Ius Gentium

University of Baltimore School of Law's Center for International and Comparative Law Fellows discuss international and comparative legal issues


Leave a comment

Renunciations on the Rise: U.S. Natural Status Is Dangerous Under FATCA

 

Julia Brent

On March 18, 2010, President Obama signed a “jobs” bill into law, paid for by the revenue raising Foreign Tax Compliance Act (FATCA).  Execution of FATCA would access a deep pocket: there is an estimated $40 billion per year in international tax evasion.[i]  Thus far, the U.S. Treasury has taken in $800 million in FATCA-related revenue.[ii]  FATCA doesn’t change the obligations of U.S. taxpayers to pay their taxes on overseas earnings, but creates an enormous reporting obligation on 200,000 foreign financial institutions (FFIs) worldwide to pass on information from accounts of U.S. citizens to the IRS. [iii]  Failure to do report results in a 30% penalty on payments into the account, payable to the IRS.[iv]

JB Blog 1_Photo1

The simple solution is to take advantage of one of several U.S. Tax amnesty programs, and many are struggling to pay their taxes before the reporting begins.  However, the legislation has created complex problems for both the institutions and for taxpayers.  For example, an FFI to merely register its own company with the IRS (much less implement the giant reporting scheme) must master a 135-page guide of registration details.  Similarly, taxpayers face multiple forms and banker’s-box size submissions. For many, hiring an accountant to handle compliance is prohibitively expensive.[v] Some foreign individuals who were born in the U.S. but raised overseas by foreign parents don’t realize they have U.S. citizenship.  Some are “accidental Americans” because their parent was born in the U.S.  Staff at the IRS report that they have been overwhelmed by calls from Americans overseas regarding what they are supposed to furnish under FATCA.[vi]

The result of this high-consequence complexity is that many individuals overseas are eliminating their U.S. citizenship. Those that hold dual citizenship often are nationals with a quality country the EU, Canada, Australia, or New Zealand and are allowed travel without a visa through much of the world (including to the United States).[vii]  In the face of accessing the value of their U.S. passport, the conclusion by many is that there is a real danger.  Many institutions are ill-equipped to handle FATCA compliance, much less retracing steps to correct an error.  Already, the IRS has extended reporting deadlines because foreign governments and FFI’s haven’t finished developing IT systems, and aren’t prepared.  Some believe the scale of implementation is so large that the cost of implementing FATCA will “far outweigh the revenues.”[viii] Scotia Bank in Canada, alone, has already spent $100 million.[ix]  There is a high likelihood of a taxpayer getting caught between the cracks of an imperfect system, and being the victim of incorrect reporting, which comes with significant consequences.  An account holder does not have to be a U.S. citizen for their FFI to report them based on U.S. indicia the distinguishing information on their account.  U.S. indicia can mean as little as a U.S. telephone listed as contact information.  One would hope that if an account held by a true non-U.S. citizen was incorrectly reported as that of a U.S. citizen, the false report would be quickly corrected.  However, the sheer size of the players the IRS, state governments, and FFIs – creates a likelihood that corrections will take months, even years, to sort out in litigation against the IRS or a foreign tax administrator.

JB Blog 1_Photo2

In addition to imperfect reporting, those with American only or dual citizenship are concerned that FACTA requirements compromise privacy and the right to data protection as a taxpayer.  Many governments have executed Intergovernmental Agreements (IGAs), either without considering the rights of the individuals affected or complying by means of what is essentially coercion.[x]  Privacy issues for Canadians have been raised by former Canadian Finance Minister, Jim Flaherty.  His concern is the “far reaching and extraterritorial implications” of FATCA which, in effect, mandate that Canadian banks become extensions of the IRS and jeopardize Canadians’ privacy rights.[xi] Banks in Canada are not required to know the nationality of their clients, and, to conform to FATCA, Canada would have to change its privacy laws.[xii]  All the countries under the Model 2 International Governmental Agreements (IGA’s) have laws which either prevent disclosure or require individual consent.[xiii]  The difficulty with consent is that in many cases it is logistically impossible.  For example, Japanese banks have several hundred million bank accounts, not digitized, all with opening forms in Japanese.[xiv]

FATCA has changed Americans into outsiders in the international financial world.[xv]  As one officer of a global bank reported, the banks are ridding themselves of the “U.S. Person pollution!”[xvi] American Citizens Abroad (ACA) has received multiple testimonies from Americans abroad who have had their foreign bank accounts closed, been refused entry into a foreign pension fund, or who cannot enter into insurance contracts overseas.[xvii]  Some claim that “American citizens are being denied savings accounts, investment accounts, mortgages, credit cards and many of the basic financial services required to live and work in modern society, raise a family and to save for retirement.”[xviii] This is due to the fact that, while there are 780 million American bank clients overseas,[xix] this number is a drop in the bucket for banks who serve a much higher number of non-Americans.

