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MEMORIAL ON BEHALF OF THE RESPONDENT

STETSON INTERNATIONALENVIRONMENTALMOOT COURT COMPETITION,2011

Team No. ----------------

IN THE INTERNATIONAL COURT OF JUSTICEAT THE

PEACE PALACE, THE HAGUE

Case concerning

Nuclear Accident and Sovereign Debt

FEDERAL STATES OF AMUKO

V.

REPUBLIC OF RENTIERS

ON SUBMISSION TO THE INTERNATIONAL COURT OF JUSTICE

MEMORIAL FOR THE RESPONDENT

REPUBLIC OF RENTIERS


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TABLE OF CONTENTS

Table of Authorities ............................................................................................................ v

Table of Cases:

ICJ Decisions ................................................................................................. v

PCIJ Decisions............................................................................................. vi

Other Decisions ............................................................................................ vi

Books and Digests .................................................................................................. viii

Articles and Commentaries ....................................................................................... ix

International Instruments .......................................................................................... xi

Statement of Jurisdiction..................................................................................... xiii

Questions Presented ......................................................................................................... xiv

Statement of Facts ............................................................................................................. xv

Summary of Arguments .................................................................................................. xvii

Arguments ........................................................................................................................... 1

Conclusion ......................................................................................................................... 18


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MERITS

I. REPUBLIC OF RENTIERS IS NOT LIABLE TO REIMBURSE/ COMPENSATE AMUKO FOR

ANY OF THE EXPENSES INCURRED ...................................................................................... 1

[I.A]. RENTIERS IS NOT OBLIGATED TO COMPENSATE AMUKO UNDER THE

ASSISTANCE CONVENTION ........................................................................................ 1

I.A.1. ANY RESPONSIBILITY FOR COMPENSATION IS LIMITED TO DAMAGES

SUFFERED WITHIN THE TERRITORY OF THE REQUESTING STATE. ........................ 1

I.A.2.THE INTERPRETATION GIVEN BY RENTIERS DOES NOT DEFEAT THE OBJECT

AND PURPOSE OF THE CONVENTION. ................................................................ 2

[I.B]. ARGUENDO,RENTIERS IS PRECLUDED FROM ASSUMING ANY RESPONSIBILITY

BECAUSE OF THE CONDUCT OF AMUKO CONGRESS.................................................... 4

I.B.1.THE ACTIONS OF AMUKO CONGRESS AMOUNT TO WAIVER OF ITS RIGHT

TO ASK FOR COMPENSATION.. ......................................................................... 4

I.B.2. AMUKO IS PRECLUDED FROM CLAIMING COMPENSATION UNDER THE

DOCTRINES OFESTOPPLEANDACQUIESCENCE. .................................................. 4

[I.C]. UNDER CUSTOMARY INTERNATIONALLAW,AMUKO IS NOT ENTITLED TO ANY

COMPENSATION FROM RENTIERS............................................................................. 5

I.C.1 CONDUCT OF AMEEMPLOYEES CANNOT BE ATTRIBUTABLE TO RENTIERS

...................................................................................................................... 5

I.C.2 THE ACTS OF AMEIS ATTRIBUTABLE TO AMUKO.................................... 6

(I.C.2.a)ACCIDENT TOOK PLACE IN THE TERRITORY OFAMUKO................ 7

II. RESTRUCTURING OF SOVEREIGN BONDS BY RENTIERS DOES NOT ENTAIL ANY

RESPONSIBILITY UNDER INTERNATIONAL LAW................................................................... 9

[II.A].DEFAULT ON SOVEREIGN BONDS DOES NOT VIOLATE THE PROVISIONS OF

RABBIT .................................................................................................................. 9


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II.A.1.SOVEREIGN BONDS ARE NOT COVERED BY THE BILATERAL INVESTMENT

TREAT -RABBIT .......................................................................................... 9

II.A.2.DEFAULT ON SOVEREIGN BONDS DOES NOT ENTAIL THE INTERNATIONAL

RESPONSIBILITY OF A STATE.......................................................................... 11

II.A.3.ARGUENDO,RENTIERSACTION DOES NOT AMOUNT TO EXPROPRIATION

IN CONTRAVENTION OF RABBIT ................................................................... 12

[II.B].RENTIERS ISNOT PRECLUDED FROMAPPLYING PRECAUTIONARY PRINCIPLE

................................................................................................................................ 13

[II.C]. RENTIERS MAY INVOKE FORCE MAJEURE TO PRECLUDE THE ALLEGED

WRONGFULNESS OF ANY ACTION ..........................................................................15

[II.D].RENTIERSCANTAKETHEDEFENCEOFNECESSITY .................................. 16


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TABLE OF AUTHORITIES

Table of Cases

ICJ Decisions

1. Ambatielos, Merits, Judgment, (1953) I.C.J. Reports 10 ............................................ 6

2. Anglo-Norwegian Fisheries Case, (1951) ICJ Reports 116......................................... 5

3. Application of the Convention of 1902 Governing the Guardianship of Infants,

Judgment, (1958) I.C.J. Reports 55, 67 ...................................................................... 7

4. Asylum Case (Peru v. Columbia), (1950) ICJ Reports 226 ......................................... 2

5. Cameroon v. Nigeria, (1998) ICJ Reports 275 ........................................................... 5

6. Certain Phosphate Lands in Nauru (Nauru v. Australia), Preliminary Objections,

Judgment,(1992) I.C.J. Reports 240 .......................................................................... 4

7. Construction of a Wall advisory opinion, (2004) ICJ Reports 136 .............................. 3

8. Elettronica Sicula S.p.A. (ELSI) (1989) I.C.J. Reports 15 .......................................... 6

9. Frontier Dispute, (1986) ICJ Reports 597 .................................................................. 5

10.Gabcikovo-Nagymaros Project Case, (1997) ICJ Reports 7 ................................. 13,16

11.Genocide Convention (Bosnia v. Serbia) case, (2007) ICJ Reports 213 ...................... 2

12.Gulf of Maine Case (1984) ICJ Reports 246 .............................................................. 5

13.

ICAO Council case, (1972) ICJ Reports, 46 ............................................................... 5

14.Indonesia/Malaysia case, (2002) ICJ Reports 625 ...................................................... 2

15.La Grand case, (2001) ICJ Reports 466 ................................................................... 2,3

16.Libya/Chad case, (1994) ICJ Reports 6 ...................................................................... 3

17.Military and Paramilitary Activities in and against Nicaragua (1986) I.C.J. Report 14

................................................................................................................................. .6

18.North Sea Continental Shelf Case, (1969) ICJ Reports 3 .......................................... 10


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19.Nuclear Test Cases (New Zealand v. France), (1974) ICJ Reports 473 ...................2,13

20.Qatar v. Bahrain case, (1995) ICJ Reports 6............................................................... 3

21.Reservations to Convention on Prevention and Punishment of Crime of Genocide, . 23

Advisory Opinion, (1951) I.C.J. Reports 15 ............................................................... 2

22.Right of Passage case (1957) ICJ Reports 125 ........................................................... 5

23.Rights of Nationals of the United States ofAmerica in Morocco, (1952) I.C.J. Reports

176 ............................................................................................................................ 6

24.Temple of Preah Vihear case (1962) ICJ Reports 6 ................................................5,10

25.

