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The Insolvency of International Organizations and


the Legal Position of Creditors: Some
Observations in the Light of the International tin
Council Crisis

Matthias Herdegen

Netherlands International Law Review / Volume 35 / Issue 02 / August 1988, pp 135 - 144
DOI: 10.1017/S0165070X00007683, Published online: 21 May 2009

Link to this article: http://journals.cambridge.org/abstract_S0165070X00007683

How to cite this article:


Matthias Herdegen (1988). The Insolvency of International Organizations and the
Legal Position of Creditors: Some Observations in the Light of the International tin
Council Crisis. Netherlands International Law Review, 35, pp 135-144 doi:10.1017/
S0165070X00007683

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THE INSOLVENCY OF INTERNATIONAL ORGANIZATIONS AND THE
LEGAL POSITION OF CREDITORS: SOME OBSERVATIONS IN THE
LIGHT OF THE INTERNATIONAL TIN COUNCIL CRISIS

by Matthias Herdegen*

1. INTRODUCTION

The quest for clear-cut legal structures in corporate bodies is not only pro-
pelled by dogmatic interest, but often also from shaken confidence and
frustrated expectations. When in October 1985 a leading official of the Inter-
national Tin Council, the manager of its buffer stock, declared that the Coun-
cil was henceforward no longer able to meet its financial commitments and
when subsequently no agreement on the settlement of outstanding claims
could be reached, the Council's creditors as well as its members were faced with
a host of legal issues for which the general rules of public international law
provide no easily extricable guidance.1 In the face of the insolvency of an in-
ternational organization the recourse to measures of liquidation as provided
for in national company laws or the determination of the position of the
organization's creditors vis-a-vis the member States cannot follow the broad
path of consolidated State practice and legal doctrine.
The six successive post-war tin agreements have purported to provide a
framework for co-operation between producing and consuming countries, to
adjust world production and consumption of tin, to prevent excessive fluctua-
tions in the price of tin and to assure both producers and consumers of a fair
and adequate price for the material. For the implementation of these objec-
tives the Sixth International Tin Agreement of 1982, like previous agreements,
provided two main instruments: a bufferstock and export controls. The Coun-

• Research Fellow, Max Planck Institute for Comparative Public Law and International Law,
Heidelberg, Federal Republic of Germany.
1. On the breakdown of the International Tin Council, see P.M. Eisemann, 'Crise du Conseil
International de l'Etain et insolvabilite d'une organisation intergouvernementale', 31 AFDI (1985)
p. 731 et seq.; E.J. McFadden, 'The Collapse of Tin: Restructuring a Failed Commodity Agree-
ment', 80 AJIL (1986) p. 811 et seq.; the House of Commons' Second Report from the Trade and
Industry Committee, Session 1985, The Tin Crisis, Vol. 1, p. IV et seq. On the proceedings in-
itiated by creditors in the United Kingdom, see P. Sands, 'The Tin Council Litigation in the
English Courts', 34 NILR (1987) p. 367 et seq.
O165-O7OX/88/O1O135-1O $00.20/0
Martinus Nijhoff Publishers/Dordrecht
XXXV-NILR 1988, 135-144
136 M. HERDEGEN NILR 1988

