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The Charter of Economic Rights and Duties of States and the Deprivation of Foreign-Owned Wealth

Published online by Cambridge University Press:  27 February 2017

Burns H. Weston
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Extract

In a parable drawn from The Trial, Franz Kafka once etched the following chilling profile:

Before the Law stands a doorkeeper on guard. To this doorkeeper there comes a man from the country who begs for admittance to the Law. But the doorkeeper says that he cannot admit the man at the moment. The man, on reflection, asks if he will be allowed, then, to enter later. “It is possible,” answers the doorkeeper, “but not at this moment.” Since the door leading into the Law stands open as usual and the doorkeeper steps to one side, the man bends down to peer through the entrance. When the doorkeeper sees that, he laughs and says: “If you are so strongly tempted, try to get in without my permission. But note that I am powerful. And I am only the lowest doorkeeper. From hall to hall keepers stand at every door, one more powerful than the other. Even the third of these has an aspect that even I cannot bear to look at.” These are difficulties which the man from the country had not expected to meet; the Law, he thinks, should be accessible to every man at all times….

Type
Research Article
Information
American Journal of International Law , Volume 75 , Issue 3 , July 1981 , pp. 437 - 475
Copyright
Copyright © The American Society of International Law 1981

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Footnotes

*

Of the Board of Editors. This article was adapted from a paper prepared for the Study Panel on State Responsibility of the American Society of International Law.

References

1 Kafka, F., Parables and Paradoxes 61 (Schocken paperback ed. 1961)Google Scholar.

2 GA Res. 3281 (XXIX), 29 UN GAOR, Supp. (No. 31) 50, UN Doc. A/9631 (1974). The text of the Charter is reproduced in full in 69 AJIL 484 (1975) and 14 ILM 251 (1975). On the vote, see notes 7 & 73 infra.

3 Mazrui, , Panel Discussion on the New International Economic Order, in The New International Economic Order: The North-South Debate 371, 374 (Bhagwati, J. ed. 1977).Google Scholar

4 Hereinafter usually referred to as Article 2(2) (c).

5 The term “wealth deprivation” and such derivatives as “deprivation measure” and “deprivation claim” are used principally to avoid the simultaneous and, hence, ambiguous reference to both facts and legal consequences that so often characterizes the more popular “expropriation,” “confiscation,” “condemnation,” “taking,” “forfeiture,” and the like. It is therefore conceived as a neutral expression that describes the public or publicly sanctioned imposition of a wealth loss (or blocking of a wealth gain)—at whatever time, by whatever means, with whatever intensity, and for whatever claimed purpose—which, in the absence of some further act on the part of the depriving party, would involve the denial of a quid pro quo to the party who sustains the deprivation (the component “wealth” usually being preferred to the more popular “property” because it refers to all the relevant values of goods, services, and income without sharing the latter’s common emphasis upon physical attributes or the civil law’s stress on “ownership”). Depending on a multitude of factual variables, a wealth deprivation may be found lawful or unlawful. As implied and as thus defined, however, the term is superior in ways other than its descriptive neutrality. By stressing more the results than the implementing procedures of the institution, it underscores the ultimate gravamen to which all claims arising out of any social interaction are addressed: value change. At the same time, but without straint of legal-technical language, it affords a broad mantle under which a variety of procedures may take shelter, whether the archetypal “direct taking” or its many “indirect” functional equivalents. Finally, it more readily admits that there can be a loss by one party without there being a one-for-one gain by another.

6 See note 2 supra.

7 Voting against the NIEO Charter, in significant part because of Article 2, were Belgium, Denmark, the Federal Republic of Germany, Luxembourg, the United Kingdom, and the United States. Abstaining were Austria, Canada, France, Ireland, Israel, Italy, Japan, the Netherlands, Norway, and Spain. The U.S. vote against the Charter was in accordance with American Bar Association Resolution No. 301, adopted at the Association’s annual meeting in August 1974, and reproduced in 9 Int’l Law. 405 (1975). See also U.S. Dept of State, the United States and the Third World (General Foreign Policy/Series No. 301, 1976).

8 On Article 2 as a symbol of Third World demands, see text accompanying notes 90 and 91 infra.

9 See, e.g., Wortley, B., Expropriation in Public International Law 24–25 (1959)Google Scholar.

10 Grotius, H., on the Rights of War and Peace 179 (Whewell trans. 1853)Google Scholar.

11 See White, G., Nationalisation of Foreign Property 146 (1961)Google Scholar.

12 See id. at 150; [Harvard] Convention on the International Responsibility of States for Injuries to Aliens, explanatory notes Art. 10, at 107 (Draft No. 12, 1961). See also Lillich, I. R. & Weston, B., International Claims: Their Settlement by Lump Sum Agreements 136–39 (1975)Google Scholar; Dawson & Weston, Banco Nacional de Cuba v. Sabbatino: New Wine in Old Bottles, 31 U. Chi. L. Rev. 63, 79–84 (1963).

13 In the Walter Fletcher Smith Claim (United States v. Cuba), 2 R. Int’l Arb. Awards 913 (1929), the arbitrator found that “the expropriation proceedings were not, in good faith, for the purpose of public utility.” To like effect, see the Oscar Chinn Case, [1934] PCIJ, ser. A/B, No. 63, at 75; El Triunfo Case (United States v. El Salvador), Foreign Relations of the United States, 1902, at 838 (1903); The Savage Claim (United States v. El Salvador), 2 Moore, J. B., International Arbitrations 1865 (1898)Google Scholar. In none of these cases, however, was the “public utility” concept explored, nor did any of them turn on the absence of “public utility” alone.

14 GA Res. 1803 (XVII), 17 UN GAOR, Supp. (No. 17) 15, UN Doc. A/5217 (1962),reprinted in 57 AJIL 710 (1963), 2 ILM 223 (1963): “Nationalization, expropriation or requisitioning shall be based on grounds or reasons of public utility, security or the national interest which are recognized as overriding purely individual or private interests, both domestic and foreign.” But see Baade, Permanent Sovereignty over Natural Wealth and Resources, in Essays on Expropriations 3, 23 (Miller, R. & Stanger, R. eds. 1967)Google Scholar: “This [provision] would appear to be an attempt to diminish, rather than to increase, international-law restrictions upon nationalization by making the precedence of public over private interests a matter of international public policy.”

Although the requirement that the taking of an alien’s property be for a public purpose —or be based on reasons of public necessity or public utility—is frequently mentioned in international adjudications and die works of text writers, there is little authority in international law establishing any useful criteria by which a state’s own determination of public purpose can be questioned. There appear to be few, if any, cases in which a taking has been held unlawful under international law on the sole and specific ground that it was not for a public purpose.

Restatement (Second) of Foreign Relations Law of the United States §185, comment b, at 553 (1965).

16 For relevant discussion, see the subsection “An Issue of Law”.of section III infra.

17 See, e.g., the Preamble, ch. I, and Arts. 1,4,5,7, 10, 12, 13, 16, 17, 24, 26, 27, and 32 of the NIEO Charter, note 2 supra.

