1 In the United Nations, the issue has been discussed within the broader, opaque concept of “permanent sovereignty over natural resources”; for discussions of the relevant resolutions and their changing substance, see Brownlie, , Legal Status of Natural Resources in International Law (Some Aspects), 162 Recueil des Cours 255 (1979 I)Google Scholar; Hyde, , Permanent Sovereignty over Natural Wealth and Resources, 50 AJIL 854 (1956)CrossRefGoogle Scholar; O’Keefe, , United Nations and Permanent Sovereignty over Natural Resources, 8 J. World Trade L. 239 (1974)Google Scholar; Schachter, O., Sharing The World’s Resources 124–33 (1977)Google Scholar; Fischer, , La Souveraineté sur les ressources naturelles, 8 Annuaire Français Droit Int’l 516 (1962)CrossRefGoogle Scholar.

2 See, e.g., the bibliographical references in Schwarzenberger, G., Foreign Investments and International Law 203–26 (1969)Google Scholar; Sohn, L. & Buergenthal, T., International Protection of Human Rights 87–96, 121–24 (1973)Google Scholar; references to articles published since 1975 are listed in the respective editions of Public International Law, A Current Bibliography of Articles, No. 16.3 [Investment, Property, Nationalization]. Much of die older literature has lost its direct relevance for contemporary discussion; in die present article, emphasis is therefore placed on comments made after the passing of the Charter of Economic Rights and Duties of States, UNGA Res. 3281 (XXIX) (Dec. 12, 1974); for three monographs of major importance on the development of the law in the period before the advent of Third World activism in this area, see K. Böckstiegel, Die Allgemeinen Grundsätze Des Völkerrechts über Eigentumsentziehung (1963); A. Fatouros, Government Guarantees to Foreign Investors (1962); G. White, Nationalisation of Foreign Property (1961).

3 See, e.g., the variety of viewpoints presented in The Valuation of Nationalized Property in International Law, 3 vols. (Lillich, R. ed. 1972, 1973, & 1975)Google Scholar. Typical of die confusion caused by the neglect of doctrinal elements is, for instance, the article of Francioni, , Compensation for Nationalization of Foreign Property: The Borderland between Law and Equity, 24 Int’l & Comp. L.Q. 255 (1975)CrossRefGoogle Scholar; the author establishes an “equitable solution,” without comments on the doctrinal foundation of the elements he proposes.

4 Cf. Kahn, P., Les Controls d’investissement: étude des principales clauses, International Law Association, Report of The 54th Conference 519 ff. (1971)Google Scholar. Under Article 42, section 1, of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, an arbitration tribunal shall decide a dispute, unless the parties agree otherwise, on the basis of the law of die contracting state party to the dispute and “such rules of international law as may be applicable.”

5 See Mosler, , Völkerrecht als Rechtsordnung, 36 Zeitschrift Für Ausländisches Öffentuches Recht und Völkerrecht [Zaörv] 6, 40 (1976)Google Scholar:

(Translation by the author.) See also Lauterpacht, H., Some Observations on the Prohibition of “Non Liquet” and the Completeness of the Law, in Symbolae Verzijl 196 (1958)Google Scholar; Stone, , Non-Liquet and the Function of Law in the International Community, 35 Brit. Y.B. Int’l L. 124 (1959)Google Scholar; Siorat, L., Le Problème des Lacunes en Droit International (1959)Google Scholar; Fitzmaurice, , The Problem of Non Liquet, in Mélanges Offerts À Charles Rousseau: La Communauté Internationale 89 (1974)Google Scholar; Scheuner, , Decisions ex aequo et bono by International Courts and Arbitral Tribunals, in International Arbitration, Liber Amicorum for Martin Domke 275, 277 (Sanders, P. ed. 1967)Google Scholar; Bleckmann, , Analogie im Völkerrecht, 17 Archiv des Völkerrechts 161, 169 (1977)Google Scholar.

6 Where the state of die law is unclear, lawyers are particularly called upon to probe for an ‘independent analysis; Schachter’s general observations are to die point here:

Schachter, , The Invisible College of International Lawyers, 72 Nw. U. L.R. 217, 220, 221 (1977)Google Scholar (footnote omitted).

The observations of D. P. O’Connell on the general process by which customary law develops are equally to the point for the subject under discussion:

O’Connell, D. P., The Role of International Law, in Conditions of World Order 49, 54 (Hoffmann, S. ed. 1968)Google Scholar.

7 A comparison of die views of de Aréchaga, Jiménez, State Responsibility for the Nationalization of Foreign Owned Property, 11 N.Y.U.J. Int’l L. & Pol. 179 (1978)Google Scholar; García-Amador, , The Proposed New International Economic Order: A New Approach to the Law Governing Nationalization and Compensation, 12 Law. Americas 1, 1 (1980)Google Scholar; Meessen, , Völkerrechtliches Enteignungsrecht im Nord-Süd-Konflikt, in Völkerrecht und Internationale Wirtschaftliche Zusammenarbeit 11 (Kewenig, W. ed. 1978)Google Scholar; Sornarajah, Compensation for Expropriation: The Emergence of New Standards, 13 J. World Trade L. 108 (1979); and O. Schachter, supra note l, at 124 ff, for instance, indicates that die conclusions reached by these authors in substance coincide to a limited extent, although the doctrinal approaches vary considerably.

8 The chronological turning point occurred in 1973. The origins of the quest for a new international economic order lie in die middle 1960’s (see Brownlie, supra note 1, at 255); the developing countries did not collectively attempt to pass any resolution embodying die Calvo rule up to 1973. In 1972, the UNCTAD Trade and Development Board still referred to Resolution 1803 (XVII) of Dec. 14, 1962 in its Resolution 8SIXll;see Note, 7 J. World Trade L. 376 (1973). In Resolution 3171 (XXVIII), passed in 1973, no international standard was accepted. The amendment proposing the omission of reference to international law was introduced by Algeria, Iraq, and the Syrian Arab Republic; see 28 UN GAOR, Annexes (Agenda Item 12) 6 f.; see also on this point García-Amador, supra note 7, at 30. It is worthwhile remembering here that the change in 1973 coincided with the first demonstration of power by the Organization of Petroleum Exporting Countries.

9 Virally, , La Charte des droits et devoirs économiques des états, Notes de lecture, 20 Annuaire Françaís de Droit International 57 (1974)CrossRefGoogle Scholar; Castañeda, , La Charte des droits et devoirs économiques des états, Note sur son processus d’élaboration, id. at 31 (1974)Google Scholar; Virally emphasizes on p. 69: “On se trouve ici au coeur du désaccord le plus fondamental qui a opposé la majorité à la minorité sur le texte de la Charte.” Castañeda, the Chairman of the working group charged with drafting die Charter, states: “Depuis le début cela fut un des thèmes les plus délicats et les plus controversés.” On p. 46, Castañeda elaborates: “La cause majeure de cet échec (d’aboutir à un accord) fut une question sur laquelle l’opposition des deux groupes de pays etait particulierement vive, celle des accords reladfs aux investissements.”

