United Nations

A/51/394


General Assembly

Distr. GENERAL  

23 September 1996

ORIGINAL:
SPANISH


                                                      A/51/394

General Assembly
Fifty-first session
Agenda items 94 (c) and 145


            MACROECONOMIC POLICY QUESTIONS:  TRADE AND DEVELOPMENT

                  UNITED NATIONS DECADE OF INTERNATIONAL LAW

                 Letter dated 18 September 1996 from the Permanent
                 Representative of Bolivia to the United Nations
                      addressed to the Secretary-General


     I have the honour, on behalf of the States members of the Rio
Group (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico,
Panama, Paraguay, Peru, Uruguay, Venezuela, Costa Rica (representing
the Central American States) and Trinidad and Tobago (representing the
Caribbean States)), to request that the document attached hereto
containing the opinion of the Inter-American Juridical Committee
issued in fulfilment of resolution AG/doc.3375/96 of the General
Assembly of the Organization of American States, entitled "Freedom of
trade and investment in the hemisphere", be circulated as a document
of the General Assembly, under agenda items 94 (c) and 145.

     The Heads of State and Government of the countries members of the
Rio Group, who met in Cochabamba, Bolivia, on 3 and 4 September 1996,
endorsed the opinion issued by the Inter-American Juridical Committee,
in which the Committee unanimously concluded that the Helms-Burton
legislation recently adopted by the United States is not in conformity
with international law.


                                            (Signed)  Edgar CAMACHO OMISTE    
                                                           Ambassador         
                                                    Permanent Representative  


                                     ANNEX

          Opinion of the Inter-American Juridical Committee in fulfilment
          of resolution AG/doc.3375/96 of the General Assembly of the
          Organization of American States, entitled "Freedom of trade and
                        investment in the hemisphere"


     The Inter-American Juridical Committee,

     Whereas the mandate contained in resolution AG/doc.3375/96,
approved by the General Assembly on 4 June 1996 during its twenty-
sixth regular period of sessions under the title "Freedom of trade and
investment in the hemisphere", instructed the Inter-American Juridical
Committee "to examine and decide upon the validity under international
law of the Helms-Burton Act ... as a matter of priority, and to
present its findings to the Permanent Council",

     Having carried out a complete, broad-ranging and detailed
examination on this matter, taking into account the various viewpoints
discussed during its consideration, and in accordance with conclusions
reached,

     Resolves:

     1.  To approve unanimously the opinion of the Inter-American
Juridical Committee that constitutes an appendix to this resolution,
issued in compliance with resolution AG/doc.3375/96 of the General
Assembly, adopted on 4 June 1996 during its twenty-sixth regular
period of sessions, and entitled "Freedom of trade and investment in
the hemisphere";

     2.  To instruct the Chairman of the Committee, in fulfilment of
resolution AG/doc.3375/96, to forward this resolution to the Permanent
Council, by the hand of the Secretary-General of the Organization of
American States, together with the opinion of the Committee.


                                   APPENDIX

          Opinion of the Inter-American Juridical Committee in response
          to resolution AG/doc.3375/96 of the General Assembly of the
          Organization of American States entitled "Freedom of trade and
                         investment in the hemisphere"


                                 INTRODUCTION

1.   This opinion is adopted pursuant to the provisions of resolution
AG/doc.3375/96 approved by the General Assembly on 4 June 1996 during
its twenty-sixth regular period of sessions and entitled "Freedom of
trade and investment in the hemisphere", by which it instructed the
Inter-American Juridical Committee, during this period of sessions, to
examine and decide upon the validity under international law of the
Helms-Burton Act [known as the "Cuban Liberty and Democratic
Solidarity Act - Libertad Act"] as a matter of priority, and to
present its findings to the permanent Council.

2.   The Committee understands that this opinion, issued in accordance
with the jurisdiction assigned to it by article 98 of the Charter of
the Organization,  1/ has no binding effect on member States or
the organs of the Organization.

3.   The Committee issues this opinion on the basis of the following
premises:

     (a) In the performance of its assignment the Committee did not
intend to interpret or pronounce on the internal legislation of any
member State;

     (b) The expression "the legislation" used in this document refers
to a law whose content is similar to that of the Helms-Burton Act;

     (c) The Committee understands that resolution AG/doc.3375/96,
adopted by the General Assembly, is intended to safeguard the
international public order of the hemispheric system.  It is thus
necessary to stress the prevalence of certain rules of international
law in the inter-American system that should be respected by the
juridical systems of member States;

     (d) The Committee interpreted its mandate set forth in paragraph
1 above as relating to the conformity of the legislation under
examination with public international law.  This has been identified
with the rules of international law as alluded to in Article 38,
paragraph 1, of the Statute of the International Court of Justice. 
However its application excludes those rules contained in instruments
of a subregional or universal character to which not all States of the
Organization of American States are party;

