Module A: Evolution and Principles of International Economic Law

Master of Laws (LLM)
Postgraduate Diploma in Laws

Postgraduate Certificate in Laws
International
economic law
Module A: Evolution
and principles of
international economic
law
Revised edition, 2021

I. Glinavos
LWM31A
This Study Guide was prepared for the University of London by:
̆ Dr Ioannis Glinavos, LLB, LLM, PhD, Senior Lecturer in Law, University of

Westminster.
The University of London gratefully acknowledges the contribution of Professor S.P.

Subedi, OBE, QC, MA, LLM, DPhil (Oxon) Professor of International Law, University of
Leeds to previous editions of this Study Guide.
This is one of a series of Study Guides published by the University. We regret that
owing to pressure of work the author is unable to enter into any correspondence
relating to, or arising from, the Guide.
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Published by: University of London

© University of London 2021
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Contents
Contents
Chapter 1: Introduction..........................................................................................1
1.1 General guidance and introduction to the course........................................1
1.2 Sources of international economic law.......................................................... 2
1.3 How to use this Study Guide.............................................................................. 3
1.3.1 Reading.............................................................................................................4
1.3.2 The VLE and electronic resources............................................................ 5
1.4 Allocating your time.............................................................................................6
1.5 Keeping up to date.................................................................................................6
1.6 Case-law.................................................................................................................... 7
1.7 Note-taking.............................................................................................................. 7
1.8 The examination.................................................................................................... 7
1.9 Examination techniques..................................................................................... 7
Chapter 2: Law and economic policy: a historical overview........................... 9
Introduction....................................................................................................................9
2.1 From antiquity to empires..................................................................................9
2.2 From empires to modern nation states........................................................10
2.2.1 The colonial era............................................................................................11
2.2.2 The effects of decolonisation.................................................................. 12
2.3 The aspirations of newly independent states............................................ 12
Chapter 3: The evolution of international economic law............................... 15
Introduction.................................................................................................................. 15
3.1 The history of economic development.......................................................... 15
3.1.1 The idea of sustainable economic development............................... 16
3.2 Restructuring of the world economy............................................................ 18
3.2.1 Developing countries assert themselves............................................. 18
3.3 The dawn of the new era................................................................................... 19
3.4 The height of corporate power....................................................................... 20
3.4.1 Opposition to capitalism......................................................................... 20
3.5 The quest for a balanced system.................................................................... 21
Chapter 4: Fundamental principles of international economic law............23
Introduction.................................................................................................................. 23
4.1 The definition of international economic law........................................... 23
4.2 The basis of international economic law....................................................24
4.3 Economic sovereignty........................................................................................24
4.4 Permanent sovereignty over natural resources (PSNR)......................... 25
4.5 Fundamental principles of international economic law.......................26
4.5.1 The right to economic development....................................................28
4.5.2 The law on natural resources.................................................................29
Chapter 5: The institutional structure of international economic law........37
Introduction.................................................................................................................. 37
5.1 Institutions............................................................................................................. 37
5.2 The UN and its specialised agencies..............................................................38
5.2.1 The World Trade Organization...............................................................38
i
International economic law: Module A
Feedback................................................................................................................41
Chapter 2........................................................................................................................ 41
Chapter 3........................................................................................................................ 41
Chapter 4........................................................................................................................ 41
Chapter 5........................................................................................................................ 41
ii
Chapter 1: Introduction
Welcome to this course in International economic law, part of the

Postgraduate Laws Programme offered through the University of London
International Programmes. The purpose of this Study Guide is to help
you with the study of international economic law. This Guide presents an
overview of the core issues involved relevant to the study of this subject.
International economic law is a massive body of law, which is growing
rapidly and changing fast. It seeks to regulate most aspects of
international economic relations between states as well as the relations
between foreign investors (such as multinational companies) and
sovereign states. This Guide is not designed to cover every issue or
topic within international economic law. Its purpose is to introduce you
to the laws relating to a select group of important topics, including:
• the main principles of international economic law such as the
economic sovereignty of states
• the law of natural resources and sustainable development
• international monetary and development law
• the law of foreign investment
• the law of international trade.
The underlying principles of general international law, such as the law
of treaties, principles of state responsibility and dispute settlement, are
applied to problems related to international economic relations as and
when necessary.
The course is divided into four modules, which you may register for and
study separately:
• Module A introduces the subject, including its historical basis and
explores the fundamental principles and institutional structure of
international economic law
• Module B looks at international monetary and development law
policy
• Module C looks at the regulation of foreign investment
• Module D looks at the public international law of trade.
Study sequence
Module A of the course must be attempted before Module D.
1.1 General guidance and introduction to the course

International economic law deals with both general and specific legal
issues of international economic relations. Since this is a large area of
study, this Study Guide will cover select topics of significance, which
provide a good overview of the subject matter, rather than address
every area of international economic law. You are advised to refer to
the Essential reading recommended in this Guide for an understanding
of areas not covered directly by this Guide. 1
The course seeks to strike a balance between theory and practice.

In doing so, it relies on treaty provisions, resolutions of international
organisations (such as the UN General Assembly) and on the
jurisprudence of the International Court of Justice (ICJ) and related
international arbitral tribunals. It will provide you with the skills to
analyse the theory of international economic law and its practical
application through a critical assessment of:
• the core international legal instruments, including both soft and
hard-law provisions
• the workings of international economic institutions
• the jurisprudence of international courts and tribunals.
Aims and objectives for Module A

The aim of this module is to analyse the evolution of international economic
law and its fundamental principles. It will examine the current framework of
international economic law and the efforts made to regulate international
economic relations between states as part of an attempt to establish a stable
global order.
It will begin by surveying efforts made prior to the establishment of the UN, and
will then focus on developments that have taken place since the establishment of
the UN.
The objective of the module is to provide a comprehensive and critical appraisal
of the law developed to govern economic relations between different states, and
between states and private economic actors such as multinational enterprises.
Learning outcomes for Module A

By the end of this Study Guide and the relevant readings you should be able to:
• describe and discuss the fundamental principles of international economic
law
• identify and discuss their sources
• explain how this body of law can be applied to contemporary international
economic affairs between different states, and between states and the
principal private economic actors.
1.2 Sources of international economic law

Sources of international economic law are also sources of general
international law, as codified in Article 38 of the Statute of the
International Court of Justice (ICJ). This article is generally regarded as
providing the most authoritative listing of international law sources.
They are:
• treaties
• international customs
• general principles of law
• judicial decisions of international courts and tribunals and the
teachings of the most highly qualified international lawyers as
subsidiary means for determining the rules of law.
Treaties have the pre-eminent role in developing international economic
law, but the practice of states is also important. The practice of states
acquires the character of customary law when a particular practice meets
2
the test of generality, uniformity and consistency, and is coupled with a

legal conviction on the part of states that they are obliged to follow it by
law. This psychological element is called opinio juris.
1.3 How to use this Study Guide

Each of the four modules of this course has a separate Study Guide, and
a version of this introductory chapter is found in each Guide.
The Guide is the focal point of your study for the course. It will
introduce the key syllabus topics, guide your reading of primary and
secondary sources, and help you to develop your critical understanding
of the law and to prepare for the final examinations for the course.
This Guide is not intended to replace independent study of legislation,
case-law, the set textbook and other academic literature. It provides
a framework for your study of the course, but as a master’s student
you will need to build on this framework in order to develop your own
critical understanding of the subject.
The Guide is designed to be easy to read and use. It also contains
several features to aid your study:
• learning outcomes for each module and each chapter, so you know
what you are expected to achieve at each stage of your study
• self-assessment questions so that you can check that you
understand important issues
• guidance on Essential reading and Useful further reading.
You should work through each chapter of the Study Guide in sequence;
it is not recommended to ‘dip’ in and out of different chapters.
Begin your study of each chapter topic by looking at the learning
outcomes for the chapter, as these will give you a clear idea of what
you are expected to achieve. You should then read through the chapter
and the relevant Essential readings. Take notes as you read. You may
well find that you can need to read some passages several times in
order to fully comprehend the issues.
Once you have worked through the chapter, the readings and the self-
assessment questions, look again at the learning outcomes. Are you
satisfied that you can now meet them? If not, you should go through
the relevant material again.
Once you have worked through the Study Guide for the whole module,
you can test your knowledge and understanding of the subject by
considering the sample examination question at the end of the guide.
It is important that you do this, as both past and future examination
questions may resemble this sample question.
It is advisable to try to answer the question in exam conditions (i.e.
to handwrite an answer in 45 minutes without referring to the Study
Guide or your study notes). Be mindful of the need to keep your writing
neat and legible. You should try to answer the question before you look
at the guidance on answering the question.
Note that this guidance is deliberately quite brief. We do not provide
you with a full model answer to the question since as a master’s level
student you should be developing your own ideas on the subject.
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1.3.1 Reading
The Study Guide refers you to various reading resources. These are
divided into Essential reading and Useful further reading.
You should make sure you read everything described as Essential
reading. All such readings should be available to you. Many readings
are extracts from the supplied set textbooks (details below), books are
available in the Online Library or elsewhere online, and some books
may be supplied to you via book repositories accessible through the
library.
The websites for the online Essential readings are given in the
document Where to find Essential readings available on the course
home page on the PG Laws virtual learning environment (VLE). If
you are having problems obtaining or accessing any of the Essential
readings, please let us know by filling out an online enquiry form at:
http://enquiries.londoninternational.ac.uk/aspx_shared/newuser.aspx
Occasionally problems do arise with the availability of particular items,
but these can usually be resolved quickly. You should also make sure
you check the VLE page for the course, for up-to-date information on
readings and other course news.
Remember that the Essential readings are the bare minimum for the
course. The Guide also refers you to some Useful further reading, and
you will find other references in your set textbook. You should try to
read beyond the Study Guide and Essential reading; the University
does not undertake to supply you with further readings, but you
should be able to find some pertinent material in the Online Library.
The students who perform best in examinations for Postgraduate Laws
courses are generally those who have taken the time to develop a
broad critical understanding of their subject area, drawing on a range
of sources and academic analyses.
Set textbook
This course is structured on the assumption that you will use the textbook for this
course which is:1 1
This is the supplied textbook
at time of publication in
• Herdegen, M. Principles of international economic law. (Oxford: Oxford 2021. In due course, we
University Press, 2016) [ISBN 9780198790563]. Available via Oxford Scholarly may start using a different
Authorities in International Law in the Online Library. edition/textbook. Details of
any change in the supplied
Hereafter, this will be referred to simply as ‘Herdegen’. textbook will be provided on
Important note the VLE.
Although the course is self-contained, a basic knowledge of public international

law is highly desirable. Those who have never studied public international law are
strongly advised to do some background reading on this subject.
The following title offers some key reading on the sources of international law.
• Kaczorowska-Ireland, A. Public international law. (London: Routledge, 2015)
[ISBN 9781315858333]. Available via VLeBooks in the Online Library.
4
1.3.2 The VLE and electronic resources