18 Baade, supra note 14, at 23.

19 For pertinent elaboration of this thesis, see 1 R. Lillich & B. Weston, supra note 12, at 136–39.

20 This contention is supported by two interpretations of the doctrine of alien nondiscrimination: the so-called national treatment standard and the so-called minimum standard of international justice. The first calls for equal treatment as between aliens and nationals, and the second for a certain de minimus treatment of aliens irrespective of the treatment accorded nationals. For details, see authorities cited in notes 21 and 23 infra.

21 For discussion and abundant references, see G. White, supra note 11, at 5, 119–50; McDougal, M., Lasswell, H., & Chen, L., Human Richts and World Public Order: The Basic Policies of an International Law of Human Dignity, ch. 14 (1980)Google Scholar. See also Dawson & Weston, supra note 12, at 84–96.

22 M. McDougal, H. Lasswell, & L. Chen, supra note 21, at 738 (footnote omitted). In the Oscar Chinn case ([1934] PCIJ, ser. A/B, No. 63, at 87), the Permanent Court of International Justice voiced the kind of discrimination that is said to be prohibited: “The form of discrimination which is forbidden is . . . discrimination based upon nationality and involving differential treatment by reason of their nationality as between persons belonging to different national groups.” Gillian White correctly points out that “the court was interpreting the prohibition of discrimination contained in the Convention of Saint-Germain and the word ‘forbidden’ clearly refers to this prohibition and not to a general principle of customary international law.” G. White, supra note 11, at 34. Considering the growth of international human rights law since the 1934 Oscar Chinn case, however, it probably is true that the Permanent Court’s language now has more generic significance.

23 The Calvo Doctrine maintains “that aliens are not entitled to rights and privileges not accorded to nationals, and that therefore they may seek redress for grievances only before local authorities.” Shea, D., The Calvo Clause 19 (1955)Google Scholar. This doctrine, which embodies the socalled national treatment standard of alien nondiscrimination (long favored in Latin American circles), is criticized as it pertains to the NIEO Charter by Lillich, , The Diplomatic Protection of Nationals Abroad: An Elementary Principle of International Law Under Attack, 69 AJIL 359 (1975)CrossRefGoogle Scholar. For sympathetic treatment of the doctrine in the same context, see García-Amador, The Proposed New International Economic Order: A New Approach to the Law Governing Nationalization and Compensation, 12 Law. Americas 1, 25 (1980). For extensive but dated analysis of the competing “minimum standard of international justice,” which rejects the Calvo Doctrine and its constituent “national treatment standard,” see Roth, A., The Minimum Standard of International Law Applied to Aliens (1949)Google Scholar; Borchard, , The Minimum Standard of the Treatment of Aliens, 38 Mich. L. Rev. 445 (1940)CrossRefGoogle Scholar.

24 Brower, & Tepe, , The Charter of Economic Rights and Duties of States: A Reflection or Rejection of International Law?, 9 Int’l Law. 295, 306 (1975)Google Scholar.

23 Accord, García-Amador, supra note 23, at 27–28. See, e.g., the Preamble and Arts. 4, 16, 18, 19, and 26 of the NIEO Charter, note 2 supra.

26 On this point, see Lillich, note 23 supra. See also Brower & Tepe, note 24 supra.

27 For a not overly charitable but nonetheless accurate explanation, see M. McDougal, H. Lasswell, & L. Chen, supra note 21, at 777.

28 McDougal, Lasswell, and Chen recently have completed a detailed elaboration of the general norm of nondiscrimination. See id., pt. III. However, only chapter 14 of this volume deals with the doctrine of alien nondiscrimination per se, and then with but limited reference to the relatively discrete context of foreign-wealth deprivation. Additionally, such other major and widely cited works as are pertinent to this realm tend to be dated and Western inspired. See, e.g., Borchard, E., The Diplomatic Protection of Citizens Abroad or The Law of International Claims (1915)Google Scholar; Dunn, F., The Protection of Nationals (1932)Google Scholar; Eagleton, C., The Responsibility of States in International Law (1928)Google Scholar; Fouilloux, G., La Nationalisation et le Droit International Public (1962)Google Scholar; Freeman, A., The International Responsibility of States for Denial of Justice (1938)Google Scholar; Friedman, S., Expropriation in International Law (1953)Google Scholar; A. Roth, note 23 supra; D. Shea, note 23 supra; G. White, note 11 supra and B. Wortley, note 9 supra.

29 Chapter I of the NIEO Charter, note 2 supra, includes among its “fundamentals of international economic relations” the principle of “[f]ulfilment in good faith of international obligations.” According to Sole Arbitrator René-Jean Dupuy, in the international arbitration of Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Libyan Arab Republic Award on the Merits, reprinted in 17 ILM 3, 31 (1978), this language applies to concession agreements.

30 G. White, supra note 11, at 144.

31 Baade, supra note 14, at 24–25.

32 But see Herz, , Expropriation of Foreign Property, 35 AJIL 243, 249 (1941)Google Scholar: “Non-discrimination has formed the basis of all those claims where measures had been directed against single foreigners. It does not matter whether the discrimination is open or veiled, if only there is evidence that in its effects the measure affects practically aliens alone.”

33 For a brief discussion of the joinder of these concepts with the doctrine of alien nondiscrimination, see Dawson & Weston, supra note 12, at 84–96.

34 On the doctrine of proportionality in the context of retaliation and reprisal, see the widely cited Naulilaa Case, 8 Trib. Arb. Mixtes 409 (1928). For a more recent statement, see Bowett, Economic Coercion and Reprisals by States, in Economic Coercion and The New International Economic Order 7 (Lillich, R. ed. 1976)Google Scholar.

35 For further and approving elaboration on this theme, see Dawson, & Weston, , “Prompt, Adequate and Effective”: A Universal Standard of Compensation?, 30 Fordham L. Rev. 727, 751–53 (1962)Google Scholar. See generally Weigel, & Weston, , Valuation Upon the Deprivation of Foreign Enterprise: A Policy-Oriented Approach to the Problem of Compensation Under International Law, in 1 The Valuation of Nationalized Property in International Law 3 (Lillich, R. ed. & contrib. 1972)Google Scholar.

36 G. White, supra note 11, at 144.

37 Ibid.

38 Accord, Delupis, I., Finance and Protection of Investments in Developing Countries 68 (1973)Google Scholar.

39 Farer, , The United Stdtes and the Third World: A Basis for Accommodation, 54 Foreign Aff. 79, 84 (1975)Google Scholar.

40 See text at note 31 supra.

41 Otherwise, how does one defend, for example, the “most-favored-nation” provisions of commercial and other treaties? On this point, see Baade, supra note 14, at 23–24. See also M. McDougal, H. Lasswell, & L. Chen, supra note 21, at 756, who, in seeking to demonstrate “an overall commitment to a minimum international standard,” contend that “[t]he standards established in many of these [FCN] treaties often go beyond national treatment in relation to particular problems, most notably in the form of’most-favored-nation treatment.’ “

42 Supra note 21, at 738.

43 Id. at 758 n.82.

44 Vicuña, Orrego, Some International Law Problems Posed by the Nationalization of the Copper Industry by Chile, 67 AJIL 711, 715 (1973)Google Scholar. Accord, A. Freeman, supra note 28, at 517, who contends that international law limits a state’s right to deprive aliens of their wealth “by arbitrary action, whether . . . directed against foreigners as such or against the populace as a whole under general legislation.”

