On 18 February 2008, the Government of the United Kingdom nationalized Northern Rock plc, a bank publicly traded on the London Stock Exchange. Thereafter, on 12 March 2008, the Government brought into effect the Northern Rock plc Compensation Scheme Order 2008 (CSO), which established a framework for determining the amount of any compensation payable to former shareholders of the now nationalized Northern Rock. The CSO framework places significant restrictions on the permitted manner of valuing the nationalized shares in the company. Instead of providing for payment of the market value of the shares at the time of nationalization, the effect of the CSO is to require that the shares be given a liquidation value (which by most accounts will likely be zero). The CSO makes no distinctions between foreign investors and UK investors in applying this valuation methodology. All are treated alike for purposes of compensation under the Order.
While the structure of the CSO may have appeared equitable to the creators of the Scheme—treat foreign investors in the same way as British investors—the CSO framework raises questions with respect to the United Kingdom's obligations under international law. The United Kingdom is party to numerous bilateral investment treaties (BITs) as well as the European Convention on Human Rights, all of which adopt an international standard for the payment of compensation to foreign investors in cases of nationalization. That standard requires that the United Kingdom provide compensation in an amount equal to the ‘market value’ of the property taken from the foreign nationals. The CSO, however, seems to prohibit the payment of market value compensation by placing restrictions on the permitted manner of valuing Northern Rock's shares. As a result, the compensation process established under the CSO appears to run contrary to the UK BITs and the rules of customary international law.
Northern Rock is not the only bank to have been nationalized by the British Government. On 29 September 2008, the UK Treasury announced the nationalization of another bank, Bradford & Bingley plc. The terms of compensation for Bradford & Bingley's shareholders are not yet known. As of this writing the UK Treasury has not brought forth an order to establish a compensation scheme for Bradford & Bingley shareholders. It remains to be seen, therefore, whether the compensation scheme applicable to Bradford & Bingley shareholders will raise the same issues as the Northern Rock scheme has done.
Part I provides a brief background to the financial difficulties in which Northern Rock found itself in the latter half of 2007 and the beginning of 2008 and outlines the terms of the UK nationalization and the shareholder compensation framework set up by the CSO. Part II looks at the standard of compensation required by the UK BITS and the European Convention on Human Rights for the expropriation of property owned by foreign nationals. Part III looks at the question of valuation under the UK BITS and the Convention.Footnote 1 Part IV addresses the circumstances of the Bradford & Bingley nationalization and whether the financial crisis of September 2008 has given rise to conditions of necessity which might justify a temporary departure from the ordinarily applicable rules of international law.
I. THE NATIONALIZATION OF NORTHERN ROCK
On Sunday 17 February 2008, the UK Government announced that it would bring forward legislation to nationalize all shares in Northern Rock.Footnote 2 It was a remarkable change in fortune for the company. Northern Rock had been the United Kingdom's fifth-largest mortgage bank.Footnote 3 Just one year earlier the company had reported profits of over £400 million and underlying assets worth £100 billion.Footnote 4 On 6 February 2007, the share price of Northern Rock closed on the London Stock Exchange at a record high: £12.58 per share.Footnote 5 One year later, however, at the time of the nationalization of its shares, the company had taken on billions of pounds of debt in facilities arranged with the Bank of England and the UK Treasury, and there were concerns about its ability to remain solvent.Footnote 6 On its last day of trading, Friday, 15 February 2008, shares in Northern Rock closed at 90 pence per share.Footnote 7 The company had gone from a market capitalization of £7.8 billion in February 2007 to just £559 million one year later.
A. Nationalization
On Monday, 18 February, following the UK's Government's Sunday announcement, the UK Financial Services Authority (FSA) suspended trading in shares of Northern Rock prior to the opening of the London Stock Exchange.Footnote 8 Later that week, on 21 February 2008, the Banking (Special Provisions) Act 2008 came into force, providing the UK Treasury with the authority to bring Northern Rock into government ownership.Footnote 9 On Friday, 22 February 2008, the Treasury issued the Northern Rock plc Transfer Order 2008, which effected the nationalization of all shares in Northern Rock.Footnote 10
B. The Northern Rock Compensation Scheme
In addition to providing authority for the Treasury to take the shares of Northern Rock into public ownership, the Banking (Special Provisions) Act required that the Treasury make an order establishing a ‘a scheme for determining the amount of any compensation payable by the Treasury to persons who held the securities immediately before they were so transferred.’Footnote 11 The Banking (Special Provisions) Act contained specific guidance to the Treasury as to the terms under which a Northern Rock compensation scheme would operate. In particular, section 5(4) of the Act states:
In determining the amount of any compensation payable by the Treasury by virtue of any provision in an order under this section, it must be assumed—
(a) that all financial assistance provided by the Bank of England or the Treasury to the deposit-taker in question here, Northern Rock, has been withdrawn (whether by the making of a demand for repayment or otherwise), and
(b) that no financial assistance would in future be provided by the Bank of England or the Treasury to the deposit-taker in question (apart from ordinary market assistance offered by the Bank of England subject to its usual terms).Footnote 12
On 13 March 2008, the Treasury issued the Northern Rock plc Compensation Scheme Order 2008.Footnote 13 Under the CSO, an ‘independent valuer’ is to be appointed by the Treasury to determine the amount of any compensation payable by the Treasury to the former shareholders of Northern Rock.Footnote 14 Although the valuer is characterized as ‘independent,’ in keeping with the terms of the Banking (Special Provisions) Act, the CSO strictly limits that independence with respect to two of the valuer's most important tasks: (a) the establishment of the legal standard under which compensation shall be awarded and (b) the determination of the valuation method by which such compensation shall be calculated.
The CSO provides that ‘[t]he amount of compensation payable to a person shall be an amount equal to the value immediately before the transfer time of all shares in Northern Rock held immediately before the transfer timeFootnote 15 by that person.’Footnote 16 This broad statement, however, is subject to an important caveat. Under section 6 of the CSO:
In determining the amount of any compensation payable by the Treasury to any person … . it must be assumed (in addition to the assumptions required to be made by section 5(4) of the [Banking (Special Provisions)] Act (compensation etc. for securities transferred etc.)) that Northern Rock—
(a) is unable to continue as a going concern; and
(b) is in administration.
