scene 6 the Deliberations.(SCENE 6)

(A P P L A U S E)MR. HAMILTON: That in effect is-that would conclude the descriptive

part of these proceedings. What we hope to do now we are going toconvene a panel and we are going to sort of recap some of the issues thatyou have listened to today. From Act 1 through to Act 6 and then we aregoing to have an Act 7 which will look at the award that you have beenhanded out, that award result in issues arising in this dispute. Obviouslywhat you have heard today we haven’t got into each and every aspect ofthe work but we will have Sir Edward read out the decision and then wewill take some questions on that, what I would say is just that the key tothis whole bundle of question is-really is this question of the improve-ment of the wine whether or not Frontero was an improvement on Toroor was it something totally different. The contract, of course, doesn’t de-scribe what is to be considered an improvement so you have got the defi-nition or lack thereof. The article with respect, I think it’s Article 3where they are saying you will distribute to and then any improvementbut it doesn’t go into what are the improvements. Well if this was a reallife situation we would have had expert testimony with respect to thetechnicalities and all the different things that would go into wine makingand viniculture but we don’t have that so that would have been consid-ered. I think the expert testimony would have been offered up by bothsides to make those determinations. Now the question, what ABC is say-ing, this was an improvement, they are also saying that and recognizing in


effect in the contract it doesn’t help much what is an improvement how-ever they are saying that the improvement was contemplated, they aresaying they had discussions and the discussions included the that Fronterowould be an improvement and the memoranda is so important as Mr.Smith was trying to get from the witness that witness knew all about thenegotiations. This was a contract that was important to ABC that thiswas a contract there if you would negotiate to this was so important toyou, improvements were important to you, some place it would havebeen discussed but unfortunately it is not in the contract so this memo-randa indeed exists and seems to exist the memoranda ought to have inthis memoranda for the purpose of addressing all these issues to theBoard, it ought to mention something about the improvements but if itdoesn’t it would mean it would lead to the conclusion that this new wineis not an improvement and this conversation did not take place if it wasso important it properly would have been in that memoranda and theBoard would have been aware of it and so that is why this document is soimportant, just to determine this whether or not these negotiations takeplace, if it didn’t take place then of course you got your answer that itwasn’t going to be considered an improvement so that’s the setting. Socontemplate that while we put the panel together and then we will beback at you

In another two or 3 minutes.(B R E A K)

MR. HAMILTON: Okay. Let’s get to it. You have a day of fascinationexercise of how you conduct international arbitration including the hear-ings we thought it was a good idea to start off the Programme with thequestions of the arbitrator because at the end of day that’s the person ortribunal, that’s where the Programme is run, is conducted after the file isreceived by the tribunal and selection of the arbitrator is very importantand the profile of that arbitrator needs to include proper management ofthe arbitration and the proceedings, you got a feel how heated discussionscan become at the hearing so you want to have a tribunal and chair of thetribunal who could command respect and understand the procedure andwho can have his opinion and capacity as chair felt by counsel because ifnot then, of course, things will run awry and so when you decide on thearbitrator or the profile of the arbitrator you need to take these thingsinto consideration; the initiative that we talked about this morning includ-ing bias, including whether the arbitrator has time, is available and in thatrespect, what happens in reality is that the ICC before they make theirappointment they would send you a form and ask you to make any disclo-sures that are relevant for that arbitration, so that’s your opportunity tosay, well my cousin is the lawyer for one of the parties or any such issuethat will give rise to a challenge. I can’t stress enough the issue ofwhether or not there is a bias, there is a question of partiality, is not whatyou think is what someone else would perceive to be bias and I think thismorning it was when you mentioned our traffic light issue in the guide-


lines, they give some guidance as to what should be disclosed but the ruleof thumb, if you are in doubt disclose because if they find out later therewill be a problem and you could be a challenge.

Now I think there are a number of issues again raised this morning andwe will go in the questions and answer, if you have any questions andanswers. I will want to make a point with respect to the review and thescrutiny of the award which is very integral of the set of services that theICC provides and that is something that is very much valued by users ofthe services of the ICC and so I think if you want to explain Dijon.

MS. ROCIO DIJON: We just saw the last scene on our deliberation, sowhat happen, then of course, the tribunal drafts the award. The next stepis not that the tribunal sends the award to the parties; the tribunal sendsthat draft award to the ICC Secretariat for scrutiny under Article 33.

“Before signing award arbitrator shall submit a draft form to court,court may lay down modification as to the form of the award andwithout arbitration liberty of the decision may also draw attention.”

Point of substance no award shall be tendered until it has been ap-proved by the court as to its form. So the purpose of Article 33 is reallyto help sort of entraining the integrity of the New York Convention andthat’s laid down by modification as to the form. It’s not rewriting theaward, it will not change the outcome in anyway and the process is 3steps. We receive the draft award from the Secretariat, counsel turn fileover to me, I do the first review, second level review by managementwhich also the Secretary General deposit, Secretary General or Manager,then third level, it goes to court and so at that court session typicallyeither it will be 3 court members that is you saw today our decision in-volving the opinion state go to full plenary session with all of the courtmanagement as many as possible present at that session. There are 3possible options in terms of this decision it can be approved without anysort of model law or suggestion from the order, it can be approved sub-ject to comments which is the most typical or if it is not approved itsreturned back to the tribunal and they have to make revision, submit itback to the court and it goes through that same review Secretariat Coun-sel, Management Court again as many times as is necessary until its ap-proved. In terms of actual type of model law it could be simple typo, thenumbers are not right typographic error could in fact award also the ISCSdocument terms of reference drafted beginning of arbitration constitutedthis includes list of issues to be determined in the arbitration, part of myjob is checking whether all the issues listed were considered in the finalaward if not that could make comments please indicate what happened tothis issue maybe it was dropped but the tribunal need to deal with it insome way, that’s how strictly it works. In reference to the statistics in2014 awards were approved without any comments 493 were approvedsubject to comments and 55 were not approved so really the majority isapproved subject to and that’s all scrutiny.


PROFESSOR JOHN ROONEY: I want to say that is something thatyou get with the ICC you don’t get many of these arbitrators and I guessto the point you may, I think in reference to the court is actually throughan internal l court that is part of the ICC and not a court of any judicialpower or any judicial Jurisdiction but you get that quality control. I thinkthere was one other point which would point to the fact of quality controlall of this starts with the ICC starts actually I suppose with the very levelof arbitration then reference. In terms of reference what happens to theICC arbitration and in many other arbitrations as well it is depended onthe need of the arbitrators and counsel and so you articulated five issuesconfirm where issues is going to be held etc., that document is also ap-proved by the ICC and also ultimately should be signed by counsel likean arbitrator, fact becomes internal guiding document in arbitration.

MS. DIJON: Point if you are worrying how long I can sort of tell you,on my team it’s a ten day process, if you receive award by Monday go tocourt session not that first Thursday the following that is the practice ofmy team I can’t speak to the others, not a source of delay as some peoplesometime say.

MR. HAMILTON: Thank you. Most of the panel members here wereintroduced to you at some time today except the gentleman on the rightand he is Thomas Piper. He is of German Nationality, he has been livingand practicing law in New York for as long as I can recall. He is a partnerwith Hogan Lovells, arbitration firm here in New York. They are all overthe world. His office is in New York and Thomas has been sittingthroughout these proceedings all these days so I am anxious to hear hisviews on many of the things that we discussed them today and how hesees them to compared to real arbitration, significance of having a bias onthe tribunal which bias might not be until a later moment that might betoo late you want to.

MR. THOMAS PIPER: Thank you very much for having me here. Iguess my first point would be in real life as an arbitrator first on orderli-ness in this case and then we will make a position and decide site visit andpicking up on what you just mentioned the selection of arbitrators, I thinkit’s very important as the session this morning showed an arbitration isonly as good as the arbitrators are and you can have any rule if the arbi-trators are not for the plan the rules don’t really help much. I think whathas been a good method is each party appoints one arbitrator and the twoparty appoints the chair and ideally you—I am speaking as counsel now,we should retain a possibility, you can discuss the idea of a candidate, atleast a profile of the chair so that gives you some sort of influence of whatyou of have of the tribunal including the chair some of these discussionswe saw this morning were obviously overplayed it would never happen inreal life. We would never ask these questions to a candidate, some arbi-trators even flatly refuse, some of the accomplished arbitrators would say,well you don’t want me or you want me. Fair enough. And the selectionprocess is very important. As I say it is sometimes very long and clients


sometimes client don’t understand what it takes to find the right candi-date, call your friends and ask around who is the best candidate for thiscase, you have some associates if you go through all the publications thecandidate has published, find decisions in general I would subscribe tothe rule or Model. When I was at the law school Sherry Thaxton, veryaccomplished arbitrator it’s like a thirty minute rule basically said youshould not take longer than thirty minutes and should be limited to thepoints that were mentioned this morning experience, availability, con-flicts and such the likes that never go through substance. So that’s anythought on that point and just to pick up the last point that came up afterdisclosure issue, one solution that arbitrators sometimes offer is they or-der what’s called encamera review meaning you have to submit the docu-ment in question but only to the arbitrators for the arbitrator’s eyes thenthey will make the call if that should go to the other side or what portionshould be or what should not. Solution here I guess in Europe or in civillaw countries attorney client privilege does not extend to in-house coun-sel there was a decision in the European Court of Justice, case you canlook it up disparity and arbitrators are trying to level the playing field andthere are various options. These are my two things.

MR. HAMILTON: Thank you. I think it is now left for me to open upto the floor if there are any questions, as we comment here anybodywants to ask a question please feel free to do so if we not we just continuetalking. Any questions down there?

MR. HAMILTON: In Lebanon on this question of disclosure and theprivilege how would that be handle is this public policy position oris this arule of evidence position; how would the question as in ours play out inLebanon.

MRS. NAYLA COMAIR-OBEID: Remember the professional who isat the Bar Association we are bound by legal privilege it’s a public policy.

MR. HAMILTON: Would the fact that it’s an international arbitratorseated in Lebanon the rules, are the arbitration still bound by your publicpolicy or in Lebanon would you take a more international public policyoutlook to the question of whether this was?

PROFESSOR NAYLA COMAIR-OBEID: In fact, this question, Idon’t think the question was addressed to the court but we have an inter-national centre of arbitration and I think that surely needs to be looked atit. What are the rules on international arbitration not to be strictly let’slook at it as our privilege as the Bar Association privilege.

JUSTICE GAFOOR: Okay. I was just wondering as an alternative tothe actual panel view of the document in terms of admissibility extent,would they be stated by a judge ruling on that issue.

MR.SMITH: Who wants to answer that one?JUSTICE GAFOOR: Whether the document should be referred to a

judge instead of the tribunal.PROFESSOR JOHN ROONEY: The problem I think you might have

with that is a procedural vehicle first of all doing it under the law, a judge


to be given second would whether the decision of the judge could then beappeal and how long it could be appeal, possible disadvantage exist thatwhen you think litigation element you introduce a very potentially pow-erful tool to delay or disrupt the arbitration. The rules provide generallyif there is a document confidential in nature and ultimately it quite restson the principle of confidentiality and there is a concern, for example, ofthe party being requested to dispose of this close document is somehowcontaminated, there is a possibility of examination by a third party soprobably a better compromise might be that the party submitting the doc-ument, third party is bound by it.

SHAN GREER: Okay. This is really a side point highlight need forsome form or arbitration laws and our laws in the Caribbean that areoutdated. For example quite a few countries Trinidad, and St. Lucia inparticular where the Evidence Act specifically states that it applies to ar-bitration so that you cannot opt out of the Evidence Act and that meansin this instance those rules would apply and that sort of waters down theautonomy of the parties because you are bound by that legislation. I justwant to indicate that is why one of the reasons why we have to have lookat our legislation if we want to see legislation, legislation will have to bechanged.

MR. HAMILTON: We had an interesting discussion and Janet is goingto expound on that.

MRS. JANET MORRISON: Thanks Calvin. That discussion sur-rounds the discussion around whether or not when a special case is sentto our court during tribunal whether that suspends the process of the ar-bitration. I thought that Sir Edward might be able to assist us in answer-ing that question because in fact that would account considerable amountof delay in the process and in fact could tie up the whole arbitral proceed-ings in the court for a pretty long time.

JUSTICE ZACCA: Sorry, what was the question you posed?MRS. JANET MORRISON: The question is during the process of ar-

bitral proceedings a request for an injunction or special case is stated tothe court as can happen under our own very Arbitration Act 1900 Actthat whether or not that suspends the arbitral proceedings until the deter-mination of the court.

JUSTICE ZACCA: On that issue I know that certainly where you havearbitration proceeding and the Jurisdiction of the arbitrators hearing theproceedings is challenged one has the opportunity before the hearing togo to the Supreme Court to have the question of Jurisdiction decided. Infact in Bermuda we had a case where an award had actually been madebut the question of Jurisdiction was to be raised under an appeal and oneparty took the matter to the Supreme Court and then it came to theCourt of Appeal on the basis, the argument was well the award is beforethe Court of Appeal, let the Court of Appeal hear the merits on theaward and also deal with the question of Jurisdiction, the court has anopportunity to deal with matters I think before the hearing starts.


MRS. JANET MORRISON: Sir Edward, what’s the case when the ar-bitration has actually started, are the proceedings suspended on an in-terim point, an interlocutory point taken by the parties?

JUSTICE ZACCA: If the point is been taken before the arbitrator,well the arbitrator could proceed if they wish to proceed.

SHAN GREER: I think it’s more of a practical point our Acts don’tnecessarily say that you have to suspend the arbitration matter going bycase stated, I think you need to do it with the arbitrator’s consent. Chal-lenge, what’s the point of continuing proceedings and incurring all of thatcosts if you are not sure what the court is going to do, from a blanketperspective it does not make sense, court does make a decision that re-quires you, you don’t have Jurisdiction, it disagrees with your decision, allthose costs are wasted. I think from a practical perspective and the spe-cifics would require you to stop the proceedings.

