CHAP 9: LAW OF STATE RESPONSIBILITY

9.1) NATURE OF STATE RESPONSIBILITY

 State responsibility refers to ‘liability’ of a state under international law.

 Responsibility arises from the breach by a State of an international obligation. That
obligation can be one of customary international law or a treaty obligation.
 The main reference is the International Law Commission’s Articles on Responsibility of
States for Internationally Wrongful Acts 2001, adopted by the General Assembly on 28
Nov. 2002.
 Substantive rules of international law (Primary rules): customary or treaty rules
laying down substantive obligations for States
 The law of State responsibility (Secondary rules): rules relating to (a) whether there
has been a breach of a primary rule and (b) the legal consequences of such a breach.

9.2) ELEMENTS OF STATE RESPONSIBILITY

 Art. 1 of the Articles on Responsibility of States, 2001: “Every internationally wrongful

act of a State entails the international responsibility of that State.”
 Art. 2 of the Articles on Responsibility of States, 2001: There is an internationally
wrongful act of a state when conduct consisting of an action or omission:
(1) Is attributable to the state under international law.
(2) Constitutes a breach of an international obligation of the state.
 Conduct: actions or omissions:
o Conduct attributable to the State can consist of actions or omissions.
o An example of an omission:
 Corfu Channel case
- The ICJ held that Albanian was responsible because it knew, or must have
known, of the presence of the mines in its territorial waters and did nothing to
warn third States of their presence.
 US Diplomatic and Consular Staff in Tehran case
- The Court concluded that Iran was responsible for the “inaction” of its
authorities which failed to take appropriate steps to protect the embassy and its
staff.
 Article 2 specifies the two constituent elements of an internationally wrongful act:
(1) Attribution of conduct to the State
(2) Breach of an international obligation by the State.
 Tehran Hostage case
o In principle, the fulfilment of these elements is a sufficient. In some cases, however,
the respondent State may claim that it is justified in its non-performance, by referring
to a ‘defence’.
o Three requirements: attribution, breach and absence of any defence.

9.3) ATTRIBUTION OF CONDUCT TO THE STATE

 The State is an abstract entity. It cannot act by itself.