cil is composed of all the members represented by delegates and has its seat
in the United Kingdom. The bufferstock manager operated at the London
Metal Exchange as well as in the Malaysian Tin Market. Transactions of tin
were related to floor and ceiling prices set by the Council.
Up until the Council's final collapse, the International Tin Agreements were
praised as a great success among the international commodity pacts.2 Among
the principal causes for the financial breakdown, the support of an artificially
high market price by the Council's operations, the inadequate size of the buf-
ferstock and rather risky forward and other transactions by the bufferstock
manager have been listed as the main factors.3 In support of the price policy
of the Council its bufferstock manager resorted to substantial borrowing
thereby overstraining its credit with bankers and brokers. After the suspension
of the International Tin Council's operations the aggregated claims of
creditors amounted to several hundred million English pounds, of which only
a fairly minor part was covered by the reduced value of tin held as collateral.
After the attempts to reach a settlement with the members had failed, some
major creditors initiated legal action before the English High Court in Lon-
don. In order to see their claims satisfied, the creditors followed three different
procedural routes: an application to have the Council wound up according to
the provisions of the British Company Act 1985 on the liquidation of an
unregistered company,4 the appointment of a receiver empowered, on the In-
ternational Tin Council's behalf, to demand contributions from members 5
and, finally, direct actions against the members of the Council.
The High Court refused the liquidation of the Council holding that Parlia-
ment could not be presumed to have legislated for the winding-up of an
organization which its members intended to withdraw from national jurisdic-
tion;6 furthermore, the Court deemed a liquidation order to be incompatible
with the immunities granted to the International Tin Council by national
legislation implementing the Headquarters Agreement between the British
Government and the Council.7 The receiver action failed because the Court
could not detect any justiciable causes of action, i.e., obligations of the
members which were not derived from the international treaty setting up the
organization.8 Equally unsuccessful were, hitherto, the actions invoking direct
liability of the members based on contract. In this context, the Court relied on
the particular status of the international organization in domestic law accord-
ed by the International Tin Council (Immunities and Privileges) Order of

2. McFadden, loccit. n.l, p. 819.


3. Ibid., p. 823 et seq.
4. In re International Tin Council [1987] 2 WLR 1229.
5. Maclaine Watson & Co. Ltd. v. International Tin Council [1987] 3 WLR 508.
6. In re International Tin Council [1987] 2 WLR 1229 (1238 et seq.); this decision was upheld
by the Court of Appeal, The Times, 29 April 1988.
7. [1987] 2 WLR 1246 et seq.
8. Maclaine Watson & Co. Ltd. v. International Tin Council [1987] 3 WLR 508; upheld by
the Court of Appeal, The Times, 4 May 1988.
N I L R 1988 INSOLVENT INTERNATIONAL ORGANIZATIONS AND CREDITORS 137

19729 which provides that the Council shall have the legal capacities of a
body corporate. The Court concluded that the International Tin Council was
thereby vested with legal personality and with the ability to contract on its own
behalf without engaging the liability of its members and without constituting
a corporation or a body corporate subject to domestic company law with
respect to the internal regulations of its affairs.10 In these cases appeals lodg-
ed by the creditors were dismissed." In the light of the cascade of actions still
pending before national courts,12 the following considerations shall be con-
fined to some rather tentative observations of a general nature on the status
of international organizations in domestic law, the possible liquidation under
the law of the forum State and the principles governing the liability of the
members.

2. THE LEGAL PERSONALITY OF INTERNATIONAL ORGANI-


ZATIONS IN PUBLIC INTERNATIONAL LAW AND IN
DOMESTIC LAW

From the angle of public international law any problems related to a con-
curring liability of an international organization and its members can arise on-
ly to the extent that the organization is vested with legal personality. An inter-
national intergovernmental organization, from the perspective of international
law, enjoys legal personality if it has rights and obligations of its own distinct
from the legal sphere of the member States and if it is able to assert its legal
positions through its own organs.13 Such legal personality comes into ex-
istence when the member States by treaty establish a legal entity whose
autonomous existence flows from the founding treaty itself and does not de-
pend upon its incorporation as a body corporate under any national law. To

