Saturday, April 19, 2003

"What Do You Mean The Contract's Void?"

The Economist has an illuminating article regarding the Bush administration's pre-attack planning for reconstruction and how the current contract negotiations will affect other countries who had past dealings with Iraq, such as Russia and France.

It also posits this;

There has been talk that a new American-backed administration in Iraq might try to revoke contracts entered into under the Saddam regime. However, that would fly in the face of international commercial law. “The government is an agent of the state and any new regime would be bound by contracts entered into by a previous government,” says Malcolm Forster, a lawyer with Freshfields, a London firm. Governments do try to revoke contracts, Mr Forster says, but to succeed they have to convince an international tribunal that the contract was entwined with a particular government policy, for example on national security—an argument that judges have little patience for. Even so-called “handshake” agreements are valid under English law, which is widely used in international contracts. However, here it is clearly more difficult to prove what was actually agreed (especially if many of the witnesses on one side have disappeared or been killed). Moreover, a new government could argue that such agreements were merely preliminary, rather than full contracts. If America has its way, Iraq’s interim administration will do just that.

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