The Botswana/Namibia case, (1999) ICJ Reports 1045 .............................................. 2

26.Western Sahara Case, (1975) I.C.J. Reports 12 .......................................................... 7

PCIJ Decisions

1. Lotus (1927) P.C.I.J.,Series A, No. 10, 24 .............................................................. 6

2. Brazilian Loans, Judgment No. 15, 1929, P.C.I.J., Series A, No. 21 ......................... 15

3. Factory at Chorzw, Jurisdiction, Judgment No. 8, (1927) P.C.I.J., Series A, No. 9,

21, 31 ........................................................................................................................ 7

4. Jurisdiction of the Courts of Danzig, Advisory Opinion, (1928) P.C.I.J., Series B, No.

15, ............................................................................................................................ 6

5. Phosphates in Morocco (1938) P.C.I.J., Series A/B, No. 74, 10, 2526 ...................... 6

6. Serbian Loans Case (Serbia v. France), (1929) PCIJ. (Ser. A) Nos. 20/21 ................ 15

7. Treatment of Polish Nationals (1932) P.C.I.J., Series A/B, No. 44, 2425.................. 6

Other Decisions

1. Canevaro Claim (Italy/Peru), (1912) 11 RIAA 397 .................................................... 5

2.

Chattin case, UNRIAA, vol. IV (Sales No. 1951.V.1), 282, 285286 (1927) ............. 7


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3. Compania NavieraVascongado v. Cristina SS [1938] AC 485, 496 ............................ 8

4. Consorzio Groupement L.E.S.I.DIPENTA v. Peoples Democratic Republic of

Algeria, ICSID Case No. ARB/03/8, Award, 72 ( Jan. 10, 2005) ............................. 9

5. Council of Europe, European Commission of Human Rights, Decisions and Reports,

vol. 9, 57 ................................................................................................................... 6

6. Difference Relating to Immunity from Legal Process of a Special Rapporteur of the

Commission on Human Rights (1999) I.C.J. Reports 62 ............................................ 6

7. Dispute concerning the interpretation of article 79 of the Treaty of Peace, ibid., vol.

XIII (Sales No. 64.V.3), 389, 438 (1955) .................................................................. 7

8. European Court of Human Rights, Series A,No. 102, 75 ILR 438 ..........................3,12

9. German External Debts Arbitration, (1980) ILM 19, 1357 ......................................... 2

10.ImpregiloS.p.A. v. Islamic Republic of Pakistan, (2005) ICSID Case No. ARB/03/3

11.Island of Palmas Case 22 AJIL (1928) 875 ................................................................ 7

12.Jalapa Railroad & Power Co. (U.S. v. Mex.), (1948) Am.-Mex. Cl. Rep. 538, 540... 11

13.Joy Mining Machinery Ltd. v. Arab Republic of Egypt, Jurisdiction, ICSID Case No.

ARB/03/11 43, 48, (Aug. 6, 2004) ........................................................................ 9

14.Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992) ................................ 11

15.Russian Indemnity case, UNRIAA, vol. XI (Sales No. 61.V.4), p. 421, at p. 446

(1912) ....................................................................................................................... 4

16.Salvador Commercial Company, UNRIAA, vol. XV (Sales No. 66.V.3), 455, 477

(1902) .................................................................................................................... 6,7

17.Societe Generale de Surveillance S.A. v. Pakistan, ICSID Case No.ARB/01/13 . 11

18.Southern Blue Fin Tuna (N.Z. & Australia v. Japan), 38 I.L.M. 1634 ...................... 13

19.Telstra Corporation Ltd v. Hornsby Shire Council [2006] NSWLEC 133 ................ 14


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20.The case concerning the Auditing of Accounts between the Netherlands and France,

arbitral award of 12 March 2004 ................................................................................ 3

21.The Iron Rhine (Belgium/Netherlands), arbitral award of 24 May 2005 ..................... 3

22.The M/V "SAIGA" (No. 2) Case (Saint Vincent and the Grenadines v. Guinea),

(1999) 120 ILR 143, 191 ......................................................................................... 16

23.X and Y v. Switzerland, application Nos. 7289/75 and 7349/76, 14 July 1977 ........... 6

24.Xhavara and Others v. Italy and Albania, application No. 39473/98, Eur. Court H.R.,

decision of 11 January 2001....................................................................................... 6

Books and Digests

1. BROWNLIE,PRINCIPLES OF PUBLIC INTERNATIONAL LAW (2003) ...........................2,12

2. CHERNOBYL AND THE SUPPLY OF NUCLEAR REACTORS IN OECD COUNTRIES (June,

1987) ........................................................................................................................ 3

3. CHRISTOPH H.SCHREUER,THE ICSIDCONVENTION:ACOMMENTARY (2001) .......9,10

4. EDWIN BORCHARD & WILLIAM H. WYNNE, STATE INSOLVENCY AND FOREIGN

BONDHOLDERS (1951) ............................................................................................. 11

5. FREDERICK POLLOCK & FREDERIC WILLIAMMAITLAND, THE HISTORY OF ENGLISH

LAW BEFORE THE TIME OF EDWARD I207(1899) ................................................... 11

6. I.A.SHEARER,STARKES INTERNATIONAL LAW (1994) ............................................ 12

7. J.P. COT, COURINTERNATIONALE DE JUSTICE:AFFAIRE DU TEMPLE DEPRAH VIHAR,

ANNUAIRE FRANCAIS DE DROIT INTERNATIONAL 217(1962) ................................... 5

8. JGSTARKE,INTRODUCTION TO INTERNATIONAL LAW202 (2005) ............................... 8

9.

M.SORNARAJAH,THE INTERNATIONAL LAW ON FOREIGN INVESTMENT (2004) .... 10,12


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10.MALCOLM SHAW,INTERNATIONAL LAW85 (5thed. 2003) ......................................... 5

11.OPPENHEIMS INTERNATIONAL LAW1271 (2008) ...................................................... 3

12.PARRY AND GRANT, ENCYCLOPAEDIC DICTIONARY OF INTERNATIONAL LAW 154

(2004) ....................................................................................................................... 5

13.ROLAND TIMERBAEV AND ABRAM IOIRYSH, INTERNATIONAL CO-OPERATION IN

NUCLEAR SAFETY, IN YEARBOOK OF INTERNATIONAL CO-OPERATION ON

ENVIRONMENT AND DEVELOPMENT4953 (1999) ..................................................... 3

14.RUDOLF DOLZER AND CHRISTOPH H. SCHREUER, PRINCIPLES OF INTERNATIONAL

INVESTMENT LAW (2008) ........................................................................................ 10

15.SINCLAIR,VIENNA CONVENTION(2001) .................................................................... 3

16.ULF LINDERFALK, ON THE INTERPRETATION OF TREATIES: THE MODERN

INTERNATIONAL LAW AS EXPRESSED IN THE 1969VIENNA CONVENTION ON THE LAW

OF TREATIES,ch. 7, 1 (2007) .................................................................................. 2

17.YEARBOOK OF THE ILC, vol. II, 223 (1966) .............................................................. 3

Ar ticles and Commentar ies

1. A.Fabra, The LOSC and the implementation of the Precautionary Principle, 10

YEARBOOK OF INTERNATIONAL ENVIRONMENTAL LAW25(1999) ............................ 13

2. Brendan Moyles, Making the Precautionary Principle Work for Biodiversity:

Avoiding Perverse Outcomes in Decision-making Under Uncertainty, in

BIODIVERSITY AND THE PRECAUTIONARY PRINCIPLE 159, 172 (Rosie Cooney &

Barney Dickson eds., 2005) .................................................................................... 14

3. Brown, A Comparative and Critical Assessment of Estoppel in International Law, 50

UNIVERSITY OF MIAMI LAW REVIEW 369(1996) ....................................................... 5


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4. D.H. Johnson, The Case Concerning the Temple of PreahVihear, 11 INTERNATIONAL

AND COMPARATIVE LAW QUARTERLY1183 (1962) ................................................... 5

5. David Freestone & Robin Churchill, The Precautionary Principle, in INTERNATIONAL

LAW AND GLOBAL CLIMATE CHANGE21 (1991) ..................................................... 14

6. David Hunter, Principles and Concepts of International Environmental Law, in

INTERNATIONAL ENVIRONMENTAL LAW AND POLICY463, (2007) ........................... 14

7. E.Hey, The Precautionary Concept in Environment Policy and Law :

Institutionalising Caution, 4 GEORGETOWN INTERNATIONAL ENVIRONMENTAL LAW

REVIEW303(1992) .................................................................................................. 13

8. Gundling, The Status in International Law of the Principle of Precautionary Action , 5

INTERNATIONAL JOURNAL OF ESTUARINE AND COASTAL LAW 23 (1990)

................................................................................................................................ 14

9. Hans Wehberg, Pacta Sunt Servanda 53 AMERICAN JOURNAL OF INTERNATIONAL

LAW775 (1959) ........................................................................................................ 2

10.

