Urteil des BVerfG vom 08.05.2007, 2 BvM 1/03

Aktenzeichen: 2 BvM 1/03

BVerfG: see, are, general, international monetary fund, submission, obligation, report, vergleichende rechtswissenschaft, civil law, acta iure imperii

Entscheidungen

HEADNOTE:

No general rule of international law is ascertainable which entitles a state to temporarily refuse to meet private-law payment claims due towards private individuals by invoking state necessity declared because of inability to pay.

Order of the Second Senate of 8 May 2007 – 2 BvM 1-5/03, 1, 2/06 –

in the proceedings on the constitutional review of the question of whether the state necessity declared by the defendant with respect to the inability to pay entitles the defendant by force of a rule of international law to temporarily refuse to meet due payment claims, and if appropriate whether this is a general rule of international law, which pursuant to Article 25 of the Basic Law (Grundgesetz), is an element of federal law which directly gives rise to rights and obligations for the individual, in this instance the Parties,

I. submission order of the Frankfurt am Main Local Court (Amtsgericht) of 10 March 2003 in a) its amended version of 2 July 2003 – 31 C 2966/02 – 83 –,

b) submission order of the Frankfurt am Main Local Court of 10 March 2003 in its amended version of 4 July 2003 – 31 C 3476/02 – 83 –,

c) submission order of the Frankfurt am Main Local Court of 10 March 2003 in its amended version of 3 July 2003 – 31 C 3474/02 – 83 –,

d) submission order of the Frankfurt am Main Local Court of 21 March 2003 in its amended version of 24 November 2003 – 31 C 3475/02 – 83 –, e) submission order of the Frankfurt am Main Local Court of 21 March 2003 in its amended version of 9 December 2003 – 31 C 150/03 – 83 –,

plaintiff of the initial proceedings: K…,

defendant of the initial proceedings: Republic of Argentina, represented by the President Néstor Kirchner, …,

- authorised representatives: lawyers …,

– 2 BvM 1-5/03 –,

II. submission order of the Frankfurt am Main Local Court of 16 May 2006 – 31 C 883/04 – 83 –,

plaintiff of the initial proceedings: Q…,

defendant of the initial proceedings: Republic of Argentina, represented by the President Néstor Kirchner, …,

- authorised representatives: lawyers …,

– 2 BvM 1/06 –,

II. submission order of the Frankfurt am Main Local Court of 19 May 2006 – 30 C 1236/05 – 24 –,

plaintiff of the initial proceedings: K…,

defendant of the initial proceedings: Republic of Argentina,

represented by the President Néstor Kirchner, …

- authorised representatives: lawyers …,

– 2 BvM 2/06 –

RULING:

The proceedings are combined for a joint ruling.

GROUNDS:

A. – I.

The Republic of Argentina has been confronted since 1999 with considerable economic problems, which at least temporarily expanded to become a state financial crisis. In connection with the financial crisis, Argentina made considerable use of the tool of government bonds abroad in order to cover the need for currency and for capital. Such bonds were also issued on the German capital market and subscribed to by German creditors.

In 2000, the Republic of Argentina received a loan of 39.7 billion US Dollars from the International Monetary Fund (IMF). In order to comply with the conditions attached to disbursement, the Republic of Argentina initiated drastic budgetary cuts, which in turn led to a grave loss of confidence in the Argentinean currency. The consequence was that Argentina had to pay higher interest on the capital markets, which against the background of the existing economic problems ultimately led to the declaration, by Act no. 25,561 on Public Emergency and the Reform of the Exchange Rate System of 6 January 2002, of the “public emergency in social, economic, administrative, financial and monetary policy”. On the basis of Decree no. 256/2002 of 6 February 2002 on the Restructuring of Obligations and Debt Payment of the Argentinean Government issued thereupon, foreign debt service was suspended by the Argentinean government fin order to restructure the foreign debt service. The Act on Public Emergency has been extended annually, most recently until 31 December 2007.

After a decision to this effect pronounced on 15 December 2005, the Republic of Argentina has now repaid, ahead of schedule, its complete obligations to the IMF amounting to 9.6 billion US Dollars.

II.

1. Several actions entered by German investors are pending against the Republic of Argentina before the Frankfurt civil courts. By orders of 10 March 2003 and 21 March 2003, the Local Court initially submitted the question as to

whether rules of international law stand in the way of convicting the defendant.

