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Customary International Law

Case: The Texaco/Libya Arbitration (1977)

Issue: Can the legal value of UN resolutions be determined under the

circumstances under which they were adopted and the analysis of the principles
they state?

If there are disputes, they shall be settled by arbitrators. Rules that are to be
applied come from international settings. This is an ex parte proceeding because
Libya would not participate. The arbitrator normally would take the complaint
allegations as true. However, in international cases (as here) the court went
through a full fact finding procedure to determine the outcome.
1. “Mixed” International Arbitration: Here the Deeds of Concession between
the U.S. oil companies and the Libyan government provided that an aggrieved parry
could request the President of the International Court of Justice to appoint a
sole arbitrator if the other party refused to make an appointment to a 3-judge
2. Individuals and International Law: The Arbitrator rejected the positivist
doctrine of the 19th and early 20th centuries that held that international law
could only bind states. Now individuals and private corporations can be subject to
international law.
3. The Role of UN General Assembly Resolutions in Making Customary
International Law:
a. The Libyan argument rested on the foundations of the 1973 and 1974 UN
General assembly resolutions proclaiming a New International Economic Order
(NIEO). The legal question for the Arbitrator was whether these NIEO resolutions
had any legal force especially in the light of UN General Assembly Resolution 1803
(XVII) if 1962. In 1962 the UN was trying to get a consensus, and the resolution
was adopted with only a few negative votes.
b. 1974 resolution did not reflect the kind of consensus of the 1962 UN
resolution. The consequence is that the 1962 resolution still was the rule of law.

1. Evaluating General Assembly Resolutions: In looking to the votes of

states on General Assembly resolutions, should the votes of some states be given
proportionality greater weight.
2. The Efficacy of the Arbitral Award: Libya agreed to pay Texaco $76MM, The
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
provides for the recognition and enforcement of many foreign arbitral awards., and
is used in commercial cases.


• Blur btwn public int'l law vs. private int'l law

○ Here, 2 corporations involved
• Facts:
○ 2 oil companies (private) doing business in Libya
§ Relationship btwn the parties: Deeds of Concession
□ A K btwn companies and Libya, give the companies rights
□ These rights should not be done away with unless there is
mutual consent
○ Then gov't of Libya passes a Nationalization Law
§ Taking private companies, and making them Libyan governed (under
state law)
§ Essentially, the deeds of concession being breached - one of the
rights under it, the Libyan gov't has done away with
○ In the deeds of concession, there is the arbitration clause
○ Libya argues - there's new int'l law that justifies Libya's actions
§ Int'l law - Series of General assembly resolutions (that arose after
the deeds of concession)
□ What weight is given to these resolutions? (They are not
® Even though not binding, the resolutions are a sign of
CIL. But court needs to see other factors. Was the resolution merely codifying
® Distinction btwn 1st resolution, and the 2nd and 3rd
◊ 1st - explicitly mentions that nationalization in
governed by CIL
◊ 2nd and 3rd - nationalization governed by domestic
► These actually give Libya exclusive rights,
while the 1st would be under CIL [Pg 122 (Substantial…)]
§ Arbitrator doesn’t find the last 2 resolutions as binding CIL
□ Not all countries signed on. All developed countries didn’t
sign on, very opposed. No consensus to find CIL.
□ So the law Libya was using as justification - the arbitrator
says there is no such law
□ 1st resolution - enough consensus that arbitrator will use
this, but it will be in opposition to Libya's case
□ So deeds then are binding.
• As policy-matter, is arbitrator going about this the right way?
○ Should we give weight to GA resolutions when they are not meant to be
§ Soft-law: non-binding law - If we have a lot of soft-law, it might
ripen to hard law
○ What if there was consensus for 2nd and 3rd resolution? Would that be
enough evidence of CIL?
§ Maybe if US was persistent objector, cant use it as CIL
§ But if US signed on
□ Look at state practice - the resolutions are aspirational, but
maybe not has manifested in practice yet. So, if not yet practicing yet, then
there is no grounds to establish CIL (the objective requirement where a custom
becomes CIL)
□ 2 aspirational GA resolution is not enough - other courts
looked at many other evidence to the practice
□ Argue in the alternative - general principle that may trump
this, even if this IS CIL
□ b/c contract was made be4 the new int'l law, there may be a
provision in the K to accommodate for a new int'l law, so we would look there
first, if any exists
® Contrasting to Hungary/Slovakia case
◊ New int'l law, so circumstances had changed, but
there were provisions in agreement to accommodate these changes
◊ Libyan - clause said it would be combined with
int'l law