University of Groningen

Sovereignty over natural resources

Schrijver, Nicolaas Jan

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Schrijver, N. J. (1995). Sovereignty over natural resources: balancing rights and duties in an
interdependent world s.n.

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1 Introduction

1. Objectives of the Study

‘Permanent sovereignty over natural resources’ is one of the more controversial
new principles of international law that have evolved since World War Two. Du-
ring this period the decolonization process has taken place and newly-independent
States have sought to develop new principles and rules of international law in
order to assert and strengthen their position in international relations and to pro-
mote their social and economic development. The principle of permanent sover-
eignty over natural resources was introduced in United Nations debates in order to
underscore the claim of colonial peoples and developing countries to the right to
enjoy the benefits of resource exploitation and in order to allow ‘inequitable’ legal
arrangements, under which foreign investors had obtained title to exploit resources
in the past, to be altered or even to be annulled ab initio, because their very
essence conflicted with the concept of permanent sovereignty. Industrialized coun-
tries opposed this by reference to the principle of pacta sunt servanda and respect
for acquired rights.
This study has three main objectives. Firstly, to map the evolution of perma-
nent sovereignty over natural resources (hereafter permanent sovereignty or
PSNR) from a political claim to a principle of international law. The hypothesis is
that resolutions of the political organs of the United Nations have been instrumen-
tal in this. Secondly, to show that the principle of permanent sovereignty has not
evolved in isolation but as part and parcel of other trends in international law.
Hence, the study entails excursions through various branches of international law,
such as international investment law, the law of the sea and international environ-
mental law. Finally, to demonstrate that, apart from rights, duties relating to
resource management can also be inferred and that under modern international
law they are being given increasing significance. Evidence has been assembled
and assessed to support this position.
The key words featuring in the subject of this study are: sovereignty, perma-
nent and natural resources. Ever since the Treaty of Augsburg (1555) and the
Peace of Westphalia (1648)1 sovereignty has served as the backbone of interna-
tional law, or—as Brownlie phrases it—as ‘the basic constitutional doctrine of the

1
Röling (1960, Chapter III); Falk and Black (1969: see particularly pp. 43–48).

1
2 Chapter One

law of nations’,2 but sovereignty has also been described as ‘the most glittering
and controversial notion in the history, doctrine and practice of international
law’.3 In the context of discussion on sovereignty over natural resources, various
adjectives have been used to emphasize its hard-core status: in addition to perma-
nent, also ‘absolute’, ‘inalienable’, ‘free’ and ‘full’. However, State sovereignty—
equated as it is with non-interference, with domestic jurisdiction and discretion in
the legal sphere—has become increasingly qualified. Legally, our planet may be
split up into almost 200 sovereign States (apart from some international areas,
such as the high seas, the deep sea-bed and perhaps Antarctica), but in practice
the world is now recognized as being interdependent on many different levels.
Economic and energy crises, speculation in the international money market, defor-
estation, acid rain, pollution of international waters, the threat of global warming,
damage to the ozone layer and loss of biodiversity, all these and other issues
provide compelling evidence of the fact that in real life States are no longer mas-
ters of their own destiny. States are intertwined in a network of treaties and other
forms of international co-operation, which qualify the range of matters
that—according to Article 2.7 of the UN Charter—are ‘essentially within the
domestic jurisdiction of the State’. Hence, in an age of globalization, drastic pol-
itical change, resource depletion and environmental degradation, a first question is
‘what is permanent sovereignty?’ To what extent have claims to ‘permanent’,
‘full’, ‘absolute’ and ‘inalienable’ sovereignty over natural resources become
tempered or even replaced by demands for ‘restricted’, ‘relative’ or ‘functional’
sovereignty? In addition, from a political perspective, the State is said to be
riddled with disease, its role in economic affairs is being reviewed and self-deter-
mination of peoples is being revitalized.4 But does this imply that sovereignty is
‘in abeyance’?5 Moreover, the definition of natural resources is no longer as
clear cut as it used to be. Until recently, it tended to be economically oriented,
focusing on the use to be made of it by humankind, thus neglecting the intrinsic
value of natural resources and the integrity of ecological systems.6 It is note-

2
Brownlie (1990: 287).
3
Steinberger (1987: 397).
4
See ‘The State of the Nation-State’, in The Economist, 22 December 1990, p. 76.
5
Berman (1988: 105).
6
It may be illustrative to refer to Adam Smith, who pointed out in his Wealth of Nations
(1776, 4th ed. in 1850: xxxii):
. . . water, leaves, skins, and other spontaneous productions of nature, have no value,
except what they owe to the labour acquired for their appropriation. The value of the
water to a man on the bank of a river depends on the labour necessary to raise it to his
lips; and its value, when carried ten or twenty miles off, is equally dependent on the
labour necessary to convey it there. Nature is not niggard or parsimonious. Her rude
 Introduction 3

worthy, however, that the UN debate on sovereignty over natural resources has
always dealt with ‘natural wealth’ as well as with natural resources. Occasionally,
attempts have been made to broaden the range of matters to which permanent
sovereignty applies to include ‘wealth’ and ‘economic activities’. This issue is
addressed in section 5 of this introductory chapter.

2. Genesis of Permanent Sovereignty as a Principle of

International Law
In the postwar era permanent sovereignty over natural resources evolved as a new
principle of international economic law. Since the early 1950s this principle was
advocated by developing countries in an effort to secure, for those peoples still
living under colonial rule, the benefits arising from the exploitation of natural
resources within their territories and to provide newly-independent States with a
legal shield against infringement of their economic sovereignty as a result of
property rights or contractual rights claimed by other States or foreign companies.
Although permanent sovereignty was soon to gain currency in international law,
its birth was far from easy. Without doubt, one main reason for this was that the
provenance of the principle lay in the UN General Assembly. This allowed its de-
velopment to be more rapid than it would have been through more conventional
methods of law-making, such as evolving State practice or diplomatic conferen-
ces. The legal merits of the development of international law through resolutions
of political organs have always been a major source of doctrinal controversy.7
Another reason for the difficult general acceptance relates to the subject matter
itself: permanent sovereignty touches on such highly controversial topics as ex-
propriation of foreign property and compensation for such acts, standards of treat-
ment of foreign investors (the national standard versus the international minimum
standard) and State succession. These matters are at the heart of official relations
between States and at the centre of international and domestic political disputes,
North-South confrontations, and interesting doctrinal duels amongst international
lawyers. Indeed, permanent sovereignty has not developed in isolation, but as an
instrument used during or as a reaction to international political events. These

products, powers, and capacities are all offered gratuitously to man. She neither
demands nor receives an equivalent for her favours. An object which may be appro-
priated or adapted to our use, without any voluntary labour on our part, may be of the
very highest utility; but, as it is the free gift of nature, it is quite impossible it can have
the smallest value.
7
Classic works on this issue include Sloan (1948), Higgins (1963), Asamoah (1966), Falk
(1966) and Castañeda (1969). For a summary and classification of the legally most relevant
categories of UN resolutions see Schrijver (1988c: 39–47).
4 Chapter One

have included sensitive nationalization cases, such as the take-over of the Anglo-
Iranian Oil Company (1951); the Suez Canal Company (1956); Dutch property in
Indonesia (1958); the Chilean copper industry (1972); and the Libyan oil industry
(1976–77).8 These events also included unprecedented political processes, such as
the struggles of colonial peoples for political self-determination and the efforts of
developing States to pursue economic self-determination and to establish a New
International Economic Order.9 Thus, the principle of permanent sovereignty was
very much part and parcel of the development of ‘United Nations law’.10

3. The International Context

Efforts in the immediate post-World War Two period to develop the principle of
permanent sovereignty were largely derived from and inspired by the following
important concerns and developments:
• concerns about the scarcity and optimum utilization of natural resources. Du-
ring the Second World War, the Allied Powers became painfully aware of their
dependence on overseas raw materials and of the vulnerability of their supply
lines. In the immediate post-war period this led to initiatives for natural re-
source development11 and full utilization of resources12 as well as to propo-
sals that every State should take into account the interests of other States and
of the world economy as a whole;13
• deteriorating terms of trade of developing countries. The trend in the prices of
industrial products continued upward while prices of raw materials sharply
fluctuated around an overall downward trend. During the early 1950s it became
obvious that the 1948 Havana Charter, which resulted from the UN Conference

