Article | Last updated: 2007-02-07
The Petroleum Fund Advisory Commission on International Law
Memorandum to the Ministry of Finance
Question of whether investments in Singapore Technologies Engineering can imply a violation of Norway’s international obligations
Approaches and conclusion
Reference is made to the letter from the Ministry of Finance dated 7 January 2001, where the Ministry of Finance requests the Petroleum Fund Advisory Commission on International Law (the Advisory Commission) to “consider whether investments in the company Singapore Technologies Engineering can imply a violation of Norway’s international obligations.”
It is presumed that the mentioned possible violation of international law is related to the company’s alleged involvement in production of anti-personnel landmines. The question will therefore be discussed in light of Norway’s international obligations in this area.
The Advisory Commission concludes that there is a large degree of probability that the company Singapore Technologies Engineering (STE) is involved in production of anti-personnel landmines. Even though an investment of a very modest degree (which would be the case here) hardly would make a big difference to STE, it is presumed that this still could be said to contribute to the overall activity of the company. Because the Mine Ban Convention 1The Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and Their Destruction, 1997. goes far in prohibiting any form of assistance, encouragement or inducement to production in violation of the convention, it is presumed that even a modest investment could be regarded as a violation of the article 1 (1) (c) cf. (b).
The reasoning behind this consideration follows below.
The facts of the case
Norges Bank (the Central Bank of Norway) requested in a letter dated 20 April 2001 to Singapore Technologies Engineering, to be informed of whether the company produced landmines. The answer four days later came from a subsidiary company, Singapore Technologies Kinetics (STK), and it said that the company did not produce landmines for export. The question of whether the company (or any of the companies in the concern) produced landmines was thus not directly answered.
Landmine Monitor 2Landmine Monitor is published annually by the International Campaign to Ban Landmines (ICBL) and gives a global overview of production, use, etc. of anti-personnel mines, as well as mine clearance programmes and other mine-related activities. Landmine Monitor has 122 researchers in 95 states, and it is reported from all states in the world. Last year’s report was 1175 pages, and was presented to the third Meeting of the States’ Parties for Anti-Personnel Mine Convention in Managua in September 2001. has reported that on two occasions, Singapore’s Ministry of Defence 3In a letter to Landmine Monitor from the Singapore Ministry of Defence, by Eric Chong, dated 15 December 2000, and in an interview by the spokesperson for Singapore Ministry of Defence, Andrew Tan, 29 March 2001. has confirmed that the company Singapore Technologies Kinetics (STK) produces anti-personnel landmines for Singapore’s own defence. It has not reported on export. It is therefore presumed that STE, through its subsidiary STK, is responsible for production of anti-personnel landmines.
In connection with the interpretation of the provisions in the Mine Ban Convention, the Advisory Commission has based itself on relevant international legal sources and followed the general rules of international law on interpretation of treaties. This means that the treaty text itself has been essential. Furthermore, the Board has considered the somewhat scarce literature on the Convention. For the time being, there is not much state practice which clarifies difficult questions on interpretation, and the same applies to judgements or other decisions from international monitoring bodies.
Article 1 of the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on Their Destruction of 3 December 1997 (the Anti-Personnel Mine Convention) reads as follows:
- Each State Party undertakes never under any circumstances:
- To use anti-personnel mines;
- To develop, produce, otherwise acquire, stockpile, retain or transfer to anyone, directly or indirectly, anti-personnel mines;
- To assist, encourage or induce, in any way, anyone to engage in any activity prohibited to a State Party under this Convention.
- Each State Party undertakes to destroy or ensure the destruction of all anti-personnel mines in accordance with the provisions of this Convention.
The first question is whether the activity of Singapore Technologies Engineering is covered by the description of activities in article 1 (1) (b), and the second question whether possible investments in the company of Norwegian state-owned funds can constitute a violation of article 1 (1) (c).
The prohibition in letter (b) includes activities to develop, produce, or otherwise acquire, 4In the Norwegian translation, the word ”erverve” is used for the English ”acquire”. This term is first and foremost associated with purchase or similar ways of acquiring. Because “produksjon” according to the construction of the text, is classified as a sub-group of “erverve”, this can lead to misunderstandings as to whether production in reality is prohibited under the convention. “Fremskaffe” seems to better cover the very wide term “acquire”. stockpile, retain or transfer anti-personnel mines, directly or indirectly. Both development of individual mines and more systematic production of anti-personnel mines are included in the prohibition.
Development covers the process up to production. It does not matter how extensive the production is or whether it is commercial or private. Production of parts used for manufacturing anti-personnel mines will also in most cases be covered by the prohibition. If, for example, it is clear that one component is only used for anti-personnel mines, production of such a part will be covered by the prohibition.
