3: International responsibility

IMPUTABILITY

(Moral responsibility for one's actions) - Imposing upon the state absolute liability wherever an official is involved encourages that state to exercise greater control over its various departments and representatives - It also stimulates moves towards complying with objective standards of conduct in international relations. State responsibility covers many fields unlawful acts or omissions directly committed by the state and directly affecting other states: 1. the breach of a treaty, 2. the violation of the territory of another state, 3. or damage to state property.

the France-New Zealand Agreement of 9 July 198

- A further example of this is provided by the France-New Zealand Agreement of 9 July 1986, concerning the sinking of the vessel Rainbow Warrior by French agents in New Zealand, the second paragraph of which provided for France to pay the sum of $7 million as compensation to New Zealand for 'all the damagewhichithassuffered'.176 Itisclearfromthecontextthatitcovered more than material damage.177 In the subsequent arbitration in 1990, the Tribunal declared that an order for the payment of monetary compensation can be made in respect of the breach of international obligations involving . . . serious moral and legal damage, even though there is no material damage.178 However, the Tribunal declined to make an order for monetary compen- sation, primarily since New Zealand was seeking alternative remedies.179 Satisfaction constitutes a third form of reparation. This relates to non- monetary compensation and would include official apologies, the pun- ishment of guilty minor officials or the formal acknowledgement of the unlawful character of an act.180 The Tribunal in the Rainbow Warrior arbitration181 pointed to the long-established practice of states and in- ternational courts of using satisfaction as a remedy for the breach of an international obligation, particularly where moral or legal damage had been done directly to the state. In the circumstances of the case, it con- cluded that the public condemnation of France for its breaches of treaty obligations to New Zealand made by the Tribunal constituted 'appropriate satisfaction'.182 The Tribunal also made an interesting 'Recommendation' that the two states concerned establish a fund to promote close relations between their respective citizens and additionally recommended that the French government 'make an initial contribution equivalent to $2 million to that fund'.183 In some cases, a party to a dispute will simply seek a declaration that the activity complained of is illegal.184 In territorial disputes, for example, such declarations may be of particular significance. The International Court, however, adopted a narrow view of the Australian submissions in the Nuclear Tests case,185 an approach that was the subject of a vigorous dissenting opinion.186 Article 37 of the ILC Articles provides that a state responsible for a wrongful act is obliged to give satisfaction for the injury thereby caused in so far as it cannot be made good by restitution or compensation. Satisfaction may consist of an acknowledgement of the breach, an expression of regret, a formal apology or another appropriate modality.187 An example of such another modality might be an assurance or guarantee of non-repetition.188

ULTRA VIRES ACTS

- An unlawful act may be imputed to the state even where it was beyond the legal capacity of the official involved, providing, as Verzijl noted in the Caire case,58 that the officials 'have acted at least to all appearances as competent officials or organs or they must have used powers or methods appropriate to their official capacity'. - This was reaffirmed in the Moss ́e case,59 where it was noted that: Even if it were admitted that . . . officials . . . had acted . . . outside the statu- tory limits of the competence of their service, it should not be deduced, without further ado, that the claim is not well founded. It would still be nec- essary to consider a question of law . . . namely whether in the international order the state should be acknowledged responsible for acts performed by officials within the apparent limits of their functions, in accordance with a line of conduct which was not entirely contrary to the instructions received.

Article 10 of the ILC Articles

- Article 10 of the ILC Articles provides that where an insurrectional movement is successful either in becoming the new government of a state or in establishing a new state in part of the territory of the pre-existing state, it will be held responsible for its activities prior to its assumption of authority.

Article 14 of the ILC Draft Articles on Diplomatic Protection

- Article 14 of the ILC Draft Articles on Diplomatic Protection reiterates the customary rule, noting that no international claim in respect of an injury to a national may be presented before that national has exhausted local remedies, which are defined as legal remedies open to an injured person before the judicial or administrative courts or bodies, whether ordinary or special, of the state alleged to be responsible for causing the injury. Article 15 provides that local remedies do not need to be exhausted where there are no reasonably available local remedies to provide effective redress, or the local remedies provide no reasonable possibility of such redress; there is undue delay in the remedial process which is attributable to the state alleged to be responsible; there was no relevant connection between the injured person and the state alleged to be responsible at the date of injury; the injured person is manifestly precluded from pursu- ing local remedies; or the state alleged to be responsible has waived the requirement that local remedies be exhausted.

Article 22 of the ILC Articles

- Article 22 of the ILC Articles provides that the wrongfulness of an act is precluded if and to the extent that the act constitutes a countermeasure.91 International law originally referred in this context to reprisals, whereby an otherwise unlawful act is rendered legitimate by the prior application of unlawful force.92 The term 'countermeasures' is now the preferred term for reprisals not involving the use of force.93 Countermeasures may be contrasted with the provisions laid down in article 60 of the Vienna Con- vention on the Law of Treaties, 1969, which deals with the consequences of a material breach of a treaty in terms of the competence of the other parties to the treaty to terminate or suspend it.94 While countermeasures do not as such affect the legal validity of the obligation which has been breached by way of reprisal for a prior breach, termination of a treaty under article 60 would under article 70 free the other parties to it from any further obligations under that treaty.

Article 23 of the ILC Articles

- Article 23 of the ILC Articles provides for the preclusion of wrongfulness where the act was due to the occurrence of an irresistible force or of an unforeseen event beyond the control of the state, making it materially impossible in the circumstances to perform obligation.109 In the Gill case,110 for example, a British national residing in Mexico had his house destroyed as a result of sudden and unforeseen action by opponents of the Mexican government. The Commission held that failure to prevent the act was due not to negligence but to genuine inability to take action in the face of a sudden situation. - The emphasis, therefore, is upon the happening of an event that takes place without the state being able to do anything to rectify the event or avert its consequences. There had to be a constraint which the state was unable to avoid or to oppose by its own power.111 In other words, the conduct of the state is involuntary or at least involves no element of free choice.112

Article 24

- Article 24 provides that wrongfulness is precluded if the author of the conduct concerned had no other reasonable way in a situation of distress of saving the author's life or the lives of other persons entrusted to his care.115 This would cover, for example, the agreement in the 1946 US-Yugoslav correspondence that only in an emergency would unauthorised entry into foreign airspace be justified,116 or the seeking of refuge in a foreign port without authorisation by a ship's captain in storm conditions - The difference between distress and force majeure is that in the former case there is an element of choice. This is often illusory since in both cases extreme peril exists and whether or not the situation provides an oppor- tunity for real choice is a matter of some difficulty.118 The Tribunal in the Rainbow Warrior arbitration119 noted that three conditions were required to be satisfied in order for this defence to be applicable to the French action in repatriating its two agents: first, the existence of exceptional circum- stances of extreme urgency involving medical and other considerations of an elementary nature, provided always that a prompt recognition of the existence of those exceptional circumstances is subsequently obtained from the other interested party or is clearly demonstrated; secondly, the re-establishment of the original situation as soon as the reasons of emer- gency invoked to justify the breach of the obligation (i.e. the repatriation) had disappeared; thirdly, the existence of a good faith effort to try to obtain the consent of New Zealand according to the terms of the 1986 Agreement.120 It was concluded that France had failed to observe these conditions (except as far as the removal of one of the agents on medical grounds was concerned).

Article 31 of the Articles

- Article 31 of the Articles on State Responsibility provides that the respon- sible state is under an obligation to make full reparation for the injury caused by the internationally wrongful act and that injury includes any damage, whether material or moral, caused by the internationally wrong- ful act of a state. The obligation to make reparation is governed in all its aspects by international law, irrespective of domestic law provisions.151 Article 34 provides that full reparation for the injury caused by the inter- nationally wrongful act shall take the form of restitution, compensation and satisfaction, either singly or in combination. - Restitution in kind is the obvious method of performing the reparation, since it aims to re-establish the situation which existed before the wrong- fulactwascommitted.153 Whilerestitutionhasoccurredinthepast,154 itis more rare today, if only because the nature of such disputes has changed. A large number of cases now involve expropriation disputes, where it is politically difficult for the state concerned to return expropriated prop- erty to multinational companies.155 Recognising some of these problems, article 35 provides for restitution as long as and to the extent that it is not - materially impossible and does not involve a burden out of all proportion to the benefit deriving from restitution instead of compensation.156 In the Rainbow Warrior arbitration,157 New Zealand sought inter alia an Order that the French Government return its agents from France to their previous place of confinement in the Pacific as required by the original agreement of 9 July 1986. New Zealand termed this request 'restitutio in integrum'. France argued that 'cessation' of the denounced behaviour was the appropriate terminology and remedy, although in the circumstances barred by time.158 The Tribunal pointed to the debate in the International LawCommissiononthedifferencesbetweenthetwoconcepts159 andheld that the French approach was correct.160 The obligation to end an illegal situation was not reparation but a return to the original obligation, that is cessation of the illegal conduct. However, it was held that since the pri- mary obligation was no longer in force (in the sense that the obligation to keep the agents in the Pacific island concerned expired under the initial agreement on 22 July 1989), an order for cessation of the illegal conduct could serve no purpose.161 - The question of the appropriate reparation for expropriation was dis- cussed in several cases.

Article 36(1)

- Article 36(1) provides that in so far as damage caused by an internationally wrongful act is not made good by restitu- tion, the state responsible is under an obligation to give compensation.168 Article 36(2) states that the compensation to be provided shall cover any financially assessable damage including loss of profits in so far as this is established.169 The aim is to deal with economic losses actually caused. Punitive or exemplary damages go beyond the concept of repara- tion as such170 and were indeed held in Vela ́squez Rodrigu ́ez v. Honduras (Compensation) to be a principle 'not applicable in international law at this time'.171 Compensation is usually assessed on the basis of the 'fair market value' of the property lost, although the method used to calculate this may depend upon the type of property involved.172 Loss of profits may also be claimed where, for example, there has been interference with use and enjoyment or unlawful taking of income-producing property or in some cases with regard to loss of future income.173 Damage includes both material and non-material (or moral) damage.174 Monetary compensation may thus be paid for individual pain and suf- feringandinsults.IntheI'mAlone175 case,forexample,asumof$25,000 was suggested as recompense for the indignity suffered by Canada, in having a ship registered in Montreal unlawfully sunk.

