Author Archive for
Christiana Ochoa

Sovereign Wealth Funds, Social Arrears and the Role of Corruption

by Christiana Ochoa

[Christiana Ochoa is Associate Professor of Law at the Maurer School of Law at Indiana University Bloomington]

I would like to supplement, rather than critique Patrick Keenan’s contribution to our deepening interest in and knowledge of sovereign wealth funds. For those of you who have not read the article, I recommend it. In it, you will find a chart presenting the official development assistance and SWF assets under management for a number of countries. What strikes me about this chart is that a third number for each country might support Keenan’s core argument (that a before being permitted to invest in SWFs a government might first, or at least conterminously, be required to invest in its social and physical infrastructure) at the same time as supplementing that argument.

I would suggest that each country’s corruption rating should inform how we interpret the numbers Keenan provides. Searching out those numbers, here’s what I found (for just a handful of the countries in his chart):

Country

Development Assistance (in millions)

SWF Assets under Management (in millions)

Corruption Rating (among 180 countries, from Transparency Int’l Corruption Perception Index 2008)

Angola

170.7

1,000

158

Azerbaijan

205.6

10,200

158

Kazakhstan

171.8

38,000

145

Nigeria

11,431.8

11,000

121

Timor-Leste

209.3

20

121

Venezuela

56.7

800

158

Vietnam

1,845.5

2,100

121

What this makes me think is that in addition to the theory of social arrears on which Keenan rests his argument, it would be helpful to consider the likelihood that the investments will eventually redound to the benefit of the SWF-country’s citizens. In the case of countries like those I included above, there is good reason to believe that endemic corruption will prevent citizens from enjoying the full benefits of their country’s resources, without regard to whether the profits from those resources are invested in SWFs or not. At the same time, however, there were also countries, like Chile, on Keenan’s chart with ratings of 23 (only five points more corrupt than the United States). These countries appear to be relatively accountable to their citizens and that should provide some comfort that their citizens will enjoy the profits from the sale of their resources, either now or, if the profits are invested in SWFs, at some point in the future.

Keenan has argued elsewhere that “the wealth created from SWFs can be compared with the revenues that come from the sale of natural resources.” This being the case, I would suggest two additional potential strategies that emerge from corruption-related work for ensuring that the profits from SWF investments benefit the SWF-country’s citizens. First, the financial reporting framework established by the Extractive Industries Transparency Initiative (EITI) might be useful in ensuring more full information about the amount of money invested, the location of the investments and the profitability of SWF investments. This would i) provide valuable information about the “downstream” uses of the profits garnered by extractive (and other) industries, ii) would increase the SWF-country’s financial accountability to its citizens and iii) has the potential of making the EITI’s impact more long-lasting and robust. Second, I’ve been watching the current efforts to “tag” oil with real interest. The idea is that the successes of the Kimberly Process might be replicated to diminish the vital role oil plays in funding violent conflicts. And, while I suspect that tagging money is at least as hard as tagging oil, good forensic accounting might have a real role to play in ensuring that the profits from SWFs actually benefit the citizens on whose behalf they are purportedly invested.

Ochoa Reply to Paust

by Christiana Ochoa

First, I’d like to thank Professor Paust for his thoughtful response to my Article. He is one of only a handful of scholars who have written on this topic and I am grateful for his taking the time to respond.



Our work surrounding the question of customary international law (CIL) in relation to the individual has taken us to very similar places in the existing literature and sources and, on the main question I ask – whether individuals should participate in the CIL-formation process, we agree that they should. On the question of whether individuals already do participate in the CIL-formation process, again, we both answer in the affirmative (though I am far more tentative about this answer than is Professor Paust). Our disagreement lies in the question of whether CIL doctrine currently recognizes this participation and opens formal routes for the inclusion of individuals in the CIL-formation process. Professor Paust maintains that it does. After mulling over this question, and digesting significant primary and secondary source material, my answer is “no.”



But, for me, this is where the hard and joyful work begins. My article aims to create a recognized opening for including individuals in the CIL-formation process. In my initial post this morning, I summarized the ways in which I approach this project – (e.g., exposing inconsistencies between current conceptions of CIL-formation and the standard thought regarding the formation of customary law, generally; discussing the inconsistency of recognizing the vital role of individuals in treaty-formation but not in CIL-formation; providing social/philosophical bases for a change in our approach to CIL-formation; and providing a framework for assessing custom among individuals).



I would imagine that my article will leave some committed positivists and volunteerists unconvinced. And, again, this is where the fun and joyful work of my next article on this subject will begin. Professor Paust has anticipated some of the historical questions I am currently asking regarding the history of custom formation. Indeed, our understanding of this process in the 17th, 18th and 19th centuries is incomplete – and my next article aims to remedy this, at least in part. Customary international law – or, rather, customary law regulating trans-boundary relations, was being formed long before our modern conception of the state, and I aim to examine this process in my next piece in order to demonstrate that the customary law has been and can be formed separate from states. In the process of developing my future article, this historical issue and others will be explored in an upcoming conference that Indiana University School of Law will host on my behalf, entitled, “The Individual and Customary International Law Formation,” in April 2008. The insights provided by this historical inquiry may help us see a path forward that will maintain the vitality and legitimacy of CIL, even in a time of the de-centered state. This should have relevance even if you believe that time has not yet arrived.



Again, if you are interested in the conference, please contact me. It would be wonderful to see you in Bloomington.


The Individual and Customary International Law Formation

by Christiana Ochoa

First, I would like to thank Roger Alford and VJIL Editor-in-Chief Chris Ripple for the groundwork they’ve done to create this blogging opportunity. I’ve followed VJIL/Opinio Juris posts all week and have found them very informative.