 An “act of the State” must involve some action or omission by a human being or group.
States can act only by and through their organs or agents.
 The question is which persons should be considered as acting on behalf of the State.
 The general rule: A State organ is considered as acting on behalf of the State and its
conduct is considered as an “act of the State” for which the State is responsible under
international law.
 As a corollary, the conduct of private persons acting in their private capacity is not as
such attributable to the State.
 Conduct of State Organs (Art 4)
o The conduct of any State organ shall be considered an act of that state under
international law, whether the organ exercises legislative, executive, judicial or any
other functions, whatever position it holds in the organization of the State, and
whatever its character as an organ of the central government or of a territorial unit of
the State.
o An organ includes any person or entity which has that status in accordance with the
internal law of the State.
o Executive organ
 Massey claim: Failure of Mexican authorities to punish the killer of Massey, a
US citizen.
 Rainbow Warrior Incident: Rainbow Warrior was blown up by French secret
service agents.
 o Judicial organ
 Immunity from Legal Process of a Special Rapporteur of the Commission on
Human Rights
 Dato’ Pram Cumarasuamy case
- “According to a well established rule of international law, the conduct of any
organ of a State must be regarded as an act of that State. This rule…is of a
customary character.”
o Acting in an official capacity
 Even though a person or entity has the status of a State organ, the State will be
responsible only when that person acts “in an apparent official capacity”. If the
person acts in a private capacity, just as a private citizen, the State will not be
responsible.
o Mallen case
 A Mexican consul had been violently attacked and beaten twice by an American
police officer.
 As for the first attack, the evidence indicated a wanton act of a private individual
who happened to be an official.
 On the second attack, the American police officer, showing his badge to assert
his ‘official capacity’, struck Mallen with his revolver, and then took him at gun
point to the county jail. It was held that the US was responsible for this second
assault.
 Conduct of persons or entities exercising elements of governmental authority (para-
Statal entities) [Art. 5]
 The conduct of a person or entity which is not an organ of the State under Art.
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.
 Liability for ultra vires act [Art. 7]
 The conduct of an organ of a State or of a person or entity empowered to
exercise elements of the governmental authority shall be considered as an act of
the State under international law if the organ, person or entity acts in that
capacity, even if it exceeds its authority or contravenes instructions.
  Caire claim
- Caire, a French national, was killed in Mexico by two Mexican military officers.
After failing to extort money, they took Caire to the military barracks and shot
him.
- Held: The officers in question, even if they are to be regarded as having acted
outside their competence…and even if their superior officers issued a counter-
order, have involved the responsibility of the State, since they acted in their
capacity as military officers and used the means placed at their disposal by virtue
of that capacity.
 Youmans claim
- A mob gathered around a house in Mexico within which were 3 US nationals.
The mayor ordered a lieutenant to proceed with troops to put an end to the attack
upon the Americans. Instead of doing that they opened fire on the house which
resulted in the death of all the Americans.
- Held: We do not consider that …acts of soldiers committed in their private
capacity…. it is clear that …the men were on duty under the immediate
supervision and in the presence of a commanding officer.
 Southern Pacific Properties (Middle East) Ltd v Egypt
- The co. entered into a contract with Egypt to develop land for tourism. There
was strong opposition in Egypt because the plan would damage valuable
antiquities. Egyptian government withdrew permission. They argued that Egypt
was not responsible because the permission was contrary to Egyptian law and
therefore ultra vires.
- Held: A State is responsible for unlawful acts of State organs, even if
accomplished outside the limits of their competence and contrary to domestic
law.
 Conduct of persons directed or control by the State [Art. 8]
o Article 8, “The conduct of a person or group of persons shall be considered an act of
a State under international law if the person or group of persons is in fact acting on
the instruction of, or under the direction or control of, that State in carrying out the
conduct.”
o Nicaragua case
  The test of “effective control”
 “It would in principle have to be proved that that State had effective control of
the military and paramilitary operations in the course of which the alleged
violations are committed. The Court …takes the view that the contras remain
responsible for their acts, and that the United States is not responsible for the
acts of the contras, but for its own conduct vis-à-vis
o Prosecutor v Tadi`c
 The test for whether the conduct of group is attributable to the State is whether
they are under the ‘overall control’ of a State, without necessarily this State
issuing instructions concerning each specific action.
 The ILC Article 8 adopts the somewhat stricter test of the Nicaragua case.
 Conduct of an Insurrectional or other Movement (Art 10)
o Conduct of a successful insurrectional movement which becomes a new
government [Art. 10]
o The conduct of an insurrectional movement which becomes the new government of a
State shall be considered an act of that State under international law.
o Short v Iran
 An American citizen, was employed by an American co. in Iran. He alleged