Article 42 of the ILC Articles

- Article 42 of the ILC Articles stipulates that a state is entitled as an injured state130 to invoke131 the responsibility of another state if the obligation breached is owed to that state individually or to a group of states, including that state or the international community as a whole, and the breach of the obligation specially affects that state or is of such a character as radically to change the position of all the other states to which the obligation is owed with respect to the further performance of the obligation. Responsibility may not be invoked if the injured state has validly waived the claim or is to be considered as having, by reason of its conduct, validly acquiesced in the lapseoftheclaim.132 Anywaiverwouldneedtobeclearandunequivocal,133 while the question of acquiescence would have to be judged carefully in the lightoftheparticularcircumstances.134 Whereseveralstatesareinjuredby the same wrongful act, each state may separately invoke responsibility,135 and where several states are responsible, the responsibility of each may be invoked.136

Article 51

- Article 51 emphasises the requirement for pro- portionality, noting that countermeasures must be commensurate with the injury suffered, taking into account the gravity of the internationally wrongful act and the rights in question.10

Article 7

- Article 7 of the ILC Articles provides that the conduct of an organ or of a person or entity empowered to exercise elements of governmental authority shall be considered an act of the state under international law if acting in that capacity, even if it exceeds its authority or contravenes instructions.63 This article appears to lay down an absolute rule of lia- bility, one not limited by reference to the apparent exercise of authority and, in the context of the general acceptance of the objective theory of responsibility, is probably the correct approach. - Although private individuals are not regarded as state officials so that the state is not liable for their acts, the state may be responsible for failing to exercise the control necessary to prevent such acts. This was emphasised in the Zafiro case65 between Britain and America in 1925. The Tribunal held the latter responsible for the damage caused by the civilian crew of a naval ship in the Philippines, since the naval officers had not adopted effective preventative measures.

Article 8 of the ILC

- Article 8 of the ILC Articles provides that the conduct of a person or group of persons shall be considered as an act of state under international law if the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that state in carrying out the conduct Difficulties: In seeking to define the necessary direction or control required for the second proposition

THE EXHAUSTION OF LOCAL REMEDIES

- Customary international law provides that before international proceed- ings are instituted or claims or representations made, the remedies pro- vided by the local state should have been exhausted.250 There is a theoret- ical dispute as to whether the principle of exhaustion of local remedies is a substantive or procedural rule or some form of hybrid concept,251 but the purpose of the rule is both to enable the state to have an op- portunity to redress the wrong that has occurred within its own legal order and to reduce the number of international claims that might be brought. Another factor, of course, is the respect that is to be accorded to the sovereignty and jurisdiction of foreign states by not pre-empting the operation of their legal systems. Article 44 of the ILC Articles on State Responsibility provides that the responsibility of a state may not be invoked if the claim is one to which the rule of exhaustion of local reme- dies applies and any available and effective local remedy has not been exhausted.252

Tadi case

- However, in the Tadi ́c case, the International Crimi- nal Tribunal for the Former Yugoslavia adopted a more flexible approach, noting that the degree of control might vary according to the circum- stances and a high threshold might not always be required.68 In this case, of course, the issue was of individual criminal responsibility. Further, the situation might be different where the state deemed responsible was in clear and uncontested effective control of the territory where the violation occurred. The International Court of Justice in the Namibia case stated that, 'Physical control of a territory and not sovereignty or legitimacy of title, is the basis of state liability for acts affecting other states.'69 This was reaffirmed in Loizidou v. Turkey, where the European Court of Human Rights noted that, bearing in mind the object and purpose of the European Convention on Human Rights, the responsibility of a contracting party may also arise when as a conse- quence of military action - whether lawful or unlawful - it exercises effective control of an area outside its national territory. The obligation to secure, in such an area, the rights and freedoms set out in the Convention, derives from the fact of such control whether it be exercised directly, through its armed forces, or through a subordinate local administration.70

the Barcelona Traction case,

- In the Barcelona Traction case, the International Court referred to the obligations of a state towards the international community as a whole as distinct from those owed to another state.137 Article 48 builds upon this principle and provides that a state other than an injured state may invoke the responsibility of another state if either the obligation is owed to a group of states including that state, and is established for the protection of a collective interest of the group, or the obligation breached is owed to the international community as a whole. In such cases, cessation of the wrongful act and assurances and guarantees of non-repetition may be claimed,138 as well as reparation.139

In the Sandline case

- In the Sandline case, the Tribunal emphasised that, 'It is a clearly established principle of international law that acts of a state will be regarded as such even if they are ultra vires or unlawful under the internal law of the state . . . their [institutions, officials or employees of the state] acts or omissions when they purport to act in their capacity as organs of the state are regarded internationally as those of the state even though they contravene the internal law of the state.

In the Union Bridge Company case,

- In the Union Bridge Company case,61 aBritish officials of the Cape Government Railway mistakenly appropriated neutral property during the Boer War. It was held that there was still liability despite the honest mistake and the lack of intention on the part of the authorities to appro- priate the material in question. The key was that the action was within the general scope of duty of the official.

The doctrine depends on the link that exists between the state and the person or persons actually committing the unlawful act or omission.

- It can only do so through authorised officials and representatives. The state is not responsible under international law for all acts performed by its nationals. Since the state is responsible only for acts of its servants that are imputable or attributable to it, it becomes necessary to examine the concept of imputability (also termed attribution). - Imputabilityis the legal fiction which assimilates the actions or omissions of state officials to the state itself and which renders the state liable for damage resulting to the property or person of an alien.

International law commission drafts on state responsibility

- Matters regarding the responsibility of states are necessarily serious and it is well established that a party asserting a fact must prove it.1 - The Interna- tional Law Commission worked extensively on this topic. In 1975 it took a decision for the draft articles on state responsibility to be divided into three parts: part I to deal with the origin of international responsibility, part II to deal with the content, forms and degrees of international re- sponsibility and part III to deal with the settlement of disputes and the implementation of international responsibility.13 Part I was provision- ally adopted by the Commission in 198014 and the Draft Articles were finally adopted on 9 August 2001.15 General Assembly resolution 56/83 of 12 December 2001 annexed the text of the articles and commended them to governments, an unusual procedure which must be seen as giving par- ticular weight to the status of the articles.16

SERIOUS BREACHES OF PEREMPTORY NORMS (JUS COGENS)

- One of the major debates taking place with regard to state responsibility concerns the question of international crimes. A distinction was drawn in article 19 of the ILC Draft Articles 1996 between international crimes and international delicts within the context of internationally unlawful acts. It was provided that an internationally wrongful act which results from the breach by a state of an international obligation so essential for the protection of fundamental interests of the international community that its breach was recognised as a crime by that community as a whole consti- tutes an international crime. All other internationally wrongful acts were termed international delicts.189 Examples of such international crimes provided were aggression, the establishment or maintenance by force of colonial domination, slavery, genocide, apartheid and massive pollution of the atmosphere or of the seas. However, the question as to whether states can be criminally responsible hasbeenhighlycontroversial.190 Some have argued that the concept is of no legal value and cannot be justified in principle, not least because the problem of exacting penal sanctions from states, while in principle possible, could only be creative of insta- bility.191 Others argued that, particularly since 1945, the attitude towards certain crimes by states has altered so as to bring them within the realm of international law.192 The Rapporteur in his commentary to draft ar- ticle 19 pointed to three specific changes since 1945 in this context to justify its inclusion: first, the development of the concept of jus cogens as a set of principles from which no derogation is permitted;193 secondly, the rise of individual criminal responsibility directly under international law; and thirdly, the UN Charter and its provision for enforcement action against a state in the event of threats to or breaches of the peace or acts of aggression.194 However, the ILC changed its approach195 in the light of the controversial nature of the suggestion and the Articles as finally approved in 2001 omit any mention of international crimes of states, but rather seek to focus upon the particular consequences flowing from a breach of obligations erga omnes and of peremptory norms (jus cogens).196

State Responsibility

- Principle of International law - International responsibility is established between two states, whenever one state commits an internationally unlawful act against another state - A breach of an international obligation gives rise to a requirement for reparation Accordingly, the focus is upon principles concerned with second-order issues, in other words the procedural and other consequences flowing from a breach of a substantive rule of international law

Article 49 ILC

- The ILC Articles deal further with countermeasures in Chapter II. Article 49 provides that an injured state97 may only take countermea- sures against a state responsible for the wrongful act in order to induce the latter to comply with the obligations consequent upon the wrongful act.98 Countermeasures are limited to the non-performance for the time being of international obligations of the state taking the measures and shall, as far as possible, be taken in such a way as to permit the resump- tion of performance of the obligation in question.99 Article 50 makes it clear that countermeasures shall not affect the obligation to refrain from the threat or use of force as embodied by the UN Charter, obligations for the protection of human rights, obligations of a humanitarian character prohibiting reprisals and other obligations of jus cogens.100 By the same token, obligations under any applicable dispute settlement procedure be- tween the two states continue,101 while the state taking countermeasures must respect the inviolability of diplomatic or consular agents, premises, archivesanddocuments.102

the Gabˇc ́ıkovo-Nagymaros Project (Hungary/Slovakia)

- The International Court noted in the Gabˇc ́ıkovo-Nagymaros Project (Hungary/Slovakia) case that it was a 'well-established rule of interna- tional law that an injured state is entitled to obtain compensation from the state which has committed an internationally wrongful act for the damage caused by it'.

The Genocide in (Bosnia v Serbia)

- The International Court returned to the issue in the Genocide Conven- tion (Bosnia v. Serbia) case and reaffirmed its approach in the Nicaragua case. It noted that the Appeal Chamber's judgment in Tadi ́c did not con- cern issues of state responsibility nor a question that was indispensable for the exercise of its jurisdiction. It held that the 'overall control' test was not appropriate for state responsibility and that the test under customary law was that reflected in article 8 whereby the state would be responsible for the acts of persons or groups (neither state organs nor equated with such organs) where an organ of the state gave the instructions or provided the direction pursuant to which the perpetrators of the wrongful act acted or where it exercised effective control over the action during which the wrong was committed.71

The Gabˇc ́ıkovo-Nagymaros Project case

- The International Court stated in the Gabˇc ́ıkovo-Nagymaros Project case that, In order to be justifiable, a countermeasure must meet certain condi- tions . . . In the first place it must be taken in response to a previous in- ternational wrongful act of another state and must be directed against that state . . . Secondly, the injured state must have called upon the state com- mitting the wrongful act to discontinue its wrongful conduct or to make reparation for it . . . In the view of the Court, an important consideration is that the effects of a countermeasure must be commensurate with the injury suffered, taking account of the rights in question . . . [and] its purpose must be to induce the wrongdoing state to comply with its obligations under international law, and . . . the measure must therefore be reversible. - In other words, lawful countermeasures must be in response to a prior wrongful act and taken in the light of a refusal to remedy it, directed against the state committing the wrongful act and proportionate. Further, there is no requirement that the countermeasures taken should be with regard to the same obligation breached by the state acting wrongfully. Thus, the response to a breach of one treaty may be action taken with regard to another treaty, provided that the requirements of necessity and proportionality are respected.96

REPARATION

- The basic principle with regard to reparation, or the remedying of a breach of an international obligation for which the state concerned is responsi- ble,146 was laid down in the Chorzo ́w Factory case, where the Permanent Court of International Justice emphasised that, The essential principle contained in the actual notion of an illegal act is that reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed. - This principle was reaffirmed in a number of cases, including, for ex- ample, by the International Court in the Gabˇc ́ıkovo-Nagymaros Project case148 and in the Genocide Convention (Bosnia v. Serbia) case,149 and by the International Tribunal for the Law of the Sea in M/V Saiga (No. 2).150

The relevant standard of treatment

- The developed states of the West have argued historically that there exists an 'international minimum standard' for the protection of foreign nationals that must be upheld irrespective of how the state treats its own nationals, whereas other states maintained that all the state need do is treat the alien as it does its own nationals (the 'national treatment standard'). The reason for the evolution of the latter approach is to be found in the increasing resentment of Western economic domination rather than in the necessary neglect of basic standards of justice. The Latin American states felt, in particular, that the international minimum standard concept had been used as a means of interference in internal affairs.269 Accordingly, the Calvo doctrine was formulated. This involved a reaffirmation of the principle of non-intervention coupled with the assertion that aliens were entitled only to such rights as were accorded nationals and thus had to seek redress for grievances exclusively in the domestic arena.270 It was intended as a shield against external interference. The international stan- dard concept itself developed during the nineteenth century and received extensive support in case-law.

