calvo clause
Named after the Argentine jurist Carlos Calvo, the clause appeared in Latin American concession contracts and constitutions. The foreign party promises to treat itself as a national for the contract and to give up diplomatic protection by its home state.
International law gives the clause only limited effect. The right of diplomatic protection belongs to the state, not to the individual, so a private investor cannot waive it on the state's behalf. Tribunals have read the clause as requiring the investor to exhaust local remedies first, while leaving the home state free to intervene for a denial of justice. Modern investment treaties with investor-state arbitration have largely displaced it.
Example
Even with a Calvo clause in the concession, the home state may espouse the claim once local courts deny justice, because the right of diplomatic protection is the state's own.
In Indian law
- North American Dredging Co. of Texas (U.S.A.) v. United Mexican States (General Claims Commission, 1926): clause upheld only as a rule on exhausting local remedies
See also
exhaustion of local remedies · state responsibility · nationality
Read more in the study notes
- States in general: definition, kinds, rights and the Monroe Doctrine (Public International Law)
- State responsibility (Public International Law)