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Interpretation by Public International Organizations of their Basic Instruments*

Published online by Cambridge University Press:  28 March 2017

Ervin P. Hexner
Ervin P. Hexner*
Affiliation:
Pennsylvania State University
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Extract

The operation of public international organizations and the development of that sector of substantive international law which such organizations administer require that an effective mechanism exist for the authoritative interpretation of their basic instruments.

Type
Research Article
Information
American Journal of International Law , Volume 53 , Issue 2 , April 1959 , pp. 341 - 370
Copyright
Copyright © American Society of International Law 1959

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Footnotes

*

The article reflects the personal views of the author.

References

1 See C. Wilfred Jenks, ‘ ‘ The Status of International Organizations in Relation to the International Court of Justice,” Problems of Public and Private International Law, 32 Grotius Society Transactions (1946) 1-41 (London, 1947); and Pollux, “The Interpretation of the Charter,” 23 Brit. Year Bk. of Int. Law 54 ff. (1946).

2 During the San Francisco Conference this question was considered from various aspects and it was decided not to include a provision on authoritative interpretation in the Charter. Doc. 750, IV/2/B/1 , of June 2, 1945, on the Interpretation of the Charter, reprinted in U.N. General Assembly, 2nd Sess., Official Records, Vol. II , pp. 1563-1564. See also Leland Goodrich and Edvard Hambro, Charter of the United Nations 547 ff. (Boston, 1949).

3 In a resolution of Nov. 14, 1947 (No. 171-III), the General Assembly decided that: “Considering: that it is a responsibility of the United Nations to encourage the progressive development of international law; Considering: that it is of paramount importance that the interpretation of the Charter of the United Nations and the constitutions of the specialized agencies should be based on recognized principles of international law; Considering: that the International Court of Justice is the principal judicial organ of the United Nations; Considering: that it is also of paramount importance that the Court should be utilized to the greatest practicable extent in the progressive development of international law, both in regard to legal issues between States and in regard to constitutional interpretation, Recommends: that organs of the United Nations and the specialized agencies should, from time to time, review the difficult and important points of law within the jurisdiction of the International Court of Justice which have arisen in the course of their activities and involve questions of principle which it is desirable to have settled, including points of law relating to the interpretation of the Charter of the United Nations or the constitutions of the specialized agencies, and, if duly authorized according to Article 96, paragraph 2, of the Charter, should refer them to the International Court of Justice for an advisory opinion.''

4 Hereinafter the International Monetary Fund will be referred to as “the Fund” or “ I M F , “ the International Bank for Reconstruction and Development as “the Bank” or “IBBD,” and the International Finance Corporation as “ IFC . “ Their basic instruments will be referred to as Fund Agreement, Bank Agreement, and IFC Agreement, respectively.

5 Under certain circumstances, members, the holdings of whose currencies by the Fund have, on the average over the preceding two years, been reduced below their quotas, are entitled to appoint an executive director in the Fund. An executive director was appointed under this title for the first time beginning Nov. 1, 1958 (Art. XII, Sec. 3(c) of the Fund Agreement), by Canada.

6 Sec. 12 of the U. 8. Bretton Woods Agreement Act reads: ‘ ‘ The governor and executive director of the Bank appointed by the United States .ire hereby directed to obtain promptly an official interpretation by the Bank as to its authority to make or guarantee loans for programs of economic reconstruction and the reconstruction of monetary systems, including long-term stabilization loans. If the Bonk does not interpret its powers to include the making or guaranteeing of such loans, the governor of the Bank representing the United States is hereby directed to propose promptly and support an amendment to the Articles of Agreement for the purpose of explicitly authorizing the Bank, after consultation with the Fund, to make or guarantee such loans. The President is hereby authorized and directed to accept an amendment to that effect on behalf of the United States.“

7 Sec. 13 of the U. S. Bretton Woods Agreement Act is as follows: “ (a) The governor and executive director of the Fund appointed by the United States are hereby directed to obtain promptly an official interpretation by the Fund as to whether its authority to use its resources extends beyond current monetary stabilization operations to afford temporary assistance to members in connection with seasonal, cyclical, and emergency fluctuations in the balance of payments of any member for current transactions, and whether it has authority to use its resources to provide facilities for relief, reconstruction, or armaments, or to meet a large or sustained outflow of capital on the part of any member. “ (b) If the interpretation by the Fund answers in the affirmative any of the questions stated in subsection (a), the governor of the Fund representing the United States is hereby directed to propose promptly and support an amendment to the Articles of Agreement for the purpose of expressly negativing such interpretation. The President is hereby authorized and directed to accept an amendment to that effect on behalf of the United States.“