As noted above, there are important study resources for this course
available online, in the Online Library and VLE. You should check
the VLE site for the course regularly, since there may be official
notices regarding the course or useful discussions about it in student
discussion forums.2 For more information about these, see the 2
For example, you should
consult the VLE for the file
Postgraduate Laws Student handbook.
Where to find the Essential
readings which lists the
Useful further reading websites containing the core
Books documents referred to in this
Study Guide.
• Toye, J. UNCTAD at 50: A short history. (Geneva: UNCTAD, 2014),
available as a UN publication: UNCTAD/OSG/2014/1.
• Lowenfeld, A.F. International economic law. (Oxford: Oxford
University Press, 2008) 2nd edition [ISBN 9780199226948]. Available
via VLeBooks in the Online Library.
• Chaisse, J., L. Choukroune and S. Jusoh Handbook of
international investment law and policy. (Springer Link, 2020)
[ISBN 9789811357442]. Available via https://link.springer.com/
referencework/10.1007/978-981-13-5744-2
Periodicals
• African Journal of International and Comparative Law.
• American Journal of International Law.
• Asian Journal of International Law.
• British Yearbook of International Law.
• Harvard International Law Journal.
• ICSID Review – Foreign Investment Law Journal.
• International and Comparative Law Quarterly.
• International Law Reports.
• International Legal Materials.
• Journal of International Economic Law.
• Journal of World Trade.
• World Trade Review.
• Manchester Journal of International Economic Law.
The list of journals above is not exhaustive. It is only a representative
sample. There is a growing list of international law journals that cover
international economic law issues.
Online resources
Please also read material held in the Online Library of the University of
London International Programmes, which includes Westlaw, LexisNexis
and JSTOR, among other resources. Search for key words in a concept,
notion, doctrine, principle or case name relevant to international
economic law and once you see an article or a judgment in a case go to
the Online Library to download it. The Online Library has a vast number
of articles and international legal materials, including decisions of
national courts and international courts and tribunals.
5
Key sources of information are accessible online through the

International Court of Justice, the main website of the United Nations,
UNCTAD, the World Bank, ICSID (see www.italaw.com for a wealth
of investment arbitration cases), the WTO and the IMF. You can also
consult the website of the Organization for Economic Co-operation and
Development (OECD). Use your favourite search engine to navigate to
the websites of the above sources.
Testing your research skills

Using your online research skills, locate the final award of August 2005
in the NAFTA case of Methanex Corporation v USA by an international
investment tribunal sitting under UNCITRAL rules.
Now try to locate the following journal article:
• Glinavos, I. ‘Brexit, the City and options for ISDS’ (2018) 33(2) ICSID
Review – Foreign Investment Law Journal 380–405.
Keep a note of the steps you took and reflect on what you could have
done differently to reach your targets more quickly and efficiently.
1.4 Allocating your time

International economic law has a very wide and diverse syllabus
consisting of general issues of international economic law as well as
numerous specific treaty regimes. It is absolutely necessary to set aside
adequate time to study it.
It is impossible to say with great precision how much time you should
set aside for studying for this course because students have individual
learning rates depending on their circumstances, fluency in English
and familiarity with the study of law. Furthermore, some topics of the
syllabus require considerably more time than others.
However, as a full-time Postgraduate Laws student you are expected
to spend approximately 120 hours studying and preparing for the
examination for each module of this course. It is advisable to set aside
a specific amount of time each week to study the course, increasing the
amount in the six weeks before the examination.
Some topics of the syllabus will require considerably more time than
others. You should allocate sufficient time for the study of the course
each week with a view to completing your study of all topics in the
syllabus so as to leave ample time for revision before the examination.
Having a broad understanding of the entire syllabus is necessary
to allow you to select and successfully answer questions in the
examination. If you are completely unfamiliar with certain areas of
the module, you will be unable to identify correctly the topics you are
meant to address in each examination question.
1.5 Keeping up to date

International economic law is an evolving area. This Study Guide was
prepared in 2020, and there may have been significant developments
in the law by the time you read it.
You should aim to keep abreast of the subject through your own research,
for example by using relevant journals and online legal resources.
6
Technically, unless you are advised otherwise, examinations for the

course will be based on the relevant law and related scholarship as
at 1 January in the year of examination, so you will be expected to be
familiar with the law up to that date. You will not be required to be
familiar with developments after that date (unless advised otherwise),
so you do not need to study them; but equally you are unlikely to be
disadvantaged if you do make intelligent reference to more recent
changes in the law.
1.6 Case-law
As in other legal subjects, case-law is very important in international
economic law. You will need to study cases decided by international
courts and arbitration tribunals. Some of the reports of cases may be
found in the books referred to above. For others you will need to go to
the websites of the court or tribunal concerned, and for some earlier
cases you may also need access to the relevant international law reports.
1.7 Note-taking
It is particularly important in studying international economic law that
you make careful and orderly notes on each topic, including notes
relating to all relevant conventions (in particular about their current
status which you should have checked on the relevant website as
referred to above).
1.8 The examination

Important: The information and advice given in the following
section is based on the examination structure used at the time this
Guide was written. However, the University can alter the format,
style or requirements of an examination paper without notice.
Because of this, we strongly advise you to check the instructions
on the paper you actually sit.
Your understanding of the material covered by the syllabus for this
module will be assessed by an unseen written examination of 45
minutes’ length, with reading time. To the extent that there are any
prerequisites for this module, knowledge of the materials covered in
those prerequisites may be necessary to answer the questions on the
examination of this module.
Due to restrictions imposed as a response to the global Covid-19 crisis
the examination for this module took place online in 2020. You will be
advised as to the means of examination in 2021, taking into account
policies and procedures applicable to your region.
1.9 Examination techniques

International economic law examination papers usually consist only
of essay questions; but sometimes there are also problem questions.
These two types of questions require very different techniques. In the
case of problem questions you need to be able to:
• identify the relevant areas of law under discussion
7
• identify the relevant facts in the question

• apply relevant international law, including case-law, to those
facts.
If you are answering an essay question, a different set of skills is
required. The examiners are looking for good critical answers to
often difficult questions and issues. You can achieve high marks only
if you are able to show a clear understanding of these issues and the
manner in which they are reflected in the law.
In answering any examination questions, you are expected to
demonstrate that you:
• have a critical understanding of the legal provisions concerned
with the subject matter
• know how certain treaty provisions or principles of international
law have been applied or interpreted by international courts
and tribunals
• are familiar with the leading literature in the area.
In your answer, you should refer to the particular provision(s)
concerned, whether contained in a bilateral or multilateral treaty or
in any other international instrument on the subject matter.
You should demonstrate an awareness of recent developments
in the area and any recent decisions of international courts and
tribunals and major policy decisions taken at the international level,
whether within or outside of relevant international organisations.
You should also write your answers in your own words and provide
your own views on a question, citing authorities as far as possible.
If the examination takes place in a physical venue, be mindful of
the need to handwrite large amounts of information in tight time
conditions. Your handwriting needs to be neat and remain legible
to the examiner. Leave lots of space as you are writing (do not cram
information tightly) and train yourself to handwrite legibly under
pressure.
To prepare for examinations, be sure to look at the past examination
papers for this subject, and, where available, the Examiners’ reports
on them. These give detailed examples of the kind of responses
that examiners are looking for. The papers and reports are
available online on the course website. Do also attempt the sample
examination questions you will find in the Study Guide itself.
Good luck with your studies!
8
Chapter 2: Law and economic policy: a historical overview
Chapter 2: Law and economic policy: a

historical overview
Introduction
This chapter will discuss how economic relations between peoples and
countries have developed over time, giving rise to new challenges for
the law.
Learning outcomes
By the end of this chapter and the relevant readings you should be able to:
• describe how people of different countries started to interact with each other
• explain why this is important in the history of international relations and
international law
• describe how the rise of newly independent states came about and how this
influenced international economic relations.
Essential reading
• Herdegen, Chapters 1 and 2.
• UN Charter of Economic Rights and Duties of States 1974. Available at:
www.un-documents.net/a29r3281.htm
2.1 From antiquity to empires

