Domicile of a Pseudo Foreign Corporations

-The scenario under Common law and in India and America .

Introduction

Following on the success of the corporate model at a national level, many corporations have become transnational or multinational corporations: growing beyond national boundaries to attain sometimes remarkable positions of power and influence in the process of globalizing. In the spread of corporations across multiple continents, the importance of private international laws has grown many folds. Conflict of laws, or private international law, or international private law, in common law system, is that branch of international law and interstate law that regulates all lawsuits involving a “foreign” law element, where a difference in result will occur depending on which laws are applied.

 

What is Pseudo Foreign Corporation?

A Pseudo-foreign corporation is a corporation incorporated in a jurisdiction with which it has minimal business contacts. Corporations may incorporate in foreign jurisdictions in order to minimize liability, taxes, or regulatory interference.

The pseudo-foreign corporations are awarded a different treatment from a national company when it comes to deciding the applicable law. Various factors are considered in determining the applicable law.

 

Domicile and Residence of Corporation in Common Law.

The Cesena case

The Cesena Company was incorporated in England under Companies Act for the purpose of taking over and working sulphur mines at Cesena in Italy. The practical business of manufacturing selling the sulphur was administered by an Italian delegate. No products were ever sent to England, the books of account were kept in Italy, the company was registered in Italy and two third of the shareholders were Italian. Taken by themselves, these facts went to show that the centre of business was Italy. As against them, however, the memorandum of association set up a Board of Directors in London which controlled the “sale, order, direction, and management” offs ‘the working of the company’s mines, the mode of the disposal thereof, and the general business of the company”. The shareholders’ meetings were held in London, and it was there that dividends were declared. In the result it was held that, since almost every act of the company connected with its management was done in London, the main place of business in London, and that therefore the company was held to be the resident of England and thus was liable to pay Income tax at London only.

The British court emphatically states that the true rule for determining the place of residence of a company for the purpose of Income tax is ‘where the company’s real business is carried on’ and in the opinion of the court the ‘real business’ is carried on where the company’s control and management abides. Usually the control and management abides where the general meetings take place.

 

Indian Position

The law in India is essentially based on Common Law system and English precedents. The present Indian legal system does not contain any specific provision on any cross –border relations, but is spread over various legislations.

 

Origin of a corporation

The domicile of origin in the case of a company is the country where it is registered, i.e., the place or country of its incorporation. Thus, a company formed under the English Companies Act has an English domicile if it is registered in England. Similarly, a company incorporated under the Indian Companies Act will have an Indian domicile. This has been recognized by the Indian Supreme Court in the case Technip SA v. SMS Holding (Pvt.) Ltd. & Ors , the court observed that:

“Questions as to the status of a corporation are to be decided according to the laws of its domicile or incorporation subject to certain exceptions including the exception of domestic public policy. This is because a corporation is a purely artificial body created by law. It can act only in accordance with the law of its creation. Therefore, if it is a corporation, it can be so only by virtue of the law by which it was incorporated and it is to this law alone that all questions concerning the creation and dissolution of the corporate status are referred unless it is contrary to public policy.”

In addition according to Indian Income Tax Act, a company registered outside India but having its management and control in India, is considered an Indian Company for the purpose of corporate taxation. The domiciles of the shareholders have no influence in determining the domicile of the company.

 

Domicile and Resident corporations

The question of domicile of a company or its residence is completely notional, as the company not being a living person cannot reside or domicile. The question arises essentially for the purpose of the levy of taxes. Under the Income Tax Act, a person is liable to pay tax in India and under section 6 (3) (ii) of the Act a foreign company is regarded as a resident unless in the previous year its management or control was situated completely outside India.

The Supreme Court quoting from De Bears consolidated Mines vs. Howe held the following in the case of Subbaya Chettiar vs. CIT, Madras – ‘The Company resides for the purpose of Income Tax, where its real business is carried on, and the real business is carried on where the actual management or the control resides.’

 

Winding Up of Pseudo Foreign Company.

It has been held in many decisions that a foreign company can be ordered to be wound up in India.

 

American Position

If a case involving a pseudo-foreign corporation comes before an American court, the court exercises its jurisdiction after determining the domicile of the pseudo-foreign company. There are two conflicting opinion on what would constitute the domicile of a pseudo-foreign corporation and they are as follows:

1. The domicile of a company would be the place where it was incorporated.

2. The domicile of a company would be the place of business or where it mostly transacts.

 

Lex Incorporationis (Law of State of Incorporation)

Under this approach the court decides the domicile of the pseudo-foreign company to be the place where it was principally incorporated. The doctrine recognizes that interests of certainty, protection of legitimate expectations and reducing the prospect of inconsistent obligations require that only one state have the authority to regulate a corporation’s internal affairs. In addition, the doctrine generally requires that the law of the sate of incorporation govern allegations of director or officer breaches of fiduciary duty owed to the corporation and its shareholders. When the rights of third parties unaffiliated with the corporation are at issue, however, the doctrine does not apply and ordinary choice of law principles govern.

 

The Place of Business

This approach of determining the domicile is often called the traditional approach. Under this approach the court may exercise jurisdiction as to any cause of action, if defendant is domiciled in the forum state or its activities there are substantial, continuous & systematic even if unrelated to the defendant’s activities within the state. This form of personal jurisdiction is known as general jurisdiction. However, even if a non-resident defendant’s contracts with a forum state are sufficiently ‘continuous & systematic’ for general jurisdiction, it may still be subject to jurisdiction on claims related to its activities or contracts there. This form of personal jurisdiction is known as limited jurisdiction.

As can be seen, there is no uniformity among the courts on the issue under review. This can lead to inequitable results. In the cases of Calder v. Jones and Keeton v. Hustler Magazine, Inc. these issues were discussed. The Supreme Court held that merely having jurisdiction over a business entity is not tantamount to having jurisdiction over the owners or employees of the entity. Rather, one must find the requisite “minimum contacts” as to each individual separately. Where one owns a pseudo-foreign corporation and is domiciled in the Forum State, the courts there already possess general personal jurisdiction over the owner. In such a situation, the “majority rule” is that the law of the place of formation decides the issue.

 

Despite this difference of opinion, one thing is absolutely clear: “The central question in choosing the appropriate law to govern a corporation asks whether the particular issue involved is an internal one or one that involves third parties.

 

Conclusion

The nature of the corporation continues to evolve through existing corporations pushing new ideas and structures, courts responding, and governments regulating in response to new situations. A question of long standing is that of diffused responsibility: for example, if the corporation is found liable for a death, then how should the blame and punishment for this be allocated across the shareholders, directors, management and staff of the corporation, and the corporation itself?

The present law differs among jurisdictions, and is in a state of flux. Some argue that the owners of the business – the shareholders – should be ultimately responsible for such circumstances, forcing them to consider issues other than profit when investing, but the modern corporation may have many millions of small shareholders who know nothing about its business activities. In addition, traders — especially hedge funds — may rapidly turn over their partial ownership of a corporation many times a day.

 

Difference between FDI and FII

The Foreign investment pertains to those investments which made by the residents of a country in the financial assets and production processes of another country. From country to country its effect varies. It can affect the factor productivity of the recipient country and can also affect the balance of payments. Foreign investment provides a channel through which countries can gain access to foreign capital. It can come in two forms: foreign direct investment (FDI) and foreign institutional investment (FII). Foreign direct investment involves in direct production activities and is also of a medium- to long-term nature. But foreign institutional investment is a short-term investment, mostly in the financial markets. FII, given its short-term nature, can have bidirectional causation with the returns of other domestic financial markets such as money markets, stock markets, and foreign exchange markets. Hence, understanding the determinants of FII is very important for any emerging economy as FII exerts a larger impact on the domestic financial markets in the short run and a real impact in the long run. India, being a capital scarce country, has taken many measures to attract foreign investment since the beginning of reforms in 1991.

In this world, India is the second largest country with a population of over 1 billion people. As a developing country, India’s economy is characterized by wage rates that are significantly lower than those in most developed countries. These two traits combine to make India a natural destination for foreign direct investment (FDI) and foreign institutional investment (FII). Until recently, however, India has attracted only a small share of global foreign direct investment (FDI) and foreign institutional investment (FII), primarily due to government restrictions on foreign involvement in the economy. But beginning in 1991 and accelerating rapidly since 2000, India has liberalized its investment regulations and actively encouraged new foreign investment, a sharp reversal from decades of discouraging economic integration with the global economy.

The world is increasingly becoming interdependent. Goods and services followed by the financial transaction are moving across the borders. In fact, the world has become a borderless world. With the globalization of the various markets, international financial flows have so far been in excess for the goods and services among the trading countries of the world. Of the different types of financial inflows, the foreign direct investment (FDI) and foreign institutional investment (FII)) has played an important role in the process of development of many economies. Further many developing countries consider foreign direct investment (FDI) and foreign institutional investment (FII) as an important element in their development strategy among the various forms of foreign assistance.

Both FDI and FII is related to investment in a foreign country. FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation.

In FII, the companies only need to get registered in the stock exchange to make investments. But FDI is quite different from it as they invest in a foreign nation.

The Foreign Institutional Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. This difference is what makes nations to choose FDI’s more than then FIIs.

FDI is more preferred to the FII as they are considered to be the most beneficial kind of foreign investment for the whole economy.

Foreign Direct Investment only targets a specific enterprise. It aims to increase the enterprises capacity or productivity or change its management control. In an FDI, the capital inflow is translated into additional production. The FII investment flows only into the secondary market. It helps in increasing capital availability in general rather than enhancing the capital of a specific enterprise.

The Foreign Direct Investment is considered to be more stable than Foreign Institutional Investor. FDI not only brings in capital but also helps in good governance practices and better management skills and even technology transfer. Though the Foreign Institutional Investor helps in promoting good governance and improving accounting, it does not come out with any other benefits of the FDI.

While the FDI flows into the primary market, the FII flows into secondary market. While FIIs are short-term investments, the FDI’s are long term.

 

Summary

1. FDI is an investment that a parent company makes in a foreign country. On the contrary, FII is an investment made by an investor in the markets of a foreign nation.

2. FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily.

3. Foreign Direct Investment targets a specific enterprise. The FII increasing capital availability in general.

4. The Foreign Direct Investment is considered to be more stable than Foreign Institutional Investor

World Trade Law

INTRODUCTION

“Prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective resolution of disputes to the benefit of all Members.”

—-World Trade Organization, Article 21.1 of the DSU

In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes or Dispute Settlement Understanding (DSU) (annexed to the “Final Act” signed in Marrakesh in 1994)[1]. Pursuant to the rules detailed in the DSU, member states can engage in consultations to resolve trade disputes pertaining to a “covered agreement” or, if unsuccessful, have a WTO panel hear the case[2]. The priority, however, is to settle disputes, through consultations if possible. By January 2008, only about 136 of the nearly 369 cases had reached the full panel process.

