Volume 43 | Number 1 Fall 2007
From the “Constitution of the Maritime Safety Committee” to the “Constitution of the Council”: Will the IMCO Experience Repeat Itself at the IMO Nearly Fifty Years On? The Juridical Politics of an International Organization
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III. Issues Before, and the Advisory Opinion of, the ICJ
A. Preliminary Issues
1. Meaning of “Elected”
The first preliminary issue before the Court was the meaning of the word “elected” in Article 28(a).49 The submissions opposing the election of Liberian and Panamanian representatives sought to construe the term to include a notion of choice. This notion implied that the Assembly was vested with the discretion to freely appraise each member under consideration to be elected.50 This interpretation, the submissions urged, applied to both the election of the “eight largest ship-owning nations” and to the six remaining members.51 The submissions assumed a meaning of the word “elected” and then sought to apply that meaning to Article 28(a) and interpret its provisions accordingly.52 In so doing, the contestants sought to place “the eight largest ship-owning nations” in a textually subordinate position to the word “elected” as used in the provision.53
The Court rejected this restricted meaning and its implied subordination. According to the Court, the meaning of the word “elected” in Article 28(a) could not be determined by reverting to its usual or common meaning and attaching that meaning to the word as it is used in the article.54 In the Court’s opinion, the word obtains its meaning from the context in which it is used.55 For instance, if the context requires a meaning connoting a wide choice, it must be construed accordingly, just as it must be given a restrictive meaning if the context requires.56 Then the Court—drawing from Articles 16(d) and 17(c)–(d) of the 1948 Convention, where the words “elect” and “elected” were also used—concluded that the margin of choice existing in the Assembly in relation to the election of any member of the Council was no greater than what was permitted by the terms of those Articles when read with Article 18 as well as in relation to the word “elected” in Article 28.57
2. Election to the Committee: “Mandatory” or “Discretionary”?
The second preliminary issue, an extension of the meaning of “elected,” was whether election of Liberia and Panama to the Committee was “mandatory” or “discretionary” for the Assembly. In this context, the U.S. representative submitted that the election of Liberia and Panama was mandatory, or automatic, rather than discretionary.58
Nonetheless, the TMNs contended that the Assembly was entitled to not elect Liberia and Panama.59 The gist of this argument was that, under Article 28(a), the Assembly was vested with discretionary power to determine which members of the Organization had “an important interest in maritime safety.”60 Consequently, in discharging its duty to elect the eight largest ship-owning nations, it was empowered to exclude as unqualified for election those nations that, in its judgment, did not have such an interest. Furthermore, the TMNs argued that this discretionary power extended to the determination of which nations comprised “the largest ship-owning nations.”61
In rejecting that reasoning, the Court concluded that the arguments supporting discretionary power would permit the Assembly to decide through its vote which nations possessed “an important interest in maritime safety,” and to deny membership on the Committee to any State regardless of the size of its tonnage or any other qualification.62 In the Court’s opinion, the effect of such an interpretation would render superfluous the majority of the language of Article 28(a) and would cause the Assembly’s discretion to become the supreme rule for the constitution of the Maritime Safety Committee.63 The Court reasoned that this would be incompatible with the principle underlying the Article—that the largest ship-owning nations had to be predominant on the Committee.64 The words “of which not less than eight shall be the largest ship-owning nations” were written into the Article, the Court explained, to express this principle.65 Thus, the Court thought that any interpretation of the Article which was inconsistent with this principle was inadmissible. The Court was adamant that these words could not be construed to read “of which not less than eight shall represent (or be representative of) the largest ship-owning nations.”66 Thus, the Court found that the largest ship-owning nations must be appointed to the Committee; that their important interest in maritime safety was axiomatic, and that this interest was inherent in their status as the eight largest ship-owning nations.67
3. What Constituted an “Important Interest in Maritime Safety”
The third preliminary issue was whether Liberia and Panama had “important interest[s] in maritime safety.” Statements submitted by TMNs contended that Liberia and Panama had neither the means nor the ability to conduct maritime safety and therefore could not have an important interest in maritime transport.68 Once more the Court disagreed with those contentions. According to the Court, the words of Article 28(a) had to be read according to their natural and ordinary meaning.69 An alternative method of Constitution should be utilized only when ambiguity arose.70 In the Court’s opinion, it was clear that the draftsman of Article 28(a) deliberately contemplated that the preponderant control of the Committee was in all circumstances to be vested in “the largest ship-owning nations.”71
This control was to be secured by the provision that no fewer than eight of the fourteen seats had to be filled by the largest ship-owning nations. The Court thought that the language employed, “of which not less than eight shall be the largest shipowning nations,” in its natural and ordinary meaning conveyed this intent.72 It was also held that the words “having an important interest in maritime safety” clearly expressed a qualification for membership on the Committee which was required of each group referred to in Article 28(a).73 In the context of the entire provision, therefore, possession of this interest was inherent in the status as being one of the eight largest ship-owning nations.74
This interpretation was consistent with the structure of Article 28(a). Having provided that “no less than eight shall be the largest ship-owning nations,” the Article went on to state that the remainder had to be elected to ensure adequate representation of “other nations” with an important interest in maritime safety; that is, nations other than the eight largest ship-owning nations, “such as [those] nations interested in the supply of a large number of crews.”75 The use of the phrases “other nations” and “such as” following the mandatory inclusion of the eight nations reinforced this reading and validated the Court’s interpretation.
