Lump Sum Agreements in Spanish Practice

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Lump Sum Agreements in Spanish Practice

in Spanish Yearbook of International Law Online


The conceptual distinction between nationalization and expropriation has been drawn by international doctrine and case law, as although both sprang from public necessity and use, their legal nature differed. Whereas expropriation was an individual nationalization performed through implementing legislation, involving the provision of an economic compensation to the individual, nationalization is a form of expropriation that entails the total and definitive suppression of a legal capacity in favour of the State. It is true that the distinction between the two concepts can also be quantitative, relating to the number of persons affected. Reality shows that both institutions have more factors in common than they do differences: based on reasons

cont. of public utility, carried out pursuant to law, and provision of compensation, more or less fair, to those affected. Other concepts such as confiscation are associated with individual penalization and therefore are not entitled to compensation; and socialization is more political than economic in nature and therefore, unlike nationalization, relates to a consequence of the general modification of the economic politico-social structure of the state organization in question, which is why socialist writers prefer to use the term socialization to refer to any general expropriation. Some authors worth consulting on these concepts are W. Friedman, Expropriation in International Law, London, 1953, p. 5; K. Kattzarov, "Rapport sur la nationalisation", ILA, 1958, pp. 210 et seq; E. Novoa Monreal, Nacionalizaci6n y recuperaci6n de recursos naturales ante la Ley Internacional, Mexico, 1974, pp. 44-49. E. Pecourt Garcia, La propiedad privada ante el Derecho Internacional, Madrid, 1966, pp. 19-31; H. Rollin, "Avis sur la validite des mesures de nationalisation decrete es par le gouvernement indonesien", in Netherlands International Law Review, 1959, p. 266; E. Vitta, La responsabilita internazionale dello Stato per atti legislativi, Milán, 1953, p. 124. Only the terms expropriation and nationalization will be used, indistinctly, in this study. 2 see E. Pecourt Garcia, La propiedad... op. cit., p. 19. 3 Ibid. p. 19. 4 In the late 19th and early 20th centuries, the emergence of new states which would be entitled to express their opinion on this, put an end to the exclusiveness of the nations that hitherto participated in international relations, generating new international regulations and breaking the homogeneity that had prevailed until then, since they were states whose religion, culture and political structure, etc. differed from those in the classical states.

It should not be forgotten that protection of nationals' assets abroad was initially carried out through intervention of the armed forces or other forms of constraint applied by the state of which they were nationals against the state that dared to threaten its assets. Cf. E. Pecourt Garcia, La propiedad... op. cit., pp. 35-43. The "Calvo clause" could be considered the reason why certain authors maintain that diplomatic protection is a right not only of the state but also of its nationals, since when they do not obtain compensation from the foreign state, they file a claim with their own state which, in certain circumstances, is deemed obliged to compensate the individual owing to the lack of an international claim. This justifies the requirement of previously exhausting all remedies available within the nationalising or expropriating state before filing an international claim. This requirement has its origins in customary international law, as it is the basic consequence of the "assumption of risk by the individual" when investing in a foreign state, which has the possibility of repairing the damage any time after it occurs. Cf. I. Seidl-Hohenveldern, International Economic Law, 3 ed., The Hague, London and Boston, 1999, pp. 65-70. Also, Cf. I. Brownlie, "Treatment of Aliens: Assumption of Risk and the International Standard" in W. Flume, H. J. Hahn, G. Kegel and K.R. Simmonds, in International Law and Economic Order: Essays in Honour of F. M. Mann, 1977, pp. 309-311; and M. Sornarajah, The pursuit of nationalized property, Dordrecht/Boston/Lancaster, 1986, p. 10 and 11.

7 Cf. M. Somarajah, The pursuit... op. cit, pp. 13 et seq. 8 Cf. F.V. Garcia Amador, "State Responsibility in the Light of New Trends in International Law", AJIL, 1955, vol. 49, p. 339; also in Anuario CDI, 1957 and 1958.

9 Cf. E. Pecourt Garcia, La propiedad... op. cit., pp. 54-59. Mexican regulations on the nationalization carried out during this period can be found in L. Gonzalez Aguayo, La nacionalizacion de bienes extranjeros en America Latina, Mexico, 1969, vol. II, pp. 216- 239, 258-269 and 284-294. 10 "It was the Soviet government which applied almost from the very moment in which it came to power - initially as sanctions from mid-1918, in order to reorganize the economy, and subsequently in accordance with the socialist economic pattern -the widest-ranging and most radical nationalization ever witnessed, which extended generically to undertakings owning means of production. They were applied indistinctly to nationals and to foreigners, did not establish any kind of compensation for the former owners and were intended to constitute "sociatist property" throughout the country". See E. Novoa Monreal, Nacionalizaci6n y recuperaci6n de recursos naturales ante la Ley Internacional, Mexico, 1974, pp. 34. In 1922 the Conference of allied powers concluded that each state was free to choose its political organization and property ownership and economic systems, though this did not mean to say that the private rights of aliens should not be respected. See E. Pecourt Garcia, La propiedad... op. cit., p. 60. 12 Cf E. Novoa Monreal, op. cit. p. 35 et seq., particularly note 7 which cites the case law of English, USA and French courts on this matter.