Josef L. Kunz, The Meaning and The Range of The Norm PactaSuntServanda , 39

AMERICAN JOURNAL OF INTERNATIONAL LAW 180(1945) ......................................... 2

11.Kelson, State Responsibility and the Abnormally Dangerous Activity, 13 HARVARD

INTERNATIONAL LAW JOURNAL 197 (1972) .................................................. 10

12.MacGibbon, Customary International Law and Acquiescence, 32 BRITISH YEARBOOK

OF INTERNATIONAL LAW115(1957) .......................................................................... 5

13.Michael Waibel, Opening Pandoras Box: Sovereign Bonds in International

Arbitration, 101 AM.J.INTLL. 711 (2007) .............................................................. 9

14.O.Schachter, Recent Trends in International Law-Making, 12 AUSTRALIAN

YEARBOOK INTERNATIONAL LAW (1992) ................................................................. 10

15.Philip J. Power, Sovereign Debt: The Rise of the Secondary Market and Its

Implications for Future Restructurings,64 FORDHAM L.REV. 2701 (1996) .............. 10


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I nternational Instruments

1.

Agreement Between the Republic of Korea and Japan for the Liberalization,

Promotion and Protection of Investment, March 22, 2002, Treaty No. 17, Ministry of

Foreign Affairs Notification No. 430 (Japan)

2. Charter of the United Nations (1945)

3. Convention on Assistance in the Case of Nuclear Accident or Radiological

Emergency, (1986) INFCIRC/336

4. Convention on Early Notification of a Nuclear Accident, (1986) INFCIRC/335.

5. Draft Articles on Responsibility of States for Internationally Wrongful Acts, in Report

of the International Law Commission on Work of its Fifty-Third Session, UN General

Assembly Official Records, 56th session, Supplement No 10, December 12, 2001, UN

Doc. A/56/10.

6.

European Convention of Human Rights, 213 UNTS 221

7. Guidelines for Mutual Emergency Assistance Arrangements in Connection With a

Nuclear Accident or Radiological Emergency, (1984) INFCRC/310

8. Harvard Draft Convention on the International Responsibility of States for Injuries to

Aliens

9. North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.-U.S., 32 ILM 289

(1993)

10.The Multilateral Agreement on Investment DAFFE/MAI (98) 17

11.United Nations Conference on the Law of Treaties, First and second sessions, Vienna,

26 March24 May 1968 and 9 April22 May 1969

12.Vienna Convention for the Protection of the Ozone Layer, Preamble, Mar. 22, 1985,

26 I.L.M. 1516 (1987) Document A/CONF.39/14


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13.Vienna Convention on the Law of Treaties, (27 January 1980), UN Doc A/Conf.

39/27,1155 UNTS 331

14.WTO, Report of the Panel, Turkey: Restrictions on Imports of Textile and Clothing

Products (WT/DS34/R), 31 May 1999

15.Year book of the European Convention on Human Rights, 1977, vol. 20 (1978), 372


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STATEMENT OF JURISDICTION

The Federal States of Amuko and The Republic of Rentiers submit the following

dispute to the International Court of Justice (ICJ). The International Court of Justice

has contentious jurisdiction over this case based on the Special Agreement of the

parties dated June 6, 2011 and in accordance with Articles 36 and 40 of the Statute of

the International Court of Justice.

Article 36 provides jurisdiction over matters referred by parties to the Court. Further

pursuant to Article 40, paragraph 1 of the Statute of the ICJ, States may bring cases

before the Court either by the notification of the special agreement or by a written

application addressed to the Registrar. [Statute of the International Court of Justice,

arts. 36 & 40(1), T.S. No. 933 (1945).]

The parties signed a special agreement to submit their dispute to the Registrar of the

Court [See Special Agreement Between The Federal States of Amuko and The

Republic of Rentiers for Submission to the International Court of Justice, signed at

Granada, Spain, on 6 June 2011]. The Registrar acknowledged receipt of the joint

notification on 20 June 2011.


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QUESTIONS PRESENTED

1. WHETHER REPUBLIC OF RENTIERS IS LIABLE TO REIMBURSE/ COMPENSATE AMUKO

FOR ANY OF THE EXPENSES INCURRED.

2. WHETHER RESTRUCTURING OF SOVEREIGN BONDS BY RENTIERS ENTAIL ANY

RESPONSIBILITY UNDER INTERNATIONALLAW.


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STATEMENT OF FACTS

The Federal States of Amuko and the Republic of Rentiers, both industrialized nations, are

neighbouring states. Nuclear energy constitutes 25% of Amukos electricity production and

75% of Rentiers electricity production. The Diablo canyon fault line runs through the centre

of Rentiers around which some of the nuclear power plants are built. Investment companies

in Amuko had purchased approximately 3 billion tenge worth of sovereign bonds issued by

Rentiers, the maturity date for the bonds being 30thNovember,2010.

Amuko and Rentiers are Members of the United Nations, IAEA; parties to the Statute of the

ICJ, VCLT, IAEA, CENNA, CACNARE, Joint Convention and CBD. Amuko and Rentiers

are also parties to RABBIT, a bilateral treaty on investment dealing with issues like

expropriation among other things.

On 5 February 2010, a catastrophic earthquake struck the territory of Rentiers along the

Diablo Canyon fault damage to many nuclear reactors among other losses. Due to a rupture in

the spent fuel pool in the nuclear plant, the fuel rods had to be removed thus Rentiers

requested assistance from Amuko to remove such fuel rods and transport them to a safer

facility.

On 12 February 2010, the AME removed the fuel rods and were transporting them to Amuko,

when due to the negligence of the driver one of the trucks met with an accident near

Robelynch. The driver and one security guard, both AME employees, were killed due to the

trauma of the accident. As a result of the accident, the fuel rod casings burnt, releasing

radioactive gases and particles into the environment forcing the authorities to evacuate

Robelynch. On 26 February 2010, the Amuko Congress established a compensation fund for

people affected by the accident.


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Amuko requested Rentiers to fully reimburse Amuko for the compensation program.

Rentiers rejected the claim and subsequent negotiations failed.

On 17 September 2010, the RNRA ordered a rapid closure of 5 power plants along the Diablo

canyon which resulted in the economy of Rentiers taking a major hit. On 24 November 2010,

Rentiers President Niall Ferguson stated that Rentiers might default on its sovereign bonds.

On 1 December 2010, Rentiers enacted the Fresh Start Act, a debt restructuring law. The Act

provided that investors would receive 10% of what they would otherwise be entitled to. The

law applied equally to all bondholders, domestic or foreign. Dispute between both parties led

to an agreement being signed to submit the present matter before ICJ.


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SUMMARY OF ARGUMENTS

I. Rentiers is not liable to compensate Amuko for any of the expenses incurred

becauseFirstly, Rentiers doesnt have any obligation to compensate Amuko under

the assistance convention, article 10 of which restricts liability to any damage

suffered within its territory. Thus the literal interpretation given by Rentiers

doesnt defeat the object andpurpose of the convention. Secondly, the actions of

the Amuko congress amount to waiver of its right to ask for compensation. Thus,

amuko is precluded under the doctrines of estopples and acquiescence from

demanding compensation. Thirdly, under the customary international law Amuko

is not entitled for any compensation from Rentiers as conduct of AME employees

is not attributable to Rentiers as there was no direction and control of the

requesting state. Thus the act of AME is attributable to Amuko. Lastly, the

accident took place in the territory of Amuko thus wrongfulness cannot be

attributed to Rentiers.