The submission of the Liberian government on this matter echoed the Court by arguing that “[a]n Important Interest in Maritime Safety” was of a limited relevance in of itself,76 unless special conditions are allowed to override the general ones.77 The Liberian government agreed with the Court that the largest ship-owning nations had an important interest in maritime safety as a matter of construction.78
4. Meaning of “Ship-Owning Nations”
The fourth preliminary issue was the meaning of “largest ship-owning nations.” On this issue, the Court had been presented several written and oral submissions. One such written submission considered by the Court was that of the Dutch representative:
The term “ship-owning nations” . . . is not suitable for a legal analysis; it cannot be decomposed into elements which have any specific legal connotation . . . even the fact that the merchant fleet, flying the flag of a particular State, is owned by nationals of that State cannot in itself qualify that State as a “ship-owning nation.” Registration and the right to fly the flag and national ownership of merchant vessels “may, together with other factors be relevant for the determination by the Assembly whether or not a State can be considered as a ‘ship-owning nation,’ but ‘they do not either separately or jointly impress upon a State the quality required.’”79
This view was supported in a written statement from the U.K. Representative:
The expression “the largest ship-owning nations” has no apparent clear-cut or technical meaning . . . . It is submitted that the intention of those words was to enable the Assembly in the process of election to look at the realities of the situation and to determine according to its own judgment, whether or not candidates for election to the Maritime Safety Committee could properly be regarded as the “largest ship-owning nations” in a real and substantial sense . . . . These words, while intended to guide the Assembly, were at the same time deliberately framed so as to enable the
Assembly to deal with the matter on the basis of the true situation and the real interest in maritime safety of the State concerned.80
However, the Court rejected that contention, concluding that those submissions fallaciously asserted authority in the Assembly to appraise which nations were ship owning nations and which were the largest among them, with the words “largest ship-owning nations” providing but a guide. According to the Court, such an interpretation would allow the Assembly “to look at the realities” on the basis of “the true situation,” whatever its individual members considered these to be.81 The Court stated that following such a line of argument would be dangerous because the Assembly would be bound by no ascertainable criteria, and its members, in casting their votes, would be entitled to consider anything they might think relevant.82 Furthermore, according to the Court, if Article 28(a) were intended to confer upon the Assembly such an authority, enabling it to choose the eight “largest ship-owning nations,” uncontrolled by any objective test of tonnage, or registration, or ownership by nationals, or any other metric, the mandatory words “not less than eight shall be the largest ship-owning nations” would be left without significance.83 The Court suggested that giving Article 28(a) such a construction would undermine its purpose—to ensure the predominance on the Committee of the “largest ship-owning nations” in the ratio of at least eight to six.84 The Court refused to accept an interpretation which would have such a result. However, the Court was not unanimous in its decision. The Court President85 and one other Justice86 disagreed with the majority verdict and wrote dissenting opinions.
In this author’s opinion, the Court correctly concluded that some basis of measurement was needed to determine which Members were the largest ship-owning nations. The majority verdict followed the rationale that when Article 28(a) spoke of the “largest ship-owning nations,” it could only have had in mind a comparative size vis-à-vis other nations’ ownership of tonnage.87 There was no other practical means by which the size of ship-owning may be measured. Therefore, this decision suggested that the largest ship-owning nations were to be elected based on the tonnage which was owned or belonged to them.88 The only remaining question was in what sense the tonnage should be owned by, or belong to, Member nations as contemplated under Article 28(a). The Court, however, was not prepared to delve into other issues of ownership and was unanimous that the words “ship-owning nations” in Article 28(a) should not be construed to mean that the ships had to be owned by the State itself.89 Thus, the Court decided the appropriate criterion was registered tonnage rather than beneficially-owned tonnage.
5. “Registered Tonnage” Criterion
i. National vs. Beneficially-Owned Tonnage
The fifth preliminary issue revolved around the criterion for determining the size of a State’s merchant fleet. As part of the Organization’s submission to the Court, their Secretary-General prepared and tabled a list showing the registered tonnage of each member of the Organization in accordance with the Lloyd’s Register of Shipping for the previous year, 1958.90 It was hardly surprising that the Liberian representative asserted that under Article 28(a), the “largest ship-owning nations” had to be determined by reference to the figures for gross registered tonnage as they appeared in the Lloyd’s Register of Shipping current at the date of the election.91 He added that Article 28(a) laid down the rules for electing members of the Committee and that these rules were to be strictly observed.92 According to Liberia, under Article 28(a), the Assembly was compelled to elect the eight largest ship-owning nations.93 In other words, Liberia did not think it was an election in the usual sense of the word but that the eight were foregone conclusions: once those eight nations had been determined, the Assembly was bound to elect them.94 Liberia contended that unless a country higher up the list had withdrawn its candidacy, no consideration should be given to those outside the eight “largest ship-owning nations.”95 Unsurprisingly, the Panamanian representative supported this assertion.96
There is merit to the Liberian and Panamanian arguments for a number of reasons. First, no member challenged the figures—which were identical to the figures shown in the then-current issue of Lloyd’s Register of Shipping—setting out by country the gross registered tonnage of each nation in the Secretary-General’s Working Paper.97 Second, no objection was made to the use of Lloyd’s Register as the accepted source of figures used to measure nations’ registered tonnage. Third, as will be apparent later, the use of these figures was in line with the apportionment of expenses, comparisons with other instruments, and the history of Article 28(a).