that he was forcefully expelled from Iran 3 days before the Revolutionary
Govt. took office and claimed damages for his loss of employment benefits.
 Held: (a) Where a revolution leads to the establishment of a new government
the State is responsible for the acts of the overthrown government insofar as
the latter maintained control of the situation.
(b)The successor government is also responsible for the acts imputable to the
revolutionary movement even if those acts occurred prior to its establishment,
as a consequence of the continuity existing between the new organization of
the State and the revolutionary movement.
(c) The claimant is unable to identify any agent of the revolutionary
movement, the actions of which compelled him to leave Iran. The acts of
supporters of a revolution [as opposed to its agents] cannot be attributed to the
government.
o Unsuccessful or on-going insurrectional or other movement
  In fact the conduct of unsuccessful or on-going insurrectional movement can
be assimilated to that of private individuals.
 It can be placed on the same footing as that of persons or groups who
participate in a riot or mass demonstration, and it is likewise not attributable
to the State (unless the State itself is guilty of breach of good faith or
negligent in suppressing insurgency, etc.)
 Home Missionary Society Claim
- The natives of Sierra Leone revolted against the British because they did not
want the collection of a new tax. During the rebellion, all the United States’
missions were attacked and destroyed, and some of the missionaries were
murdered.
- Held: It is a well-established principle of international law that no government
can be held responsible for the act of rebellious bodies of men committed in
violation of its authority, where it is itself guilty of no breach of good faith, or of
no negligence in suppressing insurrection.
 Sambaggio case
- An Italian national sought compensation for damage caused by unsuccessful
revolutionaries in Venezuela.
- Held: The very existence of a revolution presupposes that a certain set of men
have gone beyond the power of the authorities; and unless the government has
failed to use promptly and with appropriate force its constituted authority, it
cannot reasonably be said that it should be responsible for a condition of affairs
created without its volition.
 Conduct acknowledged and adopted by a State as its own [Article 11]
o Conduct which is not attributable to a State under the preceding articles shall
nevertheless be considered an act of that State under international law if and to the
extent that the State acknowledges and adopts the conduct in question as its own.
o United States Diplomatic and Consular Staff in Tehran Case
 In 1979, several hundred student-demonstrators occupied the US Embassy in
Tehran by force and held the embassy staff as hostages.
 The Court divided the events into two phases.
 In the first stage, the attack was carried out by militants who in no way could
be regarded as “agents” or organs of the Iranian State’. Therefore, according
 to the Court, the militants’ conduct could not be imputable to the State on that
basis.
 Nevertheless Iran was held responsible in that it failed to protect the embassy
and the diplomats as required by international law (Vienna Convention on
Diplomatic Relations, 1961).
 The second phase started after completion of the occupation of the embassy.
At this stage, the Iranian Government was legally bound to bring to an end the
unlawful occupation and pay reparation. Instead, it approved and endorsed the
occupation and even issued a decree stating that the American embassy was a
centre of espionage.
 The decree went on expressly to declare that the embassy and the hostages
would remain as they were until the US had handed over the former Shah for
trial.
 The approval given to the acts of the militants and the decision to perpetuate
them translated continuing occupation of the embassy and detention of the
hostages into acts of that State. The militants had now become agents of the
Iranian State for whose acts the State itself was internationally responsible.
 Conduct of private persons – not attributable
o In principle, a State is not responsible for the acts of private individuals, unless they
were in fact acting on behalf of that State.
o However, sometimes the acts of private individuals may be accompanied by some act
or omission on the part of the State, for which the State is liable. The following are
examples of such act or omission:
 Failure to exercise “due diligence”
 Asian Agricultural Products Ltd v Sri Lanka
- A British company brought an action against Sri Lanka and claimed
compensation for the destruction of its Sri Lankan farm.
- The farm was in an area that was largely under the control of Tamil Tiger rebels.
The farm management had offered to dismiss farm staff thought by the
Government to be in league with them.
- Neglecting this offer, the Government forces launched a vast counter-insurgency
operation in that area.
- Some company workers were killed and the farm was destroyed.
 - The Tribunal held that Sri Lanka was responsible because it violated its due
diligence obligation.
 Denial of justice
 A State is responsible under international law if it fails to punish responsible
individuals or to provide the injured foreign national with the opportunity of
obtaining compensation from the wrongdoers in the local courts.
 In Janes Claim
- Janes, an American citizen, was murdered at a mine in Mexico. The person who
killed Janes was well known in the community where the killing took place.
- There is evidence that a Mexican magistrate was informed of the shooting within
five minutes after it took place. However, even after eight years had elapsed, the
murderer had not been apprehended and punished by the Mexican authorities.
- The Commission found that Mexico was responsible for the denial of justice and
awarded damages accordingly.

