Chapter 2

Chapter 2
STATE RESPONSIBILITY
AND
ENVIRONMENTAL
REGULATION
2-1
© 2009 Pearson Education, Inc publishing as Prentice Hall
CHAPTER 2
STATE RESPONSIBILITY AND
ENVIRONMENTAL REGULATION
Topics for this chapter:

State Responsibility
Standard of Care
Objections
Relief
Insurance
Environmental Protection
2-2
State Responsibility
 Historically, state was only
responsible to another state for
an injury to an individual alien or
foreign business.
 Rationale for this was that injury
to a state’s national is an injury
to that state.
 Liability determined by an
international standard, not the Elihu Root, U.S. Sec. of
laws of any particular state, as State, Nobel Laureate,
U.S. Senator
argued by Sec. Root in 1909.
2-3
State Responsibility –
Basis Requirements
 Two requirements to establish that state is
responsible for an injury to an alien or foreign
business:
1. “conduct consisting of an action or
omission…attributable to the State under
international law,” and
2. the conduct must “constitute…a breach of an
international obligation of the State.”
 The sovereign state must consent to being
adjudged responsible by another state or
international tribunal.
2-4
Doctrine of Imputability
 Under the doctrine of imputability, a state is
only responsible for actions that are imputable
or attributable to it.
 State is responsible for acts done by officials
within their apparent authority. This includes:
1. Acts within the scope of officials’ authority
and
2. Acts outside their scope of authority if the
state provided the means to accomplish the
act.
2-5
Case 2-1
Sandline International Inc. v.
Papua New Guinea
 Sandline claimed PNG owed it
$18 million under agreement
entered into by PNG officials
under color of authority that was
illegal under PNG law.
 Agreement between private party
and state is an international (not
domestic) contract.
 State is responsible for
unauthorized or ultra vires acts of
state agents performed under
cover of official character.
 Responsible for acts of state
organs even if acts are contrary to
domestic law of the state.
2-6
State Responsibility –
Nonimputable Acts
 While states are responsible to other
states and private parties for the acts (even
ultra vires acts) of their organs and state
officials, the state is not responsible for:
• Acts of officials of other states
• Acts of international organizations
• Acts of insurrectionaries within their territory
See Case 2-2 for example of nonimputable acts.
2-7
Case 2-2
Home Missionary Society Case
 Natives of Sierra Leone
revolted against imposition of
“hut tax” by Great Britain.
 Missions destroyed and
missionaries killed.
 U.S. claimed G.B. negligent.
 Tribunal held that no
government can be held
responsible for rebellious acts
in violation of its authority
where it acted in good faith.
2-8
State Sanctioned Terrorism
 Terrorism is the sustained clandestine use of
violence.
 When states sanction terrorism, most states only
hold the terrorist state responsible for helping
bring terrorists to trial.
 United States allows suits against foreign states
and their officials for death and injury resulting
from state-sponsored terrorist acts.
2-9
Case 2-3
Flatow v. The Islamic Rep. of Iran
 Iran provided financial support to the

Shaqaqi faction of Palestine Islamic
Jihad, a terrorist group that killed U.S.
citizen Flatow in suicide bombing.
 Iran liable because the seven elements
needed to support a cause of action
under the U.S. Antiterrorism and
Effective Death Penalty Act of 1996
were proven as follows:
2-10
Case 2-3
Seven elements to establish state-sponsored terrorism:
1. Death due to extrajudicial killing
• Suicide bombing by Shaqaqi faction is deliberate
killing carried out without lawful authority.
2. Carried out by an actor receiving support from a
foreign state
• Iran supplied financial support to Shaqaqi faction.
3. Resources provided by official acting within
scope of his or her employment
• Resources provided by Iranian head of state.
2-11
Case 2-3
Seven elements of state-sponsored terrorism (continued):
4. State designated as terrorism sponsor by the U.S.
government.
• Iran had been designated as a terrorist state.
5. Opportunity to arbitrate (not applicable in this case)
6. Plaintiff or victim a U.S. citizen
• Flatow was a U.S. citizen.
7. Similar conduct by U.S. officials would be
actionable
• U.S. officials would be liable if they supported
suicide bombing within the United States.
2-12
Fault and Causation
 A state is responsible for the injuries to other states

