International Economic Law

International economic law regulates the international economic order or economic relations among nations. However, the term “international economic law” encompasses a large number of areas, such as:

1) International Trade Law (ITL), including both the international law of the World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT) and domestic trade laws;

2) International Economic Integration Law (IEIL), including the law of the European Union (EU), North American Free Trade Agreement (NAFTA).

3) Private International Law (PIL), including international choice of law, choice of forum, enforcement of judgments and the law of international commerce;

4) International Business Regulation (IBR), including antitrust or competition law, environmental regulation and product safety regulation;

5) International Financial Law (IFL), including private transactional law, regulatory law, the law of foreign direct investment and international monetary law, including the law of the International Monetary Fund (IMF) and World Bank(WB);

6) The role of law in development;

7) International Tax Law (ITL);

8) International Intellectual Property Law (IIPL).

International economic law is based on the traditional principles of international law such as pacta sunt servanda (see notes), freedom, sovereign equality, reciprocity, economic sovereignty.

When states began to function as politically independent and sovereign entities, they realized that one of the most important attributes of state sovereignty was economic sovereignty. Without this, political sovereignty wasn’t complete.

In many countries it was difficult to assert economic sovereignty without doing away with the rights, concessions and privileges enjoyed by foreign individuals and companies over the country’s natural resources.

However, developed countries whose nationals had gone overseas to invest and do business resisted attempts to impose of national law on foreigners. They argued that existing concessions and contracts had to be honoured under international law. It was at this juncture that the concept of permanent sovereignty over natural resources (PSNR) was introduced in international law.

When the number of newly independent developing countries grew, these states sought to assert their complete economic sovereignty by proclaiming that they had complete and permanent sovereignty over their natural resources – regardless of any arrangements made by their previous colonial administrations.

Consequently, a resolution was introduced in the UN General Assembly to this effect and was passed by an overwhelming majority of states in 1962.

As an attempt to implement the objectives of the new international economic order (NIEO) and to establish the norms of international economic relations, the UN General Assembly adopted as part of its resolutions on the NIEO the Charter of Economic Rights and Duties of States (GERDS) of 1974.

According to the Charter economic as well as political and other relations among states shall be governed, by the following principles: sovereignty, territorial integrity and political independence of States; permanent sovereignty over natural resources; non-aggression; non-intervention; mutual and equitable benefit; peaceful coexistence; equal rights and self-determination of peoples; peaceful settlement of disputes; fulfillment in good faith of international obligations; respect for human rights and international obligations; no attempt to seek hegemony and spheres of influence; preferential treatment for developing countries in general and the least-developed countries in particular.

These are principles of a general nature which include both economic and political principles and reflect the trend of the early 1970s.

Articles 1, 2, 4 and 5 of the Charter of Economic Rights and Duties of States (GERDS) of 1974 outline the economic rights and duties of states in a more concrete manner:

Every state has:

- the sovereign and inalienable right to choose its economic system as well as its political, social and cultural systems;

- the right to engage in international trade and other forms of economic cooperation irrespective of any differences in political, economic and social systems;

- the right to associate in organizations of primary commodity producers.

Each state has the right:

- to regulate and supervise authority over foreign investment within its national jurisdiction;

- to regulate and supervise the activities of transnational corporations within its national jurisdiction;

- to nationalize, expropriate or transfer ownership or foreign property, in which case appropriate compensation should be paid by the State.

Although the charter was not a “hard law” instrument having binding legal effect, many of the principles embodied in it have been regarded as representing the basis for the development of international economic law.

Note: pasta sunt servanda – принцип добросовісного виконання зобов’язань за міжнародними договорами.

5. Word study: Key Terms