Ultimately, the Court was persuaded that no criterion other than registered tonnage should determine the “largest ship-owning nations” under Article 28(a).98 In the Court’s opinion, it was unlikely that the drafters contemplated a criterion based on the nationality of stockholders or of others holding a beneficial interest in every merchant ship.99 According to the Court, such a criterion would be difficult to catalogue, ascertain, and measure.100 This remains the criterion for determining world tonnage of each nation—whether it is an open or normal registry.
The Court’s reasoning was compelling for many reasons. First, this framework is analogous to other areas of international law. For example, in international corporate law, the company is considered to be a separate entity from its shareholders.101 Second, to attempt to take into account the names and nationalities of the owners or shareholders of shipping companies around the world would, in the words of the U.K. representative during the debates preceding the election, “introduce an unnecessarily complicated criterion.”102 The Court reasoned that to adopt such a method of evaluating the ship-owning rank of the world’s countries was neither practical nor certain.103 Above all, such an approach finds no basis “in international practice, [in] the language of international jurisprudence, in maritime terminology, in international conventions dealing with safety at sea or in the practice[s] followed by the Organization itself in carrying out the Convention.”104 On the other hand, the use of registered tonnage was, though unacceptable to other countries, practical, certain, and capable of easy application.105
It is also possible that the Court was persuaded by other factors such as the principles of public international law cited in the Liberian submission, including: (1) the international law doctrine of effectiveness;106 (2) comparisons with IMCO’s own Convention and internal practices;107 (3) comparisons with international maritime instruments;108 (4) comparisons with State and international practices; and (5) international judicial practice.109 Each of these possibilities is examined below.
ii. The International Law Doctrine of “Effectiveness”
The doctrine of effectiveness—though rarely used in treaty practice in public international law—provides that courts, in interpreting treaties, should prefer the construction most likely to further, or least likely to hinder, the treaty’s main objectives. This doctrine is an established principle of the ICJ’s jurisprudence regarding the interpretation of treaties generally.110 Edward Gordon argues that the Court applies the principle of effectiveness rather than the parties’ intentions in its interpretation of treaties.111
There have been many examples of the doctrine. First, in its Advisory Opinion on the Acquisition of Polish Nationality, the Court said, in relation to the interpretation which it proposed to adopt, that if the doctrine of effectiveness were not applied, “the value and sphere of application of the Treaty would be greatly diminished.”112 However, this should be contrasted with the Court’s earlier Advisory Opinion regarding the questions concerning German Colonists in Poland, in which the Court expressed the view that an interpretation that would deprive the Minorities Treaty of a great part of its value was inadmissible.113
Second, the Court had already applied the doctrine with particular effect in interpreting the scope of the powers and functions of international organizations. For example, in dealing with the powers of the Mixed Commission under the Greco-Turkish Agreement of December 1, 1926, the Court said:
All the duties indicated above are entrusted to the Mixed Commission as the sole authority for dealing with the exchange of populations, and special stress should be laid on the fact that these duties have been entrusted to it with the object among other things of facilitating this exchange. It follows that any interpretation or measure capable of impeding the work of the Commission in this domain must be regarded as contrary to the spirit of the clauses proving for the creation of this body.114
Third, the doctrine runs through the whole of the Court’s Advisory Opinion in Reparations for Injuries Suffered in the Service of the United Nations.115 On that issue, when referring to the capacity of the United Nations, the Court said, “[i]t must be acknowledged that its Members, by entrusting certain functions to it, with the attendant duties and responsibilities, have clothed it with the competence required to enable those functions to be effectively discharged.”116
Fourth, and finally, when referring to the Obligations of the Members of the United Nations, the Court said that, “[i]t must be noted that the effective working of the Organization—the accomplishment of its task, and the independence and effectiveness of the work of its agents—require that these undertakings should be strictly observed.”117
In light of the application of the doctrine above, Liberia argued that the Convention should be construed in the manner which was most likely to further the purposes of the Organization generally and, where the contents relate to the MSC, to further the purposes of that committee in particular.118 Consequently, Liberia took the position that the best interpretation of Article 28(a), with regard to the expression “the largest ship-owning nations,” would be to identify “the nations in which the largest quantity of tonnage was registered.”119 Liberia and Panama concluded their submissions on this point by insisting that the validity of this consideration would be best established by an examination of the objectives of the Organization, of the Committee, and of the legal consequences which flow from the link of registration.120 Although the Court did not refer to these submissions specifically during the proceedings, given its decision in favor of the submission, it seems to have been persuaded by the argument.
