The asymmetry of international law – conversation with Professor Bruno Simma

2019. november 7. 16:01
One of the biggest challenges of current international law is that while transnational corporations are increasingly recognized as right holders, they still do not have legally binding obligations. This problem should be tackled by a number a different ways bearing in mind that states are still the main actors in international legal matters – pointed out by Bruno Simma, Professor of International Public Law and former judge at the International Court of Justice in The Hague in a conversation in the interview series of Lénárd Sándor, researcher at the National University of Public Service, located in Budapest.

You are a well respected and internationally recognized expert in various fields of international public law. You also served on the International Court of Justice (ICJ) in The Hague. Can you tell us how you became a judge at the World Court?

It is a long story, but I try to cut it short. With the exception of the permanent members of the UN Security Council, States have to compete for a seat on the International Court of Justice. In 2001, Germany held such a seat, but the German judge at the time  did not want to continue and that is where I came in. In the preceding years I had served as the lead counsel of the German team before the ICJ in a case against the United States of America, namely the LaGrand case. The case was about the treatment of two German brothers in Arizona who had committed murder and were sentenced to death. Germany went to the ICJ because the American authorities had failed to notify the German consulate about the criminal proceeding and thus, Germany claimed, the LaGrand brothers had not had sufficiently effective lawyers.  Germany won the case and this moment coincided with the possibility to present a new candidate for the seat at the Court. Under the circumstances just mentioned and since I am also a Professor of Public International Law, I was what you could call a natural candidate of Germany, which did lead an effective campaign for me. So I was elected in 2002.

Can you share some of your interesting experiences on the bench and introduce us to some of the important cases you took part in?

One of the most important cases during my nine-year term was the Genocide case brought by Bosnia and Herzegovina against Serbia already in 1993 but only leading to a final judgment in 2007. According to the depressing allegations of Bosnia and Herzegovina, Serbia was to be found internationally responsible for the genocide committed in Bosnia and Herzegovina. The Court finally found Serbia guilty of a lack of preventing the genocide in Srebrenica. Because of the sheer horror to even read the files, this case was exceptional. So this was the most important but at the same time, the most depressing case I took part in.

Another politically interesting case was an advisory opinion. The ICJ does not only render judgments in contentious cases between states but can also give advisory opinions if asked for such an opinion by for example the General Assembly of the United Nations (UN). The General Assembly did so about the legality of the Wall that Israel was constructing in  2003 on the occupied Palestinian territory. This was a highly politicized procedure, a Palestinian even made a film about it. Even though the opinion came out in favor of the Palestinians, the legal consequences that the Court described were only accepted  with great hesitation, if at all.

The last case I would mention grew out of many domestic court cases that were brought against Germany before the courts of Greece and Italy with regards to the atrocities committed by the German Army and Gestapo throughout the Second World War. Italian courts admitted the execution of judgments into German properties. These decisions made Germany go to the ICJ to protect its sovereign immunity. According to the principles of sovereign immunity, a national court of one country cannot admit a case brought against another country for acts which that country has committed as a sovereign, for instance in war time. Germany won the case against Italy, but the responsibility of Germany for the crimes committee in World War II is still a story in which the last word has not been spoken…

In one of your studies, “Foreign Investment Arbitration: a place for human rights?”, you pointed out that international law and especially one of its most powerful regime, international investment law is currently asymmetrical because it favors transnational business interests over the human rights considerations of both individuals and communities. Can you explain this dilemma in more details?

In order to provide a foreign investment with more security, an investor can usually rely on a treaty concluded between its home country and the host country. In that treaty the states pledged to each other that they would treat investments of nationals of the respective other states in accordance with international law, particularly not expropriate the property of the investor in illegal ways and treat the foreign investments in an equitable and fair manner. The investor gains the right to turn directly to an arbitration institution like the World Bank in Washington, the Permanent Court of Arbitration in The Hague or the Stockholm Chamber of Commerce and bring a suit against the state. So the parties in these proceedings are the investor versus the state.

Not until recently have human rights played a role in that process. The first group of cases in which human rights interests appeared were brought against Argentina. Argentina went through a deep financial crisis in 2001 and during that time period, because of the policy measures taken with regard to the crisis management, several investors brought suits against Argentina before international investment tribunals. In some of these proceedings, Argentina argued that the measures in questions were based on human rights obligations of the state of Argentina towards its population, such as duties arising from the human right to water. The number of these types of cases has increased since then. There was a case very recently also against Argentina in which the country was sued by an investor but put forward a so called “counter claim” because of alleged human rights violations by the investor. So there is a growing recognition that human rights do have a role to play in international economic law.

In your view is it “only” a human rights dilemma or maybe it goes beyond the field of human rights and raise constitutional concerns?

I think the constitutional problem would consist in the different treatment of foreign investors vis-à-vis those investing in their own country. Let me refer to an example. In Germany a few years ago the government took the decision that nuclear energy will be phased out. As a consequence, companies that had invested in nuclear energy brought compensation suits before the domestic German courts and finally to the German Constitutional Court, the “Bundesverfassungsgericht” in Karlsruhe. But one of these companies, Vattenfall, is a Swedish company and thus not only brought claims against Germany before German courts but also had the opportunity to go before one of these investment tribunals. This is of course a difference in the treatment between domestic and foreign investors.