The CSO further requires that the valuer ‘shall determine’ the amount of any compensation payable by the Treasury in accordance with these assumptions.Footnote 17
At the time of the Transfer Order, there were 421.2 million ordinary shares of Northern Rock outstanding.Footnote 18 In addition, there were 200 million shares of preference stock outstanding.Footnote 19 Financial information resources suggest that while most shareholders appear to have been UK nationals, large amounts of Northern Rock's shares also appear to have been held by non-UK nationals, although because information about the identity of the shareholders of Northern Rock is not a matter of public record much of this information is far from precise.Footnote 20
The valuation process established under the CSO makes no distinction between the compensation payable to UK investors in Northern Rock, on the one hand, and foreign investors on the other. Given international principles of non-discrimination against foreign nationals, this is perhaps not surprising. However, merely providing foreign investors with the same treatment as national investors does not insulate the State from claims that the treatment on offer falls below an international minimum standard or standards guaranteed under treaties. In the debates in the House of Lords introducing the CSO, it was put to Lord Davies, the Government Deputy Chief Whip, that the existence of treaties between the United Kingdom and other states might require that higher standards of compensation would need to apply to the treatment of foreign investors, resulting in foreign investors receiving greater compensation for their Northern Rock investments than domestic investors.Footnote 21 In response, Lord Davies offered the following view:
The Government are determined that all shareholders shall be equal with regard to the position of Northern Rock. I have heard the reflections, which were also made in the other place, that certain international treaties will safeguard shareholders based abroad and give them more favourable treatment than other shareholders. First, that is not so. Secondly, in all equity, it ought not to be so. I cannot think of anything being less fair to the ordinary small shareholder … . Nothing could be more offensive to the small shareholder than the idea that someone based abroad would be able to take advantage of bilateral treaties that were designed to—and this has been accurately reflected in discussion today— safeguard, on the whole, British taxpayers regarding regimes that can act on occasion in an extremely arbitrary and unfair manner.Footnote 22
Contrary to the implication of Lord Davies' comments, however, the standard of protection for foreign investors in cases of expropriation is set by principles of public international law, not national law alone. This is true whether the investor is protected by one of the United Kingdom's numerous bilateral investment treaties (BITs), the European Convention on Human Rights, or customary international law. For foreign investors, therefore, the CSO is not the last word, even though for national investors it is likely to provide as much protection as they can reasonably expect to receive.Footnote 23
Whether one considers this a case of foreign investors being treated too well or Parliament not treating UK investors well enough, the international law on the subject seems relatively clear. While the United Kingdom has great sovereign discretion to determine how it treats investors with UK nationality, the international agreements to which the United Kingdom is a party place limits on that sovereignty with respect to foreign investors. Of course if the CSO provided compensation that was in accord with international standards, there would be no problem. However, as the analysis below suggests, the CSO appears to fall short under international standards and to leave the United Kingdom in breach of its international obligations.
II. OF BITs AND HUMAN RIGHTS—THE STANDARD OF COMPENSATION FOR NORTHERN ROCK SHAREHOLDERS
A. The Standard of Compensation for Expropriation under the UK BITs: ‘Prompt, Adequate and Effective’ Compensation
The United Kingdom has concluded over 100 bilateral investment treaties (BITs)Footnote 24 with other states, of which 91 are in force.Footnote 25 All contain provisions addressing the standard of compensation to be used in the event that the property of an investor from one of the contracting states is nationalized by the other contracting state. These treaties create obligations for the United Kingdom in international law and limit the United Kingdom's capacity to make unilateral determinations as to the manner in which foreign investors should be treated, particularly in cases of nationalization or expropriation and, importantly, regardless of the way in which the United Kingdom decides to treat its own nationals. Because the United Kingdom has historically been a capital-exporting state, the UK BITs will have been negotiated on the assumption that UK investors would be the ones to benefit from the protections contained therein.Footnote 26 Nevertheless, the BIT standards apply reciprocally.
Generally speaking, all of the United Kingdom's BITs use substantially similar language to indicate the level of protection owed to foreign investors in cases of expropriation.Footnote 27 In nearly all UK BITs the standard of compensation payable to a foreign investor whose property has been expropriated or nationalized is to be judged against the classic Hull formula:Footnote 28 expropriation may only be undertaken in the ‘public interest’ and only upon the payment of ‘prompt, adequate and effective’ compensation.Footnote 29 In adopting the language of the Hull formula, the UK BITs are in accord with a vast number of the more than 2,500 BITs which have been concluded worldwide.Footnote 30
1. When is compensation ‘adequate’? The significance of variations in the UK BITs
The Hull formula's use of the term ‘adequate’ of course begs the question of what compensation will be considered adequate. In an effort to answer this question, many BITs, including virtually all of those to which the United Kingdom is a party, provide, in addition to the invocation of the Hull formula, elaboration on the measurement of adequate compensation. The 1975 UK-Singapore BIT, for example, provides:
Such [prompt, adequate and effective] compensation shall amount to the market value of the investment expropriated immediately before the expropriation or impending expropriation became public knowledge.Footnote 31
In more recent UK BITs, the reference to ‘market value’ has been replaced by the phrase ‘genuine value.’ The 1992 UK-United Arab Emirates BIT thus provides:
Such [‘prompt, adequate and effective’] compensation shall amount to the genuine value of the investment expropriated immediately before the expropriation or before the impending expropriation became public knowledge, whichever is the earlier … .Footnote 32
Some commentators have questioned whether the provision in one BIT for compensation amounting to the ‘market value’ of the investment might call for a different appraisal of compensation than that provided in another BIT indicating that compensation shall amount to the ‘genuine value’ of the expropriated investment.Footnote 33 It is a question worth asking. In addition to these variants, one could also note the formulation used in the UK-Russia BIT, requiring ‘adequate and effective compensation’ amounting to the ‘real value of the investment,’Footnote 34 or the UK-Bangladesh BIT, requiring ‘prompt, adequate and effective compensation’ amounting to the ‘full value of the investment.’Footnote 35 Must these all mean the same thing?
