International Organizations Before National Courts Part 4 pot

state doctrine seems to be limited to ‘state’ acts,276 there is some author￾ity in the case law that acts of international organizations could also

trigger its application.

In International Tin Council v. Amalgamet Inc.,277 a US follow-up to the Tin

Council litigation in England, a New York court had to deal with, inter

alia, the issue of act of state as a potential bar to arbitration. The ITC had

moved to stay arbitration proceedings in New York brought against it by

Amalgamet Inc. for not honouring contractual liabilities. The ITC argued

that since it enjoyed immunity from legal process it should not be

amenable to arbitral proceedings as well and, in the alternative, that the

issue involved amounted to something like an act of state which could

not form the subject of arbitral scrutiny. It is interesting that the court

held the act of state argument inapplicable because it could not find any

exercise of ‘sovereign’ functions in the entering into contracts for the

purchase of tin. Thus, it must have at least implicitly thought that an

international organization could act in a sovereign fashion over which

domestic courts would have to refrain from sitting in judgment. In a

short case note the decision was criticized for using an act of state test at

all, because this doctrine was considered inapplicable for the simple

reason that the ITC was not a foreign state.278 While this assessment

appears convincing on its face, the underlying rationale asking whether

there might be something comparable, like an ‘act of the international

organization’, is worth discussing. The court’s language – reasoning that

the doctrine ‘is involved where the dispute is intrinsically involved with

some sovereign function of a foreign entity so that political as well as

purely private commercial issues are implicated’279 – already suggests

that a modification of the act of state doctrine could gain wider applica￾bility.

The International Association of Machinists v. OPEC court also relied upon

the act of state doctrine. Technically, however, it did not apply it to OPEC,

but rather to the collective acts of its member states. Still, this case seems

to show that the act of state doctrine may be applicable to acts of

international organizations. In International Association of Machinists v.

OPEC280 a US labour union brought suit against OPEC and its individual

276 Cf. Steven R. Ratner, ‘Sovereign Immunity – International Organizations – Act of State

Doctrine – Recognition of Foreign Laws – Arbitration Clauses, International Tin Council

v. Amalgamet Inc. . . .’ (1988) 82 American Journal of International Law 837–40 at 839. 277 New York County, Supreme Court, 25 January 1988. 278 Ratner, ‘Sovereign Immunity’, 839. 279 524 NYS 2d 971 at 974 (1988). 280 US District Court CD Cal., 18 September 1979, affirmed on other grounds, US Court of

Appeals 9th Cir., 6 July–24 August 1981.

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member states in US courts asking for damages and injunctive relief for

alleged price-fixing of crude oil prices in violation of US antitrust law. As

far as the case against the organization itself was concerned, the courts

did not hesitate to dismiss the plaintiff’s suit because OPEC was not and

could not legally be served in the US – either under the IOIA or under the

FSIA.281 As far as the other defendants named in the claim were con￾cerned, the courts differed in their reasoning for dismissing the suit.

While the court of first instance based its dismissal on sovereign immun￾ity reasons282 and on antitrust law requirements which have not been

met,283 the appellate court embarked on an interesting act of state

analysis which led it to abstain from adjudicating the dispute. Although,

technically, the circuit court did not have to address the issue of OPEC’s

amenability to suit in the US courts (because it affirmed the district

court’s dismissal on grounds of lack of service of process), its discussion of

the act of state doctrine is so broad and sometimes indeterminate that it

seems to apply as well to international organizations. While the court

clearly saw that the remedy sought was an ‘injunction against the OPEC

nations’,284 it frequently referred to the organization in its legal analysis,

noting that ‘OPEC’s price fixing activity has a significant sovereign com￾ponent’,285 contemplating the possibility that ‘the court [could] hold that

OPEC’s actions are legal’,286 and at some point speaking of the ‘injunction

against OPEC’s alleged price-fixing activity’.287 The Court of Appeals did

not explicitly affirm the lower court’s decision to qualify the price-fixing

activity within OPEC as ‘sovereign’ and thus requiring immunity for its

281 477 F. Supp 553 at 560 (CD Cal. 1979). Although the dismissal was justified on the

technical ground of the lack of a possibility of serving the organization with process, this

came close to a de-recognition of foreign international organizations. Cf. p. 70 above. 282 It qualified the setting of crude oil prices as a governmental, as opposed to a commercial,

activity. The court noted that ‘the nature of the activity engaged in by each of these OPEC

member countries is the establishment by a sovereign state of the terms and conditions

for the removal of a prime natural resource – to wit, crude oil – from its territory’. 477 F.