Cf. E. Novoa Monreal, op. cit., p. 37. This author cites examples of claims between western states that performed nationalization and those that defended their nationals who had been paid insufficient compensation for having their assets nationalized. During the 18th, 19th and early 20th centuries, the western states had signed bilateral treaties (of amity, navigation and trade; of establishment; and of peace, putting an end to the First World War, etc...) among themselves and with other non-western states (China, El Salvador, New Granada, Turkey, etc.), which included clauses on the immunity of their nationals' property or, at least, the granting of proper compensation, reciprocally, in both states' territory. These states were therefore not unaware of this type of practice, which was consolidated by other different states. �4 During the historic period we are dealing with, the right to private property was by no means considered an inalienable right of the individual. The communist states stressed this point, as a necessary means of eroding the classical view of property law, with a view to states' current needs. This was solved by justifying the interference of the state in the aforementioned property law. Cf. M. Somarajah, The pursuit... op. cit., pp. 32 et seq.

15 With respect to this area of law, it is important to bear in mind the principle of recognition of a minimum standard in the sense of placing aliens on a level with a state's nationals as regards the exercise of the right to private property. This article does not deal with this issue, despite acknowledging that it is an interesting and complex subject to study. There is a very interesting study by Professor C. Jimenez Piernas, "El particular ante el derecho de la responsabilidad internacional : los problemas previos del standard minimo y la proteccion diplomatica", in Cur. DI Vitoria, 1987, pp. 67 et seq., and also, by the same author: La conducta arriesgada y la responsabilidad internacional del Estado, Alicante, 1988. 16 C f among others, E. Pecourt Garcia, La propiedad... op. cit., p. 104. 17 The Charter of the United Nations was to enshrine the principles of equality, independence and sovereignty of all the states comprising the current international community, as pillars of the world organization.

18 Cf. G. Berlia, "Contribution a 1'elude de la nature de la protection diplomatique", AFDI, 1957, pp. 63- 72. According to one of the most representative Soviet authors of his time, G.I. Tunkin, the developing states rejected the clauses on colonial conquests, colonial domination and racial inequality, unequal treaties, the doctrine of "acquired rights", western doctrine on legal succession pursuant to international treaties, and clauses on liability for damages to aliens placing them in a privileged situation with respect to the country's citizens, etc. According to the Soviet author this was due to the influence of . the socialist states, since the former URSS succeeded in ensuring that "these reactionary clauses of international law" ceased to be compulsory for all states. Cf. G.I. Tunkin, Curso de Derecho Internacional. Manual, Moscow, Editorial Progreso, 1979, pp. 136-147. This leads the author to draw one of his most categorical conclusions: "La politique etrangere d'un Etat est etroitement liee a sa politique interieure et constitue en quelque sorte son prolongement. La ligne generate de la politique etrangere d'un Etat depend surtout des principes de son regime social, de son essence de classe. En meme temps, il edifie sa politique etrangere compte tenu des fluctuations de la situation interieure et intemationale". See G. I. Tunkin, Droit International Public. Probldmes Theoriques, Paris, 1965, p. 174. This opinion was also shared by K. Grzybowski, according to whom compensation is a measure that must be considered when implementing a nationalization policy, but if there is no obligation to grant compensation to nationals, neither is there to compensate aliens; cf. K. Grzybowski, Soviet Public International Law. Doctrines and Diplomatic Practice, London, 1987, pp. 253-257. Cf. Nguyen Huu-Tru, Les nationalisations dans quelques pays d'Asie de tradition britannique: Inde, Sri-Lanca, Birmanie, 3 vols, Brussels, 1984; esp. vol. I, pp. 4-6.