8
Akinsanya (1980: 3).
9
See VerLoren van Themaat (1981) and Verwey (1981a).
10
The term ‘United Nations law’ has been used on various occasions by Schachter. See
Schachter (1991: 452) and (1994: 1).
11
For example, the 1947 International Timber Conference of the Food and Agriculture Or-
ganization and the 1949 UN Scientific Conference on the Conservation and Effective Util-
ization of Natural Resources.
12
See the preamble of the General Agreement on Tariffs and Trade (1947), in which the
Contracting Parties recognize that their relations in the field of trade and economic endeav-
our should be conducted with a view to ‘. . . developing the full use of the resources of the
world and expanding the production and exchange of goods’.
13
See GA Resolution 523 (VI), entitled ‘Integrated Economic Development and Commercial
Agreements’, 12 January 1952.
 Introduction 5

on Trade and Employment at Havana and which sought to provide for regula-
tory mechanisms for commodity prices, would not come into effect.14 The
Economic Commission for Latin America (ECLA) at an early stage drew atten-
tion to the terms of trade which were so problematic for developing countries;
• promotion and protection of foreign investment. At the Havana Conference, ag-
reement had been reached on a substantive article dealing with the treatment of
foreign investment.15 It recognized, on the one hand, the great value of such
investment in promoting economic development and social progress and it re-
quested member States to provide adequate security and to avoid discrimina-
tion. On the other hand, it provided for certain rights of host States, including
the right to non-interference in their internal affairs and domestic policies and
the right to determine whether, to what extent, and on what terms they would
admit foreign investment in the future. In the early UN debates, different opin-
ions as to the role of foreign investment in the development process were
voiced. Western countries, and also countries such as India and Haiti, openly
acknowledged the positive role of foreign investment, while others, for exam-
ple Bolivia, Uruguay and Colombia, explicitly referred to its adverse effects;
• nationalization. The early debates in the United Nations on permanent sover-
eignty took place at a time when memories of the Mexican oil nationalizations
of 1938 were still fresh, when the Anglo-Iranian Oil Company dispute (1950–
52) was still a ‘hot issue’, and nationalizations also were taking place or were
seriously considered in Latin America. For example, in 1951, Bolivia national-
ized its tin mines, Guatemala was about to launch an agrarian land reform pro-
gramme under which it would take over United Fruit Company properties, and
other Latin American countries (including Chile and Argentina) were consider-
ing similar action. Later in the decade, there were dramatic experiences arising
from the nationalization of the Suez Canal Company (in 1956) and of Dutch
property in Indonesia (in 1958);
• Cold War rivalry added to the heat of the debate. The ideological competition
between the two major social and economic systems had a profound impact on
the debate on permanent sovereignty. There were significant opposing views on
the rights of colonial peoples, on issues of State succession, on the right to
property protection and the respect for acquired rights, on the role of foreign
investment in the development process and on the inclusion of the right to self-
determination and of socio-economic rights in international human rights law;

14
On the Havana Charter for an International Trade Organization, see Wilcox (1949).
15
Article 12, entitled ‘International Investment for Economic Development and Reconstruc-
tion’, of the Havana Charter for the International Trade Organization.
6 Chapter One

• the demand for economic independence and strengthening of sovereignty. The

decolonization process entailed a claim to economic self-determination. This
came especially to the fore in the context of drafting an article on the right of
peoples to self-determination to be included in the Human Rights Covenants.
In addition, Latin American countries grew increasingly unhappy about their
unequal relationship with the USA and wanted to demonstrate their indepen-
dence. Furthermore, in an effort to avoid having to take sides in the evolving
Cold War between the Western and Eastern blocs, the newly-independent
countries of Asia and Africa and liberation movements in Non-Self-Governing
Territories combined forces in the search for a politically and economically
independent position, later termed ‘non-alignment’;16 and
• the formulation of human rights. In the UN Commission on Human Rights, the
Economic and Social Council (ECOSOC) and the Third Committee (charged
with social, humanitarian and social affairs) of the UN General Assembly
(UNGA), the question was discussed whether the right to self-determination
included an economic corollary, in particular the right of peoples and nations to
have free disposal of their natural wealth and resources.

All these developments exerted a profound influence on international politics

during the formative years of the principle of permanent sovereignty and in gen-
eral terms induced major changes, both in international law—which progressively
developed, in the words of Röling, ‘from a European-oriented law towards a truly
universal law’17—and in the United Nations as an organization, where emphasis
shifted from peace and security issues to decolonization and to the promotion of
development in developing countries.18

4. The Subjects: A Widening and a Contracting Circle

A basic question concerns who is entitled to and endowed with the legal capacity
to dispose freely of natural resources. Of course, the discussion on the subjects of
the right to permanent sovereignty cannot be dissociated from the general discus-
sion on the subjects of international law. In general, in international law there has
been a gradual extension of the circle of subjects.19 In 1912 Oppenheim could
still write: ‘Since the law of nations is based on the common consent of individual

16
See for the background of the Non-Aligned Movement Syatauw (1961: 16) and (1994:
132–35).
17
Röling (1960: 68–99) and (1982: 181–209).
18
Among a vast body of literature see the pioneering book of Claude (1967: 49–124).
19
See in general terms Mosler (1984) and Menon (1990).
 Introduction 7

States, and not of individual human beings, States solely and exclusively are sub-
jects of international law.’20
However, although States are still the primary subjects of international law to-
day, they are no longer the only subjects. In the course of this century additional
subjects have obtained legal personality under international law. In its 1949 Advi-
sory Opinion in the Reparation Case, the International Court of Justice (ICJ) con-
cluded that the United Nations is ‘an international person’, and ‘is a subject of
international law and capable of possessing rights and duties’.21 Other intergov-
ernmental organizations have since been treated similarly. The circle has further
widened due to legal developments pertaining to the principle of self-determina-
tion of peoples and to human rights, which have endowed peoples and individuals
with rights and obligations under international law. Furthermore, (transnational)
corporations have obtained a limited, functional international personality,22 as
evidenced by the procedures under the World Bank Convention on the Interna-
tional Settlement of Investment Disputes between States and Nationals of Other
States23 and by provisions relating to international settlement of deep sea-bed
mining disputes in the 1982 UN Convention on the Law of the Sea.24 However,
it should be noted that this legal status is conditional since it depends on consent
by the corporations’ home States. Finally, reference should be made to the devel-
opment of the concept of ‘mankind’, or rather—as it is termed today—‘human-
kind’, which includes both present and future generations. In international law
relating to the oceans, outer space and the global environment, rights and entitle-
ments accrue to humankind as such.25
The circle of subjects entitled to dispose of natural resources has changed con-
siderably over the years. Initially, during the 1950s, the right to permanent sover-
eignty was alternatively vested in ‘peoples and nations’ and ‘underdeveloped
countries’ due to the fact that permanent sovereignty had taken root in both the
promotion of the economic development of ‘underdeveloped’ countries and the
self-determination of peoples.26 As the decolonization process progressed the
emphasis on ‘peoples’ and the connection with ‘self-determination’ diminished