JB Blog 1_Photo3

These difficulties explain why the amount of renunciations since FATCA was implemented has quadrupled.[xx]  Renunciations have caused such a backlog of paperwork that, in November last year, the fee for renunciation was increased by 400%.[xxi] The U.S. response has been inadequate:  Robert Stack, Treasury Deputy Assistant Secretary of International Tax Affairs, described the claim that Americans living abroad will give up their U.S. citizenship because of liabilities and burdens created by FATCA as Myth No. 3.[xxii]  Meanwhile, the New York Times reports, “The bureaucratic burden of identifying, verifying and reporting has caused many banks to regard American clients, particularly those of moderate means, as more trouble than they are worth.”[xxiii]

There is currently a push to make renunciation “easy and harmless,” financially and mentally, since new regulatory burdens on non-resident US citizens make living with that status nearly impossible.[xxiv]  Recently, a “renunciation meeting” was held in Canada, the first of its kind, to permit 22 Americans together to renounce their U.S. Citizenship, in spite of the $2,350 fee and paperwork. Tara Ferris, then Senior Counsel at Chief Counsel IRS, and others did an outstanding job in drafting the internal revenue rules and regulations of FATCA, an unprecedented behemouth of legislation.  However, the code implements policies that have significant unintended consequencesMass renunciations, a sort of reverse of our naturalization ceremonies, may become a thing of the future.[xxv]

[i] http://www.fas.org/sgp/crs/misc/R40623.pdf, Summary

[ii] Id.

[iii] http://www.acfcs.org/fatca-may-identify-tax-cheats-but-its-dragnet-for-financial-criminals-may-produce-an-even-bigger-yield/

[iv] http://fatca.thomsonreuters.com/about-fatca/

[v] http://cnsnews.com/news/article/gabrielle-cintorino/tax-laws-pushing-americans-living-abroad-renounce-their-us

[vi] http://www.bloomberg.com/news/features/2015-04-08/an-emotional-audit-irs-workers-are-miserable-and-overwhelmed

[vii] http://opiniojuris.org/2012/01/08/fatca-fallout-mass-renunciations/

[viii] http://www.acfcs.org/fatca-may-identify-tax-cheats-but-its-dragnet-for-financial-criminals-may-produce-an-even-bigger-yield/

[ix] http://business.financialpost.com/news/fp-street/electronic-spying-a-big-issue-for-banks-scotia-ceo-waugh-says

[x] http://www.keepcalmtalklaw.co.uk/accidental-americans-the-us-citizenship-conundrum/

[xi] http://sundominica.com/articles/fatca-and-you-1462/

[xii]http://web.archive.org/web/20130601041733/http://americansabroad.org/issues/fatca/fatca-is-bad-for-america-why-it-should-be-repealed/

[xiii] https://www.irs.gov/Businesses/Corporations/FATCA-Governments

[xiv] http://web.archive.org/web/20130601041733/http://americansabroad.org/issues/fatca/fatca-is-bad-for-america-why-it-should-be-repealed/

[xv] Id.

[xvi] http://www.finance.senate.gov/imo/media/doc/Republicans%20Overseas,%20Inc.1.pdf, page 3

[xvii] Id.

[xviii] http://www.finance.senate.gov/imo/media/doc/Republicans%20Overseas,%20Inc.1.pdf

[xix] http://money.cnn.com/2016/02/08/news/americans-citizenship-renunciation/

[xx] http://intltax.typepad.com/intltax_blog/2016/02/new-expatriate-record-2015-nearly-4300-expatriations.html

[xxi] http://www.bbc.com/news/35383435

[xxii] https://www.treasury.gov/connect/blog/Pages/Myth-vs-FATCA.aspx

[xxiii] http://www.nytimes.com/2015/05/14/opinion/an-american-tax-nightmare.html?_r=0

[xxiv] http://www.keepcalmtalklaw.co.uk/accidental-americans-the-us-citizenship-conundrum/

[xxv] http://opiniojuris.org/2012/01/08/fatca-fallout-mass-renunciations/


4 Comments

Faux-Pas Fashion “Caveat Emptor”: Let The Buyer Beware

Kia Roberts Warren

Growing up in one of the fashion capitals of the world (NYC), I am, admittedly, a bit of a fashionista. I learned at a very young age that if you go down to Canal Street and enter a store looking for a Chanel boy bag that someone will take you to the small back room or a van filled with every designer name imaginable. This is the second oldest profession: counterfeiting. Many consumers believe that these counterfeiters are doing a service because consumers do not want to pay an exorbitant price for the real thing. However, counterfeiting is not a victimless crime.

KRW Blog2_Photo1

A counterfeit is a trademark infringement, a manufactured good being passed off as an original under the trademark.[1] This is harmful to luxury brands because their trademark is their business. Luxury brands rely on their trademarks to attract consumers and the brand mark signals to consumers the high quality of their products. Counterfeiting hurts the economy. The United States economy loses up to $250 billion in sales each year and 750,000 jobs lost.[2] In 2015, the EU economy reported a value 9.7% of their total sales every year or $28.7 billion and 363,000 jobs lost.[3]KRW Blog2_Photo2

Counterfeiting is a $600 billion industry and represents 5-7% of total world trade.[4]  And, these numbers are only increasing due to modern technology and the Internet. Because consumers can now shop within their own homes, counterfeit sales are on the rise because companies cannot watch the internet 24/7 looking for counterfeit sites [5] In 2007, for example, $119 billion worth of knock-off merchandise were purchased on the web.[6]

If clothing does not interest you like it does me, just know that more than clothing and handbags are counterfeited. Counterfeits have spread to toys, electronics, cosmetics, and pharmaceuticals,[7] many of which are sold through legitimate retail stores and websites.[8] These are public safety issues; these counterfeits are made with hazardous materials to the environment and to people’s health. Counterfeit luxury goods, also, have serious criminal ramifications that are not known to most consumers.

