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The Nature of Law Newsletter, April 2007



Volume 1, Issue 4, April 2007

Message from the Chief Counsel

The common theme of the various contributions to this fourth issue of our newsletter is the complexity of the legal issues raised by environment-related disputes, be they brought before national courts, international courts, arbitral tribunals or neutral experts. I first analyze some aspects of the U.S. Supreme Court's recent decision in Massachusetts v. EPA, in which the Court addresses global warming for the first time. Next, Maurizio Ragazzi and Salman Salman discuss the International Court of Justice's recent decision on provisional measures in the ongoing River Uruguay case. Then Rolande Pryce considers the arbitral award on a maritime boundary dispute between Barbados and the Republic of Trinidad and Tobago. Finally, Salman Salman examines the international waters difference between Pakistan and India that led to the appointment of a Neutral Expert under the Indus Waters Treaty. For anyone interested in a more in-depth review of any of these matters, please do not hesitate to contact LEGEN.

Charles E. Di Leva
Chief Counsel, Environment and International Law Unit
Legal Vice Presidency - The World Bank


Massachusetts , et al. v. Environmental Protection Agency - Landmark Climate Ruling
By Charles Di Leva

River Uruguay Dispute before the ICJ (Orders on Provisional Measures)
By Salman M.A. Salman & Maurizio Ragazzi

Barbados and the Republic of Trinidad and Tobago: Arbitral Tribunal Award on Access to Flyingfish Stock
By Rolande Simone Pryce

Neutral Expert Renders his Decision on the Baglihar Difference
By Salman M.A. Salman

Massachusetts , et al. v. Environmental Protection Agency - Landmark Climate Ruling
By Charles Di Leva

On April 2, 2007, the United States Supreme Court issued its much-anticipated ruling in Massachusetts, et al. v. Environmental Protection Agency. (No.05-1120). The case addressed the claim by the State of Massachusetts that it had legal standing to argue that the EPA should be required to regulate carbon dioxide as a pollutant under the U.S. Clean Air Act. During oral argument on November 29, 2006, the Massachusetts, Attorney General addressed the standing issue by noting damage to the State’s coastline from rising sea level that would only get worse as global warming continues. Some Justices asked whether such damage could be apportioned, and whether the State should have standing if the contribution from the sector of the US economy that EPA could regulate would have only a very minor impact on the total sea-level rise. Justices also discussed how and whether to take into account the share of emissions from other nations, given the predicted rise from China and India, as examples.

In a 5-4 decision, the majority referred to the “respected scientific opinion that a well-documented rise in global temperatures and attendant climatological and environmental changes have resulted from a significant increase in the atmospheric concentration of “greenhouse gases” and, in addressing the issue of standing, held that “EPA’s steadfast refusal to regulate greenhouse gas emissions present a risk of harm to Massachusetts that is both ‘actual’ and ‘eminent’ ”. The manner in which EPA refused the state’s petition to regulate greenhouse gases was in the view of the majority both “arbitrary and capricious”, and the question of whether to regulate CO2 has been sent back to EPA with the requirement that it ground its reasons for action or inaction in a manner consistent with the Clean Air Act. The Court stated that EPA’s argument that it cannot resolve the greenhouse gas issue due, at least in part , to the emissions predicted from India and China should not be determinative on whether EPA should act.

While the ruling for this precedent-setting case was eagerly awaited, other actions concerning climate change are also continuing. For example, in the United States, disputes between the auto industry and individual states within the U.S. are underway in several courts.

The United States is not the only venue where climate change litigation is taking place. Two recent state decisions in courts in Australia take conflicting views on the question whether climate change should be taken into account for purposes of environmental impact assessments. In Gray v. The Minister for Planning and Ors [2006], NSWLEC 720, the New South Wales Land and Environment Court decided on November 29, 2006 that a mine developer had failed to adequately account for greenhouse gas emissions from its mine in its environmental impact assessment and that these emissions had to be taken into account by the government in issuing a permit. Another court took a different approach to the issue.

The Inter-American Commission on Human Rights (IACHR) of the Organization of American States (OAS) was also the venue for an effort to file a petition that the United States should be held responsible for the damage that global warming was causing to the Inuit People of the Arctic Regions. The claim was rejected, however, without prejudice, and the attorneys representing the Inuit were invited to give testimony to the IACHR in support of their petition. The testimony was provided in February 2007 and is available on the OAS webpage, as well as at the CIEL website.. (While the Commission can only issue non-binding recommendations, its decisions are often used in building legal arguments before courts and administrative tribunals.)