20
Oppenheim (1912: 19).
21
ICJ Reports 1949, p. 174.
22
See Kokkini-Iatridou and de Waart (1986).
23
As reviewed in Chapter 6, section 3.
24
See in particular section 6 of Part XI of UNCLOS; see also Merrills (1991: Chapter 8) and
Chapter 7, section 6 of this study.
25
See Chapters 7 and 8. Occasionally, the term ‘humanity’ is used, e.g., in the 1992 Biodi-
versity Convention.
26
GA Res. 523 (VI) and 626 (VII), 12 January 1952 and 21 December 1952.
8 Chapter One

and gradually shifted to ‘developing countries’, while during the 1970s ‘all States’
became the primary subjects of the right to permanent sovereignty. From the rele-
vant resolutions and treaty provisions one can only infer that this increasingly
‘étatist’ orientation was tempered by a rising number of obligations incumbent on
States, in particular the obligation to exercise permanent sovereignty in the nati-
onal interest and for the well-being of ‘their peoples’. Recently, furthermore, the
rights of indigenous peoples have become an issue, although these peoples feature
as objects rather than as subjects of international law.27 During the 1970s and
1980s only peoples whose territories were under foreign occupation or under alien
or colonial domination were identified as subjects of the right to permanent sover-
eignty and considered as deserving UN attention. For example, in 1974 the UN
Council for Namibia formulated the right of ‘the people of Namibia’ to the natural
wealth and resources of the territory of Namibia, which was called ‘their birth-
right’, and the Council appointed itself more or less as the new trustee of Namib-
ia’s natural resources. In the same vein, the UNGA gave emphatic attention to a
corresponding right of the Palestinian people. For a time, similar rights of particu-
lar States, such as some in Latin America and Arab areas under Israeli occupation,
received special attention.28
Yet, beyond doubt, during the 1970s and 1980s a clear tendency to confine the
circle of permanent sovereignty subjects solely to States, that is all States, re-
emerged. Both the UNGA’s Charter of Economic Rights and Duties of States
(CERDS, 1974) and the Seoul Declaration (1986) of the International Law Asso-
ciation (ILA), a major non-governmental international law organization which
includes lawyers from both industrialized and developing countries, exemplify this
tendency: neither Article 2 of CERDS, nor section 5 of the Seoul Declaration,
which deal with permanent sovereignty, contains any reference to ‘peoples’.29
Meaning of terms
It can be inferred from relevant PSNR-related UN debates that the term peoples
was originally meant to refer to those peoples which had not yet been able to ex-
ercise their right to political self-determination. This is not to say that after these
peoples had exercised this right, States were free to do with their natural resources
whatever their governments saw fit. Various injunctions have been formulated
according to which States have to exercise the right to permanent sovereignty in

27
See section 3 of Chapter 10.
28
See Chapter 5 for three case studies.
29
GA Res. 3281 (XXIX); Seoul Declaration on the Progressive Development of Principles of
Public International Law Relating to a New International Economic Order, in Report of the
62nd Conference of the ILA held at Seoul, ILA: London, 1987, p. 2. The latter text is also
published in de Waart et al. (1988: 409) and 33 NILR (1986: 328–33).
 Introduction 9

the interest of their populations and to respect the rights of indigenous peoples to
the natural wealth and resources in their regions,30 where ‘peoples’ are objects
rather than subjects of international law. The extent to which the people in a re-
source-rich region of a State (for example, the province of Groningen in the Neth-
erlands) are entitled to (extra) benefit from resource exploitation in their region is
in principle a matter of domestic politics. International law is only relevant when
a State manifestly discriminates against a certain people and can thus no longer
claim to be ‘possessed of a government representing the whole people belonging
to the territory without distinction as to race, creed or colour’.31
In international law the term nation is often used as a synonym for ‘State’,
‘nation-State’ or ‘country’. For example, Article 1 of the UN Charter points out
that the purposes of the inter-State organization include ‘to develop friendly rela-
tions among nations’ and ‘to be a centre for harmonizing the actions of nations’.
In the social sciences the term ‘nation’ refers to a society of people united by a
common history, culture and consciousness:
. . . the vital binding force of the nation is variously derived from a strong sense
of its own history, its special religion, or its unique culture, including language. A
nation may exist as an historical community and a cultural nexus without political
autonomy or statehood.32
During the 1950s and 1960s reference to ‘nations’ as subjects of the right to per-
manent sovereignty was probably meant to reinforce the right of peoples to eco-
nomic self-determination, both prior to and after the exercise of their right to
political self-determination. Whatever its legal meaning may be, after the adoption
of the 1962 Declaration on permanent sovereignty, the word ‘nation’ was only
once included in a PSNR-related resolution, namely in GA Resolution 2692
(XXV), and we do not find it in any treaty. A justified conclusion is hence that
the term nation has lost its relevance as a subject of the right to permanent sover-
eignty.
The term State has a stable and well-defined meaning in international law.33
An authoritative definition of States is provided in the 1933 Montevideo Conven-

30
See Chapter 10, sections 2 and 3. See also Cassese (1976: 103).
31
GA Res. 2625 (XXV), Declaration on Principles of International Law concerning Friendly
Relations and Co-operation among States in accordance with the Charter of the United
Nations, principle V.7, 24 October 1970. See Röling (1985: 97–99) and de Waart (1994a:
73 and 1994c: 390).
32
J. Gould & W.L. Kolb (eds), Dictionary of the Social Sciences, New York/UNESCO
(1969: 451).
33
See Crawford (1979), Döhring (1987: 424) and de Waart (1994: 98).
10 Chapter One

tion on Rights and Duties of States, adopted during the Seventh International
Conference of American States. Article 1 reads:
The State as a person of international law should possess the following qualifica-
tions: (a) permanent population; (b) a defined territory; (c) a government; and (d)
capacity to enter into relations with other States.34
UN resolutions, in contrast to treaties, frequently refer to what was originally
called ‘underdeveloped countries’ and, after 1960, developing countries.35 From
the debates on permanent sovereignty it has become obvious that these are generic
terms meant to include all countries of Africa (before 1994 with the exception of
South Africa), Asia (with the exception of Japan) and Latin America, in addition
to some European countries such as Albania, Cyprus and Malta. The Vienna Con-
ventions on State Succession introduce an additional sub-category in the PSNR-
debate, namely newly-independent States and stipulate that agreements between
the predecessor State and the newly-independent State must not infringe the prin-
ciple of permanent sovereignty of any people.36 The term newly-independent
State is defined as ‘a successor State the territory of which, immediately before
the date of the succession of States, was a dependent territory for the international
relations of which the predecessor State was responsible’.37

5. The Objects to Which Permanent Sovereignty Applies

An analysis of relevant PSNR resolutions shows a gradual extension of the range
of resources and activities covered by the principle of permanent sovereignty:
from (a) ‘natural resources’ and ‘natural wealth and resources’ (as from GA Res.
523, 1952); through (b) ‘natural resources, on land within their international boun-
daries, as well as those in the sea-bed, in the subsoil thereof, within their national
jurisdiction and the superjacent waters’ (GA Res. 3016, 1972), (c) ‘natural
resources, both terrestrial and marine, and all economic activities for the explo-

34
Convention on Rights and Duties of States, signed in Montevideo, 26 December 1933, 165
LNTS, p. 19.
35
For an identification of various (sub-)categories of developing countries, see Verwey (1983:
359–74).
36
See for the text of the Vienna Convention on Succession of States in respect of Treaties
(1978) and the Vienna Convention on Succession of States in respect of State Property,
Archives and Debts, The Work of the International Law Commission, 4th ed., United
Nations: New York, 1988, p. 323 and p. 343. See Appendix IV for the text of the relevant
articles.
37
Art. 2, sub (f) of the 1978 Convention and Art. 2, sub (e) of the 1983 Convention. The
commas do not appear in the 1978 Convention.
 Introduction 11

itation of these resources’ (UNIDO II, 1975) and (d) ‘natural resources and all
economic activities’ (GA Res. 3201, 1974); to (e) ‘all wealth, natural resources
and economic activities’ (GA Res. 3281, CERDS, 1974). The last citation can be
seen as the culmination of a series of PSNR claims.38 Only the resolutions on
permanent sovereignty in the occupied Arab territories consistently employ the
phrase ‘national resources’, both in their titles and their substantive paragraphs.39
UN organs have not always consistently used specific phrases in a particular
period. For example, the 1962 Declaration on Permanent Sovereignty over Natural
Resources alternates, rather arbitrarily, between references to permanent sover-
eignty over ‘natural resources’ and ‘natural wealth and resources’;40 and the
1974 Declaration on the Establishment of a New International Economic Order
(NIEO, GA Res. 3201, 1974) refers to permanent sovereignty over ‘natural re-
sources and all economic activities’, while the accompanying NIEO Programme of
Action (GA Res. 3202, 1974) refers to permanent sovereignty over ‘natural re-
sources’ only.
Western countries and authors have consistently and strongly opposed the ex-
tension of the scope of permanent sovereignty beyond ‘natural wealth and resour-
ces’, although some of them (including the FRG) have occasionally invoked the
extended doctrine in order to justify permanent sovereignty over their own tech-
nology.
It is noteworthy that in the PSNR-related UN resolutions adopted during the
1980s and 1990s there has been a tendency to return gradually to the original
scope of the principle of permanent sovereignty, namely ‘natural resources’ or
‘natural wealth and resources’. An example is the 1986 Declaration on the Right
to Development.41 What is the significance of these four terms in regard to the
object of the right to permanent sovereignty?

