The Protection of Foreigners and Investments Abroad Diplomatic Protection of Natural and Legal Persons

The Protection of Foreigners and Investments Abroad Diplomatic Protection of Natural and Legal Persons

Structure 1. Introduction 1. Brief historical background 2. Contemporary system of protection 2. Primary Rules 3. Secondary Rules 2

Introduction: Sovereigns represent claims of individuals Vattel (1714-1767): whoever uses a citizen ill, indirectly offends the state, which is bound to protect this citizen Mavrommatis Palestine Concession Case (PCIJ 1924): by taking up the case of one of its subjects a State is in reality asserting its own rights A world dominated by countries whose citizens invested heavily abroad Special courts and/or legal regimes for foreigners investors Heavily criticised by developing and, in particular, Latin American countries 3

Introduction: Contemporary System Contemporary System of Protection based on: a) Customary International Law b) Conventions c) Cases d) Draft Articles of the International Law Commission Þ2001 Articles on the Responsibility of States for Internationally Wrongful Acts (ARSIWA) Þ2006 Draft Articles on Diplomatic Protection (DAP) 4

Primary and Secondary Rules 1. Primary Rules: which substantive rights do foreign nationals and corporations possess? 2. Secondary Rules: how can foreign nationals and corporations enforce their rights? 5

Primary Rules Multiplicity of protective legal layers Þ Domestic Law: Swedish Aliens Act 2005 Þ EU Law: TFEU Þ ECHR Law: ECHR Þ Specific Conventions: ICCPR, Vienna Convention on Consular Relations Þ Investment Law 6

Domestic Law 2005 Aliens Act: Ch. 12, Sec. 7a: Aliens with a permanent right of residence may not be expelled unless there are exceptional circumstances 7

Domestic Law In the proceedings before the British Courts Julian Assange enjoyed the various protections of English Law 8

Domestic Law Treaty on the Functioning of the European Union: art. 21 and art. 45: guarantee free movement and protect against non-discrimination on grounds of nationality 9

EU Law The case against Julian Assange in the UK proceeds on the basis of and pursuant to a European Arrest Warrant a legal instrument based on an EU Framework Decision 10

European Convention of Human Rights European Convention of Human Rights: art. 5: protects against arbitrary detention 11

European Convention of Human Rights Alleged violations of Julian Assange s ECHR rights were invoked before the Swedish Supreme Court 12

Specific Human Rights Regimes 1951 Refugee Convention 1966 International Covenant on Civil and Political Rights 1963 Vienna Convention on Consular Relations 13

Specific Human Rights Regimes The UN Working Group on Arbitrary Detention ruled that Julian Assange is being detained arbitrarily 14

Recap: Primary Rules ÞDomestic Law ÞEU Law ÞECHR Law ÞSpecific Human Rights Regimes ÞInvestment Law 15

Primary Rules: Investments ÞSources: Þ General International Law Þ Bilateral Investment Treaties 16

Primary Rules: Investments General Principles Minimum Standard: which reference standard? Þ National Treatment Þ Accord aliens the same treatment as nationals Þ International Minimum Standard Þ Neer Claim 1926: The propriety of governmental acts should be put to the test of international standards. Þ NAFTA 1105(1): Each Party shall accord to investments of investors of another Party treatment in accordance with international law. 17

Primary Rules: Investments General Principles Which content of reference standard? Þ NAFTA 1105(1): fair and equitable treatment, full protection and security Þ Neer Claim 1926: only acts amounting to an outrage, bad faith, wilful neglect of duty or an insufficiency of governmental action 18

Primary Rules: Investments General Principles Specific claims: ÞDenial of justice ÞAzinian v. United Mexican States 1999 (NAFTA) Þ Expropriation Þ Metalclad Corporation v. United Mexican States 2000 (NAFTA) Þ Expropriation lawful if adequate compensation provided Þ Even if no compensation, might be lawful if expropriation for specific public purposes (police powers, national defence) 19

Primary Rules: Investments Bilateral Investment Treaty ÞBilateral Investment Treaties (BIT) primary means of protecting investors ÞExample: 2004 Sweden Kazakhstan BIT Level of protection (art. 3): no less favourable that that accorded to investments made by its own investors or by investors of any third State Expropriation (art. 4): No measures depriving an investor of an investment unless the following conditions are complied with - Public interests and due process of law - non-discriminatory - Compensation payable 20

