CONSTRUING OF APPLICATION OF ANY TREATIES AND OTHER INTERNATIONAL ACTS GOVERNING THE STATUS AND POWERS OF ANY ORGANIZATIONS WITHIN CIS, AND THE CIS BODIES

Construing of application of the treaties and other acts governing the status of organizations, and powers within CIS

Judgment No. 07/95 dated December 21, 1995 on construing the Agreement on international and legal guarantees for unhampered and independent activities of MIR Intergovernmental TV and Radio Broadcasting Company, of December 24, 1993, clarifies from which particular taxes and duties MIR Intergovernmental TV and Radio Broadcasting Company (MIR ITVRC) shall be exempt in accordance with Article 6 of such mentioned Agreement. Article 6 of the Agreement dated December 24, 1993 establishes that such mentioned Company and the property thereof shall be exempt from direct taxes and duties of any nature (except for payment for the utilities and other similar services) and from any customs duties and restrictions when importing and exporting the goods destined for use for the purposes stipulated by the Statute of MIR ITVRC; and MIR ITVRC and its branches (representative offices), when carrying out their production and commercial activities according to the Statute, shall make the appropriate payments to the respective budgets of the Commonwealth member-States.

The CIS Economic Court has established that MIR ITVRC shall be exempt from all kinds of taxes and duties of any nature (except for payment for the utilities and other similar services) in the territories of the States which are the parties to the Agreement dated December 24, 1993. Nevertheless, due to non-existence, within the CIS, of the generally recognized definition of “direct taxes” as on the date of decision-making, such term shall be defined on the basis of the legislation of each particular State. That is why MIR ITVRC shall not be exempt from taxes which are defined as “indirect” in the territory of a particular State according to the rules of law of such State. After the definition of “direct taxes” is developed within the Commonwealth, the States which are the members to the appropriate CIS treaties or acts shall be governed with the norms thereof.

The exact list of customs taxes and duties from which any imported and exported goods destined for use in accordance with the MIR ITVRC Statute are exempt, shall be established by the legislation of the States which are the parties to the Agreement dated December 24, 1993, and shall include: the ban on and restriction of import/export of particular goods into/from the territory of the State which is a party to such mentioned Agreement; transit of particular goods; fixing the minimum or maximum import/export prices; and other restrictions of non-tariff nature.

The CIS Economic Court has emphasized that the States shall undertake to apply the Agreement dated December 24, 1993 provisionally from the date of signing thereof.

Judgment No. 01-1/3-98 dated September 15, 1998 on construing Article 6 in the Agreement on international and legal guarantees for unhampered and independent activities of MIR Intergovernmental TV and Radio Broadcasting Company, of December 24, 1993, concerns the opportunity to apply the rules of exemption of MIR ITVRC from payment of taxes and duties of any nature with respect to mandatory payments to any off-budget funds.

The CIS Economic Court believes that since the national legislations of majority of the CIS member-States draw no distinction between the taxes, duties and any other mandatory payments, the notion of “direct taxes and duties” in Article 6 of the Agreement dated December 24, 1993 covers all variety of direct taxes established by the legislations of the member-States. The duties include any mandatory payments of a taxation nature, which have a direct impact, including also any mandatory deductions to any off-budget funds.

Nevertheless, Part one Article 6 of the Agreement may not be applied to any tax payments collected directly from salaries and wages of any persons who are employed in MIR ITVRC (its branches and representative offices) and are the citizens of the country where the Company (its branches and representative offices) resides. Such payments shall be deducted and transferred by MIR ITVRC in accordance with the legislation in force in the country where the Company resides.

Judgment No. 01-1/1-2000 dated June 27, 2000 on construing Articles 2 to 5, 10 in the Agreement on international and legal guarantees for unhampered and independent activities of MIR Intergovernmental TV and Radio Broadcasting Company, of December 24, 1993, clarifies whether such guarantees mentioned in the Agreement have been granted to MIR ITVRC as an international organization, taking account the purposes of establishment thereof.

