NEW YORK INTERNATIONAL LAW REVIEW Winter 2002 Vol. 15, No. 1 Articles 1 Acceding to the WTO: Advantages for Foreign Investors in the Ukrainian Market Daniil E. Fedorchuk 61 Bank Holiday: The Constitutionality of President Mahuad’s Freezing of Accounts and the Closing of Ecuador’s Banks Jorge J. Pozo 99 External Competence of the European Community in the Hague Conference on Private International Law: Community Harmonization and Worldwide Unification Charles T. Kotuby, Jr. Recent Decisions 131 Haywin Textile Products, Inc. v. International Finance Investment and Commerce Bank, Ltd. United States District Court grants summary judgment to plaintiff, holding defendant to be a successor in interest despite controlling Bangladeshi law denying third-party beneficiaries standing to sue for enforcement of a contract. 135 United States v. Charles Kim Second Circuit Court holds that jurisdiction over defendant is proper although the act of fraud and conspiracy was not committed in the United States. 141 The European Community v. RJR Nabisco, Inc. The revenue rule is a discretionary rule, not a constitutional rule or one imperative under international law, but the European Community lacks standing to sue under RICO for injury to the revenues of its member states. 149 Fujitsu Ltd. v. Federal Express Corp. Under the Vienna Convention on the Law of Treaties, application of the Warsaw Convention is not terminated by the Hague protocol but continues in force until the latter takes effect for the country in question. 157 Armiliato v. Zaric-Armiliato United States District Court holds that relief under the Hague Convention on the Civil Aspects of Child Abduction, as implemented by the International Child Abduction Remedies Act, was appropriate once it is determined that the minor child had been wrongfully removed from her habitual residence. 165 Virtual Countries, Inc. v. Republic of South Africa The United States District Court for the Southern District of New York held that plaintiff failed to satisfy the requirements for the “commercial activity” exception to the Foreign Sovereign Immunity Act of 1976 and thus granted defendants’ motion to dismiss the case for lack of subject matter jurisdiction. NEW YORK STATE BAR ASSOCIATION INTERNATIONAL LAW & PRACTICE SECTION Published with the assistance of St. John’s University School of Law Winter 2002] Ukrainian Market Advantages 1 Acceding to the WTO: Advantages for Foreign Investors in the Ukrainian Market Daniil E. Fedorchuk* Probably no other topic of international economic law has recently sparked such a strong disagreement between industrialized and developing worlds on the one hand, and businessmen and environmentalists on the other, as that of international investment regulation.1 The prob- lems of direct investment in the global setting reflect all controversies, irregularities and even antagonisms inherent in the highly diverse modern world with an increasing gap between the planet’s richest and poorest countries.2 By and large, the dispute on international investment is a dispute between two worlds over the issues of economic dominance and political sovereignty.3 1. See Peter T. Muchlinski, The Rise and Fall of the Multilateral Agreement on Investment: Where Now? 34 INT’L LAW. 1033, 1033 (2000) (stating that “the increasing integration of global business through both international trade and foreign direct investment” has raised many social issues, such as “protection of the environment, observance of minimum labour and human rights standards, and development of the least developed countries and regions”); Eric M. Burt, Developing Countries and the Framework for Negotiations on Foreign Direct Investment in the World Trade Organization, 12 AM. U. J. INT’L L. & POL’Y 1015, 1015–28 (1997) (discussing the dispute between the developed and developing nations over the regulation of international investment); see also Charles N. Brower and Lee A. Steven, NAFTA Chapter 11: Who Then Should Judge?: Developing the International Rule of Law under NAFTA Chapter 11, 2 CHI. J. INT’L L. 193, 197 (2001) (noting that NAFTA has received criticism from many nations and different organizations). 2. According to the World Development Report, the rich countries are becoming wealthier than ever, while poor underdeveloped countries are living in misery. The world’s wealthiest country in 1999, Luxembourg, had a per capita GNP of $44,640 with 3.8% annual growth; at the same time, the poorest country, Sierra Leone, had a $130 per capita GNP with annual decline of 8.1%. World Bank’s WORLD DEVELOPMENT REPORT 2000/2001: ATTACKING POVERTY, at 275, 310 (2001); see also Sofia Wu, ROC Emerges As World’s 17th Largest Economy, CENT. NEWS AGENCY, Sept. 14, 2000 (stating that according to a 2000–2001 World Development Report, “the United States remained the world’s No. 1 economy, with its GNP reaching US $8.35 trillion; followed by Japan, with a GNP of US $4.08 trillion; and Germany, with GNP of US $2.08 trillion”); Robert Wade, Winners and Losers, ECONOMIST, Apr. 28, 2001 (noting that there is a rising income inequality between the nations). 