PROFESSOR JOHN ROONEY: The general rule, UNCITRAL Mod-ern Laws that recourse to judicial protection or assistance outside of sim-ply aiding the prosecution of the arbitration doesn’t indeed affect theability of the tribunal to continue and even to proceed to final awardArticle 8 of Modern Law which basically copies in large part Article 23 ofthe New York Convention, parties goes to court the judge that you wouldrefer the parties to arbitration claim to recover by the arbitration agree-ment unless the arbitration agreement is null and void, opportunity capa-ble of being performed. Article 8 of the UNCITRAL Modern Law addsanother paragraph which is client-privilege basically says in such case thetribunal can continue in giving final award and point with respect to theexpense can in fact become a good case by case basis if you know that thejudicial process takes a very, very long time perhaps it might make moresense to move to final award if you get a favorable results from the courtyou have the award and in the event you could still take the award toanother country.

MR. DEAN BARROWS: I think under the English 1996 Act, they al-lowed a leap call to the Commercial Court so it is not delay or held-up atall while the arbitration proceedings is going you can immediately get ajudgment while you are deliberating.

MR. HAMILTON: I think the principle though is that the tribunal isnot obliged to wait for a response from whomever. They do have theability and capacity to continue and the Modern Law, John described, didI misunderstand you, did you say that there was an award and after theaward they are challenging the Jurisdiction, question of Jurisdiction.

JUSTICE ZACCA: Yes.MR. HAMILTON: Isn’t there a waiver of the Jurisdiction?JUSTICE ZACCA: Not necessarily. I am not sure whether they took

the point originally.MR. HAMILTON: Oh, I see later under the outdated legislation you

can challenge from conduct and you can make that challenge at any time.


Jurisdiction before conduct, one of the grounds that the courts act isoutside of the Jurisdiction that can count as misconduct.

MRS. JANET MORRISON: I just wanted to mention something elsethat came out of the mock arbitration which is, I think that that is astrong case, an ordinary case for arbitrators to be chosen from a panel ofarbitrators that have been put together saying that the ICC, to my ownmind, that would eliminate substantially all of the issues that we wouldhave here this morning, I am not so—what I was saying I think that this isa case for arbitrators to be appointed from an international panel of arbi-trators and that would eliminate altogether all of the issues that we weregrappling with this morning, conflict of interest, experience, integrity, allof the other issues, pertinent ones and in that way someone who does arequest for an arbitration would depend entirely on the empanelling ofthe arbitral tribunal by the ICC or if they choose just one arbitrator, onearbitrator would come from that panel and the issues that they wouldhave been grappling with wouldn’t present themselves at all. I wonderhow some persons feel about that, I had the benefit of reading somethingthat Calvin gave me which said that the number of eminent EuropeanArbitrators have declined to interviews like the one that we just wentthrough, in that they were at least demeaning or at worst improper. Thecontrary view when conducted properly is that the integrity, proprietyand if it is done with integrity, propriety and restraint such interview pro-cess of allowing the party to gain confidence in the experience, intellec-tual knowledge of potential arbitrator, there is one view which somearbitrators particularly the prominent ones, I am not going to be askedabout conflict, my experience, Oh I a big mighty arbitrator and there isthe other view that it gives the party an opportunity to know who theyare going to select but at the end of day I still see strong an argument forthe empanelling of an arbitrator of the level of the ICC and that selectionis made from there, that’s anonymous, there is no connection there is nobackground, there is no history and it cures the ills that we were address-ing. I am interested in hearing your views.

MS. ROCIO DIJON: As it is the ICC doesn’t have any panelist of arbi-trators, if ICC is asked to appoint an arbitrator on the basis of NationalCommittee System, you in Canada, Caribbean National Committeebased out of Trinidad & Tobago you have party simple claim partiesdoesn’t want to nominate please appoint when they seize to, please ap-point given appointing for the claimant that is US the approach, the USNational Committee, that National Committee typically some kind ofdatabase or list of people that are registered considered and some 6,000names registered with the US National Committee there but they receivea letter from the Secretary saying we have a case please propose an arbi-trator, here is the case information, here is some sort of salient things toconsider, please propose in a week or a certain time period, the courtthen has to appoint that person, that’s how ICC system works. If indeedthe court with appointed power of direct appointment in certain circum-


stances hence involved I don’t remember the exact numbers but the ma-jority arbitrators are either nominated by the parties, jointly nominatedby the parties so it’s over seventy percent of the times that are partiesthemselves constitute.

SHAN GREER: I was just asking for the national committees, is therea process that—do you regulate how they put persons on their list? Howdo you ensure persons on their list are suitable or qualified? Do youregulate how they choose their persons?

MS. DIJON: We don’t have a pool of candidate to choose from, courttakes decision as to appoint who that person when it’s given the proposal.

PATICIPANT: My question was if ICC had a panel of recommendedarbitrators but Miss Dijon answered but my follow-up question she saidthat their National Committee, so you mentioned there was one in Trini-dad that covers our region? And is there anybody from Trinidad herewho could tell us how an arbitrator gets into their pool because the ICCdoesn’t have any involvement in it so I just want to.

PATICIPANT: Miss Morrison I hear you about panel and that you re-move from the party the capacity to choose, would the court becauseright now you got a dispute and the only difference is whether or not yougo under the rules of the court or rules of arbitration but you don’t haveany choice who is going to be your decision-maker. I think that’s a very,very important aspect we have to be very careful that you do not erodethe arbitration opportunity just going back to the court, it is alreadyoverloaded.

MR. HAMILTON: What we are going to do is to read the judgmentand see one or two questions with respect to the judgment but the re-sponse to your question quickly I don’t know how the Trinidad NationalCommittee Court works but I do know how the Spanish National Com-mittee, they know people, they go out, they determine their qualifica-tions, they would just see how you act in certain circumstances and theyhave heard you speak, they might have heard you sit as counsel, have youprepared them, they have the discretion to determine the people thatwould go into that list so there is no strict formula for determining howyou get on their—get into that data base except for the fact they feel theywould have vetted you based on what their requirements are with respectto what the profile should be, what they should have, a large discretion, Ithink saying that at the end of the day ICC Court will determine suitablecandidate, if you are not then they would not accept. And lastly withrespect to Tony’s question, it’s a huge debate, I think counsel was the onewho raised this question about whether or not the constitution shouldappoint the arbitrator forgot party interview and likes, end of the daytalking about autonomy of the process like I said one of the importantaspects of arbitration is that the party has the right and capacity and theability to appoint his or her arbitrator, to deprive the party of that right Ithink would be a transgression to many of the practitioners, transgression


wouldn’t be forgiven that would be my one comment while we get theprivilege the tribunal will be ready, you want to make the comment Janet.

MRS. JANET MORRISON: Tony I made that comment in the contextrefining the rules, Rules of Arbitration process to borrow from the judi-cial system, this will, I think is an admirable feature of having a judge thatyou don’t know where he is coming from, you see because, advantagethat of empanelling arbitrators ICC offers is that those arbitrators wouldbe already certified to be experts in a particular area whereas the risk thatyou take with a judge of the court is that you might get a judge whodoesn’t know twidly twat about the particular matter that you havebrought before the judge but you still have that opportunity in an arbitra-tion proceedings based on empanelling of the ICC to get a particular ar-bitrator that is suitable for your particular case, your particular matterand I don’t see that it necessarily takes us back to the litigation processbecause the empanelling of the arbitral tribunal is just a little small partof the though important of the whole arbitration process.

PROFESSOR JOHN ROONEY: I have strict instructions from man-agement that we must be finished by 4:15. I am going to suggest that wemove to Act 7 and Sir Edward to take the stage.

(SCENE 7)(A P P L A U S E)

All right. That’s it.MR. HAMILTON: Thank you for staying the course and thank you

very much for all our panelists and a lot of my colleagues that I don’t seethis afternoon, they have dealt with me so nicely this morning to makethis effective. Now I would—I thank him for affording his entire litiga-tion department one wonders then who is working at the office but in anyevent thank you, I hope this was enjoyable. We will do it again next time.

(A P P L A U S E)

Reports

THE AUTOMOTIVE RULES OF ORIGIN

CONTROVERSY THAT STALLED TRANS-PACIFIC PARTNERSHIP NEGOTIATIONS

Elise LeGros*

AUTOMOTIVE rules of origin have been some of the most con-tentious issues in the Trans-Pacific Partnership (TPP) delibera-tions between the twelve TPP countries—Australia, Brunei,

Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore,the United States, and Vietnam. Automotive rules of origin determinethe percentage of cars or car parts (such as engines or transmissions) thathave to originate in a treaty-region to receive preferential tariff treat-ment.1 The North American Free Trade Agreement (NAFTA) betweenthe United States, Canada, and Mexico2 also has automotive rules of ori-gin that have allowed car and car parts markets to flourish in the NAFTAregion.3 With that in mind, the United States, Canada, and Mexico (asparties to the TPP) had a keen interest during TPP negotiations to ensurethat the TPP automotive rules of origin—which, if ratified by Congress,will supersede NAFTA’s automotive rules of origin4—remain favorableto NAFTA countries.

* J.D. Candidate, SMU Dedman School of Law, 2016; B.A. in Global Studies, St.Edward’s University, 2010. The author would like to thank her little brother,Evan, for his endless support.

1. NAFTA Countries, Japan to Return to Auto Talks, BLOOMBERG BNA INT’LTRADE DAILY (Sept. 18, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=75998889&vname=itdbulallissues&wsn=499854000&searchid=26251054&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

2. See generally North American Free Trade Agreement art. 403, U.S.-Can.-Mex.,Dec. 17, 1992, 32 I.L.M. 289 (1993).

3. See Carter Dougherty, Mexico Throws a Wrench into Trade Talks, BLOOMBERG

BNA INT’L TRADE REPORTER (Sept. 3, 2015), http://news.bna.com/itln/ITLNWB/split_display.adp?fedfid=75398829&vname=itrnotallissues&wsn=486494000&searchid=26251062&doctypeid=1&type=date&mode=doc&split=0&scm=ITLNWB&pg=0.

4. See Trans-Pacific Partnership, art. 1.2, Nov. 5, 2015, available at https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text(“Recognizing the Parties’ intention for this Agreement to coexist with their ex-isting international agreements,” and that “[i]f a Party believes the provision ofthis Agreement is inconsistent with a provision of another agreement . . . the Par-ties to the other agreement shall consult with a view to reach a mutually satisfac-tory solution.”); see also Julien Chaisse, The Shifting Tectonics of InternationalInvestment Law – Structure and Dynamics of Rules and Arbitration on ForeignInvestment in the Asia-Pacific Region, 47 GEO. WASH. INT’L L. REV. 563, 618(2015).

451


I. NAFTA’S AUTOMOTIVE RULES OF ORIGIN

NAFTA’s automotive rules of origin require 62.5 percent of a car andcertain car parts5 (including engines) to “originate” from the NAFTA re-gion.6 The 62.5 percent regional value-content requirement (RVC) takesinto account the net cost of the car or car part and value of materials usedin production of the car or car part that did not originate in the NAFTAregion.7 For instance, if a car seat manufacturer uses a motor produced ina non-NAFTA country to make a car seat and then sells that seat to a carmanufacturer in a NAFTA country, the car manufacturer in the NAFTAregion must include the value of the non-originating motor when calculat-ing the car’s RVC.8 NAFTA employs tracing to calculate the RVC forcars; certain materials are included on a tracing list and if a car part is onthe list, then it must be treated as a non-originating part.9

Canada and Mexico’s auto markets have flourished under NAFTA’srules of origin.10 Duty-free access to the U.S. market and access to cheapdomestic labor led to expanded auto production in Mexico.11 NAFTA’sautomotive rules of origin “shifted a significant portion of low-value-ad-ded manufacturing to Mexico, while allowing Canada to retain significantlevels of high-value-added production . . . .”12 Today, Canada and Mex-ico are the first and second largest exporters of vehicles to the UnitedStates.13 So both countries had a keen interest in any TPP provision thatmight affect the NAFTA rules of origin.

II. TPP AUTOMOTIVE RULES OF ORIGIN

Mexico and Canada’s disagreements over automotive rules of originstalled the more general negotiations taking place between all TPP coun-tries at a meeting in Maui, Hawaii in July 2015 (the Maui meeting).14

5. This percentage refers to cars that transport fifteen people or less. There are sepa-rate provisions for larger cars (that carry sixteen or more people) and the car partsfor larger cars. This article focuses on the rules of origin for smaller cars. SeeNorth American Free Trade Agreement, supra note 2, art. 403, § 1, at 351.

6. Id. art. 403, § 5(a), at 351.7. Id. art. 402, §§ 3, 5, at 349–50.8. Lawrence M. Friedman, NAFTA Rules of Origin, BARNES/RICHARDSON GLOBAL

TRADE LAW (Jan. 1, 2003), http://www.barnesrichardson.com/?t=40&an=7124&format=xml&p=3734.

9. North American Free Trade Agreement, supra note 2, art. 403, § 1, at 351.10. Peter Menyasz, Little Room for Canada to Negotiate on Autos, BLOOMBERG BNA

INT’L TRADE DAILY (Aug. 21, 2015), http://news.bna.com/itln/ITLNWB/split_display.adp?fedfid=74857761&vname=itrnotallissues&wsn=486537500&searchid=26251083&doctypeid=1&type=date&mode=doc&split=0&scm=ITLNWB&pg=0.

11. Dougherty, supra note 3. One study showed that Mexican automotive workers’wages ranged from one-eighth to one-fifth of U.S. auto workers’ wages. LenBracken & Emily Pickrell, U.S., Mexico, Canada in Talks on Autos, BLOOMBERG

BNA INT’L TRADE REPORT (Aug. 20, 2015), http://news.bna.com/itln/ITLNWB/split_display.adp?fedfid=74857759&vname=itrnotallissues&wsn=486513500&searchid=26251075&doctypeid=1&type=date&mode=doc&split=0&scm=ITLNWB&pg=0.