The cause for the inquiry was given by the fact that MIR ITVRC was registered as an ordinary joint stock company, with the Recording Chamber under the Government of the city of Moscow, due no non-existence, in the legislation of the Russian Federation, of any norms governing the activities of international joint stock companies. As the result of such registration, MIR ITVRC and its branched established in the member-States are deemed the residents of such States, which fact causes difficulties to the operation of the Company as an intergovernmental organization.

The CIS Economic Court has ascertained that MIR ITVRC is an intergovernmental organization established by the CIS member-States for attainment of goals of a humanitarian nature. The notion of an “international organization” (as applied to MIR ITVRC) used in the Agreement dated December 24, 1993 shall be deemed not a general-type international organization, but a specialized CIS structure — a legal entity which status and the scope of legal capacity shall be specified by its constituent documents. As MIR ITVRC has been established for serving common interests of the founder-States, no control of the Company by separate States may be taken. The CIS Economic Court believes that obedience of the Company to the national law of any particular State shall be deemed a sort of such mentioned control. With a view to ensure unhampered and independent activities of MIR ITVRC, the Company signs, with each of the member-States in which territories MIR ITVRC and its branches operate, the protocols (agreements) establishing and specifying the scope of privileges and immunities granted to the Company in its capacity of an international legal entity (paragraph 1 Article 2, and paragraph 2 Article 13 in the Agreement dated December 24, 1993), which scope of privileges and immunities may not be less than the level established by the Agreement dated December 24, 1993.

The CIS Economic Court has mentioned that, as appears from the Preamble to the Agreement dated December 24, 1993, any privileges and immunities granted to MIR ITVRC by the States on contractual basis shall be of a functional nature, i.e. destined for creation of the international legal guarantees of unhampered and independent professional activities of MIR ITVRC in the territories of such member-States in its capacity of an intergovernmental organization. The MIR ITVRC Statute dated September 5, 1997 fails to specify deriving profits as the main goal of the Company’s activities, yet it permits carrying out, by the Company, of any commercial activity not prohibited by the legislation; provided, however, that in this case the States shall be entitled to restrict the privileges and immunities granted to the Company.

Judgment No. 08/95 dated December 13, 1995 on construing the Agreement on establishment on the Intergovernmental Bank, dated January 22, 1993, and the Statute of the Intergovernmental Bank dated January 22, 1993, concerns the mechanism of making alterations and addenda in the Bank Statute, namely:

-         What is the procedure of making any amendments and addenda in the Bank Statute?

-         Shall the decision made by the Board of the Bank be sufficient for making any amendments and addenda in the Bank Statute?

-         In what way shall the Bank acquire the rights of a legal entity? Is compliance with the Bank registration procedure required? If so, in accordance with what procedure shall the Bank be subject to the registration?

The cause for the inquiry was given by collision of norms of the Statute of the Intergovernmental Bank. According to Part twelve Article 8 in the Statute, and the Protocol Decision of the CIS Council of Heads of States dated December 9, 1994, any amendments and addenda therein shall be recorded in special protocols and require consent of all contracting parties. At the same time, the Board of the Intergovernmental Bank is entitled to make any amendments and addenda in the Bank Statute by the Protocol Decision.

In connection with the fact that the Bank Statute, being an integral part of the Agreement on establishment of the Intergovernmental Bank dated January 22, 1993, is an international agreement, any amendments and addenda in the Statute shall be made in accordance with the rules of making any amendments and addenda in the international agreements. Therefore, taking account of the provisions contained in Article 14 of the Agreement of January 22, 1993, consent of the member-States to making such amendments and addenda in the Bank Statute shall be expressed by means of ratification or signing (if the legislation of a member-State does not require ratification of such agreements).

The CIS Economic Court believes that since the terms of reference of the Bank Board are specified by the Bank Statute, any change thereof (in particular, delegation, to the Bank Board, of the right to enter any amendments in the Bank Statute) shall be carried out through adoption of a special protocol on entering amendments in Part three Article 7 of the Bank Statute whereby the terms of reference of the Bank Board are specified, but not through adoption of any act or a Protocol Decision of the CIS Council of Heads of States. It follows from this, that the provisions of the Statute prevail over the norms of the Protocol Decision of the CIS Council of Heads of States dated December 9, 1994, according to which the Board of the Bank was granted the right to make any amendments in the Bank Statute.

