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The Insolvency of International Organizations and the Legal Position of Creditors: Some Observations in the Light of the International tin Council Crisis

Published online by Cambridge University Press:  21 May 2009

Matthias Herdegen
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Extract

The quest for clear-cut legal structures in corporate bodies is not only propelled by dogmatic interest, but often also from shaken confidence and frustrated expectations. When in October 1985 a leading official of the International Tin Council, the manager of its buffer stock, declared that the Council was henceforward no longer able to meet its financial commitments and when subsequently no agreement on the settlement of outstanding claims could be reached, the Council's creditors as well as its members were faced with a host of legal issues for which the general rules of public international law provide no easily extricable guidance. In the face of the insolvency of an international organization the recourse to measures of liquidation as provided for in national company laws or the determination of the position of the organization's creditors vis-à-vis the member States cannot follow the broad path of consolidated State practice and legal doctrine.

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Articles
Information
Netherlands International Law Review , Volume 35 , Issue 2 , August 1988 , pp. 135 - 144
Copyright
Copyright © T.M.C. Asser Press 1988

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References

1. On the breakdown of the International Tin Council, see Eisemann, P.M., ‘Crise du Conseil International de l'Etain et insolvabilité d'une organisation intergouvernementale’, 31 AFDI (1985) p. 731 et seq.Google Scholar; McFadden, E.J., ‘The Collapse of Tin: Restructuring a Failed Commodity Agreement’, 80 AJIL (1986) p. 811 et seq.Google Scholar; the House of Commons' Second Report from the Trade and Industry Committee, Session 1985, The Tin Crisis, Vol. 1, p. IV et seq. On the proceedings initiated by creditors in the United Kingdom, see Sands, P., ‘The Tin Council Litigation in the English Courts’, 34 NILR (1987) p. 367 et seq.Google Scholar

2. McFadden, , loc.cit. n.l, p. 819Google Scholar.

3. Ibid., p. 823 et seq.

4. In re International Tin Council [1987] 2 WLR 1229.

5. Maclaine Watson & Co. Ltd. v. International Tin Council [1987] 3 WLR 508.

6. In re International Tin Council [1987] 2 WLR 1229 (1238 et seq.); this decision was upheld by the Court of Appeal, The Times, 29 April 1988.

7. [1987] 2 WLR 1246 et seq.

8. Maclaine Watson & Co. Ltd. v. International Tin Council [1987] 3 WLR 508; upheld by the Court of Appeal, The Times, 4 May 1988.

9. S.I. 1972, No. 120.

10. J. H. Rayner (Mincing Lane) Ltd. v. Department of Trade and Industry and Others; TSB England and Wales pic and Others v. Same; Amalgamated Metal Trading and Others v. ITC and Others, The Times, 29 June 1987. Dismissing a similar action against the British Department of Trade and Industry, the High Court held that the International Tin Council existed as a separate legal entity distinct from its members and able to incur liabilities which were exclusively its own: Maclaine Watson and Co. Ltd. v. Department of Trade and Industry, The Times, 7 September 1987. These decisions were upheld by the Court of Appeal, The Times, 28 April 1988.

11. See nn. 6, 8 and 10 supra.

12. Cf., also the Dutch Council of State [Raad van State], Algemene Bank Nederland (NV) v. Minister van Economische Zaken, summary judgment 1987, No. 350, p. 681 et seq.; Supreme Court of New York, International Tin Council v. Amalgamet Inc., 524 N.Y.S. 2d 971 (1988).

13. See Bindschedler, R.L., ‘International Organizations, General Aspects’, in Bernhardt, R., ed., Encyclopedia of Public International Law, instalment 5 (1983) p. 119 et seq., at p. 130Google Scholar; Lauterpacht, E., ‘The Development of the Law of International Organization by the Decisions of International Tribunals’, 152 RdC (1976) part IV, p. 377 et seq., at p. 403 et seq.Google Scholar; see also International Court of Justice, Reparation for Injuries Suffered in the Service of UN, Advisory Opinion, ICJ Rep. 1949, p. 174 et seq., at p. 179.Google Scholar

14. Seidl-Hohenveldern, I., Corporations in and under International Law (1987) p. 72Google Scholar.

15. See Arts. 3 and 4 of the Sixth International Tin Agreement (UN Doc.TD/TIN.6/14/Rev.1).

16. Art. 16 (1) of the Sixth International Tin Agreement.

17. Bindschedler, , loc.cit. n.12, p. 130Google Scholar; Meng, W., ‘Internationale Organisationen im völkerrechtlichen Deliktsrecht’, 45 ZaöRV (1985) p. 324 et seq., at p. 328Google Scholar.

18. See Mann, F.A., ‘International Corporations and National Law’, 42 BYIL (1967) p. 145 et seq., at p. 160Google Scholar.

19. See Herdegen, M., ‘Bemerkungen zur Zwangsliquidation und zum Haftungsdurchgriff bei internationalen Organisationen’, 47 ZaöRV (1987) p. 537 et seq., at pp. 542–543Google Scholar.