9.4) BEACH OF AN INTERNATIONAL OBLIGATION

 Article 12: There is a breach of an international obligation by a State 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.
 The phrase “regardless of its origin” refers to all possible sources of international
obligations.
 In the Rainbow Warrior Arbitration:
o It was held that any violation by any State of any international obligation, of
whatever origin, gives rise to State responsibility and consequently, to the duty of
reparation.
o International obligations may be established by a customary rule of international law,
by a treaty, by a judgment given by the ICJ or any other international tribunal.
o In international law, there is no distinction between “contractual” and “tortious”
responsibility nor between “civil” and “criminal” responsibility.

9.5) DEFENCES

 Consent (Article 20):

 o Valid consent by a state to the commission of the given act by another state precludes
the wrongfulness of that act in relation to the former state, to the extent that the act
remains within the limits of that consent.
o In normal circumstances, activities carried out will be prohibited by international
law, but if there is consent = preclude responsibilities.
o Eg: Consent to allow foreign troops on national territory, to allow aircraft to cross the
airspace.
o Condition = consent must be valid (the person giving the consent must be authorised
to do so, conduct must be within the limit of the consent
 Self-defence (Article 21):
o The wrongfulness of an act of a state is precluded if the act constitutes a lawful
measure of self-defence in conformity with the UN Charter.
o Article 51 – preserve a state’s inherent right of self-defence in the face of an armed
attack (so if state exercise right under Section 51, it is not in breach with Article 2 (4)
which prohibits the threat of use of force).
 Countermeasures (Article 22):
o ICJ affirmed in the case of Gabcikovo-Nagymaros Project, countermeasures taken
by a state in response to an internationally wrongful act of another state are not
wrongful acts, but are recognised as valid means of self-help a long as certain
conditions are respected.
o Conditions for valid countermeasures are discussed in Article 23.
 Force majeure (Article 23 (1)):
o The occurrence of an irresistible force or of an unforeseeable event, beyond the
control of the State, making it materially impossible in the circumstances to perform
the obligation.”
o Rainbow Warrior Arbitration: France argued that urgency of medical treatment
amounted to force majeure. Held: “the test for force majeure was one of ‘absolute
and material impossibility’. It does not cover a circumstance rendering performance
of the obligation more difficult or burdensome.”
 Distress (Article 24 (1)):
o The author of the [otherwise wrongful] act has no other reasonable way, in a situation
of distress, of saving the author’s life or the lives of other persons entrusted to the
author’s care.
 Necessity (Article 25 (1)):
o An act which (a) is the only means for the State to safeguard an essential interest
against a grave and imminent peril.
o (b) Does not seriously impair an essential interest of the State or States towards
which the obligation exists, or of the international community as a whole. The ILC,
in its commentary affirms the exceptional nature of the plea of necessity.

9.6 LEGAL CONSEQUENCES OF AN INTERNATIONAL WRONGFUL ACT

 Reparation for injury:

o An important legal consequence of an internationally wrongful act is that the injured
State is entitled to obtain reparation from the wrong doing State.
o Chorzow Factory Case:
- 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.
- Restitution in kind, or, if this is not possible, payment of a sum corresponding to
the value which a restitution in kind would bear.
o Forms of reparation [Article 34]
- Full reparation for the injury caused by the internationally wrongful act shall
take the form of restitution, compensation and satisfaction, either singly or in
combination, in accordance with the provisions of this chapter.
o Restitution [Article 35]
- A State responsible for an internationally wrongful act is under an obligation to
make restitution, that is, to re-establish the situation which existed before the
wrongful act was committed, provided and to the extent that restitution: (a) Is not
materially impossible.
- Does not involve a burden out of all proportion to the benefit deriving from
restitution instead of compensation.
- Material restitution (Restitution in kind): An example of restitution in kind is
found in the Temple of Preah Vihear Case
 The World Court ordered Thailand to return to Cambodia religious objects it
had taken illegally from a temple in Cambodia. Compensation [Article 36]
 1. The State responsible for an internationally wrongful act is under an
obligation to compensate for the damage caused thereby, insofar as such
damage is not made good by restitution.
- The I’m Alone case
 The Commissioners recommended the payment by the United States of $
25.000 as a material amend in respect of the wrong committed by the United
States in sinking the I’m Alone.
o Satisfaction [Article 37]
- The State responsible for an internationally wrongful act is under an obligation
to give satisfaction for the injury caused by that act insofar as it cannot be made
good by restitution or compensation.
- Satisfaction may consist in an acknowledgement of the breach, an expression of
regret, a formal apology or other appropriate modality.
- A good example of different forms of satisfaction can be found in the
Borchgrave case:
 In this case, a Belgian national was found dead on the roadside in Madrid.
The Belgium Government demanded as reparation:
 (1) an expression of the Spanish Government’s excuses and regrets, (2)
transfer of the corpse to the port of embarkation with military honours, and
(3) just punishment of the guilty.
 Countermeasures:
o Apart from self-defence, there are two traditional types of self-help, namely:
retorsion and reprisals.
o A retorsion is an unfriendly act against an unfriendly act which does not involve a
breach of an international obligation.
- Examples are:
(1) Disruption of normal diplomatic relations
(2) Embargoes of various kinds
(3) Withdrawal of voluntary aid programmes.
o A reprisal is an unlawful act in response to an unlawful act of another State.
o According to modern terminology, the term ‘countermeasures’ mainly refers to
‘reprisals’.
o The pre-condition for any lawful countermeasure or reprisal is that another State
must first commit an internationally wrongful act against the State taking the
countermeasure.
o A countermeasure (although it involves a breach of an international obligation) is
done in response to the wrongful conduct of the wrong doing State and is, therefore,
deemed to be lawful under international law.
- Examples: Suppose that State B committed an internationally wrongful act
against State A.
(1) A could seize or freeze the assets of B available within its jurisdiction
(2) A could suspend its treaty obligations towards B
(3) A could confiscate property owned by companies of B available in A.
o Like other forms of self-help, countermeasures are open to abuse. They are, therefore,
justified only in certain conditions and are subject to stringent limitations.
o Limitations on countermeasures:
(1) Countermeasures must be directed at the wrongdoer State only and with the
objective of compelling it to cease the wrongful act or to make reparation for it [Art.
49]
(2) Countermeasures shall not involve the use of armed force [Art. 50(1)(a)]
[obligation to refrain from the use of force, Art. 2(4) of the Charter]
(3) Countermeasures shall not violate basic obligations under international law, e.g.,
obligations for the protection of fundamental human rights or obligations under jus
cogens [Art. 50(1) (b)(c)&(d)]
(4) Countermeasures shall not affect any dispute settlement procedure between two
parties and inviolability of diplomatic agents, etc.[Art. 50(2)]
(5) Principle of ‘Proportionality’: countermeasures must be commensurate with the
injury suffered [Art. 51]
- Naulilaa case
 Where it was held that one should consider as excessive and therefore
unlawful, countermeasures that are out of all proportion to the act motivating
them.
o Conditions relating to resort to countermeasures:
(1) Before taking countermeasures, the injured State shall notify its decision to take
them and offer to negotiate [Art. 52(1)]
 (2) Countermeasures may not be taken and if already taken must be suspended, if:
(a) the wrongful act has ceased and
(b) the dispute is pending before a court or tribunal which has the authority to make
decisions binding on the parties [Art. 52(3)(4)].

