Transnational Investment Companies' Diplomatic Protection Policy

Diplomatic protection (diplomatic protection) refers to a country's infringement on its nationals or legal persons abroad by the organs or officials of the host country. In accordance with the law of the host country, where all local administrative and judicial remedies are still not able to be remedied, the right of [2] can be remedied in the name of the state and the procedure between countries.

The state's protection of its national diplomacy is the sovereign act of the state. It is established according to the personal supremacy, also known as the personal jurisdiction, that is, the state's jurisdiction over people with their own nationality.

As Mr. Wang Tieya said, diplomatic protection is "a country's protection for its citizens." If a country's nationals are violated by other countries in violation of international law, they can not be settled through common means. The state of which the national belongs to is entitled to diplomatic protection in fact, which is a basic principle of the national law. The diplomatic action taken by the state for its nationals actually advocates their rights - the right to ensure respect for the rules of international law "[3].

When a country or a legal person enters a foreign country, its country still has the right to protect in accordance with the personal law. However, such protection is not unlimited. It must satisfy the following prerequisites: 1. the national or legal person has been infringed upon by the host country; 2., the behavior of the country in which it acts constitutes a breach of international obligations, which should bear international responsibility; [4]; 3., the nationality or legal person has the nationality of the country of protection; 4., the holding of such a nationality is persistent, that is, continuous nationality principle; and 5., the exhaustion of the host country's local relief (exhaustion of local remedies).

Because of the protection of multinational investment companies, the protection of companies, the protection of shareholders, the conflict of jurisdiction in disputes and the restrictions on Calvo clause, etc., it is one of the widely divergent fields in the field of international law for multinational investment companies to establish diplomatic protection subjects, the establishment of their nationals and how to coordinate with the [5] provisions.

I. The main body of diplomatic protection rights of transnational investment companies

In terms of economics, a company is a fictional legal entity invested by shareholders to achieve their economic purposes. The rise and fall of a company is closely related to the interests of shareholders. Can we derive from this: when a company suffers damage, its shareholders are bound to take certain actions? Or can the mother country of shareholders exercise diplomatic protection? In 1970, the the Barcelona traction (light, and power company case, Barcelona traction in short) was revealed by the International Court of Justice (Barcelona).

The core of the matter is to determine whether Belgium has the right to undertake diplomatic protection when the Belgian shareholder of a Barcelona company as a Canadian legal person is injured by Spain's measures against the company itself. Because the international law at that time did not establish any explicit provisions on the rights of the state to the company and shareholders, the court therefore thought that it must invoke the relevant rules of the domestic law (municiple law). According to the universally accepted rules of domestic legal systems in various countries, there are differences in legal status and legal authority between companies and shareholders in limited liability companies. As long as the company remains a legal entity, shareholders have no direct right to the company's property. The operating mechanism of a company is characterized by the fact that only companies can act on their behalf. An illegal act causes damage to the company (infringe), usually causing damage to its shareholders. However, this does not mean that the company and shareholders are entitled to claim compensation from the infringer. Because in this case, the company's rights (right) are damaged, shareholders are only interest whose interests are not affected, and right is not affected. Therefore, only companies can take appropriate actions. The court distinguishes three nouns: property, right and interest. It argues that only when rights are impaired can action be taken. It is a great initiative in international law. It also shows that international law is a developing system.

The court held that even if the company was only a means for shareholders to achieve their economic purpose, it would exist independently as long as it was real, so the rights and interests of shareholders would be separated from the rights and interests of the company. "The company has an independent legal personality, has its own property, and has certain legal capacity to carry out civil activities independently in its own name. It is independent of shareholders and is responsible for its own behavior independently. Shareholders have no independent legal status in the company. They only benefit from the company and are the beneficiaries. "[7]

In the judgment report, the court also talked about disregarding the legal entity or lifting or piercing the corporate veil. In fact, this theory can only be considered reasonable and fair for specific purposes under special circumstances. It will play a role only when the relevant substantive law is unable to relieve the injured party. It acts as a means of regulating afterwards the unfair facts caused by shareholders' abuse of company law personality and shareholders' limited liability act. It should be applied to different specific occasions when the substantive law is unable to fully remedy the interests of the injured party, and to realize the eternal value goal of fairness and justice and cooperate with various substantive laws. In other words, if the relevant substantive law can sanction shareholders' abuse of the personality of the company law and the limited liability of shareholders, especially if it can make up for the injured parties, it is unnecessary to use the theory of corporate personality negation. In this case, these conditions can not be satisfied, so the corporate personality can not be applied to [8].