II. Rentiers is not liable to pay compensation because Firstly, Sovereign Bonds are

not covered by the Bilateral Investment Treat - RABBIT. Secondly, a default on

Sovereign Bonds does not entail the international responsibility of a state. Thirdly,

the debt restructuring does not amount to expropriation. Fourthly, the fault lines

always existed, the fact that they were active came to light only after the

earthquake. Thus Rentiers is not precluded from applying Precautionary Principle.

Further, the closing of power plants, which led to the default and restructuring

was necessary for Rentiers to safeguard an essential interest from a grave and

imminent peril. Lastly, Rentiers can invoke force majeure to preclude the alleged

wrongfulness of any action and hence Rentiers is not liable to pay compensation.


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ARGUMENTS

I. REPUBLIC OF RENTIERS IS NOT LIABLE TO REIMBURSE/ COMPENSATE AMUKO FOR

ANY OF THE EXPENSES INCURRED.

It is most humbly submitted that the Republic of Rentiers has performed its obligations in

good faith1by notifying other countries of the imminent danger posed by the earthquake in

accordance with the Early Notification Convention2.Additionally, Rentiers is not responsible

for any damage that ensues outside its territory. Thus, Rentiers cannot be held liable for

damage caused to Amuko and is hence not liable to bear compensation .

[I.A] RENTIERS IS NOT OBLIGATED TO COMPENSATE AMUKO UNDER THE

ASSISTANCE CONVENTION

The Assistance Convention obligates the requesting party to compensate the assisting party

for losses in the course of providing assistance only when such damage has incurred within

its territory.3 In the instant case, as this requirement stands unfulfilled Rentiers is not

obligated to compensate Amuko.

I.A.1. ANY RESPONSIBILITY FOR COMPENSATION IS LIMITED TO DAMAGES

SUFFERED WITHIN THE TERRITORY OF THE REQUESTING STATE.

1Charter of the United Nations art 2(2) (1945); Nuclear Test Cases (Newzealand v. France), (1974) ICJ Reports473, 488; Hans Wehberg, PactaSuntServanda 53 AMERICAN JOURNAL OF INTERNATIONAL LAW 775 (1959);Josef L. Kunz, The Meaning and The Range of The Norm PactaSuntServanda, 39 AMERICAN JOURNAL OFINTERNATIONAL LAW 180 (1945); Josef L. Kunz, The Nature of Customary Law, 47 AMERICAN JOURNAL OFINTERNATIONAL LAW662 (1953).

2Convention on Early Notification of a Nuclear Accident, art 2, 5, (1986) INFCIRC/335.

3

Convention on Assistance in the Case of Nuclear Accident or Radiological Emergency, art 10, (1986)INFCIRC/336.


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It is submitted that the requesting state bears no responsibility for any death or injury or loss

caused outside its territory.4Additionally, the responsibility entailing overall direction and

control of such assistance of the requesting state is further limited to within its territory.5A

literal interpretation of a treaty in the context of what it should ordinarily mean is in absolute

compliance with the object and purpose of a convention.6In the present case, Rentiers relied

on a literal interpretation of Article 10 which is in accordance with Article 31 of the Vienna

Convention,7and hence the interpretation is not restrictive or in violation of the object and

purpose of the Assistance Convention. Hence, Rentiers cannot be held liable according to the

provisions of the Assistance Convention.

I.A.2.THE INTERPRETATION GIVEN BY RENTIERS DOES NOT DEFEAT THE OBJECT

AND PURPOSE OF THE CONVENTION.

It is submitted that the general rule of treaty interpretation highlights three sources in which

practitioners may seek the meaning of a treaty;8the treatys terms, the context of those terms,

and the treatys object and purpose.9Further, Object and purpose appears to be a unitary

concept referring to the goals that the drafters of the treaty hoped to achieve. 10 Judicial

4Convention on Assistance in the Case of Nuclear Accident or Radiological Emergency, art 10, (1986)INFCIRC/336.

5Ibid.

6LaGrand Case (F.R.G. v. U.S.), (2001) I.C.J. 466 (June 21) (The Court will therefore now consider the object

and purpose of the Statute together withthe context of Article 41.); Reservations to Convention on Preventionand Punishment of Crime of Genocide, Advisory Opinion, (1951) I.C.J. Reports 15 (May 28) (discussing theobject and purpose of the Genocide Convention).

7Vienna Convention on the Law of Treaties, (27 January 1980), art. 31, UN Doc A/Conf. 39/27,1155 UNTS 331

8BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 604-07 (1966); ULF LINDERFALK, ON THEINTERPRETATION OF TREATIES: THE MODERN INTERNATIONAL LAW AS EXPRESSED IN THE 1969 VIENNACONVENTION ON THE LAW OF TREATIES,ch. 7, 1 (2007).

9Supranote 7.

10Supranote 8.


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decisions have given due importance to the object and purpose while interpreting various

treaties.11It may be further appreciated that in order to completely understand the object and

purpose behind a treaty and draw a better understanding of the terms of the treaty it is

essential to look at the travaux preparatoires of the said treaty.12

It is submitted that though the assistance convention was established to provide prompt

assistance in the case of a nuclear emergency, the liability of any accident that took place

outside the territory of the requesting state still rests on the assisting state.13The preparatory

material to the assistance convention,14clearly state that the liability of the requesting state

arising out of any accident is restricted to within its territory. 15This clearly goes to show that

the intention of the parties while drafting the treaty was to restrict the liability of the

requesting state to any accident arising within its territory only.

11Asylum Case (Peru v. Columbia), (1950) ICJ Reports 226, 275, 282; Rights of Nationals of the USA inMorocco, (1952) ICJ Reports 176, 196; La Grand case, (2001) ICJ Reports 466; German External Debts

Arbitration, (1980) ILM 19, 1357, 1377; Genocide Convention (Bosnia v. Serbia) case, (2007) ICJ Reports 213,160; Indonesia/Malaysia case, (2002) ICJ Reports 625, 645; The Botswana/Namibia case, (1999) ICJ Reports1045; The Libya/Chad case, (1994) ICJ Reports 6, 212; Qatar v. Bahrain case, (1995) ICJ Reports 6, 18; Thecase concerning the Auditing of Accounts between the Netherlands and France, arbitral award of 12 March2004, 59; The Iron Rhine (Belgium/Netherlands), arbitral award of 24 May 2005, 45; O PPENHEIMSINTERNATIONAL LAW1271 (2008).

12La Grand case, (2001) ICJ Reports 466; River Oder case, PCIJ, Series A, No. 23, 1929; that thetravauxpreparatoires of certain provisions of theTreatyofVersailles could not be taken into account since threeof the states before the Court had not participated in the preparatory conference; Young Loan case, 1959 ILR495, 5445; SINCLAIR,VIENNA CONVENTION1417 (2001); Lithgow case, European Court of Human Rights,Series A, No. 102, 117; Libya/Chad case, (1994) ICJ Reports 6, 27; Qatar v. Bahrain case, (1995) ICJ Reports6, 2, the International Court held that while it was not necessary to have recourse to the travaux preparatoires to

elucidate the content of the instruments in question, it could turn to them to confirm its reading of the text;Construction of a Wall advisory opinion, (2004) ICJ Reports 136, 174.

13ROLAND TIMERBAEV AND ABRAM IOIRYSH,INTERNATIONAL CO-OPERATIONINNUCLEAR SAFETY,IN YEARBOOKOF INTERNATIONAL CO-OPERATION ON ENVIRONMENT AND DEVELOPMENT 4953 (1999); CHERNOBYL ANDTHE SUPPLY OFNUCLEAR REACTORS IN OECDCOUNTRIES(June, 1987).

