Fifty-ninth General Assembly

Sixth Committee

19^th & 20^th Meetings (AM & PM)

interests of shareholderS, victim compensation discussed as legal committee

 

continues review of international law commission report

Further Discussion of Diplomatic Protection, Liability for Transboundary Harm

Questions related to protection of foreign shareholders and compensation for innocent victims of transboundary harm were raised in the Sixth Committee (Legal) in two meetings today as debate concluded on diplomatic protection and international liability texts in the report of the International Law Commission.

Portugal’s representative said the draft articles on diplomatic protection were too generous to shareholders.  There was no added value in making specific provisions for them.  Also, the draft articles were intended to protect nationals, and provisions for them as investors should be dealt with in other contexts, such as bilateral treaties for protecting foreign investments.

The representative of Switzerland said the exercise of diplomatic protection was discretionary and not an obligation.  It was one thing for a State to decide not to exercise diplomatic protection but quite another for it to abandon the exercise in proceedings by another State regarding that person.  Those difficulties would not arise in the framework of the Commission’s text.  Cuba’s delegate echoed the view, and added that diplomatic protection must be exercised by peaceful means and not by force.

On nationality, Slovenia’s representative said there should be no deviation from the basic rule that was the State of nationality at the time of injury was entitled to exercise diplomatic protection.  Also, the issue of diplomatic protection of foreign shareholders should be approached with great care to avoid providing more favourable treatment to an economically stronger party.

Australia’s delegate said the law of the sea, including the relevant provisions of the United Nations Convention on the Law of the Sea, adequately covered diplomatic protection of members of a crew of a ship.  The provisions covering them should be excluded from the draft articles.

Morocco’s representative agreed that protection granted by the State to a crew belonged under the Law of the Sea.  However, he said the solution offered by the articles was acceptable.

On international liability, Kenya’s representative said innocent victims of transboundary harm caused by activities of States or their nationals must be promptly and adequately compensated.  Poland’s delegate said the State and not the operator was responsible for providing adequate compensation.  International or domestic mechanisms should be set up to help States recover liability costs from the operator.

Nigeria’s representative said his country had suffered from the dumping of 40 to 50 tons of radio active industrial waste on its territory at a time when no relevant international instruments existed.  International liability regimes should be scrupulously examined to facilitate the Commission’s work.  Hungary’s geographical vulnerability to transboundary harm had led it to make bilateral and multilateral agreements with neighbours, its delegate said.  But the text on international liability was still of vital interest.

Also speaking today were the delegations of the United States, Belarus, Israel, Singapore, Greece, Russian Federation, El Salvador, Pakistan and Romania.

A representative of the Council of Europe also addressed the Committee.

In addition, today, the representative of Pakistan introduced a draft resolution requesting observer status in the General Assembly for the South Asian Association for Regional Cooperation (SAARC).  The seven members of the regional intergovernmental group are:  Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

The Committee Secretary and Director of the Codification Division of Legal Affairs made a statement on the role of his Division in the substantive work of the International Law Commission.

The Committee will meet again at 10 a.m. on Friday, November 5, when debate of the Law Commission’s report will continue with a focus on responsibility of international organizations and shared natural resources.

Background

The Sixth Committee (Legal) met this morning to continue debate on the report of the International Law Commission.  (For background on the report, see Press Release GA/L/3263 of 1 November.)

The Committee has before it the Commission’s report on its fifty-ninth session (Geneva, 3 May to 4 June and 5 July to 6 August) (document A/59/10).

Also before the Committee is a resolution requesting observer status in the General Assembly for the South Asian Association for Regional Cooperation (document A/C.6/59/L.21).  A report on the seven-member intergovernmental body (document A/59/234) states that its aim is to promote cooperation among members to achieve social, economic and cultural growth on a national, regional and international level.  The seven member-countries of South Asia are:  Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Statements

MIRJAM SKRK (Slovenia) said the present set of articles on diplomatic protection was well balanced and provided a good starting point for the preparation of the text to be submitted for a second reading by the International Law Commission.  She said the nationality of a natural person acquired by the succession of States was not in itself a created form of nationality.  Its legal effects fell within one of the established means of acquisition of nationality, namely by birth, descent or naturalization.  Her delegation had some reservations about the changes of nationality envisaged in the provisions of article 5 “continuous nationality”.  There should be no deviation from the basic rule that the State of nationality at the time of injury was in fact entitled to exercise the diplomatic protection.