12. Menyasz, supra note 10.13. Dougherty, supra note 3.14. Id.

2015] AUTOMOTIVE RULES OF ORIGIN 453

Prior to TPP negotiations, the United States and Japan had entered intobilateral negotiations regarding automotive rules of origin.15 Matt Blunt,head of the American Automotive Policy Council, noted that automobileprovisions in the TPP are extremely important due to the magnitude ofauto trade between the United States and Japan.16 According to onesource, at the end of 2014, Japanese manufacturers made 3.82 million carsin the United States and about seventy-four percent of Japanese-brandedvehicles that were sold in the United States were built in Canada, theUnited States, or Mexico.17

At the Maui meeting, the United States revealed the results of its bilat-eral-negotiations with Japan to the other TPP parties for the first time.One source reported that the United States and Japan suggested the RVCshould be forty-five percent for finished cars and thirty percent for carparts.18 The United States was purportedly supposed to share these num-bers with Canada and Mexico before the Maui meeting but did not, andthus Canada and Mexico felt blindsided by the lack of transparency.19

According to another source, when the TPP automotive rule of originwas suggested to be well below NAFTA’s 62.5 percent rule of origin,“Mexico and Canada resented not being consulted in advance and felt asthough the U.S. was dictating the terms to them . . . .”20 A director froman Ottawa-based public and government relations consulting firm saidthat the “demands by the [United States] and Japan on auto contentcaught everyone by surprise . . . .”21

Many argued that NAFTA’s 62.5 percent mark should have been thestarting point of TPP negotiations.22 Those concerned expressed worryabout Japan’s ability to substitute auto parts made in Texas or Mexico forparts made in Thailand and other non-TPP countries.23 Moreover, the

15. Len Bracken, Canada, Mexico, Japan in TPP Auto Talks, BLOOMBERG BNA INT’LTRADE DAILY (Aug. 5, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=73747108&vname=itdbulallissues&wsn=500384000&searchid=26251091&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

16. Mark Clothier & Carter Dougherty, U.S. Automakers Leery as Pacific Trade DealTalks Resume, BLOOMBERG BNA INT’L TRADE DAILY (Jul. 27, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=73342658&vname=itdbulallis-sues&wsn=500622000&searchid=26251095&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

17. Id.18. Rossella Brevetti, TPP Auto Talks Among Japan, NAFTA Countries End Without

Agreement, BLOOMBERG BNA INT’L TRADE DAILY (Sept. 14, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=75712178&vname=itdbulallis-sues&wsn=499884000&searchid=26251130&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

19. Bracken, supra note 15.20. Id.21. Menyasz, supra note 10.22. See Rossella Brevetti, Senators Urge USTR to Fight for TPP Auto Rules, BLOOM-

BERG BNA INT’L TRADE DAILY (Sept 11, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=75475050&vname=itdbulallissues&wsn=499898500&searchid=26251132&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

23. Dougherty, supra note 3.


President of the United Automobile Workers union warned in an emailthat “[a] low standard w[ould] lead to even more outsourcing to poorcountries and fewer jobs in the United States.”24

On August 20, 2015, steel industry associations in the United States,Canada, and Mexico wrote a joint letter to stop trade officials stressingthat the TPP should maintain strong rules of origin “‘to sustain the bene-fits currently accruing to NAFTA steel producers, their integrated supplychains[,] and the NAFTA economy.’”25 The industry associations furtherurged that the TPP “‘must not confer an advantage to producers whoseprimary supply chain is located outside the TPP region.’”26 On Septem-ber 8, 2015, associations representing auto parts makers in NAFTA coun-tries sent a letter to U.S. Trade Representative Michal Froman, Canada’sInternational Trade Minister Ed Fast, and Mexico’s Economy MinisterIldefonso Guajardo Villareal.27 The letter advocated a fifty percent RVCfor finished cars and car parts.28

Three U.S. Senators—Sherrod Brown (D-Ohio), Rob Portman (R-Ohio), and Debbie Stabenow (D-Mich.)—also urged U.S. Trade Repre-sentative Michael Froman to use NAFTA’s 62.5 percent rule as a startingpoint.29 In a letter to Froman, the three senators stated that“[u]ndermining the NAFTA rules of origin would displace the U.S. autosupply chain and result in the loss of jobs throughout the country.”30

Matthew McAlvanah, spokesman of the Office of the U.S. Trade Repre-sentative, said that the final agreement must strike “the right balance be-tween the needs of domestic auto producers, who have made clear thatthey rely on international supply chains to be able to produce in theUnited States, and our desire to promote U.S. sourcing and Americanjobs.”31

Meetings continued between the NAFTA countries and Japan through-out the months of August and September.32 By October 5, 2015, the dis-pute was resolved and all twelve TPP countries announced that they hadreached a final agreement.33 On October 7, 2015, reports surfaced thatthe minimum RVC under the TPP would be forty-five percent for fin-

24. Id.25. Alex Lawson, NAFTA Country Steel Groups Unite on TPP Auto Rules, LAW360

(Sep. 22, 2015, 3:53 PM), http://www.law360.com/articles/705660/nafta-country-steel-groups-unite-on-tpp-auto-rules.

26. Id.27. Rossella Brevetti, Auto Parts Makers in NAFTA Countries Call for Strong TPP

Content Rules, BLOOMBERG BNA INT’L TRADE DAILY (Sept. 9, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=75399259&vname=itdbulallis-sues&wsn=499913500&searchid=26251136&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

28. Id.29. Brevetti, supra note 22.30. Id.31. Dougherty, supra note 3.32. NAFTA Countries, Japan to Return to Auto Talks, supra note 1.33. Jackie Calmes, Trans-Pacific Partnership is Reached, but Faces Scrutiny in Con-

gress, N.Y. TIMES (Oct. 5, 2015) http://www.nytimes.com/2015/10/06/business/trans-pacific-partnership-trade-deal-is-reached.html?_r=0.


ished cars and forty percent for car parts.34

The final text of the TPP, released to the public on November 5,2015,35 appears to be relatively consistent with the reports. Under theTPP, vehicles made with some materials that do not come from a TPPcountry can still qualify as “originating”—and therefore get preferentialduty treatment—if the RVC is at least forty-five percent or fifty-five per-cent, depending on which method of RVC calculation is used.36 Certaincar parts used in the production of the vehicle, such as bumpers, may beconsidered originating if they meet an individual, part-specific rule of ori-gin or undergo certain manufacturing processes within the TPP region.37

Certain car parts also may be considered originating if they have betweenthirty-five and fifty-five percent RVC, depending on which rule of originapplies and the RVC method of calculation used.38 Finally, and unlikeNAFTA, the TPP does not utilize “tracing” to calculate RVC.39

III. CONCLUSION

Automotive rules of origin proved more controversial than expectedand stalled TPP negotiations for roughly two months.40 But ultimately,the parties were able to agree on a compromise.41 Industry leaders andtrade officials from the United States, Mexico, and Canada expressed ap-

34. Emily Pickrell, Mexican Groups OK with Regional Content Level, BLOOMBERG

BNA INT’L TRADE REPORTER (Oct. 7, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=76969752&vname=itdbulallissues&wsn=499738000&searchid=26251140&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

35. Jackie Calmes, Trans-Pacific Partnership Text Released, Waiving Green Flag forDebate, N.Y. TIMES (Nov. 5, 2015). The TPP automotive rules of origin are highlytechnical and will likely be subject to extensive analysis through the ratificationprocess. Id.; see also Trans-Pacific Partnership, supra note 4. The author has sum-marized only those provisions that are pertinent to the conflict between theNAFTA and the TPP reported in this article.

36. Trans-Pacific Partnership, supra note 4, Annex 3-D, ch. 87; Reid Whitten, TheTrans Pacific Partnership and the Auto Industry: Will Six Thousand Pages Pave theWay for Increased Exports?, SHEPPARD MULLIN GLOBAL TRADE LAW BLOG (Nov.12, 2015), http://www.globaltradelawblog.com/2015/11/12/the-trans-pacific-partner-ship-and-the-auto-industry-will-six-thousand-pages-pave-the-way-for-increased-exports/.

37. Trans-Pacific Partnership, supra note 4, art. 3.6 & Annex 3-D, app. 1, § 1(a)–(b);What will the Trans-Pacific Partnership mean to the Automotive Industry?, PWC(Dec. 7, 2015), http://www.pwc.com/us/en/tax-services/publications/insights/assets/pwc-trans-pacific-partnership-and-the-automotive-industry.pdf.

38. Trans-Pacific Partnership, supra note 4, art. 3.5 & Annex 3-D, ch. 87; What will theTrans-Pacific Partnership mean to the Automotive Industry?, supra note 37.

39. What will the Trans-Pacific Partnership mean to the Automotive Industry?, supranote 37.

40. Adam Behsudi, Auto rules complicate TPP endgame — USTR considers environ-mental dispute with Peru — Vietnamese official: Trade talks to resume to nextmonth, POLITICO (August 19, 2015, 10:00 AM), http://www.politico.com/tipsheets/morning-trade/2015/08/auto-rules-complicate-tpp-endgame-ustr-considers-environmental-dispute-with-peru-vietnamese-official-trade-talks-to-resume-to-next-month-019669.

41. Pickrell, supra note 34.


proval of the new rules.42 The president of the Mexican Automotive In-dustry Association, Eduardo Solis, said in a press conference that thefinal agreement was “fairly positive” and that it would “open up privi-leged areas of competition for Mexico.”43 A Canadian trade official alsostated that Canada was “pleased with the outcome” of the rules of originnegotiations.44 According to the Office of the United States Trade Rep-resentative, the TPP’s rules of origin “ensure that TPP benefits will go tothe United States and the TPP region and expand the auto industry’spotential export opportunities. These rules of origin are more accurate,more easily verifiable, and more enforceable than those ofNAFTA . . . .”45

But there also remains much controversy and disapproval of the auto-motive rules of origin. On December 3, 2015, the United Auto Workers’executive board unanimously voted to oppose the TPP.46 The Boardclaims that the TPP puts overseas profits before working families in theUnited States, and that the rules of origin standard “is unacceptable asover half of the value of a car or truck could be built by countries that arenot in the agreement and still receive benefits.”47 Further, there is strongopposition to the agreement in Canada.48 Yet the president of the Cana-dian Automotive Parts Manufacturers Association recently stated in aninterview that he thinks Canada must accept the TPP, and that the Asso-ciation “‘put a lot of pressure while the negotiations were on, and thatwas the time to do it. But now it’s closed.”49

42. William Mauldin, U.S. Reaches Trans-Pacific Partnership Trade Deal With 11 Pa-cific Nations, WALL ST. J. (Oct. 5, 2015, 5:12 PM), http://www.wsj.com/articles/u-s-reaches-trade-deal-with-11-pacific-nations-1444046867.

43. Pickrell, supra note 34.44. Rossella Brevetti, TPP Contains U.S.-Japan Auto Trade Provisions, BLOOMBERG

BNA INT’L TRADE DAILY (Oct. 5, 2015), http://news.bna.com/tdln/TDLNWB/split_display.adp?fedfid=76798608&vname=itdbulallissues&wsn=499760500&searchid=26251143&doctypeid=1&type=date&mode=doc&split=0&scm=TDLNWB&pg=0.

45. The Trans-Pacific Partnership, OFFICE OF THE UNITED STATES TRADE REPRESEN-

TATIVE, https://ustr.gov/sites/default/files/TPP-Getting-the-Best-Deal-for-the-US-Auto-Industry-Fact-Sheet.pdf (last visited November 8, 2015).

46. United Auto Workers Leadership Statement of Opposition to the TPP—Statementfrom UAW President Williams, UNITED AUTO WORKERS (Dec. 3, 2015), http://uaw.org/united-auto-workers-leadership-statement-of-opposition-to-the-tpp-state-ment-from-uaw-president-williams/.

47. Id.48. See, e.g., Peter Menyasz, Canada Not Close to Decision on TPP Approval, BLOOM-

BERG LAW (Dec.16, 2015), https://www.bloomberglaw.com/search/results/df85f03c9e3af514e81884d31b7c20ab/document/XCRQGM6S000000?search32=C9P6UQR5E9FN6PB1E9HMGNRKCLP6QFBKE1O20OBLEHNJMEREDTFMIRBGBTO6GSJ1EDIN6F9H7CTMCQBOBTH6URRCBTONAPBIF4UJ2. A key contribu-tor to Canadian discord with the TPP is Canada’s newly liberalized political cli-mate; Canada entered into the TPP under its conservative former prime minister,Steven Harper. Id.

49. Allison Lampert & Leah Schnurr, Canada auto parts makers back TPP, urge fur-ther gov’t support, REUTERS (Dec. 1, 2015, 5:02 PM), http://www.reuters.com/arti-cle/trade-tpp-canada-autos-idUSL1N13Q23B20151201.


The TPP parties’ governments must still ratify the TPP for it to takeeffect. If one of the NAFTA countries—Canada, for instance—choosesnot to ratify the TPP, then Canadian-made vehicles would get duty-freeaccess to the U.S. market only if they met NAFTA’s 62.5 percent RVCrequirement.50 By contrast, if Mexico does ratify the agreement, Mexi-can-made vehicles would need to meet just a forty-five percent thresholdunder the TPP, and could source the remaining fifty-five percent fromlower-cost sources.51

As of December 26, 2015, no NAFTA party government had ratifiedthe TPP. Thus, it remains to be seen whether the automotive rules oforigin in the TPP will ultimately replace those in NAFTA.

50. Lawrence L. Herman, NAFTA is not TPP, FIN. POST (Oct. 8, 2015, 10:37 AM),http://business.financialpost.com/fp-comment/nafta-is-not-tpp.

51. Id.

COMPETING PARADIGMS OF IMMIGRANT

HUMAN RIGHTS IN AMERICA

Vienna Flores*

“GIVE me your tired, your poor, your huddled masses yearn-ing to breathe free, the wretched refuse of your teemingshore. Send these, the homeless, tempest-tossed to me, I

lift my lamp beside the golden door.”1 These are the words chiseled ontothe Statue of Liberty—the expression that has sculpted the free world;the promise carved into every crevice of American history. But the prideof a melting-pot society has worn away through fear and intolerance. Toprotect the homeland, the borders, and economic resources, naturalhuman rights have been ignored and a sub-class of people has been cre-ated to live in the shadows. While the United States scrambles to agreeon immigration reform, undocumented immigrants endure hostility andignorance in America.