Bangladesh

Shakil Khan, 10, has worked for 4 months in a garment factory in Old Dhaka, making money for his impoverished family in Chandpur, Bangladesh. Nafeesa Binte Aziz/Toronto Star

Counterfeit luxury goods aren’t just hurting the economy, but promote child labor exploitation, human trafficking, drug trafficking, and even terrorism as well as other civil, criminal, and administrative crimes.[9] A Vietnamese crime gang leader earned $13 million selling counterfeit watches in New York.[10] Children, as young as six, are treated to excessively cruel and criminal treatment.[11] Forced laborers are smuggled into the country with the products to sell them and to place the finishing touches on the goods after getting across the borders.[12] There have been reports of authorities uncovering operations where proceeds from drug trafficking were channeled into counterfeiting and, vice versa, where profits from the sale of counterfeit goods were used to further other illicit operations.[13] The FBI has evidence that the World Trade Center 1993 bombing was financed with counterfeit luxury goods on Canal Street.[14] In 1996, the FBI found that followers of Sheik Omar Abdel Rahman, a blind cleric who was sentenced to 240 years in prison for plotting to bomb New York City landmarks, had made millions of dollars selling counterfeit t-shirts bearing Nike and Olympics logos.[15]

KRW Blog2_Photo3

So what can be done to protect fashion maisons and stop crime? Louis Vuitton employs about 40 lawyers, 250 independent investigators, and spends over $20 million each year to fight counterfeiting of its products.[16] Fashion maisons also turn to MarkMonitor (a corporation that accesses data and detects unauthorized channels and shuts them down) for help.[17] Of course, all of these costs get passed on to the consumer. There are also national laws in place. For example, the U.S. enacted the Lanham Act and Copyright Act of 1976.[18] In France, consumers can be forced to pay a costly fine and possible jail time for owning a counterfeit.[19] This idea is catching on in Italy and Britain as well. The European Union has placed two new regulations dealing with counterfeits.[20] On the international level there is International Anti-Counterfeiting Coalition (IACC), Office for Harmonization in the Internal Market, Anti-Counterfeiting Group, International Intellectual Property Alliance. The World Trade Organization has its members sign the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement.[21]

KRW Blog2_Photo5

In 2008, Louis Vuitton sued eBay in a French court. The French court ruled that eBay did not do enough to prevent the counterfeit sales from occurring on the site and eBay was ordered to pay $60.8 million in damages.[22] In a UK court, Cartier and Montblanc were recently granted orders ruling Internet providers to block websites selling counterfeit watches under their trademark.[23] Moncler has recently become victorious in the judicial arena. The Uniform Domain Name Dispute Resolution Policy under the World Intellectual Property Organization (WIPO) granted the transfer of 50 domain names incorporating its trademark.[24] In its case against Royalcat (a Chinese company), the Beijing IP Court awarded the maximum statutory damages in a trademark infringement action.[25]

As consumers we have the power to stop the counterfeiting industry. We are hurting ourselves. We have a responsibility to protect ourselves and each other. So, if you see someone considering buying a counterfeit Prada tell them “caveat emptor.” We need to educate each other about where and who are money is going to.

For more info on how to spot a fake, click here.

Kia Roberts-Warren is a 2l at University of Baltimore. She has always had an interest in international affairs. She is interested in private international law as well as international humanitarian law. She is on the executive board of ILS as the Career Development Director and is on the Phillip C. Jessup Moot Court Team.

[1] http://www.oecd.org/sti/ind/2090589.pdf

[2] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[3] http://qz.com/460932/fakes-are-costing-europes-fashion-industry-10-of-its-sales-and-thousands-of-jobs/

[4] http://michiganjb.org/issues/1/article4.pdf

[5]http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[6] http://michiganjb.org/issues/1/article4.pdf

[7] https://www.iwu.edu/economics/PPE17/lewis.pdf

[8] https://www.iwu.edu/economics/PPE17/lewis.pdf

[9]  https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[10] https://www.iwu.edu/economics/PPE17/lewis.pdf

[11] https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[12] https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[13] https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[14] http://michiganjb.org/issues/1/article4.pdf

[15] http://michiganjb.org/issues/1/article4.pdf

[16] http://michiganjb.org/issues/1/article4.pdf

[17] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[18] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[19] http://crefovi.com/articles/fashion-law/efficiently-fight-counterfeiting-fashion-luxury-sectors/

[20] http://crefovi.com/articles/fashion-law/efficiently-fight-counterfeiting-fashion-luxury-sectors/

[21] http://www.oecd.org/sti/ind/2090589.pdf

[22] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[23] http://www.thefashionlaw.com/home/cartier-wins-court-order-blocking-sites-selling-fakes

[24] http://www.wipo.int/amc/en/domains/search/text.jsp?case=DNL2015-0031

[25] http://www.worldtrademarkreview.com/Magazine/Issue/59/News/Beijing-IP-Court-grants-maximum-amount-of-statutory-damages-for-the-first-time


