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Published online by Cambridge University Press: 28 March 2017
The object of this article is to examine the role of insurance in international claims,and in particular the relationship of subrogation to the traditional rules of diplomatic protection and nationality of claims. Among the questions to be examined is that of locus standi of insurers in international claims (meaning in this context the standing of a state to present a claim of an insurer to an international tribunal, or to espouse it through diplomatic channels), the nationality of the insurers in relation to that of the insured, and the effect upon an international claim of payment by insurers possessing the nationality of State A to victims of an international wrong possessing the nationality of either State A or of State B. Can State C, which has caused the injury in circumstances involving its international responsibility towards State B, invoke the performance of the insurance contracts, in accordance with which the payments have been made, to deny its responsibility on the ground that the rules of nationality of claims have not been respected? If the insurers have covered the damage suffered in part only, would the quantum of the claim be affected&
1 The literature on this subject is scarce. See, in general, Monaco, , Les Assurances en Droit International, 101 Rec. Des Cours de L’Académie de Droit International 383 (1960)Google Scholar (iii); Ritter, , Subrogation de L’assureur et Protection Diplomatique, 65 Rev. Générale de Droit Int. Public 765 (1961)Google Scholar; On subrogation, see Keeton, , Basic Text on Insurance Law 147 et seq. (1971)Google Scholar. Regarding some economic aspects of insurance, see “Everybody’s Centre: Insurance 1972—A Survey,” The Economist, June 24–30, 1972, at 58, et seq.
2 For questions of insurance arising in a different context, see the case of Pan American World Airways, Inc. v. The Aetna Casualty and Surety Co., 368 F. Supp. 1098 (S. D. N.Y. 1973), 12 ILM 1445 (1973), resulting from the 1970 hijacking and destruction by members of the Popular Front for the Liberation of Palestine of a Boeing 747.
3 Barcelona Traction, Light and Power Company, Limited, Judgment, [1970] ICJ Rep. 3 at 32.
4 See, in general, 8 Whiteman, , Digest of International Law 1233 et seq. (1967)Google Scholar.
5 Judgment of April 6, 1955, [1955] ICJ Rep. 4, at 20–21.
6 Supra note 3, at 33–34.
7 Id. at 35–36.
8 Id. at 48.
9 Id. at 49.
10 Preliminary Objections, Judgment of May 26, 1959, [1959] ICJ Rep. 127.
11 Unfortunately, the value of the pleadings of the parties in international judicial proceedings is often underestimated. For the Bulgarian argument, see the Aerial Incident of 27 July 1955 case, ICJ Pleadings 438–45, 562–64 (1959); for the Israeli argument see id. at 524–25, 532–35, 593–94.
The Third Preliminary Objection of Bulgaria, in its final form, requested the Court “To adjudge and declare that the Government of Israel has no capacity to submit to the Court claims to a right to be indemnified which has been the subject of assignment or subrogation in favour of insurance companies not of Israel nationality.” Preliminary Objections, Judgment of May 26, 1959, [1959] ICJ Rep. 133.
12 The older cases on the subject are conveniently collected in 2 Whiteman, , Damages in Int. Law 1296–328 (1937)Google Scholar; see also Borchard, , The Diplomatic Protection of Citizens Abroad 646–50 (1915)Google Scholar.
13 Lillich, , International Claims: their Adjudication by National Commissions 95 (1962)Google Scholar. Elsewhere, Lillich writes that the Foreign Claims Settlement Commission insisted on the continuous American nationality of both the insureds and the insurers. Lillich, & Christenson, , International Claims: Their Preparation and Presentation 25 (1962)Google Scholar.
14 International Claims : Their Adjudication by National Commissions, supra note 13, at 96.
15 Supra note 12, at 649.
16 United States War Claims Commission, Seventh Semiann. Rep. for the period ending March 13, (1953) at 17.
The United States-German Mixed Claims Commission, established under the Special Agreement of 10 August, 1922, decided in the War-Risk Insurance Premium Claims that such premiums do not “constitute claims for which Germany is financially liable,” and that they were not losses attributable to Germany’s act as a proximate cause. 7 U.N.R.I.A.A. 44, at 52, 54, 63. See also the case of Eastern Steamship Lines, Inc. (United States v. Germany) id. at 71. Regarding the rejection by the Geneva Tribunal in the Alabama Claims of claims for enhanced payments of insurance, see 4 Moore, , History and Digest of the International Arbitrations to which the United States has been a Party 4113–14 (1898)Google Scholar.
