The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
Disputes with Foreign States
Lawrence W. Newman and Michael Burrows
There was a time when foreign states rarely found themselves involved
in dispute resolution proceedings in court or arbitration. With the
enactment of the Foreign Sovereign Immunities Act, 28 U.S.C. §§1602 et
seq., however, came codification and clarification of the circumstances
under which foreign states and their agencies and instrumentalities could be
sued in United States courts in disputes arising out of their commercial
activities (jus gestionis) - as opposed to their activities in their sovereign
capacity (jus imperii). The result was that foreign states were increasingly
named as defendants in litigation in the United States.
More recently, this trend to reduce the scope of sovereign immunity
has manifested itself in the arbitration context, as private parties investing in
foreign countries have been afforded — by way of investment and other
treaties — the right to bring arbitration proceedings against foreign
countries for violations of obligations under those treaties. Those
obligations implicate activities that can be characterized as being beyond
what is ordinarily regarded as commercial. The growing availability of
arbitration for testing these obligations represents a potentially important
development in the laws of international commerce and investment.
Under the North American Free Trade Agreement (NAFTA), and
under various bilateral investment treaties (BITs) entered into by the
United States over the past several years, nationals of signatory nations who
are investors in countries of which they are not nationals may assert claims
based on violations of those treaties, particularly claims based on
discrimination or non-national treatment by the other states.
It has been suggested that the right of an investor to be treated in the
same way as a national of the country in which it is doing business is jus
cogens, a norm having the force of fundamental international law. To the
extent that this proposition is supportable, an argument can be made that
the right to national treatment is so fundamental under international law
that a foreign judgment based on a violation of it should not be enforced
because permitting it would be contrary to the public policy of the United
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.