Shareholders' Liability in International Organizations-The Settlement of the International Tin Council Case

Abstract

The financial collapse of the International Tin Council (ITC) in 1985 raised three fundamental legal questions. Firstly, whether the granting of legal personality to an organization under international law by means of an international agreement always carries with it the limited liability of the organization. Secondly, it must be asked whether agreements to establish an international entity based on the statutes of international law are never subject to national jurisdiction. And thirdly, consideration is needed of the precautions to be taken in the future in order to avoid this kind of financial collapse. The answers to these questions have to consider that the international organizations have changed the emphasis of their activities from the perception of sovereign duties over the economic field where they rely on trust and cooperation with private enterprises. Due to this situation a distinction must be made between acts of state and activities under civil law. There is no principle at all in international or private law according to which the granting of international personality or legal capacity involves sole liability. Also the Act of State doctrine is not suited to protect the FTC or its member states from recourse to the court by private creditors in the case of civil acts. To realise the aim of creating a new and more equitable economic order and to improve the necessary credit standing, the statutes of the internationalorganizations must also contain improved control mechanisms.