10 See, e.g., Sinha, S., New Nations and the Law of Nations 26 (1967)Google Scholar; Anand, R., New States and International Law 57 (1972)Google Scholar. Developing countries took this position frequently during the preparation of the Charter of Economic Rights and Duties of States; see Rozental, , The Charter of Economic Rights and Duties of States and the New International Economic Order, 16 Va. J. Int’l L. 309, 315 (1976)Google Scholar.

11 In the view of many developing countries, the political aspect of sovereignty is a necessary precondition to economic development; see Virally, supra note 9, at 67.

12 I n this perspective it is interesting to note Castañeda’s comments upon the way the Charter of Economic Rights and Duties of States was developed: “En bonne partie, la confusion était due à la préparation juridique insuffisante d’un certain. nombre de participants, qui par ailleurs tendaient à souligner seulement l’aspect politique du document.” Castañeda, supra note 9, at 55.

13 A partial decline of the role of customary international law will necessarily occur in the present situation. However, it is appropriate to ask whether the integrative and ordering function of customary law should not be preserved in all those areas where the doctrine of sources leaves room for preservation of the law.

14 The position of the United States, which does not differ substantially from that of other Western states, is described in Smith, R., The United States Government Perspective on Expropriation and Investment in Developing Countries, 9 Vand. J. Transnat’l L. 517 (1976)Google Scholar. But see also Gantz, , The Marcona Settlement: New Forms of Negotiation and Compensation for Nationalized Property, 71 AJIL 474 (1977)CrossRefGoogle Scholar, for the attitude of the United States in the Marcona negotiations. See also Rogers, W., Of Missionaries, Fanatics and Lawyers: Some Thoughts on Investment Disputes in the Americas, 72 id. at 1 (1978)Google Scholar.

15 See, e.g., Roy, , Is the Law of Responsibility of States for Injuries to Aliens a Part of Universal International Law?, 55 AJIL 863 (1961)CrossRefGoogle Scholar; Röling, B., International Law in an Expanded World 15 (1960)Google Scholar. For a recent version of this view, see, e.g., Sornarajah, supra note 7, at 109 and 118. Mosler, H., The International Society as a Legal Community 3–6 (1980)Google Scholar, points out, in a broader perspective, that international law has historically developed on the basis of a rational concept of relations among equal states.

16 For a specific case, see, for instance, the positions taken in 1913 by France, Spain, the United Kingdom, and Portugal at the beginning of the Expropriated Religious Property arbitration; the award is reprinted in 1 R. Int’l Arb. Awards 7. All parties initially agreed that, as a matter of principle, foreigners were owed compensation for expropriation, regardless of the treatment of nationals of the host state; the disagreement related only to the holders of the property in question. In reading the actual award, it must be recalled that in 1920 the parties reached a compromise in which “equity” was accepted as the main basis of the proceedings. See also Von Frisch, H., Das Fremdenrecht 225 (1910)Google Scholar; Verdross, , Les Règies internationales concemant le traitement des étrangers, 37 Recueil des Cours 327–36 (1931 III)Google Scholar; Doehring, K., Die Allgemeinen Regeln des Völkerrechtlichen Fremdenrechts und das Deutsche Verfassungsrecht 76–80 (1963)Google Scholar; Audinet, , Le Monopole des assurances sur la vie en Italie et le droit des étrangers, 20 Rev. Générale Droit Int’l Public 4 (1913)Google Scholar. See also the note written in 1796 by United States Secretary of State Adams:

Cited in 4 J. B. Moore, A Digest of International Law 5 (1906). For a general discussion of the historical aspects, see Borchard, , The Minimum Standard of the Treatment of Aliens, 38 Mich. L. Rev. 445 (1940)CrossRefGoogle Scholar; Mann, , Outlines of a History of Expropriations, 75 L. Q. 188 (1959)Google Scholar; McDougal, , Lasswell, & Chen, , The Protection of Aliens from Discrimination and World Public Order: Responsibility of States Conjoined with Human Rights, 70 AJIL 431, 440–43 (1976)Google Scholar; Neufeld, H., The International Protection of Private Creditors from the Treaties of Westphalia to the Congress of Vienna (1648–1815), at 94ff (1971)Google Scholar.

17 The correspondence is reprinted in 3 Hackworth, G. H., Digest of International Law 655–65 (1942)Google Scholar. Secretary Hull’s initial letter of July 21, 1938, states the issue and the positions taken: “During recent years the Government of the United States has upon repeated occasions made representations to the Government of Mexico with regard to the continuing expropriation by Your Excellency’s Government of agrarian properties owned by American citizens, without adequate, effective and prompt compensation being made therefor.” For an early contrary view of the law, see Williams, Fischer, International Law and the Property of Aliens, 9 Brit. Y.B. Int’l L. 1 (1928)Google Scholar. The Mexican view is presented in García-Robles, A., La Question Du Pétrole et le droit International (1939)Google Scholar. For a comment on the Hague Conference of 1930 regarding the rules concerning the responsibility of states for injuries to aliens, see Hackworth, , Responsibility of States for Damages Caused in their Territory to the Person or Property of Foreigners, 24 AJIL 500 (1930)CrossRefGoogle Scholar.

18 I R. Int’l Arb. Awards 332 (1922); for a brief presentation with further references, see Dolzer, , Norwegian Shipowners’ Claims Arbitration, in Encyclopedia of Public International Law, Installment 2 (ed. Bernhardt, forthcoming)Google Scholar.

19 R. Int’l Arb. Awards 615 (1925).

20 Case Concerning the Factory at Chorzów (Merits), [1928] PCIJ, ser. A, No. 7, at 32–33.

21 See Schwebel, , The Story of the United Nations’ Declaration on Permanent Sovereignty over Natural Resources, 49 A.B.A.J. 463 (1963)Google Scholar; Gess, , Permanent Sovereignty over Natural Resources: An Analytical Review of the United Nations Declaration and its Genesis, 13 Int’l & Comp. L.Q. 398 (1964)CrossRefGoogle Scholar.

22 See p. 571 infra.

23 See on this point Bishop, W., International Law 960 (3d ed. 1970)Google Scholar, with further references.

24 TIAS No. 9306, reprinted in 18 ILM 551 (1979).

25 [1970] ICJ Rep. 3, 40, para. 61.

26 Lillich, R. & Weston, B., International Claims: Their Settlement by Lump Sum Agreements 9–43 (1975)Google Scholar.

27 According to Lillich and Weston, id. at 43, 95% of claims practice is regulated by lump sum arrangements. Depending upon the definition of lump sum arrangements, this figure might in reality be somewhat lower. Nonetheless, it is incontestable that most claims are channeled through lump sum arrangements.

