Seyed Yaser Ziaee; Masoomeh Sadat Hoseini
Abstract
Cryptocurrencies is a class of digital asset that is controlled using cryptographic algorithms and often works in a decentralized manner. Some experts believe that cryptocurrencies could be the future currency or international money. Therefore, cryptocurrencies and related technology might disrupt many ...
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Cryptocurrencies is a class of digital asset that is controlled using cryptographic algorithms and often works in a decentralized manner. Some experts believe that cryptocurrencies could be the future currency or international money. Therefore, cryptocurrencies and related technology might disrupt many things, including finance and law. Fiat currencies derive their authority from the government or monetary authorities. For example, the Federal Reserve back-stops each dollar bill. However, Cryptocurrencies are not backed by any public or private entities. Therefore, it has been difficult to make a case for their legal status in different financial jurisdictions throughout the world. In order to determine the positions, capacities, and challenges of cryptocurrencies in international monetary and financial law, it is necessary to first analyze the status of cryptocurrencies as money and then examine the position of cryptocurrencies in the International Monetary Fund as well as some other international financial organizations. Monetary and financial organizations have had different positions towards cryptocurrencies. The International Monetary Fund has done little more than encouraging the use of government cryptocurrencies. The position of international financial institutions has also been different in this regard: from the pessimistic approach of the Bank of International Settlements and the European Central Bank to the organizing approach of the Financial Action Task Force, as well as the passive approach of the World Bank Group. It seems that in order to use the benefits of cryptocurrencies (such as blockchain technology in international transactions) and avoid the problems caused by them (such as currency instability and financial crimes), it is necessary to complete and strengthen the international monetary and financial law system in this regard.
Seyed Yaser Ziaee; Mohammad Reza Mellat
Abstract
This article tries to respond to this question that how we can analyze foreign investment sanctions against Iran in the light of regulations concerning on capital flow in international law? Finally, it can be understood that capital or foreign currencies are entered to or withdrawn from the states intentionally ...
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This article tries to respond to this question that how we can analyze foreign investment sanctions against Iran in the light of regulations concerning on capital flow in international law? Finally, it can be understood that capital or foreign currencies are entered to or withdrawn from the states intentionally or unintentionally. Intentional restraints against inflow and outflow of capital might be contrary to some of the international obligations. This analysis should have been done in four chapter which consist of capital restrict and flow in international economy, capital restrict and flow in international law, foreign investment in international law: from promotion to restriction, and analysis of foreign investment sanction in Iran. Capital Restrict and Flow In International Economy Free flow of capital as a result of global trade liberalization has been a subject of the economists’ attention. There are different economic schools which have different view to capital flow. Capital flow isn't supposed in Mercantilism because of importance of import of capital and consequently increasing of gold storages of State. In Physiocracy school there is this belief that capital turnover is a natural rule. After that in economic liberalism the voluntary trade strengthened. In this view flow of capital is in the top of its possibility. In contrast, Marxism and Socialism were opposite with the freedom of capital movement. In Islam economy also there are subjective and objective limitations in trade. Keynesians believe that State should control on the capital inflow and outflow. In the view of Milton Friedman (New Classics) the right way is self-regulation of the market e.g. in capital trade. There is also the theory of Impossible Trinity in which respecting to inflow and outflow of capital and stability of domestic exchange is impossible. The superior view in the nowadays world is assimilate to Keynesians meaning that international organizations can supervise on the free movement of exchange and capital in the world. Capital Restrict and Flow in International Law (Structural View) As PCIJ stated as a principle States have sovereignty in regulating of currency movement. International Monetary Fund, World Trade Organization, European Union, Organization for Economic Cooperation and Development (OECD), Group 20 (G20), free trade agreements, and bilateral foreign investment treaties emphasize on this principle. There are also exceptions to the free flow of capital, which shall be restrictively and conservatively applied. In other words, after World War 2 Bretton Woods regime restricted this freedom. IMF advise capital movement and restrict it to economic infrastructures in the country. WTO allowed cash and non-cash capital inflow in TRIMS and GATS and restricted it balance of payments. European Union enforced capital movement and restricted it just in breach of tax law of members and public policy or public security. In OECD capital movement just can be restricted in economic crisis. Capital Restrict and Flow in International Law (Contractual View) multilateral trade treaty also supports from the capital inflow and outflow but some of them –like U.S. agreements- support of that more than others. In BITs if core term of definition of investment is non-physician capitals, so capital flow is supported better by free transfer clauses by which investor can transfer its currencies to foreign easily. Capital flow can be happen in nine type which include: voluntary inflow movement, involuntary inflow movement, voluntary inflow restriction, involuntary inflow restriction, voluntary outflow movement, voluntary outflow restriction (general), voluntary outflow restriction (special), involuntary outflow movement, involuntary outflow restriction. Capital flow just in three type of them: voluntary inflow restriction, voluntary outflow movement and voluntary outflow restriction. Foreign Investment in International Law: From Promotion to Restriction Although foreign investment trend increased in 1990 decades and States competed in encouraging of investors, but sometimes this trend decreased cause of some host State or national State policies or involuntary reasons like security of host State. Some economists believe that respecting of inflow of capitals for investment without restrictions isn't favorable. So States tried to restrict inflow of capital for investment which mostly happened by colonialized country. Analysis of Foreign Investment Sanction in Iran In investment sanction of Iran inflow capital sanction is due to some non-economic policies. These sanctions are against allowed exceptions set out in international law because goal of that exceptions are safe of economy of State. These sanctions breaches IMF rules as capital flow restriction just permitted where economic infrastructures are undermined or economic crisis is ongoing. These sanctions by EU States are violation of article 63 of Treaty on the Functioning of the European Union, 2007 in which just public interests of States can be justify capital flow restrictions. In according to relations of Iran and United Stated of America, Treaty of Amity, article 7 of Economic Relations and Consular Rights, 1955 prohibited any restriction on payments, remittances and other transfers of funds to or from the territories of each other except to the extent necessary to assure the availability of foreign exchange for payments for goods and essential to the health and welfare of its people. In any way these restriction shouldn't be taken in discrimination. Although U.S. withdraw of Amity Agreement in 2018 but this treaty would be applicable till one year after withdrawal declaration and U.S. is responsible for the enforceable period. Also some bilateral investment agreements of Iran and other States mentioned to the free transfer clause. For example, investment sanctions by franc and Japan is against of their investment treaties by Iran in which capital flow restrictions just is allowable in situation of safe of balance of payments and protecting of debtors, as the same the treaties by Austria (with exception of balance of payments) and by Germany, Italy and South Korea without any exception. By adoption of JCPOA, EU and US obliged to seize investment sanctions on oil and gas and Petrochemical. So any capital sanction like re-imposition of sanctions by president of US is against several recognized international rules.