38
It is rather confusing that the NIEO resolutions also contain references to ‘resources’ as
such (on three occasions), ‘natural and other resources’ (once) and ‘natural resources’
(twice).
39
See Chapter 5, section 2.
40
The term ‘natural resources’ occurs 14 times and ‘natural wealth and resources’ 11 times in
Declaration 1803 (XVII). The Declaration refers only once to ‘all its wealth and natural
resources’ and once to ‘resources and wealth’. One can only presume that here we are
dealing with slips of the pen, since during these days the extension of the principle of
PSNR beyond natural wealth and resources was not yet an issue.
41
Yet, in the ‘Principles Relating to Remote Sensing of the Earth from Space’ (GA Res.
41/65), adopted only one day earlier, the General Assembly refers to ‘the principle of full
and permanent sovereignty of all States and peoples over their own wealth and natural
resources’ (emphasis added).
12 Chapter One

Definition of natural resources

In non-legal literature there are plenty of definitions of natural resources: for
example, that ‘natural resources are naturally occurring materials that are useful to
man or could be useful under conceivable technological, economic or social cir-
cumstances’42 or ‘. . . supplies drawn from the earth—supplies such as food,
building and clothing materials, fertilizers, metals, water and geothermal pow-
er’.43 For a long time, natural resources were the domain of the natural sciences.
As the economist Zimmerman stated in 1933:
. . . for centuries resources were the stepchild of economic thought. If they were
recognized at all, they were absorbed into the market process, acknowledged only
in so far as they were reduced to working tools of the entrepreneur—land, labor
and capital—or recognized through their effects on cost and price, supply and
demand.44
In international law, before 1945 natural resources were not exactly an object of
systematic study and regulation, fisheries and international rivers being to a cer-
tain extent an exception. However, the emergence of the principle of permanent
sovereignty, the law of the sea and commodity trade regulation have given rise to
a somewhat more active interest in natural resources law.45
During recent decades natural resources have become the object of a variety of
scientific disciplines. This makes a definition both desirable and difficult. Every
description of the concept will be determined by the specific angle from which the
object is studied; the natural scientist will emphasize the generation of living and
non-living resources, the economist the abundance or scarcity of resources and
their exploitability and distribution at certain cost levels, the environmentalist the
intrinsic value of natural resources and the need for their sustainable use, while
the lawyer will study their ownership and usufruct rights.

42
19 Encyclopedia Americana (1982), p. 792.
43
Skinner (1986: 1).
44
Zimmerman (1933, reprinted 1951: 6). This view may be somewhat exaggerated. For ex-
ample, at various places in his Principles of Political Economy John Stuart Mill (1896) paid
attention to the natural advantages of a country such as fertile soil, climate, abundance of
mineral deposits (‘. . . the coalfields of Great Britain, which do so much to compensate its
inhabitants for the disadvantages of climate’, p. 64) and natural water-power, good natural
harbours and navigable rivers as factors which determine the degree of productiveness and
prosperity of a country. See also Lewis (1955: 249–52).
45
Nonetheless, it may be symptomatic that an American textbook on natural resources and
energy law can still afford to ignore the role of international law and international institu-
tions; see Jan G. Laitos and Joseph P. Tomain, Energy and Natural Resources Law in a
Nutshell, St. Paul: West Publishing Co., 1992.
 Introduction 13

In modern economic and geographic reference books natural resources are

commonly divided into the following categories:
a. non-renewable or stock resources, such as minerals and land, which have taken
millions of years to form and the quantity of which, from a human perspective,
is fixed (of course, with the Dutch as an exception in view of their reclamation
of land from the sea);
b. renewable or flow resources, which naturally regenerate to provide new supply
units within at least one human generation.46
It has often been stated that the distinction between the two categories is blurred.
Data on availability and exploitability of resources depend very much on know-
ledge, technology, social structures, use and human investment. As Zimmerman
put it in a well-known comment: ‘resources are not, they become; they are not
static but expand and contract in response to human wants and human actions’.47
For example, fossil fuels are non-renewable and are consumed by use, but the size
of their exploitable reserves depends very much on their price and on the
knowledge, technology and investment to exploit them. Forests, plants, animals,
fish and soils are in principle renewable resources, but their renewability and
regeneration will often depend on actual use levels and human decisions relating
to investment and management. Political factors also may be involved:
In peacetime available reserves are also known as commercial reserves in capi-
talistic countries because availability is measured by commercial standards, i.e., in
terms of profitableness reckoned in money. But in war, when victory and the lives
of many hinge on certain mineral supplies, the cost-price relationship drops more
or less out of sight and availability becomes a matter of geological realities and of
technical proficiency, scientific know-how, and availability of capital and labor
determined not by a free and automatic market but by government decree. . . .
When peace hangs delicately balanced, considerations of national security demand
that mineral reserve problems be approached not solely from the standpoint of
business profit but also with due regard to their vital significance for national
security.48
For political reasons governments may decide not to publish accurate records on
known reserves of mineral resources. With the aim of strengthening their negoti-
ating position and business prospects, oil and gas companies may do the same.
During the 1960s and 1970s, Shell and the Netherlands Oil Company (NAM, a

46
A classic reference work on the concept of stock resources vs. flow resources is Ciriacy-
Wantrup (1968). See also R.J. Johnson (ed.), The Dictionary of Human Geography, Black-
well: London, 2nd ed., (1986: 408–9); Secretariat for Future Studies (1980: Chapter 2).
47
Zimmerman (1951: 15).
48
Zimmerman (1951: 445).
14 Chapter One

joint venture of Esso and Shell) consistently published minimum figures relating
to natural gas reserves in the north of the Netherlands. In contrast, the South Afri-
can Government used to publish maximum figures in order to demonstrate its
powerful resource basis and its relaxed attitude towards the threat of economic
sanctions.49
Despite the intensive work on natural resources law in recent decades, no gen-
eral definition exists of the term natural resources in international law. Some treat-
ies provide their own definition of specific natural resources. Thus, in Article 2 of
the 1958 Convention on the Continental Shelf, repeated in Article 77 of the 1982
Law of the Sea Convention, it is provided that:
The natural resources . . . consist of the mineral and other non-living resources of
the seabed and the subsoil together with living organisms belonging to sedentary
species, that is to say, organisms which, at the harvestable stage, either are im-
mobile on or are unable to move except in constant physical contact with the sea-
bed or the subsoil.
For the purposes of the 1968 African Convention on the Conservation of Nature
and Natural Resources, the term natural resources means ‘renewable resources,
that is soil, water, flora and fauna’,50 while the 1992 Biodiversity Convention
employs the term ‘biological resources’ as meaning ‘genetic resources, organisms
or parts thereof, populations, or any other biotic component of ecosystems with
actual or potential use or value for humanity’.51 Nor does international law litera-
ture provide a legally-oriented definition of natural resources. So far, the most
detailed attempt at systematic definition and classification of natural resources has
been made by the Argentinean lawyer Cano in a report to the Food and Agricul-
ture Organization of the United Nations (FAO). He advocates to treat the whole
complex of natural resources as an integrated whole and as a constitutional
element of the human environment and defines natural resources as ‘physical nat-
ural goods, as opposed to those made by man (which are termed "cultural resour-
ces").’52 During a conference in 1985, Rosenne approached the question from a
similar angle, namely which resources are not ‘natural’. With reference to the sea,
he mentioned shipwrecks, sunken aircraft, archaeological and historical objects.53
Artificial islands and oil platforms could be added to this. Trumpy tried to
broaden Rosenne’s definition and proposed that: ‘A resource is any tangible or
intangible which may be used in an economic manner or to create economic val-

