CASE CONCERNING CERTAIN PHOSPHATE LANDS IN NAURU

(NAURU v. AUSTRALIA)
(PRELIMINARY OBJECTIONS)
Judgment of 26 June 1992
In its Judgment on the Preliminary Objections filed by Australia in the case concerning Certain Phosphate Lands in
Nauru (Nauru v. Australia), the Court rejected Australia's objections concerning the circumstances in which the
dispute relating to the rehabilitation of the phosphate lands worked-out prior to 1 July 1967 arose between Nauru
and Australia; it also rejected the objection based on the fact that New Zealand and the United Kingdom are not
parties to the proceedings; and lastly, it upheld Australia's objection based on Nauru's claim concerning the overseas
assets of the British Phosphate Commissioners being a new one. The Court thus found, by 9 votes to 4, that it had
jurisdiction to entertain the Application and that the Application was admissible; it also found, unanimously, that the
Nauruan claim concerning the overseas assets of the British Phosphate Commissioners was inadmissible.
The Court was composed as follows: President Sir Robert Jennings; Vice-President Oda; Judges Lachs, Ago,
Schwebel, Bedjaoui, Ni, Evensen, Tarassov, Guillaume, Shahabuddeen, Aguilar Mawdsley, Ranjeva;
Registrar Valencia-Ospina.
*
The complete text of the operative paragraph of the Judgment is as follows:
"THE COURT,
(1) (a) rejects, unanimously, the preliminary objection based on the reservation made by Australia in its declaration
of acceptance of the compulsory jurisdiction of the Court;
(b) rejects, by twelve votes to one, the preliminary objection based on the alleged waiver by Nauru, prior to
accession to independence, of all claims concerning the rehabilitation of the phosphate lands worked out prior to
1 July 1967;
IN FAVOUR: President Sir Robert Jennings; Judges Lachs, Ago, Schwebel, Bedjaoui, Ni, Evensen, Tarassov,
Guillaume, Shahabuddeen, Aguilar Mawdsley, Ranjeva;
AGAINST: Vice-President Oda;
(c) rejects, by twelve votes to one, the preliminary objection based on the termination of the trusteeship over Nauru
by the United Nations;
IN FAVOUR: President Sir Robert Jennings; Judges Lachs, Ago, Schwebel, Bedjaoui, Ni, Evensen, Tarassov,
Guillaume, Shahabuddeen, Aguilar Mawdsley, Ranjeva;
AGAINST: Vice-President Oda;
(d) rejects, by twelve votes to one, the preliminary objection based on the effect of the passage of time on the
admissibility of Nauru's Application;
IN FAVOUR: President Sir Robert Jennings; Judges Lachs, Ago, Schwebel, Bedjaoui, Ni, Evensen, Tarassov,
Guillaume, Shahabuddeen, Aguilar Mawdsley, Ranjeva;
AGAINST: Vice-President Oda;
(e) rejects, by twelve votes to one, the preliminary objection based on Nauru's alleged lack of good faith;
IN FAVOUR: President Sir Robert Jennings; Judges Lachs, Ago, Schwebel, Bedjaoui, Ni, Evensen, Tarassov,
Guillaume, Shahabuddeen, Aguilar Mawdsley, Ranjeva;
AGAINST: Vice-President Oda;
(f) rejects, by nine votes to four, the preliminary objection based on the fact that New Zealand and the United
Kingdom are not parties to the proceedings;
IN FAVOUR: Judges Lachs, Bedjaoui, Ni, Evensen, Tarassov, Guillaume, Shahabuddeen, Aguilar Mawdsley,
Ranjeva;
AGAINST: President Sir Robert Jennings; Vice-President Oda; Judges Ago, Schwebel;
(g) upholds, unanimously, the preliminary objection based on the claim concerning the overseas assets of the British
Phosphate Commissioners being a new one.
(2) finds, by nine votes to four, that, on the basis of Article 36, paragraph 2, of the Statute of the Court, it has
jurisdiction to entertain the Application filed by the Republic of Nauru on 19 May 1989 and that the said Application
is admissible;
IN FAVOUR: Judges Lachs, Bedjaoui, Ni, Evensen, Tarassov, Guillaume, Shahabuddeen, Aguilar Mawdsley,
Ranjeva;
AGAINST: President Sir Robert Jennings; Vice-President Oda; Judges Ago, Schwebel.
(3) finds, unanimously, that the claim concerning the overseas assets of the British Phosphate Commissioners, made
by Nauru in its Memorial of 20 April 1990, is inadmissible."

*
Judge Shahabuddeen appended a separate opinion to the Judgment; President Sir Robert Jennings, VicePresident Oda and Judges Ago and Schwebel appended dissenting opinions.
I. History of the Case (paras. 1-6)
In its Judgment, the Court recalls that on 19 May 1989 Nauru filed in the Registry of the Court an Application
instituting proceedings against Australia in respect of a "dispute ... over the rehabilitation of certain phosphate lands
[in Nauru] worked out before Nauruan independence". It notes that to found the jurisdiction of the Court the
Application relies on the declarations made by the two States accepting the jurisdiction of the Court, as provided for
in Article 36, paragraph 2, of the Statute of the Court.
The Court then recites the history of the case. It recalls that time-limits for the filing of the Memorial of Nauru and
the Counter-Memorial of Australia were fixed by an Order of 18 July 1989. The Memorial was filed on
20 April 1990, within the prescribed time-limit. On 16 January 1991, within the time-limit fixed for the filing of the
Counter-Memorial, the Government of Australia filed Preliminary Objections submitting that the Application was
inadmissible and that the Court lacked jurisdiction to hear the claims made therein. Accordingly, by an Order dated
8 February 1991, the Court, recording that by virtue of the provisions of Article 79, paragraph 3, of the Rules of
Court, the proceedings on the merits were suspended, fixed a time-limit for the presentation by the Government of
Nauru of a Written Statement of its Observations and Submissions on the Preliminary Objections. That Statement
was filed on 17 July 1991, within the prescribed time-limit, and the case became ready for hearing in respect of the
Preliminary Objections.
The Court then sets out the following Submissions presented by Nauru in the Memorial:
"On the basis of the evidence and legal argument presented in this Memorial, the Republic of Nauru
Requests the Court to adjudge and declare
that the Respondent State bears responsibility for breaches of the following legal obligations:
"First: the obligations set forth in Article 76 of the United Nations Charter and Articles 3 and 5 of the Trusteeship
Agreement for Nauru of 1 November 1947.
Second: the international standards generally recognized as applicable in the implementation of the principle of selfdetermination.: the international standards generally recognized as applicable in the implementation of the principle
of self-determination.
Third: the obligation to respect the right of the Nauruan people to permanent sovereignty over their natural wealth
and resources.: the obligation to respect the right of the Nauruan people to permanent sovereignty over their natural
wealth and resources.
Fourth: the obligation of general international law not to exercise powers of administration in such a way as to
produce a denial of justice lato sensu.: the obligation of general international law not to exercise powers of
administration in such a way as to produce a denial of justice lato sensu.
Fifth: the obligation of general international law not to exercise powers of administration in such a way as to
constitute an abuse of rights.: the obligation of general international law not to exercise powers of administration in
such a way as to constitute an abuse of rights.
Sixth: the principle of general international law that a State which is responsible for the administration of territory is
under an obligation not to bring about changes in the condition of the territory which will cause irreparable damage
to, or substantially prejudice, the existing or contingent legal interest of another State in respect of that territory.: the
principle of general international law that a State which is responsible for the administration of territory is under an
obligation not to bring about changes in the condition of the territory which will cause irreparable damage to, or
substantially prejudice, the existing or contingent legal interest of another State in respect of that territory.
Requests the Court to adjudge and declare further
that the Republic of Nauru has a legal entitlement to the Australian allocation of the overseas assets of the British
Phosphate Commissioners which were marshalled and disposed of in accordance with the trilateral Agreement
concluded on 9 February 1987.
Requests the Court to adjudge and declare
that the Respondent State is under a duty to make appropriate reparation in respect of the loss caused to the Republic
of Nauru as a result of the breaches of its legal obligations detailed above and its failure to recognize the interest of
Nauru in the overseas assets of the British Phosphate Commissioners."
It further sets out the submissions presented by Australia in its Preliminary Objections and by Nauru in the Written
Statement of its Observations and Submissions on the Preliminary Objections, as well as the final submissions
presented by each of the Parties at the hearings, the latter of which are as follows:
On behalf of Australia:

"On the basis of the facts and law set out in its Preliminary Objections and its oral pleadings, and for all or any of
the grounds and reasons set out therein, the Government of Australia requests the Court to adjudge and declare that
the claims by Nauru against Australia set out in their Application and Memorial are inadmissible and that the Court
lacks jurisdiction to hear the claims."
On behalf of Nauru,
"In consideration of its written and oral pleadings the Government of the Republic of Nauru requests the Court:
To reject the preliminary objections raised by Australia, and the preliminary objections raised by Australia, and
To adjudge and declare::
(a) that the Court has jurisdiction in respect of the claims presented in the Memorial of Nauru, and that the Court has
jurisdiction in respect of the claims presented in the Memorial of Nauru, and
(b) that the claims are admissible. that the claims are admissible.
In the alternative, the Government of the Republic of Nauru requests the Court to declare that some or all of the
Australian preliminary objections do not possess, in the circumstances of the case, an exclusively preliminary
character, and in consequence, to join some or all of these objections to the merits."
II. Objections Concerning the Circumstances in which the Dispute Arose (paras. 8-38)
1. The Court begins by considering the question of its jurisdiction. Nauru bases jurisdiction on the declarations
whereby Australia and Nauru have accepted the jurisdiction of the Court under Article 36, paragraph 2, of the
Statute. The declaration of Australia specifies that it "does not apply to any dispute in regard to which the parties
thereto have agreed or shall agree to have recourse to some other method of peaceful settlement".
Australia contends that as a result of the latter reservation the Court lacks jurisdiction to deal with Nauru's
Application. It recalls that Nauru was placed under the Trusteeship system provided for in Chapter XII of the
United Nations Charter by a Trusteeship Agreement approved by the General Assembly on 1 November 1947 and
argues that any dispute which arose in the course of the trusteeship between "the Administering Authority and the
indigenous inhabitants" should be regarded as having been settled by the very fact of the termination of the
trusteeship, provided that that termination was unconditional.
The effect of the Agreement relating to the Nauru Island Phosphate Industry, concluded on 14 November 1967
between the Nauru Local Government Council, on the one hand, and Australia, New Zealand and the United
Kingdom, on the other, was, in Australia's submission, that Nauru waived its claims to rehabilitation of the
phosphate lands. Australia maintains, moreover, that on 19 December 1967, the United Nations General Assembly
terminated the trusteeship without making any reservation relating to the administration of the territory. In those
circumstances, Australia contends that, with respect to the dispute presented in Nauru's Application, Australia and
Nauru had agreed "to have recourse to some other method of peaceful settlement" within the meaning of the
reservation in Australia's declaration, and that consequently the Court lacks jurisdiction to deal with that dispute.
The Court considers that declarations made pursuant to Article 36, paragraph 2, of the Statute of the Court can only
relate to disputes between States. The declaration of Australia only covers that type of dispute; it is made expressly
"in relation to any other State accepting the same obligation ...". In these circumstances, the question that arises in
this case is whether Australia and the Republic of Nauru did or did not, after 31 January 1968, when Nauru acceded
to independence, conclude an agreement whereby the two States undertook to settle their dispute relating to
rehabilitation of the phosphate lands by resorting to an agreed procedure other than recourse to the Court. No such
agreement has been pleaded or shown to exist. That question has therefore to be answered in the negative. The Court
thus considers that the objection raised by Australia on the basis of the above-mentioned reservation must be
rejected.
2. Australia's second objection is that the Nauruan authorities, even before acceding to independence, waived all
claims relating to rehabilitation of the phosphate lands. This objection contains two branches. In the first place, the
waiver, it is said, was the implicit but necessary result of the above-mentioned Agreement of 14 November 1967. It
is also said to have resulted from the statements made in the United Nations in the autumn of 1967 by the Nauruan
Head Chief on the occasion of the termination of the Trusteeship. In the view of Australia, Nauru may not go back
on that two-fold waiver and its claim should accordingly be rejected as inadmissible.
Having taken into consideration the negotiations which led to the Agreement of 14 November 1967, the Agreement
itself, and the discussions at the United Nations, the Court concludes that the Nauruan local authorities did not,
before independence, waive their claim relating to rehabilitation of the phosphate lands worked out prior to
1 July 1967. The Court finds therefore that the second objection raised by Australia must be rejected.
3. Australia's third objection is that Nauru's claim is
"inadmissible on the ground that termination of the Trusteeship by the United Nations precludes allegations of
breaches of the Trusteeship Agreement from now being examined by the Court".

The Court notes that, by resolution 2347 (XXII) of 19 December 1967, the General Assembly of the United Nations
resolved
"in agreement with the Administering Authority, that the Trusteeship Agreement for the Territory of Nauru ... shall
cease to be in force upon the accession of Nauru to independence on 31 January 1968".
The Court observes that such a resolution had "definitive legal effect" (Northern Cameroons,
Judgment, I.C.J. Reports 1963, p. 32), and that consequently, the Trusteeship Agreement was "terminated" on that
date and "is no longer in force" (ibid., p. 37). It then examines the particular circumstances in which the Trusteeship
for Nauru was terminated. It concludes that the facts show that, when, on the recommendation of the Trusteeship
Council, the General Assembly terminated the trusteeship over Nauru in agreement with the Administering
Authority, everyone was aware of subsisting differences of opinion between the Nauru Local Government Council
and the Administering Authority with regard to rehabilitation of the phosphate lands worked out before 1 July 1967.
Accordingly, though General Assembly resolution 2347 (XXII) did not expressly reserve any rights which Nauru
might have had in that regard, the Court cannot view that resolution as giving a discharge to the Administering
Authority with respect to such rights. In the opinion of the Court, the rights Nauru might have had in connection
with rehabilitation of the lands remained unaffected. The Court therefore finds that, regard being had to the
particular circumstances of the case, Australia's third objection must be rejected.
4. Australia's fourth objection stresses that Nauru achieved independence on 31 January 1968 and that, as regards
rehabilitation of the lands, it was not until December 1988 that that State formally "raised with Australia and the
other former Administering Powers its position". Australia therefore contends that Nauru's claim is inadmissible on
the ground that it has not been submitted within a reasonable time.
The Court recognizes that, even in the absence of any applicable treaty provision, delay on the part of a claimant
State may render an application inadmissible. It notes, however, that international law does not lay down any
specific time-limit in that regard. It is therefore for the Court to determine in the light of the circumstances of each
case whether the passage of time renders an application inadmissible. The Court then takes note of the fact that
Nauru was officially informed, at the latest by letter of 4 February 1969, of the position of Australia on the subject of
rehabilitation of the phosphate lands worked out before 1 July 1967. Nauru took issue with that position in writing
only on 6 October 1983. In the meantime, however, as stated by Nauru and not contradicted by Australia, the
question had on two occasions been raised by the President of Nauru with the competent Australian authorities. The
Court considers that, given the nature of relations between Australia and Nauru, as well as the steps thus taken,
Nauru's Application was not rendered inadmissible by passage of time, but that it will be for the Court, in due time,
to ensure that Nauru's delay in seising it will in no way cause prejudice to Australia with regard to both the
establishment of the facts and the determination of the content of the applicable law.
5. The Court further considers that Australia's fifth objection to the effect that "Nauru has failed to act consistently
and in good faith in relation to rehabilitation" and that therefore "the Court in exercise of its discretion, and in order
to uphold judicial propriety should ... decline to hear the Nauruan claims" must also be rejected, as the Application
of Nauru has been properly submitted in the framework of the remedies open to it and as there has been no abuse of
process.
III. Objection Based on the Fact that New Zealand and the United Kingdom are Not Parties to the Proceedings
(paras. 39-57)
6. The Court then considers the objection by Australia based on the fact that New Zealand and the United Kingdom
are not parties to the proceedings.
In order to assess the validity of this objection, the Court first refers to the Mandate and Trusteeship rgimes and
the way in which they applied to Nauru. It notes that the three Governments mentioned in the Trusteeship
Agreement constituted, in the very terms of that Agreement, "the Administering Authority" for Nauru; that this
Authority did not have an international legal personality distinct from those of the States thus designated; and that,
of those States, Australia played a very special role established by the Trusteeship Agreement of 1947, by the
Agreements of 1919, 1923 and 1965, and by practice.
The Court observes that Australia's preliminary objection in this respect appears to contain two branches, the first of
which can be dealt with briefly. It is first contended by Australia that, in so far as Nauru's claims are based on the
conduct of Australia as one of the three States making up the Administering Authority under the Trusteeship
Agreement, the nature of the responsibility in that respect is such that a claim may only be brought against the three
States jointly, and not against one of them individually. The Court does not consider that any reason has been shown
why a claim brought against only one of the three States should be declared inadmissible in limine litis merely
because that claim raises questions of the administration of the territory, which was shared with two other States. It
cannot be denied that Australia had obligations under the Trusteeship Agreement, in its capacity as one of the three

States forming the Administering Authority, and there is nothing in the character of that Agreement which debars the
Court from considering a claim of a breach of those obligations by Australia.
Secondly, Australia argues that, since together with itself, New Zealand and the United Kingdom made up the
Administering Authority, any decision of the Court as to the alleged breach by Australia of its obligations under the
Trusteeship Agreement would necessarily involve a finding as to the discharge by those two other States of their
obligations in that respect, which would be contrary to the fundamental principle that the jurisdiction of the Court
derives solely from the consent of States. The question that arises is accordingly whether, given the rgime thus
described, the Court may, without the consent of New Zealand and the United Kingdom, deal with an Application
brought against Australia alone.
The Court then examines its own case-law on questions of this kind (cases concerning the Monetary Gold Removed
from Rome in 1943 (Preliminary Question), Military and Paramilitary Activities in and against Nicaragua
(Nicaragua v. United States of America) and the Land, Island and Maritime Frontier Dispute
(El Salvador/Honduras)). It refers to the fact that national courts, for their part, have more often than not the
necessary power to order proprio motu the joinder of third parties who may be affected by the decision to be
rendered; and that that solution makes it possible to settle a dispute in the presence of all the parties concerned. It
goes on to consider that on the international plane, however, the Court has no such power. Its jurisdiction depends on
the consent of States and, consequently, the Court may not compel a State to appear before it, even by way of
intervention. A State, however, which is not a party to a case is free to apply for permission to intervene in
accordance with Article 62 of the Statute. But the absence of such a request for intervention in no way precludes the
Court from adjudicating upon the claims submitted to it, provided that the legal interests of the third State which
may possibly be affected do not form the very subject-matter of the decision that is applied for. Where the Court is
so entitled to act, the interests of the third State which is not a party to the case are protected by Article 59 of the
Statute of the Court, which provides that "The decision of the Court has no binding force except between the parties
and in respect of that particular case."
The Court then finds that in the present case, the interests of New Zealand and the United Kingdom do not constitute
the very subject-matter of the judgment to be rendered on the merits of Nauru's Application and that, although a
finding by the Court regarding the existence or the content of the responsibility attributed to Australia by Nauru
might well have implications for the legal situation of the two other States concerned, no finding in respect of that
legal situation will be needed as a basis for the Court's decision on Nauru's claims against Australia. Accordingly, the
Court cannot decline to exercise its jurisdiction and the objection put forward in this respect by Australia must be
rejected.
IV. Objections to the Claim by Nauru Concerning the Overseas Assets of the British Phosphate Commissioners
(paras. 58-71)
7. Finally, the Court examines the objections addressed by Australia to the claim by Nauru concerning the overseas
assets of the British Phosphate Commissioners. At the end of its Memorial on the merits, Nauru requests the Court to
adjudge and declare that
"the Republic of Nauru has a legal entitlement to the Australian allocation of the overseas assets of the British
Phosphate Commissioners which were marshalled and disposed of in accordance with the trilateral Agreement
concluded on 9 February 1987"
and that
"the Respondent State is under a duty to make appropriate reparation in respect of the loss caused to the Republic of
Nauru as a result of ... its failure to recognise the interest of Nauru in the overseas assets of the British Phosphate
Commissioners".
The British Phosphate Commissioners were established by Article 3 of the Agreement of 2 July 1919 between the
United Kingdom, Australia and New Zealand, one Commissioner to be appointed by each of the Partner
Governments. These Commissioners managed an enterprise entrusted with the exploitation of the phosphate
deposits on the island of Nauru.
Australia, inter alia, maintains that Nauru's claim concerning the overseas assets of the British Phosphate
Commissioners is inadmissible on the ground that it is a new claim which appeared for the first time in the Nauruan
Memorial; that Nauru has not proved the existence of any real link between that claim, on the one hand, and its
claims relating to the alleged failure to observe the Trusteeship Agreement and to the rehabilitation of the phosphate
lands, on the other; and that the claim in question seeks to transform the dispute brought before the Court into a
dispute that would be of a different nature.
The Court concludes that the Nauruan claim relating to the overseas assets of the British Phosphate Commissioners
is inadmissible inasmuch as it constitutes, both in form and in substance, a new claim, and the subject of the dispute
originally submitted to the Court would be transformed if it entertained that claim. It refers in this connection to

Article 40, paragraph 1, of the Statute of the Court which provides that the "subject of the dispute" must be indicated
in the Application; and to Article 38, paragraph 2, of the Rules of Court which requires "the precise nature of the
claim" to be specified in the Application.
The Court therefore finds that the preliminary objection raised by Australia on this point is well founded, and that it
is not necessary for the Court to consider here the other objections of Australia with regard to the submissions of
Nauru concerning the overseas assets of the British Phosphate Commissioners.
__________
Summary of the opinions appended to the Judgment of the Court
Separate opinion of Judge Shahabuddeen
In his separate opinion, Judge Shahabuddeen gave his reasons for agreeing with the decision of the Court rejecting
Australia's preliminary objection that Nauru's Application was inadmissible in the absence of New Zealand and the
United Kingdom as parties. In his opinion, the obligations of the three Governments under the Trusteeship
Agreement were joint and several, with the consequence that Australia could be sued alone. However, he considered
that, even if the obligations were joint, this, in law, did not prevent Australia from being sued alone. Also, in his
view, while a possible judgment on the merits against Australia might be based on a course of reasoning which was
capable of extension to New Zealand and the United Kingdom, that reasoning would operate only at the level of
precedential influence in any case that might be separately brought by Nauru against those two States; it would not
by itself amount to a judicial determination made in this case of the responsibilities of those two States to Nauru.
Consequently, there was no question of the Court exercising jurisdiction in this case against non-party States.
__________
Dissenting opinion of President Sir Robert Jennings
President Jennings dissented from the Court's decision to reject that Australian objection to jurisdiction, which is
based on the fact that New Zealand and the United Kingdom are not parties to the proceedings. The Mandate for
Nauru was in 1920 conferred upon "His Britannic Majesty"; the Trusteeship Agreement of 1947 designated
"The Governments of Australia, New Zealand and the United Kingdom (hereinafter called 'the Administering
Authority') as the joint authority which will exercise the administration of the Territory";
New Zealand and the United Kingdom were two of the three members of the British Phosphate Commission; and
they were both joint parties with Australia to the Canberra Agreement of 1967.
Thus the legal interest of New Zealand and the United Kingdom are so inextricably bound up with those of Australia
in this matter, that they "would not only be affected by a decision, but would form the very subject-matter of the
decision" (I.C.J. Reports 1954, p. 32); and this would be a breach of the principle of the Court's consensual basis of
jurisdiction.
__________
Dissenting opinion of Vice-President Oda
In his dissenting opinion, Vice-President Oda analyses the historical developments considered by the Court and
demonstrates why he differs from the Judgment in the construction he places upon them. Under the trusteeship the
possibility of rehabilitating the worked-out lands was thoroughly discussed in the relevant organs of the United
Nations, the only fora in which a claim could have been put forward on behalf of the Nauruan people. Nevertheless,
the Canberra Agreement to which all parties subscribed on the eve of independence made no mention of the issue,
neither was it then dealt with separately. Considering that, at that critical point, Nauru failed to reserve a claim to
land-rehabilitation, the silence of the Agreement can be construed as implying a waiver. Furthermore, in the debates
on Nauru within the Trusteeship Council, the rehabilitation question was repeatedly aired, but the Council eventually
took no position on the matter in recommending the termination of the trusteeship. Neither did the General
Assembly in adopting that recommendation, even if one or two allusions to the subject were made from the floor.
Consequently the responsibility of the Administering Authority, as well as the rights and duties of the Administrator,
were completely terminated by resolution 2347 of 19 December 1967, and that put an end to any claims arising from
the implementation of the Trusteeship Agreement. No such claim, therefore, was taken over by the State of Nauru.
Even supposing a fresh claim could have been raised by independent Nauru, none was officially asserted until 1983
at the earliest. So long a silence made it inappropriate for the Court to find the claim admissible. Neither had Nauru
taken any steps to rehabilitate lands worked since independence. In the Vice-President's view, this conduct,
combined with lack of due diligence, disqualifies Nauru from alleging Australian responsibility to rehabilitate lands
worked under trusteeship.
In consequence, Vice-President Oda considers that the Court should have upheld Australia's objections based on
alleged waiver, the termination of the trusteeship, the effect of the passage of time, and lack of good faith. The fact
that he voted against rejecting the objection based on the absence from the proceedings of New Zealand and the

