Source: https://cyberlaw.ccdcoe.org/w/index.php?title=Scenario_09:_Economic_cyber_espionage&veaction=edit&section=8
Timestamp: 2020-04-01 14:02:23
Document Index: 203637082

Matched Legal Cases: ['Art 4', 'Art 8', 'Art 41', 'Art 41', 'Art 31', '§792', 'Art 31', 'Art 9']

Scenario 09: Economic cyber espionage - International cyber law: interactive toolkit
Layout scheme of Su-25. Source: Ildar Bedretdinov Shturmovik Su-25 i ego modifikacii ISBN 5-901668-01-4. Licence: CC-BY-SA 3.0 Unported.
Private entities become targets of economic cyber espionage by or on behalf of a State. Under what circumstances can cyber espionage be attributed to the State and the latter be held responsible under international law? What measures, if any, can the victim State lawfully take in response?
2.1 Attribution to State B
2.2 Breach of an international obligation by State B
2.2.1 Violation of diplomatic law by misusing the premises of the mission
2.2.2 Obligation to respect the sovereignty of other States
2.2.3 Violation of a potential rule in international law forbidding economic cyber espionage
2.3.1 Persona non grata
2.3.2 Countermeasures
Advanced persistent threat, economic cyber espionage, sovereignty, diplomatic and consular law, premises of the mission, persona non grata, countermeasures
[F1] State A learns that several hi-tech companies incorporated and having headquarters in its territory are subject to an advanced persistent threat (APT) operation by unknown actors. The goal of the APT operation is to obtain trade secrets and other intellectual property from the companies’ computers and networks. In the course of the operation, the unknown actors exfiltrated hundreds of terabytes of technical data about the companies’ products and services, emails of the companies’ employees, internal memos, and other documents. After a meticulous investigation that lasts for over a year, State A determines that the operation was conducted by a military unit subordinated to State B’s Armed Forces' General Staff; and that, additionally, one diplomat at State B’s embassy accredited to State A and physically located in State A also took part in the operation under authorization of State B.
[F2] State A decides to declare several diplomats of State B in State A as personae non gratae. As stated, one of them was allegedly directly involved in the cyber espionage operation, while others are merely suspected of other activities against the interests of State A that are unrelated to the APT operation. An insider in one of the victim companies, who is a State B national and who was found to be working for State B’s APT operation, is indicted and taken into custody. State A also indicts several members of State B’s military unit who were reportedly involved in it. State B denies all of State A's allegations and, in turn, declares the same number of State A diplomats in State B as personae non gratae.
[F3] Both State A and State B are parties to the Vienna Convention on Diplomatic Relations (VCDR).[1]
Operation Cloudhopper (2017)
Chinese PLA Unit 61398 indictments (2014)
[L1] The legal analysis briefly deals with attribution, then discusses whether State B breached any of its potentially relevant international obligations (illegal use of the premises of the mission, violation of State A’s sovereignty, and a violation of a supposed rule forbidding economic cyber espionage), and finally closes with a consideration of State A’s options for responding (specific remedies in diplomatic law; countermeasures).
2.1 Attribution to State B[edit | edit source]
The conduct of any of the organs of that State, "whether the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organization of the State, and whatever its character as an organ of the central Government or of a territorial unit of the State";[2]
The conduct of an organ of another State placed at the disposal of the State in question, if "the organ is acting in the exercise of elements of the governmental authority" of the latter State;[3]
The conduct of "a person or entity which is not an organ of the State […] but which is empowered by the law of that State to exercise elements of the governmental authority, […] provided the person or entity is acting in that capacity in the particular instance."[4]
Such conduct is attributable to the State even if the organ, person or entity acting in that capacity "exceeds its authority or contravenes instructions" (acts ultra vires).[5]
[L2] Given that participation of a State B military unit and an embassy diplomat in the operation has been established, the APT operation can verifiably be attributed to State B. This is because both the military unit and the diplomat are State organs and as such, their conduct is attributable to State B.[6]
"in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct";[7]
"in fact exercising elements of the governmental authority in the absence or default of the official authorities and in circumstances such as to call for the exercise of those elements of authority";[8]
"an insurrectional movement which becomes the new Government of a State";[9] or
"a movement, insurrectional or other, which succeeds in establishing a new State in part of the territory of a pre-existing State or in a territory under its administration".[10]
the conduct of a non-State actor is attributable to a State "if and to the extent that the State acknowledges and adopts the conduct in question as its own".[11]
[L3] The legal qualification of the insider’s conduct is less clear. If the fact of “working for State B” entailed an ongoing relationship of subordination reaching to the level of direction or control,[12] then the relevant conduct may also be attributed to State B.[13] Absent subordination, the degree of instruction and control actually exercised over the insider will determine whether attribution can be made to the State, although the facts may be difficult to establish in that case.