Generally speaking, the interpretation of compensation standards under BITs has not been the most nuanced of exercises. There is a definite trend in the Western commentary to give short shrift to variations in language describing the level of compensation so long as the BIT is taken as referring in sum and substance to the Hull formula. Thus, terms like ‘market value’, ‘genuine value’ and ‘full value’ when used in BITs have largely been treated as synonymous with each other and with the Hull formula.Footnote 36
This conclusion seems sound, at least where, as with the majority of UK BITs, terms like ‘market value’ and ‘genuine value’ are used in conjunction with a textual inclusion of the Hull formula's ‘prompt, adequate and effective’ standard this conclusion seems sound.Footnote 37 Under the Vienna Convention on the Law of Treaties, the terms of a treaty are to be interpreted in accordance with their ordinary meaning in the context in which they occur.Footnote 38 As a result of its frequent articulation as a standard of customary international law,Footnote 39 and its inclusion in numerous BITs, the Hull standard of compensation in cases of expropriation has developed a precise meaning in international law. In particular, the ‘adequacy’ of compensation under the Hull formula has come to refer rather concretely to the payment of ‘market value’ as compensation for expropriated property.Footnote 40 Thus, for example, the World Bank in its Guidelines on the Treatment of Foreign Direct Investment states that ‘[c]ompensation will be deemed “adequate” if it is based on the fair market value of the asset as such value is determined immediately before the time at which the taking occurred or the decision to take the asset became publicly known.'Footnote 41 UNCTAD has taken a similar position,Footnote 42 and arbitral tribunals have reached the same conclusion as well.Footnote 43
Given that ‘adequate’ compensation under the Hull formula means ‘market value’ compensation, it is reasonable to use that meaning to inform the interpretation of ambiguous terms like ‘genuine,’ ‘real’ or ‘full’ found in certain UK BITs. This view finds support in the decision of the arbitral tribunal in CME Czech Republic BV (Netherlands) v Czech Republic. There, the Netherlands-Czech Republic BIT provided that in the event of an expropriation, the expropriating state would be required to make ‘payment of just compensation’ amounting to ‘the genuine value of the investment affected.’Footnote 44 Reflecting upon whether the use of the phrases ‘just compensation’ and ‘genuine value’ contemplated a standard of compensation different from that of the Hull formula and the standard of ‘market value,’ the Tribunal concluded that it did not. In the tribunal's view the terms were synonymous with the Hull formula; full market value was required.Footnote 45 Here, it is not necessary to stretch the interpretation that far. The UK BITs expressly include the Hull formula in their terms. The standard of compensation to be paid, therefore, is market value compensation.Footnote 46
2. The significance of BIT standards to covered Northern Rock investors
Neither the CSO, nor the Banking (Special Provisions) Act sets a clear standard for the compensation that is to be paid to the owners of nationalized Northern Rock shares. Instead, both instruments refer obliquely to ‘any compensation payable.’ The UK BITs, however, set a standard of compensation applicable to the investments of nationals from the States which are parties to them. These BITs set the standard of compensation in terms of the market value of the property taken immediately before the expropriation or before the impending expropriation became public knowledge, whichever is the earlier. That is the level of compensation which the United Kingdom is obligated to pay investors covered by the UK BITs. As a result, regardless of the ambiguity created by Parliament's reference to ‘any compensation payable,’ regardless of the valuation assumptions imposed by the CSO and the Act, and regardless of Lord Davies' comments, with regard to those investors covered by UK BITs, the United Kingdom has an obligation to follow the standard forth in those BITs. The fact that UK nationals will not benefit from this international standard and will be processed instead under the CSO's vague standard is the United Kingdom's decision to make. As to foreign investors, however, the United Kingdom bargained that discretion away when it entered into the BITs.
B. The Standard of Compensation under the European Convention on Human Rights: Different Degrees of Protection for Nationals and Non-Nationals
The European Convention on Human Rights provides an additional source of protection in cases of expropriation. Unlike the UK BITs, the Convention applies to all investors in Northern Rock: UK nationals, nationals of one of the Convention's Contracting States, and nationals of States who are not parties to the Convention. However, the standard of protection provided by the Convention is not the same for all investors. In its case law the European Court of Human Rights has indicated that the standard of protection for property rights, including the compensation required for expropriation, differs significantly depending upon the nationality of the claimant. Thus, where interference with property rights is at the hands of the claimant's own state of nationality, the standard of compensation will be assessed according to the Court's rather deferential European human rights jurisprudence, whereas when the interference is at the hands of a state other than the claimant's own, customary international law will provide the standard. As shown below, for UK investors this means that the Convention provides a lesser standard of protection for their investments than it does for the investments of foreign nationals.
1. The two-tier system of protection
Compensation for the expropriation of property was a controversial issue in the Council of Europe's negotiations on the European Convention on Human Rights.Footnote 47 While there was wide agreement that in the event of expropriation compensation must be paid, the negotiating States were unable to agree on how to formulate a standard for that compensation.Footnote 48 This was not a matter of States disagreeing about the standard which ought to be applicable to the treatment of foreign investors. Instead, the disagreement concerned what restrictions, if any, States would be willing to place upon their treatment and compensation of their own nationals. As a result of the disagreements on the treatment of domestic claims, the language ultimately included in Article 1 of Protocol No 1 makes no reference to compensation at all. Instead, Protocol No 1 provides in relevant part: ‘No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.’Footnote 49 To have been more specific would have meant losing the agreement of the negotiating States.
Although Protocol No 1 contains no direct reference to compensation for the expropriation of property, the European Court of Human Rights has interpreted it to include a kind of guarantee of compensation, albeit one which varies depending upon the nationality of the applicant. The differing standards of treatment are a result of the way in which the Court has interpreted Protocol No 1's guarantee that ‘no one’ shall be deprived of property except as subject to ‘general principles of international law.’ In James v United Kingdom, and again in Lithgow v United Kingdom, the Court treated the reference to ‘general principles of international law’ in Protocol No 1 as referring to the principles of customary international law on state responsibility, and concluded, on that basis, that those principles were incorporated into Protocol No 1 only with regard to those acts to which they are normally applicable, namely, acts of a State in relation to non-nationals.Footnote 50 Thus, where the applicant is a non-national, the level of protection will be determined by international law. However, where the applicant is a national of the expropriating State, the level of protection will be determined under the Court's specialized Convention jurisprudence—international legal standards will not be applicable.