United Kingdom did not, however, mean that he necessarily upheld that objection also, since he considered that it
was too closely bound up with the merits to be decided at the preliminary stage.
__________
Dissenting opinion of Judge Ago
Judge Ago has regretfully been unable to join those of his colleagues who voted in favour of the Judgment of the
Court because in his opinion there exists an insurmountable contradiction between two facts: Nauru has filed an
Application against Australia alone, without also bringing proceedings against the United Kingdom and
New Zealand, even though first the League of Nations and then the United Nations jointly entrusted three different
States - the United Kingdom, Australia and New Zealand -, on a basis of complete legal equality, with the
administration of Nauru.
This being so, the Court should have upheld the preliminary objection of Australia based on the absence from the
proceedings of two of the three Powers to which the Trusteeship over Nauru had been entrusted.
Having brought its action against Australia alone, Nauru has thus placed the Court before an insurmountable
difficulty, that of defining the possible obligations of Australia with respect to the rehabilitation of Nauru's territory
without at the same time defining those of the two other States not parties to the proceedings. But the Court's ruling
on the complaints against Australia alone will inevitably affect the legal situation of the United Kingdom and
New Zealand, that is, the rights and the obligations of these two States. Were the Court to determine the share of
responsibility falling upon Australia, it would thereby indirectly establish that the remainder of that responsibility is
to fall upon the two other States. Even if the Court were to decide - on what would, incidentally, be an extremely
questionable basis - that Australia was to shoulder in full the responsibility in question, that holding would equally
inevitably and just as unacceptably affect the legal situation of two States that are not parties to the proceedings. In
either case the exercise by the Court of its jurisdiction would be deprived of its indispensable consensual basis.
__________
Dissenting opinion of Judge Schwebel
Judge Schwebel, dissenting, maintained that the salient issue was, where more than one State is charged with a joint
(or joint and several) commission of an act wrongful under international law, but only one such State is before the
Court, may the Court proceed to adjudge the present State even though a determination of its liability may or will
entail the effective determination of the liability of an absent State? In answering this question, private law sources
and analogies are of little use, since, in national law, jurisdiction is compulsory whereas in this Court it is
consensual.
The principal precedent is the Monetary Gold case. In that case, a holding as to the responsibility of the absent
Albania was a temporal and logical precondition of rendering judgment between the parties present, whereas it is
agreed that, in the instant case, the determination of the responsibility of New Zealand or the United Kingdom is not
a prerequisite for the determination of the responsibility of Australia. The Court unpersuasively assigns dispositive
force to that distinction. Whether determination of the responsibility of the absent State is antecedent or
simultaneous is not significant. What rather is dispositive is whether the determination of the legal rights of the
present party effectively determines the legal rights of the absent party.
The Court's reliance on its 1984 holding in Military and Paramilitary Activities in and against Nicaragua is
misplaced since that latter holding was in error in this as in some other respects. In that case, Nicaragua brought suit
against the United States alone, even though it claimed that El Salvador, Honduras and Costa Rica were vitally
involved in its alleged delicts. For its part, the United States maintained that it was acting in collective self-defence
with those three States to counter Nicaraguan subversive intervention which was tantamount to armed attack. In
1986, on the merits, the Court held that no responsibility could be attributed to Nicaragua for any flow of arms
across its territory to Salvadoran insurgents. When that Judgment is read together with the Court's Judgment in 1984
that El Salvador, Honduras and Costa Rica would be protected by Article 59 of the Statute against any adverse
effects of a Judgment on the merits against the United States, it appears that its articulate factual holding of 1986
was the inarticulate factual premise of its Judgment of 1984. For, assuming the factual allegations of the United
States and El Salvador in 1984 to have been correct, it was clear then and is clear today that Article 59 furnished no
meaningful protection to third States so situated. If the United States were to have ceased to act in support of El
Salvador pursuant to the Court's 1986 Judgment, the latter's Government, far from having its interests conserved by
the force of Article 59, could have fallen before the onslaught of the insurrection so significantly supported by
Nicaragua.
Judge Schwebel maintained that, despite Nicaragua's sworn and reiterated denials before the Court of any material
support of the Salvadoran insurrection, it later transpired that revelations, and admissions of the Governments of the
Soviet Union and Nicaragua, demonstrated the reality and significance of that material support, and, hence, the
disutility of Article 59. Such precedential status as the Court's 1984 Judgment may be thought to have was further

prejudiced by Nicaragua's acting in 1986 contrary to its 1984 contention before the Court that its claims were against
the United States alone.
In sum, the security interests of the States in whose collective self-defence the United States in 1984 claimed to be
acting were as close if not closer to "the very subject-matter of the case" as were the interests of Albania in
Monetary Gold. Moreover, the precedent of the Land, Island and Maritime Boundary Dispute appears to cut against
the Court's conclusion in the current case.
It is clear from the facts of the instant case that Nauru was subject to the governance of a Mandatory and Trust
Administering Authority composed of Australia, New Zealand and the United Kingdom; that, by the terms of the
governing international legal instruments, Australia uniformly acted "on the joint behalf" of the three States, and "on
behalf" of the Administering Authority, as part of what those instruments termed "the joint Authority". The three
Governments were described and regarded as "Partner Governments". All communications regarding the Mandate
and Trusteeship ran not between Australia and the League, and Australia and the United Nations, but between the
tripartite Administering Authority and those Organizations. The phosphates operations themselves were run by the
British Phosphate Commissioners who represented the three Governments. Nauru itself regularly maintained not
that Australia alone, but the Administering Authority, the three Partner Governments, were responsible for
restoration of worked-out phosphate lands. When it brought suit against Australia alone, it officially reiterated its
identical claims against New Zealand and the United Kingdom.
Consequently, a Judgment by the Court upon the responsibility of Australia would appear to be tantamount to a
Judgment upon the responsibility of New Zealand and the United Kingdom, States not before the Court. For this
reason, proceeding against Australia alone is inadmissible.

Portugal Vs Australia
FACTS
Portugal administered East Timor as a non-self-governing territory under United Nations Chapter XI. On 27th
August 1975, due to internal disturbances caused by factions calling for self-determination, Portugal withdrew from
East Timor. Soon after its departure on 7th of December 1975, Indonesia invaded and occupied East Timor; and in
1976 East Timor's People Assembly formally sought to be integrated into Indonesia as part of its territorial
dominion. Later, on 20th of January 1978, Australia acknowledged de facto Indonesia's annexation of East Timor
which was then followed by de jure recognition in the following year.
A number of meetings between Portugal and Australia took place to resolve the issue in relation to undefined
continental shelf between Indonesia and Australian known as the 'Timor Gap'. The failure to resolve the matter
through talk between the two countries resulted in a treaty between the two countries for exploration and
exploitation of natural resources around the Timor Sea seabed known as the Treaty between Australia and the
Republic of Indonesia on the zone of cooperation in an area between the Indonesian province of East Timor and
Northern Australia.' [1]

ISSUE
Portugal:
* Determination of the objectivity of the conduct of Australia in entering into a treaty with Indonesia over the
continental shelf.

Australia:
* Object to the jurisdiction of International Court of Justice and admissibility of the application;
* determination of the lawfulness or otherwise of Indonesia's entry and continuing administration of East Timor;
* Whether the treaty over the continental shelf between Australia and Indonesia was lawful or not.
IDENTIFICATION / QUALIFICATION
This is a violation of East Timor's right to Self-determination. The United Nations Charter has recognized the
principle of self-determination, which is one of the fundamental principles of modern international law.
This is a violation of East Timor's right of Permanent Sovereignty over Natural Resources as laid out by General
Assembly Resolution 1803 (XVII).
There is an issue regarding International Court of Justices Jurisdiction to adjudicate on legal dispute between
Portugal and Australia. Article 35, paragraph 1, of the Statute of the International Court of Justice provides that the
Court shall be open to the States parties to the Statute.
PRINCIPLE OF INTRERNATIONAL LAW
Principle of Self-Determination
This is the issue of principle of self-determination, which literally means the right to control one's own destiny. By
virtue of the principle of equal rights and self-determination of people enshrined in the Charter of the United
Nations, all people have the right to determine, without external interference, their political statute and to pursue
their economic, social and cultural development. The International Covenant on Civil and Political Rights, Part I,
Article 1, Paragraph established that All peoples have the rights of self-determination. By virtue of that right they
freely determine their political status and freely pursue their economic, social and cultural development.'[2]
Self-determination has been established a principle of customary international law as seen in case law of Western
Sahara[3] where the court stated that right of people to self-determination is now a right of erga omnes.
Portugal:
Portugal's concern is that Australia has acted unlawfully by infringing the right of the people of East Timor to self determination. The argument on behalf of Portugal rises from the issue that Australia had negotiated and concluded
the 1989 Timor Gap Treaty' and by commencing the performance of the Treaty, took measures under its domestic
law for the application of the Treaty, continuing negotiation with Indonesia to infringe the rights of East Timor. The
objective conduct of Australia is an exclusive concern for Portugal, which is distinguishable from any queries
relating to the lawfulness of the conduct of Indonesia. Under the Prescription method, there has been no
encroachment of East Timor's sovereignty, since it was colonised by Portugal in the 16th Century. Thus, resulting in
Portugal obtaining good title to East Timor and the treaty between Indonesia and Australia has in fact breached the
rights of Portugal as the administering power, disregarding the Security Council Resolutions 384 and 389. Security
Council Resolutions 384 recognized the right of the people of East Timor to self-determination. Security Council
Resolutions 389 subsequently reaffirmed the right of the people of East Timor passed earlier in 384 and ordered all
states involved to respect the territorial integrity of East Timor.

The withdrawal of Portugal from East Timor as an administrator was to facilitate East Timorese rights to Self
Determination. To add, Portugal had not officially relinquished the responsibility bestowed upon it as an
administrator of East Timor through UN mandate.
Australia, through de facto and de jure recognition of Indonesia's forced annexation of East Timor failed to consider
erga omnes obligations of self-determination which has become universal and undeniable interest of East Timor.
Furthermore, this action has further legitimised forced occupation of another territory. In trying to obtain a
favourable term for the Timor Gap Treaty with Indonesia, Australia has failed in recognising the rights of the people
of East Timor to self-determination.
Australia:
On the issue of Self Determination', the people of East Timor had exercised this when the People's Assembly'
formally requested to be integrated into Indonesia as its 47th province with the latter maintaining effective control
and exercising sovereignty over the Non- Self- Governing- Territory' as recognized and declared by the ICJ in its
non-statement.
Portugal had lost its status as administering power of East Timor when it withdrew its troops and administration
from the island due to its inability to contain the insurgency by the separatist in 1975.

Besides, the General Assembly as early as 1973 had stripped Portugal of any general right to represent its various
overseas territories[4] a decision General assembly never attempted to go back on before Dec. 1975 when the issue
of East Timor was tabled before the Assembly and the Security Council.
It will be interesting to note that even UN Security council resolution 389 (1976); General Assembly resolutions
31/53 (Dec.1976); 32/34 (Nov.1977) and 33/39 (Dec. 1978) all undermine the status of Portugal as administering
power in East Timor by not referring to it as such.
Furthermore, no specific authorization in the like of which was accorded the United Kingdom by the UN General
Assembly and the Security Council resolutions 217 (1965); 221 (1966) and 328(1973)[5] to bring proceedings as an
absent administering power against Ian Smith's led apartheid government of Southern Rhodesia was granted to
Portugal. To stress the status of the United Kingdom as an administering power, even in absentia, these resolutions
point to it to take all effective measures to bring about the conditions necessary to enable the people of the then
Southern Rhodesia now Zimbabwe to exercise freely and fully their right to self-determination and independence.
Whereas, most resolutions of the UN General assembly and the Security Council prior to 1980 avoided referring to
Portugal as administering power of East Timor; and when they did Portugal was always urged to co-operate with
special committee set up to ensure the realisation of the right to self-determination of the Timorese People.
Furthermore, the provisions of resolution 36/50 of Nov. 1981 did not change the status of Portugal significantly, as it
also urged it to co-operate with other parties namely, the representatives of East Timor and Indonesia to guarantee
East-Timor right to self-determination.
All these factors indicate, that even the UN, did not recognize Portugal as an effective administering power over
East Timor. Compare to the recognition and rights given to United Kingdom in many resolutions of the General
Assembly and the Security Council to take all effective measures possible to liberate the people of Southern
Rhodesia from the jaw of the minority ruled of Ian Smith.

If the United Nations is totally against any state regarding any violation of international rule or principles, it usually
takes a formal position by condemning such act in strong terms and is immediately followed by a rule-of-nonrecognition. However, since occupation of East Timor the UN took no such steps. Neither did it condemn the treaty
between Australia and Indonesia over the Continental Shelf', an indication that the occupation was in order and
confirmation of Indonesia as a legitimate administering power of East Timor.
Besides, the resolutions adopted between1976-82 could not secure consensus of the UN member states on East
Timor issue rather more states accorded recognition to the position of Indonesia as an administering power of East
Timor.
Accordingly, Indonesia had legitimate standing for negotiating treaty on behalf of East Timor. Consequently,
Australia had a legitimate standing under international law in negotiating and concluding a treaty with a sovereign
state of Indonesia that is in effective control of East Timor.
Furthermore, East Timor was not a state but a non-self-governing-territory' and consequently does not have the
capacity to negotiate a treaty since it was under the effective control of a sovereign state of Indonesia.
Principle of Permanent Sovereignty over Natural Resources[6]
The East Timor Treaty violated the General Assembly resolution 1803 (XVII) which is based on a number of
previous UN resolutions. This resolution saw the establishment of the Commission on permanent sovereignty over
natural wealth and resources as a basic constituent of the right to self-determination. Number of issues were
considered when this resolution was drafted, some of which include;
* The resolution is to encourage international co-operation in the economic development of developing countries'.
* To establish the sovereign right of every State to dispose of its wealth and its natural resources should be
respected;
* it was based on the recognition of the inalienable right of all States freely to dispose of their natural wealth and
resources in accordance with their national interests, and on respect for the economic independence of States;
* desirability to promote international co-operation for the economic development of developing countries, and that
economic and financial agreements between the developed and the developing countries must be based on the
principles of equality and of the right of peoples and nations to self-determination and;
* particular importance of promoting the economic development of developing countries and securing their
economic independence was to be given.
This above charter, although not exhaustive, provides the fundamental principle of Permanent sovereignty over
natural resources' and the The right of peoples and nations to permanent sovereignty over their natural wealth and
resources must be exercised in the interest of their national development and of the well-being of the people of the
State concerned..
Portugal:
Through creation of the Timor Gap Treaty' with Indonesia, Australia has infringed on East Timor's rights of
Permanent Sovereignty over Natural Resources, a fundamental principle of self-determination. Australia had denied
certain rights of Timorese laid out in this charter. Firstly, under paragraph (1), the treaty has denied Timorese the

rights of 'sovereignty over their natural wealth and resources' and failed to provide for the 'interests of their national
development' and 'well being' of the Timorese. Secondly, under paragraph (2), the Timorese were not part to this
treaty as a nation, therefore, 'exploration, development and disposition' of natural resources were not 'in conformity
with the rules and conditions which the peoples and nations freely consider to be necessary or desirable'. Thirdly,
under paragraph (5), Australia failed to give 'mutual respect' to Timorese 'based on their sovereign equality' as a
nation seeking self-determination. Fourthly, under paragraph (6), the co-operation between Australia has failed to
seek further development of East Timor based on 'respect for their sovereignty over their natural wealth and
resources'. Finally, under paragraph (7), Australia has violated rights 'over their natural wealth and resources is
contrary to the spirit and principles of the Charter of the United Nations and hinders the development of
international co-operation and the maintenance of peace'.[7]
Australia:
Australia respects the right of Indonesia as a sovereign state with unreserved right of control over its natural
resources and will abide by the treaty it entered into with it in line with the principle of Pacta Sunt Servanda'[8]. To
do otherwise can result in Indonesia taking a legal proceeding against Australia for not keeping to its obligations in
breach of Art.59 of the Statute. Therefore, Portugal's proceedings regarding Continental Shelf' treaty is tantamount
to interfering in the internal affairs of Indonesia in violation of Art 2 (7)[9] of the UN charter.
In addition, this is an attempt to dictate to Australia, a sovereign state what treaty it could or could not undertake;
which is a gross violation of international principle of sovereignty and non-interference. Portugal cannot claim to be
bringing this proceeding based on international public service, as there is no general principle of international law
that confer such principle on any state. It is a well-established decision that for a state to have the right to bring
proceedings before ICJ for determination it must be able to show that it has a legal interest regarding the contentious
issue[10]. Consequently, Portugal had breached its obligations under international law to respect the right of other
state to sovereignty and control over their territories and natural resources.
The Principle of Jurisdiction
The International Court of Justice acts as a world court. The Court has a dual jurisdiction: it decides, in accordance
with international law, disputes of a legal nature that are submitted to it by States (jurisdiction in contentious cases);
and it gives advisory opinions on legal questions at the request of the organs of the UN.
The very basic essence of sovereignty is existence of a state as an international entity where the state has authority
and power over all property and persons within its territory. No external powers, including the United Nation, under
Charter 2 (7) can enforce jurisdiction over a sovereign state, without its approval, exception being cases on issues
related to Human rights.
Therefore, a fundamental principle of its International Court of Justice's (PCIJ) is that it cannot decide a dispute
between States without the consent of those States to its jurisdiction[11]. This principle, reaffirmed in the Judgment
given by the Court in the case concerning Monetary Gold[12] case and confirmed in several of its subsequent
decisions.
The PCIJ in the case law of Lotus[13] stated that the first and foremost restriction imposed by imposed by
International law upon a state is that - failing the existence of a permissive rule to the contrary - it may not exercise

its power in any form in the territory of another state'. To do so, it must have be expressly permitted by the state in
concern. The jurisdiction of a state within its own territory is absolute.
Portugal:
Portugal believes that as an original member state of the United Nation, under Article 93, Paragraph 1, Australia is in
no position to reject jurisdiction of International Court of Justice to adjudicate in legal issues arising between the
two countries due to Timor Gap Treaty'. Article 35, paragraph 1, of the Statute provides that the Court shall be open
to the States parties to the Statute.[14]
Portugal had never relinquished its administering power for East Timor, Australia had the opportunity to create
treaty with Portugal on Timor Gap but failed to do so.
This implies that Indonesia is under no obligation to accept the jurisdiction of PCIJ under International Law.
Australia:
Following the provisions of Art 36(2)ICJ[15] statutes, a party who has not consented to the jurisdiction of court in a
proceedings cannot be compelled to make a representation. Therefore, Australia objected to the jurisdiction of the
ICJ because the substantial issue is not between Portugal and Australia regarding Zone of Co-operation' treaty of
1989.If any state, whatsoever, has to move proceedings against Australia concerning this issue such a state will be
Indonesia, which unfortunately had not consented to the proceedings.
Even if Australia accepts the court jurisdiction under Art 36(2) of the ICJ, this does not necessarily confer on
Portugal a legal right to bring proceedings on any subject of its choosing against Australia as stated by the ICJ in
South West African case[16].
Therefore, ICJ could not deliberate on the application brought by Portugal against Australia, without firstly establish
whether the treaty between Indonesia and Australia was lawful as was established by the court[17] in the case of
Monetary Gold'(1954) brought by Italy against United States, France, United Kingdom and Northern Ireland.
Where the court held that in the absence of the consent of Albania, it was not authorized to judge on Italy's claim
against Albania and; furthermore, the proceedings brought by Italy could be addressed if only the issue with Albania
had been in favour of Italy. In the first instance, the treaty was entered into by two sovereign states Australia and
Indonesia on behalf of East Timor ,which is the latter's 47th province following formal request in 1976 by the EastTimor's People Assembly' to be integrated into Indonesia[18]. Besides, Indonesia maintained an effective
occupation of East Timor in accordance with UN resolutions 1541[19]& 2465[20]; and therefore exerted control and
accordingly can negotiate treaties on their behalf.
On the other hand, if the decision in the case of Island of Palmas'[21] between the United States and the
Netherlands could be applied, the title hold by Portugal is ambiguous, this is also noted in the decision of ICJ in this
case of Portugal v Australia[22]. Furthermore, the fact that another sovereign, which in this case is Indonesia, had
begun to exercise continuous and actual sovereignty[23] over Indonesia after the exit of Portugal meant that she
does not have standing under International law to bring proceedings against the legitimate conduct of two sovereign
states of Australia and Indonesia.

Contrary to the claim of Portugal, therefore, Australia had not acted unlawfully nor breached any obligations in
international law; nor infringed the rights of the people of East Timor to self-determination as result of the treaty
with Indonesia.
Accordingly, Indonesia had legitimate standing for negotiating treaty on behalf of the non-self- governingterritories' of East Timor.
RECOMENDATION
Portugal's Recommendations
Portugal therefore recommends the Court rule that;
1. The Court's judgment should establish that, the Territory of East Timor remains a non-self governing territory and
its people have the right to self-determination.
2. Australia to accept the treaty violated its obligation to respect Portugal's status as an administering Power of East
Timor;
3. Australia has infringed and continues to infringe right of the people of East Timor to self-determination;
4. Australia has violated erga onmes obligations;
5. To request that Australia Rescind on the Timor Gap Treaty';
6. Australia to accept East Timor's right to permanent sovereignty over its wealth and natural resources.
7. United Nation, through Security Council Resolutions, to establish the advisory opinion stated in Legal
consequences for state of continued presence of South Africa and Namibia that occupation is contrary to principle of
self-determination and sovereignty.
Australia's Recommendations
1. In light of the facts of this case, it is recommended that:

2. If any state is bringing proceedings, especially concerning colonies and territories before ICJ, it must be in
relations to a colony or territories still under its administration; otherwise this would amount to wasting the valuable
time and resources of the court that would have been put to use in more pressing and genuine cases;
3. As a matter of necessity, such application should be presented with approval of the people of such colonies or
territories through a legitimate means prescribed by the UN Charter;
4. A state should only bring proceedings where its rights and obligations under international law are affected;
5. A state should not bring proceedings challenging the legitimate rights of other states to enter into treaties
stemming from its domestic and national needs and legitimate expectations of its people; as this could lead to build
up of tensions that could degenerate into conflict;

6. No state under international system should assume the role of performing service in the interest of international
public that call to question legitimate rights to sovereignty of other states; as this tend to defeat the very essence of
the basic rights of states i.e rights to sovereignty and principle of non-interference;
7. In future, in order to make issues clear UNSC should be decisive and avoid ambiguity in their resolutions to
prevent the possibility of different parties giving variant interpretations to their stand. Thus, while resolution 384 did
not condemn the actions of Indonesia for the occupation of East Timor; It nevertheless recognized East Timor's right
to Self Determination' as Non-Self-Governing-Territory'; and at the same time expressed dismay at Portugal's
inability to administer East Timor effectively under chapter XI of the charter. This equivocal expressions by the
resolution allow states to play around international laws and principles at the expense of the people of East Timor;
Conclusion
Portugal had not officially relinquished its powers over East Timor, withdrawal of Portugal from East Timor,
signalled the call for self-determination by the East Timorese. East Timor remained a non-self governing territory
until force occupation by Indonesia. Portugal reiterated that East Timor's call for self-determination arose from UN
Charters and that it needed to be respected. This treaty by Australia with Indonesia had also denied sovereignty over
natural resources to people East Timor.
On the other hand, Portugal is meddling in the internal affairs of Indonesia because as at the time when the treaty of
Continental Shelf' was entered into by Australia and Indonesia, Portugal had effectively withdrawn its control and
administration over
EastTimor. Indonesia, had therefore maintained effective control of East Timor firstly through effective occupation
and the subsequent request by the Peoples Assembly', a representative body of East Timor to be integrated into
Indonesia as its 47th province.
Furthermore, it would be a violation of the Art 36 (1) to bring proceedings where a state had not consented to the
jurisdiction of ICJ in the subject matter. Therefore, the issue at stake is not with Australia but between Portugal and
Indonesia. Portugal cannot dictate to two sovereign states that had legitimately entered into a treaty that such
conduct was not valid.
100. CASE CONCERNING EAST TIMOR
(PORTUGAL v. AUSTRALIA)
In its Judgment on the case concerning East Timor (Portugal v. Australia), the Court, by 14 votes to 2, found that it
could not exercise the jurisdiction conferred upon it by the declarations made by the Parties under Article 36,
paragraph 2, of its Statute to adjudicate upon the dispute referred to it by the Application of the Portuguese Republic.
Those who voted in favour were: President Bedjaoui: Vice President Schwebel; Judges Oda, Sir Robert Jennings,
Guillaume, Shahabuddeen, Aguilar-Mawdsley, Ranjeva, Herczegh, Shi, Fleischhauer, Koroma, Vereshchetin; Judge
ad hoc Sir Ninian Stephen.
Against: Judge Weeramantry; Judge ad hoc Skubiszewski.
Judges Oda, Shahabuddeen, Ranjeva, and Vereshchetin appended separate opinions to the Judgment of the Court.

