The relationship between "permanent sovereignty" and the obligation not to cause transboundary environmental damage.

• Author: Perrez, Franz Xaver

1. Introduction 1188 II. Permanent Sovereignty over Natural Resources 1190 A. Conception and Development of the Principle 1190 B. The Principle of Permanent Sovereignty over Natural Resources 1191 C. Resolution 1803 (XVII) as Restatement of Customary International Law 1194 III. Obligation Not to Cause Transboundary Environmental Damages 1197 A. Conception and Development of the Principle 1197 B. Principle 21 of the Stockholm Declaration 1200 C. Principle 2 of the Rio Declaration 1203 IV. Relationship Between the Two Principles 1204 A. Permanent Sovereignty over Natural Resources Is an Economic Concept 1204 B. Permanent Sovereignty over Natural Resources Is Inherently Limited 1207 C. U.N. Resolutions and the Limitation of Permanent Sovereignty over Natural Resources by Other Rules of International Law 1210 V. Conclusions 1212

1. Introduction

   The sovereignty of states is considered to be one of the basic and fundamental principles of public international law.(1) Not only is a state supposed to be sovereign within its border, furthermore, international law is based on the sovereignty of states. Sovereign states have accepted the necessity of international law and submitted themselves to the authority of international institutions.(2) It therefore can be said that it is sovereignty that creates international law.(3) Thus, a rule of international law generally becomes binding upon a state only if the state freely accepts that rule and submits its sovereignty under the rule.(4) States principally determine for themselves what they must or may do.(5) Moreover, while sovereignty is accepted as a basic notion, its precise meaning is debated, and there is a "trend toward using sovereignty with varying definition."(6)

   The principle of state sovereignty is not absolute.(7) The international doctrine of state sovereignty bears an obvious resemblance to the domestic-liberal doctrine of individual liberty(8) -- where a limitation is generally accepted. As an individual's sphere of liberty must, by definition, be delimited by the spheres of liberty of the other members of society, so must a state's sphere of liberty be capable of determination from a perspective that is external to it.(9) As such, sovereignty inherently includes a duty of nonintervention into the sovereign realm of other states.(10) Recognizing that duty, it follows that limits are inherent in the notion of state sovereignty.

   This Article will focus on these notions of sovereignty and limitations on sovereignty. Specifically, while each state has permanent sovereignty over its natural resources, each state also has an obligation not to cause transboundary environmental damage. These principles seem to represent "two fundamental objectives pulling in opposing directions."(11) However, both are set out in Principle 21 of the United Nations Stockholm Declaration.(12)

   This Article will examine whether there is indeed a conflict between these two principles or whether they can be reconciled. Part II analyzes the principle of permanent sovereignty over natural resources and the context in which the principle was formulated. Part III focuses on the obligation not to cause transboundary environmental damage. Part IV concludes that these two principles are not only not contradictory; they are inherent in each other. Like the notions of sovereignty and a state's right of self-determination, the principle of permanent sovereignty over natural resources is limited by the obligation to respect the sovereignty of other states over their natural resources.

2. Permanent Sovereignty over Natural Resources

   1. Conception and Development of the Principle

      The principle of permanent sovereignty over natural resources is "a fundamental principle of contemporary international law."(13) It emerged in the 1950s(14) during the process of decolonization(15) as "a basic constituent of the right to self-determination(16) and an essential and inherent element of state sovereignty."(17) The concept originated in negotiations over natural resource development agreements(18) because developing nations wished to avoid the inequitable and onerous arrangements imposed upon their unwary and vulnerable governments during the colonial period.(19) The typical context where permanent sovereignty is invoked concerns the relationship between host states rich with natural resources and transnational or multinational corporations which are engaged in or wish to begin the exploitation of such resources(20) -- especially with regard to the nationalization of such foreign enterprises and the question of compensation.(21) The discussions on the principle of permanent sovereignty over natural resources are thus characterized by a conflict of interest between capital exporting and capital importing nations.(22)