45 The “denial of justice” concept, though important to the notion of arbitrariness, might best be left as a juridical variable in its own right, not to complicate further an already complex alien nondiscrimination doctrine. Such a conclusion is inferred, at any rate, from García-Amador, F., Sohn, L., & Baxter, R., Recent Codification of the Law of State Responsibility for Injuries to Aliens 180 (1974)Google Scholar:

This term [denial of justice] has in the past been used in at least three different senses. In its broadest sense, this term seems to embrace the whole field of State responsibility, and has been applied to all types of wrongful conduct on the part of the State toward aliens. In its narrowest sense, this term has been limited to refusal of a State to grant an alien access to its courts or a failure of a court to pronounce a judgment. In an intermediate sense, the expression “denial of justice” is employed in connection with the improper administration of civil and criminal justice as regards an alien, including denial of access to courts, inadequate procedures, and unjust decisions. The last appears to be the most apposite usage, since the term may thus be usefully employed to describe a particular type of international wrong for which no other adequate phrase exists in the language of the law.

On “denial of justice” generally, see, e.g., Eagleton, , Denial of Justice in International Law, 22 AJIL 538 (1928)CrossRefGoogle Scholar; Fitzmaurice, , The Meaning of the Term “Denial of Justice,” 13 Brit. Y.B. Int’l L. 93 (1932)Google Scholar; and Lissitzyn, , The Meaning of Denial of Justice in International Law, 30 AJIL 632 (1936)CrossRefGoogle Scholar.

46 Murphy, , Limitations Upon the Power of a State to Determine the Amount of Compensation Payable to an Alien Upon Nationalization, in 3 The Valuation of Nationalized Property in International Law 49, 59 (1975)Google Scholar.

47 Banco Nacional de Cuba v. Sabbatino, 307 F.2d 845 (2d Cir. 1962), affirming a district court decision holding the Cuban actions to be unlawfully discriminatory, 193 F.Supp. 375 (S.D.N.Y. 1961). The United States Supreme Court reversed these decisions in 376 U.S. 398 (1964). For criticism of these two lower court decisions, see Dawson & Weston, supra note 12, at 84–96.

48 On this point, see Dawson & Weston, supra note 12, at 93–94.

49 Murphy, supra note 46, at 62.

50 This conclusion finds support in post-World War II lump sum settlement practice. See 1 R. Lillich & B. Weston, supra note 12, at 138. To avoid possible misinterpretation, however, it is important to note that it is stated only with reference to the deprivation, in contrast to the exclusion, of foreign-owned property rights and interests. Most countries (including the United States) disallow foreign nationals from participating in certain economic activities and sectors, and the LDC’s especially give preferential treatment to local entrepreneurs desiring entry into the economic marketplace. Such discriminations, it may be said, are not deemed ipso facto impermissible. See, e.g., M. McDougal, H. Lasswell, & L. Chen, supra note 21, at 737–78. In other words, the conclusion extends only to postinvestment— not preinvestment—circumstances, i.e., to the deprivation of rights that already have “vested.”

51 Lillich, , Forcible Self-Help by States to Protect Human Rights, 53 Iowa L. Rev. 325, 327–28 (1967)Google Scholar.

52 See note 14 supra. For a description of the formulation of this resolution, see Gess, , Permanent Sovereignty over Natural Resources, 13 Int’l & Comp. L.Q. 398 (1964)CrossRefGoogle Scholar.

53 GA Res. 1803 (XVII),supra note 14, para. 1(4) (emphasis added). The provision continues: “In any case, where the question of compensation gives rise to a controversy, the national jurisdiction of the State taking such measures shall be exhausted. However, upon agreement by sovereign States and other parties concerned, settlement of the dispute should be made through arbitration or international adjudication.”

54 Cornelius Murphy, writing in 1975, described “[t]he standard of’appropriate’ compensation referred to in General Assembly Resolution 1803 (XVII), understood as an amount that is reasonable under all the circumstances,” as “probably the governing principle.” Murphy, supra note 46, at 52. The same view was taken by the sole arbitrator in the TOPCO/California Asiatic international arbitration with Libya, 17 ILM at 27–31, paras. 80–89. Cf. García- Amador, supra note 23, at 20–24. For a less positive view, reporting the retrenchments taken within the United Nations since the adoption of Resolution 1803 (XVII), see Lillich, , The Valuation of Nationalized Property in International Law: Toward a Consensus or More “Rich Chaos”?, in 3 The Valuation of Nationalized Property, supra note 46, at 183Google Scholar. See also note 64 infra.

55 In 1962, the U.S. negotiator had argued that the phrase “in accordance with international law” meant “prompt, adequate, and effective compensation” even though such language was not in the resolution. See Schwebel, , The Study of the U.N.’s Declaration on Permanent Sovereignty over Natural Resources, 49 A.B.A.J. 463 (1963)Google Scholar. See also note 59 and accompanying text infra.

56 Supra note 2 and accompanying text (emphasis added).

57 Accord, Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Libyan Arab Republic, 17 ILM at 28, para. 82. For pertinent comment, see note 67 infra.

58 See 29 UN GAOR, Second Committee (1638th mtg.) 382, UN Doc. A/C.2/SR.1638, at 383–84 (1974). See also Castañeda, , La Charte des Droits et Devoirs Economiques des Etats—Note sur son processus d’élaboration, 20 Annuaire François Droit Int’l 31, 50–51 (1974)Google Scholar.

59 de Aréchaga, Jiménez, International Law in the Past Third of a Century, 159 Recueil des Cours 1, 302–03 (1978 I)Google Scholar. In point of fact, as a colleague and I sought to demonstrate almost two decades ago, and Western advocates to the contrary notwithstanding (see, e.g., Schwebel, note 55 supra), the notion of “prompt, adequate, and effective compensation” always has been, at least in the context of large-scale nationalization, more a preference assumed for bargaining purposes than a rule of international law. See Dawson & Weston, note 35 supra.

60 For a helpful summary, see García-Amador, supra note 23, at 32–40.

61 Note, for example, the following passage from the Lima Declaration and Plan of Action on Industrial Development, adopted in 1975 by the Second General Conference of the United Nations Industrial Development Organization (UNIDO):

32. That every State has the inalienable right to exercise freely its sovereignty and permanent control over its natural resources, both terrestrial and marine, and over all economic activity for the exploitation of these resources in the manner appropriate to its circumstances, including nationalization in accordance with its laws as an expression of this right, and that no State shall be subjected to any forms of economic, political or other coercion which impedes the full and free exercise of that inalienable right [emphasis added].

For the full text of the Lima’Declaration, see Doc. ID/Conf.3/31 or UN Doc. A/10112 (1975).

