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Private Foreign Investment and International Organizations

Published online by Cambridge University Press:  22 May 2009

Stanley D. Metzger
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Extract

More rapid industrial and agricultural development of the economically underdeveloped three-quarters of the globe is the most important long-run task in international relations, with the sole exception of avoiding major warfare. While economic development depends primarily upon domestic efforts to marshal and direct resources, both human and material, the marshaling and direction of supplementary external resources can assist materially in attempting to achieve that objective. While the major external resources necessary to supplement domestic efforts will continue to be governmental and intergovernmental assistance, there has been for some time now, and will doubtless continue to be, a substantial insufficiency of such resources.

Type
Articles
Information
International Organization , Volume 22 , Issue 1 , Winter 1968 , pp. 288 - 309
Copyright
Copyright © The IO Foundation 1968

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References

1 See Hackworth, Green Haywood, Digest of International Law (Washington: United States Government Printing Office, 1942), Vol. III, pp. 658–660Google Scholar, for the United States formulation in its 1938 note to Mexico. See also Fatouros, Arghyrias A., Government Guarantees to Foreign Investors (New York: Columbia University Press, 1962), pp. 303–338Google Scholar; and Metzger, Stanley D., “Property in International Law,” Virginia Law Review, 05 1964 (Vol. 50, No. 4), pp. 594, 598–607CrossRefGoogle Scholar.

2 Hackworth, , Digest of International Law (Washington: United States Government Printing Office, 1943), Vol. V, pp. 635–636Google Scholar; and American Law Institute, Restatement of the Law, Foreign Relations Law of the United States (Philadelphia, 1965), Section 185, Reporters' Notes Section 2Google Scholar.

3 Hackworth, Vol. III, pp. 658–659, 657–658.

4 Fatouros, A. A., “An International Code to Protect Private Investment—Proposals and Perspectives,” University of Toronto Law Journal, 1961 (Vol. 14, No. 1), p. 79CrossRefGoogle Scholar.

5 Ibid., p. 80; and Articles 11 and 12 of the Havana Charter in Havana Charter for an International Trade Organization, March 24, 1948 (Department of State Publication 3046) (Washington: United States Government Printing Office, 1948)Google Scholar.

6 Draft Charter for the International Trade Organization of the United Nations, Embodied in the Report of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment at Geneva, Switzerland, April–August 1947 (Department of State Publication 2927) (Washington: United States Government Printing Office, 1947)Google Scholar.

7 Ibid., pp. 14, 13.

8 In United States Statutes at Large, Vol. 60 (79th Congress, 2nd Session, 1946), Part 2 (Washington: United States Government Printing Office, 1947)Google Scholar, and Treaties and Other International Acts Series (hereinafter cited as TIAS) 1501 (Department of State Publication 2512) (Washington: United States Government Printing Office, 1946)Google Scholar, Article VI, section 3, states: “Members may exercise such controls as are necessary to regulate international capital movements. …”

9 See for example, Article XII of the Treaty of Friendship, Commerce and Navigation Between the United States of America and Japan in TIAS 2863 (Department of State Publication 5312) (Washington: United States Government Printing Office, 1954)Google Scholar; see also Metzger, , Virginia Law Review, Vol. 50, No. 4, pp. 606–607Google Scholar; and Walker, Herman Jr, “Modern Treaties of Friendship, Commerce and Navigation,” Minnesota Law Review, 04 1958 (Vol. 42, No. 5), pp. 805–824Google Scholar, reprinted in Stanley D. Metzger, Law of International Trade: Documents and Readings (Washington: Lerner Law Book Company, 1966), Vol. I, pp. 24–29.

10 Diebold, William Jr, The End of I.T.O. (Essays in International Finance No. 16) (Princeton, N.J: International Finance Section, Department of Economics and Social Institutions, Princeton University, 10 1952), pp. 11–24Google Scholar; and National Foreign Trade Council, Position of the National Trade Council With Respect to the Havana Charter for an International Trade Organization (New York, 1950), pp. 5–6, 53–60Google Scholar.

