Hundred and Twenty-third Session
Rome, 28 October - 2 November 2002
REPORT OF THE SEVENTY-THIRD SESSION OF THE COMMITTEE ON CONSTITUTIONAL AND LEGAL MATTERS (CCLM)
Rome, 17 - 18 June 2002
1. The Seventy-third Session of the Committee on Constitutional and Legal Matters (CCLM) was held on 17 and 18 June 2002. All the Members of the Committee, as listed below, were represented:
Canada, France, Iraq, Malta, Niger, Philippines and Uruguay.
2. The Committee elected H.E. Francis Montanaro Mifsud (Malta) as Chairman.
3. The Committee elected Mr. Adam Maiga Zakariaou (Niger) as Vice-Chairman.
4. The Committee reviewed document CCLM/73/2, as well document CCLM 73/2-Sup.1, containing a letter with observations from the Avvocatura Generale dello Stato regarding the arbitration. A copy of the arbitration award was also made available to the Committee. The Committee was of the view that the various documents were comprehensive and allowed the CCLM to acquire a detailed understanding of the dispute.
5. The Committee noted that the arbitration was held to adjudicate a dispute which had arisen between FAO and a commercial Contractor following the termination by FAO of the relevant contract. This contract, which had been concluded with respect to the period 1 January 1998 to 31 December 2000, entrusted to the Contractor the performance of works of ordinary maintenance on the premises of the Organization on a non-exclusive basis. The Committee also noted that this contract was terminated because it had come to light that works had been ordered, certified and paid for under a previous and separate contract with the same Contractor, but had in fact not been carried out. The complex circumstances under which this was ascertained led to a breach of a fundamental requirement of good faith, trust and fair dealing which, in FAO’s view, made the relationship with that Contractor impossible.
6. The Committee noted that, following a decision taken by the FAO Conference in 1987, and a request by FAO to that effect, the Avvocatura Generale dello Stato had been authorized to assume the representation and defence of FAO in the context of disputes that might involve its immunity. Consequently, the Director-General had decided to request the Avvocatura Generale dello Stato not only to appoint an arbitrator for FAO but also to represent the Organization in the proceedings. The arbitration proceedings were conducted in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).
7. As regards the law applicable to the dispute, the Committee noted that, by interim award of 25 September 2000, the Arbitration Tribunal recognized that it should be adjudicated in accordance with the “UNIDROIT Principles of International Commercial Contracts”, in line with a provision of the contract to the effect that it should be governed by general principles of law to the exclusion of any particular legal system. Subsidiarily, and only in event that specific matters were not covered or dealt with by those principles, the Arbitration Tribunal indicated that it would apply the principles of Italian law concerning public contracts, provided, however, that they were not incompatible with the “UNIDROIT Principles of International Commercial Contracts”. The Committee found this approach to the complex problem of the choice of law to be fully consistent with the international nature both of the Organization and the contract.
8. The Committee noted that, in its final award of 4 December 2001, the Arbitration Tribunal confirmed the correctness of the approach taken by the Organization. In particular, the Arbitration Tribunal emphasized that the termination of contract could not be seen in isolation from the high standards of behaviour and trust that FAO requested from its contractors, given its institutional objectives as an intergovernmental organization of the United Nations system, and that the Organization’s position was in keeping with a basic requirement of good faith on the part of the Contractor which the latter failed to follow. The Arbitration Tribunal, which referred subsidiarily to principles of the Italian Civil Code applicable to public contracts, recognized that the Organization had legal grounds to terminate the contract provided it indemnify the Contractor for lost gain and general expenditures sustained as a result of the termination of the contract. In doing so, the Arbitration Tribunal equated FAO with Italian public bodies, in keeping with various provisions of the Headquarters Agreement with the Italian Republic, and applied substantive rules which, by excluding the payment of damages, were more favourable to the Organization.
9. The Committee concluded that the arbitration had been conducted in accordance with applicable contractual provisions and that the Director-General was under a legal obligation to comply with the award of 4 December 2001, in accordance with the clause on the settlement of disputes contained in the Contract whereby “any arbitration award rendered in accordance (with the relevant provisions of the contract) shall be final and binding on the parties”. The Committee, therefore, recommended that payment be effected as soon as possible.
