LAWS 8993 – International Business Transactions
Online Module 1
Introduction
Why did the US Court dismiss Mrs. Sanchez’s claim?
The US Court based its decision to dismiss the suit
brought by Mrs. Sanchez against the Banco Central of
Nicaragua on the argument that a national of a foreign
country, who in this case is Mrs. Sanchez, may not sue
an agency of that foreign state (Banco Central of
Nicaragua) in another state’s courts for breaching a
contractual obligation. Such an issue between a national
and a government agency of his/her own country is
considered as a domestic issue. If the United States and
its courts would choose to make a decision regarding
such a case, it would be equivalent to encroaching on
the sovereignty of another state over its own domestic
affairs.
Furthermore, the United States as a state and its courts
could not apply international law to decide on the case
of Mrs. Sanchez. In general, international law applies to
relations between states, and not individuals.
International law, may be used to deal with certain
cases involving individuals if for instance one state
injures a national of another state, but this is not true in
the situation of Mrs. Sanchez.
If international human rights law is to be considered, it
cannot also be applied to the case of Mrs. Sanchez as
only a limited number of fundamental human rights
(e.g. right not to be murdered, tortured, illegally
detained, etc.) have been incorporated into the law of
nations. Thus only breaches to these rights committed
by a foreign state to its national who is an alien in
another state may persuade the court of the latter to
decide on a case against the foreign state. A state taking
the property of its national do not qualify as a violation
under any of the abovementioned fundamental human
rights, thus the US Court cannot also use the
international human rights law justification to establish
jurisdiction in this case as well.
These were the points considered by the US Court in
deciding against the claim of Mrs. Sanchez.
Sample Answer:
The issue in this case relates to the rights of individuals
under international law. Individuals are treated in the
international law context in one of two ways: they are
ignored (traditional view) or are treated as its subjects.
The traditional view, according to which, international
law deals with relations between sovereign states, not
between states and individuals is the main reason why
the Court decided to dismiss Mrs. Sanchez’s claim. As
traditionally nations are the subjects of international
law, the only way for injuries to individuals to be
cognizable is where they implicate two or more
different nations: one state injures the national of
another state which then gives rise to a violation of
international law since the individual’s injury is viewed
as an injury to his state. In the case of Mrs. Sanchez’s
however there is no inter-state dispute or injury, here
the government of Nicaragua injures its own national,
there is no other state’s interest involved and the issue
is a domestic affair.
In what circumstances would the court have accepted
the claim?
The US Court would have accepted the claim if any of
the following circumstances were true:
(1) The person who filed the claim and was ‘injured’ by
Nicaragua, its Banco Central, or any other state (and its
agencies) is a national of the United States of America;
(2) The ‘injury’ inflicted by Nicaragua, its Banco Central,
or any other state (and its agencies) was a breach of
fundamental human rights as stated in international
human rights law;
(3) The claim/case calls into question the territorial
sovereignty of the United States of America.
Sample answer:
In recent years, the traditional dichotomy between
injuries to states and injuries to individuals as well as
between injuries to homegrown and to alien individuals
has begun to erode thanks to the international human
rights movement. This movement is based on the belief
that international law sets a minimum standard of
treatment of human beings in general.
This minimum standard, although generally accepted
and incorporated into the law of nations has its limits:
only basic human rights such as the right not to be
murdered, tortured, or otherwise subjected to cruel,
inhuman, or degrading punishment, the right not to be
a slave or arbitrarily detained are protected. Therefore,
the only circumstances in which the U.S. court would
have accepted the claim would have been if Nicaragua
had violated one of those basic and essential human
rights in its treatment of Mrs. Sanchez.