8 See Elizabeth Mclntyre, “Weighted Voting in International Organizations,” 8 Int. Organization 484 ff. (1954), and Stanley D. Metzger, “Settlement of International Disputes by Non-Judicial Methods,” 48 A.J.I.L. 408 ff. (1954). See also suggestions for an interesting form of a weighted voting system in the V.N. General Assembly in Grenville Clark and Louis B. Sohn, World Peace through World Law passim (Cambridge, Mass., 1958). Literature on the weighted voting system is listed in Louis B. Sohn, Cases on United Nations Law 221 (Brooklyn, 1956).

9 See Sec. 23 of the By-Laws of the Fund and Sec. 22 of the By-Laws of the Bank. Art. VIII, subpar. (c), of the IFC Agreement contains a provision to the same effect.

10 The relevant provisions are as follows: Art. IX, Sec. 3, of Fund Agreement: “Immunity from judicial process. The Fund, its property and its assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that it expressly waives its immunity for the purpose of any proceedings or by the terms of any contract.” Art. VII, Sec. 3, of Bank Agreement: “Position of the Bank with regard to judicial process. Actions may be brought against the Bank only in a court of competent jurisdiction in the territories of a member in which the Bank has an office, has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities. No actions shall, however, be brought by members or persona acting for or deriving claims from members. The property and assets of the Bank shall, wheresoever located and by whomsoever held, be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Bank.” Art. VI, Sec. 3, of the IFC Agreement is in substance identical with the provision of Art. VII, Sec. 3, of the Bank Agreement.

11 See resolutions of the General Assembly of Nov. 15, 1947, A/349 and A/519, and resolution of Feb. 20, 1957, A/3529, Rev. 1. The authority to ask advisory opinions is incorporated in the agreement of the Fund and Bank on their relationship with the TJ.N. The relationship between the U.N. and the IFC is governed by the Agreement of the Bank with the U.N.

12 Sec. 32 of the Convention on Privileges and Immunities of Specialized Agencies (Ees. A, 179/11), adopted by the U.N. General Assembly on Nov. 21, 1947, deals with the settling of controversies arising out of the interpretation and application of the Convention by requesting an advisory opinion from the International Court of Justice. In Annexes dealing with special problems of the Fund and Bank, the provision of Sec. 32 is strongly qualified. These Annexes make it explicit that the only controversies submitted to the I.C.J, would be those which relate to a small fragment of immunities and privileges derived exclusively from the Convention and not to the main body of immunities and privileges derived from the Articles of Agreement.

13 Art. XII, Sec. 2(b), of the Fund Agreement specifies that the Board of Governors may not delegate to the Executive Directors the power to ‘ ‘ decide appeals from interpretations of this agreement given by the Executive Directors.'’ But the provision does not prescribe that the Executive Directors should not interpret those provisions of the Agreement which deal with the jurisdiction and procedure of the Board of Governors. One could argue that this limitation seems to be implicit in the structure of the Fund.

14 Art. XV, Sec. 1, reads as follows: “Bight of members to withdraw. Any member may withdraw from the Fund at any time by transmitting a notice in writing to the Fund at its principal office. Withdrawal shall become effective on the date such notice is received.“

15 Proceedings and Documents of the U.N. Monetary and Financial Conference, Doc, 255, Vol. I, p. 428 (U. S. Dept. of State Publication No. 2866, Washington, 1948).

16 The last sentence of this article reads as follows: ‘ ‘ The Fund shall be guided in all its decisions by the purposes set forth in this Article.“

17 The Agreements of the Bank and the IFC do not contain an equivalent provision on “Explanation of Terms.“

18 [1952] I.O.J. Eep. 176; digested in 47 A.J.I.L. 136 (1953).

