Mr. Chairman,

The Chinese Delegation wishes to thank Mr. Guillaume Pambou-Tchivounda, Chairman of the International Law Commission for his presentation of the work of the Commission. We'd like to congratulate the Commission for its achievements under the leadership of Mr. Pambou-Tchivounda. Now I'd like to comment on two topics, namely, "diplomatic protection" and "international liability for injurious consequences arising out of acts not prohibited by international law."

On "Diplomatic Protection"

The International Law Commission at its 58th session adopted on second reading 19 draft articles on diplomatic protection as scheduled. We congratulate the Commission for this achievement and would like to express appreciation for the excellent job that the Special Rapporteur Mr. Dugard has done.

The entire set of draft articles adopted on second reading is a compilation of the rules of customary international law governing diplomatic protection, and in certain aspects, also reflects a gradual evolution of international law. On the whole, we view as positive the text of these draft articles.

Here I'd like to comment on some of the specific points in the draft articles and commentaries. We reserve the right to make further comments on the draft articles.

We believe that the following principles should be followed in exercising the right of diplomatic protection. First, diplomatic protection is a right of the State of nationality, rather than an obligation. Second, the State of nationality, in excising diplomatic protection, must not encroach upon the territorial jurisdiction of the State where an injury has occurred and should respect its law. Third, citizens and legal persons outside their State of nationality should be primarily protected by the law of the State where an injury has occurred, supplemented by protection provided by the State of nationality; under no circumstances should protection exercised by the State of nationality substitute that provided by the law of the State where the injured person is located. Fourth, the State of nationality should ensure that measures it takes in exercising diplomatic protection should be proportionate to the injury, and should refrain from taking excessive measures. Fifth, diplomatic protection should be without prejudice to other applicable rules of international law, including those concerning consular protection, human rights protection, investment protection and the Law of the Sea.

(I) On draft article 1, "Definition and scope"

The definition in draft article 1 emphasizes the condition that diplomatic protection is provided against an internationally wrongful act of a foreign country. We endorse the recognition of this rule of customary international law. We also believe that the necessary elements for constituting the above-mentioned internationally wrongful act should include not only the act in violation of an international obligation but also the physical consequences caused by such an act.

(II) On draft article 4, "State of nationality of a natural person"

Draft article 4 gives the definition to the State of nationality of a natural person, to which we agree in principle. However, we know that in international practice, there are often cases of dual or multiple nationalities, whereas many States do not recognize dual or multiple nationalities. This inevitably begs the question of nationality identification which must take into account the law of the relevant States other than the State of nationality. Therefore we suggest that a proviso be added to draft article 4: "unless otherwise provided for in the law of the State where a natural person is located."

(III) On draft article 7, "Multiple nationality and claim against a State of nationality"

Draft article 7 provides that a State of nationality may not exercise diplomatic protection in respect of a person against a State of which that person is also a national unless the nationality of the former State is predominant. While understanding the purpose and practice of this provision, we believe that there is no clear definition for the so-called "predominant nationality" in international law and it is difficult to judge in practice. Therefore we suggest that this concept be clearly defined or the "principle of closest association" be followed in determining which State is entitled to such a right.

(IV) On draft article 8, "Stateless persons and refugees"

Draft article 8 spells out diplomatic protection in respect of a stateless person, which we approve. But given continuous nationality as a universal principle applicable to diplomatic protection of natural and legal persons, it should be applicable to "Stateless persons and refugees" as well. Therefore we suggest that "lawful and habitual residence" be revised to "continuously lawful and habitual residence." We also believe that, in determining what is to be construed as "continuous," the law of the State of current residence and universally accepted principles of international law should be taken into account along with the law of the State of legal residence of a Stateless person or refugee in order to ensure that diplomatic protection would not be abused.

(V) On draft article 12, "Direct injury to shareholders"

Draft article 12 provides that the State of nationality of shareholders is entitled to exercise diplomatic protection against an internationally wrongful act that causes direct injury to the rights of any such shareholders. We believe that this article is jurisprudentially problematic and therefore suggest that further study be conducted. The main reasons are as follows: (1) There is no clear definition for the so-called "rights of shareholders" in international law, and cases of this kind are very rare in international practice; (2) as protection of shareholders' interests is primarily embodied in the diplomatic protection regime in respect of their corporation, it is inconsistent with the basic principles of corporate law, and might easily lead to the abuse of diplomatic protection if, while exercising diplomatic protection of such a legal entity as a corporation, additional protection is to be provided for its shareholders. (3) With regard to "the rights of shareholders as distinct from those of the corporation itself," the principle of diplomatic protection applicable to natural persons can be invoked, and there is no need to have such a specific provision for diplomatic protection of shareholders.

(VI) On draft article 13, "Other legal persons"

In practice, universities that are funded and ultimately controlled by a State are a form of legal person. Therefore we suggest that the following wording be added to the commentary: "Universities funded and ultimately controlled by State are also entitled to diplomatic protection."

(VII) On draft article 15, "Exceptions to the local remedies rule"

Draft article 15 spells out five exceptions to the local remedies rule, of which paragraph (a) sets out "unavailability of local remedies to provide effective redress" as an exception. To my understanding, this provision covers the situation where certain matters are deemed non-actionable by the law of the State where an injury has occurred.

