REPORT OF THE INTER-AMERICAN COMMISSION
REPORT N° 10/91
22 February 1991
On March 11, 1988, Mr. David Westin of the law firm Wilmer, Cutler, and
Pickering filed a petition with the Inter-American Commission on Human
Rights (hereinafter the "Commission") on behalf of 105 named
petitioners, all individual shareholders of the Banco de Lima, against the
Government of Peru. The petition
alleges violations of Article 8, 21, 24 and 25 of the American Convention on
Human Rights (hereinafter the "Convention") by the Government of Peru.
The case arises out of President Alan Garcia's announced plan to
expropriate "all of the shares of the Peruvian Banks remaining in private
hands" (Complaint, p. 4).
The complaint alleges that the government expropriation plan consisted of
two parts: 1) the executive had introduced legislation in Congress to
approve its decision to expropriate the Banks' shares, and 2) the executive,
while the legislation was pending, announced that his government would move to
intervene the Banks.
The bill was enacted into law on October 9, 1987 and in
Mid-November 1987 the court sent to the shareholders a notice of
expropriation filled October 23, 1987 informing the shareholders that the
expropriation proceedings had been commenced and summoning the shareholders to
respond in court. The expropriation
notice did not include any appraisal of the value of the shares and
consequently, challenging in court the validity of the proceedings because of
the lack of any government appraisal. The
complaint states that "the Banco de Lima shareholders are under the
constant threat of forcible intervention and expropriation." (Complaint, p.
The complaint requests that the Commission issue a Resolution declaring
that the Peruvian Government: l) has violated Articles 8, 24 and 25 of the
Convention "By selectively denying petitioners and other prompt, simple,
and effective recourse to the courts of Peru as previously established by law
for vindication of their fundamental rights in connection with the decreed
intervention of Banco de Lima and expropriation of the Banco de Lima shares; 2)
has violated Article 21 of the Convention by wrongfully decreeing the
intervention of Banco de Lima and taking action to expropriate the shares of
Banco de Lima without any justification in the social interest as defined in the
Convention by wrongfully decreeing the intervention of Banco de Lima
and taking action to expropriate the shares of Banco de Lima
other than in the cases and according to the forms provided in Peruvian
law; 4) has violated Article 21 of the Convention by wrongfully threatening to
take the shares of Banco de Lima after
selectively changing the rules for determining compensation to the detriment of
Banco de Lima shareholders and
resolving that the Peruvian government; 5) "immediately comply with all
outstanding court orders relating to the decreed intervention of Banco de Lima and the threatened expropriation of its shares;" and
that it 6) "cease and desist from expropriating the shares of Banco de
Lima" (Complaint, pp. 36-38).
The Commission transmitted the pertinent parts of the complaint to the
Government of Peru on March 17, 1988 with a request for information on the facts
referred to and for any observations on the question whether domestic remedies
had been exhausted in this case.
By note dated June 10, 1988, the Government of Peru sent the Commission a
copy of the disputed law and requested an extension of time of 90 days to
respond to the complaint due to the "importance of this law and its
application." By note dated
August 8, 1988, the Government of Peru informed the Commission that it would not
have all the information necessary for a response by August 15th, and it
requested a second extension of 30 days, beginning on that date.
The Commission informed both parties that the requested extension had
During the 74th period of sessions of the Commission, held from September
5-16, 1988, the petitioners, at a hearing on the case held on September
14, 1988, requested the application of precautionary measures pursuant to
Article 29 of the Regulations of the Commission maintaining that irreparable
damage to the shareholders in the complaint could occur. The Commission resolved
to deny the application of provisional measures requested by petitioners on the
grounds that "no such decision may be taken without reference to the merits
of the complaint, and such a decision would be premature since the Government of
Peru has yet to present its response in this matter."
The response of the Government of Peru, transmitted to the petitioners on
September 21, 1988, stated, in essence, that the law in question was in
conformity with the Peruvian Constitution in so far as the Constitution provides
that "financial and banking activity must fulfill a social function of
helping the Peruvian economy in its different regions and assist all sectors of
activity and of the population in conformity with development plans."
The Government of Peru added that this law is also in conformity with the
American Convention, which provides in Article 21 that the right to property may
be limited "for reasons of public utility or social interest."
By letter dated January 9, 1989, the petitioners reiterated their request
for precautionary measures in this case, arguing that the shareholders of the
Banco de Lima were facing "creeping expropriation" of their assets and
were being denied access to effective judicial remedies. The petitioners again
asked the Commission to resolve "that the Government of Peru shall not take
any action directly or indirectly to expropriate or substantially impair the
value of the property interests at stake in this proceeding until such time as
the Commission has ruled upon the pending petition or until a further order of
That the Preamble of the American Convention on Human Rights as well as
the provisions of Article 1 (2) provide that "for the purposes of this
Convention, 'person' means every human being," and that consequently, the
system for the protection of human rights in this hemisphere is limited to the
protection of natural persons and does not include juridical persons.
That the petitioners base their claim on Article 21 which provides in
relevant part as follows:
has the right to be use and enjoyment of his property.
The law may subordinate such use and enjoyment to the interest of
one shall be deprived of his property except upon payment of just compensation,
for reasons of public utility or social interest, and in the cases and according
to the forms established by law.
Consequently, in the inter-American system, the right to property
is a personal right. The Commission
is empowered to vindicate the rights of an individual whose property is
confiscated, but is not empowered with jurisdiction over the rights of juridical
beings, such as corporations or as in this case, banking institutions.
That in the judgment of the Commission, the named shareholders of the
Banco de Lima, although individuals, have presented this action alleging that
the Government of Peru has taken actions to affect the rights of the Banco de
Lima. The Commission considers that what is at issue here are not
the individual property rights of the individual shareholders, but rather the
collective property rights of the company, the Banco de Lima, and that this case
is not within the jurisdiction of the Inter-American Commission of Human
That for the above reasons the Commission considers that it does not have
to examine the specific factual questions as to whether there has been a
deprivation of property of the shareholders of the Banco de Lima, or whether the
is only the threat of a possible deprivation.
THE INTER-AMERICAN COMMISSION ON HUMAN RIGHTS,
To declare inadmissible the complaint presented by Mr. David Westin of
Wilmer, Cutler, and Pickering on behalf of the 105 named shareholders of the
Banco de Lima against the Government of Peru pursuant to Article 41 (b) of the
Regulations of the Commission.
Commission on Human Rights during its 79th
period of sessions decided to publish this report in light of the fact the
petitioners in this case desisted in their request for a reconsideration of
The term "intervention" as defined by the petitioners means
"the government's wresting of control of the Bank from its owners and