[The Introductory Note was provided to International Legal Materials by Robert B. von Mehren of the New York Bar.]

[In 1973 and 1974, Libya promulgated decrees purporting to nationalize all of the rights, interests and property of Texaco Overseas Petroleum Company and California Asiatic Oil Company (the "Companies") in Libya granted to them jointly under 14 Deeds of Concession. The Companies objected to the decrees and claimed that such action by the Libyan Government violated the terms and conditions of their Deeds of Concession.

Exercising their rights under their Deeds of Concession, the Companies requested arbitration and appointed an arbitrator. The Libyan Government refused to accept arbitration and did not appoint an arbitrator. Pursuant to the arbitration provision in their Deeds of Concession, the Companies requested the President of the International Court of Justice to appoint a sole arbitrator to hear and determine the disputes. The Libyan Government opposed such request and filed a memorandum with the President contending, inter alia, that the disputes were not subject to arbitration because the nationalizations were acts of sovereignty. . . . After considering the Libyan Government's objections, the President of the International Court of Justice, on December 18, 1974, appointed Rene-Jean Dupuy, Secretary General of The Hague Academy of International Law and Professor of Law at the University of Nice, as the Sole Arbitrator. . . .

On January 19, 1977, the Sole Arbitrator delivered an Award on the Merits in favor of the Companies. The Sole Arbitrator held that (a) the Deeds of Concession are binding on the parties, (b) by adopting the measures of nationalization, the Libyan Government breached its obligations arising under the Deeds of Concession and (c) the Libyan Government is legally bound to perform the Deeds of Concession and to give them their full force and effect. . . .

Approximately eight months after the Award on the Merits was rendered, Libya and the Companies reached a settlement of their disputes. . . . Libya agreed to provide the Companies over the next 15 months with $ 152 million of Libyan crude oil, and the Companies agreed to terminate the arbitration proceedings.]

Refusal to recognize any legal validity of United Nations Resolutions must, however, be qualified according to the various texts enacted by the United Nations. These are very different and have varying legal value, but it is impossible to deny that the United Nations' activities have had a significant influence on the content of contemporary international law. In appraising the legal validity of the above-mentioned Resolutions, this Tribunal will take account of the criteria usually taken into consideration, i.e., the examination of voting conditions and the analysis of the provisions concerned.

84. (1) With respect to the first point, Resolution 1803 (XVII) of 14 December 1962 was passed by the General Assembly by 87 votes to 2, with 12 abstentions. It is particularly important to note that the majority voted for this text, including many States of the Third World, but also several Western developed countries with market economies, including the most important one, the United States. The principles stated in this Resolution were therefore assented to by a great many States representing not only all geographical areas but also all economic systems.

From this point of view, this Tribunal notes that the affirmative vote of several developed countries with a market economy was made possible in particular by the inclusion in the Resolution of two references to international law, and one passage relating to the importance of international cooperation for economic development. According to the representative of Tunisia:

". . . the result of the debate on this question was that the balance of the original draft resolution was improved--a balance between, on the one hand, the unequivocal affirmation of the inalienable right of States to exercise sovereignty over their natural resources and, on the other hand, the reconciliation or adaptation of this sovereignty to international law, equity and the principles of international cooperation." (17 U.N. GAOR 1122, U.N. Doc. A/PV. 1193 (1962).)

85. On the contrary, it appears to this Tribunal that the conditions under which Resolutions 3171 (XXVII), 3201 (S-VI) and 3281 (XXIX) (Charter of the Economic Rights and Duties of States) were notably different:

--Resolution 3171 (XXVII) was adopted by a recorded vote of 108 votes to 1, with 16 abstentions, but this Tribunal notes that a separate vote was requested with respect to the paragraph in the operative part mentioned in the Libyan Government's Memorandum whereby the General Assembly stated that the application of the principle according to which nationalizations effected by States as the expression of their sovereignty implied that it is within the right of each State to determine the amount of possible compensation and the means of their payment, and that any dispute which might arise should be settled in conformity with the national law of each State instituting measures of this kind. As a consequence of a roll-call, this paragraph was adopted by 86 votes to 11 (Federal Republic of Germany, Belgium, Spain, United States, France, Israel, Italy, Japan, The Netherlands, Portugal, United Kingdom), with 28 abstentions (South Africa, Australia, Austria, Barbados, Canada, Ivory Coast, Denmark, Finland, Ghana, Greece, Haiti, India, Indonesia, Ireland, Luxembourg, Malawi, Malaysia, Nepal, Nicaragua, Norway, New Zealand, Philippines, Rwanda, Singapore, Sri Lanka, Sweden, Thailand, Turkey).