28 The Calvo Doctrine is based on the general notion of an exclusive jurisdiction of any state over its territory and, in” principle, on the view that aliens have no more rights than nationals of the state in which they live or enjoy personal rights. Rights and claims of aliens against the host state are therefore to be decided exclusively by the domestic courts of the host country. In the context of expropriation of an alien, the doctrine means that the alien has acquired no right permitting his home state to exercise diplomatic protection. See Shea, D., The Calvo Clause 16ff. (1955)Google Scholar. The Calvo Doctrine was to be applicable to the full range of human rights, including property rights. The position taken by Mexico in 1938 related only to expropriations, and only to general ones as opposed to individual takings.

In the following pages, reference to the Calvo Doctrine is meant only with respect to its operation in the area of the protection of property held by aliens.

29 For a summary of the practice up to 1959, see [1959] 2 Y.B. Int’l L. Comm’n 1–36.

30 Cuba has settled claims with other countries affected by the nationalizations; see Gordon, M., The Settlement of Claims of Expropriated Foreign Property between Cuba and Foreign Nations Other than the United States, 5 Law. Americas 457 (1973)Google Scholar.

31 With regard to the concept of book value and some of its applications, see Wesley, A Compensation Framework for Expropriated Property in the Developing Countries, in 3 The Valuation of Nationalized Property, supra note 3, at 3. See also Litvak, & Maule, , Forced Divestment in the Caribbean, 27 Int’l J. 501, 527 (1977)Google Scholar. With respect to specific African practice, see Rood, , Compensation for Takeovers in Africa, 11 J. Int’l L. & Econ. 521 (1977)Google Scholar. For the Central and Latin American systems, see Casad, R. & Montagné, R., Expropriation in Central America and Panama: Processes and Procedures (1975)Google Scholar; Expropriation in the Americas (Lowenfeld, A. ed. 1971)Google Scholar.

32 See Gantz, supra note 14.

33 Introductory Note, 17 ILM 1, 2 (1978).

34 Unfortunately, no source exists that comprehensively lists all or most compensation arrangements; for some more recent cases, see Wesley, supra note 31.

H. Mosler, supra note 15, at 111.

36 See Simma, B., Das Reziprozitätselement im Zustandekommen Völkerrechtlicher Verträge (1972)CrossRefGoogle Scholar.

37 For a list of sanctions that the United States has construed on the legislative level and that in themselves have a certain preventive effect, see Gantz, supra note 14, at 47. More broadly speaking, expropriating developing countries have in general realized that investment will fall off unless they maintain the confidence of foreign investors and trading partners. See Schachter, , The Evolving Law of International Development, 15 Colum. J. Transnat’l L. 1, 8f. (1976)Google Scholar.

38 In the opinion of the ICJ in the North Sea Continental Shelf case:

[1969] ICJ Rep. 3, 44. The more general question whether the opinio juris or the practice of states is the central element of the lawmaking process has only a little bearing on this point. Where the practice itself has not been consistent, the importance of the opinio juris necessarily increases. For the various positions on the abstract issue, see Hagemann, , Das Gewohnheitsrecht als Rechtsquelle in der Rechtsprechung des Internationalen Gerkhtshofs, 10 Schweizerisches Jahrbuch Für Internationales Recht 79 (1953)Google Scholar; Baxter, , Treaties and Custom, 129 Recueil des Cours 31, 74 (1970 I)Google Scholar; Barberis, J., Fuentes del Derecho Internacional 57–85 (1973)Google Scholar; Thirlway, H., International Law and Codification 53–56 (1972)Google Scholar; Steiner, H. & Vagts, D., Transnational Legal Problems 259–61 (2d ed. 1975)Google Scholar. Sohn, , The Shaping of International Law, 8 Ga. J. Int’l & Comp. L. 7 (1978)Google Scholar, has pointed out that the traditional doctrine of customary law needs to be adapted to the modern system of rapid communication among states.

39 See supra note 21. The Abs-Shawcross Draft on the Protection of Private Property, presented in 1965 by the OECD, attempted such precision in the sense of the Hull rule, but, not surprisingly, failed; for a history of the draft, see Schwarzenberger, supra note 2, at 153–59. In the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, an agreement was reached that reflects the insecurity about the present law; see Broches, The Convention on the Settlement of Investment Disputes between States and Nationals of Other States: Applicable Law and Default Procedure, in International Arbitration, supra note 5, at 12. See also Ryan, & Baker, , The International Center for the Settlement of Investment Disputes (ICSID), 10 J. World Trade L. 65 (1976)Google Scholar; O’Keefe, , The International Centre for Settlement of Investment Disputes, 34 Y.B. World Aff. 286 (1980)Google Scholar.

The Financial Affairs Commission of the Conference on International Economic Cooperation (CIEC), which ended on June 3, 1977, dealt with the topic specifically in the North- South context. No shift in the attitude of states became apparent; see the Statement by Cooper, R., reprinted in 77 Dep’t State Bull. 92, 97 (1977)Google Scholar. The text of the Final Communiqué of June 3 is partially reprinted in 76 id., at 650–52 (1977). At present, the issue is under discussion in the preparations for a code of conduct for transnational corporations; the outcome remains to be seen.

40 See supra note 1.

41 See, e.g., the award in the Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. The Government of the Libyan Arab Republic arbitration, 17 ILM 3, 30 n.87 (1978).

42 See, e.g., the general remarks of Brownlie, supra note 1, at 260.

43 Jiménez de Aréchaga, supra note 7, at 184; Brownlie, supra note 1, at 268.

44 Given this strong majority of votes in favor of the Charter and the intense discussions preceding this vote, the more general objections to the legal relevance of UN resolutions have no decisive weight in this particular context. The fact that the representatives of states do not necessarily derive their authority from their domestic lawmaking body but “only” from the executive branch, for instance, could hardly be a convincing argument against the assertion that the majority of the member states has expressed its position on the present and future status of international law on this point.

Recognition of the legal relevance of UN resolutions in this specific context does not imply that these resolutions create “instant customary international law.” As to the shortcomings of the present voting system in the United Nations and their implications for the legal status of resolutions, see Mosler, supra note 5, at 36; Geek, , Völkerrechtliche Verträge und Kodifikation, 36 Zaörv 96, 124 (1976)Google Scholar; Tomuschat, , Die Charta der wirtschaftlichen Rechte und Pflichten der Staaten, id. at 444, 489Google Scholar. See also Weintraub, , How the UN Votes on Economic Issues, 53 Int’l Aff. 188 (1977)CrossRefGoogle Scholar.