17 Panel Opinion No. 24, under Public Law 285, FCSC, Fourth Semiann. Rep. 20 (Jan.–June 1956). Could this decision, for which no reasons were stated, have been influenced by the inadequacy of available claims funds? See FCSC, Fifth Semiann. Rep. 6 (July-Dec. 1956). In the Matter of the Claim of George H. Earle III and United States of America (Claim No. Bul-1,094, Decision No. Bul—280), the Commission recognized the subrogation of the United States following the compensation of the claimant by the United States under a private law. FCSC, Tenth Semiann. Rep. 24–25 (Jan.-June 1959).
18 In the Matter of the Claim of Federal Insurance Company (Claim No. IT-10,370, Decision No. IT-456). FCSC, Tenth Semiann. Rep. 150–51 (Jan.-June 1959); Whiteman, supra note 4, at 1261. In the Matter of the Claim of the Continental Insurance Company (Claim No. IT-10,278, Decision No. IT-455), FCSC, Tenth Semiann. Rep., at 151–52 (Jan.-June 1959). Italian claims were decided under section 304 of the International Claims Settlement Act, as amended, which was significantly different from section 303 relating to Bulgaria, Hungary, and Romania. Also on the practice of the Commission, see FCSC, Decisions and Annotations 271, 597–98, 639–40 (undated, published in 1968).
19 “Suggestions for Preparing Claims Arising out of Seizures of Vessels in International Waters” (Dec. 6, 1972). See Fishermen’s Protective Act of 1967, as amended. 22 U.S.C. §1971. See also “Suggestions for Preparing Claims, for Personal Injury or Loss of Life” (July 1, 1955) (“amount of insurance or other indemnity collected or payable by reason of death of the deceased”); see also “Suggestions for Preparing Claims for Loss of or Damage to Property—Real or Personal” (Apr. 1, 1965) (“The amount, if any, claimant has recovered through insurance or otherwise for property lost, destroyed, or damaged.”). Two of these “suggestions” are reprinted in Lellich & Chhistenson, supra note 13, as Appendices C & D.
20 Regarding recent developments pertaining to U.S. insurance of investments abroad, see, in general, Senate Comm. on Foreign Relations, Report on the Overseas Private Investment Corporation Amendments Act, S. Rep. No. 93–676, 93d Cong., 2d Sess. (1974).
21 See Art. III , 7 U.S.T. 3125 (1956); T.I.A.S. 3691.
22 Lillich, , International Claims: Postwar British Practice 59, 122–23 (1967)Google Scholar.
23 Mcnair, , 2 International Law Opinions 290 (1956)Google Scholar.
24 Id. at 291, 292.
25 Ibid.
26 Vallat, , International Law and the Practitioner 22–23 (1966)Google Scholar.
27 Id. at 23. Compare Foreign Secretary Sir Anthony Eden’s reply in the House of Commons on November 24, 1954:
Mr. Onassis, though born a Greek, is now a citizen of the Argentine, and . . . the crews are German and Norwegian. We have locus standi in respect of the insurance and because we do not agree to this limit which has been imposed, but that is the extent of our interest in the matter.
Mr. Hall: Whilst thanking my right hon. Friend for that reply, may I ask whether he is pressing representations, because the amount of insurance interest with which this country is concerned is very considerable indeed?
Sir A. Eden: I am well aware of that but that is not the same issue as that which is the subject of these Questions.
533 Parl. Deb., H.C. (5th Ser.) 1241–42 (1953–1954).
28 Weston, , International Claims: Postwar French Practice 87–88, (1971)Google Scholar.
29 Verzijl, , le Droit des Prises de la Grande Guerre 447–48 (1924)Google Scholar; Garner, , Prize Law during the World War 106–07, 109 (1927)Google Scholar; Rowson, , Prize Law during the Second World War, 24 B.Y.I.L. 160 (1947)Google Scholar; The St. Kilda, 1 Hurst, and Bray, , Russian and Japanese Prize Cases 188 (1912)Google Scholar; The Ikhona, id. at 226; The Knight Commander, id., at 357; The Hsiping, 2 Hurst, and Bray, , Russian and Japanese Prize Cases 133 (1913)Google Scholar; The Este, [1943–1945] Ann. Dig. 511; The Indus, id. at 524; The Salerno, [1946] Ann. Dig. 407; The Arsia, [1949] Ann. Dig. 577; The Flying Trader, [1950] Ann. Dig. 440.
