Notes on State Responsibility

1. Abdikarim Hassan Mohamed
Public International Law ii
SIMAD University
March 7th
, 2018
Lecture 3: State Responsibility & Nationality
A. Introduction and Requirements for Bringing a Claim
State Responsibility deals mainly with rules that govern what happens when a state
breaks a rule of international law. Responsibility in this context is synonymous with
liability. The law of state responsibility is essentially concerned with 4 broad things. We
must determine:
(b) Whether there is a breach of international law;
(c) Whether the breach can be attributed to a state/can a particular state be
held responsible for the breach;
(d) Legal consequences of the breach; and
(e) How can responsibility for that breach be enforced.
A state can be responsible for the actions of their organs, agents/officials and in some
cases the actions of private citizens. A state may be held responsible even if only one
state has suffered damage or injury. Thus, responsibility may be established even if only
one state suffers damage. All states agree that responsibility entails the obligation to
make reparations.
1. Mavrommatis Framework
The following case sets out the basic test for state responsibility.
Mavrommatis Palestine Concessions Case (Greece v UK) 1924:
What are the Requirements for making a claim?
This test incorporates four elements:
1. A state is entitled to protect its subjects; injury to its national {nationality}
2. when injured by acts contrary to international law {international delicts vs.
crimes},
3. committed by another state {must be able to attribute breach to an/r state},
4. from whom the national has been unable to obtain a remedy through ordinary
channels {exhaustion of local remedies}.
B. Injury to Nationals
Diplomatic Protection: A state can only bring a claim on behalf of its own nationals. The
only circumstance in which a state can bring a claim on behalf of a foreign national or
stateless person is if that foreign state gives express permission or if there’s a general rule
of international law that permits this. Thus the first question is whether the individual
(natural or legal) is a national of a state seeking to bring a claim.
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2. 1. Exception: State Claims
The rules in the Mavrommatis case aren’t applicable in claims where one state has
directly injured another state. The nationality of claims rule only applies if you are
bringing a claim on behalf of a person. In other words it deals directly with injury to a
national. This is b/c of the sovereign equality of states- there’s no need to show
exhaustion of local remedies etc.
This comes out clearly in the Arrest Warrant case: where Belgium challenged the claim
of the Congo that it had violated Congo’s rights by arguing that the character of the
dispute had changed from one alleging violation of state rights to one alleging violation
of individual rights as when the suit was filed, he (Mr. Erodia) seized to be a member of
the Congolese government. If the character of the dispute had really changed, the factors
in the Mavrommatis test would have to be fulfilled by Congo.
The ICJ clearly disagreed with Belgium and found that the dispute dealt with direct injury
to the sate itself, Congolese sovereign rights, and that the harm was to a then minister of
affairs and that the character of the case had not changed. They found in addition that
there was a violation as rules regarding state immunity were not respected.
2. Nationality
(a) Determination of Nationality
Who are the subjects of a state? How is nationality determined? According to the
Nationality Decrees in Tunis & Morocco case 1923, ‘questions of nationality are… in
principle within the reserved domain (sovereign jurisdiction) [of the state’s domestic
jurisdiction].’
Nationality also has an international law character to it. The reason is that, it is rules of
international law that determine whether nationality is valid for the purpose of that state
advancing a claim on behalf of its national. For most matters nationality is determined by
domestic law but whether or not this nationality is sufficient for the purposes of bringing
an international claim is determined by rules of international law.
The articles under the Hague Convention Relating to Conflicts of International Law
reflect this conflict b/w nationality being a question of domestic law on the one hand and
there being international legal elements to nationality on the other. 5 articles deal with
this and is set out on page 20 of worksheet.
Art 1 states that each state determines under its own law who are its national. It reinforces
the idea that nationality is a question of domestic law. It goes on to say that this law shall
be recognized by other states in so far as it is consistent with rules of international law.
Therefore recognition is dependent on international law.
Art 2 gives rise to further conflict as any question as to whether a person possesses the
nationality of a particular state is determined by the laws of that state. Reflects the
conflict b/w power of a state to determine who its nationals are with the requirement
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3. under international law regarding nationality of claims. International law determines
whether the nationality is valid for the purpose of advancing a claim on behalf of its
nationals.
(b) Acquisition of Nationality
How do we determine whether a person is a national of a particular state?
Nationality can be acquired at birth or after birth.
Nationality at Birth:
♦ Jus Soli: refers to laws that award nationality on the basis of the person
being born in the territory of the state.
♦ Jus Sanguinis: acquisition of nationality on the basis of blood ties with a
national.
Jus Soli and Jus Sanguinis can be applied either unconditionally or conditionally. This
means that according to these rules one could acquire nationality automatically or
conditionally.
Unconditional & Conditional application of Jus Soli: A state can allow for a person
who is born in the territory to automatically acquire nationality unconditionally. However
some states require more to be proven, for example that parents should also be born in
territory.
Unconditional &Conditional application of Jus Sanguinis: this is nationality gained
through decent. If a person has blood ties with a national, that of itself could enable the
person to acquire nationality. However there may be more requirements for example the
individual would have to live in the territory for a period of years as well. Nationality
under this can be acquired from your father, mother, either parents or both.
Acquisition of Nationality after Birth:
The means by which persons can acquire nationality after birth are as a result of:
♦ Territory being transferred: for example from one sovereign to another;
persons who are inhabitants of the ceding state could acquire nationality of
the state to which territory is being transferred. State practice differs
however. For e.g. transfer of Hong Kong back to China. UK didn’t give
the option of letting the citizens retain the UK nationality status. They had
no choice but to be Chinese nationals.
♦ Marriage: obtain nationality of your spouse upon marriage; state practice
differs however. In some countries, marriage may actually lead to process
of naturalization being speeded up. In other countries the spouse is
actually given a choice as to which nationality they would prefer or the
option of becoming a dual-national.
♦ Adoption- adopted child acquire nationality of adopting parent.
♦ Voluntary Naturalization: naturalization must be distinguished from
nationalization. Naturalization is becoming a national/citizen as opposed
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4. to nationalization where a state confiscates your property. The key with
voluntary naturalization is that the individual has to request the nationality
i.e. not automatically gained. Dealing with cases for example of an
permanent resident of ca country may be eligible for nationality after they
have lived in the country for a particular time.
♦ Involuntary Naturalization: the acquisition of the nationality is
automatic. In many states for instance, if you are a permanent resident for
a particular time, they can become citizens of that state or upon marriage,
the spouse gains the nationality of the other spouse.
(c) Types of Nationals
(1) Natural & Legal Persons
Who may be your national? Natural persons are the most common form of nationals but
legal persons could also be nationals of a state.
Barcelona Traction Case (Belgium & Spain): involved injury to a corporation. Injury by
gov’t of Spain to Barcelona Tract Co. The majority of company’s shareholders were
Belgians but the company was registered in Canada and thus a Canadian national. Canada
was entitled to exert diplomatic protection on behalf of the company since it was
registered in that territory but decided not to protect the company. Most of the
shareholders who were largely Belgians therefore had no remedy at international law.
They decided to appeal to the Belgian government and asked it to launch an appeal
against Spain on the Co’s behalf. The court rejected the claim. The ICJ found that there
was no link of nationality b/w Belgium and the Barcelona Traction Co that would allow
Belgium to pursue a claim on their behalf. Only the state of which Barcelona Traction Co
was a national i.e. Canada could bring a claim. Consequently the shareholders were
without a remedy under international law.