45 Brownlie, supra note 1, at 262, 264.

46 It is not of central importance here whether the widespread description of the Lotus judgment ([1927] PCIJ, ser. A, No. 10) as extremely positivistic is entirely correct. It is noteworthy, however, as pointed out by H. Steiner and D. Vagts (supra note 38, at 278), that the majority opinion included these remarks:

Quoted in id. at 257. In a decision that is less well known than the Lotus case, the same Court again had to deal with the presumption-of-freedom rule 2 years later (Oder-Kommissions Case, [1929] PCIJ, ser. A, No. 23). In its interpretation of a clause of the Versailles Treaty, Poland relied on die Lotus case and argued that, in ambiguous cases, treaties must be read in a way that least impairs the parties concerned. The Court rejected this approach. It ruled that general considerations related to the subject matter itself took priority over the presumption-of-freedom rule.

Bernhardt, Ungeschrkbenes Völkerrecht, 36 ZaöRV 50, 58 (1976), has rightly pointed out that the reality of the interdependence of states today must find its counterpart in the modern doctrine of international law.

47 Subparagraph 2(c) of Article 2 of the Charter is quoted on p. 438 supra.

47a This article does not examine all facets of die general problem of change in customary international law. It is assumed here that, contrary to a strictly positivist view, a new state is bound to those rules of international law which exist when it is established. It is also assumed that customary law is subject to a condition of “changed circumstances” analogous to the clausula rebus sic stantibus applicable to treaties (Art. 62 of die Vienna Convention on the Law of Treaties). It is not necessary to consider here whether, when a rule of customary law was generally accepted and firmly established, a state that consistently upheld that rule in practice and opinio juris can continue to invoke it if, as a result of an influx of states diat did not exist when the rule was established, a large majority of the international community now challenges the rule. In the present case, this problem does not arise because the rule in question was not firmly established.

48 Up to December 1976, 143 bilateral agreements for the protection of foreign investment were concluded; see International Chamber of Commerce, Bilateral Treaties for International Private Investment (1977). It is remarkable that in 1980, the United Kingdom alone concluded four such agreements: with Sri Lanka (Cmnd. 7984, No. 1, 1980), reprinted in 19 ILM 886 (1980); Senegal (Cmnd. 8079, No. 1, 1980); Bangladesh, [1980] GR. Brit. TS No. 73 (Cmnd. 8013), and the Philippines, [1981] id. No. 7 (Cmnd. 8148). The highest total number of investment treaties so far has been concluded by the Federal Republic of Germany.

49 Doehring, , Gewoknkeitsrecht aus Verträgen, 36 Zaörv 77, 92 (1976)Google Scholar. See also Baxter, supra note 38, at 31.

50 See Joint Declaration on Investments Relating to Article 64 of the Convention, reprinted in 19 ILM 333 (1980). Up to 1980, the Federal Republic of Germany alone had concluded investment treaties with 22 states signatory to the Convention which incorporate the standard of the Hull rule or similar clauses.

51 As early as 1976, oil-producing countries sought guarantees from Western countries concerning appropriate compensation in case of nationalization; see Economic Times, Jan. 29, 1976 (cited in Jain, , Permanent Sovereignty over Natural Resources and Nationalization in International Law, 19 J. Indian L. Inst. 241, 250 (1977)Google Scholar). Most of these states had strongly supported the statements made in the Charter of Economic Rights and Duties of States concerning expropriation.

52 In some instances, however, investment treaties have in substance not gone considerably beyond an agreement for the protection of property. For two recent examples, see the Agreement for the Promotion and Protection of Foreign Investments, between Sri Lanka and the United Kingdom, concluded on Feb. 13, 1980, supra note 48; and the Agreement between the Federal Republic of Germany and the Syrian Arab Republic, concluded on Aug. 2, 1977, reprinted in [1979] BGB 1 .II 423. Nevertheless, these treaties should also be seen in their legal and political context; they sometimes follow capital aid programs or are prompted by special political considerations.

53 The same is true with respect to enactments of foreign investment laws on the domestic level. Pakistan, for instance, voted in favor of Article 2(2)(c) of the Charter, but in 1976 introduced a law providing far-reaching guarantees for alien investors. Pakistan had concluded investment guarantee treaties with the United States in 1954 and with the Federal Republic of Germany in 1959. The relevance of international law and domestic law is different in this respect: domestic law can be freely enacted, and, in particular.-can be unilaterally repealed at any time.

54 It is interesting to note here that for more homogeneous international orders, existing or projected, the requirement of obligatory compensation seems to be beyond doubt. The Communist countries have among themselves obviously agreed on this point; see Drucker, , Compensation Treaties between Communist States, 10 Int’l & Comp. L.Q. 250 (1960)Google Scholar. Similarly, the Group of 77 seems to emphasize the necessity for investment protection as long as the home state belongs to the group: “Les pays en développement bénéficiaires sont instamment priés de prendre, dans le cadre de leurs politiques et de leurs législations nationales, des mesures visant à garantir la sécurité des investissements d’autres pays en développement et de faire bénéficier ces investissements d’un régime privilégié.” Statement by the Foreign Ministers of the Group of 77, Sept. 29, 1979, UN Doc. A/34/553, para. 17. Such an approach was suggested earlier by Jain, supra note 51, at 256.

In his bold dissenting opinion in the Anglo-Iranian Oil case ([1952] ICJ Rep. 92, 124), Judge Alvarez developed the contours of a modern, dynamic international order; with respect to expropriation issues, he stated that recourse to an international court should always be given. In the same case, Judge Levi Carneiro wrote (p. 151) that rules on state responsibility are “a prerequisite of international cooperation in the economic and financial fields.” See also the ideal order envisaged by McDougal, et al, supra note 16, and the rules there suggested with regard to expropriation issues. Moreover, the position of the Arab states is remarkable; see supra note 51.

55 Doehring, supra note 49, at 92.

56 See the examples noted in P. Kahn, supra note 4, at 519 and 525.

57 Roth, A., The Minimum Standard of International Law Applied to Aliens 86 (1949)Google Scholar.

58 See R. Dolzer, Nationalization and Compensation in a Code of Conduct for Transnational Corporations (1980, on file with the United Nations Centre on Transnational Corporations).

In a major group of liberal states, the constitutions indicate a broad principle that the legislatures must observe when exercising their discretion in the determination of compensation. In Belgium (Art. 11 of the Constitution), France (Preamble of the Constitution, referring to Art. 17 of the Declaration of Human Rights of 1789), and the United States (Fifth Amendment), the Constitutions call for “just compensation.”

In the Federal Republic of Germany, the Parliament must find a “just balance of interests” of the owners and the public (Art. 14 of the Constitution). Within the liberal countries, a mandatory standard corresponding to the Hull rule was included in Art. 17 of the Greek Constitution.

In a considerable number of liberal countries, the legislature is not specifically bound by any constitutional or other document in the method and principles by which it determines the amount of compensation (cf Art. 42 of the Italian Constitution; Art. 33 of the Spanish Constitution; ch. 2, §18 of the Swedish Constitution; the law applicable in the United Kingdom; and Art. 17 of the Swiss Draft Constitution presented in 1977 by the Commission of Experts).