49
Brouwer (1983).
50
Art. III.1. Text in Hohmann (1992a: 1530).
51
Article 2 of the Convention on Biological Diversity, 1992.
52
Cano (1975: 1 and 30–33).
53
Rosenne (1986b: 64).
 Introduction 15

ue, and which is not a manufactured product or tool’.54 This is, however, not a
satisfactory definition, since it is only economically oriented and disregards the
intrinsic value of natural resources and the integrity of ecological systems, includ-
ing the sea, the air, the land and flora and fauna.
Natural wealth and wealth in general
The term ‘natural wealth’ has frequently been used in UN resolutions and other
legally-relevant instruments, but hardly in legal doctrine. It cannot easily be
inferred from those documents what is actually meant by ‘natural wealth’ and in
which respect it differs from physical natural resources.55 It seems logical to pre-
sume that it refers to the natural wealth of our planet, such as land,56 soil, for-
ests, wetlands, natural harbours, rivers, lakes, beaches, seas and oceans, flora and
wildlife, rainfall and other beneficial climatic conditions, including the sun, the
wind and natural sources of energy. Problems of definition may arise in certain
cases, for example concerning the question whether or not the inter-oceanic
Panama Canal as ‘a product of human labour’ but based on the natural character-
istics of the territory comes within the scope of Panama’s permanent sovereignty
over natural wealth. In the opinion of this author and by reference to particular
geographical circumstances, the answer should be affirmative.57 Reference
should also be made to the rather peculiar opinion of Katzarov that the working
capacity of workers should as well be considered a natural resource of the country
concerned.58
The concept of natural wealth may come close to what is commonly called ‘the
environment’ as a description of a physical matter, being the air, the sea, the land,

54
Trumpy (1986: 184).
55
The concept of ‘natural wealth and resources’ as used in early UN debates does not link up
with the ‘wealth of nations’ as analysed by Adam Smith and numerous classical economists
since then. Tinbergen has pointed out that the wealth of any nation consists of two compo-
nents: ‘[i] its natural wealth, such as land for agricultural purposes, minerals, natural means
of communication, geographic position and climate, and [ii] the capital goods it owns, i.e.
the goods partly produced by human labour which are used for further production or con-
sumption: Buildings, roads, harbours, machinery, raw material stocks, stocks of consumer
goods.’ Tinbergen (1965: 4).
56
See, for example, the definition of ‘land’ in the 1994 UN Convention to Combat
Desertification: ‘the terrestial bio-productive system that comprises soil, vegetation, other
biodata, and the ecological and hydrological processes that operate within the system’
(Art. 1(e)).
57
See Chapter 5.3.
58
Katzarov (1964: 355). Also cited in Seidl-Hohenveldern (1992: 27).
16 Chapter One

flora and fauna and the rest of the natural heritage.59 Alternative terms are some-
times used, such as ‘ecosystems’ (the ‘natural capital of the earth’) and ‘biological
diversity’. Adler-Karlsson has used the phrase ‘harrying and carrying capacity’ of
the earth to acknowledge the basic interrelationships between developments in the
fields of population, utilization and distribution of resources, and the state of tech-
nology.60 Opschoor has introduced the term ‘environmental utilization space’
which aims to emphasize that the capacity of the natural environment to be used
as a basis for supply of natural resources and for the absorption of waste is
limited.61 The physical availability of resources, the regenerative capacity of
nature, the way economic processes function and the state of technology are
among the main factors determining the size and the limits of the environmental
space.62 These concerns are also echoed in the concept of ‘sustainable develop-
ment’ adopted by the Brundtland Commission in 1987. This concept seeks to in-
tegrate environmental and developmental concerns ‘. . . to ensure that it meets
the needs of the present without compromising the ability of future generations to
meet their own needs’.63 Obviously, sustainable development requires that we do
not structurally operate beyond the limits of the environmental space.
It is doubtful whether the coverage of permanent sovereignty can be extended
to ‘wealth’ in general, that is including non-natural wealth, as claimed in CERDS,
in some treaties and in the 1986 Seoul Declaration of the ILA. Wealth is a funda-
mental concept of economics with different connotations at different times.64 It
features in the titles of such classic treatises of economics such as Adam Smith’s
The Wealth of Nations (1776) and John Bates Clark’s The Distribution of Wealth
(1908). According to the Oxford English Dictionary wealth is a generic term: ‘a
collective term for those things the abundant possession of which (by a person or

59
See also the Convention on the Prohibition of Military or Any Other Hostile Use of Envi-
ronmental Modification Techniques which refers in its Article II to ‘the dynamics, compo-
sition or structure of the earth, including its biota, lithosphere, hydrosphere and atmosphere,
or of outer space’. On this ENMOD Convention see Falk (1984) and Goldblat (1984).
60
Adler-Karlsson (1974).
61
Opschoor (1992b: 28–33). See also Klaassen and Opschoor (1992). Opschoor first intro-
duced this term in Duurzaamheid en verandering: ecologische inpasbaarheid van economi-
sche ontwikkeling, inaugural lecture, Vrije Universiteit, Amsterdam, 1987.
62
See the Netherlands Ministry of Foreign Affairs (Development Co-operation), A World of
Dispute. A survey of the frontiers of development co-operation, The Hague, 1993 (38–60).
63
World Commission on Environment and Development (1987: 8).
64
See Heilbroner, ‘Wealth’, in Eatwell et al. (eds), The New Palgrave. A Dictionary of Eco-
nomics, Macmillan: London, Vol. 4 (1987: 880–82).
 Introduction 17

a community) constitutes riches, or "wealth" in the popular sense.’65 Apart from

natural wealth, the term wealth may thus cover artificial (capital goods) and cul-
tural wealth. Yet, the principle of permanent sovereignty is, historically speaking,
a resource- and investment-related concept and rather remote from wealth in gen-
eral. Therefore, it is neither appropriate nor wise to put ‘wealth’ in general under
the permanent sovereignty umbrella.66
Economic activities
The concept of permanent sovereignty over natural resources and economic activ-
ities was introduced in the Resolution launching the International Development
Strategy for the Second UN Development Decade (DD II) in 1970.67 It also fea-
tures in the 1974 NIEO Declaration and the CERDS, but not in the NIEO Action
Programme. The NIEO Declaration uses in one place the phrase ‘natural resources
and all economic activities’.68 In contrast, one year later the UNIDO II confer-
ence referred to ‘natural resources . . . and . . . all economic activities for the
exploitation of these resources’. In the latter formulation, the scope of permanent
sovereignty has not been significantly extended. Diaz also argues that the prin-
ciple of permanent sovereignty should cover not only control over the resource,
but also control over the production, especially in the case of oil: ‘for the one who
controls production also controls the market, since production is a key to deter-
mining the price of oil, and therefore, the value of the resource. Sovereignty over
a resource is meaningless unless it includes sovereignty over the value of the
resource.’69 This appears to be the case in the 1994 European Energy Charter
Treaty, one of the few international legal instruments which contains a definition
of the term ‘economic activity’. For the purposes of this treaty, it is defined as:
‘economic activity concerning the exploration, extraction, refining, production,
storage, land transport, transmission, distribution, trade, marketing, or sale of
energy materials and products’.70 These activities come within the purview of the
principle of sovereign rights over energy resources as provided for in Article 18 of