iii. Comparisons with IMCO’s Own Convention and Internal Practice
As indicated above, in arriving at its decision, the Court was persuaded by, inter alia, IMCO’s practice of carrying out both its enabling convention and other maritime conventions to which it is a party.121 First, Article 60 of the Convention provides for the Convention’s entry into force and follows the form of numerous multilateral treaties dealing with safety and working conditions at sea. The Article states that “[t]he present Convention shall enter into force on the date when 21 States, of which seven shall each have a total tonnage of not less than 1,000,000 gross tons of shipping, have become parties to the Convention in accordance with Article 57.”122 In the English texts of Article 60, the reference to seven States that “have” at least 1,000,000 gross tons of shipping appears significant when compared to the language of Article 28(a) referring to nations “owning ships.” The corresponding French and Spanish texts, however, all use “to own” and “to possess,” respectively. Noting the differences in word choice, the Court nevertheless concluded that all the three texts referred to registered tonnage123 and provided the criterion to determine the point of time at which the Convention automatically came into effect—when Liberian tonnage, then the third largest, was included.
The practice followed by IMCO’s Assembly in relation to other Articles of the Convention also revealed the reliance placed upon registered tonnage. Article 17(c) of the 1948 Convention, for example, provided that two members of the Council “shall be elected by the Assembly from among the governments of nations having a substantial interest in providing international shipping services.”124 In implementing this provision, the Assembly elected Japan and Italy.125 It should be noted that this occurred after Council members, who were required by Article 18 to make recommendations to the Assembly, had considered the claims of the countries with substantial interests in providing international shipping services and made recommendations to the Assembly.126 These representatives, however, did not feel that they should propose a long list of countries to the Assembly, as two countries clearly surpassed the others in the size of their tonnage.127 Instead, they simply recommended the election of Japan (ranked ninth with tonnage of about 5.5 million tons), and Italy (ranked tenth with tonnage of nearly 5 million tons).128
At the election, the Secretary-General of the Organization stood before the Assembly, under Article 28(a), with a listing of this tonnage in the form of a copy of the Lloyd’s Register of Shipping for 1958.129 On this occasion, therefore, the registered tonnage of the two countries was taken unquestionably as the appropriate criterion.130 Moreover, there was no suggestion that a different criterion be utilized, presumably because the highest tonnage belonged to members of the TMNs’ “club” that was intended to control shipping. There were only two members to be elected under Article 17(c), and there were only two recommendations to the Council.131 Yet the Assembly completely ignored the Liberian and Panamanian registered tonnages, and the corresponding apportionment of the expenses of the Organization among its Members. This data would have revealed that Liberia and Panama, both with larger tonnages than Japan and Italy, contributed significantly more to the budget. But above all, the Assembly, when proceeding to elect the eight largest ship-owning nations under Article 28(a), hardly took note of the Working Paper prepared by the Secretary-General.132 The Secretary-General’s paper embodied a list of all the ship-owning nations with their respective registered tonnages, which were formulated on the basis of Lloyd’s Register of Shipping.133 Consequently, and perhaps absurdly, two countries among the eight largest on the list were not elected by the Assembly while countries ranking ninth and tenth were elected.134
Surely, there must be one rule and set of criteria for all rather than different standards for the DMNs and the TMNs. Could the reason for this apparent contradiction be that the latter were members of “the club”? We may never know.
iv. Comparison with International Instruments and Practices
The Court noted that other maritime conventions predating IMCO also point to registration.135 In these conventions, largely reflecting international customary law, a ship has commonly been considered to belong to the State where it is registered.136
For example, Article 3 of the Load Line Convention of 1930 provided that:
(a) a ship is regarded as belonging to a country if it is registered by the Government of that country; and
(b) the expression “Administration” in that convention means the Government of the country to which the ship belongs.137
Moreover, in Article 2(1) of the Convention of the Safety of Life at Sea, 1929, a similar provision is found.138 Still other conventions and international instruments that have acknowledged the same principles include: (1) the Brussels Conventions of 1910 respecting Collisions, Assistance and Salvage at Sea;139 (2) Article II of The Conventions for the Safety of Life at Sea of 1914 (as amended on 10 June, 1948, providing that “[t]he ships to which the present Convention applies are ships registered in countries the Governments of which are Contracting Governments, and ships registered in territories to which the present Convention is extended under Article XIII”);140 and (3) Article II of the Convention for the Prevention of Pollution of the Sea by Oil of 1954 (providing that “[t]he present Convention shall apply to sea-going ships registered in any of the territories of a Contracting Government”).141
In addition to those conventions noted by the Court, particularly close connection between registration and the law applicable on board ships is reflected in numerous practices of the International Labor Organization (ILO). In 1936, for example, the ILO inserted into those labor conventions on maritime matters142 a reference to the registration as the basis for identifying a ship with a State.143
