Chile: the balanced view : a recopilation of articles about the Allende years and after

litYof deduclions forexcess profits with the notion pfflexibility in internalionallaw, It is quile clear thal inlernational lawyers do not look with sympathy on any Kind of retroactive measures, since in general such measures are not compatible with respecl for acquired rights, Moreover, authority for retroactive measures cannot be found within the express terms of Resolution 1803. For the same reason that internalionallaw does nol oblige a slate 10 pay compensation for taki ngs of property when the rights of the affecled parties are acquired under a system of municipallaw which expressely does not require such payment or leaves the question of compensation wholly to lhe slate's discretion,(84) compensalion can be required as a matter of right and good faith when the right to property has been acquired under legíslalion providing for compensation in the evenl of ils taking,(85) Profits lawfully earned under the legislalion in force are, of course, part of the acquired righ1. EV¡en assuming that the state has broad discretionary powers in' connection with nationalization,(86) the question of excess profits ,still would be inseparable from the question,of compensation, since the constitutional amendment provided fer their deduc– tion from the amount of compensation, This is implicit in the legislative history of that amendment and in the resolution of the Comptroller General, who, in deducting the excess profits, resolved {hat some of Ihe copper companies were "not entitled to compensa– tion."(87) It could be argued that the distinction madeby the Special Tribunal belween deductions for excess profits and compensation has no real significance from the point of view of international law,(88) nor does describing the deduction as political help lo solve lhe problem,(89) Consequently, if the measure could be justified but if as a result of its application the standard of just, adequate, equitable, or reasonable compensalion is nol mel, it could be argued that municipallaw exceeded the limits of the flexibility contempla– ted by international law, VIII THE QUESTION OF CONTRACTUAL RIGHTS Complex doctrinal discussions on the question of the performance of contractual oblígations(90) have also been stimulated by the Chilean copper nalionalizalion. In view of the observation made by the Specíal Rapporteur of the International Law Commission that a breach of a contract can only be considered per se contrary to internatíonal law when the contract itself is governed by internalionallaw or by a body of laws other than the municipal law of a particular country,(91) it does not appear that the "Chileanization" agreements belong in this category. These agreements were governed by municipallaw and could be affected by nationalization measures wilhout engaging Ihe responsibility of the state provided that the requirements of internationallaw with regard lo arbitraríness, discrimina– tion, compensation, and olher relevant principies were observed. The restraints imposed by internationallaw on the functioning of municipallaw are also applicable in this matter. The presidential message whích accompanied the constitutional amendmenl to lht:l Chilean Congress clearly stated that one of the purposes ofthe nationalizatíon was to affect the contracts with the copper companies and he also indicated lhal compensalion would (84)Fourth Report. supra note 10. al 18-19. (85)See Art. 9,1 01 draft 01 Dec, 11, 1961, supra note 7, (86)García-Amador makes a distinctian on lhis painl between the case 01 expropriation and tha! 01 nationaliza- tion, Compare Articles 9.1 and 9,2, 01 the draft 01 Dec, 11, 1961, supra note 7, (87)Resolution 01 the Comptroller General on Compensation olOct. 11, 1971 in 10 IlM 1240-53 (1971), (88)See note 36, supra. (89)Statement by the representative 01 the Executive befare the Senate Committee in the session 01 Dec, 29, 1970. Senate 8ul!. at 47, (90)See in general A. Fatouros. Government Guarantees lo Foreign Investors (1962) and Amerasinghe, Stade Breaches ofContracts with Aliens and lnternationol Law, 58 AJll881-913 (1964), (91 )FOllrth Report, supra note 10, at 31-32, 266