20 C f M. Sornarajah, The pursuit... op. cit., pp. 56-65. z� This is the explanation given by Professors Sohn and Baxter for the rules on state responsibility, which were applied in cases of nationalization of foreign property when the investment sprang from the wish for economic cooperation with the new state. Therefore, in these authors' view, nationalization carried out in such circumstances was classified as "unjust" or "discriminatory". Cf. L. Sohn and R. R. Baxter, in "Responsibility of States for Injury to the Economic Interests of Aliens", AJIL, vol. 55, 1961, p. 545. 22 Massive nationalization took place in France from 1945; in the United Kingdom between 1946 and 1949; in Austria, in 1946 and 1947; Dutch banks were also nationalized during this period; Norway nationalized assets in 1945; nationalization took place in Indonesia between 1950 and 1959; and also in Iran; the Suez Canal was likewise nationalized. z3 Poland, Romania, Hungary, Czechoslovakia, Albania, Yugoslavia, the German Democratic Republic, the Democratic People's Republic of Korea, Bulgaria, etc. were to issue laws and decrees on nationalization, providing for compensation in such cases, though the compensation was considerably lower than the real value of the expropriated assets. Cf. E. Novoa Monreal, Nacionalizaci6n... op. cit. p. 38, E. Pecourt Garcia, La propiedad... op. cit., p. 139. 24 The measures of socialization, nationalization and expropriation of aliens' assets were included in many constitutions drawn up after 1945. These are examined by Professor E. Pecourt Garcia, in his aforementioned work La propiedad..., pp. 163-237.

zs C f M. Sornarajah, The Pursuit... op. cit., pp. 110-112. 26 The United Nations General Assembly approved Resolutions 626 (VIII), 1803 J (VII), 3016 (XXVII), 3171 (XVIII) which culminated definitively in the Charter of Economic Rights and Duties of States, of 12 December 1974 (General Assembly Resolution 3281 (XXIX)), article 2.2.c of which states that nationalising, expropriating or transferring the property of foreign assets shall be considered as a right of all states, nonetheless adding that in which case appropriate compensation should be paid by the State adopting such measures, taking into account its relevant laws and regulations and all circumstances that the State considers pertinent. In any case, the New International Economic Order enshrined the principle of compensating inequality, "desigualdad compensadora", which, in addition to leading to the classification of states on the basis of greater or lesser economic development, gave rise to a privileged situation for the less developed states, which obtained economic, food, technical and commercial assistance from the international organizations and more developed states. See A. Remiro Brotons et al. Derecho Internacional, Madrid, 1997, pp. 1093 et seq; V. Abellan Honrubia, "Algunas consideraciones sobre el NOI", in ONU, vol. XL, Madrid 1987, p. 213; A. Fernandez Tomas, Las estructuras de cooperacion para el desarrollo en NU, Valencia, 1987, p. 132. z� Resolution 3201 (S-VI), of the United Nations General Assembly, of 1 May 1974. z8 Cf. R. B. Lillich, "Duties of States Regarding the Civil Rights of Aliens", R. des C., vol. 161, 1978, pp. 333-371. By the same author, also "The Diplomatic Protection of Nationals Abroad: An elementary Principle of International Law under Attack", in AJIL, vol. 69, 1975, p. 359. 29 For example, art. 19 of the Costa Rican Constitution of 7 November 1949; art. 16 of the Ecuadorian Constitution of 10 August 1979; art. 33 of the Constitution of the Republic of Honduras, of 20 January 1982; and art. 63 of the Constitution of Peru of 3 October 1993.

30 This was confirmed with the Swiss nationalizations in 1947 and the nationalization of the Suez Canal in 1956, backed by different UN resolutions. Regarding the resolutions of the United Nations General Assembly, important ones are 626 (VIIJ, adopted on 21 December 1952; 1314 (XIIIJ in 1958; 1803 (XVIIJ on 14 December 1962. 31This was how the nationalization of Dutch investments carried out by Indonesia in 1958 to achieve the free independence of West New Guinea was classified. The Egyptian government likewise nationalized assets belonging to Belgian investors in 1960 as a reprisal for the breaking off of diplomatic relations between Belgium and the Republic of the Congo, and with the United Arab Republic. The USA classified the Cuban nationalization of American assets in that state as a discriminatory attitude (Banco Nacional de Cuba c. Sabbatino), etc. 3z C f M. Somarajah, The pursuit... op. cit., pp. 214 et seq. 33 By way of an example, see Resolution 1803 of the United Nations General Assembly (XVIIJ, point 4 of which takes this approach. 3a In this respect, the nationalization of Dutch assets by Indonesia triggered a controversy that materialized in a Note of Protest sent by the Netherlands to the Indonesian government on 18 December 1959 stating that the first of the nationalizations constituted an arbitrary and discriminatory act against the assets of its nationals, cf. McNair, in AJIL, 1960, vol. 54, p. 485; and H. Rolin, "Avis sur la validite des mesures de nationalis- ation decretes par le Gouvemement Indonesien", NILR, 1956, n. 6, pp. 260-264.

