Diplomatic Protection and Local Remedies: Barcelona Traction

When a foreigner is injured by the acts of a state, the person usually has no standing before international tribunals. The traditional remedy is diplomatic protection: the person's state takes up the claim against the wrongdoing state. This note covers the standards owed to aliens, the nature and conditions of diplomatic protection, the rule on exhausting local remedies, and the protection of companies and shareholders in Barcelona Traction.

1. Treatment of Aliens

• Admission. A state has no general duty to admit aliens and may set conditions on entry, subject to treaties and the law on refugees.
• Expulsion. A lawfully present alien may be expelled only by a decision reached in accordance with law, with an opportunity to submit reasons and have the case reviewed, unless national security requires otherwise (Article 13, ICCPR)
• Ahmadou Sadio Diallo (Guinea v DRC), 2010. The DRC's arrest, detention and expulsion of a Guinean businessman violated Articles 9 and 13 of the ICCPR, the African Charter and Article 36 of the consular convention; compensation was fixed in 2012.

Figure 1: Two standards of treatment

• Neer claim (US v Mexico), 1926. The treatment of an alien violates international law only if it amounts 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 person would readily recognise it.
• Calvo clause. A contract clause by which an alien agrees to submit disputes to local courts and not to seek diplomatic protection; in North American Dredging Co (1926), it was held valid as to the individual's contractual claims, but an individual cannot waive the state's own right to protect him against a breach of international law.
• Property. Expropriation of alien property requires a public purpose, non-discrimination and compensation; the standard of compensation is considered in Topic 57.

2. Nature of Diplomatic Protection

• Definition, ILC Article 1 (2006). 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 to a natural or legal person that is a national of the former state.
• Mavrommatis Palestine Concessions, PCIJ, 1924. By taking up the case of one of its subjects, a state is in reality asserting its own rights, its right to ensure respect for international law in the person of its subjects.
• Discretion. The state has a right, not a duty, to protect; it decides whether to claim and how to use any compensation (Barcelona Traction, 1970; ILC Article 2); national courts in some countries have required governments at least to consider requests.
• Distinct from consular assistance. Consular officers help nationals without making a claim; diplomatic protection is a formal claim for an international wrong already done.

3. Conditions

Figure 2: When a state may exercise diplomatic protection

• Nationality of claims. The person must be a national of the claimant state continuously from the date of injury to the official presentation of the claim (ILC Article 5); a state may protect stateless persons and refugees lawfully and habitually resident in it (Article 8)
• Interhandel (Switzerland v USA), 1959. The rule that local remedies must be exhausted before international proceedings is a well established rule of customary international law; Interhandel's case was still pending in US courts, so the claim was inadmissible.
• Elettronica Sicula (ELSI) (USA v Italy), 1989. A Chamber held that local remedies are exhausted where the essence of the claim has been brought before the competent tribunals and pursued as far as local law permits, even if not on the exact international law argument.
• Exceptions, ILC Article 15. No reasonably available local remedies providing effective redress; undue delay attributable to the respondent state; no relevant connection between the person and the state; the person is manifestly precluded from pursuing remedies; or the state has waived the requirement.

4. Companies and Shareholders

• Barcelona Traction, Light and Power Co (Belgium v Spain), 5 February 1970. The company, incorporated and with its registered office in Canada, operated utilities in Spain and was declared bankrupt by Spanish courts in 1948; most shares were held by Belgians; the Court held that Belgium had no standing, because injury to the company's rights is not injury to shareholders' rights, only to their interests; the company's national state, Canada, alone could protect it.
• Exceptions considered. The Court noted that the veil might be lifted where the company had ceased to exist or its national state lacked capacity to act, but found neither applied.
• Obiter on erga omnes. In the same judgment, the Court distinguished obligations owed to the international community as a whole (Topic 10)

Figure 3: Protection of companies and shareholders

5. Frequently Asked Questions

Why could Belgium not protect the shareholders in Barcelona Traction?

Because the measures harmed the company, a separate legal person of Canadian nationality. Shareholders' financial interests were affected, but their own legal rights were not, so only Canada, as the company's national state, could take up the claim.

Must local remedies be exhausted even if courts are clearly ineffective?

No. Under ILC Article 15, the rule does not apply where there are no reasonably available local remedies providing effective redress, or where there is undue delay attributable to the respondent state.

Is a state obliged to protect its nationals abroad?

Not under international law. Diplomatic protection is a right of the state, exercised at its discretion (Barcelona Traction, 1970; ILC Article 2). The ILC Articles recommend, in Article 19, that states give due consideration to protection where significant injury has occurred.

What is the continuous nationality rule?

The injured person must have been a national of the claimant state at the date of the injury and continuously until the official presentation of the claim (ILC Article 5), so that a person cannot acquire a powerful protector by changing nationality after the event.

6. Related Topics

• Topic 38: Nationality. Nottebohm and dual nationals.
• Topic 43: State Responsibility. Wrongful acts and reparation.
• Topic 57: International Economic Law. Investment protection and expropriation.