Judge Weeramantry and Judge ad hoc Skubiszewski appended dissenting opinions to the Judgment of the Court.
----------Summary of the Judgment
Procedural history (paras. 1-10)
In its Judgment the Court recalls that on 22 February 1991 Portugal instituted proceedings against Australia
concerning "certain activities of Australia with respect to East Timor". According to the Application Australia had,
by its conduct, "failed to observe -- the obligation to respect the duties and powers of [Portugal as] the administering
Power [of East Timor].. and... the right of the people of East Timor to self-determination and the related rights". In
consequence, according to the Application, Australia had "incurred international responsibility vis--vis both the
people of East Timor and Portugal". As the basis for the jurisdiction of the Court, the Application refers to the
declarations by which the two States have accepted the compulsory jurisdiction of the Court under Article 36,
paragraph 2, of its Statute. In its Counter-Memorial, Australia raised questions concerning the jurisdiction of the
Court and the admissibility of the Application. In the course of a meeting held by the President of the Court the
Parties agreed that these questions were inextricably linked to the merits and that they should therefore be heard and
determined within the framework of the merits. The written proceedings having been completed in July 1993,
hearings were held between 30 January and 16 February 1995. The Judgment then sets out the final submissions
which were presented by both Parties in the course of the oral proceedings.
Historical background (paras. 11-18)
The Court then gives a short description of the history of the involvement of Portugal and Indonesia in the Territory
of East Timor and of a number of Security Council and General Assembly resolutions concerning the question of
East Timor. It further describes the negotiations between Australia and Indonesia leading to the Treaty of 11
December 1989, which created a "Zone of Cooperation... in an area between the Indonesian Province of East Timor
and Northern Australia".
Summary of the contentions of the Parties (paras. 19-20)
The Court then summarizes the contentions of both Parties.
Australia's objection that there exists in reality no dispute between the Parties (paras. 21-22)
The Court goes on to consider Australia's objection that there is in reality no dispute between itself and Portugal.
Australia contends that the case as presented by Portugal is artificially limited to the question of the lawfulness of
Australia's conduct, and that the true respondent is Indonesia, not Australia. Australia maintains that it is being sued
in place of Indonesia. In this connection, it points out that Portugal and Australia have accepted the compulsory
jurisdiction of the Court under Article 36, paragraph 2, of its Statute, but that Indonesia has not.
The Court finds in this respect that for the purpose of verifying the existence of a legal dispute in the present case, it
is not relevant whether the "real dispute" is between Portugal and Indonesia rather than Portugal and Australia.
Portugal has, rightly or wrongly, formulated complaints of fact and law against Australia which the latter has denied.
By virtue of this denial, there is a legal dispute.
Australia's objection that the Court is required to determine the rights and obligations of Indonesia (paras.
23-35)
The Court then considers Australia's principal objection, to the effect that Portugal's Application would require the
Court to determine the rights and obligations of Indonesia. Australia contends that the jurisdiction conferred upon
the Court by the Parties' declarations under Article 36, paragraph 2, of the Statute would not enable the Court to act
if, in order to do so, the Court were required to rule on the lawfulness of Indonesia's entry into and continuing

presence in East Timor, on the validity of the 1989 Treaty between Australia and Indonesia, or on the rights and
obligations of Indonesia under that Treaty, even if the Court did not have to determine its validity. In support of its
argument, it refers to the Court's Judgment in the case of the Monetary Gold Removed from Rome in 1943. Portugal
agrees that if its Application required the Court to decide any of these questions, the Court could not entertain it. The
Parties disagree, however, as to whether the Court is required to decide any of these questions in order to resolve the
dispute referred to it.
Portugal contends first that its Application is concerned exclusively with the objective conduct of Australia, which
consists in having negotiated, concluded and initiated performance of the 1989 Treaty with Indonesia, and that this
question is perfectly separable from any question relating to the lawfulness of the conduct of Indonesia.
Having carefully considered the argument advanced by Portugal which seeks to separate Australia's behaviour from
that of the Indonesia, the Court concludes that Australia's behaviour cannot be assessed without first entering into
the question why it is that Indonesia could not lawfully have concluded the 1989 Treaty, while Portugal allegedly
could have done so; the very subject-matter of the Court's decision would necessarily be a determination whether,
having regard to the circumstances in which Indonesia entered and remained in East Timor, it could or could not
have acquired the power to enter into treaties on behalf of East Timor relating to the resources of its continental
shelf. The Court could not make such a determination in the absence of the consent of Indonesia.
The Court rejects Portugal's additional argument that the rights which Australia allegedly breached were rights erga
omnes and that accordingly Portugal could require it, individually, to respect them regardless of whether or not
another State had conducted itself in a similarly unlawful manner.
In the Court's view, Portugal's assertion that the right of peoples to self-determination, as it evolved from the Charter
and from United Nations practice, has an erga omnes character, is irreproachable. The principle of self-determination
of peoples has been recognized by the United Nations Charter and in the jurisprudence of the Court; it is one of the
essential principles of contemporary international law. However, the Court considers that the erga omnes character
of a norm and the rule of consent to jurisdiction are two different things. Whatever the nature of the obligations
invoked, the Court could not rule on the lawfulness of the conduct of a State when its judgment would imply an
evaluation of the lawfulness of the conduct of another State which is not a party to the case.
The Court goes on to consider another argument of Portugal which, the Court observes, rests on the premise that the
United Nations resolutions, and in particular those of the Security Council, can be read as imposing an obligation on
States not to recognize any authority on the part of Indonesia over East Timor and, where the latter is concerned, to
deal only with Portugal. Portugal maintains that those resolutions would constitute "givens" on the content of which
the Court would not have to decide de novo.
The Court takes note of the fact that, for the two Parties, the Territory of East Timor remains a non-self governing
territory and its people has the right to self-determination, and that the express reference to Portugal as the
"administering Power" in a number of the above-mentioned resolutions is not at issue between them. The Court
finds, however, that it cannot be inferred from the sole fact that a number of resolutions of the General Assembly
and the Security Council refer to Portugal as the administering Power of East Timor that they intended to establish
an obligation on third States to treat exclusively with Portugal as regards the continental shelf of East Timor.
Without prejudice to the question whether the resolutions under discussion could be binding in nature, the Court
considers as a result that they cannot be regarded as "givens" which constitute a sufficient basis for determining the
dispute between the Parties.
It follows from this that the Court would necessarily have to rule upon the lawfulness of Indonesia's conduct as a
prerequisite for deciding on Portugal's contention that Australia violated its obligation to respect Portugal's status as
administering Power, East Timor's status as a non-self governing territory and the right of the people of the Territory
to self-determination and to permanent sovereignty over its wealth and natural resources. Indonesia's rights and
obligations would thus constitute the very subject matter of such a judgment made in the absence of that State's
consent. Such a judgment would run directly counter to the "well-established principle of international law

embodied in the Court's Statute, namely, that the Court can only exercise jurisdiction over a State with its consent"
(Monetary Gold Removed from Rome in 1943, I.C.J. Reports 1954, p. 32).
Conclusions (paras. 36-37)
The Court accordingly finds that it is not required to consider Australia's other objections and that it cannot rule on
Portugal's claims on the merits, whatever the importance of the questions raised by those claims and of the rules of
international law which they bring into play.
The Court recalls in any event that it has taken note in the Judgment that, for the two Parties, the Territory of East
Timor remains a non-self governing territory and its people has the right to self-determination.
Separate opinion of Judge Oda
Judge Oda, while agreeing that Portugal's Application should be dismissed as the Court lacks jurisdiction to
entertain it, considers that its dismissal should not have been based upon the absence of Indonesia's consent, as in
the Court's Judgment, but upon the sole consideration that Portugal lacked locus standi.
After examining Portugal's complaint, Judge Oda concludes that Portugal "has given an incorrect definition of the
dispute and seems to have overlooked the difference between the opposability to any State of its rights and duties as
the administering Power or of the rights of the people of East Timor and the more basic question of whether Portugal
is the State entitled to assert these rights and duties." He further points out that the right of the people of East Timor
to self-determination and the related rights have not been challenged by Australia and, in any event, cannot be made
an issue in the present case. That case relates in Judge Oda's view solely to the title to the continental shelf which
Portugal claims to possess as a coastal State.
Judge Oda goes on to note that, in the area of the "Timor Gap" Australia has not asserted a new claim to any sea-bed
area intruding into the area of any State or of the people of the Territory of East Timor, nor has it acquired any new
sea-bed area from any State or from that people. The continental shelves of Australia and of the opposite State
overlap somewhere in the middle of the "Timor Gap" and Australia should and did negotiate the question of that
overlapping with the coastal State lying opposite to it across the Timor Sea.
The central question in the present case is whether Portugal or Indonesia, as a State lying opposite to Australia, was
entitled to the continental shelf in the "Timor Gap".
From a survey of events in relation to the delimitation of the continental shelf in the relevant areas, it appears that
since the seventies Indonesia claimed the status of a coastal State for East Timor and, as such, negotiated with
Australia. If Portugal had also claimed that status, it could and should have initiated a dispute over the
corresponding title to the continental shelf with Indonesia, but not with Australia. Not unless and until such time as
Portugal had been established as having the status of the coastal State entitled to the corresponding continental shelf
could any issue concerning the seabed area of the "Timor Gap" have been the subject matter of a dispute between
Portugal and Australia. Had that been the case, the treaty between Australia and Indonesia would certainly have been
null and void from the outset. The reliance of the Judgment on the principle of the required consent of the third party
to the Court's jurisdiction (as exemplified in the Monetary Gold) case accordingly seems to be irrelevant.
A further historical survey shows that, in Judge Oda's view, "while the military intervention of Indonesia in East
Timor and the integration of East Timor into Indonesia in the mid-1970s were not approved by the United Nations,
there has not been any reason to assume that Portugal has, since the late 1970s and up the present time, been
entrusted with the rights and responsibilities of an administering Power for the Non-Self Governing Territory of East
Timor. Few States in the international community have in the recent past regarded, or at present regard, Portugal as a
State located in East Timor or would maintain that as such it may lay claim to the continental shelf off the coast of
East Timor". Portugal therefore lacks standing as an Applicant State in this proceeding which relates to the
continental shelf extending southward into the Timor Sea from the coast of East Timor in the "Timor Gap".

The lack of any evidence as to the view of the people of East Timor, on whose behalf the Application has been filed,
is one of the principal reasons leading to the inability of the Court to decide the dispute.
Dissenting opinion of Judge Weeramantry
Judge Weeramantry, in his opinion, expresses agreement with the Court's decision dismissing the objection that no
real dispute exists between Australia and Portugal. He also agrees with the stress laid by the Court on the importance
of self-determination as "one of the essential principles of contemporary international law".
However, he differs from the majority of the Court on the question whether the Court lacks jurisdiction on the
ground that a decision against Australia would involve a decision concerning the rights of Indonesia, a third State,
not before the Court.
The opinion analyses the Monetary Gold decision and the prior and subsequent jurisprudence on this matter, and
concludes from this analysis that, having regard to the facts of this case, the Monetary Gold decision is not relevant
inasmuch as the Court could determine the matter before it entirely on the basis of the obligations and actions of
Australia alone, without any need to make an adjudication on the conduct of Indonesia. A central principle of State
responsibility in international law is the individual responsibility of a State for its actions, quite apart from the
complicity of another State in those actions.
The respondent State's actions, in negotiating, concluding and initiating performance of the Timor Gap Treaty, and
taking internal legislative measures for its application are thus justiciable on the basis of its unilateral conduct.
The rights of self-determination and permanent sovereignty over natural resources are rights erga omnes belonging
to the people of East Timor, and therefore generate a corresponding duty upon all States, including the Respondent,
to recognize and respect those rights. The act of being party to a treaty recognizing that East Timor, (admittedly a
non-self governing territory and recognized as such by the United Nations), has been incorporated in another State,
which treaty deals with a valuable non-renewable resource of the people of East Timor for an initial period of forty
years, without reference to them or their authorized representative, raises substantial doubts regarding the
compatibility of these acts with the rights of the people of East Timor and the obligations of Australia. The Court
could have proceeded to determine whether a course of action had been made out against Australia on such actions,
without the need for any adjudication concerning Indonesia.
The opinion also holds in favour of the right of Portugal to maintain this application as the administering Power over
East Timor, recognized as such by the United Nations. The position and responsibilities of an administering Power
which continues to be so recognized by the United Nations are not lost by the mere circumstance of loss of physical
control, for such a proposition would run contrary to the protective scheme embodied in the United Nations Charter
for the care of non-self governing territories.
Dissenting opinion of Judge Skubiszewski
In Judge Skubiszewski's view, the Court has jurisdiction in this case and the Portuguese claims are admissible. The
requirements of judicial propriety are also met. The Court can render a decision on the merits.
In particular, even if the Court finds itself without jurisdiction to adjudicate on any issue relating to the Timor Gap
Treaty, the Court could deal with the first submission of Portugal, i.e., with the status of East Timor, the applicability
to that territory of the principle of self-determination and some other basic principles of international law, and the
position of Portugal as administering Power. This is so because the first submission can be separated from the
remaining submissions which concern exclusively the specific issues of the treaty. It is true that the Court refers to
the status of the territory and to self- determination, and in this respect Judge Skubiszewski concurs with the Court
(as he also does in regard to the Court's rejection of the Australian objection that there is no dispute between the
Parties). But Judge Skubiszewski thinks that the Court should have elaborated on these matters (as there are some
unclear points) and included the result of such elaboration in the operative clause. By not doing so, the Court
adopted a narrow view of its function.

The Monetary Gold rule does not exclude jurisdiction in this case. The premise for the application of the rule is
lacking here: to decide on all the submissions of Portugal, the Court need not adjudicate on any powers, rights and
duties of Indonesia. In this case the Court adopted an extensive interpretation of the Monetary Gold rule; this
interpretation contrasts with its earlier practice. The Court has gone beyond the limit of the operation of Monetary
Gold.
The Court can decide on the lawfulness of some unilateral acts of Australia leading to the conclusion of the Treaty. A
decision thereon does not imply any adjudication on Indonesia, nor does it involve any finding on the validity of the
Treaty (which the Court is not competent to make). The conduct of Australia can be assessed in the light of United
Nations law and resolutions. Such assessment is not linked to any passing upon Indonesia's activities.
Portugal has the capacity to act before the Court in this case on behalf of East Timor and to vindicate the respect for
its position as administering Power.
In discussing and defining the present status of the Territory (i.e., after annexation by Indonesia) the rule of nonrecognition is relevant. In the instance of East Timor, recognition of annexation erodes self-determination. The
position of Portugal as administering Power was questioned by Australia; the Court should have clarified this issue.
It is within its jurisdiction.
Even if the Court's Judgment is legally correct (which it is not), the Court's function cannot be reduced to legal
correctness alone. Otherwise the Court would restrict its function to the detriment of justice and of the basic
constitutional rule that it is "the principal judicial organ of the United Nations". That restrictive approach is
illustrated by the Judgment and it is cause for concern.
CASE CONCERNING EAST TIMOR
(PORTUGAL v. AUSTRALIA)
Judgment of 30 June 1995
In its Judgment on the case concerning East Timor (Portugal v. Australia), the Court, by 14 votes to 2, found that it
could not exercise the jurisdiction conferred upon it by the declarations made by the Parties under Article 36,
paragraph 2, of its Statute to adjudicate upon the dispute referred to it by the Application of the Portuguese Republic.
Those who voted in favour were: President Bedjaoui: Vice President Schwebel; Judges Oda, Sir Robert Jennings,
Guillaume, Shahabuddeen, Aguilar-Mawdsley, Ranjeva, Herczegh, Shi, Fleischhauer, Koroma,
Vereshchetin; Judge ad hoc Sir Ninian Stephen.
Against: Judge Weeramantry; Judge ad hoc Skubiszewski.
Judges Oda, Shahabuddeen, Ranjeva, and Vereshchetin appended separate opinions to the Judgment of the Court.
Judge Weeramantry and Judge ad hoc Skubiszewski appended dissenting opinions to the Judgment of the Court.
__________
Summary of the Judgment
Procedural history (paras. 1-10)
In its Judgment the Court recalls that on 22 February 1991 Portugal instituted proceedings against Australia
concerning "certain activities of Australia with respect to East Timor". According to the Application Australia had,
by its conduct, "failed to observe -- the obligation to respect the duties and powers of [Portugal as] the administering
Power [of East Timor].. and... the right of the people of East Timor to self-determination and the related rights". In
consequence, according to the Application, Australia had "incurred international responsibility vis--vis both the
people of East Timor and Portugal". As the basis for the jurisdiction of the Court, the Application refers to the
declarations by which the two States have accepted the compulsory jurisdiction of the Court under Article 36,
paragraph 2, of its Statute. In its Counter-Memorial, Australia raised questions concerning the jurisdiction of the
Court and the admissibility of the Application. In the course of a meeting held by the President of the Court the
Parties agreed that these questions were inextricably linked to the merits and that they should therefore be heard and
determined within the framework of the merits. The written proceedings having been completed in July 1993,
hearings were held between 30 January and 16 February 1995. The Judgment then sets out the final submissions
which were presented by both Parties in the course of the oral proceedings.
Historical background (paras. 11-18)

The Court then gives a short description of the history of the involvement of Portugal and Indonesia in the Territory
of East Timor and of a number of Security Council and General Assembly resolutions concerning the question of
East Timor. It further describes the negotiations between Australia and Indonesia leading to the Treaty of 11
December 1989, which created a "Zone of Cooperation... in an area between the Indonesian Province of East Timor
and Northern Australia".
Summary of the contentions of the Parties (paras. 19-20)
The Court then summarizes the contentions of both Parties.
Australia's objection that there exists in reality no dispute between the Parties (paras. 21-22)
The Court goes on to consider Australia's objection that there is in reality no dispute between itself and Portugal.
Australia contends that the case as presented by Portugal is artificially limited to the question of the lawfulness of
Australia's conduct, and that the true respondent is Indonesia, not Australia. Australia maintains that it is being sued
in place of Indonesia. In this connection, it points out that Portugal and Australia have accepted the compulsory
jurisdiction of the Court under Article 36, paragraph 2, of its Statute, but that Indonesia has not.
The Court finds in this respect that for the purpose of verifying the existence of a legal dispute in the present case, it
is not relevant whether the "real dispute" is between Portugal and Indonesia rather than Portugal and Australia.
Portugal has, rightly or wrongly, formulated complaints of fact and law against Australia which the latter has denied.
By virtue of this denial, there is a legal dispute.
Australia's objection that the Court is required to determine the rights and obligations of Indonesia (paras. 23-35)
The Court then considers Australia's principal objection, to the effect that Portugal's Application would require the
Court to determine the rights and obligations of Indonesia. Australia contends that the jurisdiction conferred upon
the Court by the Parties' declarations under Article 36, paragraph 2, of the Statute would not enable the Court to act
if, in order to do so, the Court were required to rule on the lawfulness of Indonesia's entry into and continuing
presence in East Timor, on the validity of the 1989 Treaty between Australia and Indonesia, or on the rights and
obligations of Indonesia under that Treaty, even if the Court did not have to determine its validity. In support of its
argument, it refers to the Court's Judgment in the case of the Monetary Gold Removed from Rome in 1943.
Portugal agrees that if its Application required the Court to decide any of these questions, the Court could not
entertain it. The Parties disagree, however, as to whether the Court is required to decide any of these questions in
order to resolve the dispute referred to it.
Portugal contends first that its Application is concerned exclusively with the objective conduct of Australia, which
consists in having negotiated, concluded and initiated performance of the 1989 Treaty with Indonesia, and that this
question is perfectly separable from any question relating to the lawfulness of the conduct of Indonesia.
Having carefully considered the argument advanced by Portugal which seeks to separate Australia's behaviour from
that of the Indonesia, the Court concludes that Australia's behaviour cannot be assessed without first entering into
the question why it is that Indonesia could not lawfully have concluded the 1989 Treaty, while Portugal allegedly
could have done so; the very subject-matter of the Court's decision would necessarily be a determination whether,
having regard to the circumstances in which Indonesia entered and remained in East Timor, it could or could not
have acquired the power to enter into treaties on behalf of East Timor relating to the resources of its continental
shelf. The Court could not make such a determination in the absence of the consent of Indonesia.
The Court rejects Portugal's additional argument that the rights which Australia allegedly breached were rights erga
omnes and that accordingly Portugal could require it, individually, to respect them regardless of whether or not
another State had conducted itself in a similarly unlawful manner.
In the Court's view, Portugal's assertion that the right of peoples to self-determination, as it evolved from the Charter
and from United Nations practice, has an erga omnes character, is irreproachable. The principle of selfdetermination of peoples has been recognized by the United Nations Charter and in the jurisprudence of the Court; it
is one of the essential principles of contemporary international law. However, the Court considers that the erga
omnes character of a norm and the rule of consent to jurisdiction are two different things. Whatever the nature of the
obligations invoked, the Court could not rule on the lawfulness of the conduct of a State when its judgment would
imply an evaluation of the lawfulness of the conduct of another State which is not a party to the case.
The Court goes on to consider another argument of Portugal which, the Court observes, rests on the premise that the
United Nations resolutions, and in particular those of the Security Council, can be read as imposing an obligation on
States not to recognize any authority on the part of Indonesia over East Timor and, where the latter is concerned, to
deal only with Portugal. Portugal maintains that those resolutions would constitute "givens" on the content of which
the Court would not have to decide de novo.
The Court takes note of the fact that, for the two Parties, the Territory of East Timor remains a non-self governing
territory and its people has the right to self-determination, and that the express reference to Portugal as the
"administering Power" in a number of the above-mentioned resolutions is not at issue between them. The Court

finds, however, that it cannot be inferred from the sole fact that a number of resolutions of the General Assembly
and the Security Council refer to Portugal as the administering Power of East Timor that they intended to establish
an obligation on third States to treat exclusively with Portugal as regards the continental shelf of East Timor.
Without prejudice to the question whether the resolutions under discussion could be binding in nature, the Court
considers as a result that they cannot be regarded as "givens" which constitute a sufficient basis for determining the
dispute between the Parties.
It follows from this that the Court would necessarily have to rule upon the lawfulness of Indonesia's conduct as a
prerequisite for deciding on Portugal's contention that Australia violated its obligation to respect Portugal's status as
administering Power, East Timor's status as a non-self governing territory and the right of the people of the Territory
to self-determination and to permanent sovereignty over its wealth and natural resources. Indonesia's rights and
obligations would thus constitute the very subject matter of such a judgment made in the absence of that State's
consent. Such a judgment would run directly counter to the "well-established principle of international law
embodied in the Court's Statute, namely, that the Court can only exercise jurisdiction over a State with its consent"
(Monetary Gold Removed from Rome in 1943, I.C.J. Reports 1954, p. 32).
Conclusions (paras. 36-37)
The Court accordingly finds that it is not required to consider Australia's other objections and that it cannot rule on
Portugal's claims on the merits, whatever the importance of the questions raised by those claims and of the rules of
international law which they bring into play.
The Court recalls in any event that it has taken note in the Judgment that, for the two Parties, the Territory of East
Timor remains a non-self governing territory and its people has the right to self-determination.
_________
Separate opinion of Judge Oda
Judge Oda, while agreeing that Portugal's Application should be dismissed as the Court lacks jurisdiction to
entertain it, considers that its dismissal should not have been based upon the absence of Indonesia's consent, as in
the Court's Judgment, but upon the sole consideration that Portugal lacked locus standi.
After examining Portugal's complaint, Judge Oda concludes that Portugal "has given an incorrect definition of the
dispute and seems to have overlooked the difference between the opposability to any State of its rights and duties as
the administering Power or of the rights of the people of East Timor and the more basic question of whether Portugal
is the State entitled to assert these rights and duties." He further points out that the right of the people of East Timor
to self-determination and the related rights have not been challenged by Australia and, in any event, cannot be made
an issue in the present case. That case relates in Judge Oda's view solely to the title to the continental shelf which
Portugal claims to possess as a coastal State.
Judge Oda goes on to note that, in the area of the "Timor Gap" Australia has not asserted a new claim to any sea-bed
area intruding into the area of any State or of the people of the Territory of East Timor, nor has it acquired any new
sea-bed area from any State or from that people. The continental shelves of Australia and of the opposite State
overlap somewhere in the middle of the "Timor Gap" and Australia should and did negotiate the question of that
overlapping with the coastal State lying opposite to it across the Timor Sea.
The central question in the present case is whether Portugal or Indonesia, as a State lying opposite to Australia, was
entitled to the continental shelf in the "Timor Gap".
From a survey of events in relation to the delimitation of the continental shelf in the relevant areas, it appears that
since the seventies Indonesia claimed the status of a coastal State for East Timor and, as such, negotiated with
Australia. If Portugal had also claimed that status, it could and should have initiated a dispute over the
corresponding title to the continental shelf with Indonesia, but not with Australia. Not unless and until such time as
Portugal had been established as having the status of the coastal State entitled to the corresponding continental shelf
could any issue concerning the seabed area of the "Timor Gap" have been the subject matter of a dispute between
Portugal and Australia. Had that been the case, the treaty between Australia and Indonesia would certainly have
been null and void from the outset. The reliance of the Judgment on the principle of the required consent of the third
party to the Court's jurisdiction (as exemplified in the Monetary Gold) case accordingly seems to be irrelevant.
A further historical survey shows that, in Judge Oda's view, "while the military intervention of Indonesia in East
Timor and the integration of East Timor into Indonesia in the mid-1970s were not approved by the United Nations,
there has not been any reason to assume that Portugal has, since the late 1970s and up the present time, been
entrusted with the rights and responsibilities of an administering Power for the Non-Self Governing Territory of East
Timor. Few States in the international community have in the recent past regarded, or at present regard, Portugal as a
State located in East Timor or would maintain that as such it may lay claim to the continental shelf off the coast of
East Timor". Portugal therefore lacks standing as an Applicant State in this proceeding which relates to the
continental shelf extending southward into the Timor Sea from the coast of East Timor in the "Timor Gap".