Reference should also be made to: (1) Articles 1 and 6 of the Convention of June 23, 1926 Concerning the Repatriation of Seamen;144 (2) Article I of the Convention for the Unification of Certain Rules relating to Maritime Mortgages and Liens, 1926;145 (3) Article 2 of the Statue on the International Regime of Maritime Ports, 1923;146 (4) Article IX(2), and Article X of the International Convention for the High Seas Fisheries of the North Pacific Ocean, 1952;147 (5) Article 1 of the Barcelona Statute on the Regime of Navigable Waters of International Concern, 1921;148 and (6) Article I(2) of the International Convention for the Regulation of Whaling, 1946.149
Numerous other bilateral and multilateral treaties, both pre-and post-IMCO/IMO, also give expression to the principle. Among such bilateral treaties are those between the U.S. and France,150 and between the U.K. and the Netherlands,151 both of which are ably discussed by Professor Rienow elsewhere.152
v. Comparisons Between the Law of the Sea Conventions and International Judicial Practices
Other modern examples in which the significance of a vessel’s registration is apparent include the United Nations Law of the Sea Convention of 1982 (UNCLOS 1982)153 and the United Nations Convention on the Conditions for Registration of Ships of 1986.154 Other sources of comparison include State Practice155 and International Judicial Practice.156
vi. Comparable Experiences of the ICAO Council
However, a more comparable experience that should interest the IMO is that of the sister United Nations Specialized Agency, the International Civil Aviation Organization (“ICAO”). Starting with what is expressly referred to as “The Solution to Analogous Problems” in ICAO Instruments,157 all ICAO constitutional law and practices support the view that registered tonnage and national vessel registrations are the essential criteria.158 ICAO is probably the most comparable sister organization to the IMO in terms of the size of its membership (190 compared to the IMO’s 170), its aims and objectives (fostering air and maritime transport and navigation respectively), and its organs (both consisting of plenary Assemblies and Councils). More importantly, however, it is specifically stipulated that the ICAO Council of twenty-one members159 be derived to ensure “adequate representation” to nations of chief importance in air transport, to nations not otherwise included that provide the largest share of facilities for international civil air navigation, and to nations whose inclusion on the Council will ensure broad geographical representation.160 Another stark difference between the IMO and ICAO or other Specialized Agencies of the U.N. is that the IMO’s plenary Assembly is not in the dominant position as those equivalent bodies of ICAO or within the U.N. system.161
6. Benefits of the Background and Brief History of the IMCO Provision
Finally, the Court considered the discussion of Article 28 that occurred during the proceedings at the United Maritime Consultative Council negotiations.162 These discussions are at the root of the problem that has plagued the Organization. The original drafting committee that met in London in 1946 proposed to restrict the number of members on the MSC to the nine largest plus three others (i.e., 9+3=12 formula). Thus, the intention of the draft was clearly to confine membership on the Committee to a clique of nations (the TMNs) having substantial amounts of shipping, thereby excluding DMNs such as Liberia and Panama.163 However, at the United Maritime Consultative Council Meeting of April 28, 1946, India (nonmember of “the club”) objected to this exclusion and proposed the 7+5 formula arguing that other countries “who did not actually own or have a large number of merchant vessels” also had important interests in maritime safety.164 Denmark objected to the Indian proposal and countered with the expanded 9+5 formula, which the Indian delegation accepted.165 The U.S. representative revealed that “the underlying principle which was generally accepted by all” and was the thinking behind the negotiations was that “the largest ship-owning nations should be in the predominance in the Maritime Safety Committee.”166
The final draft adopted an expanded fourteen-member Committee with an 8+6 combination rather than the Danish 9+5 formula.167 Thus, the determination to retain the predominance of the largest ship-owning nations found expression in Article 28(a), the terms of which should have excluded the possibility of an interpretation which would authorize the Assembly to refuse membership on the Committee to any of the eight largest ship-owning nations. This was the exact opposite outcome that the TMNs had in mind. To try and consolidate their position back, it was accordingly suggested by the TMNs in Court that the word “elected” where it first appeared in Article 28(a) was deliberately chosen to confer a wide authority on the Assembly to appraise the relative qualifications of Member States for election to the Committee.168 Unfortunately for the TMNs, however, the Court found that this word was edited into the Article at some time between March 1 while the Article was adopted “subject . . . to drafting changes,” and March 5, 1948.169 The word “elected” had replaced the word “selected” which had appeared in every draft of the Article since 1946.170
While the Court did not determine why and how this change took place, it was not called upon to do so. There had apparently been no explanation for, or discussion regarding the alteration.171 The Court determined, however, that if the drafters had intended the word “elected” to take on the special significance sought to be attached to it, it was unlikely that the word would have been edited into the Article in this manner.172 Furthermore, the Court seemed persuaded by the apparent acquiescence of the TMNs since they neither protested nor proposed replacement.173 On these bases, the Court stated that Article 28(a) required the Assembly to establish which of its members comprised the eight “largest ship-owning nations” within the natural meaning of those words.174 Thus, the Court concluded that the words, “of which not less than eight shall be the largest ship-owning nations,” had a “mandatory and imperative sense” that precisely reflected the intention of the framers of the Convention.175
The problem was then—and still remains today—that the dominant TMNs club never contemplated that Liberia and Panama should, or would, be among those nations. It was why the TMNs objected to Liberia and Panama being elected, and is what led to the ICJ case in 1959. Moreover, unless it is resolved soon, it will take the Organization back to the ICJ half a century later.
