ACSA, SOFA, MCC Once concluded there is no walking away from treaties

By Dr Palitha Kohona

We have been hearing lengthy and, at times learned, discussions on Treaties in the last few months, especially in the lead up to the Presidential election. This rich discourse, occasionally not well informed, has not ceased. The Millennium Challenge Compact (MCC) was the main focus of many and generated a highly charged range of views, including a fast unto death, (thankfully, it was called off at the last moment), and the Free Trade Agreement with Singapore also featured prominently in the discussions, especially in professional circles. Earlier it was the proposed Comprehensive Economic Partnership Agreement (CEPA) with India that caused animated debate, particularly in business and professional circles. We have also heard many views on the Acquisitions and Cross Services Agreement (ACSA) and the proposed Status of Forces Agreement (SOFA).

Both with the USA. Against the background of the raging debates, on November 6, 2019, the Government Medical Officers Association (GMOA) filed a Fundamental Rights petition seeking to stay all approvals and decisions in respect of the MCC as well as the ACSA and the SOFA. The petitioners asserted that if signed and executed, the MCC would violate the fundamental tenet of sovereignty of the country, which the constitution expressly upholds to be “free, sovereign and independent.” We are still uncertain whether the SOFA has been concluded. The Cabinet spokesman certainly suggested that this was the case and no denial or retraction has been forthcoming. The Guneruwan Committee appointed by the Government to examine the implications of the proposed MCC has recommended that it not be concluded, at least in its present form.

Let us first dispose of some of the basic issues which provide the backdrop to this discussion on treaties. Sri Lanka follows the “dualist” approach to international law, like many others. It basically means that in our approach there is a difference between national and international law, and requires the translation of the latter into the former. Without such translation, international law cannot be implemented as domestic law. Thus, if a treaty concluded by the State is intended to have domestic legal consequences, including the MCC, it must be properly adopted by the legislature. This legal premise states that international law and municipal law are two separate and independent legal systems, one national and the other international.

International law regulates relations between States (and now even between states and intergovernmental organizations and among intergovernmental organizations) and is broadly based on treaty law and customary law. Under a dualist approach, national law, attributes rights and duties to individuals and legal persons deriving their force from the national Constitution. This principle was discussed at length by the former Chief Justice Sarath Silva in the Singarasa case. (The other eminent judges on that bench were, Nihal Jayasinghe, Judge of the Supreme Court, N.K. Udalagama, Judge of the Supreme Court, N.E. Dissanayake, Judge of the Supreme Court, Gamini Amaratuga, Judge of the Supreme Court. S.C. Spl(LA) No. 182/99 Nallaratnam Singarasa).

This discussion of the principle in Singarasa is consistent with the framework of Sri Lanka’s Constitution, which is based on the understanding that municipal law and international law are two distinct systems. Accordingly, when Sri Lanka ventures to conclude international treaties with domestic legal implications, this basic premise must be borne in mind. The constitutional premise of the United Kingdom, from which we derived inspiration, adheres to the dualist theory.

Under the “monist” theory, international law and municipal law constitute a single legal system. Accordingly, in countries which subscribe to the monist principle, the generally recognized rules of international law constitute an integral part of the municipal law and produce direct legal effect without any further implementing law being required to be enacted within those countries. Treaties, thus are considered part of domestic law. In fact, in the USA, Article 2 Section 2 of the Constitution states that “(The President) shall have power, by and with the advice and consent of the Senate, to make treaties, provided two thirds of the Senators present concur”. The Supremacy Clause of the Constitution of the United States (Article VI, Clause 2), establishes that the Constitution, federal laws made pursuant to it, and treaties made under its authority, constitute the “supreme Law of the Land”, and thus take priority over any conflicting state laws.

Given that Sri Lanka subscribes to the dualist model, it is understandable that the draft MCC, which will have wide ranging implications within Sri Lanka, requires it to be submitted to and enacted by the Parliament (MCC Article 7, Section7.1). One can also detect the influence of the US lawyers and their thinking in its drafting.

The MCC itself is intended to be of treaty status. (Article 6 Section 6.4 , This Compact is an international agreement and as such shall be governed by international law.). It is between two entities capable of entering into treaties, the MCC ( The Preamble to the Compact states that it is a US Government Corporation acting on behalf of the US Government) and Sri Lanka (acting through its Ministry of Finance and Mass Media). It is intended to create legally binding rights and obligations. The draft itself says that it is governed by international law. This may suggest that the Compact and all its activities will be above the Sri Lankan law and Sri Lankan citizens may not be able to seek legal assistance from their country’s judicial system. Moreover, Sri Lanka could be taken to an international court or tribunal if it backs out of the Compact or contravenes any of its clauses. Sri Lanka, unlike the USA, has only limited experience in international adjudication and is likely to be confronted by serious constraints in such a situation.