In response to the argument that this interpretation would render the reference to international law redundant—because non-nationals already were covered by international law prior to the Convention—the Court in James and Lithgow noted two reasons for the inclusion of the reference. First, the Court reasoned, the reference ‘enables non-nationals to resort directly to the machinery of the Convention to enforce their rights on the basis of the relevant principles of international law.’Footnote 51 And secondly, the reference prevents any confusion that the entry into force of the Protocol might have somehow diminished non-nationals' property rights under international law.Footnote 52
The Court's conclusion that under Protocol No 1 non-nationals continue to be protected by international law while nationals only have the Convention to protect them, raises the question of whether such a two-tier system of protection is incompatible with Article 14 of the Convention by differentiating between nationals and non-nationals. The Court has concluded that it is not:
Especially as regards a taking of property effected in the context of a social reform or an economic restructuring, there may well be good grounds for drawing a distinction between nationals and non-nationals as far as compensation is concerned. To begin with, non-nationals are more vulnerable to domestic legislation: unlike nationals, they will generally have played no part in the election or designation of its authors nor have been consulted on its adoption. Secondly, although a taking of property must always be effected in the public interest, different considerations may apply to nationals and non-nationals and there may well be legitimate reason for requiring nationals to bear a greater burden in the public interest than non-nationals … .Footnote 53
As a result of the James and Lithgow cases, it is clear that for Northern Rock shareholders, the level of protection available to them under the Convention very much depends upon whether they are UK nationals or not. And, as shown below, with respect to the protection afforded under the European Convention on Human Rights, it is better not to be British, at least with respect to obtaining compensation from the UK Government for nationalized shares in Northern Rock.
2. Protection for nationals under the European Convention: The loose requirements of proportionality and the wide margin of appreciation
For a national claimant the Convention provides limited protection in cases of nationalization. Guided by the principle of proportionality, the Court has held that with respect to the standard of compensation Protocol No 1 simply requires that the expropriating State strike a fair balance between the demands of the community's general interests and the requirements of the protection of the individual's right to peaceful enjoyment of his property.Footnote 54 Protocol No 1 ‘does not … guarantee a right to full compensation in all circumstances, since legitimate objectives of “public interest,” such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value.'Footnote 55 Moreover, the Court's review of the compensation provided by the State in such cases is limited ‘to ascertaining whether the choice of compensation terms falls outside the State's wide margin of appreciation in this domain’.Footnote 56
The Lithgow case demonstrates how the Court has applied this standard.Footnote 57 There, the applicants were UK nationals (individuals and companies) whose shares in various companies had been nationalized under the Aircraft and Shipbuilding Industries Act 1977. All of the complaints concerned shares in unlisted companies. The UK Government had awarded compensation for these unlisted shares by calculating a hypothetical share price over a six-month period set some three and a half years before the actual date of the nationalization. The applicants argued that this method was inappropriate for the closely held companies at issue because it undervalued their shares. In some cases, for example, the amount of compensation did not even equal the cash reserves of the companies. To produce a more accurate valuation, the applicants argued, the UK Government should have utilized a valuation methodology that would have accounted for the premium usually paid to acquire a controlling block of shares, such as a one based upon the model of a sale by private agreement between a willing seller and a willing buyer. And, moreover, even if a hypothetical share price model had been used, the valuation date should have been set at the time just before the nationalization, not at a far earlier period.
The Court rejected these arguments. Relying upon the ‘wide margin of appreciation’ available to States under the Convention, the Court stated that it would ‘be artificial in this respect to divorce the decision as to the compensation terms from the actual decision to nationalize, since the factors influencing the latter will of necessity also influence the former.’Footnote 58 Accordingly, it would accept ‘the legislature's judgment in this connection unless that judgment was manifestly without reasonable foundation’.Footnote 59 Given such a deferential standard of review, it seems that the applicants in Lithgow never really had much of a chance. Tom Allan has rightly observed of the Court's decision:
[T]he combination of the relaxed view of proportionality and the wide margin of appreciation make it apparent that the shareholders were given very little protection: in the abstract, the rules for determining compensation only had to be ‘reasonably related’ to the value of the property, and in practice, the application of the rules could leave some owners with less than the value of their shares; and even so, a challenge would be successful only if the rules were ‘manifestly without reasonable foundation.’ In the end, it is difficult to imagine how any set of valuation rules could have been challenged, so long as some compensation had been provided.Footnote 60
The Court of Human Rights' deference does not bode well for UK nationals seeking to challenge the CSO under European standards in the Northern Rock case.
3. Protection for non-nationals under the European Convention: application of ‘General Principles of International Law’
Although in James and Lithgow the Court of Human Rights confirmed that non-nationals would continue to be protected by ‘general principles of international law’ under Protocol No 1, the Court did not elaborate its view on the level of protection provided by these principles. It is clear, however, that the Court assumed that international law provides a greater degree of protection for non-nationals than the Convention provides for nationals. Thus, in James, the Court observed that the reference to ‘general principles of international law’ in Protocol No 1 ‘ensures that the position of non-nationals is safeguarded, in that it excludes any possible argument that the entry into force of Protocol No. 1 has led to a diminution of their rights.’Footnote 61 Apart from this one statement, however, the Court's jurisprudence has been notably silent on the extent of protection available under ‘general principles of international law.’Footnote 62 Indeed, the Court has not addressed the application of Protocol No 1 to foreign nationals since the Lithgow and James cases. Thus, a claim brought by foreign Northern Rock investors under the Convention would raise an issue of first impression for the Court: what standard of compensation is owed under international law for the expropriation of alien property?
a) The customary international law standard of compensation for expropriation in the age of BITs
For many years the question of the standard of compensation for the expropriation of foreign investments has been one of the most debated areas of customary international law. The main points of the debate are well known, and there is little to be gained from a recitation here.Footnote 63 Suffice it to say, in overview, that on one side of the debate have been States and academic commentators who have taken the view that international law generally follows the Hull formula of ‘prompt, adequate and effective’ compensation.Footnote 64 According to this view, as we have seen above, in order to be ‘adequate’ such compensation would require, at the least, the payment of the market value of the property that has been expropriated. Against this view, on the other side of the debate, have been developing States and other academics who have argued instead for a standard of ‘appropriate compensation,’Footnote 65 articulated as a flexible standard that permits a State to take into account factors such as the profits made by the foreign investor, the duration of the period during which profits were made, the social purpose of the expropriation, and similar factors in assessing the compensation, all of which tend to produce valuations below market value. At the high point of the debate, the positions of States and academics on the issue came to be seen as a proxy in the wider struggle between socialism and capitalism, between capital-exporting and capital-importing States, between ‘the haves and the have-nots.’Footnote 66
The rise of BITs and regional free trade agreements like the NAFTA and the Energy Charter Treaty has taken much of the heat out of the debate, as States have chosen to avoid the contentious application of customary law by memorializing in treaties the standard of compensation that will be applicable between them in the event of the expropriation of the property of one of their nationals.Footnote 67 Nevertheless, for treaties which refer simply to ‘international law,’ like the European Convention on Human Rights at issue here, or Article 42 of the ICSID Convention,Footnote 68 the debate about the content of international law remains important for defining the level of protection available to foreign investors.
