Agenda Item 152

Report of the International Law Commission on the work of its fifty-fifth session

Diplomatic Protection
New York, October 29, 2003

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Mr. Chairman,

Let me commence by congratulating you as well as the other Members of the Bureau on your election.

Addressing for the first time agenda item No. 152: "Report of the International Law Commission on the work of its fifty-fifth session" (hereinafter referred to as "the Report"), the Czech Delegation wishes to thank Mr. Enrique Candioti, Chairman of the 55th session of the International Law Commission (hereinafter referred to as "the Commission"), for the efficient manner in which he conducted Commission´s deliberations this year as well as for his insightful introduction to the relevant Chapters of the Report, in particular to Chapter IV, V, VI and XI. My delegation would also like to express its gratitude to the distinguished members of the Commission as well as to the Commission´s Secretariat for the excellent outcome of the 55th session of the Commission as contained in document A/58/10.

Mr. Chairman,

In this statement I would like to focus on the topic "Diplomatic Protection". First, I will comment on issues relating to the scope of the draft articles on "Diplomatic Protection". Then, I will address some aspects concerning the new draft articles on the topic in question that the Commission examined at its 55th session. In addition to comments on "Diplomatic Protection", I would like to touch upon Chapter XI of the Report at the end of my statement.

Mr. Chairman,

As regards the topic "Diplomatic Protection" I wish to start by commending both the Special Rapporteur and the Commission for the progress they have achieved on the subject matter. We hope that the progress will enable the Commission to conclude the topic of " Diplomatic Protection" within the current quinquennium.

Turning to issues relating to the scope of the draft articles on "Diplomatic Protection", I will briefly comment on paragraphs 28 and 29 of the Report.

According to paragraph 28 of the Report, two issues will be examined by the Special Rapporteur in his final report, namely the issue of "the diplomatic protection of members of a ship´s crew by the flag State", and the issue of "the diplomatic protection of nationals employed by an intergovernmental international organization in the context of the Reparation for Injuries case". As the Czech Delegation already indicated in its statement delivered during the last year´s discussion in the Sixth Committee on "Diplomatic Protection", we are not convinced of the necessity to extend the scope of the draft articles on "Diplomatic Protection" to diplomatic protection exercised by a flag State on behalf of crew members and passengers who are nationals of a State different from a flag State. We have also certain doubts whether the issue of the so-called functional protection exercised by an international organization on behalf of its officials, based on the contractual link between such an organization and its officials, is appropriate one to be covered in the draft articles on "Diplomatic Protection".

Paragraph 29 of the Report seeks Governments´comments on the question whether the Commission should consider within the topic of "Diplomatic Protection" any other issue than those already covered in the existing draft articles or those to be included in the Special Rapporteur´s final report. In our view, it is perhaps the issue of the delegation of the right of a State to exercise diplomatic protection to a third State that the Commission might take into consideration in its future deliberations on "Diplomatic Protection". In this regard we would recall Article 20 of the Consolidated Version of the Treaty Establishing the European Community, according to which: "Every citizen of the Union shall, in the territory of a third country in which the Member State of which he is a national is not represented, be entitled to protection by the diplomatic or consular authorities of any Member State, on the same conditions as the nationals of that State.". Although the Special Rapporteur noted in his Third Report that the delegation of the right to exercise diplomatic protection does not frequently arise in practice and is rarely discussed by the jurisprudence, the given example shows that the issue is or could be a practical one, at least for the European Union Member States.

Mr. Chairman,

Let me now comment on some of the new draft articles on " Diplomatic Protection"that the Commission examined at its 55th session, namely on draft articles 17, 18 and 19.

As the Special Rapporteur rightly pointed out in its Fourth Report, it is the well known Judgment of the International Court of Justice in the Case Concerning the Barcelona Traction, Light and Power Company, Limited, rendered by the Court in 1970, that represents the key judicial decision in the realm of diplomatic protection of legal persons or, more specifically, in the realm of diplomatic protection of corporations and of shareholders in such corporations.

Considering the Judgement of the Court in the Barcelona Traction Case, in particular the separate opinions given by the Judges of the Court, one might notice how delicate and contradictory the issue of diplomatic protection of shareholders was at the time the Court rendered its Judgement and perhaps still is. Worth mentioning in this regard is the criticism that the Court´s Judgement attracted, in particular, among writers, who criticized not only the general rule the Court had expounded in its Judgement but also the way the Court had arrived at the general rule. Even today there are voices advocating departing from the Court´s findings in the Barcelona Traction Case.