Seyed Yaser Ziaee; Mahdi Telba
Abstract
International trade relations in the contemporary international environment is essential. Security and speed in the trade relations plays an important role in its success. International trade legal system is a special place to regulate transboundary relations between international traders. This legal ...
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International trade relations in the contemporary international environment is essential. Security and speed in the trade relations plays an important role in its success. International trade legal system is a special place to regulate transboundary relations between international traders. This legal regime must respond to emerging issues in international trade relations. Payments is one of the most important issues in international trades which should be regulated by the legal regime. One of the common and regular methods in international payments is opening of letters of credit which are done by banks of origin state and destination state. The documentary credit is the most common payment method in international agreements. This method of payment makes payments secure through financial guarantee of contracts by a third party. However, the principle of irrevocability in the letter of credit largely assures payments, but some events could impair the function of the bank. Among them, force majeure is a usual and possible execution which can make issuing banks unable to do their function well. This execution is referred to as Uniform Customs and Practice for Documentary Credit (UCP 600) which has been approved by the International Chamber of Commerce. Force majeure in brief can be defined as unpredictable and uncontrollable and out of intention of the adducer. Force majeure makes execution of the contract impossible and may cause suspension or termination of the transaction.
In recent years, among the cases of force majeure, economic sanctions and specifically banking sanctions have been applied against some countries including Islamic Republic of Iran that have prevented from flow of international financial trade as fast and secure. Although article 36 UCP 600, which include instances of force majeure, hasn't mentioned to economic sanctions, these instances are not limited, because it noted to "or for any other reason" as one of instances of force majeure. Banking sanction as a unpredictable, inevitable and out of intention event, which can be introduced as a force majeure, causes to preclude responsibility of the banks and corporations which their state are under sanction. However, it is necessary to distinguish between the types of sanctions: mandatory sanctions and voluntary sanctions. While the banking sanctions by the Security Council of UN may suspend implementation of the grant of credit by banks, voluntary sanctions, such as secondary sanctions by the United States of America against Iran and Cuba, cannot be invoked as a force majeure. As well, sanctions that are applied by the bank itself are not an instance of force majeure, unless a pre-condition has been stipulated for sanctions in the contract for issuing of letters of credit.
This study attempted to examine the relationship between banking sanctions and force majeure and to evaluate effect of bank sanctions on the obligations arising from the issuing of letters of credit. By examining this issue, we can present solutions for facilitating the international trade, particularly transactions within the scope of the Islamic Republic of Iran as one of the countries that is subject to international sanctions. For this purpose, in this study, library study has been used to collect data and Descriptive- Analytical method has been adopted to provide appropriate solutions. Suggestions in this regard are as follows:
A) The beneficiaries request from other party to guarantee the credit. Confirmation is used in the event that, for any reason, vendors believe that the bank’s commitments are not enough for issuing letter of credits and so demands other party to attach its bank credit to another bank approval -preferably from another country. In this way, beneficiaries would be sure before shipping goods on the board. In such cases, the confirming bank with approving the credit, has an independent obligation to the issuing bank in favor of the beneficiary. In other words, an independent contract between the confirming bank and the beneficiary would exist. B) In contract, parties predict the possibility of transforming the obligation of the issuing bank of letter of credit to a third party. This means that at the request of the beneficiary, the commitment of the bank should be exercised in favor of someone else. Whereas sanctions are primarily against a state and its citizens, commitments could be done in favor of other banks or companies. In other words, if issuing bank of letters of credit in relation to trade with the bank A from country A has applied bank sanctions against that bank, issuing bank can exercise its commitment in favor of Bank B from country B. C) This clause inserted in the contract for opening letters of credit that committed even in case of force majeure will be responsible or in cases of hardship parties are required to solve their dispute through the payment of adequate compensation. D) If the possibility of imposing binding economic sanctions on issuing banks is weak, the applicant and the beneficiary and issuing bank ought to avoid from acceptance of the voluntary sanctions clause. E) The applicant and the beneficiary of credit should refrain from the opening of letters of credit in the bank which are likely to be sanctioned in the future.