DIPLOMATIC PROTECTION AND NATIONALITY OF CLAIMS

- The doctrine of state responsibility with regard to injuries to nationals rests upon twin pillars, the attribution to one state of the unlawful acts and omissions of its officials and its organs (legislative, judicial and executive) and the capacity of the other state to adopt the claim of the injured party.

The Rainbow Warrior arbitration in 1990.

- The issue of force majeure was raised by France in the Rainbow Warrior arbitration in 1990.113 It was argued that one of the French agents repatri- ated to France without the consent of New Zealand had to be so moved as a result of medical factors which amounted to force majeure. The Tri- bunal, however, stressed that the test of applicability of this doctrine was one of 'absolute and material impossibility' and a circumstance render- ing performance of an obligation more difficult or burdensome did not constitute a case of force majeure.114

The question of fault

- The principle of objective responsibility (the so-called 'risk' theory) maintains that the liability of the state is strict. Once an unlawful act has taken place, which has caused injury and which has been committed by an agent of the state, that state will be responsible in international law to the state suffering the damage irrespective of good or bad faith. - the subjective responsibility concept (the 'fault' theory) which emphasises that an element of intentional (dolus) or negligent (culpa) conduct on the part of the person concerned is necessary before his state can be rendered liable for any injury caused. - Divided opinions on the right approach

Introduction

- The rules on state responsibility we have a body of codified principles - We have several articles adopted by the international law commission in 2001 - Some in 2011 (only applies of international organisations) - We are only examining the 2001 articles on state responsibility - After 60 years of work, adopted rules and principles that define consequences attached to a breach of international law In 1920 PCIJ - before they had to rely on precedents since there were no rules - The codification originates from practice in courts/ judicial practice - The codification is the result of the hard work of the international commission - A body of experts of internationals from all over the world - The int commission is the author of the rule of treaties - The outcome of the codification process was not translated into a treaty, it is just a set of articles Link to set of article: Responsibility of States for Internationally Wrongful Acts 2001 https://docs.google.com/document/d/1_GwSuR-Fm8wTMxyoMw3AcTMy5OoTATrMg474LNnOA3s/edit - These articles are commonly deemed to constitute customary international law - Courts when they deal with issues of state responsibility they refer/and rely to these articles which they consider customary international law These articles have been uncontested - All this under the banner of custom The legal bindingness and legal relevance has never been contested/universal - This is because it has been formed by a century of judicial practice These articles crystalised centuries of judicial practice - Rules on the consequences to breach of international law - General rules applicable to any breac whatever the SOURCE of international law (no discrimination against sources) - Responsibility arises if 2 conditions are met: There must be a breach/violation - That violation must be attributable to a state (state or organ of state) (ie. cannot simply i.e be an individual of a state) Responsibility is objective NOT subjective States which are victim of a violation can take countermeasures/sanctions against the author of the violation until that state has repaired the harm done

THE CONSEQUENCES OF INTERNATIONALLY WRONGFUL ACTS CESSATION

- The state responsible for the internationally wrongful act is under an obligation to cease that act, if it is continuing, and to offer appropri- ate assurances and guarantees of non-repetition if circumstances so re- quire.140 The Tribunal in the Rainbow Warrior case held that in order for cessation to arise, the wrongful act had to have a continuing char- acter and the violated rule must still be in force at the date the order is given.141 The obligation to offer assurances of non-repetition was raised by Germany and discussed by the Court in the LaGrand case.142 The Court held that a US commitment to ensure implementation of specific mea- sures was sufficient to meet Germany's request for a general assurance of non-repetition,143 while with regard to Germany's request for specific assurances, the Court noted that should the US fail in its obligation of con- sular notification, it would then be incumbent upon that state to allow the review and reconsideration of any conviction and sentence of a German national taking place in these circumstances by taking account of the violation of the rights contained in the Vienna Convention on Consular Relations.144

CIRCUMSTANCES PRECLUDING WRONGFULNESS

- Where a state consents to an act by another state which would otherwise constitute an unlawful act, wrongfulness is precluded provided that the actiswithinthelimitsofthe consent given. Ie. where troops from one state are sent to another at the request of the latter.87 Wrongfulness is also precluded where the act constitutes a lawful measure of self-defence taken in conformity with the Charter of the UN.88 This would also cover force used in self-defence as defined in the customary right as well as under article 51 of the Charter, since that article refers in terms to the 'inherent right' of individual and collectiveself-defence.89 Further,theILCCommentarymakesitclearthat the fact that an act is taken in self-defence does not necessarily mean that all wrongfulness is precluded, since the principles relating to human rights and humanitarian law have to be respected. The International Court, in particular, noted in its advisory opinion in the Legality of the Threat or Use of Nuclear Weapons that, 'Respect for the environment is one of the elements that go to assessing whether an action is in conformity with the principles of necessity and proportionality' and thus in accordance with the right to self-defence.90

MOB VIOLENCE, INSURRECTIONS AND CIVIL WARS

- Where the governmental authorities have acted in good faith and with- out negligence, the general principle is one of non-liability for the ac- tions of rioters or rebels causing loss or damage The state, however, is under a duty to show due diligence. Quite what is meant by this is difficult to quantify and more easily defined in the negative.74 It should also be noted that special provisions apply to diplomatic and consular personnel

Article 5 of the International Law Commission's Articles on State Responsibility

- in reaction to the proliferation of government agencies and parastatal entities, notes that the conduct of a person or of an entity not an organ of the state under article 4 but which is empowered by the law of that state to exercise elements of governmental authority shall be considered an act of the state under international law, provided the person or entity is acting in that capacity in the particular instance. This provision is intended inter alia to cover the situation of privatised corporations which retain certain public or regulatory functions. Examples of the application of this article might include the conduct of private security firms authorised to act as prison guards or where private or state-owned airlines exercise certain immigration controls54 or with regard to a railway company to which certain police powers have been granted. - Article 5 issues may also arise where an organ or an agent of a state are placed at the disposal of another international legal entity in a situation where both the state and the entity exercise elements of control over the organ or agent in question. This occurs most clearly where a military contingent is placed by a state at the disposal of the UN for peace-keeping purposes. Both the state and the UN will exercise a certain jurisdiction over the contingent. The question arose in Behrami v. France before the European Court of Justice as to whether troops from certain NATO states forming part of KFOR and concerned in the particular instance with demi- ning operations in the province of Kosovo could fall under the jurisdiction of the Court or whether the appropriate responsible organ was KFOR op- erating under the authority of the United Nations, a body not susceptible to the jurisdiction of the Court. The Court held that the key question was whether the UN Security Council retained ultimate authority and control so that operational command only was delegated and that this was so in the light of resolution 1244. Accordingly, responsibility for the impugned action was attributable to the UN, so that jurisdiction did not exist with regard to the states concerned for the European Court.56

Article 4 of the International Law Commission's Articles on State Responsibility

- of the ILC Articles provides that the conduct of any state organ (including any person or entity having that status in accordance with the internal law of the state) shall be considered as an act of the state concerned under international law where the organ exercises legislative, executive, judicial or any other function, whatever position it holds in the organisation of the state and whatever its character as an organ of the central government or of a territorial unit of the state.

Article 41

- provides that states are under a duty to co-operate to bring to an end, through lawful means, any serious breach197 by a state of an obligation arising under a peremptory norm of international law198 and not to recognise as lawful any such situation.199

Article 6 of the International Law Commission's Articles on State Responsibility

- provides that the conduct of an organ placed at the disposal of a state by another state shall be considered as an act of the former state under international law, if that organ was acting in the exercise of elements of the governmental authority of the former state. This would, for example, cover the UK Privy Council acting as the highest judicial body for certain Commonwealth countries

Short v. The Islamic Republic of Iran,

- state for activ- ities that occurred prior to its coming to power was raised before the Iran-US Claims Tribunal. In Short v. The Islamic Republic of Iran,77 the Tribunal noted that the international responsibility of a state can be en- gaged where the circumstances or events causing the departure of an alien are attributable to it, but that not all departures of aliens from a coun- try in a period of political turmoil would as such be attributable to that state.78 In the instant case, it was emphasised that at the relevant time the revolutionary movement had not yet been able to establish control over any part of Iranian territory and the government had demonstrated its loss of control. Additionally, the acts of supporters of a revolution cannot be attributed to the government following the success of the revolution, just as acts of supporters of an existing government are not attributable to the government. Accordingly, and since the claimant was unable to identify any agent of the revolutionary movement the actions of whom forced him to leave Iran, the claim for compensation failed In Yeager v. The Islamic Republic of Iran,80 the Tribunal awarded compensation for expulsion, but in this case it was held that the expulsion was carried out by the Revolutionary Guards after the success of the revolution. Although the Revolutionary Guards were not at the time an official organ of the Iranian state, it was determined that they were exercising governmental authority with the knowledge and acquiescence of the revolutionary state, making Iran liable for their acts.81

Article 12 of the International Law Commission's Articles on State Responsibility

- stipulates that there is a breach of an international obligation when an act of that state is not in conformity with what is required of it by that obligation, regardless of its origin or character. - A breach that is of a continuing nature extends over the entire period during which the act continues and remains not in conformity with the international obliga- tion in question,27 while a breach that consists of a composite act will also extend over the entire period during which the act or omission continues andremainsnotinconformitywiththeinternationalobligation.28 Astate assisting another state29 to commit an internationally wrongful act will also be responsible if it so acted with knowledge of the circumstances and where it would be wrongful if committed by that state State responsibility may co-exist with individual responsibility. The two are not mutually exclusive.