9. S.I. 1972, No. 120.


10. J.H. Rayner (Mincing Lane) Ltd. v. Department of Trade and Industry and Others; TSB
England and Wales pic and Others v. Same; Amalgamated Metal Trading and Others v. ITC and
Others, The Times, 29 June 1987. Dismissing a similar action against the British Department of
Trade and Industry, the High Court held that the International Tin Council existed as a separate
legal entity distinct from its members and able to incur liabilities which were exclusively its own:
Maclaine Watson and Co. Ltd. v. Department of Trade and Industry, The Times, 7 September
1987. These decisions were upheld by the Court of Appeal, The Times, 28 April 1988.
11. See nn. 6, 8 and 10 supra.
12. Cf., also the Dutch Council of State [Raad van State], Algemene Bank Nederland (NV)
v. Minister van Economische Zaken, summary judgment 1987, No. 350, p. 681 et seq.; Supreme
Court of New York, International Tin Council v. Amalgamet Inc., 524 N.Y.S. 2d 971 (1988).
13. See R.L. Bindschedler, 'International Organizations, General Aspects', in R. Bernhardt,
ed., Encyclopedia of Public International Law, instalment 5 (1983) p. 119 et seq., at p. 130; E.
Lauterpacht, 'The Development of the Law of International Organization by the Decisions of In-
ternational Tribunals', 152 RdC (1976) part IV, p. 377 et seq., at p. 403 et seq.; see also Interna-
tional Court of Justice, Reparation for Injuries Suffered in the Service of UN, Advisory Opinion,
ICJ Rep. 1949, p. 174 et seq., at p. 179.
138 M. HERDEGEN NILR 1988

require, furthermore, that the organization must be endowed with the capacity
to perform acts jure imperil, as some writers do, 14 seems too strict a view. It
must be sufficient that the structure of an organization established by treaty
and its relations vis-a-vis its members are primarily governed by international
law and are at least partly withdrawn from any national law.
These elements are clearly present in the case of the International Tin
Council, although the draftsmen of the International Tin Agreements were
perhaps not very well advised to apply the term 'Council' to both the organiza-
tion itself and its main organ.15 The provisions on the legal personality of the
Council,16 albeit not explicitly comprising the international plane, also do not
refer to any specific municipal law and thus imply that the legal personality
flows from the treaty itself. From the international personality of an organiza-
tion, according to the prevailing view, follows the capacity to be the subject of
international responsibility and liability; this capacity appears as the necessary
result of the legal personality.17
In public international law there is no notion of legal personality distinct
from the ability to act as a subject of public international law. The often invok-
ed dichotomy between status and function must, therefore, be viewed with con-
siderable caution. On the other hand, the notion of legal personality as known
in many national legal systems is inflated and instilled with the idea of a com-
prehensiveness of possible functions and with a strict separation from the
members which cannot simply be transferred into the law of international
organizations. The scope of the legal autonomy and the engagement of the ex-
clusive liability of an international organization cannot be concluded from a
general definition of legal personality in international law. Rather, they depend
on the functions and the structure of the organization as determined by the
founding treaty and other agreements. The laws of several States know forms
of organization where the exclusive liability of a body is not a necessary cor-
ollary of its legal personality.18 For these reasons the possible liability of the
members of an international organization does not necessarily depend on the
presence of exceptional factors which is suggested by the metaphor of 'pierc-
ing' the legal personality or of 'lifting the company veil' in municipal law.
In municipal law, the legal personality of an international organization can
simply flow from the recognition of the legal personality under international
law for the purpose of the application of municipal law.19 The international
personality is thus extended so to speak into national law by the conferment

14. I. Seidl-Hohenveldern, Corporations in and under International Law (1987) p. 72.


15. See Arts. 3 and 4 of the Sixth International Tin Agreement (UN Doc.TD/TIN.6/14/Rev.l).
16. Art. 16 (1) of the Sixth International Tin Agreement.
17. Bindschedler, loccit. n.12, p. 130; W. Meng, 'Internationale Organisationen im volker-
rechtlichen Deliktsrechf, 45 ZaoRV (1985) p. 324 et seq., at p. 328.
18. See F.A. Mann, 'International Corporations and National Law', 42 BYIL (1967) p. 145 et
seq., at p. 160.
19. See M. Herdegen, 'Bemerkungen zur Zwangsliquidation und zum Haftungsdurchgriff bei
internationalen Organisationen', 47 ZaoRV (1987) p. 537 et seq., at pp. 542-543.
NILR 1988 INSOLVENT INTERNATIONAL ORGANIZATIONS AND CREDITORS 139

of legal capacities usually reserved for bodies established under the domestic
law of the State concerned. In this case the internal structure of the interna-
tional organization continues to be governed by international law and only by
international law. It is in this sense that the Sixth International Tin Agreement
and its stipulations on the Council's legal personality and its capacity to con-
tract must be construed. Alternatively, an international organization could be
fully incorporated under the law of one or several member States and to that
extent be subject to national jurisdiction. For practical purposes this alter-
native is of fairly minor relevance.

