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The Diallo Case (Republic of Guinea v. Democratic Republic of Congo) – A Rare Instance of Diplomatic Protection before the International Court of Justice

On 19 June 2012, the International Court of Justice (“ICJ” or the “Court“) delivered its judgment on compensation in the Case Concerning Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of Congo) (the “Diallo case“). In its prior judgment of 30 November 2010, the Court held that the Democratic Republic of Congo (“DRC“), through its arrest, detention and expulsion of Mr. Diallo, had breached his human rights and was under an obligation to make reparation, in the form of compensation, to the Republic of Guinea (“Guinea“) (together, the “Parties“). Guinea requested, and the Court agreed, that the Parties should attempt to reach an agreed settlement on this matter. However, despite being granted a period of six months in which to reach agreement, the Parties failed to do so. The Court was therefore called upon to settle the level of compensation due to Guinea.

Background

Mr. Diallo, a Guinean national, moved to the DRC (formerly known as “Congo” between 1960 and 1971, and “Zaire” between 1971 and 1997) in 1964. Ten years later, in 1974, Mr. Diallo established an import-export company, Africom Zaire. In 1979, Mr. Diallo also took part in the founding of a private limited liability company specialising in the containerised transport of goods, Africontainers-Zaire (together, the “Companies“). Mr. Diallo was an associé (shareholder) in the Companies.

In the late 1980s, the Companies instituted legal proceedings against their public and private business partners in order to recover several debts. On 31 October 1995, the Prime Minister of Zaire issued an expulsion decree against Mr. Diallo. The decree stated that the:
“presence and personal conduct [of Mr. Diallo] have breached Zairean public order, especially in the economic, financial and monetary areas, and continue to do so.”

With a view to the implementation of this decree, Mr. Diallo was arrested and detained for 66 days from 5 November 1995 to 10 January 1996, and for a further 6 days, from 25 January to 31 January 1996. On 31 January 1996, Mr. Diallo was given notice of his expulsion and deported from Zaire (as it was then known) back to Guinea.

On 28 December 1998, Guinea instituted proceedings against the DRC before the Court. Under international law, a State has the discretionary right to protect its national who has been injured by another State. This right is based upon a link of nationality between the (natural or legal) person concerned and the State. This is known as the right of diplomatic protection. Guinea sought to exercise diplomatic protection on behalf of Mr. Diallo in respect of the DRC’s alleged violation of his rights.

Judgment on Preliminary Objections of 24 May 2007

There was no dispute between the Parties regarding the Court’s jurisdiction to hear Guinea’s claim. Indeed, the DRC acknowledged that the Parties’ respective declarations under Article 36(2) of the Court’s Statute were sufficient to establish jurisdiction in this case. However, the DRC contested the admissibility of Guinea’s claim and raised two preliminary objections. Namely, that Guinea:
(1) was precluded from exercising diplomatic protection on the basis that neither the Companies, nor Mr. Diallo, had exhausted local remedies in the Congolese courts; and
(2) lacked standing as the rights it was seeking to protect belonged to the Companies, rather than Mr. Diallo.
Exhaustion of local remedies
Regarding the requisite link of nationality, it was undisputed that Mr. Diallo’s sole nationality was Guinean. The area of disagreement, as the ICJ noted, was in relation to the exhaustion of local remedies, a matter to which the Parties had “devoted much argument”. The Parties did not challenge the validity of the requirement to exhaust local remedies prior to exercising diplomatic protection. They did, however, disagree as to whether the DRC’s legal system offered local remedies which Mr. Diallo should have exhausted.
The Court confirmed that it was for the DRC, as the respondent, to prove that there were “available and effective remedies in its domestic legal system against the decision to remove Mr. Diallo from the territory and that he did not exhaust them.” The DRC failed to do so. The Court noted that refusals to entry, as indicated in the notice of expulsion of 31 January 1996 given to Mr. Diallo, were not appealable under Congolese law. In this respect, the DRC failed to show that any means of redress against expulsion were available under its domestic law. Consequently, in the ICJ’s view:
“the possibility open to Mr. Diallo of submitting a request for reconsideration of the expulsion decision to an administrative authority having taken it, that is to say the Prime Minister, in the hope that he would retract his decision as a matter of grace cannot be deemed a local remedy to be exhausted.”

Standing – Mr. Diallo and the Companies
Guinea sought to exercise diplomatic protection on Mr. Diallo’s behalf in three respects, through: (1) his rights as an individual; (2) his direct rights as associé in the Companies; and (3) the rights of the Companies by “substitution” (as a shareholder in a foreign “victim” company).

Guinea submitted that the Court, in its previous Barcelona Traction decision, had referred to the possibility of an exception, founded on reasons of equity, to the general rule (that the right of diplomatic protection of a company belongs to its national State) which allows for the protection of shareholders by their own national State through “substitution”. The Court acknowledged that since Barcelona Traction, it had not:
“had occasion to rule on whether, in international law, there is indeed an exception to the general rule “that the right of diplomatic protection of a company belongs to its national State”, which allows for protection of the shareholders by their own national State “by substitution”, and on the reach of any exception.”