65
The Shorter Oxford English Dictionary, revised and corrected 3rd ed., 1987 p. 2519.
66
See also Peters (1989: 7–9).
67
Paragraph 73 of GA Res. 2626 (XXV), 24 October 1974.
68
Paragraph 4 (e) of GA Res. 3201 (S-VI), 1 May 1974.
69
Diaz (1994: 157).
70
Art. 1.5 of the European Energy Charter Treaty, Lisbon, 17 December 1994.
18 Chapter One

this treaty.71 However, the term ‘(all) economic activities’ may cover a much
wider spectrum and could also include non-extractive industries and financial
services (banks and insurance). Economic activities are undoubtedly part and
parcel of the scope of economic jurisdiction of the host State. However, the prin-
ciple of permanent sovereignty does not have much to add to this since it is in any
case a rule that economic activities within the territorial jurisdiction of a State are
subject to its sovereignty.
National resources and national wealth
In UN resolutions concerning the sovereignty of the territories occupied by Israel,
the terms ‘national wealth and resources’, ‘national resources’ and ‘all resources
and wealth’ are used. In this regard, as we shall see in Chapter 5, (a majority of)
the UNGA preferred to extend the scope of permanent sovereignty beyond natural
resources in order to include: the exploitation of ‘human resources’; use and own-
ership of cultural, religious and other aspects of the national heritage; and the
personal wealth of Arab people. In this particular context, permanent sovereignty
over national wealth and resources is used as a comprehensive concept, linked up
with the right of self-determination of the Palestinian people and ‘permanent’
sovereignty of Arab States, individually or perhaps collectively, as an element of
pan-Arabism (‘Arab fatherland’), over territories occupied by Israel.72
Definitions used in this study
In line with the recent tendency to limit the object of permanent sovereignty once
again to ‘natural wealth and resources’, this study focuses on jurisdiction over
‘natural wealth’ and ‘natural resources’. For its purposes it can be presumed that
‘natural wealth’ refers to those components of nature from which natural resources
can be extracted or which can serve as the basis for economic activities. Not all
natural-resource benefits are extractable; ecosystems can provide many subtle
services, for example, flood amelioration or air purification. Natural resources can
be described as supplies drawn from natural wealth which may be either renew-
able or non-renewable and which can be used to satisfy the needs of human
beings and other living species.73 Both ‘natural wealth and resources’ and ‘natu-

71
In comparison, Article 56.1 of the 1982 Law of the Sea Convention confers on coastal
States ‘sovereign rights for the purpose of exploring and exploiting, conserving and manag-
ing the natural resources . . . and with regard to other activities for the economic exploita-
tion and exploration of the zone, such as the production of energy from the water, currents
and winds’.
72
See Malanczuk (1990) and de Waart (1994a: 140–43).
73
See also Art. 1(e) of IUCN’s Draft International Covenant on Environment and Develop-
ment, revision of draft 4, in IUCN-CEL/Rev.Draft 4/3.5.93. It is notable that Working Draft
5 of 1994 no longer provides an article on the use of terms.
 Introduction 19

ral resources’ are the object of the principle of permanent sovereignty and are
used interchangeably in this study.

6. Goals and Objectives for the Exercise of Permanent

Sovereignty
Claims regarding permanent sovereignty were initially motivated by efforts to
reinforce the sovereignty of newly-independent and other developing States.74
Subsequently, claims regarding permanent sovereignty of peoples over natural
resources were motivated by the desire to secure the benefits of natural resource
exploitation for non-self-governing peoples.75
Once most of the formerly colonial peoples had gained independence, emphasis
shifted back to States as the main subjects invested with the right to permanent
sovereignty, but with the injunction—as the 1962 Declaration puts it—that perma-
nent sovereignty over natural wealth and resources ‘must be exercised’ in the in-
terest of the ‘national development and the well-being of the people con-
cerned’.76 Likewise, subsequent resolutions increasingly emphasized that natural
resources of developing countries must be utilized in the interest of development
of these countries themselves.77
Only a few references have been made to world economic interests, and most
of them in an indirect way. The very first PSNR-related Resolution 523 (1952) in-
cluded as one of the objectives ‘to further the expansion of the world economy’;
the DD-II Resolution (1970) pointed out that ‘. . . production policies should be
carried out in a global context designed to achieve optimum utilization of world
resources, benefiting both developed and developing countries’;78 and, finally,
CERDS linked the right to association (and the right to form cartels) of primary
commodity producers—a right sometimes claimed to arise from permanent sover-
eignty79—to ‘the promotion of sustained growth of the world economy, in par-

74
See the statement by Uruguay and Poland when they tabled proposals which finally
resulted in the adoption of the first PSNR-related GA Resolutions 523 and 626 in 1952.
75
For a discussion see Chapter 2.
76
Para. 1 of GA Res. 1803 (XVII), 14 December 1962. Emphasis added.
77
See GA Res. 2158 (XXI), 25 November 1966.
78
Para. 73 of GA Res. 2626 (XXV), 24 October 1970; see also para. 11.
79
See para. 7 of GA Res. 3171 (XXVIII), 17 December 1973.
20 Chapter One

ticular accelerating the development of developing countries’.80 Such references

are, however, the exception rather than the rule. The rule in PSNR-related para-
graphs of the NIEO resolutions is that they spell out vague objectives—such as ‘to
safeguard these resources’ (NIEO Declaration)—or none at all (Art. 2, CERDS),
providing States with maximum discretion in the management of natural
resources.
As regards the right to permanent sovereignty of peoples living under colonial
or racial domination or foreign occupation, the primary objective undoubtedly has
been ‘to regain effective control over their natural resources’.81 The objective of
Decree I for the Protection of the Natural Resources of Namibia was indeed to
secure ‘for the people of Namibia adequate protection of the natural wealth and
resources which is rightfully theirs’.82
It can be inferred from the series of environmentally-relevant resolutions that
States, as subjects of the right to permanent sovereignty, have increasingly been
charged with the duty to manage the natural resources within their jurisdiction in
an environmentally sound way or, in other words, in a sustainable way.83
Treaties which implicitly or explicitly formulate the right of permanent sover-
eignty hardly ever spell out its objectives. The Human Rights Covenants of 1966
provide that peoples may for their own ends dispose of their natural wealth and
resources and that they should enjoy and utilize these fully and freely.84 The Af-
rican Charter on Human and Peoples’ Rights of 1981 is slightly less general: ‘This
right shall be exercised in the exclusive interest of the people.’85 It is further
provided that States shall exercise this right ‘with a view to strengthening African
unity and solidarity’.86
Article 56 of the 1982 UN Convention on the Law of the Sea spells out that
the sovereign right to natural resources is conferred upon States ‘for the purpose

80
Article 5 of CERDS reads: ‘All States have the right to associate in organizations of pri-
mary 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.’
81
See GA Res. 3171 (XXVIII), 17 December 1973.
82
Preamble. For a review of this Decree, see Chapter 5, section 1.2.
83
See Chapters 4 and 10, section 5.
84
Art. 1 and Arts 25 and 14, respectively.
85
Art. 21, para. 1.
86
Ibid., para. 3.
 Introduction 21

of exploring and exploiting, conserving and managing the natural resources’.

Innovative is the injunction enshrined in Article 193:
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.
Finally, the two State Succession Conventions (1978 and 1983) contain provisions
that agreements between the predecessor State and a newly-independent State
shall not infringe the principle of permanent sovereignty. They thus purport to
provide newly-independent States with maximum discretion (a tabula rasa)87 as
far as control over and management of natural resources of their territories is con-
cerned. This enables them to ensure that their peoples will fully benefit from the
advantages to be derived from their natural resources.
Legal literature provides a fair account of the objectives to be pursued by the
exercise of permanent sovereignty in the various periods of its evolution, as
described in Part I of this study. For example, Hossain points out that:
The principle was originally articulated in response to the perception that during
the colonial period inequitable and onerous arrangements, mainly in the form of
‘concessions’, had been imposed on unwary and vulnerable governments.88
In another context, Hossain was more specific:
For developing countries the principle of permanent sovereignty was important
because it provided a basis on which they could claim to alter ‘inequitable’ legal
arrangements under which foreign investors enjoyed rights to exploit natural re-
sources found within their territories. Such alteration could be affected through an
exercise of (a) the right to nationalize, that is, to acquire the rights enjoyed by the
foreign investor or (b) the right to alter certain terms of the arrangements (or to
repudiate an agreement entered into with the foreign investor).89