On the international plane, the principle of permanent sovereignty has become the focal normative conception used by states to justify their right to exercise control over production and distribution arrangements without being hampered by the international law of state responsibility as it had been traditionally interpreted by the capital-exporting countries.

O. Schachter, Sharing the World’s Resources 1 2 4 - 2 5 (1977).

63 Accord, García-Amador, supra note 23, at 32–40 and 51. See also Meagher, R., an International Redistribution of Wealth and Power—A Study of the Charter of Economic Rights and Duties of States 52–54 (1979)Google Scholar.

64 See Lillich, supra note 54, at 190: “Resolution 1803 (XVII) . . . still affords the best opportunity for an eventual consensus on the thorny compensation question. It can no longer be assumed, however, that developing as well as developed States still consider it reflective of customary international law” (footnote omitted). Compare with Murphy, note 54 supra.

65 GA Res. 3171 (XXVIII) on Permanent Sovereignty over Natural Resources, 28 UN GAOR, Supp. (No. 30) 52, UN Doc. A/9030 (1974), reprinted in 13 ILM 238 (1974).

66 Declaration on the Establishment of a New International Economic Order, GA Res. 3201 (S–VI), UN GAOR, 6th Spec. Sess., Supp. 1, UN Doc. A/9559, reprinted in 68 AJIL 798 (1974), 13 ILM 715 (1974), adopted without vote on May 1, 1974, with reservations by the Federal Republic of Germany, France, Japan, the United Kingdom, and the United States.

67 In fairness, however, one must acknowledge that Article 2(2) (c) does provide that the question of compensation need not be settled under the domestic law of the depriving state if “it is freely and mutually agreed by all States concerned that other peaceful means be sought on the basis of die sovereign equality of States and in accordance with the principle of free choice of means. “See text accompanying note 6 supra. Also, considering that paragraph (j) of chapter I of the NIEO Charter provides for the “[f]ulfilment in good faith of international obligations” (see note 2 supra), it is reasonable to assume that treaty commitments to international arbitration or mediation would be honored. Nevertheless, it is important to note that “compulsory adjudication or an obligation to submit to third-party settlement only exists when that method has been agreed upon by both interested States, either on an ad hoc basis or by means of a preexisting treaty or agreement.” Jiménez de Aréchaga, supra note 59, at 304.

68 Compare, e.g., the remarks of Ambassador Rydbeck of Sweden and Ambassador Karhilo of Finland with the remarks of Ambassador Scali of the United States and Ambassador Gehlhoff of the Federal Republic of Germany in the discussion of the Report of the Ad Hoc Committee of the Sixth Special Session, in UN GAOR, 6th Spec. Sess. (2229th plen. mtg.), UN Doc. A/PV.2229 (May 1, 1974).

69 As observed by Holmes, J., in The Western Maid (257 U.S. 419,433 (1922)): “legal obligations that exist but cannot be enforced are ghosts that are seen in the law but that are elusive to the grasp.”

70 Summary of Address by Mr. Luis Echeverría Alvarez, President of the United Mexican States, UNCTAD Proceedings, 3d Sess., UN Doc. TD/180, Vol. 1A, pt. 1, at 184, 186 (1972). See also the remarks of Ambassador Castañeda of Mexico in the Report of the first session of the Working Group established by the United Nations Conference on Trade and Development (UNCTAD) in May 1972 to prepare a Draft Charter of Economic Rights and Duties of States, in UN Doc. TD/B/AC. 12/1 (March 6,1973). The purpose of the proposed Charter, Ambassador Castañeda (the working group’s Chairman) stated, was to “enunciate authentic economic rights and duties of States . . . as rights and duties of a juridical nature” and that therefore the function of the working group was “to formulate an instrument . . . setting out genuine authentic rights and duties of a juridical nature arising in economic relations between States.”

71 This point is stressed by the sole arbitrator in Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Libyan Arab Republic, 17 ILM at 30, paras. 86–88. It also is abundantly documented in Brower & Tepe, supra note 24, at 295–302. See also Dubitzky, , The General Assembly’s International Economics, 16 Harv. Int’l L.J. 670, 672 (1975)Google Scholar; Haight, , The New International Economic Order and the Charter of Economic Rights and Duties of States, 9 Int’l Law. 591, 595–97 (1975)Google Scholar.

72 See, e.g., Brierly, J., The Law of Nations 110 (6th ed. 1963)Google Scholar.

73 As already mentioned, the roll-call vote on the NIEO Charter was 120 in favor to 6 against, with 10 abstentions. For details, see notes 2 and 7 and accompanying text supra. As summarized and evaluated by one observer, “The Charter was passed by a large margin, but the United States, Canada, Japan, and the members of the European Economic Community all abstained or voted against it. Such opposition properly raises a serious question as to the legal significance of the Charter.” Dubitzky, supra note 71, at 674 (footnote omitted). A more emphatic position was taken by the sole arbitrator in Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Libyan Arab Republic, 17 ILM at 29, paras. 85–86.

74 Other provisions of the NIEO Charter that failed to achieve universal endorsement were, in particular, Articles 5, 19, and 28.

75 Common sense dictates that there is at least room for argument that the NIEO Charter may have “binding” legal effect as among those developing and socialist countries which voted for its adoption with little or no reservation. In this connection, see the authorities cited in note 81 infra.

78 See text at and accompanying notes 82 through 87 infra.

77 1 R. Lillich & B. Weston, supra note 12, at 15 (footnote omitted). As I have written elsewhere, although in a different context,

law is legitimized politics—a Hydra-headed process of social decision, involving persons at all levels and from all walks of public and private life who, with authority derived both explicitly and implicitly from community consensus or expectation, and supported by formal and informal sanction, effect those codes or standards of everyday conduct by which we plan and go about our lives.

Weston, The Role of Law in Promoting Peace and Violence: A Matter of Definition, Social Values, and Individual Responsibility, in Toward World Order and Human Dignity—Essays in Honor of Myres S. McDougal 114, 115 (W. M. Reisman & B. Weston eds. & contribs. 1976).

78 Haight, supra note 71, at 597 (emphasis added). Curiously, and in seeming contradiction, the same author subsequently rues the fact that the Resolution on Permanent Sovereignty over Natural Resources (note 38 supra) was adopted without the inclusion of a U.S.-initiated provision designed to safeguard the faithful observance of state contracts with private persons.

79 GA Res. 3082 (XXVIII), 28 UN GAOR, Supp. (No. 30) 40, UN Doc. A/9030 (1974).

80 Principal among the major recent conferences have been UNCTAD IV at Nairobi in May 1976 and the ongoing Paris Conference on International Economic Cooperation (CIEC); also the 1976 ILO World Employment Conference and the earlier 1975 UNIDO Lima Conference.