Points to note: this case sets out the basic test for nationality of a company. The court
found that the nationality of a company would be the state under whose laws (1) the
corporation is incorporated and (2) the state in which its registered office is located.
Court distinguishes the Nottebohm case from this one, and the idea that there should be
any genuine connection b/w the Co and its state of nationality (Genuine Connection test
established in Nottebohm case distinguished). In other words to determine the nationality
of a company, the company need to show no more than it has been incorporated and is a
registered national in that country. You need not establish a genuine connection.
Applying these rules the Barcelona Traction Co could not be a national of Belgium.
The second thing the court points out to us is the possible remedies shareholders could
have under international law: shareholders not allowed to advance the claim in this case.
There’s a general doctrine of ‘piercing the veil’ or ‘lifting the corporate pail’- to find out
who the true owners of the company were. The court lifted the corporate veil and found
that there were only certain circumstances in which the shareholders would be able to
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5. enforce their rights. For example (1) where the company ceased to exist or (2) if the
national state of the company lacks capacity to take action on corporation’s behalf.
State bringing claim based on injury to a company: 2 cases;
Romano American Case: UK damaged assets of Romanian Subsidiary of a US Parent Co.
UK rejected the claim made by the US b/c they found that there were very limited
circumstances in which the state of nationality of the shareholders of a company could
bring a claim.
One such circumstance is where the state injuring the company has actually put an end to
the company’s operation or where the state injuring the company has compelled it to
suspend its operation. The state injuring the Co has to actually have caused the Co to
cease to exist or its operation suspended. An/r circumstance is where the two states have
arrived at a compromise to compensate the shareholders. Neither of these requirements
was satisfied and the US had to drop claim against UK.
Mexican Eagle Co case 1938: a case in which the country in which most of shareholders
located was actually allowed to bring a claim. Involved a Co incorporated in Mexico but
most of the shareholders of the Co were British nationals. Mexico expropriated assets of
this Co and Britain intervened on behalf of shareholders the majority of which were its
nationals. Court found that a state can bring an action on behalf of shareholders if the
state of nationality of the Co has harmed the Co. The state of which the shareholders
were nationals allowed to bring claim against the state of nationality of the company
(Mexico).
Bear in mind that we are dealing with cases in which shareholders of Co is seeking to
assert a right and the court in circumstances have to consider whether it will allow such
claim. In the Mexican Eagle case, this can only happen where the nationality of the
company has harmed the nationals of the state making claim. In the Romano American
case this can only happen where the injury resulted in the company’s operation being
suspended or terminated all together.
(3) Related Entities: Ships and aircrafts:
Ships like companies have a nationality: nationals of flag state.
The M/V Saiga case (St. Vincent & Grenadines v Guinea) 1999- established that the
nationality of a ship is determined by the domestic law of the state concerned. This rule is
enshrined in art. 91 of UN Convention on the Law of the Sea. Questions of nationality of
ships are questions of fact: that you prove or disprove.
The court had something to say about the requirement for a genuine link b/w a ship and
the flagship state; this is also set out in art 91. The purpose of this requirement was to
ensure that the duties of the flag state could be effectively implemented. The court found
that this genuine link requirement didn’t serve the purpose of setting out criteria that
other states could use to challenge the nationality of the flag state.
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6. [This clearly contradicted the Nottebohm case which established this genuine link test for
the purpose of determining whether nationality is valid in order to bring a claim.]
The court found that the nationality of the ship allows the flag state to bring a claim for
injury to the ship, its crew and its cargo, essentially treating the ship as one unit. The
court found that treating the ship as one unit served a practical purpose and the reasoning
was that in modern shipping, there is an incredible interplay b/w nationality of various
states on board a ship. For e.g. the crew could be nationals of many state, the cargo could
belong to an/r state etc therefore treat ship as one unit to prevent multiple claims.
Aircrafts: injury to an aircraft can give rise to state responsibility in 2 ways. (1) There
may be injury to aircraft itself and thus it is injury to national of the state. (2) Damage to
an aircraft also involves damage to the property of a national. For e.g. newly formed
Caribbean Airlines- if there is damage to one of the planes in the C’bean Airlines fleet, it
would result in claim for damage to a national of T&T and damage to property of
national as well.
3. Claim ‘on Behalf of’ a National?
Mavrommatis case sets out that the person must be a national of the state. This
requirement have been formulated in the Panevezys case where it was found that state
cannot bring claim on behalf of foreign nationals without express permission. In both
cases it says that when a state is bringing a claim on behalf of its national, in reality the
state is asserting its own rights. The real right that the state is enforcing is the right to
ensure respect for rules of international law.
What are the implications of this statement?
♦ One is that when a state is bringing a claim on behalf of its national its doing so to
preserve its sovereignty and dignity and to ensure respect for international law. If
injury has occurred it is really an injury to the state not jus national b/c of what is
being protected.
♦ An/r implication is that since the state is only bringing a claim to protect its own
interest, the state is under no obligation to bring the claim. An/r form of discretion
the state will have is that the state will have complete control over how the claim
is advanced, whether it can be withdrawn or whether it can be settled etc. The
implication of this is that the state can very well decide not to pursue a claim for
injury to national when other important interests are at stake/threatened.
This comes out clearly in the Barcelona Traction case- the court says that the
state is the sole judge of whether its protection will be granted, to what extent it
will be granted and when it will cease. The court went on to say that the exercise
of this power can be determined by considerations of a political nature. Thus it is
a discretionary power that the state has.
♦ An/r implication that state is in reality protecting its own rights is that b/c the
claim really involves injury to the state, reparation is owed to the state and
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7. therefore compensation for the injury doesn’t in any way have to be directly
related to the injury suffered by the individual but what the state believes is
adequate to satisfy its interest.
This comes out in Barcelona Traction case-that reparation is owed to the state.
♦ An/r implication is that any compensation acquired by the state need not be
shared. Administrative Decision # 5 US v Germany 1924: brings out this point
and finds that as a matter of international law the state has complete control over
what it should do with any compensation that is awarded.
♦ An/r-any restriction or duty to share the compensation funds can only arise at
domestic level and at the domestic level some states retain sovereign control over
such funds. This comes out clearly in UK practice.
In the UK, the sovereign need not hand over any money awarded to its subjects. This
comes out clearly in the Rustomjee v The Queen case 1876: Rustomjee was injured but
wasn’t compensated even though the UK received compensation for the injuries suffered.
The British court held that sovereign could not be held responsible for any failure to hand
over funds to Rustomjee.
4. Capacity to Bring a Claim: The Nationality Link
This focuses on the nationality link as international law determines whether the
nationality is valid for the purpose of advancing a claim on behalf of its national.
Concerns really arise about dual nationality.
Traditional concerns with dual nationality- Concerns can exist on part of the state as both
states have the ability to protect the individual and clearly disputes can arise as to which
state is entitled to bring the claim on behalf of that national.
Another concern arises for the actual individual: this may be problematic for the
individual as the national may be subject to the laws of each state which may not be
compatible. For e.g. double taxation, military duty, caught in catch 22 situation where in
order to obey the laws of one state results in breaking the laws of an/r state.
These problems of dual nationality identified above have given rise to certain rules. One
is art 4 of the Hague Convention on pg 20. Art 4 provides that a state may not afford
diplomatic protection to one of its nationals against a state whose nationality such person
also possesses. Art 4 therefore bars those types of claim (middle diagram). A dual
national cannot receive protection from one state against another
Genuine Link/Connection test and Effective Nationality test.