It is not the purpose of this article to wade too deeply into the ongoing debate in this area. One observation which is worth making, however, is that the consideration of customary international law today takes place against a radically different background than the debates of the 1960s, 70s, 80s, and even the early 1990s.Footnote 69 As of 2008 there are over 2,500 BITs in force throughout the world, most of which adopt the Hull formula or some close variant on the issue of compensation for expropriation.Footnote 70 Significantly, this formula has been adopted not only in BITs between capital-importing and capital-exporting States, but also in second generation BITs between capital-importing States—the have-nots.Footnote 71 These second generation BITs are the fastest growing category of BIT and now account for over 45 per cent of all BITs in force.Footnote 72 In these agreements—negotiated and entered into between developing States—the parties are routinely, consistently and overwhelmingly adopting the Hull formula or some similar market value variant as the standard of compensation for expropriation.Footnote 73 Thus, when one looks to the question of whether the standard of compensation adopted across this great mass of BITs might be said to have come to represent customary international law, it is no longer possible to discount that development on the ground of unequal bargaining power between capital-exporting and capital-importing States.Footnote 74
The principle that treaty-based rules may ‘become generalized through the conclusion of other similar conventions containing identical or similar provisions’Footnote 75 is well recognized in international law. The question that arises with respect to the standard of compensation for expropriation is whether the conclusion of so many BITs carries with it the opinio juris classically necessary for a customary rule to emerge.Footnote 76 As early as 1981, when BITs were still in their relative nascence, and still almost exclusively between developed States and developing States, Mann argued that ‘[w]here these treaties express a duty which customary international law imposes or is widely believed to impose, they give very strong support to the existence of such a duty and preclude the Contracting States from denying its existence … ’Footnote 77 While Mann was perhaps premature with his assessment of the law at the time, it does not seem as though he would be today. Twenty-five years on and we find over 2,500 BITs in force between States of all levels of development, all types of political orientation and covering all geographic regions. And across these agreements we find that States have adopted overwhelmingly the Hull formula or some similar market value variant as the standard of compensation in cases of expropriation.
To paraphrase Mann, can it really be said that the adoption of a similar standard in such a large number of BITs involving States across the spectrum ought not give indication of what we think the customary international law on the subject is? One would think not.Footnote 78 Particularly when set against the background of the active and contentious debate on the customary law standard which dominated much of the 20th century, it is hard to treat the volte-face of so many developing States in BITs as merely lex specialis. Instead, it seems much more reasonable to conclude that the trend represented by BITs and other investment agreements which have adopted the Hull formula or some variant indicates coalescence by States on a particular standard of treatment. Indeed, it would seem that the lex specialis here is to be found in those few BITs in which the States have chosen to depart from the Hull formula or a market value variant. This does not mean that customary international law is becoming fixed for all time, or that every BIT provision has come to represent customary international law, but it does reflect what appears to be a global consensus which has not previously existed in the customary international law debate on the standard of compensation for expropriation.
The decisions of the tribunals charged with interpreting and applying these BITs have come to the same conclusion: BIT provisions on the standard of protection in cases of expropriation reflect customary international law.Footnote 79 Thus, in the CME Czech Republic award, for example, the tribunal concluded that the Hull formula had become ‘truly universal’ as a consequence of the essential agreement on the standard found in (what was then) some 2,200 BITs and similar multilateral investment treaties.Footnote 80 Other tribunals have come to the same conclusion.Footnote 81 It is fair to say, therefore, that for purposes of the European Convention on Human Rights, the Hull standard reflects the ‘general principles of international law’ which the Court would and ought to apply.
B. The UK and European View on the Customary Standard
Beyond the arguments on the current state of customary international law, it is hard to imagine that, in an actual case before the European Court of Human Rights, the United Kingdom would take a different view on the protection available to a foreign investor under ‘general principles of international law.’ The United Kingdom's position on the customary international law standard for compensation in cases of the expropriation of alien property has been the same for more than fifty years and is not in any doubt. As a major exporter of investment capital, the United Kingdom has consistently taken the view that in order for an expropriation to be lawful it must be made against prompt, adequate and effective compensation. Thus, in the Anglo-Iranian Oil Case, for example, the British pleadings before the International Court of Justice took the view that ‘it is clear that the nationalization of the property of foreigners, even if not unlawful on any other ground, becomes an unlawful confiscation unless provision is made for compensation which is adequate, prompt and effective.’Footnote 82 Similarly, in the BP arbitration, the British protest to the Government of Libya took the position that ‘[a]n act of nationalization is not legitimate unless … it [is] followed by the payment of prompt, adequate and effective compensation.’Footnote 83 Indeed, even in the Lithgow case, where such a standard might well have worked against the United Kingdom (had the Court interpreted Protocol No 1 differently), the United Kingdom maintained its position that customary international law requires the payment of compensation in accordance with the Hull formula.Footnote 84 While such declarations may not be dispositive with respect to the standard applicable under the ‘general principles of international law’ provision of Protocol No 1,Footnote 85 it is hardly imaginable that the UK Government would take a different position if this issue were to arise before the European Court of Human Rights in the context of the Northern Rock nationalization.
Moreover, the United Kingdom is not alone among parties to the European Convention on Human Rights in taking the view that customary international law requires ‘prompt, adequate and effective’ compensation for expropriation. While it is difficult to be comprehensive because of the vagaries involved in identifying individual states' positions the view taken by commentators on Protocol No 1 is that ‘the States signing up to the Protocol in 1950 would have said that right of protest arises where an alien's property is taken without prompt, adequate and effective compensation.’Footnote 86 By way of illustration, the example of Portugal's accession to the European Convention on Human Rights in 1978 may be given. In that situation, Portugal decided to submit a reservation to Protocol No 1 upon its ratification, the purpose of which was to reserve to Portugal the right to make expropriations without compensation.Footnote 87 In response, France, Germany and the United Kingdom took the unusual step of making declarations which affirmed that regardless of Portugal's reservation, general principles of international law as referenced in Protocol No 1 required the payment of prompt, adequate and effective compensation with respect to the expropriation of foreign property.Footnote 88 The Portuguese might do as they wished with respect to their own nationals, but as to foreign nationals the ‘general principles of international law’ applied and could not be varied by the reservation.