87
See Vienna Convention on Succession of States in respect of Treaties, 23 August 1978, not
yet in force, 17 ILM (1978), p. 1488. The theory of tabula rasa is closely related to the
‘Nyerere doctrine’ named after the Tanganyikan prime minister who in 1961 advocated that
newly-independent African States should have the right to a ‘period of reflection’ and the
right to review the terms of bilateral treaties within a period of two years from the date of
independence. The Government of Tanganyika (later incorporated into Tanzania)
announced that this would not be applied to multilateral treaties which instead would be
reviewed individually. See Yearbook International Law Commission 1962, Vol. II, p. 115
and p. 121. See also Makonnen (1984). See generally Bedjaoui (1970), who served as ILC
Rapporteur on the issue during the drafting of the Conventions on Succession of States.
88
Hossain (1984a: IX).
89
Hossain (1980b: 35).
22 Chapter One

Socialist international lawyers have paid ample attention to the principle of

permanent sovereignty.90 For example, Brehme analysed the need to exercise it
within the framework of ‘the struggle of the young independent states and other
developing countries’ for their economic independence:
It arises from the contradiction between the potentials which most of these coun-
tries have on the basis of their natural conditions for a blossoming and indepen-
dent economy and the actual exploitation of this natural wealth by foreign capital
to its own advantage. [. . . ] National sovereignty over natural wealth and resour-
ces therefore means the objective driving out of foreign monopolies from the key
positions of the economy, elimination of the domination of foreign monopoly cap-
ital, . . . , abolition of the plundering of the natural wealth for the advantage of
foreign monopolies and their home states which ensues on the basis of inequality
and pressure.91
While Western commentators have acknowledged that States have the right to
control their natural wealth and resources, their main preoccupation was—and still
is—how permanent sovereignty could be made compatible with international
obligations arising from general international law or contractual undertakings. As
Hyde put it in 1956:
A state has the power to control and use its natural wealth and resources. It may
thus enter into binding agreements for the development of its natural wealth and
resources. In the exercise of its power, it is obligated to act in accordance with
recognized principles of international law as well as international agreements and
with due regard for existing legal rights or interests, with adequate, prompt and
effective compensation as one remedy, if the exercise of powers impairs them.92
Schachter points out that the development of the permanent sovereignty entailed a
challenge to some traditional international law concepts. In his view permanent
sovereignty has become ‘the focal normative conception used by states to justify
their right to exercise control over production and distribution arrangements with-
out being hampered by the international law of State responsibility as it had been
traditionally interpreted by the capital-exporting countries’.93 He argues:
It would be a mistake to consider the idea of permanent sovereignty over resour-
ces as anachronistic nationalistic rhetoric. It should be viewed as a fresh manifes-
tation of present aspirations for self-rule and greater equality.94

90
See generally on socialist conceptions of international law, Tunkin (1974 and 1986).
91
Brehme (1967: 265) (in the English summary).
92
Hyde (1956: 865).
93
Schachter (1977: 124–25).
94
Ibid., p. 126.
 Introduction 23

Among Third World international lawyers, Abi-Saab observes that the principle of
permanent sovereignty ‘addresses the question of the limits imposed by interna-
tional law on States regarding alien economic interests within their national
jurisdiction’ and takes the view that while ‘this exclusive power is subject to any
limitations imposed by international law . . . sovereignty is the rule and can be
exercised at any time, . . . limitations are the exception and cannot be permanent,
but limited both in scope and time.’95 In the same vein Chowdhury concludes:
The principle underlines the domestic jurisdiction of the State over natural re-
sources, economic activities and wealth within its national jurisdiction without
however exempting it from the application of relevant principles and rules of in-
ternational law.96
Bedjaoui takes a more radical position:
When they treat the claim for permanent sovereignty of States and nations over
their own natural wealth as mere logomachy, traditional lawyers are singularly
failing to understand the real facts about how the Third World countries have
been dispossessed of their sovereignty for the benefit of foreign economic
coteries.97
Bedjaoui considers the ‘stronger and stronger assertion of the right of peoples and
States to be in control of their natural resources’ as a method of defence against
the ‘violent reaction by the imperialists to counter their demands for a new inter-
national economic order’.98 In this respect he is supported by the French lawyer
Rosenberg who analyses permanent sovereignty from the perspective of ‘un droit
à l’émancipation et une arme de libération pour les peuples du tiers monde’.99
Zakariya also analyses the principle in the context of the search for an NIEO, but
in more specific terms. He points out that ‘petroleum, the natural resource par ex-
cellence, . . . kindled the big controversy’ concerning the search for a new inter-
national economic order. However, NIEO debates and resolutions:
. . . reaffirm the crucial place of natural resources, and the manner in which they
ought to be developed and disposed of both for the benefit of the producing coun-
tries and in the interests of the world community at large.100
In this study there will be a tendency to stress that the exercise of permanent sov-
ereignty should coincide with sustainable use of natural wealth and resources.

95
Abi-Saab (1984: 47–48).
96
Chowdhury (1988: 80).
97
Bedjaoui (1979: 99).
98
Ibid., p. 153.
99
Rosenberg (1975–76) and (1983).
100
Zakariya (1980: 209).
24 Chapter One

Elian refers to the necessity for all States to ensure ‘better husbanding of their
natural resources’101 and Weiss observes that:
While States have sovereignty over their territory, this sovereignty is of necessity
tempered by the requirements of intergenerational equity. They have rights to use
and benefit from the resources of the planet, but not to destroy it for future gen-
erations.102
In summary, the motives for formulating the principle of permanent sovereignty
and the objectives to be pursued by it are obvious. The principle was developed
during the 1950s, as part of an effort both to secure the benefits arising from ex-
ploiting natural resources for peoples living under colonial rule and to provide
newly-independent States with a shield against infringements upon their sover-
eignty by foreign States or companies. A far-reaching series of rights was claimed
on the basis of the principle of permanent sovereignty. In recent texts a growing
emphasis can be discerned on the obligation of all States to manage their resour-
ces in the interest of economic development and that of their population, and in an
environmentally responsible way, while also taking into account the interests of
other States and humankind. This will be discussed further in Part III.

7. Scope and Orientation of the Study

Part I of this book summarizes and assesses the evolution of the principle of per-
manent sovereignty through the political organs of the United Nations during the
period 1945–94. Approximately 65 resolutions are reviewed, as well as—for the
most important ones—the records of the relevant debates conducted in working
groups, committees and sessions of the UNGA, ECOSOC, the Commission on
Human Rights, UNCTAD and, on one occasion, the Security Council.
The overall aim of Part I is to analyse the major norm-setting legal instruments
which initially shaped the principle and which later tailored it to new circumstan-
ces, practices and needs. These legal instruments include in particular, but not
exclusively, UNGA resolutions.103
Part II shows that permanent sovereignty is deeply rooted in international law
and has not evolved as a legal principle in isolation but rather as part and parcel
of other modern trends in public international law. These related developments in
modern international law have had a major impact on the evolution, application
and interpretation of the principle of permanent sovereignty. Chapter 6 deals with