Mention should also be made of the conditions that existed before the 1946 Maritime Consultative Council176 and the part played in the debate by the apportionment of expenses among the membership.
7. “Apportionment of Expenses” Criterion
The apportionment of the expenses of the Organization amongst its members under the provisions of Article 41 of the Convention is significant. Under Resolution A.20(I), adopted by the Assembly of the Organization177 on January 19, 1959, the assessment of each Member State’s contributions was principally “determined by its respective gross registered tonnage as shown in the latest edition of Lloyd’s Register of Shipping.”178 Accordingly, those States whose registered tonnages were the largest would pay the largest assessments.179 At the time Liberia paid US$16,278 (6.87%)180 including US$3,435 to the Working Capital totaling US$17,713 (nearly 8% of the total budget),181 and Panama over US$15,000 (over 7% of the total budget), the two accounting for 15% of the budget contributions; this is still largely the case today among the leading registered tonnage members.
Nonetheless, the two countries were kept out of the Organization’s most important organ. Although the developed countries undoubtedly pay considerably more towards technical assistance and other voluntary contributions in most U.N. and international organizations, the IMO is, to the best of the author’s knowledge, the only Specialized Agency of the United Nations or, for that matter the only, international organization where developing countries pay more allocated budgetary contributions than the industrialized nations. For comparative purposes, when paying 7–8% of the IMCO budget, Liberia’s contributions to UNESCO and WHO were 0.04%, ICAO, 0.13%, and the ILO, 0.12%, respectively.182 Moreover, the IMO is also the only organization where those who pay more have correspondingly less power.183 This is due partly to the peculiar nature of the shipping industry, especially the part played by operations of open registry in international shipping where the DMNs have more registered tonnage than their TMN counterparts while the latter beneficially own those tonnages.184
This leads one to wonder whether the “genuine link” issue was ever a relevant factor in the thinking of the TMNs.
C. Whether Nationality of Ships, Open Registry, and “Genuine Link” Were Relevant Factors
1. Flags of Convenience or Open Registries
Although not pleaded at the Court, the underlying issue was clearly the TMNs unease over flags of convenience.185 Speaking at the Seventh Meeting of the Assembly on January 14, 1959, the U.K. representative provided a clear hint when he said:
The United Kingdom delegation felt it would be wrong for the Assembly . . . to pretend to ignore the essential difficulty, namely, the position of Liberia and Panama. There was clearly no question of dealing with flags of convenience, which lay outside the limits of discussion. What the Assembly had to do was to choose eight countries which, on the one hand, had an important interest in maritime safety and, on the other hand, were the largest shipping ship-owning nations, as these were the criteria laid down in Article 28 of the Convention.186
He continued that:
What the Assembly had to do was to consider how governments were interested in maritime questions and to see to what extent they were able to make a contribution in various fields connected with safety. . . . It is obvious that in all those fields neither Liberia nor Panama was, at the moment, in a position to make any important contribution to maritime safety.187
Therefore, rather than recognizing their ranking in gross tonnage, the perception that Liberia and Panama were unable to make “any important contribution to maritime safety” proved the relevant factor.188 According to this perspective, membership at the high table was meant for those nations with genuine tonnage rather than nations having open registries, such as Liberia and Panama.
He continued that:
As to the second criterion . . . namely, relative importance as a shipowning nation, I would emphasize that that expression was being used for the first time, but it was perfectly clear. Vessels had really to belong to the countries in question, which was obviously not the case with Panama and Liberia.189
He concluded that “neither from the point of view of interest in maritime safety nor from that of tonnage could Liberia or Panama be included amongst the eight maritime countries referred to in Article 28(a) of the Convention.”190 The U.K. representative spoke for the rest of the TMNs, namely that, according to the Convention those eight places should be allotted to the largest ship-owning nations. But, seeming to contradict himself, he argued that the eight places were not necessarily meant to be filled by those countries whose fleets represented the largest registered gross tonnage.191 The fallacy in his argument was that it sought to evaluate “registered tonnage” and “interest in maritime safety” independently, whereas the Liberian and Panamanian position (accepted by the Court) was that registered tonnage was the corollary of and reflected interest in maritime safety.192 Other countries, such as India, took an even more liberal position.193
Unsurprisingly, the U.K. position was (as is the case at many of these international gatherings) supported by the Dutch representative who opined that “the concept of the largest ship-owning nations was not necessarily identical with that of the nations having the largest registered tonnage; on the contrary, a country’s registered tonnage might in no way reflect its actual importance.”194 Other TMNs put forward the argument that the members of the Maritime Safety Committee elected “on the strength of their tonnage” should also be nations which were in position to make a contribution to the work of the Committee based on their knowledge and experience in the field of maritime safety—a qualification, according to the TMNs, that Liberia and Panama did not possess.195 In addition to accurately reflecting the TMNs position on the issues, this argument sought to separate the flags of convenience from the nationality of ships, despite the two issues being inextricably linked.