cont. The USA likewise regarded the nationalization of its nationals' assets by the Cuban government from 1959 onwards as reprisals of a political nature, cf. P. Sigmund, Multinationals in Latin America, 1980, p. 98. Regarding Libyan nationalization of British and American oil companies, these were also classified as political reprisals against both states, particularly in the case of the US, since the proceeds of the exploitation of oil in that territory basically constituted economic support for Israel, cf. G. W. Haight, "Libyan Nationalization of British Petroleum Assets", International Lawyer, 1972, vol. 6, p. 541; also ILM, 1974, n. 13, p. 767, and AJIL, 1974, n. 75, p. 486. 3s Regarding the current treatment of the issue in question, see, among others, the following works: L. M. Diaz Gonzalez, Globalizaci6n de las inversiones extranjeras, Mexico, 1989; by the same author, "La inversion extranjera. Promoci6n intemacional de la inversion extranjera: el MIGA", R. de Investigation Juridica, 1990, pp. 457 et seq. ; P. Merciai, Les entreprises multinationales en DI, Brussels, 1993; A. Miaja, "El Derecho Intemacional ante las sociedades multinacionales", ADI, 1975, pp. 169 et seq; A. Mouri, The IL of Expropriation as Reflected in the Work of the Iran-US Claims Tribunal, Dordrecht, 1994; E. Pecourt, "La dimension economica de la soberania estatal", REDI, 1963, pp. 459 et seq.; R. Perez Miranda, "La inversion extranjera directa" in R. de Investigaci6n Juridica, 1990, pp. 545 et seq.; A. Pigrau, Subdesarrollo y adopcion de decisiones en la economia mundial, Madrid, 1990; R. Pritchard (ed.) Economic Development, Foreign Investment and the law, London, 1996; I. Seidl- Hohenveldern, Corporations in and under IL, Cambridge, 1987; M. Sornarajah, The IL of Foreign Investment, Cambridge, 1994. 36 This does not mean that certain developing states that respect the right to private property always guarantee it, owing to an evident state of necessity. Cf. H. T. Nguyen, "La validite internationale des mobiles d'expropriation", RBDI, 1990/2, pp. 441-463. The same is not true of states which have been or continue to be "socialist". These states remain loyal to a policy of nationalization, which they attempt to justify through their constitutional political principles. This furthermore leads them to avoid adopting the promise to provide economic compensation by granting the compensation requested by the states whose nationals' assets are seized as a result of the application of intervention measures. The justification which is most commonly alleged in this connection is, again, the lower level of development and the application of a planned economy system. Cf. C. M. Diaz Barrado and C. R. Fernandez Liesa, Indemnizaciones a espanoles..., op. cit., pp. 15 and 16.

Cf. R. B. Lillich, B. H. Weston, International Claims: Their Settlement by Lump Sum Agreements, Charlottesville, 1975, vol. I, pp. 36. 38 Cf. C. F. Amerasinghe, "Assessment of Compensation for Expropriated Foreign Property: Three Critical Problems", Essays in Honour of Wang Tieya, The Nether- lands, 1994, pp. 55-66. requested the ILC to begin a study on 39 In 1953 the United Nations General Assembly requested the ILC to begin a study on the principles of international law governing the responsibility of states as a result of internationally wrongful act committed by them. In 1955 the Commission appointed Garcia Amador special rapporteur. In his 1957 draft, he proposed an article 9 establishing the following: "El Estado es responsable de los perjuicios que causa a los extranjeros expropiandoles sus bienes salvo si esta medida se justifica por razones de interes publico y si el Estado paga una indemnizacion adecuada". See Anuario CDI, 1957, vol. II, pp. 104-131. 4° Cf. M. Sornarajah, The pursuit... op. cit., pp. 214-225.

41 Cf. G. Tesauro, Nazionalizzazioni e diritto internazionale, Naples, 1976, pp. 214-219. 42 R. B. Lillich, B. H. Weston, International Claims, op. cit., vol. II, p. 5. This volume also includes a substantial collection of existing international practice on this matter. a3 Cf CPJI, Serie A, n. 9, p. 21 et seq. 44 See A. Remiro Brotons et al., op. cit., p. 1, 100. 45 It is interesting to analyse USA practice regarding the conclusion of lump sum agreements with other former Eastern European states (East Germany, Poland, Hungary, Czechoslovakia) whose communist regimes had confiscated property owned by American citizens residing in these territories, see M. L. Neef, "Eastern Europe's Policy of Restitution of Property in the 1990s", in Dickinson Journal of International Law, vol. 10/2, 1992, pp. 357-381.