19 The decision contains the following statement: ‘ ‘ The Government of France has submitted various contentions purporting to demonstrate the legality of exchange control. The Court does not consider it necessary to pronounce upon these contentions. Even assuming the legality of exchange control, the fact nevertheless remains that the measures applied by virtue of the Decree of December 30, 1948, have involved a discrimination in favour of imports from France and other parts of the French Union. This discrimination cannot be justified by considerations relating to exchange control.” [1952] I.C.J. Rep. 186. An interesting aspect which might be considered in regard to this statement is the question whether or not France was authorized to institute and adapt (at that time) discriminatory exchange restrictions on imports under Art. XIV, Sec. 2, of the Fund Agreement.

20 2 I.C.J. Pleadings 200.

21 Ibid., 261.

22 Ibid,. 308-309.

23 Art. XV, Sec. 2(a) and (b), of the Fund Agreement reads as follows: “Compulsory withdrawal, (a) If a member fails to fulfill any of its obligations under this Agreement, the Fund may declare the member ineligible to use the resources of the Fund. Nothing in this Section shall be deemed to limit the provisions of Article IV, Section 6, Article V, Section 5, or Article VI, Section 1. “ (b) If, after the expiration of a reasonable period the member persists in its failure to fulfill any of its obligations under this Agreement, or a difference between a member and the Fund under Article IV, Section 6, continues, that member may be required to withdraw from membership in the Fund by a decision of the Board of Governors carried by a majority of the governors representing a majority of the total voting power.''

24 Under Art. XX, Sec. 2(a), of the Fund Agreement, members undertake to accept the Agreement in accordance with their law and to take all steps necessary to enable their governments to carry out all their obligations under the Agreement.

25 Art. 5 of the German Statute of July 28, 1952, concerning adherence of Germany to the Fund and Bank, contains the following provision: “The two Agreements mentioned in Article I [Fund and Bank] are published below with the force of law.“

26 See Meyer, Bernard S., “Recognition of Exchange Controls after the International Monetary Fund Agreement,” 62 Yale Law Journal 883-885 (1953)Google Scholar; Gold, Joseph, ‘ ‘ The Interpretation by the International Monetary Fund of its Articles of Agreement,'’ 3 Int. and Comp. Law Q. 256-276 (1954).CrossRefGoogle Scholar

27 The International Bank for Reconstruction and Development and the International Monetary Fund, Complainants, v. All America Cables and Radio, Inc., The Commercial Cable Company, Mackay Radio and Telegraph Company, Inc., BCA Communications, Inc., The Western Union Telegraph Company, Defendants, Docket No. 9362, FCC 53-306.

28 The interpretative decision is reproduced below.

29 Art. IX, Sec. 7, of the Fund Agreement, and Art. VII, Sec. 7, of the Bank Agreement read as follows: “The official communications of the Fund [Bank] shall be accorded by members the same treatment as the official communications of other members.“

30 E.g., the “conclusions” on capital controls, rendered on July 25, 1956, and published in the Fund's Annual Report 1957, do not contain such reference. Their nature as an interpretative decision may be assumed from its material content and from the reference to the conclusions in the Annual Report (p. 127) which reads as follows: ‘’ 1st year the Board undertook a discussion of certain problems connected with capital controls, and in this connection considered the interpretation of Article VI, Section 3, of the Fund's Articles of Agreement. While no policy decision on the Fund's position to capital movements was formulated, it was concluded that under the Articles of Agreement members are free to regulate capital movements for any reason, due regard being paid to other related provisions of the Fund Agreement, and members may exercise such controls as are necessary for this purpose, including the making of arrangements with other members, without prior Fund approval. The conclusions adopted are contained in Appendix VII . “ (Emphasis supplied.)