In the BP case

- the tribunal emphasised that there was no explicit support for the proposition that specific performance, and even less so restitutio in integrum, are remedies of public international law available at the option of a party suffering a wrongful breach by a co- contracting party . . . the responsibility incurred by the defaulting party for breach of an obligation to perform a contractual undertaking is a duty to pay damages . . . the concept of restitutio in integrum has been employed merely as a vehicle for establishing the amount of damages.163 However,intheTexacocase,164 whichsimilarlyinvolvedLibyannation- alisation of oil concessions, the arbitrator held that restitution in kind under international law (and indeed under Libyan law) constituted the normal sanction for non-performance of contractual obligations and that it is inapplicable only to the extent that restoration of the status quo ante is impossible.165 This is an approach that in political terms, particularly in international contract cases, is unlikely to prove acceptable to states since it appears a violation of sovereignty. The problems, indeed, of enforcing such restitu- tion awards against a recalcitrant state may be imagined.166

Nature of State Responsibility

1. The existence of an international legal obligation in force as between two particular states; 2. secondly, that there has occurred an act or omission which violates that obligation and which is imputable to the state responsible, and finally, that loss or damage has resulted from the unlawful act or omission.

the Home Missionary Society claim in 1920

A leading case adopting the subjective approach is the Home Missionary Society claim36 in 1920 between Britain and the United States. In this case, the imposition of a 'hut tax' in the protectorate of Sierra Leone triggered off a local uprising in which Society property was damaged and missionaries killed. The tribunal dismissed the claim of the Society (presented by the US) and noted that it was established in international law that no government was responsible for the acts of rebels where it itself was guilty of no breach of good faith or negligence in suppressing the revolt. It should, therefore, be noted that the view expressed in this case is concerned with a specific area of the law, viz. the question of state responsibility for the acts of rebels. Whether one can analogise from this generally is open to doubt.

Article 25

Article 25 provides that necessity may not be invoked unless the act was the only means for the state to safeguard an essential interest against a 'grave and imminent peril' and the act does not seriously impair an essen- tial interest of the other state or states or of the international community as a whole. Further, necessity may not be invoked if the international obliga- tion in question excludes the possibility or the state has itself contributed tothesituationofnecessity.121 Anexampleofthiskindofsituationispro- vided by the Torrey Canyon,122 where a Liberian oil tanker went aground off the UK coast but outside territorial waters, spilling large quantities of oil. After salvage attempts, the UK bombed the ship. The ILC took the view that this action was legitimate in the circumstances because of a state ofnecessity.123 Itwasonlyaftertheincidentthatinternationalagreements were concluded dealing with this kind of situation. - The Tribunal in the Rainbow Warrior case took the view that the de- fence of state necessity was 'controversial'.125 However, the International Court in the Gabˇc ́ıkovo-Nagymaros Project case considered that it was 'a ground recognised in customary international law for precluding the wrongfulness of an act not in conformity with an international obli- gation', although it could only be accepted 'on an exceptional basis'.126 The Court referred to the conditions laid down in an earlier version of, and essentially reproduced in, article 25 and stated that such conditions must be cumulatively satisfied.127 In M/V Saiga (No. 2), the International - Tribunal for the Law of the Sea discussed the doctrine on the basis of the ILC draft as approved by the International Court, but found that it did not apply as no evidence had been produced by Guinea to show that its essential interests were in grave and imminent peril and, in any event, Guinea's interests in maximising its tax revenue from the sale of gas oil to fishing vessels could be safeguarded by means other than extending its customs law to parts of the exclusive economic zone

Article 9 of the ILC Articles

Article 9 of the ILC Articles provides that the conduct of a person or a group of persons shall be considered as an act of the state under international law if the person or group was 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

Rankin v. The Islamic Republic of Iran

Falling somewhat between these two cases is Rankin v. The Islamic Republic of Iran,82 where the Tribunal held that the claimant had not proved that he had left Iran after the revolution as a result of action by the Iranian government and the Revolutionary Guards as distinct from leaving because of the general difficulties of life in that state during the revolutionary period. Thus Iranian responsibility was not engaged. Where a state subsequently acknowledges and adopts conduct as its own, then it will be considered as an act of state under international law entailing responsibility, even though such conduct was not attributable to the state beforehand.83 In the Iranian Hostages case, for example, the International Court noted that the initial attack on the US Embassy by militants could not be imputable to Iran since they were clearly not agents or organs of the state. However, the subsequent approval of the Ayatollah Khomeini and other organs of Iran to the attack and the decision to maintain the occupation of the Embassy translated that action into a state act. The militants thus became agents of the Iranian state for whose acts the state bore international responsibility.84

Serbian Loans case

Force majeure has long been accepted as precluding wrongfulness,106 although the standard of proof is high. In the Serbian Loans case,107 for example, the Court declined to accept the claim that the First World War had made it impossible for Serbia to repay a loan. In 1946, following a number of unauthorised flights of US aircraft over Yugoslavia, both states agreed that only in cases of emergency could such entry be justified in the absence of consent.108

In Youman's claim

In Youman's claim,60 militia ordered to protect threatened American citizens in a Mexican town instead joined the riot, during which the Amer- icans were killed. These unlawful acts by the militia were imputed to the state of Mexico, which was found responsible by the General Claims Com- mission.

the Neer claim in 1926

In the Neer claim33 in 1926, an American superintendent of a Mexican mine was shot. The USA, on behalf of his widow and daughter, claimed damages because of the lackadaisical manner in which the Mexican au- thorities pursued their investigations. The General Claims Commission dealing with the matter disallowed the claim, in applying the objective test.

Nicaragua Case

In the Nicaragua case, the International Court declared that in order for the conduct of the contra guerrillas to have been attributable to the US, who financed and equipped the force, 'it would in principle have to be proved that that state had effective control of the military or paramilitary operation in the course of which the alleged violations were committed'.67 In other words, general overall control would have been insufficient to ground responsibility.