59 For a thoughtful modern philosophical discussion of the relationship between utilitarian thought and concepts of individual rights, see Hart, , Between Utility and Rights, 79 Colum. L. Rev. 828 (1979)CrossRefGoogle Scholar.

69 Broadly speaking, property rules in the Western countries have not been entirely inflexible; see, e.g., Horwitz, M., The Transformation of American Law 1780–1860, at 31–34 (1977)Google Scholar; Nelson, W., Americanization of the common Law 123 (1975)Google Scholar; Philbrick, , Changing Conceptions of Property in Law, 86 U. Pa. L. Rev. 691 (1937)Google Scholar. For the recent transformation of German property law in response to environmental issues, see Dolzer, R., Property and the Environment (1976)Google Scholar.

61 Generally on the notion of vested rights in international law, see Kaeckenbeeck, , La Protection internationale des droits acquis, 59 Recueil des Cours 317 (1937 I)Google Scholar; Lalive, , The Doctrine of Acquired Rights, in Private Investors Abroad: Rights and Duties 145 (Southwestern Legal Foundation, 1965)Google Scholar; Foighel, I., Nationalization and Compensation 124–28 (1964)Google Scholar. For a recent critical evaluation of the notion of “acquired rights” in international law, see Sik, K., The Concept of Acquired Rights in International Law, 24 Neth. Int’l L. Rev. 120 (1977)CrossRefGoogle Scholar.

62 See the discussion at p. 580 ff. infra.

63 See on this point Bothe, , Die Bedeutung der Rechtsvergleichung in der Praxis der internationalen Gerichte, 36 Zaörv 280 (1976)Google Scholar; Hailbronner, , Ziele und Methoden völkerrechtlich relevanter Rechtsvergleichung, id. at 190Google Scholar.

64 See also Jiménez de Aréchaga, supra note 7, at 184.

65 See, e.g., Akinsanya, , Permanent Sovereignty over Natural Resources and the Future of Private Investment in the Third World, 18 Indian J. Int’l L. 175, 184 (1978)Google Scholar. The most comprehensive analysis of the clause, its background, and its legal implications is still to be found in D. Shea, The Calvo Clause (1955); see also Freeman, , Recent Aspects of the Calvo Doctrine in International Law, 40 AJIL 121 (1946)CrossRefGoogle Scholar; Lipstein, , The Place of the Calvo Clause in International Law, 22 Brit. Y.B. Int’l L. 130 (1945)Google Scholar. The historical background prompting the appearance of the doctrine is described in Scott, , Hague Convention Restricting the Use of Force to Recover on Contract Claims, 2 AJIL 78 (1908)CrossRefGoogle Scholar; see also the factual background of the Cerruti arbitrations, 6 AJIL 965 (1912).

66 Whereas the original intent of the Calvo Doctrine was to prevent the misuse of diplomatic protection, the modern attack upon the Hull rule receives its main impetus from economic and political considerations. It is of interest here, too, that the Group of 77 agreed in September 1979 that developing countries should take measures ensuring the security of investments coming from other developing countries; supra note 54. Considering the Calvo Doctrine in the context of the alien’s general status in the host country, it is odd that the alien should have the same obligations as nationals of the host state without acquiring the same rights (such as electoral or social benefit rights). The notion of “comunidad de fortunas” therefore has no proper place in this context; see on this point the award in the George W. Hopkins Claim (1926), 4 R. Int’l Arb. Awards 41, 47. In explaining the attempts of Latin American countries to promote the Calvo Doctrine, it must be remembered that it dates from an era in which European states claimed—and sometimes exercised—the right to secure the payment of compensation by means of force; today such a form of self-help would not conform to international law.

67 See p. 559 ff. supra.

68 See also on this point H. Mosler, supra note 15, at 28:

The ICJ clearly pointed this out in the North Sea Continental Shelf case, [1969] ICJ Rep. at 42 and 43.

69 See Norwegian Fisheries case, [1951] ICJ Rep. 115, 131.

70 See on this point B. Röling, supra note 15.

71 Jiménez de Aréchaga, supra note 7, at 181.

72 Art. 17 of the Declaration reads: “ 1 . Everyone has the right to own property alone as well as in association with others. 2. No one shall be arbitrarily deprived of his property.” For the development of the discussions within the United Nations on this point from 1948 to 1955, see in particular the original proposal of Australia (UN Doc. E/CN.4/AC.1/21, at 1 (1948)), the initiative of the Philippines (UN Doc. E/CN.4/353/Add.3, at 10 (1950)), and the Belgian initiative (UN Doc. E/AC.7/SR.148, at 9 (1950)); the discussion in the 7th session of the Commission on Human Rights, May 7–8, 1951 (UN Docs. E/CN.4/SR.230–31), in its 8th session, May 20–21, 1952 (UN Docs. E/CN.4/SR.302–03), and in its 10th session, Feb. 25–March 2, 1954 (UN Docs. E/CN.4/SR.413–18); and the discussion in the Third Committee of the General Assembly at its 9th session, 1954 (9 GAOR, C.3 (557–76th mtgs.), UN Docs. A/C.3/SR.557–76, at 74–170); as well as the summarizing Memorandum of the Secretary- General of July 1, 1955 (10 GAOR, Annexes (Agenda Item 28, pt. II), UN Doc. A/2907 and Adds. 1 & 2, at 65–67). It may be argued that the judgment of the ICJ in the Barcelona Traction case ([1970] ICJ Rep. 3, 32, para. 34), confirms that the right to hold property does not in every respect enjoy the status of a human right; see also the dissent of Judge Gros, at 274, para. 12. See also on this point Amerasinghe, C., State Responsibility for Injuries to Aliens 278–81 (1967)Google Scholar; McDougal et al., supra note 16; but see Sornarajah, supra note 7, at 112.

73 Generally on the Charter and Article 2(2)(c), see Brower, & Tepe, , The Charter of Economic Rights and Duties of States: A Reflection or Rejection of International Law?, 9 Int’l Law. 295 (1975)Google Scholar; Castañeda, supra note 9; Feuer, , Réflexions sur la Charte des Droits et Devoirs économiques des États, 79 Rev. Générale Droit Int’l Public 273 (1975)Google Scholar; García-Amador, supra note 8; Haight, , The New International Economic Order and the Charter of Economic Rights and Duties of States, 9 Int’l Law. 591 (1975)Google Scholar; Riser, & Aldridge, , The Charter of Economic Rights and Duties of States: A Solution to the Development Aid Problem?, 6 Ga. J. Int’l & Comp. L. 441 (1975)Google Scholar; Meagher, R., An International Redistribution of Wealth and Power (1979)Google Scholar; Rozental, supra note 10; Seidl-Hohenveldern, , Die “Charta” der wirtschaftlichen Rechte und Pflichten der Staaten, 21 Recht der Internationalen Wirtschaft 236 (1975)Google Scholar; Schachter, supra note 37; Tomuschat, supra note 44; Virally, supra note 9; White, R., A New International Economic Order, 24 Int’l & Comp. L.Q. 542 (1975)CrossRefGoogle Scholar. A thorough, if in part questionable, analysis is found in Centro de Estudios Económicos y Sociales del Tercer Mundo, Exégesis de la Carta de Derechos y Deberes Económicos se los Estados (Mexico, 1976).