2. By orders of 2 July 2003, 3 July 2003, 4 July 2003, 24 November 2003 and 9 December 2003, the Local Court reformulated the submission orders, and now submitted the question

whether the state necessity declared by the defendant with respect to the inability to pay entitles the defendant by force of a rule of international law to temporarily refuse to meet due payment claims, and if appropriate whether this is a general rule of international law which, pursuant to Article 25 of the Basic Law, is an element of federal law which directly gives rise to rights and obligations for the individual, in this instance the Parties.

The Local Court specifically explained that the submitted question was material to the ruling for the respective proceedings because the actions were admissible and well-founded as to the main claims, and the claims could only be dismissed based on the application of the principle of international law proposed by the defendant which purportedly justifies the defendant’s refusal to pay due to state necessity. The court handing down the judgment

presumed the existence of state necessity, and was of the view that it was unable to judge on the factual circumstances of such state necessity itself. Serious doubts as to the existence of a general rule of international law on the use of state necessity as a plea were said to emerge from the fact that there was a principle of state necessity under international law, which in principle could also justify the non-fulfilment of an international obligation, but that there were no unambiguous rulings by international courts on the legal consequences of the inability to pay, in particular in the case of due claims by private third parties.

3. By orders of 16 May 2006 and 19 May 2006, the Local Court submitted two more sets of proceedings relating to the same question.

III.

1. The German Bundestag, the Bundesrat and the Federal Government were afforded the opportunity to make a statement pursuant to § 83.2 of the Federal Constitutional Court Act (Bundesverfassungsgerichtsgesetz – BVerfGG).

The Federal Ministry of Justice made a statement for the Federal Government by letter of 30 December 2003 on the impact of state necessity under international law. In its statement, the Ministry of Justice asserted that regulations on the lack of actionability of claims pursuant to Article VIII section 2 (b) of the Articles of Agreement of the International Monetary Fund in its version of 30 April 1976 (Bundesgesetzblatt (Federal Law Gazette – BGBl) 1978 II pp. 13 et seq.) did not contradict the materiality of the submitted question to the ruling. In the view of the Federal Government, there was no general rule of international law within the meaning of Article 25 of the Basic Law permitting a state to suspend payment obligations under private-law contracts unilaterally by invoking state necessity. There were said to be sufficient indications that state necessity had gained a foothold in customary international law. This, however, was said to apply only in the context of the strict preconditions of Article 25 of the Articles on State Responsibility of the United Nations International Law Commission, in other words only for the justification of the violation of international obligations. Additionally, the state may not have caused the occurrence of the peril itself.

There were, however, said to be considerable doubts when it came to transferring these principles to a case in which a state does not meet its payment obligations because of overindebtedness. Moreover, there were said to be only individual precedents which did not allow for the recognition of any unambiguous legal conclusions. The general principles of state necessity were also said not to have been lent concrete form in the sense of their being directly applicable to cases of inability to pay and a resulting justification of a breach of contract. A rule under customary law would have not only to entail a justification, but over and above this would have to order the applicability of the contractual relationship under international law also in the sphere of private law. This was said to be conditional on an obligation of the forum state to protect the debtor state against its creditors. Such an obligation was, however, said not to be ascertainable. Arguments contained in literature on international law according to which a private creditor should not be placed on a better footing than a state creditor were said not to apply in the case at hand. There could be no question of a better position applying across the board since, as a rule, state immunity would be invoked towards private creditors in the enforcement proceedings at the latest. A declared waiver of immunity was however said not to be allowed to be circumvented de facto by invoking the applicability of an exception under international law with regard to private-law contracts.

2. Furthermore, the Federal Court of Justice (Bundesgerichtshof) was afforded the opportunity to make a statement. The President of the Federal Court of Justice referred by letter of 5 December 2003 to a statement from the Chairpersons of the IX and IXa Civil Senates. In this statement, the Chairpersons stated that at that time two legal complaints had been pending for which the dates of their ruling could not yet be estimated. Moreover, the named Civil Senates had not yet dealt with the legal issues raised in the submission proceedings.