81 At least tacit recognition of this thesis is given in the TOPCO/California Asiatic international arbitration with Libya, 17 ILM at 30–31, para. 89. For enlightened analyses of the legal effect of UN resolutions, which also support the thesis, see Asamoah, O., The Legal Significance of the Declarations of the General Assembly of the United Nations (1966)Google Scholar; Castañeda, J., Legal Effects of United Nations Resolutions (1969)Google Scholar; Higgins, R., The Development of International Law Through the Political Organs of the United Nations (1963)Google Scholar. See also Arangio-Ruiz, , The Normative Role of the General Assembly of the United Nations and the Declaration of Principles of Friendly Relations, 137 Recueil des Cours 419, 431–518 (1972 III)Google Scholar; Falk, , The Quasi-Legislative Competence of the General Assembly, 60 AJIL 702 (1966)Google Scholar; Schachter, , The Evolving International Law of Development, 15 Colum. J. Transnat’l L. 1, 4–6 (1976)Google Scholar.

82 See,e.g., Lillich, R., International Claims: Postwar British Practice (1967)Google Scholar; 1 R. Lillich & B. Weston, note 12 supra; Weston, B., International Claims: Postwar French Practice (1971)Google Scholar; Amerasinghe, , The Quantum of Compensation for Nationalized Property, in 3 The Valuation of Nationalized Property, supra note 46, at 91Google Scholar [hereinafter in this footnote cited as Valuation]; Bradley, The Nationalisation of Companies in Tanzania, in Private Enterprises and the East African Company 207 (Thomas, P. ed. 1969)Google Scholar; Bradley, , Legal Aspects of the Nationalisations in Tanzania, E. Afr. L.J., No. 3, 1967, at 149Google Scholar; Brower, , The Future for Foreign Investment—Recent Developments in the International Law of Expropriation and Compensation, in Private Investors Abroad—Problems and Solutions in International Business 93 (1976)Google Scholar; Freidberg, & Lockwood, , The Measure of Damages Against Cuba, in 1 Valuation 117Google Scholar; Furnish, , Days of Revindication and National Dignity: Petroleum Expropriations in Peru and Bolivia, in 2 Valuation 55 (1973)Google Scholar; Gantz, , The United States-Peruvian Claims Agreement of February 19, 1974, 10 Int’l Law. 389 (1976)Google Scholar; Goldman, & Paxman, , Real Property Valuations in Argentina, Chile, and Mexico, in 2 Valuation 129Google Scholar; Girvan, , Expropriating the Expropriators: Compensation Criteria from a Third World Viewpoint, in 3 Valuation 149Google Scholar; Henry, , The Valuation of Nationalized Property in Great Britain, in 1 Valuation 86Google Scholar; Lillich, The Valuation of Nationalized Property by the Foreign Claims Settlement Commission, in id. at 95; Lillich, International Law and the Chilean Nationalizations: The Valuation of the Copper Companies, in 2 id. at 120; Orrego Vicuña, The International Regulation of Valuation Standards and Processes: A Reexamination of Third World Perspectives, in 3 id. at 131; Seidl-Hohenveldern, The Valuation of Nationalized Property in Austria, in 1 id. at 64; Wesley, A Compensation Framework for Expropriated Property in Developing Countries, in 3 id. at 3.

83 For a summary of compensation and valuation standards prevalent since World War II, see 1 R. Lillich & B. Weston, supra note 12, at 207–56.

84 Very little international legal analysis is to be found in this discrete but important realm. For a preliminary glimpse, see Weston, , “Constructive Takings” Under International Law: A Modest Foray into the Problem of “Creeping Expropriation,” 16 Va. J. Int’l L. 103 (1975)Google Scholar. See also 1 R. Lillich & B. Weston, supra note 12, at 167–73; B. Weston, supra note 82, at 120–41; and Vagts, , Coercion and Foreign Investment Rearrangements, 72 AJIL 17 (1978)CrossRefGoogle Scholar.

85 Among such post-NIEO Charter respondent countries are Bolivia, Chile, Guyana, Jamaica, Libya, and Peru. For details, see the authorities cited in note 82 supra, especially Brower.

86 Baxter, , Treaties and Custom, 129 Recueil des Cours 25, 89 (1970 I)Google Scholar. For lengthy (and one hopes exhaustive) treatment of this point, see 1 R. Lillich & B. Weston ..supra note 12, at 9–43.

87 Accord, Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Libyan Arab Republic, 17 ILM at 27–31, paras. 80–90; after comparing language and voting patterns relative to Resolution 1803 (XV11), note 14 supra, the sole arbitrator declared the law still to be as enunciated in Resolution 1803.

88 See, in particular, the recent studies of the World Order Models Project of die Institute for World Order (New York City): Falk, R., A Study of Future Worlds (1975)Google Scholar; Galtung, J., The True Worlds—A Transnational Perspective (1980)Google Scholar; Kothari, R., Footsteps into The Future (1974)Google Scholar; Lagos, G. & Godoy, H., The Revolution of Being (1977)Google Scholar; Mazrui, A., A World Federation of Cultures (1977)Google Scholar; On the Creation of A Just World Order (S. Mendlovitz ed. 1975).

89 For a perceptive and sensitive treatment of “international equity and its dilemmas,” see O. Schachter, supra note 62, at 3–34. See also note 93 and accompanying text infra.

90 Farer, supra note 39, at 84.

91 See, in particular, 1 R. Lillich & B. Weston, note 12supra. See also R. Lillich, note 82 supra, and B. Weston, note 82 supra, regarding British and French international claims practice, respectively; and International Claims: Contemporary European Practice (Lillich, R. & Weston, B. eds., forthcoming 1981)Google Scholar.

92 McDougal, Perspectives for an International Law of Human Dignity, in McDougal, M. & Associates, Studies in World Public Order 987 (1960)Google Scholar. Less abstractly, even if not splendidly in avoidance of the high-level-of-abstraction problem, this means that the principle of compensation must be seen to serve the following interdependent, although always potentially contradictory, objectives: (1) reducing the possibility for resort to coercion on the part of capital-exporting, claimant countries; (2) fostering at least minimum order within capital-importing, depriving countries; (3) maximizing the free flow of beneficial wealth, skills, enlightenment, and other important values across national boundaries; and (4) facilitating an optimum necessary return from and for all host country value processes.

93 ul Haq, M., The Third World and the International Economic Order 10 (Overseas Development Council Development Paper No. 22, 1976)Google Scholar. The same author continues:

Whenever and wherever the rich have made any accommodation, they have done so because it had become inevitable, since the poor had gotten organized and would have taken away power in any case. The basic question today, therefore, is not whether the poor nations are in a grossly unfavorable position in the present order. They are, and they will continue to be, unless they can negotiate a new world order. The basic question really is whether they have the necessary bargaining power to arrange any fundamental changes in the present political, economic, and social balance of power in the world.

Ibid. See generally also ul Haq, M., The Poverty Curtain—Choices for the Third World (1976)Google Scholar.

94 De Seynes, Statement on the United Nations Study of Multinational Corporations to the Southwestern Legal Foundation, International and Comparative Law Center, Symposium on Private Investments Abroad, Dallas, Texas, June 13, 1974, UN Doc. OPI/CESI NOTE/254, at 3 (1974).

