Treaty Abuse—Why Criticism of the Doctrine is Unfounded

Treaty Abuse—Why Criticism of the Doctrine is Unfounded ABSTRACT Although treaty abuse is an increasingly occurring element in international legal arguments, especially in the sphere of international economic law, the concept is still viewed by many lawyers as suspicious, for several reasons. First, lawyers have doubts about the legal status of the treaty abuse doctrine. Second, as many lawyers would seem to believe, the concept of treaty abuse is imprecise—it is the expression of some loose or unsettled idea about the function of international law that cannot be explained in a clear and coherent manner. Third, lawyers fear that by accepting the validity of a treaty abuse argument, a court or tribunal will import elements into a treaty that were not there originally, and by so doing, will encroach upon the sovereign right of the parties to define between themselves the precise terms of application of their treaty. 1. INTRODUCTION As every international lawyer is aware, when law-applying agents (such as states, international organizations or international courts and tribunals) set out to make a determination of international law relative to a particular dispute or a particular set of facts, they often find that the scope of application of rights and obligations are not delimited with any great precision. To some extent, this is the unavoidable consequence of the generality of law and the dependency of legal communication on the usage of human language. More interestingly, however, it is in many cases the result of a deliberate law-making strategy. Because of the particular issue to be governed by a treaty provision, within the limits posed by the language expressing it, international law-makers sometimes decide to leave to law-applying agents the possibility to choose between diverse courses of action. For example, while, according to Article 25 of the ICSID Convention,1 ‘the jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State … and a national of another State’, the Convention confers upon parties the discretion to define for themselves, by the conclusion of bilateral investment treaties (BITs), what precise disputes should come within the jurisdiction of ICSID. Generally, when lawyers talk about any such power conferred on law-applying agents, they use the term legal discretion. Over the last 5–10 years, treaty abuse has become an increasingly popular element in international legal argument.2 The concept pertains to the proper exercise of legal discretion. The suggestion is that no legal discretion offered under a treaty provision is absolute in the sense that a law-applying agent has complete freedom to exercise it any way it likes. If, for example, Article 25 of the ICSID Convention confers on parties a power to agree between themselves what precise criteria shall be applied in determining the nationality of an investment, according to the suggestion, this is not to say that any such criterion will be acceptable. From the perspective of the treaty abuse doctrine, at some point or another, the exercise of the discretion conferred under Article 25 to determine the applicable criteria of nationality will turn into an abuse of that same provision. According to the argument, what might appear at first to be just the exercise of a treaty right will in fact amount to a breach of an international rule imposing on treaty parties an obligation not to exercise treaty rights abusively.3 In a situation where the jurisdiction of ICSID assumes that nationality criteria are applied in a way that abuses Article 25, this explains why jurisdiction has to be declined. The treaty abuse argument can be observed especially in the practice of international economic law. In the context of the application of tax treaties, for example, treaty abuse is an argument regularly used by domestic authorities when trying to justify the application of domestic anti-avoidance measures denying taxpayers treaty benefits.4 It is a concept very much in focus of the OECD/G20 project on Base Erosion and Profit Shifting.5 WTO Panels and the WTO Appellate Body have considered the possibility of denying the introduction of barriers to trade in goods, and discriminatory treatment in international commerce, invoking the duty of states not to abuse the exceptions contained in Article XX of the 1994 GATT; similarly, in the interpretation and application of the TRIPS agreement, they have referred to treaty abuse as a safeguard against a potential arbitrary regulation by states of ownership of intellectual property.6 ICSID arbitration tribunals have declared it to be a condition for the protection of an investment that it does not constitute an abuse of the ICSID Convention/BIT system.7 In several cases, including the recently issued award in the arbitration between Philip Morris Asia and Australia, arbitration tribunals have found that the commencement of arbitration proceedings constitutes an abuse of process ‘when an investor has changed its corporate structure to gain the protection of an investment treaty at a point in time where a dispute was foreseeable’.8 In the growing camp of lawyers engaged with the practice of international economic law, treaty abuse arguments are still viewed by many as suspicious.9 This widely shared attitude would seem to have mainly three reasons. First, lawyers have doubts about the legal status of the alleged rule not to exercise treaty rights abusively.10 For example, the UN Committee of Experts on International Cooperation in Tax Matters, at one point of their work on tax treaty abuse and treaty shopping, expressed the idea that treaty abuse is tantamount to ‘an incorrect use of a treaty, without however necessarily involving an illegal act or a formal breach of the treaty’.11 In Philip Morris Asia v Australia, the claimant responded to the objection that the commencement of arbitration shortly after restructuring was contrary to the treaty abuse doctrine which prevented it from exercising rights offered under Article 10 of the 1993 Hong Kong–Australia BIT. According to claimant, there was no coherent—much less settled—principle of international law underlying the respondent’s objection.12 In Rompetrol v Romania,13 Respondent relied heavily on the dissenting opinion of Professor Prosper Weil in Tokios Tokelės v Ukraine, in which the Professor forcefully defended the relevance of the treaty abuse doctrine.14 As concluded by the Arbitration Tribunal in Rompetrol, it would not pay great attention to this opinion ‘since (as the Claimant argued) the view expressed by Prof. Weil had not been widely approved in the academic and professional literature, or generally adopted by subsequent tribunals’.15 Second, as many international economic lawyers would seem to believe, the concept of treaty abuse is imprecise; it is the expression of some loose or unsettled idea about the function of international law that cannot be explained in a clear and coherent manner.16 This particular assumption would seem to be largely spurred by the absence of a coherent language pattern. For international tax lawyers, it would seem to be a problem that while ‘treaty abuse’ is a term used in international legal discourse, it is also a concept of many domestic legal systems taking on a great variety of different meanings.17 Even when looked upon from a purely international lawyers’ perspective, however, the use of ‘treaty abuse’ fails to present a single stable pattern of meaning. On the one hand, especially for ICSID tribunals, the meaning of ‘treaty abuse’ would seem to relate to the doctrine of abuse of rights. ICSID tribunals use ‘treaty abuse’ and ‘abuse of rights’ interchangeably.18 To further complicate things, in response to the great variety of circumstances which in arbitration proceedings may provoke an argument of treaty abuse, there is now a tendency of further fine-tuning terminology: arbitration tribunals distinguish between ‘abuse of treaty rights’ and ‘abuse of process’,19 and between breaches of ‘material’ or ‘procedural good faith’.20 On the other hand, especially for taxation law scholars, and domestic courts adjudicating issues of international taxation, the meaning of ‘treaty abuse’ would seem to relate to issues of treaty interpretation and good faith.21 Examining the role assigned to the concept of the improper use of taxation conventions in strategies of states to prevent tax avoidance and evasion, the Commentary to the United Nations Model Double Taxation Convention between Developed and Developing Countries adopted in 2011 gives the following explanation: Another approach that has been used to counter improper uses of treaties has been to consider that there can be abuses of the treaty itself and to disregard abusive transactions under a proper interpretation of the relevant treaty provisions that takes account of their context, the treaty’s object and purpose as well as the obligation to interpret these provisions in good faith. As already noted, a number of countries have long used a process of legal interpretation to counteract abuses of their domestic tax laws and it seems entirely appropriate to similarly interpret tax treaty provisions to counteract tax treaty abuses.22 Third, many international economic lawyers fear that by accepting the validity of such arguments, a court or tribunal will import elements into a treaty which were not there originally, and that by so doing, will encroach upon the sovereign right of parties to a treaty to define between themselves its precise terms of application.23 When a treaty uses language that leaves to law-applying agents the possibility to choose between diverse courses of action, this should be seen as a deliberate choice: whatever ensues from the loose language of the treaty, this is precisely what the parties intended. In Tokios Tokelės v Ukraine, for example, the respondent argued that the ICSID Tribunal should deny jurisdiction because the claimant did not maintain substantial business activities in the country of its nationality (Lithuania). The Tribunal noted that while many investment treaties enable parties to deny treaty benefits to corporations controlled by nationals of the denying party when they do not engage in substantial business activity in the country of their nationality, the Ukraine–Lithuania BIT contained no such provision: We regard the absence of such a provision as a deliberate choice of the Contracting parties. In our view, it is not for tribunals to impose limits on the scope of BITs not found in the text, much less limits nowhere evident from the negotiating history.24 In Rompetrol, as earlier noted, the Tribunal expressed doubt about the legal status of the treaty abuse doctrine. As it added, the situation allowed it to leave this question aside: The Tribunal would in any case have great difficulty in an approach that was tantamount to setting aside the clear language agreed upon by the treaty Parties in favour of a wide-ranging policy discussion. Such an approach could not be reconciled with Article 31 of the Vienna Convention on the Law of Treaties (which lays down the basic rules universally applied for the interpretation of treaties), according to which the primary element of interpretation is ‘the ordinary meaning to be given to the terms of the treaty’.25 As this article finds, much of the criticism still expressed among international economic lawyers to the treaty abuse doctrine is unfounded. It is the objective of this article to establish this proposition properly. As the article will argue: (i) the concept of treaty abuse expresses a very clear and coherent idea about the function of international law, despite the existence of an incoherent language pattern; (ii) there is in international law an established rule not to exercise treaty rights abusively; and (iii) by accepting the validity of a treaty abuse argument, a court or tribunal will not be acting contrary but rather in deference to the intention of treaty parties. If ever an explanation of the treaty abuse criticism can be given, consequently, it would seem to lie partly in the failure of international economic lawyers to fully recognize the foundational basis of the treaty abuse doctrine. Partly, it would seem to be the result of an inclination of those same lawyers to perceive of treaty abuse arguments as something highly peculiar for the practice of international economic law, which naturally makes them reluctant to acknowledge the clear affinity of those arguments with the practice of international law generally. The organization of the article will be as follows. Sections 2–4 will inquire into the precise meaning of ‘treaty abuse’. Methodologically, instead of investigating the concept considered in isolation, the article will draw on the idea of treaty abuse as an element of a conceptual field. Like linguistics, the article will assume that the extension of any concept is determined partly by its relationship with ‘conceptual neighbors’.26 Consequently, it will make an attempt to define the concept of treaty abuse by clarifying its relationship with abuse of rights and good faith treaty interpretation, respectively. As Sections 2–4 will establish, in one sense of the term, treaty abuse is a special case of abuse of rights. It denotes a situation in which the exercise of a discretion offered under a treaty rule renders the purpose of the treaty ineffective. In another sense of the term, treaty abuse bears on the concept of good faith treaty interpretation, being in some cases its conceptual opposite—treaty interpretation mala fides. Section 5 will inquire into the legal status of the rule prohibiting treaty abuse. It will do so by surveying case law concerning the exercise of treaty-based discretionary powers developed outside of the limited context of international economic law. As this section will establish, the treaty abuse doctrine has been applied by international courts and tribunals since long. Admittedly, they have not referred to the doctrine using this precise term, but substantially they have accepted the validity of the treaty abuse argument without much hesitation. Section 6 will establish the relation of the treaty abuse doctrine with the principle of free consent. Since, as found in earlier sections of the article, the treaty abuse doctrine is merely the application of the principle of good faith to a particular category of international rights, Section 6 will be conducted as an inquiry into the function of the principle of good faith. As argued, when the principle of good faith is applied relative to the treaty abuse doctrine, it serves no other purpose than the determination of the intention of treaty parties. Applying the treaty abuse doctrine, consequently, a court or tribunal will satisfy the principle of free consent much like when it acts upon the clear language of the text of a treaty. 2. THE CONCEPT OF ABUSE OF RIGHTS A. Theory A first task assumed in this article is to investigate whether, by the determination of the relationship of treaty abuse with its conceptual neighbors, this concept can be defined more precisely. The task will be accomplished in three stages, the first of which—to be completed in the current section—implies the development of a fuller understanding of the concept of abuse of rights. An abuse of rights argument, much like the doctrine of treaty abuse, builds on the assumption that a legal discretion offered under a rule of law is never absolute.27 Say, for example, that according to a fishing agreement concluded between two states, fishing vessels of the nationality of each state are allowed to conduct fishing operations in the exclusive economic or fishing zone of the other party. The agreement leaves to each of the two parties to determine the applicable criteria of nationality of fishing vessels. As the abuse of rights doctrine teaches, however, this is not to say that parties are free to apply just any such criteria. Some criteria when applied for the purpose of the fishing agreement may in fact be contrary to international law;28 more specifically, they may be contrary to the obligation of all states and international organization not to exercise international rights abusively. Parties to a treaty may choose to lay down this obligation explicitly in a treaty provision similar to Article 300 of the UN Convention on the Law of the Sea (UNCLOS), for example: States Parties shall fulfil in good faith the obligations assumed under this Convention and shall exercise the rights, jurisdiction and freedoms recognized in this Convention in a manner which would not constitute an abuse of right.29 However, if the abuse of right doctrine is adopted, such a provision makes little difference. Although, of course, an explicit rule may serve the useful purpose of clarifying the scope of treaty obligations assumed, as argued, the prohibition of the abuse of rights applies whether explicitly referred to in the treaty or not.30 The ICSID Tribunal in Phoenix Action Ltd v The Czech Republic phrased this very neatly: ‘[E]very right includes an implied clause that it must not be abused.’31 The fundamental question raised by the abuse of rights doctrine, as described, is the following: If the discretionary power offered under a law is always limited, and this limitation is not the result of the language expressing the law, then what could possibly be the determining factor? Stated differently, what exactly marks the point when the exercise of a right conferred on a state or an international organization under a rule of international law turns into an abuse of that same right? The answer to this question would seem to require a more informed understanding of the justification of the doctrine of abuse of rights. This is where the principle of good faith enters the picture. Already Professor Bin Cheng emphasized the existence of a relationship between the principle of good faith and the abuse of rights doctrine. As he put it, ‘the theory of abuse of rights (abus de droit) … is merely an application of this principle to the exercise of rights’.32 This idea is widely represented in later academic writing.33 It finds recognition in the practice of international courts and tribunals. For example, in La Bretagne Arbitration, the conclusion of the Tribunal was that the registration of trawlers referred to in Article 4(b) of the 1972 Fishing Agreement between Canada and France ‘was considered by the Parties, together with the principle of good faith … as affording a sufficient guarantee against any risk of the French Party exercising its rights abusively’.34 In Phoenix, in interpreting the ICSID Convention, as the ICSID Tribunal declared, it was concerned … with the international principle of good faith as applied to the international arbitration mechanism of ICSID. The Tribunal has to prevent an abuse of the system of international investment protection under the ICSID Convention, in ensuring that only investments that are made in compliance with the international principle of good faith and do not attempt to misuse the system are protected.35 In US – Shrimp and Shrimp Products, the WTO Appellate Body, commenting upon the relevance of the principle of good faith for the interpretation and application of Article XX of the 1994 GATT, made similar reference to the doctrine of abus de droit as ‘[o]ne application of this general principle of international law’.36 Furthermore, as indicated by several treaties,37 and among them most importantly UNCLOS, the idea of a relationship between the doctrine of abuse of rights and the principle of good faith seems to be commonly represented also among states. If the source of the abuse of rights doctrine can be traced back to the principle of good faith, obviously, this helps to clarify a few things. First, it helps to clarify the identity of the ‘abuser’. The obligation to perform a treaty in good faith, as known to international lawyers, is incumbent upon treaty parties.38 In the case of a treaty concluded by two states—say a BIT—consequently, the concept of abuse of rights has to be construed in terms of the conduct of those states, and not the conduct of any investor or taxpayer. Take, for example, the 1993 Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments.39 Article 10 of the Agreement, while providing for the settlement of disputes between either of the contracting parties and investors of the other party, does not itself define the concept of an investor. A definition of sort can be found in Article 1(f), which provides that in respect of Hong Kong, for example, ‘investors’ means among other things ‘companies defined in paragraph 1(b)(i) of this Article’, according to which ‘companies’ means, in respect of Hong Kong, ‘corporations, partnerships, associations, trusts or other legally recognised entities incorporated or constituted or otherwise duly organised under the law in force in its area …’. The 1993 Agreement, obviously, leaves to the Government of Hong Kong to determine the criteria that make a corporation a Hong Kong investor for the purpose of the 1993 Agreement. The abuse of rights doctrine sets a limit to the exercise of this discretion. It does not go as far as to limit the law-making power of Hong Kong, of course. What it implies is that the application of the nationality criteria laid down in the laws of Hong Kong will not necessarily always be recognized for the purpose of the application of the 1993 Agreement. Second, and more importantly for the purpose of this section, the close relationship between the abuse of rights and the principle of good faith helps to identify the criterion that determines, in each and every case of application of the abuse of rights doctrine, whether an exercise of discretion is abusive or not. Commenting upon the concept of good faith, international lawyers typically emphasize the importance of rationality and reason for the application of international law.40 More specifically, good faith is said to place an obligation on every party to a treaty to take into account the reasonable expectations of all others,41 or an obligation to apply the treaty in a reasonable way,42 or again an obligation to give the treaty a reasonable and equitable effect.43 Good faith is said to signify an element of reasonableness;44 it is said to call in substance for a nonarbitrary interpretation of a treaty;45 it is said to help bring into effect a reasonable and nonabusive result of any treaty interpretation process,46 or a result which is not manifestly absurd or unreasonable.47 As this article will rather put it, good faith stands for the idea of international law as a purposive endeavor.48 The principle insists upon the assumption that when states and international organizations enter into a treaty relationship, this is done to help bring about some particular state or states of affairs, such as the maintenance of international peace and security,49 the reinforcement of mutual commitments with regard to judicial settlement50 or the development of just any stable and foreseeable pattern of conduct. Stated in the inverse, good faith insists upon the assumption that the creation of the treaty relationship was seen by the parties as something more than an end in itself. So interpreted, good faith makes sense of the very occurrence of a treaty,51 in much the same way as the assumption of a communicative intention provides the necessary basis for the understanding of treaty language.52 If this conclusion is correct, then obviously, to exercise a discretionary power in good faith means to exercise it for a purpose. Stated in the inverse, to accept the unlimited exercise of a discretionary power is to accept that this power is sometimes exercised either unreasonably (i.e. for any purpose), or arbitrarily (i.e. for no purpose at all). Assuming that there is no single overarching purpose of all rules of international law, the relevant purpose can only be determined relative to each particular rule conferring a power. This conclusion presupposes, of course, that good faith can be categorized as a principle of international law. According to the assumption, contrary to any rule of international law, good faith does not provide a standard that can be directly applied to determine whether the exercise of a discretionary power is abusive or not.53 It serves this purpose only indirectly by identifying the relevant criterion to be used in the assessment, which is the purpose of the particular rule conferring the power in question. Viewed in this way, good faith allows for flexibility and assessments on a case-by-case basis, much like any equitable principle in the resolution of maritime delimitation disputes, or the principle of proportionality in the application of the European Convention on the Protection of Human Rights and Fundamental Freedoms, or again, the principle of due diligence in the application of laws protecting foreign investments. The quick survey of case law conducted in Section 2(B) of this article will illustrate and further establish this proposition. B. Practice In several awards, ICSID tribunals have addressed objections made by respondents on the ground that in accepting jurisdiction over a dispute, the respective Tribunal would in effect protect ‘an abusive manipulation of the system of international investment protection offered under the ICSID Convention and bilateral investment treaties’.54 In Autopista v Venezuela,55 for example, a Mexican company, Autopista Concesionada de Venezuela (Aucoven) had restructured its investments in a Venezuelan company by transferring 75% of its shares to a US corporation, Icatech. Venezuela argued that this transfer was accomplished only to gain access to the scope of protection offered under the ICSID Convention, and that the assertion by Aucoven of ICSID jurisdiction on the basis of Icatech’s 75% ownership of Aucoven in effect amounted to an abuse of the Convention. The Tribunal recalled that Article 25 of the ICSID Convention does not specifically define important terms used in the provision, such as, for instance, ‘national’, ‘investment’ and ‘foreign control’. As the Tribunal explained, the drafters of the Convention ‘preferred giving the parties the greatest latitude to define these terms themselves’.56 Consequently, in determining whether one company controlled another, in the sense of Article 25, the Tribunal ‘may not adopt a more restrictive definition of foreign control, unless the parties have exercised their discretion in a way inconsistent with the purposes of the Convention’.57 The Tribunal concluded that, based on the facts of the case, it could not be inferred that Icatech was a corporation of convenience exercising merely fictitious control over Aucoven. Consequently, no abuse of the ICSID Convention could be established.58 In Phoenix Action Ltd v The Czech Republic,59 a company (Phoenix) registered under the laws of Israel complained about the treatment given by the Czech Republic to two Czech companies fully owned by Phoenix. As the Respondent argued, because Phoenix had acquired the two companies ‘for the precise purpose of bringing their pre-existing and purely domestic disputes before an international judicial body … the Tribunal should look beyond the shell of the corporate claimant’. 