article 44 of the ILC Articles

Indeed article 44 of the ILC Articles provides that the responsibility of a state may not be invoked if the claim is not brought in accordance with any applicable rule relating to nationality of claims.201 Nationality is the link between the individual and his or her state as re- gards particular benefits and obligations. It is also the vital link between the individual and the benefits of international law. Although international law is now moving to a stage whereby individuals may acquire rights free from the interposition of the state, the basic proposition remains that in a state-oriented world system, it is only through the medium of the state that the individual may obtain the full range of benefits available under international law, and nationality is the key.202 The principle of diplomatic protection originally developed in the con- text of the treatment by a state of foreign nationals. However, the Interna- tional Court has pointed out that, 'Owing to the substantive development of international law over recent decades in respect of the rights it accords to individuals, the scope ratione materiae of diplomatic protection, origi- nally limited to alleged violations of the minimum standard of treatment of aliens, has subsequently widened to include, inter alia, internationally guaranteed human rights'.203 The International Law Commission adopted Draft Articles on Diplo- matic Protection in 2006.204 Article 1 provides that, for the purposes of the draft articles, diplomatic protection consists of the invocation by a state, through diplo- matic action or other means of peaceful settlement, of the responsibility of another state for an injury caused by an internationally wrongful act of that state to a natural or legal person that is a national of the former state with a view to the implementation of such responsibility.205 A state is under a duty to protect its nationals and it may take up their claims against other states. Diplomatic protection includes, in a broad sense, consular action, negotiation, mediation, judicial and arbi- tral proceedings, reprisals, a retort, severance of diplomatic relations, and economic pressures.206 There is under international law, however, no obligation for states to provide diplomatic protection for their nationals abroad,207 although it can be said that nationals have a right to request their government to consider diplomatic protection and that government is under a duty to consider that request rationally.208 In addition, once a state does this, the claim then becomes that of the state. This is a result of the historical reluctance to permit individuals the right in international law to prosecute claims against foreign countries, for reasons relating to state sovereignty and non-interference in internal affairs. This basic principle was elaborated in the Mavrommatis Palestine Con- cessionscase.209 ThePermanentCourtofInternationalJusticepointedout that: By taking up the case of one of its subjects and by resorting to diplomatic action or international judicial proceedings on his behalf, a state is in reality asserting its own rights, its right to ensure, in the person of its subjects, respect for the rules of international law . . . Once a state has taken up a case on behalf of one of its subjects before an international tribunal, in the eyes of the latter the state is sole claimant.210 It follows that the exercise of diplomatic protection cannot be regarded as intervention contrary to international law by the state concerned. Coupled with this right of the state is the constraint that a state may in principle adopt the claims only of its own nationals. Diplomatic protection may not extendtotheadoptionofclaimsofforeignsubjects,211 althoughithasbeen suggested 'as an exercise in progressive development of the law' that a state may adopt the claim of a stateless person or refugee who at the dates of the injury and presentation of the claim is lawfully and habitually resident in that state.212 Such diplomatic protection is not a right of the national concerned, but a right of the state which it may or may not choose to exercise.213 It is not a duty incumbent upon the state under international law. As the Court noted in the Barcelona Traction case, within the limits prescribed by international law, a state may exercise diplo- matic protection by whatever means and to whatever extent it thinks fit, for it is its own right that the state is asserting. Should the natural or le- gal person on whose behalf it is acting consider that their rights are not adequately protected, they have no remedy in international law.214 The UK takes the view that the taking up of a claim against a foreign state is a matter within the prerogative of the Crown, but various prin- ciples are outlined in its publication, 'Rules regarding the Taking up of International Claims by Her Majesty's Government', stated to be based on international law.215 This distinguishes between formal claims and in- formal representations. In the former case, Rule VIII provides that, 'If, in exhausting any municipal remedies, the claimant has met with prejudice or obstruction, which are a denial of justice, HMG [Her Majesty's Gov- ernment] may intervene on his behalf in order to secure justice.' In the latter case, the UK will consider making representations if, when all legal remedies have been exhausted, the British national has evidence of a mis- carriage or denial of justice. This may apply to cases where fundamental violations of the national's human rights had demonstrably altered the course of justice. The UK has also stated that it would consider making direct representations to third governments where it is believed that they were in breach of their international obligations.216 The issue was discussed by the Court of Appeal in Abbasi v. Secretary of State.217 It was noted that there was no authority which supported the imposition of an enforceable duty on the UK authorities to protect its citizens; however, the Foreign Office had a discretion whether to exercise the right it had to protect British citizens and had indicated what a citizen may expect of it through, for example, the Rules regarding the Taking up of International Claims. The Court concluded that, in view of the Rules and official statements made,218 there was a 'clear acceptance by the government of a role in relation to protecting the rights of British citizens abroad, where there is evidence of miscarriage or denial of justice'.219 While the expectations raised by such Rules and statements were limited and the discretion wide, there was no reason why any decision or inaction by the government should not be judicially reviewable under English law, if it could be shown that such decision or inaction were irrational or contrary to legitimate expectation. It might thus be said that there existed an obligation to consider the position of any particular British citizen and consider the extent to which some action might be taken on his behalf.220 This legitimate expectation of the citizen was that his or her request would be 'considered', and that in that consideration 'all relevant factorswillbethrownintothebalance'.221 TheCourtheldthatthe'extreme case' where judicial review would lie in relation to diplomatic protection would be if the Foreign and Commonwealth Office were, contrary to its stated practice, to refuse even to consider whether to make diplomatic representations on behalf of a subject whose fundamental rights were being violated.222 The scope of a state to extend its nationality223 to whomsoever it wishes is unlimited, except perhaps in so far as it affects other states. Article 1 of the Hague Convention on Certain Questions Relating to the Conflict of Nationality Laws, 1930, for example, provides that, It is for each state to determine under its own law who are its nationals. This law shall be recognised by other states in so far as it is consistent with international conventions, international custom, and the principles of law generally recognised with regard to nationality . . . 224 IntheNottebohmcase,225 theInternationalCourtofJusticedecidedthat only where there existed a genuine link between the claimant state and its national could the right of diplomatic protection arise. However, the facts of that case are critical to understanding the pertinent legal proposition. The Government of Liechtenstein instituted proceedings claiming restitu- tion and compensation for Nottebohm against Guatemala for acts of the latter which were alleged to be contrary to international law. Guatemala replied that Nottebohm's right to Liechtenstein nationality and thus its diplomatic protection was questionable. The person in question was born in Germany in 1881 and, still a German national, applied for naturali- sation in Liechtenstein in 1939. The point was, however, that since 1905 (and until 1943 when he was deported as a result of war measures) Not- tebohm had been permanently resident in Guatemala and had carried on his business from there. The Court noted that Liechtenstein was entirely free, as was every state, to establish the rules necessary for the acquisition of its nationality, but the crux of the matter was whether Guatemala was obliged to recognise the grant of Liechtenstein nationality. The exercise of diplomatic protection by a state regarding one of its nationals brought the whole issue of nationality out of the sphere of domestic jurisdiction andontotheplaneofinternationallaw.226 TheCourtemphasisedthat,ac- cording to state practice, nationality was a legal manifestation of the link between the person and the state granting nationality and the recognition that the person was more closely connected with that state than with any other.227 Having brought out these concepts, the Court emphasised the tenu- ous nature of Nottebohm's links with Liechtenstein and the strength of his connection with Guatemala. Nottebohm had spent only a very short period of time in Liechtenstein and one of his brothers lived in Vaduz. Beyond that and the formal naturalisation process, there were no other links with that state. On the other hand, he had lived in Guatemala for some thirty years and had returned there upon obtaining his papers from Vaduz. Since the Liechtenstein nationality 'was granted without regard to the concept . . . adopted in international relations' in the absence of any genuine connection, the Court held that Liechtenstein was not able to extend its diplomatic protection to Nottebohm as regards Guatemala.228 The case has been subject to criticism relating to the use of the doctrine of 'genuine connection' by the Court. The doctrine had until then been utilised with regard to the problems of dual nationality, so as to enable a decision to be made on whether one national state may sue the other on behalf of the particular national. Its extension to the issue of diplomatic protection appeared to be a new move altogether.229 The ILC in its Draft Articles on Diplomatic Protection adopted in 2006 did not require establishment of a genuine link as a requirement of nationality230 and the Commentary argues that the Nottebohm case should be limited to its facts alone.231 The nationality must exist at the date of the injury, and should continue until at least the date of the formal presentation of the claim, although this latter point may depend upon a variety of other facts, for example any agreement between the contending states as regards the claim.232 Where an individual possesses dual or multiple nationality, any state of which he is a national may adopt a claim of his against a third state233 and there appears no need to establish a genuine link between the state of nationality and the dual or multiple national.234 In the case of more than one state of nationality, the rule appears to be that the state with which he has the more effective connection may be able to espouse hisclaimasagainsttheotherstate.IntheMerg ́ecase,235 itwasemphasised that the principle based on the sovereign equality of states, which excludes diplomatic protection in the case of dual nationality, must yield before the principle of effective nationality whenever such nationality is that of the claimant state. However, where such predominance is not proved, there would be no such yielding. In other words, the test for permitting protection by a state of a national against another state of which he is also a national is the test of effectiveness. This approach was reaffirmed by the Iran-US Claims Tribunal, where the Full Tribunal held that it had juris- diction over claims against Iran by a dual national when the 'dominant and effective nationality' at the relevant time was American.236 Article 7 of the ILC Draft Articles on Diplomatic Protection provides that a state of nationality may not exercise diplomatic protection in respect of a person against a state of which the person is also a national unless the nationality of the former state is predominant, both at the time of the injury and at the date of the official presentation of the claim. As far as a corporation is concerned, it appears that there must be some tangible link between it and the state seeking to espouse its claim. Different cases have pointed to various factors, ranging from incorporation of the company in the particular state to the maintenance of the administrative centre of the company in the state and the existence of substantial holdings by nationals in the company.237 The Court in the Barcelona Traction case238 remarked that the tradi- tional rule gave the right of diplomatic protection of a corporation to the state under the laws of which it is incorporated and in whose territory it has its registered office. Any application of the Nottebohm doctrine of the 'genuine connection' was rejected as having no general acceptance. Nevertheless, it remains true that some meaningful link must bind the state to the company which seeks its protection. The position as regards the shareholders in a company was discussed in that case. It concerned a dispute between Belgium and Spain relating to a company established in 1911 in Canada, which was involved in the production of electricity in Spain and the majority of whose shares were owned by Belgian nationals. After the Second World War, the Spanish authorities took a number of financial measures which resulted in harm to the company, and in 1948 it was declared bankrupt. The case concerned a Belgian claim in respect of injury to the shareholders, who were Belgian nationals, because of the steps that Spain had adopted. Spain replied by denying that Belgium had any standing in the case since the injury had been suffered by the company and not the shareholders. The Court rejected the Belgian claim on the grounds that it did not have a legal interest in the matter. Although shareholders may suffer if wrong is done to a company, it is only the rights of the latter that have been infringed and thus entitle it to institute action. If, on the other hand (as did not happen here), the direct rights of the shareholders were affected, for example as regards dividends, then they would have an independent right of action; but otherwise, only if the company legally ceased to exist. The Court emphasised that the general rule of international law stated that where an unlawful act was committed against a company representing foreign capital, only the national state of the company could sue. In this case Canada had chosen not to intervene in the dispute. To accept the idea of the diplomatic protection of shareholders would, in the opinion of the International Court of Justice, result in the creation of an atmosphere of confusion and insecurity in economic relations especially since the shares of international companies are 'widely scattered and frequently change hands'.239 Article 9 of the ILC Draft Articles on Diplomatic Protection provides that the nationality of a corporation is the state where it was incorporated, although when the corporation is controlled by nationals of another state or states and has no substantial business activities in the state of incor- poration, and the seat of management and the financial control of the corporation are both located in another state, that state shall be regarded as the state of nationality. Article 11 provides that the state of nationality of shareholders shall not be entitled to provide diplomatic protection to shareholders where the injury is to the corporation, unless the corpora- tion has ceased to exist according to the law of the state of incorporation for a reason unrelated to the injury; or the corporation had, at the date of injury, the nationality of the state alleged to be responsible for causing the injury, and incorporation in that state was required by it as a precondition for doing business there.240 The International Court returned to the question of corporations in the Diallo case,241 noting that, What matters, from the point of view of international law, is to determine whether or not these have a legal personality independent of their mem- bers. Conferring independent corporate personality on a company implies granting it rights over its own property, rights which it alone is capable of protecting. As a result, only the state of nationality may exercise diplo- matic protection on behalf of the company when its rights are injured by a wrongful act of another state. In determining whether a company possesses independent and distinct legal personality, international law looks to the rules of the relevant domestic law.242 In so far as the shareholders of such corporations in the context of diplomatic protection were concerned, the Court emphasised that, The exercise by a state of diplomatic protection on behalf of a natural or legal person, who is associ ́e or shareholder, having its nationality, seeks to engage the responsibility of another state for an injury caused to that person by an internationally wrongful act committed by that state. Ultimately, this is no more than the diplomatic protection of a natural or legal person as defined by Article 1 of the ILC draft Articles; what amounts to the internationally wrongful act, in the case of associ ́es or shareholders, is the violation by the respondent state of their direct rights in relation to a legal person, direct rights that are defined by the domestic law of that state, as accepted by both Parties, moreover. On this basis, diplomatic protection of the direct rights of associ ́es of a SPRL or shareholders of a public limited company is not to be regarded as an exception to the general legal re ́gime of diplomatic protec- tion for natural or legal persons, as derived from customary international law.243 The United Kingdom, according to the set of Rules regarding the Taking upofInternationalClaimsproducedbytheForeignOfficein1985,244 may intervene in Barcelona Traction situations where a national has an interest as a shareholder or otherwise, and the company is defunct, although this is regarded as an exceptional instance. The United Kingdom may also intervene where it is the national state of the company that actively wrongs the company in which a United Kingdom national has an interest as a shareholder or in some other respect; otherwise the UK would normally take up such a claim only in concert with the government of the state of incorporation of the company.245 Further, practice varies as between states246 and under different treaty regimes.247 The position with regard to ships is rather different. The International Tribunal for the Law of the Sea in M/V Saiga (No. 2) emphasised that under the Law of the Sea Convention, 1982 it is the flag state that bears the rights and obligations with regard to the ship itself so that 'the ship, every thing on it and every person involved or interested in its obligations are treated as an entity linked to the flag state. The nationalities of these persons are not relevant.'248