3. NATIONAL LIQUIDATION MEASURES

In the absence of treaty provisions for the case of insolvency, creditors will
consider measures of liquidation in the country of the organization's principal
seat of business or other countries where substantial assets of the organization
are located. The grant of extensive immunities as often stipulated in
agreements between the organization and the State where it has its principal
seat of business is not the only possible bar to national measures of liquida-
tion. Such measures ordered by the national courts of member States will often
collide with the obligation of the forum State to respect the integrity of the
organization as a 'going' entity (subject to a different agreement between the
members).20
Although the initiation of liquidation proceedings under national jurisdic-
tion does not as such terminate the legal personality of an international
organization, it seems conclusive that an organization set up and structurally
governed by an international treaty can only be dismantled by an international
agreement among its members.21 The winding-up of an international
organization by order of a municipal court will, as a general rule, constitute
an interference with the internal structure of the organization which the
member States have withdrawn from national jurisdiction; when ordered by
the courts of a member State or a third State which has recognized the interna-
tional organization, such an interference will amount to an intervention and
engage the international responsibility of the forum State. In a similar way, a
national court order appointing a receiver empowered to pursue obligations of
the member States vis-a-vis the international organization must be qualified as
an unlawful interference with the internal structure of the organization to the
extent that the corresponding claims of the organization are not governed by
domestic law and are held by the organization qua subject of public interna-
tional law.
Different considerations will, of course, apply in the rather hypothetical
case when the member States have stipulated that the organization be fully in-

20. See, e.g., Art. 41(1) of the Sixth International Tin Agreement.
21. Cf., Herdegen, loacit. n. 18, pp. 546-547.
140 M. HERDEGEN N I L R 1988

corporated under a national law and have thereby subjected their relations with
the organization to such national law, e.g., to the company lav/ of the seat
State.

4. THE LIABILITY OF THE MEMBERS

The liability of the members for obligations incurred by an international


organization and direct actions based on such a liability involve highly con-
troversial and intricate issues. The approaches adopted in legal doctrine and
occasionally in judicial decisions range from the principle of exclusive liability
of the organization itself a to the model of joint liability of the members.23
However, among publicists the different concepts of either an exclusive
liability of the organization or a joint liability of its members are not carried
to extremes by either fully assimilating an international organization to a
limited company or an unincorporated partnership; nor are they otherwise
argued in absolute terms. A broad consensus in legal doctrine supports the
view that the personality of an intergovernmental organization in international
law does not entirely shelter the members from liabilities arising from the
organization's acts.24 States may not altogether escape responsibility or
liability under the general rules of international law by the mere interposition
of an entity with juridical personality acting in their interest and performing
their functions.25 On the other hand, it can hardly be argued that the
members of an international organization engaged in economic transactions
may always be held directly and fully liable for any obligation incurred by the
organization. On the basis of such a far-reaching view it would be logical to
subject the members to the same primary obligations as the organization itself
and, conversely, to also attribute claims of the organization to the joint
members. Even the advocates of an extensive liability of the member States for