10. The Committee noted that, drawing on the experience acquired during the course of the past few years, and in close consultation with the United Nations, FAO had reviewed the standard clause on settlement of disputes in commercial contracts concluded by FAO. In this respect, the Committee considered it appropriate for the future to insert in such contracts a provision whereby disputes arising from the interpretation and execution of contracts should be compulsorily referred to conciliation prior to arbitration. The Committee also emphasized that, given a number of inconveniences inherent in arbitration proceedings, including cost considerations, the Organization should, whenever possible, seek to reach out-of-arbitration settlements of contractual disputes. However, the possibility of resorting to arbitration depends on the particular circumstances of each case. As regards this particular dispute, the Committee agreed that there were issues of principle at stake and concurred with the Director-General’s decision to resort to arbitration rather than seeking amicable settlement.
11. In endorsing the proposed changes to FAO standard contractual provisions that FAO has been implementing, the Committee requested the Legal Office to continue to keep some of them under review, taking into account the practice and experience of the various organizations of the United Nations system. Thus, while taking note that, in the United Nations system, the conciliation or arbitration proceedings are generally conducted in English in cases where the language of the contract is not an official language, the Committee noted that it might sometimes be difficult to apply such requirement, especially in cases of small companies (e.g, maintenance contracts) as this would prejudice their basic right of defence. The Committee also requested the Legal Office to keep under review the complex issue of the proper law applicable to the contracts.
12. The Committee took due note of the observations reproduced in Document CCLM 73/2-Sup.1 and expressed its appreciation for the generous assistance extended to the Organization by Italy through the Avvocatura Generale dello Stato. The Committee asked the Director-General to convey to the Avvocatura Generale dello Stato its gratitude for the work accomplished.
13. The CCLM reviewed document CCLM 73/3 “Information on cases involving the immunity of the Organization”. It noted that the Organization’s response to requests for information from States and national authorities on its staff or on data of a personal nature had evolved over time. At first, the Organization’s position was very restrictive, in line with the overall approach to the matter taken by the United Nations and the organizations of the United Nations family. This position was in accordance with provisions of the Convention on the Privileges and Immunities of the Specialized Agencies regarding the immunity of the organization and its staff and judgements of the Administrative Tribunal of the International Labour Organization regarding the right to privacy of staff members.
14. However, this position evolved taking into consideration the requirement that each specialized agency should co-operate at all times with the appropriate authorities of Member States to facilitate the proper administration of justice, secure the observance of police regulations and prevent the occurrence of any abuse in connection with the privileges, immunities and facilities recognized by the Convention. This is also reflected in the Headquarters Agreement between FAO and the Italian Republic, as well as in all other FAO’s Headquarters Agreements.
15. The Committee noted that, under current practice, when requests for information concerning a staff member are made by competent national authorities, usually in connection with private obligations of staff members, the Organization reviews such requests in light of all relevant considerations. The Organization normally seeks the consent of the staff member concerned before releasing information of a personal nature to non-judicial parties outside FAO. In such cases, the Organization is particularly careful in reviewing the reasons that the staff members adduce. In cases of requests stemming from a judicial authority and, in particular when such requests are connected with a spouse and child support case, the Organization releases such information even without the consent of the staff member, in order to facilitate the proper resolution of the claim and prevent any miscarriage of justice. The staff member is advised on the nature of the information and notified that the information is being provided.
16. Aside from the above, the Committee took note of recent instances where the Organization provided information to States or national authorities on access to its electronic data.
17. The Committee welcomed and endorsed the proposal that future instances of provision of information to States and national authorities that would involve the immunity of the Organization be reported regularly to the CCLM.
18. The Committee considered document CCLM 73/4 entitled “Provision of written information on the activities of the Organization to opposition parties in Member Nations” and, in doing so, took due notice of the particular request for information which had led the Director-General to submit the matter to the CCLM, for such guidance as the Committee would deem appropriate to provide.
19. The Committee made a general review of the matter in the course of which it noted that the issue of the provision of information to opposition parties in Member Nations was a delicate one requiring careful consideration. Under these circumstances, given the delicate nature of the whole matter, as well as the need for some of its Members to obtain instructions from their Governments, the Committee decided to defer consideration of the issue until its forthcoming Seventy-fourth Session.
20. Meanwhile, as regards the particular request for information which had led the Director-General to refer the issue of principle to the CCLM and any other instance that may arise, the Committee recommended that the Director-General should act in consultation with the Secretary General of the United Nations.