In Claim 4, one of several in Case No. Bl before the Iran-United States Claims Tribunal, claimant, the Islamic Republic of Iran, sought to recover from the United States possession of certain military equipment that had been sold to Iran pursuant to contracts forming part of the U.S. “Foreign Military Sales” (FMS) program. In the alternative, Iran sought compensation from the United States in the amount of U.S. $143,290,948, plus interest, for the alleged replacement value of the property at issue. In this partial award, the Full Tribunal held: that the United States was not obliged to deliver the equipment and that Iran’s request for specific performance must be denied, but that the United States was still required to compensate Iran for the value of the properties as of March 26, 1981, the date the United States communicated its decision not to permit their export to Iran. The Tribunal did not make an award of damages at this stage, since neither party had provided evidence as to the value of the goods on that date. American Arbitrators Howard H. Holtzmann and Charles N. Brower each filed an opinion concurring in part and dissenting in pArt. The three Iranian arbitrators concurred in the award, but without filing an opinion.

As the Constitution begins its third century, the system of congressional oversight of covert action is only in its second decade. In the ancient history of covert action—before the intelligence oversight reforms of the 1970s—Congress did not involve itself in covert operations. After giving the Central Intelligence Agency standing authority to “perform such other functions and duties related to intelligence affecting the national security as the National Security Council may from time to time direct,” Congress paid little attention to what the Executive did under this authority. The era of congressional noninvolvement came to an end with the Watergate disclosures of intelligence activities that many Americans found reprehensible, the ensuing investigations into assassination attempts and other controversial covert actions, and the adoption of a new statutory framework for congressional oversight of the intelligence agencies.

The material in this section is arranged according to the system employed in the annual Digest of United States Practice in International Law, published by the Department of State.

Disputes with foreign policy implications have often been brought to the federal courts. These cases call attention to the tension between the authority of the political branches to conduct the foreign relations of the United States and the authority of the courts to render judgments according to the law. How this tension is resolved, in turn, bears directly on the commitment of the United States to the rule of law.

This decision is the latest of several by arbitral bodies of the International Centre for Settlement of Investment Disputes (ICSID) addressing a claim by Amco Asia Corporation (Amco Asia) against respondent Republic of Indonesia. An ICSID tribunal (First Tribunal) in 1984 rendered an award on the merits in favor of claimant Amco Asia. In 1986 an “ad hoc committee” (Ad Hoc Committee) convened on Indonesia’s request pursuant to Article 52 of the ICSID Convention annulled the 1984 award on the grounds that, with respect to a principal holding, the tribunal had “manifestly exceeded its powers” and “failed to state reasons,” both being grounds for annulment specified in Article 52(1) of the Convention. The Ad Hoc Committee did not disturb certain other holdings of the tribunal. Claimant then resubmitted the dispute, and a second tribunal (Second Tribunal) was constituted pursuant to Article 52(6) of the Convention. The first task of the new tribunal was to determine which holdings of the previous bodies were res judicata and therefore could not be relitigated. The three-member ICSID Second Tribunal held: (1) that holdings of the First Tribunal that had not been annulled by the Ad Hoc Committee were res judicata; (2) that issues as to which the First Tribunal’s holdings had been annulled could be relitigated; and (3) that the Ad Hoc Committee’s reasoning, as distinct from its actual decision of annulment, was not binding on the Second Tribunal.

The unevenness of congressional oversight, the proclivity of executive foreign affairs agencies for violating the law and the traditional responsibility of the courts as the last guardians of the Constitution—all point to the propriety of an active role for the judiciary in ensuring governmental compliance with the law. Specifically, courts should not decline to resolve foreign affairs disputes between Congress and the President because they present “political questions.” The recent case of Lowry v. Reagan illustrates the serious systemic damage wrought by judicial abstention in such disputes.

On July 28, 1986, the Republic of Nicaragua filed an application instituting proceedings against the Republic of Honduras in the International Court of Justice. Nicaragua alleged that Honduras had allowed armed bands, known as contras, to operate from its territory to the detriment of Nicaraguan sovereignty, that Honduran military forces had directly participated in attacks on Nicaragua and that the Government of Honduras had given material aid and logistical support to the rebels. Nicaragua requested that the Court declare the acts and omissions of Honduras to be violations of international law and order it to desist from all such activities and to make reparations to Nicaragua. Honduras objected to the jurisdiction of the Court and to the admissibility of the Application. The parties subsequently agreed that the Court should first decide these questions before proceeding to the merits. Relying on the Pact of Bogotá for its jurisdictional rationale, the Court unanimously held: that it had jurisdiction and that the Application could be entertained.

Beckman Instruments, Inc. (Beckman) brought a claim before the American Arbitration Association (AAA) against the Overseas Private Investment Corporation (OPIC) to recover under insurance policies issued by OPIC certain losses sustained by Beckman in connection with the liquidation of Beckman’s wholly owned subsidiary, Aplar, S.A. (Aplar) in El Salvador. The OPIC insurance policies provided protection against injury directly caused by war, revolution or insurrection. Beckman’s local plant manager and a visiting Beckman engineer were kidnapped in El Salvador, setting in motion a chain of events leading to closure of the subsidiary and liquidation of the assets at a considerable loss to Beckman. OPIC denied Beckman’s claim for recovery of its losses under the OPIC insurance policies. The three-member AAA tribunal held: that the losses sustained by Beckman in connection with the liquidation of Aplar were the direct result of an act of insurrection—the kidnapping—and, consequently, were covered under the OPIC insurance policies, but that Beckman was not entitled to any compensation because the OPIC policies required that amounts received in compensation from other insurance companies and the value of all property recovered be set off against the amount that would otherwise be payable by OPIC.