14Vienna Convention on the Law of Treaties, (27 January 1980), art. 32, UN Doc A/Conf. 39/27,1155 UNTS331, travauxpreparatoires serve as a supplementary means of interpretation; Qatar v. Bahrain, (1995) ICJReports 6, 21; Lithgow case, European Court of Human Rights, Series A,No. 102, 75 ILR 438, 484; Libya/Chadcase, (1994) ICJ Reports 6, 27; Construction of a Wall advisory opinion, (2004) ICJ Reports 136, 174;YEARBOOK OF THE ILC, vol. II, 223 (1966).

15

Guidelines for Mutual Emergency Assistance Arrangements in Connection With a Nuclear Accident orRadiological Emergency, (1984) INFCRC/310.


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[I.B] ARGUENDO, RENTIERS IS PRECLUDED FROM ASSUMING ANY RESPONSIBILITY

BECAUSE OF THE CONDUCT OFAMUKO CONGRESS.

I.B.1.THE ACTIONS OF AMUKO CONGRESS AMOUNT TO WAIVER OF ITS RIGHT

TO ASK FOR COMPENSATION.

It is submitted that it is the duty of the requesting State to assume responsibility for dealing

with legal proceedings and claims brought by third parties against the assisting party.16

However, according to Article 45 of ILC Draft Articles on State Responsibility17 a valid

waiver or settlement of the responsibility between the responsible State and the injured State

precludes any claim for reparation.18Waiver may be inferred from the conduct of the States

concerned or from a unilateral statement19, provided the conduct or statement must be

unequivocal.20By enacting the legislation for providing compensation to persons affected in

the accident, Amuko assumed responsibility, establishing a waiver of its right to seek

compensation from Rentiers.

16Ibid, art 10.

17Draft Articles on Responsibility of States for Internationally Wrongful Acts, in Report of the InternationalLaw Commission on Work of its Fifty-Third Session, UN General Assembly Official Records, 56 th session,Supplement No 10, art 45, December 12, 2001, UN Doc. A/56/10.

18Russian Indemnity case, UNRIAA, vol. XI (Sales No. 61.V.4), p. 421, at p. 446 (1912);Ibid.

19Certain Phosphate Lands in Nauru (Nauru v. Australia), Preliminary Objections, Judgment, (1992) I.C.J.Reports 240, 253255, 3136.

20Ibid.


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I.B.2.AMUKO IS PRECLUDED FROM CLAIMING COMPENSATION UNDER THE

DOCTRINES OFESTOPPLEANDACQUIESCENCE.

Theprinciple of estoppelholds that a party that has acquiesced in a particular situation cannot

then proceed to challenge it.21Further,Acquiescence,22has been defined as silence or absence

of protest in circumstances generally calling for a positive reaction of objection.23 When

States acquiesce to the conduct of other states, the assumption is that such behaviour is

accepted, and such State cannot subsequently claim against such conduct.24Under Article 10

of the Assistance Convention it was the responsibility of Rentiers and not Amuko, to deal

with the claims of the third parties. Under such a circumstance Amuko should have asked for

compensation from Rentiers and is now precluded from claiming re-imbursement.

[I.C] UNDER CUSTOMARY INTERNATIONAL LAW,AMUKO IS NOT ENTITLED TO ANY

COMPENSATION FROM RENTIERS.

I.C.1 CONDUCT OF AMEEMPLOYEES CAN NOT BE ATTRIBUTABLE TO RENTIERS

21Temple of PreahVihear case (1962) ICJ Reports 6; Right of Passage case (1957) ICJ Reports 125, 141-142;Cameroon v. Nigeria, (1998) ICJ Reports 275, 303; ICAO Council case, (1972) ICJ Reports, 46; D.H. Johnson,

The Case Concerning the Temple of PreahVihear, 11 INTERNATIONAL AND COMPARATIVE LAW QUARTERLY1183 (1962); J.P. COT, COURINTERNATIONALE DE JUSTICE: AFFAIRE DU TEMPLE DE PRAHVIHAR,ANNUAIREFRANCAIS DE DROIT INTERNATIONAL 217(1962); Brown, A Comparative and Critical Assessment ofEstoppel in International Law, 50 UNIVERSITY OF MIAMI LAW REVIEW 369 (1996); PARRY AND GRANT,ENCYCLOPAEDIC DICTIONARY OF INTERNATIONAL LAW 154 (2004); Canevaro Claim (Italy/Peru), (1912) 11RIAA 397.

22MacGibbon, Customary International Law and Acquiescence, 32 BRITISH YEARBOOK OF INTERNATIONALLAW115(1957);

23Delimitation of the Maritime Boundary in the Gulf of Maine Area, (Gulf of Maine Case), (1984) ICJ Reports305; Frontier Dispute, (1986) ICJ Reports 597.

24

Gulf of Maine Case (1984) ICJ Reports 246; Anglo-Norwegian Fisheries Case, (1951) ICJ Reports 116;MALCOLM SHAW,INTERNATIONAL LAW85 (5thed. 2003).


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It is the most humble submission that Article 625envisages a situation in which an organ of a

State is put in effective control of another State for its temporary benefit. The notion of an

organ placed at the disposal of another State excludes the case of State organs, sent to

another State for the purposes of the former State or even for shared purposes, which retain

their own autonomy and status including cultural missions, diplomatic or consular missions,

foreign relief or aid organizations.26

It is submitted that the conduct of such an organ must involve the exercise of elements of the

governmental authority of the receiving State.27 Additionally, such organ placed at the

disposal of a State must be acting in the exercise of elements of the governmental authority

of the receiving State.28

Therefore as was no direction or control over AME by Rentiers at the time of removal of

fuel rods, there was no exercise of governmental authority by Rentiers over AME. 29Thus the

conduct of AME employees cannot be attributed to Rentiers.

I.C.2 THE ACTS OF AMEIS ATTRIBUTABLE TO AMUKO.

It may be noted that by virtue of Article 4 30the principle of the unity of the State entails that

the acts or omissions of all its organs should be regarded as acts or omissions of the State for

25Supranote 17.

26

Supra note 17; The conduct of Italy in policing illegal immigration at sea pursuant to an agreement withAlbania was not attributable to Albania: Xhavara and Others v. Italy and Albania, application No. 39473/98,Eur. Court H.R., decision of 11 January 2001. Conversely, the conduct of Turkey taken in the context of theTurkey-European Communities customs union was still attributable to Turkey; WTO, Report of the Panel,Turkey: Restrictions on Imports of Textile and Clothing Products (WT/DS34/R), 31 May 1999, 9.339.44.

27Ibid.

28X and Y v. Switzerland, application Nos. 7289/75 and 7349/76, 14 July 1977; Council of Europe, EuropeanCommission of Human Rights, Decisions and Reports, vol. 9, 57; Year book of the European Convention onHuman Rights, 1977, vol. 20 (1978), 372, 402406.

29Ibid.

30Supranote 17.


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the purposes of international responsibility.31Elaborating, in Salvador Commercial Company

case, the tribunal held that; a State is responsible for the acts of its rulers, whether they

belong to the legislative, executive, or judicial department of the Government, so far as the

acts are done in their official capacity.32

Thus, it is lucid that the accident which took place because of the negligent act can only be

solely attributed to Amuko, as it was done by an AME employee.33Also the doctrine of clean

handsprovides that a State may not benefit itself from its own wrongful act. 34

Further, Article 20 of draft articles35provides for consent by a State to particular conduct by

another State precludes the wrongfulness of that act in relation to the consenting State,

provided the consent is valid.36 Therefore consent given by Rentiers though as a matter of

request to Amuko for removal of nuclear fuel rods was a valid consent and any wrongful act

committed during the removal of fuel rods thereby cannot be imputed to Rentiers.

I.C.3THERE WAS NO DIRECTION AND CONTROL IN AMUKOS TERRITORY.