EXTRA

IntheNeercase,271 forexample,wheretheAmericansuperintendentof a mine in Mexico had been killed, the Commission held 'that the propriety of governmental acts should be put to the test of international standards', while in the Certain German Interests in Polish Upper Silesia case,272 the Court recognised the existence of a common or generally accepted in- ternational law respecting the treatment of aliens, which is applicable to themdespitemunicipallegislation.IntheGarciacase,273 theUS-Mexican Claims Commission emphasised that there existed an international stan- dard concerning the taking of human life, and in the Roberts claim,274 reference was made to the test as to whether aliens were treated in ac- cordance with ordinary standards of civilisation. If the principle is clear, the contents or definition of that principle are far from clear. In the Neer claim,275 the Commission stated that the treatment of an alien, in order to constitute an international delinquency, should amount to an outrage, to bad faith, to wilful neglect of duty, or to an insufficiency of governmental action so far short of international standards that every reasonable and impartial man would readily recognise its insufficiency. In other words, a fairly high threshold is specified before the minimum standard applies. Some indeed have argued that the concept never involved a definite standard with a fixed content, but rather a 'process of decision',276 a process which would involve an examination of the responsibility of the state for the injury to the alien in the light of all the circumstances of the particular case.277 The issue of the content of such a standard has often been described in terms of the concept of denial of justice.278 In effect, that concept refers to the improper administration of civil and criminal justice as regards an alien.279 It would include the failure to apprehend and prosecute those wrongfully causing injury to an alien, as in the Janes claim,280 where an American citizen was killed in Mexico. The identity of the murderer was known, but no action had been taken for eight years. The widow was awarded $12,000 in compensation for the non-apprehension and non-punishment of the murderer. It would also include unreasonably long detention and harsh and unlawful treatment in prison.281 A progressive attempt to resolve the divide between the national and international standard proponents was put forward by Garcia-Amador in a report on international responsibility to the International Law Com- mission in 1956. He argued that the two approaches were now synthesised in the concept of the international recognition of the essential rights of man.282 He formulated two principles: first, that aliens had to enjoy the same rights and guarantees as enjoyed by nationals, which should not in any case be less than the fundamental human rights recognised and de- fined in international instruments; secondly, international responsibility would only be engaged if internationally recognised fundamental human rights were affected.283 This approach did not prove attractive to the ILC at that time in the light of a number of problems. However, human rights lawhasdevelopedconsiderablyinrecentyears284 andcannowberegarded as establishing certain minimum standards of state behaviour with regard to civil and political rights. It is noticeable, for example, that the relevant instruments do not refer to nationals and aliens specifically, but to all individuals within the territory and subject to the jurisdiction of the state without discrimination.285 One should also note the special efforts being made to deal with non-nationals, in particular the UN Declaration on the Human Rights of Individuals who are not Nationals of the Country in which they Live,286 and the continuing concern with regard to migrant workers.287 Some differences as regards the relative rights and obligations of na- tionals and aliens are, of course, inevitable. Non-nationals do not have political rights and may be banned from employment in certain areas (e.g. the diplomatic corps), although they remain subject to the local law. It is also unquestioned that a state may legitimately refuse to admit aliens, or may accept them subject to certain conditions being fulfilled. Whether a state may expel aliens with equal facility is more open to doubt. A number of cases assert that states must give convincing reasons for expelling an alien. In, for example, the Boffolo case,288 which concerned an Italian expelled from Venezuela, it was held that states possess a gen- eral right of expulsion, but it could only be resorted to in extreme cir- cumstances and accomplished in a manner least injurious to the person affected. In addition, the reasons for the expulsion must be stated before an international tribunal when the occasion demanded. Many munici- pal systems provide that the authorities of a country may deport aliens without reasons having to be stated. The position under customary in- ternational law is therefore somewhat confused. As far as treaty law is concerned, article 13 of the International Covenant on Civil and Political Rights stipulates that an alien lawfully in the territory of a state party to the Convention may be expelled therefrom only in pursuance of a decision reached in accordance with law and shall, except where compelling reasons of national security otherwise require, be allowed to submit the reasons against his expulsion and to have his case reviewed by and be represented for the purpose before, the competent authority. Article 3 of the European Convention on Establishment, 1956, provides that nationals of other contracting states lawfully residing in the territory may be expelled only if they endanger national security or offend against public order or morality, and Article 4 of the Fourth Protocol (1963) of the European Convention on Human Rights declares that 'collective ex- pulsionofaliensisprohibited'.289 Theburdenofprovingthewrongfulness of the expelling state's action falls upon the claimant alleging expulsion and the relevant rules would also apply where, even though there is no di- rect law or regulation forcing the alien to leave, his continued presence in that state is made impossible because of conditions generated by wrongful acts of the state or attributable to it.290 Where states have expelled aliens, international law requires their national state to admit them.291 The expropriation of foreign property 292 The expansion of the Western economies since the nineteenth century in particular stimulated an outflow of capital and consequent heavy investment in the developing areas of the world. This resulted in sub- stantial areas of local economies falling within the ownership and control of Western corporations. However, with the granting of independence to the various Third World countries and in view of the nationalisation measures taken by the Soviet Union after the success of the communist revolution, such properties and influence began to come under pressure. In assessing the state of international law with regard to the expropri- ation of the property of aliens, one is immediately confronted with two opposing objectives, although they need not be irreconcilable in all cases. On the one hand, the capital-exporting countries require some measure of protection and security before they will invest abroad and, on the other hand, the capital-importing countries are wary of the power of foreign in- vestments and the drain of currency that occurs, and are often stimulated to take over such enterprises. Nationalisation for one reason or another is now a common feature not only in communist and Afro-Asian states, but also in Western Europe. The need to acquire control of some key privately owned property is felt by many states to be an essential requirement in the interests of economic and social reform. Indeed it is true to say that extensive sectors of the economies of most West European states were at some stages under national control after having been taken into public ownership. Since it can hardly be denied that nationalisation is a perfectly legit- imate measure for a state to adopt and clearly not illegal as such under internationallaw,293 theproblemariseswhereforeignpropertyisinvolved. Not to expropriate such property in a general policy of nationalisation might be seen as equivalent to proposing a privileged status within the country for foreign property, as well as limiting the power of the state within its own jurisdiction. There is no doubt that under international law, expropriation of alien property is legitimate.294 This is not disputed. However, certain conditions must be fulfilled.295 state responsibility 829 The question, of course, arises as to the stage at which international law in fact becomes involved in such a situation. Apart from the relevance of the general rules relating to the treatment of aliens noted in the preced- ing section, the issue will usually arise out of a contract between a state and a foreign private enterprise. In such a situation, several possibilities exist. It could be argued that the contract itself by its very nature becomes 'internationalised' and thus subject to international law rather than (or possibly in addition to) the law of the contracting state. The consequences of this would include the operation of the principle of international law that agreements are to be honoured (pacta sunt servanda) which would constrain the otherwise wide competence of a state party to alter unilat- erally the terms of a relevant agreement. This proposition was adopted by the Arbitrator in the Texaco v. Libya case in 1977,296 where it was noted that this may be achieved in various ways: for example, by stating that the law governing the contract referred to 'general principles of law', which was taken to incorporate international law; by including an interna- tional arbitration clause for the settlement of disputes; and by including a stabilisation clause in an international development agreement, pre- venting unilateral variation of the terms of the agreement.297 However, this approach is controversial and case-law is by no means consis- tent.298 International law will clearly be engaged where the expropriation is unlawful, either because of, for example, the discriminatory man- ner in which it is carried out or the offering of inadequate or no compensation.299 830 international law The property question Higgins has pointed to 'the almost total absence of any analysis of concep- tualaspectsofproperty'.300 Propertywouldclearlyincludephysicalobjects and certain abstract entities, for example, shares in companies, debts and intellectual property. The 1961 Harvard Draft Convention on the In- ternational Responsibility of States for Injuries to Aliens301 discusses the concept of property in the light of 'all movable and immovable property, whether tangible or intangible, including industrial, literary and artistic property as well as rights and interests in property'. In the Liamco case the arbitration specifically mentioned concession rights as forming part of incorporeal property,302 a crucial matter as many expropriation cases in fact involve a wide variety of contractual rights.303 The nature of expropriation304 Expropriation involves a taking of property,305 but actions short of direct possession of the assets in question may also fall within the category. The 1961 Harvard Draft would include, for example, 'any such unreasonable interference with the use, enjoyment or disposal of property as to justify an inference that the owner thereof will not be able to use, enjoy or dispose of the property within a reasonable period of time after the inception of such interference'.306 In 1965, for example, after a series of Indonesian decrees, the UK government stated that: state responsibility 831 in view of the complete inability of British enterprises and plantations to exercise and enjoy any of their rights of ownership in relation to their properties in Indonesia, Her Majesty's Government has concluded that the Indonesian Government has expropriated this property.307 In Starrett Housing Corporation v. Government of the Islamic Republic of Iran before the Iran-US Claims Tribunal,308 it was emphasised by the Tribunal that: measures taken by a state can interfere with property rights to such an extent that these rights are rendered so useless that they must be deemed to have been expropriated, even though the state does not purport to have expropriated them and the legal title to the property formally remains with the original owner. In that case, it was held that a taking had occurred by the end of January 1980 upon the appointment by the Iranian Housing Ministry of a tempo- rary manager of the enterprise concerned, thus depriving the claimants of the right to manage and of effective control and use.309 However, a series of events prior to that date, including armed incursions and detention of personnel, intimidation and interference with supplies and needed facili- ties, did not amount to a taking of the property, since investors in foreign countries assume certain risks with regard to disturbances and even revo- lution. The fact that the risks materialise, held the Tribunal, did not mean that property rights affected by the events could be deemed to have been taken.310 There is clearly an important, but indistinct, dividing line here. It has also been held that the seizure of a controlling stock interest in a foreign corporation is a taking of control of the assets and profits of the enterprise in question.311 In Biloune v. Ghana Investment Centre, an 832 international law investor began construction work relying upon government representa- tions although without building permits; a stop order was then issued based upon the absence of such permit. The Tribunal held that an in- direct expropriation had taken place because the totality of the circum- stances had the effect of causing the irreparable cessation of work on the project.312 Where the taking constitutes a process rather than one clear act, there will be a problem of determining when the process has reached the point at which an expropriation in fact has occurred.313 This issue may be im- portant, for example, in determining the valuation date for compensation purposes. In Santa Elena v. Costa Rica, the Tribunal stated that 'a prop- erty has been expropriated when the effect of the measures taken by the state has been to deprive the owner of title, possession or access to the benefit and economic use of his property . . . This is a matter of fact for the Tribunal to assess in the light of the circumstances of the case.'314 The expropriation of a given property may also include a taking of closely connected ancillary rights, such as patents and contracts, which had not been directly nationalised.315 state responsibility 833 Public purposes The Permanent Court in the Certain German Interests in Polish Upper Silesia case noted that expropriation must be for 'reasons of public utility, judicial liquidation and similar measures'.316 How far this extends is open to dispute, although it will cover wartime measures. The issue was raised in the BP case,317 where the reason for the ex- propriation of the BP property was the Libyan belief that the UK had encouraged Iran to occupy certain Persian Gulf Islands. The arbitrator explained that the taking violated international law, 'as it was made for purely extraneous political reasons and was arbitrary and discriminatory in character'.318 This is ambiguous as to the public purpose issue, and in the Liamco case319 it was held that 'the public utility principle is not a necessary requisite for