9.7) INVOCATION OF RESPONSIBILITY RESPONSES BY THE INJURED STATE

AND OTHER STATES

 Once it has been established that a State is responsible under international law, the next
step to be considered is what the injured State, or other States having the legal interest in
the breach, may do, or what action they may take in order to secure the performance of
the obligations of cessation and reparation on the part of the responsible State.
 Invocation of responsibility by an injured State
o Under Article 42: A State is entitled as ‘an injured State’ to invoke the responsibility
of another State if the obligation breached is owed to:
(a) That State individually
(b) A group of States including that State, or the international community as a whole,
and the breach of the obligation specially affects that State.
o The concept of the ‘injured State’ is important in the invocation of responsibility. This
is the State whose individual right has been infringed by the internationally wrongful
act or which has otherwise been particularly affected by that act.
o A state which is injured in the sense of Article 42 is entitled to resort to all means of
redress. It can raise a claim against the responsible State, commence proceedings
before an international tribunal, or take countermeasures.
 Invocation of responsibility by a state other than the injured state:
o The concept of obligations erga omnes
o The term “erga omnes” means “towards all”.
o Obligations erga omnes are concerned with the enforceability of norms of
international law, the violation of which is deemed to be an offence not only against
the state directly affected by the breach, but also against all members of the
international community.
o According to Article 48 (1), “any State other than an injured State is entitled to
invoke the responsibility of another State in accordance with paragraph 2 if: (b) The
obligation breached is owed to the international community as a whole.”
 o The existence of the obligations erga omnes has been confirmed by the International
Court of Justice in Barcelona Traction, Light and Power Co. case.
o Barcelona Traction Case:
- An essential distinction should be drawn between the obligations of a State
towards the international community as a whole, and those arising vis-à-vis
another State in the field of diplomatic protection. By their very nature the
former are the concern of all States. In view of the importance of the rights
involved, all States can be held to have a legal interest in their protection, they
are obligations erga omnes.
- Such obligations derive, e.g., in contemporary international law, from the
outlawing of acts of aggression, and of genocide, as also from the principles and
rules concerning basic rights of the human person including protection from
slavery and racial discrimination.

9.8) TREATMENT OF FOREIGN NATIONALS

 A state has no general obligation to admit foreigners or foreign companies to its