The lack of any evidence as to the view of the people of East Timor, on whose behalf the Application has been filed,
is one of the principal reasons leading to the inability of the Court to decide the dispute.
__________
Dissenting opinion of Judge Weeramantry
Judge Weeramantry, in his opinion, expresses agreement with the Court's decision dismissing the objection that no
real dispute exists between Australia and Portugal. He also agrees with the stress laid by the Court on the importance
of self-determination as "one of the essential principles of contemporary international law".
However, he differs from the majority of the Court on the question whether the Court lacks jurisdiction on the
ground that a decision against Australia would involve a decision concerning the rights of Indonesia, a third State,
not before the Court.
The opinion analyses the Monetary Gold decision and the prior and subsequent jurisprudence on this matter, and
concludes from this analysis that, having regard to the facts of this case, the Monetary Gold decision is not relevant
inasmuch as the Court could determine the matter before it entirely on the basis of the obligations and actions of
Australia alone, without any need to make an adjudication on the conduct of Indonesia. A central principle of State
responsibility in international law is the individual responsibility of a State for its actions, quite apart from the
complicity of another State in those actions.
The respondent State's actions, in negotiating, concluding and initiating performance of the Timor Gap Treaty, and
taking internal legislative measures for its application are thus justiciable on the basis of its unilateral conduct.
The rights of self-determination and permanent sovereignty over natural resources are rights erga omnes belonging
to the people of East Timor, and therefore generate a corresponding duty upon all States, including the Respondent,
to recognize and respect those rights. The act of being party to a treaty recognizing that East Timor, (admittedly a
non-self governing territory and recognized as such by the United Nations), has been incorporated in another State,
which treaty deals with a valuable non-renewable resource of the people of East Timor for an initial period of forty
years, without reference to them or their authorized representative, raises substantial doubts regarding the
compatibility of these acts with the rights of the people of East Timor and the obligations of Australia. The Court
could have proceeded to determine whether a course of action had been made out against Australia on such actions,
without the need for any adjudication concerning Indonesia.
The opinion also holds in favour of the right of Portugal to maintain this application as the administering Power over
East Timor, recognized as such by the United Nations. The position and responsibilities of an administering Power
which continues to be so recognized by the United Nations are not lost by the mere circumstance of loss of physical
control, for such a proposition would run contrary to the protective scheme embodied in the United Nations Charter
for the care of non-self governing territories.
__________
Dissenting opinion of Judge Skubiszewski
In Judge Skubiszewski's view, the Court has jurisdiction in this case and the Portuguese claims are admissible. The
requirements of judicial propriety are also met. The Court can render a decision on the merits.
In particular, even if the Court finds itself without jurisdiction to adjudicate on any issue relating to the Timor Gap
Treaty, the Court could deal with the first submission of Portugal, i.e., with the status of East Timor, the applicability
to that territory of the principle of self-determination and some other basic principles of international law, and the
position of Portugal as administering Power. This is so because the first submission can be separated from the
remaining submissions which concern exclusively the specific issues of the treaty. It is true that the Court refers to
the status of the territory and to self-determination, and in this respect Judge Skubiszewski concurs with the Court
(as he also does in regard to the Court's rejection of the Australian objection that there is no dispute between the
Parties). But Judge Skubiszewski thinks that the Court should have elaborated on these matters (as there are some
unclear points) and included the result of such elaboration in the operative clause. By not doing so, the Court
adopted a narrow view of its function.
The Monetary Gold rule does not exclude jurisdiction in this case. The premise for the application of the rule is
lacking here: to decide on all the submissions of Portugal, the Court need not adjudicate on any powers, rights and
duties of Indonesia. In this case the Court adopted an extensive interpretation of the Monetary Gold rule; this
interpretation contrasts with its earlier practice. The Court has gone beyond the limit of the operation ofMonetary
Gold.
The Court can decide on the lawfulness of some unilateral acts of Australia leading to the conclusion of the Treaty. A
decision thereon does not imply any adjudication on Indonesia, nor does it involve any finding on the validity of the
Treaty (which the Court is not competent to make). The conduct of Australia can be assessed in the light of United
Nations law and resolutions. Such assessment is not linked to any passing upon Indonesia's activities.

Portugal has the capacity to act before the Court in this case on behalf of East Timor and to vindicate the respect for
its position as administering Power.
In discussing and defining the present status of the Territory (i.e., after annexation by Indonesia) the rule of nonrecognition is relevant. In the instance of East Timor, recognition of annexation erodes self-determination. The
position of Portugal as administering Power was questioned by Australia; the Court should have clarified this issue.
It is within its jurisdiction.
Even if the Court's Judgment is legally correct (which it is not), the Court's function cannot be reduced to legal
correctness alone. Otherwise the Court would restrict its function to the detriment of justice and of the basic
constitutional rule that it is "the principal judicial organ of the United Nations". That restrictive approach is
illustrated by the Judgment and it is cause for concern.

Case concerning Oil Platforms

(Islamic Republic of Iran v. United States of America)
Summary of the Judgment of 6 November 2003
History of the proceedings and submissions of the Parties (paras. 1-20)
On 2 November 1992, the Islamic Republic of Iran (hereinafter called "Iran") instituted proceedings against the
United States of America (hereinafter called "the United States") in respect of a dispute "aris[ing] out of the attack
[on] and destruction of three offshore oil production complexes, owned and operated for commercial purposes by
the National Iranian Oil Company, by several warships of the United States Navy on 19 October 1987 and
18 April 1988, respectively".
In its Application, Iran contended that these acts constituted a "fundamental breach" of various provisions of the
Treaty of Amity, Economic Relations and Consular Rights between the United States and Iran, which was signed in
Tehran on 15 August 1955 and entered into force on 16 June 1957 (hereinafter called "the 1955 Treaty"), as well as
of international law. The Application invoked, as a basis for the Court's jurisdiction, Article XXI, paragraph 2, of the
1955 Treaty.
Within the time-limit fixed for the filing of the Counter-Memorial, the United States raised a preliminary objection
to the jurisdiction of the Court pursuant to Article 79, paragraph 1, of the Rules of Court of 14 April 1978. By a
Judgment dated 12 December 1996 the Court rejected the preliminary objection of the United States according to
which the 1955 Treaty did not provide any basis for the jurisdiction of the Court and found that it had jurisdiction,
on the basis of Article XXI, paragraph 2, of the 1955 Treaty, to entertain the claims made by Iran under Article X,
paragraph 1, of that Treaty.
The United States Counter-Memorial included a counter-claim concerning "Iran's actions in the Gulf during 1987-88
which, among other things, involved mining and other attacks on U.S.-flag or U.S.-owned vessels". By an Order of
10 March 1998 the Court held that this counter-claim was admissible as such and formed part of the proceedings.
Public sittings were held between 17 February and 7 March 2003, at which the Court heard the oral arguments and
replies on the claim of Iran and on the counter-claim of the United States. At those oral proceedings, the following
final submissions were presented by the Parties:
On behalf of the Government of Iran,
at the hearing of 3 March 2003, on the claim of Iran:
"The Islamic Republic of Iran respectfully requests the Court, rejecting all contrary claims and submissions, to
adjudge and declare:
1. That in attacking and destroying on 19 October 1987 and 18 April 1988 the oil platforms referred to in Iran's
Application, the United States breached its obligations to Iran under Article X, paragraph 1, of the Treaty of
Amity, and that the United States bears responsibility for the attacks; and
2. That the United States is accordingly under an obligation to make full reparation to Iran for the violation of its
international legal obligations and the injury thus caused in a form and amount to be determined by the Court at a
subsequent stage of the proceedings, the right being reserved to Iran to introduce and present to the Court in due
course a precise evaluation of the reparation owed by the United States; and
3. Any other remedy the Court may deem appropriate";
at the hearing of 7 March 2003, on the counter-claim of the United States:
"The Islamic Republic of Iran respectfully requests the Court, rejecting all contrary claims and submissions, to
adjudge and declare:

That the United States counter-claim be dismissed."

On behalf of the Government of the United States,
at the hearing of 5 March 2003, on the claim of Iran and the counter-claim of the United States:
"The United States respectfully requests that the Court adjudge and declare:
(1) that the United States did not breach its obligations to the Islamic Republic of Iran under Article X,
paragraph 1, of the 1955 Treaty between the United States and Iran; and
(2) that the claims of the Islamic Republic of Iran are accordingly dismissed.
With respect to its counter-claim, the United States requests that the Court adjudge and declare:
(1) Rejecting all submissions to the contrary, that, in attacking vessels in the Gulf with mines and missiles and
otherwise engaging in military actions that were dangerous and detrimental to commerce and navigation between
the territories of the United States and the Islamic Republic of Iran, the Islamic Republic of Iran breached its
obligations to the United States under Article X, paragraph 1, of the 1955 Treaty; and
(2) That the Islamic Republic of Iran is accordingly under an obligation to make full reparation to the United
States for its breach of the 1955 Treaty in a form and amount to be determined by the Court at a subsequent stage
of the proceedings."
Basis of jurisdiction and factual background (paras. 21-26)
The Court begins by pointing out that its task in the present proceedings is to determine whether or not there have
been breaches of the 1955 Treaty, and if it finds that such is the case, to draw the appropriate consequences
according to the submissions of the Parties. The Court is seised both of a claim by Iran alleging breaches by the
United States, and of a counter-claim by the United States alleging breaches by Iran. Its jurisdiction to entertain both
the claim and the counter-claim is asserted to be based upon Article XXI, paragraph 2, of the 1955 Treaty.
The Court recalls that, as regards the claim of Iran, the question of jurisdiction has been the subject of its judgment
of 12 December 1996. It notes that certain questions have however been raised between the Parties as to the precise
significance or scope of that Judgment, which will be examined below.
As to the counter-claim, the Court also recalls that it decided by its Order of 10 March 1998 to admit the counterclaim, and indicated in that Order that the facts alleged and relied on by the United States "are capable of falling
within the scope of Article X, paragraph 1, of the 1955 Treaty as interpreted by the Court", and accordingly that "the
Court has jurisdiction to entertain the United States counter-claim in so far as the facts alleged may have prejudiced
the freedoms guaranteed by Article X, paragraph 1" (I.C.J. Reports 1998, p. 204, para. 36). It notes that in this
respect also questions have been raised between the Parties as to the significance and scope of that ruling on
jurisdiction, and these will be examined below.
The Court points out that it is however established, by the decisions cited, that both Iran's claim and the counterclaim of the United States can be upheld only so far as a breach or breaches of Article X, paragraph 1, of the
1955 Treaty may be shown, even though other provisions of the Treaty may be relevant to the interpretation of that
paragraph. Article X, paragraph 1, of the 1955 Treaty reads as follows: "Between the territories of the two High
Contracting Parties there shall be freedom of commerce and navigation."
The Court then sets out the factual background to the case, as it emerges from the pleadings of both Parties,
observing that the broad lines of this background are not disputed, being a matter of historical record. The actions
giving rise to both the claim and the counter-claim occurred in the context of the general events that took place in
the Persian Gulf - which is an international commercial route and line of communication of major importance between 1980 and 1988, in particular the armed conflict that opposed Iran and Iraq. In 1984, Iraq commenced
attacks against ships in the Persian Gulf, notably tankers carrying Iranian oil. These were the first incidents of what
later became known as the "Tanker War": in the period between 1984 and 1988, a number of commercial vessels and
warships of various nationalities, including neutral vessels, were attacked by aircraft, helicopters, missiles or
warships, or struck mines in the waters of the Persian Gulf. Naval forces of both belligerent parties were operating in
the region, but Iran has denied responsibility for any actions other than incidents involving vessels refusing a proper
request for stop and search. The United States attributes responsibility for certain incidents to Iran, whereas Iran
suggests that Iraq was responsible for them.
The Court takes note that two specific attacks on shipping are of particular relevance in this case. On
16 October 1987, the Kuwaiti tankerSea Isle City, reflagged to the United States, was hit by a missile near Kuwait
harbour. The United States attributed this attack to Iran, and three days later, on 19 October 1987, it attacked two
Iranian offshore oil production installations in the Reshadat ["Rostam"] complex. On 14 April 1988, the warship
USS Samuel B. Roberts struck a mine in international waters near Bahrain while returning from an escort mission;
four days later the United States employed its naval forces to attack and destroy simultaneously the Nasr ["Sirri"]
and Salman ["Sassan"] complexes.

These attacks by United States forces on the Iranian oil platforms are claimed by Iran to constitute breaches of the
1955 Treaty; and the attacks on the Sea Isle City and the USS Samuel B. Roberts were invoked in support of the
United States' claim to act in self-defence. The counter-claim of the United States is however not limited to those
attacks.
The United States request to dismiss Iran's claim because of Iran's allegedly unlawful conduct (paras. 27-30)
The Court first considers a contention to which the United States appears to have attributed a certain preliminary
character. The United States asks the Court to dismiss Iran's claim and refuse it the relief it seeks, because of Iran's
allegedly unlawful conduct, i.e., its violation of the 1955 Treaty and other rules of international law relating to the
use of force.
The Court notes that in order to make the finding requested by the United States it would have to examine Iranian
and United States actions in the Persian Gulf during the relevant period - which it has also to do in order to rule on
the Iranian claim and the United States counter-claim. At this stage of its judgment, it does not therefore need to deal
with this request.
Application of Article XX, paragraph 1 (d), of the 1955 Treaty (paras. 31-78)
The Court recalls that the dispute in the present case has been brought before it on the jurisdictional basis of
Article XXI, paragraph 2, of the 1955 Treaty, which provides that "Any dispute between the High Contracting
Parties as to the interpretation or application of the present Treaty, not satisfactorily adjusted by diplomacy, shall be
submitted to the International Court of Justice, unless the High Contracting Parties agree to settlement by some other
pacific means."
The Court further recalls that by its Judgment of 12 December 1996, it found that it had jurisdiction, on the basis of
this Article, "to entertain the claims made by the Islamic Republic of Iran under Article X, paragraph 1, of that
Treaty" (I.C.J. Reports 1996 (II), p. 821, para. 55 (2)). Its task is thus to ascertain whether there has been a breach by
the United States of the provisions of Article X, paragraph 1; other provisions of the Treaty are only relevant in so
far as they may affect the interpretation or application of that text.
In that respect, the Court notes that the United States has relied on Article XX, paragraph 1 (d), of the Treaty as
determinative of the question of the existence of a breach of its obligations under Article X. That paragraph provides
that
"The present Treaty shall not preclude the application of measures:
................................................................
(d) necessary to fulfil the obligations of a High Contracting Party for the maintenance or restoration of
international peace and security, or necessary to protect its essential security interests."
In its Judgment on the United States preliminary objection of 12 December 1996, the Court ruled that Article XX,
paragraph 1 (d), does not afford an objection to admissibility, but "is confined to affording the Parties a possible
defence on the merits" (I.C.J. Reports 1996 (II), p. 811, para. 20). In accordance with Article XXI, paragraph 2, of
the Treaty, it is now for the Court to interpret and apply that subparagraph, inasmuch as such a defence is asserted by
the United States.
To uphold the claim of Iran, the Court must be satisfied both that the actions of the United States, complained of by
Iran, infringed the freedom of commerce between the territories of the Parties guaranteed by Article X, paragraph 1,
and that such actions were not justified to protect the essential security interests of the United States as contemplated
by Article XX, paragraph 1 (d). The question however arises in what order the Court should examine these questions
of interpretation and application of the Treaty.
In the present case, it appears to the Court that there are particular considerations militating in favour of an
examination of the application of Article XX, paragraph 1 (d), before turning to Article X, paragraph 1. It is clear
that the original dispute between the Parties related to the legality of the actions of the United States, in the light of
international law on the use of force. At the time of those actions, neither Party made any mention of the 1955
Treaty. The contention of the United States at the time was that its attacks on the oil platforms were justified as acts
of self-defence, in response to what it regarded as armed attacks by Iran, and on that basis it gave notice of its action
to the Security Council under Article 51 of the United Nations Charter. Before the Court, it has continued to
maintain that it was justified in acting as it did in exercise of the right of self-defence; it contends that, even if the
Court were to find that its actions do not fall within the scope of Article XX, paragraph 1 (d), those actions were not
wrongful since they were necessary and appropriate actions in self-defence. Furthermore, as the United States itself
recognizes in its Rejoinder, "The self-defense issues presented in this case raise matters of the highest importance to
all members of the international community", and both Parties are agreed as to the importance of the implications of
the case in the field of the use of force, even though they draw opposite conclusions from this observation. The
Court therefore considers that, to the extent that its jurisdiction under Article XXI, paragraph 2, of the 1955 Treaty
authorizes it to examine and rule on such issues, it should do so.

The question of the relationship between self-defence and Article XX, paragraph 1 (d), of the Treaty has been
disputed between the Parties, in particular as regards the jurisdiction of the Court. In the view of the Court, the
matter is one of interpretation of the Treaty, and in particular of Article XX, paragraph 1 (d). The question is whether
the parties to the 1955 Treaty, when providing therein that it should "not preclude the application of measures . . .
necessary to protect [the] essential security interests" of either party, intended that such should be the effect of the
Treaty even where those measures involved a use of armed force; and if so, whether they contemplated, or assumed,
a limitation that such use would have to comply with the conditions laid down by international law. The Court
considers that its jurisdiction under Article XXI, paragraph 2, of the 1955 Treaty to decide any question of
interpretation or application of (inter alia) Article XX, paragraph 1 (d), of that Treaty extends, where appropriate, to
the determination whether action alleged to be justified under that paragraph was or was not an unlawful use of
force, by reference to international law applicable to this question, that is to say, the provisions of the Charter of the
United Nations and customary international law.
The Court therefore examines first the application of Article XX, paragraph 1 (d), of the 1955 Treaty, which in the
circumstances of this case, as explained above, involves the principle of the prohibition in international law of the
use of force, and the qualification to it constituted by the right of self-defence. On the basis of that provision, a party
to the Treaty may be justified in taking certain measures which it considers to be "necessary" for the protection of its
essential security interests. In the present case, the question whether the measures taken were "necessary" overlaps
with the question of their validity as acts of self-defence.
In this connection, the Court notes that it is not disputed between the Parties that neutral shipping in the Persian Gulf
was caused considerable inconvenience and loss, and grave damage, during the Iran-Iraq war. It notes also that this
was to a great extent due to the presence of mines and minefields laid by both sides. The Court has no jurisdiction to
enquire into the question of the extent to which Iran and Iraq complied with the international legal rules of maritime
warfare. It can however take note of these circumstances, regarded by the United States as relevant to its decision to
take action against Iran which it considered necessary to protect its essential security interests. Nevertheless, the
legality of the action taken by the United States has to be judged by reference to Article XX, paragraph 1 (d), of the
1955 Treaty, in the light of international law on the use of force in self-defence.
The Court observes that the United States has never denied that its actions against the Iranian platforms amounted to
a use of armed force. The Court indicates that it will examine whether each of these actions met the conditions of
Article XX, paragraph 1 (d), as interpreted by reference to the relevant rules of international law.
Attack of 19 October 1987 on Reshadat (paras. 46-64)
The Court recalls that the first installation attacked, on 19 October 1987, was the Reshadat complex, which was also
connected by submarine pipeline to another complex, named Resalat. At the time of the United States attacks, these
complexes were not producing oil due to damage inflicted by prior Iraqi attacks. Iran has maintained that repair
work on the platforms was close to completion in October 1987. The United States has however challenged this
assertion. As a result of the attack, one platform was almost completely destroyed and another was severely
damaged and, according to Iran, production from the Reshadat and Resalat complexes was interrupted for several
years.
The Court first concentrates on the facts tending to show the validity or otherwise of the claim to exercise the right
of self-defence. In its communication to the Security Council at the time of the attack, the United States based this
claim on the existence of "a series of unlawful armed attacks by Iranian forces against the United States, including
laying mines in international waters for the purpose of sinking or damaging United States flag ships, and firing on
United States aircraft without provocation"; it referred in particular to a missile attack on the Sea Isle City as being
the specific incident that led to the attack on the Iranian platforms. Before the Court, it has based itself more
specifically on the attack on the Sea Isle City, but has continued to assert the relevance of the other attacks.
The Court points out that the United States has not claimed to have been exercising collective self-defence on behalf
of the neutral States engaged in shipping in the Persian Gulf. Therefore, in order to establish that it was legally
justified in attacking the Iranian platforms in exercise of the right of individual self-defence, the United States has to
show that attacks had been made upon it for which Iran was responsible; and that those attacks were of such a nature
as to be qualified as "armed attacks" within the meaning of that expression in Article 51 of the United Nations
Charter, and as understood in customary law on the use of force. The United States must also show that its actions
were necessary and proportional to the armed attack made on it, and that the platforms were a legitimate military
target open to attack in the exercise of self-defence.
Having examined with great care the evidence and arguments presented on each side, the Court finds that the
evidence indicative of Iranian responsibility for the attack on the Sea Isle City, is not sufficient to support the
contentions of the United States. The conclusion to which the Court has come on this aspect of the case is thus that

the burden of proof of the existence of an armed attack by Iran on the United States, in the form of the missile attack
on the Sea Isle City, has not been discharged.
In its notification to the Security Council, and before the Court, the United States has however also asserted that
the Sea Isle City incident was "the latest in a series of such missile attacks against United States flag and other nonbelligerent vessels in Kuwaiti waters in pursuit of peaceful commerce".
The Court finds that even taken cumulatively, and reserving the question of Iranian responsibility, these incidents do
not seem to the Court to constitute an armed attack on the United States.
Attacks of 18 April 1988 on Nasr and Salman and "Operation Praying Mantis" (paras. 65-72)
The Court recalls that the second occasion on which Iranian oil installations were attacked was on 18 April 1988,
with the attacks on the Salman and Nasr complexes. Iran states that the attacks caused severe damage to the
production facilities of the platforms; that the activities of the Salman complex were totally interrupted for four
years, its regular production being resumed only in September 1992, and reaching a normal level in 1993; and that
activities in the whole Nasr complex were interrupted and did not resume until nearly four years later.
The nature of the attacks on the Salman and Nasr complexes, and their alleged justification, was presented by the
United States to the United Nations Security Council in a letter from the United States Permanent Representative of
18 April 1988, which stated inter alia that the United States had "exercised their inherent right of self-defence under
international law by taking defensive action in response to an attack by the Islamic Republic of Iran against a United
States naval vessel in international waters of the Persian Gulf", namely the mining of the USS Samuel B. Roberts;
according to the United States, "This [was] but the latest in a series of offensive attacks and provocations Iranian
naval forces have taken against neutral shipping in the international waters of the Persian Gulf."
The Court notes that the attacks on the Salman and Nasr platforms were not an isolated operation, aimed simply at
the oil installations, as had been the case with the attacks of 19 October 1987; they formed part of a much more
extensive military action, designated "Operation Praying Mantis", conducted by the United States against what it
regarded as "legitimate military targets"; armed force was used, and damage done to a number of targets, including
the destruction of two Iranian frigates and other Iranian naval vessels and aircraft.
As in the case of the attack on the Sea Isle City, the first question is whether the United States has discharged the
burden of proof that the USSSamuel B. Roberts was the victim of a mine laid by Iran. The Court notes that mines
were being laid at the time by both belligerents in the Iran-Iraq war, so that evidence of other minelaying operations
by Iran is not conclusive as to responsibility of Iran for this particular mine. The main evidence that the mine struck
by the USS Samuel B. Roberts was laid by Iran was the discovery of moored mines in the same area, bearing serial
numbers matching other Iranian mines, in particular those found aboard the vessel Iran Ajr. This evidence is highly
suggestive, but not conclusive.
Furthermore, no attacks on United States-flagged vessels (as distinct from United States-owned vessels), additional
to those cited as justification for the earlier attacks on the Reshadat platforms, have been brought to the Court's
attention, other than the mining of the USS Samuel B. Roberts itself. The question is therefore whether that incident
sufficed in itself to justify action in self-defence, as amounting to an "armed attack". The Court does not exclude the
possibility that the mining of a single military vessel might be sufficient to bring into play the "inherent right of selfdefence"; but in view of all the circumstances, including the inconclusiveness of the evidence of Iran's responsibility
for the mining of the USS Samuel B. Roberts, the Court is unable to hold that the attacks on the Salman and Nasr
platforms have been shown to have been justifiably made in response to an "armed attack" on the United States by
Iran, in the form of the mining of the USS Samuel B. Roberts.
Criteria of necessity and proportionality (paras. 73-77)
The Court points out that in the present case a question of whether certain action is "necessary" arises both as an
element of international law relating to self-defence and on the basis of the actual terms of Article XX,
paragraph 1 (d), of the 1955 Treaty, already quoted, whereby the Treaty does "not preclude . . . measures . . .
necessary to protect [the] essential security interests" of either party. The Court therefore turns to the criteria of
necessity and proportionality in the context of international law on self-defence. One aspect of these criteria is the
nature of the target of the force used avowedly in self-defence.
The Court indicates that it is not sufficiently convinced that the evidence available supports the contentions of the
United States as to the significance of the military presence and activity on the Reshadat oil platforms; and it notes
that no such evidence is offered in respect of the Salman and Nasr complexes. However, even accepting those
contentions, for the purposes of discussion, the Court finds itself unable to hold that the attacks made on the
platforms could have been justified as acts of self-defence. In the case both of the attack on the Sea Isle City and the
mining of the USSSamuel B. Roberts, the Court is not satisfied that the attacks on the platforms were necessary to
respond to these incidents.