The former is applied to see if an individual is a national of a state for the purposes of
bringing a claim on international scene. (Genuine link test in first diagram). Determines
whether the individual can be considered to be a national of that state for the purposes of
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8. a claim being brought. Is there a genuine connection b/w the state and the person
suffering injury?
The latter test is applied where a person is a dual national. This test is applied to
determine which nationality is stronger. (Apply in scenarios 2 and 3).
(a) Criteria of Genuine Link: not dealing with dual nationality
Nottebohm case: heavily criticized. Nottebohm was a national of Germany by birth. He
moves to Guatemala but never becomes Guatemala national. Guatemala was going to
join the allies in WW2 he becomes scared that he may be considered an enemy. He
applied for Liechtenstein nationality. As a result of this, he would have to loose one of
the nationalities and thus lost German nationality when he became a naturalized citizen of
Liechtenstein. He’s expelled by Guatemala and after he’s expelled, and ended up in an
interment camp in US for many years, Guatemala started proceeding to take all his
property in Guatemala. After released from camp he then tries to return to Guatemala to
defend the case but wasn’t allowed in country. He then appeals to Liechtenstein who
agrees to advance a case on his behalf.
Question: whether his acquisition of Liechtenstein nationality has to be recognized by
other states. Is he a national of the state of Liechtenstein for the purpose of that state
bringing a claim against Guatemala? The Court found that Liechtenstein didn’t have
capacity under international law to afford Mr. Nottebohm diplomatic protection and thus
left without remedy under Guatemala and international law.
Court says; nationality is determined by the domestic laws of each state (same principle
found in art 2 of Hague Convention). However court finds that for one state to bring a
claim on behalf of a national the state has to satisfy rules of international law regarding
nationality. In other words the nationality has to be recognized or have international
effect.
Court also says that for nationality to be valid at international level there has to be a
genuine link b/w the state asserting nationality and the individual. Court found that
Nottebohm didn’t have a genuine link or connection to Liechtenstein and that at time of
naturalization his ties to that state were very weak, and could not be recognized under
international law.
Brownlie finds that the genuine link test should only be used to deprive a person of their
nationality in extreme cases. He finds that there should be a presumption that a state’s act
of naturalization is valid and should only be invalidated in very extreme cases such as
fraud.
The genuine link test applies very weakly under UN Convention on Law of the Seas. The
M/V Saiga case acknowledged that there was this genuine link requirement under art. 91,
but they found that the purpose of genuine link requirement under UN Convention was
just to ensure that flag state was able to carry out its duty effectively and not for the
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9. purpose of challenging the validity of the national state. Thus court didn’t allow Guinea
to use the genuine link test to challenge the ability of St. Vincent and the Grenadines to
bring claim in international law.
(b) Effective Nationality test:
This test is applied in cases where the individual is a dual national. In a case which
involves a person having two or more nationalities, only the state of dominant or
effective nationality is allowed to bring a claim on that person’s behalf.
(Bear in mind that we are dealing with cases that deals with last 2 scenarios-claim b/w
dual national states or by one of the dual national state).
Art 4 of Hague Convention appears to bar claims b/w dual national state (2nd
scenario).
Under Hague Convention the test of effective nationality would only arise under the third
scenario that is against a third state.
This notion that the effective nationality test can be applied in that type of scenario comes
out in art 5 of Hague convention which states that the third state should only recognize
the nationality of the country with which the person appears to be most closely
connected.
In cases of claims involving dual national states against a third state another test will be
seen which is the non-opposability rule. This means that either of the dual national states
is allowed to bring a claim against the third state. It allows either of the dual national state
to bring a claim; it doesn’t allow the state with effective/dominant nationality to bring a
claim. The effective nationality test (art 5) would require the state wishing to make a
claim to prove that it has the dominant or effective nationality.
(Think of which rule applies and the scenario as well.)
The Canevaro case (Italy v Peru): Italy bringing a claim on behalf of Canevaro against
Peru. Canevaro had Peruvian nationality by birth but got Italian nationality by decent.
The court found that his Peruvian nationality was the dominant one and didn’t allow Italy
to advance his claim. In rejecting Italy’s claim, the Permanent Court looked at certain
factors such as the fact that Mr. Canevaro had run as a candidate for the Senate in Peru
and also at the fact that he had accepted the office of Peruvian consul general to the
Netherlands. He engaged in the public life of Peru. (Scenario 2)- Italy trying to bring a
claim against the other dual national state. The effective nationality test was applied. This
seems to conflict with rule in art 4 of Hague Convention which bars claims b/w dual
national states.
(Genuine test is not applied in situations where there is a claim involving dual
nationality.)
Salem case (Egypt v US) 1932: involved claim by US against Egypt on behalf of Mr.
Salem. Egypt trying to reject claim by US by saying that Mr. Salem’s effective
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10. nationality was not American. Court found that the effective nationality test was not
sufficiently established in international law and that it didn’t really matter in any event
b/c if he had Egyptian nationality neither the US or Egypt could bring a claim against the
other. This is therefore endorsing the rule in art 4 of Hague Convention. The court found
that rule in art 4 didn’t apply in this case b/c he was a Persian national at the time he
gained US nationality–(scenario 3). The court applied the rule of non-opposability and
found that this rule should be applied in claims against 3rd states. They found that third
states should not be permitted to contest the claim by referring to the nationality of the
other state in question.
Nottebohm case: had things to say about both scenarios 2 and 3. Genuine link test applied
in this case. The court also made certain pronouncement on what test should be applied in
scenarios 2 and 3. The court found that in cases of claim of dual nationality involving
dual national states preference should be given to the state which has real and effective
nationality (effective nationality test-in cases of claims b/w dual nationality states). They
found that you could determine effective nationality by reference to factors such as where
the person is habitually resident, where the person’s interest are centered such as
participation in public life, family ties, his attachment to the country.
In respect to claims made by third states the court found that preference should be given
to the state that has real and effective nationality and thus in both scenarios the court is
enforcing this test.
March 12, 2018
Summary: looking at the various scenarios in which nationality had to be determined.
One was where the individual was a national of one state but the determination had to be
made whether the link of nationality was sufficient for a claim to be brought on his
behalf.
Another scenario was where the person was a national of two states and one involved a
claim between the two states of dual nationality. The third scenario involved the case
where one of the states of nationality brings a claim against a third state.
Which particular rule would apply in each case: single nationality: there were slightly
conflicting positions in the Hague Convention and saw that the Nottebohm case
established the genuine link test. When we looked at cases involving a claim of two states
of dual nationality we found that there was one position in article 4 of the Hague
Convention which seems to bar these types of claim but also that there were cases in
which one state of nationality would be allowed to bring a claim against an/r if it was the
state of effective or dominant nationality.
Once state of nationality against a third state: two rules being applied-1) endorsing rule in
art 5 where state had to show that it was the state of dominant or effective nationality and
the other rule was the rule of non-opposability.
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11. Which of the various rules apply in the following cases?
Nottebohm case- endorses the rule of dominant or effective nationality in cases where a
claim is brought b/w states of dual nationality. Claim of one state of nationality against a
third state- rule endorsed is the dominant or effective nationality rule.