4 Comments

Restricting Schengen – Keeping out Refugees

Raiven Taylor 

Recently, European countries have come up with plans to keep migrants out. In June of 2015, the EU had an emergency meeting and came up with a “10-point plan” to “capture and destroy” boats used to smuggle in migrants.[i] Not long after this plan hatched, Hungary and other European countries erected wire fences to keep migrants out. [ii] Germany, Denmark, Austria and a few other countries suspended their willingness to adhere to the Schengen rules and reintroduce border controls.[iii] The Schengen treaty allows for open travel in the 26-nation bloc known as the Schengen area.[iv] This area, created in 1995 and originally consisting of 26 EU nations, abolished passport controls at common borders.[v] The recent suspension of this was thought to shock the rest of EU when it came to border controls to deal with the migration crisis. Because Germany borders nine other countries, without its participation, Schengen fails.[vi] This led other countries to begin closing their borders, criminalizing most new arrivals as illegal immigrants.[vii] With all of the changes, it has been difficult for migrants to find a country that will allow them to enter. This also makes it difficult for those countries that CAN take these immigrants into their territory because resources are tight. As of September 2015, 63,000 asylum seekers from Hungary and Austria entered Bavaria, which is more than the total of asylum seekers for the enter year of 2014.[viii]

RT Blog1_Photo1

The EU proposed a deal with Turkey, promising $3.3 billion for it to close down its borders.[ix] Denmark has also passed a law allowing it to seize valuables from asylum seekers in order to pay for their upkeep.[x] All of this is leads to bigger problems because even though countries are locking down their borders, migrants are finding other, often very dangerous ways, to get in anyway. On February 12, 2016 the UN High Commission for Refugees (UNHCR) expressed its concern for the increasing restrictive measures on the part of EU states, stressing that something must be done to protect the fundamental human rights of the people trying to reach Europe.

RT Blog1_Photo2

Spokesperson for the Office of the UN High Commissioner for Refugees (UNCHR) stated that more than 80,000 migrants arrived in Europe by boat in the first 6 weeks of 2016, with 400 dying in their attempt. Statistics show that 58 percent of migrants coming to Europe are women and children. One in 3 people arriving in Greece are children, compared to the 1 in 10 in September 2015.[xi] It has also been reported that two children drown every day, on average, since September 2015 as their families attempt to cross the Mediterranean Sea, totaling more than 340 children.[xii] UNCHR and the UN Children’s Fund (UNICEF) urge countries to cooperate and make dangerous journeys like this safer for children.[xiii]

A UN Special Rapporteur on Human Rights of Migrants, François Crépeau, stated that although “Europe has always been a strong advocate of human rights in Europe and elsewhere… its struggle to maintain control of its borders however…is being tested…[and by]stripping away the rights of asylum-seekers and migrants, Europe is creating a scary new ‘normal.’”[xiv] Over-reliance and securitization of borders will not work to keep migrants out because they will find another way in order to survive, allowing smugglers to continue to adapt, prosper, and exploit migrants.[xv] In order to combat smuggling, states must provide regular, safe and cheap mobility solutions, including both identity and security checks.[xvi]

RT Blog1_Photo3

The European public, predominantly, has the view that Europe needs stricter controls, bigger fences, and more military control.[xvii] Although the public might favor these stricter policies, politicians view them as an immoral and an unworkable approach.[xviii] The question is how will European countries pursue this issue and in what ways will immigration be affected long term? Will countries continue keeping its borders open? Will countries continue with daily limits on migrants? I believe countries should find a less dangerous way for migrants to travel while also coming up with a way to stem the tide of migration. It is somewhat understandable for countries to not want to be overpopulated and have an extra burden on state-run agencies. However, risking the lives of migrants is not the way to overcome this problem. Many organizations are attempting to convince the politicians to work this issue out as peacefully as possible and in a way that lessens the dangers for migrants. Something needs to be done – sooner, rather than later!

[i] http://www.theguardian.com/commentisfree/2016/jan/31/europe-bind-act-morally-on-immigrants-heed-its-citizens

[ii] Id.

[iii] Id.

[iv] http://www.theguardian.com/world/2015/sep/13/germany-border-crackdown-deals-blow-to-schengen-system

[v] http://www.theguardian.com/commentisfree/2016/jan/31/europe-bind-act-morally-on-immigrants-heed-its-citizens

[vi] http://www.theguardian.com/world/2015/sep/13/germany-border-crackdown-deals-blow-to-schengen-system

[vii] Id.

[viii] Id.

[ix] http://www.theguardian.com/commentisfree/2016/jan/31/europe-bind-act-morally-on-immigrants-heed-its-citizens

[x] Id.

[xi] http://www.un.org/apps/news/story.asp?NewsID=53217#.VsxxWMfiQtg

[xii] http://www.un.org/apps/news/story.asp?NewsID=53272#.VsxxYsfiQtg

[xiii] Id.

[xiv] http://www.un.org/apps/news/story.asp?NewsID=53217#.VsxxWMfiQtg

[xv] id.

[xvi] Id.

[xvii] http://www.theguardian.com/commentisfree/2016/jan/31/europe-bind-act-morally-on-immigrants-heed-its-citizens

[xviii] Id.


4 Comments

Nigeria’s Economy – Help is on the Way!

Carolyn Mills

The economy of Nigeria is the largest economy in West Africa, experiencing massive growth in the last 24 years. While the African continent, as a whole, has experienced rapid growth and development, there is concern amongst the international community regarding the threat of terror organizations, such as Boko Haram and the internal rampant corruption. The economy of Nigeria has recently faced difficulty and has made several appeals to the international community for support. Without this crucial intervention international organizations the threat of collapse could be imminent.