101
Elian (1979: 217).
102
Weiss (1989: 290).
103
See the list contained in Appendix I. The text of the main UN resolutions on PSNR is con-
tained in Appendix II.
 Introduction 25

developments in international investment law, in particular the controversies re-

lating to the National versus the International Minimum Standard; Chapter 7 dis-
cusses the international law of the resources of the sea, especially the extension of
exclusive economic jurisdiction over marine resources; and Chapter 8 reviews
trends in international environmental law and assesses their impact on the prin-
ciples of territorial sovereignty and permanent sovereignty over natural resources.
Part III examines the hard-core content of permanent sovereignty, particularly
the rights and duties of States and peoples arising from the principle. Chapter 9
focuses on what kind of corollary rights have been claimed on the basis of perma-
nent sovereignty and can be derived from it: the right to dispose freely of natural
resources; to choose freely a socio-economic system; to expropriate or nationalize
foreign investment; to regain effective control over natural resources and to re-
ceive compensation for damages to natural resources inflicted by other States or
by foreign enterprises; and the right of States to pursue their own environmental
and developmental policies. To what extent are these rights recognized in the
sources of international law?
The main questions to be answered in Chapter 10 are: does the principle of
permanent sovereignty raise issues not only of rights but also of obligations incu-
mbent on States and peoples? If so, what are these obligations? An analysis will
be made of the emergence of obligations pertaining to national management of
natural resources. This will entail a search for State obligations toward peoples
and nationals of the managing State itself, toward other States (for example, with
respect to transboundary natural resources) as well as toward other subjects of
international law (for example, ‘humankind’ in general). Such obligations may re-
late to: respect for the rights of (indigenous) peoples and future generations; fair
treatment of foreign investors; due care for the environment (including that of
other States and of areas beyond the limits of national jurisdiction); equitable use
of transboundary resources; and international co-operation for sustainable devel-
opment, in particular of developing countries.
This analysis consistently takes as a starting point the rights and claims con-
tained in the approximately 65 UN resolutions reviewed in Part I. Then, partly
building on the discussion of various branches of international law in Part II, the
recognition and further development of the principle of permanent sovereignty
will be investigated, with reference to the main recognized sources of international
law, along the lines of Article 38 of the Statute of the ICJ. Thus the analysis
includes:
• multilateral treaties: for example, the Law of the Sea Conventions of 1958 and
1982, the World Bank Convention on the Settlement of Investment Disputes
between States and Nationals of Other States, human rights treaties, the Vienna
Conventions on State Succession, commodity agreements, and selected multi-
26 Chapter One

lateral treaties in the field of international trade, foreign investment and the
environment;104
• major trends in State practice, especially as they are manifested in the form of
bilateral investment protection treaties between (a) industrialized and develop-
ing countries, and (b) developing countries inter se;
• international judicial decisions and arbitral awards, especially those dealing
with the settlement of disputes arising over nationalization of foreign invest-
ments; and
• the literature in international law and the work of international law forums
(such as the UN International Law Commission and the non-governmental
International Law Association).
Chapter 11 provides conclusions and final observations. Principal issues to be
addressed in this chapter on the basis of the study relate to:
1. The origin, development and current legal status of the principle of permanent
sovereignty over natural wealth and resources. Is it correct to assert, as is often
done, that during the initial years permanent sovereignty evolved as a corollary
of the principle of self-determination of peoples, while in later years the link
with self-determination and human rights has become looser and (territorial)
sovereignty of States has come to serve as its main legal foundation? If so, at
what point did the emphasis shift, and for which reasons? Has the principle of
permanent sovereignty become firmly accepted in international law or does it
still belong to the ‘grey zone’ between mere political claims and international
law?105 What conclusions can be drawn as to the ‘law-making’ functions of
the political organs of the United Nations?
2. The impact of the various challenges to State sovereignty and of the changing
perceptions of the role of the State in economic development on the current
relevance and interpretation of permanent sovereignty. Will awareness of econ-
omic interdependence and the process of environmental globalization eventu-
ally result in ‘the end of permanent sovereignty over natural resources’? Have
relevant traditional doctrines, notably the ‘national standard’ and the ‘inter-
national minimum standard’, and in particular the principles and rules pertain-
ing to the treatment of foreign investment, lost legal significance? Otherwise,
to what extent have they been or can they be reconciled with the principle of
permanent sovereignty? What role can be attributed to international law in the
peaceful settlement of disputes over the distribution and management of natural
resources?

104
See the list of treaties in Appendix III.
105
See generally on these grey zones in international law, Verwey (1984: 536–45).
 Introduction 27

3. The new directions of permanent sovereignty in an interdependent world. What

are the consequences of the increasing attention for the rights and interests of
(indigenous) peoples and humankind as a whole for the status and content of
the principle of ‘permanent’ sovereignty of States? Can a changing approach to
the exploitation of natural resources be discerned: from full use toward optimal
utilization? Can one, as in certain other branches of international law, deduce
from the evolution of the principle of permanent sovereignty a trend from
‘coexistence’ towards ‘co-operation’, from mere attention for its corollary
rights towards gradual recognition of corollary obligations, from emphasis on
the rights of States towards the interests of people and mankind as a whole? If
the answer is yes, how do these rights and duties relate to each other? What is
the impact of the emergence of the international law of sustainable develop-
ment on the principle of permanent sovereignty? Is its original linkage with the
cause of promoting the development of developing countries being replaced by
increasing emphasis on proper and environmentally-sound management of
natural wealth and resources?

In order to be able to examine the issues arising from these questions we shall
embark on a long excursion through various chapters of international law. A def-
initive characterization of the principle of permanent sovereignty may prove dif-
ficult to attain at this stage, given the controversial nature of the issues involved.
This is partly a consequence of the nature of the discipline. International law does
not lend itself easily to definitive conclusions as it still has to take shape in many
fields and is characterized by the inadequacy of international legislative and judi-
cial bodies. As a consequence of the predominant status of the principle of sover-
eignty, States still have a right to make their own interpretations in many fields.
Furthermore, many international law instruments referred to in this study have
been formulated in broad terms rather than precise legal language. The contents of
these instruments often resemble codes of conduct if not programmes of action,
even though they may have been concluded in the legal form of a treaty. There-
fore, it will often not be immediately clear what their implications are and logical
methods of interpretation, such as the use by analogy of the interpretation rules of
Article 31 of the Vienna Convention on the Law of Treaties, may not be suffi-
cient. Even if the rules are clear, it is by no means certain that they will provide
an unambiguous conclusion on the state of the law. For example, State practice
may not be in accordance with treaty law. A treaty may not have been ratified by
a significant or representative majority of States. Consequently, various alternative
interpretations may have legal merits, and this is often evidenced by separate and
dissenting opinions of judges and arbitrators in international courts and tribunals.
This means that majority decisions can only be taken as authoritative statements
on the state of the law in a particular field at a particular point of time and not as
final rulings for all time. Finally, as noted above, permanent sovereignty touches
28 Chapter One

on controversial issues in international law and international relations and one has
to enter the grey zone between politics and law in order to understand its evol-
ution and content. Permanent sovereignty has never been a static principle but one
often in a state of flux. Hence, it can only be assessed if law is seen as a process.
Basically, this process has been characterized by progress in a positive sense, but
the evolution of permanent sovereignty has also been affected by stagnation and
even regression. The international law status of the principle has increasingly been
recognized and permanent sovereignty is expected to serve a host of causes, inclu-
ding promoting the economic development of developing countries, contributing
to the attainment of self-determination of peoples and effectuating State economic
sovereignty, promoting respect for peoples’ and human rights and optimal utiliz-
ation of the world’s natural resources, enhancing nature conservation and pursuing
sustainable development.
All this requires that permanent sovereignty should be perceived and interpret-
ed as a fully-fledged principle which gives rise to duties in addition to rights. In
view of the particular background of the principle, namely that of a main element
of the decolonization process and an instrument for the development of newly-
independent States, it is only logical that in the past legal development and even
academic analysis have tended to focus on rights rather than obligations. Yet, it is
a deeply-rooted presumption of international law that rights and duties are correla-
tive. As early as 1925 Rapporteur Huber, the then President of the League of
Nations’ Permanent Court of International Justice, pointed out in the Spanish Zone
of Morocco Claims: ‘responsibility is the necessary corollary of a right. All rights
of an international character involve international responsibility’.106 This comes
—perhaps by coincidence—close to the finding of the International Court of Jus-
tice in the Barcelona Traction Case (1970): ‘Responsibility is the necessary corol-
lary of a right’,107 a case which is best known for the Court’s obiter dictum
about obligations erga omnes. To summarize, whoever is endowed with the legal
capacity to manage natural resources has to accept a balance between rights and
duties in order to do justice to the various objectives that permanent sovereignty
over natural wealth and resources is meant to serve.

106
Spanish Zone of Morocco Claims, 2 RIIA (1925), p. 615.
107
Barcelona Traction, Light and Power Company Ltd. Case (Belgium v Spain), ICJ Rep.
1970, para. 36.