60 It should deal with the two companies as they would have to deal with any investment made by a Czech national in the Czech Republic. The Tribunal noted that it was not the intention of the drafters of the ICSID Convention to leave to the parties a total discretion to define for themselves the notion of an investment.61 As the Tribunal stated, ‘basic criteria’ had to be met.62 The ICSID system was not created to protect nationals of a Contracting State against their own State, but to facilitate the settlement of disputes between states and foreign investors with a view to stimulating a larger flow of private international capital into those countries which wish to attract it.63 The Tribunal noted that the request for arbitration submitted to ICSID was based on a claim by the two Czech companies, supposedly assigned to Phoenix. It stressed the fact that when Phoenix acquired the Czech companies they were already involved in lawsuits and disputes with the Czech authorities. It emphasized the timing of the claim, which was presented by Phoenix to the Czech Republic before the registration of its ownership of the two companies in the Czech Republic, and a mere two months after acquisition agreements were signed. Furthermore, as it observed, circumstances indicated that no economic activity was either performed or even intended.64 The Tribunal concluded: the Claimant’s initiation and pursuit of this arbitration is an abuse of the system of international ICSID investment arbitration. If it were accepted that the Tribunal has jurisdiction to decide Phoenix’s claim, then any pre-existing national dispute could be brought to an ICSID tribunal by a transfer of the national economic interests to a foreign company in an attempt to seek protections under a BIT. Such transfer from the domestic arena to the international scene would ipso facto constitute a ‘protected investment’ – and the jurisdiction of BIT and ICSID tribunals would be virtually unlimited. It is the duty of the Tribunal not to protect such an abusive manipulation of the system of international investment protection under the ICSID Convention and the BITs.65 In Philip Morris Asia v Australia,66 the claimant initiated arbitration under the Arbitration Rules of the UNICITRAL, as revised in 2010, in accordance with Article 10 of the 1993 Hong Kong–Australia BIT. As provided by this article, in the case of a dispute ‘between an investor of one Contracting Party and the other Contracting Party concerning an investment of the former in the area of the latter’, as a remedy of last resort, ‘the parties to the dispute shall be bound to submit it to arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law as then in force’.67 The dispute in this case pertained to the effects on the claimant’s investments in Australia of the enactment and enforcement of the 2011 Australian legislation on plain packing of tobacco. The claimant (Philip Morris Asia) was a company incorporated in accordance with the laws of Hong Kong. In 2010, the Philip Morris International company group had restructured so as to transfer to Philip Morris Asia the ownership of an Australian holding company called ‘Philip Morris (Australia)’, which in turn owned all shares of the Australian trading company (‘Philip Morris Limited’) that manufactured and distributed Philip Morris’ products in Australia. As the respondent argued, since arbitration had been commenced only shortly after the transfer of ownership of the two Australian companies, the doctrine of treaty abuse prevented the claimant from exercising the right laid down in Article 10 of the 1993 BIT. The Tribunal upheld this objection. As it affirmed: [T]he commencement of treaty-based investor-State arbitration constitutes an abuse of right (or abuse of process) when an investor has changed its corporate structure to gain the protection of an investment treaty at a point in time where a dispute was foreseeable. A dispute is foreseeable when there is a reasonable prospect that a measure that may give rise to a treaty claim will materialise.68 In effect, the reasoning of the Tribunal seems largely similar to the findings of the ICSID Tribunal in Phoenix. Article 10 of the 1993 BIT leaves to each of the two parties a discretion to determine, by the adoption and application of domestic legislation, the nationality of a company.69 The adoption of the plain packaging legislation was foreseeable before the claimant decided to restructure. As the Tribunal seems to express, because of this, the application of Hong Kong nationality laws to Philip Morris Asia cannot be accepted for the purpose of the application of Article 10. If the nationality law of Hong Kong would be unconditionally accepted for the purpose of the admissibility of an investor’s claim, then any existing or foreseeable dispute between an Australian corporation and the government of that country could easily be made arbitrable under the 1993 BIT by a transfer of ownership of the corporation to a company incorporated in accordance with the laws of Hong Kong. This would be inimical to the purpose of Article 10, which is identical to the purpose of the 1965 ICSID Convention: to facilitate the settlement of disputes between states and foreign investors with a view to stimulating a larger flow of private international capital into those countries which wish to attract it.70 Abuse of rights is an argument sometimes applied in the consideration of claims of violation of the European Convention on the Protection of Human Rights brought before the European Court. This is for obvious reasons, as Article 17 of the Convention explicitly establishes a ‘Prohibition of abuse of rights’: Nothing in this Convention may be interpreted as implying for any State, group or person any right to engage in any activity or perform any act aimed at the destruction of any of the rights and freedoms set forth herein or at their limitation to a greater extent than is provided for in the Convention. While the reference in Article 17 to the ‘destruction’ of rights and freedoms does not itself reveal the purpose to be protected by the application of the provision, this purpose comes out very clearly from established case law. Securing to everyone, who finds himself within the jurisdiction of a state party, the enjoyment of the rights and freedoms laid down in the Convention is a means for the protection of the ideals and values of a democratic society.71 This idea about the relationship between human rights and political democracy poses a limit to the discretion that state parties exercise when implementing Convention rights. As the Court phrased it in Refah Partisi, ‘no one must be authorized to rely on the Convention’s provisions in order to weaken or destroy the ideals and values of democratic society’.72 The European Court and (before 1994) the European Commission have many times had recourse to Article 17 to declare applications wholly or partly incompatible ratione materiae with the provisions of the Convention.73 In Kasymakhunov and Saybatalov,74 the applicants had been convicted by Russian courts for their membership in a prohibited extremist Islamic organization called Hizb ut-Tahrir al-Islami. They both complained that this conviction violated their rights under Articles 9, 10 and 11 of the European Convention. The Court stressed the relevance in this case of Article 17. As a point of general clarification, it remarked that in pleading the rights enshrined in Article 11, and also in Articles 9 and 10 of the Convention, a political party or other association may attempt to derive therefrom the right to conduct activities intended to destroy the rights or freedoms set forth in the Convention and thus bring about the destruction of democracy. Article 17 was created precisely with the aim to prevent that: the provision serves to guarantee that the Convention is not applied for purposes contrary to the ideals and values of a democratic society.75 In addressing the particular facts of the Kasymakhunov and Saybatalov case, the Court noted that the applicants were engaged in spreading the ideology and distributing the literature of Hizb ut-Tahrir, the aims of which were ‘clearly contrary to the values of the Convention’.76 Among other things, the organization urged members to fight the unfaithful with weapons and to kill any citizens of ‘enemy States’.77 It proposed to introduce capital punishment for apostasy from Islam and to ban all political parties which are not based in this religion. It intended to set up a regime based on sharia, which particularly with regard to the legal status of women, and the way it intervened in all spheres of private and public life in accordance with religious precepts, in the words of the Court, could ‘hardly be regarded as complying with the democratic ideal that underlies the whole of the Convention’. Furthermore, according to Hizb ut-Tahrir’s Draft Constitution, only Muslims would have the right to vote and to be elected, to become State officials or to acquire membership of political parties.78 The Court concluded that the dissemination of the political ideas of Hizb ut-Tahrir by the two applicants clearly constituted an activity falling within the scope of application of Article 17.79 3. THE CONCEPT OF GOOD FAITH TREATY INTERPRETATION A. Theory Section 2 initiated an investigation of whether, by the determination of the relationship of treaty abuse with its conceptual neighbors, the application of this concept can be defined more precisely. Section 3 will pursue this investigation. As a second stage of the inquiry, it will attempt the development of a fuller understanding of the concept of god faith treaty interpretation. The relevance of good faith for a treaty interpretation process is confirmed by the 1969 and 1986 Vienna Conventions on the Law of Treaties.80 According to common Article 31, paragraph 1, ‘[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’.81 As will be argued in this article, this explicit reference to the principle of good faith serves a twofold purpose. First, it provides explanation of the legal regulation laid down in Articles 31–33,82 forming a natural linkage between the means of interpretation specified in the Conventions and the idea of the ultimate purpose of treaty interpretation. A treaty interpretation process aims to determine the communicative intention of the treaty parties, that is to say, what the parties intended to communicate by adopting, ratifying or acceding to the particular treaty considered.83 For any intellectual process aiming to determine the communicative intention of some treaty parties, it remains a problem that such an intention can only be assumed. Thus, the interpretation of a treaty is no different than the understanding of just any verbal utterance produced by a person or group of persons at a particular occasion, whether orally or in writing. As emphasized by modern linguistics (pragmatics), an utterance can be understood only on the assumption that whoever produced it acted rationally. The addressee or addressees of the utterance have to assume that in verbalizing and expressing his intention, the utterer act in conformity with some particular standards of communication.84 An addressee may assume, for example, that by making his utterance, the utterer brings only information that can be seen as relevant or necessary, given the situation or context of utterance.85 Henceforth in this article, any such assumption made by an agent in the interpretation of an utterance will be referred to as a communicative assumption.86 The good faith requirement inserted in common Article 31, paragraph 1 can be seen as recognition of this rationality assumption inherent in any act of treaty interpretation. Still, it does not provide very much information about the particular rules to be applied. A full explanation of the legal regulation laid down in the Vienna Conventions requires that we identify also the relevant communicative assumptions. While only partly indicated in the text of Articles 31–33, those assumptions will have to be inferred largely from the practice of international courts and tribunals. They include: Parties to the treaty arranged so that the treaty conforms to the lexicon, grammar and pragmatic rules of the language used for every authenticated version of it.87 Parties to the treaty arranged so that no norm laid down in the treaty logically contradicts another.88 Parties to the treaty arranged so that the application of the treaty helps attain its object and purpose.89 Parties to the treaty arranged so that the treaty corresponds with whatever can be inferred from the subsequent practice developed in its application.90 Parties to the treaty arranged so that the treaty corresponds with whatever can be inferred from its preparatory work.91 Parties to the treaty arranged so that the treaty corresponds with whatever can be inferred from the subsequent practice developed in its application, rather than with whatever can be inferred from its preparatory work.92 Given that the requirement of good faith presupposes the use of a series of communicative assumptions, and given that not every such assumption can be defended based on Articles 31–33, the substance of those articles can be restated in the form of rules of interpretation, properly speaking.93 Examples include: Rule (1) If a treaty uses elements of conventional language (such as words, grammatical structures or pragmatic features), the treaty shall be understood in accordance with the rules of that language. Rule (2) If in one of its two possible ordinary meanings a treaty entails a logical contradiction, whereas in the other ordinary meaning it does not, then the latter meaning shall be adopted. Rule (3) If one of the two possible ordinary meanings of a treaty helps attain the object and purpose of the treaty, whereas the other ordinary meaning does not, then the former meaning shall be adopted. Rule (4) If one of the two possible ordinary meanings of a treaty accords with the way in which the treaty parties have applied it, whereas the other meaning does not, then the former meaning shall be adopted. Rule (5) If the preparatory work of a treaty indicates a common understanding of the negotiators of a particular term of the treaty, then the term shall be interpreted accordingly. Rule (6) Rule (3) shall be applied prior to Rule (5), insofar as this does not leave the meaning of the treaty ambiguous or obscure, or leads to a manifestly absurd or unreasonable result. This list of examples helps explain the second purpose of the explicit reference in common Article 31, paragraph 1 to the principle of good faith. In applying the rules of interpretation laid down in the two Vienna Conventions, obviously, states and international organizations exercise some discretion. As pointed out in previous publications, there are three things about the rules that make interpretation a less than automatic exercise.94 First, the rules of interpretation cannot always determine the extension of a means of interpretation relative to the particular issue confronted. For example, whereas according to Rule (1), the interpreter shall understand a treaty in conformity with conventional language, international law leaves to the interpreter to decide whether in the interpretation of a particular treaty, conventional language shall be understood to mean the language applied at the time of the conclusion of the treaty, or the language applied at the time of interpretation. Second, the rules of interpretation cannot always determine the existence of the relationship required by a rule of interpretation between a means of interpretation and an interpreted treaty provision. For example, whereas according to Rule (3), if the ordinary meaning of a treaty is ambiguous, the interpreter shall adopt the meaning which best helps attain the object and purpose of the treaty, international law leaves to the interpreter to determine the instrumental relationship between the ordinary meanings of a treaty and its object and purpose. Third, the rules of interpretation cannot always determine the priority of two or more communicative assumptions. For example, whereas according to Rule (6), if a conflict occurs between Rules (3) and (5), normally, the former shall have precedence, international law leaves to the interpreter to resolve any similar conflict between Rules (2) and (3). As will be argued in this article, the principle of good faith poses a limit to any discretion exercised by states and international organizations under common Articles 31–33 of the two Vienna Conventions. Just because some issues of interpretation cannot be resolved based on any rule of interpretation, interpreters are not free to resolve them any way they like. As noted earlier, good faith requires that interpretation be based on the assumption that treaty parties act rationally. That is to say, interpreters should be able to reconstruct an assumed correct meaning of a treaty as a conclusion inferred from sound premises according to the accepted rules of inference.95 It would seem only natural that interpreters be guided by this same idea throughout the entire process of interpretation, even in those particular cases where the settlement of an issue is left to their discretion. Consequently, as argued, not only does the requirement of good faith provide explanation of the rules laid down in Articles 31–33. It also adds to the normativity of those rules in particular cases of application. The legal practice surveyed in Section 3(B) will illustrate the further implications of this proposition. B. Practice In Navigational and Related Rights,96 the International Court of Justice was asked to give an opinion on the scope of application of a Treaty of Limits concluded by Costa Rica and Nicaragua in 1858. The Treaty established Nicaragua’s dominion and sovereign jurisdiction over the waters of the San José River. At the same time, it affirmed Costa Rica’s right to navigate the lower course of the River for purposes of commerce (‘con objetos de comercio’). Nicaragua argued that the ordinary meaning of ‘comercio’ excluded all services, such as passenger transport, ‘because in 1858 the word “commerce” [“comercio”] necessarily meant trade in goods and did not extend to services, the inclusion of services being a very recent development’.97 The interesting thing with this argument is that Article 31, paragraph 1 of the 1969 Vienna Convention leaves the definition of ‘the ordinary meaning’ to the discretion of law-applying agents.98 Article 31, paragraph 1 does not say whether the terms of a treaty shall be interpreted in accordance with their ordinary meaning at the time of the conclusion of the treaty or their ordinary meaning at the time of interpretation. Acting in line with the requirement of good faith interpretation, of course, the Court would not be free to make this choice at will. It would have to continue efforts to establish the intention of the treaty parties. The Court took precisely such an approach. The Court affirmed that, as a matter of principle, ‘the terms used in a treaty must be interpreted in light of what is determined to have been the parties’ common intention, which is, by definition, contemporaneous with the treaty’s conclusion’.99 As it immediately added, however, it did not necessarily follow that no account should ever be taken of the meaning of a treaty at the time of interpretation. More often than commonly realized, treaty parties use terms to refer generically, that is to a class (or genus) of entities or states of affairs; ‘comercio’ presents an example of precisely such a generically referring expression. It refers to a class, the extension of which is defined by Costa Rica and Nicaragua only indirectly, by reliance on an institutional practice of some kind, in this case the language activities of Spanish-speaking people in general.100 Since, obviously, the parties where aware that in common language, the usage of the word comercio was likely to evolve over time, and since the 1858 Treaty had been entered into by the parties for a very long period, as the Court held, ‘comercio’ should be interpreted in light of the Spanish language now in current use, and not the language used in 1858.101 In Öcalan v Turkey,102 the Grand Chamber of the European Court of Human Rights reexamined the argument considered in Soering, 16 years earlier, that the imposition and/or execution of the death penalty constituted an inhuman and degrading punishment in violation of Article 3 of the European Convention. The Court found this interpretation to be inconceivable in the absence of an agreement of the parties to the Convention to abrogate the exception for capital punishment provided for under Article 2, paragraph 1. As it explained, ‘if Article 2 is to be read as permitting capital punishment, notwithstanding the almost universal abolition of the death penalty in Europe, Article 3 cannot be interpreted as prohibiting the death penalty since that would nullify the clear wording of Article 2 § 1’.103 Citing the previous decision of the Chamber on this point, the Court reiterated the importance of the developments and commonly accepted standards in the penal policy of the Council of Europe Member States: all states had abolished the death penalty de jure except Russia, which however had decided on a moratorium.104 This trend reflected on the law-making activities of the Member States. All states had signed Protocol No 6, which abandoned the death penalty in times of peace, and 41 states had ratified it. Moreover, in 2002, the Council of Europe had opened for signature Protocol No 13, which laid down provisions for a complete abolishment of the death penalty in all circumstances. Three states had not yet signed this Protocol and 16 had not ratified it.105 In the final analysis, the Court found that, it was not really necessary for it to reach any firm conclusion on the soundness of the interpretation of Article 3 proposed by the applicant.106 The trial of Öcalan would in any case be unfair, in the sense of Article 6 of the Convention; and the implementation of a death sentence following an unfair trial itself amounted to an inhuman treatment in violation of Article 3.107 At the same time, the following passage added by the Court clearly indicates what otherwise might have been its conclusion on the point at issue: [T]he fact that there is still a large number of States who have yet to sign or ratify Protocol No. 13 may prevent the Court from finding that it is the established practice of the Contracting States to regard the implementation of the death penalty as inhuman and degrading treatment contrary to Article 3 of the Convention, since no derogation may be made from that provision, even in times of war.108 This reasoning of the Court can be construed as involving a conflict between two communicative assumptions. On the one hand, there is the assumption that the parties to the European Convention arranged so that Article 3 corresponds to whatever can be inferred from the penal policy of the Member States of the Council of Europe. On the other hand, there is the assumption that the parties arranged so that Article 3 does not logically contradict Article 2. Both assumptions can be justified based on the rules of interpretation laid down in the 1969 Vienna Convention—more specifically, they can be justified based on the earlier referred to Rules (4) and (2), respectively. In the situation prevailing, since obviously the Court cannot act upon both assumptions at the same time, it would have to decide whether to act upon the one assumption or the other. Whatever will be its decision, there is no rule of interpretation to justify it. Articles 31–33 do not give precedence to either of Rules (4) and (2) over the other. The principle of good faith, however, requires that the Court continue efforts to establish the intention of the parties to the European Convention. The question to be answered is whether there are stronger reasons to hold as correct the one or the other assumption: that the parties to the European Convention arranged so that Article 3 corresponds to whatever can be inferred from the penal policy of the Member States of the Council of Europe; or the assumption that the parties arranged so that Article 3 does not logically contradict Article 2. The strong emphasis placed by the Court on the adoption of Protocol No 13 indicates a finding in favor of the latter assumption. 4 TREATY ABUSE AS AN ELEMENT OF A CONCEPTUAL FIELD A. How the Concept of Treaty Abuse Relates to the Concepts of Abuse of Rights and Good Faith Treaty Interpretation, and What These Relations Tell Us Having developed a fuller understanding of the two concepts of abuse of rights and good faith treaty interpretation, this article will now attempt to tie all strings together. Section 4—corresponding as it does to the third and final stage of the investigation initiated in Section 2—will not only determine the application of treaty abuse relative to its two conceptual neighbors, but furthermore it will suggest on this basis a more precise definition of this concept. As the abuse of rights doctrine teaches, there is always a limit to the discretion conferred under a rule of international law. This proposition is founded on the principle of good faith and the idea of international law as a purposive endeavor. Consequently, according to the abuse of rights doctrine, no exercise of a discretionary power offered under a rule of international law must render its purpose ineffective. As illustrated in Section 2(A), the doctrine of abuse of rights applies equally to all rights, whether they originate in customary international law or international agreements. This observation prompts the assumption that treaty abuse is in fact merely a special case of abuse of rights: if sometimes the exercise of a discretionary power offered under a treaty is abusive, then this is because this same exercise renders the purpose of the treaty ineffective. Doctrinal commentaries on the concept of treaty abuse confirm this assumption. To explain the concept of treaty abuse, scholarly writing refers to common Article 26 of the 1969 and 1986 Vienna Conventions and the provision that treaties must be performed in good faith.109 However trite, at least this reference tells us that good faith is the common theme connecting the two concepts of abuse of rights and treaty abuse. There is also the practice of international courts and tribunals cited in Section 2(B) of this article. Especially ICSID tribunals use the two terms interchangeably. In the context of the interpretation of treaties, the principle of good faith serves a twofold purpose. First, it forms a linkage between the means of interpretation featured in the two Vienna Conventions and the idea of the ultimate purpose of the treaty interpretation process: to establish the communicative intention of the treaty parties. Thus, good faith provides explanation of the rules of interpretation laid down in common Articles 31–33. Secondly, the principle of good faith serves as a reminder that whether or not an issue of interpretation can be resolved using any of the rules of interpretation laid down in Articles 31–33, the ultimate purpose of the interpretation process remains the same. When the rules of interpretation leave it to states and international organizations to make a decision on an issue of interpretation, states and organizations are not free to decide that issue any way they like. Viewed in this way, good faith adds to the normativity of the rules of interpretation in particular cases of application. Consequently, just like the abuse of rights doctrine, ‘good faith treaty interpretation’ may be used to stand for the idea of the proper exercise of legal discretion. When exercising a discretion offered under the rules of interpretation expressed in common Articles 31–33 of the two Vienna Conventions, interpreters must act for the purpose of establishing the communicative intention of treaty parties. To act for any other purpose is to act for the opposite of good faith; it is to exercise discretion in mala fides. This observation prompts the assumption that mala fides treaty interpretation is a special case of abuse of rights. As for the relationship between mala fides treaty interpretation and treaty abuse, obviously, the application of the two concepts is not wholly identical. To begin with, accepting the assumption that treaty abuse is a special case of abuse of rights, obviously, the concept of mala fides treaty interpretation serves the protection of a different purpose than treaty abuse. If international law prevents a particular application by a state or international organization of a particular treaty (T) on the ground of treaty abuse, then this is to prevent that state or organization from rendering the purpose of T ineffective. When, on the other hand, international law excludes a particular understanding of this same treaty T on the ground of mala fides treaty interpretation, this is to prevent the state or organization from rendering naught, not the purpose of T, but the purpose of common Articles 31–33 of the Vienna Conventions. Still, practice leaves the impression that there must be some overlap of the extensions of the two concepts. After all, in many cases, as noted in Section 1, lawyers use ‘treaty abuse’ and ‘mala fides treaty interpretation’ to refer to the same thing. As argued in this article, mala fides treaty interpretation is a special case of treaty abuse. Whereas every case of mala fides treaty interpretation is a case of treaty abuse, not every case of treaty abuse is a case of mala fides treaty interpretation. View largeDownload slide View largeDownload slide This proposition builds on the assumption that when the interpretation of a treaty (T) renders the purpose of common Articles 31–33 ineffective, then for that very same reason, any application of T based on that interpretation will render ineffective also the purpose of T. Stated generally, according to the assumption, the concept of mala fides treaty interpretation is an instrument not only for the protection of the purpose of common Articles 31–33, but also for the protection of the purpose of every particular treaty that happens to be interpreted. As will be argued in the subsequent Section 4(B), this assumption corresponds well to the potential inherent in Articles 31–33. B. How Common Articles 31–33 May be Used to Serve the Purpose of a Treaty In exercising a discretion offered under common Articles 31–33, states and international organizations typically have plenty of possibility to act for the protection of the purpose of the interpreted treaty, in several phases of the interpretation process. First, they may take guidance in the purpose when determining the extension of a means of interpretation. For example, if stability of the relations of two states is the ultimate purpose of a boundary treaty, then naturally, that purpose will be served by defining the ordinary meaning of that treaty based on the language applied at the time of the conclusion of the treaty, rather than the language applied at the moment of interpretation.110 Similarly, if the purpose of a treaty on the construction and operation of a system of locks in the Danube river is to ensure the quality of the water in the river, that purpose may be served by the interpretation of the treaty in the light of the international environmental law applicable in the relations between the parties at the moment of interpretation rather than the time of the conclusion of the treaty.111 Second, the purpose of a treaty may provide guidance when determining the existence of the relationship required by a rule of interpretation between an interpreted treaty provision and a means of interpretation. For example, if the purpose of the European Convention is the maintenance and further realization of human rights, that purpose will be served by assuming that the adoption of Protocol No 6 or Protocol No 13 establishes the agreement of the parties regarding its interpretation.112 Similarly, if the purpose of a treaty is the regulation of the taxation of worldwide income of residents of the contracting parties, then that purpose will help determining to what extent the drafters of the convention were influenced by the wording of an OECD Model Agreement or not.113 Third, and perhaps most important, as will now be illustrated, the overall purpose of a treaty may provide guidance to a state or organization when determining the priority of two or more communicative assumptions. In several cases, when considering complaints of violation of rights which potentially at least would seem to be governed by the prohibition of abuse of rights laid down in Article 17 of the European Convention on the Protection of Human Rights, the European Court has found against the applicant on the ground that his complaint was based on a mala fides interpretation of a substantial right.114 In Refah Partisi,115 for example, the applicants were a political party (Refah) in Turkey, as well as its chairman and three vice-chairmen, all members of Parliament. The party obtained 22% of the vote in the 1995 general elections, when it