31 List of Fund Decisions and their publication: 1. Term of appointed executive directors (Interpretation of the provisions of Art. XII, Sec. 3(b) (i) and 3 (f)) . Executive Board Decision of May 8, 1946, No. 2-1. Published in First Annual Meeting of the Board of Governors, Report of the Executive Directors and Summary Proceedings, 1946, p . 107. -. Changes of par value in connection with threatening unemployment (Interpretation applies to Art. I, subpars. (ii) and (v) and to Art. IV, Sec. 5 (f)) . Executive Board Decision of Sept. 26, 1946, No. 71-2. Published op. cit. 105-106. 3. Use of Fund resources limited to temporary assistance (No reference to specified provisions, interpretation applies presumably to Art. V, Sec. 3, and Art. XIV, Sec. 1). Executive Board Decision of Sept. 26, 1946, No. 71-2. Published op. cit. 106. 4. Unenforceability of certain exchange contracts (Interpretation of Art. VIII, Sec. 2 (b)) . Executive Board Decision of June 10, 1949, No. 446-4. Published in Annual Report for 1949, pp. 82-83. 5. Privileged treatment of Fund communications (Interpretation of Art. IX, See. 7). Executive Board Decision of Feb. 20, 1950, No. 534-3. Published in Annual Report for 1950, pp. 118-119. 6. Conditions for compulsory withdrawal of a member (Interpretation of Art. XV, Sec. 2). Executive Board Decision of Aug. 11, 1954, No. 344 (54/47) and confirming Decision of Board of Governors of Sept. 28, 1954, Ees. No. 9-7. Published in Summary Proceedings of the Board of Governors’ Meeting 1954, pp. 112-113. 7. Extent of drawing rights (Interpretation of Art. V, Sec. 3 (a) (iii)) . Executive Board Decision of Aug. 24, 1955, No. 451 (55/52). Published in Annual Eeport for 1956, p . 135. 8. Investment of Fund Assets (Interpretation of Art. IV, Sec. 8(a), and of other provisions of the Agreement not specified). Executive Board Decision of Jan. 25, 1956, No. 488(56/5). Published in Annual Report for 1956, pp. 147-148. 9. Controls on Capital Transfers (Interpretation of Art. VI, Sec. 3). Executive Board Decision of July 25, 1956, No. 541 (56/39). Published in Annual Report for 1957, p. 162.

32 The relevant parts of the interpreted provisions of the Fund Agreement are the following: Art. XII, Sec. 3(b)(1): “ ( b ) There shall not be less than twelve directors who need not be governors, and of whom (i) five shall be appointed by the five members having the largest quotas; … “ Art. XII, Sec. 3(f): “Directors shall continue in office until their successors are appointed or elected … “

33 The relevant part of Art. IV, Sec. 5(f), reads: “The Fund shall concur in a proposed change [of the par value] which is within the terms of (c) (ii) or (c) (iii) above if it is satisfied that the change is necessary to correct a fundamental disequilibrium. In particular, provided it is so satisfied, it shall not object to a proposed change because of the domestic social or political policies of the member proposing the change.'’ Items (ii) and (v) of Art. I read: ‘ ‘ The purposes of the International Monetary Fund are: ‘ ‘ (ii) To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy. “ (v) To give confidence to members by making the Fund's resources available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.''

34 See footnote 7 above.

35 The provision of Art. IX, See. 7, is quoted in footnote 29.

36 The procedure before the Federal Communications Commission is discussed above in Part V of this study.

37 For text of Art. XV, Sec. 2, see note 23 above.

38 Art. VI, Sec. 3, follows: “Controls of capital transfers. Members may exercise such, controls as are necessary to regulate international capital movements, but no member may exercise these controls in a manner which will restrict payments for current transactions or which will unduly delay transfers of funds in settlement of commitments, except as provided in Article VII, Section 3(b), and in Article XIV, Section 2 .“

39 The decisions are contained in a pamphlet issued under the date July 12, 1954, Decisions of Executive Directors under Article IX of the Articles of Agreement on Questions of Interpretation of the Articles of Agreement. Several decisions were transmitted to the Board of Governors for their information ;^e.g., the Decisions of May 23, 1950, and June 14, 1951, are contained in pp. 42-43 of the Summary Proceedings of the Sixth Annual Meeting, Sept. 10-14, 1951, of the Bank. No formal interpretation has been issued by the Bank since June 14, 1951.