22. I. Seidl-Hohenveldern, 'Die volkerrechtliche Haftung fur Handlungen internationaler


Organisationen im Verhaltnis zu Nichtmitgliedstaaten', 11 Osterreichische Zeitschrift fiir Of-
fentliches Recht und Volkerrecht (1961) p. 497 et seq., at pp. 505-506; and by the same author,
Das Recht der Internationalen Organisationen einschliefilich der Supranationalen Ge-
meinschaften, 4th edn. (1984) p. 84; cf., also Lauterpacht, locxit. n. 12, pp. 412-413.
23. See, e.g., G. Hoffmann, 'Der Durchgriff auf die Mitglieder internationaler Organistionen
fiir deren Schulden', 41 Neue Juristische Wochenschrift (1988) p. 585 et seq., at p. 586; H.G.
Schermers, International Institutional Law, 2nd edn. (1980) p. 780.
24. H.-T. Adam, Les organismes internationaux specialises, vol. 1 (1965) p. 130; Mann,
loacit. n. 17, pp. 160-161; Meng, loach, n. 16, p. 332 et seq.; Schermers, op.cit. n. 22, p. 780; I.
Seidl-Hohenveldern, 'Responsibility of Member States of an International Organization', in Inter-
national Law at the Time of its Codification, Essays in Honour of Roberto Ago, vol. Ill (1987)
p. 415 et seq.; I. Shihata, 'The Role of Law in Economic Development: The Legal Problems of
International Public Ventures', 25 Revue Egyptienne de Droit International (1969) p. 119 et seq.,
at p. 125.
25. Cf., also as to the possible liability of the parties to a joint intergovernmental enterprise,
the United States Court of Claims, Anglo-Chinese Shipping Company v. United States, 22 ILR
1955, p. 982 at p. 986.
NILR 1988 INSOLVENT INTERNATIONAL ORGANIZATIONS AND CREDITORS 141

an international organization's obligations tend to qualify such liability as sub-


sidiary in nature.26 Finally, a concurring liability of the members for all the
organization's obligations would easily erode the objective underlying the
often extensive immunities granted to the organization itself.
The approach adopted by the Court of Arbitration of the International
Chamber of Commerce in the Westland case,27 which is often invoked in sup-
port of extensive liability of member States, cannot fully stand up to scrutiny.
This (interim) award identified the member States of the Arab Organization
for Industrialization with the organization itself, which those States had
established as an entity not subject to the laws of any of its members and
vested with legal personality. The award held the member States directly liable
for the contractual obligations of the organization and even construed an ar-
bitration agreement between the organization and a British contractor as ex-
tending to direct actions against the member States, a fairly amazing conclu-
sion. Critical considerations will, however, not necessarily affect the result of
the award, as in this case the creditor company could also rely on guarantees
by the member States and as, furthermore, the majority of the members had
taken steps to dissolve the organization. It seems obvious that the member
States cannot hide behind the legal personality of an organization which they
have liquidated and dismantled.
It follows from the endowment of an international organization with inter-
national personality in relation to its members and to other States which have
recognized the organization that the member States can only be held liable for
the organization's obligations on the basis of certain elements of attribu-
tion.28 Membership alone cannot serve as an appropriate basis for an exten-
sion of claims and liabilities, unless the member States clearly intended to
share the organization's rights and obligations. The International Law Com-
mission's Draft on the Law of Treaties between States and International
Organizations or between International Organizations 29 envisaged obliga-
tions of the members of an international organization flowing from
agreements between the organization and other States only on the basis of
their clearly expressed consent.30
Under public international law, the responsibility and liability of the
members can flow from the direct violation of international law by establishing

26. Adam, op.cit. n. 23, pp. 129-130; Meng, loccit. n. 16, p. 335 et seq.; Schermers, op.cit. n.
22, p. 780; see also I. von Munch, Das volkerrechtliche Delikt in der modernen Entwicklung der
Volkerechtsgemeinschaft (1963) pp. 268-270; Seidl-Hohenveldern, loccit. n. 23, p. 427.
27. Westland Helicopters Ltd. v. Arab Organization for Industrialization, United Arab
Emirates, Saudi Arabia, Qatar, Egypt, Arab British Helicopter Company, 23 ILM 1984, p. 1071.
28. Herdegen, loccit. n. 18, pp. 551-556; cf., also Shihata, loccit. n. 23, p. 125.
29. ILC Yearbook 1982 vol. 2 part 2, p. 17 et seq.
30. This provision was not adopted as part of the Vienna Convention on the Law of Treaties
between States and International Organizations or between Organizations, UN DocA/CON^
129/15. See G.E. da Nascimento e Silva, 'The 1986 Vienna Convention and the Treaty-Making
Power of International Organizations', 29 GYIL (1986) p. 79 et seq., at pp. 80-82.
142 M. HERDEGEN NILR 1988