--Resolution 3201 (S-VI) was adopted without a vote by the General Assembly, but the statements made by 38 delegates showed clearly and explicitly what was the position of each main group of countries. The Tribunal should therefore note that the most important Western countries were opposed to abandoning the compromise solution contained in Resolution 1803 (XVII).

--The conditions under which Resolution 3281 (XXIX), proclaiming the Charter of Economic Rights and Duties of States, was adopted also show unambiguously that there was no general consensus of the States with respect to the most important provisions and in particular those concerning nationalization. Having been the subject matter of a roll-call vote, the Charter was adopted by 118 votes to 6, with 10 abstentions. The analysis of votes on specific sections of the Charter is most significant insofar as the present case is concerned. From this point of view, paragraph 2 (c) of Article 2 of the Charter, which limits consideration of the characteristics of compensation to the State and does not refer to international law, was voted by 104 to 16, with 6 abstentions, all of the industrialized countries with market economies having abstained or having voted against it.

A first general indication of the intent of the drafters of the Charter of Economic Rights and Duties of States is afforded by the discussions which took place within the Working Group concerning the mandatory force of the future text. As early as the first session of the Working Group, differences of opinion as to the nature of the Charter envisaged gave rise to a very clear division between developed and developing countries. Thus, representatives of Iraq, Sri Lanka, Egypt, Kenya, Morocco, Nigeria, Zaire, Brazil, Chile, Guatemala, Jamaica, Mexico, Peru and Rumania held the view that the draft Charter should be a legal instrument of a binding nature and not merely a declaration of intention.

On the contrary, representatives of developed countries, such as Australia, France, Federal Republic of Germany, Italy, Japan, United Kingdom and United States expressed doubt that it was advisable, possible or even realistic to make the rights and duties set forth in a draft Charter binding upon States (Report of the Working Party on its 1st Session, U.N. Doc. TD/B/AC. 12/1 (1973), at 6).

The form of resolution adopted did not provide for the binding application of the text to those to which it applied, but the problem of the legal validity to be attached to the Charter is not thereby solved. In fact, while it is now possible to recognize that resolutions of the United Nations have a certain legal value, this legal value differs considerably, depending on the type of resolution and the conditions attached to its adoption and its provisions. Even under the assumption that they are resolutions of a declaratory nature, which is the case of the Charter of Economic Rights and Duties of States, the legal value is variable. Ambassador Castaneda, who was Chairman of the Working Group entrusted with the task of preparing this Charter, admitted that "it is extremely difficult to determine with certainty the legal force of declaratory resolutions", that it is "impossible to lay down a general rule in this respect", and that "the legal value of the declaratory resolutions therefore includes an immense gamut of nuances" ("La Valeur Juridique des Resolutions des Nations Unies", 129 R.C.A.D.I. 204 (1970), at 319-320).

As this Tribunal has already indicated, the legal value of the resolutions which are relevant to the present case can be determined on the basis of circumstances under which they were adopted and by analysis of the principles which they state:

--With respect to the first point, the absence of any binding force of the resolutions of the General Assembly of the United Nations implies that such resolutions must be accepted by the members of the United Nations in order to be legally binding. In this respect, the Tribunal notes that only Resolution 1803 (XVII) of 14 December 1962 was supported by a majority of Member States representing all of the various groups. By contrast, the other Resolutions mentioned above, and in particular those referred to in the Libyan Memorandum, were supported by a majority of States but not by any of the developed countries with market economies which carry on the largest part of international trade.