territory. However, once foreign nationals or companies are present in its territory, the
State is under an international obligation not to ill-treat them.
 If the State violates this obligation it may incur international responsibility to the State
of whom the person is a national.
 This type of State responsibility is one of the commonest forms of responsibility that
arises in international law today. The law of diplomatic protection
 The national State has the right under international law to extend diplomatic protection
over its nationals or corporations present in a foreign country.
 The ‘law of diplomatic protection’ is an important subset of State responsibility. It can
be defined as “resort to diplomatic action or other means of peaceful settlement by a
State adopting in its own right the cause of its national in respect of an injury to that
national arising from an internationally wrongful act of another State.”
 National treatment or international minimum standard?
o Whether or not a State is internationally responsible for the way it treats foreign
nationals depends on the standard of treatment which international law obliges that
State to adopt.
o It is only if the State falls below this standard that it becomes internationally
responsible.
o Unfortunately, there is considerable debate as to the correct standard of treatment. •
There are two contrary views in this respect: the standard of national treatment and
international minimum standard.
 National treatment:
- The state is not responsible if it accords foreign nationals standard of treatment
which is not less than its own nationals, even though that standard may be much
lower compared to international standard.
- It is favoured by ‘developing States’ especially because it allows them to
establish an economic and social system of their own design.
- It allows a State to nationalize property owned by foreigners without fear of
international responsibility, if its national law allowed it to nationalize the
property of its own nationals.

 International minimum standard:

- Many states, especially those of the developed world, maintain that the treatment
of foreign nationals is governed by an ‘international minimum standard’.
- This means that every state must treat foreign nationals within its territory by
reference to a minimum international standard, irrespective of how national law
allows the State to treat its own nationals. The standard has enjoyed the support
of many international tribunals.
o What is the correct standard to be followed?
 There is no real consensus about which standard is obligatory under customary
international law.
 This has caused considerable problems in the field of expropriation of foreign
property.
 Although it appears that with globalization, more and more countries are ready
to support the international minimum standard, the acute problem is that there
is no agreement in respect of the content of this standard. Examples of the
international minimum standard in operation
 Duty not to harm: The State and its organs have the legal obligation to refrain
from harming foreign nationals (Youmans Claim).
  Not to mistreat in lawful custody: In the Roberts Claim, it was held that the
treatment of Roberts in Mexican prison and the length of detention before
facing trial were unreasonable and below the ‘ordinary standards of
civilization’.
 Denial of justice: “A State is responsible if an injury to an alien results a denial
of justice.”
 Denial of Justice exists when there is a denial, unwarranted delay or obstruction
of access to courts, gross deficiency in the administration of judicial or
remedial process, failure to provide those guarantees which are generally
considered indispensable to the proper administration of justice, or a manifestly
unjust judgment.
 In Chattin Claim, Mexico was held responsible for inadequacies and unfairness
in the trial and prosecution of Chattin.
 Admissibility of claims:
o Article 44: The responsibility of a State may not be invoked if:
(a) The claim is not brought in accordance with any applicable rule relating to the
nationality of claims
(b) The claim is one to which the rule of exhaustion of local remedies applies and
any available and effective local remedy has not been exhausted.
o Nationality of claims: A state can make an international claim against another
State when the injured person is its national. The general rule on ‘protection of
nationals’ can be found in the following leading case.
 Mavrommattis Palestine Concession case:
- It is an elementary principle of international law that a state is entitled to protect
its subjects, when injured by acts contrary to international law committed by
another state, from whom they have been unable to obtain satisfaction through
the ordinary channels. 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.
 Bond of nationality: basis for the claim Panevezys-Saldutiskis Case:
- The case concerned a claim for compensation for the expropriation of a railway
company filed by Estonia against Lithuania.
 - Held: It is the bond of nationality between the state and the individual which
alone confers upon the state the right of diplomatic protection, and… the right to
take up a claim.
o Protection of private individuals: The Hague Convention on the Conflict of
Nationality Laws, 1930 Article 1-
 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 customs, and the principles of law
generally recognised with regard to nationality
 Article 5: Within a third state, a person having more than one nationality shall
be treated as if he had only one. A third state shall, of the nationalities which
any such person possesses, recognise exclusively in its territory either the
nationality of the country in which he is habitually and principally resident, or
the nationality of the country with which in the circumstances he appears to be
most closely connected.
 Nottebohm case
