i nternational i nvestment l aw - 6 state responsibility and attribution prof. dr. werner meng -...

INTERNATIONAL INVESTMENT LAW - 6

State Responsibility and Attribution

Prof. Dr. Werner Meng - Europa Institut - Saarland University 1

2Prof. Dr. Werner Meng - Europa Institut - Saarland University

• Direct or indirect expropriations by central, subfederal states, provinces or municipalities?

• Is the state responsible for violating acts of independent judges? For acts of the parliaments on different levels? For independent government agencies like central banks or cartel authorities?

• For activities of independent legal persons owned by the state, or where the state is a majority shareholder, the holder of a blocking majority, of a golden share

• For activities of private persons on behalf of the state, by employment, by legal submission or out of free will?

Whose actions are states responsible for?


• Article 4. Conduct of organs of a State • 1. The conduct of any State organ shall be con-

sidered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organization of the State, and whatever its character as an organ of the central Government or of a territorial unit of the State.

• 2. An organ includes any person or entity which has that status in accordance with the internal law of the State.

• International law Commission, Draft articles on Responsibility of States for Internationally Wrongful Acts (2001)

Organs of a state


• The European central bank, by manipulating the exchange rate with the US dollar is deteriorating the export position of the exporters to the dollar area.– Among them are also foreign investors

• What if the cartel authority of a state is breaking up the merger of two firms of foreign investors unlawfully, causing their bankruptcy?

State agencies


• "empowered by the law of that State to exercise elements of the governmental authority"

• Formal arguments– Presumptions

• Direct or indirect state ownership• Direct or indirect control by the state• Activities are governmental in nature of reserved for the state

• Functional arguments– Are specific acts or omissions are essentially commercial

rather than governmental in nature?

State agencies


Article 5. Conduct of persons or entities exercising elements of governmental authority • The conduct of a person or entity which is not an

organ of the State under article 5 but which is empowered by the law of that State to exercise elements of the governmental authority shall be considered an act of the State under international law, provided the person or entity is acting in that capacity in the particular instance.


Agencies of a state


• Very rarely in reality• The customs authority of a foreign state in an exclave

of the territory of a state creates an act that amounts to a direct or indirect expropriation

Delegated organs


Article 6. Conduct of organs placed at the disposal of a State by another State • The conduct of an organ placed at the disposal of a

State by another State shall be considered an act of the former State under international law if the organ is acting in the exercise of elements of the governmental authority of the State at whose disposal it is placed.


Delegated organs


• A state organ causes an act of indirect expropriation • Later the government contends that this activity was

unlawful, in excess of the powers of this organ

Excess of powers


Article 7. Excess of authority or contravention of instructions • The conduct of an organ of a State or of a person or

entity empowered to exercise elements of the governmental authority shall be considered an act of the State under international law if the organ, person or entity acts in that capacity, even if it exceeds its authority or contravenes instructions.


Excess of powers


• The state is using a labor union group in the enterprise to paralyze its activities and monitors and steers this union

Controlled conduct


Article 8. Conduct directed or controlled by a State• The conduct of a person or group of persons shall be

considered an act of a State under international law if the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct.


Controlled conduct


• In the ELSI case the municipality had secured the persistence of the factory.

• What if a labor union would have done that securing?

Default conduct


Article 9. Conduct carried out in the absence or default of the official authorities • The conduct of a person or group of persons shall be

considered an act of a State under international law if the person or group of persons is in fact exercising elements of the governmental authority in the absence or default of the official authorities and in circumstances such as to call for the exercise of those elements of authority.


Default conduct


Article 10. Conduct of an insurrectional or other movement

• 1. The conduct of an insurrectional movement which becomes the new Government of a State shall be considered an act of that State under international law.

• 2. The conduct of a movement, insurrectional or other, which succeeds in establishing a new State in part of the territory of a pre-existing State or in a territory under its administration shall be considered an act of the new State under international law.

• 3. This article is without prejudice to the attribution to a State of any conduct, however related to that of the movement concerned, which is to be considered an act of that State by virtue of articles 4 to 9.


Insurrection and civil war


• Hardly happening in reality• Not: acknowledgement of economic activities of a

state entity• Only public power activities of non-State entities• But how could that ever happen?

Acknowledged conduct


Article 11. Conduct acknowledged and adopted by a State as its own

• Conduct which is not attributable to a State under the preceding articles shall nevertheless be considered an act of that State under international law if and to the extent that the State acknowledges and adopts the conduct in question as its own.


Acknowledged conduct


• Already minimum standard obligation• In BITs:– Full security and protection or– FET

• Violated by an omission• Objective standard– No subjective fault necessary

Obligation to protect the investor

i nternational i nvestment l aw - 6 state responsibility and attribution prof. dr. werner meng -...

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