     (e) The Committee considered that the mandate received from the
General Assembly did not require an opinion on bilateral issues
between member States, which is why it makes no statement on the
specific measures adopted by the Government of the United States of
America in relation to Cuba, such as the embargo imposed for over
three decades, while nevertheless noting that such measures raise
legal questions in the light of the norms established in articles 18
and 19 of the charter of the Organization of American States;

     (f) The Committee examined the provisions of the legislation
covering matters such as the admission of aliens and activities with
regard to international financial institutions.  Regarding these
matters the Committee did not deem it convenient to issue a statement,
as it notes that there are legal mechanisms for settling any possible
disputes regarding these issues.  Nonetheless, the Committee stresses
that these matters may bring up questions of international law such as
respect for human rights and the principle of pacta sunt servanda;

     (g) The Committee examined two principal areas of legal questions
suggested by the legislation:  the protection of the property rights
of nationals and the extraterritorial effects of jurisdiction.


              A.  Protection of the property rights of nationals

4.   The Committee considered that the enactment of the legislation in
some cases and its possible application in others could have the
juridical effect of:

     (a) Transforming the espousal  2/ of a State-to-State claim
under international law into a domestic legal claim asserted under
internal law by a national against nationals of third States;

     (b) Conferring the right to make such claims on persons who were
not nationals at the time of the alleged loss;

     (c) Attributing responsibility for acts of a foreign State to
private persons who might be nationals of third States;

     (d) Authorizing the determination of the quantum of compensation
in a manner that could increase it to three times the loss caused by
the act of expropriation;

     (e) Creating liability for a private defendant for the total
value of an asset expropriated without taking into account the value
of the "benefit" derived by him from its use or the claimed "loss"
caused to the alleged original owner by such use;

     (f) Allowing claims that should be filed against a foreign State
to be enforced by means of proceedings brought against the nationals
of third States without endowing them with effective means to refute
or contest the allegations against them or the third State in respect
of the existence or the valuation of such claims, including on the
basis of conclusive certifications issued by an internal
administrative commission;

     (g) Confusing a claim for damages or restitution, based on
nationalization, with an action in rem to claim "wrongfully
confiscated property" and in addition with an action in personam for
unjust enrichment from the use of such "wrongfully confiscated
property" by any person subsequently involved in such use in a broad-
ranging and indeterminate manner;

     (h) Creating liability for nationals of third States for the
lawful use of expropriated property in the territory of the
expropriating State or for the lawful use of property which does not
itself constitute expropriated property.

5.   The Committee considered the rules of international law applicable
to diplomatic protection, State responsibility, and the minimum rights
of aliens regarding the protection of property rights of nationals. 
In the Committee's view the following principles and rules are
generally accepted by the member States in this regard:

     (a) Any State that expropriates, nationalizes or takes measures
tantamount to expropriation or nationalization of property owned by
foreign nationals must respect the following rules:  such action must
be for a public purpose, non-discriminatory, and accompanied by
prompt, adequate and effective compensation, granting to the
expropriated party effective administrative or judicial review of the
measure and quantum of compensation.  Failure to comply with these
rules will entail State responsibility;

     (b) The obligation of a State in respect of its liability for
acts of expropriation consists of the restitution of the asset
expropriated or adequate compensation for the damage caused, including
interest up to the time of payment;

     (c) When a national of a foreign State is unable to obtain
effective redress in accordance with international law, the State of
which he is a national may espouse the claim through an official
State-to-State claim.  It is a condition for such espousal that from
the time of the occurrence of the injury until the settlement of the
claim the holder thereof must without interruption have been a
national of the claimant State and not have the nationality of the
expropriating State;

     (d) Claims against a State for expropriation of the property of
foreign nationals cannot be enforced against the property of private
persons except where such property is itself the expropriated asset
and within the jurisdiction of the claimant State.  Products grown or
produced on such property do not under customary international law
constitute expropriated property;

     (e) Any use by nationals of a third State of expropriated
property located in the expropriating State where such use conforms to
the laws of that State, as well as the use anywhere of products or
intangible property not constituting the expropriated asset itself,
does not contravene any norm of international law;

     (f) The nationals of foreign States have the right to due process
of law in all judicial or administrative procedures that may affect
their property.  Due process includes the possibility of effectively
contesting both the basis and quantum of the claim in a legal or
administrative proceeding.

