The Case of State X Company - Essay Example

?Question Answer QUESTION The case here illustrates that Overseas Investment Co. (OIC), a multinational enterprise with its headquarters in W which entered into a joint venture with Investment Promotions Facility, Ltd (IPF) which is a state held company whose panel of directors and major officers had been selected by the minister of finance of State X. The joint venture entered by both the organisations provided that any dispute that may arise would be resolved by arbitration. Moreover, the law of State X affirms that all the foreign investment agreements need to be sanctioned by the minister of finance. Notably, finance minister of State X was present at the signing of the agreement between the two parties and after signing the document, the finance minister added the words “approved and ratified” and the minister also placed his own signature. Later on, a dispute aroused where OIC initiated a settlement proceeding in accordance with the procedures set out in the joint venture contract specifying both IPF and State X. However, State X argued that settlement tribunal has no jurisdiction over it. The major case issue is that whether State X can be excused from participating in the suit or not. With regard to the case, it can be stated that State X cannot be excused from participating in the suit. As the common law of contract in Australia affirms that any third party benefitting from the contractual agreement is liable to sue the other major party under the contractual agreement and vice versa. Nonetheless, privity of contract states that only the major parties entering into the contractual agreement has the right to sue each other if any dispute arises. Simultaneously, the doctrine of privity of contract denies any obligations or liabilities to third party1. However, the doctrine of privity states that the major party has the right to sue the third party benefiting from the contract. Notably, it is argued that the plaintiff can only seek nominal remedies from the third party to the contract. Thus, it can be argued in the contractual agreement between OIC and IPF, State X is the third party that is benefiting from the actions or the contractual obligations arising from the IPF. At the same time, State X holds significant control over the performance of IPF, it cannot be denied that any action performed by IPC is governed by and taken with the active participation of State X2. Thus, the action of IPC cannot be distinguished from State X. In addition, State X also affirmed the contract by providing its approval and rectification as well as the finance minister of State X placed his signature to the contractual agreement which provided an evidence of State X’s involvement to the contractual agreement entered between OIC and IPF. At the same time, it can be argued that finance minister of State X was endorsing the contract but he was not making government as a party to the contract entered. Despite this aspect, it can be stated that State X should not be excused from participating in the suit. Additionally, the arbitration tribunal has sole power to involve State X in the suit. QUESTION 2: Considering the case of the Republic of Argentina et al v. Weltover Inc. et al., The United States used the Foreign Sovereign Immunities Act of 1996 to bring suit against Argentina for a default on bond repayment. According to Foreign Sovereign Immunities Act 1996, statutory method can be ascertained from the United States courts to acquire jurisdiction over non-US sovereign. It offers that any person in the United States can seek for jurisdiction for disputes resulting from business transactions to non-US sovereign. It immunises non-U.S. states from jurisdiction of US court unless any exceptional scenario applies. Accordingly, Supreme Court of the USA has characterised “commercial activity” as the most important exception. This exception provides the verdict regarding which party can apply for lawsuit against the non-US sovereign in the US court. As part of a plan to stabilise petitioner, the Republic of Argentina and its central bank Banco Central (collectively Argentina) delivered bonds also termed as “Bonods” that facilitated for repayment of debts in United States Dollars by transferring it in the different markets in several places including New York in the United States. However, during the time of the maturity of Bonods, Argentina individually extended the payment time. Notably, the bond holders including Panamanian Corporation and Swiss Bank declined to accept the decision of Argentina for rescheduling and these bondholders obliged Republic of Argentina for repayment at New York. It was argued that since the place of performance of contractual obligation is in the United States, it contributes direct effects in the United States and thereby the court will have personal jurisdiction. The court concluded that the rearrangement of the maturity sates certainly had more explicit effect on respondents. The court further concluded that its effect will render substantial influence in the United States. Nonetheless, it can be argued that monetary effects on macroeconomic concerns in the United States were integral to the Supreme Court assuming jurisdiction over the Republic of Argentina. This can be justified by the fact that respondents who had designated their accounts in the New York as the location of imbursement and Argentina made certain interest disbursements into those accounts before proclaiming that it was rearranging the payments. Contextually, New York was consequently the location of performance for Argentina’s eventual prescribed obligations the rescheduling of those obligations necessarily has direct effect in the United States. Evidently, the money that was supposed to have been delivered to a New York bank for deposit was not realising. Argentina’s affirmation can be solely rejected which emphasised that direct effect requirement cannot be entertained where the complainants are all foreign organisations with no linkages with the United States3. Thus, it can be stated that monetary effects on macroeconomic concerns in the United States were integral to the Supreme Court assuming jurisdiction over the Republic of Argentina. QUESTION 3:  According to the stated case, several automobile manufacturers from State J are importing large number of cars to State K’s automobile market and putting K’s own automobile manufacturers and workers out of business. Moreover, State J’s manufacturers are neither subsidised by the State J nor they are dumping their cars at below-cost prices. Accordingly, the major issue concerning the case is to discuss measures that facilitate State K to overcome the problems arising from the import of cars from State J. In this context, article 