3. The parties to the initial proceedings were afforded the opportunity to make a statement pursuant to § 82.3 and § 84 of the Federal Constitutional Court Act.

a) The plaintiffs of the initial proceedings essentially alleged that the Republic of Argentina had no longer been in a position of state necessity as early as 2003, and that such state necessity was certainly its own responsibility, so that invocation of such a situation had to be ruled out. By way of documentation, they referred to statistics and considerable data on positive economic development in Argentina, as well as to foreign court judgments in which state necessity had not been recognised as an obstacle for a conviction and the enforcement of due payment claims benefiting private creditors.

b) The Republic of Argentina submitted a statement by virtue of its written pleading of 4 February 2004 on the proceedings submitted in 2003, and submitted a joint expert report by Prof. Dr. Michael Bothe and Prof. Dr. Gerhard Hafner which it had commissioned. By written statement of 10 October 2006, the Republic of Argentina furthermore made a statement on the submissions from 2006 in which it confirmed its view that it could also invoke state necessity as a justifiable plea in the proceedings before the German courts towards private creditors.

In the view of the Republic of Argentina, the justification of state necessity is a rule of customary international law. State responsibility had allegedly not yet been codified, so that rules on reasoning of responsibility, as well as on the justification of conduct which per se was wrongful, must belong to customary law. Recognition of state necessity as a reason for justification under customary law was said to emerge from the work of the International Law Commission, the rulings of the International Court of Justice and the relevant literature on international law.

Necessity was said to apply if major state interests were at risk. It was not possible to objectively define these interests in a manner that would be universally valid, but it was not necessary for the existence of the state itself to be at stake in order to justify necessity. State insolvency was said to be a vital interest that was worthy of protection. If a state was insolvent, the ability to perform all state purposes was said to be impaired. It was said to follow from international jurisprudence and doctrine that a state could also invoke state necessity if it were in dire economic and financial straits. Moreover, the act resulting from necessity must be the only possibility to avert peril, and must stand up to a weighing of interests. Both criteria were said to have been met here. It was in fact not possible to invoke state necessity if a state had caused the occurrence of the peril itself, but the judgment of economic policy assessments was said not to be amenable to court review and to be restricted to a mere review for arbitrariness. In the case of a financial crisis, it was furthermore not possible to prove the causality of specific conduct because of the dependence of the national economy on global economic contexts.

As to the transferability of the rules on necessity under international law to private-law relationships, the Republic of Argentina states that economic necessity could be pleaded towards private individuals before the courts of the Federal Republic of Germany. The Articles on State Responsibility are said certainly not to be contrary to extending [such rules] also to private-law relationships. Were one to interpret Article 25 of the Articles on State Responsibility such that it were restricted to international obligations, Article 56 explicitly referred to the supplementation of the Articles through further customary international law. International jurisprudence was said to comprise a number of cases in which necessity was permitted to justify refusal to pay. Furthermore, with regard to private individuals, financial obligations were said to become international obligations insofar as they were raised to the level of international law by means of diplomatic protection.

IV.

The Senate handing down the judgment commissioned Prof. Dr. August Reinisch to draft an expert report on the question of the validity and impact of state necessity under international law. The expert report was in particular to contain statements on whether state necessity is embedded as a justification in customary international law, what the state practice on the recognition of state necessity in international legal transactions is, and what practical impact the financial necessity of a state has on proceedings before foreign national courts.

On the basis of a discussion of relevant international-law practice, the expert witness reached the conclusion that there is no rule of international law embedded in customary law stating that state necessity as a justification under international law may also be used in private-law relationships towards private individuals before national courts. The ruling practice of international courts and tribunals was said not to provide any clear indications that state necessity as a justification under international law also affected debt contracts under private law. Legal literature was also said to give virtually no indications of a decision on the relevance of necessity in relationships between a state and private individuals on the basis of loans that were subject to national law. Whilst there were various statements in favour of equal treatment of international-law and private-law relationships, the lack of relevant proceedings nonetheless disfavoured imposing an obligation on national courts to recognise state necessity as a justification for noncompliance. However, a consideration [of state necessity] on the basis of domestic law was not out of the question. Yet the practice of national courts was said to have so far not displayed any uniform trend with regard to the transferability of the rules of necessity under international law. The case-law was said in many cases not to deal with the argument of state necessity at all, but to have the admissibility of proceedings fail because of the matter of state immunity.

The submissions are admissible.

1. The questions submitted are to be presented in greater detail in that the question which is material to the ruling relates to the possible application of state necessity as an objection towards private individuals and in relation to payment claims due under private law. It emerges from the reasoning of the orders in conjunction with the circumstances of the proceedings that private-law payment claims of private creditors towards a foreign state are at issue in the matter, and that the Local Court doubts whether there is a general rule of international law which recognises invoking necessity in this specific constellation.