Flegenheimer Claim 1958- this was brought before a commission created by a peace
treaty b/w Italy and the allied powers at the end of WW2. according to this treaty, the
rules were that in order for a claim to be brought on behalf of the individual the person
had to be a national of the United Nations. For the purposes of this commission the
member states of the UN were considered UN nationals, therefore anyone who was a US
national would be a UN national and thus claims commission could here the case.
Flegenheimer was not a US national and thus, the court could not hear the claim.
The claims commission in obiter dicta said certain things especially about Nottebohm
case:
**Regarding the need for a genuine link –the commission rejects the very idea of the
Nottebohm case establishing a genuine link test applicable to all nationality cases.
**The commission speaks about the relevance of effective nationality test- effective
nationality should only arise in the case of someone having dual nationality in order to
determine which nationality is dominant. However the commission suggests that even if
effective nationality would apply in two states situation, effective nationality shouldn’t be
used to deny a claim by a third state. Commission seems to accept the non-opposability
rule.
*In the case where the individual has only one nationality, the theory of genuine link test
cannot be applied without the risk of causing some confusion. This suggests that the
genuine link test should not be used when a person only has one nationality. Genuine link
test shouldn’t be used where person has only one nationality. If this is applied you would
expose person to non-recognition at international level.
Merge Claim (1955)-attempts to resolve these tensions in previous case. This was heard
before the same Italian/US claim commission as above. Merge was a US national and
thus claim could be heard. The problem was that he was not only an American but also an
Italian and there were no provisions in the treaty governing cases of dual nationality. The
commission had to decide: can the US bring a claim against Italy when the person has
both nationalities?
The commission stated that there are two principles set out in the Hague Convention
which deals with this situation. The first is art 4 –the claims bar rule which bars a claim
by either of the state of nationality against the other. The 2nd
rule that the commission say
could apply is the art 5 rule-where the effective nationality is used to determine which
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12. state could advance a claim. This seems contradictory that art 5 is applicable to two
states.
The commission is talking really about principles that underlie the rules and says that
these rules (claims bar rules vs. effective nationality) are not really competing but are
compatible. The commission states that the principle based on sovereign equality of
states which excludes diplomatic protection in case of dual nationality, must yield before
the principle of effective nationality whenever such nationality is that of the claiming
state. If the claimant state could clearly prove that it was the state of effective nationality,
then it could advance a claim against the other state of dual nationality.
In other words, the art 4 (claims bar rule) test will yield if the claim is brought by the
state of dominant and effective nationality. The commission also tells us that nationality
must be strictly proved and that the nationality in question must have existed from the
time of the injury to the time of the claim. (Contrary to state jurisdiction where the
individual can be a national at either the time the crime occurred or at the time of trial).
This case also tells us factors to look at if you’re trying to prove dominant nationality-
similar to Nottebohm case- the person’s habitual residence, the conduct of the individual
in economic, political, social, civic and family life as well as where the person has the
closer and more effective bond with the two states. Mr. Merge in this case failed the test.
He didn’t have an effective nationality with the US and his case thus dismissed.
Iran-United States, case 1984- heard by the Iran/US claims tribunal. This claims tribunal
was established after revolution in Iran to resolve complaints for compensation claims by
those who had been injured during the revolution. The tribunal had to decide whether it
would allow/hear claims by dual nationals of Iran and the US.
The tribunal said that in this area there were conflicting authorities as to whether or not to
allow claims by dual nationals. The tribunal first tells us that art 4 of The Hague
convention must be interpreted cautiously and is out of date as well. Art 4- The claims
bar rule probably wouldn’t even apply to our tribunal b/c it is the individual who brings
the claim and not the state. Where the individual was bringing the claim, the tribunal
wouldn’t allow such claim.
They went on to say that the better rule today however is the dominant effective rule and
not art 4 rules. The Nottebohm case sets out the proper approach for dominant and
effective nationality even if in that case, there’s no claim against the state of which
Nottebohm was a national. Tribunal also states that the claims bar rule must yield to a
claim by the state of dominant and effective nationality.
Thus if a US national brings a claim against Iran even though that person is also Iran, as
long as the us nationality is the effective nationality, the case can go forward.
Esphahanian v Bank Tejarat 1983- shows how the effective nationality test is applied to
concrete facts. The tribunal did something relatively new- it suggests that if a claimant
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13. uses his or her non-dominant nationality to get around local laws, then that claimant may
be estopped, or should not be allowed to make a claim against that country. Court did
allow him to make a claim as he didn’t use his non-dominant (Iranian) nationality to get
around local laws and then try to bring a claim against that state.
Summary
In cases of single nationality the Nottebohm case shows us that nationality is determined
by domestic law but international law intervenes to determine whether it is valid for the
purposes of advancing an international claim. Art 1 of Hague Convention seems to take
the same approach.
Following from the Nottebohm case, the appropriate requirement in these types of cases
is the Genuine Link Test. But art 2 of Hague Convention seems to contradict this
principle as it only allows for determination of nationality by domestic laws. In
Flegenheimer case at least obiter, the Nottebohm approach of genuine link test was
rejected.
In claims b/w dual national states there seems to be two contrasting approaches- one is
the use of the principle of dominant/effective nationality tests adopted- cases supporting
this are: Flegenheimer, Merge, Iran/Us, Canevaro and the Hague Convention doesn’t
seems to support this notion that the state of dominant or effective nationality can bring a
claim against another state of dual nationality; which provision in Hague Convention
seems to contradict this rule?- art 4 seems to bar claims b/w dual national states. Salem
case seems to support rule in art 4 of Hague Convention.
There are cases which seem to suggest that the rule in art 4 and using the principle of
dominant/ effective are not irreconcilable as when we looked at the Merge case and
Iran/US claim the reasoning is that art 4 must yield to the principle of dominant or
effective nationality. That is the claim should only be barred if the claimant cannot prove
that it has dominant/effective nationality.
Dealing with claims by one state of dual nationality against a 3rd
state- there seems to be
two rules that are applied: the non-opposability rule and the dominant/effective
nationality. The Salem and Flegenheimer case supports the non-opposability rule: either
state of dual nationality should be able to bring a claim against a third state. The
Nottebohm case supports principle of effective nationality-only state of effective
nationality should be able to bring a claim in this scenario, and also art 5 of Hague
Convention supports that principle
5. Consequence of Loss of Nationality: Statelessness
How can you lose nationality and what are the consequences of such a loss? Most times
that there is a loss of nationality, there will be no problem as this will be a situation where
you lose one nationality and gain another etc.
You can loose nationality voluntarily, involuntarily-cancelled by laws of the state (spouse
loses nationality as a result of marriage or upon the breakdown of marriage) or by doing
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14. certain acts threatening to the state such as joining another state’s military, or acquiring
the nationality of another state or by an act of treason etc. A naturalized citizen can loose
their nationality where it was obtained by fraud. Also by residing in an/r country for a
particular period, an individual can loose their nationality.
If you lose all nationalities serious problems may arise as established in Dickson case
below and you will become a stateless person.
Dickson Car Wheel Co (US v Mexico) 1931- states do not/cannot commit an international
wrong by harming a stateless person nor can any state bring a claim on that person’s
behalf. A stateless person would be are an alien wherever they may go. A stateless person
would have no voting rights, no rights of entry into any state; you can be deported and are
excluded from a right to work.
The question of whether or not a stateless person could exist at law was raised in the case
below.