In my most recent article, The Individual and Customary International Law Formation, I propose opening a space for non-state actors, specifically individuals, in the process by which customary international law (CIL) is formed. A good portion of the article is devoted to a discussion of the concept of custom, as well as to a brief history of CIL, and the current thinking regarding CIL (both in terms of accepted doctrine and critiques thereof). Because the idea that non-state actors ought to participate in the CIL-formation process has not gained a tremendous amount of traction previously, the article also steers readers through the existing literature addressing the possibility, reality and prospects for inclusion of non-state actors in this process. Readers not familiar with CIL doctrine or these contributions to its various sub-literatures will surely find this section informative. However, as is so often the case, it is the second half of the article to which I would like to draw your attention, for it is here that the central portions of my argument– that the CIL-formation process should include individuals – takes shape. In the second half of the article, I venture to provide theoretical underpinnings for the proposition that individuals should be recognized in CIL formation doctrine and construct a framework for how this might be accomplished, both doctrinally and practically.



In essence, my argument rests on what I see as two doctrinal premises. The first is a general shift in thinking about individuals as mere objects of international law – akin to rivers, cattle or real property – to a generally accepted recognition of individuals as subjects of international law. This shift, I argue, has created a deep doctrinal inconsistency due to the fact that customary law, international or otherwise, has typically been conceived of as the law that arises from its subjects. The recognition of individuals as subjects of international law has thus rightly drawn the validity and legitimacy of CIL into question – CIL doctrine no longer permits it to arise from all of its subjects. Rather, CIL continues to look only to states.



The second doctrinal premise is that international law accepts the participation of individuals in international law – particularly those aspects in which they are most interested, such as human rights – and creates routes for this participation. The article focuses on the recognized participation of individuals in the process by which human rights treaties are formed to illustrate that while human rights treaties may address many of the same norms as compose the CIL of human rights, there is no recognized avenue for individuals to participate in CIL formation. There is no avenue for individual participation even in the area of human rights, which is oriented toward the individual and recognizes and anticipates that states will be rights violators. And this is true despite evidence that states do not always represent the human rights aspirations and desires of their populations (see, e.g., the recent events in Burma).



The article also discusses social/philosophical bases for including the individual. These bases ought to be quite familiar to international law scholars and include globalization, cosmopolitanism and cosmopolitan identity, as well as transnationalism, and globalization from below. The premise of each of these theories is that the hold of the state on international power and influence is no longer monolithic. If this is the case, then we are pushed to rethink not just who international law protects and who it governs but also how it is made and by whom. Given the deeply democratic rhetoric and idealism of the international project and the real and perceived need to continually reinforce the legitimacy of that project, the article stops briefly to inquire about the relationship of democracy to a democratized method of law formation. (I develop this inquiry further in a forthcoming note titled, The Relationship of Participatory Democracy to Participatory Law-Formation, 15 INDIANA J. GLOBAL LEGAL STUD. __ (2008, forthcoming)).



I imagine some of you will suggest, as some of you already have, that my article is self-limiting in that it does not propose that all manner of non-state actors (including private groups) be included in the CIL formation process. I sympathize with that critique. It is very possible that other non-state actors should similarly be included in CIL formation. I did not address other actors comprehensively because I opted for the more careful and methodical approach afforded by addressing only individuals. As a result, other non-state actors simply fell outside of the purview of the article. Thinking through the doctrinal and social/philosophical justifications for including other non-state actors will clearly be a separate and significant undertaking. I hope, however, that if that task is taken up by someone else, before I get to it in my own work, that my bases for expanding the formative actors of CIL will be helpful to those future authors.



For those persuaded by the arguments I make for doctrinal alterations, I would especially like to direct your attention to the last section of the article, titled “Operationalizing the Inclusion of Individuals” – the section in which I make an early foray into the practical application of my theory. In the first part of this last section I begin to develop a framework for assessing custom among individuals (presumably if individuals are to be included in determinations of CIL, a methodology for doing so would have to be developed). This is the section of the article that I find most exciting because it is here that the real prospective puzzles lie. These puzzles, perhaps not surprisingly, mirror those that have vexed CIL scholars for decades. What would “count” as custom; individuals’ beliefs about their rights or their expectations about how various actors ought to behave, or both? And what use would we make of the practice of individuals, given that custom arises from conduct and actual behavior as opposed to arising from beliefs and expectations alone? And what levels of uniformity, universality and duration would we expect of individual’s beliefs, expectations and behavior before custom could be asserted and ascertained?



Finally, I attempt to address another question that will naturally arise: What would be the material sources that could serve as evidence of the formation of international custom among individuals? This section leaves open significant questions for future debate – questions that mirror the debate that has ensued since Article 38(1)(b) was drafted – about the proper material sources of evidence in respect to state opinio juris and practice. Because the study of individuals, their behavior, their beliefs and their customs has not traditionally been a focus of the law, this is an inherently cross-disciplinary endeavor that will require contributions from and dialogue with, among others, political scientists, anthropologists, sociologists and journalists. Again, the article offers only a framework and a list of possible avenues for obtaining evidence of custom formation among individuals.



Given the significant scholarly attention and debate that has been devoted to these questions under traditional state-oriented CIL doctrine, it is my hope and expectation that these questions will attract the attention of current and future international law scholars as they contribute to a new literature on the possibility of non-state actor contributions to CIL. I hope for this because I believe in the project – I believe individuals really should be consulted in the CIL formation process.



For those of you especially interested in this article, please feel free to contact me (cochoa AT indiana DOT edu). The Indiana University School of Law is hosting a conference on April 3-5, 2008 on “The Individual and Customary International Law Formation,” during which these ideas will be further explored and developed. It would be wonderful to see you in Bloomington for that event.