As to the requirement of proportionality, the attack of 19 October 1987 might, had the Court found that it was
necessary in response to the Sea Isle City incident as an armed attack committed by Iran, have been considered
proportionate. In the case of the attacks of 18 April 1988, however, they were conceived and executed as part of a
more extensive operation entitled "Operation Praying Mantis". As a response to the mining, by an unidentified
agency, of a single United States warship, which was severely damaged but not sunk, and without loss of life,
neither "Operation Praying Mantis" as a whole, nor even that part of it that destroyed the Salman and Nasr
platforms, can be regarded, in the circumstances of this case, as a proportionate use of force in self-defence.
Conclusion (para. 78)
The Court thus concludes from the foregoing that the actions carried out by United States forces against Iranian oil
installations on 19 October 1987 and 18 April 1988 cannot be justified, under Article XX, paragraph 1 (d), of the
1955 Treaty, as being measures necessary to protect the essential security interests of the United States, since those
actions constituted recourse to armed force not qualifying, under international law on the question, as acts of selfdefence, and thus did not fall within the category of measures contemplated, upon its correct interpretation, by that
provision of the Treaty.
Iran's claim under Article X, paragraph 1, of the 1955 Treaty (paras. 79-99)
Having satisfied itself that the United States may not rely, in the circumstances of the case, on the defence to the
claim of Iran afforded by Article XX, paragraph 1 (d), of the 1955 Treaty, the Court turns to that claim, made under
Article X, paragraph 1, of that Treaty, which provides that "Between the territories of the two High Contracting
Parties there shall be freedom of commerce and navigation."
In its Judgment of 12 December 1996 on the preliminary objection of the United States, the Court had occasion, for
the purposes of ascertaining and defining the scope of its jurisdiction, to interpret a number of provisions of the 1955
Treaty, including Article X, paragraph 1. It noted that the Applicant had not alleged that any military action had
affected its freedom of navigation, so that the only question to be decided was "whether the actions of the United
States complained of by Iran had the potential to affect freedom of commerce'" as guaranteed by that provision
(I.C.J. Reports 1996 (II), p. 817, para. 38). After examining the contentions of the Parties as to the meaning of the
word, the Court concluded that "it would be a natural interpretation of the word commerce' in Article X,
paragraph 1, of the Treaty of 1955 that it includes commercial activities in general - not merely the immediate act of
purchase and sale, but also the ancillary activities integrally related to commerce" (ibid., p. 819, para. 49).
In that decision, the Court also observed that it did not then have to enter into the question whether Article X,
paragraph 1, "is restricted to commerce between' the Parties" (I.C.J. Reports 1996 (II), p. 817, para. 44). However
it is now common ground between the Parties that that provision is in terms limited to the protection of freedom of
commerce "between the territories of the two High Contracting Parties". The Court observes that it is oil exports
from Iran to the United States that are relevant to the case, not such exports in general.
In the 1996 Judgment, the Court further emphasized that "Article X, paragraph 1, of the Treaty of 1955 does not
strictly speaking protect commerce' but freedom of commerce'", and continued: "Unless such freedom is to be
rendered illusory, the possibility must be entertained that it could actually be impeded as a result of acts entailing the
destruction of goods destined to be exported, or capable of affecting their transport and storage with a view to
export" (ibid., p. 819, para. 50). The Court also noted that "Iran's oil production, a vital part of that country's
economy, constitutes an important component of its foreign trade", and that "On the material now before the Court,
it is . . . not able to determine if and to what extent the destruction of the Iranian oil platforms had an effect upon the
export trade in Iranian oil . . ." (ibid., p. 820, para. 51). The Court concludes by observing that if, at the present stage
of the proceedings, it were to find that Iran had established that such was the case, the claim of Iran under Article X,
paragraph 1, could be upheld.
Before turning to the facts and to the details of Iran's claim, the Court mentions that the United States has not
succeeded, to the satisfaction of the Court, in establishing that the limited military presence on the platforms, and the
evidence as to communications to and from them, could be regarded as justifying treating the platforms as military
installations (see above). For the same reason, the Court is unable to regard them as outside the protection afforded
by Article X, paragraph 1, of the 1955 Treaty, as alleged by the United States.
The Court in its 1996 Judgment contemplated the possibility that freedom of commerce could be impeded not only
by "the destruction of goods destined to be exported", but also by acts "capable of affecting their transport and their
storage with a view to export" (I.C.J. Reports 1996 (II), p. 819, para. 50). In the view of the Court, the activities of
the platforms are to be regarded, in general, as commercial in nature; it does not, however, necessarily follow that
any interference with such activities involves an impact on the freedom of commerce between the territories of Iran
and the United States.
The Court considers that where a State destroys another State's means of production and transport of goods destined
for export, or means ancillary or pertaining to such production or transport, there is in principle an interference with

the freedom of international commerce. In destroying the platforms, whose function, taken as a whole, was precisely
to produce and transport oil, the military actions made commerce in oil, at that time and from that source,
impossible, and to that extent prejudiced freedom of commerce. While the oil, when it left the platform complexes,
was not yet in a state to be safely exported, the fact remains that it could be already at that stage destined for export,
and the destruction of the platform prevented further treatment necessary for export. The Court therefore finds that
the protection of freedom of commerce under Article X, paragraph 1, of the 1955 Treaty applied to the platforms
attacked by the United States, and the attacks thus impeded Iran's freedom of commerce. However, the question
remains whether there was in this case an interference with freedom of commerce "between the territories of the
High Contracting Parties".
The United States in fact contends further that there was in any event no breach of Article X, paragraph 1, inasmuch
as, even assuming that the attacks caused some interference with freedom of commerce, it did not interfere with
freedom of commerce "between the territories of the two High Contracting Parties". First, as regards the attack of 19
October 1987 on the Reshadat platforms, it observes that the platforms were under repair as a result of an earlier
attack on them by Iraq; consequently, they were not engaged in, or contributing to, commerce between the territories
of the Parties. Secondly, as regards the attack of 18 April 1988 on the Salman and Nasr platforms, it draws attention
to United States Executive Order 12613, signed by President Reagan on 29 October 1987, which prohibited, with
immediate effect, the import into the United States of most goods (including oil) and services of Iranian origin. As a
consequence of the embargo imposed by this Order, there was, it is suggested, no commerce between the territories
of the Parties that could be affected, and consequently no breach of the Treaty protecting it.
Iran has asserted, and the United States has not denied, that there was a market for Iranian crude oil directly
imported into the United States up to the issuance of Executive Order 12613 of 29 October 1987. Thus Iranian oil
exports did up to that time constitute the subject of "commerce between the territories of the High Contracting
Parties" within the meaning of Article X, paragraph 1, of the 1955 Treaty.
The Court observes that at the time of the attack of 19 October 1987 no oil whatsoever was being produced or
processed by the Reshadat and Resalat platforms, since these had been put out of commission by earlier Iraqi
attacks. While it is true that the attacks caused a major setback to the process of bringing the platforms back into
production, there was at the moment of the attacks on these platforms no ongoing commerce in oil produced or
processed by them.
The Court further observes that the embargo imposed by Executive Order 12613 was already in force when the
attacks on the Salman and Nasr platforms were carried out; and that, it has not been shown that the Reshadat and
Resalat platforms would, had it not been for the attack of 19 October 1987, have resumed production before the
embargo was imposed. The Court must therefore consider the significance of that Executive Order for the
interpretation and application of Article X, paragraph 1, of the 1955 Treaty.
The Court sees no reason to question the view sustained by Iran that, over the period during which the United States
embargo was in effect, petroleum products were reaching the United States, in considerable quantities, that were
derived in part from Iranian crude oil. It points out, however, that what the Court has to determine is not whether
something that could be designated "Iranian" oil entered the United States, in some form, during the currency of the
embargo; it is whether there was "commerce" in oil between the territories of Iran and the United States during that
time, within the meaning given to that term in the 1955 Treaty.
In this respect, what seems to the Court to be determinative is the nature of the successive commercial transactions
relating to the oil, rather than the successive technical processes that it underwent. What Iran regards as "indirect"
commerce in oil between itself and the United States involved a series of commercial transactions: a sale by Iran of
crude oil to a customer in Western Europe, or some third country other than the United States; possibly a series of
intermediate transactions; and ultimately the sale of petroleum products to a customer in the United States. This is
not "commerce" between Iran and the United States, but commerce between Iran and an intermediate purchaser; and
"commerce" between an intermediate seller and the United States.
The Court thus concludes, with regard to the attack of 19 October 1987 on the Reshadat platforms, that there was at
the time of those attacks no commerce between the territories of Iran and the United States in respect of oil produced
by those platforms and the Resalat platforms, inasmuch as the platforms were under repair and inoperative; and that
the attacks cannot therefore be said to have infringed the freedom of commerce in oil between the territories of the
High Contracting Parties protected by Article X, paragraph 1, of the 1955 Treaty, particularly taking into account the
date of entry into force of the embargo effected by Executive Order 12613. The Court notes further that, at the time
of the attacks of 18 April 1988 on the Salman and Nasr platforms, all commerce in crude oil between the territories
of Iran and the United States had been suspended by that Executive Order, so that those attacks also cannot be said
to have infringed the rights of Iran under Article X, paragraph 1, of the 1955 Treaty.

The Court is therefore unable to uphold the submissions of Iran, that in carrying out those attacks the United States
breached its obligations to Iran under Article X, paragraph 1, of the 1955 Treaty. In view of this conclusion, the
Iranian claim for reparation cannot be upheld.
*
The Court furthermore concludes that, in view of this finding on the claim of Iran, it becomes unnecessary to
examine the argument of the United States (referred to above) that Iran might be debarred from relief on its claim by
reason of its own conduct.
United States Counter-Claim (paras. 101-124)
The Court recalls that the United States has filed a counter-claim against Iran and refers to the corresponding final
submissions presented by the United States in the Counter-Memorial.
The Court further recalls that, by an Order of 10 March 1998 it found "that the counter-claim presented by the
United States in its Counter-Memorial is admissible as such and forms part of the current proceedings."
Iran's objections to the Court's jurisdiction and to the admissibility of the United States counter-claim (paras. 103116)
Iran maintains that the Court's Order of 10 March 1998 did not decide all of the preliminary issues involved in the
counter-claim presented by the United States; the Court only ruled on the admissibility of the United States counterclaim in relation to Article 80 of the Rules of Court, declaring it admissible "as such", whilst reserving the
subsequent procedure for further decision. Iran contends that the Court should not deal with the merits of the
counter-claim, presenting five objections.
The Court considers that it is open to Iran at this stage of the proceedings to raise objections to the jurisdiction of the
Court to entertain the counter-claim or to its admissibility, other than those addressed by the Order of
10 March 1998. It points out that this Order does not address any question relating to jurisdiction and admissibility
not directly linked to Article 80 of the Rules. The Court indicates that it will therefore proceed to address the
objections now presented by Iran.
The Court finds that it cannot uphold the first objection of Iran to the effect that the Court cannot entertain the
counter-claim of the United States because it was presented without any prior negotiation, and thus does not relate to
a dispute "not satisfactorily adjusted by diplomacy" as contemplated by Article XXI, paragraph 2, of the
1955 Treaty. The Court points out that it is established that a dispute has arisen between Iran and the United States
over the issues raised in the counter-claim; and that it is sufficient for the Court to satisfy itself that the dispute was
not satisfactorily adjusted by diplomacy before being submitted to the Court.
The Court finds that the second objection of Iran, according to which the United States is in effect submitting a
claim on behalf of third States or of foreign entities and has no title to do so, is devoid of any object and cannot be
upheld The Court recalls that the first submission presented by the United States in regard to its counter-claim
simply requests the Court to adjudge and declare that the alleged actions of Iran breached its obligations to the
United States, without mention of any third States.
In its third objection, Iran contends that the United States counter-claim extends beyond Article X, paragraph 1, of
the 1955 Treaty, the only text in respect of which the Court has jurisdiction, and that the Court cannot therefore
uphold any submissions falling outside the terms of paragraph 1 of that Article. The Court notes that the United
States, in presenting its final submissions on the counter-claim, no longer relies, as it did at the outset, on Article X
of the 1955 Treaty as a whole, but on paragraph 1 of that Article only, and, furthermore, recognizes the territorial
limitation of Article X, paragraph 1, referring specifically to the military actions that were allegedly "dangerous and
detrimental to commerce and navigation between the territories of the United States and the Islamic Republic of
Iran" (emphasis added) rather than, generally, to "military actions that were dangerous and detrimental to maritime
commerce". By limiting the scope of its counter-claim in its final submissions, the United States has deprived Iran's
third objection of any object, and the Court finds that it cannot therefore uphold it.
In its fourth objection Iran maintains that "the Court has jurisdiction to rule only on counter-claims alleging a
violation by Iran of freedom of commerce as protected under Article X (1), and not on counter-claims alleging a
violation of freedom of navigation as protected by the same paragraph". The Court notes nevertheless, that Iran
seems to have changed its position and recognized that the counter-claim could be founded on a violation of
freedom of navigation. The Court further observes that it also concluded in 1998 that it had jurisdiction to entertain
the United States Counter-Claim in so far as the facts alleged may have prejudiced the freedoms (in the plural)
guaranteed by Article X, paragraph 1, of the 1955 Treaty, i.e., freedom of commerce and freedom of navigation. This
objection of Iran thus cannot be upheld by the Court.
Iran presents one final argument against the admissibility of the United States counter-claim, which however it
concedes relates only to part of the counter-claim. Iran contends that the United States has broadened the subjectmatter of its claim beyond the submissions set out in its counter-claim by having, belatedly, added complaints

relating to freedom of navigation to its complaints relating to freedom of commerce, and by having added new
examples of breaches of freedom of maritime commerce in its Rejoinder in addition to the incidents already referred
to in the Counter-Claim presented with the Counter-Memorial.
The Court observes that the issue raised by Iran is whether the United States is presenting a new claim. The Court is
thus faced with identifying what is "a new claim" and what is merely "additional evidence relating to the original
claim". It is well established in the Court's jurisprudence that the parties to a case cannot in the course of
proceedings "transform the dispute brought before the Court into a dispute that would be of a different nature." The
Court recalls that it has noted in its Order of 10 March 1998 in the present case that the Counter-Claim alleged
"attacks on shipping, the laying of mines, and other military actions said to be dangerous and detrimental to
maritime commerce'" (I.C.J. Reports 1998, p. 204, para. 36). Subsequently to its Counter-Memorial and CounterClaim and to that Order of the Court, the United States provided detailed particulars of further incidents
substantiating, in its contention, its original claims. In the view of the Court, the United States has not, by doing so,
transformed the subject of the dispute originally submitted to the Court, nor has it modified the substance of its
counter-claim, which remains the same. The Court therefore cannot uphold the objection of Iran.
Merits of the United States Counter-Claim (paras. 119-123)
Having disposed of all objections of Iran to its jurisdiction over the counter-claim, and to the admissibility thereof,
the Court considers the counter-claim on its merits. It points out that, to succeed on its counter-claim, the United
States must show that: (a) its freedom of commerce or freedom of navigation between the territories of the High
Contracting Parties to the 1955 Treaty was impaired; and that (b) the acts which allegedly impaired one or both of
those freedoms are attributable to Iran.
The Court recalls that Article X, paragraph 1, of the 1955 Treaty does not protect, as between the Parties, freedom of
commerce or freedom of navigation in general. As already noted above, the provision of that paragraph contains an
important territorial limitation. In order to enjoy the protection provided by that text, the commerce or the navigation
is to be between the territories of the United States and Iran. The United States bears the burden of proof that the
vessels which were attacked were engaged in commerce or navigation between the territories of the United States
and Iran.
The Court then examines each of Iran's alleged attacks, in chronological order, from the standpoint of this
requirement of the 1955 Treaty and concludes that none of the vessels described by the United States as being
damaged by Iran's alleged attacks was engaged in commerce or navigation "between the territories of the two High
Contracting Parties". Therefore, the Court concludes that there has been no breach of Article X, paragraph 1, of the
1955 Treaty in any of the specific incidents involving these ships referred to in the United States pleadings.
The Court takes note that the United States has also presented its claim in a generic sense. It has asserted that as a
result of the cumulation of attacks on US and other vessels, laying mines and otherwise engaging in military actions
in the Persian Gulf, Iran made the Gulf unsafe, and thus breached its obligation with respect to freedom of
commerce and freedom of navigation which the United States should have enjoyed under Article X, paragraph 1, of
the 1955 Treaty.
The Court observes that, while it is a matter of public record that as a result of the Iran-Iraq war navigation in the
Persian Gulf involved much higher risks, that alone is not sufficient for the Court to decide that Article X,
paragraph 1, was breached by Iran. It is for the United States to show that there was an actual impediment to
commerce or navigation between the territories of the two High Contracting Parties. However, the United States has
not demonstrated that the alleged acts of Iran actually infringed the freedom of commerce or of navigation between
the territories of the United States and Iran. The Court also notes that the examination above of specific incidents
shows that none of them individually involved any interference with the commerce and navigation protected by the
1955 Treaty; accordingly the generic claim of the United States cannot be upheld.
The Court has thus found that the counter-claim of the United States concerning breach by Iran of its obligations to
the United States under Article X, paragraph 1, of the 1955 Treaty, whether based on the specific incidents listed, or
as a generic claim, must be rejected; there is therefore no need for it to consider, under this head, the contested issues
of attribution of those incidents to Iran. In view of the foregoing, the United States claim for reparation cannot be
upheld.
*
The full text of the operative paragraph (para. 125) reads as follows:
"For these reasons,
The court,
(1) By fourteen votes to two,
Finds that the actions of the United States of America against Iranian oil platforms on 19 October 1987 and
18 April 1988 cannot be justified as measures necessary to protect the essential security interests of the United

States of America under Article XX, paragraph 1 (d), of the 1955 Treaty of Amity, Economic Relations and Consular
Rights between the United States of America and Iran, as interpreted in the light of international law on the use of
force; finds further that the Court cannot however uphold the submission of the Islamic Republic of Iran that those
actions constitute a breach of the obligations of the United States of America under Article X, paragraph 1, of that
Treaty, regarding freedom of commerce between the territories of the parties, and that, accordingly, the claim of the
Islamic Republic of Iran for reparation also cannot be upheld;
IN FAVOUR: President Shi; Vice-President Ranjeva; Judges Guillaume, Koroma, Vereshchetin, Higgins, ParraAranguren, Kooijmans, Rezek, Buergenthal, Owada, Simma, Tomka; Judge ad hoc Rigaux;
AGAINST: Judges Al-Khasawneh, Elaraby;
(2) By fifteen votes to one,
Finds that the counter-claim of the United States of America concerning the breach of the obligations of the Islamic
Republic of Iran under Article X, paragraph 1, of the above-mentioned 1955 Treaty, regarding freedom of commerce
and navigation between the territories of the parties, cannot be upheld; and accordingly, that the counter-claim of the
United States of America for reparation also cannot be upheld.
IN FAVOUR: President Shi; Vice-President Ranjeva; Judges Guillaume, Koroma, Vereshchetin, Higgins, ParraAranguren, Kooijmans, Rezek, Al-Khasawneh, Buergenthal, Elaraby, Owada, Tomka; Judge ad hoc Rigaux;
AGAINST: Judge Simma.
___________
Annex to Summary 2003/2
Declaration of Judge Ranjeva
Subscribing to the conclusions set out in the Judgment, Judge Ranjeva raises the distinction arising in respect of the
same set of facts between the violation of freedom of commerce between the two Parties and the non-violation of
freedom of commerce between those Parties' territories.
In his declaration Judge Ranjeva draws attention to the fact that the Judgment pierces the veil of the dispute: the
Court sought to give priority to thorough consideration of the point of law to which the Parties ascribed the greatest
importance: whether the use of force was justified under Article XX, paragraph 1, of the 1955 Treaty or the principle
of self-defence under international law. The negative response given in the operative part itself reflects the Court's
decision to adopt an approach grounded on an analysis of the elements of the claim: its cause (cur) and its
subject (quid). It would have been appropriate under these circumstances to look to Article 38, paragraph 2, of the
Rules of Court and to refer directly to the concept of the cause of the claim. Another approach, masking the cause of
the claim, would have affected the subject of the litigants' true intent and favoured wholly artificial considerations or
purely logical ones, given the strategy employed in presenting the claims and arguments. In the present proceedings
the Respondent's attitude helped to forestall the theoretical debate concerning the tension between the consensual
basis of the Court's jurisdiction and the principle jura novit curia.
Declaration of Judge Koroma
In the declaration he appended to the Judgment, Judge Koroma stated that it was crucial and correct, in his view, that
the Court had determined that measures involving the use of force and purported to have been taken under the
Article of the 1955 Treaty relating to the maintenance or restoration of international peace and security, or necessary
to protect a State party's essential security interests, had to be judged on the basis of the principle of the prohibition
under international law of the use of force, as qualified by the right of self-defence. In other words, whether an
action alleged to be justified under the Article was or was not an unlawful measure had to be determined by
reference to the criteria of the United Nations Charter and general international law.
He agreed with the Court's decision, as reflected in the Judgment, that the actions carried out against the oil
installations were not lawful as measures necessary to protect the essential security interests of the United States,
since those actions constituted recourse to armed force not qualifying, under the United Nations Charter and general
international law, as acts of self-defence, and thus did not fall within the category of measures contemplated by the
1955 Treaty. Judge Koroma maintained that that finding constituted a reply to the submissions of the Parties and,
accordingly, the issue of non ultra petita did not arise.
He also subscribed to the Court's finding that the protection of freedom of commerce under the 1955 Treaty applied
to the oil installations and that the attacks, prima facie, impeded Iran's freedom of commerce within the meaning of
that expression in the text of the Treaty, but did not violate the freedom of commerce. Judge Koroma considered this
finding not devoid of significance.
Separate opinion of Judge Higgins
Judge Higgins has voted in favour of the dispositif, because she agrees that the claim of Iran that the United States
has violated Article X, paragraph 1, of the Treaty of Amity cannot be upheld.

However, she believes that this determination makes it unnecessary for the Court also to address in its Judgment the
question of whether the United States could justify its military attacks on the oil platforms under Article XX,
paragraph 1 (d), of the same Treaty. This is because the Court itself has said, in its Judgment on Preliminary
Objections in 1996, that Article XX, paragraph 1 (d), is in the nature of a defence. In the absence of any finding of a
breach by the United States of Article X, paragraph 1, the issue of a possible defence does not arise.
Judge Higgins observes that there are two particular reasons why there should not have been a finding on
Article XX, paragraph 1 (d), in thedispositif. The first is that the Court usually treats a defence as part of its
reasoning in deciding whether a Respondent has acted contrary to an international legal obligation. It is its
conclusion which normally constitutes the dispositif, and not its reasoning as to any possible defence or justification.
The second reason is that, given the consensual basis of jurisdiction, the Court is limited in the dispositif to making
findings upon matters that the Applicant has requested for determination. The final submissions of Iran do not
include any request for a determination on Article XX, paragraph 1 (d).
Even if it had been correct for the Court to deal with that clause, Judge Higgins believes that it should then have
interpreted the particular provisions in the light of general international law as to their specific terms. In her view,
the Court has not interpreted the actual terms of Article XX, paragraph 1 (d), but has essentially replaced them,
assessing the United States military action by reference to the law on armed attack and self-defence.
Finally, in Judge Higgins's opinion, in the handling of the evidence that would fall for consideration in any
examination of Article XX, paragraph 1 (d), the Court has not specified the standard of evidence to be met; nor dealt
with the evidence in sufficient detail; nor dealt with it in an even-handed manner.
Separate opinion of Judge Parra-Aranguren
Judge Parra-Aranguren declared that his vote for the operative part of the Judgment should not be understood as an
expression of agreement with each and every part of the reasoning followed by the Court in reaching its conclusions.
In particular he indicated his disagreement with the first sentence of paragraph 125 (1) stating that the Court:
"Finds that the actions of the United States of America against Iranian oil platforms on 19 October 1987 and
18 April 1988 cannot be justified as measures necessary to protect the essential security interests of the United
States of America under Article XX, paragraph 1 (d), of the 1955 Treaty of Amity, Economic Relations and Consular
Rights between the United States of America and Iran, as interpreted in the light of international law on the use of
force."
The reasons for his disagreement are the following:
The Court decided in its 12 December 1996 Judgment that: "it has jurisdiction, on the basis of Article XXI,
paragraph 2, of the Treaty of 1955, to entertain the claims made by the Islamic Republic of Iran under Article X,
paragraph 1, of that Treaty" (Oil Platforms (Islamic Republic of Iran v.United States of America), Preliminary
Objection, Judgment, I.C.J. Reports 1996 (II), p. 821, para. 55 (2)).
In its first and main submission Iran requests the Court to reject all contrary claims and submissions and to adjudge
and declare "That in attacking and destroying on 19 October 1987 and 18 April 1988 the oil platforms referred to in
Iran's Application, the United States breached its obligations to Iran under Article X, paragraph 1, of the Treaty of
Amity, and that the United States bears responsibility for the attacks."
Thus Judge Parra-Aranguren considered that the subject-matter of the dispute submitted by the Islamic Republic of
Iran (hereinafter Iran) to the Court was whether the military actions of the United States of America (hereinafter the
United States) breached its obligations to Iran under Article X, paragraph 1, of the Treaty of Amity, Economic
Relations and Consular Rights signed in Teheran on 15 August 1955 (hereinafter the 1955 Treaty), in force between
the parties. Therefore the task of the Court was to decide the claim presented by Iran, i.e., to examine and determine
whether the United States violated its obligations under Article X, paragraph 1, of the 1955 Treaty. In his opinion it
is only if the Court came to the conclusion that the United States breached its obligations under Article X,
paragraph 1, of the 1955 Treaty that it would have jurisdiction to enter into the consideration of the defence
advanced by the United States to justify its military actions against Iran, in particular whether they were justified
under Article XX, paragraph 1 (d), of the 1955 Treaty as necessary to protect its "essential security interests".
In the Court's view there are particular considerations militating in favour of an examination of the application of
Article XX, paragraph 1 (d), before turning to Article X, paragraph 1.
The first particular consideration militating in favour of reversing the order of examination of the Articles of the
1955 Treaty, as explained in paragraph 37 of the Judgment, is that: "It is clear that the original dispute between the
Parties related to the legality of the actions of the United States, in the light of international law on the use of force";
"At the time of those actions, neither Party made any mention of the 1955 Treaty", the United States contending that
"its attacks on the oil platforms were justified as acts of self-defence, in response to what it regarded as armed
attacks by Iran"; and "on that basis it gave notice of its action to the Security Council under Article 51 of the United
Nations Charter".

