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

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    Bloomberg Law

    Citation. I.C.J., 2007 I.C.J. ____.

    Brief Fact Summary. A state responsibility and diplomatic protection case on behalf of its national, Diallo, was filed against the Democratic Republic of Congo (D.R.C.) (D) by the Republic of Guinea (P), alleging that Diallo’s right were violated as well as his right as a shareholder (associe) of limited companies (SPRIs) incorporated in the D.R.C. (D). These allegations which Guinea (P) levied against D.R.C. (D) were however contended on the ground that Guinea (P) did not have standing to protect Diallo.


    Synopsis of Rule of Law. (1) Where a state alleges that internationally wrongful acts by a host state have been melted out on its national’s right as a shareholder, such a state has the legal standing to bring a diplomatic protection claim on behalf of its national who is a shareholder in a company organized under the laws of the host state.
    (2) In customary international law of diplomatic protection, there is no exception that permits “substitution” of a shareholder for a company in exceptional circumstances.


    Facts. A state responsibility and diplomatic protection case was filed by Guinea (P) on behalf of Diallo, its national, against the D.R.C. (D) for the violation of Diallo’s rights, including his rights as a shareholder (associe) of two limited companies (SPRLs), which was incorporated in the D.R.C. (D)-Africom-Zaire and Africontainers-Zarie. Diallo was a manager (gerant) of these companies. Based on the fact that D.R.C’s (D) violated Diallo’s right as a shareholder rather than just on the companies’ rights, Guinea (P) claimed that its diplomatic protection claim was viable. And also based on the companies’ right, Guinea (P) contended that it could bring on a “theory of substitution”. All these allegations were contended by D.R.C (D) on the ground that Guinea (P) lacked standing to bring claims against them.


    Issue. (1) Where a state alleges that internationally wrongful acts by a host state have been melted out on its national’s right as a shareholder, does such a state have the legal standing to bring a diplomatic protection claim on behalf of its national who is a shareholder in a company organized under the laws of the host state?
    (2) In customary international law of diplomatic protection, is there an exception that permits “substitution” of a shareholder for a company in exceptional circumstances?


    Held. (1) Yes. where a state alleges that internationally wrongful acts by a host state have been melted out on its national’s right as a shareholder, such a state has the legal standing to bring a diplomatic protection claim on behalf of its national who is a shareholder in a company organized under the laws of the host state. In the support of its allegation against D.R.C. (D), Guinea (P) referred to the judgment in the Court’s Barcelona Traction case, where the Court ruled that “an act directed against and infringing only the company’s rights does not involve responsibility towards the shareholders, even if their interest are affected” but added that “(t)he situation is different if the act complained of is aimed at the direct rights of the shareholder as such.” The most important factor the court have to determine is which of Diallo’s rights is associated to his status as a manager against his status as a manager, as the Court will define the precise nature of the rights at the merit stage. Hence, as to Diallo’s direct rights as a shareholder, the D.R.C’s (D) objections are rejected and dismissed.


    Discussion. The protection of the rights of shareholders and those of their companies in contemporary international law, including the settlement of associated disputes are primarily governed by bilateral or multilateral agreements for the protection of foreign investments. Hence, treaties for the promotion and protection of foreign investments and the Washington Convention of 18 March 1965 on the Settllement of Investment Disputes between States and Nationals of Other States which created an International Centre for Settlement of Investment Disputes (ICSID) are examples of such agreements meant to protect foreign investments, and also by contracts between states and foreign investors.



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