2. Nationality of Ships in International Law
The Court rejected this contention, preferring that the names and nationalities of the owners or shareholders of the shipping companies not be taken into account for such purposes, as that “would introduce an unnecessary complication as a shipowning nation.”196 This was also in line with the U.S. interpretation:
Article 28 called upon the Assembly to elect from among the Member Governments which had an important interest in maritime safety the eight nations which were the largest ship-owners, as shown by the statistical tables of Lloyd’s Register. . . . Article 28 stipulated that no less than eight should be ‘the largest ship-owning nations’ and not merely ‘large shipowning nations.’ They should be elected automatically.197
The U.S. delegate added that he could not accept the argument advanced by the U.K. representative that the ability of countries to contribute to the work of the MSC, based on their expert knowledge and experience, was a criterion of eligibility separate from that of their status as one of the largest ship-owning nations.198 In the U.S. delegate’s opinion, under no circumstances could the two nations, whose combined registered tonnage represented 15% of the active fleet of the entire world, be excluded from membership of the Committee.199 Even acknowledging the American dominance in the beneficial interests of the two countries’ shipping at the time, this interpretation was reasonable and correct.
Regardless of one’s views on the nature and function of open registry, unless the veil is lifted, the Court was correct in holding that the phrase simply meant that nations with the largest registered tonnage should have been elected irrespective of any linkage between ships and the states of nationality or ownership. Otherwise, the existence of flags of convenience raises a host of vexing questions from an international law perspective. These questions include whether the state of ownership of the flag of convenience vessel can, or has the right, to protect it, to requisition it in times of national emergency (e.g., under the U.S. doctrine of “effective control,”), or whether the labor laws of the state of ownership can be extended to flags of convenience vessels. This is likely what the opponents of the system had in mind in suggesting that Liberia and Panama, as flags of convenience countries, had no interest in maritime safety and could not be elected to the MSC. But from the standpoint of purely legalistic reasoning and statutory construction of Article 28(a), those were irrelevant considerations. Taking that route would be to open a Pandora’s Box. Besides, it is also generally agreed that the practice of flags of convenience, although unacceptable to some, is in itself not contrary to international law. Therefore, the Court was correct to steer clear of the question of nationality of ships and flags of convenience. In sum, the issue of ownership and nationality of ships200 raises many political, social, and economic international issues into which the Court would not be expected to delve. Therefore, the Court quite correctly restricted its decision to the mandate before it—an interpretation of the Constitution of the IMCO to determine whether two of its members were unfairly left out by a decision of its principal organ.
We now consider whether the genuine link of the open registry vessels was a relevant consideration.
3. Relevance of the “Genuine Link” Issue as a Consideration
In both public and private international law, the flags of convenience issue is invariably related to the issue of the genuine link between the vessel and its state of registry. The genuine link is the notion that a real tie must exist between an individual or an entity and the state of which nationality is claimed. A genuine link, also referred to as an “effective bond of attachment” or “effective nationality,” is one in which the tie of nationality is real and effective, rather than one of convenience. It impacts international legal principles of nationality with regard to individuals, claims, aircrafts, corporations, and ships.
It cannot have escaped the 1959 IMCO Assembly that the year before the Assembly elections201 and little over 10 years after the IMCO Conference in 1948, an International Conference, having grappled with this very issue, produced the Geneva Convention on the High Seas.202 Thus, open registry (as flags of convenience is sometimes called) had already been around for a long time. Moreover, it has been the subject of many conferences, debates, and commentaries over the years, including two by this author.203
Be that as it may, some members contended in the course of the arguments before the Court in the IMCO case that the Assembly, in assessing the relative size of each ship-owning nation, was entitled to take into consideration the notion of the genuine link, which it was claimed should exist between ships and the countries in which they are registered.204 In support of their argument, the opponents of the election of Liberia and Panama to the MSC invoked Article 5(1) of the then unratified Geneva Convention on the High Seas 1958.205 The Article provides that:
Each state shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship; in particular, the State must effectively exercise its jurisdiction and control in administrative, technical and social matters over the ships flying its flag.”206
However, having earlier concluded that the determination of the largest shipowning nations depended solely upon each country’s registered tonnage, the Court held that any further examination of the genuine link issue was irrelevant for the purpose of answering the question before the Court.207 Therefore, the Court simply reiterated its position that by failing to elect Liberia and Panama to the MSC despite their status among the eight largest ship-owning nations, the Assembly failed to comply with Article 28(a) of the Convention.208
The Court rightly rejected the linkage which would have involved it unnecessarily in complex areas of nationality. The Court perhaps was aided by the Indian209 submission on this point, which was particularly thorough in its exposition of international maritime law.
The dissenting opinion of Judge Moreno Quintana was equally useful in putting forward an opposing view.210 However, the dissenting judge’s view, though admirable and nearer to the history and rationale for ship registration,211 was irrelevant. Irrelevancy notwithstanding, one must agree with the dissenting opinion that in any action in which an individual seeks the support or protection of his or her government, it must be established that the individual or entity is indeed a national of that state.212 For most individuals, nationality is acquired through their parents or location at birth and would normally provide a basis for proof of genuine link between the individual and the state. However, it is not uncommon for individuals to purchase nationality and passports, or become naturalized for self-serving reasons which might sometimes amount to nominal or doubtful claims of nationality. Conversely, in shipping, proof of registration suffices. In the controversial Nottebohm case the Court held that, “nationality is a legal bond having at its basis a social fact of attachment, a genuine connection of existence of reciprocal rights and duties.”213 In the Geneva Convention on the High Seas 1958214 and UNCLOS 1982,215 the genuine link concept is applied to merchant vessels as a challenge to the practice of flags of convenience.