40 The ten interpretative decisions are listed below: 1. Bight of the five largest subscribers to appoint an Executive Director without prejudice to the right of a subsequently admitted member to appoint a Director if it has one of the five largest subscriptions. Interpretation of Art. V, Sec. 4(b) (i) and 4(d), of May 9, 1946. 2. Power of the United States to control the use of United States dollars paid to the Bank in lieu of gold pursuant to Article II, Section 7 (i). Interpretation of Art. IV, Sec. 2 (a), of June 20, 1946. 3. Authority of the Bank to make or guarantee loans for programs of Economic Reconstruction and the Reconstruction of Monetary Systems, including long-term stabilization loans. Interpretation of the Articles of Agreement, of Sept. 20, 1946. 4. Calls on the 80% of capital subscriptions of members subject to call only to meet obligations of Bank. Interpretation of Art. IV, Sec. 1(a) (ii) and (iii), of April 2, 1947. 5. Use of currencies received by Bank on account of principal of loans made out of borrowed funds. Interpretation of Art. IV, Sec. 2(c), of June 18, 1947. 6. Maintenance of value of certain currency holdings of the Bank. Interpretation of Art. II, Sec. 9(a), of April 28, 1948. 7. Guarantees. Interpretation of Art. IV, Sec. 5(c), of July 8, 1948. 8. Privilege for communication. Interpretation of Art. VII, Sec. 7, of Feb. 17, 1950. 9. Maintenance of value of 18% currencies loaned by the Bank. Interpretation of Art. II, Sec. 9(a) and (b), of May 23, 1950. 10. Portfolio Sales. Interpretation of Art. II, Sec. 9 and Art. IV, Sec. 2(b), of June 14, 1951. The introductory sentence of the decision of July 8, 1948, listed under No. 7, is here reproduced to indicate the content of that decision. It reads: “WHEREAS the Bank is considering a possible sale of securities in which it will have invested and, in order to facilitate their sale, the Bank proposes to guarantee such securities in accordance with the provisions of Section 8 of Article IV of the Articles of Agreement of the Bank, and a question has arisen with regard to the interpretation of the provisions of said Articles relating to guarantees by the Bank.“

41 The desirability of establishing institutional arrangements to that effect is considered in a resolution of the Institute of International Law adopted at its Session at Amsterdam, Sept. 25, 1957, recommending the institution of “Judicial Redress against the Decisions of International Organs.” 47 Annuaire de l'Institut de Droit International 488 (Tome II, 1957); 52 A.J.I.L. 105-106 (1958). The characteristics of an independent and “truly judicial organ” are considered in the Advisory Opinion of the I.C.J., Effect of Awards of Compensation Made by the TJ.N. Administrative Tribunal, [1954] I.C.J. Rep. 47.

42 P.C.I.J., Series B, No. 12 (1925).

43 The Development of International Law by the International Court 160-161 (London, 1958).

44 See especially Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals 297 ff. (London, 1953).

45 When discussing the draft regulations for the establishment of an International Court of Arbitral Justice, the existence of this principle as a general rule of law was confirmed and emphasized especially by the IT. S. and British representatives. The Report on the Proceedings contains the following statement: “ It is familiar doctrine that a man should not be judge and advocate in his own case and this provision obtains in all systems of national jurisprudence.” 1 Proceedings of the Hague Peace Conference, Ninth Meeting (October 16, 1907), Annexes, p. 362 (Translation of the Official Texts) (New York, 1920).

46 The question whether international public law contains provisions of a mandatory nature at all or whether it comprises only provisions of the nature of jus dispositivum (optional law, naehgiebiges Becht) which applies only in the absence of treaty law, is unsettled. Paul Guggenheim (Traité de Droit international public (Geneva, 1953), Vol. 1, p. 57) is of the opinion that international public law does not contain any provisions of a mandatory nature. There do not exist, in his opinion, limitations on the substantive content of international agreements. Guggenheim recognizes, however, that customary international law (in questions in which treaty law does not apply) is binding upon a state whether or not that state consents (p. 49). Alfred Verdross (Völkerrecht (3rd ed., Vienna, 1955), pp. 77-79) deals with the problem of jus cogens. In his opinion the prevailing majority of the provisions of international law comprise jus dispositivwm (nachgiebiges Becht). However, he specifies a number of provisions of international law (e.g., on the freedom of the high seas, on the principle of good faith in international intercourse, on the status of states) which have the nature of mandatory law (jus cogens). According to E. de Vattel, Le Droit des Gens (Introduction), that section of the law of nations which is derived from natural law constitutes the “necessary” law of nations and nations are bound to observe it. “Since this law is not subject to change and the obligations which it imposes are necessary and indispensable, nations cannot alter it by agreement, nor individually or mutually release themselves from i t . “ (Quoted by Hans Kelsen, Principles of International Law 344 (New York, 1952). See also Georg Schwarzenberger, International Law 352-353, 485-486, et passim (3rd ed., London, 1957).