6 of GATT allows countries to take actions against dumping. However, State K cannot seek for action against the manufactures from State J under the WTO anti-Dumping agreement owing to the reason that manufacturers from State J are not exactly practicing dumping. Another probable remedy that can be sought by State K under GATT would have been dispute settlement procedure that would have facilitated in the withdrawal or removal of subsidy offered by State J. Nonetheless, the car manufacturers from State J are not facilitated with any subsidies by State J so State K cannot seek remedy under the World Trade Organisation’s (WTO’s) dispute settlement procedure4. Contextually, State K in order to reduce the adverse impact on its own automobile business as well as on its domestic workers however has few significant remedial measures5. Additionally, General Agreement on Tariffs and Trade (GATT) duly recognises that countries may wish to protect their business from foreign competition. Accordingly, State K has an opportunity to reduce the negative of imports of automobile from State J through tariffs. The principle of tariffs allows State K to reinforce provisions that shall facilitate State K to sue quantitative restrictions on the imports of cars from State J. Under GATT agreement, State K can negotiate with State J regarding the rates of tariffs. Other significant measures that can be undertaken by State K can be treating imported products at similar footing to domestically produced goods. State K can impose internal taxes including sales tax at higher rates than those implemented to comparable domestic products. At the same time, article 19 of GATT ensures safeguard measures if the domestic industry is seriously threatened with injury caused by the surge in the imports. Contextually, State K can also safeguard its domestic industry and workers from any serious injury through “grey area” measures. “Grey area” measures comprise bilateral negotiations outside GATT’s auspices. Moreover, WTO sets out desires for safeguard of investigation by national authorities. This allows national authority to undertake investigations regarding the adverse effect of import from other countries to the domestic industry and workers. It is essential that evidence arising from investigation must present significant argument that measures opted for reducing or eliminating the negative consequences of imports is in the public interest. Contextually, State K has to report each phase of safeguard investigation and related decision making. The WTO’s Safeguard Committee is responsible for overseeing and reviewing the functioning of the agreement and decision taken by effected member state to defend domestic industry from any serious threat. State K can request the committee to make necessary findings for effectively tackling the problem. QUESTION 4: Armstrong functioned for a United Nations agency in Geneva for seven years as a part of the civil rights actions of member states agency. Accordingly, one state did not agree by his listing of certain civil rights abuses that he blamed that country was committing against its nationals. However, the country rejected to pay its dues to the agency unless he was dismissed. As a consequence, the Secretary General of the agency dismissed him. On this note, Armstrong filed this decision to ILO’s Administrative Tribunal which has authority over these types of disputes. Now, he wanted the tribunal to order the agency to either rehire him or to pay him requisite compensation for loss of his job. In relation to above stated case, it is essential to identify the nature of the tribunal. Contextually, the tribunal can be explained as an administrative body as it is neither civil nor human rights/criminal court of law. Its primary purpose is to examine complaints filed by officials that highlight the rules and the regulations governing their employment relationship, whether they have been implemented fairly or they have been ignored. Furthermore, its responsibility is to ensure that administration is appropriately brought and resolved concerning any abuse of authority or arbitrariness in the application of such rules and regulations. Concerning the case of Armstrong, the tribunal should order preliminary investigation measures including hearing expert and other witnesses. The tribunal duly determines the conduct of hearing6. The preliminary investigation should be intended towards identifying if Armstrong has been actually treated unfairly by the agency and if there are any issues related to abuse of employee rights or any related misconduct towards him. The preliminary investigation should also focus on identifying regarding the factors or the ground based on which Armstrong has been removed from his job and it should also ensure that if the ground of his removal is acceptable or not. If the tribunal finds from the preliminary investigation conducted that no injustice or any act of misconduct was performed by the agency, it should reject the complaint filed by Armstrong. The tribunal can also make use of oral proceedings from both the plaintiff and the authority of the agency. If the tribunal after examining the contradictory statements in relation to case filed finds that his termination was valid then it should consider whether the punishment (i.e. dismissal) imposed by the agency was proportional to the conduct. If it is ascertained that the agency has neglected in terms of discharge of responsibility, likely remedies should be provided to him. Moreover, if it is found that dismissal of Armstrong was a serious professional misconduct by the agency, the tribunal should ask the agency to rehire him. If it is found the rehiring of Armstrong not possible then it should order the agency to pay him compensation for the loss of job7. Works Cited August, Ray. International Business Law: International Edition. London: Pearson, 2013. Print. “Administrative Tribunal.” Conclusions and Recommendations. Office of Legal Affairs, 2010. Web 17 May. 2013. “Anti-dumping, subsidies, safeguards: contingencies, etc.” Subsidies and Countervailing Measure. The World Trade Organization, 2013. Web 17 May. 2013. . Lavelle, Maria. “Privity of Contract and Third Party Beneficiaries.” Alberta Law Reform Institute (2007): 1-32. Print. Lew, Avi. Republic of Argentina v. Weltover, Inc.: Interpreting the Foreign Sovereign Immunity Act’s Commercial Activity Exception to Jurisdictional Immunity. Fordham International Law Journal 17.3 (1993): 726-775. Print. “Rules of the Administrative Tribunal of the International Labour Organization.” Other Matters.  International Labour Organization, 2012. Web 17 May. 2013. . Wilson, Louise. “Contract and Benefits for Third Parties.” Sydney Law Review 11(1987): 230-258. Print. Read More