In summary, then, under international law the standard of protection owed to investors in Northern Rock is relatively straightforward. For non-UK nationals, the standard of protection is to be set either by the provisions of an applicable BIT which the United Kingdom has entered into with the investor's home state or by the customary international law standard as incorporated into Protocol No 1 of the European Convention on Human Rights. These standards require the payment of market value compensation and apply as a trump to the treatment set out in the CSO, notwithstanding Lord Davies' comments in the House of Lords. For UK investors, however, the situation is very different. There is no significant international check on the CSO's provisions. Apart from the very modest review available under European human rights law, UK investors are likely to be left to the mercies of the process set forth under the CSO and such protections as may be available under UK administrative law.Footnote 89
III. APPLYING THE INTERNATIONAL STANDARD OF COMPENSATION—THE QUANTUM OF MARKET VALUE
It is not enough to look at the standard of compensation provided by international law. The payment of compensation requires that a quantum be calculated.Footnote 90 A figure must be reached that a court or tribunal can apply. In order to have operational meaning, a qualitative standard like ‘adequate’ compensation must be paired with a valuation methodology capable of producing a quantum.Footnote 91 Even where the value to be calculated is articulated in terms closely associated with a quantitative determination, such as the ‘market value’ standard applicable in the UK BITs and customary international law, there still may be a number of possible bases on which a valuer may make a valuation due to the nature of the property being valued.Footnote 92 Investment treaties only infrequently refer to specific methodologies for the determination of value.Footnote 93 The UK BITs are not among those that do.
The selection of a compensation methodology requires in the first place a determination of the property or investment which is to be valued. In the case of Northern Rock, nationalization has been effected through the transfer to the State of all of the shares of Northern Rock. Instead of nationalizing the company itself and taking its assets after dissolution, the United Kingdom has taken the shares of the company and claims that the legal existence of the company has not been the subject of any modification. Only the ownership of the company has changed. In such a situation, it is the shares of Northern Rock that must be valued.Footnote 94
A. The Valuation Assumptions of the CSO and Their Likely Effect on the Quantum of Compensation—The Valuation Date Problem
Under international law, the value of expropriated property is to be determined by looking at the value of the property as of or just immediately before the date on which the expropriation occurred or the decision to expropriate became publicly knownFootnote 95 without reference to the effects of the expropriation itself or any acts related to that expropriation.Footnote 96 The significance of establishing the market value of expropriated property ‘as of’ (or just before) the date of the act of expropriation lies in its bearing on the factors that may properly be taken into account in assessing the market value of the property. Factors which relate to the act of expropriation ought not to be considered.
Ordinarily, the governmental action which the valuation-date rule seeks to exclude is governmental action taken before the expropriation has actually occurred. In a situation like the one arising under the CSO, however, there is reason to think that the valuation-date rule should also apply to exclude the blighting effects of governmental action taken after the expropriation. While it is strange to think of governmental action taken after the expropriation as having a retroactive effect on the market value of an investment at the effective date of the expropriation that is precisely what the CSO seeks to do. Even though section 3 of the CSO states that ‘the amount of any compensation payable’ to Northern Rock shareholders ‘shall be an amount equal to the value immediately before’ the expropriation occurred,Footnote 97 other provisions of the CSO make clear that this value ‘must’ reflect four key assumptions mandated by the CSO itself, ie after the expropriation occurred. These are that:
(a) Northern Rock is unable to continue as a going concern;Footnote 98
(b) Northern Rock is in administration;Footnote 99
(c) All financial assistance provided to Northern Rock by the Bank of England or the Treasury has been withdrawn;Footnote 100 and
(d) No financial assistance would be provided to Northern Rock by the Bank of England or Treasury in the future (except for such ordinary assistance offered by the Bank of England).Footnote 101
The inclusion of these mandatory ‘assumptions’ in the CSO is fairly remarkable. Notwithstanding the financial difficulties experienced by Northern Rock in late 2007/early 2008, there is considerable evidence in the public record indicating that at the time immediately prior to the nationalization—ie the valuation date required by international law and the UK BITs—none of the ‘assumptions’ required by the CSO was true. Northern Rock in fact was not in administration. By the Government's own account, Northern Rock was solvent and a going concern.Footnote 102 Financial assistance from the Treasury and the Bank of England had not been withdrawn.Footnote 103 And there was no suggestion one way or the other how the Treasury or the Bank of England would act in the future with respect to further financial assistance to Northern Rock. In essence, the CSO requires a rewriting of history. As a result, it is difficult to see how a valuation based upon the CSO assumptions can be characterized as independent of the effects of the UK's expropriating measures. To the contrary, the valuation ‘methodology’ mandated by the CSO seems to require a lack of independence by the Government-appointed valuer and render impossible a valuation free from the effects of the expropriating measure.Footnote 104
B. The Generally Accepted Manner of Determining the Market Value of Shares in a Publicly Traded Company—The ‘Market Value’ Problem
It seems apparent that the assumptions imposed by the CSO will not produce a market valuation of the Northern Rock shares. Under the CSO assumptions the likely result is that shareholders will receive no more than liquidation value for their shares. The term ‘going concern’ has an established meaning for accountants and valuation experts, and where a business is not classified as a going concern, liquidation value is generally the methodology employed.Footnote 105 Liquidation value refers to ‘the amounts at which individual assets comprising the enterprise or the entire assets of the enterprise could be sold under conditions of liquidation to a willing buyer less any liabilities which the enterprise has to meet.’Footnote 106 While it is not possible in this article to measure with precision the quantum of compensation which application of the CSO methodology will produce—the information necessary for such an exercise is not in the public record—it is widely expected that the quantum produced by a liquidation value methodology will fall far short of the 90p market price at which those shares were trading on the London Stock Exchange immediately before the expropriation became public knowledge. Indeed, Northern Rock shareholders believe that the value produced by the CSO methodology will be nil or nearly so.Footnote 107
While the UK Government may legally have the discretion to pay liquidation value to investors of UK nationality,Footnote 108 with regard to non-UK investors the United Kingdom must meet the market value standard set by international law and its BIT obligations. In a case such as this—almost by definition—liquidation value is unlikely to equate to market value.