95 Id. at 4.

96 One can easily suppose a radically different situation, of course, even if not a wholly salutary one, were the current rate of more than $450 billion in annual military expenditures diverted to the satisfaction of worldwide basic human needs. As Soviet Foreign Minister Gromyko told the UN General Assembly at its 7th Special Session in 1975:

Of late, the economic upheavals which many states have been going through have increased in intensity, and they are increasingly affecting the people’s material situation. Statesmen and economists are racking their brains over the causes behind all this. But the conclusion that is borne out every day and every hour is beyond question: the aggravation of economic problems is largely connected with the rising scale of the arms race and with soaring military expenditure.

UNGA, 7th Spec. Sess., Issues and Background 13 (1975). On the distorted priorities that military expenditures can impose on societies, see Sivard, R., World Military and Social Expenditures 1980 (1980)Google Scholar.

97 See, e.g., The Cocoyoc Declaration, adopted Oct. 12, 1974 by the participants in the UNEP/UNCTAD Symposium on Pattern of Resource Use, Environment and Development Strategies at Cocoyoc, Mexico, Oct. 8–12,1974, reproduced in Dev. Dialogue No. 2,1974, at 92, and Basic Documents in International Law and World Order 415 (Weston, B., Falk, R., & D’Amato, A. eds. 1980)Google Scholar. While not rejecting foreign aid, the declaration underscores the importance of developing the “capacity of people themselves to invent and generate new resources and techniques” and, further, strongly denounces economic dependence. For critical views on foreign aid, at least as administered heretofore, see, e.g., Bauer, P., Dissent on Development (1971)Google Scholar; Goulet, D. & Hudson, M., The Myth of Aid: The Hidden Agenda of The Development Reports (1971)Google Scholar; Mende, T., From Aid to Recolonization: Lessons of a Failure (1973)Google Scholar; Somner, J., Beyond Charity—U.S. Voluntary Aid for a Changing Third World (1977)Google Scholar; Verney, W., Economic Development, Peace and International Law 118–216 (1972)Google Scholar; Frank, & Baird, , Foreign Aid: Its Speckled Past and Future Prospects, 29 Int’l Organization 133 (1975)CrossRefGoogle Scholar; Omo-Fadaka, , Development: The Third Way, 1 Alternatives—A Journal of World Policy 23 (1975)Google Scholar; Rondinelli, , International Assistance Policy and Development Project Administration: The Impact of Imperious Rationality, 30 Int’l Organization 573 (1976)CrossRefGoogle Scholar.

98 See generally W. Chudson & L. Wells, Jr., Acquisition of Technology from Multinational Corporations by Developing Countries (UN Doc. ST/ESA/12, 1974), analyzing the various means of dealing with private foreign investment. See also Helleiner, , International Technology Issues: Southern Needs and Northern Responses, in The New International Economic Order, supra note 3, at 295Google Scholar. For earlier pertinent discussion, see Friedmann, W. & Kalmanoff, G., Joint International Business Ventures (1961)Google Scholar.

99 See, e.g., the excellent collection of mainly Third World essays in Beyond Dependency—The Developing World Speaks Out (G. Erb & V. Kallab eds. 1975). See also Uri, P., Development Without Dependence 60–75 (1976)Google Scholar.

100 Omo-Fadaka, supra note 97, at 47. Consider also Parthasarathi, , Self-Reliance as Alternative Strategy for Development, 2 Alternatives 365, 369 (1976)Google Scholar, who writes that the concept of self-reliance (SR)

should not be equated merely with economic nationalism; nor should it be meant to imply autarchy or self-sufficiency; SR and self-sufficiency do not necessarily lie along the same “line.” While SR may imply, or indeed call for, self-sufficiency in a particular case, the reverse would not be true. SR does not imply a lessening of interest in international cooperation, but it does imply a desire to make the relations between industrialized and developing countries reflect genuine interdependence and international economic justice.

See also Mittleman, , The Dialectic of National Autonomy and Global Participation: Alternatives to Conventional Strategies of Development—Mozambique Experience, 5 Alternatives 307 (1979)CrossRefGoogle Scholar.

101 O. Schachter, supra note 62, at 126. Schachter continues: “This apparent contradiction cannot be dismissed as irrational; it should be understood as reflecting a polarity inherent in the objective circumstances and, in that sense, as a challenge to seek a reconciliation that would, to the extent possible, maximize the competing values.” Ibid. For similar opinion, see Dawson & Weston, supra note 12, at 72–77.

102 The term “transnational corporation,” which I use interchangeably with the term “multinational enterprise,” is the expression used in Article 2 of the NIEO Charter. Whatever the term employed, however, this advanced form of business organization clearly dominates direct foreign investment, as implied by Article 2 itself. For details, see, e.g., Sauvant, Controlling Transnational Enterprises: A Review and Some Further Thoughts, in The New International Economic Order—Confrontation or Cooperation Between North and South? 356, 357–60 (Sauvant, K. & Hasenpflug, H. eds. 1977)Google Scholar. On the other hand, it should be understood that most of the activities of the multinational firms are located in the developed, not the developing, world. “This is so,” writes Joseph LaPalombra, “notwithstanding the proliferation of developing nations since World War II, and notwithstanding the location of natural resources and population growth in the Third World.” Lapalombra, J., Multinational Corporations and Developing Countries 4–5 (Report No. 767 from the Conference Board, 1979)Google Scholar.

103 A popular elaboration of these and related themes is found in Barnett, R. & Muller, R., Global Reach—The Power of the Multinational Corporations (1974)Google Scholar. For a less impassioned study, reflecting both the benefits and the burdens of multinational enterprise, see The Impact of Multinational Corporations on Development and on International Relations 14 (UN Doc. E/5500/Rev.1, ST/ESA/6, 1974).

104 For a brilliant synoptic account of Western liberalism’s place in relation to historical demands for economic justice, see Barbara Ward’s Foreword to M. ul Haq, The Poverty Curtain, supra note 93, at ix–xii.

105 See, e.g., Goodsell, C., American Corporations and Peruvian Politics (1974)CrossRefGoogle Scholar. See also Multinational Corporations and United States Foreign Policy (ITT and Chile): Hearings Before the Subcomm. on Multinational Corporations of the Senate Comm. on Foreign Relations, 93d Cong., 1st Sess. (1973).

106 See authorities cited in note 103 supra. See also, among many other writers, Ajami, , Corporate Giants-Some Global Social Costs, in Multinational Corporations and World Order 109 (Modelski, G. ed. 1972)Google Scholar; Hymer, , The Efficiency (Contradictions) of Multinational Corporations, 60 Am. Econ. Rev. 446 (1970)Google Scholar; Hymer, The Multinational Corporation and the Law of Uneven Development, in Economics and World Order 113 (Bhagwati, J. ed. 1972)Google Scholar; Muller, The Political Economy of Global Corporations and National Stabilization Policy: A Diagnostic on the Need for Social Planning, in The Multinational Corporation and Social Change 179 (Apter, D. & Goodman, L. eds. 1976)Google Scholar; Sunkel, , Big Business and Dependencia, 50 Foreign Aff. 517 (1972)CrossRefGoogle Scholar. Additionally, see Goulet, D., The Uncertain Promise—Value Conflicts in Technology Transfer (1977)Google Scholar; Mobilizing Technology for World Development (Ramesh, J. & Weiss, C. eds. 1979)Google Scholar; W. Chudson & L. Wells, supra note 98.