The Intergovernmental Bank has all features of an international organization and in this capacity exercises the right of the subject of international law. As far as the constituent documents of the Bank do not provide for any special mechanism of granting the right of the subject of international law to the same, the Bank shall acquire the right of a legal entity from the moment when the Agreement on Formation of the Intergovernmental Bank has come into effect. The Bank Statute shall be registered in accordance with the legislation of the country of residence.

Judgment No. 01-1/5-04 dated January 31, 2005 on construing the Agreement on establishment on the Intergovernmental Bank, dated January 22, 1993, the Statute of the Intergovernmental Bank dated January 22, 1993, and the Agreement signed between the Intergovernmental Bank and the Government of the Russian Federation on the terms of residence of such Intergovernmental Bank in the territory of the Russian Federation, dated June 30, 1996considers the following issues:

§         Is the Intergovernmental Bank entitled to be involved in any kinds of activities (investment activity including), which are not directly provided for by its constituent documents and by any other documents governing its operation, provided there is an appropriate resolution of the Board of such Intergovernmental Bank to this effect? And, may such activities be regarded as carried out in accordance with the constituent documents?

§         From what kinds of taxes, duties, fees and other payments, depending on the way and procedure of fixing, imposition and collection thereof, shall the Intergovernmental Bank be exempt by virtue of Article 6 in the Agreement dated June 30, 1996?

§         In what way the notion of “… except for those which represent the payment for certain kinds of services” shall be interpreted within the context of Paragraph one Article 6 in the Agreement dated June 30, 1996, taking account of the generally recognized principles of the international law, international practice of granting such tax concessions?

§         Does the norm contained in Paragraph two Article 6 in the Agreement signed between the Intergovernmental Bank and the Government of the Russian Federation dated July 30, 1996 exclude the opportunity to apply the norm contained in Paragraph one Article 6 when importing, by the Bank, to the customs territory of the Russian Federation, of its property destined not for the official use but for use within any other economic activities carried out by the Bank?

The CIS Economic Court has come to a conclusion that the list of banking operations specified by the constituent documents of the Intergovernmental Bank, which operations the Bank is entitled to carry on, is not exhaustive. According to the provisions contained in Paragraph seven Article 3 in the Agreement of January 22, 1993, and Item 7 Article 2 in the Bank Statute, the Board of the Bank may by its resolution assign any banking operations, not directly stipulated for by the constituent documents, to the terms of reference of the Intergovernmental Bank, provided such banking operations agree with the purposes and tasks of the Bank. Such activity of the Bank shall be deemed complying with its constituent documents. The Bank shall be entitled to carry out any activities not provided for by its constituent documents (investment activity including) also on the basis of special international agreements. 

According to Article 6 in the Agreement signed between the Intergovernmental Bank and the Government of the Russian Federation dated July 30, 1996, the Intergovernmental Bank shall be exempt from payment of all taxes, duties, fees and other payments collected in the territory of the Russian Federation with respect to activities arising from the constituent documents of the Intergovernmental Bank, except for payments and duties which are “the payment for certain kinds of services”. The CIS Economic Court believes that the latter includes any kinds of charges and duties collected in the territory of the Russian Federation, which payment is an indispensable condition of making, by the governmental bodies, institutions of local governing, other authorized bodies and officials, of any actions of judicial importance in respect of the payers, in particular, granting of certain rights or issue of permits (licenses), but which do not belong to the category of taxes regarded as mandatory individual gratuitous payment.

Any benefits with respect to importing and exporting of the property, granted according to Part two Article 6 in the Agreement dated July 30, 1996, shall only apply to the goods imported for the official use but not to the property imported by the Intergovernmental Bank into the customs territory of the Russian Federation with a view to carrying out economic activities.

