Original version by Wolfgang Benedek January 2007; reviewed by Wolfgang Benedek November 2024.

A.  Facts

1  In 1875 the Peruvian firm José Canevaro & Sons became a creditor of the Peruvian government, which, in 1880, issued government bonds (libramientos) to the firm. Only part of the sum had been paid when, in 1889, the Peruvian government refunded the domestic debt by issuing new bonds, thereby causing a major devaluation of the Canevaro bonds (Debts). The firm, however, insisted on full payment. The bonds later passed to the three brothers, Napoleon, Carlos, and Raphael Canevaro by endorsement and by inheritance. Claiming to be Italian nationals (Nationality), they asked Italy for diplomatic protection, which they were accorded.

2  On 25 April 1910, Peru and Italy agreed in a protocol to submit the issue to arbitration (Compromis; see also Ottoman Debt Arbitration).

3  Three questions were submitted to the Permanent Court of Arbitration (PCA) at The Hague: first, whether the Peruvian government had to pay the sums owed on the bonds plus the legal interest in cash or in accordance with the law of 1889 on the domestic debt; second whether the Canevaro brothers had a right to demand the total of the amount claimed; and third, whether Raphael Canevaro had a right to be considered as an Italian claimant—the Italian nationality of the brothers Carlos and Napoleon was not disputed by Peru (Nationality Cases before International Courts and Tribunals).

B.  Findings and Reasonings of the Tribunal

4  The arbitral tribunal, set up by the PCA and presided over by the French professor Louis Renault, rendered its award on 3 May 1912 (International Courts and Tribunals, Judges and Arbitrators). Dealing first with the status of Raphael Canevaro, it held that according to the laws of the two countries he was Peruvian by birth (ius soli) and Italian as son of an Italian father (ius sanguinis; Multiple Nationality). The tribunal approached this problem of dual nationality by observing that Raphael Canevaro had on several occasions acted as a Peruvian citizen, both by running as a candidate for the Senate, where none are admitted except Peruvian citizens, and also especially by accepting the office of Consul General of the Netherlands, after soliciting the authorization of the Peruvian government; under these circumstances the government of Peru had a right to consider him as a Peruvian citizen and to deny his status as an Italian claimant (Affaire Canevaro (Italy v Peru) (1912) 406). The court disposed of the second question by allocating two-thirds of the sum claimed plus interest to the brothers Napoleon and Carlos.

5  As to the first question, the Court held that the law of 1889 applied to the company as it was Peruvian by virtue of its incorporation and the nationality of its members (Corporations in International Law). Applying the principle nemo plus iuris ad alium transferre potest quam ipse habet (no one can transfer to another a greater right than that person has themselves (translation by the editor)), the court found that the later assignment of the debt to a foreigner by endorsement and inheritance could not change the status of the debt. The court did not examine the question of what its decision might have been if the debt had been owed to Italian nationals at the time when the law was enacted.

C.  Significance

6  The Canevaro arbitration is referred to in legal literature for its importance in the development of the rule of active or effective nationality. The ‘Canevaro principle’ (see O’Connell (1970) 685; Hailbronner (2004) 189) was followed in a number of international decisions, e.g., the Mergé Case of 1955, and it also served as a basis for the decision of the International Court of Justice (ICJ) in the Nottebohm Case, however, from a different perspective. The Canevaro principle was incorporated into Article 5 Convention on Certain Questions relating to the Conflict of Nationality Laws, which provides a third State with a criterion to identify which nationality should be recognized. The principle also played a role in the 1953 discussion of the International Law Commission (ILC) with regard to the treatment of stateless persons and in the work of the Iran–United States Claims Tribunal. It may be noted that as early as 1888 the Institut de Droit international, in its consideration of a case of dual nationality, had agreed to the rule of active nationality as proposed in a report of the then rapporteur Louis Renault.

7  The Canevaro principle notwithstanding, the principle that a State may not exercise its right of diplomatic protection in respect of one of its nationals against a State which regards that person as its own national would have led to the same result. This principle was later codified in Article 4 Convention on Certain Questions relating to the Conflict of Nationality Laws and was referred to by the ICJ in the case Reparations for Injuries Suffered in the Service of the United Nations (Advisory Opinion).