Since time immemorial, the first and foremost objective of the law has
been to maintain law and order in society. When people in antiquity
began to organise themselves as societies on the basis of some rules
to govern the activities of the members of their society, the primary
occupation of the law was to maintain law and order in that society.
From its outset, the legal system of society advanced civilisation by
maintaining law and order and creating a mechanism for settlement of
disputes through third-party involvement.
This prevented members of society from taking the law into their own
hands and retaliating individually for any alleged injustices meted out
to them by other members of society.
Those not content with this basic objective of the law began to expand
its role by using it for social engineering with a view to advancing
civilisation, promoting justice (both social and economic) and
achieving greater prosperity and happiness for members of society.
For centuries people have endeavoured to create wealth and to surpass
older generations in attaining higher standards of living, prosperity and
happiness. This led some to venture out of their local communities and
interact with people from other communities for trade and commerce.
This level of interaction grew as science and technology advanced. New
modes of travel made it easy for explorers and adventurers to travel to
faraway countries. They were then followed by traders. Thanks to these
traders, people living in remote areas began to acquire access to goods
enjoyed by the people of southern Europe, the Mediterranean and
9
Asia. Consequently, the volume of trade and the level of interaction

between the people of these faraway countries grew. With this growth,
people belonging to different national communities began to learn
more about the lives and cultures of the people of foreign nations.
This was the beginning of the first phase of globalisation, and the
challenge for law (which would later be termed international law) was
to regulate the relations of people living under different sovereign
entities (local, regional and subsequently national) scattered all over
the world.
When societies began to organise themselves as political entities, those
with common aspirations began to form alliances, giving rise to the
formation of states. The most powerful and ambitious rulers strove
to bring as many states as possible under their sway to create vast
empires. Such empires needed massive amounts of wealth to sustain
them. On the basis of the wealth that they amassed, imperial rulers
embarked upon breathtaking projects in different spheres of human
activity, ranging from building physical infrastructure such as palaces,
castles, monuments, roads and bridges to promoting arts and culture.
However, in time, these empires began to crumble under their own
weight as they were, by and large, political entities held together on
the basis of force and oppression. The nations and peoples living under
the empires began to assert their freedom.
This process ultimately gave rise to the birth of modern nation states
in Europe. The Peace of Westphalia of 1648 was a major landmark in
the history of both international law and international relations. It was
this treaty which acted as a catalyst for the downfall of the Holy Roman
Empire and the birth of the modern nation state in Europe.
2.2 From empires to modern nation states

When these nation states became organised, they too began to assess
whether the world outside their boundaries offered any opportunities
for wealth creation and the betterment of their peoples’ lives.
Various expeditions were commissioned by these nation states to
explore what lay beyond the vast waters of the oceans to the east,
west and south. The explorers and adventurers who set off from their
European homelands in their journeys to unknown territories were
to return with exciting tales of faraway lands, together with samples
of exotic items collected during their travels overseas, enticing the
rulers and the populace of the country to embark on ever bigger
overseas expeditions. This was the beginning of the second phase of
globalisation and empire creation by nation states.
These explorers and adventurers became the catalyst for a profound
change in international relations in the centuries to come. People
living in Western Europe were now in active and direct contact with the
people of Asia, Africa and the Americas. The Europeans grew to depend
on the resources enjoyed by the people of Arabia, South and South-
east Asia and the Far East and the volume of trade between these
faraway territories began to grow.
10
With trade came missionaries to spread their religion, and with the help
of traders, missionaries, adventurers and explorers the nation states
of Western Europe began to create their own empires by colonising
the newly discovered lands. This global interaction between the
native peoples of Asia, Africa and Latin America on the one hand and
the Europeans on the other was the beginning of a new phase of
globalisation.
2.2.1 The colonial era

It was during the period of colonisation that international law began
to evolve as a body of law governing relations between states. The first
phase of international law-making was Eurocentric and was designed
to regulate affairs among the European powers themselves. The
colonial powers were often at war with each other but their relations
had to be regulated to ensure some degree of peace at home. Their
relations vis-à-vis their colonial territories overseas also had to be
regulated so that there was a smooth colonial rule.
The Congress of Vienna of 1815 and the Treaty of Versailles of 1919
were designed primarily to settle disputes between the warring states
of Europe. The establishment of the League of Nations together with
the creation of a Permanent Court of International Justice and the
International Labour Organization marked the beginning of a new
phase of globalisation.
These institutions sought to identify and advance the common values
of the international community based on the desire to institutionalise
peace. Bound by the rules of the Covenant of the League of Nations
and the provisions of the General Agreement of Peace of 1928, a spirit
of international community of nations emerged. The objectives of this
community were to act for the betterment of humanity.
However, colonial powers were in fierce competition with each
other for dwindling world resources, in order to meet the economic
aspirations of their rulers and populations. Competition for wealth
among the European powers and the desire to bring as many colonial
territories as possible within their control led to many wars between
them, including the First and Second World Wars.
When the capitalist countries of Europe were weakened by the First
World War, they resorted to protectionist measures to defend their
economic interests, rather than promoting the ideals of free trade.
Therefore, the inter-war period was a time of economic disorder
among the different capitalist countries on the one hand and between
capitalist countries and newly independent states on the other.
The idea of a community of nations suffered a huge setback when the
Second World War broke out in Europe. Moreover, during and prior
to the outbreak of hostilities in Europe, nations under colonial rule
elsewhere were struggling for independence. Just as nations within the
old European empires had sought freedom from their imperial rulers, so
nations under colonial rule began to assert their freedom from that rule.
Consequently, various waves of independence brought freedom to
nations under colonial rule. The independence of the Latin American
states was followed by the independence of many Asian and African
countries in the aftermath of the Second World War.
11
The independence of these countries posed new challenges to

international economic relations, as they sought to attain their own
aspirations and ambitions.
2.2.2 The effects of decolonisation

As these newly independent states started to assert their sovereign
rights, they came into conflict with the interests of those foreign powers
who had an economic interest in their territory. For instance, when the
newly independent states of Latin America asserted their economic
sovereignty by claiming that their national laws would apply to foreign
investors, the investors’ home countries challenged this assertion.
The argument advanced by the investor countries was that
international law (or more precisely, international minimum standards)
rather than national law applied to foreign investors. It was against this
backdrop that the norms of modern international economic law began
to evolve and the Eurocentric nature of international law began to
acquire a global character.
It was also during this phase of international law-making that
international law sought to regulate not only economic relations, but
also matters relating to:
• disarmament
• the use of force
• the conduct of states during time of war
• the peaceful settlement of disputes.
Latin American countries gradually came to accept international
minimum standards in their treatment of foreign investors through
various human rights instruments relating to the Americas.
By contrast, the newly independent states of Asia and Africa were more
assertive of their economic sovereignty and attempted to rewrite the
existing international law concerning economic relations through the
platform provided by the UN.
However, Western capitalist countries resisted this tendency and sought
to defend the existing rules of international economic law, which mostly
served the interests of capitalism. Soon after the establishment of the
UN, two camps of states, one led by the USA and the other by the former
USSR, became locked in a ‘Cold War’ that lasted for nearly 40 years.
During this time, a polarised form of globalisation was in existence.
In 1989–90 the ‘free world’ of capitalism, democracy and individual
freedom triumphed over communism. A new phase of globalisation
then began. This current phase has been the most comprehensive and
all-encompassing so far, bringing about far-reaching changes in almost
all spheres of human activity.
2.3 The aspirations of newly independent states

The number of independent developing states grew dramatically in the
1950s and 1960s, thanks to the success of independence movements in
Asia, Africa, the Pacific and the Caribbean. The economic order created
in the aftermath of the Second World War with the establishment of
12
the Bretton Woods institutions – the World Bank, the International

Monetary Fund (IMF) and the General Agreement on Tariffs and
Trade (GATT) – was no longer capable of fully addressing the world’s
economic problems in this changed context.
GATT 1947 was premised on the idea of creating a ‘level playing field’
in the conduct of the international trade. This was not acceptable to
the newly independent developing countries, who sought help from
the international community to be able to compete on a truly equal
footing and also benefit from the GATT regime.
What is more, the developing countries did not confine their aims to
changes to the GATT system, but had much more ambitious dreams
for themselves. They sought to restructure the whole international
economic order in order to bring about international justice – a
cherished goal of the international community outlined in the
Preamble to the Charter of the UN.
Consequently, the decolonisation period of the 1950s and 1960s was
characterised by conflict on both the economic and political fronts
between developed and developing countries.
When the newly independent states of Asia and Africa started acting
jointly with the Latin American states, they embarked on a policy
designed to achieve economic equality between states by proposing a
restructuring of international economic relations.
Activity 2.1
What do you think was the most important event in modern history impacting on
the rules governing international economic relations among states?
Feedback is available at the end of this Study Guide.
Summary and conclusions

This is the historical background to the development of international
economic law in modern times. As we can see, the history of
international economic law is basically the history of the interplay
between law and international politics. At its heart have been the
national interests of the major powers of the day and their desire to
fashion international economic law to suit their priorities.
Self-assessment questions
• Describe briefly the historical development of international economic
relations.
• In what ways have those relations changed in the last 100 years?
When you have completed this task, you might like to upload your answers to the
Student Café on the VLE and seek comments from your peers. Peer evaluation is
an excellent method of assessing your grasp of key course concepts.
Useful further reading

• Sakr, R.L. ’Beyond history and boundaries: rethinking the past in the present of
international economic law’ (2019) 22(1) Journal of International Economic Law.
Available via LexisLibrary in the Online Library.
13
• Ip, E.C. ‘Globalization and the future of the law of the sovereign state’
(2010) 8(3) International Journal of Constitutional Law 636–55. Available via
HeinOnline in the Online Library.
Reminder of learning outcomes

Having completed this chapter and the Essential readings and activities, you
should be able to:
• describe how people of different countries started to interact with each other
• explain why this is important in the history of international relations and
international law
• describe how the rise of newly independent states came about and how this
influenced international economic relations.
14
Chapter 3: The evolution of international economic law
Chapter 3: The evolution of

Introduction
Much of international economic law has developed relatively recently
in response to the growth in international economic activity.
As the expansion of international economic activity increased contacts
between people of different nations, and between the nations
themselves, this interaction had to be regulated by international law.
International economic law developed as a separate and identifiable
body of law in the post-Second World War era. Prior to this, the law
relating to international economic activities (e.g. the protection of
foreign investment) was at a rudimentary stage and was regarded as
part of public international law.
In the early years of the development of international economic
law, provisions dealt mainly with the nature of the legal relationship
between a state and a foreign company engaged in the exploitation of
the state’s natural resources.
It is in this context that this chapter will examine the evolution of select
key principles of international economic law.
Learning outcomes
• explain the importance of the history of international economic law
• explain how international economic law has evolved over time with regard to:
• the management and utilisation of natural resources
• the requirements of newly independent states
• the rise of capitalism.
Essential reading
• Herdegen, Chapters 2, 5 and 6.
• UN Resolution on the Permanent Sovereignty of States over their
Natural Resources 1962. Available at: www.un.org/ga/search/view_doc.
asp?symbol=A/RES/1803%28XVII%29
• UN Charter of Economic Rights and Duties of States 1974. Available via:
https://legal.un.org/avl/ha/cerds/cerds.html
3.1 The history of economic development