On the basis of the circumstances of adoption mentioned above and by expressing an opinio juris communis, Resolution 1803 (XVII) seems to this Tribunal to reflect the state of customary law existing in this field. Indeed, on the occasion of the vote on a resolution finding the existence of a customary rule, the States concerned clearly express their views. The consensus by a majority of States belonging to the various representative groups indicates without the slightest doubt universal recognition of the rules therein incorporated, i.e., with respect to nationalization and compensation the use of the rules in force in the nationalizing State, but all this in conformity with international law.

88. While Resolution 1803 (XVII) appears to a large extent as the expression of a real general will, this is not at all the case with respect to the other Resolutions mentioned above, which has been demonstrated previously by analysis of the circumstances of adoption. In particular, as regards the Charter of Economic Rights and Duties of States, several factors contribute to denying legal value to those provisions of the document which are of interest in the instant case.

--In the first place, Article 2 of this Charter must be analyzed as a political rather than as a legal declaration concerned with the ideological strategy of development and, as such, supported only by non-industrialized States.

--In the second place, this Tribunal notes that in the draft submitted by the Group of 77 to the Second Commission (U.N. Doc A/C.2/L. 1386 (1974), at 2), the General Assembly was invited to adopt the Charter "as a first measure of codification and progressive development" within the field of the international law of development. However, because of the opposition of several States, this description was deleted from the text submitted to the vote of the Assembly. This important modification led Professor Virally to declare:

"It is therefore clear that the Charter is not a first step to codification and progressive development of international law, within the meaning of Article 13, para. 1 (a) of the Charter of the United Nations, that is to say an instrument purporting to formulate in writing the rules of customary law and intended to better adjust its content to the requirements of international relations. The persisting difference of opinions in respect to some of its articles prevented reaching this goal and it is healthy that people have become aware of this." ("La Charte des Droits et Devoirs Economiques des Etats. Notes de Lecture", 20 A.F.D.I. 57 (1974), at 59.)

89. Such an attitude is further reinforced by an examination of the general practice of relations between States with respect to investments. This practice is in conformity, not with the provisions of Article 2 (c) of the above-mentioned Charter conferring exclusive jurisdiction on domestic legislation and courts, but with the exception stated at the end of this paragraph. Thus a great many investment agreements entered into between industrial States or their nationals, on the one hand, and developing countries, on the other, state, in an objective way, the standards of compensation and further provide, in case of dispute regarding the level of such compensation, the possibility of resorting to an international tribunal. In this respect, it is particularly significant in the eyes of this Tribunal that no fewer than 65 States, as of 31 October 1974, had ratified the Convention on the Settlement of Investment Disputes between States and Nationals of other States, dated March 18, 1965.

90. The argument of the Libyan Government, based on the relevant resolutions enacted by the General Assembly of the United Nations, that any dispute relating to nationalization or its consequences should be decided in conformity with the provisions of the municipal law of the nationalizing State and only in its courts, is also negated by a complete analysis of the whole text of the Charter of Economic Rights and Duties of States.

From this point of view, even though Article 2 of the Charter does not explicitly refer to international law, this Tribunal concludes that the provisions referred to in this Article do not escape all norms of international law. Article 33, paragraph 2, of this Resolution states as follows: "2. In their interpretation and application, the provisions of the present Charter are interrelated and each provision should be construed in the context of the other provisions". Now, among the fundamental elements of international economic relations quoted in the Charter, principle (j) is headed as follows: "Fulfillment in good faith of international obligations".

Analyzing the scope of these various provisions, Ambassador Castaneda, who chaired the Working Group charged with drawing up the Charter of Economic Rights and Duties of States, formally stated that the principle of performance in good faith of international obligations laid down in Chapter I(j) of the Charter applies to all matters governed by it, including, in particular, matters referred to in Article 2. Following his analysis, this particularly competent and eminent scholar concluded as follows:

"The Charter accepts that international law may operate as a factor limiting the freedom of the State should foreign interests be affected, even though Article 2 does not state this explicitly. This stems legally from the provisions included in other Articles of the Charter which should be interpreted and applied jointly with those of Article 2." ("La Charte des Droits et Devoirs Economiques des Etats. Note sur son Processus d'Elaboration", 20 A.F.D.I. 31 (1974), at 54.)