(I.C.3.a)ACCIDENT TOOK PLACE IN THE TERRITORY OFAMUKO.

31Difference Relating to Immunity from Legal Process of a Special Rapporteur of the Commission on HumanRights (1999) I.C.J. Reports 62, 87, 62; Treatment of Polish Nationals (1932) P.C.I.J., Series A/B, No. 44, 2425; Phosphates in Morocco (1938) P.C.I.J., Series A/B, No. 74, 10, 2526; Rights of Nationals of the UnitedStates of Americain Morocco, (1952) I.C.J. Reports 176, 193194; As to executive acts: Military andParamilitary Activities in and against Nicaragua (1986) I.C.J. Report 14; Elettronica Sicula S.p.A. (ELSI)(1989) I.C.J. Reports 15; As tojudicial acts:Lotus (1927) P.C.I.J.,Series A, No. 10, 24; Jurisdiction of the

Courts of Danzig, Advisory Opinion, (1928) P.C.I.J., Series B, No. 15, 2627; Ambatielos,Merits, Judgment,(1953) I.C.J. Reports 10, 2122; Application of the Convention of 1902 Governing the Guardianship of Infants,Judgment, (1958) I.C.J. Reports 55, 67.

32Salvador Commercial Company, UNRIAA, vol. XV (Sales No. 66.V.3), 455, 477 (1902); Chattin case,UNRIAA, vol. IV (Sales No. 1951.V.1), 282, 285286 (1927); Dispute concerning the interpretation of article79 of the Treaty of Peace, ibid., vol. XIII (Sales No. 64.V.3), 389, 438 (1955).

33Record 21.

34Factory at Chorzw, Jurisdiction, Judgment No. 8, (1927) P.C.I.J., Series A, No. 9, 21, 31; Gabkovo-Nagymaros Project case, (Hung. v. Slovk.) (1997) ICJ Reports 7.

35

Supranote 17.36Official Records of the Security Council, Fifteenth Year, 873rd meeting, 1314 July 1960.


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It is hereby submitted, that sovereignty is the right to exercise therein, to the exclusion of any

other state, the functions of a state.37A state has jurisdiction over property, persons, acts or

events occurring within its territory.38

Hence, a state has no jurisdiction over any person or property in the territory of another state,

when such person or property associated with a particular conduct that has the authority of

government of the other state.39

Article 3(b) of assistance convention40provides for the protection of personnel, equipment

and materials brought into its territory by or on behalf of the assisting party for such purpose

by the requesting state.41 However from the language of the article brought into its

territory; such protection of personnel, equipment or material is restricted only to the

territory of the requesting state42and once it enters into the territory of the assisting state43, it

becomes the duty of the assisting state to protect the personnel and materials.

Therefore for an accident which took place within the territory of the Amuko due to the

negligent act of AME employees, wrongfulness cannot be attributed to Rentiers.

37Western Sahara Case, (1975) I.C.J. 12; Island of Palmas Case 22 AJIL (1928) 875.

38JGSTARKE, INTRODUCTION TO INTERNATIONAL LAW 202 (2005);Compania NavieraVascongado v. CristinaSS [1938] AC 485, 496.

39JGSTARKE, ibid.

40Supranote 3, art 3.

41Ibid.

42

Ibid.43Record 21.


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II. RESTRUCTURING OF SOVEREIGN BONDS BY RENTIERS DOES NOT ENTAIL ANY

RESPONSIBILITY UNDER INTERNATIONAL LAW.

It is most humbly submitted that Amuko and Rentiers being parties to Rentiers-Amuko

Bilateral Business Investment Treaty (hereinafter referred to as RABBIT)44 are under

obligation not to take any measure of expropriation, nationalization, or other measures so

equivalent without just compensation.45Rentiers submit that its actions do not amount to a

violation of its obligation under RABBIT.

[II.A]DEFAULT ON SOVEREIGN BONDS DOES NOT VIOLATE THE PROVISIONS OF

RABBIT.

II.A.1.SOVEREIGN BONDS ARE NOT COVERED BY THE BILATERAL INVESTMENT

TREAT -RABBIT

It is most humbly submitted that a fine line of distinction exists between a sovereign bond

and an investment given the fact that there is no sharing of commercial risk as sovereign

bonds are tied to the general macroeconomic condition of the county,46 an absence of

territorial link with the host country in the form of physical assets 47 and the lack of

association with a commercial undertaking.48Additionally, sovereign bonds are bought on

44Record12.

45Record13; RABBIT Art 10.

46Joy Mining Machinery Ltd. v. Arab Republic of Egypt, Jurisdiction, ICSID Case No. ARB/03/11 43, 48,(Aug. 6, 2004)

47Consorzio Groupement L.E.S.I.DIPENTA v. Peoples Democratic Republic of Algeria, ICSID Case No.ARB/03/8, Award, 72 ( Jan. 10, 2005).

48

Michael Waibel, Opening Pandoras Box: Sovereign Bonds in International Arbitration, 101 AM. J. INTL L.711, 744, 746 (2007).


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the secondary market without formal or other specific relationship with the debtor

government.49

In this regard it may be noted that the definition of Investment lacks a universally accepted

meaning.50 Investment Treaties themselves define their scope rationemateriae.51 BITs may

use various definitions of investments, which are independent of the any pre-determined

criteria.52 Some BITs include sovereign bonds,53while others explicitly exclude sovereign

bonds,54with party freedom being the foremost obligation.55

It is submitted that the Sovereign Bonds are beyond the scope of the definition of

investment under RABBIT as they are merely country debt instruments acknowledging

49In the secondary market for sovereign debt, loans and bonds are exchanged between buyer and seller, often atsubstantial discounts from their face value. These discounts reflect the likelihood of eventual repayment. Therise of secondary markets since 1980 has provided incentives to buy below par and pursue litigation for fullprincipal and interest, Philip J. Power, Sovereign Debt: The Rise of the Secondary Marketand Its Implicationsfor Future Restructurings,64 FORDHAM L.REV. 2701, 271519 (1996).

50M. SORNARAJAH, THE INTERNATIONAL LAW ON FOREIGN INVESTMENT 918 (2004); CHRISTOPH H.SCHREUER, THE ICSID CONVENTION:A COMMENTARY,80, 89 (2001);RUDOLF DOLZER AND CHRISTOPH H.SCHREUER,PRINCIPLES OF INTERNATIONAL INVESTMENT LAW60 (2008).

51RUDOLF DOLZER AND CHRISTOPH SCHREUER,Ibid.

52M.SORNARAJAH,supra note 50.

53The 2004 U.S. Model BIT, http://www.ustr.gov/assets/Trade_Sectors/Investment/Model_BIT/asset_upload_file847_6897.pdf (last accessed on July 21, 2011), covers, among others, bonds, debentures,

other debt instruments, and loans; JapanSouth Korea BIT, Every kind of asset . . including . . . bonds,debentures, loans, and other forms of debt as well as rights under contracts; Agreement Betw een the Republicof Korea and Japan for the Liberalisation, Promotion and Protection of Investment, art. 1(2), March 22, 2002,Treaty No. 17, Ministry of Foreign Affairs Notification No. 430 (Japan).

54Treaty between the United States of America and Bahrain Concerning the Encouragement and ReciprocalProtection of Investment, with Annex, art. 1(d)(2), Sept. 29, 1999, S. TREATY DOC.NO. 106-25 (2000). TheNorth American Free Trade Agreement includes debt securities and loans of enterprises. Public issuers areexplicitly excluded; North American Free Trade Agreement, art. 11.39, Dec. 17, 1992, Can.-Mex.-U.S., 32 ILM289 & 605 (1993); The Canadian Model BIT, athttp://ita.law.uvic.ca/documents/Canadian2004-FIPA-model-en.pdf (last accessed on Aug 23, 2011), excludes debt instruments issued by public entities.