107 Senghass, , If You Can’t Keep Up With the Rich . . . Keep Away, Development Forum, May 1977, at 3Google Scholar. Senghass attributes this circumstance “to the continuing dominance of classical free trade doctrine” in the international discussion on development policy. Ibid. For further treatment of this and related themes by the same author, see Senghass, More Self-Reliance as an Alternative Policy, in Problems of World Modeling—Political and Social Implications 131 (Deutsch, K., Fritsch, B., Jaguaribe, H., & Markovits, A. eds. 1977)Google Scholar.

108 McHale, J. & McHale, M., Basic Human Needs: A Framework for Action 194 (Report to the UN Environment Programme, April 1978)Google Scholar.

109 Ibid.

110 Harry Johnson has summarized private business behavior in this sphere as follows:

Its capacity to make profits derives essentially from its possession of productive knowledge, which includes management methods and marketing skills, as well as production technology. It has no commercial interest in diffusing its knowledge to potential native competitors. Nor has it any interest in investing more than it has to in acquiring knowledge of local conditions and investigating ways of adapting its own productive knowledge to local factor/price ratios and market conditions. Its purpose is not to transform the economy by exploiting its potentialities (especially its human potentialities) for development, but to exploit the existing situation to its own profit by utilization of the knowledge it already possesses, at minimum cost to itself of adaptation and adjustment. . . . Hence, it will invest in technological research on the adaptation of its technology and in the development of local labour skills only to the extent that such investment holds a clear prospect of profit.

Technology and Economic Independence 79–80 (1975).

111 This approach is developed at length in Weigel & Weston, note 35 supra. For criticism of certain aspects of this approach, see Hu, , Compensation in Expropriations: A Preliminary Economic Analysis, 20 Va. J. Int’l L. 61 (1979)Google Scholar; Mintz, , An Economic Analysis of Aspects of International Expropriation of Property, in 2 The Valuation of Nationalized Property, supra note 82, at 18, 21–25Google Scholar. For an earlier attempt along similar lines, see Axelrod & Mendlovitz, Expropriation and Underdeveloped Nations: The Analogy of U.S. Constitutional Law, in Essays on Expropriations 83 (Miller, R. & Stanger, R. eds. 1967)Google Scholar.

112 See text preceding and following note 139 infra.

113 Cleveland, , Toward an International Poverty Line, in J. McHale & M. McHale, supra note 108, at 3Google Scholar.

114 On this point, see Keohane, & Ooms, , The Multinational Firm and International Regulation, 29 Int’l Organization 169 (1975)CrossRefGoogle Scholar; Streeten, Costs and Benefits of Multinational Enterprises in Less-Developed Countries, in The Multinational Enterprise (Dunning, J. ed. 1971)Google Scholar. A useful (and sobering) summary of the competing arguments about the impact of the multinational firm upon Third World development is provided in Diebold, , Multinational Corporations: Why Be Scared of Them?, 12 Foreign Pol’y 79, 84–85 (1973)Google Scholar. See also note 137 infra and accompanying text.

115 George Modelski has usefully demonstrated this point in a recent important collection of previously published essays: Transnational Corporations and World Order (1979): “The field of international business,” he writes in the Introduction, at 4,

is composed of a number of important and partly antagonistic interest groups, and its analysis must necessarily consider the interests and the world views of such groups. Without wishing to be excessively deterministic in this matter we might maintain for the sake of clarity of exposition that the field contains at least four important groups: corporations (represented by management), employees (both union and nonunion), home-country governments, and host-country governments.

Distinct outlooks and approaches toward multinationals, he continues, correspond to each of these groups, and in his collection Modelski assembles “studies and expositions of views” that adequately express them. Of course, as Modelski is careful to point out, “this effort does not exhaust the range of viewpoints to be considered.” Id. at 5.

116 One is tempted to ask, however, whether this logic should apply to the likes of a John D. Rockefeller or a J. Paul Getty.

117 See subsection 2 infra.

118 See text preceding and following note 139 infra. See also Weigel & Weston, note 35 supra.

It would be preferable that for their part, the host countries defined well in advance at what moment they meant to take a share—either governmental or by local capitalists— if the firms which come from abroad indicate at what point they would insist on participation by their nationals in the personnel and management of these firms. It would be natural, too, that the host countries outlined the sectors to which they would prefer to see foreign capital directed subsequently, as the initial investments are gradually replaced by local capital. Such schemes could prevent misunderstandings and tensions, and could make of foreign enterprises a real impetus for a balanced, and less dependent, national development.

P. Uri, supra note 99, at 75. Summaries of the kinds of national prior-restraint schemes to which Uri refers are available in a series of reports by the UN Secretary-General on permanent sovereignty over natural resources. See, e.g., UN Docs. E/5170 (1972), E/5425 (1973), and A/9716 (1974).

120 Helleiner, supra note 98, at 297. Helleiner cites the following two studies of the Bureau of Intelligence and Research of the US Department of State: Nationalization, Expropriation, and Other Takings of United States and Certain Foreign Property Since 1960 (1971); Disputes Involving US Foreign Direct Investment: July 1, 1971 Through July 31, 1973(1974).

121 See, e.g., The Impact of Multinational Corporations, note 103 supra. See also Ball, Proposal for an International Charter, in Global Companies 167 (Ball, G. ed. 1975)Google Scholar; E. Rostow, The Need for a Treaty, in id. at 156.

122 See text at note 6 supra.

123 This point and the discussion following are drawn from one of my earlier writings. See Weston, International Law and the Deprivation of Foreign Wealth: A Framework for Future Inquiry, in 2 The Future of the International Legal Order 36, 172–75 (Falk, R. & Black, C. eds. 1970)Google Scholar.

124 O. Schachter, supra note 62, at 125.

Firms, like other organizations and even individuals, are able to operate more effectively if they understand their environment and can predict its future shape. Therefore, a relatively stable and understandable business environment is of crucial importance to a manager of a multinational corporation. . . . A host country with a rapidly changing business environment . . . would have to offer unusually attractive market, labor, technical, raw materials, or other advantages to an MNC in order to induce it to invest.

Goodman, The Social Organization of Decision-Making in the Multinational Corporation, in Apter & Goodman eds., supra note 106, at 63, 77 (emphasis added). Accord, Aharoni, Y., The Foreign Investment Decision Process 273–303 (1966)Google Scholar. For empirical studies supporting the “chilling effect” theory relative to DFI in general, see Barlow, E. & Wender, I., Foreign Investment and Taxation 210–12 (1955)Google Scholar; Gaston, J., Obstacles to Direct Foreign Investment 17 (Nat’l Indus. Conf. Bd. 1951)Google Scholar; Gaston, J., Obstacles and Incentives to Private Foreign Investment 1962–64, at 14–15 (Nat’l Indus. Conf. Bd. 1965)Google Scholar; U.S. Dep’t of Commerce, Factors Limiting United States Investment Abroad, pt. 2 (1954). See also Fatouros, A., Government Guarantees to Foreign Investors 50–54 (1962)Google Scholar; Report of the Secretary-General, Economic Development of Underdeveloped Countries—International Flow of Long-Term Capital and Official Donations, 1959–61, UN Doc. A/5195 (1962); Root, , The Expropriation Experience of American Companies, Bus. Horizons, April 1968, at 69Google Scholar.