3. See Eric M. Burt, Developing Countries and the Framework for Negotiations on Foreign Direct Investment in the World Trade Organization, 12 AM. U. J. INT’L L. & POL’Y 1015, 1015–20 (1997) (discussing the fact that the dispute over foreign direct investment is one between the developed and developing nations of the world); David Schneiderman, Investment Rules and the New Constitutionalism, 25 LAW & SOC. INQUIRY 757, 767 (2000) (not- ing that the dispute between developed and developing nations is split between the two hemispheres); see also Mark B. Baker, Integration of the Americas: A Latin Renaissance or a Prescription for Disaster?, 11 TEMP. INT’L & COMP. L.J. 309, 318 (1997) (stating that “the degree of economic integration in the Northern Hemisphere is significantly different than in the Southern Hemisphere.”). * University of Pittsburgh School of Law (LL.M. 2001), Senior Lecturer, Economics and Law Faculty, Donetsk National University, Ukraine. The present article is based on the LL.M. thesis completed in 2001. I wish to express my sincere gratitude to Prof. Ronald A. Brand for his valuable supervision and encouragement of this project. 2 New York International Law Review [Vol. 15 No. 1 as well as a debate on the limits of human expansion into natural life on the earth.4 Nations have sought a resolution to these two core problems for at least the past 50 years.5 Many poor countries lack resources to recover from stagnation and thus view foreign investment as the only major source of financing.6 Unsurprisingly, the World Bank states that opportunities for developing countries require encouraging effective foreign investment and that “[i]nvestment and technological innovation are the main drivers of growth in jobs and labor incomes.”7 It is increasingly recognized that foreign direct investment (“FDI”) is an important component of an effective strategy to develop solutions to the global economic crisis, in part because it creates a flow of non-debt equity into developing countries and promotes sustained growth and employment.8 4. See Judith Kimerling, International Standards in Ecuador's Amazon Oil Fields: The Privatization of Environmental Law, 26 COLUM. J. ENVTL. L. 289, 314 n.69 (2001) (noting the fear that increased environmental protection will lead to decreased foreign investment); David A. Ring, Sustainability Dynamics: Land-Based Marine Pollution and Development Priorities in the Island States of the Commonwealth Caribbean, 22 COLUM. J. ENVTL. L. 65, 106 (1997) (commenting that countries often forsake environmental protections in order to encourage foreign direct investment). See generally Robin L. Cowling, Pic, Pops and the Mai Apocalypse: Our Environmental Future as a Function of Investors’ Rights and Chemical Management Initiatives, 21 HOUS. J. INT’L L. 231, 278–79 (1999) (dis- cussing the various studies that analyze the link between foreign investment and the environment). 5. See Pedro A. Malavet, The Foreign Notarial Legal Services Monopoly: Why Should We Care?, 31 J. MARSHALL L. REV. 945, 948 n.13 (1998) (citing THE INT’L AND COMP. LAW CENTER OF THE SOUTHWESTERN LEGAL FOUND., PRIVATE INVESTMENTS ABROAD: PROBLEMS AND SOLUTIONS (1959–1993) as an annual publication that has existed since 1959 which analyzes the various problems and international solutions to foreign invest- ment). See, e.g., E.I. NWOGUGU, THE LEGAL PROBLEMS OF FOREIGN INVESTMENT IN DEVELOPING COUN- TRIES 33 (1965) (a book written over thirty years ago which addresses various nations’ attempts at solving the problems of direct foreign investment). See generally Myron R. Morales, Russian Customs Laws as Barriers to For- eign Direct Investment, 9 CURRENTS INT’L TRADE L.J. 27, 35 (2000) (discussing various proposals to resolve problems of direct foreign investment). 6. See Mark B. Baker, Integration of the Americas: A Latin Renaissance or a Prescription for Disaster? 11 TEMP. INT’L & COMP. L.J. 309, 331 (1997) (encouraging Latin nations to place more emphasis on foreign investment). See generally World Bank, WORLD DEVELOPMENT REPORT 2000/2001: ATTACKING POVERTY, at 57 (2001) (not- ing that “global economic advance, access to international markets, global stability, and technological advances are all [crucial] determinants of poverty reduction”). 7. World Bank, WORLD DEVELOPMENT REPORT 2000/2001: ATTACKING POVERTY, at 8 (2001) (stating that “expanding into international markets promotes economic growth in the developing countries”). See Bartram S. Brown, Developing Countries in the International Trade Order, 14 N. ILL. U. L. REV. 347, 396 (1994) (stating that “since massive additional transfers of foreign aid are unlikely” in the future, foreign investment will be “indispensable”); see also Richard Bernal, Regional Trade Arrangements in the Western Hemisphere, 8 AM. U. J. INT’L L. & POL’Y 683, 713 (1993) (noting that domestic reforms must be coupled with active participation in international trade). 8. See Ibrahim F. I. Shihata, Factors Influencing the Flow of Foreign Investment and the Relevance of a Multilateral Investment Guarantee Scheme, 21 INT’L LAW.