A major component of international economic law concerns itself with
the legal aspects of economic development. Until recently the element
of sustainability of economic development, or the need to conserve the
natural resources of the earth, was missing in the body of international
economic law.
15
Whether they be oil, water, phosphates or gas, all the natural

resources of a state have been regarded until recently as commercial
commodities to be exploited here and now for the economic
development of the country concerned.
There is a history of an effort towards the optimal utilisation of natural
resources by states for economic development. During the Industrial
Revolution, industrialising countries were engaged in the optimal
utilisation of their natural resources for their economic development.
During colonisation, colonial powers ruthlessly exploited the natural
resources of their colonies.
In the aftermath of the Second World War, colonial powers lost
their colonies but were keen to maintain their access to the natural
resources of those territories. However, the newly independent states
were asserting their economic independence following their political
independence. Consequently, they claimed permanent sovereignty
over their natural resources in accordance with their own economic
and development policies.
This is how international development law came to be part of
international economic law in the 1960s and 1970s.
3.1.1 The idea of sustainable economic development

The attempts made in the 1960s and 1970s within the UN to define
the nature of the legal relationship between a host state and a foreign
company sought to define the competence of a sovereign state to
expropriate and regulate foreign companies operating within it.
They did not seek to regulate the unhindered exploitation of natural
resources by states themselves.
1
The UN General Assembly
With the exception of a UN resolution of 1962 designed to endorse adopted a resolution in 1962
a call by UNESCO to enact effective domestic legislation to preserve on economic development and
natural resources (including flora and fauna1), the emphasis was very the conservation of nature
(Resolution 1831 (XVII)) in which
much on establishing the right of states in international law to exploit it expressed its consciousness of
their natural resources in accordance with their own development the extent to which economic
policies. development of developing
countries might jeopardise their
As well as various international economic law instruments, various natural wealth and resources,
human rights instruments adopted in the period from the 1960s including flora and fauna. As
to the 1980s sought to establish and strengthen the right of states Schrijver notes, through this
resolution the Assembly was
and peoples to freely dispose of their wealth and natural resources. endorsing ‘a call by UNESCO
Examples include: to enact effective domestic
legislation covering, inter alia, the
• the 1966 International Covenant on Civil and Political Rights (ICCPR)2 preservation and rational use of
• the 1966 International Covenant on Economic, Social and Cultural natural resources’. See Schrijver,
N. Sovereignty over natural
Rights (ICESCR)3
resources: balancing rights and
• the 1981 African Charter on Human and Peoples’ Rights.4 duties. (Cambridge: Cambridge
University Press, 1997), p.121.
Even the resolutions of the UN concerning the new international 2
Article 47 of the ICCPR.
economic order (NIEO)5 and the Charter of Economic Rights and Duties 3
Article 25 of the ICESCR.
of States6 adopted in the mid-1970s (i.e. during the heyday of the 4
Article 21 of the African Charter.
triumph of the developing countries within the UN) did not introduce
5
G.A.Res. 3201 (S-VI) and 3202
the element of sustainability or any need for countries to consider (S-VI) of 1 May 1974.
the environment while engaging in the exploitation of their natural 6
G.A.Res. 3281 (XXIX) of 12
resources. December 1974.
16
Thus, traditionally speaking, the idea of sustainable development or the

need to conserve natural resources was missing in the main corpus of
international economic law. It was only through developments taking
place elsewhere (mainly in the area of international environmental
law) that the idea of sustainable economic development and the need
to conserve natural resources was introduced on to the agenda of
international economic law.
The Charter of the UN (the ‘world constitution’) entrusted the UN with
an overall responsibility for formulating policies designed to:
• achieve higher standards of living for the people of the world
• address problems of an economic character.
Consequently, the UN began to work from quite early on for the
economic development of developing countries. It did not simply react
to economic events, but was also proactive in formulating policies
designed to address the problem of underdevelopment. The activities
of the UN and its specialised agencies in this regard have evolved in
phases, as follows.
Technical assistance
During the first phase of UN activities (i.e. between its establishment
and the late 1950s), its activities focused mainly on developing the
human resources of developing countries and providing technical
assistance to them.
The number of developing countries was small, and their ambition
limited. Providing technical assistance was seen by both the UN
and developed countries as the starting point for furthering their
development. The absorbing capacity of the developing countries
was limited. What they needed at an early stage of their economic
development was technical assistance in the form of expertise in
human resources and related assistance.
Economic sovereignty
As the number of developing countries grew within the UN, thanks
to accelerating decolonisation, they started to assert their economic
independence and champion a more just and fair world economic
system.
Between the late 1950s and the late 1960s, the international
development agenda moved on from providing technical assistance
to creating institutions such as the UN Conference on Trade and
Development (UNCTAD) to ensure that the international institutions
took the needs and aspirations of developing countries more seriously.
Developing countries began to challenge some of the existing
principles of international economic law in favour of a system which
met their aspirations. In doing so, they aimed to introduce some reform
of the Bretton Woods institutions, especially within the GATT system.
They also wished to introduce the development agenda into GATT.
17
3.2 Restructuring of the world economy

The 1960s was an exciting decade, raising human expectations and
ambitions. People saw that it was possible to go to outer space and
reach the moon, and towards the end of the decade the world came to
know that there was a huge reserve of mineral resources in the deep
seabed.
It was during this decade that a large number of states gained
independence – many of them with little or no bloodshed. It was
a positive and progressive time in many respects, but it was also
tumultuous. The Cold War reached new heights, the two superpowers
of the day came close to all-out nuclear war during the Cuban missile
crisis and developing countries sought to restructure the world
economy through the UN.
3.2.1 Developing countries assert themselves

During this decade the gap between rich and the poor widened
dramatically. The nations that had gained independence realised
that the existing world economic order was not conducive to their
economic development. Encouraged by the numerical majority that
they had now acquired within the UN and the solidarity that they
enjoyed, the developing countries decided to pursue a proactive policy
aimed at the redistribution of wealth through the UN.
The idea was first to halt the unilateral expansion and exploitation
of the world’s resources by a few technologically advanced and
economically powerful countries and then to introduce rules designed
to achieve equality of opportunity and justice for all.
Consequently, while the 1967 Treaty on Outer Space sought to prevent
unilateral claims over outer space and other celestial bodies by those
with the technological ability to travel in space, the 1970 Declaration of
the Common Heritage of Mankind sought to halt unilateral claims over
areas of the deep seabed and unilateral exploitation of the resources
therein.
Once the developing countries gained a numerical majority in the
UN, they sought to use the UN system to introduce much more
fundamental reform of the international economic system. In a sense,
the 1970s was the ‘heyday’ of developing countries’ influence, and saw
strong solidarity among them. They were encouraged by the oil crisis
of the early 1970s, during which oil-exporting developing countries
sought to flex their economic muscle. It was in the 1970s that the
non-aligned (capitalist or communist) movement of mainly developing
countries gathered some momentum and the idea of south–south co-
operation was treated as a serious proposition.
Developing countries were able to shape the policy agenda on a wide
range of issues. For instance, the UN General Assembly declared the
high seas and the ocean floor as the common heritage of mankind
and imposed a moratorium on unilateral exploitation of the mineral
resources of the deep seabed.
Thus, the 1970s were the ‘golden decade’ for developing countries – a
time of political triumph for them.
18
The new international economic order

While both Eastern and Western countries were competing for
influence and trying to win over new developing country friends for
their bigger political, military and strategic objectives, there was no
strong opposition initially from the developed countries to ambitious
proposals from developing countries. In fact, much of the communist
world sided with the aspirations of developing countries, and many
capitalist countries with some socialist values (e.g. the Scandinavian
countries, the Netherlands, Canada, Australia and New Zealand) had
some sympathy for the developing countries’ position.
Confronted with this changed situation, the leading developed
countries appeared to be in a state of confusion in their approach
towards the developing countries. The developed countries were still
seeking to redefine their position vis-à-vis the developing countries.
Many of the powerful developed countries had either liberal or pro-
human rights governments in the 1970s, and so could not mount
outright opposition to the attempts of the developing countries to
create a fairer and more just international economic system.
The developing countries were not satisfied with reform of the
GATT system. They were not content with a fairer trade regulating
mechanism. They wanted to change the focus of the existing
international economic institutions from regulating institutions to
more proactive institutions which would actively promote the ideals
of international economic justice through a redistributive international
economic system.
Eventually, the developing countries’ radical approach met with
resistance from developed countries. From then on, the UN was
divided into two camps: developed and developing countries. Since
the developing countries had a numerical majority, they pressed
ahead with resolutions within the UN which aspired to restructure the
world economy. This approach was represented by the notion of new
international economic order (NIEO).
3.3 The dawn of the new era

While the notion of the NIEO was still on the international agenda,
a powerful countermovement spearheaded the capitalist agenda
in much of the Western world. This countermovement was based
on privatisation, marketisation, globalisation, liberalisation of the
economy and less government, both nationally and internationally.
By the early 1980s China had decided to embark on greater economic
liberalisation and openness, and during that decade other leading
developing countries, such as India and Zambia, which had up to
then believed in a mixed economy and had socialist tendencies,
decided to abandon their traditional policy and jump on the capitalist
bandwagon.
Much of the developing world found itself in a state of confusion
during much of the mid-1980s, as many countries realised that their old
economic and political ideologies were not improving their economies.
Developing country solidarity was disintegrating and developing
19
countries now found themselves competing with each other for the
trickle of foreign direct investment from developed countries.
Consequently, the late 1980s became a period of political uncertainty
and economic confusion in many developing countries. As the
developing world began to embrace the capitalist agenda, the
communist world in Eastern Europe came under tremendous pressure
to open up its doors to the outside world.
A realisation on the part of the Soviet Union that it could not go on
shouldering the huge economic burden of the Cold War while other
countries (including its giant next-door neighbour, China) pursued
economic prosperity led to the collapse of communism in Eastern
Europe and the fall of the Berlin Wall.
The Soviet Union simply caved in under the pressure of capitalism.
It could not sustain the arms race nor could it go on extending an
expensive protective military umbrella over much of Eastern Europe.
The very reasons that led to the withdrawal of the Soviet Union
from its satellite states in Eastern Europe acted as catalysts for the
disintegration of the Soviet empire itself.
The chaos that ensued resulted in disarray right at the heart of the
Kremlin and relegated Russia, the core of the Soviet empire, to a weak
position. Ripples from the gigantic democratic revolution in Eastern
Europe and the changes in the central Asian republics spread to many
Asian and African states. This brought down old regimes and installed
new governments, some democratic and some semi-democratic, a
process that two decades after the fall of communism repeated itself
in Northern Africa and the Middle East in the ‘Arab Spring’ popular
uprisings against many of those countries’ rulers.
3.4 The height of corporate power