Stoeck v Public Trustee 1921: similar to Nottebohm- Stoeck brought a case in English
courts against the English government for unlawfully attempting to confiscate his
property. He had been a national of Germany by birth, but by later actions gave up his
German nationality and unlike Nottebohm never obtains an/r nationality. At the end of
the war when England took his property, he said they couldn’t b/c he’s not a German
national or any other national and claimed he was a stateless person.
Court had to look at question as to whether in fact you can give up your nationality and
can you be stateless at international law and if so can you be stateless under English law.
Judge Russell held that in international law there were different opinions as to whether
statelessness exists and proceeded to look at municipal law. Under German law you could
be stateless and thus Stoeck was stateless under German law. Under English law
however, there was no direct authority on the point. However Judge Russell said that
English law could allow recognition of a stateless person.
As a result of these deliberations, if Stoeck had no nationality, he would be stateless
under British law. Question arose as to which law would be used to decide whether or not
Stoeck was stateless. Would it be the law of UK or Germany?
The Attorney General of UK said it should be the laws of England. Judge Russell decided
that whether or not you have nationality must be determined by the municipal law of the
country granting or revoking nationality. Thus Stoeck’s nationality should be determined
by the laws of Germany.
There’s no definition of a stateless person under CIL. There’s actually a convention that
deals with this. Statelessness refers to a person who has no nationality by virtue of the
domestic law of a particular state. Statelessness is recognized by both international law
and municipal law.
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15. Act Contrary to International Law
What unlawful acts can be the basis for a claim under international law? Hardest part of
the Mavrommatis test. Things to be established include:
1. Identifying the Legal Wrong
How do we identify whether there has been a breach of international law or that there has
been a legal wrong? The International Law Commission Draft Articles on State
Responsibility gives us help in this regard. The most recent version of Draft Articles
published in 2001 but first draft issued in 1996.
These Draft Articles do not codify the substantive rules of international law-meaning
governing every particular issue in international law. They set out the conditions for
states to be considered responsible for any wrongs committed and establish the
consequences for such wrongs committed.
These Draft Articles are not presently binding. They have been transmitted to all
members of the UN but they are not binding. If a multilateral treaty is drawn up and its
open for signature, like the Vienna Convention, the provisions of such a treaty could
become CIL.
Draft articles actually codify certain aspects of CIL. Art 1-tells us that a breach of an
international obligation entails responsibility. Art 2-sets out elements of international
wrongful acts are and that there is an international wrong where the conduct is
attributable to the state and the conduct constitutes a breach of an international obligation
of the state.
Art 3-tells us that such actions have to be judged by international law and not by
domestic law. Pg 22 Factory at Chorzow case- breach of an international obligation not
only entails responsibility as set out in art 1 but also an obligation to make reparations for
that breach. This is the position under CIL that goes a bit further than the Draft Articles.
2. International delicts, international Crimes, or simply breaches of international
obligations?
Whether there’s a distinction b/w crimes and delicts/torts under international law? The
first draft articles divided international wrongs into two categories: international delicts
and international crimes. This was the most controversial are of that draft articles. This
approach was abandoned in the 2001 Draft Articles.
Art 12- find that a breach of an international obligation will be a breach regardless of the
origin of the character of the breach. Art 13- the obligation in question must be binding
on the state at the time that the acts occur. Arts 40 and 41- distinction b/w different types
of breaches- especially breaches of the rules of jus cogens.
15

16. Under draft articles serious breaches of rules of jus cogens will have different
consequences and where this occur, the state has to bring an end to the breach and states
must not recognize the effect of the breach.
3. Standard: risk or fault?
The question here is whether you use an objective or subjective test to determine whether
an international wrong is committed. Do you have to show fault in order for a state to be
held liable? Or is it sufficient that a wrong is committed?
The first theory is the Risk / Objective Theory of Responsibility- where a state is held
accountable simply b/c a wrong has been committed/similar to strict liability in tort law.
The other theory is the Fault/ Subjective Theory- where the state is only held responsible
if it has been at fault.
(Try and identify which theory is applied)
Caire Claim (France v Mexico 1929)- murder of a French national by Mexican soldiers
after he refused to pay extortion money. The question b4 the commission was whether
Mexico could be held responsible for the actions of these soldiers even if they had acted
outside of their competence and contrary to orders of their superiors.
The commission found that Mexico was responsible by applying the objective theory and
that a State is responsible for acts committed by its officials or its organs outside their
competence. They found that two circumstances had to arise- (1) the state would be
responsible if the officials/organs acted at least to all appearances as competent officials/
organs – (2) the state would be responsible if officials or organs used methods or powers
that were appropriate to their official capacity.
Applying those principles to this case, the commission found that even if Mexican
soldiers acted outside of their authority or contrary to instruction of military superior they
did act in the capacity as military soldiers and used military facilities to commit the acts.
Case therefore used objective theory.
Corfu Channel case (UK v Albania) - damage to British battle ships by mines/explosives
that were floating in Albanian waters while British battle ships were passing and
consequently damaged. This case is difficult as it cannot be fitted easily under either
theory. The UK in this case alleged that Albania had either laid the mines themselves or
assisted an/r state in laying the mines but the court found no evidence of this –no
evidence of fault. The court found also that Albania couldn’t be held responsible simply
b/c the mines were in its territory. Thus court restricting strict objective theory. But at the
same time the court could find no element of culpa/fault on Albania’s part.
The court however allowed reference to circumstantial evidence-and found that even
though state can’t be held responsible simply b/c acts were done in their territory
circumstantial evidence could be used to impute knowledge on the part of Albania. Court
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17. found that Albania must have known about the mines and had failed in its duty to warn
passing ships. Albania thus held responsible.
Interesting thing about Draft Articles is that it doesn’t adopt either theory. Art 2 sets out
the components for an internationally wrongful act: i.e. you have to show that the conduct
is attributable to a state and that it constitutes a breach of obligation that the state owed.
Harris sets out Draft Articles and commentaries on these articles.
Commentaries on article 2- shows that ILC consciously chose to avoid such
characterization. Some wrongs will impose a subjective element and some won’t and
therefore one would have to look to the substantive wrong to see which element is
applied. No general rule would be implied across the board.
4. Circumstances Precluding Wrongfulness
Circumstances in which responsibility will not arise: Draft Articles address this point:
♦ If allegedly wrong act was done with the state’s consent:
♦ Wrongful act done as a form of lawful self defence;
♦ Wrongful act done as a lawful countermeasure;
♦ If act done as a result of an act of God,
♦ If the act was done as a result of distress to save human life: or
♦ Act done out of necessity (only available in exceptional circumstances-art
25). Test for necessity is much harder than the other defences.
Danube Damn case-defence not successfully invoked for several reasons.
Art 26 of Draft Articles- tells us that none of these defences will allow a state to violate a
rule of jus cogens. Art 27- tells us that these defences so to speak do not remove the
obligation to comply with the rule in question if situation changes. They don’t affect the
question of possible compensation for lost. These defences do not terminate the
obligation; they act as a shield for a particular time.
D. By another State
1. Attribution [Immutability]
Requirement of attribution- you must be able to impute wrong to an/r state. A state can
only be responsible for its acts/omissions under international law. It won’t be responsible
for acts committed by private citizens acting in a private capacity. There must be
imputation of the wrong to a state.
Pg 508 of Harris- arts 4-11, 16, 17
Art 4- deals with the conduct of the organs of a state. The conduct of any state organ shall
be considered an act of the state. This art points out as well that an organ includes a
17

18. person or entity. How do we know if something is a state organ? Look to the domestic
law to determine this and to the reality of the situation.