The Czech Delegation, however, does not respond in the affirmative to the voices that are advising modifications of the general rule of the Barcelona Traction Case, i.e. departing from the rule according to which it is a State of nationality of a corporation who is entitled to exercise the right of diplomatic protection in respect of an injury inflicted on the corporation by another State and not a State of nationality of shareholders in that corporation whose rights have been violated only as a consequence of the direct injury to the corporation. We are of the opinion that the general rule, the Court articulated in its Judgement in the Barcelona Traction Case, together with the exceptions from the general rule, the Court recognized in its Judgement, accurately reflects the current state of customary international law in relation to diplomatic protection of corporations. Departing from the general rule by allowing the possibility of two or even more competing claims on behalf of a corporation and on behalf of shareholders in that corporation, could create, as the Court had pointed out, "an atmosphere of confusion and insecurity in international economic relation". Therefore, the Czech Delegation concurs with those voices speaking in favor of the retention of the general rule of the Barcelona Traction Case.
Having said that, my delegation notes with satisfaction that the basic principle of diplomatic protection of corporations, the Special Rapporteur decided to follow in his Fourth Report, reflects the general rule of the Barcelona Traction Case and that the approach gained the general support among the members of the Commission. My delegation finds the general principle of diplomatic protection of corporations reflected in draft article 17, paragraph 1, to be appropriate one. As regards draft article 17, paragraph 2, we would prefer deletion of the current text in brackets, i.e. omitting the criterion of "the place of the registered office" that a corporation would be required to meet in order to fit into the definition of a State of nationality of the corporation.

Draft article 18 is dealing with certain exceptions to the general rule of the Barcelona Traction Case. As to the question whether it is de jure status of a corporation or its de facto status which should be decisive in formulating the exception from the general rule allowing, in qualified cases, a State of shareholders in a corporation to exercise diplomatic protection on their behalf in respect of an injury to the corporation, my delegation shares the Court´s opinion that "the company´s status in law is alone relevant, and not its economic condition, nor even the possibility of its being "practically defunct"". Therefore, we support the basic idea of draft article 18 (a) that the so-called secondary right, i.e. the right of a State of nationality of shareholders in a corporation to exercise the right of diplomatic protection on their behalf, should be activated only if the so-called primary right, i.e. the right of a State of nationality of a corporation to exercise the right of diplomatic protection on behalf of that corporation, ceased to exist de jure. As far as draft article 18 (b) is concerned, we would be hesitant to state at this stage whether it reflects the current status of customary international law or not. Even the Court in its Judgement in the Barcelona Traction Case did not explicitly take a stand on the question whether there is or not the exception to the general rule which would enable a State of nationality of shareholders to exercise the right of diplomatic protection on behalf of the shareholders in situations where it is the State of nationality of the corporation who is responsible for the alleged injury to the corporation. Considering this issue, one should not forget the disagreement among the Judges of the Court over the existence of such an exception when several Judges of the Court explicitly recognized the existence of the exception while several others explicitly opposed its existence. However, my delegation notes with interest the Special Rapporteur´s opinion, the opinion of many scholars as well as the opinion of several States that the Court´s reference to "equity and reason", in relation to the exception in question, may be considered as its implicit recognition by the Court. Further, we are also aware of the fact that the exception was recognized by several arbitral decisions.

Draft article 19 reflects, in our view, the findings of the Court in the Barcelona Traction Case with respect to an infringement of direct rights of shareholders in a corporation and we support its basic idea.

Mr. Chairman,

As I indicated at the beginning of this statement, I would like to comment briefly on Chapter XI of the Report, in particular on its Part A.2. "Documentation of the Commission".

In order to fulfill its obligations under Article 13, paragraph 1 (a) of the Charter, on 21 November 1947 the General Assembly adopted resolution 174 (II), establishing the International Law Commission and approving the Commission´s Statute. According to Article 1 of the Statute the object of the Commission´s activities is "the promotion of the progressive development of international law and its codification". Since its first annual session in 1949 the Commission has dealt with many topics of international law, selected by the Commission itself or referred to it by the General Assembly. Further, the Commission has also dealt with the so-called special assignments of the General Assembly, examining particular legal materials or legal questions. It would take a while to enumerate all the topics that the Commission successfully concluded since its establishment. In most cases the Commission´s final report on the specific topic contains a set of draft articles accompanied by extensive commentaries referring to the relevant State practice, judicial and quasi-judicial findings and jurisprudence. In many cases draft articles prepared by the Commission served as the key legal basis in the process of elaborating international conventions. Needless to say that it is not only the Governments of States who have greatly benefitted from the work of the Commission but the international legal community as a whole. In our view it is obvious how important and hardly substitutable role the Commission has played in the process of codification and progressive development of international law.

The Commission´s Report from its 55th session, which consists of almost 300 pages, is currently under our consideration. My delegation would recall that the Report of the Commission from its 53rd session contained 536 pages, from which more than 300 dealt exclusively with the final text of the draft articles and commentaries on "State Responsibility".

Having said that, we find any attempt to set up a page limit for both reports of the Commission and reports of the Commission´s Special Rapporteurs to be inappropriate one. In this regard we fully concur with the Commission´s concerns as contained in Chapter XI, Part A.2., of the Report.

I thank you, Mr. Chairman.