The 1990s represented the return of the ‘golden age’ for capitalism.
There was a huge swing from the 1970s heyday of developing
countries’ influence to the 1990s. During this era, capitalist countries,
led by the US and the UK, came to dominate the world, both politically
and economically.
The 1990s offered free-marketeers and multinational companies
an unprecedented opportunity to expand. The WTO agreements
concluded at the end of the Uruguay Round in 1993 reflected the
triumph of capitalism over socialism and ideas of a mixed economy.
While Russia attempted to recover from the disorder of the early 1990s,
China was quietly leaping forward on the road to economic prosperity.
Many developing countries dealing with civil strife and war were seeking
to emerge from chaos and confusion. This gave the developed countries
an unprecedented opportunity to assert their authority on more or
less every area of human activity throughout the 1990s. Consequently,
the 1990s became the most ambitious decade in recent times for the
globalisation of Western ideologies, both political and economic.
3.4.1 Opposition to capitalism

However, the triumph of capitalism and absence of any credible
opposition to the activities of multinationals and free-marketeers led
20
to excesses. The perception of world domination by big business and

concern that its pursuit of profit takes place at the expense of human
rights, the environment, and moral and ethical values, gave rise to
opposition from within.
Academics, other intellectuals, environmentalists, human rights
activists and other campaigners from around the world were united
in their opposition to the excesses of capitalism. In the late 1990s they
mounted huge and often successful protests. This time opposition
came not from the developing countries, nor from the socialist camp,
but from within many capitalist countries. Consequently:
• the OECD was forced to abandon a pro-big business draft
Multilateral Agreement on Investment (MAI) in 1998
• the WTO was forced to abandon its Seattle Conference in 1999
• both the World Bank and the IMF faced widespread opposition to
their policies from campaigners.
As a result, a period of reckoning began towards the end of the 1990s
which led to a more balanced approach to world trade by the time
the WTO met in Doha, Qatar, in November 2001. The tensions created,
however, led the era of the evolution of international economic law
through the WTO process close to an end.
3.5 The quest for a balanced system

The twenty-first century seemed to begin with a quest for a balanced
system which paid due attention to the interests of both developed
and developing countries. World leaders also seemed to be looking
to establish a system which paid due attention to human rights
considerations and environmental concerns while seeking to further
the agenda of international trade.
Some of the elements of the NIEO from the 1970s had apparently
resurfaced to give shape to the new agenda for the new century.
Examples were:
• the idea of quota-free and duty-free access to world markets for
products from the least-developed countries
• special and preferential treatment for developing countries
• some relaxation of the TRIPS provisions in favour of developing
countries, especially with regard to medicines for public health in
these countries.
It looked as if the world might just be witnessing a shift in emphasis in
terms of the regulation of international economic relations. However,
future progress in this quest for a balanced system depended on the
negotiating positions of various countries on fundamental issues
such as the liberalisation of trade in agriculture, the regulation of
investment, the inclusion or exclusion of labour rights within the
trade agenda and balancing the expansion of international trade
with environmental concerns. The latter are providing crucial impetus
for change, with the declaration of a Climate Emergency in a variety
of jurisdictions in response to UN assessments on the speed and
consequences of global warming. See the Intergovernmental Panel on
Climate Change (IPCC) 2019 Special Report at www.ipcc.ch/sr15/
21
Activity 3.1
How effective was the UN in pronouncing new principles of international
economic law in the 1960s and 1970s?

The principles of international economic law have undergone a
profound change in the last half century. The change was driven
initially by the aspirations of the newly independent states and later
by the demands of market forces following the process of accelerated
globalisation in the 1990s. The rules of international economic law that
exist today seek to address not only international economic issues, but
also other issues impacting on international economic relations.
• What does the idea of sustainable development entail?
• What did the new international economic order entail?
• What did the capitalist agenda of the 1980s and 1990s involve, and in what
ways (if at all) has this agenda now been modified?
an excellent method of assessment.

• Schipper, L. and M. Pelling ‘Disaster risk, climate change and international
development: scope for, and challenges to, integration’ (2006) 30(1) Disasters
19–38. Available via the Online Library.
• Glinavos, I. ‘Neoliberal law: unintended consequences of market-friendly law
reforms’ (2008) 29(6) Third World Quarterly 1087–99. Available via the Online
Library.

should be able to:
• explain the importance of the history of international economic law
• explain how international economic law has evolved over time with regard to:
• the management and utilisation of natural resources
• the requirements of newly independent states
• the rise of capitalism.
22
Chapter 4: Fundamental principles of international economic law
Chapter 4: Fundamental principles of

Introduction
This chapter will examine the definition of international economic law,
the fundamental principles of this body of law and developments in
other areas of international law that have influenced the development
of international economic law.
Learning outcomes
• explain the fundamental principles of international economic law
• explain the importance of the economic sovereignty of states and the PSNR.
Essential reading
• Herdegen, Chapters 4, 5, 6 and 8.
• UN Resolution on the Permanent Sovereignty of States over their Natural
Resources 1962. Available via: https://legal.un.org/avl/ha/ga_1803/ga_1803.
html
• UN Charter of Economic Rights and Duties of States 1974. Available at:
www.un-documents.net/a29r3281.htm
• Rio Declaration on Environment and Development 1992. Available at:
www.un.org/en/development/desa/population/migration/generalassembly/
docs/globalcompact/A_CONF.151_26_Vol.I_Declaration.pdf
• Kyoto Protocol of 1997. Available at: https://unfccc.int/resource/docs/convkp/
kpeng.pdf
• Paris Agreement under the UN Framework Convention on Climate Change
(FCCC). Available at: https://unfccc.int/sites/default/files/english_paris_
agreement.pdf
4.1 The definition of international economic law

International economic law regulates the international economic order
or economic relations among nations. However, the term ‘international
economic law’ encompasses a large number of areas.
It is often defined broadly to include a vast array of topics ranging from
the public international law of trade to private international law of
trade, to certain aspects of international commercial law and the law of
international finance and investment.
The International Economic Law Interests Group of the American
Society of International Law includes the following non-exhaustive list
of topics within the term ‘international economic law’:
1. International Trade Law, including both the international law of

the World Trade Organization and GATT and domestic trade laws;
2. International Economic Integration Law, including the law of the
European Union, NAFTA (now USMCA) and Mercosur;
23
3. Private International Law, including international choice of law,

choice of forum, enforcement of judgments and the law of
international commerce;
4. International Business Regulation, including antitrust or
competition law, environmental regulation and product safety
regulation;
5. International Financial Law, including private transactional
law, regulatory law, the law of foreign direct investment
and international monetary law, including the law of the
International Monetary Fund and World Bank;
6. The role of law in development;
7. International tax law; and
8. International intellectual property law.
4.2 The basis of international economic law

International economic law is based on the traditional principles of
international law such as:
• pacta sunt servanda
• freedom of contract
• sovereign equality
• reciprocity
• economic sovereignty.
It is also based on modern and evolving principles such as:
• the duty to cooperate
• permanent sovereignty over natural resources
• preferential treatment for developing countries in general and the
least-developed countries in particular.
The sources of international economic law are the same as those
sources of international law generally outlined in Article 38 of the
Statute of the International Court of Justice:
Article 38
(1) The Court, whose function is to decide in accordance
with international law such disputes as are submitted to it,
shall apply: (a) international conventions, whether general
or particular, establishing rules expressly recognized by the
contesting states; (b) international custom, as evidence of a
general practice accepted as law; (c) the general principles of
law recognized by civilized nations; (d) subject to the provisions
of Article 59, judicial decisions and the teachings of the most
highly qualified publicists of the various nations, as subsidiary
means for the determination of rules of law.
4.3 Economic sovereignty

When states began to function as politically independent and
sovereign entities, they realised that one of the most important
attributes of state sovereignty was economic sovereignty. Without
this, political sovereignty was not complete. Asserting economic
24
sovereignty meant having control over the economic activities of both

juridical and natural persons conducting business within the country,
whether nationals of that country or foreigners.
Owing to a number of historical reasons, many states inherited on
independence a situation in which foreign individuals or companies
enjoyed certain concessions, privileges or control over the economic
activities of the country concerned. In many states natural resources
and mining rights were controlled by foreign companies or individuals
under a concession agreement entered into with the previous
administration, whether colonial or otherwise.
When the country concerned wished to embark on a policy of
economic development, one of the first initiatives it had to take was
to consider harnessing its natural resources in accordance with its
economic policies. It therefore became necessary for these states to
assert sovereignty over the natural resources of their countries and
require that foreign individuals and companies comply with new
policies adopted by the state.
In many countries it was difficult to assert economic sovereignty
without doing away with the rights, concessions and privileges
enjoyed by foreign individuals and companies over the country’s
natural resources.
However, developed countries (whose nationals had gone overseas
to invest and do business) resisted attempts to impose national law
on foreigners. They argued that existing concessions and contracts
had to be honoured under international law. It was at this juncture
that the concept of permanent sovereignty over natural resources was
introduced in international law.
4.4 Permanent sovereignty over natural resources