and its citizens only if the offending state actually
caused the injury.
 Evidence must establish a causal connection
between the act of the state and the resulting injury.
 In the Corfu Channel Case, the court found that
Albania was liable to Great Britain for damage to its
warships by mines because Albania did not warn
the British or try to prevent the disaster. A causal
relationship was found even though Albania did not
lay the mines in its territorial waters.
2-13
Establishing the Standard of Care
 Once a causal connection is established
between a state’s action and an injury, it
must be determined if the state owed a
duty to other states or aliens. This is
determined by applying the appropriate
standard of care.
 The two criteria for establishing the
appropriate standard of care are:
1.the international standard, or
2.the national standard.
2-14
The National Standard of Care
 A national standard of care is a doctrine

under which a state must treat aliens the
same way that it treats its own nationals.
 Critics attack this doctrine by pointing out that
is provides no protection for aliens if the
nationals are ill treated.
 The national standard is often supported by
Latin American, Eastern European, Asian,
and African states that mistreat their own
citizens.
2-15
Case 2-4
Cantero Herrera v. Canevaro & Co.
 Cantero Herrera, a Cuban national, filed suit in
Peru in an attempt to collect an inheritance.
 Cantero Herrera lost the suit. Five years later
the Cuban Envoy requested reparations based
upon an unspecified denial of justice.
 Applying the national standard of care, the Peru
Supreme Court found that unless there was a
denial of justice, the judgment of the sovereign
was entitled to respect.
 Cantero Herrera was not denied a hearing,
denied any right, or subjected to any
objectionable treatment. The claim was denied.
2-16
The International Standard of Care
 The international standard is favored by

major Western countries. This doctrine
provides that a state is responsible for
injuring an alien when the state’s conduct
violates international norms.
 Mistreatment of an alien constitutes a
“delinquency” (violation of international
standard) if it amounts to an outrage, to
bad faith, or to willful neglect of duty that
falls short of international standards.
2-17
The International Standard of Care
 Delinquencies can be either crimes or torts.

 State acts are international crimes if they:
• Seriously breach international peace
• Deny people the right of self-determination
• Fail to safeguard human life and dignity (e.g.,
slavery or genocide)
 International torts include expropriation and
denial of justice.
• Expropriation is the taking or deprivation of the
property of foreigners.
2-18
Case 2-5
ACSYNGO v. CSG (France) SA
 France nationalized the stock of
CSG which owned stock in Belgian
company (GSR).
 Belgian stockholders (ACSYNGO)
argued that they should retain
ownership in GSR so as to prevent
wrongful extraterritorial effect of
French decree.
 Court ruled that if fair and adequate
compensation has been paid, the
nationalization decree of one nation
can have an effect in another nation.
2-19
Third World Argument on
Nationalization of Property
 Third World countries object to
requirement of adequate compensation,
arguing that past seizures of their
property by colonial powers do not justify
payment of full market value when they
break from colonial rule.
 Two UN General Assembly Resolutions
have taken the Third World viewpoint.
 Case 2-6 states the Third World position.
2-20
Case 2-6
Case Concerning Barcelona Traction,
Light, and Power Co., Ltd.
 Spaniards purchased bonds and forced
bankruptcy to detriment of Belgians who
owned 88% of Barcelona Traction, a Canadian
company.
 Spain argued that Belgium could not act on
behalf of Canadian company stockholders.
 Court ruled that when a state admits into its
territory foreign investors, it is bound to extend
to them the protection of the law and is obliged
to treat them fairly.
2-21
Case 2-6
Case Concerning Barcelona Traction
- Dissent Sets Forth Third World Position
 Dissenting judge argued that it is
not the shareholders of the huge
corporations that needed
protection, but the poor and weak
states, where the investments
take place, who need to be
protected from powerful foreign
investors.
 Foreign investors take a risk and
should abide by the national laws
of the state where they invest.
2-22
Delinquency Based Upon
Denial of Justice
 Denial of justice exists “when there is:
• a denial, unwarranted delay, or obstruction of
access to courts,
• gross deficiency in the administration of judicial
or remedial process,
• failure to provide those guarantees which are
generally considered indispensable to the
proper administration of justice, or
• a manifestly unjust judgment.”
2-23
Case 2-7
Chattin v. United Mexican States
 Chattin, a railroad conductor
and U.S. citizen, was tried for
embezzlement in Mexico.
 Trial procedures were in
compliance with Mexican law.
 Procedures were insufficient
under international standards
due to irregularity of court
proceedings, lack of
confrontation of witnesses,
and withholding of evidence.
2-24
Objections To Complaints
That States May Raise
 A state may raise several types of