6.   In the light of the principles and norms set out in paragraph 5
above the Committee considers that the legislation under analysis does
not conform to international law in each of the following respects:

     (a) The domestic courts of a claimant State are not the
appropriate forum for the resolution of State-to-State claims;

     (b) The claimant State does not have the right to espouse claims
by persons who were not its nationals at the time of injury;

     (c) The claimant State does not have the right to attribute
liability to nationals of third States for a claim against a foreign
State;

     (d) The claimant State does not have the right to attribute
liability to nationals of third States for the use of expropriated
property located in the territory of the expropriating State where
such use conforms to the laws of this latter State, nor for the use in
the territory of third States of intangible property or products that
do not constitute the actual asset expropriated;

     (e) The claimant State does not have the right to impose
liability on third parties not involved in a nationalization through
the creation of liability not linked to the nationalization or
unrecognized by the international law on this subject, thus modifying
the juridical bases for liability;

     (f) The claimant State does not have the right to impose
compensation in any amount greater than the effective damage,
including interest, that results from the alleged wrongful act of the
expropriating State;

     (g) The claimant State may not deprive a foreign national of the
right in accordance with due process of law to effectively contest the
bases and the quantum of claims that may affect his property;

     (h) Successful enforcement of such a claim against the property
of nationals of a third State in a manner contrary to the norms of
international law could itself constitute a measure tantamount to
expropriation and result in responsibility of the claimant State.


          B.  Extraterritoriality and the limits imposed by international
              law on the exercise of jurisdiction

7.   The Committee understands that legislation would result in the
exercise of legislative or judicial jurisdiction over acts performed
abroad by aliens on the basis of a concept termed "trafficking in
confiscated properties".

8.   The Committee has also examined the applicable norms of
international law in respect of the exercise of jurisdiction by States
and its limits on such exercise.  In the opinion of the Committee,
these norms include the following:

     (a) All States are subject to international law in their
relations.  No State may take measures that are not in conformity with
international law without incurring responsibility;

     (b) All States have the freedom to exercise jurisdiction but such
exercise must respect the limits imposed by international law.  To the
extent that such exercise does not comply with these limits, the
exercising State will incur responsibility;

     (c) Except where a norm of international law permits, the State
may not exercise its power in any form in the territory of another
State.  The basic premise under international law for establishing
legislative and judicial jurisdiction is rooted in the principle of
territoriality;

     (d) In the exercise of its territorial jurisdiction a State may
regulate an act whose constituent elements may have occurred only in
part in its territory; for example an act initiated abroad but
consummated within its territory ("objective territoriality") or
conversely an act initiated within its territory and consummated
abroad ("subjective territoriality");

     (e) A State may justify the application of the laws of its
territory only insofar as an act occurring outside its territory has a
direct, substantial and foreseeable effect within its territory and
the exercise of such jurisdiction is reasonable;

     (f) A State may exceptionally exercise jurisdiction on a basis
other than territoriality only where there exists a substantial or
otherwise significant connection between the matter in question and
the State's sovereign authority, such as in the case of the exercise
of jurisdiction over acts performed abroad by its nationals and in
certain specific cases of the protection objectively necessary to
safeguard its essential sovereign interests.

9.   The Committee examined the provisions of the legislation that
establish the exercise of jurisdiction on bases other than those of
territoriality, and concluded that the exercise of such jurisdiction
over acts of "trafficking in confiscated property" does not conform
with the norms established by international law for the exercise of
jurisdiction in each of the following respects:

     (a) A prescribing State does not have the right to exercise
jurisdiction over acts of "trafficking" abroad by aliens unless
specific conditions are fulfilled which do not appear to be satisfied
in this situation;

     (b) A prescribing State does not have the right to exercise
jurisdiction over acts of "trafficking" abroad by aliens under
circumstances where neither the alien nor the conduct in question has
any connection with its territory and where no apparent connection
exists between such acts and the protection of its essential sovereign
interests.

Therefore, the exercise of jurisdiction by a State over acts of
"trafficking" by aliens abroad, under circumstances whereby neither
the alien nor the conduct in question has any connection with its
territory and there is no apparent connection between such acts and
the protection of its essential sovereign interests, does not conform
with international law.


                                  CONCLUSION

10.  For the above reasons the Committee concludes that in the
significant areas described above the bases and potential application
of the legislation which is the subject of this opinion are not in
conformity with international law.


                                     -----


                                     Notes

1/       "Article 98 (formerly article 104):  The purpose of the
Inter-American Juridical Committee is to serve the Organization as an
advisory body on juridical matters; to promote the progressive
development and codification of international law; and to study
juridical problems related to the integration of the developing
countries of the hemisphere and, insofar as may appear desirable, the
possibility of attaining uniformity in their legislation."

2/       The expression "arrogacio'n" in the Spanish text is used as
the equivalent to "interposicio'n di'ploma'tica" (diplomatic
interposition) which is also used when a State espouses a claim by a
national.

 

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