74 See Castañeda, supra note 9, at 54.

75 See on this point Lillich, , The Diplomatic Protection of Nationals Abroad: An Elementary Principle of International Law Under Attack, 69 AJIL 359 (1975)CrossRefGoogle Scholar; García-Amador, supra note 8, at 50.

76 This view of the Connally Reservation has been most clearly stated by Judge Lauterpacht in his dissenting opinion in the Interhandel case ([1959] ICJ Rep. 6, 95).

It is an ironic comment upon the present situation that some learned writers of the Third World have been at pains to construe Article 2(2)(c) as admitting the relevance of international law (see, e.g., Castañeda, supra note 9, Jiménez de Aréchaga, supra note 7), whereas some Western commentators have tended to view the Charter on this point as a blatant rejection of international law (see, e.g., Brower & Tepe, supra note 73; Haight, supra note 73). The latter interpretation would not seem to serve the apparent interest of the writers in the protection of foreign investment, though it probably meets a desire to discredit UN majority voting.

77 Brownlie, supra note 1, at 255.

78 See, e.g., Girvan, , Expropriating the Expropriators: Compensation Criteria from a Third World Viewpoint, in 3 The Valuation of Nationalized Property, supra note 3, at 149 (1975)Google Scholar. Of course, some argue that present international economic relations are nothing but a contemporary reflection of the former political colonization; see, e.g., Frank, G., Latin America: Underdevelopment or Revolution (1969)Google Scholar; Karl Marx on Colonialism and Modernization (Avineri, S. ed. 1969)Google Scholar. A survey of the older wide literature on this point is found in Hirschman, A., A Bias for Hope (1971)Google Scholar; Apter, D., The Politics of Modernization (1965)Google Scholar.

UN Doc. E/C.10/74, at 4 (May 16, 1980) (footnote omitted). See also sections 2 and 3 of the Programme of Action adopted by the General Assembly at its 6th Special Session (UNGA Res. 3202 (S-VI)(1974)) and the Annual Reports of the International Finance Corporation of recent years.

UN Doc. E/C.10/74, at 18, para. 38 (1980); see also p. 29, para. 76:

81 See, e.g., Jiménez de Aréchaga, supra note 7, at 184; Castañeda, supra note 9, at 12.

82 See Virally, supra note 9, at 69. Commenting on this situation, Schachter writes: “This apparent contradiction cannot be dismissed as irrational; it should be understood as reflecting a polarity inherent in the objective circumstances and, in that sense, as a challenge to seek a reconciliation that would, to the extent possible, maximize the competing values.” O. Schachter, supra note 1, at 126. In the limited context described here, it would not necessarily appear to be a paradox, as Brownlie, supra note 1, at 308 ff., seems to suggest, if foreign investment received more protection today than previously. Specifically with respect to the “international” or “national” status of concessions, general principles have less importance than the autonomous will of the parties concerned. A presumption in favor of the international status of such contracts has correctly been denied by most commentators and courts; in this respect, the reasoning of the arbitrator in the TOPCO/Calasiatic case is not entirely convincing.

It has been correctly pointed out that the use of the concept of permanent sovereignty over natural resources for the purpose of denying the binding effect of international treaties may not be helpful for the developing countries; see Brownlie, supra note 1, at 310; García-Amador, supra note 8, at 56.

83 For a recent version of this approach, see the “Brandt Report”: Independent Commission on International Developmental Issues, North-South: A Programme for Survival (1980).

84 Dolzer, supra note 58.

85 The following observations of the ICJ in the Barcelona Traction case ([1970] ICJ Rep. at 33 f.) are addressed to a different issue, but indirectly apply in this context as well:

86 In his separate opinion in the Barcelona Traction case, id. at 268, Judge Gros appears to advance the proposition that the increasing involvement of home states, for instance, via risk guarantees or subventions, no longer permits alien investment to be treated as a relationship between the alien and the host state only. Jiménez de Aréchaga, supra note 7, at 182, similarly assumes that the community of the home state is directly affected by an expropriation of an alien. Such arguments are obviously not entirely misguided from an economic viewpoint. Their legal relevance, however, must be assessed in light of the territorial jurisdiction of the host state.

H. Mosler, supra note 15, at 251.

88 See, e.g., the Aramco arbitration, 27 ILR 117 (1963); the British Petroleum Exploration Co. arbitration, partially reported in 1 G. Wetter, The International Arbitral Process 432–40, 2 id. at 559–622, and 5 id. at 489–91; reprinted in full in 53 JLR 297 (1979); the Sapphire arbitration, 35 ILR 136 (1967); and the TOPCO/Calasiatic arbitration, 17 ILM 3 (1978).

89 See p. 556 f. supra.

90 Bleckmann, , Vöikergewohnheitsrecht trotz widersprüchlicher Praxis?, 36 Zaörv 374, 378 (1976)Google Scholar, seems to argue that once a specific rule of customary law has developed, this rule disappears only when new practice can be shown that is generally accepted. It is doubtful whether such a strong emphasis on the stability of international law adequately reflects the consensual foundation of customary law. See also on this point Bernhardt, supra note 46, at 68.

91 For the Soviet view, see, e.g., Tunkin, , Remarks on the Juridical Nature of Customary Norms of International Law, 49 Cal. L. Rev. 419 (1961)CrossRefGoogle Scholar; Tunkin, , “General Principles of Law” in International Law, in Internationale Festschrift Für Alfred Verdross Zum 80. Geburtstag 523 (1971)Google Scholar.

92 See, e.g., the terminology used by the ICJ in the North Sea Continental Shelf case, [1969] ICJ Rep. at 46 ff.; and in the Fisheries Jurisdiction case, [1974] id. at 3, 30.

93 See Brownlie, supra note 1, at 287.

94 Mosler’s general remarks, written in the introduction to his work, The International Society as a Legal Community, supra note 15, at xviii, apply here as well: “We have to approach the problem from both sides—from a realisation of the need for international life to be governed by rules binding all participants, on the one hand, and from the investigation of realities of present international life on the other” (footnote omitted).

95 For the limitations of this approach, see Wood, , Public Order and Political Integration in Contemporary International Theory, 14 Va. J. Int’l L. 423, 438 (1976)Google Scholar; Higgins, , Policy and Impartiality: The Uneasy Relationship in International Law, 23 Int’l Organization 914 (1969)CrossRefGoogle Scholar.