objections to complaints brought
against them:
• Lack of standing
• Lack of nationality
• Lack of a genuine link
• Failure to exhaust remedies
2-25
Lack of Standing
 An objection to an international tribunal’s

exercise of jurisdiction when a plaintiff is
not qualified to appear before the court.
• Ex: Only a state, not a person or company,
can file a complaint in the Int. Court of Justice.
• Lack of standing does not apply to tribunals
such as European Court of Human Rights,
where the right of private persons to bring
actions against a state is allowed.
2-26
Lack of Nationality
 An objection made to an international
tribunal’s exercise of jurisdiction when the
state bringing the suit files a complaint on
behalf of a person who is not a national of
that state.
• Calvo Clause: clause in agreement between
host state and foreign investor that says that
the investor will not seek diplomatic assistance
of its home state in dispute with host state.
• Lack of nationality was unsuccessfully raised
as defense in Case 2-6.
2-27
Lack of a Genuine Link
 Objection made to an international tribunal’s

exercise of jurisdiction when there is no real
and bona fide relationship between the
state bringing the suit and the person on
whose behalf the suit is brought.
• Person may not acquire citizenship in another
country to facilitate claim.
• International tribunals require that a company
has a genuine link with its sponsoring state.
2-28
Failure To Exhaust Remedies
 Before a person or company can seek the
help of its home state to being a complaint
against a foreign state, the person or
company must exhaust all remedies
available to them in the foreign state.
 Requirement is waived if:
• adequate remedy not available in the foreign
state,
• if the requirement is waived by treaty, or
• if the foreign state caused the injury directly.
2-29
Case 2-8
The M/V Saiga Case
St. Vincent and the Grenadines v. Guinea
 M/V Saiga, an oil tanker,
seized for selling oil in
Guinea’s economic zone.
 Saiga’s nationality links:
• Owner – Cyprus
• Manager – Scotland
• Charter – Switzerland
• Registered – SVG
• Crew – Ukraine
• Cargo – Switzerland
2-30
Case 2-8
The M/V Saiga Case (cont.)
 Guinea raised objections
(genuine link, failure to exhaust
remedies, lack of nationality.)
 Court found that under
UNCLOS:
• flag state has genuine link to
ships flying under its flag
• need not exhaust local remedies
• flag state has jurisdiction over all
associated with a ship
 UNCLOS looks at a ship as a
unit. Crew is part of that unit.
2-31
Relief Awarded To Injured Parties
 Relief that can be obtained from states

for injuring an alien include:
 Restitution in kind – the item taken is
returned (ship, jewels, art)
 Satisfaction – honor of the injured state
is restored (pay for the insult)
 Compensatory damages – money is
paid for the cost of the injury suffered
2-32
Case 2-9
Re Letelier and Moffitt
 Letelier (former foreign minister of Chile) and
Moffitt killed in car bombing in Washington, D.C.
 Chile found liable in U.S. trial court.
 Chile refused to pay judgment but agreed to
make an ex gratia payment to the U.S.
government on behalf of the victims.
 Appropriate ex gratia payment is full reparation.
 Reparation must wipe out all the consequences
of the illegal act and make the victims whole.
2-33
Insurance
 Insurance is the contractual commitment