The operation of the WTO dispute settlement process involves the parties and third parties to a case and may also involve the DSB panels, the Appellate Body, the WTO Secretariat, arbitrators, independent experts, and several specialized institutions[3]. The General Council discharges its responsibilities under the DSU through the Dispute Settlement Body (DSB)[4]. Like the General Council, the DSB is composed of representatives of all WTO Members. The DSB is responsible for administering the DSU, i.e. for overseeing the entire dispute settlement process. It also has the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize the suspension of obligations under the covered agreements.[5] The DSB meets as often as necessary to adhere to the timeframes provided for in the DSU[6].

Since 1 January 1995 to 1 March 2007 of the extent to which WTO Members have complied with adverse WTO dispute settlement rulings rendered both by dispute settlement panels and the Appellate Body. The record indicates that, generally speaking, WTO Members found in violation of their WTO obligations in dispute settlement proceedings have done a reasonably good job in taking steps to correct these violations within a reasonable period of time. While there have been some cases where compliance has been delayed or where full compliance has yet to be achieved, this should not detract from the fact that the overall compliance record of WTO Members has been quite positive, which in turn has contributed significantly to the effectiveness of the WTO dispute settlement system as a whole.

It is to be recalled that Article 3.7 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) clearly states that the preferred remedy under the WTO dispute settlement system is the withdrawal of any WTO-inconsistent measure. If and only if this is not possible on a timely basis are alternative remedies to be pursued. These alternative remedies are (i) the granting of compensation by the responding Member to the complaining Member consisting of trade liberalization measures with respect to a volume of trade comparable to that adversely affected by the WTO-inconsistent measures; and (ii) if compensation is not possible and as a last resort, retaliation by the complaining Member consisting of trade-restrictive measures of a proportionate nature against the trade of the responding Member[7].

Up until 1 March 2007, there have been panel or panel/Appellate Body reports adopted by the WTO Dispute Settlement Body (DSB) in 109[8] cases excluding reports from so-called Article 21.5 of the DSU compliance proceedings, which have occurred in roughly one out of every five cases where WTO violations have been found in the original WTO litigation proceedings[9]. Of the 109 adopted panel or panel/Appellate Body reports, in nearly 90% of these cases the panel and/or the Appellate Body have found WTO violations.

Only 17 WTO Members—counting the European Communities as 1 Member rather than as 27 Members—or about 30% of all 150 WTO Members—counting the European Communities in this calculation as 27 Members—have ever been the object of adverse or partially adverse rulings by WTO panels and/or the Appellate Body for which compliance was required. Seven of these 17 WTO Members have been the object of only one adverse or partially adverse ruling. These seven Members are Brazil, the Dominican Republic, Egypt, Guatemala, Indonesia, Thailand, and Turkey.

Ten WTO Members have had multiple adverse or partially adverse rulings in WTO litigation proceedings. These 10 Members are (with the number of cases in which violations against them were found in parentheses) the United States (33), European Communities (16), Canada (8), Argentina (6), India (4), Mexico (4), Korea (5), Japan (4), Chile (2), and Australia (2).

COMPLIANCE RECORD OF WTO MEMBERS—SOME GENERAL OBSERVATIONS

As has been widely acknowledged by WTO Members themselves, the overall compliance record of WTO Members with adverse WTO dispute settlement rulings has generally been quite good in the cases to date in which WTO violations have been found. In virtually every one of these cases, the WTO Member found in violation of its WTO obligations has indicated its intention to bring itself into compliance and in most cases has already done so.

The record has also shown that compliance has usually been more rapid where WTO violations could be corrected through administrative action under the control of the Executive as opposed to legislative action. This outcome is not surprising since legislative action involves more complicated political processes; the enactment of corrective remedies through changes to national statutes usually takes a longer period of time in most national systems. As will be seen further, the experience of the United States in this regard is instructive.

The use of compensation as a transitional remedy until full compliance could be achieved has only occurred in one case[10]. Thus, the WTO dispute settlement model in practice has been a ‘compliance-retaliation’ model rather than a ‘compliance-compensation-retaliation’ model.

As for the resort to retaliation, out of the 109 cases where a panel or panel/Appellate Body report was adopted, retaliation has been requested in only 18 instances of which 9 have gone through the arbitration process under Article 22.6 of the DSU to establish the proper level of retaliation. The DSB granted authorization to retaliate in only eight cases. In one case (US1916 Act), the WTO-inconsistent measure was withdrawn soon after the arbitration was completed, thus obviating the need for final DSB authorization of retaliation. More will be said on retaliation in the final section subsequently.

Compliance Problems in WTO Dispute Settlement:

This Comment surveys the problems of compliance facing the World Trade Organization (WTO) dispute settlement system and considers reforms that might improve compliance. In general, the WTO dispute settlement system has an excellent compliance record. A recent examination of the implementation record of WTO decisions for the first ten years of WTO dispute settlement found a compliance rate of 83%[11]. Although new problem cases continue to arise, several of the ten problem cases outstanding at the time of the study have since been resolved[12]. This compliance rate is very good for an international state-to-state dispute settlement system[13].Moreover; the success rate of consultations in WTO cases that do not result in either adopted panel or Appellate Body reports is impressive[14]. The picture, however, is not so rosy if one looks beyond general statistics and considers the quality and timeliness of compliance actions.

Timeliness also encompasses inquiries into whether the time taken by the panel and appellate processes has met the standards specified in the WTO Dispute Settlement Understanding (DSU)[15].

An examination of the quality and timeliness of compliance in the first ten years of the WTO dispute settlement system reveals some interesting patterns. General Agreement on Tariffs and Trade (GATT) and Trade- Related Aspects of Intellectual Property Rights (TRIPS) cases typically result in the timely withdrawal of the contested measure[16]. The two TRIPS cases brought against the United States[17] and the European Communities –Bananas[18] case are the main exceptions to this trend[19]. In other words, the desired result has generally been achieved in GATT and TRIPS cases. There have also typically been timely withdrawals of the contested measures in safeguard and textiles cases; however, the contested measures in these cases were often in place for all or most of the initially intended period of effectiveness[20]. Thus, compliance was timely in terms of respecting the reasonable period of time for implementation set by the WTO dispute settlement process, but the overall WTO process took so long that implementation was not very meaningful in practical terms[21].

 

Finally, with respect to the overall timeliness of the panel and appellate process, a detailed examination of the time taken by panels to issue their reports shows that panels typically exceed the targets set in the DSU by many months, especially in Article 21.5 compliance proceedings[22].While the Appellate Body usually issues its report within ninety days of an appeal[23], the overall time taken by the process— especially when the “reasonable” periods of time for implementation are taken into account— is quite long[24]. This Comment will not further consider the problem of the length of proceedings, except to note that reforms are both needed and feasible[25].

Taken together, the foregoing suggests that although the WTO dispute settlement system may have an admirable record overall, considerable room for improving the quality and timeliness of compliance exists. Indeed, businesses have expressed concerns about non-compliance and delays as reasons not to use the WTO dispute settlement system, which raises serious concerns for the future[26]. Thus, it is appropriate to consider the question of what changes might be made to the system to address these problems. It has been considered that the changes in compensation and retaliation rules could resolve the dispute settlement system more perfect.

CASE STUDIES—UNITED STATES AND THE EUROPEAN COMMUNITIES:

The United States and the European Communities are the two WTO Members that have by far not only initiated the greatest number of WTO litigation proceedings against other WTO Members but that have also had the most number of litigation proceedings initiated against them. Thus, it is particularly instructive to review the compliance record of the United States and the European Communities, since together they have been the object of about one half of all adverse WTO rulings.

The United States has been the object of adverse or partially adverse rulings as a respondent in 33 cases. In four other cases, no WTO violations were found and the United States was fully exonerated. Of the 33 cases where violations were established, the United States has been able to comply or is in the process of complying solely through administrative actions in 26 cases. Sixteen of these were either anti-dumping or subsidy cases, three were textile cases, four were safeguard cases and three involved other WTO violations. As of 1 March 2007, the steps taken by the United States to implement the rulings and recommendations of the DSB in USUpland Cotton, USOil Country Tubular Goods Sunset Reviews, and USGambling were in compliance proceedings under Article 21.5 of the DSU. In seven cases[27] legislative action has been or is necessary to bring the United States into compliance. In four out of these seven cases, the US Congress has already passed remedial legislation[28]. Indeed, these legislative acts to comply by the US Congress, all taken since late 2004, have been among the most noteworthy and positive developments for the WTO dispute settlement system, given the previous harsh criticism of the system emanating from certain members of the US Congress, particularly with respect to trade remedy cases. There are some transitional problems in the USOffset Act (Byrd Amendment) case since the legislation repealing the Byrd Amendment does not take effect until 1 October 2007 and remedial legislative action is still required in the other three cases. Nonetheless, recent congressional actions to implement adverse WTO panel and Appellate Body reports have been significant and their importance for maintaining the legitimacy of the WTO dispute settlement system should not be underestimated.

As for the European Communities, it has been the object of adverse or partially adverse rulings in 16 of the 19 completed cases in which it was the responding party. In addition, the European Communities settled the matter prior to the issuance of the final panel report in three instances. In all 16 cases where the European Communities was found to be in violation of certain of its WTO obligations, the European Communities committed to bring itself fully into compliance with the adverse panel and Appellate Body reports. Its actual compliance record has also been good, although the administrative and legislative processes which must be observed to implement a decision are of course quite different from those used in the United States[29]. While the United States and the European Communities have been the WTO Members with the most extensive compliance experience, other WTO Members, both developed and developing, have also had to comply with adverse WTO rulings and, for the most part, have done so in a satisfactory fashion. As for other developed country WTO Members, Canada has taken actions to comply in six cases[30]. Canada has yet to comply in the two regional aircraft subsidy cases successfully brought against it by Brazil. For its part, Japan has taken actions to comply in three cases[31] where WTO violations were found and settled the matter prior to the adoption of the final panel report in one instance.[32] Finally, Australia has taken actions to comply in the two cases where WTO violations were found.[33]

A problem with the implementation of WTO dispute settlement recommendations and rulings is the lack of guidance over what exactly a losing party must do to comply. The tendency has been for the losing party to take minimal steps and declare itself in full compliance. The winning party often disagrees. One solution is to refer the matter to a compliance panel under art 21.5 of the DSU.In EC—Bananas III (Ecuador) and EC—Bananas III (US)[34], the DSB authorized retaliation for both Ecuador and the United States against the European Communities. However, only the United States actually imposed retaliatory measures against $115 million of its trade with the European Communities. These measures were subsequently withdrawn after a bilateral settlement and are no longer in effect.