This report analyzes the competing paradigms of immigrant humanrights in the United States in areas of economic well-being, education,healthcare, and discrimination. Part I addresses the history of immigra-tion law and current rules in the United States. Part II explains the argu-ments against immigration. Part III discusses the contrasting paradigmsof immigration law between the states, Trumpists, current administration,and United Nations. Part IV considers the human rights implications thatcome from different immigration law interpretations. Finally, the reportdeliberates on which paradigm would align with the protection of humanrights.

I. CURRENT IMMIGRATION LAWS

“The history of the United States is in part made of the stories, talents,and lasting contributions of those who crossed oceans and deserts tocome [to America].”2 The founding fathers granted the power of immi-gration regulation to Congress in the Constitution.3 The federal govern-

* Vienna Flores is in her final year at SMU Dedman School of Law. She currentlyserves as the President of the Student Bar Association and the Latin AmericaReporter for the International Law Review Association. She earned her Bachelorin Business Administration at Texas A&M University in College Station. Viennawould like to thank her friends, family, and professors for their continued support.

1. Emma Lazarus, The New Colossus, POETRY FOUND., http://www.poetryfoundation.org/poem/175887 (last visited Feb. 2, 2016).

2. Arizona v. U.S., 132 S. Ct. 2492, 2510 (2012).3. U.S. CONST. ART.1, § 8.

459


ment oversees this delicate issue because it overlaps with internationallaw concerns that require communication “with one national sovereign,not [fifty] separate [s]tates.”4 The Immigration and Nationality Act(INA) codifies immigration law in the United States, which is managedby the U.S. Citizenship and Immigration Services (USCIS) governmentagency.5 The INA allows for 675,000 permanent immigrants to lawfullymigrate to the United States from all around the world each year.6 Immi-gration law in America focuses on certain guiding principles: (1) familyunification; (2) admitting immigrants with valuable work skills; (3) diver-sifying the country; and (4) aiding refugees.7 Those principles are bal-anced with prioritizing national security, the safety of the homeland, andprotecting the borders.8 But “one of the most important and delicate ofall international relationships has to do with the protection of the justrights of a country’s own nationals when those nationals are in anothercountry” and thus the government must treat foreign citizens with dignityand respect.9

To understand the current status of immigration laws in America, it isimportant to look at the history of their development. In 1790, the firstU.S. naturalization law was passed for those “free white [aliens] “‘ofgood moral character’ who had lived in the [United States] for at leasttwo years.”10 Immigration limitations were not established until 1875 andwere mainly meant to deter prostitutes and criminals from entering thecountry.11 The federal government’s exclusive power over matters of im-migration was established the following year.12 In 1916, an Americanlawyer, Madison Grant, attempted to logically establish racial superiorityin The Passing of the Great Race, which ignited anti-immigration lobbyiststo create “nationality-based restrictions.”13 The next policy shift cameafter World War I and brought two large changes: (1) a quota limiting theimmigration numbers from each country to the total people of that na-

4. Arizona, 132 S. Ct. at 2498.5. Immigration and Nationality Act, USCIS, http://www.uscis.gov/laws/immigration-

and-nationality-act (last visited Sept. 28, 2015).6. How the US Immigration System Works: A Fact Sheet, AM. IMMIGR. COUNCIL,

http://www.immigrationpolicy.org/just-facts/how-united-states-immigration-sys-tem-works-fact-sheet (last visited Sept. 28, 2015). This count does not include ref-ugee admissions, which are determined by Congress and the president. Id.

7. Id.8. Jeh Johnson & Eric Holder, Fixing our Broken Immigration System Through Exec-

utive Action – Key Facts, DEP’T HOMELAND SEC. (Nov. 20, 2015), http://www.dhs.gov/immigration-action.

9. Arizona, 132 S. Ct. at 2498–99.10. D’vera Cohn, How U.S. Immigration Laws and Rules have Changed through His-

tory, PEW RESEARCH CTR. (Sept. 30, 2015), http://www.pewresearch.org/fact-tank/2015/09/30/how-u-s-immigration-laws-and-rules-have-changed-through-history/.

11. CONG. BUDGET OFFICE, Immigration Policy in the United States 1 (2006), availableat https://www.cbo.gov/sites/default/files/109th-congress-2005-2006/reports/02-28-immigration.pdf.

12. Id.13. Jake Scobey-Thal, Illegal Alien: A Short Story, FOREIGN POL’Y (Aug. 27, 2014),

http://foreignpolicy.com/2014/08/27/illegal-alien-a-short-history/.

2015] COMPETING PARADIGMS 461

tionality already in the United States;14 and (2) the establishment of theBorder Patrol.15

Nationality-based restrictions and quotas were largely irrational, andgrew from fears sown by pseudoscientists such as Madison Grant andgeneral anxiety that foreign workers would steal domestic jobs in a com-petitive labor market.16 And they were the norm until 1965 when theINA “created a new system favoring family reunification and skilled im-migrants, rather than country quotes.”17 But the INA was not perfect,and “also imposed the first” immigration limits on Latin Americans, who,up until that point, “had been allowed to enter the [United States] with-out many restriction.18 More limits and restrictions have followed since,each sharing a seemingly central tenet to U.S. immigration policy overthe years—conscious discrimination against certain classes of people.

As immigration law has developed, so too have its legal statuses.Among those are: (1) immigrant; (2) non-immigrant; and (3) “illegalalien.” Immigrant and permanent resident status applies to any person inthe United States who is not under a non-immigrant visa.19 It includesthose people who want to remain in America permanently and allows apathway to citizenship.20 Non-immigrant status applies to aliens thathave been given permission by USCIS to remain in the United States ona temporary basis.21 This is often the type of visa used by students, work-ers, and tourists.22 Finally, “illegal alien” status applies to people whohave entered the country either illegally or legally but have since “fallen‘out of status’ and [are] deportable.”23 Other immigration statuses, suchas refugee/asylee and deferred action, also exist.24

The federal government exercises “discretion in the enforcement of im-migration law [by embracing] immediate human concerns.”25 The hu-manitarian factors used to determine a person’s deportability include hisor her family status, likelihood of criminal behavior, ties to the commu-nity, military service, and having an American child.26 The governmentalso considers whether the person’s home country is engaged in a civil

14. Id.15. History of U.S. Immigration Laws, FED’N FOR AM. IMMIGR. REFORM, http://www

.fairus.org/facts/us_laws (last updated Jan. 2008).16. Scobey-Thal, supra note 13.17. Cohn, supra note 10.18. Id.19. Permanent Resident Alien, USCIS, http://www.uscis.gov/tools/glossary/permanent-

resident-alien (last visited Oct. 1, 2015).20. Immigration Terms and Definitions Involving Aliens, IRS, http://www.irs.gov/Indi-

viduals/International-Taxpayers/Immigration-Terms-and-Definitions-Involving-Aliens (last visited Sept. 28, 2015).

21. Id.22. Directory of Visa Categories, U.S. DEP’T OF STATE, http://travel.state.gov/content/

visas/en/general/all-visa-categories.html (last visited Nov. 1, 2015).23. Immigration Terms and Definitions Involving Aliens, supra note 20.24. See Refugees and Asylum, USCIS, https://www.uscis.gov/humanitarian/refugees-

asylum (last visited Feb. 3, 2016).25. Arizona, 132 S.Ct. at 2499.26. Id.


war that exposes him or her to a real risk of harm or where politicalpersecution is inevitable.27 But even with extensive immigration policies,the country remains divided on migrant control.

II. ARGUMENTS AGAINST IMMIGRATION

Immigration is a polemic issue in both the United States and world as awhole. The stigma surrounding undocumented immigrants stems fromtheir illegal entry into the country, which in turn makes them allegedly“criminal.”28 Media, unprecedented findings, and coarse rhetoric fuelthis notion.29 Interestingly enough, the Pew Research Center reported in2014 that only seventeen percent of Americans supported deportation ofall undocumented immigrants.30 Yet the historical bias against immi-grants prevails, and opponents still argue that undocumented immigra-tion imports criminals that burden society economically and socially.

Most people opposed to immigration believe that, from the time animmigrant steps onto U.S. soil without proper documentation, he or sheis a criminal.31 Some media outlets have gone as far as reporting thatundocumented persons account for over thirty percent of murders inmany states.32 The recent murder of a San Francisco woman by an un-documented immigrant brought that strain to a fever pitch.33 But a 2011report by the U.S. Government Accountability Office found just the op-posite of the manipulated reporting by the media—the majority of of-fenses committed by undocumented immigrants were related toimmigration, drugs, traffic violations, and obstructions of justice.34 Theseare non-violent offenses. And of the nearly three million arrests of un-documented immigrants, less than one percent were attributed tohomicide.35

The perception of immigrants continues to skew into an image of afreeloader—living on welfare, taking American jobs, and failing to paytaxes. This is just another impression painted by misguided media. Real-ity shows that the majority of immigrants come to America for employ-

27. Id.28. The State of Hate: Escalating Hate Violence Against Immigrants, THE LEADERSHIP

CONFERENCE, http://www.civilrights.org/publications/hatecrimes/escalating-vio-lence.html?referrer=https://www.google.com/ (last visited Nov. 1, 2015).

29. Id.30. Sara Kehaulani Goo, What Americans want to do about Illegal Immigration, PEW

RESEARCH CTR. (Aug. 24, 2015), http://www.pewresearch.org/fact-tank/2015/08/24/what-americans-want-to-do-about-illegal-immigration/.

31. Maria Santana, 5 Immigration Myths Debunked, CNN MONEY (Nov. 20, 2014, 7:12PM), http://money.cnn.com/2014/11/20/news/economy/immigration-myths/.

32. Tom Tancredo, Illegal Alien Crime Account for over 30% of Murders in ManyStates, BREITBART (Aug. 8, 2015), http://www.breitbart.com/big-journalism/2015/08/08/illegal-alien-crime-accounts-for-over-30-of-murders-in-some-states/.

33. Steve Almasy ET AL., Suspect in killing of San Francisco Woman had been deportedfive times, CNN (July 4, 2015, 12:21 PM), http://www.cnn.com/2015/07/03/us/san-francisco-killing-suspect-immigrant-deported/.

34. U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-11-187, CRIMINAL ALIEN STATISTICS

21 (2011), available at http://www.gao.gov/assets/320/316959.pdf.35. Id.


ment opportunities that will significantly alter their lives.36 And thatemployment that leads to undocumented immigrants paying taxes: In2010, undocumented immigrants “paid an estimated $10.6 billion to stateand local taxes.”37 Additionally, the majority of immigrants that enterthe country are not taking in-demand jobs but the “low-skilled jobs” thatmost Americans rebuff.38 The United States has effectively passed theblame of their problems to a group of people that cannot lawfully defendthemselves.

III. THE PARADIGMS OF IMMIGRATION LAW

There are an estimated 11.3 million undocumented immigrants in theUnited States as of 2014.39 About 5.6 million of those immigrants arefrom Mexico.40 These large numbers, and their combined threat tohomeland security, have ignited a never-ending kitchen table debate.The states, presidential candidates, current administration, and theUnited Nations all seem to be at ends on the issue and resolution seemselusive.

A. THE STATE’S PARADIGM

Whether it is a bipartisan war or a legitimate concern, immigration is aprominent issue that the states feel they must address. States do not be-lieve that the federal government does enough to prevent undocumentedimmigration.41 For that reason, many have made the fight their own bypassing state laws to deter unauthorized immigration.42 As of 2011, thirtystates had proposed laws that targeted immigration.43 One of the first ofthese laws was Section 21.031 of the Texas Education Code, which pro-vided that undocumented children should be denied enrollment into pub-lic schools unless they paid tuition.44 Texas passed the law to save money,deter undocumented immigration, and prevent immigrant children fromhindering education due to their limited understanding of English.45

36. From Anecdotes to Evidence: Setting the Record Straight on Immigrants and Crime,AM. IMMIGR. COUNCIL (July 25, 2013), http://www.immigrationpolicy.org/just-facts/anecdotes-evidence-setting-record-straight-immigrants-and-crime-0.

37. Santana, supra note 31 (explaining that IRS reports show 50% to 75% of all un-documented immigrants “file and pay income taxes each year”).

38. Id.39. Manuel Krogstad & Jeffrey S. Passel, 5 Facts about Illegal Immigration in the U.S.,

PEW RESEARCH CTR. (Nov. 19, 2015), http://www.pewresearch.org/fact-tank/2015/11/19/5-facts-about-illegal-immigration-in-the-u-s/.

40. Id.41. John Vettese, Illegal Immigration: Is it a State or Federal Issue?, ANNENBERG

CLASSROOM, http://www.annenbergclassroom.org/speakout/illegal-immigration-is-it-a-state-or-federal-issue (last visited Oct. 1, 2015).

42. Immigrant Policy Project, Nat’l Conference of State Leg. (Aug. 27, 2012), http://www.ncsl.org/research/immigration/omnibus-immigration-legislation.aspx.