Cf. R. B. Lillich; B. H. Weston, "Lump Sum Agreements: Their Continuing Contribution to the Law of International Claims", AJIL, vol. 82/1, January, 1988, pp. 69-80. 47 on this specific question, see Cuthbert Joseph, Nationality and Diplomatic Protection. The Commonwealth Nations, Layden, 1969. 48 Cf. A. Giardina, "Compensating nationals for damage suffered abroad: Italian practice", IYIL 1986/87, pp. 3-25; G. Berlia, "Contribution a 1'etude de la nature de la protection diplomatique", AFDI, 1957, pp. 63- 72; J. A. Westberg, "Compensation in Cases of Expropriation and Nationalization: Awards of the Iran-United States Claims Tribunal", in Foreign Investment Law Journal, n. 5, 1990, pp. 256-291; M. L. Neef, "Eastern Europe's Policy of Restitution of Property in the 1990s", in Dickinson Journal of International Law, vol. 10/2, 1992, pp. 357-381, amongst others.

49 Some possible examples are the cases of states like the Italian Republic, the French Republic (Commissions de Repartitions), the United Kingdom (British Foreign Compensation Commission) and the United States (United States Foreign Claims Settlement Commission), among others; cf. A. Giardina, "Compensating nationals for damage suffered abroad: Italian practice", IYIL, 1986/87, pp. 3-25; G. Berlia, "Contribution a l'etude de la nature...", op. cit., pp. 66-69. There is an interesting article on this question by J. A. Westberg, "Compensation in Cases of Expropriation and Nationalization: Awards of the Iran-United States Claims Tribunal", in Foreign Investment Law Journal, n. 5, 1990, pp. 256-291.

so In the case of Spain, which lacked a joint body like the latter, only the first two options were possible. There was a body of these characteristics before the civil war, the so- called Servicio de Asuntos Contenciosos, which disappeared as Spanish law evolved. Cf. Asesoria Juridica del Ministerio de Asuntos Exteriores, Expediente de reclamaci6n del Sr. Isu Eias, Exp. n. 1.878, Madrid, 13 Aprill972, pp. 2-4. sl In this connection Prof. A. Remiro points out the following: by 1996 1,010 bilateral agreements had been concluded between 159 states and Eastern European, Latin American and African countries. In particular, Spain had entered into treaties with Hungary in 1989, Poland in 1992, Romania in 1995, Argentina in 1991, Peru and Cuba in 1994, Mexico, Colombia and Venezuela in 1995, Morocco in 1989, and Algeria in 1994, among others. This same author cites as an example of an agreement that is more general in scope and multilateral in nature the IV Lome Convention, which suggests that the EC member states enter into bilateral treaties of economic development with each of the ACP countries. Cf. A. Remiro Brotons et al., op. cit., p. 1, 100. 52 Examples of the latter are the agreement between Greece and Hungary of 1963, a simple treaty reflecting the existence of claims of limited quantity, signed at Athens on 27 April 1963, which entered into force on 19 October 1965. See R. B. Lillich and B. H. Weston, International Claims: Their Settlement by Lump Sum Agreements, Part II, New York, 1975, pp. 260 et seq. And the 1963 agreement between the Netherlands and Poland as an example of a more complex and far-reaching agreement, signed at Warsaw on 20 December 1963, in force from 10 July 1964, see ibid. pp. 280-283. s3 Cf ibid, p. 1, 100 et seq.

s4 See BOE 11 November 1985. 55 The Kingdom of Morocco granted Spain compensation of 9,000,000 dirhams as a "lump sum settlement" to be awarded in a single payment and which the Spanish government would be responsible for distributing among the parties it deemed to be beneficiaries. The lump sum in question was established on the basis of the theoretical value of the following assets: "the land, plantations, habitable or operable buildings, machinery or holdings in cooperatives, and any other element transferred to the state within the Dahir framework of 2 March 1973"; to which it added "the material, livestock, products in storage and crop expenses ", and "the debts of Spanish farmers... contracted with the Moroccan state and public bodies established prior to the date of the present Agreement, except those of the undertaking "Electricas Marroquies, Sociedad An6nima", payment of which shall be as established directly by this enterprise and the Moroccan state". See article 2 of the aforementioned Hispano- Moroccan Convention.

56 In the judgement issued by the Supreme Court (3rd division) on 17 February 1998 relating to a claim lodged with the Spanish administration by Spaniards who had lost their assets in Morocco as a result of the nationalization referred to in this Convention, the Court dismisses their claims as it considers that, according to the Agreement, Spain did not substitute the Kingdom of Morocco in respect of its pending obligations, unlike in the one signed with Egypt on 14 April 1982. On this judgement see the commentary by Prof. Andres Saenz de Santa Maria, highlighting the limitations of lump sum agreements from the point of view of individual interests, REDI 1999/2, vol. LI, pp. 619-621. s� See BOE, 22 June 1984. this revolution gave rise to a number of situations that were detrimental to the interests of foreign subjects (including Spaniards), mainly owing to the implementation of the laws on agricultural reform, the nationalization of certain sectors of the economy, the sequestration of goods, the so-called "conservative" measures, a new monetary policy, etc. To mitigate or compensate for these effects, the then Egyptian Arab Republic signed compensation agreements with Britain, Holland, Austria, France, Belgium, the USA, Italy, Switzerland, Greece and Cyprus, undertaking to provide compensation for the damage caused in varying proportions and periods. s9 See C. M. Diaz Barrado, and C. R. Fernandez Liesa, Indemnizaciones a espanoles..., op. cit., pp. 33-36.