(PSNR)
When the number of newly independent developing countries grew,
these states sought to assert their complete economic sovereignty by
proclaiming that they had complete and permanent sovereignty over
their natural resources – regardless of any arrangements made by their
previous colonial administrations.
Consequently, a resolution was introduced in the UN General Assembly
to this effect and was passed by an overwhelming majority of
states. Paragraphs 1 and 2 of the famous 1962 UN General Assembly
Resolution on the Permanent Sovereignty over Natural Resources
(PSNR) state:
1. 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;
2. The 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 with regard to the authorisation,
restriction or prohibition of such activities.
25
Accordingly, the resolution goes on to outline the rights of states with

regard also to the expropriation and nationalisation of the assets of
foreign companies:
4. Nationalisation, expropriation or requisitioning shall be based
on grounds or reasons of public utility, security or the national
interest which are recognised as overriding purely individual or
private interests, both domestic and foreign. In such cases the
owner shall be paid appropriate compensation, in accordance
with the rules in force in the state taking such measures in the
exercise of its sovereignty and in accordance with international
law. In any case where the question of compensation gives rise
to a controversy, the national jurisdiction of the state taking
such measures shall be exhausted. However, upon agreement
by sovereign states and other parties concerned, settlement of
the dispute should be made through arbitration or international
adjudication.
The concluding paragraph of the resolution seeks to assure investor

countries and foreign investors that the provisions of bilateral
investment agreements will be respected:
8. Foreign investment agreements freely entered into by or
between sovereign states shall be observed in good faith; states
and international organisations shall strictly and conscientiously
respect the sovereignty of peoples and nations over their
natural wealth and resources in accordance with the Charter
and the principles set forth in the present resolution.
The provisions of the PSNR Resolution (Resolution 1803 of 1962) have

been held widely as representing customary international law because
of:
• the unanimous support it received at the UN
• its declaratory nature of the rules of customary international law on
the subject matter.
4.5 Fundamental principles of international

economic law
As an attempt to implement the objectives of the NIEO and to establish
the norms of international economic relations, the UN General Assembly
adopted as part of its resolutions on the NIEO the Charter of Economic
Rights and Duties of States (CERDS) of 1974. The full text of this Charter
is available at www.un-documents.net/a29r3281.htm
Chapter 1 of the Charter outlines the fundamentals of international
relations in the following words:
Economic as well as political and other relations among states
shall be governed, inter alia, by the following principles:
a. Sovereignty, territorial integrity and political independence
of States;
b. Sovereign equality of all States;
c. Non-aggression;
26
d. Non-intervention;
e. Mutual and equitable benefit;
f. Peaceful coexistence;
g. Equal rights and self-determination of peoples;
h. Peaceful settlement of disputes;
i. Remedying of injustices which have been brought about
by force and which deprive a nation of the natural means
necessary for its normal development;
j. Fulfilment in good faith of international obligations;
k. Respect for human rights and international obligations;
l. No attempt to seek hegemony and spheres of influence;
m. Promotion of international social justice;
n. International co-operation for development;
o. Free access to and from the sea by land-locked countries
within the framework of the above principles.
These are principles of a general nature which include both economic

and political principles and reflect the trend of the early 1970s.
Articles 1, 2, 4 and 5 outline the economic rights and duties of states in
a more concrete manner:
Article 1
Every State has the sovereign and inalienable right to choose
its economic system as well as its political, social and cultural
systems in accordance with the will of its people, without
outside interference, coercion or threat in any form whatsoever.
Article 2
1. Every State has and shall freely exercise full permanent
sovereignty, including possession, use and disposal, over all its
wealth, natural resources and economic activities.
2. Each state has the right:
a. To regulate and exercise authority over foreign investment
within its national jurisdiction in accordance with its
laws and regulations and in conformity with its national
objectives and priorities. No State shall be compelled to
grant preferential treatment to foreign investment;
b. To regulate and supervise the activities of transnational
corporations within its national jurisdiction and take
measures to ensure that such activities comply with its
laws, rules and regulations and conform with its economic
and social policies. Transnational corporations shall not
intervene in the internal affairs of a host State. Every State
should, with full regard for its sovereign rights, cooperate
with other States in the exercise of the right set forth in this
subparagraph;
c. To nationalize, expropriate or transfer ownership of foreign
property, in which case appropriate compensation should
be paid by the State adopting such measures, taking
into account its relevant laws and regulations and all
circumstances that the State considers pertinent. In any case
where the question of compensation gives rise to a
27
controversy, it shall be settled under the domestic law of the

nationalizing State and by its tribunals, unless it is freely and
mutually agreed by all States concerned that other peaceful
means be sought on the basis of the sovereign equality of
States and in accordance with the principle of free choice of
means.
Article 4
Every State has the right to engage in international trade
and other forms of economic cooperation irrespective of any
differences in political, economic and social systems. No State
shall be subjected to discrimination of any kind based solely on
such differences. In the pursuit of international trade and other
forms of economic cooperation, every State is free to choose
the forms of organisation of its foreign economic relations and
to enter into bilateral and multilateral arrangements consistent
with its international obligations and with the needs of
international economic cooperation.
Article 5
All States have the right to associate in organizations of primary
commodity producers in order to develop their national
economies, to achieve stable financing for their development
and, in pursuance of their aims, to assist in the promotion
of sustained growth of the world economy. In particular
accelerating the development of developing countries.
Correspondingly, all States have the duty to respect that right
by refraining from applying economic and political measures
that would limit it.
Although the charter was not a ‘hard law’ instrument having binding
legal effect, many of the principles embodied in it have been regarded
as representing the basis for the development of international
economic law. Indeed, the charter reiterates some of the principles
that were already widely accepted as representing customary rules of
international law, such as the permanent sovereignty of states over
their natural resources.
4.5.1 The right to economic development

One of the central elements of the NIEO and CERDS was the economic
development of states. This element was reinforced and strengthened
through a 1986 resolution of the UN General Assembly on the right to
economic development of states. The main operative provisions of this
declaration read as follows:
Article 1
1. The right to development is an inalienable human right by
virtue of which every human person and all peoples are entitled
to participate in, contribute to, and enjoy economic, social,
cultural and political development, in which all human rights
and fundamental freedoms can be fully realised.
2. The human right to development also implies the full realisation
of the right of peoples to self-determination, which includes,
subject to the relevant provisions of both International Covenants
on Human Rights, the exercise of their inalienable right to full
sovereignty over all their natural wealth and resources.
28
Article 2
1. The human person is the central subject of development and
should be the active participant and beneficiary of the right to
development.
2. All human beings have a responsibility for development,
individually and collectively, taking into account the need for
full respect for their human rights and fundamental freedoms as
well as their duties to the community, which alone can ensure
the free and complete fulfilment of the human being, and they
should therefore promote and protect an appropriate political,
social and economic order for development.
3. States have the right and the duty to formulate appropriate
national development policies that aim at the constant
improvement of the well-being of the entire population and of
all individuals, on the basis of their active, free and meaningful
participation in development and in the fair distribution of the
benefits resulting therefrom.
Although the right to development is a difficult right to define in
concrete terms and does not have much legal significance, the
articulation of this right in 1986 has enabled the international
community to rely on it to support and develop:
• other principles of international trade and development
• special and preferential treatment for developing countries
• the need to address the problem of the international debt.
It can also be argued that the right to development was a contributor
to the adoption of the Millennium Development Goals by the
international community in 2000, at the dawn of the new millennium.
4.5.2 The law on natural resources

The Stockholm Declaration 1972
The Stockholm Declaration of the United Nations Conference on the
Human Environment of 19721 was perhaps the first major international 1
11 ILM 1416 (1972),
adopted on 16 June 1972.
environmental law instrument that introduced the idea of conserving
natural resources on to the agenda of international economic law.
Principles 2, 3 and 5 of the Stockholm Declaration speak of the need to
conserve natural resources:
Principle 2
The natural resources of the earth including, the air, water, land, flora
and fauna and especially representative samples of natural ecosystems
must be safeguarded for the benefit of present and future generations
through careful planning or management, as appropriate.
Principle 3
The capacity of the earth to produce vital renewable resources must
be maintained and, wherever practicable restored or improved.
Principle 5
The non-renewable resources of the earth must be employed in such
a way as to guard against the danger of their future exhaustion and to
ensure that benefits from such employment are shared by all mankind.
29
The Stockholm Declaration sought for the first time to limit the right
of states to exploit their natural resources (especially those which are
non-renewable).
As stated earlier, until this point international economic law had sought
to define and strengthen the rights of sovereign states to exploit their
natural resources (whether renewable or non-renewable) through
various instruments, such as the concept of permanent sovereignty
over natural resources.
However, while endorsing this right of states, Principle 21 of the
Stockholm Declaration sought to reconcile it with the need for
environmental protection:
States have, in accordance with the Charter of the United
Nations and the principles of international law, the sovereign
right to exploit their own resources pursuant to their own
environmental policies, and the responsibility to ensure that
activities within their jurisdiction or control do not cause
damage to the environment of other States or of areas beyond
the limits of national jurisdiction.
The Charter of Economic Rights and Duties of States 1974
Article 30 of the Charter of Economic Rights and Duties of States of
1974 included the following provision furthering the spirit of the
Stockholm Declaration:
The protection, preservation and enhancement of the
environment for the present and future generations is the
responsibility of all States. All States shall endeavour to establish
their own environmental and developmental policies in
conformity with such responsibility. The environmental policies
of all States should enhance and not adversely affect the present
and future development potential of developing countries. All
States have the responsibility to ensure that activities within their
jurisdiction or control do not cause damage to the environment
of other States or of areas beyond the limits of national
jurisdiction. All States should cooperate in evolving international
norms and regulations in the field of the environment.
Thus, the momentum was maintained within international
environmental law to limit the right to exploit natural resources in
favour of the preservation of the environment. Consequently, the need
to conserve natural resources and to exploit them in a sustainable
manner figured prominently in the 1982 World Charter for Nature.2 2
UNGA Res. 37/7; 22 ILM
455 (1983), adopted on 28
World Charter for Nature 1982 October 1982.
The preamble to this Charter declares that ‘man can alter nature and
exhaust natural resources by his action or its consequences and,
therefore, must fully recognise the urgency of maintaining the stability
and quality of nature and of conserving natural resources’.
The Charter then goes on to state that:
The degradation of natural systems owing to excessive
consumption and misuse of natural resources, as well as to
failure to establish an appropriate economic order among
peoples and among states, leads to the breakdown of the
economic, social and political framework of civilisation.
30
UN Convention on the Law of the Sea 1982