2.2 Breach of an international obligation by State B[edit | edit source]
2.2.1 Violation of diplomatic law by misusing the premises of the mission[edit | edit source]
Premises of the mission
Article 41 of the Vienna Convention on Diplomatic Relations (VCDR) provides that “it is the duty of all persons enjoying [privileges and immunities according to the Convention] to respect the laws and regulations of the receiving State”.[14] In addition, it prohibits the premises of the mission from being used “in any manner incompatible with the functions of the mission” as these are laid down by the VCDR or in any other relevant international legal rules.[15] In this regard, the VCDR specifically notes that legitimate functions of the mission include “[a]scertaining by all lawful means conditions and developments in the receiving State, and reporting thereon to the Government of the sending State”.[16] This formulation thus legitimates the gathering of intelligence as long as it is conducted in a manner compatible with the domestic law of the receiving State. By contrast, most States criminalize espionage, including economic espionage, under their domestic law,[17] and therefore conduct that falls under such domestic prohibitions will also constitute a violation of Article 41 of the VCDR.[18]
[L4] Depending on the extent to which State B's diplomat exceeded the legitimate functions of the mission of State A, the latter may claim that the operations would have amounted also to a violation of State B’s international obligations towards it according to the VCDR.[19]
[L5] The cyber operations conducted by State B’s diplomat from the premises of State B’s embassy and utilizing its cyber infrastructure most likely violated the domestic law of State A, which can be expected to prohibit foreign espionage in its domestic criminal law as most other States do.
2.2.2 Obligation to respect the sovereignty of other States[edit | edit source]
[s]overeignty in the relations between States signifies independence. Independence in regard to a portion of the globe is the right to exercise therein, to the exclusion of any other State, the functions of a State.[20]
Multiple declarations by the UN,[21] NATO,[22] OSCE,[23] the European Union,[24] and individual States have confirmed that international law applies in cyberspace. Accordingly, so too does the principle of sovereignty. However, there is some debate as to whether this principle operates as a standalone rule of international law, the breach of which gives rise to state responsibility.
For the proponents of this view, the prohibition on violating the sovereignty of other States is a substantive primary rule of international law, the breach of which is an internationally wrongful act. This view was unanimously accepted by the experts who prepared the Tallinn Manual 2.0[25] and it was reportedly not challenged by any of the over fifty States that participated in the process of consultations regarding the Manual prior to its publication in 2017.[26] This view has now been adopted by three States: France,[27] Germany[28] and the Netherlands.[29]
By contrast, the opposing view is that sovereignty is a principle of international law that may guide State interactions, but it does not amount to a standalone primary rule.[30] This view has now been adopted by one State, the United Kingdom.[31] By this approach, cyber operations never violate the sovereignty of a State, although they may constitute prohibited intervention, use of force or other internationally wrongful acts.
It is understood that sovereignty has both an internal and an external component.[32] In the cyber context, the “internal” facet of sovereignty entails that “[a] State enjoys sovereign authority with regard to the cyber infrastructure, persons, and cyber activities located within its territory, subject to its international legal obligations.”[33][34]
As a general rule, each State must respect the sovereignty of other States.[35] It is clear that a cyber operation with severe destructive effects, comparable to a “non-cyber” armed attack or a use of force against a State, constitutes a violation of its sovereignty; however, with more subtle cyber operations, the question is far from settled.[36]
A State organ conducting cyber operations against a target State or entities or persons located there while physically present in the target State's territory violates the target State's sovereignty.[37] This was agreed by all Experts drafting the Manual; however, “a few” of the Experts thought that the extensive State practice carved out an exception for espionage operations.[38]
Causation of physical damage or injury by remote means;[39] again, “a few” Experts took the position that this is a relevant but not a determinative factor by itself.[40]
Causation of a loss of functionality of cyber infrastructure: although the Tallinn Manual 2.0 experts agreed that a loss of functionality constituted “damage” and thus a breach of sovereignty, no consensus could be achieved as on the precise threshold for a loss of functionality (the necessity of reinstallation of operating system or other software was proposed but not universally accepted);[41] Below this threshold, there was no agreement among the Experts whether operations that do not cause physical consequences or a loss of functionality qualify as a violation of sovereignty.[42]
Interference with data or services that are necessary for the exercise of "inherently governmental functions";[43] although the Experts could not conclusively define the term "inherently governmental functions", they agreed that, for example, the conduct of elections would so qualify.[44]
Usurpation of "inherently governmental functions", such as exercise of law enforcement functions in another State’s territory without justification.[45]
Whether non-State actors can violate territorial sovereignty on their own is a matter of disagreement.[46]
[L6] The diplomat of State B working at the embassy in State A might have violated State A’s sovereignty by engaging in cyber espionage operations against State A’s companies while physically present in State A’s territory (option 1).