became the largest party in Parliament. In January 1998, the Constitutional Court of Turkey ordered the dissolution of Refah on the ground that it had become a ‘centre of activities contrary to the principle of secularism’.116 It also decided to strip the applicants of their MP status. The applicants complained of violations of Article 11 of the European Convention, which provides for the right of freedom of association. In giving its view of the proper interpretation of this Article, the Court noted the primordial role played in a democratic regime by political parties enjoying the rights of freedom of association and expression enshrined in Articles 11 and 10, respectively.117 It emphasized the relationship between Articles 11 and 10: while Article 10 serves to protect opinions and the freedom to express them, this is one of the objectives of the freedom of association laid down in Article 11, too; all the more so in the case of political parties. As the Court affirmed, political parties have an essential role in ensuring pluralism and the proper functioning of democracy: [T]here can be no democracy without pluralism. It is for that reason that freedom of expression as enshrined in Article 10 is applicable, subject to paragraph 2, not only to ‘information’ or ‘ideas’ that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb.118 According to Article 11, paragraph 2, obviously, Turkey still retained the possibility of imposing restrictions on the right of freedom of association, especially if activities of an association jeopardized state institutions.119 As so neatly phrased by the Court, a ‘compromise between the requirement of defending democratic society and individual rights is inherent in the Convention system’; this is precisely why provisions such as paragraph 2 of Article 11 are included.120 Commenting generally on the limits within which political organizations can continue to enjoy the protection of the European Convention, the Court stressed ‘the very clear link’ between the Convention and democracy—the Convention was designed precisely with the aim to protect the ideals and values of a democratic society.121 As the Court held, it necessarily followed: that a political party whose leaders incite to violence or put forward a policy which fails to respect democracy or which is aimed at the destruction of democracy and the flouting of the rights and freedoms recognised in a democracy cannot lay claim to the Convention’s protection against penalties imposed on those grounds.122 The Court considered the arguments and evidence cited by the Constitutional Court of Turkey as grounds for its decision of January 1998.123 It acknowledged, in particular, the arguments that Refah intended to set up a plurality of legal systems, leading to discrimination based on religious beliefs; that it intended to apply sharia to the internal or external relations of the Muslim community within the context of this plurality of legal systems; and that in addressing the general public, Refah members had repeatedly made reference to the possibility of recourse to force as a political method.124 The Strasbourg Court concluded that the decision of the Constitutional Court of Turkey of January 1998 met a ‘pressing social need’ and was ‘proportionate to the aims pursued’.125 It could be regarded as ‘necessary in a democratic society’ within the meaning of Article 11, paragraph 2. Accordingly, there had been no violation of Article 11.126 It is possible to construe the reasoning of the Court as involving the resolution of a conflict between two communicative assumptions. The one assumption is founded on the particular purpose of Article 11: the parties to the European Convention arranged so that the application of Article 11 helps ensure pluralism and the protection of opinions and the freedom to express them. The other assumption is founded on the overall purpose of the entire Convention: the parties arranged so that the application of the Convention, including Article 11, helps protect the ideals and values of a democratic society. Adopting the former assumption, in a narrow perspective at least, the decision of the Constitutional Court of Turkey to dissolve Refah, and to strip the other applicants of their MP status, cannot be considered ‘necessary in a democratic society’. Adopting the latter assumption, it can. The overall purpose of the European Convention, obviously, helps the European Court to come to a decision on the order of preference of those two assumptions. What patently also illustrates the role of the overall purpose of a treaty for the determination of the priority of two or more communicative assumptions is the strategy of particularly Canadian judiciaries to use the purpose of tax treaties to turn the focus of the interpretation process from Article 31 to Article 32 of the 1969 Vienna Convention.127 In Crown Forest Industries,128 for example, the Supreme Court of Canada considered the decision of Canadian tax authorities to withhold a certain percentage of tax on the rental of barges by a Canadian company (Crown Forest Industries Ltd). Barges were rented from a Bahamian corporation, named Norsk, whose sole office and place of business was located in the United States. At issue was whether Norsk was to be considered a ‘resident of a Contracting State’ in the sense of Article IV of the 1980 Convention between Canada and the United States with respect to Taxes on Income and on Capital.129 Article IV, paragraph 1 reads: For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature. The Court (per Judge Iacobucci) noted that according to the US Income Tax Act, ‘[a] foreign corporation engaged in trade or business within the United States … shall be taxable … on its taxable income which is effectively connected with the conduct of a trade or business within the United States’.130 It acknowledged the expert opinion heard by judges of the Federal Court, which asserted: that Norsk is liable to tax in the U.S. because it conducted a ‘trade or business which is effectively connected with the United States’, and [because] the fact that its head office and place of management are in the U.S. constitutes a principal factor determining whether it carries on a trade or business in the U.S.131 Quoting approvingly from earlier Canadian case law, however, the Court stressed the importance of giving the 1980 Convention a liberal interpretation ‘with a view to implementing the true intentions of the parties’.132 In examining the intentions of the treaty parties, the Court recalled the purpose of the Convention: to promote international trade between Canada and the United States.133 As it affirmed, ‘the goal of the Convention is not to permit companies incorporated in a third party country (the Bahamas) to benefit from a reduced tax liability on source income merely by virtue of dealing with a Canadian company through an office situated in the United States’.134 To further illuminate the meaning of Article IV, the Court referred to Article 4 of the OECD Model Double Taxation Convention on Income and Capital adopted in 1980. This provision, recognized as having served as a basis for the Convention between Canada and the United States, limited residence to persons taxed only on world-wide income. As the Court inferred, Norsk was not a ‘resident’ under the terms of the Canada–US Convention: [T]he only way for Norsk to benefit from residency status under the Convention is if source taxation on a business effectively connected with the contracting party constitutes a criterion similar to the other enumerated criteria in Article IV (residence, place of management, place of incorporation, domicile). It is not similar, since all of the other criteria constitute grounds for taxation on world-wide income, not just source income.135 Like the reasoning of the European Court in Refah Partisi, this interpretation involves the resolution of a conflict between two communicative assumptions. On the one hand, there is an assumption based on the ordinary meaning of Article 4: parties to the Convention arranged so that the text of Article 4 conforms to the lexicon, grammar and pragmatic rules of the English language. Adopting this assumption, since Norsk is liable to tax in the United States by reason of its place of management, the company is a ‘resident’ of that state. On the other hand, there is an assumption based on a supplementary means of interpretation: parties to the Convention arranged so that Article 4 corresponds to whatever can be inferred from the OECD Model Agreement, including its Commentary.136 Adopting this assumption, because the tax liability of Norsk in the United States is based on source income, and because residence in Article 4 of the Canada–US Convention is limited to persons taxed only on world-wide income, the company is not a ‘resident’. The decision of the Court, obviously, is to act upon the latter assumption, and not the former. What makes this decision particularly interesting is the fact that according to Article 32 of the Vienna Convention, when an argument of interpretation is founded on a supplementary means of interpretation, it can be given priority over an argument based on any of the means of interpretation specified in Article 31, including the ordinary meaning, only in the exceptional circumstance that the application of Article 31 ‘leads to a result which is manifestly absurd or unreasonable’. Article 32 does not tell specifically by what criterion the result of the application of Article 31 is to be assessed. The reasoning of the Court in Crown Forest Industries illustrates the possibility of using, as such a criterion, the overall purpose of a treaty. 5. THE LEGAL STATUS OF THE RULE PROHIBITING TREATY ABUSE A. The Definition and Source of the Treaty Abuse Doctrine Section 4 clarified the relations between the concept of treaty abuse on the one hand and the concepts of abuse of rights and good faith treaty interpretation on the other. As the section concluded, in one sense of the term, treaty abuse is a special case of abuse of rights. In another sense, treaty abuse is in some cases, but not necessarily all, the exact opposite of good faith treaty interpretation—treaty interpretation mala fides. By this conclusion, Section 4 accomplishes two things. First, it helps to establish the meaning of ‘treaty abuse’. The results of the investigation conducted in Sections 2–4 can be neatly summarized in the form of the following general definition: When a state or international organization takes action in reliance of a discretion conferred by a treaty, this action amounts to treaty abuse if either the understanding is manifestly unfounded, or the action renders the purpose of the treaty ineffective. Second, Section 4 helps clarifying the source of the treaty abuse doctrine. If treaty abuse is a special case of abuse of rights, and the doctrine of abuse of rights is a mere application of the principle of good faith, then the source of the treaty abuse doctrine must be looked for in no more and no less than this same principle. For any further inquiry into the legal status of the treaty abuse doctrine this conclusion is extremely interesting, clarifying as it does what should be seen as the true object of such an inquiry. When investigating the standing of the treaty abuse doctrine in international law, obviously, scholars should focus attention to the way in which the principle of good faith has been played out by international courts and tribunals when considering claims of an unlawful exercise of a treaty-based discretionary power. Scholars should not be overly concerned with whether or not, in considering such claims, courts and tribunals actually refer to the doctrine by the precise term that it has become generally known to international economic lawyers. It is along these lines that the subsequent Section 5(B) will now perform an analysis of the practice developed by international courts and tribunals outside of the limited context of international economic law. B. Practice In Certain Activities Carried out by Nicaragua in the Border Area,137 the International Court of Justice found that Nicaragua had breached several international obligations owed to Costa Rica, including the principle of territorial sovereignty, and the right of navigation laid down in the 1858 Treaty of Limits. It found that Nicaragua had the obligation to compensate Costa Rica for material damages caused by its unlawful activities on Costa Rican territory. It declined, however, the request that the Court order Nicaragua to provide appropriate assurances and guarantees of nonrepetition of its unlawful conduct.138 In so doing, it followed what by now would seem to be a firmly established practice of the Court.139 As the Court explained, quoting from its decision in Navigational and Related Rights,140 ‘“there is no reason to suppose that a State whose act or conduct has been declared wrongful by the Court will repeat that act or conduct in the future, since its good faith must be presumed” and therefore assurances and guarantees of non-repetition will be ordered only “in special circumstances”’.141 To fully clarify its position, the Court could have added reference to Article 59 of its Statute. According to this provision, a judgment of the Court has binding force between the disputing parties in respect of the particular case. What makes Article 59 relevant to this article is the fact that it leaves to each of the disputing parties to decide themselves precisely how to implement a judgment. In exercising this discretion—this is what the statement of the Court implies—parties must remain faithful to the purpose of the provision: to avoid the repetition of internationally wrongful conduct. In other words, if two states have agreed to accept the compulsory jurisdiction of the International Court, a judgment will entail the obligation that they accommodate their future behavior with it, so as to avoid the repetition of conduct declared by the judgment to be internationally wrongful. It is for this reason that the Court sees no need to order specifically that Nicaragua provides appropriate assurances and guarantees of non-repetition of Nicaragua’s unlawful conduct. In Application of the Interim Accord of 13 September 1995,142 the Hague Court considered the respondent’s allegation that the applicant had breached the obligation laid down in Article 5, paragraph 1 of the Interim Accord of 13 September 1995 between the Former Yugoslavian Republic of Macedonia and Greece. According to this provision, ‘[t]he Parties agree to continue negotiations under the auspices of the Secretary-General of the United Nations pursuant to Security Council resolution 845 (1993) with a view to reaching agreement on the difference described in that resolution and in Security Council resolution 817 (1993)’.143 Although this provision clearly imposed on the Greek and FYROM governments an obligation to ‘continue negotiations’, at the same time it conferred on them the discretion to decide precisely how negotiations were to be conducted and when. Citing Article 26 of the 1969 Vienna Convention on the Law of Treaties, the Court stressed that it is an implicit requirement of Article 5, paragraph 1 that the parties negotiate in good faith.144 As it noted, the obligation ‘is not only to enter into negotiations, but also to pursue them as far as possible, with a view to concluding agreements’.145 No doubt, so understood, Article 5, paragraph 1 of the Interim Accord did not impose on the parties the obligation to reach an agreement; nor did it require that lengthy negotiations be pursued of necessity. As the Court seemed very keen to convey, the provision entailed an obligation of conduct. In exercising the discretion conferred under Article 5, paragraph 1, the parties would have to conduct themselves so as not to frustrate the object and purpose of the provision—the creation of conditions favorable to reaching an agreement. As clarified by the Court: States must conduct themselves so that the ‘negotiations are meaningful’. This requirement is not satisfied, for example, where either of the parties ‘insists upon its own position without contemplating any modification of it’ or where they obstruct negotiations, for example, by interrupting communications or causing delays in an unjustified manner or disregarding the procedures agreed upon. Negotiations with a view to reaching an agreement also imply that the parties should pay reasonable regard to the interests of the other.146 In Certain Questions of Mutual Assistance in Criminal Matters,147 the International Court of Justice considered allegations of breaches of the 1986 Convention on Mutual Assistance in Criminal Matters between France and Djibouti.148 More specifically, it considered the allegation that France had violated its obligation to afford assistance by not having executed a letter rogatory sent by a Djibouti investigating judge, requesting the transmission of a series of documents. France, for its part, invoked the possibility of refusing assistance provided by Article 2(c) of the Convention. According to this provision, ‘[j]udicial assistance may be refused … [i]f the requested State considers that execution of the request is likely to impair its sovereignty, security, public policy or other essential interests’. The Court began its examination of Article 2(c) by commenting upon a remark of the respondent categorizing the provision as a ‘self-judging clause’. It observed that: while it is correct, as France claims, that the terms of Article 2 provide a State to which a request for assistance has been made with a very considerable discretion, this exercise of discretion is still subject to the obligation of good faith codified in Article 26 of the 1969 Vienna Convention on the Law of Treaties … This requires it to be shown that the reasons for refusal to execute the letter rogatory fell within those allowed for in Article 2.149 What the Court seems to be saying is that in order to correctly understand Article 2(c), not too much emphasis should be placed on the mere wording of the phrase ‘If the requested State considers’. While Article 2(c) leaves to France in the first place to assess whether the execution of a request for judicial assistance is likely to impair its sovereignty, security, public policy or other essential interests, there is a limit to this discretion. The discretion conferred upon France under Article 2(c) does not extend as far as to make the assessment purely a question for the judgment of France alone. That would lead to a result inimical to the most basic of reasons for at all having a treaty such as that between France and Djibouti: not leaving to each of the two parties to conduct their relations at will. Good faith required that if France refuses to execute a letter rogatory requesting judicial assistance, it falls on that country to establish that it so acted for reasons that came within any of the categories stated in Article 2. In Rainbow Warrior Arbitration,150 the Arbitration Tribunal considered allegations of a series of breaches of the Agreement of 9 July 1986 concluded between the governments of France and New Zealand. According to the terms of the Agreement, ‘Major Mafart and Captain Prieur will be transferred to a French military facility on the island of Hao for a period of not less than three years. They will be prohibited from leaving the island for any reason, except with the mutual consent of the two Governments.’151 New Zealand requested the Tribunal to declare, among other things, that France had acted contrary to the Agreement by, first, removing Major Mafart and Captain Prieur from the island of Hao, and second, by failing to seek in good faith to obtain the consent of New Zealand to their removal. As far as concerns the removal of Captain Prieur, the Tribunals found in favor of New Zealand on both counts. In so doing, the Tribunal fully accepted New Zealand’s proposed understanding of the Agreement. The understanding was that the Agreement imposed on France a twofold duty: first, France had the duty not to remove the two agents from the island of Hao failing consent of the government of New Zealand; and second, whenever France considered that there was good reason to remove an agent from the island, it had the duty to seek to obtain in good faith the consent of New Zealand. To explain its finding that France had failed to make efforts to seek to obtain in good faith the consent of New Zealand, the Tribunal reiterated the events of 5 May 1989: [W]hen the French Republic notified the Ambassador of New Zealand on 5 May at 11.00 a.m. (French time), the latter was merely told that Mrs. Dominique Prieur’s father, hospitalized for cancer treatment, was dying. Of course, it was explained that the New Zealand Government could verify ‘the validity of this information’ using a physician of its choice, but the telegram the French Minister of Foreign Affairs sent to the Embassy of France in Wellington on 5 May 1988 clearly stated that the decision to repatriate was final. And this singular announcement was addressed to New Zealand: ‘After all, New Zealand should understand that it would be incomprehensible for both French and New Zealand opinion for the New Zealand Government to stand in the way of allowing Mrs. Prieur to see her father on his death bed …’. Thus, New Zealand was really not asked for its approval, as compliance with France’s obligations required, even under extremely urgent circumstances; it was indeed demanded so firmly that it was bound to provoke a strong reaction from New Zealand.152 The 1986 Agreement, obviously, conferred on the parties the discretion to decide jointly what would constitute a valid reason to remove an agent from the island, in the sense of the conditions that would have to obtain before New Zealand could give its consent. What the decision of the Tribunal appears to imply is that this discretion would always have to be exercised for a purpose. Indeed, if France had the duty to obtain the consent of New Zealand, it can be seen to be the very point of this requirement that New Zealand be given both an opportunity and the sufficient time to make an informed decision in the matter. In Admission of a State to Membership in the United Nations,153 the International Court of Justice examined a request made by the UN General Assembly for an advisory opinion. The request asked the Court to clarify whether in virtue of Article 4 of the Charter of the United Nations, on the admission of a state to membership in the UN, a member of the organization was ‘judicially entitled to make its consent to the admission dependent on conditions not expressly provided by paragraph 1 of the said Article’. Article 4 provides: 1. Membership in the United Nations is open to all other peace-loving states which accept the obligations contained in the present Charter and, in the judgment of the Organization, are able and willing to carry out these obligations. 2. The admission of any such state to membership in the United Nations will be effected by a decision of the General Assembly upon the recommendation of the Security Council. As the Court held, states which fulfill the conditions stated in paragraph 1 are qualified for admission to membership. Paragraph 1 provides not merely the necessary conditions for admission, but also the conditions which suffice. At the same time, obviously, Article 4, paragraph 2 confers on members of the UN—acting either in the Security Council or in the General Assembly—the discretion to pronounce itself by its vote on whether, in particular cases, admission should be granted to a state or not. As the Court emphasized, that discretion would have to be exercised in good faith. Even though, potentially, many circumstances of fact may be considered by a member when determining whether to support the admission of a state to membership or not, circumstances are relevant only when connected with the conditions laid down in Article 4, paragraph 1: Article 4 does not forbid the taking into account of any factor which it is possible reasonably and in good faith to connect to the conditions laid down in that Article.154 In other words, as the Court sees it, to pronounce in good faith on the admission of a state to membership in the United Nations means to make an assessment of facts with a view to determining whether the stated conditions for membership are all fulfilled. In Constitution of the IMCO Maritime Safety Committee,155 the International Court of Justice considered the lawfulness of the decision of the Assembly of the-then Inter-Governmental Maritime Consultative Organization (IMCO) electing members to another principal body of the organization, the Maritime Safety Committee. More specifically, the Court examined whether, in not electing Liberia and Panama, the Assembly had exceeded the discretionary powers conferred upon it under Article 28(a) of the Convention for the Establishment of IMCO. The provision reads: The Maritime Safety Committee shall consist of fourteen Members elected by the Assembly from the Members, governments of those nations having an important interest in maritime safety, of which not less than eight shall be the largest ship-owning nations, and the remainder shall be elected so as to ensure adequate representation of Members, governments of other nations with an important interest in maritime safety, such as nations interested in the supply of large numbers of crews or in the carriage of large numbers of berthed and unberthed passengers, and of major geographical areas. As can be seen from the wording of Article 28(a), it conferred a discretion on the Assembly of the IMCO. The provision left to the Assembly to elect to the Maritime Safety Committee 14 members of the organization, of which not less than eight would have to be ‘the largest ship-owning nations’. Contrary to the argument of some governments, as the Court held, this discretion did not extend as far as to enable the Assembly to choose itself the criteria to be used in determining whether members are among the ‘eight largest ship-owning nations’ or not. Such a construction would deprive the passage of all significance. What is more, ‘[t]o give to the Article such a construction would mean that the structure built into the Article to ensure the predominance on the Committee of the largest ship-owning nations in the ratio of at least eight to six would be undermined and would collapse. The Court is unable to accept an interpretation which would have such a result.’156 The Court found it apparent that in instructing the Assembly to elect the ‘eight largest ship-owning nations’, Article 28(a) implied the application of a specific basis of measurement—that of registered tonnage. This interpretation was said by the Court to be consistent also ‘with the general purpose of the Convention and the special functions of the Maritime Safety Committee’: The Organization established by the Convention is a consultative one only, and the Maritime Safety Committee is the body which has the duty to consider matters within the scope of the Organization and of recommending through the Council and the Assembly to Member States, proposals for maritime regulation. In order effectively to carry out these recommendations and to promote maritime safety in its numerous and varied aspects, the co-operation of those States who exercise jurisdiction over a large portion of the world's existing tonnage is essential.157 Careful readers will have noted that in no part of the Opinion does the Court make explicit reference to good faith. Still, as this article suggests, the line of reasoning applied by the Court is in all relevant respects similar to its reasoning in Admission of a State to Membership in the United Nations. In Constitution of the IMCO Maritime Safety Committee, as in the Opinion given 12 years earlier, the Court pored over the application of a treaty provision, which conferred a discretion on an organ of an international organization. It reached once again the conclusion that discretion must be exercised so as not to leave a result, which is inimical to the purpose of the provision—in this case, the promotion of maritime safety. 6. HOW THE TREATY ABUSE DOCTRINE RELATES TO THE IDEA OF TREATIES AS AN EXPRESSION OF PARTY INTENTION Earlier sections of this article referred in passing to the existence of an international rule imposing on treaty parties the obligation not to exercise treaty rights abusively. Section 5 established the legal status of this rule. As argued, the source of the rule can be traced back to the principle of good faith. The treaty abuse doctrine is merely the application of the principle of good faith to a particular category of international rights—the treaty-based discretionary powers. Assuming that in the context of treaty law, the scope of application of the principle of good faith is not confined solely to the exercise of treaty-based discretionary powers, the treaty abuse doctrine can be construed along the lines of the following two norm sentences: ‘A treaty must be performed in good faith by its parties.’ ‘If a party to a treaty takes action in reliance of a discretion conferred by a treaty, although the action may be based on an understanding of the treaty permitted by the rules of interpretation laid down in common Articles 31-33 of the 1969 and 1986 Vienna Conventions on the Law of Treaties, this party is not performing the treaty in good faith if either the understanding is manifestly unfounded, or the action renders the purpose of the treaty ineffective.’ Those two sentences set the parameters for the task now to be accomplished. As this section will argue, when an international court or tribunal accepts the validity of a treaty abuse argument, it acts in deference to the intention of the treaty parties. Given the source of the treaty abuse doctrine, the proper justification of this proposition presupposes an investigation of the function of the principle of good faith. As earlier sections of this article established, when a treaty confers a discretion, the scope of this discretion is only partly the function of the text of the treaty. Partly, it is the function of the principle of good faith. The text of a treaty is commonly seen as an expression of the free will or consent of the treaty parties. According to a fundamental principle underlying much of the international law of treaties, what parties to a treaty freely agreed upon should be respected. In the terminology of the 1969 and 1986 Vienna Conventions on the Law of Treaties, this is referred to as the principle of free consent.158 In the sphere of international economic law, commentators express themselves as if the application of the treaty abuse doctrine would risk undermining this principle.159 If acting upon the text of a treaty serves to satisfy the principle of free consent, as commentators would seem to suggest, the treaty abuse doctrine serves a different purpose. As will now be argued, this suggestion builds on a misunderstanding of the function of the principle of good faith. Any loose talk about the principle of good faith may suggest that it operates in much the same way as equitable principles in the resolution of maritime delimitation disputes. It does not.160 The operation of an equitable principle depends on what other principles are applicable to the resolution of a maritime delimitation dispute. The outcome of the dispute is determined on the overall balance of all applicable principles. The operation of the principle of good faith, on the other hand, depends on the existence of some communicative behavior on the part of a state or international organization.161 It is the function of the principle of good faith to help determine the legal effect of such a behavior. In the case of the application of the doctrines of estoppel or acquiescence, for example, the principle of good faith helps to determine whether a behavior gave rise to a legal obligation. In the case of treaty interpretation and the doctrine of treaty abuse, the principle of good faith helps to determine the scope of obligations. Applied to the topic of this article, the operation of the principle of good faith presupposes the existence of a very particular kind of communicative behavior. It presupposes a verbal utterance in written form, or more specifically, the text of a treaty. Therefore, to understand precisely how the principle of good faith relates functionally to the idea of party intention, it would seem appropriate to consider first of all the operation of the principle of good faith relative to the application of the law laid down in common Articles 31–33 of the two Vienna Conventions. As noted by linguistics, an utterance (whether in the form of a treaty or not) can only be understood on the basis of the assumption that the utterer acted for the purpose of conveying to its intended addressee or addressees some or other piece or pieces of information. The idea is that if the utterer acted for this purpose, then it can be assumed for good reasons that in phrasing the utterance, the utterer conformed to standards of communication that will allow the addressee(s) to capture the information. It is in this light that the function of the principle of good faith should be seen. The principle imposes on interpreters to conduct a process of interpretation based on an assumption of the application by the treaty parties of some particular standard or standards of communication. The application of this principle is the only means to ensure a successful outcome of the exercise. If the proper function of the principle of good faith presupposes in this case the text of a treaty, then consequently, the opposite proposition holds true as well: the proper function of the text of a treaty presupposes the principle of good faith. The one cannot function without the other. A similar explanation can be applied to the analysis of the function of the principle of good faith relative to the application of the treaty abuse doctrine. If good faith insists upon the assumption of the existence of a communicative intention on the part of treaty parties, it would seem to be just an extension of this same line of thought to argue the existence of a further purpose. According to the argument, when states or international organizations enter into a treaty relationship, communication is never an end in itself.162 The treaty is concluded to help bring about some particular state or states of affairs, often referred to as its ‘object and purpose’. Naturally, it must be a fundamental assumption of any process of treaty interpretation that treaty parties phrase treaty instruments so that when eventually applied their objects and purposes can be obtained. This is why the text of a treaty is always to be the point of departure of the process.163 At the same time, as experience tells us, treaties are not always instrumentally perfect: a treaty may be the result of an unfortunate choice of words or a mistranslation; the parties may not have fully realized either the ordinary meaning of the terms of the treaty, or the relationship between its different provisions, or between a provision of the treaty and some other rule of international law; the parties may have failed to anticipate either the occurrence of a particular conduct or state of affairs, or a change in the factual or legal context of the treaty; etc. For every such situation, there is a need for a safety-valve that will guarantee that the treaty remains teleologically effective. This is where the treaty abuse doctrine comes in. Applied to the determination of the rights and obligations laid down in an international treaty, the principle of good faith can be seen to impose on states and international organizations the assumption that the parties to the treaty acted for the realization of its object and purpose. Even though an understanding of the text of the treaty may be fully in accordance with the rules of interpretation laid down in common Articles 31–33 of the two Vienna Convention, if a state or organization finds that this understanding will render the object and purpose of the treaty ineffective, consequently, the state or organization has reason to correct it. Although this is obviously the idea underlying the treaty abuse doctrine, there is nothing peculiar about it. A great many rules laid down in the two Vienna Conventions are the result of the same line of thought. Obvious examples include the obligation not to defeat the object and purpose of a treaty prior to its entry into force;164 the prohibition of reservations that are incompatible with the object and purpose of a treaty;165 the obligation to reconciliate the different authenticated texts of multilingual treaties by adopting the meaning that helps to best attain their object and purpose;166 the provision that excludes any modification of a treaty incompatible with the effective execution of its principal object and purpose;167 the prohibition of suspension of the operation of a treaty by agreement between some of its parties when suspension is incompatible with the object and purpose of the treaty;168 and the requirement that a breach of a treaty may only be used as an excuse for terminating it, or suspending its operation, when it consists in the violation of a provision essential for the accomplishment of the object and purpose of the treaty.169 As implied by Section 4 of this article, and by the earlier suggested definition of the concept of treaty abuse, the function of the principle of good faith makes the application of the treaty abuse doctrine secondary to the application of the rules of interpretation laid down in common Articles 31–33 of the two Vienna Conventions. The treaty abuse doctrine applies only as a corrective, in cases where the adoption of a meaning resulting from the application of Articles 31–33 can be thought to render naught the object and purpose of a treaty. Still, it has to be acknowledged, the function of the principle of good faith remains the same whether it is applied relative to the law laid down in Articles 31–33 or the doctrine of treaty abuse: it helps to determine the intention of treaty parties. Contrary to what some commentators have suggested,170 the doctrine of treaty abuse serves to satisfy the principle of free consent, much like the text of a treaty. If there is ever any difference between the clear language of the text of a treaty and the doctrine of treaty abuse, then this is because the latter serves directly the realization of the object and purpose of the treaty, whereas the former does so only indirectly, depending as it does on the ordinary meaning of the text. According to what critics have argued, the treaty abuse doctrine tends to impose limits on the scope of application of treaties that are not found in its text. If by ‘the text of a treaty’ critics mean the applications allowed by its ordinary meaning, they are right, of course. The argument, however, misses entirely what must be taken to be its intended target, since the same could be said about just any supplementary means of interpretation, including the preparatory work of a treaty and the circumstances of its conclusion.171 On close inspection, the argument would seem to build on a confusion of the ordinary meaning of the text of a treaty with the idea of the text as an expression of the free will of the treaty parties. Footnotes 1 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 575 UNTS 159. 2 International lawyers sometimes prefer to talk about misuse of treaty rights. Often, ‘treaty abuse’ is used interchangeably with ‘improper use’ or ‘misuse of treaty rights’. Cf United States – Import of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (12 October 1998), para 116; Commentary to art 1 of the UN Model Double Taxation Convention between Developed and Developing Countries, adopted in 2011. If ever there is any difference of meaning, it is not because those terms are used to refer to different things, but because sometimes lawyers wish to avoid some of the accusatory ring inherent in ‘treaty abuse’. 3 US – Shrimp (n 2) para 158. 4 See Commentaries to art 1 of the OECD Model Convention on the Prevention of Double Taxation of Income and Capital, adopted in 2010. 5 See eg OECD (2015), Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, Action 6 – 2015, Final Report, available through the webpage of the OECD <http://www.oecd.org> accessed 4 October 2017. 6 See e.g. US – Shrimp (n 2) paras 112–24, 156–60; US – Section 211 Section 211 Omnibus Appropriations Act of 1998, WT/DS176/R (6 August 2001) para 8.57. 7 See eg Autopista Concesionada de Venezuela, CA v Bolivarian Republic of Venezuela, ICSID Case No ARB/00/5, Decision on Jurisdiction (2001); Tokios Tokelės v Ukraine, ICSID Case No ARB/02/18, Decision on Jurisdiction (2004); Aguas del Tunari SA v Republic of Bolivia, ICSID Case No ARB/02/3, Decision on Respondent’s Objections to Jurisdiction (2005); Phoenix Action Ltd v The Czech Republic, ICSID Case No ARB/06/5, Award (2009); Mobil Corporation, Venezuela Holdings, BV and Others v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/27, Decision on Jurisdiction (2010); Tidewater Inc and others v Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5, Decision on Jurisdiction (2013); ConocoPhilips Petrozuata BV and others v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Decision on Jurisdiction and the Merits (2013); Renée Rose Levy and Gremcitel SA v Republic of Peru, ICSID Case No ARB/11/12, Award (2015). 8 Philip Morris Asia Ltd v Commonwealth of Australia, PCA Case No 2012-12, Award (2015), available through the webpage of the Permanent Court of Arbitration<https://pca-cpa.org>, accessed 4 October 2017 para 585. 9 On the apparent reluctance of international investment tribunals to embrace the doctrine, see generally T Voon, A Mitchell and J Munro, ‘Legal Responses to Corporate Manoeuvring in International Investment Arbitration’ (2014) 5 Journal of International Dispute Settlement 41–68; SW Schill and HL Bray, ‘Good Faith Limitations on Protected Investments and Corporate Structuring’ in AD Mitchell, M Sornarajah and T Voon (eds), Good Faith and International Economic Law (OUP 2015) 88, 105ff. 10 See generally, Voon and others (n 9) 62ff; JP Gaffney, ‘“Abuse of Process” in Investment Treaty Arbitration’ (2010) 11 Journal of World Investment & Trade 515–38. 11 Treaty Abuse and Treaty Shopping, UN Doc E/C.18/2006/2, 5. 12 Philip Morris Asia (n 8) para 434. 13 The Rompetrol Group NV v Romania, ICSID Case No ARB/06/3, Decision on Repondent’s Preliminary Objections on Jurisdiction and Admissibility (2008). 14 Tokios Tokelės (n 7), Dissenting opinion of Prosper Weil (President). 15 Rompetrol (n 13) para 85. 16 On the great difficulty of defining the concept, see generally eg E De Brabandere, ‘“Good Faith”, “Abuse of Process” and the Initiation of Investment Treaty Claims’ (2012) 3 Journal of International Dispute Settlement 609–36; L De Broe and J Luts, ‘BEPS Action 6: Tax Treaty Abuse’ (2015) 43 Intertax 122–46; M Feldman, ‘Setting Limits on Corporate Nationality Planning in Investment Treaty Arbitration’ (2012) 27 ICSID Review 281, 284ff; AD Mitchell and T Voon, ‘Conclusion’ in AD Mitchell, M Sornarajah and T Voon (eds), Good Faith and International Economic Law (OUP 2015) 174; Schill and Bray (n 9) 107ff; A Slade, ‘Good Faith and the TRIPS Agreement: Putting Flesh on the Bones of the TRIPS “Objectives”’ (2014) 63 International and Comparative Law Quarterly 353, 371–76. 17 See eg S Van Weeghel, The Improrer Use of Tax Treaties (Kluwer 1998). See also Commentaries to the 2010 OECD Model Double Taxation Convention (n 4). 18 For references, see n 7. 19 See eg Gremcitel (n 7) para 183; Philip Morris Asia (n 8) para 554. 20 See eg Abaclat and Others v Argentine Republic, ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility (2011) paras 647–49. 21 See eg M Lang, Introduction to the Law of Double Taxation Conventions, Online Books IBDF (accessed 17 December 2013), ch V; K Vogel, ‘Steuerumgehung nach innnerstaatlichem Recht und nach Abkommensrecht’ (1985) 15 Steuer und Wirtschaft 369, 376; Commentary to the UN Model Double Taxation Convention (n 2) 49–50; Aguas del Tunari (n 7), para 206ff, 330–31; B Michel, ‘Anti-Avoidane and Tax Treaty Override: Pacta Sunt Servanda’ (2013) European Taxation 415; Canada, Tax Court, Mil Investments SA, Case No 2004-3354(IT)G (2006), available through the IBFD Tax Research Platform database: <http://www.ibfd.org> accessed 4 October 2017; United States, US Tax Court, Aiken Industries Inc v Commissioner of Internal Revenue (1971), ibid; Canada, Supreme Court, Crown Forest Industries Ltd v Her Majesty the Queen, Case No 23940, ibid; Israel, District Court, Yanko-Weiss Holdings Ltd v Assessing Officer of Holon, Case No 5663/07 (2007), Case Summary, ibid; Denmark, National Tax Tribunal, Case No 10-02772/SKM No 2012.26 (2011), Case decision, in Danish, ibid; Switzerland, Federal Administrative Court, Case A-6537/2010 (2012), Case decision, in German, ibid; Switzerland, Federal Supreme Court, Case 2A.416/2005/svc (2006), Case decision, in French, ibid; Canada, Tax Court of Canada, Myron and Berna Garron v Her Majesty the Queen, Case No 2006-1405(IT)G (2009), ibid. 22 Commentary to the UN Model Double Taxation Convention (n 2) 49–50; footnotes are omitted. 23 See eg De Broe and Luts (n 16) 144; Feldman (n 16) 284; Voon and others (n 9),62. 24 Tokios Tokelės (n 7) para 36. 25 Rompetrol (n 13) para 85. 26 See eg J Lyons, Semantics (CUP 1977) chs 8–9. 27 Comp H Thirlway, ‘The Law and Procedure of the International Court of Justice, 1960-1989, Part One’ (1989) 60 BYIL 4, 25: ‘It has of course to be accepted that if a right or discretion exists, it may be abused.’ Comp Phoenix (n 7) para 82: ‘There is nothing like a total discretion.’ 28 Some would say that fishing vessels would have to have a genuine link with the state of their nationality. This is where the abuse of rights doctrine intersects with rules of general international law concerning the nationality of claims. Further on this, see eg de Brabandère (n 16) 609–36. 29 1833 UNTS 3. 30 Cf the following statement made by Hersch Lauterpach: ‘There is no right, however well established, which could not be refused recognition on the ground that it has been abused.’ Development of International Law by the International Court (Stevens and sons 1958) 164. 31 Phoenix (n 7) para 107. 32 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Stevens and sons 1953) 121. 33 See eg T Cottier and KN Schefer, ‘Good Faith and the Protection of Legitimate Expectations in the WTO’ in M Broncker and R Quick (eds), New Directions in International Economic Law (Kluwer 2000) 47, 51; HE Zeitler, ‘“Good Faith” in the WTO Jurisprudence’ (2005) 8 Journal of International Economic Law 738; Thirlway (n 27) 7ff, esp 25–29; M Kotzur, ‘Good Faith (Bona Fides)’ (2009) EPIL 508, 514; R Jennings and A Watts (eds) Oppenheim’s International Law (9th edn, Longman 1992) vol 1, 408. 34 La Bretagne Arbitration (1986), 82 ILR 589, 614. 35 Phoenix (n 7) para 113. 36 ibid para 158. 37 Apart from UNCLOS, see eg art 34 of the Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 21673 UNTS 3. 38 Comp common art 26 of the 1969 and 1986 Vienna Conventions on the Law of Treaties. 39 1748 UNTS 385. 40 See eg Cottier and Schefer (n 33) 51; Zeitler (n 33) 738; G Ress, ‘The Interpretation of the Charter’ in B Simma (ed), The Charter of the United Nations. A Commentary (OUP 1994) 25, 31; MK Yaseen, ‘L’interprétation des traits d’après la Convention de Vienne sur le droit des traités’ (1976) 151 Recueils des cours 1, 23; R Gardiner, Treaty Interpretation (OUP 2008) 151; Slade (n 16) 353, 372, 374. 41 Kotzur (n 33) 509. 42 J Salmon, ‘Article 26: Pacta sunt servanda’ in O Corten and P Klein (eds), The Vienna Convention on the Law of Treaties: A Commentary (OUP 2011) vol 1, 659, 679, citing the ICJ in Gabčíkovo-Nagymaros Project. 43 Cf Gerald Fitzmaurice, who in his Fourth Report as Special Rapporteur on the Law of Treaties, wrote: ‘A treaty must be carried out in good faith, and so as to give it a reasonable and equitable effect according to the correct interpretation of its terms.’ ILC Yrbk (1959:2) 42. 44 Gardiner (n 40) 151. 45 Ress (n 40) 31. 46 Yaseen (n 40) 23. 47 I Sinclair, The Vienna Convention on the Law of Treaties (2nd edn, Manchester University Press 1984) 120. 48 Interestingly, in his Third Report as Special Rapporteur to the ILC on the Law of Treaties, Sir Humphrey Waldock proposed a provision on the rule of pacta sunt servanda that included something like a tentative definition of the concept of good faith (ILC Yrbk, 1964:2, 7). The proposed provisions reads as follows: Article 55. Pacta sunt servanda 1. A treaty in force is binding upon the parties and must be applied by them in good faith in accordance with its terms and in the light of the general rules of international law governing the interpretation of treaties. 2. Good faith, inter alia, requires that a party to a treaty shall refrain from any acts calculated to prevent the due execution of the treaty or otherwise to frustrate its objects. 49 Comp art 1 of the Charter of the United Nations. 50 Case Concerning Border and Transborder Armed Actions (Nicaragua v Honduras), Jurisdiction and Admissibility [1988] ICJ Rep, 69, para 46. 51 Comp M Virally, ‘Review Essay: Good Faith in Public International Law’ (1983) 77 AJIL 130, 132: ‘The effects attached to the expressed will and, more broadly, to the behavior of international actors are conceivable only because it is assumed that they act in good faith and that what is apparent is in conformity with their real will. If this postulate is not taken for granted, the whole fabric of international law will collapse.’ 52 Comp U Linderfalk, ‘Is Treaty Interpretation an Art or a Science? International Law and Rational Decision-Making’ (2015) 26 EJIL 169, 172–73; U Linderfalk and M Hilling, ‘The Use of OECD Commentaries as Interpretative Aids: The Static/Ambulatory-Approaches Debate Considered from the Perspective of International Law’ (2015) 1 Nordic Tax Journal 34, 37–39. 53 Cf M Byers, ‘Abuse of Rights: An Old Principle, A New Age’ (2002) 47 McGill Law Journal 389, 406: ‘The determination of when the exercise of a right becomes abusive must depend on the specific context of each case rather than the application of any abstract legislative standard.’ 54 See eg Autopista (n 7); Tokios Tokelės (n 7); Phoenix (n 7); Mobil Corporation (n 7); Tidewater (n 7); ConocoPhilips Petrozuata (n 7). 55 Autopista (n 7). 56 ibid para 97. 57 ibid para 114. 58 ibid para 126. 59 Phoenix (n 7). 60 ibid para 34. 61 ibid para 82. 62 ibid para 82. 63 ibid para 88. 64 ibid paras 135–44. 65 ibid para 144. 66 Philip Morris Asia (n 8). 67 1748 UNTS 385. 68 Philip Morris Asia (n 8) para 585. 69 Comp art 1(f) and (b) of the Hong Kong–Australia BIT. 70 Comp Phoenix (n 7) para 88. 71 As stated by the Court in United Communist Party of Turkey and Others v Turkey (ECHR 1998-I), among other cases, ‘the Convention was designed to maintain and promote the ideals and values of a democratic society’ (para 45). Admittedly, the way the relationship between human rights and political democracy is described in the European Convention, instrumentality works both ways. In the preamble to the Convention, effective political democracy is described as a means to ensure the maintenance and further realization of human rights and fundamental freedoms. At the same time, in the case-law of the European Court, securing to everyone within the jurisdiction of a state party the enjoyment of the rights and freedoms laid down in the Convention is seen as a means for the protection of the ideals and values of a democratic society. 72 Refah Partisi (The Welfare Party) and Others v Turkey, ECHR 2003-II, para 99. 73 See eg German Communist Party v Germany, Appl no 250/57 (Commission, 20m July 1957); Glimmerveen and Hagenbeek App nos 8348/78 and 8406/78 (ECtHR, 11 October 1979); Marais v France App no 31159/96 (Commission, 24 June 1996); Schimanek v Austria App no 32307/96 (ECtHR, 1 February 2000); Norwood v the UK, ECHR 2004-XI; WP and Others v Poland, ECHR 2004-VII; Pavel Ivanov v Russia App no 35222/04 (ECtHR, 20 February 2007); Paksas v Lithuania, ECHR 2011; Hizb ut-Tahrir and Others v Germany App no 31098/08 (ECtHR, 12 June 2012); Kasymakhunov and Saybatalov v Russia App nos 26261/05, 26377/06 (ECtHR, 14 June 2013). 74 Kasymakhunov and Saybatalov ibid. 75 ibid paras 104–05. 76 ibid para 106. 77 ibid para 107. 78 ibid paras 107–11. 79 ibid para 113. 80 Vienna Convention on the Law of Treaties, adopted on 22 May 1969, 1155 UNTS 331; Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations, adopted on 21 March 1986, UN Doc A/CONF.129/15, at the time of writing, the Convention has not entered into force. 81 Emphasis added. 82 Comp Ress (n 40), 31. 83 Comp the ICJ in Navigational and Related Rights (Costa Rica v Nicaragua) [2009]: ‘It is true that the terms used in a treaty must be interpreted in light of what is determined to have been the parties’ common intention.’ ICJ Rep, 213, 242. 84 See eg D Sperber and D Wilson, Relevance: Communication and Cognition (Basil Blackwell 1986); D Blakemore, Understanding Utterances: Introduction to Pragmatics (Blackwell 1992). 85 Comp the maxims of communicative cooperation suggested by HP Grice, Studies in the Way of Words (Harvard University Press 1989). 86 This terminology builds on the pragmatic literature. See eg Sperber and Wilson (n 84); Blakemore (n 84). For a more comprehensive treatment of the concept of communicative assumptions in the context of treaty interpretation, see U Linderfalk, On the Interpretation of Treaties (Springer 2007). 87 See eg Case Concerning Kasikili/Sedudu Island (Botswana/Namibia) [1999] ICJ Rep, 1045, 1062. 88 See eg Soering v the UK (1989) Series A no 161, para 103. 89 See eg Kasikili/Sedudu Island (n 87) 1072–73. 90 See eg Guinea – Guinea-Bissau Maritime Delimitation, Award (1985), 77 ILR 636, 666–68. 91 See eg La Grand Case (Germany v United States) [2001] ICJ Rep 466, 503–05. 92 See eg Sigurður A Sigurjónson v Iceland (1993) Series A no 264, paras 33–35. 93 By a rule of interpretation proper, lawyers usually mean a rule stated in a particular form: ‘If, in the interpretation of a treaty, a state of affairs of a particular kind P obtains, then the treaty shall be interpreted in a particular manner Q.’ See eg J Wróblewski, The Judicial Application of Law (Springer 1992) 96ff. 94 See Linderfalk (n 86). 95 See eg J Wróblewski, ‘Legal Syllogism and Rationality of Judicial Decision’ (1974) 5 Rechtstheorie 33, 38–39. 96 Navigational and Related Rights (n 83). 97 ibid para 58. 98 Symptomatically, the choice between contemporaneous and historical meaning is often said to be a matter of good faith. See eg G Haraszti, Some Fundamental Problems of the Law of Treaties (Akadémiai Kiadó 1973) 169. 99 Navigational and Related Rights (n 83) para 63. 100 Note that a class may be defined by other institutional practices than the conventions of a common language. Examples include the practice of UN organs (‘human rights’), the teaching of natural science (‘the quality of the water in the Danube’) or the moral standards in European countries (‘morals’). See, respectively, art 55 of the Charter of the United Nations; art 15 of the 1972 Treaty between Hungary and Czechoslovakia Concerning the Construction and Operation of the Gabčíkovo-Nagymaros System of Locks; and art 8 of the European Convention on the Protection of Human Rights and Fundamental Freedoms. 101 Navigational and Related Rights (n 83) para 70 102 Öcalan v Turkey, ECHR 2005-IV. 103 ibid para 162. 104 ibid para 163. 105 ibid para 164. 106 ibid para 165. 107 ibid paras 166–75. 108 ibid para 165. 109 For references, see n 21. 110 Comp Guinea – Guinea-Bissau Maritime Delimitation (n 90) 662–63. 111 Gabčíikovo-Nagymaros Project (Hungary/Slovakia) [1997] ICJ Rep, 7, para 112. 112 Comp Öcalan (n 102), para 165. 113 Comp Crown Forest Industries (n 21), para 55 ff. 114 See eg Purcell and Others v Ireland (1991), 70 DR 262; Vogt v Germany (1995) Series A no 323; Lehidieux and Isorni v France, ECHR 1998-VII; Refah Partisi (n 72); Ždanoka v Latvia, ECHR 2006-IV. 115 Refah Partisi (n 72). 116 ibid para 26. 117 ibid para 87. 118 ibid paras 88–89; page references are omitted. 119 ibid para 96. 120 ibid. 121 ibid para 99 122 ibid para 98. 123 ibid paras 107–34. 124 ibid. 125 ibid paras 132–34. 126 ibid para 135. 127 See eg Crown Forest Industries (n 21); Canada, Tax Court of Canada, TD Securities LLC v Her Majesty the Queen, 8 April 2010, available through the IBFD Tax Research Platform database: http://www.ibfd.org, accessed 4 October 2017. (n 21). 128 Crown Forest Industries (n 21). 129 1469 UNTS 189. 130 Crown Forest Industries (n 21) para 7. 131 ibid para 10. 132 ibid para 53. 133 ibid para 46. 134 ibid para 49. 135 ibid para 68. 136 Reasons suggest that the OECD Model Agreement and Commentaries be categorized as belonging to the circumstances of the conclusion of the Canada–US Convention, rather than to its preparatory work. 137 Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v Nicaragua); Construction of a Road in Costa Rica Along the San Juan River (Nicaragua v Costa Rica) [2015], available at the webpage of the Court: <http://www.icj-cij.org> accessed 4 October 2017. 138 ibid para 140–41. 139 See eg Request for Interpretation of the Judgment of 15 June 1962 in the Case Concerning the Temple of Preah Vihear (Cambodia v Thailand) [2013] ICJ Rep 281, para 99; Application of the Interim Accord of 13 September 1995 (The Former Republic of Macedonia v. Greece) [2011] ICJ Rep 644, para 168; Case Concerning Pulp Mills on the River Uruguay (Argentina v Uruguay) [2010] ICJ Rep 14, para 278; Navigational and Related Rights (n 83) para 150. 140 Navigational and Related Rights (n 83) para 150. 141 Certain Activities Carried Out by Nicaragua in the Border Area (n 137) para 141. Quotes are from the decision of the ICJ in Navigational and Related Rights. 142 Application of the Interim Accord of 13 September 1995 (n 139). 143 1891 UNTS 7. 144 Application of the Interim Accord of 13 September 1995 (n 139), para 131. 145 ibid para 132. Quotes are from the PCIJ in Railway Traffic between Lithuania and Poland. 146 ibid para 132. References to earlier case-law have been omitted. 147 Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v France) [2008] ICJ Rep 179. 148 1695 UNTS 298. 149 Certain Questions of Mutual Assistance in Criminal Matters (n 147) para 145. 150 Rainbow Warrior Arbitration (New Zealand v France) [1990] 20 UNRIAA 215. 151 As quoted ibid para 13. 152 ibid para 94. 153 Admission of a State to the United Nations (Charter, art 4), Advisory Opinion [1948] ICJ Rep 57. 154 ibid 63. 155 Constitution of the Maritime Safety Committee of the Inter-Governmental Maritime Consultative Organization, Advisory Opinion [1960] ICJ Rep 149. 156 ibid 166. 157 ibid 170–71 158 See preambular para 3 of both Conventions. 159 See above, Section 1. 160 Comp U Linderfalk, ‘What are the Functions of the General Principles? Good Faith and International Legal Pragmatics’ (20 April 2017) <https://ssrn.com/abstract=2955648> accessed 4 October 2017. 161 ibid. 162 ibid. 163 See Draft Articles on the Law of Treaties with Commentaries, Report of the International Law Commission on the second part of its seventeenth session and on its eighteenth session, Part II, ILC Yrbk (1966:2) 220: ‘The article as already indicated is based on the view that the text must be presumed to be the authentic expression of the intention of the parties; and that, in consequence, the starting point of interpretation is the elucidation of the meaning of the text, not an investigation ab initio into the intentions of the parties.’ 164 See common art 18. 165 See common art 19(c). 166 See common art 33, para 4. 167 See common art 41, para 1(b). 168 See common art 58, para 1(b). 169 See common art 60, para 3(b). 170 See above, Section 1. 171 As should be recalled, common art 32 of two Vienna Conventions differ from art 31. Whereas under art 31, no interpretation may exceed the boundaries set by conventional usage, art 32 allows for more extensive interpretations, the condition being of course that the application of art 31 leads to a ‘manifestly absurd or unreasonable’ result. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of International Dispute Settlement Oxford University Press