Arts 5-9 and 11- tell us about how responsibility can be assigned. Art 5 tells us that a
conduct done by an entity that isn’t an organ but who is empowered to exercise
governmental authority that the state can be held responsible. Art 6- if another state
places its organs at your disposal you could be held responsible for the conduct of those
organs.
Art 8 points out that if an entity is acting under the direct control/action of a state then
that entity’s conduct is attributable to the state.
Art 9- deals with extreme circumstances- if a person/entity acts in capacity of a state in
absence of state authority-then the conduct of that person/entity that is acting in the place
of the state may be attributable to the state as well.
Diplomatic staff in Tehran case-if a state adopts the actions of a person or entity then
responsibility may follow.
Art 9- a person or entity acting in place of a state where state authority is absent is
illustrated by the Yeager v Iran case where Mr. Yeager was an employee of American co
and was arrested by revolutionary guards who came into his house, gave him 30 minutes
to pack his belongings and then shipped him to Iran.
The issue b4 the court was whether the actions of the revolutionary guards could be
attributed to state of Iran. In coming to its decision the tribunal looked at the role the
revolutionary guards played during and after the revolution. Tribunal found that even
though there were problems with discipline, the iotola generally supported these guards
and that they became part of the Iranian state at end of revolution. The court found that
even though they were not official organs of the state they could be considered to be
agents of the Iranian state; therefore actions imputed to state.
Whether these particular actions of revolutionary guards toward Mr. Yeager could be
imputed to the state? They found that they could as the iotola must have known about
such a large scale operation. Tribunal also found that since there was no evidence
showing that they weren’t acting on behalf of Iran, their actions could be attributable to
Iran. Court awarded compensation to Yeager.
a) Ultra Vires acts
These cases deal with situations where an entity/person exceeds authority or goes against
clear instruction. Art 7- finds that if an organ of a state or a person or entity who is
empowered to exercise governmental authority, if person acts in that capacity then the
state will be held responsible for that action even if the person exceeds that authority or
acts contrary to instructions. This is illustrated in the Caire claim as well.
b) Insurrectionaries
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19. Art 10- deals with the acts of insurectionaries (revolutionaries). This art deals with
several circumstances-the first is where the insurgents come to constitute the new
government of the state.
Art 10(1) - tells us that the conduct of that movement which becomes the new
government will be considered as an act of that state. Also deals with circumstance where
the insurgents become the new state, not just the new government but actually forms a
new state. They find that the conduct of an insurrectional movement that establishes a
new state will be attributed to that new state.
The interesting thing with art 10 is that it tells us that those two positions don’t really
affect other actions that can still be attributed to the state. This is brought out in
Diplomatic Staff and Tehran case- shows how actions of private citizens could be
attributed to the state. We are focusing on what happened after the militants took
occupation of embassy and other diplomatic buildings- court found Iran to be directly
responsible for acts of militant. Court found that even though at first militants weren’t
acting under state authority as the situation progressed Iran adopted their actions b/c they
failed to take any steps to rectify situation and b/c of the decree made by the iotola (that
hostages would be detained until iotola returned to Iran).
Rankin v Iran- unlike the Yeager case- Mr. Ranking was an employee of an American
firm who requested to be evacuated. He claimed compensation for forced expulsion and
the tribunal found that expulsion could actually exist in situations where there is no law
requiring the person to leave. Forced expulsion could arise where a persons continued
existence in a country is made impossible b/c of certain conditions that can be attributed
to the state.
Tribunal found that Mr. Rankin’s evacuation was more caused by the general turmoil that
existed in Iran at the time. They couldn’t find any specific actions that were attributable
to the state of Iran. This case clearly shows that you have to find actions that are directly
connected to the state.
Based on rule in art 10 and case law- a state is responsible for failure to exercise due
diligence to protect persons during an insurrection- Diplomatic Staff in Tehran case. State
can be responsible for actions of its soldiers-Caire case. A State can be responsible for
actions of revolutionaries if they become new government or state or if actions adopted
by government –Diplomatic and Tehran case.
2). Specific harms
We will be focusing on two areas: Treatment of aliens and expropriation.
a) Treatment of Aliens
Treatment of aliens: Barcelona Traction case sets out that when a state admits foreign
nationals or foreign investments into its territory it has certain obligations to them such as
protection of the law and assumes certain obligation with regards to its treatment.
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20. The kinds of obligation that a state will assume fall into two categories but we will be
focusing on only one. One such category is obligation erga omnes- this is where all states
have this type of obligation and violation of this type of obligation can be the basis of a
claim by any state.
These second type of obligations are simpler types, that one state would owe to another.
(This type of obligation we will deal with.) There has been a notion that there is an
obligation to treat foreign nationals with a certain minimum standard. This may be
problematic as the international standard may be more stringent than the standard applied
to locals.
The Neer claim- sets out international minimum standard for treatment of foreigners-
standard was that treatment of the alien had to amount to an outrage or willful neglect
that fell so far short of international standards that every reasonable person would regard
this conduct as insufficient.
This standard is very easy to satisfy as states just have to show that they haven’t
committed an outrage or willfully neglected its duties.
Expulsion of Aliens: there are international minimum standards that exist with regard to
treatment of persons being expelled. One standard is set out in Dr. Breger’s case- this
states that a state can expel an alien provided expulsion is not arbitrary. Expulsion would
be classed as arbitrary if it involved unnecessary force or done in such a hurry that the
person couldn’t safeguard their possession or property.
Dr Breger’s case- given 6 months to leave and Italy not found to be liable.
Yeager v Iran- Mr. Yeager was given 30 minutes to pack belongings. In this particular
case, Iran was held liable b/c he wasn’t given adequate time to arrange his affairs before
leaving.
Ranking v Iran- there was no illegal expulsion on part of Iran largely b/c they could not
attribute his evacuation, or acts on part of Iran that created a condition that made it
impossible for Mr. Ranking to stay in the country. They found that it was as a result of
the general turmoil that made him feel like he had to leave and thus, no action found to be
attributed to Iran.
International Technical Products case- case found that illegal expulsion can arise
indirectly-there can be constructive expulsion. This case echoes reasoning of tribunal in
Rankin v Iran-where expulsion could arise in two circumstances-(1) where the alien
doesn’t have reasonable choice about leaving and (2) if there was an intention behind the
acts of the state of having the alien ejected. Shows that there is something called
constructive expulsion.
Breger’s case shows that expulsion can’t be arbitrary.
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21. February 27, 2007
b) Expropriation
1) What constitutes expropriation?
It covers situations where the state takes an individual’s property. This is really the
compulsory taking of the property by the state. Amoco International Finance Corp’n v
Iran (US v Iran) 1987 case defines expropriation in these terms as the compulsory
transfer of property.
Nationalization- is one form of expropriation and covers situation where economic
activity is transferred from private ownership to the public sector. It involves an entire
industry or set of industries being taken over by the state. An/r important point emanating
from the case is that states have a right to nationalize foreign property for public purpose.
Case therefore illustrates that expropriation is permitted under international law.
An/r case which speaks to a state’s right to nationalize property is the Texaco Overseas
Petroleum Co Libya (1977). The case makes it clear that this right to nationalize property
arises from a state’s territorial sovereignty.
What kind of actions can amount to expropriation?
