INTERNATIONAL LAW AND

INTERNATIONAL
ECONOMIC RELATIONS
2021
International Law and International
Economic Relations
 Pertinent questions

 What is the relevance of international law in the

context of international trade regulation?

 What are the sources of international law?

 Which sources of international law are most pertinent

to international trade regulation?
International Law and International
Economic Relations

Pertinent questions
Which basic principles of international law are most

important in the context of international trade law/

regulation?

What are the various standards of (state) treatment of

foreign nationals, property, goods and services in
international law?

How would you describe the nature, content, and

purpose(s) of the Bretton Woods System?
International Law and International
Economic Relations

Pertinent questions

 What is the nexus/link between the objectives

of the WTO and those of the IMF?

 Can you identify the various international

organizations that are involved in the
processes of international trade regulation/
facilitation/liberalisation?
 Role of International Law in
International Trade Regulation
 International Law operates as the ‘Constitution’
for international economic relations and their
regulation.
IMPLICATIONS:
(1) International Law is the FOUNDATIONAL SOURCE of
the duties/obligations/rights/entitlements of nations and
individuals relevant to international trade/commerce.
(2) International law DETERMINES the legal
CONSEQUENCES (justiciability) in respect of the
effects of trade-related actions, decisions, measures, etc.
 Sources of International
Law
Four sources

(a) International Treaties/Conventions

(b) Rules of customary international law

(c) General principles of law

(d) Judicial decisions and teachings of jurists

See: Statute of the International Court of Justice (ICJ),

Article 38
 Treaties
 What are treaties?

 They are written agreement(s) between states

 They are governed by the principle of Pacta sunt

servanda – the good faith principle
 Non-members are NOT BOUND by the treaty (Art.
34 of Vienna Convention on the Law of Treaties -
VCLT)

QUERY: Why? What are some of the practical

implications?
 Treaties
 Treaties represent/constitute the most
important source of international law
(including WTO Law).

 Why?
 They contain legal rules to which the

signatory-states (contracting parties)

have expressly GIVEN their CONSENT.
 Types of Treaties
 They (treaties) can be bilateral:

 Common examples of bilateral treaties and their

purposes:

(1) Bilateral trade agreements

(2) Bilateral investment treaties (BITs)

(3) Double-taxation agreements

(4) Bilateral friendship treaties (FCN treaties)

 Types of Treaties

They can be multilateral:

 Multilateral treaties can be designed to serve

different purposes as follows:

(1) Seek to LIBERALISE TRADE between

the contracting states / parties; eg
GATT/WTO Charter; IMF Articles of
Agreement
 Treaties
(2) Harmonise the domestic law(s) of the
contracting states (or aspects thereof);

(3) Entrust certain powers in respect of

international trade and finance to an
international organization.

 For examples: The WTO Charter and the IMF

Articles of Agreement are classic examples.
 Customary international
law/custom
 Definition: Rules that are not formally
codified but are binding on all states.

 Customary international law usually consists

of or manifests as settled state practice (Usus).
Requirements
a) Constant and uniform usage (North Sea
Continental Shelf case)
b) Time factor
 Custom

c) General and widespread acceptance (Nduli v.

Minister of Justice 1978 (1) SA 893 A at 906D)

(d) Opinio Juris – the psychological requirement

– state of mind of states.

 State compliance in the belief that they are

bound by the rule.
 Custom
Opinio Juris
 Factors to consider:

a) Behaviour of the states particularly affected;

b) UN Declarations and resolutions; and

c) Soft law instruments.

Relevant general principles
of law
Principle of Sovereignty

a) Exclusive jurisdiction over territory & population

b) Non-intervention

c) Principle of sovereign immunity;

d) Performance of international obligations.

Relevant general principles (of
Customary International Law)

 Nationalization – right to nationalise

property belonging to foreigners

 Query: Is there an obligation to pay

‘reasonable/appropriate compensation’?

 If yes, what constitutes ‘reasonable/

appropriate compensation?
Standards of treatment (of foreigners/foreign
commercial interests) under Int. Trade Law

(1) MINIMUM standard of treatment OR

standard of EQUITABLE treatment

It REQUIRES equal treatment – ie treatment of

foreign nationals (and their business interests)
in the SAME WAY that a state treats its own
citizens/nationals.

The implication is that discrimination against foreign

nationals/interests is FORBIDDEN under this standard.
 Standards of treatment (of foreigners/foreign
commercial interests) under Int. Trade Law

Minimum standard of treatment – cont’d

 Applicability: It is BINDING on STATES whether or

not there is a treaty providing for it.

 QUERY: What happens where a state treats its own

citizens in a manner that falls short of ‘international
standards’?

 This is where the INTERNATIONAL minimum

standard of treatment applies.
Standards of treatment (of foreigners/foreign
commercial interests) under Int. Trade Law

(2) Most favoured nation (MFN) standard

 This standard requires EQUAL

TREATMENT for goods and services
originating from foreign sources; ie NON-
DISCRIMINATION as between
foreigners/their goods/services.

 Applicability: Only applies when a treaty

provides for it.
Standards of treatment (of foreigners/foreign
commercial interests) under Int. Trade Law

(3) National Treatment (NT) Standard

 Requires EQUAL treatment as between

CITIZENS and FOREIGNERS (nationals/non-
nationals).

 However, the treatment accorded should never

fall below international minimum standards.

 Applicability: Only applies when a treaty

provides for it.
Standards of treatment (of foreigners/foreign
commercial interests) under Int. Trade Law

(4) Standard of preferential treatment

(a) This standard ALLOWS the granting of
preference(s) (or preferential treatment) -
usually motivated by political and/or
economic considerations.

(b) Common examples are: Customs Unions (CUs), Free

Trade Areas (FTAs), etc

 APPLICABILITY: Only applies when a treaty

provides for it.
 Bretton Woods System and other
International Economic Institutions

1) Bretton Woods institutions

 IMF
 IBRD (World Bank) and
 GATT/WTO

2) Other international economic institutions

 UNCTAD;
 UNCTC;
 UNIDO
 Bretton Woods System and other
International Economic Institutions

3) Regional economic institutions

 EU, NAFTA, MERCOSUR

 SACU, SADC, COMESA, EAC, ECOWAS,

ASEAN