She reiterated her delegation’s position that the Commission should address the issue of protection of foreign shareholders with great care in order not to provide a more favourable treatment to an economically stronger party against a weaker one.  Foreign shareholders must not be discriminated against and their property rights must be respected, she said.

MICHAEL GUMBLEY (Australia) said his delegation was particularly interested in the subject of diplomatic protection of corporations and of their shareholders. On similar protection of members of a crew of a ship, it was of the view that the law of the sea, including the relevant provisions of the United Nations Convention on the Law of the Sea, covered that issue adequately.  The topic should therefore be excluded from the draft articles, he said.

On international liability, he referred again to his delegation’s position that the guiding principle should be that the innocent victim should not bear the loss, and that the primary responsibility for compensating such loss should rest with those in command or control of the activity at the time of the incident.  The procedure for assessing compensation for environmental damage needed further development.  His delegation reserved judgement on the final form of the work on the topic.

ERIC ROSAND (United States) said he would be submitting written comments.  Meanwhile, with regard to international liability, he said experience indicated that different types of hazardous activities required different solutions; different legal systems could require different methods; and States at different levels of economic development could need different approaches.  Principles recommended were welcome, all the more so since they were innovative and aspirational rather than descriptive of current law or State practice.  Since there was no consensus on “liability” or loss allocation in cases of harm from acts not prohibited by international law, the principles should not be presented in a form that could be understood as codification of customary international law.

LUIS SERRADAS TAVARES (Portugal) said, with regard to diplomatic protection, that he had a number of concerns.  The scope should be widened in the exception to the general rule laid down in the article on protection by the State of nationality, so as to make it applicable to today’s international legal system.  The requirement of both lawful and habitual residence for diplomatic protection of stateless persons and refugees set too high a threshold.  But the main concern with the draft articles on diplomatic protection as a whole concerned the articles on shareholders.  The protection afforded them was too generous.  There was no added value in making specific provisions for them.  Also, the draft articles were intended to protect nationals; provisions for them as investors should be dealt with in other contexts such as bilateral treaties for protecting foreign investments.  And finally, the rights of shareholders were provided for by internal law rather than international.

On international liability, he said that the State and not the operator was the subject of international law and was responsible for providing adequate compensation according to the principle of international law that the State was liable for acts emanating from its territory.  Therefore, the State should set up either international or domestic mechanisms to recover costs from the operator.  In addition, the text should take final form as a set of draft articles, not principles, to complete those on prevention.  In due course, they should form the basis for an international convention on liability in case of transboundary harm arising out of hazardous activities.

LUDMILA KAMENKOVA (Belarus) said her delegation had serious doubts about the provisions of article 7 concerning multiple nationality and claim against a State of nationality.  The concept of predominant nationality had not been clearly defined in international law.  It could create a situation whereby a disgruntled individual could dishonestly exploit a situation.  The provisions should be excluded from the text.  She also said articles 11 and 12, “protection of shareholders” and “direct injury to shareholders”, could be merged into a new provision.  Her delegation preferred a specific and unambiguous wording of article 13 on “other legal persons”.

EHUD KEINAN (Israel) said a balance of the interest between nationality of the corporation and that of its shareholders demanded further consideration.  The rights of shareholders must have a significant role within the articles.  The close relationship between the topic of diplomatic protection and the subject of State responsibility added to the needs and concerns of States to ensure the limited form and non-binding nature of those documents.  There would also be a need to ensure a harmony between those disciplines and the flexibility of States to carry out affairs of State without a perception of stifling limitations.

On international liability, he expressed support for the Commission’s approach in seeking a set of non-binding principles which could be used by States. He said the Commission’s efforts on the two topics were valued and duly appreciated.

YVONNE OW (Singapore) reviewed the articles on diplomatic protection.  She said, with regard to exercising the right, that the Barcelona Traction case had set out the discretionary power of a State to exercise it.  The views expressed on both sides of the argument should be taken into consideration when deciding whether to include provisions for stateless persons and refugees.  Further comments would come later, but on the articles concerning alternatives to diplomatic protection and special treaty provisions, she asked whether that latter phrase was clearly understood and recognized in the context.  For example, what was the difference between that and other treaty provisions?  Was there an implied hierarchy to whether the principles of the draft articles applied?  If the object was to clarify the relationship between the articles and investment treaties, could explicit reference be included in free trade agreements instead?