The Starrett Housing Corp v Iran (US v Iran) case– shows that forced transfer of
property/ownership constitutes expropriation. For instance if property is transferred under
duress or confiscatory taxation. The case is important b/c it shows that even if state action
doesn’t remove foreign ownership, they may still constitute expropriation. The actions of
the state in this case involved putting an American subsidiary under state management-
i.e. Iran placed this American company under a temporary manager.
Court found that state management even though it doesn’t involve the transfer of
ownership can still amount to expropriation. Thus actions that interfere with property
rights to the extent that they are rendered useless will amount to expropriation. Thus
placing company under state management was found to constitute expropriation.
The tribunal in the Starrett Housing case says that a revolution per se will not constitute
expropriation, but actions short of transfer of ownership can.
2) Distinction that the law makes b/w lawful and unlawful expropriation:
This is important b/c it determines the level of compensation that must be paid by the
state. This distinction arises under CIL and can also arise if expropriation violates a treaty
or what is called an internationalized contract.
Internationalized contract-Texaco Overseas Petroleum case-shows that a contract b/w a
private co and a state can become an internationalized contract if at least part of the
contract can be interpreted acc/ to the rules of international law. The arbitrator explains
the different ways in which a contract can be internationalized (a) if the contract contains
a clause that refers to principles of international law; and (b) if it makes disputes subject
to arbitration.
21

22. Breach of an internationalized contract will more likely make expropriation unlawful.
The general test that is used to determine whether expropriation is lawful or unlawful-
elements listed on pg 25 wrksht.
Expropriation can be unlawful:
(1) If it is discriminatory- that is if only one of many companies is expropriated;
(2) If it is not done for a public purpose;
(3) If there’s breach of treaty obligation; and
(4) If the compensation is below the lawful level.
Few cases that will help us understand these test listed on pg 25:
Libyan Oil Co case- this case tells us that expropriation will be unlawful if it is
discriminatory, if it breaches a treaty and if compensation is not duly paid.
Amoco International v Iran -explains the different levels of compensation that have to be
paid depending on whether the expropriation is lawful or unlawful.
Where expropriation is unlawful, the required level of compensation is restituto in integra
i.e. restitution in kind. In cases where restitution must be paid in kind, compensation is
not limited to the value of the undertaking at the time it was expropriated. This means
that all illegal consequences of the act should be wiped out.
Where expropriation is lawful you’re simply required to pay the value of the undertaking
at the time it was dispossessed.
The requirement that expropriation must be done for public purpose:
Amoco case- explains that states are granted extensive discretion. The tribunal points out
that expropriation will not be done for a public purpose if it is done only for avoiding
contractual obligations and if the state takes the property for financial purposes.
Requirement that expropriation must not be discriminatory:
Amoco case- the US tried to argue that expropriation of an American Co by the Iranian
gov’t was discriminatory simply b/c they found that a Japanese Oil Co had not been
expropriated. The court found that that wasn’t enough to show that the expropriation was
discriminatory. They also found that since other non-US companies had been
expropriated, then the fact that one particular non-US co wasn’t expropriated didn’t make
it discriminatory.
BP (UK v Libya) 1974 had to make a determination wh/r expropriation discriminatory-in
this case it was found that expropriation was discriminatory. The court found on the facts
that expropriation was done for purely political reasons and consequently arbitrary and
discriminatory.
Requirement of inadequate compensation:
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23. Expropriation will be unlawful if the level of compensation is below the international
standard. (Very controversial requirement). Take into account factors such as (a)
incomplete payment will not necessarily make compensation unlawful as the state may
eventually complete compensation. This however is a problematic idea as no one will be
able to tell when a state will complete payment.
3) Level of Compensation required for Expropriation
In cases where expropriation is unlawful compensation is normally payment in kind as
opposed to cases in which expropriation is lawful where compensation would be the
value of the undertaking at time of restitution.
There are conflicting views as to what the appropriate minimum standard of
compensation is-chart pg 26
4) Level of compensation for Lawful Expropriation:
There are 3 different standards /tests.
♦ Hull formulation- traditional formulation (named after US Secretary of State).
The standard here is that compensation for expropriation is lawful if it is (a)
adequate (i.e. will be adequate if the value of undertaking at time of dispossession
is covered and interests as well); (2) prompt (if paid immediately and also if
allowances is made for interest upon late payment); (3) and effective (some form
of compensation that is useable, e.g. compensation in a currency that is easily
convertible/not restricted). Most states no longer accept this standard as
supporting binding rules of CIL.
♦ The most adhered view is that laid out in the 1962 UN Resolution on Permanent
Sovereignty over Natural Resources. The standard laid out here is payment of
appropriate compensation. Whether compensation is appropriate is determined
under the national law of the state taking measures and international law. This
standard represents the current position under CIL on adequate compensation.
♦ The final position is laid out in the 1974 Charter of Economic Rights and Duties
of States, an/r UN Resolution- the main difference b/w this resolution and the
1962 resolution is that in the 1974 resolution the appropriateness is determined
only, by reference to the national law of the expropriating state. No reference
made to international law.
By referring to the history of international law, we see that the reason for emphasizing
nat’l standards is that these were made to reflect concerns of newly independent states.
At the moment the 1974 charter doesn’t represent the present position under CIL; the
1962 charter is more inline with CIL
5) Level of Compensation for Unlawful Expropriation:
Amoco case- unlawful expropriation requires either restitution in kind or its monetary
equivalent of restitution in kind. Important thing in this judgment is that it clearly states
that neither lawful nor unlawful expropriation will be awarded punitive damages.
23

24. Texaco Overseas Petroleum case- tells us also about unlawful expropriation: this case
involved internationalized contract. In this case it was found to be internationalized b/c
there was a clause stating that the agreement will be governed by international law. This
contract contained what is called a stabilization clause which is meant to protect the
interest of foreign investor and they normally restrict expropriation for eg by preventing
unilateral alteration of rights under the contract.
In this particular case, b/c Libya breached the stabilization clause the expropriation was
illegal and Libya was required to provide restitution.
The Aminoil case (Kuwait v American Independent Oil Co) 1982- this case takes an
opposing view to the Texaco case. It adopts a more flexible approach in regard to
stabilization clauses. It involved stabilization contract as well and tribunal looked at
various stabilization clauses in the contract (restrict expropriation) and found that they
ought to be interpreted flexibly. It was also found that the contract covered a 60 yrs
period. A contract of this nature had to be interpreted flexibly b/c of the extensive period
of time it covered. The state was allowed to nationalize property as long as it didn’t do so
in a confiscatory manner. Even though stabilization clause was breached, expropriation
was lawful.
First case- very strict interpretation: once clause breached expropriation is unlawful, 2nd
case flexible interpretation: breach of such a clause per se will not render expropriation
unlawful.
6) Current Dilemma: Bi-lateral Investment Treaties v Lump Sum Settlements
These are the primary ways by which states enter into contracts for provision of foreign
investment. Most of these bi-lateral investment agreements adopt the Hull Formulation of
compensation. There is however an increase in the cases emerging, where states accept
lump sum settlement which would result in a lower level of compensation being paid.
Some commentators find that b/c there’s conflict b/w these formulations, they should be
ignored. It appears however that 1962 Resolution reflects CIL.
E. Inability to Obtain Satisfaction
1) Exhaustion of Local Remedies
This requires the exhaustion of local remedies before a state can bring a claim on behalf
of its own nationals. This requirement calls for the national to pursue all available
channels within the injuring state b4 it brings an international claim. Only after this is
done would the state of nationality be able to bring a claim.