1. The market valuation of shares in publicly traded companies
As a general rule, the market value of a share in a company, like the market value of most things, comes down to what a willing buyer would pay a willing seller.Footnote 109 Where there is no public market for shares, ie where the company is closely held, ascertaining a market value can be exceptionally challenging.Footnote 110 In essence, as Lord Ashbourne observed, a feat of imagination is necessary:Footnote 111 a hypothetical market value of the shares must be created. In such cases, the choice of methodology and its application can be both complex and contentious.Footnote 112
Where, however, shares are quoted on an active public exchange, such as the London Stock Exchange, the best indicator of the market value of those shares is the price at which they are trading in the actual market.Footnote 113 It is not necessary to construct a hypothetical share price because there is a real share price in the market. Current market prices reflect the market's assessment of the underlying present value of the future profits of quoted shares.Footnote 114 As one tribunal has noted, where share prices are quoted on a public market, the valuation process ‘can be a fairly easy one,’ since the price of the shares is determined under conditions which, a fortiori, meet the definition of ‘market value.’Footnote 115 Simply put, ‘[i]nternational jurisprudence supports finding fair market value by reference to a share trading price when available.’Footnote 116
The conclusion that the market price of a share reflects its value is based upon the principle of capital market efficiency, which posits that market prices reflect the value of shares because an active public stock exchange with low transaction costs is able to respond quickly to available information, including temporary and artificial factors, in reaching a share price.Footnote 117 ‘So long as the market is reasonably efficient, the market price can be trusted as a fair assessment of value.’Footnote 118 Valuation experts suggest, however, that where the shares under consideration represent a controlling interest in a company, a ‘control premium’ of some amount above market price should be added to reflect the fact that ownership of a controlling number of shares brings with it rights that minority share owners do not possess, such as the right to appoint the managers of the company.Footnote 119 The justification for this view is based upon economic studies of control transactions in the market, which provide evidence that control premiums are ordinarily paid by purchasers of controlling quantities of shares.Footnote 120 Adding a control premium above the quoted market price for valuation purposes reflects the fact that the quoted price of a share on a public exchange is the product of numerous minority transactions, not transactions involving the trading of controlling interests in the company. Accordingly, the market price serves as a base onto which the premium should be added in cases in which a control premium is appropriate.Footnote 121
The use of control premiums has been acknowledged in the corporate law of numerous jurisdictions. To date, however, it has not featured prominently in the valuation decisions of international arbitral tribunals. In part this may be because control premiums are most appropriately applied in cases in which the shares being valued are publiclyFootnote 122 traded and most cases of expropriation have not involved publicly traded shares. Where, however, as in the Northern Rock situation, or the Bradford & Bingley situation discussed below, the expropriated investment consists of publicly traded shares, the principles of valuation would indicate that a control premium ought to apply when evaluating the adequacy of the State's compensation. Had the State wished to purchase a controlling block (or all) of these shares in the market, such a premium would likely have been required. Accordingly, if the standard of compensation to be paid is meant to be the ‘market value’ of the investment, then it should represent not only the share price at the relevant time, but also the relevant premium.
IV. THE NATIONALIZATION OF BRADFORD & BINGLEY: QUESTIONS AT THE OUTSET
Like Northern Rock, Bradford & Bingley plc was a publicly held bank, whose shares were traded on the London Stock Exchange.Footnote 123 Like Northern Rock as well, Bradford & Bingley confronted a worsening financial position as a result of tightening in the global credit markets in 2007 into 2008.Footnote 124 When global credit markets froze in September 2008, Bradford & Bingley faced unprecedented margin and liquidity pressure, and on Saturday 27 September 2008, the UK Financial Services Authority (FSA) determined that the company no longer met its threshold conditions for operating as a deposit taker under the Financial Services and Markets Act 2000 and FSA rules.Footnote 125 Thereafter, on Monday 29 September 2008, the UK Treasury brought forward an order nationalizing all shares in Bradford & Bingley and selling certain Bradford & Bingley assets to Abbey National plc, a subsidiary of Banco Santander SA (the ‘Bradford & Bingley Transfer Order’).Footnote 126 Like the Northern Rock nationalization, the authority for the Bradford & Bingley nationalization was the Banking (Special Provisions) Act 2008.
In material respects, the Bradford & Bingley Transfer Order tracks the provisions of the Northern Rock Transfer Order. As of this writing, however, the terms of compensation for Bradford & Bingley's shareholders are unknown. The Treasury has not yet brought forth an order establishing a compensation scheme for Bradford & Bingley shareholders, although it has said that it will do so in due course.Footnote 127 It remains to be seen, therefore, whether the compensation scheme for Bradford & Bingley shareholders will raise the same issues as the Northern Rock scheme.
Even so, one difference between the Bradford & Bingley and the Northern Rock transfer orders is worth noting preliminarily, and that is the emphasis in the Bradford & Bingley Transfer Order on the circumstances under which the nationalization has taken place. Whereas the Northern Rock Transfer Order contains perambulatory language indicating that the purpose of the Order was to ‘protect the public interest’ in circumstances in which the UK Treasury had provided financial assistance to Northern Rock, the preamble to the Bradford & Bingley Transfer Order indicates that the purpose of the Order was to ‘maintain[ ] the stability of the UK financial system in circumstances where the Treasury consider that there would be a serious threat to its stability if the Order were not made.’ This different seems significant. The latter phrasing is evocative of the doctrine of necessity, and suggests that on the UK Treasury's view the nationalization of Bradford & Bingley was a necessary action taken in order to prevent a serious threat to the UK economy from materializing. As a consequence, it is conceivable that the United Kingdom could seek to rely on necessity to justify the payment of no compensation to Bradford & Bingley shareholders or compensation which is less than market value.
A. The Doctrine of ‘Necessity’ in International Law
Under customary international law as reflected in Article 25 of the International Law Commission's (ILC) Articles on State Responsibility, necessity may be relied upon by a State as a ground to derogate from its international obligations in circumstances in which to do so would otherwise be wrongful. In order to establish a defence of necessity, however, the State must meet a number of stringent criteria:
(a) the act or measure sought to be justified must have been occasioned by a threat to an ‘essential interest’ of the State;
(b) the measure taken must have been ‘the only means’ of safeguarding that interest;
(c) the measure must not have seriously impaired an essential interest of the State towards which the obligation existed; and
(d) the State seeking to rely upon the defense must not have ‘contributed to the occurrence of the state of necessity.’