by an insurer to indemnify an insured
against specific contingencies and perils.
 Insurance may be available from
private insurers, governments, and
intergovernmental agencies. The risks
covered range from injury to customers
to covering losses from nationalization of
property by a foreign government.
2-34
Examples of International
Insurance Products
International Property Insurance
• Foreign Commercial Property Insurance covers
financial losses from damage to overseas property.
• Marine Cargo Insurance protects goods in transit.
International Casualty Insurance
• Foreign Commercial General Liability Insurance
protects against financial loss from third-party lawsuits.
Coverage for Overseas Employees
• Foreign Accident and Health Insurance covers
employees and their family.
Specialty Coverages
• Political Risk Insurance covers losses from the acts by
foreign governments, such as nationalization of assets.
2-35
The U.S. Overseas Private
Investment Corporation (OPIC)
 Agency that runs political risk insurance program
and finance program.
 Offers insurance for losses from:
• Expropriation – usually creeping expropriation
which through series of administrative acts result
in depriving people of their property.
• Currency Inconvertibility – guarantees that
investor will be able to convert local currency into
dollars.
• Political Violence – loss from war and terrorism.
2-36
Environmental Protection
 Stockholm Declaration issued in 1972
 Asserts that a healthy environment is a
human right and that states have a
responsibility not to damage the
environment of other states.
 States have a sovereign right to exploit
their own resources, but also have the
responsibility to ensure that activities
within their territory do not damage the
environment of other states.
2-37
Environmental Protection and
the Rio Declaration (1992)
 Reaffirmed the principles in the Stockholm
Declaration.
 Linked protection of the environment to the
need for sustainable development.
 Promoted “supportive and open international
economic system…to better address the
problems of environmental degradation.”
 Adopted precautionary approach – states
should not delay in taking action to correct
threat of damage to the environment.
2-38
Regulation of Pollution
 Marine pollution – 1982 UN Convention on the Law
of the Sea imposes on all states the obligation to
protect and preserve the marine environment.
 States must take measures to minimize:
• The release of toxic, harmful, or noxious
substances from land-based sources.
• Pollution from vessels.
• Pollution from the installations and devices
used in exploitation of the seabed.
• Pollution from installations and devices
operating in the marine environment.
2-39
Case 2-10
Southern Bluefin Tuna Cases
 Australia and New Zealand brought
action against Japan for violating
1993 Convention for the
Conservation of Southern Bluefin
Tuna (CCSBT).
 Japan was using an experimental
fishing program to increase its total
yearly quota without permission.
 Court granted provisional remedies
(restraining orders) under a
precautionary approach. 920 lb Bluefin Tuna
2-40
Climate and Air Pollution
 Principal treaty dealing with global warming is
the United Nations Framework Convention on
Climate (UNFCC).
 Two main political problems are:
1. How to distribute burden of reducing emissions,
2. How to deal with scientific uncertainty.
 Kyoto Protocol requires industrialized nations to
reduce greenhouse gas emissions by 5.2
percent below 1990 levels.
 The US Senate did not ratify the Kyoto Protocol.
2-41
Product Regulations
 Toxic Waste - controlled by the 1989
Basel Convention on the Control of
Transboundary Movements of
Hazardous Wastes and their Disposal
that forbids exports of wastes to states
that cannot handle them safely.
 Nuclear Materials - The International
Atomic Energy Agency supervises
nuclear waste and oversees compliance
with the 1968 Treaty on the Non-
Proliferation of Nuclear Weapons.
2-42
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photocopying, recording, or otherwise,
without the prior written permission of the
publisher. Printed in the United States of
America.

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Chapter 2

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Chapter 2

Topics for this chapter:

 Iran provided financial support to the

 A state is responsible for the injuries to other states

 A national standard of care is a doctrine

 The international standard is favored by

 Delinquencies can be either crimes or torts.

 A state may raise several types of

 An objection to an international tribunal’s

 Objection made to an international tribunal’s

 Relief that can be obtained from states

 Insurance is the contractual commitment

© 2009 Pearson Education, Inc publishing as Prentice Hall

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