2. A submission by a non-constitutional court to the Federal Constitutional Court (Bundesverfassungsgericht) is admissible pursuant to Article 100.2 of the Basic Law if the existence or scope of a general rule of international law is called into doubt in a legal dispute (see Decisions of the Federal Constitutional Court (Entscheidungen des Bundesverfassungsgerichts – BVerfGE) 15, 25 (31); 16, 27 (32); 46, 342 (358); 75, 1 (11-12)). What is more, the submitting court must adequately explain materiality to the ruling (see BVerfGE 4, 319 (321); 15, 25 (30); 16, 27 (32- 33); 75, 1 (12); Order of the Second Senate of the Federal Constitutional Court of 6 December 2006 – 2 BvM 9/03 –, Deutsches Verwaltungsblatt – DVBl 2007, pp. 242 et seq.). These prerequisites are met.

Serious doubts can already be assumed because the Local Court has explained that there is no relevant highestcourt case-law on the submitted questions, and that the jurisprudence of international courts has not, for the questions submitted, taken a decisive position on the transferability of state necessity as a justification [for non-payment] to the relationship with private individuals.

The Local Court adequately explained in its submission orders that the constitutional-court ruling on the existence of a general rule of international law is of prior importance to the non-constitutional proceedings. According to the statement made by the Local Court, the initial proceedings are essentially concerned with the impact of state necessity as a possible general rule of international law. In principle, a state which undertakes private economic transactions abroad and agrees to the application of the rules of the civil-law system and jurisdiction of the forum state subjects itself fully to this national order and to its rules. The special relevance of international law, and coupled therewith the materiality of the submitted questions to the ruling, however emerges from the fact that in individual cases, on the basis of the sovereignty of states under international law, exceptions exist to private individuals being placed on an equal footing with a state. This also applies if a state undertakes private economic transactions, for instance if the non-constitutional courts must rule on execution against assets of a state used for sovereign purposes (see also BVerfGE 46, 342 et seq.; Order of the Second Senate of the Federal Constitutional Court of 6 December 2006 – 2 BvM 9/03 –, loc. cit.).

The presumption of the submitting court that state necessity continues to the present day is certainly not unjustifiable with regard to the fact that the Republic of Argentina has extended the Act on the Public Emergency until 31 December 2007 (Act 26,204 of 13 December 2006 extending Act 25,561).

If there is a general rule of international law permitting the Republic of Argentina to invoke necessity under international law as justification for refusal to pay also in private-law relationships towards its creditors, a judgment could certainly not be declared executable as long as this objection applies. If the proceedings on the constitutionality of a statute, by contrast, reveal that the Republic of Argentina may not invoke state necessity towards the creditors, the submitting court is not prevented from taking its decision without allowing for the objection of inability to pay on the basis of the applicable federal statutes.

A general rule of international law which entitles a state to temporarily refuse to meet private-law payment claims due towards private individuals by invoking state necessity declared because of inability to pay cannot be currently ascertained.

A rule of international law is “general” within the meaning of Article 25 of the Basic Law if it is recognised by the vast majority of states (see BVerfGE 15, 25 (34)). The general nature of the rule relates to its application, not to its content, recognition by all states not being necessary. It is equally not necessary for the Federal Republic of Germany in particular to have recognised the rule.

General rules of international law are rules of universally applicable customary international law, supplemented by the traditional general legal principles of national legal orders (see BVerfGE 15, 25 (32 et seq.); 16, 27 (33); 23, 288 (317); 94, 315 (328); 96, 68 (86)). Whether a rule is one of customary international law, or whether it is a general legal principle, emerges from international law itself, which provides the criteria for the sources of international law. According to the unanimous view, Article 25 of the Basic Law, by comparison, does not relate to provisions that are contained in international agreements. Treaties under international law are to be applied and interpreted by the nonconstitutional courts themselves (see BVerfGE 15, 25 (32-33, 34-35); 16, 27 (33); 18, 441 (450); 59, 63 (89); 99, 145 (160); Order of the 4th Chamber of the Second Senate of the Federal Constitutional Court of 12 December 2000 – 2 BvR 1290/99 –, Juristenzeitung – JZ 2001, p. 975; established case-law). Stringent requirements are to be made as to the establishment of a general rule of international law because of the fundamental obligation of all states which it expresses.