The foregoing discussion represents a noticeable trend to use legal mechanisms to address the impacts of climate change. (See, "The Next Big Thing in Environmental Law: Climate Change", International Herald Tribune Business Section March 21, 2007). As this article points out, there is an expectation, even before the U.S. Supreme Court ruling, that extensive litigation concerning the effects of global warming in the years to come is highly likely.

River Uruguay Dispute before the ICJ (Orders on Provisional Measures)
By Salman M.A. Salman & Maurizio Ragazzi

In the July 2006 issue of this Newsletter, we reported that, in May 2006, Argentina had brought a case against Uruguay before the International Court of Justice (the ICJ). The case concerns certain breaches, allegedly committed by Uruguay through the unilateral authorization to construct pulp mills near Frey Bentos, of the 1975 Statute of the River Uruguay. The Statute regulates the conservation, utilization, exploitation of natural resources, and prevention of pollution of the River Uruguay, which partially constitutes the boundary between the two countries.

In submitting its application, Argentina also requested from the ICJ the indication of provisional measures whereby Uruguay would suspend all authorizations for the construction of the mills, take all necessary measures to stop building work on the mills, cooperate with Argentina to ensure optimal and rational utilization of the river, and refrain from both unilateral actions regarding the construction of the mills and from aggravating actions that would render the settlement of the dispute more difficult. By an order dated July 13, 2006, the ICJ found that the circumstances did not justify the indication of the requested provisional measures.

Several months later, it was Uruguay that submitted a request to the ICJ for provisional measures, on the grounds that organized groups of Argentine citizens had blockaded a vital international bridge over the Uruguay River. The request, submitted to the ICJ on November 30, 2006, alleged that such an action was causing enormous economic damage to Uruguay, without Argentina having taken any steps to put an end to the blockade. Uruguay asked the ICJ to order Argentina to take all reasonable and appropriate steps to prevent or end the interruption of transit between the two countries, and to abstain from taking measures that might aggravate the dispute or prejudice the rights of Uruguay in dispute before the ICJ.

In response to this request too, the ICJ gave a negative answer by an order dated January 23, 2007: it was not convinced that the blockade risked prejudicing irreparably the rights claimed by Uruguay, nor that such a risk was imminent.

In conclusion, the ICJ reiterated its call, already made in the 2006 order, that the parties fulfill their obligation under international law, that they implement the procedures set forth in the 1975 Statute, and that they refrain from actions which might render more difficult the settlement of the dispute.

The documentation regarding the case is electronically available at the ICJ web site. 

Barbados and the Republic of Trinidad and Tobago: Arbitral Tribunal Award on Access to Flyingfish Stock
By Rolande Simone Pryce

On April 11, 2006, the Permanent Court of Arbitration published the arbitral award regarding the request of Barbados to set a single maritime boundary line delimiting the exclusive economic zone (EEZ) and the continental shelf between Barbados and Trinidad and Tobago, as provided under Articles 74 and 83 of the 1982 United Nations Convention on the Law of the Sea (UNCLOS). In its decision, the arbitral tribunal identified that single maritime boundary line, thus introducing an element of certainty as to the area within which each State can exercise its sovereign rights in the waters off their coasts. In a proactive manner, the tribunal (composed of eminent international lawyers with wide expertise in the law of maritime delimitation) delineated the relevant legal principles and crucial facts that should inform the interaction of these States, as they attempt to resolve the vexing question of access to fisheries by Barbadian fisherfolk in the EEZ of Trinidad and Tobago.

The award, however, was limited to maritime delimitation and did not concern fisheries per se. The core of Barbados’ discontent thus was not definitively addressed. Barbadian fisherfolk must await the outcome of further negotiations between the two States to learn how their livelihoods will be impacted.

For some time, the two Caribbean countries had engaged in high-level negotiations concerning the use of resources, chief among them fisheries and hydrocarbons, in the maritime areas that they claimed respectively. These negotiations resulted in a 1979 Memorandum of Understanding between them, covering, inter alia, hydrocarbon exploration and fishing, and in a 1990 Fishing Agreement which regulated aspects of harvesting of fisheries resources by Barbadian fisherfolk in Trinidad and Tobago’s exclusive economic zone (EEZ) and facilitated access to Barbadian markets for Trinidad and Tobago’s fish. After the expiration of the 1990 Fishing Agreement, these issues remained unregulated and the repeated arrests of Barbadian fisherfolk by Trinidad and Tobago authorities for illegal fishing underscored the need for a definitive resolution of the issues. Thus, Barbados initiated the arbitration proceedings against Trinidad and Tobago, pursuant to Article 286 and Annex VII of UNCLOS, when negotiations broke down.