the legality of a nationalisation'.320 It is to be noted, however, that the 1962 General Assembly Resolution on Perma- nent Sovereignty over Natural Resources mentions this requirement,321 although the 1974 Charter of Economic Rights and Duties of States does not.322 The question may thus still be an open one,323 although later prac- tice suggests that general measures taken on a non-discriminatory basis for the public good would not constitute unlawful expropriation. The 834 international law Tribunal in Santa Elena v. Costa Rica took the view that international law permitted expropriation of foreign-owned property inter alia for a public purpose and noted that this might include a taking for environmental reasons.324 Compensation The requirement often stipulated is for prompt, adequate and effective compensation, the formula used by US Secretary of State Hull on the occasion of Mexican expropriations.325 It is the standard maintained in particular by the United States326 and found in an increasing number of bilateral investment treaties.327 However, case-law has been less clear. Early cases did not use the Hull formulation328 and the 1962 Permanent Sovereignty Resolution referred to 'appropriate compensation', a phrase cited with approval by the arbitrator in the Texaco case329 as a rule of cus- tomary law in view of the support it achieved. This was underlined in the Aminoil case,330 where the tribunal said that the standard of 'appropriate compensation' in the 1962 resolution 'codifies positive principles'.331 It was stated that the determination of 'appropriate compensation' was bet- ter accomplished by an inquiry into all the circumstances relevant to the particular concrete case than through abstract theoretical discussion.332 However, while the 'appropriate compensation' formula of the 1962 res- olution is linked to both national and international law, the 1974 Charter of Economic Rights and Duties of States links the formula to domestic law and considerations only. The former instrument is accepted as a reflection state responsibility 835 of custom, while the latter is not.333 But in any event, it is unclear whether in practice there would be a substantial difference in result.334 It should also be noted that section IV(1) of the World Bank Guidelines on the Treatment of Foreign Direct Investment provides that a state may not expropriate foreign private investment except where this is done in accordance with applicable legal procedures, in pursuance in good faith of a public purpose, without discrimination on the basis of nationality and against the payment of appropriate compensation. Section IV(2) notes that compensation will be deemed to be appropriate where it is adequate, promptandeffective.335 Article13oftheEuropeanEnergyCharterTreaty, 1994 provides that expropriation must be for a purpose which is in the public interest, not discriminatory, carried out under due process of law and accompanied by the payment of prompt, adequate and effective com- pensation.336 In the sensitive process of assessing the extent of compensation, sev- eral distinct categories should be noted. There is generally little dispute about according compensation for the physical assets and other assets of the enterprise such as debts or monies due. Although there are differing methods as to how to value such assets in particular cases,337 the essential 836 international law principle is that of fair market value.338 Interest on the value of such assets will also normally be paid.339 There is, however, disagreement with regard to the award of compensation for the loss of future profits. In AMCO v. Indonesia,340 the Arbitral Tribunal held that: the full compensation of prejudice, by awarding to the injured party, the damnum emergens [loss suffered] and the lucrum cessans [expected profits] is a principle common to the main systems of municipal law, and therefore, a general principle of law which may be considered as a source of international law, although the compensation that could be awarded would cover only direct and foreseeable prejudice and not more remote damage.341 In Metalclad Corporation v. United Mexican States, the Tribunal noted that normally the fair market value of a going concern which has a history of profitable operation may be based on an estimate of future profits subject to a discounted cash flow analysis,342 but where the enterprise has not operated for a sufficiently long time to establish a performance record or where it has failed to make a profit, future profits cannot be used so that to determine the fair market value, reference instead to the actual investment made may be appropriate.343 However, it has been argued that one may need to take into account whether the expropriation itself was lawful or unlawful. In INA Corpora- tionv.TheIslamicRepublicofIran,344 theTribunalsuggestedthatinthecase of a large-scale, lawful nationalisation, 'international law has undergone state responsibility 837 a gradual reappraisal, the effect of which may be to undermine the doc- trinal value of any "full" or "adequate" (when used as identical to "full") compensation standard'. However, in a situation involving an investment of a small amount shortly before the nationalisation, international law did allow for compensation in an amount equal to the fair market value oftheinvestment.345 However,JudgeLagergrennotedthatthe'fairmarket value' standard would normally be discounted in cases of lawful large- scale nationalisations in taking account of 'all circumstances'.346 In Amoco International Finance Corporation v. The Islamic Republic of Iran,347 Chamber Three of the Iran-US Claims Tribunal held that the property in question had been lawfully expropriated and that 'a clear distinction must be made between lawful and unlawful expropriations, since the rules applicable to the compensation to be paid by the expropri- ating state differ according to the legal characterisation of the taking'.348 In the case of an unlawful taking, full restitution in kind or its mone- tary equivalent was required in order to re-establish the situation which would in all probability have existed if the expropriation had not oc- curred,349 whileinthecaseoflawfultaking,thestandardwasthepayment of the full value of the undertaking at the moment of dispossession. The difference was interpreted by the Tribunal to mean that compensation for lost profits was only available in cases of wrongful expropriation. As far as the actual method of valuation was concerned, the Tribunal rejected the 'discounted cash flow' method, which would involve the estimation of the likely future earnings of the company at the valuation date and discount- ing such earnings to take account of reasonably foreseeable risks, since it was likely to amount to restitution as well as being too speculative.350 Bilateral investment treaties In practice, many of the situations involving commercial relations be- tween states and private parties fall within the framework of bilateral 838 international law agreements.351 Thesearrangementsareintendedtoencourageinvestment in a way that protects the basic interests of both the capital-exporting and capital-importing states. Indeed, there has been a remarkable expansion in the number of such bilateral investment treaties.352 The British gov- ernment, for example, has stated that it is policy to conclude as many such agreements as possible in order to stimulate investment flows. It has also been noted that they are designed to set standards applica- ble in international law.353 The provisions of such agreements indeed are remarkably uniform and constitute valuable state practice.354 While normally great care has to be taken in inferring the existence of a rule of customary international law from a range of bilateral treaties, the very number and uniformity of such agreements make them significant exemplars. Some of these common features of such treaties may be noted. First, the concept of an investment is invariably broadly defined. In article 1(a) of theimportantUK-USSRbilateralinvestmenttreaty,1989,355 forexample, it is provided that: state responsibility 839 the term 'investment' means every kind of asset and in particular, though not exclusively, includes: (i) movable and immovable property and any other related property rights such as mortgages; (ii) shares in, and stocks, bonds and debentures of, and any other form of participation in, a company or business enterprise; (iii) claims to money, and claims to performance under contract having a financial value; (iv) intellectual property rights, technical processes, know-how and any other benefit or advantage attached to a business; (v) rights conferred by law or under contract to undertake any commer- cial activity, including the search for, or the cultivation, extraction or exploitation of natural resources.356 Secondly, both parties undertake to encourage and create favourable con- ditions for investment, to accord such investments 'fair and equitable treatment' and to refrain from impairing by unreasonable or discrimina- tory measures the management, maintenance, use, enjoyment or disposal of investments in its territory.357 Thirdly, investments by the contracting partiesarenottobetreatedlessfavourablythanthoseofotherstates.358 As far as expropriation is concerned, article 5 of the UK-USSR agreement, by way of example, provides that investments of the contracting parties are not to be expropriated: except for a purpose which is in the public interest and is not discriminatory and against the payment, without delay, of prompt and effective compen- sation. Such compensation shall amount to the real value of the investment expropriated immediately before the expropriation or before the impend- ing expropriation became public knowledge, whichever is the earlier, shall be made within two months of the date of expropriation, after which in- terest at a normal commercial rate shall accrue until the date of payment and shall be effectively realisable and be freely transferable. The investor affected shall have a right under the law of the contracting state making the expropriation, to prompt review, by a judicial or other independent authority of that party, of his or its case and of the valuation of his or its investment in accordance with the principles set out in this paragraph. 840 international law Such practice confirms the traditional principles dealing with the condi- tions of a lawful expropriation and compensation, noting also the accep- tance of the jurisdiction of the expropriating state over the issues of the legality of the expropriation and the valuation of the property expropri- ated.359 An attempt to produce a Multilateral Agreement on Investment commenced in 1995 within the framework of the Organisation of Eco- nomic Co-operation and Development, but foundered in 1998.360 Lump-sum agreements Many disputes over expropriation of foreign property have in fact been resolved directly by the states concerned on the basis of lump-sum settle- ments, usually after protracted negotiations and invariably at valuation below the current value of the assets concerned.361 For example, the UK- USSR Agreement on the Settlement of Mutual Financial and Property Claims, 1986362 dealt with UK government claims of the order of £500 million in respect of Russian war debt and private claims of British na- tionals amounting to some £400 million.363 In the event, a sum in the region of £45 million was made available to satisfy these claims.364 The state responsibility 841 Agreement also provided that money held in diplomatic bank accounts in the UK belonging to the pre-revolutionary Russian Embassy, amounting to some £2.65 million, was released to the Soviet authorities. As is usual in such agreements, each government was solely responsible for settling the claims of its nationals.365 This was accomplished in the UK through the medium of the Foreign Compensation Commission, which acts to dis- tribute settlement sums 'as may seem just and equitable to them having regard to all the circumstances'. A distinction was made as between bond and property claims and principles enunciated with regard to exchange rates at the relevant time.366 The question arises thus as to whether such agreements constitute state practice in the context of international customary rules concerning the level of compensation required upon an expropriation of foreign property. A Chamber of the Iran-US Claims Tribunal in SEDCO v. National Iranian Oil Co.367 noted that deriving general principles of law from the conduct of states in lump-sum or negotiated settlements in other expropriation cases was difficult because of the 'questionable evidentiary value . . . of much of the practice available'. This was because such settlements were often motivated primarily by non-juridical considerations. The Chamber also held incidentally that bilateral investment treaties were also unreliable evidence of international customary standards of compensation. Views differ as to the value to be attributed to such practice,368 but caution is required before accepting bilateral investment treaties and lump-sum agreements as evidence of customary law. This is particularly so with regard to the latter since they deal with specific situations rather than laying down a framework for future activity.369 Nevertheless, it would be equally unwise to disregard them entirely. As with all examples of state practice and behaviour, careful attention must be paid to all the relevant circumstances both of the practice maintained and the principle under consideration. 842 international law Non-discrimination It has been argued that non-discrimination is a requirement for a valid and lawful expropriation.370 Although it is not mentioned in the 1962 resolution, the arbitrator in the Liamco371 case strongly argued that a dis- criminatory nationalisation would be unlawful.372 Nevertheless, in that case, it was held that Libya's action against certain oil companies was aimed at preserving its ownership of the oil and was non-discriminatory. Indeed, the arbitrator noted that the political motive itself was not the predominant motive for nationalisation and would not per se constitute sufficient proof of a purely discriminatory measure.373 While the discrim- ination factor would certainly be a relevant factor to be considered, it would in practice often be extremely difficult to prove in concrete cases. The Multilateral Investment Guarantee Agency 374 One approach to the question of foreign investment and the balancing of the interests of the states concerned is provided by the Convention Establishing the Multilateral Investment Guarantee Agency, 1985, which came into force in 1988.375 This Agency is part of the World Bank group and offers political risk insurance (guarantees) to investors and lenders. Membership is open to all members of the World Bank. Article 2 provides that the purpose of the Agency, which is an affiliate of the World Bank, is to encourage the flow of investment for productive purposes among member countries and, in particular, to developing countries. This is to be achieved in essence by the provision of insurance cover 'against non-commercial risks', such as restrictions on the transfer of currency, measures of expropriation, breaches of government contracts and losses resulting from war or civil disturbances.376 state responsibility 843 It is also intended that the Agency would positively encourage in- vestment by means of research and the dissemination of information on investment opportunities. It may very well be that this initiative could in the long term reduce the sensitive nature of the expropriation mechanism.