Canadian, Finnish and United States producers of wood pulp and two trade associations of such producers, one Finnish and one American, applied to the Court of Justice of the European Communities for annulment of a 1984 decision of the Commission of the European Communities. Under the 1984 decision, the Commission found the applicants to have infringed Article 85 of the EEC Treaty by engaging in concerted actions relating to the prices of wood pulp exports into the European Community (EC). The applicants, whose registered offices were all outside the Community, were ordered to terminate the pricing practices and to refrain in the future from measures having the same object or effect. The Commission fined all but two of the applicants for their past conduct. In this preliminary judgment, the Court held: (1) that the territorial scope of Article 85 of the EEC Treaty applies to the pricing practices of the applicants; (2) that by applying Article 85 to such practices, the EC had not infringed the public international law principles of territoriality and noninterference; (3) that the Commission’s decision is vacated insofar as it concerns the pricing actions of KEA, an association of U.S. wood pulp producers registered as an export cartel under the Webb-Pomerene Act; and (4) that the competition rules in the Free Trade Agreement between Finland and the Community do not preclude the application of the EEC Treaty.

A major purpose of the Constitution was to place control of foreign relations firmly in the hands of the national Government. In 1788 James Madison wrote in The Federalist: “If we are to be one nation in any respect, it clearly ought to be in respect to other nations.” Yet a recent article, 200 years later, reports approvingly that “more than 1000 U.S. state and local governments of all political stripes are participating in foreign affairs, and their numbers are expanding.” Criticizing this development, another recent article comments: “The national interest demands that local interference in foreign and defense policy be curtailed before the federal government finds itself hamstrung by hundreds of would-be secretaries of state touting their own parochial agendas. … Foreign policy must be made in Washington and not in the citizens’ backyards.” My intent here is briefly to describe the current situation, and to indicate some of the legal and policy factors relevant to assessing the propriety of state and local government involvement in foreign affairs.

The material in this section is arranged according to the system employed in the annual Digest of United States Practice in International Law, published by the Department of State.

On January 2, 1988, the President of the United States and the Prime Minister of Canada signed the Canada-United States Free Trade Agreement (FTA). It was implemented by appropriate legislation in both countries and came into force on January 1, 1989. This Agreement is the most comprehensive of a series of projects and treaties on free trade between Canada and the United States over the last 135 years.

The fundamental principles that guide determinations about the appropriate relationship between state and national authority in matters affecting the foreign affairs of the United States began to evolve even before the ratification of the Constitution in 1789. The centralization of governmental power in this field is reflected in microcosm in the three great state papers of the United States. The nation began in 1776 as “United Colonies” that were “Free and Independent States” under the Declaration of Independence; developed into a “firm league of friendship” under the Articles of Confederation in 1781; and became a “more perfect union” created by the people, not by its constituent political units, under the Constitution in 1789.

The Inter-American Commission on Human Rights (Commission) brought this action in 1986 against the Government of Honduras in the Inter-American Court of Human Rights. The Commission alleged that Honduras had violated Articles 4, 5 and 7 of the American Convention on Human Rights (Convention) with respect to the 1981 detention and subsequent disappearance of a Honduran student, Angel Manfredo Velásquez Rodríguez. The Court ruled for the Commission and unanimously held: (1) that domestic Honduran legal remedies were ineffective and did not bar the Court’s jurisdiction; (2) that a systematic pattern of disappearances was carried out or tolerated by Honduran government officials from 1981 to 1984; (3) that Honduras had violated the victim’s rights as part of that practice; and (4) that Honduras must therefore compensate the family of the victim and that any agreement on the form and amount of compensation must be approved by the Court. The Court further held, by six to one, that it would decide the form and amount of compensation if Honduras and the Commission were unable to negotiate an agreement within 6 months. Judge Piza filed a dissenting opinion.

A review of the current state of legal regulation in the field of human rights is likely to give the disappointing impression that international legislation is unequal to the task of checking widespread disregard for human dignity. Despite the vast proliferation of instruments setting standards on human rights, imposing obligations as regards the observance of those standards and establishing procedures to deal with breaches of those obligations, violations of human rights continue, their perpetrators apparently undeterred.

Plaintiffs and respondents, Amerada Hess Shipping Corp. and United Carriers, Inc., were respectively the charterer and owner of the Hercules, a crude oil tanker that was bombed in international waters by Argentine military aircraft during the war over the Malvinas or Falkland Islands. The ship was severely damaged and had to be scuttled off the coast of Brazil. After unsuccessfully seeking relief in Argentina, the companies filed suit against defendant and appellant, the Argentine Republic, in the Southern District of New York. Plaintiffs argued that the federal courts had jurisdiction under the Alien Tort Statute (28 U.S.C. §1350 (1982)), which confers federal jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” The district court dismissed the suit for lack of subject matter jurisdiction, holding that the Foreign Sovereign Immunities Act of 1976 (28 U.S.C. §§1330, 1602-1611 (1982)) (FSIA) is by its terms the sole basis of federal jurisdiction over cases against foreign states. A divided panel of the U.S. Court of Appeals for the Second Circuit reversed. The Supreme Court (per Rehnquist, C.J.) unanimously reversed the Second Circuit and held that the FSIA provides the exclusive basis of federal jurisdiction over suits against foreign states.