¹ Myrdal, , An International Economy (1956) 13Google Scholar.

² Snyder, , “Foreign Investment Protection: The Dispute Solving Aspect”; The Columbia Journal of Transnational Law (1965) vol. 3, No. 2, p. 127 at 131Google Scholar.

³ Snyder (ibid n. 2) refers inter alia to Jordan Investments Ltd. v. Soyuzneftexport (the decision of the Soviet Foreign Trade Arbitration Commission in the Israel Soviet oil dispute) as an illustration to the proposition that the decisions of national tribunals are sometimes motivated by the interests which they wish to safeguard. Cf. Sasson, , “The Soviet Israel Oil Arbitration” Journal of Business Law (1959) at p. 131Google Scholaret seq.

⁴ Art. 34, para. 1, of the Statute of the International Court of Justice.

⁵ See e.g., Shea, , The Calvo Clause. A Problem of Inter-American and International Law and Diplomacy (Uni. of Minnesota Press, 1955)Google Scholar.

⁶ Mediation, which is aimed at persuading the parties to resolve their dispute themselves (see definition in Brierly, The Law of Nations 373 et seq. (6th ed. 1963)), and in this sense approaches conciliation, has few advocates in this particular field.

⁷ National facilities, e.g. The London Court of Arbitration or the American Arbitration Association, are understandably suspect of bias in favour of the investor. For this reason, the creation of an international tribunal has actually been supported by senior officers of some of these national institutions, see, e.g., Domke, M., “The Settlement of Investment Disputes” The Business Lawyer (1957) 264 at 268Google Scholar.

⁸ The Court is willing to lend staff and premises for solution of disputes “between States and private persons, especially between States and important commercial corporations” through conciliation or arbitration notwithstanding the provisions of art. 37 of the Hague Convention for the Pacific Settlement of International Disputes, which refers to disputes between States, see Circular Note of the Secretary General, Permanent Court of Arbitration dated March 3, 1960 as reproduced in (1960) 54 American Journal of International Law 933, 937. Subsequently the Court adopted a set of regulations entitled “Rules 1962 of Arbitration and Conciliation For Settlement of International Disputes Between Two Parties of Which Only One is a State”.

⁹ See Brochure, International Commercial Arbitration of the ICC, dated December 1956, and also Böckstiegel, Karl-Heinz, “Arbitration of Disputes between States and Private Enterprises in the International Chamber of Commerce” (1965) 59 American Journal of International Law 579Google Scholaret seq.

¹⁰ See e.g. U.N. Document No. E/3325 at p. 63 et seq. (1960).

¹¹ Resolution 836 (XXXII) August 3, 1961, Promotion of the Flow of Private Capital.

¹² It should be noted that it is the policy of the Bank not to assist member Governments who have defaulted on external debt or have declined to offer equitable compensation for expropriated foreign property unless and until they make appropriate efforts to reach a fair and equitable settlement of their debts. See Policies on the Operations of the World Bank, IFC and IDA, amended to June 30, 1963, at p. 41.

¹³ The Ghana Capital Investment Act, 1963, furnishes a good example of the role the Bank was apparently expected to assume. Art. 8(3) of this Act (No. 172 of April 19, 1963) postulates: “…when there is a dispute as to the amount of compensation payable under this Section [Governmental taking over of an approved investment project] the matter shall be referred to an arbitrator appointed by the parties and failing such appointment, to arbitration through the agency of the International Bank of Reconstruction and Development.”

¹⁴ The Executive Directors represent the member Governments and do not form part of the staff of the Bank. At present there are 20 Executive Directors. The five largest contributors to the Bank's capital (U.S., U.K., France, Germany and India) appoint their own Directors. The rest are elected, each representing a varying number of members. Israel is represented, together with the Netherlands, Yugoslavia and Cyprus, by Mr. P. Lieftinck.

¹⁵ Israel attended both the Bangkok and the Washington meetings.

¹⁶ For the text of the Convention see International Legal Materials, vol. IV, no. 3 of May, 1965, at p. 524.

¹⁷ At the date of writing, the Bank had a membership of 102 countries. One additional application for membership was pending. Poland, Czechoslovakia, Cuba and Indonesia withdrew from the Bank at different periods. Other Communist countries, and particularly the USSR which was a party to the Bretton Woods Conference where the Articles of Agreement of the Bank were formulated, never joined. Switzerland, although not a member, has entered into a relationship agreement with the Bank dated 29 June 1951 (1955) 216 U.N.T.S. and enjoys a special status by virtue of opening its markets to Bank borrowing (e.g., participation in all bids for supply of goods and services financed by the Bank).