96 Sornarajah, supra note 7, at 110, points out certain policy considerations that work in the same direction.

97 See generally Verdross, , Les Principes généraux de droit dans le système des sources du droit international public, in Recueil d’Études de Droit International: En Hommage À Paul Guggenheim 521 (1968)Google Scholar; H. Mosler, supra note 15, at 122–43. With a strong positivist inclination, Brownlie, supra note 1, at 288, suggests that equity “offers little but disappointment” for the solution of sophisticated problems, but admits a “particular and interstitial significance.” Brownlie’s view is certainly well-founded when a judgment is reached directly on the basis of “equity” without an explanation of the factors and principles that inform the concept of equity with regard to the issue at hand. My own general view is nonetheless less reserved on this point, the main reason being that the composition of an international court will in general lead to solutions in which the interests involved will tend to be well presented, considered, and ultimately balanced. Today, the role of international courts in the development of international law appears to be unduly hampered by a rigorous insistence upon the will of the states involved; obviously, the confidence of commentators in a court’s skill and power to balance diverging political interests varies in different legal systems.

98 Jiménez de Aréchaga, supra note 7, at 194.

99 Castañeda, supra note 9, at 54; see also García-Robles, 69 ASIL, Proc. 231 (1975).

100 See supra note 87.

101 The general relevance of the idea of legitimate reliance becomes obvious in such principles as “estoppel,” “acquiescence,” and “prescription.” Much broader, the protection of induced reliance is one of the central elements around which the process of the growth of customary law is centered; see Müller, J. P., Vertrauensschutz im Völkerrecht (1971)Google Scholar. Although these applications of the concept of legitimate reliance apply to relationships between states, the importance of the concept suggests its application to aliens as well. It must be recognized here that “legitimate reliance” as such is not a general principle of law in the sense of Article 38 of the ICJ Statute: it is too vague, unsophisticated, and begs the question to a considerable extent. Nonetheless, the various applications of legitimate reliance in international law must be recognized, and it does not appear methodologically improper to use the concept in a new sense in an area where international law is in the process of change. It may be added here that the concept of legitimate reliance is basic to any notion of property and property protection.

102 The political stability as such of the host country and the general political process are not open to the alien to influence. Of course, foreign investment may under certain circumstances bear on political stability. Nonetheless, the political and legal decisions concerning the admission of foreign investment, the legal conditions to be observed by die alien in case of admission, and the decision whether to terminate foreign investment are exclusively within the competence of the host country. Therefore, factors relating to the political stability of the host country should not enter into a scheme of “legitimate reliance.” In this context, it is also worth noting that international law is indifferent with respect to the form of government established within a state.

103 Jiménez de Aréchaga, supra note 7. For previous discussions of the principle in this context, see, e.g., Cheng, Bin, The Rationale for Compensation for Expropriation, 44 Grotius Society, Transactions 267 (1959)Google Scholar; McNair, , Opinion on the Seizure of Property and Enterprises in Indonesia, 6 Neth. Int’l L. Rev. 218 (1959)CrossRefGoogle Scholar; Friedmann, W., The Changing Structure of International Law 207 (1964)Google Scholar; Schreuer, , Unjustified Enrichment in International Law, 22 Am. J. Comp. L. 281 (1974)CrossRefGoogle Scholar; Wortley, B., Expropriation in Public International Law 149 (1959)Google Scholar; all with further references.

104 This is illustrated by the fruitless discussions of the substance of this principle in rules of state succession; see [1969] 1 Y.B. Int’l L. Comm’n 69 ff. See also on this point, O’Connell, , Recent Problems of State Succession in Relation to New States, 95 Recueil des Cours 130, 140 (1970 II)Google Scholar.

105 Whereas Francioni, supra note 3, argues that the concept should limit the compensation claim of the owner, Bergin, , The Compensation Rule: An Imaginary Debate, in 2 The Valuation of Nationalized Property, supra note 3, at 3Google Scholar, 15, seems to suggest that, in principle, it should operate against the expropriating state.

106 See, e.g., Albrecht, , Taxation of Aliens in International Law, 29 Brit. Y.B. Int’l L. 145 (1952)Google Scholar; Christie, , What Constitutes a Taking under International Law?, 38 id. at 307 (1962)Google Scholar; Vagts, , Coercion and Foreign Investment Rearrangements, 72 AJIL 35 (1978)Google Scholar.

107 Turning to another detail, Judge Jiménez de Aréchaga assumes that compensation will be “much higher” (supra note 7, at 192) if a contract is annulled by the expropriatory action; the concept of legitimate reliance explains such reasoning more easily than the notion of unjust enrichment.

108 Recourse to domestic orders within this specific doctrinal framework is not precluded by the foregoing remarks (p. 569/.) concerning general principles and international law in this field.

109 Dolzer, supra note 58.

110 Meessen, supra note 7, at 28, has correctly pointed out that a balancing of interests is required even under the standards of Article 24 of the Charter of Economic Rights and Duties of States. The present author does not fully accept Meessen’s view, however, inasmuch as he suggests, on p. 28, that the international law on compensation serves the function of equalizing economic conditions between states with different economic strength; interstate debt regulation, for instance, is a much more appropriate instrument for contributing to this aim than the measure of compensation to be granted to individual owners. Meessen’s starting point that the damages owed the home state due to an expropriation measure form the basis of the compensation is in line with the traditional view that, in case of diplomatic protection, the protecting state itself is the creditor and not the expropriated individual. It appears questionable, however, whether this view (see, e.g., Mavrommatis Jerusalem Concessions, [1927] PCIJ, ser. A, No. 11) can be upheld on the basis of a modern concept of the position of the individual in international law.

111 See Dolzer, supra note 58.

112 Considering present treaty practice, it is worth mentioning here, for instance, that standard Swiss investment treaties do not require prompt compensation, but compensation “without undue delay.” See Levy & Gattiker, Behandlung und Schutz der Auslandsinvestitionen, Institutionen im Wandel, 35 Außenwirtschaft 53, 61 (1980).

113 Of course, this view is far from novel. Romania relied on it in the 1920’s, and so did Mexic after expropriations in the late 1930’s. See also on this point Lauterpacht, Judge H., Règies générates du cours de la paix, 62 Recueil des Cours 346 (1937 IV)Google Scholar; García-Amador, supra note 7, at 48, with extensive further references; Meessen, supra note 7, at 28.

114 Gantz, supra note 14, at 490.

115 According to Schwarzenberger, , The Protection of British Property Abroad, 5 Current Legal Prob. 307 (1952)Google Scholar, the compensation amounted to 70% of die value of die rights expropriated; die credit vouchers issued by France were payable in seven annual installments.