In EC—Hormones (Canada) and EC—Hormones (US)[35], the DSB authorized retaliation for both Canada and the United States against the European Communities and both imposed retaliatory measures—the United States against $130 million of trade and Canada against some $20 million of trade. Despite claims by the European Communities that it has brought itself into compliance with the original panel and Appellate Body reports, these retaliatory measures currently remain in place. The European Communities has initiated dispute settlement proceedings against Canada and the United States seeking their removal[36].

In US—Offset Act (Byrd Amendment)[37], the DSB authorized retaliation by the eight original complaining parties against the United States, with the amount of the retaliation to be directly tied to the amount of the anti-dumping and countervailing duties actually refunded to US petitioners under the WTO-inconsistent statute. To date, only the European Communities, Canada, Japan, and Mexico have actually imposed retaliatory measures against US trade. Following a recent US court ruling that the Byrd Amendment does not apply to Canada and Mexico by virtue of certain NAFTA provisions, Canada and Mexico withdrew their retaliatory measures. However, the European Communities and Japan have indicated that their retaliatory measures will remain in place as long as anti-dumping and countervailing duties assessed against their exports to the United States continue to be distributed to domestic producers under the Byrd Amendment. This distribution of duties assessed may continue to occur with respect to certain existing orders even after the repeal of the Byrd Amendment becomes effective on 1 October 2007.

Finally, in the regional aircraft subsidy cases (Canada—Aircraft Credits and Guarantees and Brazil—Aircraft)[38] brought by Canada and Brazil against each other, the DSB authorized retaliation for each side against the other, but retaliatory measures have never been imposed as the two sides continue to seek a negotiated settlement to the dispute.

Implications for Panel Reform

Consideration of how the WTO dispute resolution process is perceived and the criticisms to which it has been subjected may provide useful information to policy makers in assessing how the panel process might be improved.

A. General Principles for Reform[39]

In light of the concerns discussed above, we should arguably focus panel reform on a few central issues, such as: (i) the need for panels to exercise restraint and refrain from moving into areas where negotiated rules are unclear, (ii) the need to focus on compliance in cases where the rules are clear and there has been a violation, and (iii) the need to ensure that the capabilities of the system are realistically portrayed and appreciated by Parties.

Encouraging panelists to exercise restraint may be pursued simply through recognition of the dangers inherent in “activism” and “law making,” and in creating a culture among the community of practitioners, WTO officials, and potential panelists that reflects the importance of closely adhering to the terms of relevant agreements and applicable standards of review. More radical proposals – such as altering the negative consensus rule to allow some percentage of DSB Members to block a panel decision – would obviously be much more controversial. In terms of compliance, the Parties to the DSB have already begun consideration of ways to streamline and clarify procedures after a panel has rendered an opinion. Finally, ensuring that the capabilities of the system are realistically assessed may suggest that we should go slowly in pursuing a more “adjudicative” structure for panels – a structure that could inappropriately downplay the continued need for negotiation and diplomatic interchange to achieve resolution of disputes.

B. Specific Proposals for Reform[40]

Concerns such as those set out above may also have implications for specific reform proposals that have been offered to increase the efficiency, consistency and transparency of panels. A few specific proposals are discussed below.

1. Permanent Body of Panelists: One proposal for panel reform that has received quite a bit of attention is the notion of establishing a permanent system of panelists, similar to that existing in the Appellate Body[41]. In light of the challenges facing the overall dispute settlement system, however, there are other considerations that could be brought to bear on the issue.

First, are there not benefits to the current system, whereby countries play an active role in the selection of panelists?[42]4 Since parties to a dispute arguably bear some responsibility for the composition of panels, they may be less inclined to criticize particular panelists for bias, lack of qualifications to hear a particular matter, etc. Certainly, such criticisms would be deflected to some degree to the extent Parties participate in the selection process.

Second, would a permanent body of panelists “put a face” on the panel system that is easier to attack by opponents. Under the current system, there is likely to be a greater diversity of panelists in terms of background, outlook, and experience as parties to a dispute seek to have panelists uniquely appropriate for their particular case, and perhaps favorable to a particular country’s outlook. While this may lead to less consistency, it may also create a less definable target for opponents who want to paint the system as dominated by “international bureaucrats” set on undermining national sovereignty.

Finally, would a permanent system of panelists not raise its own questions as to the ideological bent of panelists? A permanent body might give rise to fewer concerns about the bias of individual panelists against a particular country. While this may be true, a permanent body might be perceived as more ideological and more given to developing the predispositions – whatever they may be – of professional trade officials. Arguably, an expert body might feel more comfortable, and more qualified, than ad hoc panels in venturing into ambiguous areas that are better left to negotiations – exacerbating concerns that panels are “making law.”[43] This is not meant to suggest that these considerations are decisive or would outweigh the arguments in favor of more consistency and professionalism – only that they should be part of the mix in considering reforms[44].

2. Transparency

Many proposals for panel reform have focused on transparency and in some sense these reforms seem obvious. Making the system more open and less mysterious would seem to have obvious benefits, if for no other reason than that it would deprive critics of a powerful argument about democracy and fairness. While the fundamental benefit of transparency seems clear, looking at the issue with an eye toward the challenges facing the dispute resolution system in general does raise some additional considerations. Undoubtedly, many of the groups and individuals that have sought greater access to the WTO have done so out of a legitimate desire to work constructively within the system. The disruption seen at Seattle, however, raises the prospect that certain groups are interested more in destroying than improving the WTO[45].

This fact has implications for reform. Transparency in the context of the dispute resolution process is arguably best focused on two goals: (i) to allow interested groups and individuals to better follow and understand the workings of the system, and (ii) to the extent practicable, to allow greater input that will help elucidate the proper scope and application of WTO agreements. On the other hand, to the extent proposals for reform would heighten opportunities for activists to politicize cases or put extraneous pressure on panelists, the implications for the system may be far less positive.

CONCLIUSION:

The incentive for governments to negotiate and abide by international trade agreements depends in part on the effectiveness of enforcement provisions. Effective enforcement is particularly important for developing countries, as they will rarely be able to exert credible threats against large trading entities that do not abide by the negotiated rules of the game and often will not appear on the ‘radar screen’ of the WTO.

Domestic enforcement is a vital dimension in enhancing the relevance of multilateral commitments to domestic stakeholders (importers, exporters, consumer groups). In most countries, including high income nations, domestic interests are restricted in their ability to contest actions by national government agencies that violate WTO commitments. Civil society has a strong interest in seeking to maximize the extent to which international treaty obligations can be invoked in national legal systems. This will remove a number of layers of uncertainty and complexity associated with bringing cases to the WTO. Strengthening national enforcement mechanisms can help make the WTO a more relevant instrument from an economic development perspective by increasing the ownership of negotiated commitments. It also relaxes the constraint of having to convince one’s government to bring a case to the WTO and will reduce the burden of DSP at the WTO level. The easiest way of making WTO commitments enforceable nationally is to expand on the type of challenge mechanisms that have been introduced in the GPA.

The private sector must play a much greater role in enforcement. In part this can be achieved by

designing domestic legal mechanisms that increase the incentive for them to collect, compile and transmit information on the measures that are being applied by governments, both their own and foreign. Thus, there is a close link to our first point — giving private interests standing in domestic fora (via a general challenge procedure) can be expected to be a great motivator for greater involvement in both the development and enforcement of multilateral disciplines. But greater private sector participation is also vital in order to ensure that developing countries can defend their rights at the WTO level. This upstream dimension of DSP at the WTO is as important as the efficacy of the downstream panel and Appellate Body process.

Developing countries have an interest in re-negotiating the existing legal framework for remedies.

Remedies in the WTO do not guarantee paritas armis among the various players and unless corrective action is taken, developing countries might have even less incentive to submit cases. On this particular issue we side with Bhagwati’s (1999) proposal to opt for re-negotiation of concessions (instead of keeping it as an option) any time a developing country’s claim prevails before the WTO but implementation raises serious political problems.

Finally, we argued in favor of a formal amendment of the DSU with respect to notification of bilateral agreements to the effect that no such agreement will be applied unless previously cleared through the DSB. The reason for this proposal is twofold: when developing countries participate in such deals along with developed countries, because of the inequality of power between the two, they might be forced to non WTO-compatible solutions. On the other hand, when they do not (which is the vast majority of cases) they might see their rights under the WTO contract diminished since the parties to such deals hardly have the incentive to respect MFN.

Bibliography:

Book:

Mitsuo Matsushita, Thomas J Schoenbaun and Petros C. Mavroidis, “The World Trade Organization Law, Practice & Policy”; Pub: Oxford University Press, 2nd Edition; 2005

John H. Jackson Et Al; “Legal Problems of International Economic Relations”; Pub Oxford University Press; Edition 5th; 2008

Prof Raj Bhala;” A treatise on the General Agreement of Tariffs & Trade”; International Trade Law Series; Pub: Thomson Sweets & Maxwell, 2005,

William J. Davey, “Expediting the Panel Process in WTO Dispute Settlement, in The WTO: Governance, Dispute Settlement & Development Countries”; Pub: Thomson Sweets & Maxwell, 3rd Edition 2008

Marion Panizzon, Nicole Pohl and Pierre Sauvé (Edited by);“GATT & the Regulation of International Trade in Services World Trade Forum”; Pub: Cambridge University Press;1st Publication,2008

Anne O Krueger; “The WTO as an International Organization”; Oxford Indian Paperbacks, 1998

David Pal meter & Petros C. Mavroidis; “Dispute Settlement in the WTO Practice and procedure”; 2nd Edition; Cambridge, 2004

Petros C Mavroidis; “The General Agreement on Tariffs & Trade- a Commentary”; Pub: The Oxford Commentaries on the GATT/WTO Agreement; 1st Publication; 2005

Article:

Jeanne J. Grimmett, “Dispute Settlement in the World Trade Organization (WTO): An Overview”; September 7, 2010 CRS Report for Congress Prepared for Members and Committees of Congress.

William J. Davey, “The WTO Dispute Settlement System: The First Ten Years”, 8 J. INT’L ECON. L. 17, 46– 48 (2005)

Tom Ginsburg & Richard H. McAdams, “Adjudicating in Anarchy: An Expressive Theory of International Dispute Resolution”, 45 WM. & MARY L. REV. 1229, 1308– 12 (2004)

James C. Hecht ; “Operation of WTO Dispute Settlement Panels: Assessing Proposals for Reform”; Presented at The First Five Years of the WTO American Bar Association Section of International Law and Practice ; January 20-21, 2000 Georgetown University Law Center.

