Treatment of Aliens under International Law

Vattel: “[w]hoever uses a citizen ill, indirectly offends the state, which is bound to protect this citizen.”

This statement goes to the heart of the present international law governing state responsibility and protection of aliens.

The ILC’s Articles on Diplomatic Protection (2006) lays down the rule governing the process of claim by a state in regard to injury or loss of her national by another state.

Introduction: Admission and Expulsion of Aliens

Conditions of admission of aliens into a territory are based on the rules and principles of the host country.

National policy may restrict economic activities of aliens. It may also restrict or regulate the purchase of goods, and other immovables.

Even Bilateral Investment Treaties (BITs) authorise the host state to determine conditions of admission of foreign investors.

In fact, in principle, expulsion of aliens also falls under the discretion of the host state. However,  this discretion is not unfettered.

Host state enjoys margin of appreciation in deciding to exclude aliens by applying ‘ordre public‘. However, such decisions should measure up to human rights standards. (See Human Rights Committee General Comment No 15)

Particularly, expulsion of aliens should be carried out in a manner according to international law.

Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo) ICJ, 2010

“the expulsion of an alien lawfully in the territory of a State which is a party to these instruments can only be compatible with the international obligations of that State if it is decided in accordance with “the law”, in other words the domestic law applicable in that respect. Compliance with international law is to some extent dependent here on compliance with internal law. However, it is clear that while “accordance with law” as thus defined is a necessary condition for compliance with the above-mentioned provisions, it is not the sufficient condition. First, the applicable domestic law must itself be compatible with the other requirements of the Covenant and the African Charter; second, an expulsion must not be arbitrary in nature.”

The court further underlined the obligation to provide grounds for expulsion, the prohibition of mistreatment of aliens subject to expulsion, the obligation to inform without delay the consular authorities of the state of origin of the aliens pending expulsion, and the obligation to respect the property rights of those being expelled.


Requirements and Standards of Diplomatic Protection

“diplomatic protection consists of 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 of that State to a natural or legal person that is a national of the former State with a view to the implementation of such responsibility.” ILC Articles on Diplomatic Protection 2006, article 1.

Standard of treatment of Aliens

The National Treatment Standard: The national treatment standard was supported by jurists both in Europe and Latin America prior to 1940, by a small number of arbitral awards. This equality principle was advocated by Argentinean jurist Calvo. Hence, the doctrine is also referred as Calvo Doctrine.

The national treatment standard seeks to ensure equal protection to aliens and the nationals of the host state. However, certain forms of inequality are permitted. For example, in regard to political rights. The application of national treatment standard is determined by acceptance of alien of local law governing the regulation of economy, restrictions on employment etc. However, the access to court must be maintained for all aliens.

The International Minimum Standard: The most of the states represented in the Hague Codification Conference, the Declaration on Permanent Sovereignty over National Resources 1962 have endorsed the international minimum standard in regard to the treatment of aliens. Modern BITs, arbitral tribunals generally rely on this standard.

In the Neer Claim, the General Claims Commission set up by the US and Mexico expressed the position as follows:

“The propriety of governmental acts should be put to the test of international standards…the treatment of an alien, in order to constitute an international delinquency should amount 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 man would readily recognize its insufficiency.”

The differences in the two standards of treatment have not been resolved so far. The two standards reflect opposing political and economic interests. The advocates of national treatment are not advocating for the supremacy of national law, however. They are arguing that the international law should regard equality of treatment as the standard as it is important to avoid the situation whereby, an alien would be able to maintain privilege status and control large areas of the national economy.

On the other hand, advocates of international minimum standard argue that states should not be allowed to avoid responsibility simply by pleading that both aliens and nationals have received equally poor treatment. But the content of the international minimum standard, sometimes, has become controversial. Particularly, in the widening scope of delictual responsibility, whereby even the acts of administrative and judicial organs, as in the field of denial of justice, have come under the scope of state responsibility and diplomatic responsibility.

In short, the two standards of treatment are still not settled in international law. Attempts, in the present time, have  been made to incorporate human rights standards in the treatment of aliens. After the ICJ’s decision in Ahmadeu Sadio Diallo Case is a testimony of this development.

Additional Forms of Delictual Responsibility in regard to Treatment of Aliens

  1. Breach of Fair and Equitable Treatment Standard (FET)

FET has become an autonomous standard of investment protection as set out in majority of the BITS.

Host state measures challenged for breach of FET vary widely, including revocation or non-renewal of licenses, imposition of new regulatory requirements by the legislative and executive organs affecting the economic operation of the investment, tax and tariff measures, termination, modification and breach of investment contracts, abusive treatment of investors, and denial of justice. [Crawford 2012]

FET has been interpreted by including international minimum standard of treatment, particularly, in the form of ‘legitimate expectations’, ‘non-abusive treatment’, non-arbitrary and non-discriminatory exercises of public powers and its adherence to due process requirements. See also, Waste Management (No 2) v. Mexico (NAFTA Tribunal).