¹⁸ Art. 67.

¹⁹ For a more detailed description of the process, see Address by A. Broches, the General Counsel of the Bank, to the Annual Meeting of the American Society of International Law (Panel on Development of Rules Relating to International Trade and Investment) entitled “Development of International Law by the International Bank for Reconstruction and Development” (April 22, 1965) reproduced in Proceedings of the American Society of International Law, Fifty-Ninth Annual Meeting at p. 33.

²⁰ IFC was originally created for the provision of risk capital (without Governmental guarantees) which the Bank could not provide, and IDA for the provision of finance on terms which were less of a burden on the balance of payments of the borrower than the conventional terms Bank loans must be subject to. Israel is a member of both affiliates, whose membership is not as large as that of the Bank.

²¹ The Bank is designated as depository of the Convention (Art. 73).

²² It shall enter into force for each State which subsequently ratifies it 30 days after the deposit of its instrument of ratification, acceptance or approval. Present information indicates that the Convention will enter into force within a relatively short time, and that in the initial 20 Contracting States both capital-exporting and capital importing countries will be represented. At the end of September, 1965, the Convention had 20 signatories, including the U.S., the U.K., Pakistan and Tunisia, and one State, Nigeria, had already deposited instruments of ratification.

²³ See, e.g., the Draft Convention on the Protection of Foreign Property prepared by a Committee of the Organization for Economic Co-operation and Development (OECD). Although the OECD has not yet endorsed the Draft, it has circulated it to States and other interested circles for comments. Art. 7 of the Draft provides that a national of a Party to the Convention claiming that he has been injured in breach of the Convention may institute proceedings against the Party responsible for such measures before the Arbitral Tribunal established in accordance with the Annex to the Convention, provided that (i) his State has renounced its right to espouse his claim under the Convention, and (ii) the Party against which the claim is made has accepted the jurisdiction of the Arbitral Tribunal.

²⁴ Privileges and immunities which apply to the Chairman, to members of the Administrative Council, to persons appointed as conciliators or arbitrators and to the officers and employees of the Secretariat are also extended to the parties to proceedings under the Convention and to persons acting as agents, counsel, advocates, witnesses or experts in such proceedings (art. 22).

²⁵ From the provisions of the Convention it is clear that any Rules for the conduct of proceedings which may be adopted by the Administrative Council (when it is constituted following the entry of the Convention into force) would not be mandatory, the parties being given the right to apply other rules if they should so elect (arts. 33 and 44).

²⁶ According to the accompanying Report of the Executive Directors this is only a screening power, and was inserted “with a view to avoiding the embarrassment to a party (particularly a State) which might result from the institution of proceedings against it in a dispute which it had not consented to submit to the Centre, as well as the possibility that the machinery of the Centre would be set in motion in cases which for other reasons were obviously outside the jurisdiction of the Centre, e.g., because either the applicant or the other party was not eligible to be a party in proceedings under the Convention.”

²⁷ The qualifications of Panel members are listed in art. 14(1) as follows: “[They] shall be persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment. Competence in the field of law shall be of particular importance in the case of persons on the Panel of Arbitrators.”

²⁸ Arts. 29, 30, 37 and 38.

²⁹ Similar provisions apply in the case of Conciliation Commissions (art. 29(2) (b)).

³⁰ Defined in art. 25(2) as:

“a) any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered…but does not include any person who on either date also had the nationality of the Contracting State party to the dispute; and

b)any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration, and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.”

Under a) above the machinery of the Convention will apparently not be available to “stateless” persons. Under b) a corporation which is registered in the host country but which is foreign owned would not be excluded.

³¹ The terms “legal dispute” and “investment” have not been defined in the Convention, in part due to the fact that they did not lend themselves to an adequate and meaningful definition for which a broad measure of support could be found. However the accompanying Report of the Executive Directors adds the following commentary to the first phrase: “The expression ‘legal dispute’ has been used to make clear that while conflicts of rights are within the jurisdiction of the Centre, mere conflicts of interests are not…” The limitation to “investment” disputes is significant. It would appear to prevent foreign consultants or foreign contractors, who are often faced with dispute-solving problems in contracts with host Governments, from having access to the Centre. Whether or not the Centre could entertain non-investment claims if both parties agreed to submit such disputes to it is unclear.