Joost Pauwelyn; “Enforcement and Countermeasures in the the WTO: The Rules and Rules-Toward a More Collective Approach”, The American Journal of International Law, Volume 94, Issue 2; Apr. ,2000

Dr. Georges T. Labaki; “The Dispute Settlement Process Before The WTO”; The Certified Accountant – October 2004; Issue: 20

 

[1] Stewart-Dawyer, The WTO Dispute Settlement System, 7 ;World Trade Organization, accessed December 1, 2010

 

 

[2] A list of covered agreements is included in Appendix 1 to the DSU

 

 

[3] WTO Bodies involved in the dispute settlement process, World Trade Organization, Jeanne J. Grimmett, “ Dispute Settlement in the World Trade Organization (WTO): An Overview”;September 7, 2010 CRS Report for Congress Prepared for Members and Committees of Congress

 

 

[4] Article IV:3 of the WTO Agreement

 

 

[5] Article 2.1 of the DSU

 

 

[6] Article 2.3 of the DSU

[7] See Article 22.1 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

[8] This number refers to the number of panel or panel/Appellate Body reports issued and adopted. Accordingly, cases such as EC—Hormones where two separate panel reports were issued—one for the complaints brought by Canada, EC—Hormones (Canada), and another for the complaints brought by the United States, EC—Hormones (US)—constitute two entries, while cases with multiple complainants such as US—Offset Act (Byrd Amendment) where only one panel report was issued constitute one entry. Mitsuo Matsushita, Thomas J Schoenbaun and Petros C. Mavroidis, “ The World Trade Organization Law, Practice & Policy;Pub: Oxford University Press,2nd Edition;2005,pp1150-1161

[9] Idib,There have been 22 panel reports and 12 Appellate Body reports circulated in compliance proceedings under Article 21.5 of the DSU.

 

 

 

[10] US—Section 110(5) Copyright Act.

 

 

[11] William J. Davey, The WTO Dispute Settlement System: The First Ten Years, 8 J. INT’L ECON. L. 17, 46– 48 (2005) [hereinafter The First Ten Years]

 

 

[12]JOHN H. JACKSON ET AL., “LEGAL PROBLEMS OF INTERNATIONAL ECONOMIC RELATIONS”,pp 284;5th ed. 2008

 

 

[13] Even though the WTO system has faced more challenging cases, the success rate is comparable to the success rate of the GATT dispute settlement system. The First Ten Years, supra note 1, at 48; see ROBERT E. HUDEC, ENFORCING INTERNATIONAL TRADE LAW: THE EVOLUTION OF THE MODERN GATT LEGAL SYSTEM 344– 51 (1991). The success rate in the WTO system is clearly better than the success rate in the International Court of Justice. See, e.g., Tom Ginsburg & Richard H. McAdams, Adjudicating in Anarchy: An Expressive Theory of International Dispute Resolution, 45 WM. & MARY L. REV. 1229, 1308– 12 (2004) (finding a 68% compliance rate, as defined by the authors, for a sample of cases before the International Court of Justice).

 

 

[14] William J. Davey, Evaluating WTO Dispute Settlement: What Results Have Been Achieved Through Consultations and Implementation of Panel Reports?, in THE WTO IN THETWENTY-FIRST CENTURY: DISPUTE SETTLEMENT, NEGOTIATIONS, AND REGIONALISM IN ASIA 98, 102– 07 (Yasuhei Taniguchi et al. eds., 2007) [hereinafter Evaluating WTO Dispute

 

 

[15] See Understanding on Rules and Procedures Governing the Settlement of Disputes arts. 12, 16.4, 17.5, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, Legal Instruments— Results of the Uruguay Round, 33 I.L.M. 1125 (1994) [hereinafter DSU].

 

 

[16] Evaluating WTO Dispute Settlement, at 114– 15, 139– 40.

 

 

[17] Appellate Body Report, United States— Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R (Jan. 2, 2002) [hereinafter US— Section 211 Appropriations Act]; Panel Report, United States—  Section 110(5) of the US Copyright Act, WT/DS160/R (June15, 2000) (adopted July 27, 2000) [hereinafter US— Section 110(5) Copyright Act].

 

 

[18] Appellate Body Report, European Communities— Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R (Sept. 9, 1997).

 

 

[19] Evaluating WTO Dispute Settlement, supra note 4, at 115, 140. The two cases in which the United States has been found to have violated the TRIPS Agreement required Congressional action for implementation, which has not been forthcoming. Id. at 115. The prevailing party in the two cases, the European Union, has never sought authority to retaliate, perhaps because the cases involve a relatively limited amount of trade.

 

 

[20] Idib. at 110.

 

 

[21] Idib. at 113– 14

 

 

[22] William J. Davey, Expediting the Panel Process in WTO Dispute Settlement, in THE WTO: GOVERNANCE, DISPUTE SETTLEMENT & DEVELOPING COUNTRIES 409, 415– 18, 420– 21 (Merit E. Janow, Victoria Donaldson & Alan Yanovich eds., 2008) [Expeditingthe Panel Process].

 

 

[23] Idib. at 418

 

 

[24] Idib. at 419– 20

 

 

[25] Idib. at 421– 30

 

 

[26] See, e.g., Gary G. Yerkey, U.S. Poultry Producers Do Not Plan to Urge U.S. to File Case at WTO over EU Import Ban, INT’L TRADE DAILY (BNA), June 9, 2008 (noting EU failure to comply in the Hormones case). In the DSU reform negotiations, Mexico has been particularly critical of what it calls the “‘fundamental problem’ of the WTO dispute settlement system, namely the ‘period of time which a WTO-inconsistent measure can be in place without the slightest consequences’ to the offending party.” Daniel Pruzin, Mexico Presents ‘Radical’ Proposal for WTO Dispute Resolution Reform, 19 INT’L TRADE REP. (BNA) 1984, 1984 (2002).

 

 

[27] US—FSC, US—Offset Act(Byrd Amendment), US—Section 211 Appropriations Act, US—1916 Act, US—Section 110(5) Copyright Act, US—Upland Cotton, US—Hot-Rolled Steel.

 

 

[28] US—FSC, US—Offset Act(Byrd Amendment), US—Upland Cotton, US—1916 Act.

 

 

[29] Some notable cases where the European Communities has taken significant actions to comply include ECBed Linen, ECTariff Preferences, ECSardines, ECTrademarks and Geographical Indications, and ECExport Subsidies on Sugar. Like the United States, there have been several cases, most notably ECBananas and ECHormones, where the European Communities has experienced residual compliance problems as a result of dissatisfaction by other WTO Members with the actions taken to comply.

 

 

[30] Canada—Periodicals, Canada—Dairy, Canada—Autos, Canada—Pharmaceutical Patents, Canada—Patent Term, and Canada—Wheat Exports and Grain Imports.

 

 

[31] Japan—Alcoholic Beverages II, Japan—Agricultural Products II, and Japan—Apples.

 

 

[32] Japan—Quotas on Laver., Modern GATT Law:; Prof Raj Bhala;” A treatise on the General Agreement of Tariffs & Trade” ; International Trade Law Series; Pub: Thomson Sweets & Maxwell,2005,pp 123- 139

 

 

[33] Australia—Salmon and Australia—Automotive Leather II. As noted previously, a number of developing country WTO Members have also had to comply with adverse or partially adverse rulings in a number of WTO cases and, like their developed country counterparts, have successfully done so in most instances. For example, Argentina has taken action to comply in five cases. Korea has taken actions to comply in five cases, although in one of those cases (Korea – Certain Paper) the steps Korea took to comply were in compliance proceedings under Article 21.5 of the DSU as of 1 March 2007. India has taken action to comply in three cases. Mexico has also taken action to comply in several cases, most notably Mexico—Telecoms, Mexico—Corn Syrup, and Mexico—Anti-Dumping Measures on Rice. Chile, Turkey, Indonesia, and Thailand are other developing countries that have taken actions to comply with adverse WTO rulings. On the other hand, Brazil has still failed to comply with adverse WTO rulings in its long-running dispute with Canada over both countries’ subsidization of their manufacturers of regional aircraft.

 

 

[34] Art 21.5 Panel Report European Communities-Bananas, Recourse to Article 21.5 by Ecuador, WT/DS27/RW/ECU,12 April 1999. No presumption of consistency with WTO  agreements attaches to revised measures under  Article 21.5 Panel Report, European Communities- Bananas-Recourse to Article 21.5 by the European Communities, WT/D27.RW/EEC,12 April 1999

 

 

[35] EC- Harmones, Report of the Appellate Body, 13th February 1998, WT/DS26/AB/R;WT/DS/48/R,PARA.104

 

 

[36] United States—Continued Suspension of Obligations in the EC—Hormones Dispute, Request for the Establishment of a Panel by the European Communities, WT/DS320/6, 14 January 2005; Canada—Continued Suspension of Obligations in the EC—Hormones Dispute, Request for the Establishment of a Panel by the European Communities, WT/DS321/6, 14 January 2005.

 

 

[37] United States-Anti-dumping Measure on certain Hot-Rolled Products from Japan, Report of the Appellate Body, 23 August 2001, WT/DS184/AB/R.

 

 

[38] Canada-Measure Affecting the Export of Civilian Aircraft, Report of the Appellate Body (AB-1999),2 August 1999,WT/DS70/AB/R,para 203

 

 

[39] James C. Hecht ; “Operation of WTO Dispute Settlement Panels: Assessing Proposals for Reform”; Presented at The First Five Years of the WTO American Bar Association Section of International Law and Practice ; January 20-21, 2000 Georgetown University Law Center

 

 

[40] Idib

 

 

[42] Under the DSU, parties to a dispute have the right to object to panelists suggested by the Secretariat. DSU Article 8.6. In cases where the parties cannot agree on the composition of a panel within 20 days, the Director-General determines its composition. Id. at Article 8.7. It has become increasingly common for the parties to fail to reach agreement on a panel’s composition, which, if the trend continues, will to some degree undermine any benefits arising from party participation in the selection process.

[43] In fairness, such concerns would presumably apply equally to the Appellate Body, and it is questionable whether that body has exhibited any particular predisposition, as compared to panels, up until now.

[44] Joost Pauwelyn; “Enforcement and Countermeasures in the the WTO: The Rules and Rules-Toward a More Collective Approach”, The American Journal of International Law, Volume 94, Issue 2;Apr. ,2000,335-347.

[45] Idib

 

 

 

The Status of International Law under the Constitution of India

Introduction

The status of International Law within a municipal legal system is generally determined by the Constitution of a State or Municipal Law. This article attempts to shed light on the Status of International Law under the Constitution of India. Unlike France, United States, Germany and some modern Constitutions that provide relatively clear provisions for the Domestic Application of International Treaty Law or Customary Law, the Constitution of India does not make specific, emphatic reference to the status of International in its domestic legal system, nor does it specifically obligates or authorises the judiciary to draw on International Law1.