  1. Denial of Justice

Is a form of injury on the part of a host state concerning the administration of justice. When the decision of the court or administrative agencies result into manifest injustice due to failure of the court or administrative agency to apply minimum procedural standard in the case, denial of justice is said to occur.

  1. Expropriation of Foreign Property

Taking of property by the state is generally considered normal.

Taking of property by the state is called expropriation.

Expropriation of one or more major national resources as part of a general programme of social and economic reform is generally referred to as nationalization.

The Convention Establishing the Multilateral Investment Guarantee Agency (1985) has defined ‘expropriation’ “as any legislative or administrative action or omission attributable to the host government which has the effect of depriving the holder of a guarantee of his ownership or control of, or a substantial benefit from, his investment, with the exception of non-discriminatory measures of general application which governments normally take for the purpose of regulating economic activity in their territories.”

Unlike direct expropriation, which consists in the physical takeover of private assets by the State Indirect expropriation cases are those where, by means of administrative or legislative procedures, the State provokes a unilateral change in contract conditions such that the investor is unable to recover the expected quasi rents of the business under the original contractual framework.” (Manuel A. Abdala and Pablo T. Spiller, ‘Damage Valuation Of Indirect Expropriation In International Arbitration Cases’, 14 Am. Rev. Int’l Arb. 447, 449 (2003))

The Compensation Rule: The rule supported by all leading ‘Western’ governments and many jurists in Europe and North America is as follows: the expropriation of alien property is only lawful if ‘prompt, adequate and effective compensation’. That is, the compensation rule makes the legality conditional.

Rules (Crawford 2012):

  1. Expropriation for certain public purposes, for example, exercise of police power and defence measures in wartime, is lawful even if no compensation is payable.
  2. Expropriation of property is otherwise unlawful unless there is provision for the payment of effective compensation.
  • Nationalization, that is, expropriation of a major industry or resource, is unlawful if there is no provision for compensation payable on a basis compatible with the economic objectives of the nationalization, and the viability of the economy as a whole.

See, the 1962 Declaration on Permanent Sovereignty over Natural Resources.

Breach and Annulment of State Contracts

  1. States may enter into various types of agreement with foreign nationals (State Contracts).
  2. The agreement that is entered into between the state and foreign national in regard to exploitation of resources is often termed as ‘concession contract’.
  • The breach of such contracts by states is regulated by the general principles governing the treatment of aliens.
  1. That is, law of state responsibility can become relevant in case of such breach.
  2. However, breach of state contracts does not create state responsibility on the international plane, unless the breach amounts to confiscatory annulment.
  3. Nevertheless there is a school of thought that argues that breach of state contract results into international responsibility. (Harvard Draft Convention (1929))
  • However, the present international law does not indicate the same. In the present international law, in addition to breach of state contract, further element of discrimination, denial of justice etc. need to be shown in order to establish international responsibility.

Nationality of Claims

Nationality serves to establish the legal interest of a state when nationals, including corporations, suffer injury or loss at the hands of another state. That is in order to establish the legal interest of a state in the dispute, it is essential that nationality of the person be established. (see Nottebohm Case)

See article 5 of the ILC’s Articles on Diplomatic Protection.

In regard to relevant nationality of corporation see, Barcelona Traction Case (Belgium v. Spain ) ICJ Reports 1970. Where the Court held that nationality relevant is the state of incorporation of the corporation not the state of which nationals are shareholders of the corporation.

However, see article 9 of the ILC Articles on Diplomatic Protection.

For the purposes of the diplomatic protection of a corporation, the State of nationality means the State under whose law the corporation was incorporated. However, when the corporation is controlled by nationals of another State or States and has no substantial business activities in the State of incorporation, and the seat of management and the financial control of the corporation are both located in another State, that State shall be regarded as the State of nationality.

Right of Shareholders

In the Barcelona Traction Case, the Court accepted that when the injury is directly related to the shareholders’ right, shareholders may have independent resort to claim (through diplomatic protection by the shareholder’s nation). But the general rule remain, the shareholders’ claim should be brought by the state of incorporation of the corporation. Why?

See also article 12 of the ILC Articles on Diplomatic Protection

Four Dual Nationality Rule see, articles 6 and 7

Exhaustion of Local Remedies

A claim is only admissible in international plane when local remedies available have been exhausted.



Article 14 of the ILC Articles on Diplomatic Protection.

The test appears to be that an effective remedy must be available “as a matter of reasonable possibility”. Norwegian Loans, ICJ Reports 1957.

No effective remedy is available if a point of law which could have been taken on appeal has previously been decided by the highest court, or

If the only issue on appeal would be one of fact and the higher courts lack the power to review findings of fact.

Treatment of Aliens under International Law