³² The Convention includes no specific provision with respect to the effect of possible reservations. Presumably the Bank as depository, and each Contracting State for its own behalf, will be left to draw its own conclusions were the question to arise. It should perhaps be noted that the General Assembly of the U.N. adopted the following recommendation on the subject of reservations on January 12, 1952: “(1) …that organs of the United Nations, Specialized Agencies (The IBRD is a Specialized Agency of the U.N.) and States should, in the course of preparing multilateral conventions, consider the insertion therein of provisions relating to the admissibility or non-admissibility of reservations and to the effect to be attributed to them…” (Resolution 598 (VI)).

³³ Although novel, it is not entirely unprecedented for an individual, whether a natural or a juridical person, to have access to an international tribunal for the purposes of bringing suit against a State or other subject of public international law. This appears to be the direction in which international law is developing, and non-nation disputants presently have, to one extent or another, direct access both to the Court of Justice of the European Communities, and to the European Commission of Human Rights. See also n. 23 with respect to the OECD Draft Convention on the Protection of Foreign Property.

³⁴ Thus, e.g., denunciation of the Convention by a Contracting State “shall not affect the rights or obligations under the Convention of that State…arising out of consent to the jurisdiction of the Centre given by it before such notice [of denunciation] was received by the depository” (art. 72).

³⁵ As the aim of conciliation is “to bring about an agreement between [the parties] upon mutually acceptable terms” (art. 34(1)), these provisions apply only to arbitral awards. In the case of conciliation the parties are required to give “their most serious consideration to the recommendations of the Commission”.

³⁶ Applicable where a dispute arises as to the meaning or scope of the award.

³⁷ Applicable when a fact of such a nature as decisively to affect the award was un known at the time of the proceedings, and that such ignorance was not due to negligence. If possible, the request will be submitted to the Tribunal which rendered the award, who may stay enforcement of the award pending its decision.

³⁸ Applicable if one or more of the following grounds is proved: (a) that the Tribunal was not properly constituted; (b) that the Tribunal has manifestly exceeded its powers; (c) that there was corruption on the part of a member of the Tribunal; (d) that there has been a serious departure from a fundamental rule of procedure, or (e) that the award has failed to state the reasons on which it is based. Applications for annulment must be made not later than 120 days after the date on which the award was rendered, except for a request on grounds of corruption which may be made within a period of three years after the date on which the award was rendered. The request will be heard by an ad hoc Committee of three persons which the Chairman of the Administrative Council shall appoint from the Panel of Arbitrators.

³⁹ Mention should also be made of art. 49(2) which states that: “The tribunal upon the request of a party made within 45 days after the date on which the award was rendered may after notice to the other party decide any question which it had omitted to decide in the award …”

⁴⁰ “The award shall be binding on the parties and shall not be subject to any appeal or any other remedy except those provided for in this Convention” (art. 53(1)).

⁴¹ Each Contracting State undertakes to notify the Secretary General of the designation of a competent court or other authority through which enforcement of awards rendered pursuant to the Convention may be sought. The execution itself shall be governed by the law concerning the execution of judgments in force in the State in whose territories such execution is sought (art. 54(2), (3).

⁴² The Report of the Executive Directors states that: “The term ‘international law’ as used in this context should be understood in the sense given to it by art. 38(1) of the Statute of the International Court of Justice, allowance being made for the fact that art. 38 was designed to apply to inter-State disputes.”

⁴³ That such an unqualified duty exists under contemporary international law has sometimes been questioned. See, e.g., the observations of the Supreme Court of the U.S. in Banco Nacional de Cuba v. Sabbatino, 84 S.Ct. 923 (1964) at p. 940, 941, and the many authorities there cited and examined, concluding that: “There are few if any issues in international law today on which opinion seems to be so divided as the limitations on a State's power to expropriate the property of aliens.”

⁴⁴ Because of the “act of state” doctrine some domestic courts are bound to recognize foreign legislation even if it contravenes international law. See with respect to the U.S., Banco Nacional de Cuba v. Sabbatino, ibid n. 43, and with respect to the U.K., In re Helbert Wagg & Co. Ltd. [1956] Ch. 323.

⁴⁵ See n. 37.

⁴⁶ According to art. 2, the seat of the Centre is at the principal office of the World Bank. It may however be moved from there in future if the Administrative Council were to so decide by a majority of two-thirds of its members.

⁴⁷ According to the Report of the Executive Directors: “These arrangements are likely to vary with the type of institution, and to range from merely making premises available for proceedings to the provision of complete secretariat services.”

⁴⁸ It is hoped that for States like Israel, which are capital-importing and capital-exporting at the same time, this would assist in mitigating any feelings of ambivalence rather than in multiplying the effects of any shortcomings.