Provisions of the Constitution of India touching the Status of International Law.

The basic provisions of the Constitution of India relevant for consideration of its interaction and inter-relationship with International Law are;  (1) Article 51                  (2) Article 73  (3) Article 245 & 246 (4) Article 253  (5) Article 260  (6) Article 363  (7) Article 372 and (8) VII schedule – entries 10 to 21.

Article 51 Promotion of International Peace and Security; The state shall endeavour to –

a)         promote international peace and security

b)         maintain just and honourable relations between nations

c)         foster respect for International Law and Treaty obligations in the dealings of organized people with one another; and

d) encourage settlement of International dispute by arbitration.

For the purpose of this study, the central point for discussion is Article 51(c).     Article 51 of the Constitution had its source and inspiration in the Havana Declaration of 30 November 1939.  The first draft (draft Article 40) provided:

“The state shall promote international peace and security by the prescription of open, just and honourable relations between nations, by the firm establishment of the understandings of International Law as the actual rule of conduct among governments and by the maintenance of justice and scrupulous respect for treaty obligations in the dealings of organized people with one another”.

With the acceptance of amendments moved by Dr. Ambedkar, H.V. Kamath, Ananthasayanam Ayyangar and P. Subbarayan, draft Art. 40 was adopted by the Constitutent Assembly in its present form as Article 51.  During the debate, all the speakers emphasized commitment of India to promoting International Peace and Security and adherence to principles of International Law and Treaty obligations.2

It is significant to note that the clause ‘c’ of Art. 51 specifically mentions ‘International Law’ and ‘Treaty Obligations’ separately.  According to Prof. C. H. Alexandrowicz the expression ‘International Law’, in the said paragraph      connotes Customary International Law and ‘Treaty Obligations’ stands for obligations arising out of International Treaties.  This interpretation seems to be logical in the context of the text of the Draft Article 40 referred above as well as the attitudes of courts in India on questions of International Law.3 It is also significant to note that Art. 51 (c) treats both International Customary Law and Treaty Obligations on the same footings.4

Judicial interpretation of Article 51(c).

Article 51 has been relied upon by Courts to hold that various International Covenants, Treaties etc., particularly those to which India is a party or signatory, become part of Domestic Law in so far as there is no conflict between the two. 5

In Keshavanand Bharati v State of Kerala,6 Chief Justice Sikri observed;

“In view of Article 51 of the constitution this court must interpret language of the Constitution, if not intractable, which is after all a municipal law, in the light of United Nations Charter and the solemn declaration subscribed to by India”

It is significant to note here that Article 51 finds place in Chapter IV of the Constitution  which provides for Directive Principles of State Policy (DPSP) and are non – justiciable by virtue of Article 37.  Even though as one of the DPSP, Art. 51 is not enforceable through a court of law, Dr. Ambedkar had said in the Constituent Assembly that the intention was that the executive and legislature should not only pay lip service to these directive principles but “they should be made the basis of all executive and legislative action that may be taken hereafter in the matter of governance of the country”. 7

Executive Power of the Union and International Treaties (Articles 53,73,253)

Article 73; Extent of executive power of the Union;

“Subject to the provisions of this Constitution, the executive power of the Union shall extend-

a)      to the matters with respect to which Parliament has power to make laws, and

b)      to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement ………………”

Article 53:      Executive Power of the Union :

“(1) The Executive Power of the Union shall be vested in the President and shall be exercised by him either directly or through officers subordinate to him accordance with this Constitution.”

Article 253 :   Legislation of giving effect to International Agreements –

“Not withstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the Territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any International Conference, Association or Other body.”

Under Article 53 the executive power of the Union vests with the President of India.  It is pertinent to note here that the President acts under the aid and advise of the Union Cabinet.8 Under Article 73, the executive power of the Union extends to all matters in respect of which parliament may make laws and to exercise of all powers that accrue to the Government of India from any International Treaty or Agreement.  It is also important to note here that executive power has to be exercised in accordance with Constitution and the laws. Article 253 confers power on Parliament to make any law for the whole or any part of the country to give effect to any International Treaty, Agreement, Convention or decision.

Though signing and ratifying an international treaty is within the domain of the executive, implementation of such treaty falls under the domain of Parliament as explicitly provided under Article 253.  Further it is to be remembered here that under Article 51, India commits itself to make endeavour to ‘foster respect for international law and treaty obligations’.  Thus under the scheme of the Constitution, International Treaties can be legally enforceable in India only when Parliament enacts an enabling legislation incorporating it under the domestic system. This stance is also fortified by the fact that India continue to act under the influence of Common Law system accepted during British rule and continued even after the coming in to force of the Constitution9.

Judicial stamp on the Status of International Law under the Constitution.

An infant Indian Judiciary, just after the coming in to force of the Constitution of India confronted with the issue of the Status of International Law under the provisions of the Constitution. The Division Bench of the Rajasthan High Court in Birma v. State,10 while considering the question as to whether a treaty between the British Government and The Princely State of Dholapur, which was not given effect to by means of  legislative enactment, could be regarded as part of the then Dholapur State observed thus;

“……Treaties which are part of the international law do not form part of the law of the land unless expressly made so by the legislative authority. In the present case the treaty remained a treaty only and no action was taken to incorporate it in to a law. That treaty cannot therefore be regarded as part of the Municipal Law of the then Dholapur State and the practice of surrendering fugitive criminals, which was being followed by the former Dholapur State cannot be deemed to be a law that could be continued under Article 372 of the Constitution of India……”

It was indeed surprising that, though the Dholapur State was in practice of surrendering of fugitive criminals under the treaty, such a practice constitute as custom under International Law and under Common Law, the Court came to the conclusion that, it cannot be regarded as a law by underestimating the effect of Article 372.

A far-reaching judgment of the Kerala High Court in Xavier v. Canara Bank Ltd.11, deserve to be mentioned here. The Court was ceased of a million dollar question, which is the central point for the present study. The issue was whether provisions of International Covenants/Treaties to which India is a party become part of the corpus juris of India and as a result giving an aggrieved individual a right to remedial action before the municipal court. The question arose on whether Article 11 of the I.C.C.P.R. 1966, viz., that no one shall be imprisoned merely on the ground of inability to fulfill a contractual obligation, has become part of the Municipal Law of this Country consequently conferring right to remedial action at the instance of an aggrieved individual of this Country. In dealing with this question, the Court observed;

“……The remedy for breaches of International Law in general is not be found  in the law courts of the State because International Law per se or proprio vigore has not the force or authority of civil law, till under its inspirational impact actual legislation is undertaken. I agree that the Declaration of Human Right merely sets a common standard of achievement for all peoples and all nations but cannot create binding set of rules. Member States may seek, through appropriate agencies, to initiate action when these basic rights are violated, but individual citizens cannot complain about there breach in the municipal courts even if the country concerning has adopted the covenants and ratified the Optional Protocol. The individual cannot come to court but may complain to the Human Rights Committee, which in turn, will set in motion other procedures. In short, the basic human rights, enshrined in the International Covenants above referred to may at best inform judicial institutions and inspire legislative action within member –States but apart from such deep reverence, remedial action at the instance of an aggrieved individual is beyond the area of judicial authority…….”

The above observation of the Kerala High Court was quoted with approval by the Supreme Court in Jolly George Verghese v. Bank of Cochin12. In this case the Court was ceased with similar facts of the Xavier case. The Court was dealing with effect of international law and its enforceability at the instance of individuals within the State (India), and enunciated the law on the point thus;

“The positive commitment of the State parties ignites legislative action at home but does not automatically make the covenant an enforceable part of the Corpus juris of India.”

The Karnataka High Court in Civil Rights Vigilance Committee S.L.S.R.C. College of Law, Bangalore v. Union of India and others13, while dealing with the question of Power of Courts to enforce International Treaty Obligations held that;

“…..the government of India’s obligations under Gleaneagles Accord and obligations attached to its Membership of United Nations cannot be enforced at the instance of citizens by Courts in India, unless such obligations are made part of the law of this country by means of appropriate legislation’.

In Magnabhai Ishwarbhai Patel v. Union of India,14 the Constitution Bench of Supreme Court of India observed that;

The effect of Art 253 is that if a treaty, agreement or convention with a foreign state deals with a subject within the competence of state legislature, the parliament alone has notwithstanding Article 246(3) the power to make laws to implement the treaty, agreement or convention or any decision made at any international conference, association or other body.”

Recently, yet again the Constitution Bench of the Supreme Court in State of West Bengal V. Kesoram Industries ltd15, observed that;

A treaty entered in to by India cannot become law of the land and it cannot be implemented unless parliament passes a law as required under Article 253.  The executive in India can enter in to any treaty be it bilateral or multilateral with any other country or countries”.

The single importance of putting Article 253 in the Constitution over and above the entries in List I of the Seventh Schedule was to clarify beyond doubt that for implementation of an international treaty, agreement or covenant or to give effect to a decision taken at an international forum, the Union Parliament could make any law irrespective of some items in the State List being attracted.  Thus, the distribution of legislative powers between the Union and the States under the Constitution cannot come in the way of international law obligations being implemented through parliamentary law.  The fact however is that the parliament has not so far made any law on treaty making powers and until that is done, the power of the executive in the matter of treaty-making shall remain unfettered.16

Article 260 : Jurisdiction of the Union in relation to territories outside India.

“The Government of India may by agreement with the Government of any territory not being part of the territory of India undertake any executive, legislative or judicial functions vested in the government of such territory, but every such agreement shall be subject to, and governed by, any law relating to the exercise of foreign jurisdiction for the time being in force.”

Under Article 260 read with entry 16 of the Union List in the Seventh Schedule of the Constitution, the Government of India may, by treaty or agreement with another country, exercise some extra-territorial jurisdiction in the territory of that country and ‘undertake any executive, legislative or judicial functions vested in the government of such territory”.  Article 260 clarifies that every such agreement shall be subject to and governed by any law relating to the exercise of foreign jurisdiction for the time being in force17.

Article 363 : Bar to interference by courts in disputes arising out of certain treaties agreements etc.

“Notwithstanding anything in this constitution but subject to the provisions of Article 143, neither the Supreme Court nor any other court shall have jurisdiction in any dispute arising out of any provision of treaty, agreement, covenant, engagement, sanad or other similar instrument which was entered into or executed before the commencement of this constitution by any ruler of an Indian State and to which the Government of the Dominion of India or any of its predecessor Governments was a party and which has or has been continued in operation after such commencement, or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of this constitution relating to any such treaty, agreement covenant, engagement, sanad or other similar instrument………..”