Construing of application of the treaties and other acts governing the status and powers of the CIS bodies

Judgment No. С-1/7-97 dated January 30, 1998 on construing the Regulations of the Inter-State Economic Committee of the Economic Union dated October 21, 1994, clarifies the procedure of fulfillment, by the Inter-State Economic Committee of the Economic Union (hereinafter ISEC), of its controlling and regulating functions, including the following issues:

-         What is understood under the “controlling functions” of the Inter-State Economic Committee of the Economic Union, and under the “organization of control of fulfillment of any assumed obligations under the decisions made by the CIS Council of Heads of States and the CIS Council of Heads of Governments”, and how do these notions correlate with each other?

-         May the Inter-State Economic Committee of the Economic Union, without powers additionally delegated to it by the States, organize control of fulfillment of such mentioned obligations, request about any information from the respective bodies of the States relative to fulfillment of certain obligations, carry out inspections at the local level (upon consent of the governments), take any measures (jointly with the public administration bodies) in order to eliminate any troubles arising from any disputes?

The CIS Economic Court has stressed that ISEC carries out its controlling and regulating functions in accordance with Part two Item 1 Section I in the Regulations of Inter-State Economic Committee of the Economic Union, within the powers voluntarily delegated to it when specifying the general ISEC status, by the States which are the parties to the Treaty on Organization of the Economic Union dated September 24, 1993. Paragraph four Item II in the ISEC Regulations establishes an exact control function of ISEC: to organize control of fulfillment of any assumed obligations under the decisions made by the CIS Council of Heads of States and the CIS Council of Heads of Governments.

The Court believes that the provisions of Part two Item 1 Section I, and Paragraph four Item 3 Section II of the ISEC Regulations do not conflict with each other as general and special norms.

The CIS Economic Court believes that as the ISEC Regulations make an integral part to the Agreement on Establishment of the Inter-State Economic Committee of the Economic Union dated October 21, 1994 (Article 2 of the Agreement), correlation between the norms of the Treaty on Organization of the Economic Union and the ISEC Regulations shall be governed by the Viennese Convention on the International Treaty Law 1969, with respect to application of any international treaties signed in sequence with regard to the same issue. Therefore, the States which are the parties to the Treaty on organization of the Economic Union dated September 24, 1993, and which have signed and/or ratified the Agreement on ISEC Establishment dated October 21, 1994 without any proviso concerning ISEC functions, thereby have voluntarily delegated to the same the control function, i.e. organization of control of fulfillment of any assumed obligations under the decisions made by the CIS Council of Heads of States and the CIS Council of Heads of Governments, and the powers for performance of such function. No additional delegation from the States is required for ISEC to perform its controlling powers provided for by Paragraph four Item 4 of the Regulations.

ISEC may independently request about any information from the respective bodies of the States relative to fulfillment of certain obligations, carry out inspections at the local level (upon consent of the governments), take any measures (jointly with the public administration bodies) in order to eliminate any troubles arising from any disputes.

Judgment No. С-1/9-96 dated May 15, 1996 on construing the Decision of the Council of Heads of Governments of the Commonwealth of Independent states, on activities of any inter-State and intergovernmental bodies of the Commonwealth of Independent States involved in co-ordination of issues of economic nature dated November 3, 1995  clarifies lawfulness of putting, by the management of the Coordination Transport Meeting of the CIS member-States (hereinafter CIS CTM), the issue on necessity to submit the Regulations of the CIS Coordination Transport Meeting, as approved by the Decision of the Presidium of the Inter-State Economic Union dated December 26, 1995, to the meeting of the CIS Council of Heads of Governments.

In fact, the cause for the inquiry was given by ambiguous interpretation of Paragraph 4 in the Decision of the Heads of Governments of the Commonwealth of Independent States, on activities of any inter-State and intergovernmental bodies involved in coordination of any issues of economic nature, dated November 3, 1995, in respect of lawfulness of approval of the CIS CTM Regulations by ISEC.

The CIS Economic Court has established that the question formulated in the inquiry is outside the Court’s competence, as lawfulness of putting one or another issue shall not be subject to construing. The Court has identified three criteria of its jurisdiction. In particular, the Court does not examine and judge any presumptive actions as it is unknown whether the rules of procedure and other norms of the substantive law and of the law of procedure will be complied with.