Finally, on diplomatic protection of ships’ crews, she said the Commission should further clarify the relative conditions under which a flag State could seek redress for non-national crew members.  It varied, depending on the facts of each case, the nature of the complaint, the redress sought and the legal regime under which it was sought.

PHANI DASCALOPOULOU-LIVADA (Greece) welcomed the provisions for multiple States exercising diplomatic protection jointly, for the inclusion of stateless persons and refugees, and for including a corporation’s seat of management among the criteria in deciding its nationality.  However, she said she had reservations about the articles on exceptions to the local remedies rule.  The drafting was vague and provided areas for overlap.  Also perplexing were the two articles on other treaties.  They should be clarified and merged.  The “exhaustion of local remedies” rule should be examined with regard to providing a specific exemption in the case of a ship’s crew.  The purpose of that article should be clear and concise:  to afford the protection of the flag State to the members of the ship’s crew, irrespective of their nationality.

On the liability draft, she said she favoured a strict civil liability regime, one not based on fault.  That benefited the victims of dangerous activities not prohibited by international law since they were relieved from the onus of providing fault to obtain compensation.  Separating compensation for bodily and property damage from the purely economic raised delicate questions about the causal link.  A definition of “loss of income” should be included, also of “response measures” and “measures of reinstatement”.  The principle on environment covered an extremely wide spectrum of cases and stark economic realities made the principle difficult to achieve.  Still, the provision enunciated the right of States and not just individuals to make a claim for damage suffered.  She said a bolder formulation of the principle should bring forward the emerging practice of the “polluter pays” principle.  Criteria should also be set out for identifying the forum in case of damage.

A text on civil liability had to take the form of a legally binding instrument, she concluded.  The principles should constitute the basic substance of a general convention, provided that a clear definition of dangerous activities could be arrived at.

JURG LINDENMANN (Switzerland) said the exercise of diplomatic protection was considered a discretionary right and not an obligation.  It was one thing for a State to decide not to exercise diplomatic protection with respect to a person, and quite another matter, morally at least, to abandon the exercise in proceedings by another State in respect of that person.  None of those difficulties arose in the framework of the system currently reflected in the provisions of article 5 on “continuous nationality” which his delegation preferred.  It had some doubts about the provisions relating to the protection of shareholders. Its position did not, however, change the very positive impression it had of the draft articles on diplomatic protection as a whole.

He was pleased with the remarkable progress made by the International Law Commission on international liability.  The quality of the draft principles on the subject, including the basic understandings on them, as well as the simplicity of the presentation went beyond its expectations.  It recognized the advantages of the Commission’s decision not to aim at the elaboration of a framework convention, but rather to stick to the drafting of principles for the time being.

MERCEDES DE ARMAS GARCIA (Cuba) said she was also pleased about the progress made by the Commission on the topics under discussion.  She commended the technical assistance offered by the Commission and welcomed the Commission’s decision to include new topics on its work programme.

On diplomatic protection, she said Cuba would present its detailed comments to the Commission as requested.  She said diplomatic protection was a discretionary matter and not an obligation of States.  It must be exercised by peaceful means and not by force.  As regards article 7 on “multiple nationality and claim against a State of nationality”, she said no exception should be established.  The concept of predominance of nationality was ambiguous and international doctrine on the subject was divided.  It would be useful for the Commission to include clear criteria on the subject.  It should also not stray from the legal regime on refugee protection.

MARIA V. ZABOLOTSKAYA (Russian Federation) said the scope of the draft articles on the topic had been identified correctly.  Issues such as “functional protection” by international organizations, “the clean hands doctrine” and matters of delegation of diplomatic protection could consequently be put aside.  At the same time, her delegation had doubts concerning the provisions “on other legal persons” of article 13, according to which the provisions of articles 9 and 10 applicable to corporations were to be applied to diplomatic protection of other legal persons.

She called for additional analysis of the provisions concerning protection of shareholders.  The text of articles 17 and 18 were not totally clear, he said, adding there did not seem to be a clear distinction between them. Article 18 in particular went beyond investment treaties. She welcomed the inclusion in the Commission’s future work programme of new topics. Her delegation believed the “Expulsion of Aliens” was to some extent a logical sequence to the topic of diplomatic protection.