Article 363 bars the jurisdiction of all courts including the Supreme Court in matters arising out of “any provision of a treaty, agreement, covenant, engagement, sanad, or other similar instrument” entered into by the Government of India with any princely Indian state.  In the Maharaja Pravin Chandra Bhunj Deo Kakatiya v. state of M.P.18, it was held by the Supreme Court that any dispute arising out of the Merger Agreement, or the Instrument of Accession was beyond the competence of the courts to enquire into.

Legislative Jurisdiction on International Law concerns.

Article 245 – Extent of laws made by Parliament and by the Legislatures of States.

(1)            Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the legislature of a state may make laws for the whole or any part of the state.

(2)            No law made by the Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation.

Article 246 – subject matter of laws made by Parliament and the legislatures of the state –

(1)               Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List – I in the Seventh Schedule (in this Constitution referred to as the Union List)

Under Articles 245 and 246 the Parliament can make laws for the whole or any part of India within its area of competence as defined and delimited under the distribution of legislative powers between Union and the States vide the Seventh Schedule.  Laws can’t be questioned on the grounds of extra territorial operations (Art. 245).  The Seventh Schedule to the Constitution embodies three lists, viz.  the Union List, State List and Concurrent List consisting of 97, 66 and 47 items, respectively.  In the three fold distribution of legislative powers, residuary powers of legislation have been left with Union (Article 248).  In regard to the Union List, the Jurisdiction of Parliament is exclusive.  International relations, foreign affairs, International Organisations and International Law matters generally have been specifically assigned by the Constitution to the Jurisdiction of the Union Parliament.19

Thus in the Seventh Schedule, List-I (Union List), the following entries are included :

a)                  Foreign affairs; all matters which bring Union into relation with any foreign country (entry 10)

b)                  Diplomatic, Consular and trade representation (entry 11)

c)                  Union Nations Organisation (entry 12)

d)                 Participation in International Conference, Associations and other bodies and implementing of decisions made there at (entry 13)

e)                  Entering into treaties, agreements and conventions with Foreign Countries (entry 14)

f)                   War and Peace (entry 15)

g)                  Foreign jurisdiction (entry 16)

h)                  Citizenship, naturalization and aliens (entry 17)

i)                    Extradition

j)                    Admission into, and emigration and expulsion from India, passports and visas

k)                  Pilgrimages to places outside India (entry 20) and

l) Piracies and crimes committed on the high seas or in the air (entry 21)

Article 372: Continuance in force of existing laws and their adaptation

 

“(1) Notwithstanding the repeal by this constitution of the enactments referred to in Article 395 but subject to the other provisions of this Constitution, all the laws in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein in until altered or repealed or amended by a competent legislature or other competent authority.”

Article 372 continued all the pre-constitution ‘laws in force’ until altered, repealed or amended except that all those laws that were repugnant to any provision of the Constitution were declared to be void.  The importance of this provision here lies in the fact that continuance of “laws in force” means continuance of the British Common Law also as that was applied by courts in India in the pre-constitution period.20

What is important to note here is that the common law treats International custom as part of municipal law unless it is inconsistent with municipal law in which case municipal law prevails over international law.21 This is modified form of Blackstonian doctrine which treats international law as part of municipal law without any limitation whatsoever.  Further more according to common law, international treaties, which effect private rights, require modification of statute law and enabling Act of Parliament for their implementation.  Those treaties which are not inconsistent with municipal law are per se part of municipal law and do not need legislative Act for their implementation.22 Thus ‘common law’ maintains that the rules of international customary and treaty law, including U.D.H.R (containing customary norms of International Human Rights law) are part of municipal law, if they are not inconsistent with municipal law.

In Civil Rights Vigilance Committee SLSRC College of Law v. Union of India and others23, the Karnataka High Court observed that;

‘The position before English courts is something of a compromise between the two methods. There can be no doubt that they regard customary international law as part of the law of the land for they take “judicial notice” of it; that is to say they assume that the court knows the law and does require it to be proved by calling expert evidence, as in cases involving foreign and external systems of law. The court regard any relevant rule of customary international law as being incorporated in to the domestic law.’

In People’s Union for Civil Liberties v. Union of India24, the Supreme Court observed that;

“It is almost an accepted proposition of law that the rules of customary international law which are not contrary to the municipal law shall be deemed to be incorporated in the domestic law.”

In A.P. Pollution Control Board v. Prof. M.V.Nayadu25, the Supreme Court recognized and applied the International Customary Rule of “precautionary principle”. The Indian Supreme Court’s view about customary nature of “precautionary principle” was appreciated in a Canadian case26.

Cession of Territory

The Supreme Court in its advisory opinion under Article 143 of the Constitution in  the “Berubari Case”27 said that where the implementation of an Indian Territory, it could not be done even by passing a law under Article 3.  A Constitution Amendment Act under Article 368 was necessary.  The court was of the opinion that Article 3 applied only to a federal redistribution of territories to a foreign state.20  This opinion was followed in subsequent Supreme Court judgments in Rama Kishore Sen and others v. Union of India.28, Magnabhai Ishwaribai Patel v. Union of India,29 and Union of India v. Sukumarson Gupta 30 cases.

Conclusion

 

Thus the combined reading of Articles 51(c), 73, 253 read with entries 10 to 21 of Seventh Schedule and 372 and judicial interpretation reveal that, unless and until Parliament enacts a law implementing international treaty ( treaties involving conferring or curtailing private rights, cession of territory), such treaty provisions cannot be enforced per se in India.  Further if such treaty provisions are consistent with Indian law or there is void in the domestic legal system then they can be read into, to do justice, and if there is conflict between the two then domestic law prevail over international law.  Further customary rules of International law are part of Indian Legal System.  But there are hardly any instances of such enforcement in India.

 

What is to be noted here is that, the language used in Article 51 and its place under Part IV of the Constitution reveals that the framers of the Constitution have given little importance to the status of International Law under the Indian Legal System and the successive Governments are unmindful of this fact. Even after sixty years of coming in to force of the Constitution, sincere attempts have not been made to clarify the status of international law and its application under the Indian legal system. This is important in the context of domestic implementation of international human rights treaties. Otherwise International Laws including Human Rights Covenants Conventions, Treaties remain bare promises.

 

—————————————————————————————

 

* Advocate, High Court of Karnataka, Bangalore.

 

** Reader in Law, Dept. of Studies in Law, Mysore University, Mysore.

 

Endnotes

1)       In this regard, provisions of South African Constitution of 1996 (Sections 39(1) & 233) are quite fascinating, which obligates the senior courts to consider International Law, while interpreting rights and legislations and authorize them to consider relevant foreign jurisprudence.  See generally N. Botha, ‘International Law in the constitutional court’, South Afr. Yr. Book of Int. L. Vol. 20, (1995) pp.222-60, and R.C. Blake, ‘The World’s Law in one country’, The South African Constitutional Court’s use of Public International Law’, South Afr. L. J. vol.115 (1998), pp.668-84.  Cited in Rindwanul Hogue and Mostafa Mahmud Naser, The Judicial Invocation of International Human Rights Law in Bangladesh : Questing a Better Approach’, IJIL, vol.46, 2006, P.159.

2)       Subhash C. Kashyap, The constitution of India and International Law’, Bimal N. Patel (ed.), ‘India and International Law’, Martinus Nijhoft Publishers, Leiden 2005, p.19.  (emphasis supplied.)

 

3)       M. K. Nawaz, ‘International Law on the contemporary Practice of India Some Perspectives’, Proc, ASIL, April 25 – 27 (1963), p 275 at p.278 ; see also C.H. Alexandrowicz, ‘International Law in India’, ICLO (1952), p.292. cited in Dr. S. K. Kapoor ‘Human Rights under International Law & Indian Law’, Central Law Agency, Allahabad 3rd ed., 2005, p.271.

 

4)       Emphasis supplied.

 

5)       In Re Berubari Union and Exchange of Enclaves, AIR 1960 SC 845; Ali Akbar v. U.A.R. AIR 1966 SC 230; Magnabhai v. Union of India, AIR 1969 SC 783; Gramaphone Co. Birendra, AIR 1984 SC 667; Jolly George Verghese V. Bank of Cochin, AIR 1980 SC 470; UPSE Board v. Hari Shankar, AIR 1979 SC 65; Prem Shankar Shukla v. Delhi Adm., AIR 1980 SC 1535; Vishaka v. State of Rajasthan, AIR 1997 SC 3011.

 

6)       AIR 1973 SC 1461

 

7)       Subhash C. Kashyap, supra, p.20

 

8)       Article 74 of Constitution of India, 1950

 

9)       Article 372 of Constitution of India 1950

 

10)    AIR 1951 Raj 127 (emphasis supplied)

 

11)    1969 Ker L T 927 (emphasis supplied)

 

12)    AIR 1980 SC 470 (emphasis supplied)

 

13)    AIR 1983 Kar 85 (emphasis supplied)

 

14)    AIR 1969 SC 783 at para 25 (emphasis supplied)

 

15)    AIR 2005 SC 1644 at para 4

 

16)    Subhash C. Kashyap, supra p.22

 

17)    Ibid

 

18)    AIR 1961 SC 775, cited in Subhash C. Kashyap, supra

 

19)    Subash C. Kashyap, supra at 21

 

20)    Builders Supply Corp. v. Union of India, AIR 1965 SC 106 cited in Subhash C. Kashyap, supra p.23 see also Gurudip Singh, ‘Human Rights Covenants in India’ IJIL, at 222 see also Civil Rights Vigilance Committee S.L.S.R.C. College of Law v. Union of India, AIR 1983 Kar. 85 at 89.  In Re Amina AIR 1992 Bom 214

 

21)    Chung Chi Cheung  v. R. A.C. (1939), 160 at y 168 see also Gurdip Singh, ‘Status of Human Rights Covenants in India’, IJIL, p216

 

22)    The Zamora,  A.C.  2 (1916) at 77

 

23)    AIR 1983 Kar 85 (emphasis supplied)

 

24)    AIR 1997 SC 568

 

25)    1999 SCC 712

 

26)    Canada Ltee (Spraytech, Socie’te’ d’arrosage) v. Hudson (2001) 2 SCR 241 at para 32, per L’Heureaux-Dube J.

 

27)    In Re Berubari Union and Exchange of Enclaves, AIR 1960 SC 845

 

28)    AIR 1966 SC 644

 

29)    AIR 1969 SC 783

 

30)  AIR 1990 SC 1962

*Jagadish S.Halashetti

**Dr.Ramesh

 

Impact of International laws on Municipal Laws

Abstract

John F. Kennedy had rightly said, “We prefer world law in the age of self-determination to world war in the age of mass extermination. “

There are many contrasts between the working of Municipal laws and International law and through this project I would like to bring out the impact International law has on the laws governing individual nation states. Firstly, this project will attempt to bring out the major theories propounded in relation to International laws and municipal law. Secondly, it will then proceed to understand the Role of Municipal rules in International Law. Thirdly, the research paper will then tackle the Role of International law before Municipal Law. Finally, the project will highlight the importance of treaties and its effect on the municipal laws. 