Boko Haram

Currently Boko Haram has taken a large foothold in the northern Nigeria, and is notably known for the kidnapping of 300 school girls in 2014, which sparked the #BringBackOurGirls movement. Boko Haram’s terror is indiscriminate as the organization is known for attacking both Christians and Muslims. Boko Haram began as a peaceful organization until 2009 when the government of Nigeria launched investigations into their activities. [1] The terror group has been credited with the death of nearly 17,000 Nigerians since its reign of terror began in 2010. [2] Corruption has been a further impediment to the growth of Nigeria’s economy. A recently published article, one of the most notable and egregious cases of corruption occurred when $195 billion naira (nearly 10 billion dollars) was pilfered from a pension fund that was intended for retired workers.[3]

CM Blog3_Photo2

2014 was a year of great exploits for Nigeria, as it was named the largest economy in Africa (as well as most populous)[4].  Its largest industries are its growing entertainment sector known as ‘Nollywood’, followed by its large agricultural sector.[5] In the past 2 years, however, Nigeria has experienced a fall in the valuation of their currency (the naira) as oil prices have fallen below $30 per barrel. Initially following the election of President Muhammadu Buhari the stock market peaked at the hope of a new president with a new economic policy, however hopes were quickly dashed. [6] The falling price of crude oil in the country coupled with their need to import refined fuel has put much pressure on the economy and President Buhari. [7]

CM Blog3_Photo1

In an effort to assist the country in its efforts to fight Boko Haram, the European Union has pledged more than $50 million dollars to aide in the fighting against Boko Haram[8]. The European Union has also recently pledged to assist in diversifying its nearly exclusive oil dependent economy[9]. The attractive package comes with many caveats (read strings). The EU Ambassador to Nigeria, based in Lagos, stressed the importance of business owners and investors having protection under Nigerian laws stating.[10] Although how Nigeria will ensure the protection of potential investors is still in flux, Foreign Minister Geoffrey Onyeama remains hopeful that any future agreements with other countries will provide Nigeria with technical assistance to make the transition from a primarily agrarian economy to a fully industrialized economy.[11] The more pronounced role of other states and organizations is necessary to help usher in Africa’s largest economy and assist in sustained growth—rather than a mere suggestion from the EU.

German President Guack

Despite the recent call for help from President Buhari, Germany has been the only state to show interest in contributing to the development and investment in Nigeria’s now lackluster economy. Among other things, German President Joachim Guack has pledged support in the move to eliminate corruption, which is seen as the country’s number one enemy to progress. [12]

The threat of global terrorism should not deter international development. With increased investment comes increased infrastructure—infrastructure that is undoubtedly linked to the safety of the country’s border. Without such investment, the economy will stagnate and most of its resources will be sunk into their safety and defense forces, rather than development.  It is a harrowing catch-22 for government of Nigeria, as they attempt to advance their economic and social strength, while combating terrorism and corruption that seeks to slow progress. Germany’s advanced (and seemingly sole) role in the elimination of terror and the diversification of the economy will hopefully prove to be altruistic and non-imperialistic in nature as Nigeria fights to remain a forerunner on the African Continent.

Carolyn Mills is a graduate from of Bowie State University  and holds a Bachelor of Arts in Political Science. Carolyn is a 2L at the University of Baltimore School of Law. She serves as 2L Representative for the International Law Society.  Her interests and focus areas are on Central America and West Africa; she has traveled to both Guatemala and Honduras and hopes to visit Ghana this summer. She is currently a law clerk for the Department of Homeland Security’s Human Rights Law Section.  

[1] http://m.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11250530

[2] http://www.globalresearch.ca/boko-haram-in-nigeria-the-destabilization-of-the-world-through-the-war-on-terror/5504014

[3] https://www.naij.com/402850-top-12-corruption-cases.html

[4] http://leadership.ng/features/502916/nigerian-economy-global-appeal-nwanze

[5] http://www.theatlantic.com/international/archive/2014/04/how-nigeria-became-africas-largest-economy-overnight/360288/

[6] http://qz.com/595453/the-precarious-state-of-nigerias-economy-right-now-captured-in-two-charts/).

[7] Id.

[8] Id.

[9] ( http://www.thisdaylive.com/articles/eu-pledges-to-assist-nigeria-diversify-economy/232283/)

[10] http://www.thisdaylive.com/articles/eu-pledges-to-assist-nigeria-diversify-economy/232283/.

[11] (http://allafrica.com/stories/201602100215.html).

[12] http://www.vanguardngr.com/2016/02/we-have-lost-lives-economy-because-of-corruption/


2 Comments

British Cabinet Drops Its Obligation to International Law from Code

Shane G. Bagwell

David Cameron has led the British Parliament since 2010 and, since that date, has not shied away from controversy. Policies such as increases in tuition fees for university education, privatization of the National Health Service, and military action in Libya have led to protests in the streets. While his leadership has been unpredictable and his policies at times self-contradicting, he has grown the Conservative Party to the point where it holds an outright majority in the House of Commons. His most recent controversy involves the Government’s self-proclaimed obligations (or lack thereof) to protect and uphold international law.