As the second particular consideration, paragraph 38 of the Judgment indicates that, in its Rejoinder, the United
States itself recognizes that "The self-defense issues presented in this case raise matters of the highest importance to
all members of the international community"; and that Iran also stresses the great importance of those issues.
In the opinion of Judge Parra-Aranguren there can be no doubt that matters relating to the use of force and to selfdefence are of the highest importance to all members of the international community. He also stated that, while
being perfectly well aware at that time of the two particular considerations indicated above, the Court in its 1996
Judgment expressly interpreted Article XX, paragraph 1 (d), of the 1955 Treaty "as affording only a defence on the
merits", concluding that it "is confined to affording the Parties a possible defence on the merits to be used should the
occasion arise" (Oil Platforms (Islamic Republic of Iran v. United States of America), Preliminary Objection,
Judgment, I.C.J. Reports 1996 (II), p. 811, para. 20).
Consequently, Judge Parra-Aranguren is convinced that there are no "particular considerations militating in favour
of an examination of the application of Article XX, paragraph 1 (d), before turning to Article X, paragraph 1". On
the contrary, there are strong considerations in favour of not doing so. The second sentence of paragraph 125 (1) of
the Judgment dismisses the claim presented by Iran because the Court came to the conclusion that the United States
had not violated Article X, paragraph 1, of the 1955 Treaty. In the opinion of Judge Parra-Aranguren, that is the end
of the story. Therefore he concluded that the Court did not have jurisdiction to examine the defences advanced by
the United States on the basis of Article XX, paragraph 1 (d), to justify its hypothetical violation of Article X,
paragraph 1, of the 1955 Treaty.
Separate opinion of Judge Kooijmans
Judge Kooijmans has voted in favour of the dispositif since he agreed with its substance. He is, however, of the view
that the Court's finding that the actions of the United States against the oil platforms cannot be justified as measures
necessary to protect its essential security interests is not part of the decision on the claim and therefore should not
have found a place in the dispositif. That creates the hazardous precedent of an obiter dictum in the operative part of
a judgment.
In his separate opinion Judge Kooijmans first gives a more detailed overview of the factual context than is presented
in the Judgment.
He then deals with the substance of the dispute before the Court, which deals with the question whether the United
States violated its obligation under Article X, paragraph 1, of the 1955 Treaty concerning freedom of commerce,
and not whether it used force in breach of the United Nations Charter and customary law.
He is of the view that Article XX, paragraph 1 (d), of the 1955 Treaty enabling the parties to take measures
necessary to protect their essential security interests, is not an exoneration clause but a freestanding provision and
that the Court therefore correctly concluded that it was free to choose whether it would first deal with Article X, or
with Article XX, paragraph 1 (d). But once the Court had found that the United States could not invoke Article XX,
it had to decide the case on grounds material to Article X, paragraph 1, itself. Its conclusion with regard to
Article XX, paragraph 1 (d), became irrelevant for the disposition on the claim and therefore should not have found
a place in the operative part of the Judgment.
Judge Kooijmans also dissociates himself from the way in which the Court puts the measures, invoked by the United
States as "necessary to protect its essential security interests", directly to the test of the general rules of law on the
use of force including the right to self-defence, thereby misinterpreting the scope of its jurisdiction.
In the last part of his opinion, Judge Kooijmans indicates what in his opinion would have been the proper approach
to deal with the legal aspects of Article XX, paragraph 1 (d). In this respect he follows the distinction made by the
Court in its 1986 Judgment in the Nicaragua case between a test of reasonableness with regard to the assessment of
the threat to the security risks and a legality test with regard to the necessity of the measures taken. Applying this
method and using the rules of general international law on the use of force as a means to interpret the meaning of
"necessary", Judge Kooijmans concludes that the actions against the oil platforms do not constitute measures which
can be deemed necessary to protect the essential security interests of the United States.
Dissenting opinion of Judge Al-Khasawneh
Judge Al-Khasawneh felt that the formal structure of the dispositif amalgamating as it does two distinct findings in
one paragraph was unorthodox and unfortunate. It also left Judge Al-Khasawneh with a difficult choice of accepting
the paragraph as a whole or leaving it. He felt compelled to dissent because he disagreed with the finding that the
United States was not in violation of its obligations under Article X, paragraph 1, of the 1955 Treaty on the freedom
of commerce. That finding was arrived at by unpersuasive reasoning that draws an artificial distinction between
protected commerce (direct commerce) and unprotected commerce (indirect commerce). He pointed out that
international trade law thresholds were ill-suited as a yardstick for treaty-protected commerce, moreover the
Judgment was unduly restrictive of the definition of freedom of commerce which included not only actual but also

potential commerce. Judge Al-Khasawneh felt also that the approach could not be supported on the basis of textual
analysis and was at variance with earlier jurisprudence.
Regarding the United States counter-claim which was rejected by the Court, Judge Al-Khasawneh felt this was a
consequence of the Court's narrow interpretation of protected commerce and felt it would be better if the Court had
upheld claim and counter-claim. The main difficulty with the United States claim was however the problem of
attribution to Iran.
Judge Al-Khasawneh felt that the Court should have been clearer in its use of language when it came to rejecting
United States claims that their actions against the oil platforms were justified by Article XX, paragraph 1 (d), of the
1955 Treaty as necessary measures to protect United States essential security interests. The use of force made it
inevitable to discuss these criterion in the language of necessity and proportionality which form part of the concept
of the non-use of force.
Separate opinion of Judge Buergenthal
Judge Buergenthal agrees with the Court's Judgment to the extent that it holds that the United States of America did
not breach Article X, paragraph 1, of the 1955 Treaty between it and Iran. He also agrees with the Court's decision
rejecting the counter-claim interposed by the United States against Iran. That decision of the Court is justified, in his
view, for the very reasons, mutatis mutandis, that led the Court to find that the United States did not breach the
obligations it owed Iran under Article X, paragraph 1, of the 1955 Treaty. But Judge Buergenthal dissents from the
Court's conclusion that the actions of the United States, in attacking certain Iranian oil platforms, cannot be justified
under Article XX, paragraph 1 (d), of the Treaty "as interpreted in the light of international law on the use of force".
He considers that this pronouncement has no place in the Judgment, much less in the operative part thereof.
Judge Buergenthal believes that the Court's Judgment, as it relates to Article XX, paragraph 1 (d), is seriously flawed
for the following reasons. First, it makes a finding with regard to Article XX, paragraph 1 (d), of the 1955 Treaty
that violates the non ultra petita rule, a cardinal rule governing the Court's judicial process, which does not allow the
Court to deal with a subject - here Article XX, paragraph 1 (d) - in the dispositif of its judgment that the parties to
the case have not, in their final submissions, asked it to adjudicate. Second, the Court makes a finding on a subject
which it had no jurisdiction to make under the dispute resolution clause - Article XXI, paragraph 2 - of the
1955 Treaty, that clause being the sole basis of the Court's jurisdiction in this case once it found that the United
States had not violated Article X, paragraph 1, of the Treaty. Third, even assuming that the Court had the requisite
jurisdiction to make the finding regarding Article XX, paragraph 1 (d), its interpretation of that Article in light of the
international law on the use of force exceeded its jurisdiction. Finally, Judge Buergenthal considers that the manner
in which the Court analyses the evidence bearing on its application of Article XX, paragraph 1 (d), is seriously
flawed.
Dissenting opinion of Judge Elaraby
Judge Elaraby voted against the first paragraph of the dispositif, essentially dissenting on three points.
First, the Court had jurisdiction to rule upon the legality of the use of force. Particularly that the Court held that the
United States use of force cannot be considered as legitimate self-defence in conformity with the "criteria applicable
to the question" which the Court identified as "the provisions of the Charter of the United Nations and customary
international law". United States action amounted to armed reprisals and their illegality as such should have been
noted. The Court missed an opportunity to reaffirm and clarify the law on the use of force in all its manifestations.
Second, the Court's refusal to uphold Iran's claim of a violation of Article X, paragraph 1, was based on unsound
premises in facts and in law. What is relevant is not whether the targeted platforms were producing oil at the time of
the attacks, but rather whether Iran as a whole was producing oil and exporting it to the United States. The test is
whether the freedom of commerce between the territories of the two Parties had been prejudiced. Once the embargo
was imposed, indirect commerce was allowed and in fact continued. The ordinary meaning of the Treaty in its
context supports the argument that its purview covers commerce in a broad sense. Also, Article X, paragraph 1, does
not exclude such indirect commerce. The ten days between the first attack and the imposition of the embargo would
have sufficed to declare that the freedom of commerce was prejudiced. Hence, the obligation emanating from Article
X, paragraph 1, was breached.
Third, the Court was right in examining Article XX, paragraph 1 (d), before Article X, paragraph 1. It had
jurisdiction to enhance its contribution to the progressive development of the law by ruling more exhaustively on the
use of force.
Separate opinion of Judge Owada
Judge Owada concurs in the final conclusion of the Court that neither the claims of the Applicant nor the counterclaim of the Respondent can be upheld, but he is not in a position to agree to all the points in the dispositif nor with
all the reasons leading to the conclusions. For this reason Judge Owada attaches his separate opinion, focusing only
on some salient points.

First, on the question of the basis of the decision of the Court, Judge Owada takes the view that the Court should
have examined Article X, paragraph 1, prior to Article XX, paragraph 1 (d). Article XX, paragraph 1 (d), constitutes
a defence on the merits of the claims of the Applicant on Article X, paragraph 1, and should for that reason be
considered only if and when the Court finds that there has been a breach of Article X, paragraph 1. The Court cannot
freely choose the ground upon which to pass judgment when its jurisdiction is limited to the examination of
Article X, paragraph 1.
Second, on the question of the scope of Article X, paragraph 1, Judge Owada is in general agreement with the
Judgment, but makes the point that the term "freedom of commerce" as used in the 1955 Treaty refers to
"unimpeded flow of mercantile transaction in goods and services between the territories of the Contracting Parties"
and cannot cover the activities of the oil platforms. Apart from the factual ground on which the Judgment is based,
the Court for this reason cannot uphold the claim that the "freedom of commerce" in Article X, paragraph 1, has
been breached.
Third, on the question of the scope of Article XX, paragraph 1 (d), which in his view the Court does not have to take
up in view of its finding on Article X, paragraph 1, Judge Owada is of the opinion that the interpretation and
application of Article XX, paragraph 1 (d), and the question of the self-defence under international law in general
are not synonymous and that the latter as such is not the task before the Court. The examination of the latter problem
by the Court should be confined to what is necessary for the interpretation and application of Article XX,
paragraph 1 (d), in view of the limited scope of the jurisdiction of the Court.
Finally, Judge Owada raises the question of asymmetry in the production of evidence in this case, which leads to a
difficult situation for the Court in verifying the facts involved. While accepting the basic principle on
evidence, actori incumbit onus probandi, Judge Owada would have liked to see the Court engage in much more indepth probing into the problem of ascertaining the facts of the case, if necessary proprio motu.
Separate opinion of Judge Simma
Judge Simma starts his separate opinion by explaining why he voted in favour of the first part of the dispositif of the
Judgment even though he agrees with the Court's treatment of only one of the two issues dealt with therein, namely
that of the alleged security interests of the United States measured against the international law on self-defence. As
to the remaining parts of the dispositif, Judge Simma can neither agree with the Court's decision that the United
States attacks on the oil platforms ultimately did not infringe upon Iran's Treaty right to respect for its freedom of
commerce with the United States, nor does Judge Simma consider that the way in which the Court disposed of the
so-called "generic" counter-claim of the United States was correct. Rather, in Judge Simma's view this counter-claim
ought to have been upheld. Regarding the part of the dispositif devoted to this counter-claim, Judge Simma thus had
no choice but to dissent. The reason why Judge Simma did not also dissent from the first part of thedispositif (and
prefers to call his opinion a "separate" and not a "dissenting" one) even though he concurs with the Court's decisions
on only the first of the two issues decided therein, is to be seen in a consideration of judicial policy: Judge Simma
welcomes that the Court has taken the opportunity, offered by United States reliance on Article XX of the 1955
Treaty, to state its view on the legal limits on the use of force at the moment when these limits find themselves under
the greatest stress. Although Judge Simma is of the view that the Court has fulfilled what is nothing but its duty in
this regard with inappropriate restraint, Judge Simma does not want to disassociate himself from what after all does
result in a confirmation, albeit too hesitant, of the jus cogens of the United Nations Charter.
Since matters relating to the United States use of force are at the heart of the case, Judge Simma finds the
Judgment's approach of dealing with Article XX before turning to Article X of the 1955 Treaty acceptable. On the
other hand, what the Court should have had the courage to do was to restate, and thus to reconfirm, the fundamental
principles of the law of the United Nations as well as customary international law on the use of force in a way
conforming to the standard of vigour and clarity set by the Court already in the Corfu Channel case of half a century
ago. This, unfortunately, the Court has not done.
In Judge Simma's view the Court could have clarified what kind of defensive countermeasures would have been
available to the United States: in Judge Simma's view, hostile military action not reaching the threshold of an armed
attack within the meaning of Article 51 of the United Nations Charter, like that by Iran in the present case, may be
countered by proportionate and immediate defensive measures equally of a military character. However, the United
States actions against the oil platforms did not qualify as such proportionate countermeasures.
In Judge Simma's view, the Court's treatment of Article X on freedom of commerce between the territories of the
Parties follows a step-by-step approach which he considers correct up to a certain point but which then turns into
wrong directions: first, the platforms attacked in October 1987 could not lose their protection under Article X
through being temporarily inoperative because, according to Judge Simma, the freedom under the Treaty embraces
also the possibility of commerce in the future. Secondly, according to Judge Simma, the indirect commerce in
Iranian oil going on during the time of the United States embargo is also to be regarded as protected by the Treaty.

Turning to the United States counter-claim, Judge Simma finds the way in which the Court has dealt with it blatantly
inadequate, particularly with regard to the so-called generic counter-claim which, in Judge Simma's view, should
have been upheld. Judge Simma then sets out to develop the arguments, put forward somewhat unpersuasively by
the United States, in support of the generic counter-claim. The fact that in the present instance (unlike in
the Nicaragua case), it was two States which created the situation adverse to neutral shipping in the Gulf, is not
determinant. According to Judge Simma, all that matters with regard to the generic counter-claim is that Iran was
responsible for a significant portion of the actions impairing the freedom of commerce and navigation between the
two countries; it is not necessary to determine the particular extent to which Iran was responsible for them. Neither
could it be argued that all the impediments to free commerce and navigation which neutral ships faced in the Gulf
were caused by legitimate acts of war carried out by the two belligerents, and that therefore neutral shipping entered
the maritime areas affected by the Gulf war at its own risk. In Judge Simma's view, Iran's actions constituted a
violation of Article X of the 1955 Treaty; an impediment on the freedom of commerce and navigation caused by
those actions is evidenced by the increase in labour, insurance, and other costs resulting for the participants in
commerce between the countries during the relevant period.
Judge Simma then turns to refuting the argument that the acts alleged to have constituted an impediment to the
freedom of commerce and navigation under the Treaty cannot be attributed to Iran with certainty and that therefore it
is impossible to find Iran responsible for those acts. Judge Simma demonstrates that a principle of joint-and-several
responsibility can be developed from domestic legal systems as a general principle of law by which the dilemma in
the present case could have been overcome.
Finally, Judge Simma argues that the so-called "indispensable-third-party" doctrine consecutively accepted and
rejected by the Court's earlier jurisprudence would not have stood in the way of accepting the United States counterclaim as well-founded.
Separate opinion of Judge Rigaux
The operative part of the Judgment comprises two points: in the second it is concluded that the counter-claim of the
United States of America must be rejected; the first is divided into two parts, the second of which rejects the claim
of the Islamic Republic of Iran for reparation while in the first the American attacks on the oil platforms are held not
to have satisfied the requirements of the applicable provisions of the 1955 Treaty, as interpreted in the light of
international law on the use of force.
Judge Rigaux voted in favour of the two points in the operative part, with some reservations as to the first. The two
clauses constituting it would appear inconsistent: it is a contradiction both to hold that use of armed force against the
oil platforms was unlawful and to reject the claim for reparation for the injury caused by the unlawful act. However,
the Court's affirmation of the principle prohibiting the use of armed force except in those situations where
contemplated by international law appeared to Judge Rigaux sufficiently important that he felt obliged to vote in
favour of it, notwithstanding the refusal to uphold Iran's rightful claim.
The reasoning supporting the rejections of the two actions contains two elements common to them, i.e., the
interpretation given to the notion of "indirect" commerce and the idea that "future" commerce falls outside the scope
of freedom of commerce. Judge Rigaux finds those two elements debatable.
Case Concerning Questions of Interpretation and Application of the 1971 Montreal Convention Arising from the
Aerial Incident at Lockerbie case brief
Case Concerning Questions of Interpretation and Application of the 1971 Montreal Convention Arising from the
Aerial Incident at Lockerbie case summary
(Libya v. United States)
1992 I.C.J. Rep. 114 (April 14)
FACTS
-An airplane exploded over Scotland, killing many American citizens.
-The US and the UK traced the bomb back to two Libyans.
-The Libyan government refused to extradite the Libyans for trial.
-Libya argued that under the Convention for the Suppression of Unlawful Acts against Civil
Aviation (the Montreal Convention) (974 U.N.T.S. 177 (1971)), Libya could either extradite or
prosecute the suspects themselves.
-Libya chose to prosecute the suspects themselves.
-The United States and the UK accused the Libyans of "Forum Shopping" and took the case to
the United Nations Security Council (UNSC).

-UNSC issued two resolutions (UNSC Resolutions 731/748). These urged Libya to hand over the
bombing suspects.
-UNSC also embargoes arms sales to Libya, told member states to close offices of the Libyan
Airlines.
-Coercive powers are detailed in Chapter VII of the United Nations Charter.
ANALYSIS
How did the UNSC justify the resolutions?
-Article 39 allows the UNSC to take enforcement actions to restore international peace. You
could argue that international terrorism is a breach of the peace.
-But how could you say that Libya's exercising their rights under a multilateral treaty is a threat
to the peace?
-Libya went to the International Court of Justice to protest the UNSC resolutions.
-Libya claimed that it was fully within its rights under the Montreal Convention to try the
suspects in Libya and not have to turn them over.
-The I.C.J. found that the UNSC resolutions were permissible, and the Libya must hand over
the suspects.
-Basically, the I.C.J. found that UNSC resolutions trumped everything else, even multilateral
treaties.
-Article 103 of the United Nations Charter says, "In the event of a conflict between the obligations
of the Members of the United Nations under the present Charter and their obligations under
any other international agreement, their obligations under the present Charter shall prevail."
-Article 25 says that member States must follow UNSC resolutions.
CASE CONCERNING ELETTRONICA SICULA S.P.A. (ELSI)
Judgment of 20 July 1989
In its judgment, the Chamber of the Court formed to deal with the case concerning Elettronica Sicula S.p.A. (ELSI)
rejected an Italian objection to the admissibility of the Application and found that Italy had not committed any of the
breaches, alleged by the United States, of the Treaty of Friendship, Commerce and Navigation between the Parties
signed at Rome on 2 February 1989 or the Agreement Supplementing that Treaty. It accordingly rejected the claim to
reparation made by the United States.
The Chamber was composed as follows: President Ruda; Judges Oda, Ago, Schwebel and Sir Robert Jennings.
*
**
The complete text of the operative clause of the judgment is as follows:
"THE CHAMBER,
"(1) Unanimously,
"Rejects the objection presented by the Italian Republic to the admissibility of the Application filed in this case by
the United States of America on 6 February 1987;
"(2) By four votes to one,
"Finds that the Italian Republic has not committed any of the breaches, alleged in the said Application, of the Treaty
of Friendship, Commerce and Navigation between the Parties signed at Rome on 2 February 1948, or of the
Agreement Supplementing that Treaty signed by the Parties at Washington on 26 September 1951.
"IN FAVOUR: President Ruda; Judges Oda, Ago and Sir Robert Jennings.
"AGAINST: Judge Schwebel.
"(3) By four votes to one,
"Rejects, accordingly, the claim for reparation made against the Republic of Italy by the United States of America.
"IN FAVOUR: President Ruda; Judges Oda, Ago and Sir Robert Jennings.
"AGAINST: Judge Schwebel."
*
**
Judge Oda appended a separate opinion and Judge Schwebel a dissenting opinion to the Judgment.
In these opinions the Judges concerned stated and explained the positions they adopted in regard to certain points
dealt with in the Judgment.
*

**
Proceedings and Submissions of the Parties (paras. 1-12)
The Chamber begins by recapitulating the various stages of the proceedings, recalling that the present case concerns
a dispute in which the United States of America claims that Italy, by its actions with respect to an Italian
company, Elettronica Sicula S.p.A. (ELSI), which was wholly owned by two United States corporations, the
Raytheon Company ("Raytheon") and the Machlett Laboratories Incorporated ("Machlett"), has violated certain
provisions of the Treaty of Friendship, Commerce and Navigation between the two Parties, concluded in Rome on 2
February 1948 ("the FCN Treaty") and the Supplementary Agreement thereto concluded on 26 September 1951.
Origins and development of the dispute (paras. 13-45)
In 1967, Raytheon held 99.16% of the shares in ELSI, the remaining 0.84% being held by Machlett, which was a
wholly owned subsidiary of Raytheon. ELSI was established in Palermo, Sicily, where it had a plant for the
production of electronic components; in 1967 it had a workforce of slightly under 900 employees. Its five major
product lines were microwave tubes, cathode-ray tubes, semiconductor rectifiers, X-ray tubes and surge arresters.
From 1964 to 1966 ELSI made an operating profit, but this was insufficient to offset its debt expense or accumulated
losses. In February 1967, according to the United States, Raytheon began taking steps to endeavour to make ELSI
self-sufficient.
At the same time numerous meetings were held between February 1967 and March 1968 with Italian officials and
companies, the purpose of which was stated to be to find for ELSI an Italian partner with economic power and
influence and to explore the possibilities of other governmental support.
When it became apparent that these discussions were unlikely to lead to a mutually satisfactory arrangement,
Raytheon and Machlett, as shareholders in ELSI, began seriously to plan to close and liquidate ELSI to minimize
their losses. An asset analysis was prepared by the Chief Financial Officer of Raytheon showing the expected
position on 31 March 1968. This showed the book value of ELSI's assets as 18,640 million lire, as explained in his
affidavit filed in these proceedings, it also showed "the minimum prospects of recovery of values which we could be
sure of, in order to ensure an orderly liquidation process", and the total realizable value of the assets on this basis
(the "quick-sale value") was calculated to be 10,838.8 million lire. The total debt of the company at 30 September
1967 was 13,123.9 million lire. The "orderly liquidation" contemplated was an operation for the sale of ELSI's
business or its assets, en bloc or separately, and the discharge of its debts, fully or otherwise out of the proceeds, the
whole operation being under the control of ELSI's own management. It was contemplated that all creditors would be
paid in full, or, if only the "quick-sale value" was realized, the unsecured major creditors would receive about 50 per
cent of their claims, and that this would be acceptable as more favourable than what could be expected in a
bankruptcy.
On 28 March 1968, it was decided that the Company cease operations. Meetings with Italian officials however
continued, at which the Italian authority rigorously pressed ELSI not to close the plant and not to dismiss the
workforce. On 29 March 1968 letters of dismissal were mailed to the employees of ELSI.
On 1 April 1968 the Mayor of Palermo issued an order, effective immediately, requisitioning ELSI's plant and
related assets for a period of six months.
The Parties disagree over whether, immediately prior to the requisition order, there had been any occupation of
ELSI's plant by the employees, but it is common ground that the plant was so occupied during the period
immediately following the requisition.
On 19 April 1968 ELSI brought an administrative appeal against the requisition to the Prefect of Palermo.
A bankruptcy petition was filed by ELSI on 26 April 1968, referring to the requisition as the reason why the
company had lost control of the plant and could not avail itself of an immediate source of liquid funds, and
mentioning payments which had become due and could not be met. A decree of bankruptcy was issued by
the Tribunale di Palermo on 16 May 1968.
The administrative appeal filed by ELSI against the requisition order was determined by the Prefect of Palermo by a
decision given on 22 August 1969, by which he annulled the requisition order. The Parties are at issue on the
question whether this period of time was or was not normal for an appeal of this character.
In the meantime, on 16 June 1970 the trustee in bankruptcy had brought proceedings in the Court of Palermo against
the Minister of the Interior of Italy and the Mayor of Palermo for damages resulting from the requisition. The Court
of Appeal of Palermo awarded damages for loss of use of the plant during the period of the requisition.
The bankruptcy proceedings closed in November 1985. Of the amount realized, no surplus remained for distribution
to the shareholders, Raytheon and Machlett.
I. Jurisdiction of the Court and Admissibility of the Application; Rule of Exhaustion of Local Remedies (pares. 4863)