 Introduction

Since the dawn of human civilization law has always played a central role in the development of mankind. The idea that order is necessary and chaos inimical to a just and stable existence[1], has always been the central idea of law. Law or the law does not consist of the total number of laws in force. The constituent elements of which the law is made up are not laws, but rules of law or legal principles[2].

Law is territorial in nature.[3] It is because no state in times of peace allows other state or states to prescribe for and exercise powers over persons, events or things within its justification[4]. Thus the Austinian theory of law which says that every law is a direct or circuitous command of the sovereign in the character of a political superior is the basis of what we call Municipal Laws. Thus Municipal law is the law applied within a State. It is also called as ‘lex proprium civitatis’. The Roman called it the jus civile, the corpus juris civilis. It is the law of civitas that is the State.  But Municipal laws proved inadequate in providing a relevant background for an expanding and developing nation. This need was served by the creation and progressive augmentation of jus gentium. This provided simplified rules to govern the relations between foreigners and between foreigners and citizens. Thus this gave rise to the system of what we know as International Law.

International Law consists of those rules which govern sovereign states in their relations and conduct towards each other[5]. The principal subjects of International law are nation states and not individual citizens.[6] International law itself is divided into conflict of laws( or private international law as it is sometimes called) and public international law(usually just termed international law).[7]

Chapter 1: Major Theories Propounded in relation to  International laws and Municipal law

There are has been many theories propounded in relation to International Law and Municipal laws. The most notable of them all will include the Positivist theory and Monist theory. We will be looking at these theories in detail in the following pages. 

Positivism stresses the overwhelming importance of the state and tends to regard International law as founded upon the consent of states[8]. It is actual practice, illustrated by customs and by treaty[9], which formulates the role of International Law, and not formalistic structures, theoretical deductions or moral stipulations. Accordingly when positivists such as Triepel and Strupp consider the relationship of International Law to Municipal law, they do so upon the basis of the supremacy of the state and the existence of wide differences between the two functioning orders. This theory is known as dualism and stresses that the rules of the systems of International Law and Municipal law exist separately and cannot purport to have an effect on, or overrule, the other[10]

This is because of the fundamentally different nature of inter-state and intra-state relations and the different legal structures employed on the one hand by the state and on the other hand as between states. Where municipal legislation permits the exercise of International law rules, this is of no sufferance as it were and is an example of the supreme authority of the state within its own domestic jurisdiction, rather than of any influence maintained by International Law within the internal sphere[11]

Those writers who disagree with this theory and who adopt the Monist Theory tend to fall into two distinct categories: Those who, like Lauterpacht, uphold a strong ethical position with a deep concern for human rights and, others, like Kelsen who, maintain a monist position on formalistic logical grounds. The monists are united in accepting a unitary view of law as a whole and are opposed to the strict division posited by the positivists[12].

The ‘naturalist’ strand represented in England by Lauterpacht’s works sees the primary function of all law as concerned with the well being of individuals, and advocates the supremacy of International law as the best method available of attaining this. It is an approach characterized by absolute independence of states, and illuminated by faith in the capacity of the rules of International law to imbue the International law to imbue the international order with a sense of moral purpose and justice founded upon the respect for human rights and the welfare of individuals[13].

The method by which Kelsen elucidates his theory of Monism is markedly different and utilizes the philosophy of Kant[14] as its basis. Law is regarded as constituting an order which lays down patterns of behavior that ought to be followed, coupled with provision for sanctions which are employed once an illegal act or course of conduct has occurred or been embarked upon[15]. Since the definition appertains within both the internal sphere and the international sphere, a logical unity is forged[16] and because states owe their legal relationship to one another to the rules of International law, such as the one positing equality, since states cannot be equal before the law without a rule to that effect, it follows that International law is superior to or more basic than municipal law.[17]

A third approach, being somewhat a modification of the dualist position and formulated by Fitzmaurice and Rousseau amongst others, attempts to establish a recognized theoretical framework tied to reality. This approach begins by denying that any common field of operation exists as between International law and Municipal law by which one system is superior or inferior to the other.[18] Each order is supreme in its own sphere, much as French law and English law are in France and England. Just as one cannot talk in terms of the supremacy of French law over English law, but only of two distinct legal systems each operating within its own field, so it is possible to treat International law and Municipal law in the same way. They are both the legal element contained within the domestic and international systems respectively, and they exist within different juridical orders[19].

 Chapter 2: Role of Municipal Rules In International Law                                                                                                    

The general rule with regard to the position of municipal law within the International sphere is that a state which has broken a stipulation of international law cannot justify itself by referring to a breach of an international obligation to argue that the state acted in such a manner because it was following the dictates of its own municipal laws[20]. The reasons for this inability to put forward internal rules as an excuse to evade international responsibility are obvious. Any other situation would permit international law to be evaded by the simple method of domestic legislation.[21]

Accordingly, state practice and decided cases have established this provision and thereby prevented countries involved in International litigation from pleading municipal law as a method of circumventing International law[22]. Article 27 of the . lays down that in so far as treaties are concerned, a party may not to be bound invoke the provisions of its internal  law as justification for its failure to carry out an international agreement, while Article 46(1) provides that a state may not invoke the fact that its consent to be bound by a treaty has been expressed in violation of a provision of its internal law regarding competence to conclude treaties as invalidating its consent[23]. The international court considered this provision in Cameroon v Nigeria in the context of Nigeria’s argument that the Moroua Declaration of 1975 signed by the two heads of state was not valid as it had not been ratified.[24] The court also took the view that ‘there is no general legal obligation for states to keep themselves informed of legislative and constitutional developments in other states which are or may become important for the International relations of these states’.[25] The International Court, in the Applicability of the obligation to Arbitrate case,[26]  has underlined ‘the fundamental principle of International law that international law prevails over domestic law’, while Judge Shahabuddeen emphasized in the Lockerbie case[27] that inability under domestic law to act was no defense to non compliance with an International obligation.

However such expressions of the supremacy of International law over municipal law in International tribunals do not mean that the provisions of domestic legislation are either irrelevant or unnecessary.  On the contrary, the role of internal legal rules is vital to the workings of the International legal machine[28]. One of the ways to understand this is by examining municipal laws[29]. A country will thus express its opinion on such vital international matters as the extent of its territorial sea, or the jurisdiction it claims or the conditions for the acquisition of nationality through the medium of its domestic law-feelmaking .Thus, it is quite often that in the course of deciding a case before it, an International court will feel the necessity to make a study of relevant pieces of municipal legislation.

Chapter 3: Role of International law before Municipal Law

The problem of International law within the municipal law system is, however, rather more complicated than the position discussed above, and there have been a number of different approaches to it. States are, of course, under a general obligation to act in conformity with the rules of International law and will bear responsibility for breaches of it, whether committed by the legislative, executive or judicial organs.[30]

In this chapter we will look at the approach adopted by the Common law system most notably the doctrine of Incorporation will be discussed.

The common law system has its roots in the UK’s legal system and it will be unjust to not discuss UK’s position concerning International law’s effect on its Municipal laws.

It is part of the public policy of the UK that the courts should in principle give effect to clearly established rules of International law. Various theories have been put forward to explain the applicability of International law rules within the jurisdiction. One expression of the positivist- individualist position has been the doctrine of transformation. This is based upon the perception of two quite distinct systems of law, operating separately, and maintains that before any rule or principle of International law can have any effect within the domestic jurisdiction, it must be expressly and specifically ‘transformed’ into municipal law by the use of appropriate constitutional machinery, such as an Act of Parliament.[31]

Another approach known as the doctrine of incorporation holds that international law is part of the municipal law automatically without the necessity for the interposition of a constitutional ratification procedure[32]. This doctrine refers to customary international law and different rules apply to treaties.

Customary International Law

It is in this sphere that the doctrine of incorporation has become the main British approach. It is an old established theory dating back to the eighteenth century, owing its prominence at that stage to the considerable discussion then taking place as to the precise extent of diplomatic immunity. In the case of Buvot v. Barbuit[33], Lord Talbot declared unambiguously that ‘the law of nations in its full extent was part of the law of England’, so that a Prussian commercial agent could not be rendered liable for failing to perform a decree. This was followed twenty seven years later by Triquet v. Bath,[34] where Lord Mansfield, discussing the issue as to whether a domestic servant of the Bavarian Minister to Britain could claim diplomatic immunity, upheld the earlier case and specifically referred to Talbot’s statement. This acceptance of customary international law rules as part and parcel of the common law of England, so vigorously stated in a series of Eighteenth century cases, was subject to the priority granted to acts of parliament and tempered by the Principle of Stare Decisis or precedent, maintained by the British courts and ensuring that the judgments of the higher court are binding upon the lower courts of the hierarchical system. Accordingly, a rule of International law would not be implemented if it ran counter to a statute or decision by a higher court.[35]

The basic approach adopted by the majority of common law states is clear, complications have arisen where the country in question has a written constitution. India, whose constitution refers only in the vaguest of terms to the provisions of International law is a perfect example[36]. Art. 253 of the Constitution of India states: “Notwithstanding anything in the foregoing provisions of this chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or body.”

Let’s take a look at a very important case in question, Vishaka v State of Rajasthan[37],

A group of social activists and non-governmental organizations brought as a class action a petition under Art. 32 of the Indian Constitution referring to the Supreme Court’s powers under that provision to issue directions for the enforcement of certain fundamental rights incorporated in the Constitution that were being violated by alleged practices of sexual harassment of women in the workplace in India. Article 32 of the Constitution empowered the Supreme Court to issue guidelines for the enforcement of constitutionally guaranteed rights.

Since domestic law did not address the issue and did not formulate effective measures to prevent sexual harassment of working women at the workplace, the Court decided to formulate general principles in order to define the concept of sexual harassment and to ensure its eradication. To do so, the Court referred to the Convention on the Elimination of All Forms of Discrimination against Women and on the statements of the United Nation Committee on the Elimination of Discrimination against Women (the international body responsible for supervising the application of this Convention).

In order to explain its reliance on international law, the Court stated the following:

“Gender equality includes protection from sexual harassment and the right to work with dignity, which is a universally recognized basic human right. The common minimum requirement of this right has received global acceptance. The international conventions and norms are, therefore, of great significance in the formulation of the guidelines to achieve this purpose.”