2955

The Cabinet of the United Kingdom is the collective decision-making body of Her Majesty’s Government of the United Kingdom, made up of the First Lord of the Treasury (also known as the Prime Minister), and members of Parliament appointed by the Prime Minister to lead government departments.[1] Though typically selected from the House of Commons, it is not entirely uncommon for members of the House of Lords to be selected for certain posts. The most senior members of the Cabinet are the Deputy Prime Minister, Foreign Secretary, Chancellor of the Exchequer and Home Secretary.[2]

            Unlike in the American system, Cabinet Ministers are not necessarily experts in their field, and rely heavily on the input of members of the Civil Service for developing and implementing policy.[3] Additionally, members of the Cabinet in the United Kingdom have joint responsibility for government departments, and may, pursuant to the Ministers of the Crown Act 1975:

(a) provide for the transfer to any Minister of the Crown of any functions previously exercisable by another Minister of the Crown;
(b) provide for the dissolution of the government department in the charge of any Minister of the Crown and the transfer to or distribution among such other Minister or Ministers of the Crown as may be specified in the Order of any functions previously exercisable by the Minister in charge of that department;
(c) direct that functions of any Minister of the Crown shall be exercisable concurrently with another Minister of the Crown, or shall cease to be so exercisable.

SBagwell Blog 2 Photo 1.png

Cabinet Ministers are bound by the Ministerial Code, which provides ethical guidelines for the performance of their duties and outlines their relationship with Parliament. The first sentence of the Ministerial Code reads, “[t]he Ministerial Code should be read against the background of the overarching duty on Ministers to comply with the law and to protect the integrity of public life.” This is not how the sentence has read historically, however. Until October of 2015, the Ministerial Code began with providing an obligation for members of the Cabinet “to comply with the law including international law and treaty obligations…” On October 22, the Guardian published an article noting the deletion of references to international law from the Code.[4] As an executive body of the British system of government, this change (though subtle) has potentially enormous implications for the United Kingdom’s relationship with the rest of the world. Philippe Sands QC, a professor of law at University College London, said the change was “shocking. Another slap to Magna Carta and the idea of the rule of law. A government that wants to ditch Europe and sever the connection with the European Convention on Human Rights now wishes to free itself from the constraints of international law and the judgments of international courts.”[5] Ken MacDonald QC, a former director of public prosecutions, piled on to the mounting criticism of the Government’s move, stating that “[i]t is difficult to believe that this change is inadvertent. If it’s deliberate, it appears to advocate a conscious loosening of ministerial respect for the rule of law and the UK’s international treaty obligations, including weakening responsibility for the quality of justice here at home.”[6]

Mr. MacDonald’s claim that the Government’s change in policy was deliberate doesn’t require particularly deep research to back up. The Tory website hosts a pamphlet called “Protecting Human Rights in the UK : the Conservative’s Proposals for Changing Britain’s Human Rights Laws,” in which the party promises that “[w]e will amend the Ministerial Code to remove any ambiguity in the current rules about the duty of Ministers to follow the will of Parliament in the UK.”[7] The Conservative Party has a fair amount of support from Euroskeptics, and has attempted to woo voters away from the UK Independence Party (UKIP) by not-so-subtly promoting an anti-EU agenda. With an upcoming referendum on the UK’s continued membership in the EU, the Conservative party has crafted its international law obligations to reflect their desire for Parliament to once again be the supreme body of law, without interference from Brussels.

What is extremely troubling about this is that the European Union is already on shaky ground with the recent crises surrounding Greek debt, the influx of Syrian refugees, and others. The Cameron Government’s decision to distance itself from the international community is a regressive policy which stands only to harm British interests. Without a strong commitment to establishing itself as a participating member of the international community, let alone a voice within the European community, the Cabinet finds itself in the precarious situation of being Europe’s least social member. As the world becomes more interconnected and reliant on international commerce, Britain’s continued aversion to participation could spell out its downfall from the international stage. While Britain retains a seat on the U.N. Security Council, it appears to be a holdover of those lost days when Britain held its head high as a global power and exercised itself as a force for good. While David Cameron backs both horses and pledges personal loyalty to the EU, yet simultaneously dismantles Britain’s obligations to the mainland, he belittles Britain’s prestige, rather projecting his country to the world as a manic and indecisive antique, wrestling with the opposing forces of its colonial past and potentially tumultuous future.

Shane Bagwell is a 3L at the University of Baltimore School of Law, and a graduate of West Chester University with a Bachelor of Arts in Political Science. He currently serves as the President of the Military Law Association. His interests are Middle Eastern politics, international conflicts, and the law of land warfare. He is currently a law clerk for the Office of the State’s Attorney for Baltimore City, Economic Crimes Division.

[1] http://www.parliament.uk/mps-lords-and-offices/government-and-opposition1/her-majestys-government/

[2] http://www.historylearningsite.co.uk/british-politics/the-executive-in-british-politics/the-cabinet-and-british-politics/

[3] http://www.parliament.uk/about/faqs/house-of-commons-faqs/members-faq-page2/

[4] http://www.theguardian.com/law/2015/oct/22/lawyers-express-concern-over-ministerial-code-rewrite

[5] Id.

[6] http://www.theguardian.com/law/2016/feb/11/no-10-legal-challenge-ministerial-code-rewrite-international-law

[7] https://www.conservatives.com/~/media/files/downloadable%20Files/human_rights.pdf


2 Comments

The Precarious Situation of Turkey

Carolyn Mills

Turkey has long been awaiting the day that it can be welcomed into the European Union (EU). Unfortunately with the rise of the Islamic State (ISIS) in Syria, the thousands of Syrian refugees fleeing to Turkey’s border, its internal conflict with the Kurds, and human rights abuse allegations; Turkey may never have the chance to receive that welcome.