55North Sea Continental Shelf Case, (1969) ICJ Reports 3; Kelson, State Responsibility and the Abnormally

Dangerous Activity, 13 HARVARD INTERNATIONAL LAW JOURNAL197 (1972); O. Schachter, Recent Trends inInternational Law-Making, 12 AUSTRALIAN YEARBOOK INTERNATIONAL LAW(1992).


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indebtedness and promising repayment of principal and interest on an earlier advance of

money.56

RABBIT being signed with the objective of regulating investments, will not be applicable on

any form of transaction but investments.57Therefore, Sovereign Bonds do not fall within the

scope of RABBIT.

II.A.2.DEFAULT ON SOVEREIGN BONDS DOES NOT ENTAIL THE INTERNATIONAL

RESPONSIBILITY OF A STATE.

It is hereby submitted that the question of liability should be addressed in the context of the

nature of the act of State,58 i.e. whether the State has acted in a commercial or sovereign

capacity.59A violation of a contract entered into by a State with an investor of another State,

is not, a violation of international law, per se.60 The issuance of sovereign bonds is a

commercial activity.61Consequently, even a restructuring of sovereign bonds is a commercial

activity as this governmental measure is connected to the issuance of such bonds.62Thus, the

56EDWIN BORCHARD& WILLIAM H. WYNNE, STATE INSOLVENCY AND FOREIGN BONDHOLDERS 23 (1951);FREDERICK POLLOCK & FREDERIC WILLIAMMAITLAND, THE HISTORY OF ENGLISH LAW BEFORE THE TIME OFEDWARDI 207 (1899).

57Record13

58Ibid.

59Jalapa Railroad & Power Co. (U.S. v. Mex.), (1948) Am.-Mex. Cl. Rep. 538, 540, a legislative act declaringa particular clause in a contract null and void could not be interpreted as an ordinary breach of contract; rather,the government stepped out of its role as contracting party and, by exercising its sovereign powers, sought toescape its obligations under the contract; ImpregiloS.p.A. v. Islamic Republic of Pakistan, (2005) ICSID Case

No. ARB/03/3, Jurisdiction, 26.

60Societe Generale de Surveillance S.A. v. Pakistan, ICSID Case No.ARB/01/13, Objections to Jurisdiction,. 167 (Aug. 6, 2003) [hereinafter SGS-Pakistan Jurisdiction Decision], 18 ICSID REV. 301 (2003)

61Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992)

62Ibid; The U.S. Supreme Court held that the issuance of sovereign bonds was commercial activity under the

Foreign Sovereign Immunities Act of 1976. Even a suspension of payments for the purposes of stabilizingArgentinas economy was commercial activity, Exclusion of sovereign bonds from BIT.


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States act being a purely commercial act; does not entail theInternational Responsibility of

the State. 63

II.A.3.ARGUENDO,RENTIERS ACTION DOES NOT AMOUNT TO EXPROPRIATION

IN CONTRAVENTION OF RABBIT.

Every deprivation of the property or right of an investor does not amount to expropriation64.

A State may lawfully exercise its power of government affecting foreign interests

considerably without amounting to expropriation65. Mere effect on the interest of investors

should not be the sole criteria for determining whether expropriation has taken place or not;

the nature of the governmental action should also be seen66. It is submitted that where an

economic injury results from a bona fide non-discriminatory regulation within the power of

the State and in the general public interest67, compensation is not required68. Further, for

63IASHEARER,STARKESINTERNATIONALLAW298 (1994)

64"INDIRECT EXPROPRIATION AND THE RIGHT TO REGULATE IN INTERNATIONAL INVESTMENT LAW, OECDDIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS WORKING PAPERS ON INTERNATIONAL INVESTMENTNumber 2004/4; I.BROWNLIE,PRINCIPLES OF PUBLIC INTERNATIONAL LAW509 (2003)

65M.SORNARAJAH,THE INTERNATIONAL LAW ON FOREIGN INVESTMENT283 (1994)

66S.D. Myers case, US-Australia Free Trade Agreement signed on March 1, 2004, [Annex 11-B, Article 4(b)];The US-Chile Free Trade Agreement was signed on June 6, 2003 (Annex 10-D); US-Central America Free

Trade Agreement (CAFTA) signed on January 28, 2004, (Annex 10-C); The Central American countries are:Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua; US-Morocco Free Trade Agreement signed on June15, 2004 (Annex 10-B); US Trade representative Robert Zoellick to Singapore Minister of Trade and Industry,George Yeo on 6 May, 2003.

67Article 3 of the OECD Draft Convention on Foreign Property, 12 October 1967 pp. 23-25.; Restatement ofthe Law Third, the Foreign Relations of the United States, American Law Institute, Volume 1, 1987, Section712, Comment g.; The Multilateral Agreement on Investment (Report by the Chairman of the NegotiatingGroup) DAFFE/MAI(98)17, 4 May 1998, available at http://www1.oecd.org/daf/mai/pdf/ng/ng9817e.pdf,Article 3, Interpretative note to Article 5 Expropriation and Compensation; D.J. Harris et al., referring to thejurisprudence of the European Court of Human Rights in the Law of the European convention on HumanRights, (1995) at 535;

68

European Convention of Human Rights are included in Article 1 of Protocol 1, concluded in 1952 and enteredinto force in 1954


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something to amount to expropriation the act of the State must be unreasonable with an

intention to wrongfully deprive the owner of his rights69.

Therefore, devaluation of the sovereign bonds was not in any way unreasonable or a mala

fide use of general State power. The damage caused by the earthquake and closure of nuclear

plants compelled Rentiers to restructure the bonds in the interest of its population.Further,in

Oscar Chinn case the PCIJ States that favourable business conditions are transient

circumstances, subject to inevitable changes70.In such circumstances if the investors suffer

any loss, it should not be considered as an expropriatory act.

[II.B.] RENTIERS IS NOT PRECLUDED FROM APPLYING PRECAUTIONARY

PRINCIPLE.

It is hereby submitted that Precautionary Principle being an accepted principles of

International Environmental Law,71 has been implemented in state practice, 72 judicial

opinions73 and international instruments74 satisfying the requirements of qualification for

customary international law.

69Harvard Draft Convention on the International Responsibility of States for Injuries to Aliens, art.10 (5), 1961.

701934 PCIJ (ser. A/B) No. 63 (Dec. 12).

71, Nuclear Tests Case, Dissenting Opinion of Justice Weeramantry, (1995) ICJ Reports 342-4; SouthernBluefin Tuna Case, ITLS, 27THAugust, 1999, ILR 117; Principle 15, 1992 Rio Declaration on Environment andDevelopment; E.Hey, The Precautionary Concept in Environment Policy and Law : Institutionalising Caution,4 GEORGETOWN INTERNATIONAL ENVIRONMENTAL LAW REVIEW 303(1992), A.Fabra, The LOSC and theimplementation of the Precautionary Principle, 10 YEARBOOK OF INTERNATIONAL ENVIRONMENTAL LAW25(1999); WSSD Plan of Implementation, 22 and 103.

72Gabcikovo-Nagymaros Project Case, (1997) ICJ Reports 7.

73Southern Blue Fin Tuna (N.Z. & Australia v. Japan), 38 I.L.M. 1634, 77-80 (1999); Nuclear Tests (N.Z. v.Fr.), (1995) I.C.J. 342, 412.; Beef Hormones, WT/DS26/R/USA, August 18, 1997; Agricultural Products,36WT/DS76/AB/R 22 February 1999;MOx Plant. Case and Land Reclamation Case(ITLOS, 2003)

74Vienna Convention for the Protection of the Ozone Layer, Preamble,Mar. 22, 1985, 26 I.L.M. 1516 (1987)


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The Principle is intended to make States take action to avoid harm before it occurs 75and is

further understood to provide that, the greater the possible harm, the more rigorous the

requirements of alertness, precaution and effort.76 The precautionary principles primary

goal, is to avoid irreversible environmental harm, 77 is undermined by requiring the state to

wait for proof of a strategys safety.78Hence, a state cannot forgo an opportunity to obtain

environmental benefits simply because there are potential harms associated with the

action.7980

The application of such principle is triggered by two conditions precedent: the threat of

serious harm; and a lack of scientific evidence as to the effects of the methods used to address

the threat. These threats are cumulative in application but once satisfied, the principle may be

applied.81 Precautionary measures may be adopted when there are reasonable grounds for

concern or when there are valid reasons to consider that there may be a risk.82

75David Hunter, Principles and Concepts of International Environmental Law, in INTERNATIONALENVIRONMENTAL LAW AND POLICY463, 510 (2007).

