Digest

Digest

Improved International Tax Cooperation on the Horizon

As the current global financial crisis continues, the European financial hubs of Luxembourg, Switzerland, and Austria along with smaller European nations, and the Asian powerhouses of Hong Kong and Singapore have moved this month to improve international cooperation on tax matters by adopting the exchange of information standards developed by the Organization for Economic Cooperation and Development (OECD). The OECD’s general mission is to provide a strong and stable policy basis for the global economy, working both among its 30 member states as well as among non-member states worldwide.

Commenting on the development, OECD Secretary-General Angel Gurría said, “These announcements mark a fundamental change and an important moment in the history of international tax cooperation.” The Secretary-General also said that, “[a]t a time when governments around the world need to maximize tax revenues in order to address the global economic crisis, this is an extremely important breakthrough.”

However, implementing the new policies – which were approved by finance ministers of the G-20 in 2004 – may take some time. Legislation and renegotiation of existing treaties and agreements may be necessary, especially as regards bank secrecy requirements.

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Digest

Sudanese President Defies ICC Arrest Order

Sudanese President Omar al-Bashir rallied Arab supporters in Darfur by stating no war crimes court or the U.N. Security Council can touch “even an eyelash” on him in response the the International Criminal Court’s (ICC) arrest order for him. President al-Bashir denounced the west for trying to “create chaos in Sudan” and attempting to split Darfur from the rest of the country.

The ICC accuses President al-Bashir of orchestrating the atrocities against civilians in Darfur. 2.7 million have been driven from their homes while as many as 300,000 people have been killed. In response to the arrest warrant, the Sudanese government expelled 13 large foreign aid agencies,  mostly those operating in Darfur.  According to U.N. estimates, the expulsion of these groups threatens more than 3 million people with the loss of food, health care, and suitable drinking water.  U.S. Secretary of State Hillary Clinton called on the Sudanese president to reverse the expulsion order because of the humanitarian crisis.

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Digest

Naval Incident Between China and U.S.

The U.S. and China are currently engaged in a skirmish over a confrontation which occurred in the South China Sea and involved five small Chinese vessels and an unarmed American surveillance vessel, the USNS Impeccable.  The US claims that the Chinese vessels harassed its ship in violation of the law of the seas, while China claims that the US intruded on an economic exclusion zone in violation of the UN Convention on the Law of the Sea.

Admiral Timothy Keating, the head of the Pacific Command, declined to comment on the Chinese Foreign Ministry’s response, but noted the American reaction would come through the State Department.   The Chinese embassy in Washington issued a statement after the incident clarifying its position.

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Digest

Pakistani Government Reinstates Chief Justice Chaudhry

The Pakistani government announced early Monday morning amidst protests that it will reinstate former chief justice of the Supreme Court Iftikhar Chaudhry and a group of other deposed judges.  The government also announced that it will lift an emergency ban on all public gatherings and release all political and legal activists arrested in the last week. Chaudhry, who was awarded the Harvard Law School Medal of Freedom in November 2008, was fired in 2007 by former Pakistani leader Pervez Musharraf.
 
President Asif Ali Zardari, a U.S. ally and widow of slain former prime minister Benazir Bhutto, had resisted reinstating Chaudhry. This move will be seen by many as a reflection of the president’s weakening position and a victory for Pakistan’s legal community, which had been working for the judge’s reinstatement for 2 years. The escalation of the recent protests had put extra pressure on Zardari and are due in part to former prime minister Nawaz Sharif, Zardari’s major political rival, who joined the lawyers’ cause last month.  The U.S. Embassy in Islamabad called the decision a “substantial step towards national reconciliation.“
 
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Digest

France to Rejoin NATO Command

President Nicolas Sarkozy has announced that France will rejoin the North Atlantic Treaty Organization (NATO) 43 years after then-President Charles de Gaulle withdrew from the 26-nation military alliance. Pledging to maintain the independence of France’s nuclear equipped military, Sarkozy believes that rejoining NATO will give France to have more influence in NATO’s decision-making. In a speech to France’s Strategic Research Foundation, Sarkozy said that “[o]ur strategy cannot remain stuck in the past when the conditions of our security have changed radically.”

While France has technically been outside of NATO’s command structure since 1966, it never left the overarching North Atlantic Alliance and has been involved in several NATO missions in the Balkans and in Afghanistan. Sarkozy noted that the practical effect of this has been continued French military involvement without participation in command decisions. This move will allow greater French involvement in NATO’s post-Cold War strategic decisions without sacrificing their much-cherished independence, and may also pave the way for a European defense force.

The move to rejoin NATO is one of many steps President Sarkozy has taken during his administration to mend and strengthen France’s relationship with the United States. Sarkozy plans to formally announce France’s return to NATO on the North Atlantic Alliance’s 60th aniversary celebrations on April 3-4.

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Digest

LCIA Awards Remedies in SLA Dispute

On February 23, the London Court of International Arbitration (LCIA) issued an Award on Remedies in a dispute filed by the US against Canada under the 2006 Softwood Lumber Agreement (SLA). In this first dispute under the SLA, the US has argued that between January and July 2007 Canada did not apply the export restrictions it had agreed to, leading to overshipment of lumber to the US. The Award on Liability upheld some of the US’s claims, leading to this second stage of arbitration on remedies.

The central dispute at the remedies stage concerned whether Canada had to retrospectively compensate for the overshipping that occurred in the period prior to the initiation of arbitration, or whether prospective rectification of its calculations after July 2007 would sufficiently remedy the violation. According to Article XIV:22 of the SLA, if the LCIA finds that a party has breached the Agreement, it shall identify a reasonable time period for curing the breach, up to 30 days from the Award. If the breaching party “fails to cure the breach within a reasonable period of time,” the SLA states that the LCIA shall determine “appropriate adjustments” to the export restrictions to compensate for the breach.  According to Article XIV:24, these adjustments apply from the end of the reasonable time period until the breach has been cured.

The LCIA, approaching the SLA as a stand-alone agreement in international law rather than as an agreement made under the WTO Dispute Settlement Understanding (DSU), held that retrospective remedies were appropriate in this case. Although it referred to the WTO DSU for comparative purposes, it cited the ILC Draft Articles and the Chorzow Factory to establish a presumption in international law in favor of retrospective remedies and found nothing contrary to this in the SLA.

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