Can Acta Jure Gestionis Be Attributable to the State? a Restrictive Doctrine of State Responsibility

While the distinction between acta jure imperii and jure gestionis plays a pivotal role in the law of state immunity, now predicated on a doctrine of restrictive immunity,¹ it appears alien to the law of state responsibility. The International Law Commission (ILC) specifies in its commentary on the Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA)² that ‘[i]t is irrelevant for the purposes of attribution that the conduct of a State organ may be classified as “commercial” or as acta iure gestionis’.³ More precisely, the commercial act of a state organ may be attributable to the state and, thus, engage state responsibility unless the organ acts in a purely ‘private’ (as opposed to ‘official’ or ‘public’ rather than ‘sovereign’) capacity.⁴ Therefore, it is logical to assume that the official (or public) act attributable to a state may encompass not only acta jure imperii but also acta jure gestionis and that the private act that is non-attributable is a narrower concept than the commercial act for the purposes of state immunity.

However, recent practice has shown conceptual overlaps between the law of state responsibility and that of state immunity. Today, the boundaries between the public and private spheres, which have been the basis of the law of attribution,⁵ are blurred. States are increasingly entrusting persons or entities outside the state apparatus with public functions. This enables states to achieve certain public goals in a more stable and efficient manner when persons or entities within the state organization do not have relevant capabilities, such as expertise, credibility, legitimacy and operational capacity.⁶ Given that outsourcing public functions to the private sector has now become a global phenomenon,⁷ the crux of the current law of attribution lies in a rule that regulates the circumstances in which a state may be held responsible for the conduct of a parastatal entity – that is, an entity that does not have the status of a state organ but is empowered to exercise a public function under the domestic law of that state.⁸ Article 5 of ARSIWA is a provision drafted for this purpose:

Regarding this provision, a few preliminary remarks are required. First, it should be noted that parastatal entities are conceptually distinct from state-owned enterprises (SOEs). It is true that ‘parastatal’ is not a legal term of art; however, when it comes to the attribution of conduct, the core of the concept lies in the legal entrustment of specific public functions. Thus, state ownership as such is neither requisite nor sufficient for an entity to be qualified as parastatal for the purposes of ARSIWA Article 5. In the absence of public functions being specifically entrusted pursuant to the domestic law of the state, the attribution of SOEs’ conduct is governed by ARSIWA Article 8.¹⁰ Second, parastatal entities are classified into two major groups: states can enlist an existing private entity that is equipped with relevant capabilities in public services, or parastatal entities can be established by a state for the purpose of exercising specific public functions.¹¹ As to the former category, examples provided by the commentary on Article 5 include private security firms acting as prison guards with powers of detention and discipline and private airlines exercising certain powers in relation to immigration control or quarantine.¹² Parastatal entities falling under the latter category are prevalent in strategic sectors, such as national resources, energy and infrastructure, which is, as seen below, illustrated by the practice of investor-state dispute settlement (ISDS) tribunals.¹³

That said, the key term, upon which attribution under ARSIWA Article 5 depends, is full of obscurities: ‘elements of the governmental authority’ (prérogatives de puissance publique). Notwithstanding that the concept is ‘not only undefined but elusive when pursued’,¹⁴ subsequent practice and the literature appear to converge in interpreting it as encapsulating a ‘restrictive approach’ that excludes acta jure gestionis from the scope of attributable conduct.¹⁵ In investment treaty arbitration, where the interpretation and application of ARSIWA Article 5 is frequently at issue, ISDS tribunals have recently applied the distinction between acta jure imperii and jure gestionis to determine whether the conduct of a parastatal entity is attributable to a respondent state and have maintained that the commercial act is categorically non-attributable to the state. Moreover, James Crawford, who contributed considerably to the finalization of ARSIWA as the last special rapporteur, opined that ‘[a]pplication of these concepts [acta jure imperii and jure gestionis] to attribution under ARSIWA Article 5 is useful’ and ‘achieves consistency’ between the law of state responsibility and that of state immunity.¹⁶ Remarkably, his first report prepared for the work of the ILC emphasized the irrelevance of that distinction for the purposes of the attribution of state organs’ conduct under ARSIWA Article 4.¹⁷ What is missing is a clear and sufficient justification for the difference between Articles 4 and 5.

Against this backdrop, this study explores whether, and to what extent, the distinction between acta jure imperii and jure gestionis dictates the interpretation and application of ARSIWA Article 5. It is argued that the wording of Article 5 fails to convey the quintessence of the rule precisely and, thus, has allowed subsequent practice and the literature to become too restrictive – that is, the scope of attributable conduct has been overly narrowed. This doctrinal critique provides a more accurate and desirable conception of the rule and a clear and detailed guideline on when the commercial act of parastatal entities can be attributable to the state.¹⁸ To put it in a broader context, this study attempts to gauge the potential of (public) international law to govern the increasingly privatized world.¹⁹

After identifying the rationale for attribution, section 2 of the article analyses the travaux préparatoires of ARSIWA Article 5, from which it is difficult to conclude that the provision was designed to preclude the attributability of acta jure gestionis. Contrarily, the investigation of subsequent practice leads to the conclusion in section 3 that Article 5 now represents a restrictive approach to the attribution of parastatal entities’ conduct. Subsequently, we discuss whether the law of state responsibility can also be predicated on a restrictive doctrine and, if so, how restrictive it can be. More precisely, to what extent is the state allowed to deny attribution to it of parastatal entities’ commercial conduct? A further analysis is made in section 4 as to why ISDS practice has developed an overly restrictive approach to Article 5 and why it is unjustifiable. Finally, section 5 of this article concludes by suggesting a revised wording of ARSIWA Article 5 to clarify the contours of the rule.

The attribution of conduct is defined as a legal operation whereby it is determined whether the conduct of a physical person is to be regarded as that of a state from the viewpoint of international law.²⁰ Attribution is ubiquitous in international law because that law is still primarily created by and addressed to states, which, as juridical persons, cannot act without a natural person as the intermediary.²¹ However, the issue of attribution has been mainly discussed in terms of state responsibility. The rules that regulate the operation for the purposes of state responsibility are stipulated in Part 1, Chapter 2 (Articles 4–11) of ARSIWA. Among them, Articles 4, 5 and 8 are the most relevant provisions in practice. The application of Article 4, in most cases, involves little difficulty. If the author of the conduct has the status of a state organ under the domestic law of that state, attribution under international law is reduced to a formal (and simple) operation of renvoi to that domestic law arrangement.²² The conduct of any state organ is to be regarded as that of the state under international law, which is, as confirmed by the International Court of Justice (ICJ), well established as a rule of customary international law.²³

In contrast, the application of Article 8, which regulates the attribution of private persons’ conduct and, according to the ICJ, also reflects the rule of customary international law,²⁴ has been problematic in practice and heatedly debated by international lawyers.²⁵ It is trite to say that, in principle, a state is not responsible for the conduct of private persons or entities.²⁶ However, as articulated in Article 8, there are two circumstances ‘where such conduct is nevertheless attributable to the State because there exists a specific factual relationship between the person or entity engaging in the conduct and the State’.²⁷ In the first scenario, a private person acts on the instruction of the state in carrying out the conduct: ‘The second deals with a more general situation where private persons act under the State’s direction or control.’²⁸ The attribution in the latter case is governed by the so-called ‘effective control’ test, whose threshold is considered to be high.²⁹ Furthermore, it is an arduous task to demonstrate that the state gives instructions to, or exercises direction or control over, the perpetrator.³⁰

Although Article 5 has come into play less frequently than Articles 4 and 8,³¹ the development of investment treaty arbitration highlights its increasing significance...