In handing out the award, the arbitral tribunal clarified that, while it had jurisdiction to consider the possible impact of Barbadian fishing activity on the maritime boundary, the dispute submitted to arbitration by Barbados and the relief sought did not give the tribunal jurisdiction to render a decision on the appropriate fisheries regime to apply in waters which may be determined to form part of Trinidad and Tobago’s EEZ.

Further, the tribunal:

  • observed that both States had a duty to agree on measures that would ensure the conservation and development of flyingfish stocks. In particular, with the Attorney General of Trinidad and Tobago having emphasized before the tribunal its Government’s readiness to negotiate an access agreement with Barbados, the tribunal concluded that Trinidad and Tobago had assumed an obligation to negotiate in good faith an agreement with Barbados that would give Barbados access to fisheries within the EEZ of Trinidad and Tobago (subject to the limitations and conditions spelled out in that agreement and to the right and duty of Trinidad and Tobago to conserve and manage the living resources within its jurisdiction).
  • relying on the 1957 decision in the Lac Lanoux case (France v. Spain), also emphasized that the obligation to negotiate an agreement in good faith is an enforceable obligation that would be breached, for example, by the parties’ unjustified breaking off of the discussions, abnormal delays, disregard of the agreed procedures, or systematic refusal to take into consideration adverse proposals or interests.
  • acknowledged the fact that each State’s fisherfolk carry out fishing in different areas and for different species, without being in competition between themselves. This fact should facilitate the finding of an agreed solution from which both States will benefit without the gains of one being at the expense of the other.

Barbados and the Republic of Trinidad and Tobago - Award of the Arbitral Tribunal

Neutral Expert Renders his Decision on the Baglihar Difference
By Salman M.A. Salman

The Indus Waters Treaty concluded between India and Pakistan in 1960 has a number of unique features. First, it is the only international water treaty signed by a third party. This third party is the World Bank who mediated the original dispute over the Indus basin and assisted the two parties in reaching the agreement. That process took almost nine years of intensive negotiations and mediation. The result has been a lengthy instrument of close to 150 pages, addressing the various pertinent issues in a general way in the main part of the Treaty, and in a very detailed manner in eight annexures thereto.

A second unique feature of the Treaty is that it divided the six rivers comprising the Indus River system between the two parties, with India getting the Eastern rivers (the Sutlej, the Beas and the Ravi), and Pakistan getting the Western rivers (the Indus, the Jhelum and the Chenab). Despite this general allocation, each country has been allowed certain uses in the rivers allocated to the other. Those uses were detailed in separate annexures to the Treaty, perhaps because of the expectation that they could be contentious issues.

The World Bank signed the Treaty for certain specified purposes, namely, Articles V and X, and Annexures F, G and H. Article V “Financial Provisions” deals with India’s contribution to the replacement works that Pakistan would construct as a result of allocation of the Eastern rivers to India, as well as the Bank's responsibilities to manage the Indus Basin Development Fund. Those works were completed in the late 1960s. Article X deals with emergency provisions during the transitional period, and set forth certain responsibilities for the Bank during that period. The transitional period ended in 1973. Annexure H deals with “Transitional Arrangements” which were also completed. Thus, the Bank’s role and responsibilities under those two Articles and Annexure H have been fully completed. Annexures F and G deal with “Neutral Expert” and “Court of Arbitration,” respectively, in connection with settlement of differences and disputes, where the Bank has and will continue to have a limited procedural role.

The Treaty provides for varying processes for settlement of issues that may arise between the two parties. Any question regarding the interpretation or application of the Treaty is first examined by the Permanent Indus Commission (Commission) established under the Treaty, with one commissioner from each country. If the Commission is unable to resolve such a question, then the question becomes a “difference” which shall be dealt with by a Neutral Expert, to be appointed by agreement between the two parties. If the parties can not agree on a Neutral Expert, or on a third party to appoint a Neutral Expert, then, according to the provisions of the Treaty, the Neutral Expert shall be appointed by the World Bank. Detailed provisions on the Neutral Expert are laid down in Annexure F to the Treaty.

If the Neutral Expert determines that the difference does not fall under his mandate as prescribed by the Treaty, then the difference becomes a dispute and would be dealt with by a Court of Arbitration. The Commission itself could also deem a difference as a dispute which would be settled by a Court of Arbitration. Although the Treaty states that the decision of the Neutral Expert is final and binding, it also states that if any question which is not within the competence of the Neutral Expert should arise out of his decision, such a question should be settled in accordance with procedures that could involve the Court of Arbitration. The Court of Arbitration consists of seven arbitrators, two of whom would be appointed by each party. The remaining three (called umpires) would be appointed through a complex process that could also involve the World Bank.