The need to pay attention to the preservation of the environment while
exploiting natural resources was also reflected in the Law of the Sea
Convention adopted in the same year.
Article 193 of this Convention provides that:
States have the sovereign right to exploit their natural resources
pursuant to their environmental policies and in accordance with
their duty to protect and preserve the marine environment.
Thus, from the 1980s onwards the idea developed that the right of
states to freely dispose of their wealth and natural resources was
subject to the concepts of:
• the preservation of the environment
• conservation of natural resources
• the sustainable use and development of such resources.
These concepts were also gradually finding their way into the body of
international economic law.
These principles of international environmental law had started
to influence the international economic law principles relating to
the exploitation of natural resources. Other environmental treaties
(whether global or regional) relating to specific regions (e.g. Africa or
Southeast Asia) or the protection of specific geographical areas (e.g.
wetlands) or specific natural resources (e.g. wildlife, flora and fauna)
had started lending their support to the idea that the international
economic law-based right of a state to exploit their natural resources
was subject to certain principles of international environmental law.
Examples are:
• the 1968 African Convention on the Conservation of Nature and
Natural Resources
• the 1985 ASEAN Agreement on the Conservation of Nature and
Natural Resources
• the 1971 Ramsar Convention on Wetlands
• the 1973 Convention on International Trade in Endangered Species
of Wild Fauna and Flora
• the 1979 Bonn Convention on the Conservation of Migratory
Species of Wild Animals
• the 1991 Protocol on Environmental Protection to the Antarctic
Treaty.
The Brundtland Commission

The 1985 report of the World Commission on Environment and
Development (WCED) (popularly known as the ‘Brundtland
Commission’) popularised the phrase ‘sustainable development’,
embodying both states’ right to economic development and their
obligation to pay particular attention to any degradation of the
environment resulting from development activities.
In other words, it was a phrase coined to express the balance that had
to be reached between the right of states to use or exploit their natural
31
resources in accordance with their developmental policies and the duty

inherent upon them to preserve the environment in carrying out such
developmental activities.
The Commission defined the term ‘sustainable development’
as ‘development that meets the needs of the present without
compromising the ability of future generations to meet their own
3
Our common future: World
needs’.3
Commission on Environment
In the opinion of the Commission, economic development that and Development. (Oxford:
undermined the environment or led to the excessive exploitation Oxford University Press, 1987),
p.43.
of natural resources to the detriment of future generations was not
sustainable development. Hence, it was felt that the need to preserve
and make rational use of the natural resources of a country in the
interests of the environment and future generations was inherent in
the concept of sustainable development.
The Rio Conference 1992

Following the groundwork done by the Brundtland Commission on
broad concepts such as sustainable development that embraced not
only the environment, but also all other economic activities regulated
by international economic law, the UN decided to convene a special
Conference on Environment and Development in Rio in 1992.
Unlike the Stockholm Conference (which was on the human
environment) the Rio Conference considered both the environment
and development, displaying the importance attached to the elements
embodied in both words. Principle 1 of the resulting Rio Declaration on
Environment and Development declared that human beings were at
the centre of concerns for sustainable development.
The Rio Declaration was adopted unanimously by the Rio Conference
– the largest conference ever convened in the history of international
relations. It seeks to recognise:
• the right of states under international economic law to exploit their
own resources pursuant to their own environmental policies
• the duty of states under international environmental law to ensure
that activities within their jurisdiction or control do not cause
damage to the environment of other states or of areas beyond the
limits of national jurisdiction.
Principle 2 of the Declaration reads:
States have, in accordance with the Charter of the United

Nations and the principles of international law, the sovereign
right to exploit their own resources pursuant to their
own environmental and developmental policies, and the
responsibility to ensure that activities within their jurisdiction
or control do not cause damage to the environment of other
States or of areas beyond the limits of national jurisdiction.
The language used here draws heavily on the provisions of:

• Principle 21 of the Stockholm Declaration
• Article 30 of the 1974 Charter of Economic Rights and Duties of
States
32
• the 1962 UN Declaration on Permanent Sovereignty of States over

their Natural Resources (PSNR).
The tension between the right of states to exploit their natural
resources and the need to conserve natural resources is reflected in
international economic law and international environmental law.
The law of sustainable development has brought these two together,
adding a sustainable development dimension to various principles of
international economic law such as:
• equity
• the right to economic development
• the right of permanent sovereignty of states over their natural
resources.
Although the Rio Declaration widened the scope of the principle of
sustainable development to include not only conservation of natural
resources, but also a host of other elements, it gave this principle a
credible international standing.
What is more, Principle 12 of the Rio Declaration injects the sustainable
development dimension into international economic law issues, and
highlights the importance of international economic law principles for
the effective operation of the rules of international environmental law.
Principle 12
States should cooperate to promote a supportive and open
international economic system that would lead to economic
growth and sustainable development in all countries, to better
address the problems of environmental degradation. Trade policy
measures for environmental purposes should not constitute a
means of arbitrary or unjustifiable discrimination or a disguised
restriction on international trade. Unilateral actions to deal with
environmental challenges outside the jurisdiction of the importing
country should be avoided. Environmental measures addressing
trans-boundary or global environmental problems should, as far as
possible, be based on an international consensus.
The UN Convention on Biological Diversity 1992

The Rio Declaration was not the only outcome of the Rio Conference.
The 1992 UN Convention on Biological Diversity was opened for
signature at the Rio Conference and was signed by 157 states and the
European Union.
The preambular paragraphs of the Convention reaffirm the sovereign
rights of states over their own biological resources.
However, the Convention stresses at the same time that states are
responsible for:
• conserving their biological diversity
• using their biological resources in a sustainable manner.
Article 6 of the Convention states:
Each Contracting Party shall, in accordance with its particular
conditions and capabilities:
33
a. Develop national strategies, plans or programmes for the

conservation and sustainable use of biological diversity
or adapt for this purpose existing strategies, plans or
programmes which shall reflect, inter alia, the measures set
out in this Convention relevant to the Contracting Party
concerned; and
b. Integrate, as far as possible and as appropriate, the conservation
and sustainable use of biological diversity into relevant sectoral
or cross-sectoral plans, programmes and policies.
Thus, although there are still not any specific international treaties
regulating the exploitation of certain natural resources (e.g. oil, gas,
minerals and land), the discussion in the preceding paragraphs
demonstrates that these natural resources must be exploited:
• in a sustainable manner
• with due respect for the environment.
The Kyoto Protocol and the Paris Accord

A key step towards a more efficient regime of climate protection was
the Kyoto Protocol of 1997. The Protocol is based on the concept of
a common, but differentiated responsibility of states. This approach
assumes the common responsibility of all states for the prevention of
further climate change, while taking into account the very different
positions of individual states in terms of causation and economic or
technical capacity to take measures of reduction. The Protocol provides
some flexible regulatory mechanisms which support international
cooperation and technology transfer. It also creates economic
incentives. Under the Kyoto Protocol, the initial period of commitments
only extended until 2012. The protracted post-Kyoto negotiations were
marked by a most difficult quest for consensus.
The UN Climate Conference in Doha (December 2012) adopted an
amendment to the Kyoto Protocol which established a new period
for the Protocol’s operation from 2013 until 2020 with new reduction
targets. In an associated development, in December 2015, the parties
to the Framework Convention on Climate Change adopted a new
treaty on climate change, the so-called ‘Paris Agreement’. This Paris
Agreement commits the parties to the overarching goal of keeping
global warming well below the threshold of 2°C and establishes the
related objectives such as low greenhouse gas emissions and climate-
resilient development (Article 2, para.1 p.147). The future of both the
Kyoto Protocol and the Paris Agreement are in doubt, however, with
diminishing interest from the US Administration under President Trump.
In November 2019 the USA begun the process of withdrawing from
the Paris Agreement, notifying the UN of its intention to leave. The
notification started a one-year process of exiting the global climate
change accord, culminating the day after the 2020 US election.
Activity 4.1
To what extent has international environmental law influenced the development
of international economic law?
34

Traditionally speaking, international economic law did not pay much
attention to environmental concerns. International economic and
commercial activities continued to expand until recently with little
concern for the harm done to the environment by these activities.
The main international economic agenda in the post-Second World War
period involved promoting the free movement of goods and capital
across borders and enabling states to exploit their natural resources to
the maximum extent possible for their economic development.
International economic law tried to catch up with this expansion
of international economic and commercial activities and regulate
wherever and whichever aspect possible, but without paying much
serious attention to environmental aspects of economic development.
However, more recently, developments taking place within
international environmental law have influenced the development
of international economic law. The international environmental law
principle of sustainable development, a relatively new principle, has
had a profound impact on international economic law.4 4
For a leading work in this
area, see Weiss, F., E.M.G.
Within the UN’s economic development agenda, a significant shift in Denters and P.J.I.M. de
emphasis in the theory of economic development began in 1987 with Waart (eds) International
the introduction of the concept of sustainable development, which economic law with a
human face. (Leiden: Brill/
sought to impose some restraints on economic development in favour Martinus Nijhoff, 1998)
of the need to protect the environment. [ISBN 9789041110015].
This idea also sought to unite both the developing and developed
countries in pursuit of a common agenda.
Implicit in the idea of sustainable development was that the
developing countries would receive financial assistance from the
developed countries to carry out developmental projects which:
• do not harm the environment
• take into account concepts such as intergenerational equity.
The development agenda of the world was no longer supposed to
be a struggle between the developed and developing countries.
Rather, both groups of states were supposed to work jointly to achieve
sustainable economic development.
All states had a duty to contribute to the process, but the level
of contribution would be guided by the concept of common but
differentiated responsibility. This idea was endorsed by the Rio
Declaration of 1992 and other instruments adopted by the Rio
Conference.
• What are the main principles of international economic law?
• How have those principles evolved over time?
35