43. Id.44. Plyler v. Doe, 457 U.S. 202, 205 (1982).45. Id. at 206–7.


Under an equal protection challenge, the U.S. Supreme Court foundTexas law was preempted by federal law, and that undocumented immi-grants were protected by the Fourteenth Amendment.46 The Court de-clared that education was not a fundamental right and that states couldnot pass that type of law because immigration issues were the sole re-sponsibility of the federal government.47 Notably, although the Courtfound that states did not have a right to deny undocumented immigrantchildren the right to free public education, it implied that Congress couldpass a law to that effect.48 The Court then reasoned that it would beunwise to discontinue education for undocumented immigrants and repri-manded Texas for attempting to “promot[e] the creation and perpetua-tion of a subclass of illiterates within [U.S.] boundaries.”49

In 2011, Alabama passed the Beason-Hammon Alabama Taxpayer andCitizen Protection Act.50 The Beason-Hammon Act, among other things,criminalized “failure to complete or carry an alien registration [card]” byan undocumented immigrant,51 allowed police officers with “reasonablesuspicion” to investigate the immigration status of a detained individ-ual,52 created state crimes penalizing people harboring, transporting, orencouraging immigration,53 asked school officials to determine the statusof children,54 and prohibited the enforcement of a contract with any un-documented immigrant that could not be completed within twenty-fourhours.55 Alabama passed the Beason-Hammon Act because of the “eco-nomic hardship and lawlessness” caused by illegal immigration,56 eventhough only 2.5 percent of Alabama was undocumented.57 But the Elev-enth Circuit preempted most of the Act in 2012, keeping just the provi-sion that allowed police to investigate a detained person’s immigrationstatus if an officer had “reasonable suspicion” to do so.58 The Court alsonoted that prohibition of contract enforcement would deprive humans of“basic necessities” and preservation of a “minimal existence” solely forAlabama’s purpose of disgorging itself of undocumented people.59

46. Id. at 209–10.47. Id. at 223, 225.48. Id. at 226–27.49. Id. at 230.50. Beason-Hammon Alabama Taxpayer and Citizen Protection Act, ALA. CODE

§ 31-13-1 (2011).51. Ala. Code § 31-13-10 (2011), invalidated by U.S. v. Alabama, 691 F.3d 1269 (11th

Cir. 2012).52. Ala. Code § 31-13-12 (2011).53. Id. § 31-13-13, invalidated by Alabama, 691 F.3d at 1280.54. Id. § 31-13-27, invalidated by Alabama, 691 F.3d at 1280.55. Id. § 31-13-26, invalidated by Alabama, 691 F.3d at 1280.56. Id. § 31-13-2.57. CAP Immigration Team, The 10 Numbers you need to know about Alabama’s

Anti-Immigrant Law, CENTER FOR AM. PROGRESS (Nov. 14, 2011), https://www.americanprogress.org/issues/immigration/news/2011/11/14/10588/the-10-numbers-you-need-to-know-about-alabamas-anti-immigrant-law/. Undocumented immi-grants paid $130 million in taxes to Alabama in 2010; it would cost Alabama morethan twenty times that amount to deport them. Id.

58. Alabama, 691 F.3d at 1280.59. Id. at 1293.


Alabama’ Beason-Hammon Act mimicked Arizona’s Support Our LawEnforcement and Neighborhoods Act, which contained many of the sameanti-immigrant regulations and empowered police officers to arrest peo-ple on the “basis of possible removability” from the country.60 Arizonalevied a similar argument in support of its statute: A large number ofcriminals and cartel members were illegally entering the country, puttingAmerican lives in danger, and casting an economic and social burden onthe state education and incarceration systems.61 And it is not just statesthat are inspired by Arizona’s anti-immigrant sentiment. In 2013, theCity of Farmers Branch, Texas tried to prevent undocumented immi-grants from renting homes or apartments by authorizing building inspec-tors to look into each person’s immigration status.62 The Fifth Circuit, inturn, held that federal law preempted the ordinance.63 This was no sur-prise because the ordinance’s “sole purpose [was] not to regulate housingbut to exclude undocumented aliens, specifically Latinos, from the City ofFarmers Branch,” which was “an impermissible regulation of immigra-tion.”64 Yet states continue to try to undermine federal immigration pol-icy, especially now with the lingering paranoia of terrorism consuming themasses. As of today, thirty-one states have declared their opposition toSyrian refugees because of an impending threat of terrorism and interestin keeping the homeland safe.65 So continues the schism between stateand federal government.

B. THE TRUMPISM PARADIGM

In the midst of this turmoil, an American presidential election looms.An election where a man whose staunch disregard for vexatious politicalcorrectness—or factual correctness for that matter—has changed the per-ception of immigrants in America. Donald Trump launched his campaignwith distorted and unfounded allegations of Mexican immigrants ascriminals, drug dealers, and rapists.66 Trump seeks to “make America

60. Ariz. Rev. Stat. Ann. § 13-3883 (2010), invalidated by Arizona v. United States,132 S.Ct. 2492, 2493 (2012).

61. See Brief for Petitioners at 2–9, Arizona, 132 S.Ct. 2492 (2012) (No. 11-182).62. Villas at Parkside Partners v. City of Farmers Branch, Tex., 726 F.3d 524, 526 (5th

Cir. 2013).63. Id. at 538–29.64. Omar Jadwat, Appeals Court Rules Anti-Immigrant in Famers Branch, Texas, is

Unconstitutional, ACLU (Mar. 22, 2012, 3:36 PM), https://www.aclu.org/blog/ap-peals-court-rules-anti-immigrant-housing-law-farmers-branch-texas-unconstitu-tional; see also Marisa Bono, Don’t You Be My Neighbor: Restrictive HousingOrdinances as the New Jim Crow, THE MODERN AM., Summer-Fall 2007, at 31,available at http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1070&context=tma (stating Famers Branch passed the ordinance because it was con-cerned with the increase in Latino—not undocumented—population from twentypercent to thirty-seven percent in the 1990s).

65. Ashley Fantz & Ben Brumfield, More than Half the Nation’s Governors say SyrianRefugees not Welcome, CNN (Nov. 19, 2015, 3:20 PM), http://www.cnn.com/2015/11/16/world/paris-attacks-syrian-refugees-backlash/.

66. Michelle Ye Hee Lee, Donald Trump’s False Comments Connecting Mexiccan Im-migrants and Crime, WASH. POST (July 8, 2015), https://www.washingtonpost.com/


great again” with an immigration policy that entails building a wall be-tween the United States and Mexico and deporting all undocumented im-migrants.67 He also wants to undermine the significance of theFourteenth Amendment of the Constitution by ending birthright citizen-ship; the very concept that changed the history of African Americans inthis country.68 And most recently, Trump urged a ban on Muslim travelinto the country and denounced any admittance of Syrian refugees.69

Trump’s immigration stance and reckless comments stem from his beliefthat immigrants take jobs from Americans, increase crime rates, burdenthe country socially, and drain the economy.70 While immigration controlis never a bad idea, Trump peddles in meritless ideas based on xenopho-bic fears.

With the extreme support that Trump received on his comments aboutimmigrants, the other Republican candidates have followed his lead.Most support his initiative to end birthright citizenship and promote“tougher enforcement against ‘anchor babies.’”71 Those candidates whoonce supported a path to citizenship quickly dismissed the idea, eventhose who have immigrant roots.72 The Senate’s “Gang of Eight” Immi-gration Bill, which was endorsed by Marco Rubio and supports a path tocitizenship for many undocumented immigrants through a provisionalvisa program and fine collection,73 has been deeply criticized by Trumpand other candidates as being too “weak on immigration.”74 Trumpistsand Republicans alike have incited a ruthless debate that rebukes anyonewith a more rational plan.

C. THE CURRENT ADMINISTRATION’S PARADIGM

Despite the never-ending spew of propaganda about immigration, thecurrent administration has adhered to more diplomatic methods thatabide by American immigration principles. The government believes infamily unification, deporting felons, and preventing continued undocu-

news/fact-checker/wp/2015/07/08/donald-trumps-false-comments-connecting-mexi-can-immigrants-and-crime/.

67. Immigration Reform that will make America Great Again, TRUMP, https://www.donaldjtrump.com/positions/immigration-reform (last visited Nov. 1, 2015).

68. Id.69. Igor Bobic, Donald Trump Calls for ‘Complete Shutdown’ of Muslims Entering

U.S., HUFFINGTON POST (Dec. 8, 2015, 4:39 PM), http://www.huffingtonpost.com/entry/donald-trump-muslim-immigration-us_5665f75de4b072e9d1c7252b.

70. Immigration Reform that will make America Great Again, supra note 67.71. Philip Elliott & Alex Altman, The Republican 2016 Field Takes a Hard Right on

Immigration, TIME (Aug. 20, 2015, 4:42 PM), http://time.com/4005245/republican-president-immigration/.

72. Id.73. Border Security, Economic Opportunity, and Immigration Modernization Act, S.

744, 113th Cong. (as passed by Senate, June 27, 2013); see also Byron York, Theimmigration system Marco Rubio wanted, WASHINGTON EXAMINER (Nov. 12,2015, 5:51 PM), http://www.washingtonexaminer.com/the-immigration-system-marco-rubio-wanted/article/2576240.

74. Pam Key, Trump: Rubio a ‘Clown’, BREITBART (Sept. 25, 2015), http://www.breitbart.com/video/2015/09/25/trump-rubio-a-clown/.


mented immigration.75 In November 2014, President Obama announcedthe expansion of Deferred Action for Childhood Arrivals (DACA) to in-clude the Deferred Action for Parents of Americans and Lawful Perma-nent Residents (DAPA).76 DACA provides that children who immigrateto the United States will be awarded deferred action status if they metcertain criteria; put another way, kids that come to the United States willneither be deported nor have lawful status.77 DAPA would have allowedparents of children who were either U.S. citizens or lawful permanentresidents to remain in the country without fear of deportation, and pro-vided eligibility for a work permit during the temporary period.78 Butthose protections have yet to materialize because a district court in theSouthern District of Texas awarded Texas and twenty-five other states aninjunction against DAPAs’ implementation on February 16, 2015.79 TheFifth Circuit Court of Appeals affirmed the order; it is currently awaitingreview by the Supreme Court.80 This backlash to a major step in immi-gration law came from partisan beliefs and the perceived need to protectstates “from economic and safety implications of illegal amnesty,” a con-cern DAPA did not implicate.81 These beliefs epitomize state action inattempting to find any way to keep immigrants out, even if it means in-fringing and discriminating against an insular minority.

Although it may appear that the current administration is more sympa-thetic towards the immigration issue, the Affordable Care Act (ACA)and other healthcare programs prove otherwise. The ACA prevents un-documented immigrants from purchasing low-cost health insurancethrough the marketplace that would provide preventative and primarycare.82 Under the Personal Responsibility and Work Opportunity Recon-ciliation Act (PRWORA) of 1996, undocumented immigrants do nothave the right to Medicaid to “remove the incentive of illegal immigra-

75. Immigration, THE WHITE HOUSE, https://www.whitehouse.gov/issues/immigration(last visited Nov. 1, 2015).

76. The Obama Administration’s DAPA and Expanded DACA Programs, NAT. IMMI-

GRATION LAW CTR. (Mar. 2, 2015), https://www.nilc.org/dapa&daca.html.77. DACA allows people under the age of thirty-one as of June 15, 2012 to apply if

they: (1) arrived in America before their sixteenth birthday; (2) physically residedin the United States on June 15, 2012; (3) had no lawful status; (4) attended schoolor attained a GED; (5) and have not been convicted of a felony. See DACA Fre-quently Asked Questions, USCIS (June 15, 2015), http://www.uscis.gov/humanita-rian/consideration-deferred-action-childhood-arrivals-process/frequently-asked-questions.

78. The Obama Administration’s DAPA and Expanded DACA Programs, supra note76.

79. Texas v. United States, 86 F.Supp.3d 591 (S.D. Tex. 2015).80. Texas v. United States, 809 F.3d 134 (5th Cir. 2015), cert. granted, No. 15-674, 2016

WL 207257 (U.S. Jan. 19, 2016).81. Elise Foley, Over Half the States Are Suing Obama for Immigration Actions, HUF-

FINGTON POST (Jan. 27, 2015, 12:59 PM), http://www.huffingtonpost.com/2015/01/26/states-lawsuit-immigration_n_6550840.html.

82. Immigrants and the Affordable Care Act, NAT’L IMMIGR. LAW CTR., http://www.nilc.org/immigrantshcr.html (last updated Jan. 2014).


tion provided by the availability of public benefits.”83 There is also afive-year delay on Medicaid, SNAP, and other federal subsidies for docu-mented immigrants that came to the United States after the enactment ofPRWOR.84 Fortunately, under the Emergency Medical Treatment andActive Labor Act (EMTALA), undocumented immigrants may receivemedical services without an upfront cost if there is an emergency medicalcondition that requires stabilization of a patient.85 Every aspect of immi-gration law requires a balance with human rights concerns, especiallyconsidering America’s prominence within the United Nations.

D. THE INTERNATIONAL/UNITED NATIONS PARADIGM

The United Nations and its Member States aligned to commit to uni-versal respect of inalienable human rights.86 The UN does not believethat migration policies should consider only “security and border con-trol,” instead, they must also recognize “obligations under internationallaw including international human rights law.”87 Human rights commit-tees have found the United States in clear violation of immigrants’ humanrights.88 Specifically, the Special Rapporteur reported in 2008 thatAmerica “lacks a clear, consistent, long-term strategy to improve respectfor the human rights of migrants.”89 This atmosphere of intolerance con-demns immigrants to become a vulnerable class subject to abuse. TheUN constantly raises concerns related to the education, discrimination,and health of immigrants in the United States.90 Notably, the Interna-tional Convention on the Elimination of all forms of Racial Discrimina-tion has been deemed to include protecting non-citizens as well.91 “Theexistence of human rights helps secure the peace, deter aggression, pro-mote the rule of law, combat crime and corruption, strengthen democra-

83. Personal Responsibility Work Opportunity Reconciliation Act, Pub. L. No. 104-193 § 400(6), 110 Stat. 2105, 2260 (1996) (codified at 8 U.S.C. § 1601 (1996)).

84. KARINA FORTUNY & AJAY CHAUDRY, URBAN INS., A COMPREHENSIVE REVIEW

OF IMMIGRANT ACCESS TO HEALTH AND HUMAN SERVICES 3–6 (June 2011), avail-able at http://www.urban.org/research/publication/comprehensive-review-immi-grant-access-health-and-human-services.

85. 42 U.S.C. § 1395dd (2006).86. Universal Declaration of Human Rights, G.A. Res. 217, U.N. Doc. A/810 (Dec. 16,

1948).87. Jonathan Lynn, UN Warns States on Illegal Immigrant Rights, REUTERS (Sept. 30,

2010, 8:07 AM), http://www.reuters.com/article/us-rights-migrants-idUSTRE68T2OT20100930.