An objection to the admissibility of the present case was entered by Italy in its Counter-Memorial, on the ground of
an alleged failure of the two United States corporations, Raytheon and Machlett, on whose behalf the United States
claim is brought, to exhaust the local remedies available to them in Italy. The Parties agreed that this objection be
heard and determined in the framework of the merits.
The United States questioned whether the rule of the exhaustion of local remedies could apply at all, as Article
XXVI (the jurisdictional clause) of the FCN Treaty is categorical in its terms, and unqualified by any reference to
the local remedies rule. It also argued that in so far as its claim is for a declaratory judgment of a direct injury to the
United States by infringement of its rights under the FCN Treaty, independent of the dispute over the alleged
violation in respect of Raytheon and Machlett, the local remedies rule is inapplicable. The Chamber rejects these
arguments. The United States also observed that at no time until the filing of the Respondent's Counter-Memorial in
the present proceedings did Italy suggest that Raytheon and Machlett should sue in the Italian courts on the basis of
the Treaty, and argued that this amounts to an estoppel. The Chamber however found that there are difficulties in
constructing an estoppel from a mere failure to mention a matter at a particular point in somewhat desultory
diplomatic exchanges.
On the question whether local remedies were, or were not exhausted by Raytheon and Machlett, the Chamber notes
that the damage claimed in this case to have been caused to Raytheon and Machlett is said to have resulted from the
"losses incurred by ELSI's owners as a result of the involuntary change in the manner of disposing of ELSI's assets":
and it is the requisition order that is said to have caused this change, and which is therefore at the core of the United
States complaint. It was therefore right that local remedies be pursued by ELSI itself.
After examining the action taken by ELSI in its appeal against the requisition order and, later, by the trustee in
bankruptcy, who claimed damages for the requisition, the Chamber considers that the municipal courts had been
fully seized of the matter which is the substance of the Applicant's claim before the Chamber. Italy however
contended that it was possible to cite the provision of the treaties themselves before the municipal courts, in
conjunction with Article 2043 of the Italian Civil Code, which was never done.
After examining the jurisprudence cited by Italy, the Chamber concludes that it is impossible to deduce what the
attitude of the Italian courts would have been if such a claim had been brought. Since it was for Italy to show the
existence of a local remedy, and as Italy has not been able to satisfy the Chamber that there clearly remained some
remedy which Raytheon and Machlett, independently of ELSI, and of ELSI's trustee in bankruptcy, ought to have
pursued and exhausted, the Chamber rejects the objection of non-exhaustion of local remedies.
II. Alleged Breaches of the Treaty of Friendship, Commerce and Navigation and its Supplementary
Agreement (paras. 64-67)
Paragraph I of the United States Final Submissions claims that:
"(1) The Respondent violated the international legal obligations which it undertook by the Treaty of Friendship,
Commerce and Navigation between the two countries, and the Supplement thereto, and in particular, violated
Articles III, V, VII of the Treaty and Article I of the Supplement . . ."
The acts of the Respondent which are alleged to violate its treaty obligations were described by the Applicant's
counsel in terms which it is convenient to cite here:
"First, the Respondent violated its legal obligations when it unlawfully requisitioned the ELSI plant on 1 April 1968
which denied the ELSI stockholders their direct right to liquidate the ELSI assets in an orderly fashion. Second, the
Respondent violated its obligations when it allowed ELSI workers to occupy the plant. Third, the Respondent
violated its obligations when it unreasonably delayed ruling on the lawfulness of the requisition for 16 months until
immediately after the ELSI plant, equipment and work-in-process had all been acquired by ELTEL. Fourth and
finally, the Respondent violated its obligations when it interfered with the ELSI bankruptcy proceedings, which
allowed the Respondent to realize its previously expressed intention of acquiring ELSI for a price far less than its
fair market value."
The most important of these acts of the Respondent which the Applicant claims to have been in violation of the FCN
Treaty is the requisition of the ELSI plant by the Mayor of Palermo on 1 April 1968, which is claimed to have
frustrated the plan for what the Applicant terms an "orderly liquidation" of the company. It is fair to describe the
other impugned acts of the Respondent as ancillary to this core claim based on the requisition and its effects.
A. Article III of FCN Treaty (paras. 68-101)
The allegation by the United States of a violation of Article III of the FCN Treaty by Italy relates to the first sentence
of the second paragraph, which provides:
"The nationals, corporations and associations of either High Contracting Party shall be permitted, in conformity with
the applicable laws and regulations within the territories of the other High Contracting Party, to organize, control
and manage corporations and associations of such other High Contracting Party for engaging in commercial,
manufacturing, processing, mining, educational, philanthropic, religious and scientific activities."

In terms of the present case, the effect of this sentence is that Raytheon and Machlett are to be permitted, in
conformity with the applicable laws and regulations within the territory of Italy, to organize, control and manage
ELSI. The claim of the United States focuses on the right to "control and manage". The Chamber considers whether
there is a violation of this Article if, as the United States alleges, the requisition had the effect of depriving ELSI of
both the right and practical possibility of selling off its plant and assets for satisfaction of its liabilities to its creditors
and satisfaction of its shareholders.
A requisition of this kind must normally amount to a deprivation, at least in important part, of the right to control
and manage. The reference in Article III to conformity with "the applicable laws and regulations" cannot mean that,
if an act is in conformity with the municipal law and regulations (as, according to Italy, the requisition was), that
would of itself exclude any possibility that it was an act in breach of the FCN Treaty. Compliance with municipal
law and compliance with the provisions of a treaty are different questions.
The treaty right to be permitted to control and manage cannot be interpreted as a warranty that the normal exercise
of control and management shall never be disturbed; every system of law must provide, for example, for
interferences with the normal exercise of rights during public emergencies and the like.
The requisition was found both by the Prefect and by the Court of Appeal of Palermo not to have been justified in
the applicable local law; if therefore, as seems to be the case, it deprived Raytheon and Machlett of what were at the
moment their most crucial rights to control and manage, it might appear prima facie a violation of Article III,
paragraph 2.
According to the Respondent, however, Raytheon and Machlett were, because of ELSI's financial position, already
naked of those very rights of control and management of which they claim to have been deprived. The Chamber has
therefore to consider what effect, if any, the financial position of ELSI may have had in that respect, first as a
practical matter, and then also as a question of Italian law.
The essence of the Applicant's claim has been throughout that Raytheon and Machlett, which controlled ELSI, were
by the requisition deprived of the right, and of the practical possibility, of conducting an orderly liquidation of
ELSI's assets, the plan for which liquidation was however very much bound up with the financial state of ELSI.
After noting that the orderly liquidation was an alternative to the aim of keeping the place going, and that it was
hoped that the threat of closure might bring pressure to bear on the Italian authorities, and that the Italian authorities
did not come to the rescue on acceptable terms, the Chamber observes that the crucial question is whether Raytheon,
on the eve of the requisition, and after the closure of the plant and the dismissal, on 29 March 1968, of the majority
of the employees, was in a position to carry out its orderly liquidation plan, even apart from its alleged frustration by
the requisition.
The successful implementation of a plan of orderly liquidation would have depended upon a number of factors not
under the control of ELSI's management. Evidence has been produced by the Applicant that Raytheon was prepared
to supply cash flow and other assistance necessary to effect the orderly liquidation, and the Chamber sees no reason
to question that Raytheon had entered or was ready to enter into such a commitment; but other factors give rise to
some doubt.
After considering these other factors governing the matter - the preparedness of creditors to co-operate in an orderly
liquidation, especially in case of inequality among them, the likelihood of the sale of the assets realizing enough to
pay all creditors in full, the claims of the dismissed employees, the difficulty of obtaining the best price for assets
sold with a minimum delay, in view of the trouble likely at the plant when the closure plans became known, and the
attitude of the Sicilian administration - the Chamber concludes that all these factors point toward a conclusion that
the feasibility at 31 March 1968 of a plan of orderly liquidation, an essential link in the chain of reasoning upon
which the United States claim rests, has not been sufficiently established.
Finally there was, beside the practicalities, the position in Italian bankruptcy law. If ELSI was in a state of legal
insolvency at 31 March 1968, and if, as contended by Italy, a state of insolvency entailed an obligation on the
company to petition for its own bankruptcy, then the relevant rights of control and management would not have
existed to be protected by the FCN Treaty. While not essential to the Chamber's conclusion stated above, an
assessment of ELSI's solvency as a matter of Italian law is thus highly material.
After considering the decision of the Prefect and the judgments of the courts of Palermo, the Chamber observes that
whether their findings are to be regarded as determinations as a matter of Italian law that ELSI was insolvent on 31
March 1968, or as findings that the financial position of ELSI on that date was so desperate that it was past saving,
makes no difference; they reinforce the conclusion that the feasibility of an orderly liquidation is not sufficiently
established.
If, therefore, the management of ELSI, at the material time, had no practical possibility of carrying out successfully
a scheme of orderly liquidation under its own management, and may indeed already have forfeited any right to do so
under Italian law, it cannot be said that it was the requisition that deprived it of this faculty of control and

management. There were several causes acting together that led to the disaster to ELSI, of which the effects of the
requisition might no doubt have been one. The possibility of orderly liquidation is purely a matter of speculation.
The Chamber is therefore unable to see here anything which can be said to amount to a violation by Italy of Article
III, paragraph 2, of the FCN Treaty.
B. Article V, paragraphs 1 and 3, of FCN Treaty (paras. 102-112)
The Applicant's claim under paragraphs 1 and 3 of Article V of the FCN Treaty is concerned with protection and
security of nationals and their property.
Paragraph 1 of Article V provides for "the most constant protection and security" for nationals of each High
Contracting Party, both "for their persons and property"; and also that, in relation to property, the term "nationals"
shall be construed to "include corporations and associations"; and in defining the nature of the protection, the
required standard is established by a reference to "the full protection and security required by international law".
Paragraph 3 elaborates this notion of protection and security further, by requiring no less than the standard accorded
to the nationals, corporations and associations of the other High Contracting Party, and no less than that accorded to
the nationals, corporations and associations of any third country. There are, accordingly, three different standards of
protection, all of which have to be satisfied.
A breach of these provisions is seen by the Applicant to have been committed when the Respondent "allowed ELSI
workers to occupy the plant". While noting the contention of Italy that the relevant "property", the plant in Palermo,
belonged not to Raytheon and Machlett but to the Italian company ELSI, the Chamber examines the matter on the
basis of the United States argument that the "property" to be protected was ELSI itself.
The reference in Article V to the provision of "constant protection and security" cannot be construed as the giving of
a warranty that property shall never in any circumstances be occupied or disturbed. In any event, considering that it
is not established that any deterioration in the plant and machinery was due to the presence of the workers, and that
the authorities were able not merely to protect the plant but even in some measure to continue production, the
protection provided by the authorities could not be regarded as falling below "the full protection and security
required by international law"; or indeed as less than the national or third-State standards. The mere fact that the
occupation was referred to by the Court of Appeal of Palermo as unlawful does not, in the Chamber's view,
necessarily mean that the protection afforded fell short of the national standard to which the FCN Treaty refers. The
essential question is whether the local law, either in its terms or in its application, has treated United States nationals
less well than Italian nationals. This, in the opinion of the Chamber, has not been shown. The Chamber must,
therefore, reject the charge of any violation of Article V, paragraphs 1 and 3.
The Applicant sees a further breach of Article V, paragraphs 1 and 3, of the FCN Treaty, in the time taken - 16
months - before the Prefect ruled on ELSI's administrative appeal against the Mayor's requisition order. For the
reasons already explained in connection with Article III, the Chamber rejects the contention that, had there been a
speedy decision by the Prefect, the bankruptcy might have been avoided.
With regard to the alternative contention that Italy was obliged to protect ELSI from the deleterious effects of the
requisition, inter alia by providing an adequate method of overturning it, the Chamber observes that under Article V
the "full protection and security" must conform to the minimum international standard, supplemented by the criteria
of national treatment and most-favoured-nation treatment. It must be doubted whether in all the circumstances, the
delay in the Prefect's ruling can be regarded as falling below the minimum international standard. As regards the
contention of failure to accord a national standard of protection, the Chamber, though not entirely convinced by the
Respondent's contention that such a lengthy delay as in ELSI's case was quite usual, is nevertheless not satisfied that
a "national standard" of more rapid determination of administrative appeals has been shown to have existed. It is
therefore unable to see in this delay a violation of paragraphs 1 and 3 of Article V of the FCN Treaty.
C. Article V, paragraph 2, of FCN Treaty (paras. 113-119)
The first sentence of Article V, paragraph 2, of the FCN Treaty provides as follows:
"2. The property of nationals, corporations and associations of either High Contracting Party shall not be taken
within the territories of the other High Contracting Party without due process of law and without the prompt
payment of just and effective compensation."
The Chamber notes a difference in terminology between the two authentic texts (English and Italian); the word
"taking" is wider and looser than "expropriazione".
In the contention of the United States, first, both the Respondent's act of requisitioning the ELSI plant and its
subsequent acts in acquiring the plant assets, and work-in-progress, singly and in combination constitute takings of
property without due process of law and just compensation. Secondly, the United States claims that, by interference
with the bankruptcy proceedings, the Respondent proceeded through the ELTEL company to acquire the ELSI plant
and assets for less than fair market value.

The Chamber observes that the charge based on the combination of the requisition and subsequent acts is really that
the requisition was the beginning of a process that led to the acquisition of the bulk of the assets of ELSI for far less
than market value. What is thus alleged by the Applicant, if not an overt expropriation, might be regarded as a
disguised expropriation; because, at the end of the process, it is indeed tide to property itself that is at stake. The
United States had, however, during the oral proceedings, disavowed any allegation that the Italian authorities were
parties to a conspiracy to bring about the change of ownership.
Assuming, though without deciding, that "expropriazione" might be wide enough to include a disguised
expropriation, account has further to be taken of the Protocol appended to the FCN Treaty, extending Article V,
paragraph 2, to "interests held directly or indirectly by nationals" of the Parties.
The Chamber finds that it is not possible in this connection to ignore ELSI's financial situation and the consequent
decision to close the plant and put an end to the company's activities. It cannot regard any of the acts complained of
which occurred subsequent to the bankruptcy as breaches of Article V, paragraph 2, in the absence of any evidence
of collusion, which is now no longer even alleged. Even if it were possible to see the requisition as having been
designed to bring about bankruptcy, as a step towards disguised expropriation, then, if ELSI was already under an
obligation to file a petition of bankruptcy, or in such a financial state that such a petition could not be long delayed,
the requisition was an act of supererogation. Furthermore this requisition, independently of the motives which
allegedly inspired it, being by its terms for a limited period, and liable to be overturned by administrative appeal,
could not, in the Chamber's view, amount to a "taking" contrary to Article V unless it constituted a significant
deprivation of Raytheon and Machlett's interest in ELSI's plant; as might have been the case if, while ELSI remained
solvent, the requisition had been extended and the hearing of the administrative appeal delayed. In fact the
bankruptcy of ELSI transformed the situation less than a month after the requisition. The requisition could therefore
only be regarded as significant for this purpose if it caused or triggered the bankruptcy. This is precisely the
proposition which is irreconcilable with the findings of the municipal courts, and with the Chamber's conclusions
above.
D. Article I of Supplementary Agreement to FCN Treaty (paras. 120-130)
Article I of the Supplementary Agreement to the FCN Treaty, which confers rights not qualified by national or mostfavoured-nation standards, provides as follows:
"The nationals, corporations and associations of either High Contracting Party shall not be subjected to arbitrary or
discriminatory measures within the territories of the other High Contracting Party resulting particularly
in: (a) preventing their effective control and management of enterprises which they have been permitted to establish
or acquire therein; or, (b) impairing their other legally acquired rights and interests in such enterprises or in the
investments which they have made, whether in the form of funds (loans, shares or otherwise), materials, equipment,
services, processes, patents, techniques or otherwise. Each High Contracting Party undertakes not to discriminate
against nationals, corporations and associations of the other High Contracting Party as to their obtaining under
normal terms the capital, manufacturing processes, skills and technology which may be needed for economic
development."
The answer to the Applicant's claim that the requisition was an arbitrary or discriminatory act which violated both
the "(a)" and the "(b)" clauses of the Article is the absence of a sufficiently palpable connection between the effects
of the requisition and the failure of ELSI to carry out its planned orderly liquidation. However, the Chamber
considers that the effect of the word "particularly", introducing the clauses "(a)" and "(b)", suggests that the
prohibition of arbitrary (and discriminatory) acts is not confined to those resulting in the situations described
in "(a)" and "(b)", but is in effect a prohibition of such acts whether or not they produce such results. It is necessary,
therefore, to examine whether the requisition was, or was not, an arbitrary or discriminatory act of itself.
The United States claims that there was "discrimination" in favour of IRI, an entity controlled by Italy; there is,
however, no sufficient evidence before the Chamber to support the suggestion that there was a plan to favour IRI at
the expense of ELSI, and the claim of "discriminatory measures" in the sense of the Supplementary Agreement must
therefore be rejected.
In order to show that the requisition order was an "arbitrary" act in the sense of the Supplementary Agreement, the
Applicant has relied (inter alia)upon the status of that order in Italian law. It contends that the requisition "was
precisely the sort of arbitrary action which was prohibited" by Article I of the Supplementary Agreement, in that
"Under both the Treaty and Italian law, the requisition was unreasonable and improperly motivated"; it was "found
to be illegal under Italian domestic law for precisely this reason".
Though examining the decisions of the Prefect of Palermo and the Court of Appeal of Palermo, the Chamber
observes that the fact that an act of a public authority may have been unlawful in municipal law does not necessarily
mean that that act was unlawful in international law. By itself, and without more, unlawfulness cannot be said to
amount to arbitrariness. The qualification given to an act by a municipal authority (e.g., as unjustified, or

unreasonable or arbitrary) may be a valuable indication, but it does not follow that the act is necessarily to be classed
as arbitrary in international law.
Neither the grounds given by the Prefect for annulling the requisition, nor the analysis by the Court of Appeal of
Palermo of the Prefect's decision as a finding that the Mayor's requisition was an excess of power, with the result
that the order was subject to a defect of lawfulness, signify, in the Chamber's view, necessarily and in itself any view
by the Prefect, or by the Court of Appeal of Palermo, that the Mayor's act was unreasonable or arbitrary.
Arbitrariness is a willful disregard of due process of law, an act which shocks, or at least surprises, a sense of
juridical propriety. Nothing in-the decision of the Prefect, or in the judgment of the Court of Appeal of Palermo,
conveys any indication that the requisition order of the Mayor was to be regarded in that light. Independently of the
findings of the Prefect or of the local courts, the Chamber considers that it cannot be said to have been unreasonable
or merely capricious for the Mayor to seek to use his powers in an attempt to do something about the situation in
Palermo at the moment of the requisition. The Mayor's order was consciously made in the context of an operating
system of law and of appropriate remedies of appeal, and treated as such by the superior administrative authority and
the local courts. These are not at all the marks of an "arbitrary" act. Accordingly, there was no violation of Article I
of the Supplementary Agreement.
E. Article VII of FCN Treaty (paras. 131-135)
Article VII of the FCN Treaty, in four paragraphs, is principally concerned with ensuring the right "to acquire, own
and dispose of immovable property or interests therein [in the Italian text, "beni immobili o . . . altri diritti
real)"] within the territories of the other High Contracting Party".
The Chamber notes the controversy between the Parties turning on the difference in meaning between the English
"interests", and the Italian, "diritti reali)", and the problems arising out of the qualification, by the Treaty, of the
group of rights conferred by this Article, laying down alternative standards, and subject to a proviso. The Chamber
considers, however, that, for the application of this Article, there remains precisely the same difficulty as in trying to
apply Article III, paragraph 2, of the FCN Treaty: what really deprived Raytheon and Machlett, as shareholders, of
their right to dispose of ELSI's real property, was not the requisition but the precarious financial state of ELSI,
ultimately leading inescapably to bankruptcy. In bankruptcy the right to dispose of the property of a corporation no
longer belongs even to the company, but to the trustee acting for it; and the Chamber has already decided that ELSI
was on a course to bankruptcy even before the requisition. The Chamber therefore does not find that Article VII of
the FCN Treaty has been violated
*
**
Having found that the Respondent has not violated the FCN Treaty in the manner asserted by the Applicant, it
follows that the Chamber rejects also the claim for reparation made in the Submissions of the Applicant.
__________
SUMMARY OF OPINIONS APPENDED TO THE JUDGMENT OF THE COURT
Separate Opinion of Judge Oda
Judge Oda, in his separate opinion, agrees with the operative findings of the Judgment. He notes, however, that, in
initiating the proceedings, the United States espoused the cause of its nationals (Raytheon and Machlett) as
shareholders in an Italian company (ELSI), whereas, as the Court itself determined in the Barcelona
Traction Judgment of 1970, the rights of shareholders as such lie beyond the reach of diplomatic protection under
general international law.
In Judge Oda's view, the 1948 FCN Treaty was intended neither to alter the shareholders' status nor to augment the
shareholders' rights in any way. The provisions in the FCN Treaty upon which the Applicant relied, and which are
extensively addressed in the Judgment, were not intended to protect the rights of Raytheon and Machlett as
shareholders of ELSI.
The 1948 FCN Treaty, like similar FCN treaties to which the United States is a party, enables one State party to
espouse the cause of a company of the other State party in an action against the latter when the company in question
is controlled by nationals of the party bringing the action. The United States could thus have brought an action for
breach of certain provisions of the 1948 Treaty which entitled it to defend an Italian company (ELSI) in which its
nationals (Raytheon and Machlett) possessed a controlling interest.
Yet the Applicant had not relied on those provisions, and the Chamber in its Judgment had made scarcely any
reference to them. Even if the proceedings had been brought as an espousal of ELSI's cause, the Applicant, in Judge
Oda's view, would still have had to prove a denial of justice. This it had failed to do.
__________
Dissenting Opinion of Judge Schwebel