1. International law contains neither a uniform nor a codified insolvency law of states (see Ohler, Der Staatsbankrott, Juristenzeitung 2005, p. 590 (592); Baars/Böckel, Argentinische Auslandsanleihen vor deutschen und argentinischen Gerichten, Zeitschrift für Bankrecht und Bankwirtschaft – ZBB 2004, p. 445 (458)). Individual international agreements do contain general necessity clauses; whether these relate to economic emergencies, however, requires interpretation in individual cases, as do the detailed preconditions for invoking necessity in legal relationships under international and private law in the event of insolvency. The rules on the legal consequences of a state’s insolvency are hence fragmentary and, if the corresponding establishment of these rules can be documented using the criteria of international law, can only belong to customary international law or to general legal principles.

2. Invocation of state necessity is recognised in customary international law in those legal relationships which are exclusively subject to international law; by contrast, there is no evidence for a state practice based on the necessary legal conviction (opinio juris sive necessitatis) to extend the legal justification for the invocation of state necessity to relationships under private law involving private creditors.

a) The principle that conduct which does not comply with the respective legal order can be justified under certain circumstances is inherent in both the national legal orders and in international law. In very general terms, national legal orders see both criminal-law and civil-law necessity as a justification for conduct otherwise regarded as wrongful, even though the concrete manifestation of the preconditions for assuming the justification may differ. Von Liszt stated in his international-law manual already in 1898 that the terms “necessary defence” and “necessity”, as recognised in criminal and private law, can also preclude the wrongfulness of the violation committed in the arena of international law (von Liszt, Das Völkerrecht, 1898, pp. 128-129).

b) In connection with the recognition and impact of state necessity under international law and as evidence of its applicability under customary law, reference is made first and foremost to the work on state responsibility and its reception in the judicature of international courts and tribunals done by the United Nations International Law Commission (ILC). After several years of debates and several drafts, the International Law Commission submitted to the United Nations General Assembly in 2001 a draft convention on the topic of Responsibility of States for Internationally Wrongful Acts, the so-called Articles on State Responsibility (Annex to the Resolution of the United Nations General Assembly A/RES/56/83; hereinafter: ILC Articles on State Responsibility).

The ILC Articles on State Responsibility are largely concerned with questions of accountability for and consequences of state violations of obligations under international law. This codification draft also covers state necessity under international law (Article 25) as a justification. The draft has not yet led to the conclusion of an international agreement. The document was accepted by the United Nations General Assembly on 12 December 2001. This, however, leads neither eo ipso to customary-law application, nor to legally binding application for another reason, but may serve as an indication of a legal conviction as is necessary to form customary law. Ultimately, it is now generally recognised in legal literature and in the view of international courts and tribunals that Article 25 of the ILC Articles on State Responsibility constitutes applicable customary international law. The commentaries of the International Law Commission during the codification process document for this provision the declared objective of identifying and reflecting in the codification the content and scope of the application of the concept under customary law by an evaluation of state practice and of the rulings of international courts, as well as an evaluation of the writings of recognised international-law researchers (International Law Commission, State Responsibility, Yearbook of the International Law Commission 1980, Vol. II, et al. marginal nos. 55 and 78).

Article 25 the ILC Articles on State Responsibility reads as follows:

1. Necessity may not be invoked by a State as a ground for precluding the wrongfulness of an

act not in conformity with an international obligation of that State unless the act:

a) Is the only way for the State to safeguard an essential interest against a grave and imminent peril; and

b) Does not seriously impair an essential interest of the State or States towards which the obligation exists, or of the international community as a whole.

2. In any case, necessity may not be invoked by a State as a ground for precluding wrongfulness if:

a) The international obligation in question excludes the possibility of invoking necessity; or

b) The State has contributed to the situation of necessity.

According to the language of the text, necessity is a justification in a relationship to which international law applies pursuant to Article 25 of the ILC Articles on State Responsibility. If the preconditions apply, necessity only precludes the wrongfulness of an act not in conformity with an international obligation.

c) In a landmark ruling favouring invocation of state necessity in relations between two states, the International Court of Justice (ICJ) ruled in the Gabcikovo-Nagymaros case that the state of necessity was recognised by customary international law as a ground for precluding the wrongfulness of an act which was otherwise not in conformity with international law (Judgment of the International Court of Justice of 25 September 1997, Gabcikovo- Nagymaros Project (Hungary/Slovakia), I.C.J. Reports 1997, pp. 7 et seq. marginal no. 51). With regard to the preconditions for necessity, the International Court of Justice refers to the restrictive preconditions of the then Article 33 of the draft of the ILC Articles on State Responsibility, which is largely identical to today’s Article 25, and reaches the conclusion that these preconditions also reflect customary law.