60 This agreement granted a sum of 1,400,000 USA dollars as a final settlement of all Spanish citizens' claims against the Egyptian government", payable in three payments. Like the Hispano-Cuban treaty, this agreement contained a "most favoured nation" clause in article 6, granting the Spaniards referred to in the agreement the same concessions as other foreign nationals granted greater concessions in other agreements of this kind that Egypt concluded with other states. See BOE, 22 June 1984. 61 it is true that most of the agreements entered into by Egypt contain the clause exempting this government from responsibility and stating that the claimant governments relinquish the exercise of diplomatic protection, though neither are these governments shouldered with specific responsibility for their nationals' claims, as in the Hispano-Egyptian agreement. The only agreement containing a partially similar clause is the one concluded with the USA on 1 May 1976, article 5.3 of which is merely establishes that "en el caso de que nacionales de los EEUU presenten tales reclamaciones directamente contra el Gobiemo egipcio, este las referird al Gobierno de los EE. UU", it does not add that the said Government will be "total y exclusivamente responsable" 62 The Council of State's own doctrine establishes this mandatory means of consultation. See also, J. D. Gonzalez Campos, L. I. Sanchez Rodriguez and P. Andres Saenz de Santa Maria, Materiales de Prdcticas de Derecho Internacional Publico, Madrid 1992, p. 81. 63 Resolution of the Plenary of the Consejo de Estado of 14 April 1994. In the opinion of the Consejo de Estado, the agreement fell within the scope of article 94.1 d) of the Constitution, and thus required the authorization of the Cortes in order to be ratified.

cont. On the one hand, the possible rights affected were those enshrined in arts. 24.1 (legal protection of rights) and 33.3 (compensation) of the CE; and, on the other, opinion 43.320 of the Council of State of 23 April 1981 concludes that: "When doubts arise on the establishment of the cases laid down in art. 94.1 of the Constitution, the opinion of the Council of State shall also be required in accordance with art. 22.1 of the Organic Law", see Repertorio Aranzadi de Jurisprudencia, 1974, n. 4510. 64 See Repertorio de Jurispudencia, 1974, n. 4510; STS of 29 December 1986, in REDI vol. X, pp. 175-176; STS of 6 February 1987, Repertorio de Aranzadi Jurisprudencia, 1987, n. 516; STS of 28 April 1987, Repertorio Aranzadi de Jurisprudencia, 1987, n. 2534; among others. del Ministerio de Asuntos Exteriores, Asunto de la Reclamaci6n due 65 Asesoria Juridica del Ministerio de Asuntos Exteriores, Asunto de la Reclamacion de indemnizaciones por espanoles contra paises de Europa Oriental, Exp. n. 3.071, Madrid, 12 June 1978. 66 See the practice collected by R. B. Lillich, B. H. Weston, International Claims..., op. cit, Part II. Also, C. M. Diaz Barrado and C. R. Fernandez Liesa, Indemnizaciones a espanoles privados de sus bienes en el extranjero,..., op. cit. pp. 31-36. C. Joseph, Nationality and diplomatic..., op. cit., pp. 198-219, in R. B. Lillich and B. H. Weston,

cont. International Claims... op. cit., Part II, pp. 94 et seq., 117 et seq., 244 et seq., 266 et seq, 297 et seq., 157 and s. 322 et seq., respectively. 67 In this case the claim was based on the losses which the Elias family had suffered to their assets as a result of the nationalization measures implemented by the Bulgarian government through a law of 27 December 1947. Cf. Asesoria Juridica del Ministerio de Asuntos Exteriores, asunto Expediente de reclamacidn del Sr. Isu Elias, Exp. N. 1.878, Madrid, 13 April 1972. 68 Mr. Elias justified this position claiming that "there was no possibility of availing himself of internal means since the entry of Soviet troops, the fall of the monarchy and the proclamation of the People's Socialist Republic gave rise to the prosecution of all the "capitalists" which cost many employers their lives, and those who did not pay for their guilt with their lives were sent to concentration camps" 69 For this purpose, the ambassador in Sofia recalled the claim, also made by Spain, for the amount of cash held by the Spanish legation when it was seized by the Bank of

cont. Bulgaria. Therefore, the agreement was to bear in mind these two claims. Asesoria Juridica del Ministerio de Asuntos Exteriores, issue Reclamaci6n bienes del Sr. Isu Elias, Exp. n. 3389 bis, Madrid, 20 August 1980. 70 Asesoria Juridica del Ministerio de Asuntos Exteriores, Expedientes n. 1.322, Madrid, 2 February 1968; and 3.261, Madrid, 1 August 1979. See BOE 18 March and 19 April 1988.