   2. The Principle of Permanent Sovereignty over Natural Resources

      The most significant statement regarding permanent sovereignty over natural resources(23) is recorded in United Nations (U.N.) General Assembly Resolution 1803 (XVIII).(24) That resolution declares that the "right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development and of the well-being of the people of the State concerned."(125) Moreover, "[t]he exploration, development and disposition of such resources, as well as the import of the foreign capital required for these purposes, should be in conformity with the rules and conditions which the peoples and nations freely consider to be necessary or desirable."(26) Thus, permanent sovereignty reflects the "inherent and overriding right" of a state to control the exploitation and the use of its natural resources.(27) However, a state has to exercise this right for the benefit of its citizens.(28)

      The principle of permanent sovereignty over natural resources was a central issue in the debate over the legality of nationalizing foreign enterprises.(29) The foreign industrial enterprises insisted that their right to exploit another nation's natural resources, already acquired during the colonial period, continued after the new independence of the formerly colonized nations.(30) In opposition, the developing nations argued that permanent sovereignty over natural resources is necessary to protect their economic sovereignty.(31) Further, developing nations claimed that permanent sovereignty includes the right to expropriate foreign enterprises.(32)

      Today it is generally accepted that permanent sovereignty over natural resources is a prerequisite for economic development(33) and, therefore, is a fundamental principle of contemporary international law.(34) Nevertheless, it is subject to criticism for trying to use legal rules to resolve eminently political and economic disputes.(35) The law in this way only repeats the political problem and declines to solve it.(36) The fact that development of natural resources finally is a political and not a legal problem(37) is probably a major reason why until now agreements on the precise content and parameters of this fundamental principle have not been reached.(38)

      Recently, the International Court of Justice (ICJ) ruled upon a claim raising the question of permanent sovereignty over natural resources.(39) Australia had negotiated a treaty with Indonesia that created a "zone of cooperation" in the Timor Gap, a portion of the continental shelf near East Timor.(40) East Timor was an incorporated Indonesian territory, but also was a non-self-governing territory under the "administering power" of Portugal, its long-time colonial parent.(41) Portugal asserted that Australia had no right to enter into treaties that contravened East Timor's right to its resources.(42) Specifically, Portugal alleged that Australia had violated its obligation to respect East Timor's rights to self-determination and permanent sovereignty over its natural resources.(43)

      However, the majority accepted Australia's argument that resolution of Portugal's claims demanded that the court address the issues of the lawfulness of Indonesia's presence in East Timor, the validity of the Australia-Indonesia treaty, and Indonesia's rights under that treaty.(44) Thus, because Indonesia was a vital party to the case and had never consented to ICJ jurisdiction, the court lacked jurisdiction to hear the case.(45)

      Two dissenting opinions, however, addressed the principle of permanent sovereignty over natural resources.(46) Because the majority issued its opinion without reaching the substance of that principle, the arguments of the two dissenting opinions have to be given considerable weight. Most notably, the two opinions embraced the principle of permanent sovereignty over natural resources as an important right of contemporary international law(47) with erga omnes character.(48)

      However, while the validity of the principle is not disputed,(49) the precise legal status of the principle is unclear.(50) While some authors note that the principle is inalienable,(51) or that it has jus cogens status,(52) other authors reject this view.(53) Moreover, the fact that a rule has jus cogens status would only imply that all states have to respect that rule, but would not determine the rule's content.(54) Therefore, the precise legal status of the principle is not as relevant once it is accepted that the content of permanent sovereignty is limited, as demonstrated below.(55)

   3. Resolution 1803 (X-VII) as Restatement of Customary

      International Law

      A number of U.N. General Assembly resolutions concern and develop the principle of permanent sovereignty over natural resources.(56) One basic difference divides these resolutions: when dealing with the problem of nationalization, some resolutions refer to other rules of international law while other resolutions do not.(57) This subpart win focus on two resolutions: Resolution 1803 (XVII) of 14 December 1962,(58) which includes a reference to international law, and...