116 See the compensation scheme in the Marcona case; Gmtz,supra note 14. In this settlement, the computation of compensation included to a large extent the profits that Marcona hoped to make under the terms of the ore sales contract reached as part of the agreement. Marcona paid roughly the same price as other trading partners of Peru. One wonders whether such an arrangement is really compatible with the old Hull rule. Arrangements of a similar type had been made in 1975 in the compensation schemes for various U.S. companies expropriated by Venezuela; see N.Y. Times, Aug. 30, 1975, at 27; Dec. 8, 1974, at 17; and Dec. 9, 1975, at 66.

117 Bergin, supra note 105, at 16, seems to voice a similar argument:

118 See Sohn & Baxter, commenting on Article 2 of their Draft Convention, in García-Amador, F. V., Sohn, L. B. & Baxter, R. R., Recent Codification of the Law of State Responsibility for Injuries to Aliens (1974), at p. 157Google Scholar:

119 Wesley, supra note 31, at 33–40, describes the excess profits systems in the domestic orders of the United States, the United Kingdom, and the Federal Republic of Germany. See also on this point, O. Schachter, supra note 7, at 128.

120 Clearly, a cautious approach is indicated to the comparison of dumping and expropriation procedures. The point here is restricted solely to the fact that the notion of “fair value” as used in dumping procedures indicates that an attempt at establishing “fair profits” in the expropriation area may not be totally out of line with current international business regulations. See, on dumping in general, Jackson, J., International Economic Relations 691–753 (1977)Google Scholar; for the latest European Economic Community and U.S. regulations on antidumping, see 19 ILM 429 (1980).

121 Sornarajah, supra note 7, at 121–26.

122 See Kewenig, W., Der Grundsatz der Nichtdiskriminierung im Völkerrecht (1972)Google Scholar; Charpentier, , De la Non-discrimination dans les investissements, 9 Annuaire Français Droit Int’l 35 (1963)CrossRefGoogle Scholar; see also the Chinn Case, [1934] PCIJ, ser. A/B, No. 63.

123 Smith, D. N. & Wells, L. T. Jr., Negotiating Third World Mineral Agreements passim (1976)Google Scholar; see also Smith, D. N., Mining the Resources of the Third World: From Concession Agreements to Service Contracts, 67 ASIL, Proc. 227–36 (1973)Google Scholar; Zorn, , New Developments in Third World Mineral Agreements, Nat. Resources F., April 1977, at 248Google Scholar; Asante, , Restructuring Transnational Mineral Agreements, 73 AJIL 335 (1979)CrossRefGoogle Scholar. Vellas, Droit de propriété, investissements étrangers et nouvel ordre économique international, 106 J. Droit Int’l 21 (1979), commented on this development from the viewpoint of the protection of the alien.

124 See the discussion remarks of Bernhardt, in Völkerrecht, supra note 7, at 50.

125 Art. 7 of the Charter of Economic Rights and Duties of States; see also Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States in Accordance with the Charter of the United Nations, pt. 5, Annex to UNGA Res. 2625 (XXV) (1970), reprinted in 65 AJIL 243 (1971), 9 ILM 1292 (1970); common Art. 1 of the human rights Covenants.

126 The World Bank has developed special expertise in this area; see, e.g., Hürni, , The “New- Style” Lending Policy of the World Bank, 13 J. World Trade L. 523 (1979).Google Scholar

127 The U.S. Overseas Private Investment Corp. (OPIC) was established by the Foreign Assistance Act of 1969, 83 Stat. 805 (1969). Section 231(3) of the Act reads: “Only such private investments should be supported as are sensitive and responsive to the needs and requirements of the local economies and which contribute to the social and economic development of the people of the host country.”

128 There is some evidence that the Marcona Co. enjoyed an economically privileged position before it was expropriated by Peru; see Gantz, supra note 14, at 478. Perhaps this helps explain why the agreement was in important respects considerably more favorable to Peru than the traditional Hull formula would have allowed.

129 In a stimulating way, F. S. Dunn attempted, as early as 1932, in his work The Protection of Nationals, to apply a risk allocation model to the law regarding aliens. More recently, Brownlie, , Treatment of Aliens: Assumption of Risk and the International Standard, in Festschrift Für F. A. Mann 309 (1977)Google Scholar, examined the usefulness of such a concept. His rather negative conclusions deserve support inasmuch as they concern a broad use of the risk idea; in specific situations, recourse to this standard remains legitimate. The suggestion that past contributions to the local economy should be a factor in the computation of the amount of compensation is not entirely new; see Weston, , 62 ASIL, Proc. 43–46 (1968)Google Scholar; Goldman & Paxman, Real Property Valuations in Argentine, Chile and Mexico, in 2 The Valuation of Nationalized Property, supra note 3, at 164; Rohwer, , Note, 14 Harv. Int’l L.J. 382, 388 (1973)Google Scholar; O. Schachter, supra note 1, at 128.

130 During the Marcona negotiations, a special study of the Stanford Research Institute on the value of the property played a key role; see Gantz, supra note 14, at 490; see also McCosker, Book Values in Nationalization Settlements, in 2 The Valuation of Nationalized Property, supra note 3, at 36.

131 The reasoning of other commentators as well suggests that complex considerations govern the present law. Jiménez de Aréchaga’s method of reasoning may not find general approval, but his results share common ground with those of this article:

Jiménez de Aréchaga, supra note 7, at 185.

132 See also W. Rogers, Foreword, in 1 The Valuation of Nationalized Property, supra note 3, at viii:

In the preparation of die Charter of Economic Rights and Duties of States, industrial states suggested the use of the formula “just compensation in the light of all relevant circumstances”; see the document in 14 ILM 262 (1975).

133 In this respect, the reasoning of the ICJ in the North Sea Continental Shelf cases will be recalled. The Court here viewed equity as a rule filling the gap left by strict common law or existing legislation. The application of this concept generally refers to equitable principles, taking into account all relevant considerations, such as geographical situation, length of coast, and proportionality of the respective shores; [1969] ICJ Rep. at 6, 47, 53–54. Helpful comments are made in Merrills, , Images and Models in the World Court: The Individual Opinions in the North Sea Continental Shelf Cases, 41 Mod. L. Rev. 638 (1978)CrossRefGoogle Scholar.

134 It has been correctly observed that the UN General Assembly has never wholeheartedly favored the settlement of the issue by an international body; see Amerasinghe, , Dispute Settlement Machinery in Relations between States and Multinational Enterprises—with Particular Reference to the International Center for the Settlement of Investment Disputes, 11 Int’l Law. 45, 46 (1977)Google Scholar.

135 Judge Jiménez de Aréchaga, supra note 7, at 190, pointed out that some Latin American countries have decided not to sign this Convention in light of the lack of international judicial guarantees caused by the making of such reservations as the Connally Amendment to declarations filed under Article 36 of the ICJ Statute. But see also the study prepared by the U.S. Department of State on Widening Access to the International Court of Justice, partially reprinted in 16 ILM 187, 196 (1977):

136 See Strebel, , Einwirkungen nationalen Rechts auf das Völkerrecht, 36 Zaörv 168 (1976)Google Scholar.