The exception given in paragraph (e) of this draft article provides, "the State alleged to be responsible has waived the requirement that local remedies be exhausted." In view of the fact that the afore-mentioned waiving is a State act, we suggest that it be changed into "the State…has expressly waived…"

(VIII) On draft article 19, "Recommended practice"

With regard to the rights of injured persons, we believe that the evolution of international human rights law has not changed the nature of diplomatic protection as a State right. The State has the right to decide whether and how to exercise diplomatic protection, and there is no such thing as State obligation to exercise diplomatic protection. However, while exercising diplomatic protection, the State should take into account the rights of injured persons, including such questions as whether and how to provide injured persons with appropriate compensation.

On "International Liability for Injurious Consequences Arising out of Acts Not Prohibited by International Law"

Under this topic, the 58th session of the International Law Commission adopted on second reading "draft principles on the allocation of loss in the case of transboundary harm arising out of hazardous activities" (hereafter referred to as "draft principles") and the commentaries. This is another significant achievement under the same topic since the Commission adopted "Draft Articles on the Prevention of Transboundary Harm from Hazardous Activities" in 2001, marking the completion of consideration under this topic by the International Law Commission. We'd like to congratulate the Commission for this achievement. Our appreciation also goes to the Special Rapporteur, Mr. Rao, for the excellent job he has done.

I'd like to make three general comments on the draft principles. First, as part of the gradual development of international law in respect of State responsibility, the draft principles are of great theoretical and practical significance. Second, the application of the draft principles is general and residuary in character. By "general," I mean the draft principles are general principles to guide State practice, and their concrete implementation measures are for the states concerned to adopt by agreement; by "residuary," I mean particular or specific compensation arrangements take precedence over these draft principles in application. Third, we support the efforts to cast the draft principles into a declaration or a set of guidelines or a model law, not only for States to invoke and apply, but also to serve as a basis for concluding treaties in the future.

Now I want to comment on some specific points in the draft principles and commentaries and I reserve the right to make further comments on the draft principles.

(I) On Principle 4, paragraph 1

Paragraph 1 stipulates that each State is obliged to ensure that prompt and adequate compensation is available for victims. It is my understanding that the aforementioned "prompt and adequate compensation" means "fair and reasonable compensation." This is consistent both with the understanding of the purposes of the draft principles and their commentaries, and with the principle of equity, reflecting the value orientation of the draft principles in striking a reasonable balance between protection of victims and protection of lawful economic activities by the relevant State.

We have noted the following statement in the commentary of this principle: As long as the "due process of law" requirements are met, and as long as compensation given is not arbitrary or grossly disproportionate to the damage actually incurred, even if it is less than full, it can be construed as adequate.

(II) On Principle 4, paragraph 2

Paragraph 2 establishes the principle of strict liability on the operator, namely "the imposition of liability on the operator or, where appropriate, other person or entity" as long as it causes transboundary damage. We agree with this principle, but we also believe that this paragraph still contains some legally vague points which need to be further clarified.

First, we suggest that in the definition of "operator," "person" be defined as any natural or legal person.

Second, with regard to the subject of liability, we endorse the attachment of primary liability on the operator, but we also believe that "other person or entity" that has participated in the hazardous activities should be held liable, too. We suggest that the afore-mentioned "other person or entity" be clearly defined.

Third, we suggest that some exemptions be spelled out. For example, it can be stipulated that the operator and the State of origin can be exempted from liability if, due to force majeure, such as natural disaster and armed conflict, the State of origin and the operator have failed to avoid causing transboundary damage despite due diligent measures they have taken.

(III) On Principle 4, Paragraph 3

Paragraph 3 provides that each State should impose a requirement on the operator or, where appropriate, other person or entity, to establish and maintain financial security for claim payment. We believe that if the operator or other person or entity can establish financial security, it will help victims obtain fair and reasonable compensation. But in practice, establishing financial security depends, to a large extent, on the economic strength of the operator. For now it is still unrealistic or difficult to realize if a requirement should be imposed on each State to make insurance available to all the enterprises engaged in transboundary hazardous operations. We endorse "some flexibility for States" as referred to in the commentary associated with this paragraph. This is a point which we would like to reaffirm.

(IV) On Principle 4, Paragraph 4

Paragraph 4 requires that the State of origin establish industry-wide funds for compensation at the national level at an appropriate time. We are of the view that "industry-wide funds" are not very common in States, especially in developing States. To provide as many options as possible for transboundary damage compensation, we suggest that a transboundary-damage-related international fund be established to cover the part of the damage which the operator's compensation is insufficient to cover, taking as reference the international practice in the running of international funds related to oil spill damage or nuclear compensation.

(V) On Principle 4, Paragraph 5

This paragraph provides that the State of origin is obliged to make available additional financial resources for compensation, that is, the State of origin is to share the relevant loss. We believe that it is not entirely reasonable to allocate residuary liability to the State of origin alone. Right now, some hazardous industries are relocating to developing States, whereby quite a number of developed States, as non-States-of-origin, have reaped enormous profits while bearing fewer obligations. It is obviously unfair to allocate "residual liability" to the developing State alone for transboundary damage. Therefore we suggest that an allocation-of-loss regime for beneficiary States be established to have the State of nationality of a given enterprise or its other beneficiary States share the loss in cases of transboundary damage.

(VI) On Principle 6, "International and domestic remedies"

Principle 6 spells out different remedies, but their interrelationships are not specified. We suggest that relevant provisions be worked out accordingly.

Thank you, Mr. Chairman.