The Advisory Opinion of the International Court of Justice from 2004 regarding the construction by Israel of a restrictive barrier confirms the view of the court as to the recognition of necessity under customary law (Advisory Opinion of the International Court of Justice of 9 July 2004, Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, 43 International Legal Materials 2004, pp. 1009 et seq., marginal no. 140).

The same conclusion was also reached by the International Tribunal for the Law of the Sea in its ruling of 1 July 1999 (The M/V Saiga (No. 2) Case, 38 International Legal Materials 1999, pp. 1323 et seq., marginal no. 134) regarding the seizure of a ship off the coast of Guinea. In these proceedings, the invocation of state necessity was, in fact, ultimately rejected; however, the court explained this rejection by noting that the preconditions had not applied in the specific case for lack of a serious impairment of a vital state interest. The recognition of state necessity under customary law as a justification for the refusal of an international obligation between states was, by contrast, explicitly accepted.

3. The relevant case-law of international and national courts together with the views expressed in scholarly literature on international law do not permit the positive ascertainment of a general rule of international law, according to which, over and above the area of application of Article 25 of the ILC Articles on State Responsibility, restricted as it is to international-law relations, a state would also be entitled to temporarily refuse to meet payment claims due in privatelaw relationships towards private creditors after declaring state necessity because of inability to pay. There is no uniform state practice recognising such a justification by force of international law. In the context of proceedings on the constitutionality of a statute, the Federal Constitutional Court is not entitled to expand an existing general rule of international law in terms of its elements.

a) The practice of international courts does not constitute an adequate basis for the recognition of an objection of state necessity towards private individuals. The rulings of international courts are, as a rule, major indications that certain rules of international law are anchored in customary law because – frequently in contrast to rulings of national courts – they deal with the qualification and application of specific norms under international law. Further, the rulings of international tribunals have always been used as indicators of the existence of customary international law. Whilst courts such as the International Court of Justice or the International Tribunal for the Law of the Sea are, as a rule,

restricted by their charters to settling those international-law matters which relate to relations between two or more states or other subjects of international law, international tribunals may also deal with cases which relate to economic disputes between states and private individuals.

aa) The International Centre for Settlement of Investment Disputes (ICSID), which acts as a tribunal and is part of the World Bank organisation, has already reviewed states’ invocation of necessity as a justification several times. Some of the claimants in these proceedings were legal entities subject to private law. Nonetheless, these cases do not provide any indications of the transferability of a plea of state necessity to private-law relations.

A distinction should be made in this respect as to whether the violation of an obligation complained of and its justification through a plea of necessity relate to the bilateral investment treaty applicable under international law, or to a private-law contract between the investor and the state. Both are, in principle, possible in connection with the competences of the International Centre for Settlement of Investment Disputes. Yet the relevant proceedings on state necessity related to the complaint of the breach of an obligation under bilateral investment treaties concluded between states, which are to be qualified as international agreements, and not the direct claims of the investor under private law. From an international-law point of view, the specific feature of the arbitration of disputes before the International Centre for Settlement of Investment Disputes is that private individuals are able to complain as claimants of the violation of an international agreement concluded between states. In terms of content, therefore, the violation of an obligation is complained of which is owed not directly to the private applicant, but to his or her home state, although the protective purpose of the agreement targets the interests of private investors. Rights and obligations of the opposing state emerge in such case constellations from an international agreement which as a rule contain a separate necessity clause; thus, such rights and obligations emerge from a relationship governed by international law.

The ruling of the ICSID Tribunal of 12 May 2005 in the case of CMS Gas Transmission Company v. The Argentine Republic (ICSID Case No. ARB/01/8), which is regularly quoted in connection with Argentinean state necessity, related to the legal evaluation of the violation of the underlying international agreement between the United States of America and the Republic of Argentina, and not to a plea of state necessity in relations under private law.