However, despite Guinea’s invocation of various international agreements for the promotion and protection of investments, the Court was not persuaded that these indicated a change in the customary law of diplomatic protection. It was, therefore, the “normal rule” of nationality which governed the diplomatic protection of the Companies in this case. As the Companies possessed Congolese nationality, the Court upheld the DRC’s objection to admissibility and held that Guinea was without standing to offer Mr. Diallo diplomatic protection regarding the alleged unlawful acts of the DRC against the rights of the Companies by “substitution”.
The Court held that Guinea’s claim was admissible as regards the protection of Mr. Diallo’s rights as an individual, and his direct rights as associé in the Companies.

Judgment on the Merits of 30 November 2010

In light of Mr. Diallo’s arrest, detention and expulsion, the Court held that the DRC had violated Articles 9 and 13 of the International Covenant on Civil and Political Rights, Articles 6 and 12(4) of the African Charter on Human and Peoples’ Rights and Article 36(1)(b) of the Vienna Convention on Consular Relations.

However, in the Court’s view, the DRC’s actions did not violate Mr. Diallo’s direct rights as an associé in the Companies, such as taking part and voting in general meetings or overseeing and monitoring their management. For example, whilst Mr. Diallo’s expulsion had “probably impeded him from taking part”, this did not “amount to a deprivation of his right to take part and vote in general meetings.”

Compensation Judgment of 19 June 2012

Guinea sought compensation of US $11,590,148 from the DRC under four heads of damage, namely:
(a) mental and moral damage, including injury to reputation;
(b) loss of earnings (during Mr. Diallo’s detention and following his expulsion);
(c) other material damage; and
(d) loss of potential earnings.

In line with its judgment on the merits of 30 November 2010, the Court did not take into account any claim for injury brought by the Companies, but instead limited its inquiry to “the injury resulting from the breach of Mr. Diallo’s rights as an individual”.
In the Court’s opinion, compensation for mental and moral damage (also known as non-material injury) was based on “equitable considerations”. In view of Mr. Diallo’s arrest, detention and wrongful expulsion, the ICJ considered that US $85,000 provided “appropriate compensation”.

With regard to Mr. Diallo’s personal property, the Court observed:
“Mr. Diallo lived and worked in the territory of the DRC for over thirty years, during which time he surely accumulated personal property.”
However, despite Guinea’s assertions that Mr. Diallo’s expulsion resulted in the loss of both tangible assets (paintings, a diamond-studded watch) and intangible assets (bank accounts) by preventing their transfer or disposal, Guinea repeatedly failed to substantiate these claims:
“Guinea has put forward no evidence whatsoever that Mr. Diallo owned these items at the time of his expulsion, that they were in his apartment if he did own them, or that they were lost as a result of his treatment by the DRC.”
Based on “equitable considerations”, the Court awarded Guinea the sum of US $10,000 under this head of damage.
The Court dismissed Guinea’s claims in respect of loss of earnings. The Court noted that the compensation phase of these proceedings was the first occasion on which Guinea had made the claim that Mr. Diallo was earning US $25,000 as gérant (manager) of the Companies prior to his detention. The Court continued:
“Guinea offers no evidence to support this claim. There are no bank account or tax records … the absence of any evidence in support of the claim for loss of remuneration at issue here stands in stark contrast to the evidence adduced by Guinea at an earlier stage of this case”.
Guinea’s claim for loss of potential earnings was ruled as beyond the scope of the proceedings. This constituted, in the Court’s view, “a claim for a loss in the value of the companies allegedly resulting from Mr. Diallo’s detentions and expulsion” and was therefore inadmissible in light of its earlier judgment on preliminary objections of 24 May 2007.

Comments

First, the Diallo case is a rare modern example of the right of diplomatic protection being exercised by a State. The Court itself noted that the role of diplomatic protection had “somewhat faded” under international law in view of the prevalence of bilateral investment treaties (“BITs“) and multilateral agreements protecting foreign investments.
Second, the Court’s judgment is notable for its willingness to draw upon the comparative findings of other international courts and tribunals in reaching its decision on damages. In the words of Judge Greenwood:
“it is entirely appropriate that the Court, recognizing that there is very little in its own jurisprudence on which it can draw, has made a thorough examination of the practice of other international courts and tribunals, especially the main human rights jurisdictions, which have extensive experience of assessing damages in cases with facts very similar to those of the present case.”
Third, the sum of compensation awarded by the Court to Guinea was minimal as compared with the amount claimed. Whilst the amount sought by Guinea was in excess of US $11.5 million, the total sum awarded was US $95,000. In this regard, it is clear that Guinea’s claims — loss of earnings and loss of potential earnings in particular -– were critically undermined by a lack of evidence to support them.

Finally, the Diallo case underscores once again the importance of obtaining adequate investment protection through, for example, BITs. Judges Al-Khasawneh and Yusuf, in their joint dissenting opinion to the Judgment on the Merits of 30 November 2010, remarked:
“[T]he low standard of protection of shareholders under customary law is now confined to the wretched of the earth like Mr. Diallo … we believe that this case sets a dangerous precedent for foreign investors unprotected by bilateral investment treaties.”