[L7] The insider might have violated State A’s sovereignty by engaging in cyber espionage from State A’s territory (option 1), but only if he or she was an organ of State B or these activities can be otherwise attributed to State B (such as acting on the instructions of State B).
[L8] On this ground, State B in any case only incurs responsibility under diplomatic law for the activities of the diplomat and the insider on the foreign territory, but not for its military unit conducting the cyber espionage operation from its own territory.
[L9] Options 2 to 5 are not applicable to the situation.
2.2.3 Violation of a potential rule in international law forbidding economic cyber espionage[edit | edit source]
Economic cyber espionage
The United States has, already in its 2011 International Strategy for Cyberspace, declared that it “will take measures to identify and respond to [persistent theft of intellectual property, whether by criminals, foreign firms, or state actors working on their behalf,] to help build an international environment that recognizes such acts as unlawful and impermissible, and hold such actors accountable.”[47] The G20 countries reaffirmed in 2015 that “no country should conduct or support ICT-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.”[48] In September 2015, the US and China agreed on a similar commitment on a bilateral basis.[49]
Therefore, there is a push to curb the practice by developing a prohibition of such practice as a matter of international law.
However, according to the prevailing opinion, no such prohibition has crystallised in customary international law. In this regard, it is noteworthy that the 2015 UN GGE report does not mention economic cyber espionage among the applicable norms, rules, and principles of responsible State behaviour in cyberspace.[50] Several authors,[51] including experts of the Tallinn Manual 2.0,[52] consider that there is no distinction between economic cyber espionage and other forms of cyber espionage in general international law.[53] Additionally, no international consensus exists that agreements such as the WTO TRIPS[54] protect trade secrets against espionage conducted by a foreign state, and it is unclear whether the affected company can challenge the spying State in a domestic court or pursuant to a bilateral investment treaty, if there is one.[55]
Accordingly, such conduct is not subject to any general prohibition under extant international law.
[L10] Hence, the mere characterization of State B’s cyber operations as amounting to economic cyber espionage is insufficient to establish its international responsibility. For any ramifications according to the rules on sovereignty or prohibited intervention, see above.
2.3 Permissible responses by State A[edit | edit source]
[L11] It should be reiterated that State B violated its obligation under Article 41 VCDR by using the premises of the mission for an unlawful cyber espionage operation; it may also have violated State B’s sovereignty by the same activity, and by using the insider in State A’s territory for the spying.
[L12] The indictments of the insider and of the members of State B’s military unit constitute an exercise of criminal jurisdiction of State A, without direct relevance for the purposes of analysis under public international law (except for possible international legal assistance implications which are not mentioned in the description of facts).
2.3.1 Persona non grata[edit | edit source]
Apart from primary rules which can be violated by the sending State’s conduct, the Vienna Convention on Diplomatic Relations also applies to the response of the receiving State. The sending State’s diplomats in the receiving State enjoy an immunity from the criminal jurisdiction of the receiving State.[56] When they are declared personae non gratae, the sending State has to recall them or terminate their functions.[57] Declaring personae non gratae those diplomats who were suspect of other activities against the interests of the receiving State without strong evidence is also lawful, since the receiving State's decision is fully discretionary and it does not need to provide any reasons.[58]
The declaration as persona non grata is a specific remedy under the VCDR.[59] However, this remedy is not the only one available; if the sending State's operation amounts to an internationally wrongful act, the receiving State could possibly invoke countermeasures in its response.[60]
2.3.2 Countermeasures[edit | edit source]
[L13] State B's operation does amount to an internationally wrongful act, so countermeasures could be available:
Countermeasures are “measures that would otherwise be contrary to the international obligations of an injured State vis-à-vis the responsible State, if they were not taken by the former in response to an internationally wrongful act by the latter in order to procure cessation and reparation”.[61]
The existence of a prior internationally wrongful act of the responsible State against the injured State;[62]
The internationally wrongful act has not ceased and “the dispute is [not] pending before a court or tribunal which has the authority to make decisions binding on the parties”, unless the “responsible State fails to implement the dispute settlement procedures in good faith”;[63]