• Carlarne, C. P. and J. Colavecchio ‘Balancing equity and effectiveness: the
Paris agreement and the future of international climate change law’ (2019)
27(2) New York University Environmental Law Journal 107–82. Available via
HeinOnline in the Online Library.
• Ruppel, O., C. Roschmann and K. Ruppel-Schlichting Climate change:
international law and global governance. Volume I: legal responses and
global responsibility. (Nomos Verlagsgesellschaft mbH, 2013). Available at:
https://www.jstor.org/stable/j.ctv941w8s

should be able to:
• explain the fundamental principles of international economic law
• explain the importance of the economic sovereignty of states and the PSNR.
36
Chapter 5: The institutional structure of international economic law
Chapter 5: The institutional structure of

Introduction
This chapter will describe the institutional structure of international
economic law and assess the role of international institutions in
developing international economic law.
Learning outcomes
• discuss the important role that international institutions have played and
continue to play in the development of international economic law, including:
• financial institutions (e.g. the World Bank, the IMF)
• the UN.
Essential reading
• Herdegen, Chapters 12, 38–40.
• Toye, J. UNCTAD at 50: A short history. (UNCTAD, 2014), available as a
UN publication: https://unctad.org/en/pages/PublicationWebflyer.
aspx?publicationid=936
5.1 Institutions
Apart from the traditional law of foreign investment, much of
international economic law has evolved since the conclusion of the
Bretton Woods agreements and the establishment of the UN. As the
Second World War came to an end, political leaders became interested
in establishing a new world economic and political order that would
help maintain international peace and security.
As with the Congress of Vienna of 1815 and the Treaty of Versailles
of 1919, at the end of the Second World War the victorious powers
had an opportunity to redraw the political and economic map of the
world. The establishment of the UN as an umbrella body was designed
to address the overarching political, economic and social issues, and
the establishment of the Bretton Woods institutions was designed to
address specific economic issues.
The idea was to create three institutions responsible for:
• financing reconstruction and development (i.e. the International
Bank for Reconstruction and Development, known as the World
Bank)
• ensuring monetary stability (i.e. the International Monetary Fund –
IMF)
• regulating international trade (i.e. the International Trade
Organization – ITO).
However, various factors, including crucially a lack of US support,
prevented the establishment of the ITO. Therefore, a provisional new
37
General Agreement on Tariffs and Trade (GATT) was concluded to

regulate international trade.
The basic architecture of the international economic order that was
laid at the end of the Second World War has served as the foundation
of international economic law and influenced the subsequent
development of the law governing international economic relations.
We look in more depth at institutions involved in the development
and implementation of the principles of international economic law
in Module B of this course. We will conclude this module with a brief
discussion of one very important body: the United Nations.
5.2 The UN and its specialised agencies

Historically the UN General Assembly has been the main body engaged
in the development of international economic law. We have already
mentioned some notable resolutions and declarations adopted by
the Assembly, including the 1962 Declaration on the Permanent
Sovereignty of States over their Natural Resources and the Charter of
Economic Rights and Duties of States of 1972.
These two documents include some of the main instruments outlining
the rights and obligations of states with regard to their economic
relations with other states.
Another resolution adopted by the Assembly is the Millennium
Declaration of 2000, which outlines the Millennium Development Goals
of the UN.
Several specialised UN agencies also play an important role in the
development of international economic law, including, inter alia:
• the Economic and Social Council (ECOSOC)
• the UN Conference on Trade and Development (UNCTAD), which
has played an important role in developing policies designed to
articulate, advance and defend the trade and other economic rights
of developing states
• the UN Development Programme (UNDP), which co-ordinates the
development activities of the UN in its developing member countries.
Prominent among the specialised agencies of the UN are the World
Bank Group and the IMF. As will be seen in Module B of this course,
the institutions within the World Bank Group have played a major role
in the development and implementation of the rules of international
economic law.
5.2.1 The World Trade Organization

The most important organisation for the liberalisation of trade is the
World Trade Organization (WTO). It was established in January 1995
as an independent organisation to oversee the implementation of the
WTO agreements.
Unlike its predecessor, GATT, the WTO is not a specialised agency of the
UN, but an independent organisation. However, it has some working
relationship with the UN and its specialised agencies (e.g. the World
Bank) through separate agreements.
38
Chapter 5: The institutional structure of international economic law
Activity 5.1
Do the powers and status of the Economic and Social Council of the UN allow it
to play a major role in driving the international economic agenda?

The role of international institutions in the regulation of international
economic affairs has varied. While one of the objectives of the UN has
been to achieve economic equality and economic justice, the World
Bank and the IMF have by and large played into the hands of capitalist
countries. Undemocratic as they are in terms of their institutional
and constitutional bases, these two institutions have advanced the
capitalist agenda through conditionality and other so-called ‘economic
reform programmes’ in much of the developing world.
The WTO does not have any ambition to engage in social engineering.
Although the current WTO agenda gives the impression that the
WTO is a very powerful body, its role is limited to overseeing the
implementation of WTO agreements concluded by its member states.
Unlike the UN, it has no agenda of its own towards the creation of a
fairer world. Nor does it have the economic leverage and elasticity that
the IMF and the World Bank have in their operation and in terms of
their constituent documents.
The WTO is there to perform basically a technical task of co-ordinating,
facilitating and overseeing the implementation of the existing
agreements and the conclusion of future agreements. Its influence on
international economic law will be discussed in detail in subsequent
modules of this course.
Self-assessment question
What are the main international institutions involved in regulating international
economic law?
Sample examination question

How successful has the UN been in developing the principles of international
economic law?

• MacKenzie, D. ‘Forever adaptable: The United Nations system at 70’ (2015) 70(3)
International Journal 489. Available via the Online Library.
• Higgins, R. et al. Oppenheim’s international law: United Nations. (Oxford: Oxford
University Press, 2017) [ISBN 9780198808312]. Available via Oxford Scholarly
Authorities in International Law in the Online Library.
39

should be able to:
• discuss the important role that international institutions have played and
continue to play in the development of international economic law, including:
• financial institutions (e.g. the World Bank, the IMF)
• the UN.
40
Feedback
Feedback
Chapter 2
Activity 2.1
Decolonisation has had a profound impact on the evolution of
international economic law. In order to address the economic
aspirations of the newly independent states, international law had to
transform itself and develop new principles (such as the principle of the
permanent sovereignty of states over their natural resources, discussed
in the following chapters).
Back
Chapter 3
Activity 3.1
In spite of being basically a political organisation, the UN has made a
substantial contribution to the development of international economic
law.
You should assess the reasons for the success or failure of various
UN General Assembly resolutions concerning the New International
Economic Order (NIEO), in particular, as the NIEO was perhaps the most
ambitious attempt by the UN to restructure world economic relations.
Back
Chapter 4
Activity 4.1
Developments within international environmental law have had a
profound impact on international economic law. The principle of
sustainable development itself is a major contribution to the evolution
of international economic law, and the law of natural resources is partly
international economic law and partly international environmental
law. The obligation to exploit the natural resources of a state in a
sustainable manner was another major influence of international
environmental law on international economic law.
Back
Chapter 5
Activity 5.1
The Economic and Social Council (ECOSOC) is a principal organ of the
UN, which basically is a political organisation. ECOSOC can operate
only within the framework of the UN Charter. You should look at
the provisions of the UN Charter on the powers and functions of
ECOSOC when assessing its effectiveness. You should also look at
the composition of its membership and the political way in which
41
members are elected, which makes ECOSOC more of a political body

than a purely economic body.
Back
Advice on answering the sample examination question

In answering this question, you would be expected to survey the
achievements of the major international economic conferences,
beginning with the Havana Conference organised by the UN to
address global economic issues. You should also outline the trade and
economic institutions established by the UN, such as UNCTAD. Most of
the major international economic instruments have emanated from the
work of the UN, including GATT. You should also refer to the principle
of permanent sovereignty of states over their natural resources and the
right to development.
Back
42
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Master of Laws (LLM)

Postgraduate Diploma in Laws

Revised edition, 2021

̆ Dr Ioannis Glinavos, LLB, LLM, PhD, Senior Lecturer in Law, University of

The University of London gratefully acknowledges the contribution of Professor S.P.

Published by: University of London

Welcome to this course in International economic law, part of the

1.1 General guidance and introduction to the course

The course seeks to strike a balance between theory and practice.

Aims and objectives for Module A

Learning outcomes for Module A

1.2 Sources of international economic law

the test of generality, uniformity and consistency, and is coupled with a

1.3 How to use this Study Guide

Although the course is self-contained, a basic knowledge of public international

1.3.2 The VLE and electronic resources

Key sources of information are accessible online through the

Testing your research skills

1.4 Allocating your time

1.5 Keeping up to date

Technically, unless you are advised otherwise, examinations for the

1.8 The examination

1.9 Examination techniques

• identify the relevant facts in the question

Chapter 2: Law and economic policy: a

2.1 From antiquity to empires

Asia. Consequently, the volume of trade and the level of interaction

2.2 From empires to modern nation states

2.2.1 The colonial era

The independence of these countries posed new challenges to

2.2.2 The effects of decolonisation

2.3 The aspirations of newly independent states

the Bretton Woods institutions – the World Bank, the International

Summary and conclusions

Useful further reading

Reminder of learning outcomes

Chapter 3: The evolution of

3.1 The history of economic development

Whether they be oil, water, phosphates or gas, all the natural

3.1.1 The idea of sustainable economic development

Thus, traditionally speaking, the idea of sustainable development or the

3.2 Restructuring of the world economy

3.2.1 Developing countries assert themselves

The new international economic order

3.3 The dawn of the new era

3.4 The height of corporate power

3.4.1 Opposition to capitalism

to excesses. The perception of world domination by big business and

3.5 The quest for a balanced system

Summary and conclusions

Useful further reading

Reminder of learning outcomes

Chapter 4: Fundamental principles of

4.1 The definition of international economic law

1. International Trade Law, including both the international law of

3. Private International Law, including international choice of law,

4.2 The basis of international economic law

4.3 Economic sovereignty

sovereignty meant having control over the economic activities of both

1.1 General guidance and introduction to the course

4.4 Permanent sovereignty over natural resources

4.5 Fundamental principles of international