However, this also poses a dilemma in the law of the European Union because EU law provides that all EU citizens should be treated in the same way within the European Union. Additionally, the European Court of Justice in Luxembourg claims for itself the sole right to interpret the law of the European Union with binding effect for everyone. Therefore, if investment arbitration panels can decide disputes between an EU Member State and an investor from another EU Member State, they are eroding the monopoly of the European Court of Justice (ECJ). Actually, EU Member States, including Hungary are preparing a treaty by which they want to exclude all international investment arbitrations within the scope of EU law and declare the awards in question invalid.

Yes, Hungary was among the first to give the green light for a conclusion of a termination agreement of these intra-EU investment treaties. So it seems that the current investment treaty mechanism has negative impacts on human rights as well as on the constitutions and even on the EU law. What potential interpretative or treaty-making methods could you envision in order to be able to remedy this asymmetry?

This is one of the most important challenges right now. One can mention two different streams. One the one hand there is the position of the EU, which wants to replace the ad hoc investment arbitrations with a standing two tiers investment court where an appellate review is provided. Some of the international economic treaties concluded by the European Union with non-European countries already provide for such courts. On the other hand, there are also attempts to leave the existing system in place but remedy its current shortcomings. For instance, Philip Morris brought claims against both Australia and Uruguay because of their tobacco advertisement regulations according to which tobacco companies are, for instance, obliged to display pictures on the harmful consequences of smoking. In one of the cases, the case against Uruguay, the decision of the investment tribunal declared that states do have the possibility and the right to protect the welfare of their population and thus found the regulations permissible. The impact of this decision can already be seen in the texts of newly formulated investment treaties which exclude, among others public health considerations from the jurisdiction of investment tribunals. So the second stream would leave the investment arbitration intact, however, it would give the states the possibility to justify their measures as public policy measures for the protection of public health, welfare and also of human rights.

There is also an ongoing and closely related treaty-making process on business and human rights. Do you think that international law should recognize the obligations of transnational corporations? How do you see this development?

What you just said exactly shows the current asymmetry of international law. Transnational corporations are nowadays increasingly recognized as holders of rights in the field of investment arbitration, but how about being recognized as the holder of obligations? According to the current mainstream view on international law, transnational corporations are not recognized as being subject to legally binding obligations. This is where the big challenge lies right now. States took the interests of large corporations into consideration without elaborating well enough on their responsibilities. To give an example: an investor has a factory in a third world country and the labor or safety conditions there are minimal if they even exist at all. Consequently, terrible things happen, as we could see in the case of the collapse of the Rana Plaza factory in Bangladesh. In these cases, the parent companies are denying any responsibility before their domestic courts, saying that it is the daughter companies or the companies they have contracted with abroad that have legal responsibilities.

Many people are speaking about various duties of companies today, but, as I just said, they are not considered legally binding. The United Nations made an effort recently that led to the adoption of the so called “Ruggie Principles” (named after Professor John Ruggie who was the leader of these efforts at the United Nations). These “Ruggie Principles” summarize what is nowadays accepted as constituting “good governance” by transnational corporations. And as you mentioned, a number of, particularly Latin American, countries initiated a process at the United Nations a few years ago under which an international treaty is now developed. This international treaty aims to regulate the human rights responsibilities of transnational corporations. The basic idea is that the States parties of this international treaty would be under an obligation to see to it that the corporations of their nationality abide by obligations of due diligence to make sure that human rights are respected wherever these large corporations or their supply chain operate. The treaty negotiations are now under way, but the problem is that in a number countries it will be very difficult to have this treaty accepted.

What would be the best approach that can “sweeten the deal” in your view? Do you think that this new treaty should embrace a supranational regulations of transnational corporations or do you think that it should rather lean on the state’s regulatory powers?

I think this is exactly the problem which should be tackled in a number of different ways instead of applying only one method or approach. You cannot say that one or the other method is the only or the best method. I think the aim of this UN treaty-making process is to be welcomed because states are still the main actors in international legal matters. And if the home state can and does – or dares to – really observe and control the compliance of its companies with human rights standards, this will be a great  achievement.

A second avenue would be to give victims the right to bring breaches of labor or other standards tha have injured their rights before the courts of the home country of the parent company. For example, British courts recently declared that it is possible for a company to be sued for negligence in labor law or in providing safety measures by another company with which the British parent company has a contractual relationship. So in this way, let’s say a German parent company under certain circumstances would be responsible before the German courts for human rights breaches by the companies they own in other countries or for the companies they have contractual relationship with. This would be a new development. It would certainly take a lot of courage from states, but it would also require a new outlook from domestic judges.

A third method is being propagated and advocated among others by me. A system of international arbitration could be developed which companies accept voluntarily. Under such a mechanism victims of human rights violations could bring a legal claim and get an award and compensation. This is of course not a panacea, but it can also contribute to the improvement of the situation.

So your suggestion would mirror the design of the current investment arbitration for the benefits of the victims?

Yes, in the sense that there are two systems that face each other and the investor can sue when the state does something wrong, but the victims of irregular activities on the part of an investor would be also able to sue the investor. This would certainly offer some remedy for the asymmetry of international law.

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