Fundamental principles of international economic law

As an attempt to implement the objectives of the NIEO and to establish the norms of international economic relations, the UN General Assembly adopted as part of its resolutions on the NIEO the Charter of Economic Rights and Duties of States (CERDS) of 1974.

The full text of this Charter is appended to this Study Guide.

Chapter 1 of the Charter outlines the fundamentals of international relations in the following words:

Economic as well as political and other relations among states shall be governed, inter alia, by the following principles:

(a) Sovereignty, territorial integrity and political independence of States;

(b) Sovereign equality of all States;

(c) Non-aggression;

(d) Non-intervention;

 (e) Mutual and equitable benefit;

(f) Peaceful coexistence;

(g) Equal rights and self-determination of peoples;

(h) Peaceful settlement of disputes;

(i) Remedying of injustices which have been brought about by force and which deprive a nation of the natural means necessary for its normal development;

(j) Fulfillment in good faith of international obligations;

(k) Respect for human rights and international obligations;

(l) No attempt to seek hegemony and spheres of influence;

(m) Promotion of international social justice;

(n) International co-operation for development;

(o) Free access to and from the sea by land-locked countries within the framework of the above principles.

These are principles of a general nature which include both economic and political principles and reflect the trend of the early 1970s.

Articles 1, 2, 4 and 5 outline the economic rights and duties of states in a more concrete manner:

Article 1

Every State has the sovereign and inalienable right to choose its economic system as well as its political, social and cultural systems in accordance with the will of its people, without outside interference, coercion or threat in any form whatsoever.

Article 2

1. Every State has and shall freely exercise full permanent sovereignty, including possession, use and disposal, over all its wealth, natural resources and economic activities.

2. Each state has the right:

(a) To regulate and exercise authority over foreign investment within its national jurisdiction in accordance with its laws and regulations and in conformity with its national objectives and priorities. No State shall be compelled to grant preferential treatment to foreign investment;

(b) To regulate and supervise the activities of transnational corporations within its national jurisdiction and take measures to ensure that such activities comply with its laws, rules and regulations and conform with its economic and social policies. Transnational corporations shall not intervene in the internal affairs of a host State.

Every State should, with full regard for its sovereign rights, cooperate with other States in the exercise of the right set forth in this subparagraph;

(c) To nationalize, expropriate or transfer ownership of foreign property, in which case appropriate compensation should be paid by the State adopting such measures, taking into account its relevant laws and regulations and all circumstances that the State considers pertinent. In any case where the question of compensation gives rise to a controversy, it shall be settled under the domestic law of the nationalizing State and by its tribunals, unless it is freely and mutually agreed by all States concerned that other peaceful means be sought on the basis of the sovereign equality of States and in accordance with the principle of free choice of means.

Article 4

Every State has the right to engage in international trade and other forms of economic cooperation irrespective of any differences in political, economic and social systems. No State shall be subjected to discrimination of any kind based solely on such differences. In the pursuit of international trade and other forms of economic cooperation, every State is free to choose the forms of organisation of its foreign economic relations and to enter into bilateral and multilateral arrangements consistent with its international obligations and with the needs of international economic cooperation.

Article 5

All States have the right to associate in organizations of primary commodity producers in order to develop their national economies, to achieve stable financing for their development and, in pursuance of their aims, to assist in the promotion of sustained growth of the world economy. In particular accelerating the development of developing countries. Correspondingly, all States have the duty to respect that right by refraining from applying economic and political measures that would limit it.

Although the charter was not a ‘hard law’ instrument having binding legal effect, many of the principles embodied in it have been regarded as representing the basis for the development of international economic law. Indeed, the charter reiterates some of the principles that were already widely accepted as representing customary rules of international law, such as the permanent sovereignty of states over their natural resources.