These criteria are cumulative;Footnote 128 all must be satisfied in order for the defence to be established.
The ILC's elaboration of the doctrine of necessity suggests the limited circumstances in which the doctrine is available and the high degree of proof required to make out the defence. Arbitral tribunals deciding claims brought under BITs containing specific treaty language dealing with circumstances of necessity have confirmed that the doctrine is ‘an exceptional remedy subject to very strict conditions because otherwise it would open the door to elude any international obligation.’Footnote 129 A review of those decisions suggests some of the difficulties which may be faced by the United Kingdom.
1. The Argentina financial crisis cases
The financial crisis experienced in Argentina in the late 1990s and early 2000s prompted a large number of claims against Argentina under various BITs. In a number of those claims, Argentina argued that the measures it had taken, particularly Emergency Law 25,561 of January 2002, had been necessary in light of the financial turmoil being experience by the country. At the time the Emergency Law was adopted, the unemployment rate in Argentina exceeded 20 per cent and millions of people were in poverty.Footnote 130 There were large scale instances of public disorder occurring throughout the country.Footnote 131 By some measures, the Argentine state itself was under threat.Footnote 132
Yet despite the gravity of the situation in which Argentina clearly found itself, two of three ICSID tribunals which heard Argentina's claim of necessity rejected it. In CMS v Argentina, for example, the tribunal concluded that while an economic crisis could certainly implicate the essential interests of the State, the State was still required to show that the measures adopted constituted the ‘only way’ for the State to protect that interest:
[T]he Tribunal is persuaded that the situation was difficult enough to justify the government taking action to prevent a worsening of the situation and the danger of total economic collapse … . A different issue, however, is whether the measures adopted were the ‘only way’ for the State to safeguard its interests. This is indeed debatable … . The International Law Commission's comment to the effect that the plea of necessity is ‘excluded if there are other (otherwise lawful) means available, even if they may be more costly or less convenient,’ is persuasive in assisting this Tribunal in concluding that the measures adopted were not the only steps available … .Footnote 133
Moreover, even if Argentina had been able to show that the measures it adopted were the ‘only way’ to safeguard its essential interests, it still would have been necessary to show that Argentina had not substantially contributed to the situation of necessity. As the CMS tribunal again observed:
In spite of the view of the parties claiming that all factors contributing to the crisis were either endogenous or exogenous, the Tribunal is again persuaded that similar to what is the case in most crises of this kind the roots extend both ways and include a number of domestic as well as international dimensions. This is the unavoidable consequence of the operation of a global economy where domestic and international factors interact.
The issue, however, is whether the contribution to the crisis by Argentina has or has not been sufficiently substantial. The Tribunal, when reviewing the circumstances of the present dispute, must conclude that this was the case. The crisis was not of the making of one particular administration and found its roots in the earlier crisis of the 1980s and evolving governmental policies of the 1990s that reached a zenith in 2002 and thereafter. Therefore, the Tribunal observes that government policies and their shortcomings significantly contributed to the crisis and the emergency and while exogenous factors did fuel additional difficulties they do not exempt the Respondent from its responsibility in the matter.Footnote 134
The rejection of Argentina's necessity plea suggests how difficult it may be for the United Kingdom to establish the plea in the situation under consideration here.
For the United Kingdom, the argument must be that while the CMS and Enron tribunals correctly identified the required elements of the necessity defense, they erred in failing to accord the State a sufficient margin of appreciation to determine for itself whether the measures taken were the ‘only means’ of safeguarding the State's interest. In LG&E Energy Corp v Argentina, the tribunal accepted Argentina's plea of necessity in significant part because it considered that Argentina had been in the best position to know what measures were truly necessary to meet the crisis it faced. Thus, even though there may have been alternative measures which Argentina could have taken to address the crisis, the Tribunal would not second-guess the State:
This was not merely a period of ‘economic problems’ or ‘business cycle fluctuation’ as Claimants described. Extremely severe crises in the economic, political and social sectors reached their apex and converged in December 2001, threatening total collapse of the Government and the Argentine State … . Claimants contend that the necessity defense should not be applied here because the measures implemented by Argentina were not the only means available to respond to the crisis. The Tribunal rejects this assertion … A State may have several responses at its disposal to maintain public order or protect its essential security interests. In this sense, it is recognized that Argentina's suspension of the calculation of tariffs in U.S. dollars and the PPI adjustment of tariffs was a legitimate way of protecting its social and economic system. The Tribunal has determined that Argentina's enactment of the Emergency Law was a necessary and legitimate measure on the part of the Argentine Government.Footnote 135
The different approaches taken to the doctrine of necessity by the Argentina tribunals represent a wider debate in international law about the applicability of a European-style margin of appreciation in the judicial and arbitral review of State action.Footnote 136 While it is beyond the scope of this article to address this emerging debate in detail, it is clear that how a tribunal or court resolves this basic question of approach may significantly affect the availability of the necessity plea.
Lastly, it should be noted that even if the United Kingdom were able to establish a necessity defense with regards to the Bradford & Bingley nationalization, the condition of necessity only justifies the temporary non-performance of international obligations.Footnote 137 Once the conditions establishing the necessity have passed, the State must resume performance of its obligations. Accordingly, even if a situation of necessity attached to the Bradford & Bingley nationalization, ultimately the obligation on the United Kingdom to make market value compensation will need to be met.
V. CONCLUSION
Litigation regarding Northern Rock has begun. On 8 May 2008 an application for judicial review of the CSO was filed in London on behalf of a group of individual shareholders from the United Kingdom.Footnote 138 On the same day, SRM Global Master Fund LLP, a Cayman Islands hedge fund (and Northern Rock's largest shareholder), also filed an application for judicial review of the CSO.Footnote 139 RAB Capital plc, a London-based hedge fund, filed its own application on 16 May 2008, and on 23 May, Legal & General Group, another UK-based institutional investor, joined the proceedings as an ‘interested party’.Footnote 140 Thus far, however, none of Northern Rock's non-UK based shareholders have brought challenges against the CSO.Footnote 141 Indeed, the ‘independent valuer’ called for by the CSO was only appointed in September 2008.Footnote 142
It remains to be seen, therefore, whether the issues raised by the CSO and the Bradford & Bingley nationalization will ever come before a court or a tribunalFootnote 143 and whether the United Kingdom will be called upon to answer the questions of international law raised by its actions. As the foregoing analysis indicates, there may well be a case to answer.