She said the Commission had achieved a real breakthrough in its work on international liability.  It would be expedient for work on the topic to be limited by the scope of the draft articles on the prevention of transboundary damage arising out of hazardous activities.  She believed that the Commission was right in deciding against including environmental damage outside national jurisdiction into the scope of the principles.  She shared the importance of a State’s participation in the loss allocation scheme.

ELIZABETH VILLALTA (El Salvador) said she would speak on diplomatic protection and would submit comments later in writing.  The new provisions on extending diplomatic protection were important additions.  They were strong additions to the regime available to a State in situations such as when one of its nationals was detained by another State.  Definitions and distinctions should be strengthened in the provisions dealing with nationality, so as to address more accurately situations arising from multiple nationalities.

ASAD MAJEED KHAN (Pakistan) also said he would submit comments later in writing and would address the text on international liability now.  States had a right but also an obligation with regard to activities within their borders.  They were responsible for actions on their territory.  A list of the activities covered by the principles should be included in their provisions.  Also the term “significant” transboundary harm was troublesome.  Who decided what was significant?  The term should be deleted if it could not be more specific.

GUY DE VEL, Director of Legal Affairs, Council of Europe, briefed the Committee on work by his organization that paralleled the Commission’s work and that of the Committee.  He said the Council’s membership had now grown to 46 after admission of Monaco in October.  A Protocol had been added to the Council’s Convention on human rights to bring its work more in line with the needs of the new century.  The Council was also dealing with questions of State immunity and reservations to treaties.  On that point, it worked closely with the Commission, as for example in helping to determine the causes of reservations and whether they were appropriate.

He outlined the measures the Council had taken with regard to refugees, where the focus was on preventing statelessness in context of the succession of States.  The Council had also elaborated measures on terrorism in consultation with the Commission, with work accelerating in that area following the attacks in Madrid and Russia.  The Council was looking to fill legislative gaps in fighting terrorism by dealing with such aspects as recruitment of terrorists.  Other work relevant to that of the Committee and the Commission included:  counter corruption activities; measures to stem trafficking of human beings; addressing the question of human rights and bioethics; and protocols outlawing human reproduction and organ transfer.

VACLAV MIKULKA, Committee Secretary and Director of the Codification of the Legal Affairs Office, made a statement on the substantive elements of the work behind the Law Commission’s report.  The report became available on 24 September in all official languages, in hard copy and through the United Nations Official Documents web site and that of the International Law Commission.  He said his Division’s role, as the Commission’s substantive secretariat, was to incorporate changes made during the Commission’s meeting, to reference the commentaries and to “final edit” the report within five days of the meeting ending.  The United Nations Office in Geneva then translated and published the report on the calendar established by the Documents Control Section of the General Assembly and Conference Management Department.  In addition to the report, his Division also provided daily updates on the Commission’s activity through its web site.

Introduction of Draft

The representative of Pakistan introduced a draft resolution requesting observer status in the General Assembly for the South Asian Association for Regional Cooperation (SAARC) (document A/59/L.21).

The representative of Bangladesh spoke in support of the draft.

The delegates of Cuba, Syria, Ecuador and Venezuela raised the issue of informal consultations on the draft resolutions.

When the Committee met again this afternoon, REMIGIUSZ HENCZEL (Poland) said the International Law Commission should consider revisiting some of the articles that had been dropped between the first and second reading.  That included the consideration of whether the “clean hands doctrine” was relevant to diplomatic protection and should be addressed in an article.  In addition, consideration might also be given to expanding the detail in some articles.  The relationship between the diplomatic protection available to States and the functional protection available to organizations should be examined and clarified.  Was a parallel entitlement to the exercise of international protection on behalf of one person possible?  The uncertainty should be reflected in the draft articles.

He said the draft principles on international protection should also be reconsidered with regard to what had been left out.  The objective, for example, was overly condensed.  It grouped individuals, legal persons and States as possible victims of transboundary damage.  Consideration should be given to combining the principles with the articles on prevention to elaborate a convention on international liability.  Finally, the new item on the Commission’s agenda, regarding the obligation to prosecute and extradite, was quite applicable to the question of terrorism.