The injured State has called upon[64] the responsible State to fulfil its obligations arising from its internationally wrongful act;[65] and
The injured State has notified the responsible State of its decision to take countermeasures, and offered to negotiate with that State, unless it is taking “urgent countermeasures as are necessary to preserve its rights.”[66]
Their aim must be to induce the responsible State to comply with the legal consequences of its internationally wrongful act;[67] in other words, the aim of countermeasures is restoration, not retribution; and the countermeasures can only target the responsible State;
They “shall, as far as possible, be taken in such a way as to permit the resumption of performance of the obligations in question;”[68]
They shall not affect “obligations under peremptory norms of general international law”[69], obligations under any dispute settlement procedure between the injured and responsible State, and obligations arising from the inviolability of diplomatic or consular agents, premises, archives and documents;[70] and
They must be “commensurate with the injury suffered, taking into account the gravity” of the prior unlawful act and of the rights in question (i.e. the requirement of “proportionality”).[71]
Only the injured State may take countermeasures, unless there has been a violation of a norm of erga omnes status. Other States can only take other lawful measures.[72]
Whether a particular measure fulfils these conditions is an objective question,[73] while the burden of proof that the relevant conditions have been fulfilled falls on the injured State.[74] The exact standard of proof required is unsettled in international law and it will depend on the relevant forum. However, relevant international jurisprudence tends to rely in this regard on the standard of “clear and convincing evidence”.[75] This standard translates in practice into a duty to “convince the arbiter in question that it is substantially more likely than not that the factual claims that have been made are true.”[76] Importantly, if a State does resort to countermeasures on the basis of an unfounded assessment that a breach has occurred, it may incur responsibility for its own wrongful conduct.[77]
[L14] Given that the internationally wrongful act by State B in this case entailed a breach of its duties under the VCDR, it is likely that the internationally wrongful act of State B has ceased when the diplomats were expelled and the insider arrested; the act had a continuing character and was terminated by State A’s response,[78] even though its effects (malware in State A’s systems) may have taken longer to remedy. The answer if the act was continuing would be less clear if State B continued to use its military unit to maintain the malware after State A’s response.
[L15] If, instead, State A chose to use countermeasures before or instead of declaring the diplomats personae non gratae, State B’s internationally wrongful act would be of a continuing nature. State A would only have to call upon State B to fulfil its obligations, and, if the countermeasures were not urgent, also inform State B about the decision to take countermeasures.
[L16] Importantly, State A’s countermeasures must not affect its “obligations arising from the inviolability of diplomatic or consular agents, premises, archives and documents”. For instance, hacking the diplomats’ computers would not be a legitimate countermeasure.
[L17] In summary, all of the responses by State A referred to in the scenario are compatible with the applicable rules of international law.
Is the diplomat a State organ?
What is the link between the insider in the private company and State B?
Diplomatic law/Espionage:
Where and when are diplomats not permitted to spy?
Sovereignty/Espionage:
Is geography relevant for establishing a violation of sovereignty by espionage operations?
Economic cyber espionage:
Is economic cyber espionage legally different from non-economic cyber espionage?
Permissible responses:
What specific remedy does diplomatic law provide?
Are countermeasures available in addition to any specific remedies, and what are the relevant requirements?
Peacetime cyber espionage
↑ Vienna Convention on Diplomatic Relations (adopted 18 April 1961, entered into force 24 April 1964), 500 UNTS 95.
↑ ILC Articles on State Responsibility, Art 4; see also ICRC Customary IHL Study, vol 1, 530–531 (“The armed forces are considered to be a State organ, like any other entity of the executive, legislative or judicial branch of government.”).
↑ Kubo Mačák, ‘Decoding Article 8 of the International Law Commission’s Articles on State Responsibility: Attribution of Cyber Operations by Non-State Actors’ (2016) 21 JCSL 405, 419.
↑ ILC Articles on State Responsibility, Art 8.
↑ Art 41 (1) VCDR.
↑ Art 41 (3) VCDR.
↑ Art 31 (1) (d) VCDR.
↑ See, UK, Official Secrets Act 1911, s 1; US, 18 USC §792–799.
↑ Cf. Darien Pun, ‘Rethinking Espionage in the Modern Era’ (2017) 18 Chicago JIL 353, 368; see also ICJ, United States Diplomatic and Consular Staff in Tehran [1980] ICJ Rep 3, 39–40 [84]–[85] (describing espionage as an abuse of diplomatic functions under the VCDR).
↑ See also Tallinn Manual 2.0, commentary to rule 43, para 3 (“a sending State may not use the premises of its diplomatic mission to engage in cyber espionage against the receiving State”).