(…) “The government of India ratified the above Resolution on 25 June 1993 with some reservations which are not material in the present context. At the Fourth World Conference on Women in Beijing, the government of India also made an official commitment, inter alia, to formulate and operationalize a national policy on women which will continuously guide and inform action at every level and in every sector; to set up a Commission for Women’s Rights to act as a public defender of women’s human rights; and to institutionalize a national level mechanism to monitor the implementation of the Platform For Action. We have therefore no hesitation in placing reliance on the above for the purpose of construing the nature and ambit of the constitutional guarantee of gender equality in our Constitution.”

The Court added:

“It is now accepted rule of judicial construction that regard must be had to international Conventions and norms for construing domestic law when there is no inconsistency between them and there is a void in the domestic law.”

The Court then referred to Australian decisions and concluded:

“There is no reason why these international Conventions and norms cannot therefore be used for construing the fundamental rights expressly guaranteed in the Constitution of India which embody the basic concept of gender equality in all spheres of human activity.”

Once justified the reference to international instruments, the Supreme Court of India closely relied on the General Recommendation of the United Nations Committee on the Elimination of Discrimination against Women in order to define the actions and situations that shall be qualified as sexual harassment. Besides, the Supreme Court followed the guidelines issued by the United Nations Committee when elaborating the measures to be taken in order to protect women against harassment and the judicial remedies to be granted to sexual harassments victims.

Chapter 4: Treaties and Conventions

As far as treaties as treaties are concerned, different rules apply as to their application within the domestic jurisdiction for very good historical and political reasons. While customary law develops through the evolution of state practice, international conventions are in the form of contracts binding upon the signatories.[38] For a custom to emerge it is usual, though not always necessary, for several states to act in a certain manner believing it to be in cohjtgnformity with the law. Therefore, in normal circumstances the influence of one particular state is not usually decisive[39]. In the case of treaties, the states involved may create new law that would be binding upon them irrespective of previous practice or contemporary practice[40]. In other words, the influence of the executive is generally of greater impact where treaty law is concerned than is the case with customary law.

It follows from this that were treaties to be rendered applicable directly within the state without any intermediate stage after signature and ratification and before domestic operation, the executive would be able to legislate without legislature. Because of this, any incorporation theory approach to treaty law has been rejected.[41]

One of the principal cases in English law illustrating this situation is the case of the Parlement Belge.[42] It involved a collision between this ship and a British tug, and the claim for damages brought by the latter vessel before the Probate, Divorce and Admiralty division of the High Court. The Parlement Belge belonged to the King of Belgians and was used as a cargo boat. During the case, the Attorney General intervened to state that the court had no jurisdiction over the vessel as it was the property of the Belgian Monarch, and that further, by a political agreement of 1876 between Britain and Belgium, the same immunity from foreign legal process as applied to warships should also apply to this packet boat. In discussing the case, the court concluded that only public ships of war were entitled to such immunity and that such immunity could not be extended to other categories by a treaty without parliamentary consent. Indeed, it was stated that this would be ‘a use of the treaty-making prerogative of the Crown…without precedent, and in principle contrary to the law of the Constitution.[43]

The interpretation of treaties not incorporated by statute into municipal law, and the decision as to whether they have been complied with, are matters exclusively for the Sovereign as ‘the court must speak with the same voice as the executive’[44]. An exception is where reference to a treaty is needed in order to explain the relevant factual background,[45] for example where the terms of a treaty are incorporated into a contract.[46]

Where the legislation in question refers expressly to a relevant but unincorporated treaty, it is permissible to utilize the latter in order to constrain any discretion provided for in the former.[47] Further, it has been argued that ratification of an international treaty (where no incorporation has taken place) may give rise to legitimate expectations that the executive, in the absence of statutory or executive indications to the contrary, will act in conformity with the treaty.[48]

However treaties relating to the conduct of war, cession of territory and the imposition of charges on the public purse[49] do not need an intervening act of legislation before they can be made binding upon the citizens of the country.[50] A similar situation exists also with regard to relatively unimportant administrative agreements which do not require ratification, providing of course they do not purport to alter municipal law. In certain cases, Parliament will give its approval generically in advance for the conclusion of treaties in certain fields within specified limits, subject to the terms negotiated for particular treaties being promulgated by statutory instrument(secondary legislation).[51]

In conclusion it may stated that parliamentary legislation will be required where a treaty for its application in the common law system requires a modification of, or addition to, existing common law or statute, affects private rights, creates financial obligations for the country or increases the powers of the Sovereign.[52] 

Conclusion

International law since the middle of the last century has been developing in many directions, as the complexities of life in the modern era have multiplied. For, as already emphasized, municipal law reflects the conditions and cultural traditions of a particular country within which it operates.  The country evolves a certain specific set of values – social, economic and political and this stamps its mark on the legal framework which orders life in the environment. International law is also a product of its environment. It has developed in accordance with the prevailing notions of international relations and to survive it must be in harmony with the realities of the age.

Nevertheless, there is continuing tension between those rules already established and the constantly evolving forces that seek changes within the system. One of the major problems of municipal law is to determine when and how to incorporate standards of International law into the already existing framework, so that, on the one hand, the law remains relevant and, on the other, the system itself is not too vigorously disrupted.

The growth of positivism in the nineteenth century has had the effect of focusing the concerns of International law upon sovereign states. They alone were the ‘subjects’ of International law  and were to be contrasted with the status of non-independent states and individuals as ‘objects’ of International law. They alone created the law and restrictions upon their independence could not be presumed. But the gradual sophistication of positivist doctrine, combined with the advent of new approaches to the whole system of international relations, has broken down this exclusive emphasis and extended the roles played by non-state entities, such as individuals, multinational firms and international institutions.

Thus in conclusion, reality circumscribes the concept of sovereignty in operation and increases the necessity for worldwide co-ordination of matters as different as the policies adopted to combat economic problems, environmental dangers and terrorist threats.

 


[1] See Malcom N. Shaw, International Law, Fifth Edition, Cambridge University Press, Cambridge,2003 pp.1

[2] See P J Fritzgerald, Salmond on Jurisprudence, Twelfth Edition, Univrsal Law Publishing Co.Pvt.Ltd., 2004,pp 10

[3] Ibid at pp.11.

[4] Ibid at pp 12.

[5] Ibid at pp. 14

[6] Supra Note 1 at pp.1

[7] See J.Bentham, Introduction to the principles of Morals and legislation, London, 1780

[8] Supra Note 1 at pp 121.

[9] See J.H.Jackson, Status of Treaties in domestic legal Systems : A Political Analysis, AJIL Pvt. Ltd. 1992, pp.310 

[10] Supra Note 1 at pp. 122

[11] See R.W.Jennings and A.D.Watts, Oppenheim’s International law,9th Edition, Sweet Maxwell and Co., 1992,  pp. 53

[12]See G.Fitzmaurice, The General Principles of International Law Considered from the standpoint of the Rule of Law, Cambridge University Press, Cambridge, 1992, pp. 5

[13] See generally, Lauterpacht, International Law, London, 1950.

[14] Kant’s philosophy: According to which all of man’s knowledge consists only of his own conceptions..

[15]  See Kelsen, General theory of Law and state, Cambridge University Press, Cambridge, 1945, pp.363 

[16] Supra Note 1 at pp. 122

[17] See, Kelsen, Principles of International Law, Cambridge University Press, Cambridge, 1952, pp. 557

[18] Supra Note 12 at pp. 53; See also C.Rosseau, Droit International Public, Paris Univ. Press, Paris, 1979, pp.4-16.

[19]  Ibid at pp. 30

[20] Supra Note 1 at pp. 124

[21] See e.g. C.W.Jenks, The Prospects of International Adjudication, London Publishing House, London, 1964, Ch. 9.

[22]  Supra Note 1 at pp. 124

[23] Note also Article 13 of the Draft Declaration on the Rights and duties of states, 1949, which provides that every state ‘has the duty to carry out in good faith its obligations arising from treaties and other sources of International law, and it may not invoke provisions in its constitution or its laws as an excuse for failure to perform this duty’, Yearbook of the ILC, 1949. pp. 286, 289.

[24]ICJ Reports, 2002, para.265

[25] Ibid., para.266

[26] ICJ Reports, 1988,pp.12, 34; 82 ILR, pp.225,252

[27] ICJ Reports, 1992, pp.3, 32; 94 ILR, pp. 478, 515; ee also Westland Helicopters Ltd v AOI, 80 ILR, pp.595, 616.

[28] Supra Note 1 at pp. 126.

[29]See e.g. the Anglo- Iranian Oil Co. case,  ICJ Reports, 1952, pp.93; 19 ILR, pp.507.

[30] Supra Note 1 at pp. 128; See also e.g. the Exchange of Greek and Turkish Populations case, PCIJ, Series B, No.10, pp.20.

[31] Supra Note 1 at pp. 129.

[32] Ibid at pp. 129.

[33] (1764) 3 Burr. 1478.

[34] (1737) Cases t. Talbot 281.

[35] See Trendtex Trading Corporation v. Central Bank of Nigeria[1977] 2 WLR 356; 64 IL, pp. 111, 128.

[36] See e.g. D.D. Basu, Commentaries on the Constitution of India, New Delhi, 1962, Vol. II.

[37] AIR 1997 SC 3011

[38] Supra Note 1 at pp.135

[39] Ibid at pp. 135

[40] See Generally A.D. Mcnair, The law of treaties, Oxford University Presss, Oxford, 1961, pp.81-97.

[41] Ibid at pp. 95                                                                                                            

[42] (1879) 4 PD 129.

[43] Ibid., pp.154.

[44] Lonrho Exports v. ECGD[1996] 4 All ER 673, 688; 108 ILR, pp.596, 613.

[45] Lord Oliver in Maclaine Watson v. Department of Trade and Industry emphasized that the conclusion of an international treaty is a question of fact, thus a treaty may be referred to as part of the factual background against which a particular issue arises, [1989] 3 All ER 523, 545; 81 ILR, pp.671, 702.

[46] Supra Note 42.

[47]  See e.g. R v. Secretary of State, on the application of the Channel Tunnel Group 119 ILR, pp. 398, 407-8.

[48] See Lord Woolf MR in Ex Parte Ahmed and Patel[1998] INLR 570, 584, relying upon the approach of the High court of Australia in Minister of Immigration v. Teoh, (1995) 128 ALR 353, as to which Hobhouse LJ stated that where the secretary of state had adopted a specific policy, it was not possible to derive a legitimate expectation from the treaty going beyond the scope of policy: at 592.

[49] Supra Note 1 at pp.138.

[50] Supra Note 38 at pp. 89.

[51] Supra Note 1 at pp.138.

[52] See, Sinclair and Dickson, National Treaty Law, Sweet Maxwell and Co., London,  1989, p.230.