Treaty Abuse—Why Criticism of the Doctrine is Unfounded

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Abstract

ABSTRACT Although treaty abuse is an increasingly occurring element in international legal arguments, especially in the sphere of international economic law, the concept is still viewed by many lawyers as suspicious, for several reasons. First, lawyers have doubts about the legal status of the treaty abuse doctrine. Second, as many lawyers would seem to believe, the concept of treaty abuse is imprecise—it is the expression of some loose or unsettled idea about the function of international law that cannot be explained in a clear and coherent manner. Third, lawyers fear that by accepting the validity of a treaty abuse argument, a court or tribunal will import elements into a treaty that were not there originally, and by so doing, will encroach upon the sovereign right of the parties to define between themselves the precise terms of application of their treaty. 1. INTRODUCTION As every international lawyer is aware, when law-applying agents (such as states, international organizations or international courts and tribunals) set out to make a determination of international law relative to a particular dispute or a particular set of facts, they often find that the scope of application of rights and obligations are not delimited with any great precision. To some extent, this is the unavoidable consequence of the generality of law and the dependency of legal communication on the usage of human language. More interestingly, however, it is in many cases the result of a deliberate law-making strategy. Because of the particular issue to be governed by a treaty provision, within the limits posed by the language expressing it, international law-makers sometimes decide to leave to law-applying agents the possibility to choose between diverse courses of action. For example, while, according to Article 25 of the ICSID Convention,1 ‘the jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State … and a national of another State’, the Convention confers upon parties the discretion to define for themselves, by the conclusion of bilateral investment treaties (BITs), what precise disputes should come within the jurisdiction of ICSID. Generally, when lawyers talk about any such power conferred on law-applying agents, they use the term legal discretion. Over the last 5–10 years, treaty abuse has become an increasingly popular element in international legal argument.2 The concept pertains to the proper exercise of legal discretion. The suggestion is that no legal discretion offered under a treaty provision is absolute in the sense that a law-applying agent has complete freedom to exercise it any way it likes. If, for example, Article 25 of the ICSID Convention confers on parties a power to agree between themselves what precise criteria shall be applied in determining the nationality of an investment, according to the suggestion, this is not to say that any such criterion will be acceptable. From the perspective of the treaty abuse doctrine, at some point or another, the exercise of the discretion conferred under Article 25 to determine the applicable criteria of nationality will turn into an abuse of that same provision. According to the argument, what might appear at first to be just the exercise of a treaty right will in fact amount to a breach of an international rule imposing on treaty parties an obligation not to exercise treaty rights abusively.3 In a situation where the jurisdiction of ICSID assumes that nationality criteria are applied in a way that abuses Article 25, this explains why jurisdiction has to be declined. The treaty abuse argument can be observed especially in the practice of international economic law. In the context of the application of tax treaties, for example, treaty abuse is an argument regularly used by domestic authorities when trying to justify the application of domestic anti-avoidance measures denying taxpayers treaty benefits.4 It is a concept very much in focus of the OECD/G20 project on Base Erosion and Profit Shifting.5 WTO Panels and the WTO Appellate Body have considered the possibility of denying the introduction of barriers to trade in goods, and discriminatory treatment in international commerce, invoking the duty of states not to abuse the exceptions contained in Article XX of the 1994 GATT; similarly, in the interpretation and application of the TRIPS agreement, they have referred to treaty abuse as a safeguard against a potential arbitrary regulation by states of ownership of intellectual property.6 ICSID arbitration tribunals have declared it to be a condition for the protection of an investment that it does not constitute an abuse of the ICSID Convention/BIT system.7 In several cases, including the recently issued award in the arbitration between Philip Morris Asia and Australia, arbitration tribunals have found that the commencement of arbitration proceedings constitutes an abuse of process ‘when an investor has changed its corporate structure to gain the protection of an investment treaty at a point in time where a dispute was foreseeable’.8 In the growing camp of lawyers engaged with the practice of international economic law, treaty abuse arguments are still viewed by many as suspicious.9 This widely shared attitude would seem to have mainly three reasons. First, lawyers have doubts about the legal status of the alleged rule not to exercise treaty rights abusively.10 For example, the UN Committee of Experts on International Cooperation in Tax Matters, at one point of their work on tax treaty abuse and treaty shopping, expressed the idea that treaty abuse is tantamount to ‘an incorrect use of a treaty, without however necessarily involving an illegal act or a formal breach of the treaty’.11 In Philip Morris Asia v Australia, the claimant responded to the objection that the commencement of arbitration shortly after restructuring was contrary to the treaty abuse doctrine which prevented it from exercising rights offered under Article 10 of the 1993 Hong Kong–Australia BIT. According to claimant, there was no coherent—much less settled—principle of international law underlying the respondent’s objection.12 In Rompetrol v Romania,13 Respondent relied heavily on the dissenting opinion of Professor Prosper Weil in Tokios Tokelės v Ukraine, in which the Professor forcefully defended the relevance of the treaty abuse doctrine.14 As concluded by the Arbitration Tribunal in Rompetrol, it would not pay great attention to this opinion ‘since (as the Claimant argued) the view expressed by Prof. Weil had not been widely approved in the academic and professional literature, or generally adopted by subsequent tribunals’.15 Second, as many international economic lawyers would seem to believe, the concept of treaty abuse is imprecise; it is the expression of some loose or unsettled idea about the function of international law that cannot be explained in a clear and coherent manner.16 This particular assumption would seem to be largely spurred by the absence of a coherent language pattern. For international tax lawyers, it would seem to be a problem that while ‘treaty abuse’ is a term used in international legal discourse, it is also a concept of many domestic legal systems taking on a great variety of different meanings.17 Even when looked upon from a purely international lawyers’ perspective, however, the use of ‘treaty abuse’ fails to present a single stable pattern of meaning. On the one hand, especially for ICSID tribunals, the meaning of ‘treaty abuse’ would seem to relate to the doctrine of abuse of rights. ICSID tribunals use ‘treaty abuse’ and ‘abuse of rights’ interchangeably.18 To further complicate things, in response to the great variety of circumstances which in arbitration proceedings may provoke an argument of treaty abuse, there is now a tendency of further fine-tuning terminology: arbitration tribunals distinguish between ‘abuse of treaty rights’ and ‘abuse of process’,19 and between breaches of ‘material’ or ‘procedural good faith’.20 On the other hand, especially for taxation law scholars, and domestic courts adjudicating issues of international taxation, the meaning of ‘treaty abuse’ would seem to relate to issues of treaty interpretation and good faith.21 Examining the role assigned to the concept of the improper use of taxation conventions in strategies of states to prevent tax avoidance and evasion, the Commentary to the United Nations Model Double Taxation Convention between Developed and Developing Countries adopted in 2011 gives the following explanation: Another approach that has been used to counter improper uses of treaties has been to consider that there can be abuses of the treaty itself and to disregard abusive transactions under a proper interpretation of the relevant treaty provisions that takes account of their context, the treaty’s object and purpose as well as the obligation to interpret these provisions in good faith. As already noted, a number of countries have long used a process of legal interpretation to counteract abuses of their domestic tax laws and it seems entirely appropriate to similarly interpret tax treaty provisions to counteract tax treaty abuses.22 Third, many international economic lawyers fear that by accepting the validity of such arguments, a court or tribunal will import elements into a treaty which were not there originally, and that by so doing, will encroach upon the sovereign right of parties to a treaty to define between themselves its precise terms of application.23 When a treaty uses language that leaves to law-applying agents the possibility to choose between diverse courses of action, this should be seen as a deliberate choice: whatever ensues from the loose language of the treaty, this is precisely what the parties intended. In Tokios Tokelės v Ukraine, for example, the respondent argued that the ICSID Tribunal should deny jurisdiction because the claimant did not maintain substantial business activities in the country of its nationality (Lithuania). The Tribunal noted that while many investment treaties enable parties to deny treaty benefits to corporations controlled by nationals of the denying party when they do not engage in substantial business activity in the country of their nationality, the Ukraine–Lithuania BIT contained no such provision: We regard the absence of such a provision as a deliberate choice of the Contracting parties. In our view, it is not for tribunals to impose limits on the scope of BITs not found in the text, much less limits nowhere evident from the negotiating history.24 In Rompetrol, as earlier noted, the Tribunal expressed doubt about the legal status of the treaty abuse doctrine. As it added, the situation allowed it to leave this question aside: The Tribunal would in any case have great difficulty in an approach that was tantamount to setting aside the clear language agreed upon by the treaty Parties in favour of a wide-ranging policy discussion. Such an approach could not be reconciled with Article 31 of the Vienna Convention on the Law of Treaties (which lays down the basic rules universally applied for the interpretation of treaties), according to which the primary element of interpretation is ‘the ordinary meaning to be given to the terms of the treaty’.25 As this article finds, much of the criticism still expressed among international economic lawyers to the treaty abuse doctrine is unfounded. It is the objective of this article to establish this proposition properly. As the article will argue: (i) the concept of treaty abuse expresses a very clear and coherent idea about the function of international law, despite the existence of an incoherent language pattern; (ii) there is in international law an established rule not to exercise treaty rights abusively; and (iii) by accepting the validity of a treaty abuse argument, a court or tribunal will not be acting contrary but rather in deference to the intention of treaty parties. If ever an explanation of the treaty abuse criticism can be given, consequently, it would seem to lie partly in the failure of international economic lawyers to fully recognize the foundational basis of the treaty abuse doctrine. Partly, it would seem to be the result of an inclination of those same lawyers to perceive of treaty abuse arguments as something highly peculiar for the practice of international economic law, which naturally makes them reluctant to acknowledge the clear affinity of those arguments with the practice of international law generally. The organization of the article will be as follows. Sections 2–4 will inquire into the precise meaning of ‘treaty abuse’. Methodologically, instead of investigating the concept considered in isolation, the article will draw on the idea of treaty abuse as an element of a conceptual field. Like linguistics, the article will assume that the extension of any concept is determined partly by its relationship with ‘conceptual neighbors’.26 Consequently, it will make an attempt to define the concept of treaty abuse by clarifying its relationship with abuse of rights and good faith treaty interpretation, respectively. As Sections 2–4 will establish, in one sense of the term, treaty abuse is a special case of abuse of rights. It denotes a situation in which the exercise of a discretion offered under a treaty rule renders the purpose of the treaty ineffective. In another sense of the term, treaty abuse bears on the concept of good faith treaty interpretation, being in some cases its conceptual opposite—treaty interpretation mala fides. Section 5 will inquire into the legal status of the rule prohibiting treaty abuse. It will do so by surveying case law concerning the exercise of treaty-based discretionary powers developed outside of the limited context of international economic law. As this section will establish, the treaty abuse doctrine has been applied by international courts and tribunals since long. Admittedly, they have not referred to the doctrine using this precise term, but substantially they have accepted the validity of the treaty abuse argument without much hesitation. Section 6 will establish the relation of the treaty abuse doctrine with the principle of free consent. Since, as found in earlier sections of the article, the treaty abuse doctrine is merely the application of the principle of good faith to a particular category of international rights, Section 6 will be conducted as an inquiry into the function of the principle of good faith. As argued, when the principle of good faith is applied relative to the treaty abuse doctrine, it serves no other purpose than the determination of the intention of treaty parties. Applying the treaty abuse doctrine, consequently, a court or tribunal will satisfy the principle of free consent much like when it acts upon the clear language of the text of a treaty. 2. THE CONCEPT OF ABUSE OF RIGHTS A. Theory A first task assumed in this article is to investigate whether, by the determination of the relationship of treaty abuse with its conceptual neighbors, this concept can be defined more precisely. The task will be accomplished in three stages, the first of which—to be completed in the current section—implies the development of a fuller understanding of the concept of abuse of rights. An abuse of rights argument, much like the doctrine of treaty abuse, builds on the assumption that a legal discretion offered under a rule of law is never absolute.27 Say, for example, that according to a fishing agreement concluded between two states, fishing vessels of the nationality of each state are allowed to conduct fishing operations in the exclusive economic or fishing zone of the other party. The agreement leaves to each of the two parties to determine the applicable criteria of nationality of fishing vessels. As the abuse of rights doctrine teaches, however, this is not to say that parties are free to apply just any such criteria. Some criteria when applied for the purpose of the fishing agreement may in fact be contrary to international law;28 more specifically, they may be contrary to the obligation of all states and international organization not to exercise international rights abusively. Parties to a treaty may choose to lay down this obligation explicitly in a treaty provision similar to Article 300 of the UN Convention on the Law of the Sea (UNCLOS), for example: States Parties shall fulfil in good faith the obligations assumed under this Convention and shall exercise the rights, jurisdiction and freedoms recognized in this Convention in a manner which would not constitute an abuse of right.29 However, if the abuse of right doctrine is adopted, such a provision makes little difference. Although, of course, an explicit rule may serve the useful purpose of clarifying the scope of treaty obligations assumed, as argued, the prohibition of the abuse of rights applies whether explicitly referred to in the treaty or not.30 The ICSID Tribunal in Phoenix Action Ltd v The Czech Republic phrased this very neatly: ‘[E]very right includes an implied clause that it must not be abused.’31 The fundamental question raised by the abuse of rights doctrine, as described, is the following: If the discretionary power offered under a law is always limited, and this limitation is not the result of the language expressing the law, then what could possibly be the determining factor? Stated differently, what exactly marks the point when the exercise of a right conferred on a state or an international organization under a rule of international law turns into an abuse of that same right? The answer to this question would seem to require a more informed understanding of the justification of the doctrine of abuse of rights. This is where the principle of good faith enters the picture. Already Professor Bin Cheng emphasized the existence of a relationship between the principle of good faith and the abuse of rights doctrine. As he put it, ‘the theory of abuse of rights (abus de droit) … is merely an application of this principle to the exercise of rights’.32 This idea is widely represented in later academic writing.33 It finds recognition in the practice of international courts and tribunals. For example, in La Bretagne Arbitration, the conclusion of the Tribunal was that the registration of trawlers referred to in Article 4(b) of the 1972 Fishing Agreement between Canada and France ‘was considered by the Parties, together with the principle of good faith … as affording a sufficient guarantee against any risk of the French Party exercising its rights abusively’.34 In Phoenix, in interpreting the ICSID Convention, as the ICSID Tribunal declared, it was concerned … with the international principle of good faith as applied to the international arbitration mechanism of ICSID. The Tribunal has to prevent an abuse of the system of international investment protection under the ICSID Convention, in ensuring that only investments that are made in compliance with the international principle of good faith and do not attempt to misuse the system are protected.35 In US – Shrimp and Shrimp Products, the WTO Appellate Body, commenting upon the relevance of the principle of good faith for the interpretation and application of Article XX of the 1994 GATT, made similar reference to the doctrine of abus de droit as ‘[o]ne application of this general principle of international law’.36 Furthermore, as indicated by several treaties,37 and among them most importantly UNCLOS, the idea of a relationship between the doctrine of abuse of rights and the principle of good faith seems to be commonly represented also among states. If the source of the abuse of rights doctrine can be traced back to the principle of good faith, obviously, this helps to clarify a few things. First, it helps to clarify the identity of the ‘abuser’. The obligation to perform a treaty in good faith, as known to international lawyers, is incumbent upon treaty parties.38 In the case of a treaty concluded by two states—say a BIT—consequently, the concept of abuse of rights has to be construed in terms of the conduct of those states, and not the conduct of any investor or taxpayer. Take, for example, the 1993 Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments.39 Article 10 of the Agreement, while providing for the settlement of disputes between either of the contracting parties and investors of the other party, does not itself define the concept of an investor. A definition of sort can be found in Article 1(f), which provides that in respect of Hong Kong, for example, ‘investors’ means among other things ‘companies defined in paragraph 1(b)(i) of this Article’, according to which ‘companies’ means, in respect of Hong Kong, ‘corporations, partnerships, associations, trusts or other legally recognised entities incorporated or constituted or otherwise duly organised under the law in force in its area …’. The 1993 Agreement, obviously, leaves to the Government of Hong Kong to determine the criteria that make a corporation a Hong Kong investor for the purpose of the 1993 Agreement. The abuse of rights doctrine sets a limit to the exercise of this discretion. It does not go as far as to limit the law-making power of Hong Kong, of course. What it implies is that the application of the nationality criteria laid down in the laws of Hong Kong will not necessarily always be recognized for the purpose of the application of the 1993 Agreement. Second, and more importantly for the purpose of this section, the close relationship between the abuse of rights and the principle of good faith helps to identify the criterion that determines, in each and every case of application of the abuse of rights doctrine, whether an exercise of discretion is abusive or not. Commenting upon the concept of good faith, international lawyers typically emphasize the importance of rationality and reason for the application of international law.40 More specifically, good faith is said to place an obligation on every party to a treaty to take into account the reasonable expectations of all others,41 or an obligation to apply the treaty in a reasonable way,42 or again an obligation to give the treaty a reasonable and equitable effect.43 Good faith is said to signify an element of reasonableness;44 it is said to call in substance for a nonarbitrary interpretation of a treaty;45 it is said to help bring into effect a reasonable and nonabusive result of any treaty interpretation process,46 or a result which is not manifestly absurd or unreasonable.47 As this article will rather put it, good faith stands for the idea of international law as a purposive endeavor.48 The principle insists upon the assumption that when states and international organizations enter into a treaty relationship, this is done to help bring about some particular state or states of affairs, such as the maintenance of international peace and security,49 the reinforcement of mutual commitments with regard to judicial settlement50 or the development of just any stable and foreseeable pattern of conduct. Stated in the inverse, good faith insists upon the assumption that the creation of the treaty relationship was seen by the parties as something more than an end in itself. So interpreted, good faith makes sense of the very occurrence of a treaty,51 in much the same way as the assumption of a communicative intention provides the necessary basis for the understanding of treaty language.52 If this conclusion is correct, then obviously, to exercise a discretionary power in good faith means to exercise it for a purpose. Stated in the inverse, to accept the unlimited exercise of a discretionary power is to accept that this power is sometimes exercised either unreasonably (i.e. for any purpose), or arbitrarily (i.e. for no purpose at all). Assuming that there is no single overarching purpose of all rules of international law, the relevant purpose can only be determined relative to each particular rule conferring a power. This conclusion presupposes, of course, that good faith can be categorized as a principle of international law. According to the assumption, contrary to any rule of international law, good faith does not provide a standard that can be directly applied to determine whether the exercise of a discretionary power is abusive or not.53 It serves this purpose only indirectly by identifying the relevant criterion to be used in the assessment, which is the purpose of the particular rule conferring the power in question. Viewed in this way, good faith allows for flexibility and assessments on a case-by-case basis, much like any equitable principle in the resolution of maritime delimitation disputes, or the principle of proportionality in the application of the European Convention on the Protection of Human Rights and Fundamental Freedoms, or again, the principle of due diligence in the application of laws protecting foreign investments. The quick survey of case law conducted in Section 2(B) of this article will illustrate and further establish this proposition. B. Practice In several awards, ICSID tribunals have addressed objections made by respondents on the ground that in accepting jurisdiction over a dispute, the respective Tribunal would in effect protect ‘an abusive manipulation of the system of international investment protection offered under the ICSID Convention and bilateral investment treaties’.54 In Autopista v Venezuela,55 for example, a Mexican company, Autopista Concesionada de Venezuela (Aucoven) had restructured its investments in a Venezuelan company by transferring 75% of its shares to a US corporation, Icatech. Venezuela argued that this transfer was accomplished only to gain access to the scope of protection offered under the ICSID Convention, and that the assertion by Aucoven of ICSID jurisdiction on the basis of Icatech’s 75% ownership of Aucoven in effect amounted to an abuse of the Convention. The Tribunal recalled that Article 25 of the ICSID Convention does not specifically define important terms used in the provision, such as, for instance, ‘national’, ‘investment’ and ‘foreign control’. As the Tribunal explained, the drafters of the Convention ‘preferred giving the parties the greatest latitude to define these terms themselves’.56 Consequently, in determining whether one company controlled another, in the sense of Article 25, the Tribunal ‘may not adopt a more restrictive definition of foreign control, unless the parties have exercised their discretion in a way inconsistent with the purposes of the Convention’.57 The Tribunal concluded that, based on the facts of the case, it could not be inferred that Icatech was a corporation of convenience exercising merely fictitious control over Aucoven. Consequently, no abuse of the ICSID Convention could be established.58 In Phoenix Action Ltd v The Czech Republic,59 a company (Phoenix) registered under the laws of Israel complained about the treatment given by the Czech Republic to two Czech companies fully owned by Phoenix. As the Respondent argued, because Phoenix had acquired the two companies ‘for the precise purpose of bringing their pre-existing and purely domestic disputes before an international judicial body … the Tribunal should look beyond the shell of the corporate claimant’. 