Turkey has been an associate member of the EU since 1963, all the while hoping to become a full-fledged member.[1] In May, the EU struck a deal with Turkey in which Turkey agreed to house migrants fleeing the violence in Syria in exchange for $3 billion Euros. Further, it came with a dangling carrot that promised to restart the stalled accession talks that have been ongoing since 2005. Even German Prime Minister Angela Merkel has thrown her support behind Turkey in exchange for its agreement to house the refugees.[2]

CM Blog2_Photo1

It seems as though Turkey is fighting a losing battle. With tensions between Turkey and Russia mounting since Turkey gunned down a Russian fighter jet, Turkey is facing an even more intensified battle within its own borders with the Kurdistan Peoples Party, or the PKK.[3] The conflict between the government and the PKK is not something that is new; the government’s efforts have increased to quell the efforts of what it labels a terrorist organization. [4]

The PKK has also been deemed a terrorist organization by the US and others in the international community. Since a breakdown of a truce between the government and the PKK in mid-2015, tensions have heightened and violence erupted in the southwest quadrant of the country. Not only is the country inundated with nearly 70,000 more migrants (adding to the nearly 2 million migrants currently there)[5], but Turkey itself cannot even contain the pre-existing violence and tensions within its own borders. Most recently violence erupted in the Kurdish town of Cizre with reports of innocent women and children being caught in the crossfire. [6]

Human rights abuses in Turkey are an ever-increasing concern. Recently, Turkish military forces shot 10 unarmed civilian Kurds, 2 of which were killed, with no recourse. As a result, the UN has called for an investigation. This also calls into question Turkey’s ability to comply with EU directives. EU member states who hold the fate of Turkey’s accession have been silent amid the accusations.[7]

CM Blog2_Photo2

My fear is that the EU and the rest of the international community are putting entirely too much strain on Turkey. Last year EU Member States agreed to help resettle 22,500 refugees from Turkey and only 779 have been resettled as of the end of January.[8] A recent corruption scandal found that the government exercised too much power over state agencies (read police, military and the judiciary).[9]

It is as if the international community is waiting to place the blame on Turkey if and when something does go horribly awry. With the myriad of struggles facing Turkey both internally and externally, and their clear desire to join the EU there is a waiting game to see is Turkey has the capacity and ability to provide stability for themselves, and abroad.

Carolyn Mills is a graduate from of Bowie State University  and holds a Bachelor of Arts in Political Science. Carolyn is a 2L at the University of Baltimore School of Law. She serves as 2L Representative for the International Law Society.  Her interests and focus areas are on Central America and West Africa; she has traveled to both Guatemala and Honduras and hopes to visit Ghana this summer. She is currently a law clerk for the Department of Homeland Security’s Human Rights Law Section.  

[1] http://www.euractiv.com/enlargement/eu-turkey-relations/article-129678

[2] http://uk.reuters.com/article/uk-europe-migrants-germany-turkey-idUKKCN0SC08020151018.

[3] http://www.bbc.com/news/world-middle-east-35495157

[4] http://www.telesurtv.net/english/analysis/A-History-of-the-Turkish-Kurdish-Conflict-20150728-0042.html

[5] http://www.bbc.com/news/world-middle-east-35495157

[6] https://www.washingtonpost.com/news/worldviews/wp/2016/02/03/as-syria-burns-turkeys-kurdish-problem-is-getting-worse/.

[7] http://www.nytimes.com/2016/02/02/world/europe/un-turkey-human-rights.html?_r=0

[8] https://www.hrw.org/news/2016/01/29/turkey-alone-cant-solve-europes-refugee-crisis

[9] https://www.hrw.org/world-report/2015/country-chapters/turkey.


1 Comment

The Trans-Pacific Partnership’s Investor-State Dispute Settlement Provision : A Baby Step toward Legitimacy

Esther Grenness

In Senator Elizabeth Warren’s (D-MA) op-ed published in the Washington Post in February 2015, she excoriated the Investor-State Dispute Settlement (ISDS) provision of the Trans-Pacific Partnership (TPP) free-trade agreement.[1] In her op-ed, she painted the ISDS provision as a nefarious tool by which multinational corporations could “tilt the playing field” in their favor.[2] This would undermine U.S. sovereignty by enabling foreign corporations to take the United States to a corporate-lawyer-infested arbitration panel and slough off regulations designed to protect the public.[3] And the cherry on top? All this would occur without a day in U.S. courts and the legal bill would be dumped on the backs of U.S. taxpayers.[4]

Grenness Blog1_Photo1

Even though Warren’s op-ed was in response to the as yet unfinished agreement, opposition has remained steadfast against the TPP.  With such a visceral reaction to a single provision of a free-trade agreement, one would think that ISDS provisions were something new to U.S. involvement in the investment treaty world. This is far from the case. There are currently over “3,000 agreements worldwide [that] utilize some form of ISDS, and the United States is party to 50 such agreements.”[5]

