Identifier
Created
Classification
Origin
03THEHAGUE2328
2003-09-16 15:23:00
UNCLASSIFIED
Embassy The Hague
Cable title:  

PCA: ADMINISTRATIVE COUNCIL ADOPTS BUDGET PROPOSAL

Tags:  ABUD AFIN AORC IBPCA 
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UNCLAS THE HAGUE 002328 

SIPDIS

DEPARTMENT FOR IO/S - ABRAHAMS/JACOBSON, L - BETTAUER,
L/UNA - KIINGI, L/PIL - KOVAR, L/CID - CLODFELTER

E.O. 12958: N/A
TAGS: ABUD AFIN AORC IBPCA
SUBJECT: PCA: ADMINISTRATIVE COUNCIL ADOPTS BUDGET PROPOSAL

REF: A. PCA DOCUMENT CAC 43.389 (JULY 16 2003)


B. SANDERS-BETTAUER MEMO (AUGUST 25 2003)

C. KAYE-VAN DEN HOUT LETTER (AUGUST 28 2003)

UNCLAS THE HAGUE 002328

SIPDIS

DEPARTMENT FOR IO/S - ABRAHAMS/JACOBSON, L - BETTAUER,
L/UNA - KIINGI, L/PIL - KOVAR, L/CID - CLODFELTER

E.O. 12958: N/A
TAGS: ABUD AFIN AORC IBPCA
SUBJECT: PCA: ADMINISTRATIVE COUNCIL ADOPTS BUDGET PROPOSAL

REF: A. PCA DOCUMENT CAC 43.389 (JULY 16 2003)


B. SANDERS-BETTAUER MEMO (AUGUST 25 2003)

C. KAYE-VAN DEN HOUT LETTER (AUGUST 28 2003)


1. (U) The Administrative Council of the Permanent Court of
Arbitration (PCA) decided by consensus on Monday, September
15, to adopt Secretary General Tjaco van den Hout's proposed
budget (ref A) for the biennium 2004-2005. Consistent with
the USG position found in ref B, the Secretary General
explained that the scale to be adopted would not be the
OECD's so-called IOS scale for the coordinated organizations
but rather the scale adopted by the OECD proper. He
underscored that PCA staff, unlike OECD staff, will not be
receiving any of the benefits otherwise included in the OECD
salary system. Responding to previous discussions he held
with major contributors and P-5 members, the Secretary
General also confirmed that the PCA will remain committed to
the user-pays approach of registry fees, whereby arbitrating
parties pay the costs of registry services and other arbitral
fees. He also said that the prevailing fee schedule would
continue to be the basis of such fees and that he would make
sparing application of fixed-fee arrangements. Finally, van
den Hout noted that he is working to secure from the Dutch
Government a continuation of its subsidy for purposes of
renting space at the Peace Palace.


2. (U) The PCA, which has labored under a budget designed at
the beginning of the 20th Century, has seen its workload
outgrow its budget over the past decade. (NB: The PCA, the
first of the international dispute settlement bodies founded
in The Hague, was established during the First Hague Peace
Conference in 1899. It plays important roles in matters of
concern to the USG, including as Appointing Authority for the
neutral arbitrators of the Iran-U.S. Claims Tribunal, and has
played a key role in arbitrations of sensitive state-to-state
disputes, including the recent Ethiopia-Eritrea boundary
claims.) While Member State assessed contributions have
remained steady, the PCA has relied on extrabudgetary
funding, mostly through registry fees for arbitration
services, to handle the increased workload, but the result
was a small and poorly paid staff of high quality. In the
face of these difficulties and increased competition for
legal talent from better-paying, higher-profile institutions
such as the International Court of Justice, International
Criminal Tribunal for the Former Yugoslavia and the
International Criminal Court, van den Hout sought to put the
PCA budget onto more stable footing, hoping in the process to
prevent the likely attrition his small organization faced.
The initial two proposals, beginning in March of this year,
would have provided for extensive increases in the PCA budget
and had the Administrative Council commit, in principle, to a
budget scheme extending beyond 2005. Few Member States were
prepared to accept these early proposals. As a result, van
den Hout decided to pare back his proposal significantly.


3. (U) The adopted budget proposal's main feature is its
shifting of the majority of core staff positions to the
regular budget, which is funded out of Member State assessed
contributions. Under the biennial budget, the staff funding
will move to the regular budget in fiscal year 2004, and the
salary scale of the OECD will be applied to the staff
beginning in fiscal year 2005.


4. (U) Embassy legal officer, drawing on refs B and C,
expressed the USG's acceptance of the PCA's budget proposal
on the condition cited by the Secretary General (i.e.,
application of the OECD salary scale). Emboff noted the
USG's strong support for the PCA and further noted that its
continuing support of the organization would depend upon the
PCA's adherence to basic budgetary principles applied to IOs
across the board. In particular, emboff noted the importance
of cost containment and a continued search for efficiencies
in the budget, such as keeping in check discretionary
operating expenditures with a view to further savings; the
USG expectation that the PCA will look to apply surplus
registry fees to the regular budget so as to alleviate the
increase in assessments; and the continuing importance of
zero nominal budget growth upon stabilization of the PCA
budget.
SOBEL