It is important to note that the MCC’s provisions are carefully drafted and also includes a sunset clause (Article 7 Section 7.4, The compact shall remain in force for five years after its entry in to force, unless terminated earlier under Section 5.1). It contains provisions on termination (Article 5 Section 5.1, Either Party may terminate this Compact without cause in its entirety by giving the other Party 30 days prior notice. The MCC may also terminate this Compact or MCC funding without cause in part by giving the Government 30 days prior written notice.) While Sri Lanka could theoretically terminate the Compact under this provision, the practicalities of doing so and incurring the displeasure of the US superpower needs to be kept in mind by our policy makers. On the other hand, the US and the MCC could and have, in other instances, terminated MCC Compacts without cause and for reasons not connected with its stated goals of alleviation of poverty or development. E.g. in the case of Madagascar where the Compact was terminated after three years for political reasons.

The above provision would enable the MCC to terminate the Compact or the funding for reasons that would be purely political. That is where the risk for Sri Lanka lies. The US and the MCC could walk away, even for political reasons, perfectly in accordance of the provisions of the Compact, without incurring any liability.

Political factors are never too far from even the economic decision making processes of a major power. In 2007, the US withdrew the MCC offer made to Sri Lanka after the tsunami for exactly such political reasons. A diplomatic cable sent by Ambassador Blake on January 14, 2008 (reproduced in Wikileaks), twelve days after the Sri Lankan government “decided to abrogate the CFA (Ceasefire Agreement)” on January 2, states that “in December 2007, the Board of the Millennium Challenge Corporation removed Sri Lanka as a country eligible for MCC lending for 2008.” The cancellation of Sri Lanka’s eligibility status was one among a number of measures taken by the US to signal its “displeasure” at “the escalating violence and growing human rights problems” in Sri Lanka. The determination that there were human rights problems in Sri Lanka was made by the US in accordance with its own criteria with no input from the affected country, Sri Lanka.

The MCC draft, as it stands at present, would enable the US to adopt similar measures without incurring any liability for resulting loss or damage. Given the implications of the MCC for the lives of hundreds of thousands of individuals, the ability to walk away without incurring any liability raises serious legal and other issues.

Very importantly, the MCC explicitly provides immunity to the Government of the USA, the MCC, its employees and contractors for a range of actions and omissions. (Article 6 Section 6.8. “MCC is a United States government corporation, acting on behalf of the United States Government in the implementation of the Compact. MCC and the United States Government assume no liability for any claims or loss arising out of activities or omissions under this Compact”. “The Government agrees that MCC and the United States Government or any current or former officer or employee of MCC or the United States Government shall be immune from the jurisdiction of all courts and tribunals of Sri Lanka for any claim or loss arising out of activities or omissions under this Compact”.

Should the US Government or the MCC decide to walk away from their commitments under the MCC at any stage of the five year Compact period, for whatever reason, they would assume no liability for any claims or loss. Furthermore, it is not only the US Government and the MCC that would enjoy immunity from the jurisdiction of our courts and tribunals for loss or claims arising out of the activities under the Compact but also current and former officers and employees of the US and the MCC. We note that all these provisions protect only the US side.

The fact that the MCC is a treaty does not leave room for any degree of complacency. A treaty is different from a contract. A treaty is governed by international law and recourse in the case of a dispute with regard to a treaty is international courts and tribunals while a contract is governed by domestic law and is enforced in the domestic courts.

The international law on treaties has mostly been codified by the Vienna Convention on the Law of Treaties 1969, which codifies the rules and procedures for creating, enforcing, amending, and interpreting treaties.

As one of the earliest manifestations of international relations, treaties are recognized as a primary source of international law. A treaty can be labeled under different names, compact, convention, agreement, covenant, accord, protocol, etc. What is important is whether the agreement is intended to create international legal rights and obligations.

Only the head of state, the head of government or the foreign minister or someone duly authorised by one of these entities could conclude a treaty on behalf of a State. Thus it is not possible for an official or a Minister, to conclude a treaty without proper authorization, which is termed “Full Powers”. Treaties are binding at international law.

International law requires that once entered in to a treaty must be implemented faithfully by the parties. It is not an excuse to argue that domestic legal constraints prevent the implementation of a treaty solemnly concluded. Article 26 of the Vienna Convention on the Law of Treaties, which substantially reflects customary international, states, pacta sunt servanda, “Every treaty in force is binding upon the parties to it and must be performed by them in good faith”. Article 27 states, Internal law and observance of treaties, “A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. This rule is without prejudice to article 46”.

If domestic legal constraints exist, it is for the party concerned not to enter in to the treaty or bring the domestic legal framework in to line with the provisions of the intended treaty. Usually, the practice is for this to be done prior to the conclusion of the treaty. Once a treaty has been concluded, it is not possible to plead that even the Constitution is a constraint without incurring adverse international legal consequences.

Once concluded, a party cannot simply walk away from a treaty. It remains binding as it must either be terminated according to its own provisions, customary practice or modified (amended). Thus it would not be possible for Sri Lanka to walk away willy nilly from the MCC, or from any other treaty, once it had become party to it.