11 Economic Agreement of Bogotá in Treaties and Conventions Signed at the Ninth International Conference of American States (Pan American Union, Law and Treaty Series No. 25) (Washington: Pan American Union, 1948)Google Scholar.

12 Fatouros, , University of Toronto Law Journal, Vol. 14, No. 1, p. 73Google Scholar.

13 U.S. Congress, House, Committee on Foreign Relations, Ad Hoc Subcommittee, Hearings, on H. J. Res. 160, to create a commission to study and make recommendations for the security of American foreign investments and the prevention of claims against the United States, 85th Congress, 1st Session, 1957, p. 14Google Scholar. See also Metzger, Stanley D., International Law, Trade and Finance (Dobbs Ferry, N.Y: Oceana Publications, 1962), pp. 164–165Google Scholar; and Metzger, , Virginia Law Review, Vol. 50, No. 4, pp. 612–613Google Scholar.

14 UN Document E/255, February 5, 1947, pp. 12–13.

15 General Assembly Resolution 1803 (XVIII), December 14, 1962; see Schwebel, Stephen M., “The Story of the U.N.'s Declaration on Permanent Sovereignty over Natural Resources,” American Bar Association Journal, 05 1963 (Vol. 47, No. 5), pp. 463–469Google Scholar.

16 Department of State Bulletin, 01 16, 1967 (Vol. 56, No. 1438), p. 105Google Scholar. The texts of the two Covenants are reprinted in that issue of the Bulletin on pp. 107–121. The “new” article is Article 25 of the Economic Covenant and Article 47 of the Civil and Political Rights Covenant.

17 UN Document A/6518, November 21, 1966, the report of the Second (Economic and Financial) Committee, reprints the text of the resolution, which was adoped by the Assembly on November 25, 1966, 104 for, none against, with 6 abstentions (including the United States), as General Assembly Resolution 2158 (XXI).

18 A convenient place to find the IBRD Convention and the report of its Executive Directors on it is International Legal Materials, 1965 (Vol. 4), pp. 532–544 and 524—531Google Scholar.

19 International Legal Materials, 1966 (Vol. 5), pp. 649, 662, 664, and particularly 666–667 and 667–670Google Scholar where the State Department's Legal Adviser made it clear, under close questioning by Senator Frank Church, that die Convention had no practical relevance so far as the United States' being required to arbitrate is concerned and Undersecretary of the Treasury Joseph W. Barr emphasized the “small step” forward which it represented.

20 See above, note 19. See also Metzger, , Virginia Law Review, Vol. 50, No. 4, pp. 615–617Google Scholar.

21 Johnson, Harry G., Economic Policies Toward Less Developed Countries (Washington: Brookings Institution, 1967), pp. 44–46Google Scholar.

22 Metzger, , Virginia Law Review, Vol. 50, No. 4, pp. 614, 622–625Google Scholar.

23 For a description of the United States program see Surrey, Walter S. and Shaw, Crawford (ed.), A Lawyer's Guide to International Business Transactions (Philadelphia: American Law Institute-American Bar Association, 1963), pp. 336–346, and references therein, particularly note 121Google Scholar; and Rivkin, Arnold, “Investment Guaranties and Private Investment,” Federal Bar Journal, 10 1959 (Vol. 19, No. 4), pp. 357–366Google Scholar. Collins, Lawrence A. and Etra, Aaron, “Policy, Politics, International Law and the United States Investment Guaranty Program,” Columbia Journal of Transnational Law, 1966 (Vol. 4, No. 2), pp. 240–296Google Scholar, represents the most comprehensive recent treatment.

24 Surrey and Shaw, pp. 341–342; and Collins, and Etra, , Columbia Journal of Transnational Law, Vol. 4, No. 2, pp. 295–296Google Scholar.

25 See, e.g., the Agreement Between the United States of America and Afghanistan, June 5 and 9, 1957, in TIAS 2972 (Washington: United States Government Printing Office, 1958)Google Scholar; and the Agreement Between the United States of America and Ecuador, March 28 and 29, 1955, in TIAS 3230 (Department of State Publication 5955) (Washington: United States Government Printing Office, 1956)Google Scholar.