or joining an organization for unlawful purposes, then also ratione materiae


from participating in an intergovernmental entity engaged in ultra-hazardous
activities,31 and finally from structural elements like the establishment of an
organization or the exercise of control falling short of certain international
standards.
To the extent that the structure of an international organization and its rela-
tions with the members are governed by the founding treaty and other rules
of international law as the 'home law' 32 of the organization, the elements of
attribution on which liability of the members can be based must flow from in-
ternational law. This principle not only applies to obligations governed by
public international law but also to claims of private creditors, unless the
member States have subjected the internal structure of the organization at least
partly to the municipal law of the State where it has its seat or any other State.
Provisions in the founding treaty that the organization shall be able to con-
clude contracts and have other capacities of a legal person " cannot be inter-
preted as full submission under national laws, because such a clause does not
purport to also subject the internal structure of the organization to municipal
rules. Any undertaking to distill general principles of law from a comparative
analysis of national rules on lifting the company veil and on a subsidiary
liability of the members must be viewed with caution; in the light of the diverg-
ing norms on publication or on the founding capital to be raised or on other
requirements under national law there is not much common ground except for
cases of manifestly abusive sheltering behind the legal personality of a cor-
poration.34 Therefore, the attribution of liability and responsibility for acts of
the international organization must rather be based on the founding act as well
as on the remaining influence and control of the founders — without entailing
a strictly accessory and full liability of all members for obligations incurred
by the organization.
In particular the members, when establishing an international organization,
must provide the organization with resources whose amount appears adequate
with respect to the functions which the organization is vested with. The
necessary contributions of the member States must be measured by the extent
of the prospective primary and secondary obligations of the organization.35
When the scope of the organization's activities and functions is extended with
the express or implied consent of the members, their financial obligations must
follow suit. Deviations from the founding treaty by the organization's organs
which the member States negligently fail to check by availing themselves of ex-
isting mechanisms may engage their responsibility under public international

31. Cf., Art. VI(3) of the Space Treaty of 27 January 1967, UNTS 610, p. 205; see also Seidl-
Hohenveldern, op.cit. n. 13, p. 65.
32. Cf., Mann, loocit. n. 17, p. 157; Seidl-Hohenveldern, op.cit. n. 13, p. 104.
33. See, e.g., Art. 16(1) of the Sixth International Tin Agreement.
34. See also the judgment of the International Court of Justice in the Barcelona Traction case
(Belgium v. Spain), ICJ Rep. 1970, p. 3 et seq., at pp. 38-39.
35. See Herdegen, loccit. n. 18, p. 553; Meng, loocit. n. 16, p. 336.
NILR 1988 INSOLVENT INTERNATIONAL ORGANIZATIONS AND CREDITORS 143

law. Such deviations from the founding treaty may frustrate legitimate expec-
tations.
The members' liability is thus linked to particular obligations flowing from
the founding act and from subsequent duties of control and supervision. As
these obligations to provide the organization with sufficient capital and to
maintain certain standards of control are incumbent upon the member States
as a community, it is suggested that the violation of such obligations does not
entail the full liability of each member; the liability must therefore be appor-
tioned according to individual involvement.36 Different considerations might,
however, be called for in cases where a member could bring about a termina-
tion of certain activities only by its own veto. In the case of the International
Tin Council, certain allegations brought forward by the creditors, e.g., with
respect to the operation and the financing of the bufferstock in deviation from
the basic treaty and the failure of the member States to intervene, 37 corres-
pond to the elements of attribution and responsibility described.
The suggested principles on elements of attribution and responsibility will
directly serve as a basis for the liability of the member States only if the
primary obligation incurred by the international organization itself flows from
international law. In this context it is rather an academic question whether the
responsibility of the members is directly based on their violation of primary
obligations under international law or whether the liability of the organization
is seen as partly or fully extended to its members.
With respect to claims of private creditors flowing from contract or other-
wise governed by a national law, the situation is rather different. The private
creditors cannot directly invoke the violation of duties under public interna-
tional law which do not purport to protect the interests of individuals and
which do not give rise to individual rights. Not even the direct breach by a State
of a contract, with an alien, as a general rule entails the State's responsibility
under international law.38 It must follow, a fortiori, that the liability of the
members of an international organization for the non-fulfilment of obliga-
tions governed by a national law cannot directly be based on international law.
International law merely determines the conditions under which the members
of an international organization may be held liable for the organization's
obligations under a national law.