20. See, e.g., Art. 41(1) of the Sixth International Tin Agreement.

21. Cf., Herdegen, , loc.cit. n. 18, pp. 546–547Google Scholar.

22. Seidl-Hohenveldern, I., ‘Die völkerrechtliche Haftung für Handlungen internationaler Organisationen im Verhältnis zu Nichtmitgliedstaaten’, 11 Österreichische Zeitschrift für Öffentliches Recht und Völkerrecht (1961) p. 497 et seq., at pp. 505–506Google Scholar; and by the same author, Das Recht der Internationalen Organisationen einschlieβilich der Supranationalen Gemeinschaften, 4th edn. (1984) p. 84; cf., also Lauterpacht, , loc.cit. n. 12, pp. 412–413Google Scholar.

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24. Adam, H.-T., Les organismes internationaux spécialisées, vol. 1 (1965) p. 130Google Scholar; Mann, , loc.cit. n. 17, pp. 160–161Google Scholar; Meng, , loc.cit, n. 16, p. 332 et seq.Google Scholar; Schermers, , op.cit. n. 22, p. 780Google Scholar; Seidl-Hohenveldern, I., ‘Responsibility of Member States of an International Organization’, in International Law at the Time of its Codification, Essays in Honour of Roberto Ago, vol. III (1987) p. 415 et seq.Google Scholar; Shihata, I., ‘The Role of Law in Economic Development: The Legal Problems of International Public Ventures’, 25 Revue Egyptienne de Droit International (1969) p. 119 et seq., at p. 125Google Scholar.

25. Cf., also as to the possible liability of the parties to a joint intergovernmental enterprise, the United States Court of Claims, Anglo-Chinese Shipping Company v. United States, 22 ILR 1955, p. 982 at p. 986.

26. Adam, , op.cit. n. 23, pp. 129–130Google Scholar; Meng, , loc.cit. n. 16, p. 335 et seq.Google Scholar; Schermers, , op.cit. n. 22, p. 780Google Scholar; see also Münch, I. von, Das völkerrechtliche Delikt in der modernen Entwicklung der Völkerechtsgemeinschaft (1963) pp. 268–270Google Scholar; Seidl-Hohenveldern, , loc.cit. n. 23, p. 427Google Scholar.

27. Westland Helicopters Ltd. v. Arab Organization for Industrialization, United Arab Emirates, Saudi Arabia, Qatar, Egypt, Arab British Helicopter Company, 23 ILM 1984, p. 1071.

28. Herdegen, , loc.cit. n. 18, pp. 551–556Google Scholar; cf., also Shihata, , loc.cit. n. 23, p. 125Google Scholar.

29. ILC Yearbook 1982 vol. 2 part 2, p. 17 et seq.

30. This provision was not adopted as part of the Vienna Convention on the Law of Treaties between States and International Organizations or between Organizations, UN Doc.A/CONF 129/15. See Silva, G.E. da Nascimento e, ‘The 1986 Vienna Convention and the Treaty-Making Power of International Organizations’, 29 GYIL (1986) p. 79 et seq., at pp. 80–82Google Scholar.

31. Cf., Art. VI(3) of the Space Treaty of 27 January 1967, UNTS 610, p. 205; see also Seidl-Hohenveldern, , op.cit. n. 13, p. 65Google Scholar.

32. Cf., Mann, , loc.cit. n. 17, p. 157Google Scholar; Seidl-Hohenveldern, , op.cit. n. 13, p. 104Google Scholar.

33. See, e.g., Art. 16(1) of the Sixth International Tin Agreement.

34. See also the judgment of the International Court of Justice in the Barcelona Traction case (Belgium v. Spain), ICJ Rep. 1970, p. 3 et seq., at pp. 38–39Google Scholar.

35. See Herdegen, , loc.cit. n. 18, p. 553Google Scholar; Meng, , loc.cit. n. 16, p. 336Google Scholar.

36. For the individual share of liability incurred by each member the quotas of contributions to the budget according to the constituent treaty may provide important guidance, see Schermers, , op.cit. n. 22, p. 780Google Scholar.

37. See also the report of the Trade and Industry Committee of the House of Commons on the tin crisis, supra n. 1, Vol. 1, pp. X–XIII.

38. See Schachter, O., ‘International Law in Theory and Practice”, 178 RdC (1982) part V p. 9 et seq., at pp. 311–312Google Scholar. This view is, however, not uncontroversial, cf., Schwebel, S., ‘On whether the Breach by a State of a Contract with an Alien is a Breach of International Law’, in International Law at the Time of its Codification, Essays in Honour of Roberto Ago, vol. III (1987) p. 401 et seq.Google Scholar

39. See n. 31 supra.

40. In this context national courts may be confronted with the issue of State immunity: although the obligations of the members to the organization may be governed by an international treaty, the members can only invoke immunity if the act giving rise to the organization's liability — attributed to a State — would qualify as being performed iure imperii; see Herdegen, , loc.cit. n. 18, pp. 556–557Google Scholar.

41. See, e.g., Art. 6 of the Agreement Establishing the Common Fund for Commodities (UN Doc. TD/IPC/CONF/25); Art. 22(5) of the International Cocoa Agreement of 1986 (Cmnd. 9905).

42. Cf., Herdegen, , loc.cit. n. 18, p. 549Google Scholar. It might, however, be also plausible to relate such a limitation of the members' liability only to claims based on membership alone without special elements of attribution being present.