88. See Special Rapporteur on the Human Rights of Migrants, Promotion and Protec-tion of all Human Rights, Civil, Political, Economic, Social, and Cultural Rights,Including the Right to Development, 2, U.N. Doc A/HRC/7/12/Add.2 (Mar. 5,2008).

89. Id.90. Human Rights Comm., Human Rights Committee Considers Report of the United

States, U.N. (Mar. 2014), http://www.ohchr.org/en/NewsEvents/Pages/DisplayNews.aspx?NewsID=14383&LangID=E.

91. Comm. on the Elimination of Racial Discrimination, General Recommendation 30:Discrimination Against Non-Citizens, U.N. Doc. CERD/C/64/Misc.11/rev.3 (Mar.12, 2004).


cies, and prevent humanitarian crisis.”92

III. THE IMPACT ON IMMIGRANT HUMAN RIGHTS

Unfortunately, the different ideals on combating undocumented immi-gration ignore principles of humanity and preserving the standardsAmerica has supported. The United States, as a member of the UnitedNations, has a duty to respect human rights and set an example for therest of the world.93 Even at the center of the world stage, the UnitedStates trails behind many democracies when it comes to ratifying interna-tional human rights treaties, which sends the message that the economicand social rights of humans are not of utmost importance in America.94

This theme is apparent in the conflicting paradigms of immigrant humanrights. The proposed and current ideals endorse concepts that infringe oneconomic well-being and the right to education and healthcare, and gen-erate a class of people prone to discrimination.

A. THE RIGHT TO ECONOMIC WELL-BEING

The main goal of human rights as a discipline is to secure economic andsocial well-being so as to attain fundamental needs.95 Economic and so-cial rights include the right to education, food, health, housing, social se-curity, and work.96 As part of Article Twenty-Three of the UniversalDeclaration of Human Rights, America has promised to maintain a coun-try where people have the right to work for equal pay without discrimina-tion.97 Although the Declaration is just an expression of fundamentalvalues and is not legally binding, it remains an important statement thatthe United States should stand by.98 Other treaties that specifically en-force the protection of these rights include the International Covenant onEconomic, Social and Cultural Rights (ICESCR) and the Convention onthe Rights of a Child, both of which United States has signed but notratified.99 The signature is a passive gesture that demonstrates support ofthe initiative and to uphold its value but fails to execute the power of itthrough ratification.100

92. Hope Lewis, Human Rights Implications of Arizona v. United States, SCOTUSBLOG (July 14, 2011, 12:48 PM), http://www.scotusblog.com/2011/07/human-rights-implications-of-arizona-v-united-states/.

93. The UN in Brief, U.N., http://www.un.org/Overview/uninbrief/about.shtml (lastvisited Nov. 1, 2015).

94. THOMAS BUERGENTHAL ET AL., INTERNATIONAL HUMAN RIGHTS IN A NUTSHELL

413 (4th ed. 1988).95. Economic and Social Rights, NESRI, https://www.nesri.org/human-rights/eco-

nomic-and-social-rights (last visited Nov. 1, 2015).96. Id.97. Universal Declaration of Human Rights, supra note 86.98. What is the Universal Declaration on Human Rights, AUSTL. HUMAN RIGHTS

COMM’N, https://www.humanrights.gov.au/publications/what-universal-declaration-human-rights (last visited Nov. 1, 2015).

99. See id.100. Signature, Ratification and Accession, UNICEF (May 19, 2014), http://www.unicef

.org/crc/index_30207.html.


But the United States has signed and ratified the Convention on theElimination of All forms of Racial Discrimination (CERD), “which pro-hibits discrimination in economic and social fields, but does not guaranteeeconomic and social rights.”101 This ratification holds America legally ac-countable for ensuring that the Convention is implemented and executedproperly.102 The Alabama initiatives clearly violated this treaty. Thelaws disregarding contracts with undocumented immigrants were a trans-gression on the right to economic and social rights that failed to acknowl-edge immediate human concerns. Alabama failed in its effort to preventundocumented immigrants from working and taking American jobs, andinstead cost non-immigrant farmers thousands of dollars.103 The inabilityto contract for housing, electricity, water, or school also hinders undocu-mented immigrants’ humanity. “The ability to contract is not merely anact of legislative grace; it is a capability that, in practical application, isessential for an individual to live and conduct daily affairs.”104

B. THE RIGHT TO EDUCATION

In complete contrast to the Supreme Court’s ruling in Plyler v. Doe,the United Nations considers education a fundamental right.105 So too,then, should the United States. Education sophisticates citizens by devel-oping “human personality” and promoting “understanding, tolerance andfriendship among all nations, racial or religious groups” to empower auniversal respect for human rights.106 Again, the United States hassigned agreements that further protect education but has failed to ratifythem.107 In particular, the ICESCR promotes free primary and secon-dary education, and suggests that higher education be accessible to allpeople as well.108 As a member of CERD, America has a legal obligationto enforce education for everyone regardless of race, color, national, orethnic origin.109

But once again, United States commitments under CERD have notbeen satisfied. Although the holding in Plyer was correct, the reasoningwas not. The Texas law that forbade undocumented children from at-tending school was contrary to U.S. federal law, but the Court did notreason that it also would be contrary to human rights initiatives.110 TheCourt even left the door open to congressional action that could possibly

101. Economic and Social Rights, supra note 95.102. Signature, Ratification and Accession, supra note 100.103. CAP Immigration Team, supra note 57 (noting that one farmer lost $100,000 in

one month).104. Alabama, 691 F.3d at 1293.105. Universal Declaration of Human Rights, supra note 86.106. Id.107. What is the Human Right to Education, NESRI, https://www.nesri.org/programs/

what-is-the-human-right-to-education (last visited Nov. 1, 2015).108. International Covenant on Economic, Social, and Cultural Rights arts. 11–12, Dec.

16, 1966, 993 U.N.T.S. 3.109. International Convention on the Elimination of all Forms of Racial Discrimination

art. 5, Dec. 21, 1965, 660 U.N.T.S. 195, ratified by the United States Nov. 20, 1994.110. Plyler, 102 S.Ct. at 2400–02 (1982).


discontinue education of undocumented children.111 This would leave in-nocent children who did not make the choice to come to this countryundocumented without any opportunity to become productive citizens.112

Additionally, Alabama law caused thousands of children to miss class infear of mandatory immigration status checks on students.113 AlthoughCERD allows a state party to differentiate between citizens and thosethat are undocumented, the United States has been criticized for violatingCERD through its treatment of immigrants.114 Simply put, “U.S. policiespreventing immigrant children from attaining higher education bypreventing them from working or receiving in-state tuition and/or bycausing them to be afraid of deportation violate CERD obligations.”115

Not only do American states demean undocumented immigrants, butthese sorts of initiatives also prevent them from ever having the chance toprosper.

C. RIGHT TO HEALTH AND HEALTHCARE

The right to health and healthcare is a fundamental human right, andencompasses the right to housing, aliment, and the environment.116

“Health care has been characteri[z]ed as a basic necessity and as such isrecogni[z]ed in international human rights law as a social right inherent inhuman dignity.”117 This right “means that everyone has the right to thehighest attainable standard of physical and mental health, which includesaccess to all medical services, sanitation, adequate food, decent housing,healthy working conditions, and a clean environment.”118 The UniversalDeclaration of Human Rights encourages health in all aspects of life.119

The ICESCR establishes that health is of utmost importance to increaseinfant survival, improve conditions within the workplace, and secure theability to receive needed medical attention.120

But once again, CERD is the only convention that could hold theUnited States accountable by enforcing measures that prevent discrimi-

111. Id. at 2398.112. Id. at 2401.113. The first day of class following the Beason-Hammon Act’s passage, some 2,285

Hispanic students were absent from school. CAP Immigration Team, supra note57.

114. HALLELAND LEWIS NILAN ET. AL, RIGHTS OF IMMIGRANTS AND MIGRANTS TO

THE UNITED STATES: A CRITICAL LOOK AT THE U.S. AND ITS COMPLIANCE

UNDER THE CONVENTION 32 (2007), available at www2.ohchr.org/english/bodies/cerd/docs/ngos/usa/USHRN3.doc.

115. Id.116. What is the Human Right to Health and Healthcare?, NESRI, http://www.nesri.org/

programs/what-is-the-human-right-to-health-and-health-care (last visited Nov. 1,2015).

117. Sylvie da Lomba, Immigration Status and Basic Social Human Rights: A Compara-tive Study of Irregular Migrants’ Right to Health Care in France, the UK and Ca-nada, 28 Neth. Q. HUM. RTS. 6, 7 (2010).

118. What is the Human Right to Health and Healthcare?, supra note 116.119. Universal Declaration of Human Rights, supra note 86.120. International Covenant on Economic, Social, and Cultural Rights, supra note 108,

art. 12.


nation in matters of health and housing.121 Criticism of the United Statesfailure to enforce and further the interests of CERD has been constant,especially after the passage of the ACA.122 The ACA’s prevention ofundocumented immigrants purchasing affordable healthcare for them-selves and their children fails to meet the standards of CERD.123 Most ofthese immigrants work in physically intensive jobs that may require fre-quent visits to the doctor’s office.124 Yet the general belief evolvingaround America characterizes undocumented people as “illegally pre-sent,” meaning that they have no right to be in the country and in effectno benefits.125 Trump’s assault on birthright citizenship pushes undocu-mented immigrants’ already limited access to healthcare further towardsthe brink. Undocumented expecting mothers can currently access socialprograms such as the Children’s Health Insurance Program (CHIP) toattain pre-natal care.126 These programs aim to protect the life of a soon-to-be American child; they may also be put at risk due to Trump’s efforts.To prevent them is to contravene the thrust of human rights treaties be-cause it undermines a woman’s ability to receive healthcare for her child.

When states attempt to limit undocumented immigration by passing or-dinances like the one in Farmers Branch, they violate undocumented im-migrants’ right to housing, which in turn impedes their health. “It is thegovernment’s obligation to guarantee that everyone can exercise the rightto live in security, peace, and dignity.”127 But that burden becomes diffi-cult to shoulder when a state’s elected method of preventing undocu-mented immigration perverts human rights and interferes with theessential need for shelter. All the more because of the complicated immi-gration system in which even those people who are not subject to depor-tation under DACA, DAPA, or other programs might be turned awayfrom renting a home because they do not technically have lawful sta-tus.128 The reality of the matter is that the United States has created a

121. International Convention on the Elimination of all Forms of Racial Discrimina-tion, supra note 109, art. 5.

122. Marjorie Cohn, US Slammed for Failure to Fulfill Legal Obligations to Eliminateall Forms of Racial Discrimination, HUFFINGTON POST (Sept. 9, 2014, 10:14 AM),http://www.huffingtonpost.com/marjorie-cohn/us-slammed-for-failure-to_b_5777674.html.

123. Id.124. John B. Judis, Documented Flaws, NEW REPUBLIC (May 29, 2013), https://

newrepublic.com/article/113295/immigration-bill-denies-obamacare-undocumented-workers.

125. See James Dwyer, Illegal Immigrants, Health Care, and Social Responsibility, in 5HASTINGS CTR. REPORT 34, 34 (Feb 2007), available at http://www.upstate.edu/bioethics/pdf/faculty/dwyerj-Hastings-Center-Report-2004-34-1.pdf.

126. Rachel Fabi, Undocumented Immigrants in the United States: Access to PrenatalCare, UNDOCUMENTED PATIENTS, http://www.undocumentedpatients.org/issuebrief/undocumented-immigrants-in-the-united-states-access-to-prenatal-care/ (lastupdated Sept. 29, 2014).

127. What is the Human Right to Housing, NESRI, https://www.nesri.org/programs/what-is-the-human-right-to-housing (last visited Nov. 1, 2015).

128. Anti-Immigrant Ordinances: Farmers Branch, Texas, ACLU (2015), https://www.aclu.org/print/node/26520.


subclass of humans who are neither deportable nor illegal but suffer eve-ryday in a country where their basic human rights lay unprotected.

D. DISCRIMINATION THAT HINDERS HUMAN RIGHTS

Finally, almost every single paradigm violates the basic principles ofCERD. The quintessential premise of CERD is the prevention of “racialdiscrimination” in “any distinction, exclusion, restriction or preferencebased on race, [color], descent, or national or ethnic origin” that unequiv-ocally hampers fundamental protections of human rights.129 At the Con-vention’s inception, CERD established that a state party’s regulation ofcitizens and non-citizens would not be affected as long as there was nodiscrimination in terms of nationality.130 But in later recommendations,the Committee emphasized that CERD should apply with equal force to“non-citizens regardless of their immigration status.”131 But even ifCERD did not apply to undocumented immigrants, the approaches thatAmericans have taken towards migrants have exploited people of similarnationalities through racial profiling. Racial profiling clearly violates theConvention’s initiative to “combat racist doctrines and practices in orderto promote understanding between races and to build an internationalcommunity free from all forms of . . . racial discrimination.”132

Arizona’s attempt to deter undocumented immigration was heavilyscrutinized by the U.N. CERD Committee, especially after finding thatpeople of Hispanic descent were 2.5 times more likely to be searchedwhen stopped than white drivers.133 Arizona S. B. 1070 targeted those ofperceived Latino origin and unnecessarily harassed them.134 But it is nota criminal offense to remain in the country as an undocumented immi-grant.135 So allowing a police officer to detain someone based on “proba-ble cause” that they are removable violates a core tenet of immigrationlaw: Each person may attend a removal hearing to determine whetherthere is a sufficient reason for him or her to stay.136 As previously stated,U.S. immigration policies must take international relations into accountto avoid adverse consequences. That said, even Mexico filed an amicuscuriae brief to the Supreme Court stressing that Arizona’s regulationswould violate the “civil and human rights of Mexican nationals” travelingto the state or those of Hispanic descent residing in the state, and would

129. Buergenthal et al., supra note 94, at 85.130. International Convention on the Elimination of all Forms of Racial Discrimina-

tion, supra note 109, art. 1.131. Comm. on the Elimination of Racial Discrimination, supra note 91.132. International Convention on the Elimination of all Forms of Racial Discrimina-

tion, supra note 109, art. 1.133. Chandra Bhatnagar, Arizona violating Treaty Ratified by U.S., CNN (May 21,

2010, 10:51 AM), http://www.cnn.com/2010/OPINION/05/19/bhatnagar.arizona.vi-olation/.