26 Protocol to the Agreement Between the United States of America and the Republic of Argentina, signed December 22, 1959, June 5, 1963, printed in International Legal Materials, 1963 (Vol. 2), pp. 776–782CrossRefGoogle Scholar. Article 3 (B) of the Agreement states:

[N]either questions under the Constitution and the laws of the Argentine Republic as to the motive, occasion for or legitimacy of an expropriation nor the final decision reached in the Argentine judicial process on any question of the Argentine Constitution and laws may be reviewed by the Arbitral Tribunal, since these are matters, within the internal jurisdiction of the Argentine Republic.

(Emphasis added.)

27 The text reflects the report of IBRD to the Secretary-General of the United Nations of September 20, 1965, on the status of the International Bank studies on multilateral investment guarantees, reprinted in International Legal Materials, 1966 (Vol. 5), pp. 92–95, and material from Metzger, , Virginia Law Review, Vol. 50, No. 4, pp. 625–627Google Scholar.

28 International Legal Materials, Vol. 5, pp. 93–94.

29 The major European countries indicated, at the OECD experts' meetings and continuously thereafter, an unwillingness to subscribe to a paid-in fund which would back investment guaranty contracts without regard to the particular nationality of the investor so long as he was a national of a subscribing state.

30 United States Statutes at Large, Vol. 76 (87th Congress, 2nd Session, 1962) (Washington: United States Government Printing Office, 1963), pp. 260–261Google Scholar; United States Code Annotated, Title 22: Foreign Relations and Intercourse (St. Paul, Minn: West Publishing Co., 1964), 2370 (e), pp. 227–228Google Scholar; Foreign Assistance Act of 1963, Section 301 (e), United States Code: Congressional and Administrative News, 88th Congress-First Session, 1963 (St. Paul, Minn: West Publishing Co., 1963), pp. 425–427Google Scholar; and Public Law 89–6, 89th Congress, 1st Session, March 24, 1965, reprinted in International Legal Materials, 1965 (Vol. 4), p. 458. The last-named enactment requires that the “voting power of the United States” in die Fund for Special Operations of IDB “shall be exercised for the purpose of disapproving any loan from” that Fund for “any project, enterprise, or activity in any country” where the President has suspended United States assistance because of the Hickenlooper Amendment.

31 Lillich, Richard B., “The Protection of Foreign Investment and the Hickenlooper Amendment,” University of Pennsylvania Law Review, 06 1964 (Vol. 112, No. 8), p. 1116CrossRefGoogle Scholar, quoting the New York Herald Tribune, January 7, 1964, p. 10 (international edition).

32 Lillich, , University of Pennsylvania Law Review, Vol. 112, No. 8, p. 1127Google Scholar; and Mctzger, , Virginia Law Review, Vol. 50, No. 4, pp. 619–620Google Scholar. As Lillich points out, however, in 1963, when the amendment was further tightened, while Agency for International Development (AID) Director David E. Bell was not enthusiastic in indicating no objection, the Secretary of State, though unhappy about congressional attempts to “legislate foreign policy,” reversed the State Department's very marked antagonism of just a year earlier, stating that the amendment was “a good thing.” (Lillich, , University of Pennsylvania Law Review, Vol. 112, No. 8, p. 1126Google Scholar.) Lillich further questions, quite cogently, whether this change of view had any substantial factual basis (ibid., pp. 1127–1128). At the April 1967 annual meeting of the American Society of International Law Andreas Lowenfeld, former Deputy Legal Adviser of the Department of State, indicated a substantial number of additional complications in connection with the administration of the Hickenlooper Amendment.

33 Banco National de Cuba v. Sabbatino, United States Reports, Vol. 376: Cases Adjudged in the Supreme Court at October Term, 1963 (Washington: United States Government Printing Office, 1964), pp. 428–430Google Scholar.