Grenness Blog1_Photo2

While ISDS provisions are nothing new, they are still highly controversial. The line between private and public law is blurred. According to Stephen Schill, “investor-State arbitration is better analogized with judicial review of governmental conduct under administrative (or constitutional) law at the domestic level or international judicial review.”[6] Because investor-State arbitral decisions affect entire nations, the reality is that ISDS functions as “an instrument of global governance” where “public law values of equality, predictability, transparency, and democratic control of decision-making” come into play.[7] This is the foundation of the major objections to the practice of ISDS. The processes is notorious for the lack of transparency, the inability for third parties to participate or have a voice in the process, the risk of improperly biased arbitrators, and the lack of appealable decisions. Furthermore, without a consistent body of law from which to draw, a decision under one treaty can violate a provision in another treaty.[8]

Grenness Blog1_Photo3

 

Even with these very real and valid concerns about the whole ISDS system, the ISDS provision in the TPP is not the demon it has been made out to be. It follows on the heels of revisions to the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules and the Mauritius Convention, which expanded third-party participation in disputes and increased transparency in the process.[9] The Mauritius Convention, in particular, has the potential to expand this transparency “to the entire treaty-based international investment regime as it stood on 1 April 2014.”[10] Indeed, the TPP’s ISDS requirements are among the most liberalized and transparent of any trade agreement reached to date. The provision requires publication of the documents, and it allows concerned third parties to participate as amicus curiae.[11] Most significantly, the provision requires not just application of the rules of the treaty itself, but also the application of relevant rules of international law.[12] This takes ISDS jurisprudence beyond the scope of a “treaty-by-treaty approach to investment law reform.”[13] The “normative pull”[14] of the decisions reached under the TPP will have more gravity, which brings the international investment body of law closer to the goal of consistency.

Grenness Blog1_Photo4

However, the TPP does not currently have a method by which decisions may be appealed (although this may be changed at a later date).[15] Enter the Trans-Atlantic Trade and Investment Partnership (TTIP). Although not finalized, the European Commission has proposed an almost complete overhaul of the ISDS system, whereby the arbitrators would be permanent appointees with demonstrated neutrality (perhaps already appointed to a judicial function in their home state.)[16] This is all highly controversial and in a complete state of flux, but the general trend in the formation of investment treaties is moving toward a more liberalized, public oriented approach to Investor-State Dispute Settlement.[17] While the procedural process may slow significantly,[18] the legitimacy of the whole system will grow.

Grenness Blog1_Photo5

There are a myriad of issues posed by ISDS; however, the TPP is a step in the direction of legitimizing the ISDS process. The TPP’s ISDS provision is not a multinational corporation’s nefarious tool for tilting the judicial balance in its favor. In a world of an increasingly interconnected, globalized economy with exponential growth, there are bound to be growing pains and stumbling blocks along the way. The TPP’s ISDS provision is a step in the right direction, small as that step may be.

 

 

[1] The Trans-Pacific Partnership (TPP) is an enormous free-trade agreement between the United States, Canada, Australia, Mexico, Japan, Malaysia, Peru, Vietnam, Chile, Brunei, Singapore, and New Zealand. The United States signed the agreement on February 4, 2016, but the agreement hasn’t yet been submitted to Congress for a vote. The TPP contains an Investor-State Dispute Settlement (ISDS) provision, where disputes between foreign investors and States are to be settled via arbitration rather than going through the domestic court system. Investors have standing to challenge sovereign actions, such as state-imposed regulatory measures. The TPP member countries represent around 40% of global gross domestic product (GDP) (https://ustr.gov/tpp/overview-of-the-TPP); Warren, Elizabeth. 2015. “The Trans-Pacific Partnership Clause Everyone Should Oppose.” Washington Post, February 25: 3. Accessed February 2, 2016.

[2] (Warren 2015)

[3] (Warren 2015)

[4] (Warren 2015)

[5] Malawer, Stuart. 2015. “Looking at Dispute Resolution In the Trans-Pacific Partnership.” New York Law Journal, December 8: 4. Accessed January 30, 2016.

[6] Schill, Stephan. 2013. “The Public Law Paradigm in International Investment Law.” EJIL: Talk! December 3. Accessed February 1, 2016. http://www.ejiltalk.org/the-public-law-paradigm-in-international-investment-law/.

[7] (Schill, The Public Law Paradigm in International Investment Law, 2013)

[8] Levine, Eugenia. 2011. “Amicus Curiae in International Investment Arbitration: The Implications of an Increase in Third-Party Participation.” Berkeley Journal of International Law 29 (1): 200-224 at 218

[9] Schill, Stephan. 2015. “The Mauritius Convention on Transparency: A Model for Investment Law Reform?” EJIL: Talk! April 8. Accessed January 29, 2016. http://www.ejiltalk.org/the-mauritius-convention-on-transparency-a-model-for-investment-law-reform/.

[10] (Schill, The Mauritius Convention on Transparency: A Model for Investment Law Reform? 2015)

[11] (Malawer 2015)

[12] (Malawer 2015)

[13] (Schill, The Mauritius Convention on Transparency: A Model for Investment Law Reform? 2015)

[14] (Schill, The Mauritius Convention on Transparency: A Model for Investment Law Reform? 2015)

[15] (Malawer 2015)

[16] Lawson, Alex. 2015. EU Floats Overhaul of Investment Arbitration Process. Law360, May 5. Accessed January 30, 2016.

[17] (Schill, The Mauritius Convention on Transparency: A Model for Investment Law Reform? 2015)

[18] (Levine 2011) at 219