72 See BOE 18 December 1990. �3 See BOE 16 March 1991. 74 In general, this is the most comprehensive case of a claim in Spanish practice, particularly bearing in mind the large number of Spaniards affected by the Cuban nationalization laws, and the legislative measures deriving from the implementation of the compensation treaty signed by Spain and the Cuban Republic. 75 In article I of the agreement of 16 November 1986 concluded between Spain and Cuba on compensation for the assets of Spaniards affected by the laws, provisions and measures dictated by the Cuban government from 1 January 1959 the Republic of Cuba recognizes the damages caused to individuals and legal persons by the provisions adopted by the new regime resulting from the Castro revolution, stating that they deserved a compensation granted by that government. (See BOE 18 March and 19 April 1988). 76 On the contrary, it established a confusing and complicated system for appraising damage, to be implemented by a joint Hispano-Cuban commission. This commission was to study on an individual basis the claims lodged by the Spaniards concerned with the Spanish Ministry of Foreign Affairs, and to present the aforementioned reports to both governments. The governments would then, by mutual agreement, conclude whether or not to grant the compensation and, if so, what amount should be paid. Nonetheless, the agreement did serve to establish, approximately, the overall amount of Cuba's debt, since the commission examined each claim individually, rejecting those regarded as inappropriate and excluding from the valid claims any concepts classified as not subject to compensation, thus establishing which claims were entitled to payment. An objective and uniform appraisal was likewise carried out of the amount owed in respect of the lost assets. Another failing of the agreement was the short period of time it granted the Spanish government to submit the claims to the Cuban Ministry of Foreign Relations - only one year from the signing of the treaty. Claimants were furthermore required to prove their effective link with the property lost through state confiscation. This meant that

cont. each claim included a number of concepts not entitled to compensation, which increased exaggeratedly and erroneously the amount. Cf. Ministerio de Asuntos Exteriores, Direcci6n General de Asuntos Consulares, Exp. sobre las Reclamaciones a Cuba de los espanoles afectados por las imposiciones sobre nacionalizaciones, Acuerdo sobre reclamaciones relativas a bienes de espanoles afectados por disposiciones del Gobierno revolucionario de Cuba firmado en la Habana el dia 14 de marzo de 1967. the Fundamental Law of 7 February 1959 establishes as a basic criterion that nationality shall not be granted automatically through marriage (article 16 of the Fundamental Law). However, the Cuban authorities -created a new nationality criterion de facto, depriving all Spanish-born descendants of fathers who had acquired Cuban nationality as minors of their foreign identity documents. This provision, which is not laid down in the Fundamental Law, deprives children who are minors of choosing when they come of age. 78 Ministerio de Asuntos Exteriores, Direction General de Asuntos Consulares, issue Nota lnformativa sobre la Reunion presidida por el Sr. Subsecretario sobre depositos irregulares efectuados en el Consulado de Espana en La Habana, Madrid, 11 November 1972. 79 The treaty concluded subsequently by Spain and Cuba appears to be inspired by the 2 March 1967 agreement between the Swiss Confederation and the Revolutionary Government of the Republic of Cuba on the compensation of Swiss assets, rights and interests affected by the laws enacted by the Revolutionary Government of the Republic of Cuba from 1 January 1959. Also the treaty concluded between Cuba and the French Republic on 16 March 1967, concerning compensation for French property, rights and interests affected by the laws and measures enacted by the revolutionary government of the Republic of Cuba from 1 January 1959. These

cont. agreements establish a lump sum relating to Cuba's debt to Switzerland and France, and the payment of the interests in kind as opposed to in money; Cf. R. B. Lillich and B. H. Weston, International Claims: Their Settlement by Lump Sum Agreements, Part Ill Agreements, 1975, pp. 339-345. 80 BOE n. 67, 18 March 1988. However, when establishing payment in cash as one of the forms of payment, different periods were specified, that is, the sum would not be paid on a single date; rather, it would be paid in different instalments in subsequent years. Payment in kind was also deferred, and different products were stated as well as the different amounts of the products to be delivered in subsequent years. This part of the treaty actually seems to relate to a trade agreement between the two parties rather then one on compensation; See BOE n. 67 of 18 March 1988, Anexo al Convenio hispano-cubano.