36. For the individual share of liability incurred by each member the quotas of contributions
to the budget according to the constituent treaty may provide important guidance, see Schermers,
opxit. n. 22, p. 780.
37. See also the report of the Trade and Industry Committee of the House of Commons on
the tin crisis, supra n. 1, Vol. 1, pp. X-XIII.
38. See O. Schachter, 'International Law in Theory and Practice", 178 RdC (1982) part V p.
9 et seq., at pp. 311-312. This view is, however, not uncontroversial, cf., S. Schwebel, 'On whether
the Breach by a State of a Contract with an Alien is a Breach of International Law', in Interna-
tional Law at the Time of its Codification, Essays in Honour of Roberto Ago, vol. Ill (1987) p.
401 et seq.
144 M. HERDEGEN NILR 1988

It seems not only logical but also adequate that, as a matter of international
law, private creditors are not placed in a more favourable position vis-a-vis the
member States of an international organization than States on an international
level. When the mentioned conditions for the member State's responsibility are
fulfilled and a national court finds liability vis-a-vis private creditors, such a
conclusion is simply an exercise of national jurisdiction and depends on the
application of the law of the forum, just as in cases in which a foreign State
is held liable for obligations incurred by an independent corporation or
another entity which it has set up or controls. The claim supporting the liabili-
ty of the member States still flows from national law with the renvoi to the
founding treaty as the organization's 'home law' 39 being superseded by the
rules of international law allowing an extension of the primary obligation (vis-
a-vis the creditors) to the member States.40
The extension of an international organization's liability to member States
may, however, be barred by the treaty obligations of the forum State, when the
members have provided for an exclusive liability of the organization as in
several recent commodity agreements.41 Such an exemption clause will not
automatically bind non-member States even in the case of recognition accord-
ed to the organization, but they may preclude the members' liability by estop-
pel in appropriate cases, or affect contractual relations with private creditors.
A limitation of the liability of the members can also be inferred by implication;
it seems very well arguable that the investiture of an international organization
with certain capacities, such as concluding contracts under national law, af-
fects claims of creditors who are nationals of the member States to the effect
that, e.g., such claims in contract can be directed only against the organization
itself.42 It is not unlikely that in the case of the International Tin Council the
members, on this basis, will finally be able to shelter behind the legal per-
sonality of the Council. To the extent that the members successfully refuse to
accept any liability, potential partners of international organizations engaged
in transactions of an economic nature will then be well advised to subject such
organizations, the standard of their management and the scope of their trans-
actions, much more so than up to now, to close scrutiny.

39. See n. 31 supra.


40. In this context national courts may be confronted with the issue of State immunity:
although the obligations of the members to the organization may be governed by an international
treaty, the members can only invoke immunity if the act giving rise to the organization's liability
— attributed to a State — would qualify as being performed iure imperii; see Herdegen, loc.cit.
n. 18, pp. 556-557.
41. See, e.g., Art. 6 of the Agreement Establishing the Common Fund for Commodities (UN
Doc. TD/IPC/CONF/25); Art. 22(5) of the International Cocoa Agreement of 1986 (Cmnd.
9905).
42. Cf., Herdegen, loccit. n. 18, p. 549. It might, however, be also plausible to relate such a
limitation of the members' liability only to claims based on membership alone'without special
elements of attribution being present.