3 - Shareholders’ Claims for Reflective Loss in Domestic Regimes, Customary International Law of Diplomatic Protection, and Human Rights Law

Summary

This chapter analyses the regime for shareholders’ claims respectively in domestic regimes, under the customary international law of diplomatic protection and in human rights law. It begins with the analysis of domestic regimes and the very broad application of the no-reflective loss principle. This prohibition is justified by policy considerations such as the protection of creditors. In the context of diplomatic protection in the realm of international law, the International Court of Justice also opted for the prohibition of shareholders’ claims for reflective loss, as demonstrated by its landmark judgement in Barcelona Traction. This chapter explains, however, that the decisions of the ICJ addressing shareholders’ claims are not applicable by analogy to international investment law and arbitration as a consequence of the specific context in which they were generally adopted: the customary international law of diplomatic protection. Finally, this chapter provides a brief overview of the prohibition of shareholders’ claims for reflective loss which has generally been adopted by human rights courts and is applicable in human rights law.