Failure to comply with the provisions of a treaty solemnly concluded could result in the activation of sanctions incorporated in the treaty itself, a dispute resolution provision being triggered (some Treaties contain dispute resolution mechanisms, including judicial and arbitration provisions), the aggrieved party suspending its obligations, or attract retaliation. Unilateral retaliation for the breach of a treaty provision can take different forms such as the imposition of economic and political sanctions, denial of the benefits intended under the treaty, suspension of cooperation, and exclusion from international initiatives. The US has not been reluctant to impose sanctions on many countries that have incurred its displeasure.

The United States has signed but not ratified the Vienna Convention on the Law of Treaties. Sri Lanka has not even signed. But it is widely accepted that the VCLT is reflective of international custom.

As a treaty, if concluded, the MCC should be registered with the United Nations in accordance with Article 102 of the UN Charter. “1. Every treaty and every international agreement entered into by any Member of the United Nations after the present Charter comes into force shall as soon as possible be registered with the Secretariat and published by it.

2. No party to any such treaty or international agreement which has not been registered in accordance with the provisions of paragraph 1 of this Article may invoke that treaty or agreement before any organ of the United Nations.” This provision has been effective since the Charter came in to force in October 1945 and the UN has been performing this Charter mandated function since then.

Member States of the UN have registered with the UN over 55,000 bilateral treaties, covering almost all aspects of international interaction, including human rights, terrorism, the seas and oceans, disarmament, outer space, the environment, organised crime and money laundering, cultural cooperation, development assistance, border demarcations, etc. In addition, over 555 multilateral treaties, most deposited with the UN Secretary-General, are also registered with the UN. There is even a multilateral treaty on white slavery inherited from the League of Nations. (International Agreement for the Suppression of the White Slave Traffic, signed at Paris on 18 May 1904, amended by the Protocol signed at Lake Success, New York, 4 May 1949). These treaties provide a rich framework of law governing international relations. Today this vast body of international law has been placed on the internet and can be accessed by clicking a few buttons on a computer.

Not all treaties concluded by the Member States of the UN have been registered in accordance with Article 102. It is quite likely that around 40% of treaties concluded by Member States have not been registered which prompted the Treaty Section of the Secretariat to organise a high level event to promote the signature of treaties at the Millennium Summit. Following the success of that event, now an annual Treaty Event is held during the UN General Assembly to encourage participation in and registration of treaties. Not surprisingly, most defense and security related agreements have not been registered with the UN.

The widely accepted view is that registration per se does not add to the legal quality of an Agreement while non-registration would preclude a treaty being invoked before a UN tribunal. Sri Lanka has concluded over 900 Treaties. It would be interesting to see if the MCC would be registered with the UN if it were to be concluded.

The Millennium Challenge Corporation is a bilateral US foreign aid agency established by the US Congress in 2004. It is said to be an independent agency, separate from the State Department and USAID. But this statement has been challenged by many. The MCC Board of Directors is comprised of the Secretary of State (Chair), Secretary of the Treasury, US Trade Representative, Administrator of USAID, CEO of the MCC, and four private sector members appointed by the US President with the advice and consent of the US Senate. The current Chief Executive Officer of the Millennium Challenge Corporation is Sean Cairncross, nominated by President Donald J. Trump on January 8, 2018 and sworn in on June 24, 2019. Against the above background, it is difficult to resist the suggestion that the MCC is yet another arm of the US foreign policy establishment.

Although the MCC’s primary commitment is said to be poverty reduction, many have argued that it is all about “reshaping the legal, institutional, infrastructural and financial contexts of poorer countries to better suit US economic and commercial interests.” The MCC is seen as an instrument of the “new imperialism” pursuing “economic hegemony through the extension and ever-deepening penetration of neoliberal capitalism”.

The MCC will be funding two main projects in Sri Lanka – the transport project focuses on improving traffic management, improving the road network along the Central Ring Road for better connectivity between the Western Province and peripheral provinces, and the modernization of the public bus system.

The land project, which has caused considerable disconcert, focuses on creating a parcel fabric map and inventory of state lands, digitizing the deeds registry, facilitating the ongoing work to move Sri Lanka from a deed registration system to a title registration system, digitizing key valuation information for properties in targeted districts, and establishing land policy councils to support the Government’s work on land policy and legislation.

Sri Lanka’s project proposals for the compact were submitted to the MCC Board in November 2017 and the Sri Lanka compact was approved by the MCC Board in April 2019, just a few days after the disastrous Easter Sunday bombings.

Curiously the MCC was negotiated in secret. In response to persistent public demands for transparency, a draft of the MCC was at last published on the website of the Sri Lankan Ministry of Finance last November 5, just 11 days before presidential elections.

Dr Palitha Kohona: A Sri Lankan born diplomat, was the Secretary, Ministry of Foreign Affairs of Sri Lanka from 2006 to 2009. Ambassador Kohona was the Permanent Representative of Sri Lanka to the United Nations in New York from 2009 to 2015

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