82 The most favoured nation clause in treaties "consists of a conventional provision according to which one party (the granting party) undertakes to award the other (the beneficiary) party or to the persons and things which have a certain relationship with it a treatment that is no less advantageous than is granted to a more favoured third party of the same nature or to the persons and things having the same relationship with it". See A. Remiro Brotons et al., Derecho Internacional, Madrid, 1997, pp. 373 et seq. s3 Still in connection with the historic framework of Hispano-Cuban relations, which led to a lump sum agreement, epigraph II of Opinion n. 53.073 of the Consejo de Estado of 20 April 1989 on the bill establishing rules for the early fulfilment of the Convention between the Kingdom of Spain and the Republic of Cuba, of 16 November 1986, under

cont. the title of "Diplomatic protection", recognized that this term, in the international sphere of relations between states and pursuant to the latest doctrine, constitutes a right not only for the state which has been the object of violation of international law by another state, but also for its nationals who have been direct victims of this unlawful attitude. And in this case, by means of negotiations, it was possible to reach a preliminary agreement on the claims relating to the assets of Spaniards affected by the internal legislation of the revolutionary government of Cuba and, finally, the 1986 convention (See Consejo de Estado, Recopilación de Doctrina Legal 1989, pp. 9-13). 84 The Opinion of the Consejo de Estado raises different questions, which subtly analyse the concept of diplomatic protection, the preliminary agreement and the Convention concluded between the Republic of Cuba and the Kingdom of Spain. First, the opinion qualifies the definition of diplomatic protection, for while this institution is defined as a right of the state intended to protect its nationals against damages suffered abroad, it must be interpreted - in accordance with modern doctrine - in the sense that when exercising diplomatic protection the state enforces not its own right or, at least, not only its own right but also that of the damaged subject, or both simultaneously". In the opinion of the Consejo de Estado, the Convention concluded by Cuba and Spain bears in mind the right of third parties, the injured parties, so that they benefit from the compensation provided for in the agreement, which at the same time serves as a limit to their requests. 85 The precepts in question require that: "The natural and legal persons who are beneficiaries must have possessed Spanish nationality continuously from the date in which the laws and provisions were enacted or the measures justifying the claim were taken until 16 November 1986, or until the death of the natural persons or winding up of the legal persons, if occurring before the second date established. The rights recognized in this law shall be transmittable to the heirs of beneficiaries who provide proper proof of their condition as such".

86 The Inter-ministerial Settlement Commission, attached to the Spanish Ministry of the Economy and Treasury, was thus in charge of deciding not only on the distribution of the compensation among the beneficiaries but also which beneficiaries were really entitled to compensation. the Royal Decree entered into force the day after it was published, that is on 17 March 1991. Cf. BOE 16 March 1991 (n. 65), Royal Decree 324/1991,15 March 1991. 88 In accordance with a resolution of 3 December 1993 of the Undersecretariat of the Ministry of the Economy and Treasury, the provisional distribution of the lump sum set out in articles 3 and 5.2 of Law 19/1990 of 17 December and in article 5.5 of Royal Decree 324/1991 of 15 March was published. In this list the Inter-ministerial Commission refers to beneficiaries of claims in respect of assets or rights, with estimates of the latter, and a list of those excluded, stating the reason for their exclusion. These lists were published in the BOE, and a period of 15 days was established for lodging complaints with the Commission with evidence justifying the complaint; see BOE, n. 6, 7 January 1994. The Ministry of the Treasury later approved a list of a total of 1,460 claimants, together with the individual appraisals for each one. The final list of beneficiaries was published in the BOE on 22 June 1994, and also displayed at all civil government premises and at the embassies and consulates of the countries and cities where the interested parties resided. A total of 2,601 cases were allowed out of the approximately 5,000 which the Ministry sent to the Inter-ministerial Commission, from the claims lodged before Law 19/1990. 1,445 cases were included and 1,156 were excluded. 228 appeals were lodged, of which 216 received negative reports, 9 presented after the deadline and 3 excluded owing to lack of documentation. There were 19 renunciations of compensation. See Ministerio de Asuntos Exteriores, Direcci6n General de Asuntos Consulares. Subdirector General de Asuntos Consulares, Nota para el Sr. Ministro, Indemnizaciones a los expropiados por Revoluci6n cubana, Madrid, 7 September 1994. See Ministerio de Economia y Hacienda. Comision Interministerial Liquidadora, Ley 19/1990, de 17 de diciembre. "Cuarta Comparecencia del Subsecretario de Economia y Hacienda y Presidente de la Comision Interministerial Liquidadora Ley 19/1990, ante la Comision de Asuntos Exteriores del Senado: 14 December 1994"


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