The ICSID Tribunal ruled on 3 October 2006 in the case of LG&E Energy Corp v. The Argentine Republic that the Republic of Argentina could invoke a state of necessity for the period between 2001 and 2003 as justification for the violation of its obligations under the bilateral agreement with the United States of America (ICSID Case No. ARB/02/1 (Decision on Liability), marginal no. 267). This first recognition of Argentinean state necessity as justification for temporary refusal to pay in an investment protection dispute by the ICSID is unhelpful when it comes to the question of the possibility to apply necessity as an objection in private-law relationships. Here too, the objection of necessity was restricted to the international obligations between the states as parties to an investment protection agreement under international law. The ruling says nothing as to the question of whether state necessity could be invoked directly towards a private individual.

bb) In its statement on the submissions, the Republic of Argentina attaches particular importance to the ruling in the so-called Serbian Loans Case of the Permanent International Court of Justice, the predecessor of today’s International Court of Justice established by the League of Nations (Ruling of the Permanent International Court of Justice of 12 July 1929, Case Concerning the Payment of Various Serbian Loans issued in France, Publications of the Permanent Court of International Justice, Series A, nos. 20/21 (1929), Judgment no. 14, pp. 5 et seq.).

The Permanent International Court of Justice ruled in this set of proceedings that the bonds at dispute, which were held by French private individuals, were subject to private law since each agreement which was not to be qualified as an agreement between states in their function as subjects of international law must be subject to the national law of a state (see ruling of the Permanent International Court of Justice of 12 July 1929, loc. cit., pp. 41 et seq.). The obligation of the Serbian State to pay applied towards private individuals, as also in the initial proceedings of the submissions pending here.

The complaint before the Permanent International Court of Justice, however, related not to the breach of private-law obligations to pay, but to a violation of international legislation relating to aliens. This complaint was made by the home state of the private creditors by means of diplomatic protection before the court for a ruling on a violation of an international obligation. This is connected with the jurisdiction of the Permanent Court, which is restricted to disputes between states. The question of whether it is a legal dispute between states or between a state and private individuals was discussed in detail by the Permanent Court, which ruled in favour of an international dispute.

The Permanent International Court of Justice explained that the dispute between the two states was identical in terms of its content to the underlying dispute between the Kingdom of Serbia and the French creditors, but that a legal distinction should be made because it related to the assertion of the protective obligations of a state in favour of its nationals towards another state (see Ruling of the Permanent International Court of Justice of 12 July 1929, loc. cit., p. 18). In this sense, the exclusively intergovernmental-defined standards of this decision, in connection with which necessity is also discussed within the context of force majeure, also differ from those on which the ruling on the submitted question is to be based. Rather, the ruling distinguishes between international agreements on one hand and bonds between states and private individuals on the other (see Ruling of the Permanent International Court of Justice of 12 July 1929, loc. cit., p. 40), and does not provide an indication of a rule of customary law according to which the invocation of necessity is also possible in relations governed by private law.

The same applies to the ruling of a tribunal, the Mixed Claims Commission France-Venezuela, which considered the case of the French Company of Venezuelan Railroads (Ruling of the Mixed Claims Commission France-Venezuela of 31 July 1905, United Nations Reports of International Arbitral Awards – UNRIAA, Vol. X, 1962, pp. 285 et seq.). The dispute appears to be based on an action of a French legal entity under private law against the state of Venezuela, since a ruling was to be handed down on Venezuelan responsibility for ruining a private French company. The fact, however, that this related in essence to a dispute between states in which France intervened for its nationals on the basis of legislation relating to aliens emerges from the fact that the dispute was arbitrated on the basis of an agreement concluded between states, i.e. by the allotment of a payment of money to a private individual which had, however, been claimed by France (ruling of the Mixed Claims Commission France-Venezuela of 31 July 1905, loc. cit., pp. 285-286).

This ruling, as well as that in the Serbian Loans case, comes from a period in which direct judicial disputes between states and private individuals were virtually ruled out because the principle of the absolute state immunity still largely applied in national court proceedings, and private individuals could not petition international courts. Assertion of claims could only be pursued via the home state with the aid of diplomatic protection. In such disputes, the ruling was consequently based on the international-law relationship between two states. These purely international proceedings cannot be used as indicia in the assessment of state practice concerning the direct defence of state necessity vis-àvis private persons for the direct disputes in front of national courts that are customary today.