↑ President of the United States, ‘International Strategy for Cyberspace: Prosperity, Security, and Openness in a Networked World’ (2011).
↑ G20 Leaders’ Communiqué (15–16 November 2015), para 26; see also G7 Principles and Actions on Cyber (Annex to the Ise-Shima Declaration from 27 May 2016).
↑ See US, ‘FACT SHEET: President Xi Jinping’s State Visit to the United States’ (25 September 2015).
↑ UNGA ‘Report of the Group of Governmental Experts on Developments in the Field of Information and Telecommunications in the Context of International Security’ (22 July 2015), A/70/174.
↑ Catherine Lotrionte, ‘Countering State-Sponsored Cyber Economic Espionage Under International Law’ (2015) 40 N.C. J. INT'L L. & COM. REG. 443, 488-492; David Fidler, ‘Economic Cyber Espionage and International Law: Controversies Involving Government Acquisition of Trade Secrets through Cyber Technologies’ (2013) 17/10 ASIL Insights; Erica Häger & Carolina Dackö, ‘Economic Espionage: A Report by Mannheimer Swartling’ (2018).
↑ Tallinn Manual 2.0, rule 32, commentary 3.
↑ For an opposing view, see Russell Buchan, ‘The International Legal Regulation of State-Sponsored Cyber Espionage’ (2016) in International Cyber Norms: Legal, Policy & Industry Perspectives, Anna-Maria Osula and Henry Rõigas (Eds.), NATO CCD COE Publications, Tallinn 2016.
↑ Agreement on Trade-Related Aspects of Intellectual Property Rights, Annex 1C to the Agreement Establishing the World Trade Organization (signed on 15 April 1994 in Marrakesh), 1869 UNTS 299, 33 ILM 1197.
↑ Erika Häger & Carolina Dackö, ‘Economic Espionage: A Report by Mannheimer Swartling’ (2018), page 5: “Economic espionage, to the extent it qualifies as a violation of intellectual property rights, should arguably be treated as an act comparable to commercial activities, jure gestionis. A [S]tate would then not be able to claim state immunity for such acts and could thus instead face a normal trial in a domestic court.“
↑ Art 31 (1) VCDR.
↑ Art 9 (1) VCDR.
↑ Jean D’Aspremont, ‘Persona Non Grata’, in Rudiger Wolfrum (ed), Max Planck Encyclopedia of Public International Law (OUP 2008) (updated January 2009): “Given that the reasons need not be given by the receiving State when declaring a diplomatic or consular agent of the sending State persona non grata, the declaration of a diplomatic agent as persona non grata is utterly discretionary. The receiving State may thus make use of it for various reasons, whether for the behaviour of the agent himself or due to the actions of the sending State.”
↑ United States Diplomatic and Consular Staff in Tehran, United States v Iran, Judgment, ICGJ 124 (ICJ 1980), 24 May 1980, paragraph 85.
↑ Jean D’Aspremont, ‘Persona Non Grata’, in Rudiger Wolfrum (ed), Max Planck Encyclopedia of Public International Law (OUP 2008) (updated January 2009), para. 16.
↑ ILC Articles on State Responsibility, Article 14(2).
Russell Buchan, ‘The International Legal Regulation of State-Sponsored Cyber Espionage’ (2016) in Anna-Maria Osula and Henry Rõigas (Eds.) International Cyber Norms: Legal, Policy & Industry Perspectives (NATO CCD COE Publications, Tallinn 2016).
Jean D’Aspremont, ‘Persona Non Grata’, in Rudiger Wolfrum (ed), Max Planck Encyclopedia of Public International Law (OUP 2008).
David Fidler, ‘Economic Cyber Espionage and International Law: Controversies Involving Government Acquisition of Trade Secrets through Cyber Technologies’ (2013) 17/10 ASIL Insights.
Erika Häger & Carolina Dackö, ‘Economic Espionage: A Report by Mannheimer Swartling’ (2018).
Catherine Lotrionte, ‘Countering State-Sponsored Cyber Economic Espionage Under International Law’ (2015) 40 N.C. J. INT'L L. & COM. REG. 443.
Kubo Mačák, ‘Decoding Article 8 of the International Law Commission’s Articles on State Responsibility: Attribution of Cyber Operations by Non-State Actors’ (2016) 21 JCSL 405.
Darien Pun, ‘Rethinking Espionage in the Modern Era’ (2017) 18 Chicago JIL 353.
Michael N Schmitt and Liis Vihul, ‘Respect for Sovereignty in Cyberspace’ (2017) 95 Tex L Rev. 1639.
Reviewed by: Deborah Housen-Couriel; Kadri Kaska; Cedric Sabbah
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