Supp 553 at 567 (CD Cal. 1979). It went on to regard the ‘defendants’ control over their oil

resources [as] an especially sovereign function because oil, as their primary, if not sole,

revenue-producing resource, is crucial to the welfare of their nations’ peoples’. It

rejected the plaintiffs’ assertion that the ‘actions of the OPEC nations in coming to￾gether to conspire to fix prices is commercial and, thus, not immune’ with the following

words: ‘It is ridiculous to suggest that the essentially governmental nature of an activity

changes merely by the act of two or more countries coming together to agree upon how

they will carry out that activity.’ 477 F. Supp. 553 at 569 (CD Cal. 1979). 283 The court held that foreign states were not persons amenable to suit under US anti-trust

law (477 F. Supp. 553 at 572) and that indirect purchasers, like plaintiffs, could not seek

damages (477 F. Supp. 553 at 574). 284 649 F. 2d 1354 at 1361 (9th Cir. 1981). 285 Ibid., 1360. 286 Ibid., 1361. 287 Ibid.

avoidance techniques 91

participants. That it probably had some doubts about this qualification is

evidenced by its differentiation between activities triggering act of state

considerations and activities leading to sovereign immunity. The court in

effect suggested that a broader range of activities might give rise to act of

state concerns than to sovereign immunity.288 Applying the act of state

doctrine, the court ultimately held that it did ‘not compel dismissal as a

matter of course’, but that ‘dismissal [was] appropriate’.289 The court

arrived at this conclusion not merely by qualifying the price-fixing activ￾ity of OPEC as an act of state, but rather by following a balancing

approach suggested in the Sabbatino case290 which looks at the content of

the specific act of state in question. It held that the issuance of the

injunction against the OPEC countries sought would not only insult the

OPEC nations, but thereby also interfere with foreign relations efforts of

the US political branches of the highest importance. The court further

thought that in an area ‘so void of international consensus’ regarding the

condemnation of cartels, royalties and production agreements, judicial

interference should be allowed only reluctantly.291 It thus affirmed the

district court’s dismissal of the suit.

Political questions doctrine

A ‘political questions’ doctrine – as most vigorously applied by the US

courts – may also serve as a tool to abstain from deciding cases involving

international organizations before national courts. Although developed

in the context of executive determinations on the recognition of states

and related issues concerning territorial sovereignty, of presidential deci￾sions to engage in hostilities, of executive declarations on sovereign

immunity to be accorded or denied to foreign states, etc.,292 there is no

reason why it could not be applied to disputes involving international

organizations.293

The difficulty rather lies in determining the political element. What

constitutes a ‘political question’ is almost as difficult to define as to

define what constitutes an act of state. At the national level the leading

288 See pp. 87f above. 289 649 F. 2d 1354 at 1361 (9th Cir. 1981). 290 There the Supreme Court stated that ‘the less important the implications of an issue are

for our foreign relations, the weaker the justification for exclusivity in the political

branches’. Banco Nacional de Cuba v. Sabbatino, 376 US 398 at 428 (1964). 291 649 F. 2d 1354 at 1361 (9th Cir. 1981). 292 Cf. Restatement (Third), § 1, Reporters’ Note 4. 293 Given the rationales put forward in the OPEC case (cf. pp. 90ff above), it almost seems that

it was rather political questions than act of state that had been applied; this can also be

deduced from the result reached in the OPEC case which led to a denial of jurisdiction,

not to a validation of OPEC’s activities.

92 descriptive analysis

case is Baker v. Carr294 where the US Supreme Court enumerated an

illustrative list of aspects involving political questions, including:

a textually demonstrable constitutional commitment of the issue to a coordinate

political department; or a lack of judicially discoverable and manageable stan￾dards for resolving it; or the impossibility of deciding without an initial policy

determination of a kind clearly for nonjudicial discretion; or the impossibility of

a court’s undertaking independent resolution without expressing lack of the

respect due coordinate branches of government; or an unusual need for unques￾tioning adherence to a political decision already made; or the potentiality of