The circumstance that it is a dispute between two states as to the repayment of debts, and not a private-law relationship between a state and a private individual, means that it is not possible to draw conclusions from the proceedings relating to the Russian damages from 1912 as to the transferability of necessity in international law to private-law relations (Ruling of 11 November 1912, Affaire de l’indemnité Russe, UNRIAA, Vol. XI, 1962, pp. 421 et seq.). The tribunal explicitly found in its judgment that necessity is a concept equally applicable in international law as in private law (see Ruling of 11 November 1912, loc. cit., p. 443). This was, however, a dispute between Russia and Turkey in which the Russian government explicitly asserted state responsibility for outstanding service of monetary debts (see Ruling of 11 November 1912, loc. cit., p. 438). It emerges from this context of a purely international dispute that referring to the application of the concept of necessity in private law was only intended to make this concept also useable for the justification of necessity under international law. In this sense, the tribunal found that international law must adapt to political necessities (see ruling of 11 November 1912, loc. cit., p. 443).

b) An inspection of national case-law on the question of state necessity also fails for lack of agreement to suggest that the recognition of state necessity impacting on private-law relationships is established in customary law. The relevant rulings either only comment on the actual existence of a state of necessity, but not to its legal impact, or they shift the problem to the level of immunity and resulting obstacles to execution. The expert report of Prof. Dr. August Reinisch therefore finds, after evaluating the practice of national courts, that no authoritative conclusions can be drawn from this to justify state inability to pay by pleading state necessity (marginal no. 126).

c) In view of the fundamental existence of necessity as a justification in international legal relations, scholarly literature takes the view, in agreement with international and national case-law, that necessity is recognised by customary law (see Baars/Böckel, loc. cit., p. 459 with further references). The relevant literature also distinguishes, however, between recognition in relations between states on the one hand and recognition as a legal justification in relations with private individuals on the other. The views expressed in scholarly literature on the transferability of international-law necessity to relations under private law differ significantly from one another (see on this Baars/Böckel, loc. cit., pp. 461 et seq. with further references). Scholarly articles indicate that it is desirable in terms of legal policy to recognise state necessity as a plea towards private individuals (see Dolzer, Staatliche Zahlungsunfähigkeit: Zum Begriff und zu den Rechtsfolgen im Völkerrecht, in: Jekewitz (ed.), Des Menschen Recht zwischen Freiheit und Verantwortung: Festschrift für Karl Josef Partsch zum 75. Geburtstag (1989), p. 550), but the lack of state practice prevents one from reaching the conclusion that customary law is already in force (see Hahn,

Das Völkerrecht der Auslandsschuldenregelungen, Kreditwesen (1989), p. 314 (318)). The transferability of a legal obligation resulting from a general principle of showing consideration is also discussed in legal literature, but it too is rejected for lack of supporting documentation from state practice (see Ohler, loc. cit., pp. 594-595).

Insofar as the scholarly literature indicates that there are, allegedly, domestic legal principles which are common to all legal systems and which thus demand recognition under international law, this can be maintained as to the fundamental principle of compensation between debtors and creditors. This approach is not, however, helpful for a ruling on the submitted question. Were there a general legal principle according to which a debtor state could use the objection of state bankruptcy towards private creditors, state bankruptcy would have to be identifiable in examples from state practice; one would hence have to be able to recognise at least a certain congruency in the various legal systems vis-à-vis the recognition of this principle. This is, however, not the case, as the evaluation of state practice undertaken to verify customary law has revealed. A general legal principle cannot be verified absent a corresponding embodiment in actual legal practice. One may not derive solely from a principle of compensation which is also inherent to the German law of obligations and to the safeguarding of the conflicting interests under procedural law an international rule determining that a state creditor should be placed in a different position than a private individual, and hence could invoke state necessity.

4. The question as to recognition, under customary law, particularly of economic or financial state necessity, and as to its preconditions concerning the degree of peril of vital state interests, can remain unresolved here. Because, in any event, an economically or financially defined state of necessity can also not be pled by a state vis-à-vis private individuals so long as there is no rule under international customary law which recognises the transferability of the defence of necessity from relationships under international law to relationships under private law.

Judges: Hassemer, Broß, Osterloh, Di Fabio, Mellinghoff, Lübbe-Wolff, Gerhard, Landau

Dissenting opinion of Judge Lübbe-Wolff on the Order of the Second Senate of 8 May 2007 – 2 BvM 1-5/03, 1, 2/06 –

“Foreigners lending money to a particular State can hardly expect not to be prejudicially affected under any circumstances by the vicissitudes of the State in question. ... A State cannot, for example, be expected to close its schools and universities and its courts, to disband its police force and