The term “acquire” includes several of the other alternatives. Both development and production will be to acquire, as will purchase and import. The expression “acquire” could, in addition, cover less obvious alternatives such as to borrow, steal, embezzle, etc.. The point is that all forms of acquisition of such mines shall be covered by the convention.
In addition, all “stockpiling” of anti-personnel mines is covered. This prohibition is modified by a four-year deadline for implementation after the entry into force of the convention for the relevant state party (article 4). The term stockpiling will cover the alternative ”retain” in most cases.
The last term, “transfer”, includes both purchase and sale, hereunder import and export of anti-personnel mines. In addition, physical transport of anti-personnel mines could, under the circumstances, be covered by this term. According to the text of the convention, both direct and indirect exercise of all of the above-mentioned alternatives is affected.
According to letter (c), the state parties are obliged “never under any circumstances to assist, encourage or induce, in any way, anyone to engage in any activity prohibited to a State Party under this Convention”. The wording of this provision is clear in prohibiting every form of possible assistance to, inter alia, production of anti-personnel mines. This entails that it is prohibited for state parties to assist in production etc., even if this takes place in states which are not party to the Convention.
Based on the above conclusion that Singapore Technologies Engineering, by a high degree of probability, is involved in production of anti-personnel mines or parts which only are used for anti-personnel mines, it is relatively clear that this activity falls within the description of what is prohibited in article 1 (1) (b). Inasmuch as the state of Singapore is not a party to the Anti-Personnel Mine Convention, this does not lead to a violation on Singapore’s part. Parties to the Convention which assist in such production in Singapore, will, however, violate their obligations not to “assist in any way” in such production even though this is not illegal in Singapore.
The provision in article 1 (1) (c) says nothing about which forms of assistance etc. that are meant to be covered. The provision is widely formulated and must be presumed to be intended to cover all forms of assistance. According to article 1 (1) letter (c) together with letter (b), assistance to both direct and indirect development and production of anti-personnel mines will be covered by the prohibition.
The question is whether investments in Singapore Technologies Engineering (STE) can be perceived as assisting within the meaning of the convention. It seems clear that it is the 100% owned subsidiary, Singapore Technologies Kinetics (STK) which is behind the controversial production. STK should, according to the Advisory Commission’s evaluation, therefore be identified with STE. In addition to the ownership structure, it can be emphasized that STK presents itself through the parent company’s internet websites and brochure material. Singapore Technologies Kinetics 5Response letter from Singapore Kinetics dated 24 April 2001 as mentioned, responded to an inquiry from Norges Bank regarding the landmine production which was addressed to Singapore Technologies Engineering. 6Letter from Norges Bank to Singapore Technologies Engineering dated 20 April 2001 It therefore seems unproblematic to assume that Singapore Technologies Engineering, through its subsidiary company, directly or indirectly participates in production of anti-personnel mines.
The question then is whether investments by the Petroleum Fund can be regarded as to ”assist, encourage or induce in any way” this production. According to the rules of the Petroleum Fund, the fund cannot acquire more than 3% ownership of an individual company. This means that the Petroleum Fund normally will not acquire either much formal nor real influence over companies in which the fund invests. Furthermore, it follows from the guidelines for the Petroleum Fund’s activities that the fund normally shall not exercise its shareholder rights. It can, however, hardly be demanded that the investment shall be of a specific amount in order for it to be covered by the Convention. According to article 31 of the Vienna Convention on the Law of Treaties, a convention shall be interpreted in accordance with its wording and in compliance with the object and purpose of the convention. Neither the wording of the convention nor its purpose supports such a restrictive interpretation.
Furthermore, the prohibition against assistance is not limited to cover only new offers of shares, in order for the company to be supplied with “new” capital. According to the Advisory Commission’s view, the point is that any investment of money in a company can be regarded as a form of support to the company even though the sums, relatively speaking, are low. The mere fact that the Petroleum Fund invests at all in a company, could, for example, contribute to other states and investors following suit. And even if an investment in a company was so modest that it probably would not reach the threshold of the prohibition on states to “assist” in landmine production, this would probably nevertheless be covered by the alternatives “encourage or induce in any way”. To own shares in Singapore Technologies Engineering as long as the company (or its subsidiary) continues to produce anti-personnel mines, can, according to the view of the Advisory Commission, therefore be affected by the accessory provision in article 1 (1) (c).
The question as to whether assistance in violation of the convention also could be covered by the Norwegian implementation law (law of 17 July 1998, no.54) falls outside the scope of the question set forth by the Ministry of Finance which specifically concerns whether Norway, through investments by the Petroleum Fund, could possibly violate international legal obligations.
The Advisory Commission will, on this basis, conclude that even modest investments in the company Singapore Technologies Engineering can imply a violation of the prohibition against assistance in article 1 (1) (c) cf. (b) of the Mine Ban Convention.