embarrassment from multifarious pronouncements by various departments on

one question.295

As with the act of state doctrine the legal effect of the application of the

political questions doctrine is not free from ambiguity.296 While some

cases seem to lead to judicial abstention by denying the courts’ jurisdic￾tion to adjudicate,297 others rather hint towards judicial abstention by

generally upholding political decisions.298

Court decisions using a political questions doctrine

A political questions rationale as a reason to deny their adjudicative

power over disputes involving international organizations is rarely used

by domestic courts. However, in some cases involving international or￾ganizations, such a reasoning was accepted in order to justify the courts’

adherence to immunity decisions made by the executive. This clearly

followed the practice in the context of sovereign immunity determina￾tions. For decades it was the executive branch which determined whether

the immunity claimed by a foreign state should be respected or not.299 If

the determination was in the negative, the dispute would be judicially

294 369 US 186 (1962). 295 Baker v. Carr, 369 US 186 at 217 (1962). 296 Restatement (Third), § 1, Reporters’ Note 4; Henkin, Foreign Affairs, 146. 297 In Oetjen v. Central Leather Co., 246 US 297 at 302 (1918), the Supreme Court held that ‘[t]he

conduct of the foreign relations of our Government is committed by the Constitution to

the Executive and Legislative – the ‘‘political’’ – Departments of the Government, and

the propriety of what may be done in the exercise of this political power is not subject to

judicial inquiry or decision’. 298 Classical examples are cases where the recognition of foreign states and governments is

considered binding on courts. E.g., Jones v. United States, 137 US 202 at 212 (1890): ‘Who is

the sovereign, de jure or de facto, of a territory is not a judicial, but a political question, the

determination of which by the legislative and executive departments of any government

conclusively binds the judges.’ 299 Cf. Restatement (Third), 392, Introductory Note to § 451. There is a general trend, however,

towards a free evaluation of immunity issues by the courts themselves. See p. 129 below.

avoidance techniques 93

resolved. The rationale for the traditional view to defer to the executive’s

opinion corresponded exactly to a kind of political questions doctrine.300

This practice also illustrates that the non-justiciability of certain issues

need not necessarily lead to the ousting of certain disputes from judicial

settlement.

In the Curran case,301 the court saw the ‘wisdom of the rule’ (that the

State Department finally and binding for the courts decided on the

immunity of states and international organizations before domestic

courts) in leaving to the executive branch ‘delicate questions pertaining

to the foreign policy of the United States’.302 Curran, however, could also

be viewed as an example of an emerging jurisprudence of avoiding the

adjudication of certain disputes properly considered as political. In the

court’s view these disputes ‘should be addressed to the political branch of

the government not the judicial’.303 Another rare case involving – at least

indirectly – an international organization that was decided on a political

questions rationale is Soucheray et al. v. Corps of Engineers of the United States

Army et al.

304 There a US court denied the relief requested, inter alia, on

grounds of non-justiciability because – in its view – the heart of the

matter was a political, foreign policy issue. The plaintiffs had claimed

damages for inundation resulting from the International Joint Commis￾sion’s regulation of water levels of Lake Superior. They had not directed

their suit against the Commission itself, a US–Canadian bilateral institu￾tion, enjoying privileges and immunities like an international organiz￾ation, but rather against the US member of the Board of Control, an organ

of the Commission, and against other US defendants claiming that the US

was responsible for the Commission’s activities. The court still felt that

granting the relief sought would in effect infringe upon the tasks of the

Commission. It held that:

questions regarding the Commission’s regulation of the boundary waters under

the Treaty of 1909 may not be appropriate for judicial resolution. These questions

contain issues of foreign relations, for which the Constitution gives Congress and

the Executive primary responsibility.305

300 See also Ex parte Republic of Peru, 318 US 578 at 588–9 (1943), where the Supreme Court

held that executive ‘suggestions of immunity’ ‘must be accepted by the courts as a

conclusive determination by the political arm of the government’ and that adjudication

would ‘interfere with the proper conduct of our foreign relations’. 301 Curran v. City of New York et al, Supreme Court, Special Term, Queens County, 29 Decem￾ber 1947. 302 77 NYS 2d 206 at 209 (S. Ct 1947). 303 Ibid., 213. For more detail, see p. 125 below. 304 US District Court WD Wisconsin, 7 November 1979. 305 483 F. Supp. 352 at 356 (WD Wisconsin 1979).

94 descriptive analysis