30 Rowson, supra note 29, at 185–86.
31 2 Hurst and Bray, supra note 29, at 54.
32 Id. at 56. In the case of The Flying Trader (1950) the Prize Court of Alexandria rejected the claim of American insurers of tractors seized in Port Said, since the neutral destination of the tractors was not established and they were considered lawful prize, but no objection to the right of the insurers to appear was made. [1950] Ann. Dig. 440.
33 Under the Special Agreement of August 10, 1922. 7 U.N.R.I.A.A. 13. For the Reports of the Decisions of this Commission, see 7–8 U.N.R.I.A.A. See also Kiesselbach, , Problems of the German-American Claims Commission 58–65 (Zeydel, transl. 1930)Google Scholar.
34 7 U.N.R.I.A.A. 32 at 36.
35 Id. a t 37.
36 See Opinion of the United States Commissioner in the Provident Mutual Life Insurance Company case, 7 U.N.R.I.A.A. 92–96. Cf. the Opinion of the German Commissioner, id., at 97–102. See also Kiesselbach, supra note 33, at 61–62.
37 7 U.N.R.I.A.A. 91.
38 Id. at 112–13.
39 Id. 114. The Mixed Claims Commission Sweden and Norway—Venezuela, constituted under the Protocol of March 10, 1903, allowed the claim of a widow arising out of the death of her husband, but denied without explanation the claim of a life insurance company because of life insurance paid to the widow. 10 U.N.R.I.A.A. 770. For the text of the compromis, see id. at 763.
40 Keeton observes that “In relation to life and accident insurance, it is generally recognized that the insurer is not subrogated to claims of its insured, or claims for wrongful death, in the absence of contract stipulations so providing. Issues regarding the validity and interpretation of any such clause seldom arise since life and accident insurance policies commonly do not contain any subrogation clause.” Supra note 1, at 149.
41 Supra note 12, at 1296.
Grubnau Bros., and Atlantic Mutual Insurance Co. (United States v. Austria and Hungary) (1928), 6 U.N.R.I.A.A. 250. La Reunion Franchise v. Germany (1922), 1 Trib. Arb. Mixtes 770 (1922). The Carolyn, Whiteman, supra note 12, at 1316. The Home Insurance Company (U.S.A. v. Mexico) (1926), 4 U.N.R.I.A.A. 48. While this claim was rejected on the merits, no objection to the standing of the insurers appears to have been made by the Mexican Government; indeed, the defendant government was ordered to refund the claimant certain freight charges. Id. at 52.
In the Santa Gertrudis Jute Mill Co. (Great Britain v. Mexico) (1930), 5 U.N. R.I.A.A. 108, the respondent government asked whether the claimant had not already been compensated for his loss and, if not, whether he ought not to have tried. The Commission found that the claimant did in fact try to make the insurance pay the damage, but in vain. Thus, while the argument was rejected on the facts, the legal relevance of possibly not having tried to obtain compensation from the insurance company is questionable. See also infra., note 69.
42 See 2 O’Connell, , International Law 1137 (1965)Google Scholar.
43 Id. at 1299.
44 The Agreed Statement on the claims of insurance underwriters for losses on hulls and cargoes, dated June 25, 1924. Id. at 1305. Section 12 of the Act of Congress of June 23, 1874, 18 Stat. (Pt. 3) 245, which established the First Alabama Claims Court made certain regulatory provisions with respect to insurance claims. It was provided that claims of persons already reimbursed by insurance would not be allowed, except when the indemnity was less than the loss, in which case allowance would be made for the difference. Claims of insurance companies would be allowed only if it were shown that the sum of a company’s losses exceeded the sum of its gains through premiums or otherwise, and the allowance could not exceed such an excess of loss. 5 Moore, , History and Digest of the International Arbitrations to which the United States has been a Party 4640–41 (1898)Google Scholar.