Paragraph 4 in the Decision of the CIS Council of Heads of Governments dated November 3, 1995 establishes the right of ISEC and its Presidium (the ISEC higher body) to make any alterations and addenda (within their respective terms of reference) in the active regulations (statutes) of the CIS inter-State and intergovernmental bodies involved in coordination of any issues of social and economic nature, but not to approve the same. The regulations (statutes) of such inter-States and intergovernmental bodies are not in need for additional approval, save as otherwise is stipulated in the appropriate agreements or acts of the Commonwealth or is required by the competent authorities.

Judgment No. С-1/17-96 dated January 23, 1997, on construing the Decision of the Council of Heads of Governments of the Commonwealth of Independent states, on the General Regulations of any inter-State (intergovernmental) bodies of the Commonwealth of Independent States, and the Model Agreement of any inter-State (intergovernmental) body of the Commonwealth of Independent States signed with the State of its residence, dated October 21, 1994,  fixes the moment of coming the Decision of the Council of Heads of Governments dated October 21, 1994 into effect, taking account of Part two of the Decision which provides that “such mentioned documents shall come into effect from the moment of making a decision on establishment of the Inter-State Economic Committee of the Economic Union, and specification of the structure of the bodies within the Commonwealth of Independent States”, and also taking account of obligatory application of the Model Agreement and General Regulations to the Inter-Parliamentary Assembly.

The CIS Economic Court has established that the Decision of the CIS Council of Heads of Governments is an act of an international organization by its legal form, pertains to the inherent right of the organization, and is binding in such capacity.

Coming of the documents, approved by the Decision of CIS Council of Heads of Governments of October 21, 1994, into effect, is conditioned by occurrence of the following two facts: making a decision on ISEC establishment and specification of the structure of the CIS bodies. The date of making a decision on ISEC establishment shall be deemed the date of approval of its constituent documents: the Agreement on ISEC establishment  dated October 21, 1994, and the two Annexes thereto: the Regulations of the Inter-State Economic Committee of the Economic Union, and the Procedure of Voices Distribution for the period until January 1, 1998 for making decisions by the Presidium and the ISEC Board by the qualified majority votes, taking account of the economic potential of the States.

When defining the meaning of the wording “specification of the structure of the CIS bodies” the CIS Economic Court has given the definition of the structure of the CIS bodies, differentiated between the statutory bodies and the bodies for branch cooperation, described the competence of the CIS bodies with respect to making decisions on establishing any other bodies.

The Court has established that since the process of improvement of the inter-organizational mechanism is invariably inherent in any international organization and may not be restricted by any time frames, so the fact of specification of the structure of the CIS bodies shall be established with reference to each particular body and shall be conditioned by specification of its legal status within the system of CIS bodies, by the competent CIS body. Since that moment on, the General Regulations and Model Agreement shall apply to such bodies.

Specification of the CIS Inter-Parliamentary Assembly legal status in its capacity of an intergovernmental body of the Commonwealth (Article 1 in the Convention on the CIS member-States Inter-Parliamentary Assembly dated May 26, 1995) is the basis for application of the norms of the General Regulations and Model Agreement to the same. At the same time, the provisions of such mentioned documents may be applied to regulate the issues not regulated by the said Convention on the CIS member-States Inter-Parliamentary Assembly dated May 26, 1995, from the moment of coming such Convention into effect (from January 16, 1996).

Advisory Opinion No. 01-1/4-05 dated April 18, 2006 on construing the Decision of the Council of Foreign Ministers of the Commonwealth of Independent States, on the Council of Permanent Plenipotentiary Representatives of the Commonwealth member-States in the statutory and other bodies of the Commonwealth, dated August 23, 2005,  clarifies the status of the Council of Permanent Plenipotentiary Representatives of the CIS member-States in the statutory and any other bodies of the Commonwealth (hereinafter CPPR), the CPPR membership institute in light of giving the status of the body of the Commonwealth of Independent State to CPPR in accordance with the decision of the CIS Council of Foreign Ministers (hereinafter CIS CFM) dated August 23, 2005; establishes the procedure of participation, in CPPR, of the States which have failed to sign the CIS CFM Decision dated August 23, 2005 (the Republic of Azerbaijan, the Republic of Kyrgyzstan, the Republic of Moldova, and Turkmenistan); and establishes the procedure of applicabiliyu, to such States, of the Regulations of the Council of Permanent Plenipotentiary Representatives of the CIS member-States approved by the CIS CFM Decision of June 20, 2000.