Considering the degree of personal and corporate mobility under infant-globalization that existed even then, what constituted a genuine link was and still is more difficult to determine than the statement provided in the Nottebohm case, or than the argument by those who denied Liberia and Panama membership of the MSC might lead one to believe. While the genuine link approach could be applied to the nationality of legal entities, such as shipping and other business corporations, their nationality generally follows from the state of their incorporation. But in some situations, the state where a corporation’s business is effectively carried out can be the determining factor. Following this path would have further complicated an already complex issue before the Court. For this reason the Court was right to reject both the genuine link issue and the suggestion to lift the veil.
Neither issue was new to the IMCO or the textual practice in other international organizations. In arriving at its decision, the Court followed the common practice of other international organizations.
4. Analogy with Textual Practice in Other International Organizations
The problems envisaged by lifting the veil and delving into ownership and nationality issues of vessels had arisen. The ICAO, a sister organization in the field of air transport, dealt with the issue in its “substantial ownership and effective control” clause.216
Article I(5) of the International Air Services Agreement, concluded in Chicago in 1944, represents the first use of this clause in a multilateral instrument. It provided that “[e]ach Contracting State reserves the right to withhold or revoke a certificate or permit to an air transport enterprise of another State in any case where it is not satisfied that substantial ownership and effective control are vested in nationals of a Contracting State.”217 A similar provision appeared in Article I(6) of the International Air Transport Agreement of the same date.218
Furthermore, the insertion of a similar clause has been a persistent feature of the numerous bilateral air transport agreements which have been concluded between States on the basis of reciprocity. This example, though common in bilateral treaties of navigation, would be relevant only in similar treaties of maritime navigation but not in conventions establishing constitutions of international organizations as in this case. They were, however, the origins of a similar clause in air transport at the Pan American Conference at Lima, Peru, in 1940.219 The purpose of inserting such clauses in air transport agreements was analogous to the maritime equivalents in the Geneva High Seas Convention of 1958 and UNCLOS 1982, that is, to prevent companies owned and controlled by German nationals during World War II, but registered in South American States, from operating in the Panama Canal Zone.220 Similar to the Geneva 1958 and UNCLOS 1982 experiences, the deliberate insertion of the clauses modified the normal rule regarding the recognition of registration and was deemed to be justified by the special requirements of international air transport.221
Thus, the treatment of substantial ownership and effective control by the ICAO, as well as in the field of civil aviation generally, were undoubtedly relevant to, and considered by, the draftsmen of the IMCO. In light of the recent ICAO precedent, had the draftsmen of the IMCO Convention in 1946–1948 intended to achieve the same end, it seems improbable that they would have used such vague terminology. Furthermore, and in contrast with the then-prevailing situation relating to the constitution of the MSC, the primary reason for inserting the “substantial ownership and effective control” clause into the Air Transport Agreement was to preserve the balance of contractual concessions in the reciprocal grant of air transport rights.222 Given that the draftsmen of the IMCO Convention did not have such factors to consider, it is more understandable that they did not insert provisions of the same degree of particularity. Finally, as previously discussed, the IMCO Convention can be construed as a multilateral treaty of a bilateral nature, as opposed to a Convention with different requirements.
The nearest modern maritime equivalent to the ICAO experience is the Convention on a Code of Conduct for Liner Conferences of 1974.223 As was the case in ICAO, the Liner Code represents a compromise between those DMNs who had sought the abolition of liner conferences and their TMNs counterparts who advocated self-regulation.224 Briefly, the aims of the Convention are: (1) facilitation of the orderly expansion of world ocean-borne trade; (2) stimulation of the development of regular and efficient liner services adequate to the requirements of the trade concerned; (3) assurance of a balance of interest between suppliers and users of liner shipping services; (4) abolition of discriminatory practices by liner conferences against ship-owners, shippers, or foreign trade of any country; (5) encouragement of meaningful consultation between liner conferences, their users, and authorities; and (6) introduction of transparency through publication and availability of relevant information.225 Accordingly, the core of the Convention is the promotion of shipping in the developing countries through introduction of the concept of national shipping lines226 and the principle of enforced or artificial cargo allocation between national shipping lines, with a reasonable portion being reserved to cross-traders.227 This principle is embodied in Article 2(4) of the Convention—the so-called 40-20-40 formula.228 The experiment, bold and admirable as it was, failed due mainly to the lack of support from the TMNs club of the EEC and the OECD countries, roughly the same group that dominated the IMO and its predecessor, the IMCO.
To reiterate, it has been necessary to dwell at length on the historical analysis in order to appreciate the issues to come. The historical background leading to the referral of the Constitution of the MSC to the Court in 1959, and the Court’s subsequent decision in 1960, sowed the seeds that would lead to the current issues at the Organization nearly half a century later. The remaining part of the article is therefore devoted to the contemporary issues.