Spanish Zone of Morocco claim

Judge Huber emphasised that: responsibility is the necessary corollary of a right. All rights of an interna- tional character involve international responsibility. Responsibility results in the duty to make reparation if the obligation in question is not met.19

Rainbow Warrior Arbitration between France and New Zealand in 1990

State responsibility giving rise to reparation - The arbitration followed the incident in 1985 in which French agents de- stroyed the vessel Rainbow Warrior in harbour in New Zealand. The UN Secretary-General was asked to mediate and his ruling in 19864 provided inter alia for French payment to New Zealand and for the transference of two French agents to a French base in the Pacific, where they were to stay for three years and not to leave without the mutual consent of both states.5 However, both the agents were repatriated to France before the expiry of the three years for various reasons, without the consent of New Zealand. The 1986 Agreement contained an arbitration clause and this was invoked by New Zealand. The argument put forward by New Zealand centred upon the breach of a treaty obligation by France, whereas that state argued that only the law of state responsibility was relevant and that concepts of force majeure and distress exonerated it from liability. The arbitral tribunal decided that the law relating to treaties was rele- vant, but that the legal consequences of a breach of a treaty, including the determination of the circumstances that may exclude wrongfulness (and render the breach only apparent) and the appropriate remedies for breach, are subjects that belong to the customary law of state responsibility.6 It was noted that international law did not distinguish between con- tractual and tortious responsibility, so that any violation by a state of any obligation of whatever origin gives rise to state responsibility and conse- quently to the duty of reparation.7 In the Gabˇc ́ıkovo-Nagymaros Project case, the International Court reaffirmed the point that international law in Opinion No. 13, when asked a question as to whether any amounts due in respect of war damage might affect the distribution of assets and debts in the succession process affecting the successor states of the Former Yugoslavia. The Commission, in producing a negative answer, emphasised that the question of war damage was one that fell within the sphere of state responsibility, while the rules relating to state succession fell into a separate area of international law. Accordingly, the two issues had to be separately decided.9

THE EXHAUSTION OF LOCAL REMEDIES 2

The general rule was well illustrated in the Ambatielos arbitration254 between Greece and Britain. The former brought proceedings arising out of a contract signed by Ambatielos, which were rejected by the tri- bunal since the remedies available under English law had not been fully utilised. In particular, he had failed to call a vital witness and he had not appealed to the House of Lords from the decision of the Court of Appeal. The requirement to exhaust local255 remedies applies only to available effective remedies. It will not be sufficient to dismiss a claim merely be- cause the person claiming had not taken the matter to appeal, where the appeal would not have affected the basic outcome of the case. This was stressed in the Finnish Ships arbitration256 where shipowners brought a claim before the Admiralty Transport Arbitration Board, but did not appeal against the unfavourable decision. It was held that since the appeal could only be on points of law, which could not overturn the vital finding of fact that there had been a British requisition of ships involved, any appeal would have been ineffective. Accordingly the claims of the shipowners would not be dismissed for non-exhaustion of local remedies. In the Interhandel case,257 the United States seized the American assets of a company owned by the Swiss firm Interhandel, in 1942, which was suspected of being under the control of a German enterprise. In 1958, after nine years of litigation in the US courts regarding the unblocking of the Swiss assets in America, Switzerland took the matter to the International Court of Justice. However, before a decision was reached, the US Supreme Court readmitted Interhandel into the legal proceedings, thus disposing of Switzerland's argument that the company's suit had been finally rejected. The Court dismissed the Swiss government's claim since the local remedies available had not been exhausted. Criticism has been levelled against this judgment on the ground that litigation extending over practically ten years could hardly be described as constituting an 'effective' remedy. However, the fact remains that the legal system operating in the United States had still something to offer the Swiss company even after that time. The local remedies rule does not apply where one state has been guilty of a direct breach of international law causing immediate injury to another state, as for instance where its diplomatic agents are assaulted. But it does apply where the state is complaining of injury to its nationals.258 The local remedies rule may be waived by treaty stipulation, as for example in Article V of the US-Mexico General Claims Convention of 1923 and Article XI of the Convention on International Liability for Damage caused by Space Objects, 1972. The issue of local remedies was clarified in the Elettronica Sicula SpA (ELSI) case,259 which referred to the concept as 'an important principle of customary international law'.260 The case concerned an action brought by the US against Italy alleging injuries to the Italian interests of two US corporations. Italy claimed that local remedies had not been exhausted, while the US argued that the doctrine did not apply since the case was brought under the Treaty of Friendship, Commerce and Navigation, 1948 between the two states which provided for the submission of disputes relating to the treaty to the International Court, with no mention of local remedies. The Chamber of the Court, however, firmly held that while the parties to an agreement could if they so chose dispense with the local remedies requirement in express terms, it 'finds itself unable to accept that an important principle of customary international law should be held to have been tacitly dispensed with'.261 In other words, the presumption that local remedies need to be exhausted can only be rebutted by express provision to the contrary. The Chamber also dealt with a claim by the US that the doctrine did not apply to a request for a declaratory judgment finding that the treaty in question had been violated. This claim in effect was based on the view that the doctrine would not apply in cases of direct injury to a state. The Chamber felt unable to find in the case a dispute over alleged violation of the treaty resulting in direct injury to the US that was both distinct from and independent of the dispute with regard to the two US corporations.262 It was stressed that the matter 'which colours and pervades the US claim as a whole' was the alleged damage to the two US corporations.263 In the light of this stringent test, it therefore seems that in such mixed claims involving the interests both of nationals and of the state itself one must assume that the local remedies rule applies. The claim that local remedies had not in fact been exhausted in the case because the two US corporations had not raised the treaty issue before the Italian courts was rejected. It was held that it was sufficient if the essence of the claim had been brought before the competent tribunals. Accordingly, identity of claims as distinct from identity of issues is not required. The Chamber was not convinced that there clearly remained some remedy which the corporations, independently of their Italian subsidiary (ELSI), ought to have pursued and exhausted.264

THE TREATMENT OF ALIENS

The question of the protection of foreign nationals is one of those issues in international law most closely connected with the different approaches adopted to international relations by the Western and Third World na- tions. Developing countries, as well as communist countries formerly, have long been eager to reduce what they regard as the privileges accorded to capitalist states by international law. They lay great emphasis upon the sovereignty and independence of states and resent the economic influence of the West. The Western nations, on the other hand, have wished to pro- tect their investments and nationals abroad and provide for the security of their property. The diplomatic protection of nationals abroad developed as the num- ber of nationals overseas grew as a consequence of increasing trading ac- tivities and thus the relevant state practice multiplied. In addition, since the US-UK Jay Treaty of 1794 numerous mixed claims commissions were establishedtoresolveproblemsofinjurytoaliens,266 whileavarietyofna- tional claims commissions were created to distribute lump sums received from foreign states in settlement of claims.267 Such international and na- tional claims procedures together with diplomatic protection therefore enabled nationals abroad to be aided in cases of loss or injury in state responsibility situations.268

The Genocide Convention (Bosnia v. Serbia)

in the Genocide Convention (Bosnia v. Serbia) case regarded it as 'one of the cornerstones of the law of state responsibility, that the conduct of any state organ is to be considered an act of the state under international law, and therefore gives rise to the responsibility of the state if it constitutes a breach ofanobligatrionofthestate'.Itwasaruleofcustomaryinternationallaw.52 It would clearly cover units and sub-units within a state

State responsibility examples

incident in 1955 when Bulgarian fighter planes shot down an Israeli civil aircraft of its state airline, El Al.45 Another ex- ample of state responsibility is illustrated by the Nicaragua case,46 where the International Court of Justice found that acts imputable to the US included the laying of mines in Nicaraguan internal or territorial waters and certain attacks on Nicaraguan ports, oil installations and a naval base by its agents.47 In the Corfu Channel case,48 Albania was held responsible for the consequences of mine-laying in its territorial waters on the basis of knowledge possessed by that state as to the presence of such mines, even though there was no finding as to who had actually laid the mines. In the Rainbow Warrior incident,49 the UN Secretary-General mediated a settlement in which New Zealand received inter alia a sum of $7 million for the violation of its sovereignty which occurred when that vessel was destroyed by French agents in New Zealand.50 The state may also incur responsibility with regard to the activity of its officials in injuring a na- tional of another state, and this activity need not be one authorised by the authorities of the state.

Article 52

provides that before taking countermeasures, the injured state must call upon the responsible state to fulfil its obligations and notify that state of any decision to take countermeasures while offering to negotiate. However, the injured state may take such countermeasures as are necessary to preserve its rights. Where the wrongful acts have ceased or the matter is pending before a court or tribunal with powers to take binding decisions, then countermea- sures should cease (or where relevant, not be taken).104 Countermeasures shall be terminated as soon as the responsible state has complied with its OBLIGATIONS

Article 2 of the International Law Commission's Articles on State Responsibility

provides that there is an internationally wrongful act of a state when conduct consisting of an action or omission is attributable to the state under international law and constitutes a breach of an international obligation of the state. This principle ha s been affirmed in the case-law It is international law that determines what constitutes an internationally unlawful act, irrespective of any provisions of municipal law.

Article 1 of the International Law Commission's Articles on State Re- sponsibility

reiterates the general rule, widely supported by practice,21 that every internationally wrongful act of a state entails responsibility.

Corfu Channel Case (1949) UK v Albania

the International Court appeared to lean towards the fault theory38 by saying that: it cannot be concluded from the mere fact of the control exercised by a state over its territory and waters that that state necessarily knew, or ought to have known, of any unlawful act perpetrated therein, nor yet that it necessarily knew, or should have known, the authors. This fact, by itself and apart from other circumstances, neither involves prima facie responsibility nor shifts the burden of proof. - O. Be- cause of the difficulties of presenting direct proof of facts giving rise to responsibility, the victim state should be allowed a more liberal recourse to inferences of fact and circumstantial evidence.40 However, it must be pointed out that the Court was concerned with Albania's knowledge of the laying of mines,41 and the question of prima facie responsibility for any unlawful act committed within the territory of the state concerned, irrespective of attribution, raises different issues. It cannot be taken as proof of the acceptance of the fault theory. It may be concluded that doctrine and practice support the objective theory and that this is right, particularly in view of the proliferation of state organs The Commentary to the ILC Articles emphasised that the Articles did not take a definitive position on this controversy, but noted that standards as to objective or subjective approaches, fault, negligence or want of due diligence would vary from one context to another depending upon the terms of the primary obligation in question.

the Chorzo ́w Factory case

the Permanent Court of International Justice said that: it is a principle of international law, and even a greater conception of law, that any breach of an engagement involves an obligation to make reparation

In the Caire claim

the matter disallowed the claim, in applying the objective test. In the Caire claim,34 the French-Mexican Claims Commission had to consider the case of a French citizen shot by Mexican soldiers for failing to supply them with 5,000 Mexican dollars. Verzijl, the presiding commis- sioner, held that Mexico was responsible for the injury caused in accor- dance with the objective responsibility doctrine, that is 'the responsibility for the acts of the officials or organs of a state, which may devolve upon it even in the absence of any "fault" of its own'.