The CIS Economic Court has established that the CIS CPPR status, functions, organizational structure and decision-making procedure shall be specified by the Regulations of the Council of Permanent Plenipotentiary Representatives of the CIS member-States in the statutory and any other bodies of the Commonwealth, as approved by the CIS CFM Decision dated June 20, 2000, as amended by the CIS CFM Decision of August 23, 2005.

When passing the Decision dated August 23, 2005, on giving the CIS-body status to CPPR, the CIS CFM has acted within its powers delegated to it by the CIS Council of Heads of Governments and the CIS Council of Heads of States. The CIS CFM Decision dated August 23, 2005 represents the act of the body of the international organization, adopted in respect of the Commonwealth inherent right; it is binding in such capacity and shall come into effect from the moment of signing thereof.

According to CIS CFM Decision of August 23, 2005, CPPR is not an organizational form of functioning of the institute of Permanent Plenipotentiary Representatives of the CIS member-States, but a CIS body functioning on continuing basis.

According to CIS CFM Decision of August 23, 2005, the CPPR members shall be the Permanent Plenipotentiary Representatives of the States which have given their consent to grant the status of the Commonwealth standing body to the same, by signing such mentioned Decision. All other CIS member-States shall be entitled to express their consent by official written notifications to the CIS CFM. Membership of the Plenipotentiary Representative of Tajikistan in CPPR, which State has signed the Decision of August 23, 2005 but accompanied it by the “except for item 2.1” reservation (which item defines the Council as a standing CIS body) will be possible if such reservation is repealed, as the provision of item 2.1 is sufficient for such mentioned Decision.

In order to enable participation of the States’ Representatives in the operation of the Council in their capacity of observers, it is recommended that an appropriate addition in the CPPR Regulations dated June 20, 2000 with the alterations and addenda of August 23, 2005 should be made. The representatives of the Republic of Azerbaijan, the Republic of Kyrgyzstan, the Republic of Moldova, Turkmenistan, the Republic of Tajikistan may participate in CPPR on temporal basis until completion of legal formalities concerning participation of such States in CPPR.

The CIS Economic Court has also characterized in its judgments the consensus-based decision-making procedure of the Commonwealth higher bodies; has given legal appraisal of a dash written by a representative of any State instead of his signature. So, the Court believes that signing a Decision means acknowledgement of its binding nature upon the signatory, whereas the dash means refusal to participate in making such decision and reaching the consensus.

Judgments No. 01‑1/1‑99 dated June 30, 1999; No. 01-1/2-99 dated June 30, 1999 define concretely the powers of the Inter-State Economic Committee of the Economic Union concerning establishment of its staff remuneration system. The cases were examined by the CIS Economic Court on the basis of the statements of claim filed by the ISEC employees claiming for collection of monetary funds from the same. The plaintiffs referred to unlawfulness of certain acts adopted by ISEC.

According to Item 14 in the Regulations of the Inter-State Economic Committee of the Economic Union dated October 21, 1994 and subsequent Decisions made by the Council of Heads of Governments, the ISEC Presidium was granted the right to approve the structure and number of its staff, estimate of expenditure. The Court believes that, since under such circumstances the absence of any objections from the CIS Council of Heads of Governments shall be deemed granting, to the ISEC Presidium, of additional powers to establish the staff remuneration system, so change of the terms of payment and of the labour remuneration system in 1997-1998 was carried out within the powers granted to ISEC and shall be recognized as change of the employee’s labour conditions.

In this connection any disputes between the plaintiff and ISEC belong to the category of individual labour disputes with respect to establishing new terms of labour remuneration and changing the existing ones, and in this capacity are outside the jurisdiction of the CIS Economic Court.