This rule is represented under both CIL and ILC Draft Articles (art 44). Several cases on
pg 27 help us to understand the requirement of exhaustion of local remedies.
24

25. Ambatielos Arbitration (Greece v UK) 1956- Mr. Ambatielos attempting to buy several
ships from UK-acting through English man and when the deal went bad he tried to gain
compensation in UK courts but he wasn’t successful. Greece then brought claim on his
behalf against UK. Arbitration commission had to determine whether he had exhausted
all local remedies. The commission found that exhaustion of local remedies doesn’t only
include exhaustion of the various courts and tribunals in a state but also covers the
procedures that can be used in these tribunals and courts.
The commission found that what an individual had to do was to exhaust all the
procedures that were essential to making out his case. Mr. Ambatielos didn’t call his
agent as crucial witness and thus he hadn’t availed himself of all the essential procedures
that were available to him to make out his case. He wasn’t found to have exhausted all
local remedies-Greece not allowed to bring claim on his behalf.
Court found that there are situations in which an individual does not have to exhaust local
remedies:
1) Where remedies are ineffective;
2) The local remedies are obviously futile;
3) Where injuries are actually direct injuries to the state.
2 cases illustrate the 3rd
situation M/V Saiga case and Arrest Warrant Case
In the M/V Saiga case(St. Vincent & the Grenadines v Guinea) 1999- all the injuries that
occurred were to international human rights that were possessed by the St. Vincent and
Grenadines and they had violated certain rights. The injuries to the national and ship were
secondary in nature. Primary injuries were to the state itself. Tribunal found that all local
remedies didn’t have to be exhausted b/c if they were required to use the local courts to
seek redress for harms suffered would involve the sovereign equality of states being
violated, as injured state would be subject to the local laws of an/r state.
Arrest Warrant case illustrates this point-Belgium alleged that the character of dispute
had changed. The court found that Congolese claim was for direct injury to state and not
a claim on behalf of the foreign minister in his personal capacity.
There are other international situations which will not require exhaustion of local
remedies:
4) Rules of Stare Decisis will make remedy ineffective-if local courts already given a
decision on the same issue, then pursuing the local remedy would be ineffective as the
court could be bound by precedent in deciding the question.
5) Where there has been an unreasonable delay in pursuing local remedies;
6) It is biased against an individual;
7) Exhaustion of local remedies has been waived.
a) Calvo Clause:
25

26. Named after Argentinean lawyer-inserted into a contract b/w a state and an alien
requiring the alien to resort only to local remedies and doesn’t allow alien to invoke
diplomatic protection of his/her state.
These clauses are frequently ignored by international tribunals. Why? A right to
diplomatic protection is a right that belongs to the state and not a right that an individual
can renounce.
b) Act of State Doctrine:
This doctrine is an/r name for state/sovereign immunity within domestic courts. It is
essentially a domestic rule that holds that local courts will not rule on the legality of the
actions of foreign governments when they are acting in their capacity as sovereigns w/in
their own territory.
This doctrine is the reverse of the rule requiring exhaustion of local remedies, as it
actually bars the use of local courts in certain circumstances. As a result of these two
rules it is actually best to pursue state to state claims at the international level.
F. Dispute Settlement Reparation and Other Remedies
1) Consequences of Internationally Wrongful Act
When we looked at the 2nd
requirement: Act Contrary to international law- we looked at
circumstances that precluded the wrongfulness/ defences. Certain provision in the draft
articles that set out circumstances where an internationally wrongful act won’t produce
responsibility eg necessity, act of God etc.
What are the consequences of wrongful act?
The consequences of a wrongful act will generate certain duties on the part of the
defendant state. These are set out in arts 29-32 in ILC Draft Articles.
One of the consequences is that the defendant state has a duty to continue to honor any
international obligations. For instance in Tehran case- one of the consequences was that
Iran was under a duty to protect the inviolability of the mission.
An/r consequence is to stop any illegal behavior, to provide guarantees that illegal
behavior will not be repeated, and there is a duty to provide reparation. Art 32 of ILC
Draft Art. tells us that a state can’t rely on its internal law to avoid state responsibility.
2) Procedures for settling disputes
There are 6 forms of peaceful means of dispute settlement highlighted in art 33 of the UN
Charter.
3) Reparation
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27. Duty to provide reparation is firmly established under CIL. The Factory at Chorzow case
reinforces this notion.
Forms of Reparation
ILC Draft Articles-pg 548 Harris
The Draft Art lists the main forms of reparation:
Art 34-37 deal with forms of reparations. Really 3 forms: 1) restitution, 2) compensation
and 3) satisfaction.
Art 35 sets out 1st
form- which is restitution. Art 36 and 37 provide for additional forms
of reparation if restitution is insufficient. Therefore compensation and satisfaction only
arise if restitution is insufficient. Art 35- makes it clear that restitution is really to re-
establish the situation that existed before the wrongful act was committed.
Art 36 only imposes a duty to compensate if the damage that was suffered is not made
good by restitution. Compensation only covers any financially assessable damage.
Compensation is really meant to cover actual losses that were incurred. Compensation
cannot be punitive.
Art 37 deals with satisfaction: financial penalties for symbolic injuries (affront to
sovereign dignity of state). This article also tells us what forms satisfaction may take-this
may consist of a mere acknowledgement of breach, expression of regret, or a formal
apology. Satisfaction shouldn’t be out of proportion to the injuries and shouldn’t take any
form that is humiliating to the injured state.
Certain passages in Arrest Warrant Case-75-77 provide eg of both satisfaction and
restitution. The Court’s judgment in favor of Congo constitutes a form of satisfaction
(acknowledgment of breach) and restitution was also provided (would have had the effect
of cancelling the arrest warrant)-returning to situation to original position.
Other methods:
Retorsion and Countermeasures: the former is a legal unfriendly act done in retaliation to
action taken by an/r state which can be either legal/illegal- cutting off aid, breaking
diplomatic ties. B/c it is legal there is no requirement for it to be proportionate. The latter
is an illegal action taken by the state in retaliation to a prior illegal act. E.g. expelling
nationals of offending state from territory, breaking off all treaty obligation with
offending state, seizing all of the foreign state’s assets in territory-all these would be
classified as illegal but would be legal if found to be a countermeasure.
IlC Draft articles sets out requirements for countermeasures 49-54. Art 49 specifies what
the purpose of a countermeasure should be and that it should be taken to induce a state to
comply with its obligations. It also sets limits to countermeasures and that it should be
limited to the non performance of international obligations of the state taking these
measures.
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28. Importantly art 50 sets out certain obligations that are not affected by countermeasures:
♦ Don’t affect obligation to refrain from the threat or use of force;
♦ Don’t affect obligations to protect human rights or humanitarian character, or
♦ Obligations of jus cogens.
Art 50- also shows that the state taking countermeasure not relieved from fulfilling
certain obligations.
Art 51-sets out the requirement that countermeasures must be proportionate.
Art 52-sets out certain steps that a state must take b4 it resorts to countermeasures.
Art 53- requires a state to terminate countermeasures as soon as the other state complies
with its obligation.
Draft articles are not representative of CIL.
Core elements- Mavromattis framework- state must satisfy these requirements in order to
bring a claim. Rules of nationality and diplomatic protection.
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