134. Lewis, supra note 92.135. Arizona, 132 S. Ct. at 2505.136. Id.


alter international relations between the two countries.137 Alabama’ssimilar laws brandished blatant discrimination with the arrest of two menwithout licenses that led to suspicion of faulty immigration status, only tobe humiliated shortly after when it was revealed that both were directorsfor Mercedes-Benz and Honda Motor Company and legally allowed to bein the country.138

The effort to prevent undocumented immigration will have dire conse-quences with foreign relations if this treatment continues. Provocativerhetoric and inflated statistics concerning undocumented immigrantshave only reinforced human rights concerns. Every reference as “illegal”or “criminals” dehumanizes and replaces feelings of sympathy withprejudice, discrimination, and xenophobia. The United Nations GeneralAssembly, European Commission, and other human rights groups haveheavily discouraged the use of “illegal” because it “is most certainly de-humanizing.”139 But the effect of hate speech extends beyond dehumani-zation. Take, for instance, the palpable effects of Trump’s absurdcomments. In Boston, two men beat a homeless Hispanic man with apipe and urinated on him while spewing anti-immigrant hyperbole.140

When arrested, the men said that “‘Trump was right’” about deportingillegals.141 But there was just one problem: He wasn’t undocumented.142

It is apparent that the negative connotations that arise from theseterms have incorrectly “shaped public opinion on immigration policy.”143

The term “illegal immigrant” has roots in the Holocaust as a racial slurused to demean Jewish refugees.144 Yet it is an expression that persists inAmerica and the rest of the world. The words do not imply that a per-son’s actions are criminal, but that his or her very existence is unlawful.145

“Illegal Alien” preserves the support for laws that violate natural humanrights because there is no compassion or enlightenment about why thesepeople have risked their lives to come to a country that criminalizes theirvery existence. The bottom line is that human beings deserve to havetheir rights respected because there are no national boundaries in naturallaw.

137. Brief for United Mexican States as Amici Curiae Supporting Respondents at 2,Arizona v. U.S., 132 U.S. 2492 (2012) (No. 11-182), 2012 WL 1098267, at *6.

138. Ed Pilkington, Alabama Red-Faced as Second Foreign Car Boss Held Under Immi-gration Law, THE GUARDIAN (Dec. 2, 2011, 1:31 PM), http://www.theguardian.com/world/2011/dec/02/alabama-car-boss-immigration-law.

139. Bill Frelick, Dispatches: Why We Should Outlaw “Illegal,” HUMAN RIGHTS WATCH

(June 24, 2014), https://www.hrw.org/news/2014/06/24/dispatches-why-we-should-outlaw-illegal.

140. Lorenzo Ferrigno, Donald Trump: Boston Beating is ‘Terrible’, CNN (Aug. 21,2015, 6:05 PM), http://edition.cnn.com/2015/08/20/politics/donald-trump-immigra-tion-boston-beating/.

141. Id.142. Id.143. Shahid Haque-Hausrath, Elie Wiesel: “No Human Being is Illegal”, BORDER

CROSSING LAW (Feb. 27, 2009), http://nohumanbeingisillegal.com/Home.html.144. Charles Garcia, Why ‘Illegal Immigrant’ is a slur, CNN (July 6, 2012, 12:14 PM),

http://www.cnn.com/2012/07/05/opinion/garcia-illegal-immigrants/.145. Haque-Hausrath, supra note 143.


V. THE PARADIGM TO CHANGE THEM ALL

Contrary to popular belief, it is possible to protect American bordersand prevent further unauthorized immigration while also respecting thehuman rights of immigrants currently residing in the United States. Im-migration is one of the most complicated areas of law and requires con-sideration of international and foreign relations. As the world leader, theUnited States must responsibly and humanely approach the issue of fix-ing a broken immigration system. The DACA and DAPA plans are arealistic approach to undocumented immigration that favors family unifi-cation. Even though the methods only defer deportation, they are a stepin the direction of creating a path to citizenship. The Pew ResearchCenter reported in 2015 that seventy-two percent of Americans surveyedbelieved in formulating a plan to help undocumented immigrants stay inthe country legally.146 A path to citizenship makes sense because expect-ing undocumented immigrants to follow the current immigration systemis ludicrous with a scheme so incredibly backed up—a major reason peo-ple take the risk of being undocumented in the first place.147 Americashould learn from past paranoia-induced mistakes and recognize humanrights as a major factor in the treatment of immigrants.148 “Whateverburdens we think that irregular migrants can properly suffer as a result ofhaving entered the society by some unauthorized route, forfeiting one ormore of their human rights is not among them.”149

146. Kehaulani Goo, supra 30.147. Why Don’t They Just Get in Line?, AM. IMMIGR. COUNC. (Mar. 14, 2013), http://

www.immigrationpolicy.org/just-facts/why-don%E2%80%99t-they-just-get-line.148. During World War II, President Roosevelt ordered Japanese-Americans to leave

the West Coast and displaced them into internment camps because of fear andanxiety among American people. Japanese-American Relocation, in THE

READER’S COMPANION TO AMERICAN HISTORY (Eric Foner and John A. Garratyeds., Houghton Mifflin Harcourt Publishing 1991), available at http://www.history.com/topics/world-war-ii/japanese-american-relocation.

149. David Miller, Irregular Migrants: An Alternative Perspective, 22 ETHICS & INT’LAFFAIRS 193, 195 (2008), available at http://onlinelibrary.wiley.com/doi/10.1111/j.1747-7093.2008.00143.x/epdf.

CANADA-CUBA RELATIONS

Clifton Beech*

I. INTRODUCTION

CANADA and Cuba have a history lasting over three centuriesthat revolves around mutually beneficial financial interests. Thetiming of U.S. embargoes on Cuba and the Canadian Prime Min-

isters’ desires to foster their country’s relationship with Cuba led to astaggering boost in tourism and trade. But recent improvement in rela-tions between the United States and Cuba, along with the negative treat-ment of Cuba by Canada’s current Prime Minster, have unraveled muchof that good will and damaged relations between the two countries.

II. HISTORY OF CANADA-CUBA RELATIONS

Relations between Canada and Cuba can be traced back to the eight-eenth century, when Canada began to trade codfish and beer for Cubanrum and sugar.1 Cuba was the first country in the Caribbean region thatCanada chose for a diplomatic mission.2 Relations remained positive andcontinued to improve through the next two centuries. Two of Canada’slargest banks, Bank of Nova Scotia and Royal Bank of Canada, bothopened offices and greatly expanded in Cuba by 1906.3 Canadian farmerswould often migrate to Cuba to chase new crops, such as sugar.4 An offi-cial diplomatic relationship was established in 1945, just eight yearsbefore the start of the Cuban Revolution, when Prime Minister King ap-pointed Emile Vaillancourt as the Canadian Minister to Cuba.5 Cuba ap-pointed its own minister to Canada that same year.6 By 1950, bothcountries had upgraded their ministers to ambassadors.7

* J.D. Candidate, SMU Dedman School of Law, 2016.1. Canada-Cuba Relations, EMBASSY OF CANADA TO CUBA, http://www.canadain-

ternational.gc.ca/cuba/bilateral_relations_bilaterales/canada_cuba.aspx?lang=eng(last modified Sep. 24, 2015).

2. Id.3. See JOHN M. KIRK & PETER MCKENNA, CANADA-CUBA RELATIONS: THE OTHER

GOOD NEIGHBOR POLICY 15 (Univ. of Fla. Press, 1997); see also JASON ZORBAS,DIEFENBAKER AND LATIN AMERICA: THE PURSUIT OF CANADIAN AUTONOMY

117–18 (Cambridge Scholars Pub., 2011).4. MICHAEL SMALL & JEFFREY SENIOR, CUBA-CANADA ONE HUNDRED YEARS IN

VIEW 1903-2003, at 18 (Maria Luisa Munoz, Charles-Antonie Rouyer & ViolainePhilippe-Walker, trans., Sarah Haggard ed., 2003), available at http://dfait-aeci.canadiana.ca/view/ooe.b3657723/2?r=0&s=1.

5. Canada-Cuba Relations, supra note 1.6. SMALL & SENIOR, supra note 4, at 8.7. Id.

477


After the Cuban Revolution ended in 1959, Canada was one of theonly two countries in the western hemisphere to maintain diplomatic re-lations with Cuba.8 When Fidel Castro seized power over Cuba, theUnited States’ control over the hemisphere was challenged and the rela-tionship between the two countries ended.9 But Prime Minister Diefen-baker spurned the United States and instead set Canada’s own foreignpolicy in regard to Cuba.10 Canada was not a member of the Organiza-tion of American States and had no obligation to follow the United Statesin its embargo.11 Cuba desired to establish its own economic partnersand replace the goods and services originally imported from the UnitedStates.12 Canada was a powerful choice due to its proximity, technologi-cal similarity, and prior relations with Cuba.

But Canada’s foreign policy after the Cuban Revolution prohibited theshipment of arms, munitions, military equipment, and “materials of aclearly strategic nature” because of its stance on not exporting arms to“areas of tension.”13 Items found to have a strategic significance, such asairplane engines, were closely scrutinized; all other Canadian goods hadno trade limitations.14 Prime Minister Diefenbaker based his decision onthree main points: (1) Canada had not established embargoes on Soviettrade; (2) it would not be pressured into using embargoes elsewhere; and(3) it did not want to damage its international trade.15

In the 1970s, Canadian Prime Minister Pierre Elliot Trudeau—the firstNorth Atlantic Treaty Organization (NATO) leader from a Western na-tion to visit Cuba since 196016—began a lifelong friendship with FidelCastro.17 The relationships between Trudeau, Castro and their respectivecountries were so strong that Castro served as a pallbearer at Trudeau’sfuneral in 2000.18 In 1998, the two countries even celebrated the openingof a Canadian-Cuban joint-venture airport in Havana, Cuba.19

III. CURRENT RELATIONS

Cuba is now represented in Canada by an embassy in Ottawa and con-

8. Canada-Cuba Relations, supra note 1.9. SMALL & SENIOR, supra note 4, at 10.

10. SMALL & SENIOR, supra note 4, at 11.11. Id.12. Id.13. Letter from John Diefenbaker, Prime Minister, Can., to John F. Kennedy, Presi-

dent, United States (Dec. 23, 1960), available at http://www.usask.ca/diefenbaker/galleries/virtual_exhibit/cuban_missile_crisis/trade_with_cuba.php.

14. Id.15. Id.16. Castro Attends Trudeau’s Funeral, NEWS 24 (Oct. 3, 2000, 7:44 PM), http://www

.news24.com/xArchive/Archive/Castro-attends-Trudeaus-funeral-20001003.17. Interview by Paule Robitaille with Fidel Castro, CBC NEWS, http://members.shaw

.ca/saturang/cbc-castro.html (last visited Jan. 29, 2015).18. Thousands Bid Farewell to Trudeau, BBC NEWS (Oct. 3, 2000, 8:18 PM), http://

news.bbc.co.uk/2/hi/americas/954918.stm.19. SMALL & SENIOR, supra note 4, at 14.

2015] CANADA-CUBA RELATIONS 479

sulates in Montreal and Toronto.20 Canada has had its own embassy inHavana since 1945.21 As of 2007, Canada was Cuba’s second largest im-porter and fifth largest exporter and remained Cuba’s largest source oftourism, accounting for forty percent of all visitors to the island.22 Ca-nada is also one of Cuba’s largest sources of foreign investment and hasat least eighty-five companies operating in Cuba.23 The strong economicties between Canada and Cuba grew largely from a dearth of competitionin most sectors.24 But due to the warming relationship between Cubaand the United States, that is no longer the case.25 This is especially trueover the last decade.26 Take, for instance, Cuban food purchases. In2000, Cuba imported over $408 million in Canadian food exports.27 In2002, however, the United States began allowing Cuba to purchase food,and Canada’s exports to Cuba fell to $325 million.28 By 2009, that num-ber had fallen to $318 million; the United States, in contrast, exportedover $700 million that year.29 The proximity of the United States to Cubaand cheaper logistical costs have led Cuba to place their economic inter-est ahead of their long founded relationship with Canada.30 Currently,the most successful Canadian-Cuban joint ventures include hotels, travelcompanies, and mining companies.31

This swing towards to the United States was exacerbated by CanadianPrime Minister Stephen Harper, who did not share his predecessor’s posi-tive attitude towards Cuba. Harper made little attempt to improve ormaintain Canada’s relationship with Cuba and even rejected a proposalto invite Cuba to the summit of the Organization of American States inPanama.32 Harper’s antipathy towards Cuba stemmed from its revolu-tionary history and his skepticism towards closer relations with a commu-nist regime.33 Prime Minister Pierre Trudeau’s son, Justin Trudeau,

20. Canada-Cuba Relations, supra note 1.21. Id.22. Lana Wylie, Reassessing Canada’s Relationship with Cuba in an Era of Change, in

CANADIAN INTERNATIONAL COUNCIL, 11 FOREIGN POLICY FOR CANADA’S TO-

MORROW 9 (Oct. 2010), available at https://www.cigionline.org/sites/default/files/reassessing_canadas_relationship_with_cuba_in_an_era_of_change.pdf; Trade Re-lations Between Canada and Cuba, CUBA TOURISM, http://www.cubatourism.ca/cuba-faq/trade-relations-canada-cuba/ (last visited Jan. 30, 2016).

23. Radek Pilar, Canada’s Response to the Libertad Act, U.S. EMBASSY CABLE (Dec.5, 2006, 9:56 PM), http://cables.mrkva.eu/cable.php?id=88243.

24. Wylie, supra note 22, at 9.25. Id.26. Id. at 15.27. Id.28. Id.29. Id.30. Id.31. SMALL & SENIOR, supra note 4, at 22.32. Wojtek Gwiazda, A Complicated Relationship, Canada and Cuba, RCI (Apr. 13,

2015), http://www.rcinet.ca/en/2015/04/13/a-complicated-relationship-canada-and-cuba/.