- Mr. Nottebohm was born in Germany. In 1905 he went to Guatemala, where he
resided and conducted his business activities until 1943. In 1939, he visited
Liechtenstein to apply for naturalization. After acquiring Liechtenstein
nationality, he went back to Guatemala. - Later, Guatemala expelled, and seized
the property of, Nottebohm. Liechtenstein instituted proceedings against
Guatemala. Guatemala argued that Liechtenstein could not extend diplomatic
protection to Nottebohm in a claim against it.
- Judgment of the ICJ: Nationality is a legal bond having as its basis a social fact
of attachment, a genuine connection of existence, interests and sentiments, the
individual upon whom it is conferred is in fact more closely connected with the
population of the state conferring nationality than with that of any other state.
- He (Nottebohm) had been settled in Guatemala for 34 years. He had carried on
his [business] activities there.
- In contrast, his actual connections with Liechtenstein were extremely tenuous.
No settled abode, no prolonged residence in that country. No intention of settling
there. On the contrary, he returned to Guatemala very shortly after his
naturalization and showed every intention of remaining there.
 - These facts clearly establish, on the one hand, the absence of any bond of
attachment between Nottebohm and Liechtenstein and, on the other hand, the
existence of a long-standing and close connection between him and Guatemala.
That naturalization lacking in genuineness requisite to an act of such
importance. It was granted without regard to the concept of nationality adopted
in international relations.
- Therefore, Guatemala is under no obligation to recognise a nationality granted in
such circumstances. Liechtenstein consequently is not entitled to extend its
protection to Nottebohm visà-vis Guatemala and its claim must, for this reason,
be held to be inadmissible.
o Protection of Companies:
 A State can bring an international claim on behalf of a company possessing its
nationality.
 A company is regarded as having the nationality of the State under the laws of
which it is incorporated.
 Barcelona Traction, Light and Power Co:
- Barcelona Co. was established in Canada under Canadian law to develop
electricity supplies in Spain. In 1948 a Spanish court declared the Co. bankrupt
and ordered the seizure of the assets of the Co. in Spain. Canada intervened on
behalf of the company but later withdrew. Belgium brought this claim in respect
of the injury to its nationals who were shareholders resulting from the injury to
the company. Spain objected that since the injury was to the company, not the
shareholders, Belgium had no right to bring the claim.
- Judgment of the ICJ: The concept of the limited liability company the separate
entity of the company and that of the shareholders, each with a distinct set of
rights. So long as the company is in existence the shareholder has no right to the
corporate assets.
- Barcelona Traction has lost all its assets in Spain, and was placed in receivership
in Canada.
- It cannot, however, be contended that the corporate entity of the company has
ceased to exist. It has not become incapable in law of defending its own rights
and the interests of the shareholders. Only in the event of the legal demise of the
company are the shareholders deprived of the possibility of a remedy available
 through the company, that an independent right of action for them and their
government could arise.
- The traditional rule attributes the right of diplomatic protection of a corporate
entity to the state under the laws of which it is incorporated and in whose
territory it has its registered office.
- In the present case, it is not disputed that the company was incorporated in
Canada and has its registered office in that country.
- Accordingly, the Court rejects the Belgian Government’s claim
 Exhaustion of local remedies
o It is an established rule of customary international law that an injured individual
(or company) must have exhausted any available and effective local remedy in the
responsible State before an international claim can be brought on his behalf.
o Ambatielos Arbitration Greece v UK
- Ambatielos, a Greek ship-owner, contracted to buy some ships from the British
Government and later accused the British government of breaking the contract. -
In the litigation before the English HC, Ambatielos failed to call an important
witness and lost; his appeal was dismissed by the CA. Greece made a claim on
his behalf before an international arbitral tribunal.
- Held: Ambatielos failed to exhaust local remedies (he had failed to appeal from
the CoA to the House of Lords).

o Robert E. Brown case (US v UK)

- The Tribunal held that the local remedies rule did not apply because it found that
“All three branches of the Government of the South African Republic conspired
to ruin the claimant’s enterprise. The judiciary, at first recalcitrant, was at length
reduced to submission and brought into line with a determined policy of the
Executive.
o Finnish Ship-owners Arbitration Finland v UK
- During the World War I, 13 ships belonging to Finnish ship-owners were used
by the UK Government, of which 4 were lost. The ship-owners claimed damages
before the Admiralty Arbitration Board in the UK. The Board decided: the ships
were requisitioned by Russia and not, as required by the British legislation, by
the UK, and that accordingly no compensation was payable.
- No appeal. The matter was later brought by Finland before an international
arbitration tribunal.
- The UK objected on the ground that the Finnish ship-owners had not exhausted
local remedies in the UK. The arbitrator rejected this objection.
- The local remedies rule does not apply where there is no effective remedy. This
is the case where a recourse is obviously futile.
- The appealable points of law obviously would have been insufficient to
reverse the decision of the Arbitration Board.