KARIM MEDREK (Morocco), addressing the report as a whole, said he welcomed the draft articles on reservations to treaties and noted the two new items, on expulsion of foreigners and effect of armed conflict on treaties.  Both would contribute to the codification and development of international law.  He would submit written comments later, but for now, the text on diplomatic protection was very balanced.

Commenting on specific articles, he said the Commission should consider articles on scope and definition from the angle of situations such as two States in conflict over the right to exercise diplomatic protection.  The question of predominant nationality, as it was now addressed, would call into question the sovereign equality of States, particularly since criteria were not given for making the determination of predominance.  Was the burden of proof for predominance of nationality placed on the claimant?  Diplomatic protection should be applicable to stateless and refugee persons, and protection for shareholders should take into account limited enterprises.  The exhaustion of local remedies was a precondition for all relevant international instruments and the exceptions cited were acceptable.  The protection granted by the State to a crew belonged under the Law of the Sea, but the solution the articles offered was acceptable.

He said the draft on international liability would make an important contribution.  The form should be a non-binding declaration, guide or model law.

COSMIN DINESCU (Romania) asked whether draft articles 17 and 18 could not be merged, since the actions referred to in the former article included provisions available under human rights treaties as well as investment treaties.  In the same vein, he said, his delegation had doubts on the need for a special provision for protection of ships’ crews in draft article 19.  Nevertheless, he said their protection could be dealt with under the general provisions of article 17 and that there might be no need for a special provision in draft article 19.

On international liability, his delegation supported the draft principles on the allocation of loss in cases of transboundary harm arising out of hazardous activities.  The principles offered the possibility for an effective mechanism to ensure compensation to victims in the context of transboundary harm.  On the text’s final form, it supported its adoption in conjunction with the instrument on prevention.  It supported the Commission’s decision to add two new topics to its work programme.  However, it had some doubts about the inclusion of the topic, “obligation to extradite or prosecute” to its long-term programme of work.

KAREN ODABA-MOSOTI (Kenya) agreed with the general thrust of the articles on diplomatic protection.  She said the application of the nationality principle raised a number of difficulties for her delegation, and the Commission should undertake further work on the issue and attempt an elaboration of rules to govern problems arising from multiple or dual nationality.  She supported the retention of the traditional continuous nationality rule.  However, she had difficulties with the exception provided for in paragraph 2 of the text and would prefer its omission altogether.

On the draft principles on the allocation of loss, she said they provided a solid basis for the development of an effective compensatory regime for transboundary harm.  Innocent victims of transboundary harm must be adequately compensated.  Her delegation would like to see greater emphasis on the “pollution pays” principle in future development of the topic.

I.A. AYUA (Nigeria) said the State should step in to secure protection and obtain reparation for one of its nationals injured by an internationally wrongful act, once all local remedies had failed.  Diplomatic protection should be extended to stateless persons and refugees under clearly stipulated conditions.  The State of incorporation should have the right to exercise diplomatic protection in the instance of injury to a corporation, but corporate investors as legal entities and shareholders also had a right to consideration.  Corporations doing business in developing countries should reciprocate by deepening and widening their corporate social responsibilities.  His country had instituted an investment regime that recognized the role of foreign direct investment (FDI) in the development of its economy.  It centred on creating a favourable investment climate, including by addressing corruption.

He said his country had suffered from the dumping of 40-50 tons of radioactive industrial wastes in its territory in 1988, a time when no relevant international legal instrument existed.  The existing liability regimes should be rigorously examined to facilitate the Commission’s work in the area of international liability.  Also, a more elaborate but concise definition of “significant damage” should be elaborated since what was not considered significant in one country or region could be enormously significant elsewhere.

ARPAD PRANDLER (Hungary) said the eight draft principles represented a significant step forward in a very important segment of international relations and law.  As contained in the text, each State should be responsible for compensation in the event of transboundary damage by hazardous activities on its territory and that liability should be imposed on the operator.  His country’s geographical position made it particularly vulnerable to such damage:  while bilateral and multilateral agreements with its neighbours had helped, the text on international liability was of vital interest to it.  The text, however, should not be cast as principles.  The work in this area had arisen out of the draft articles on prevention.  The work on liability should also be a set of draft articles.  The Commission should take into consideration the number of delegations that had expressed a similar view.

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