Secondary Rules How can an individual/corporation enforce a violated right? Þ Depends on the source of the infringed right Þ Domestic Law: Domestic Courts Þ EU Law: Domestic Courts, EU Courts Þ ECHR: Domestic Courts, ECtHR Þ International Law: Domestic Courts, International Courts Þ General Principles Þ Investment Law: Domestic Courts, International Courts, Arbitration Panels 21

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection Art. 1 DAP: Diplomatic Protection consists of the invocation by a State, through diplomatic 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 22

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 1. 2. 3. 4. 5. 6. 7. Invocation by a State Diplomatic action or other means Responsibility of another State Injury Caused by Internationally Wrongful Act To a natural or legal person That is a national of the former State Plus: Exhaustion of Local Remedies 23

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 1. Invocation by a State Þ This excludes the invocation by international organisations Reparation for Injuries Case 1949 (ICJ) 24

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 2. Diplomatic action or other means of peaceful settlement ÞIncludes all lawful procedures including protest, request fo an inquiry, negotiations, mediation, arbitration, judicial dispute settlement ÞDoes not include use of force, requests for corrective action 25

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 3. Of the Responsibility of Another State ÞThis means act in question must be attributable to a State in accordance with the ARSIWA 26

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 4. Injury ÞState in question must be able to establish that one of its nationals sustained an injury 27

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 5. An internationally wrongful act ÞThis refers to the definition of an internationally wrongful act of the ARSIWA art. 2: There is an internationally wrongful act of a State when conduct consisting of an act or an omission: a) is attributable to that State; and b) constitutes a breach of an international obligation of that State. 28

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 6. To a natural or legal person Þ This means that diplomatic protection extends not only to natural people, but also corporations Þ Draft Articles in principle also apply to legal entities that are not corporations (cf. art. 13 DAP) such as NGOs or universities. 29

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 7. National of the Former State Þ In principle States can only exercise diplomatic protection with respect to their own nationals Þ In principle States are free to decide on which basis they grant nationality 30

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 7a. Nationality of Natural Persons (Ch. II, DAP) Þ Nationality may be based, for example, on birth descent, naturalisation: Þ Note Nottebohm 1955 (ICJ) now confined to its facts Þ LaGrand 2001 (ICJ) made no reference to genuine link Þ Special Issues Þ Multiple Nationalities: art. 6 DAP Þ Competing Nationalities: art. 7 DAP ÞRefugees/Stateless Persons: art. 8 DAP 31

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection 7b) Nationality of Legal Persons (Ch. III, DAP) ÞCorporation s nationality: State where incorporated, unless: Þ no substantial business activities in State of incorporation Þ seat of management elsewhere Þ financial control located in other State Þ Special Issues: Protection of Shareholders Þ only the State of incorporation can exercise diplomatic protection (art. 11 DAP). Exceptions: Þ the corporation ceased to exist, Þ the state of incorporation is itself to blame for a given injury, Þ direct injury to shareholders 32

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection Plus: Exhaustion of Local Remedies Þ Art. 14 DAP: A State may not present an international claim in respect of an injury to a national or other person before the injured person has exhausted all local remedies Þ Local remedies: legal remedies open to injured person before the judicial or administrative courts of the State alleged to be responsible for causing the injury (art. 14(2) DAP) 33

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection Reason for exhaustion of local remedies rule: Þ Individual claims better handled in domestic courts Þ Governments dislike having to deal with many diplomatic protection claims Þ Reasonable to submit to local system first 34

Secondary Rules: General Principles The Draft Articles on Diplomatic Protection Exceptions to Local Remedies Rule (art. 15 DAP): Þ No reasonably available local remedies: are courts reasonably capably of providing relief? Þ Þ Þ Þ Þ Local courts have no jurisdiction Local courts lack independence Consistent line of precedent adverse to aliens Local courts lack competence Inadequate system of judicial protection Þ Undue delay Þ No reasonable connection between injured person and responsible State Þ Injured person precluded from local remedies Þ Requirement waived (=> BITs) 35

Secondary Rules: Special Rules - BITs Investment Disputes are normally governed by special investment regimes: Þ ICSID: International Centre for Settlement of Investment Disputes Þ UNCITRAL: United Nations Commission on International Trade Law Þ Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) 36

Secondary Rules: Special Rules The Swedish-Kazakhstan BIT Investor-State Disputes (art. 8 BIT): Þ Negotiations Þ International Arbitration Þ ICSID Þ UNCITRAL ad hoc arbitration tribunal State-State Disputes (art. 9 BIT) Þ Ad hoc tribunal Þ Assisted if necessary by ICJ 37

Questions? 38