33. Mark Kennedy, As U.S. Moves to Normalize Relations with Cuba, Harper’s Antip-athy to the Communist Nation Evident at Summit, NAT’L POST (Apr. 12, 2015, 8:21PM), http://news.nationalpost.com/news/canada/canadian-politics/as-u-s-moves-to-


replaced Harper as Prime Minister on November 4, 2015.34 Trudeau hasmade no statements as to the type of policy he desires towards Canada-Cuba relations at this time.

A. BILATERAL AGREEMENTS

Canada and Cuba are parties to at least nine bilateral agreements thatremain in force: (1) an agreement on the sharing of forfeited assets ortheir equivalent funds;35 (2) an extradition treaty;36 (3) an audio-visualagreement to expand the production of film and television;37 (4) anagreement relating to the hijacking of aircraft and other vessels;38 (5) anair transport agreement;39 (6) an agreement relating to the effect of theCuban Revolution on property right claims and other causes of action;40

(7) a mutual fisheries agreement;41 (8) an agreement establishing a line ofcredit for Cuba;42 and (9) a technical cooperation agreement.43 The twocountries were also parties to three bilateral agreements that have sincebeen terminated: (1) an establishment of a commercial modus vivendi;44

(2) an agreement on the bulk purchase of Cuban raw sugar;45 and (3) an

normalize-relations-with-cuba-harpers-antipathy-to-the-communist-nation-evi-dent-at-summit.

34. Justin Trudeau sworn in as new Canada prime minister, BBC (Nov. 4, 2015), http://www.bbc.com/news/world-us-canada-34725055.

35. Agreement Between the Government of Canada and the Government of the Re-public of Cuba Regarding the Sharing of Forfeited Assets or Their EquivalentFunds, Can.-Cuba, July 8, 2003, E104971, available at http://www.treaty-ac-cord.gc.ca/text-texte.aspx?id=104971.

36. Treaty between the Government of Canada and the Government of the Republicof Cuba on the Serving of Penal Sentences, Can.-Cuba, Jan. 7, 1999, 1999 Can.T.S24.

37. Audio-visual Co-production Agreement Between the Government of Canada andthe Government of the Republic of Cuba, Can.-Cuba, Apr. 27, 1998, 1999 Can.T.S.26.

38. Exchange of Notes Constituting an Agreement to Renew and Amend the Agree-ment Between the Government of Canada and the Government of the Republic ofCuba on Hijacking of Aircraft and Vessels and Other Offenses, Can.-Cuba, Feb.12, 1998, 1998 Can.T.S. 5.

39. Air Transport Agreement between the Government of Canada and the Govern-ment of the Republic of Cuba, Can.-Cuba, Feb. 12, 1998, 2000 Can.T.S. 31.

40. Agreement Between the Government of Canada and the Government of the Re-public of Cuba Relating to the Settlement of Canadian Claims, Can.-Cuba, Nov. 7,1980, 1981 Can.T.S. 18.

41. Agreement Between the Government of Canada and the Government of the Re-public of Cuba on Mutual Fisheries Relations, Can.-Cuba, May 12, 1977, 1977Can.T.S. 17.

42. Agreement Between the Government of Canada and the Revolutionary Govern-ment of the Republic of Cuba Establishing a Development Line of Credit forCuba, Can.-Cuba, Mar. 18, 1975, 1975 Can.T.S. 9.

43. Technical Co-operation Agreement Between the Government of Canada and theRevolutionary Government of the Republic of Cuba, Can.-Cuba, Feb. 8, 1974,1974 Can.T.S. 8.

44. Exchange of Notes between Canada and Cuba establishing a Commercial ModusVivendi, Can.-Cuba, Nov. 21, 1927, available at http://www.treaty-accord.gc.ca/details.aspx?id=103018.

45. Exchange of Notes between Canada and Cuba concerning Undertaking by the Ca-nadian Government to Bulk Purchase Cuban Raw Sugar, Can.-Cuba, Mar. 31,1951, available at http://www.treaty-accord.gc.ca/details.aspx?id=103017.


older air-transport agreement.46

B. MULTILATERAL AGREEMENTS

Canada and Cuba are both founding members of the United Nations,having signed the charter in 1945.47 With the exception of the 1864 Con-vention and the III protocol, Canada and Cuba are both members to eachGeneva Convention and protocol.48 While Cuba has chosen to sign andratify most of the Hague Conventions, it has not become a memberstate.49 Canada is a member of the Hague conference and has ratified allHague conventions.50 Cuba has still not joined the North Atlantic TreatyOrganization and has even condemned NATO’s expansion into Europe.51

Both countries are members of the World Trade Organization.52 WhileCanada ratified the International Criminal Court, Cuba refused to be-cause of the Rome Statute’s unclear definition for a crime of aggression.53

In addition to the above organizations and agreements, Canada andCuba are also members to the following treaties, agreements, andorganizations:

1. Human Rights and Related International Laws

• Inter-American Convention on the Nationality of Women54

• International Institute for the Unification of Private Law55

46. Air Transport Agreement between the Government of Canada and the Revolu-tionary Government of the Republic of Cuba, Can.-Cuba, Sept. 26, 1975, 1976Can.T.S. 26.

47. U.N. Charter art. 2, para.4.48. Treaties State Parties and Commentaries: Canada, INT’L COMM.OF THE RED

CROSS, https://www.icrc.org/applic/ihl/ihl.nsf/vwTreatiesByCountrySelected.xsp?xp_countrySelected=CA (last visited Jan. 30, 2016); Treaties State Parties andCommentaries: Cuba, INT’L COMM.OF THE RED CROSS, https://www.icrc.org/ap-plic/ihl/ihl.nsf/vwTreatiesByCountrySelected.xsp?xp_countrySelected=CU (lastvisited Jan. 30, 2016); Treaties State Parties and Commentaries: Convention for theAmelioration of the Condition of the Wounded of Armies in the Field, INT’LCOMM. OF THE RED CROSS, https://www.icrc.org/applic/ihl/ihl.nsf/States.xsp?xp_viewStates=Xages_NORMStatesParties&xp_treatySelected=120 (last visited Jan.30, 2016).

49. See Non-Member Contracting States, HAGUE CONFERENCE ON PRIVATE INT’LLAW, http://www.hcch.net/index_en.php?act=states.nonmember (last visited Jan.30, 2016).

50. Members, HAGUE CONFERENCE ON PRIVATE INT’L LAW, http://www.hcch.net/in-dex_en.php?act=states.listing (last visited Jan. 30, 2016).

51. Thomas Barrabi, Cuba Defends Russia, Criticizes Economic Sanctions, NATO’sExpansion In Eastern Europe, INT’L BUS. TIMES (July 16, 2015, 9:53 AM), http://www.ibtimes.com/cuba-defends-russia-criticizes-economic-sanctions-natos-expan-sion-eastern-europe-2011909.

52. Members and Observers, WORLD TRADE ORGANIZATION, https://www.wto.org/en-glish/thewto_e/whatis_e/tif_e/org6_e.htm (last visited Jan. 30, 2016).

53. Canada, COALITION FOR THE INT’L COURT, http://www.iccnow.org/?mod=country&iduct=31 (last visited Jan. 30, 2016); Cuba, COALITION FOR THE INT’L COURT,https://www.iccnow.org/?mod=country&iduct=43 (last visited Jan. 30, 2016).

54. Convention on the Nationality of Women, Dec. 26, 1933, 4 O.A.S.T.S. 38.55. Membership, UNIDROIT, http://www.unidroit.org/about-unidroit/membership

(last visited Jan. 30, 2016).


• World Health Organization56

• San Francisco Treaty57

• Tokyo Convention58

• Treaty of Tlatelolco (OPANAL)59

• Warsaw Convention60

• International Labour Organization61

• World Tourism Organization—Cuba is member but Canada pulledout in 2012 due to Zimbabwe’s endorsement as a safe country tovisit.62

• Vienna Convention on the Law of Treaties63

• Seabed Arms Control Treaty64

• 1926 Slavery Convention65

• Ramsar Convention66

• 1949 Agreement for the Suppression of the Circulation of ObscenePublications67

• Convention on Biological Diversity68

• World Customs Organization69

• Environmental Modification Convention70

56. Countries, WORLD HEALTH ORG., http://www.who.int/countries/en/ (last visitedJan. 30, 2016).

57. Security Treaty Between the United States and Japan, U.S.-Japan, Sept. 8, 1951,136 U.N.T.S. 45 (entry into force Apr. 28, 1952).

58. Convention On Offences And Certain Other Acts Committed On Board Aircraft,INT’L CIVIL AVIATION ORG., http://www.icao.int/secretariat/legal/List%20of%20Parties/Tokyo_EN.pdf (last visited Jan. 30, 2016).

59. Agency for the Prohibition of Nuclear Weapons in Latin America and the Carib-bean (OPANAL), NUCLEAR THREAT INITIATIVE, http://www.nti.org/treaties-and-regimes/agency-prohibition-nuclear-weapons-latin-america-and-caribbean-opanal/(Jan. 30, 2016).

60. Contracting Parties To The Convention For The Unification Of Certain Rules Re-lating To International Carriage By Air, INT’L CIVIL AVIATION ORG., http://www.icao.int/secretariat/legal/list%20of%20parties/wc-hp_en.pdf (last visited Jan. 30,2016).

61. Alphabetical list of ILO member countries, INT’L LABOR ORG., http://www.ilo.org/public/english/standards/relm/country.htm (last visited Jan. 30, 2016).

62. Member States, WORLD TOURISM ORG., http://www2.unwto.org/members/states(last visited Jan. 30, 2016); Aislinn Laing, Canada Pulls Out of World TourismOrganization Over Robert Mugabe Role, THE TELEGRAPH (June 1, 2012), http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/9306672/Canada-pulls-out-of-World-Tourism-Organisation-over-Robert-Mugabe-role.html.

63. Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331.64. Sealed Arms Control Treaty, U.S. DEP’T OF STATE, http://www.state.gov/www/

global/arms/treaties/seabed3.txt (last visited Jan. 30, 2016).65. Slavery Convention, Sept. 25, 1926, 60 U.N.T.S. 254.66. Country Profiles, RAMSAR, http://www.ramsar.org/country-profiles (last visited

Jan. 30, 2016).67. Convention for the Suppression of, and Traffic in, Obscene Publication, Feb. 2,

1950, 46 U.N.T.S. 201.68. List of Parties, CONVENTION ON BIOLOGICAL DIVERSITY, https://www.cbd.int/in

formation/parties.shtml (last visited Jan. 30, 2016).69. Member States, WORLD CUSTOMS ORG. (Aug. 6, 2015), http://www.wcoomd.org/~/

media/WCO/Public/Global/PDF/About%20us/WCO%20Members/List%20of%20Members%20with%20membership%20date.ashx?db=web.

70. Convention on the Prohibition of Military or Any Other Hostile Use of Environ-mental Modification Techniques, Dec. 10, 1976, 1108 U.N.T.S. 17119.


• International Mobile Satellite Organization71

• International Maritime Organization72

2. Communications and Technology

• Universal Postal Union73

• International Telecommunications Union74

• Inter-American Telecommunications Commission75

• World Intellectual Property Organization76

• World Meteorological Organization77

• International Civil Aviation Organization78

• International Atomic Energy Agency79

• Outer Space Treaty80

• North American Radio Broadcasting Agreement81

• International Telecommunications Satellite Organization82

• International Hydrographic Organization83

• International Committee of Military Medicine84

• Inter-American Institute for Global Change Research85

71. Member States, INT’L MOBILE SATELLITE ORG., http://www.imso.org/public/MemberStates (last visited Jan. 30, 2016).

72. Member States, INT’L MARITIME ORG., http://www.imo.org/en/About/Membership/Pages/MemberStates.aspx (last visited Jan. 30, 2016).

73. Member Countries, UNIVERSAL POSTAL UNION, http://www.upu.int/en/the-upu/member-countries.html (last visited Jan. 30, 2016).

74. ITU Member States, INT’L TELECOMMUNICATIONS UNION, https://www.itu.int/on-line/mm/scripts/mm.list?_searchUstates&_languageid=1 (last visited Jan. 30, 2016).

75. Inter-American Telecommunication Commission (CITEL), ORG. OF AMERICAN

STATES, https://www.citel.oas.org/en/Pages/About-Citel.aspx (last visited Jan. 30,2016) (explaining that all OAS member countries serve on commission); MemberStates, ORG. OF AMERICAN STATES, http://www.oas.org/en/member_states/de-fault.asp (last visited Jan. 30, 2016) (listing Canada and Cuba as OAS memberstates).

76. Member States, WORLD INTELLECTUAL PROP. ORG., http://www.wipo.int/mem-bers/en/ (last visited Jan. 30, 2016).

77. Members of WMO with date of ratification/accession, WORLD METEOROLOGICAL

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• Biological Weapons Convention86

3. Trade

• Inter-American Development Bank—Canada is a member but Cubais not because it failed to ratify the establishing agreement after sign-ing it.87

• International Monetary Fund—Canada is a member and Cuba was afounding member but Castro renounced its membership to both theIMF and World Bank in 1964 after a dispute over a late loanpayment.88

• Food Aid Convention—Canada is a member owing commitment andCuba is an eligible recipient.89

• Northwest Atlantic Fisheries Organization90

• International Seed Treaty91

• Food and Agriculture Organization92

• International Grains Council93

86. Biological Weapons Convention Signatories and States-Parties, ARMS CONTROL

ASS’N, https://www.armscontrol.org/factsheets/bwcsig (last updated Feb. 2015); seealso Convention on the Prohibition of the Development, Production, and Stockpil-ing of Bacteriological (Biological) and Toxin Weapons and on Their Destruction,Apr. 10, 1972, 1015 U.N.T.S. 163.

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88. Scott Morris, Will Cuba Join the World Bank and Inter-American DevelopmentBank?, CTR. FOR GLOBAL DEV. (December 22, 2014), http://www.cgdev.org/blog/will-cuba-join-world-bank-and-inter-american-development-bank.

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