76David Freestone & Robin Churchill, The Precautionary Principle, in INTERNATIONAL LAW AND GLOBALCLIMATE CHANGE21, 36 (1991).

77Brendan Moyles, Making the Precautionary Principle Work for Biodiversity: Avoiding Perverse Outcomes in

Decision-making Under Uncertainty, in BIODIVERSITY AND THE PRECAUTIONARY PRINCIPLE159, 172 (RosieCooney & Barney Dickson eds., 2005).

78Ibid.

79 Gundling, The Status in International Law of the Principle of Precautionary Action , 5 INTERNATIONALJOURNAL OF ESTUARINE AND COASTAL LAW. 23,26 (1990); The development of the precautionary approach atinternational law, the Right Hon Sir Geoffrey Palmer, 2001, Presentation to Environmental Risk ManagementAuthority Seminar Precaution in Environmental Risk Management: A reviewof recent policy and practice.

80European Commission, Communication on the Precautionary Principle, COM 4 (2001).

81Telstra Corporation Ltd v. Hornsby Shire Council [2006] NSWLEC 133.

82Supranote 12.


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It is submitted that while the Diablo fault line existed, the fact that it was still active came to

light only after the earthquake, as a consequence to which Rentiers has shut its nuclear plants

depite its grave economic consequences.

[II.C].RENTIERS MAY INVOKE FORCE MAJEURE TO PRECLUDE THE ALLEGED

WRONGFULNESSOFANYACTION.

Article 23 of ILC draft articles83provides for a situation where the wrongfulness of an act of

a State not in conformity with an international obligation of that State is precluded if the act

is due toforce majeure i.e.the occurrence of an irresistible force or of an unforeseen event,

beyond the control of the State, making it materially impossible to perform the obligation.84

Force majeure was acknowledged as a general principle of law by PCIJ in the Serbian Loans

andBrazilian Loans cases.85

A situation of force majeure precluding wrongfulness arises only when three elements are

met: (a) the act in question must be brought by an irresistible force or an unforeseen event;

(b) which is beyond the control of the State concerned; and ( c) which makes it materially

impossible in the circumstances to perform an obligation.86

83Supra note 17.

84Ibid; e.g., the cases of accidental intrusion into airspace attributable to weather, and the cases of accidentalbombing of neutral territory attributable to navigational errors during the First World War discussed in the study

prepared by the Secretariat s. 250256; The exchanges of correspondence between the States concerned in theincidents involving United States military aircraft entering the airspace of Yugoslavia in 1946, United States ofAmerica, Department of State Bulletin (Washington, D.C.), vol. XV, No. 376 (15 September 1946), p. 502,reproduced in the study prepared by the Secretariat, 144, and the incident provoking the application to ICJ in1954,I.C.J. Pleadings, Treatment in Hungary of Aircraftand Crew of the United States of America, p. 14 (noteto the Hungarian Government of 17 March 1953). It is not always clear whether these cases are based ondistress orforce majeure; the proposal of the representative of Mexico, United Nations Conference on the Lawof Treaties, First and second sessions, Vienna, 26 March24 May 1968 and 9 April22 May 1969, Documentsof the Conference (United Nations publication, Sales No. E.70.V.5), Report of the Committee of the Whole onits work at the first session of the Conference, document A/CONF.39/14, p. 182, 53

85Serbian Loans, Judgment No. 14, 1929, P.C.I.J., Series A, No. 20, pp. 3940; Brazilian Loans, Judgment No.15, 1929, P.C.I.J., Series A, No. 21, p. 120.

86 Supra note 17; The decision of the American-British Claims Commission in the Saint Albans Raid case,Moore, History and Digest, vol. IV, 4042 (1873); The decisions of the United States-Venezuela Claims


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In the instant case, when an earthquake measuring 9.2 on the Richter scale struck the territory

of Rentiers along the Diablo Canyon fault line,87 it was beyond the control of Rentiers to

perform any obligation under international law. Therefore Rentiers can invoke the force

majeure to preclude the alleged wrongfulness of any action that Rentiers has taken.

[II.D].RENTIERSCANTAKETHEDEFENCEOFNECESSITY

It is submitted that, a State may claim necessity if its response was the only means of

safeguarding an essential interest of the State against a grave and imminent peril.88 Even

State practice clearly recognises this principle.89 For the application of this defence, there

should be evidence of grave and imminent peril90and the course of action taken must be the

only way available to safeguard that interest.91 Elaborating in Gabckovo-Nagymaros

Project92the court held:

that a peril appearing in the long term might be held to be imminent as soon as it is

established, at the relevant point in time, that the realization of that peril, however far off it

might be, is not thereby any less certain and inevitable.93

Commission in the Wippermancase, Moore, History and Digest, vol. III, 3039; British- Mexican ClaimsCommission in the Gill case, UNRIAA, vol. V (Sales No. 1952.V.3), p. 157 (1931).

87Record 15.

88Supra note 17, art 25; Gabcikovo-Nagymaros Project, supra note 72

891969 Torrey Canyon Accident, Report of the Home office (London), Cmnd 3246 (1967).

90The M/V "SAIGA" (No. 2) Case (Saint Vincent and the Grenadines v. Guinea), (1999) 120 ILR 143, 191.

91 P. A. PILLITU, LO STATO DI NECESSITNELDIRITTO INTERNAZIONALE 233 (1981); J. BARBOZA, NECESSITY(REVISITED)IN INTERNATIONAL LAW,ESSAYS IN INTERNATIONAL LAW IN HONOUR OF JUDGE MANFRED LACHS27 (1984); R. Boed, State of necessity as a justification for internationally wrongful conduct, 3 YALEHUMAN RIGHTS AND DEVELOPMENT LAW JOURNAL, 1 (2000).

92Gabcikovo-Nagymaros Project Case, (1997) ICJ Reports 7.

93Ibid.


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It may be noted that when an earthquake measuring 9.2 on the Richter scale struck the

territory of Rentiers along the Diablo Canyon fault line,94 two pressurized-water nuclear

reactors in city of Nihan were affected.95Further, the subsequent inspections determined that

five nuclear power plants near the Diablo Canyon fault posed an unreasonable risk to human

health and the environment if another earthquake of a similar magnitude were to occur.96

Therefore, closing of power plants, which led to the default and restructuring was necessary

for Rentiers to safeguard an essential interest from a grave and imminent peril.

94Record 15.

95

Record 16.96Record 29.


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CONCLUSION

For the foregoing reasons, the Government of the Republic of Rentiers, Respondent

respectfully requests the Court to adjudge and declare that

1. Rentiers has no obligation under International Law to compensate Amuko for

expenses related to :

a. the deaths of two Amuko Ministry of Energy Employees,

b. the property losses suffered by the former residents of Robelynch, and

c. the medical monitoring and related medical expenses of the former

residents of Robelynch;

2. Rentiers is not liable to compensate for the aforesaid expenses incurred by Amuko;

3. Rentiers has not violated International Law by restructuring the investment in the

sovereign bonds and is therefore not liable to pay compensation for the same; and

4. Any other relief as to this Court may seem appropriate.

Respectfully Submitted:

Agents for the Republic Of Rentiers