In some respects, it is impossible for international law to specify special rules in specific cases. Under specific circumstances, companies directly injured by wrongful acts are obviously given the right, while their shareholders are not. Therefore, the status of a company depends on two substantive rules: International Law and domestic law; shareholders only have the rights expressly granted to them by domestic law, while international law does not stipulate such rights. Therefore, the diplomatic protection of the company can only be exercised by the nationality country of the company and not exercised by the country of nationality of the shareholders, even if there are some exceptions to this general principle, [9].

Two. Determination of nationality of transnational investment companies

As the scope of international economic activities is expanding, a company is composed of a fund raising member of the people's Republic of China, but its registered place is in the State B, the board of directors or the management center is located in the country of the Republic of China, while the actual operation of the business is common in the state of Ding. As for how to determine the nationality of a legal person, there is no conclusion in the international community today. Whether or not the overseas direct investment enterprises have the legal person nationality of the host country mainly depends on the standard of the nationality of the legal person determined by the host country law. Internationally, the main methods of determining the nationality of legal persons are:

1. legal person domicile. It is said that in which country a legal person residences should be identified as a legal person. But there are two claims for where the legal person residences are: one is that the residence of the legal person should be in the [10] of its management center, that is, the Le siege social reel, and the other is that the residence of the legal person should be in its business center or development and Utilization Center.

2. practical control. It is of great importance to determine the enemy's legal person in the war period. However, there are many difficulties in real life. For example, companies that issue bearer shares, companies with frequent changes in shareholders and determining the nationality of a company based on the number of investors or the amount of capital contributions are not easy, so it is seldom used in practice.

3. legal person registration. Which country is the legal person that advocates a company to register in? Most British and American countries say this. In 1971, the second restatement of conflict law of the United States said: "the effective establishment of a commercial legal person must conform to the conditions prescribed by the state law of the place where it is established, regardless of its place of activity, or the law of the place where the directors, managers and shareholders are domiciled. "[11] Barcelona company also adopted this idea.

4. the law on the establishment of a legal person. This view holds that a legal person is established in accordance with the provisions of a certain national law and approved by the state, so the applicable law based on the establishment of a legal person shall be used as a criterion for determining the nationality of a legal person. Japan holds this view, and now this view has a tendency to take advantage of [12].

5. composite standards. The legal person's domicile and the registration place of the legal person shall be combined to determine the nationality of the legal person. At the seventh session of the international private law held in Hague in 1956, the Convention on the recognition of the legal personality of foreign companies, associations and consortia was adopted. The convention adopted this composite standard according to international practice. Nationality is the legal expression of the fact that individuals are closely related to the population of a country. Only when the nationality changes the close relationship between an individual and a country of nationality, does it enable the state to exercise diplomatic protection. In 1955, the International Court of justice examined the "Nottebohm case" (the real and effective nationality) established by Baum case, which is a clear proof of [14].

The legal precedent practice of the International Court of justice also shows that although the nationality also indicates a legal relationship with its country, it reflects the relationship between its rights and obligations with its country of nationality, and the right of the nationality state to protect its rights in the same international law, and the same country has the obligation to protect it. However, the international law does not apply to the theoretical [15] of the actual nationality of the legal person. Jennings and watts revised "Auburn sea international law" pointed out: as for a country's protection of a company which has its nationality, but its significant interests are owned by non nationals, "Barcelona traction company case" (1970) seems to indicate (though not directly recognized), as a general rule, the company's own country can still protect it. However, it is not clear how effective the effective link concept can be in this case. [16] is not clear.

Three, the principle of local relief in host countries

1. meaning.

Also known as the principle of exhaustion of local relief, in international law, it means that when a dispute arises between a foreigner and a host government or enterprise or individual, the administrative or judicial organs that submit the dispute to the host country should be settled according to the procedural law and substantive law of the host country. Before the exhaustion of all available remedies provided by the host country, no international procedure can be required to solve the problem. The alien's own government can not exercise diplomatic protection and investigate the host country's international responsibility (state responsibility). When dealing with disputes between foreign investors and host countries, the territory jurisdiction of host countries has priority over personal jurisdiction, which is from the perspective of diplomatic protection.