60 It should deal with the two companies as they would have to deal with any investment made by a Czech national in the Czech Republic. The Tribunal noted that it was not the intention of the drafters of the ICSID Convention to leave to the parties a total discretion to define for themselves the notion of an investment.61 As the Tribunal stated, ‘basic criteria’ had to be met.62 The ICSID system was not created to protect nationals of a Contracting State against their own State, but to facilitate the settlement of disputes between states and foreign investors with a view to stimulating a larger flow of private international capital into those countries which wish to attract it.63 The Tribunal noted that the request for arbitration submitted to ICSID was based on a claim by the two Czech companies, supposedly assigned to Phoenix. It stressed the fact that when Phoenix acquired the Czech companies they were already involved in lawsuits and disputes with the Czech authorities. It emphasized the timing of the claim, which was presented by Phoenix to the Czech Republic before the registration of its ownership of the two companies in the Czech Republic, and a mere two months after acquisition agreements were signed. Furthermore, as it observed, circumstances indicated that no economic activity was either performed or even intended.64 The Tribunal concluded: the Claimant’s initiation and pursuit of this arbitration is an abuse of the system of international ICSID investment arbitration. If it were accepted that the Tribunal has jurisdiction to decide Phoenix’s claim, then any pre-existing national dispute could be brought to an ICSID tribunal by a transfer of the national economic interests to a foreign company in an attempt to seek protections under a BIT. Such transfer from the domestic arena to the international scene would ipso facto constitute a ‘protected investment’ – and the jurisdiction of BIT and ICSID tribunals would be virtually unlimited. It is the duty of the Tribunal not to protect such an abusive manipulation of the system of international investment protection under the ICSID Convention and the BITs.65 In Philip Morris Asia v Australia,66 the claimant initiated arbitration under the Arbitration Rules of the UNICITRAL, as revised in 2010, in accordance with Article 10 of the 1993 Hong Kong–Australia BIT. As provided by this article, in the case of a dispute ‘between an investor of one Contracting Party and the other Contracting Party concerning an investment of the former in the area of the latter’, as a remedy of last resort, ‘the parties to the dispute shall be bound to submit it to arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law as then in force’.67 The dispute in this case pertained to the effects on the claimant’s investments in Australia of the enactment and enforcement of the 2011 Australian legislation on plain packing of tobacco. The claimant (Philip Morris Asia) was a company incorporated in accordance with the laws of Hong Kong. In 2010, the Philip Morris International company group had restructured so as to transfer to Philip Morris Asia the ownership of an Australian holding company called ‘Philip Morris (Australia)’, which in turn owned all shares of the Australian trading company (‘Philip Morris Limited’) that manufactured and distributed Philip Morris’ products in Australia. As the respondent argued, since arbitration had been commenced only shortly after the transfer of ownership of the two Australian companies, the doctrine of treaty abuse prevented the claimant from exercising the right laid down in Article 10 of the 1993 BIT. The Tribunal upheld this objection. As it affirmed: [T]he commencement of treaty-based investor-State arbitration constitutes an abuse of right (or abuse of process) when an investor has changed its corporate structure to gain the protection of an investment treaty at a point in time where a dispute was foreseeable. A dispute is foreseeable when there is a reasonable prospect that a measure that may give rise to a treaty claim will materialise.68 In effect, the reasoning of the Tribunal seems largely similar to the findings of the ICSID Tribunal in Phoenix. Article 10 of the 1993 BIT leaves to each of the two parties a discretion to determine, by the adoption and application of domestic legislation, the nationality of a company.69 The adoption of the plain packaging legislation was foreseeable before the claimant decided to restructure. As the Tribunal seems to express, because of this, the application of Hong Kong nationality laws to Philip Morris Asia cannot be accepted for the purpose of the application of Article 10. If the nationality law of Hong Kong would be unconditionally accepted for the purpose of the admissibility of an investor’s claim, then any existing or foreseeable dispute between an Australian corporation and the government of that country could easily be made arbitrable under the 1993 BIT by a transfer of ownership of the corporation to a company incorporated in accordance with the laws of Hong Kong. This would be inimical to the purpose of Article 10, which is identical to the purpose of the 1965 ICSID Convention: to facilitate the settlement of disputes between states and foreign investors with a view to stimulating a larger flow of private international capital into those countries which wish to attract it.70 Abuse of rights is an argument sometimes applied in the consideration of claims of violation of the European Convention on the Protection of Human Rights brought before the European Court. This is for obvious reasons, as Article 17 of the Convention explicitly establishes a ‘Prohibition of abuse of rights’: Nothing in this Convention may be interpreted as implying for any State, group or person any right to engage in any activity or perform any act aimed at the destruction of any of the rights and freedoms set forth herein or at their limitation to a greater extent than is provided for in the Convention. While the reference in Article 17 to the ‘destruction’ of rights and freedoms does not itself reveal the purpose to be protected by the application of the provision, this purpose comes out very clearly from established case law. Securing to everyone, who finds himself within the jurisdiction of a state party, the enjoyment of the rights and freedoms laid down in the Convention is a means for the protection of the ideals and values of a democratic society.71 This idea about the relationship between human rights and political democracy poses a limit to the discretion that state parties exercise when implementing Convention rights. As the Court phrased it in Refah Partisi, ‘no one must be authorized to rely on the Convention’s provisions in order to weaken or destroy the ideals and values of democratic society’.72 The European Court and (before 1994) the European Commission have many times had recourse to Article 17 to declare applications wholly or partly incompatible ratione materiae with the provisions of the Convention.73 In Kasymakhunov and Saybatalov,74 the applicants had been convicted by Russian courts for their membership in a prohibited extremist Islamic organization called Hizb ut-Tahrir al-Islami. They both complained that this conviction violated their rights under Articles 9, 10 and 11 of the European Convention. The Court stressed the relevance in this case of Article 17. As a point of general clarification, it remarked that in pleading the rights enshrined in Article 11, and also in Articles 9 and 10 of the Convention, a political party or other association may attempt to derive therefrom the right to conduct activities intended to destroy the rights or freedoms set forth in the Convention and thus bring about the destruction of democracy. Article 17 was created precisely with the aim to prevent that: the provision serves to guarantee that the Convention is not applied for purposes contrary to the ideals and values of a democratic society.75 In addressing the particular facts of the Kasymakhunov and Saybatalov case, the Court noted that the applicants were engaged in spreading the ideology and distributing the literature of Hizb ut-Tahrir, the aims of which were ‘clearly contrary to the values of the Convention’.76 Among other things, the organization urged members to fight the unfaithful with weapons and to kill any citizens of ‘enemy States’.77 It proposed to introduce capital punishment for apostasy from Islam and to ban all political parties which are not based in this religion. It intended to set up a regime based on sharia, which particularly with regard to the legal status of women, and the way it intervened in all spheres of private and public life in accordance with religious precepts, in the words of the Court, could ‘hardly be regarded as complying with the democratic ideal that underlies the whole of the Convention’. Furthermore, according to Hizb ut-Tahrir’s Draft Constitution, only Muslims would have the right to vote and to be elected, to become State officials or to acquire membership of political parties.78 The Court concluded that the dissemination of the political ideas of Hizb ut-Tahrir by the two applicants clearly constituted an activity falling within the scope of application of Article 17.79 3. THE CONCEPT OF GOOD FAITH TREATY INTERPRETATION A. Theory Section 2 initiated an investigation of whether, by the determination of the relationship of treaty abuse with its conceptual neighbors, the application of this concept can be defined more precisely. Section 3 will pursue this investigation. As a second stage of the inquiry, it will attempt the development of a fuller understanding of the concept of god faith treaty interpretation. The relevance of good faith for a treaty interpretation process is confirmed by the 1969 and 1986 Vienna Conventions on the Law of Treaties.80 According to common Article 31, paragraph 1, ‘[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’.81 As will be argued in this article, this explicit reference to the principle of good faith serves a twofold purpose. First, it provides explanation of the legal regulation laid down in Articles 31–33,82 forming a natural linkage between the means of interpretation specified in the Conventions and the idea of the ultimate purpose of treaty interpretation. A treaty interpretation process aims to determine the communicative intention of the treaty parties, that is to say, what the parties intended to communicate by adopting, ratifying or acceding to the particular treaty considered.83 For any intellectual process aiming to determine the communicative intention of some treaty parties, it remains a problem that such an intention can only be assumed. Thus, the interpretation of a treaty is no different than the understanding of just any verbal utterance produced by a person or group of persons at a particular occasion, whether orally or in writing. As emphasized by modern linguistics (pragmatics), an utterance can be understood only on the assumption that whoever produced it acted rationally. The addressee or addressees of the utterance have to assume that in verbalizing and expressing his intention, the utterer act in conformity with some particular standards of communication.84 An addressee may assume, for example, that by making his utterance, the utterer brings only information that can be seen as relevant or necessary, given the situation or context of utterance.85 Henceforth in this article, any such assumption made by an agent in the interpretation of an utterance will be referred to as a communicative assumption.86 The good faith requirement inserted in common Article 31, paragraph 1 can be seen as recognition of this rationality assumption inherent in any act of treaty interpretation. Still, it does not provide very much information about the particular rules to be applied. A full explanation of the legal regulation laid down in the Vienna Conventions requires that we identify also the relevant communicative assumptions. While only partly indicated in the text of Articles 31–33, those assumptions will have to be inferred largely from the practice of international courts and tribunals. They include: Parties to the treaty arranged so that the treaty conforms to the lexicon, grammar and pragmatic rules of the language used for every authenticated version of it.87 Parties to the treaty arranged so that no norm laid down in the treaty logically contradicts another.88 Parties to the treaty arranged so that the application of the treaty helps attain its object and purpose.89 Parties to the treaty arranged so that the treaty corresponds with whatever can be inferred from the subsequent practice developed in its application.90 Parties to the treaty arranged so that the treaty corresponds with whatever can be inferred from its preparatory work.91 Parties to the treaty arranged so that the treaty corresponds with whatever can be inferred from the subsequent practice developed in its application, rather than with whatever can be inferred from its preparatory work.92 Given that the requirement of good faith presupposes the use of a series of communicative assumptions, and given that not every such assumption can be defended based on Articles 31–33, the substance of those articles can be restated in the form of rules of interpretation, properly speaking.93 Examples include: Rule (1) If a treaty uses elements of conventional language (such as words, grammatical structures or pragmatic features), the treaty shall be understood in accordance with the rules of that language. Rule (2) If in one of its two possible ordinary meanings a treaty entails a logical contradiction, whereas in the other ordinary meaning it does not, then the latter meaning shall be adopted. Rule (3) If one of the two possible ordinary meanings of a treaty helps attain the object and purpose of the treaty, whereas the other ordinary meaning does not, then the former meaning shall be adopted. Rule (4) If one of the two possible ordinary meanings of a treaty accords with the way in which the treaty parties have applied it, whereas the other meaning does not, then the former meaning shall be adopted. Rule (5) If the preparatory work of a treaty indicates a common understanding of the negotiators of a particular term of the treaty, then the term shall be interpreted accordingly. Rule (6) Rule (3) shall be applied prior to Rule (5), insofar as this does not leave the meaning of the treaty ambiguous or obscure, or leads to a manifestly absurd or unreasonable result. This list of examples helps explain the second purpose of the explicit reference in common Article 31, paragraph 1 to the principle of good faith. In applying the rules of interpretation laid down in the two Vienna Conventions, obviously, states and international organizations exercise some discretion. As pointed out in previous publications, there are three things about the rules that make interpretation a less than automatic exercise.94 First, the rules of interpretation cannot always determine the extension of a means of interpretation relative to the particular issue confronted. For example, whereas according to Rule (1), the interpreter shall understand a treaty in conformity with conventional language, international law leaves to the interpreter to decide whether in the interpretation of a particular treaty, conventional language shall be understood to mean the language applied at the time of the conclusion of the treaty, or the language applied at the time of interpretation. Second, the rules of interpretation cannot always determine the existence of the relationship required by a rule of interpretation between a means of interpretation and an interpreted treaty provision. For example, whereas according to Rule (3), if the ordinary meaning of a treaty is ambiguous, the interpreter shall adopt the meaning which best helps attain the object and purpose of the treaty, international law leaves to the interpreter to determine the instrumental relationship between the ordinary meanings of a treaty and its object and purpose. Third, the rules of interpretation cannot always determine the priority of two or more communicative assumptions. For example, whereas according to Rule (6), if a conflict occurs between Rules (3) and (5), normally, the former shall have precedence, international law leaves to the interpreter to resolve any similar conflict between Rules (2) and (3). As will be argued in this article, the principle of good faith poses a limit to any discretion exercised by states and international organizations under common Articles 31–33 of the two Vienna Conventions. Just because some issues of interpretation cannot be resolved based on any rule of interpretation, interpreters are not free to resolve them any way they like. As noted earlier, good faith requires that interpretation be based on the assumption that treaty parties act rationally. That is to say, interpreters should be able to reconstruct an assumed correct meaning of a treaty as a conclusion inferred from sound premises according to the accepted rules of inference.95 It would seem only natural that interpreters be guided by this same idea throughout the entire process of interpretation, even in those particular cases where the settlement of an issue is left to their discretion. Consequently, as argued, not only does the requirement of good faith provide explanation of the rules laid down in Articles 31–33. It also adds to the normativity of those rules in particular cases of application. The legal practice surveyed in Section 3(B) will illustrate the further implications of this proposition. B. Practice In Navigational and Related Rights,96 the International Court of Justice was asked to give an opinion on the scope of application of a Treaty of Limits concluded by Costa Rica and Nicaragua in 1858. The Treaty established Nicaragua’s dominion and sovereign jurisdiction over the waters of the San José River. At the same time, it affirmed Costa Rica’s right to navigate the lower course of the River for purposes of commerce (‘con objetos de comercio’). Nicaragua argued that the ordinary meaning of ‘comercio’ excluded all services, such as passenger transport, ‘because in 1858 the word “commerce” [“comercio”] necessarily meant trade in goods and did not extend to services, the inclusion of services being a very recent development’.97 The interesting thing with this argument is that Article 31, paragraph 1 of the 1969 Vienna Convention leaves the definition of ‘the ordinary meaning’ to the discretion of law-applying agents.98 Article 31, paragraph 1 does not say whether the terms of a treaty shall be interpreted in accordance with their ordinary meaning at the time of the conclusion of the treaty or their ordinary meaning at the time of interpretation. Acting in line with the requirement of good faith interpretation, of course, the Court would not be free to make this choice at will. It would have to continue efforts to establish the intention of the treaty parties. The Court took precisely such an approach. The Court affirmed that, as a matter of principle, ‘the terms used in a treaty must be interpreted in light of what is determined to have been the parties’ common intention, which is, by definition, contemporaneous with the treaty’s conclusion’.99 As it immediately added, however, it did not necessarily follow that no account should ever be taken of the meaning of a treaty at the time of interpretation. More often than commonly realized, treaty parties use terms to refer generically, that is to a class (or genus) of entities or states of affairs; ‘comercio’ presents an example of precisely such a generically referring expression. It refers to a class, the extension of which is defined by Costa Rica and Nicaragua only indirectly, by reliance on an institutional practice of some kind, in this case the language activities of Spanish-speaking people in general.100 Since, obviously, the parties where aware that in common language, the usage of the word comercio was likely to evolve over time, and since the 1858 Treaty had been entered into by the parties for a very long period, as the Court held, ‘comercio’ should be interpreted in light of the Spanish language now in current use, and not the language used in 1858.101 In Öcalan v Turkey,102 the Grand Chamber of the European Court of Human Rights reexamined the argument considered in Soering, 16 years earlier, that the imposition and/or execution of the death penalty constituted an inhuman and degrading punishment in violation of Article 3 of the European Convention. The Court found this interpretation to be inconceivable in the absence of an agreement of the parties to the Convention to abrogate the exception for capital punishment provided for under Article 2, paragraph 1. As it explained, ‘if Article 2 is to be read as permitting capital punishment, notwithstanding the almost universal abolition of the death penalty in Europe, Article 3 cannot be interpreted as prohibiting the death penalty since that would nullify the clear wording of Article 2 § 1’.103 Citing the previous decision of the Chamber on this point, the Court reiterated the importance of the developments and commonly accepted standards in the penal policy of the Council of Europe Member States: all states had abolished the death penalty de jure except Russia, which however had decided on a moratorium.104 This trend reflected on the law-making activities of the Member States. All states had signed Protocol No 6, which abandoned the death penalty in times of peace, and 41 states had ratified it. Moreover, in 2002, the Council of Europe had opened for signature Protocol No 13, which laid down provisions for a complete abolishment of the death penalty in all circumstances. Three states had not yet signed this Protocol and 16 had not ratified it.105 In the final analysis, the Court found that, it was not really necessary for it to reach any firm conclusion on the soundness of the interpretation of Article 3 proposed by the applicant.106 The trial of Öcalan would in any case be unfair, in the sense of Article 6 of the Convention; and the implementation of a death sentence following an unfair trial itself amounted to an inhuman treatment in violation of Article 3.107 At the same time, the following passage added by the Court clearly indicates what otherwise might have been its conclusion on the point at issue: [T]he fact that there is still a large number of States who have yet to sign or ratify Protocol No. 13 may prevent the Court from finding that it is the established practice of the Contracting States to regard the implementation of the death penalty as inhuman and degrading treatment contrary to Article 3 of the Convention, since no derogation may be made from that provision, even in times of war.108 This reasoning of the Court can be construed as involving a conflict between two communicative assumptions. On the one hand, there is the assumption that the parties to the European Convention arranged so that Article 3 corresponds to whatever can be inferred from the penal policy of the Member States of the Council of Europe. On the other hand, there is the assumption that the parties arranged so that Article 3 does not logically contradict Article 2. Both assumptions can be justified based on the rules of interpretation laid down in the 1969 Vienna Convention—more specifically, they can be justified based on the earlier referred to Rules (4) and (2), respectively. In the situation prevailing, since obviously the Court cannot act upon both assumptions at the same time, it would have to decide whether to act upon the one assumption or the other. Whatever will be its decision, there is no rule of interpretation to justify it. Articles 31–33 do not give precedence to either of Rules (4) and (2) over the other. The principle of good faith, however, requires that the Court continue efforts to establish the intention of the parties to the European Convention. The question to be answered is whether there are stronger reasons to hold as correct the one or the other assumption: that the parties to the European Convention arranged so that Article 3 corresponds to whatever can be inferred from the penal policy of the Member States of the Council of Europe; or the assumption that the parties arranged so that Article 3 does not logically contradict Article 2. The strong emphasis placed by the Court on the adoption of Protocol No 13 indicates a finding in favor of the latter assumption. 4 TREATY ABUSE AS AN ELEMENT OF A CONCEPTUAL FIELD A. How the Concept of Treaty Abuse Relates to the Concepts of Abuse of Rights and Good Faith Treaty Interpretation, and What These Relations Tell Us Having developed a fuller understanding of the two concepts of abuse of rights and good faith treaty interpretation, this article will now attempt to tie all strings together. Section 4—corresponding as it does to the third and final stage of the investigation initiated in Section 2—will not only determine the application of treaty abuse relative to its two conceptual neighbors, but furthermore it will suggest on this basis a more precise definition of this concept. As the abuse of rights doctrine teaches, there is always a limit to the discretion conferred under a rule of international law. This proposition is founded on the principle of good faith and the idea of international law as a purposive endeavor. Consequently, according to the abuse of rights doctrine, no exercise of a discretionary power offered under a rule of international law must render its purpose ineffective. As illustrated in Section 2(A), the doctrine of abuse of rights applies equally to all rights, whether they originate in customary international law or international agreements. This observation prompts the assumption that treaty abuse is in fact merely a special case of abuse of rights: if sometimes the exercise of a discretionary power offered under a treaty is abusive, then this is because this same exercise renders the purpose of the treaty ineffective. Doctrinal commentaries on the concept of treaty abuse confirm this assumption. To explain the concept of treaty abuse, scholarly writing refers to common Article 26 of the 1969 and 1986 Vienna Conventions and the provision that treaties must be performed in good faith.109 However trite, at least this reference tells us that good faith is the common theme connecting the two concepts of abuse of rights and treaty abuse. There is also the practice of international courts and tribunals cited in Section 2(B) of this article. Especially ICSID tribunals use the two terms interchangeably. In the context of the interpretation of treaties, the principle of good faith serves a twofold purpose. First, it forms a linkage between the means of interpretation featured in the two Vienna Conventions and the idea of the ultimate purpose of the treaty interpretation process: to establish the communicative intention of the treaty parties. Thus, good faith provides explanation of the rules of interpretation laid down in common Articles 31–33. Secondly, the principle of good faith serves as a reminder that whether or not an issue of interpretation can be resolved using any of the rules of interpretation laid down in Articles 31–33, the ultimate purpose of the interpretation process remains the same. When the rules of interpretation leave it to states and international organizations to make a decision on an issue of interpretation, states and organizations are not free to decide that issue any way they like. Viewed in this way, good faith adds to the normativity of the rules of interpretation in particular cases of application. Consequently, just like the abuse of rights doctrine, ‘good faith treaty interpretation’ may be used to stand for the idea of the proper exercise of legal discretion. When exercising a discretion offered under the rules of interpretation expressed in common Articles 31–33 of the two Vienna Conventions, interpreters must act for the purpose of establishing the communicative intention of treaty parties. To act for any other purpose is to act for the opposite of good faith; it is to exercise discretion in mala fides. This observation prompts the assumption that mala fides treaty interpretation is a special case of abuse of rights. As for the relationship between mala fides treaty interpretation and treaty abuse, obviously, the application of the two concepts is not wholly identical. To begin with, accepting the assumption that treaty abuse is a special case of abuse of rights, obviously, the concept of mala fides treaty interpretation serves the protection of a different purpose than treaty abuse. If international law prevents a particular application by a state or international organization of a particular treaty (T) on the ground of treaty abuse, then this is to prevent that state or organization from rendering the purpose of T ineffective. When, on the other hand, international law excludes a particular understanding of this same treaty T on the ground of mala fides treaty interpretation, this is to prevent the state or organization from rendering naught, not the purpose of T, but the purpose of common Articles 31–33 of the Vienna Conventions. Still, practice leaves the impression that there must be some overlap of the extensions of the two concepts. After all, in many cases, as noted in Section 1, lawyers use ‘treaty abuse’ and ‘mala fides treaty interpretation’ to refer to the same thing. As argued in this article, mala fides treaty interpretation is a special case of treaty abuse. Whereas every case of mala fides treaty interpretation is a case of treaty abuse, not every case of treaty abuse is a case of mala fides treaty interpretation. View largeDownload slide View largeDownload slide This proposition builds on the assumption that when the interpretation of a treaty (T) renders the purpose of common Articles 31–33 ineffective, then for that very same reason, any application of T based on that interpretation will render ineffective also the purpose of T. Stated generally, according to the assumption, the concept of mala fides treaty interpretation is an instrument not only for the protection of the purpose of common Articles 31–33, but also for the protection of the purpose of every particular treaty that happens to be interpreted. As will be argued in the subsequent Section 4(B), this assumption corresponds well to the potential inherent in Articles 31–33. B. How Common Articles 31–33 May be Used to Serve the Purpose of a Treaty In exercising a discretion offered under common Articles 31–33, states and international organizations typically have plenty of possibility to act for the protection of the purpose of the interpreted treaty, in several phases of the interpretation process. First, they may take guidance in the purpose when determining the extension of a means of interpretation. For example, if stability of the relations of two states is the ultimate purpose of a boundary treaty, then naturally, that purpose will be served by defining the ordinary meaning of that treaty based on the language applied at the time of the conclusion of the treaty, rather than the language applied at the moment of interpretation.110 Similarly, if the purpose of a treaty on the construction and operation of a system of locks in the Danube river is to ensure the quality of the water in the river, that purpose may be served by the interpretation of the treaty in the light of the international environmental law applicable in the relations between the parties at the moment of interpretation rather than the time of the conclusion of the treaty.111 Second, the purpose of a treaty may provide guidance when determining the existence of the relationship required by a rule of interpretation between an interpreted treaty provision and a means of interpretation. For example, if the purpose of the European Convention is the maintenance and further realization of human rights, that purpose will be served by assuming that the adoption of Protocol No 6 or Protocol No 13 establishes the agreement of the parties regarding its interpretation.112 Similarly, if the purpose of a treaty is the regulation of the taxation of worldwide income of residents of the contracting parties, then that purpose will help determining to what extent the drafters of the convention were influenced by the wording of an OECD Model Agreement or not.113 Third, and perhaps most important, as will now be illustrated, the overall purpose of a treaty may provide guidance to a state or organization when determining the priority of two or more communicative assumptions. In several cases, when considering complaints of violation of rights which potentially at least would seem to be governed by the prohibition of abuse of rights laid down in Article 17 of the European Convention on the Protection of Human Rights, the European Court has found against the applicant on the ground that his complaint was based on a mala fides interpretation of a substantial right.114 In Refah Partisi,115 for example, the applicants were a political party (Refah) in Turkey, as well as its chairman and three vice-chairmen, all members of Parliament. The party obtained 22% of the vote in the 1995 general elections, when it became the