Foreign and Other Economic Rights Upon Conquest and Under Occupation: Iraq in Comparative and Historical Context

Abstract

Under customary international law, conquest does not extinguish pre-existing private property and contract rights. However, the applicability of this classical rule has been restricted in scope and at best it has been applied inconsistently over the last century. This article examines the rationales underlying the rule and the reasons accounting for the uneven and inconsistent application of its prohibition of extinction of private property and contract rights upon conquest. I argue that the primary reason accounting for its uneven and inconsistent application has been to facilitate the political expediency and hegemony of conquering states over weaker and vulnerable states. Hence, courts have held treaties embodying this rule that private property rights shall be inextinguishable upon conquest, are subject to the overriding constraint of their compatibility with national policy during times of war. In the United States, such views have been fortified by judicial attitudes reluctant to use international law to restrain the Executive Branch especially with regard to war time decisions.

It follows that the prohibition against extinguishing private property and contract rights upon conquest is more likely honored by conquering states when it is most compatible with their interests. For example, the prohibition is often enforced to secure the private property rights of nationals from a powerful belligerent state who are domiciled in a weaker state vulnerable to conquest. Yet, the private property rights of weaker enemy states are often subject to sequestration or confiscation. It is therefore not surprising that following the U.S.-led conquest of Iraq in the early 2003, most scholarly and press coverage has focused on the status of the foreign corporations' property in Iraq before the war. By contrast, there has been little attention given to the impact of the conquest on the private property and contracts of Iraqi citizens entered into before the war. In addition, the human rights of the Iraqi people for the most part took a back-seat during the conquest and only emerged in significance in the planning of returning sovereign control of the country back to Iraqis.

This difference in the application of the rule against extinction of private property rights and contracts upon conquest is not a post-second World War phenomenon but rather a reflection of a more systemic disregard of rights of non-European peoples going back decades in the history of international law. Thus, as Native American ownership of land in early America history was held to have been extinguished upon conquest, and the various peace treaties between the United States and Spain treated Native American ownership of land as mere possession. Similar possession of land by White colonial settlers was held to constitute unimpeachable private property interests upon conquest.

While under the classical international law rule, conquest does not extinguish pre-existing private property and contract rights, as a general matter, the municipal law of conquering states often requires the suspension of all contracts, except those of necessity at the beginning of hostilities between states. Thus the national security interests and the political exigencies in preventing free commerce between belligerent states over time modified and relaxed the rule against extinction of private property and contract rights upon conquest. For example, trading with enemy laws in the U.S. and the U.K. authorize the confiscation, and sequestration of the property and contracts of enemy nationals. The rationale for these actions has been to prevent enemy nationals from helping their home state in the war effort.

By contrast to the rule prohibiting extinction of private property rights by conquest, the protection of private property and contract rights under military occupation has a much lower threshold. Though the occupying power is required to respect pre-existing private property rights, interferences are permissible where they accord with the requirements laid down under Articles 48, 49, 51, 52, 53, 54, and 56 of the Hague Regulations of the 1907 Hague Convention. However, these provisions do not anticipate all possible scenarios where the private property of enemy state nationals may be interfered with by an occupying power. This arguably gives occupying powers wiggle room to interfere with private property rights in occupied territory much more broadly than conquest does. In addition, expansive readings of the duties of an occupying power under Article 43 of the Hague Regulations have in practice justified broad authority. It is also credible to claim that there are differences in some aspects of the treatment of the private property of the Fascists and Nazis, whom the Allied powers authorized to continue receiving certain payments such as pensions, as opposed to Japanese ultranationalists or Iraqi Baathists. Thus, while the Fascists and Nazis were defeated by conquest and their territory occupied, their private property rights were relatively better protected than those of the defeated Japanese after World War II and more recently those of the Baathists in Iraq after the U.S.-led conquest.

In Part Two of the paper, I examine the rule against extinction of private property and contract rights, its rationales and why it has changed over time. In Part 3, I examine how the rule against extinction of private property rights and contracts upon conquest has been most attenuated in situations of non-western states conquered by western states, compared to the conquests among European states. This difference in the extinction of private property rights and contracts upon conquest is, I argue, a systemic expression of the hegemonic power of conquering states that goes back decades in the history of international law. To show that this hegemonic impulse to override private property rights of non-Europeans upon conquest in the history of international law, I discuss a 1905 House of Lords decision that explicitly found the rule against extinction was preempted by the overriding prerogatives of the Crown. I also discuss Indian ownership of territory in colonial America which upon conquest was treated as constituting mere possession, while similar possession of land by White colonial settlers was held to constitute unimpeachable private property interests.

Part 4 is the most ambitious part of the paper. I explore whether the conquest of Iraq is exhibiting a parallel process of privileging and protecting foreign economic interests while under-protecting the property rights of Iraqis under the U.S.-led occupation as demonstrated in Part 3. To do so, first I outline the law governing treatment of private property under occupied territory before discussing the variety of claims that Iraqis in general and Iraqi women in particular may bring under the international legal regime to secure their private property rights adversely affected by conquest and occupation. I also discuss the international law governing treatment of Iraqi public assets under occupation and how the "De-Baathification" of Iraq compares and contrasts with similar occupation reconstruction programs in Nazi Germany, Fascist Italy, and Japan. In Part 4, I also examine the process of transforming the Iraqi economy into an open market economy and illustrate how the doctrine of military necessity, and the political and hegemonic objectives of transforming Iraq have justified expansive powers of the United States as an occupying power beyond those contemplated by Article 43 of the Hague Regulations. These powers include the authority to expropriate private property rights, and the privatization of formerly publicly owned wealth in an unprecedented transformation of the Iraq economy into a market economy. This Section ends with an examination of whether a future Iraqi government would be bound by the decisions of the U.S.-led occupation, and the alternative forums that Iraqis may turn to for remedies as a result of adverse consequences to their economic interests and their limitations that these alternatives pose.