Pakistan approached the World Bank on January 15, 2005, stating that a “difference” has arisen with India with regard to the Baglihar Hydropower plant which India is constructing on the Chenab river. Although the Chenab river has been allocated by the Treaty to Pakistan, India has been allowed certain uses of the river, including run-of-river hydropower plants, subject to certain conditions specified in great details under the Treaty. India claimed that the Baglihar Plant is in conformity with those conditions, while Pakistan challenged that claim.

This was the first time since the Treaty was concluded in 1960 that the Bank has been called upon by one of the parties to exercise its responsibilities under the Treaty with regard to the settlement of a difference or a dispute. The Bank studied the extensive briefings provided by the two parties and concluded that it was required under the Treaty to appoint a Neutral Expert. After consultations with the two parties, the Bank appointed on May 10, 2005, Mr. Raymond Lafitte, a Swiss national and professor at the Swiss Federal Institute of Technology as a Neutral Expert. At the request of the Neutral Expert, and with the agreement of the two parties, the International Centre for Settlement of Investment Disputes (ICSID) undertook coordination of the process. The parties presented their arguments both in writing and orally. Five meetings were organized for representatives of the two parties and the Neutral Expert, his assistant and legal adviser. In addition, the Neutral Expert visited the plant site and its model.

The Neutral Expert issued his decision on February 12, 2007, two years after Pakistan approached the World Bank. The decision dealt with the six contested issues: (i) maximum design flood, (ii) spillway, ungated or gated, (iii) spillway, level of the gates, (iv) artificial raising of the water level, (v) pondage, and (vi) level of the power intake.

The first issue on the maximum flood design related to the calculation of the maximum amount of water which can arrive at the dam. In view of many uncertainties of flood analysis, the Neutral Expert retained the value proposed by India of 16,500 m3/s.

With regard to the second issue of a gated or ungated spillway, Pakistan considered that a gated spillway is not necessary. The Neutral Expert determined that the conditions of the site require a gated spillway, indicating that an ungated spillway might create the risk of flooding the upstream shores, and that an elevation of the dam crest, which would prevent such a risk, would be costly.

On the issue of the level of the spillway gates, Pakistan stated that even if it can be assumed (without conceding) that a gated spillway is necessary, the orifice spillway proposed by India is not located at the highest level consistent with the provisions of the Treaty. The Neutral Expert determined that the gated chute spillway on the left wing planned in India’s design is at the highest level consistent with the Treaty. Moreover, the Neutral Expert considered that the outlets composing the sluice spillway, proposed by India, are of the minimum size and located at the highest level in conformity with the international practice and the state of the art and consistent with the Treaty. However, the Neutral Expert determined that the outlets should preferably be located 8 m. lower to ensure protection against upstream flooding.

On the fourth issue of the artificial raising of the water level, Pakistan considered that the dam crest elevation proposed by India is exaggerated and could be lower. The Neutral Expert determined that the dam crest elevation should be slightly lower than the one proposed by India.

With regard to the volume of the maximum pondage, Pakistan argued that the value of the maximum pondage proposed by India is too high. The Neutral Expert agreed with India that the main objective of pondage is to regulate the flow of the river to meet the consumer demand as opposed to producing constant power, as defined by Pakistan. However, the Neutral Expert determined that the value proposed by India was not in compliance with the Treaty and fixed a lower value.

On the sixth point relating to the level of the power intake, Pakistan considered that the power intake is not located at the highest level as required by the Treaty. The Neutral Expert agreed with this consideration and determined that the intake level should be raised by 3 m.

The Neutral Expert considers his decision as not being rendered against one or the other party. According to the provisions of the Treaty, the decision of the Neutral Expert is final and binding. The Neutral Expert, his legal adviser and assistant were financed by a Trust Fund established under the Treaty in 1960, and to which both parties contributed in equal amounts. The Neutral Expert has the mandate of deciding which of the two parties should bear the cost of the process. In this case, he directed that the parties share the cost equally. This will also include reimbursements to the Trust Fund.

The Executive summary of the decision can be found on the World Bank Indus Water Treaty webpage 








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The Environment and International Law Unit of the World Bank’s Legal Vice Presidency (LEGEN) provides advice to the Bank on all environmental and international legal and policy issues related to Bank-financed, implemented and/or supported projects.

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Last updated: 2011-09-05

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