45 Regarding the calculation of net amounts in this particular case, see Whiteman, supra note 12, at 1306. Regarding the calculation of “net losses” of insurance companies by the Foreign Claims Settlement Commission, see FCSC, Decisions and Annotations, supra note 18, at 639.
46 The Caldera (1859), Whiteman, supra note 12, at 1320. Corwin’s claim (The Mechanic) (1885), id. at 1326; 3 Moore, , History and Digest of International Arbitrations to which the United States has been a Party 3210 at 3212 (1898)Google Scholar. For the relevant compromis, see Claims Convention between the United States and Venezuela, signed at Washington, Dec. 5, 1885, 28 Stat. 1053, T.S. No. 371, Malloy, , Treaties, Conventions, International Acts, Protocols and Agreements between the United States Of America and other Powers 1776–1909, at 1858 (1910)Google Scholar. The Circassian, Whiteman, supra note 12, at 1323.
47 Borchard, supra note 12, at 647.
48 Id. at 649.
49 5 Moore, supra note 46, at 4672.
50 McNair, supra note 23, at 290.
51 Thus, the United States commissioners appointed under the Florida Treaty of February 22, 1819 between the United States and Spain stated in their report of June 8, 1824 that the claims of American citizens who claimed before the commission for losses sustained by them through insuring the property of foreigners which had been illegally taken by France or Spain had not been received. 5 Moore, supra note 44, at 4507, 4516. This has also been the attitude adopted by the United States Court of Claims, on the ground that “the insurer could have no higher standing in court than the insured.” Whiteman, supra note 12, at 1328. The United States commission for the distribution of moneys received from France under the French Indemnity Convention of July 4, 1831 held that an American insurer was to be treated as having acquired pro tanto an interest in the fund; but if he happened to be a foreigner, he would be excluded “by alienage.” 5 Moore, supra note 44, at 4481.
62 Whiteman, supra note 12, at 1314. See also O’Connell, supra note 42, at 1136.
53 La Foncière, Compagnie Générale d’assurances v. Serbo-Croat-Slovanian State (1929), 9 Trib. Arb. Mixtes 400 (1929).
54 U.N.R.I.A.A. 139. See also O’Connell, supra note 42, at 1136.
55 Id. at 140.
56 Id. at 141.
57 Id. at 142.
58 Id. at 141.
59 Ibid.
60 Id. at 142.
61 An international tribunal seized of such a case would have to consider the extremely complicated questions of fact involved in disentangling the web of insurance and reinsurance contracts and determining the losses and their classification according to the nationalities of the insurers (or reinsurers). Bearing in mind the inherent limitations of international arbitral procedure, the difficulties facing an international tribunal would be greater than those facing domestic tribunals. See also, the Odessa, [1916] 1 A.C. 145 at 154. Note also the view of the International Court of Justice in the Barcelona Traction case that “the adoption of the theory of diplomatic protection of shareholders as such, by opening the door to competing diplomatic claims, could create an atmosphere of confusion and insecurity in international economic relations.” [1970] ICJ Rep. 49.
62 7 U.N.R.I.A.A. 9, 13.
63 See e.g. the case of Quillin (1926), id. at 299.
64 The Agreed Statement of June 25, 1924, Whiteman, supra note 12, at 1305. See also Harby Steamship Company (1926), 7 U.N.R.I.A.A. 323, Housatonic Steamship Company (1926) id. 320.
65 Kiesselbach, supra note 33, at 68.
66 Id. at 68–69.
67 U.N.R.I.A.A. 299 at 300.
68 Text in Whiteman, supra note 12, at 1305. See also supra, note 44.
69 13 U.N.R.I.A.A. 828.
70 See text in id. at 2.
71 Keeton, supra note 1, at 88, 91, 160 et seq.
72 Regarding the protection of a defendant state from double claims, see, Reparation for Injuries Suffered in the Service of the United Nations [1949] ICJ Rep. 174 at 188.
73 Keeton, supra note 1, at 157.
74 Id. at 156–58.
75 Id. at 160.
76 Id. at 156.
77 Regarding the difficulties which arise when international tribunals examine insurance and reinsurance contracts, see supra note 61.
78 While suggesting that such a procedure should be possible, Vallat observes that whether it “would meet the needs of the rules in a case before an international tribunal is at present an open question, but it should do so.” Supra note 26, at 24.