126 An indication of the kinds of benefits that could be lost beyond the purely investment sector is suggested in Erb, , The Developing World’s “Challenge” in Perspective, in Beyond dependency, supra note 99, at 135Google Scholar, 149:

For the developing countries, the costs of intensification of their confrontation with the developed world could include:

  • (a) Defensive commodity stockpiling by individual industrialized countries or groups of these countries;

  • (b) A drawing inward and a further withdrawal from the family of United Nations institutions by developed countries;

  • (c) A hardening of the rich-country approach toward trade negotiations with the developing nations, both in the multilateral negotiations in Geneva and with regard to primary commodities;

  • (d) Greater support for protectionist policies in developed countries, and, consequently, more frequent use of such mechanisms as counter-vailing duties (applied against subsidized foreign exports) and requests for “voluntary” restrictions on developing-country exports of certain “sensitive” products; and

  • (e) A decline in bilateral development assistance programs and a cutback in support for the leading programs of international financial institutions.

127 See Bergsten, , Panel Discussion on the New International Economic Order, in The New International Economic Order, supra note 3, at 347Google Scholar, 347–48.

128 Helleiner, supra note 98, at 297.

129 Id., at 298.

130 For an insightful essay on dissociative strategies of development, see C. Díaz-Alejandro, Delinking North and South: Unshackled or Unhinged?, in Fishlow, A., Diaz-Alejandro, C., Fagen, R., & Hansen, R., Rich and Poor Nations in the World Economy 85 (1978)Google Scholar.

131 See text preceding and following note 139 infra.

132 A notable exception is American economist Martin Bronfenbrenner who has sought to demonstrate through arithmetic models that the “confiscation” of private foreign wealth (i.e., without compensation) in “reasonably representative” underdeveloped economies can significantly accelerate economic development “by shifting income to developmental investment from capitalists’ consumption, from transfer abroad, and from unproductive ‘investment’ like luxury housing.” The Appeal of Confiscation in Economic Development, 3 Econ. Dev. & Cultural Change 201 (1955).

133 On some of the moral implications of anthropomorphizing juridical/political entities, see Mazrui, supra note 3, at 372–73.

134 Apter, , Charters, Cartels, and Multinationals—Some Colonial and Imperial Questions, in The Multinational Corporation and Social Change, supra note 106, at 1Google Scholar, 24 (footnote omitted).

135 See, e.g., Garnick, , “The Appeal of Confiscation” Reconsidered: A Gaming Approach to Foreign Economic Policy, 11 Econ. Dev. & Cultural Change 353 (1963)CrossRefGoogle Scholar, a reply to Bronfenbrenner, note 132 supra. See also Bronfenbrenner’s reply to Garnick, : Second Thoughts on Confiscation, 11 Econ. Dev. & Cultural Change 367 (1963)Google Scholar.

138 “We . . . find in the concept of permanent sovereignty over resources a principle which is, so to speak, conservative in its stress on sovereign rights (based on historic acquisition) yet utilized by poor countries as a weapon of change.” O. Schachter, supra note 62, at 21.

137 Bhagwaci, Introduction, in The New International Economic Order, supra note 3, at 1, 2–3. The author summarizes the opposing traditional view as follows:

The ideology that has traditionally been dominant is aptly characterized as that of “benign neglect”—links with the rich nations create benefits for the poor nations. This view of the world economy parallels the utilitarian economists’ view that the invisible hand works to promote universal well-being. In this model, the laissez-faire view that private greed will produce public good translates on the international scene into the notion that, while the different actors in the world economy pursue their own interests, the result will nonetheless be to benefit the developing countries. Thus, while multinational corporations invest in these countries to make profits, they will increase these countries’ incomes, diffuse technology, and harness their domestic savings. The exchange of commodities and services in trade will reflect the principle of division of labor and hence bring gains from trade to these countries. The migration of skilled labor, instead of constituting a troublesome brain drain, will help to remove impediments to progress such as inadequate remuneration of the educated elite.

Id. at 2.

For a fictional rendering opposed to the “benign neglect” school and supportive of the “malign neglect” point of view, see A. Huxley, Island (1962), especially at 80–81:

“How on earth were you able to choose?” Will asked.

“The right people were intelligent at the right moment,” said Ranga. “But it must be admitted—they were also very lucky. In fact Pala as a whole has been extraordinarily lucky. It’s had the luck, first of all, never to have been anyone’s colony. Rendang has a magnificent harbor. That brought them an Arab invasion in the Middle Ages. We have no harbor, so the Arabs left us alone and we’re still Buddhists or Shivaites—that is, when we’re not Tantrik agnostics.”

“Is that what you are?” Will enquired. “A Tantrik agnostic?”

“With Mahayana trimmings,” Ranga qualified. “Well, to return to Rendang. After the Arabs it got the Portuguese. We didn’t. No harbor, no Portuguese. Therefore no Catholic minority, no blasphemous nonsense about its being God’s will that people should breed themselves into subhuman misery, no organized resistance to birth control. And that isn’t our only blessing: After a hundred and twenty years of the Portuguese, Ceylon and Rendang got the Dutch. And after the Dutch came the English. We escaped both those infestations. No Dutch, no English, and therefore no planters, no coolie labor, no cash crops for export, no systematic exhaustion of our soil. Also no whisky, no Calvinism, no syphilis, no foreign administrators. We were left to go our own way and take responsibility for our own affairs.”

“You certainly were lucky.”

138 For historical evidence of such a possibility as a propensity in U.S. foreign policy, see Lafeber, , Empire Begins at Home, The Nation, June 9, 1979, at 656Google Scholar. See also Lafeber, W., The New Empire (1963)Google Scholar.

139 See Herrera, A., et al., Catastrophe or New Society? A Latin American World Model (Ottawa: International Development Research Centre, 1976)Google Scholar; Morris, M., Measuring the Condition of The World’s Poor—The Physical Quality of Life Index (1979)Google Scholar. In both studies, the authors reject GNP economics as the sole or even most important way to measure economic progress and human welfare.

140 As noted earlier, I have attempted (with the help of colleagues) a preliminary foray in this direction already. See notes 35 & 111 supra. Much more needs to be done, however.

141 On the two-way character of “duress” and “fraud,” see Vagts, supra note 84, at 33.

142 See UN Commission on Transnational Corporations, Transnational Corporations: Material Relevant to the Formulation of a Code of Conduct, UN Doc. E/C.10/18, at 80–81, 94 (1977).

143 Tinbergen, J., et al., Reshaping the International Order—A Report to the Club of Rome 63 (1976)Google Scholar.

144 See note 142 supra.

145 See Bergin, , The Compensation Rule: An Imaginary Debate, in 2 The Valuation of Nationalized Property, supra note 82, at 3Google Scholar.