largest party in Parliament. In January 1998, the Constitutional Court of Turkey ordered the dissolution of Refah on the ground that it had become a ‘centre of activities contrary to the principle of secularism’.116 It also decided to strip the applicants of their MP status. The applicants complained of violations of Article 11 of the European Convention, which provides for the right of freedom of association. In giving its view of the proper interpretation of this Article, the Court noted the primordial role played in a democratic regime by political parties enjoying the rights of freedom of association and expression enshrined in Articles 11 and 10, respectively.117 It emphasized the relationship between Articles 11 and 10: while Article 10 serves to protect opinions and the freedom to express them, this is one of the objectives of the freedom of association laid down in Article 11, too; all the more so in the case of political parties. As the Court affirmed, political parties have an essential role in ensuring pluralism and the proper functioning of democracy: [T]here can be no democracy without pluralism. It is for that reason that freedom of expression as enshrined in Article 10 is applicable, subject to paragraph 2, not only to ‘information’ or ‘ideas’ that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb.118 According to Article 11, paragraph 2, obviously, Turkey still retained the possibility of imposing restrictions on the right of freedom of association, especially if activities of an association jeopardized state institutions.119 As so neatly phrased by the Court, a ‘compromise between the requirement of defending democratic society and individual rights is inherent in the Convention system’; this is precisely why provisions such as paragraph 2 of Article 11 are included.120 Commenting generally on the limits within which political organizations can continue to enjoy the protection of the European Convention, the Court stressed ‘the very clear link’ between the Convention and democracy—the Convention was designed precisely with the aim to protect the ideals and values of a democratic society.121 As the Court held, it necessarily followed: that a political party whose leaders incite to violence or put forward a policy which fails to respect democracy or which is aimed at the destruction of democracy and the flouting of the rights and freedoms recognised in a democracy cannot lay claim to the Convention’s protection against penalties imposed on those grounds.122 The Court considered the arguments and evidence cited by the Constitutional Court of Turkey as grounds for its decision of January 1998.123 It acknowledged, in particular, the arguments that Refah intended to set up a plurality of legal systems, leading to discrimination based on religious beliefs; that it intended to apply sharia to the internal or external relations of the Muslim community within the context of this plurality of legal systems; and that in addressing the general public, Refah members had repeatedly made reference to the possibility of recourse to force as a political method.124 The Strasbourg Court concluded that the decision of the Constitutional Court of Turkey of January 1998 met a ‘pressing social need’ and was ‘proportionate to the aims pursued’.125 It could be regarded as ‘necessary in a democratic society’ within the meaning of Article 11, paragraph 2. Accordingly, there had been no violation of Article 11.126 It is possible to construe the reasoning of the Court as involving the resolution of a conflict between two communicative assumptions. The one assumption is founded on the particular purpose of Article 11: the parties to the European Convention arranged so that the application of Article 11 helps ensure pluralism and the protection of opinions and the freedom to express them. The other assumption is founded on the overall purpose of the entire Convention: the parties arranged so that the application of the Convention, including Article 11, helps protect the ideals and values of a democratic society. Adopting the former assumption, in a narrow perspective at least, the decision of the Constitutional Court of Turkey to dissolve Refah, and to strip the other applicants of their MP status, cannot be considered ‘necessary in a democratic society’. Adopting the latter assumption, it can. The overall purpose of the European Convention, obviously, helps the European Court to come to a decision on the order of preference of those two assumptions. What patently also illustrates the role of the overall purpose of a treaty for the determination of the priority of two or more communicative assumptions is the strategy of particularly Canadian judiciaries to use the purpose of tax treaties to turn the focus of the interpretation process from Article 31 to Article 32 of the 1969 Vienna Convention.127 In Crown Forest Industries,128 for example, the Supreme Court of Canada considered the decision of Canadian tax authorities to withhold a certain percentage of tax on the rental of barges by a Canadian company (Crown Forest Industries Ltd). Barges were rented from a Bahamian corporation, named Norsk, whose sole office and place of business was located in the United States. At issue was whether Norsk was to be considered a ‘resident of a Contracting State’ in the sense of Article IV of the 1980 Convention between Canada and the United States with respect to Taxes on Income and on Capital.129 Article IV, paragraph 1 reads: For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature. The Court (per Judge Iacobucci) noted that according to the US Income Tax Act, ‘[a] foreign corporation engaged in trade or business within the United States … shall be taxable … on its taxable income which is effectively connected with the conduct of a trade or business within the United States’.130 It acknowledged the expert opinion heard by judges of the Federal Court, which asserted: that Norsk is liable to tax in the U.S. because it conducted a ‘trade or business which is effectively connected with the United States’, and [because] the fact that its head office and place of management are in the U.S. constitutes a principal factor determining whether it carries on a trade or business in the U.S.131 Quoting approvingly from earlier Canadian case law, however, the Court stressed the importance of giving the 1980 Convention a liberal interpretation ‘with a view to implementing the true intentions of the parties’.132 In examining the intentions of the treaty parties, the Court recalled the purpose of the Convention: to promote international trade between Canada and the United States.133 As it affirmed, ‘the goal of the Convention is not to permit companies incorporated in a third party country (the Bahamas) to benefit from a reduced tax liability on source income merely by virtue of dealing with a Canadian company through an office situated in the United States’.134 To further illuminate the meaning of Article IV, the Court referred to Article 4 of the OECD Model Double Taxation Convention on Income and Capital adopted in 1980. This provision, recognized as having served as a basis for the Convention between Canada and the United States, limited residence to persons taxed only on world-wide income. As the Court inferred, Norsk was not a ‘resident’ under the terms of the Canada–US Convention: [T]he only way for Norsk to benefit from residency status under the Convention is if source taxation on a business effectively connected with the contracting party constitutes a criterion similar to the other enumerated criteria in Article IV (residence, place of management, place of incorporation, domicile). It is not similar, since all of the other criteria constitute grounds for taxation on world-wide income, not just source income.135 Like the reasoning of the European Court in Refah Partisi, this interpretation involves the resolution of a conflict between two communicative assumptions. On the one hand, there is an assumption based on the ordinary meaning of Article 4: parties to the Convention arranged so that the text of Article 4 conforms to the lexicon, grammar and pragmatic rules of the English language. Adopting this assumption, since Norsk is liable to tax in the United States by reason of its place of management, the company is a ‘resident’ of that state. On the other hand, there is an assumption based on a supplementary means of interpretation: parties to the Convention arranged so that Article 4 corresponds to whatever can be inferred from the OECD Model Agreement, including its Commentary.136 Adopting this assumption, because the tax liability of Norsk in the United States is based on source income, and because residence in Article 4 of the Canada–US Convention is limited to persons taxed only on world-wide income, the company is not a ‘resident’. The decision of the Court, obviously, is to act upon the latter assumption, and not the former. What makes this decision particularly interesting is the fact that according to Article 32 of the Vienna Convention, when an argument of interpretation is founded on a supplementary means of interpretation, it can be given priority over an argument based on any of the means of interpretation specified in Article 31, including the ordinary meaning, only in the exceptional circumstance that the application of Article 31 ‘leads to a result which is manifestly absurd or unreasonable’. Article 32 does not tell specifically by what criterion the result of the application of Article 31 is to be assessed. The reasoning of the Court in Crown Forest Industries illustrates the possibility of using, as such a criterion, the overall purpose of a treaty. 5. THE LEGAL STATUS OF THE RULE PROHIBITING TREATY ABUSE A. The Definition and Source of the Treaty Abuse Doctrine Section 4 clarified the relations between the concept of treaty abuse on the one hand and the concepts of abuse of rights and good faith treaty interpretation on the other. As the section concluded, in one sense of the term, treaty abuse is a special case of abuse of rights. In another sense, treaty abuse is in some cases, but not necessarily all, the exact opposite of good faith treaty interpretation—treaty interpretation mala fides. By this conclusion, Section 4 accomplishes two things. First, it helps to establish the meaning of ‘treaty abuse’. The results of the investigation conducted in Sections 2–4 can be neatly summarized in the form of the following general definition: When a state or international organization takes action in reliance of a discretion conferred by a treaty, this action amounts to treaty abuse if either the understanding is manifestly unfounded, or the action renders the purpose of the treaty ineffective. Second, Section 4 helps clarifying the source of the treaty abuse doctrine. If treaty abuse is a special case of abuse of rights, and the doctrine of abuse of rights is a mere application of the principle of good faith, then the source of the treaty abuse doctrine must be looked for in no more and no less than this same principle. For any further inquiry into the legal status of the treaty abuse doctrine this conclusion is extremely interesting, clarifying as it does what should be seen as the true object of such an inquiry. When investigating the standing of the treaty abuse doctrine in international law, obviously, scholars should focus attention to the way in which the principle of good faith has been played out by international courts and tribunals when considering claims of an unlawful exercise of a treaty-based discretionary power. Scholars should not be overly concerned with whether or not, in considering such claims, courts and tribunals actually refer to the doctrine by the precise term that it has become generally known to international economic lawyers. It is along these lines that the subsequent Section 5(B) will now perform an analysis of the practice developed by international courts and tribunals outside of the limited context of international economic law. B. Practice In Certain Activities Carried out by Nicaragua in the Border Area,137 the International Court of Justice found that Nicaragua had breached several international obligations owed to Costa Rica, including the principle of territorial sovereignty, and the right of navigation laid down in the 1858 Treaty of Limits. It found that Nicaragua had the obligation to compensate Costa Rica for material damages caused by its unlawful activities on Costa Rican territory. It declined, however, the request that the Court order Nicaragua to provide appropriate assurances and guarantees of nonrepetition of its unlawful conduct.138 In so doing, it followed what by now would seem to be a firmly established practice of the Court.139 As the Court explained, quoting from its decision in Navigational and Related Rights,140 ‘“there is no reason to suppose that a State whose act or conduct has been declared wrongful by the Court will repeat that act or conduct in the future, since its good faith must be presumed” and therefore assurances and guarantees of non-repetition will be ordered only “in special circumstances”’.141 To fully clarify its position, the Court could have added reference to Article 59 of its Statute. According to this provision, a judgment of the Court has binding force between the disputing parties in respect of the particular case. What makes Article 59 relevant to this article is the fact that it leaves to each of the disputing parties to decide themselves precisely how to implement a judgment. In exercising this discretion—this is what the statement of the Court implies—parties must remain faithful to the purpose of the provision: to avoid the repetition of internationally wrongful conduct. In other words, if two states have agreed to accept the compulsory jurisdiction of the International Court, a judgment will entail the obligation that they accommodate their future behavior with it, so as to avoid the repetition of conduct declared by the judgment to be internationally wrongful. It is for this reason that the Court sees no need to order specifically that Nicaragua provides appropriate assurances and guarantees of non-repetition of Nicaragua’s unlawful conduct. In Application of the Interim Accord of 13 September 1995,142 the Hague Court considered the respondent’s allegation that the applicant had breached the obligation laid down in Article 5, paragraph 1 of the Interim Accord of 13 September 1995 between the Former Yugoslavian Republic of Macedonia and Greece. According to this provision, ‘[t]he Parties agree to continue negotiations under the auspices of the Secretary-General of the United Nations pursuant to Security Council resolution 845 (1993) with a view to reaching agreement on the difference described in that resolution and in Security Council resolution 817 (1993)’.143 Although this provision clearly imposed on the Greek and FYROM governments an obligation to ‘continue negotiations’, at the same time it conferred on them the discretion to decide precisely how negotiations were to be conducted and when. Citing Article 26 of the 1969 Vienna Convention on the Law of Treaties, the Court stressed that it is an implicit requirement of Article 5, paragraph 1 that the parties negotiate in good faith.144 As it noted, the obligation ‘is not only to enter into negotiations, but also to pursue them as far as possible, with a view to concluding agreements’.145 No doubt, so understood, Article 5, paragraph 1 of the Interim Accord did not impose on the parties the obligation to reach an agreement; nor did it require that lengthy negotiations be pursued of necessity. As the Court seemed very keen to convey, the provision entailed an obligation of conduct. In exercising the discretion conferred under Article 5, paragraph 1, the parties would have to conduct themselves so as not to frustrate the object and purpose of the provision—the creation of conditions favorable to reaching an agreement. As clarified by the Court: States must conduct themselves so that the ‘negotiations are meaningful’. This requirement is not satisfied, for example, where either of the parties ‘insists upon its own position without contemplating any modification of it’ or where they obstruct negotiations, for example, by interrupting communications or causing delays in an unjustified manner or disregarding the procedures agreed upon. Negotiations with a view to reaching an agreement also imply that the parties should pay reasonable regard to the interests of the other.146 In Certain Questions of Mutual Assistance in Criminal Matters,147 the International Court of Justice considered allegations of breaches of the 1986 Convention on Mutual Assistance in Criminal Matters between France and Djibouti.148 More specifically, it considered the allegation that France had violated its obligation to afford assistance by not having executed a letter rogatory sent by a Djibouti investigating judge, requesting the transmission of a series of documents. France, for its part, invoked the possibility of refusing assistance provided by Article 2(c) of the Convention. According to this provision, ‘[j]udicial assistance may be refused … [i]f the requested State considers that execution of the request is likely to impair its sovereignty, security, public policy or other essential interests’. The Court began its examination of Article 2(c) by commenting upon a remark of the respondent categorizing the provision as a ‘self-judging clause’. It observed that: while it is correct, as France claims, that the terms of Article 2 provide a State to which a request for assistance has been made with a very considerable discretion, this exercise of discretion is still subject to the obligation of good faith codified in Article 26 of the 1969 Vienna Convention on the Law of Treaties … This requires it to be shown that the reasons for refusal to execute the letter rogatory fell within those allowed for in Article 2.149 What the Court seems to be saying is that in order to correctly understand Article 2(c), not too much emphasis should be placed on the mere wording of the phrase ‘If the requested State considers’. While Article 2(c) leaves to France in the first place to assess whether the execution of a request for judicial assistance is likely to impair its sovereignty, security, public policy or other essential interests, there is a limit to this discretion. The discretion conferred upon France under Article 2(c) does not extend as far as to make the assessment purely a question for the judgment of France alone. That would lead to a result inimical to the most basic of reasons for at all having a treaty such as that between France and Djibouti: not leaving to each of the two parties to conduct their relations at will. Good faith required that if France refuses to execute a letter rogatory requesting judicial assistance, it falls on that country to establish that it so acted for reasons that came within any of the categories stated in Article 2. In Rainbow Warrior Arbitration,150 the Arbitration Tribunal considered allegations of a series of breaches of the Agreement of 9 July 1986 concluded between the governments of France and New Zealand. According to the terms of the Agreement, ‘Major Mafart and Captain Prieur will be transferred to a French military facility on the island of Hao for a period of not less than three years. They will be prohibited from leaving the island for any reason, except with the mutual consent of the two Governments.’151 New Zealand requested the Tribunal to declare, among other things, that France had acted contrary to the Agreement by, first, removing Major Mafart and Captain Prieur from the island of Hao, and second, by failing to seek in good faith to obtain the consent of New Zealand to their removal. As far as concerns the removal of Captain Prieur, the Tribunals found in favor of New Zealand on both counts. In so doing, the Tribunal fully accepted New Zealand’s proposed understanding of the Agreement. The understanding was that the Agreement imposed on France a twofold duty: first, France had the duty not to remove the two agents from the island of Hao failing consent of the government of New Zealand; and second, whenever France considered that there was good reason to remove an agent from the island, it had the duty to seek to obtain in good faith the consent of New Zealand. To explain its finding that France had failed to make efforts to seek to obtain in good faith the consent of New Zealand, the Tribunal reiterated the events of 5 May 1989: [W]hen the French Republic notified the Ambassador of New Zealand on 5 May at 11.00 a.m. (French time), the latter was merely told that Mrs. Dominique Prieur’s father, hospitalized for cancer treatment, was dying. Of course, it was explained that the New Zealand Government could verify ‘the validity of this information’ using a physician of its choice, but the telegram the French Minister of Foreign Affairs sent to the Embassy of France in Wellington on 5 May 1988 clearly stated that the decision to repatriate was final. And this singular announcement was addressed to New Zealand: ‘After all, New Zealand should understand that it would be incomprehensible for both French and New Zealand opinion for the New Zealand Government to stand in the way of allowing Mrs. Prieur to see her father on his death bed …’. Thus, New Zealand was really not asked for its approval, as compliance with France’s obligations required, even under extremely urgent circumstances; it was indeed demanded so firmly that it was bound to provoke a strong reaction from New Zealand.152 The 1986 Agreement, obviously, conferred on the parties the discretion to decide jointly what would constitute a valid reason to remove an agent from the island, in the sense of the conditions that would have to obtain before New Zealand could give its consent. What the decision of the Tribunal appears to imply is that this discretion would always have to be exercised for a purpose. Indeed, if France had the duty to obtain the consent of New Zealand, it can be seen to be the very point of this requirement that New Zealand be given both an opportunity and the sufficient time to make an informed decision in the matter. In Admission of a State to Membership in the United Nations,153 the International Court of Justice examined a request made by the UN General Assembly for an advisory opinion. The request asked the Court to clarify whether in virtue of Article 4 of the Charter of the United Nations, on the admission of a state to membership in the UN, a member of the organization was ‘judicially entitled to make its consent to the admission dependent on conditions not expressly provided by paragraph 1 of the said Article’. Article 4 provides: 1. Membership in the United Nations is open to all other peace-loving states which accept the obligations contained in the present Charter and, in the judgment of the Organization, are able and willing to carry out these obligations. 2. The admission of any such state to membership in the United Nations will be effected by a decision of the General Assembly upon the recommendation of the Security Council. As the Court held, states which fulfill the conditions stated in paragraph 1 are qualified for admission to membership. Paragraph 1 provides not merely the necessary conditions for admission, but also the conditions which suffice. At the same time, obviously, Article 4, paragraph 2 confers on members of the UN—acting either in the Security Council or in the General Assembly—the discretion to pronounce itself by its vote on whether, in particular cases, admission should be granted to a state or not. As the Court emphasized, that discretion would have to be exercised in good faith. Even though, potentially, many circumstances of fact may be considered by a member when determining whether to support the admission of a state to membership or not, circumstances are relevant only when connected with the conditions laid down in Article 4, paragraph 1: Article 4 does not forbid the taking into account of any factor which it is possible reasonably and in good faith to connect to the conditions laid down in that Article.154 In other words, as the Court sees it, to pronounce in good faith on the admission of a state to membership in the United Nations means to make an assessment of facts with a view to determining whether the stated conditions for membership are all fulfilled. In Constitution of the IMCO Maritime Safety Committee,155 the International Court of Justice considered the lawfulness of the decision of the Assembly of the-then Inter-Governmental Maritime Consultative Organization (IMCO) electing members to another principal body of the organization, the Maritime Safety Committee. More specifically, the Court examined whether, in not electing Liberia and Panama, the Assembly had exceeded the discretionary powers conferred upon it under Article 28(a) of the Convention for the Establishment of IMCO. The provision reads: The Maritime Safety Committee shall consist of fourteen Members elected by the Assembly from the Members, governments of those nations having an important interest in maritime safety, of which not less than eight shall be the largest ship-owning nations, and the remainder shall be elected so as to ensure adequate representation of Members, governments of other nations with an important interest in maritime safety, such as nations interested in the supply of large numbers of crews or in the carriage of large numbers of berthed and unberthed passengers, and of major geographical areas. As can be seen from the wording of Article 28(a), it conferred a discretion on the Assembly of the IMCO. The provision left to the Assembly to elect to the Maritime Safety Committee 14 members of the organization, of which not less than eight would have to be ‘the largest ship-owning nations’. Contrary to the argument of some governments, as the Court held, this discretion did not extend as far as to enable the Assembly to choose itself the criteria to be used in determining whether members are among the ‘eight largest ship-owning nations’ or not. Such a construction would deprive the passage of all significance. What is more, ‘[t]o give to the Article such a construction would mean that the structure built into the Article to ensure the predominance on the Committee of the largest ship-owning nations in the ratio of at least eight to six would be undermined and would collapse. The Court is unable to accept an interpretation which would have such a result.’156 The Court found it apparent that in instructing the Assembly to elect the ‘eight largest ship-owning nations’, Article 28(a) implied the application of a specific basis of measurement—that of registered tonnage. This interpretation was said by the Court to be consistent also ‘with the general purpose of the Convention and the special functions of the Maritime Safety Committee’: The Organization established by the Convention is a consultative one only, and the Maritime Safety Committee is the body which has the duty to consider matters within the scope of the Organization and of recommending through the Council and the Assembly to Member States, proposals for maritime regulation. In order effectively to carry out these recommendations and to promote maritime safety in its numerous and varied aspects, the co-operation of those States who exercise jurisdiction over a large portion of the world's existing tonnage is essential.157 Careful readers will have noted that in no part of the Opinion does the Court make explicit reference to good faith. Still, as this article suggests, the line of reasoning applied by the Court is in all relevant respects similar to its reasoning in Admission of a State to Membership in the United Nations. In Constitution of the IMCO Maritime Safety Committee, as in the Opinion given 12 years earlier, the Court pored over the application of a treaty provision, which conferred a discretion on an organ of an international organization. It reached once again the conclusion that discretion must be exercised so as not to leave a result, which is inimical to the purpose of the provision—in this case, the promotion of maritime safety. 6. HOW THE TREATY ABUSE DOCTRINE RELATES TO THE IDEA OF TREATIES AS AN EXPRESSION OF PARTY INTENTION Earlier sections of this article referred in passing to the existence of an international rule imposing on treaty parties the obligation not to exercise treaty rights abusively. Section 5 established the legal status of this rule. As argued, the source of the rule can be traced back to the principle of good faith. The treaty abuse doctrine is merely the application of the principle of good faith to a particular category of international rights—the treaty-based discretionary powers. Assuming that in the context of treaty law, the scope of application of the principle of good faith is not confined solely to the exercise of treaty-based discretionary powers, the treaty abuse doctrine can be construed along the lines of the following two norm sentences: ‘A treaty must be performed in good faith by its parties.’ ‘If a party to a treaty takes action in reliance of a discretion conferred by a treaty, although the action may be based on an understanding of the treaty permitted by the rules of interpretation laid down in common Articles 31-33 of the 1969 and 1986 Vienna Conventions on the Law of Treaties, this party is not performing the treaty in good faith if either the understanding is manifestly unfounded, or the action renders the purpose of the treaty ineffective.’ Those two sentences set the parameters for the task now to be accomplished. As this section will argue, when an international court or tribunal accepts the validity of a treaty abuse argument, it acts in deference to the intention of the treaty parties. Given the source of the treaty abuse doctrine, the proper justification of this proposition presupposes an investigation of the function of the principle of good faith. As earlier sections of this article established, when a treaty confers a discretion, the scope of this discretion is only partly the function of the text of the treaty. Partly, it is the function of the principle of good faith. The text of a treaty is commonly seen as an expression of the free will or consent of the treaty parties. According to a fundamental principle underlying much of the international law of treaties, what parties to a treaty freely agreed upon should be respected. In the terminology of the 1969 and 1986 Vienna Conventions on the Law of Treaties, this is referred to as the principle of free consent.158 In the sphere of international economic law, commentators express themselves as if the application of the treaty abuse doctrine would risk undermining this principle.159 If acting upon the text of a treaty serves to satisfy the principle of free consent, as commentators would seem to suggest, the treaty abuse doctrine serves a different purpose. As will now be argued, this suggestion builds on a misunderstanding of the function of the principle of good faith. Any loose talk about the principle of good faith may suggest that it operates in much the same way as equitable principles in the resolution of maritime delimitation disputes. It does not.160 The operation of an equitable principle depends on what other principles are applicable to the resolution of a maritime delimitation dispute. The outcome of the dispute is determined on the overall balance of all applicable principles. The operation of the principle of good faith, on the other hand, depends on the existence of some communicative behavior on the part of a state or international organization.161 It is the function of the principle of good faith to help determine the legal effect of such a behavior. In the case of the application of the doctrines of estoppel or acquiescence, for example, the principle of good faith helps to determine whether a behavior gave rise to a legal obligation. In the case of treaty interpretation and the doctrine of treaty abuse, the principle of good faith helps to determine the scope of obligations. Applied to the topic of this article, the operation of the principle of good faith presupposes the existence of a very particular kind of communicative behavior. It presupposes a verbal utterance in written form, or more specifically, the text of a treaty. Therefore, to understand precisely how the principle of good faith relates functionally to the idea of party intention, it would seem appropriate to consider first of all the operation of the principle of good faith relative to the application of the law laid down in common Articles 31–33 of the two Vienna Conventions. As noted by linguistics, an utterance (whether in the form of a treaty or not) can only be understood on the basis of the assumption that the utterer acted for the purpose of conveying to its intended addressee or addressees some or other piece or pieces of information. The idea is that if the utterer acted for this purpose, then it can be assumed for good reasons that in phrasing the utterance, the utterer conformed to standards of communication that will allow the addressee(s) to capture the information. It is in this light that the function of the principle of good faith should be seen. The principle imposes on interpreters to conduct a process of interpretation based on an assumption of the application by the treaty parties of some particular standard or standards of communication. The application of this principle is the only means to ensure a successful outcome of the exercise. If the proper function of the principle of good faith presupposes in this case the text of a treaty, then consequently, the opposite proposition holds true as well: the proper function of the text of a treaty presupposes the principle of good faith. The one cannot function without the other. A similar explanation can be applied to the analysis of the function of the principle of good faith relative to the application of the treaty abuse doctrine. If good faith insists upon the assumption of the existence of a communicative intention on the part of treaty parties, it would seem to be just an extension of this same line of thought to argue the existence of a further purpose. According to the argument, when states or international organizations enter into a treaty relationship, communication is never an end in itself.162 The treaty is concluded to help bring about some particular state or states of affairs, often referred to as its ‘object and purpose’. Naturally, it must be a fundamental assumption of any process of treaty interpretation that treaty parties phrase treaty instruments so that when eventually applied their objects and purposes can be obtained. This is why the text of a treaty is always to be the point of departure of the process.163 At the same time, as experience tells us, treaties are not always instrumentally perfect: a treaty may be the result of an unfortunate choice of words or a mistranslation; the parties may not have fully realized either the ordinary meaning of the terms of the treaty, or the relationship between its different provisions, or between a provision of the treaty and some other rule of international law; the parties may have failed to anticipate either the occurrence of a particular conduct or state of affairs, or a change in the factual or legal context of the treaty; etc. For every such situation, there is a need for a safety-valve that will guarantee that the treaty remains teleologically effective. This is where the treaty abuse doctrine comes in. Applied to the determination of the rights and obligations laid down in an international treaty, the principle of good faith can be seen to impose on states and international organizations the assumption that the parties to the treaty acted for the realization of its object and purpose. Even though an understanding of the text of the treaty may be fully in accordance with the rules of interpretation laid down in common Articles 31–33 of the two Vienna Convention, if a state or organization finds that this understanding will render the object and purpose of the treaty ineffective, consequently, the state or organization has reason to correct it. Although this is obviously the idea underlying the treaty abuse doctrine, there is nothing peculiar about it. A great many rules laid down in the two Vienna Conventions are the result of the same line of thought. Obvious examples include the obligation not to defeat the object and purpose of a treaty prior to its entry into force;164 the prohibition of reservations that are incompatible with the object and purpose of a treaty;165 the obligation to reconciliate the different authenticated texts of multilingual treaties by adopting the meaning that helps to best attain their object and purpose;166 the provision that excludes any modification of a treaty incompatible with the effective execution of its principal object and purpose;167 the prohibition of suspension of the operation of a treaty by agreement between some of its parties when suspension is incompatible with the object and purpose of the treaty;168 and the requirement that a breach of a treaty may only be used as an excuse for terminating it, or suspending its operation, when it consists in the violation of a provision essential for the accomplishment of the object and purpose of the treaty.169 As implied by Section 4 of this article, and by the earlier suggested definition of the concept of treaty abuse, the function of the principle of good faith makes the application of the treaty abuse doctrine secondary to the application of the rules of interpretation laid down in common Articles 31–33 of the two Vienna Conventions. The treaty abuse doctrine applies only as a corrective, in cases where the adoption of a meaning resulting from the application of Articles 31–33 can be thought to render naught the object and purpose of a treaty. Still, it has to be acknowledged, the function of the principle of good faith remains the same whether it is applied relative to the law laid down in Articles 31–33 or the doctrine of treaty abuse: it helps to determine the intention of treaty parties. Contrary to what some commentators have suggested,170 the doctrine of treaty abuse serves to satisfy the principle of free consent, much like the text of a treaty. If there is ever any difference between the clear language of the text of a treaty and the doctrine of treaty abuse, then this is because the latter serves directly the realization of the object and purpose of the treaty, whereas the former does so only indirectly, depending as it does on the ordinary meaning of the text. According to what critics have argued, the treaty abuse doctrine tends to impose limits on the scope of application of treaties that are not found in its text. If by ‘the text of a treaty’ critics mean the applications allowed by its ordinary meaning, they are right, of course. The argument, however, misses entirely what must be taken to be its intended target, since the same could be said about just any supplementary means of interpretation, including the preparatory work of a treaty and the circumstances of its conclusion.171 On close inspection, the argument would seem to build on a confusion of the ordinary meaning of the text of a treaty with the idea of the text as an expression of the free will of the treaty parties. Footnotes 1 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 575 UNTS 159. 2 International lawyers sometimes prefer to talk about misuse of treaty rights. Often, ‘treaty abuse’ is used interchangeably with ‘improper use’ or ‘misuse of treaty rights’. Cf United States – Import of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (12 October 1998), para 116; Commentary to art 1 of the UN Model Double Taxation Convention between Developed and Developing Countries, adopted in 2011. If ever there is any difference of meaning, it is not because those terms are used to refer to different things, but because sometimes lawyers wish to avoid some of the accusatory ring inherent in ‘treaty abuse’. 3 US – Shrimp (n 2) para 158. 4 See Commentaries to art 1 of the OECD Model Convention on the Prevention of Double Taxation of Income and Capital, adopted in 2010. 5 See eg OECD (2015), Preventing the Granting of Treaty Benefits in Inappropriate Circumstances, Action 6 – 2015, Final Report, available through the webpage of the OECD <http://www.oecd.org> accessed 4 October 2017. 6 See e.g. US – Shrimp (n 2) paras 112–24, 156–60; US – Section 211 Section 211 Omnibus Appropriations Act of 1998, WT/DS176/R (6 August 2001) para 8.57. 7 See eg Autopista Concesionada de Venezuela, CA v Bolivarian Republic of Venezuela, ICSID Case No ARB/00/5, Decision on Jurisdiction (2001); Tokios Tokelės v Ukraine, ICSID Case No ARB/02/18, Decision on Jurisdiction (2004); Aguas del Tunari SA v Republic of Bolivia, ICSID Case No ARB/02/3, Decision on Respondent’s Objections to Jurisdiction (2005); Phoenix Action Ltd v The Czech Republic, ICSID Case No ARB/06/5, Award (2009); Mobil Corporation, Venezuela Holdings, BV and Others v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/27, Decision on Jurisdiction (2010); Tidewater Inc and others v Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5, Decision on Jurisdiction (2013); ConocoPhilips Petrozuata BV and others v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Decision on Jurisdiction and the Merits (2013); Renée Rose Levy and Gremcitel SA v Republic of Peru, ICSID Case No ARB/11/12, Award (2015). 8 Philip Morris Asia Ltd v Commonwealth of Australia, PCA Case No 2012-12, Award (2015), available through the webpage of the Permanent Court of Arbitration<https://pca-cpa.org>, accessed 4 October 2017 para 585. 9 On the apparent reluctance of international investment tribunals to embrace the doctrine, see generally T Voon, A Mitchell and J Munro, ‘Legal Responses to Corporate Manoeuvring in International Investment Arbitration’ (2014) 5 Journal of International Dispute Settlement 41–68; SW Schill and HL Bray, ‘Good Faith Limitations on Protected Investments and Corporate Structuring’ in AD Mitchell, M Sornarajah and T Voon (eds), Good Faith and International Economic Law (OUP 2015) 88, 105ff. 10 See generally, Voon and others (n 9) 62ff; JP Gaffney, ‘“Abuse of Process” in Investment Treaty Arbitration’ (2010) 11 Journal of World Investment & Trade 515–38. 11 Treaty Abuse and Treaty Shopping, UN Doc E/C.18/2006/2, 5. 12 Philip Morris Asia (n 8) para 434. 13 The Rompetrol Group NV v Romania, ICSID Case No ARB/06/3, Decision on Repondent’s Preliminary Objections on Jurisdiction and Admissibility (2008). 14 Tokios Tokelės (n 7), Dissenting opinion of Prosper Weil (President). 15 Rompetrol (n 13) para 85. 16 On the great difficulty of defining the concept, see generally eg E De Brabandere, ‘“Good Faith”, “Abuse of Process” and the Initiation of Investment Treaty Claims’ (2012) 3 Journal of International Dispute Settlement 609–36; L De Broe and J Luts, ‘BEPS Action 6: Tax Treaty Abuse’ (2015) 43 Intertax 122–46; M Feldman, ‘Setting Limits on Corporate Nationality Planning in Investment Treaty Arbitration’ (2012) 27 ICSID Review 281, 284ff; AD Mitchell and T Voon, ‘Conclusion’ in AD Mitchell, M Sornarajah and T Voon (eds), Good Faith and International Economic Law (OUP 2015) 174; Schill and Bray (n 9) 107ff; A Slade, ‘Good Faith and the TRIPS Agreement: Putting Flesh on the Bones of the TRIPS “Objectives”’ (2014) 63 International and Comparative Law Quarterly 353, 371–76. 17 See eg S Van Weeghel, The Improrer Use of Tax Treaties (Kluwer 1998). See also Commentaries to the 2010 OECD Model Double Taxation Convention (n 4). 18 For references, see n 7. 19 See eg Gremcitel (n 7) para 183; Philip Morris Asia (n 8) para 554. 20 See eg Abaclat and Others v Argentine Republic, ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility (2011) paras 647–49. 21 See eg M Lang, Introduction to the Law of Double Taxation Conventions, Online Books IBDF (accessed 17 December 2013), ch V; K Vogel, ‘Steuerumgehung nach innnerstaatlichem Recht und nach Abkommensrecht’ (1985) 15 Steuer und Wirtschaft 369, 376; Commentary to the UN Model Double Taxation Convention (n 2) 49–50; Aguas del Tunari (n 7), para 206ff, 330–31; B Michel, ‘Anti-Avoidane and Tax Treaty Override: Pacta Sunt Servanda’ (2013) European Taxation 415; Canada, Tax Court, Mil Investments SA, Case No 2004-3354(IT)G (2006), available through the IBFD Tax Research Platform database: <http://www.ibfd.org> accessed 4 October 2017; United States, US Tax Court, Aiken Industries Inc v Commissioner of Internal Revenue (1971), ibid; Canada, Supreme Court, Crown Forest Industries Ltd v Her Majesty the Queen, Case No 23940, ibid; Israel, District Court, Yanko-Weiss Holdings Ltd v Assessing Officer of Holon, Case No 5663/07 (2007), Case Summary, ibid; Denmark, National Tax Tribunal, Case No 10-02772/SKM No 2012.26 (2011), Case decision, in Danish, ibid; Switzerland, Federal Administrative Court, Case A-6537/2010 (2012), Case decision, in German, ibid; Switzerland, Federal Supreme Court, Case 2A.416/2005/svc (2006), Case decision, in French, ibid; Canada, Tax Court of Canada, Myron and Berna Garron v Her Majesty the Queen, Case No 2006-1405(IT)G (2009), ibid. 22 Commentary to the UN Model Double Taxation Convention (n 2) 49–50; footnotes are omitted. 23 See eg De Broe and Luts (n 16) 144; Feldman (n 16) 284; Voon and others (n 9),62. 24 Tokios Tokelės (n 7) para 36. 25 Rompetrol (n 13) para 85. 26 See eg J Lyons, Semantics (CUP 1977) chs 8–9. 27 Comp H Thirlway, ‘The Law and Procedure of the International Court of Justice, 1960-1989, Part One’ (1989) 60 BYIL 4, 25: ‘It has of course to be accepted that if a right or discretion exists, it may be abused.’ Comp Phoenix (n 7) para 82: ‘There is nothing like a total discretion.’ 28 Some would say that fishing vessels would have to have a genuine link with the state of their nationality. This is where the abuse of rights doctrine intersects with rules of general international law concerning the nationality of claims. Further on this, see eg de Brabandère (n 16) 609–36. 29 1833 UNTS 3. 30 Cf the following statement made by Hersch Lauterpach: ‘There is no right, however well established, which could not be refused recognition on the ground that it has been abused.’ Development of International Law by the International Court (Stevens and sons 1958) 164. 31 Phoenix (n 7) para 107. 32 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Stevens and sons 1953) 121. 33 See eg T Cottier and KN Schefer, ‘Good Faith and the Protection of Legitimate Expectations in the WTO’ in M Broncker and R Quick (eds), New Directions in International Economic Law (Kluwer 2000) 47, 51; HE Zeitler, ‘“Good Faith” in the WTO Jurisprudence’ (2005) 8 Journal of International Economic Law 738; Thirlway (n 27) 7ff, esp 25–29; M Kotzur, ‘Good Faith (Bona Fides)’ (2009) EPIL 508, 514; R Jennings and A Watts (eds) Oppenheim’s International Law (9th edn, Longman 1992) vol 1, 408. 34 La Bretagne Arbitration (1986), 82 ILR 589, 614. 35 Phoenix (n 7) para 113. 36 ibid para 158. 37 Apart from UNCLOS, see eg art 34 of the Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 21673 UNTS 3. 38 Comp common art 26 of the 1969 and 1986 Vienna Conventions on the Law of Treaties. 39 1748 UNTS 385. 40 See eg Cottier and Schefer (n 33) 51; Zeitler (n 33) 738; G Ress, ‘The Interpretation of the Charter’ in B Simma (ed), The Charter of the United Nations. A Commentary (OUP 1994) 25, 31; MK Yaseen, ‘L’interprétation des traits d’après la Convention de Vienne sur le droit des traités’ (1976) 151 Recueils des cours 1, 23; R Gardiner, Treaty Interpretation (OUP 2008) 151; Slade (n 16) 353, 372, 374. 41 Kotzur (n 33) 509. 42 J Salmon, ‘Article 26: Pacta sunt servanda’ in O Corten and P Klein (eds), The Vienna Convention on the Law of Treaties: A Commentary (OUP 2011) vol 1, 659, 679, citing the ICJ in Gabčíkovo-Nagymaros Project. 43 Cf Gerald Fitzmaurice, who in his Fourth Report as Special Rapporteur on the Law of Treaties, wrote: ‘A treaty must be carried out in good faith, and so as to give it a reasonable and equitable effect according to the correct interpretation of its terms.’ ILC Yrbk (1959:2) 42. 44 Gardiner (n 40) 151. 45 Ress (n 40) 31. 46 Yaseen (n 40) 23. 47 I Sinclair, The Vienna Convention on the Law of Treaties (2nd edn, Manchester University Press 1984) 120. 48 Interestingly, in his Third Report as Special Rapporteur to the ILC on the Law of Treaties, Sir Humphrey Waldock proposed a provision on the rule of pacta sunt servanda that included something like a tentative definition of the concept of good faith (ILC Yrbk, 1964:2, 7). The proposed provisions reads as follows: Article 55. Pacta sunt servanda 1. A treaty in force is binding upon the parties and must be applied by them in good faith in accordance with its terms and in the light of the general rules of international law governing the interpretation of treaties. 2. Good faith, inter alia, requires that a party to a treaty shall refrain from any acts calculated to prevent the due execution of the treaty or otherwise to frustrate its objects. 49 Comp art 1 of the Charter of the United Nations. 50 Case Concerning Border and Transborder Armed Actions (Nicaragua v Honduras), Jurisdiction and Admissibility [1988] ICJ Rep, 69, para 46. 51 Comp M Virally, ‘Review Essay: Good Faith in Public International Law’ (1983) 77 AJIL 130, 132: ‘The effects attached to the expressed will and, more broadly, to the behavior of international actors are conceivable only because it is assumed that they act in good faith and that what is apparent is in conformity with their real will. If this postulate is not taken for granted, the whole fabric of international law will collapse.’ 52 Comp U Linderfalk, ‘Is Treaty Interpretation an Art or a Science? International Law and Rational Decision-Making’ (2015) 26 EJIL 169, 172–73; U Linderfalk and M Hilling, ‘The Use of OECD Commentaries as Interpretative Aids: The Static/Ambulatory-Approaches Debate Considered from the Perspective of International Law’ (2015) 1 Nordic Tax Journal 34, 37–39. 53 Cf M Byers, ‘Abuse of Rights: An Old Principle, A New Age’ (2002) 47 McGill Law Journal 389, 406: ‘The determination of when the exercise of a right becomes abusive must depend on the specific context of each case rather than the application of any abstract legislative standard.’ 54 See eg Autopista (n 7); Tokios Tokelės (n 7); Phoenix (n 7); Mobil Corporation (n 7); Tidewater (n 7); ConocoPhilips Petrozuata (n 7). 55 Autopista (n 7). 56 ibid para 97. 57 ibid para 114. 58 ibid para 126. 59 Phoenix (n 7). 60 ibid para 34. 61 ibid para 82. 62 ibid para 82. 63 ibid para 88. 64 ibid paras 135–44. 65 ibid para 144. 66 Philip Morris Asia (n 8). 67 1748 UNTS 385. 68 Philip Morris Asia (n 8) para 585. 69 Comp art 1(f) and (b) of the Hong Kong–Australia BIT. 70 Comp Phoenix (n 7) para 88. 71 As stated by the Court in United Communist Party of Turkey and Others v Turkey (ECHR 1998-I), among other cases, ‘the Convention was designed to maintain and promote the ideals and values of a democratic society’ (para 45). Admittedly, the way the relationship between human rights and political democracy is described in the European Convention, instrumentality works both ways. In the preamble to the Convention, effective political democracy is described as a means to ensure the maintenance and further realization of human rights and fundamental freedoms. At the same time, in the case-law of the European Court, securing to everyone within the jurisdiction of a state party the enjoyment of the rights and freedoms laid down in the Convention is seen as a means for the protection of the ideals and values of a democratic society. 72 Refah Partisi (The Welfare Party) and Others v Turkey, ECHR 2003-II, para 99. 73 See eg German Communist Party v Germany, Appl no 250/57 (Commission, 20m July 1957); Glimmerveen and Hagenbeek App nos 8348/78 and 8406/78 (ECtHR, 11 October 1979); Marais v France App no 31159/96 (Commission, 24 June 1996); Schimanek v Austria App no 32307/96 (ECtHR, 1 February 2000); Norwood v the UK, ECHR 2004-XI; WP and Others v Poland, ECHR 2004-VII; Pavel Ivanov v Russia App no 35222/04 (ECtHR, 20 February 2007); Paksas v Lithuania, ECHR 2011; Hizb ut-Tahrir and Others v Germany App no 31098/08 (ECtHR, 12 June 2012); Kasymakhunov and Saybatalov v Russia App nos 26261/05, 26377/06 (ECtHR, 14 June 2013). 74 Kasymakhunov and Saybatalov ibid. 75 ibid paras 104–05. 76 ibid para 106. 77 ibid para 107. 78 ibid paras 107–11. 79 ibid para 113. 80 Vienna Convention on the Law of Treaties, adopted on 22 May 1969, 1155 UNTS 331; Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations, adopted on 21 March 1986, UN Doc A/CONF.129/15, at the time of writing, the Convention has not entered into force. 81 Emphasis added. 82 Comp Ress (n 40), 31. 83 Comp the ICJ in Navigational and Related Rights (Costa Rica v Nicaragua) [2009]: ‘It is true that the terms used in a treaty must be interpreted in light of what is determined to have been the parties’ common intention.’ ICJ Rep, 213, 242. 84 See eg D Sperber and D Wilson, Relevance: Communication and Cognition (Basil Blackwell 1986); D Blakemore, Understanding Utterances: Introduction to Pragmatics (Blackwell 1992). 85 Comp the maxims of communicative cooperation suggested by HP Grice, Studies in the Way of Words (Harvard University Press 1989). 86 This terminology builds on the pragmatic literature. See eg Sperber and Wilson (n 84); Blakemore (n 84). For a more comprehensive treatment of the concept of communicative assumptions in the context of treaty interpretation, see U Linderfalk, On the Interpretation of Treaties (Springer 2007). 87 See eg Case Concerning Kasikili/Sedudu Island (Botswana/Namibia) [1999] ICJ Rep, 1045, 1062. 88 See eg Soering v the UK (1989) Series A no 161, para 103. 89 See eg Kasikili/Sedudu Island (n 87) 1072–73. 90 See eg Guinea – Guinea-Bissau Maritime Delimitation, Award (1985), 77 ILR 636, 666–68. 91 See eg La Grand Case (Germany v United States) [2001] ICJ Rep 466, 503–05. 92 See eg Sigurður A Sigurjónson v Iceland (1993) Series A no 264, paras 33–35. 93 By a rule of interpretation proper, lawyers usually mean a rule stated in a particular form: ‘If, in the interpretation of a treaty, a state of affairs of a particular kind P obtains, then the treaty shall be interpreted in a particular manner Q.’ See eg J Wróblewski, The Judicial Application of Law (Springer 1992) 96ff. 94 See Linderfalk (n 86). 95 See eg J Wróblewski, ‘Legal Syllogism and Rationality of Judicial Decision’ (1974) 5 Rechtstheorie 33, 38–39. 96 Navigational and Related Rights (n 83). 97 ibid para 58. 98 Symptomatically, the choice between contemporaneous and historical meaning is often said to be a matter of good faith. See eg G Haraszti, Some Fundamental Problems of the Law of Treaties (Akadémiai Kiadó 1973) 169. 99 Navigational and Related Rights (n 83) para 63. 100 Note that a class may be defined by other institutional practices than the conventions of a common language. Examples include the practice of UN organs (‘human rights’), the teaching of natural science (‘the quality of the water in the Danube’) or the moral standards in European countries (‘morals’). See, respectively, art 55 of the Charter of the United Nations; art 15 of the 1972 Treaty between Hungary and Czechoslovakia Concerning the Construction and Operation of the Gabčíkovo-Nagymaros System of Locks; and art 8 of the European Convention on the Protection of Human Rights and Fundamental Freedoms. 101 Navigational and Related Rights (n 83) para 70 102 Öcalan v Turkey, ECHR 2005-IV. 103 ibid para 162. 104 ibid para 163. 105 ibid para 164. 106 ibid para 165. 107 ibid paras 166–75. 108 ibid para 165. 109 For references, see n 21. 110 Comp Guinea – Guinea-Bissau Maritime Delimitation (n 90) 662–63. 111 Gabčíikovo-Nagymaros Project (Hungary/Slovakia) [1997] ICJ Rep, 7, para 112. 112 Comp Öcalan (n 102), para 165. 113 Comp Crown Forest Industries (n 21), para 55 ff. 114 See eg Purcell and Others v Ireland (1991), 70 DR 262; Vogt v Germany (1995) Series A no 323; Lehidieux and Isorni v France, ECHR 1998-VII; Refah Partisi (n 72); Ždanoka v Latvia, ECHR 2006-IV. 115 Refah Partisi (n 72). 116 ibid para 26. 117 ibid para 87. 118 ibid paras 88–89; page references are omitted. 119 ibid para 96. 120 ibid. 121 ibid para 99 122 ibid para 98. 123 ibid paras 107–34. 124 ibid. 125 ibid paras 132–34. 126 ibid para 135. 127 See eg Crown Forest Industries (n 21); Canada, Tax Court of Canada, TD Securities LLC v Her Majesty the Queen, 8 April 2010, available through the IBFD Tax Research Platform database: http://www.ibfd.org, accessed 4 October 2017. (n 21). 128 Crown Forest Industries (n 21). 129 1469 UNTS 189. 130 Crown Forest Industries (n 21) para 7. 131 ibid para 10. 132 ibid para 53. 133 ibid para 46. 134 ibid para 49. 135 ibid para 68. 136 Reasons suggest that the OECD Model Agreement and Commentaries be categorized as belonging to the circumstances of the conclusion of the Canada–US Convention, rather than to its preparatory work. 137 Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v Nicaragua); Construction of a Road in Costa Rica Along the San Juan River (Nicaragua v Costa Rica) [2015], available at the webpage of the Court: <http://www.icj-cij.org> accessed 4 October 2017. 138 ibid para 140–41. 139 See eg Request for Interpretation of the Judgment of 15 June 1962 in the Case Concerning the Temple of Preah Vihear (Cambodia v Thailand) [2013] ICJ Rep 281, para 99; Application of the Interim Accord of 13 September 1995 (The Former Republic of Macedonia v. Greece) [2011] ICJ Rep 644, para 168; Case Concerning Pulp Mills on the River Uruguay (Argentina v Uruguay) [2010] ICJ Rep 14, para 278; Navigational and Related Rights (n 83) para 150. 140 Navigational and Related Rights (n 83) para 150. 141 Certain Activities Carried Out by Nicaragua in the Border Area (n 137) para 141. Quotes are from the decision of the ICJ in Navigational and Related Rights. 142 Application of the Interim Accord of 13 September 1995 (n 139). 143 1891 UNTS 7. 144 Application of the Interim Accord of 13 September 1995 (n 139), para 131. 145 ibid para 132. Quotes are from the PCIJ in Railway Traffic between Lithuania and Poland. 146 ibid para 132. References to earlier case-law have been omitted. 147 Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v France) [2008] ICJ Rep 179. 148 1695 UNTS 298. 149 Certain Questions of Mutual Assistance in Criminal Matters (n 147) para 145. 150 Rainbow Warrior Arbitration (New Zealand v France) [1990] 20 UNRIAA 215. 151 As quoted ibid para 13. 152 ibid para 94. 153 Admission of a State to the United Nations (Charter, art 4), Advisory Opinion [1948] ICJ Rep 57. 154 ibid 63. 155 Constitution of the Maritime Safety Committee of the Inter-Governmental Maritime Consultative Organization, Advisory Opinion [1960] ICJ Rep 149. 156 ibid 166. 157 ibid 170–71 158 See preambular para 3 of both Conventions. 159 See above, Section 1. 160 Comp U Linderfalk, ‘What are the Functions of the General Principles? Good Faith and International Legal Pragmatics’ (20 April 2017) <https://ssrn.com/abstract=2955648> accessed 4 October 2017. 161 ibid. 162 ibid. 163 See Draft Articles on the Law of Treaties with Commentaries, Report of the International Law Commission on the second part of its seventeenth session and on its eighteenth session, Part II, ILC Yrbk (1966:2) 220: ‘The article as already indicated is based on the view that the text must be presumed to be the authentic expression of the intention of the parties; and that, in consequence, the starting point of interpretation is the elucidation of the meaning of the text, not an investigation ab initio into the intentions of the parties.’ 164 See common art 18. 165 See common art 19(c). 166 See common art 33, para 4. 167 See common art 41, para 1(b). 168 See common art 58, para 1(b). 169 See common art 60, para 3(b). 170 See above, Section 1. 171 As should be recalled, common art 32 of two Vienna Conventions differ from art 31. Whereas under art 31, no interpretation may exceed the boundaries set by conventional usage, art 32 allows for more extensive interpretations, the condition being of course that the application of art 31 leads to a ‘manifestly absurd or unreasonable’ result. © The Author 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices)

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