Judge Schwebel agreed with the Judgment in what he termed two paramount respects which have important
implications for the vitality and growth of international law.
First, the Judgment applies a rule of reason in its interpretation of the reach of the requirement of the exhaustion of
local remedies. It holds not that every possible local remedy must have been exhausted to satisfy the local remedies
rule but that, where in substance local remedies have been exhausted, that suffices to meet the requirements of the
rule even if it may be that a variation on the pursuit of local remedies was not played out. This holding thus confines
certain prior constructions of the rule to a sensible limit.
Second, the Judgment largely construes the FCN Treaty in ways which sustain rather than constrain it as an
instrument for the protection of the rights of nationals and corporations of the United States and Italy. The Chamber
declined to accept a variety of arguments pressed upon it which, if accepted, would have deprived the Treaty of
much of its value. In particular, the Chamber declined to hold that ELSI, an Italian corporation whose shares were
owned by United States corporations, was outside the scope of protection afforded by the Treaty. The claims of the
United States in the case were not sustained, but that was not because the Chamber found against the United States
on the law of the Treaty; it found against the United States on the practical and legal significance to be attached to
the facts of the case.
The Treaty and its Supplementary Agreement were to be interpreted as a unit, since the Agreement was specified to
be "an integral part" of the Treaty. Because the United States and Italy advanced conflicting interpretations of the
Treaty which demonstrated that certain of its provisions were ambiguous, this was a case in which recourse to the
preparatory work and circumstances of the Treaty's conclusion were in order. It was the fact that Italy had requested
negotiation of the Supplementary Agreement to meet the ascertained needs of U.S. investors for investment in Italy.
Italian parliamentary proceedings in ratification of the Treaty and Supplement demonstrate that it was the intent of
the Parties to give investors "guarantees against political risks" and "freedom to manage the companies" which
investors established or procured in implementation of "the principles of equitable treatment" which are stated to be
set forth in the Treaty. In the entire, detailed record of ratification, there is no trace of support for the interpretation
that the manifold treaty rights granted investors were conditioned upon investment being made in a corporation of
the investor's nationality.
The requisition deprived Raytheon of its Treaty right to control and manage and hence liquidate ELSI
The Chamber's cardinal conclusion in the case is that, because of the practicalities of ELSI's financial situation and
the legalities of Italian bankruptcy practice, Raytheon was no longer able, as of the date of the requisition, to control
and manage - and hence liquidate - ELSI and thus could not have been deprived by the requisition of its Treaty right
to do so. In Judge Schwebel's view, that conclusion was incorrect for the following reasons.
First, ELSI had been advised in March 1968, on financial and legal grounds, that it was entitled to liquidate its
assets, in a process to be managed by ELSI.
Second, as of the day of the requisition, no legal or practical steps had been taken in any quarter to place ELSI in, or
force ELSI into, bankruptcy.
Third, in the weeks and days preceding, and following, the requisition, the most senior officials of Sicily and the
Italian Government, while graphically informed of ELSI's precarious financial condition, pressed ELSI not to close
the plant, not to dismiss the workforce, and most particularly not to go into bankruptcy, but rather to take measures
in concert with the Italian public and private sectors to keep open or reopen the plant and carry out liquidation over a
period of time. The Prime Minister of Italy and the President of Sicily and their associates presumably acted, and
must be presumed to have acted, in accordance with the law of Italy. Thus whether in this case Italian or United
States counsel are correct in their differing interpretations of Italian bankruptcy law, it is clear that the "living law"
of Italy as of the time of the requisition was inconsistent with Italy's current plea and the Chamber's acceptance of it.
Italy in 1989 should not be heard to maintain the opposite of what it maintained in 1968.
Fourth, the Chamber's cardinal conclusion is not fully consistent with the holding of the Court of Appeal of Palermo
on which the Judgment relies. That Court concluded that ELSI's bankruptcy was caused not by the requisition but by
its prior state of insolvency. But it neither concluded nor implied that such insolvency dissolved existing rights of
management and control of ELSI. It rather awarded damages "derivable from the operational unavailability" of the
plant as the result of what it found to be an "unlawful" requisition order. Thus the Court imported that ELSI
continued as of the date of the requisition and thereafter to have possessory rights in ELSI even though it had been
insolvent before that date.
Fifth, Italy's experts differed among themselves as to whether ELSI was insolvent as of the time of the requisition.
Sixth, and most important, the question of whether ELSI was insolvent as of 1 April 1968 essentially depended on
the policy of Raytheon, whose resources were ample. The Chamber accepts that Raytheon had transferred fresh
capital to pay small creditors; that Raytheon was ready to purchase ELSI's large accounts receivable at 100 per cent
of value; and that Raytheon was prepared to advance sufficient cashflow funds to enable ELSI to engage in an

orderly liquidation. Why then does it accept the inconsistent conclusion that, as of the time of the requisition, ELSI
was insolvent or, if not, was in any event fast slipping into bankruptcy? If the requisition had not intervened, and if
ELSI's immediate cash-flow requirements had been met by Raytheon, thus buying time in order to sell assets, can it
really be held that ELSI would have been forced into bankruptcy, at any ratewhen it was? Even if bankruptcy had
eventually come, such a later date would have enabled Raytheon materially to reduce its losses relative to those
which actually were incurred. Moreover, if the requisition had not intervened, it would have been in the interest of
the Italian banks to have settled their claims against ELSI for 40 or 50 per cent of value.
An orderly liquidation, Judge Schwebel acknowledged, would have been beset by uncertainties,but they go not so
much to ELSI's ability and entitlement to liquidate its assets as to the calculability of damages which may be found
to flow from denial of that right.
The conclusion that by imposition of the requisition Italy violated a viable right of Raytheon to control and manage
ELSI is the more compelling in the light of the meaning of the Treaty which the processes of its ratification
elucidate. It was not consistent with investors' "unobstructed control" of companies they "procured", with the
Treaty's "guarantee against political risks", and with the "principles of equitable treatment" which the Treaty was
designed to ensure.
The requisition was an arbitrary measure which violated the Treaty
The Chamber's conclusion that the requisition of ELSI's plant and equipment was not an arbitrary measure in breach
of the Treaty is based on three holdings, which Judge Schwebel saw as unfounded: first, that the Palermo Prefect
and Court of Appeal did not find the requisition to be arbitrary; second, that in international law the requisition was
neither unreasonable nor capricious, and third, that in any event the Italian processes of appeal and redress to which
the requisition order was subject ultimately ensured that the order was not arbitrary.
(i) The rulings of the Prefect and Court of Appeal
The Prefect held that the Mayor, in issuing the requisition order, relied on provisions of law which, in conditions of
grave public necessity and unforeseen urgency, entitle the Mayor to requisition private property; but in this case, the
Prefect found, these conditions were present "from the purely theoretical standpoint", a finding which appears to
mean that they were not actually present. The Prefect's decision indicates that in fact those conditions were not
present since the Prefect's decision concludes that (a) the order of requisition could not restore ELSI's plant to
operation or solve the company's problems; (b) the order in fact did not; (c) the plant remained closed and occupied
by former employees and (d) public order was in any event disturbed by the plant's closure: in short, that the
requisition order proved unjustified on all counts. The Prefect's holding that, since the requisition order was
incapable of achieving its purported purposes, it lacked the juridical cause which might justify it, is not far from
stating that the requisition was ill-motivated and hence unreasonable or even capricious.
Moreover, the Prefect held that the order by its terms showed that the Mayor issued the order to show his intent to
intervene "in one way or another", as a step "aimed more than anything else at bringing out his intention to tackle
the problem just the same". The Prefect there referred to the provision of the Mayor's order stating that "the local
press is taking a great interest in the situation . . . being very critical toward the authorities and is accusing them of
indifference to this serious civic problem . . .". The Court of Appeal of Palermo characterized that holding of the
Prefect as "severe" and as "showing a typical case of excess of power" on the part of the Mayor - i.e., a classic
arbitrary act. Moreover, the Court of Appeal taxed the Mayor with compounding the "unlawful" requisition by
failing to pay the indemnity for requisition for which the order itself provided - a failure which is at odds with the
due process which is antithetical to an arbitrary act.
(ii) The unreasonable and capricious nature of the requisition
What is unreasonable or capricious in international law, while having a sense in customary international law, has no
invariable, plain meaning, but can be appreciated only in the particular context of the facts of a case. In this case, the
order of requisition as motivated, issued and implemented was arbitrary since:
- the legal bases on which the Mayor's order relied were justified only in theory;
- the order was incapable of achieving, and did not achieve, its purported purposes;
- the order "also" was issued "mainly" to appease public criticism rather than on its merits, a "typical case of excess
of power";
- the order violated its own terms by failing to pay an indemnity for the requisition;
- a paramount purpose of the requisition order was to prevent ELSI's liquidation and possible dispersal of its assets,
a purpose pursued without regard to Treaty obligations of contrary tenor (despite Italy's contention that these
obligations were binding internally).
(iii) The process of appeal did not render the measure non-arbitrary

Italy's objective processes of administrative and judicial review of the requisition order might be argued to have
ensured, by their existence and application, that the requisition, even if initially arbitrary, ultimately was not, thus
absolving Italy of any consummated breach of international responsibility.
However, as the Draft Articles on State Responsibility of the United Nations International Law Commission put it:
"There is a breach by a State of an international obligation requiring it to achieve, by means of its own choice, a
specified result, if, by the conduct adopted, the State does not achieve the result required of it by that obligation."
That fits this case, for Italy did not provide ELSI or its representative with "full and complete compensation" (as the
ILC requires) for what otherwise was the arbitrary act of requisition. The requisition order was annulled by the
Prefect, but 16 months after it was promulgated, by which time ELSI had suffered irreparable damage as a result of
it. The Court of Palermo awarded minimal damages for the requisition, which, however, took no account of principal
elements of ELSI's actual losses. It accordingly follows that ELSI was not placed in the position it would have been
in had there been no requisition, or in an equivalent position. For that reason, Italian administrative and judicial
processes, however estimable, did not absolve Italy of having committed an arbitrary act within the meaning of the
Treaty.

Usa Versus Italy The Elettronica Sicula Case International Law Essay
International trade and investment breed prosperity. Prosperity, in turn, fosters peaceful relations. Through legal
regimes that encourage and strengthen trade and investment, international law contributes greatly to the "creation of
conditions of stability and well-being which are necessary for peaceful and friendly relations among nations." For
the United States, bilateral treaties have held center stage in setting legal standards for the establishment and
protection of United States investments overseas, including those that take the form of foreign incorporated
businesses. One measure of the effectiveness of these legal standards is their success at resolving international
investment disputes when they arise. Without enforceable legal protections, the prospective investor has a lower
expectation of security in the investment and is therefore less inclined to conduct business abroad. Consequently, a
legal regime that fails to protect overseas investment carries a cost in foregone welfare and ultimately lessens
opportunities for nations to forge strong and lasting economic ties.
International litigation arising from disputes of a commercial character has unfortunately been far from encouraging
to investors. The contribution of the International Court of Justice has been particularly chilling. If after more than
twenty years one rereads the Judgment in the Barcelona Traction case in which Belgium suffered so remarkable a
defeat, one is more than ever disappointed by the Court's lack of appreciation of the very specific facts of the case,
the narrow reasoning and the almost complete adherence to conceptualism as opposed to equity. It is even more
noteworthy that post- Franco Spain, now a member of the European Community, did not regard it as one of its first
duties to undo the wrong of which even the Court must have been conscious and which a civilized country would
not wish to deny or uphold. Recently the Court, or rather one of its Chambers consisting of Judges Ruda (as
President), Oda, Ago, Sir Robert Jennings and Schwebel, had another opportunity of judging a dispute of a
commercial character, viz., a dispute between the United States of America and Italy that arose from a substantial
investment by a United States company in Italy. It led to a decision that has attracted singularly little comment and
deserves greater attention than it has so far received.
FACTS OF THE CASE
The Investment
In 1952, Raytheon Company -- a United States manufacturer of electronics equipment -- entered into a licensing and
technical assistance agreement with an Italian company. This relationship eventually led Raytheon to become a

partial shareholder in a relatively new company, Elettronica Sicula S.p.A. (ELSI), located in Palermo, Sicily. From
1956 through 1967, Raytheon invested some 7.42 billion lire in ELSI, ultimately acquiring over ninety-nine percent
of its shares. In addition, Raytheon guaranteed more than five billion lire worth of loans to ELSI from various Italian
banks. In April 1967, Machlett Laboratories, a wholly-owned subsidiary of Raytheon, acquired ELSI's remaining
shares.
ELSI manufactured sophisticated electronic components and equipment, based largely on patents, licenses, and
technical assistance provided by Raytheon. While ELSI sold its products throughout the world (sales in 1965 and
1966 exceeded eight billion lire), the company never became economically self-sufficient. During fiscal years 1964
through 1966, ELSI earned an operating profit, but this profit was insufficient to offset its debt expenses and
accumulated losses. ELSI never paid any dividends to its shareholders.
B. The Decision To Liquidate
By 1968, however, the causes of ELSI's condition were less germane than the rights and obligations of the United
States and Italy under the FCN Treaty. Raytheon had decided not to infuse additional capital into ELSI, and since no
further capital was forthcoming from an Italian partner, Raytheon developed a plan to close and liquidate ELSI to
minimize Raytheon's losses. Under this plan, ELSI would maintain limited operations to complete work-in-progress
and to fill existing purchase orders. This action would preserve ELSI as a going concern and make it more attractive
to potential purchasers, who would have the chance to acquire ELSI's established name and reputation, its customer
and supplier relationships, and the necessary patent and trademark licenses and technical assistance from Raytheon.
Raytheon planned at that time to offer ELSI for sale both as a total package and separately by product lines in order
to maximize the liquidation price.
On March 16, 1968, ELSI's Board of Directors voted to cease full-scale production by March 29 and to liquidate
ELSI. The company's shareholders voted to affirm this decision on March 28. On March 29, ELSI sent dismissal
letters to those employees deemed unnecessary to fulfill the liquidation plan.
C. The Requisition By The Italian Government
On April 1, 1968, the Mayor of Palermo issued an order requisitioning ELSI's plant and related tangible assets for
six months. The order was based on an 1865 law that provided Italian administrative authorities with the power to
"dispose of private property" for reasons of "grave public necessity." The requisition noted that ELSI's decision to
close its plant gave rise "to strikes (both general and sectional)," aggravated the difficulties of the region, which had
been "severely tried" by recent earthquakes, and created a "touchy" situation in which "unforeseeable disturbances
of public order could take place." The order also stated that ELSI's plan spurred a public reaction that "strongly
stigmatized" the action and caused the local press to be "very critical toward the authorities" and to accuse them of
"indifference." These conditions, according to the Mayor, created a "grave public necessity and [an] urgency to
protect the general economic public interest."
On April 2, 1968, ELSI's management surrendered control of the plant and assets to the Mayor of Palermo.
Surprisingly, the Mayor did not then keep the plant open and regularly operating. Workers were allowed to enter the
plant premises, but production largely remained at a standstill. On April 9, ELSI's management petitioned the Mayor
to lift his order, arguing that the requisition was illegal. On April 12, the company again invited the Mayor to revoke
his order. When it received no response from the Mayor, ELSI's management appealed the order to the Prefect of

Palermo, the Mayor's administrative superior.Again, ELSI's management argued that the requisition was illegal,
arbitrary, and ultra vires. However, the Prefect did not rule on this appeal for sixteen months.
D. The Bankruptcy
On April 25, 1968, ELSI's Board of Directors voted to file a voluntary petition in bankruptcy. The Civil and
Criminal Tribunal of Palermo adjudged ELSI bankrupt on May 16, 1968, and designated a trustee to represent the
creditors' interests in ELSI's assets. The dispute between the United States and Italy over the reason for the
bankruptcy became the focal issue on which the ELSI decision turned. The United States argued that Raytheon
quickly recognized that it would not be permitted to place ELSI through an orderly liquidation. Without the constant
infusion of funds from Raytheon, ELSI could no longer meet its financial obligations as they came due, and unless
ELSI's board of directors was willing to incur possible personal liability for ELSI's debts, ELSI had no choice under
Italian law but to declare bankruptcy.
Italy argued that immediately prior to the time of the requisition, ELSI's financial condition was so grave that the
company should have been placed in bankruptcy under Italian law. Consequently, the requisition did not cause the
bankruptcy. Even if the bankruptcy had been related to the requisition, Italy argued, ELSI's shareholders did not lose
anything since by April 1 the corporation's liabilities exceeded its assets.
The requisition began on April 1 and lasted through September 1968. On July 25, 1968 -- long before the
bankruptcy court held any auction of ELSI's assets -- the Italian Minister of Industry, Commerce and Crafts
announced to the Parliament that the Italian government intended to take over ELSI's plant through a subsidiary of
the government-owned conglomerate, Istituto per la Ricostruzione Industriale (IRI). On November 13, 1968, the
government stated that an entity of IRI would acquire ELSI's plant. The following month, IRI formed a new
subsidiary, Industria Elettronica Telecommunicazioni S.p.A. (ELTEL), to take over ELSI's plant and assets.
The bankruptcy court began its efforts to liquidate ELSI soon after the formation of ELTEL. The first auction of
ELSI's plant and equipment occurred on January 18, 1969, with a minimum bid of five billion lire (U.S.
$8,000,000). No buyers appeared at the auction. On March 22, the bankruptcy court held a second auction, adding
ELSI's inventory to the assets for sale and setting a minimum bid of approximately 6.2 billion lire (U.S. $
9,957,000). Again, no buyers appeared. Shortly after this auction, ELTEL proposed to the trustee that it be allowed
to lease and reopen the plant for eighteen months. The trustee recommended this course of action, and the judge
agreed to grant ELTEL the lease. In April 1969, ELTEL proposed to the trustee that it be allowed to buy ELSI's
work-in-progress -- material left on the production lines -- for 105 million lire (U.S. $168,000). The bankruptcy
court approved the sale. On May 3, the bankruptcy court held the third auction of ELSI's plant, equipment, and
inventory for the same price as the first auction. For a third time, no buyers appeared. On May 27, ELTEL offered to
buy the remaining plant, equipment, and supplies for four billion lire (U.S. $6,400,000). With the approval of the
creditors' committee, the bankruptcy court scheduled a fourth auction on these terms, and the sale was
consummated.
Not surprisingly, the United States and Italy had two very different views of what was going on during the
bankruptcy process. The United States asserted that by its acts -- delaying the bankruptcy sale by imposing a sixmonth requisition, allowing the local work force to occupy the plant, and announcing its intention to take over the
plant -- Italy had essentially scared off potential buyers, producing a bankruptcy sale that greatly benefitted Italy's
own corporate entity. The United States presented evidence, particularly during the oral proceedings, regarding the

likelihood of a European company purchasing ELSI's product lines either together or individually. Italy countered
that the United States was advancing an absurd conspiracy theory, envisioning a coordinated effort by numerous
central and local government officials over a protracted period. Italy contended that the lack of participation in the
bankruptcy auctions proved the low value of ELSI, implying that only the Italian government's willingness to
purchase ELSI permitted any recovery in the bankruptcy process at all.

E. Administrative And Judicial Remedies

Forty days after ELTEL purchased ELSI's plant and equipment, the Prefect of Palermo ruled on the appeal of the
Mayor's decision to requisition the plant. The Prefect declared the requisition illegal, as it could not have achieved
its stated purposes, such as preventing labor unrest by keeping the plant operating. This ruling later formed a
cornerstone of the United States case, inasmuch as the principal standards in judging adherence to the treaty
obligations discussed below turned in part on whether the Mayor had arbitrarily interfered with property interests.
The United States saw the Prefect's decision as an admission of the arbitrary nature of the requisition by an official
of the Italian government.
The Mayor appealed the Prefect's decision to both the Italian Council of State and the President of Italy. This appeal
was dismissed on the ground that the Mayor lacked standing to appeal a decision of the Prefect. Based on the
Prefect's decision, ELSI's trustee brought suit in the Court of Palermo against the local and national Italian
governments. The trustee sought damages for the injuries that the requisition caused to ELSI and to its creditors. The
alleged injuries arose from the decrease in the value of ELSI's plant and equipment during the requisition period,
and from ELSI's inability to dispose of the plant and equipment during that period.
The District Court of Palermo denied the trustee's claim for compensation. On appeal, however, the Court of Appeal
of Palermo awarded compensation of 114 million lire (U.S. $171,000) for the lost use and possession of ELSI's plant
and assets during the six-month requisition period. Often referred to by the United States as a "rental" payment, this
compensation made no provision for the decline in value due to the inability to dispose of ELSI's plant and
equipment during the requisition period. The Supreme Court of Appeals, the highest competent Italian court, upheld
this decision on appeal.
F. Intervention By The United States
As the appeals were reaching their unsuccessful conclusion, Raytheon sought help from the United States
government in "espousing" the claim as an injury to the United States under international law. On February 7, 1974,
the United States presented Italy with a diplomatic note advancing a claim "based upon the illegal actions and
interferences by Italian authorities contrary to treaty provisions, Italian law, and international law which precluded
an orderly liquidation under the laws of Italy of ELSI, S.p.A." Although some limited discussions took place
between United States and Italian officials from 1974 to 1978, Italy did not respond formally to this diplomatic note
until the summer of 1978. By an aide-mmoire of June 13, 1978, Italy rejected the claim as groundless, stating, "The
records show that the order of seizure, even though unlawful, did not cause damage to the shareholders." The United
States continued its efforts to resolve the claim through diplomatic communications, including unsuccessful
discussions held during a May 1979 meeting in Rome between United States Secretary of State Vance and Italian
Foreign Minister Forlani. Ultimately, the United States determined to resolve the dispute through a third-party

dispute settlement mechanism. From 1981 to 1985, the United States presented diplomatic notes to Italy seeking to
submit the claim to binding arbitration.
In 1985, the parties met in Rome and agreed that instead of arbitration, the United States would submit the dispute to
the ICJ. On October 7, 1985, the United States announced that it had agreed with Italy to bring the dispute before "a
special chamber as provided by the Court's Statute and rules of procedure, subject to mutually satisfactory resolution
of implementing arrangements." On February 6, 1987, the United States filed its application instituting proceedings
before the ICJ. The parties subsequently filed two rounds of pleadings: the United States Memorial (May 15, 1987),
the Italian Counter--Memorial (November 16, 1987), the United States Reply (March 19, 1988), and the Italian
Rejoinder (July 18, 1988). Upon considering the views of the parties, the ICJ formed a Chamber of five judges to
hear the case: Judge Roberto Ago (Italy), Judge Sir Robert Jennings (United Kingdom), Judge Shigeru Oda (Japan),
Judge Steven Schwebel (United States), and President Nagendra Singh (India), who was replaced by President Jos
Mara Ruda (Argentina) upon Judge Singh's death in December 1988. The Chamber held a hearing in The Hague
from February 13 to March 3, 1989.
JURISDICTION AND ISSUES IN THE CASE
The cause of action arose from the convergence of three events:
The Mayor of Palermo's requisition of ELSI,
The Italian subsidiary of Raytheon and Machlett; ELSI's bankruptcy;
The acquisition of ELSI by an Italian state-owned entity.
The United States charged Italy with the following violations:
Impairing Raytheon and Machlett's right to manage and control under article III(2) of the 1948 FCN; failure to
provide the full protection and security dictated by treaty and international law under article V(1) and (3);
A taking by the Italian government without just compensation under article V(2); denial of the right to dispose of
property interests on terms no less favorable than those to which Italian companies were entitled on a reciprocal
basis under article VII;
Discriminatory treatment of Raytheon and Machlett under article I of the supplement.
Jurisdictional issue
Before adjudicating the dispute on the merits, the World Court addressed the question of its jurisdiction. Article
XXVI of the FCN Treaty explicitly confers jurisdiction upon the World Court with respect to questions of
interpretation and application of the treaty and its supplement.
ARGUMENT RAISED BEFORE THE CHAMBER.
ARGUMENT RAISED BY UNITED STATES
The United States argued before the Chamber that Raytheon undertook extensive efforts to improve ELSI's financial
performance by enhancing its administrative efficiency and by upgrading the plant facilities. Nevertheless,
according to the United States, the real key to making ELSI successful lay in overcoming an inherent competitive

disadvantage vis--vis Italian-owned company by securing an Italian investment partner with economic power and
political influence. In doing so, ELSI would gain the support of the national and regional governments, which
granted certain benefits to businesses operating in southern Italy. The United States argued that when Raytheon's
efforts to obtain such an Italian partner failed, ELSI lost all ability to provide a return.
The United States argued that the requisition was an unlawful, arbitrary act taken by political authorities to appease
public opinion. The United States noted that on March 31, 1968, the President of the Sicilian Region had met with
ELSI's Managing Director to inform him that the Italian government would not allow ELSI to close, since a closure
would produce significant unemployment just before the national elections of May 1968. Furthermore, the United
States introduced as evidence several comments made by officials of the Italian government before and after the
requisition stating that the government wished to take over ELSI itself rather than allow its liquidation.
The United States argued that Raytheon quickly recognized that it would not be permitted to place ELSI through an
orderly liquidation. Without the constant infusion of funds from Raytheon, ELSI could no longer meet its financial
obligations as they came due, and unless ELSI's board of directors was willing to incur possible personal liability for
ELSI's debts, ELSI had no choice under Italian law but to declare bankruptcy.
ARGUMENT RAISED BY THE GOVERNMENT OF ITALY
Italy countered that Raytheon essentially caused ELSI's demise with bad management, including poor product
selection, poor choice of location, poor labor relations, and exorbitant charges for technical assistance. Italy further
argued that it had given ELSI considerable financial assistance and that the success of non-Italian competitors
during this period showed that ELSI's problems did not derive from its foreign ownership. Italy admitted that ELSI
had approached it for help, but stated that the financial contributions requested by ELSIexceeded the government's
resources.
The Italian government responded that the United States was accusing it of a grand conspiracy to take over a
relatively worthless company. Italy argued that the Mayor of Palermo had acted as he thought necessary, given the
labor unrest that could have resulted had the government remained silent. Even if the Mayor had made a mistake in
requisitioning the plant, Italy contended, he nevertheless had still exercised a police power granted to him by Italian
law, and therefore had not acted improperly.
Italy argued that immediately prior to the time of the requisition, ELSI's financial condition was so grave that the
company should have been placed in bankruptcy under Italian law. Consequently, the requisition did not cause the
bankruptcy. Even if the bankruptcy had been related to the requisition, Italy argued, ELSI's shareholders did not lose
anything since by April 1 the corporation's liabilities exceeded its assets.
JUDGMENT BY THE INTERNATIONAL COURT OF JUSTICE
DECISION ON PRELIMINARY ISSUE OF JURISDICTION
The court's jurisdictional analysis considered Italy's challenge that the United States had not complied with the
requirement of local exhaustion. The court dismissed the U.S. suggestion that the exhaustion-of-local-remedies rule
did not apply absent explicit mention in the treaty. On the contrary, the court held the exhaustion-of-local-remedies
requirement to be a principle of customary international law, applicable unless explicitly waived. Furthermore, the
court found that Italy's failure to allege a lack of compliance with local exhaustion requirements in its diplomatic

exchanges with the United States did not constitute an estoppel. In the end the court determined that the United
States fulfilled its obligation under the local-exhaustion rule.

DECISION RELATING TO THE ISSUES AND CAUSE OF ACTION

In a complex opinion, the I.C.J. held that Italy had not violated the FCN Treaty. Despite the court's broad
interpretation of the treaty, the court found that the United States failed to state a claim absent a direct causal link
between the mayor's requisition order and ELSI's bankruptcy. The court determined that the core claim was found in
article III of the treaty: impairment of the right to manage and control. Although the Italian courts found the
requisition order unjustifiable, the I.C.J. was left to determine the financial position of ELSI. If ELSI's position was
so precarious that Raytheon and Machlett would not have been able to manage and control it before the requisition
order, then ELSI was already deprived of the rights allegedly impaired by the order. The court also considered
whether the orderly liquidation plan was still feasible as of March 31, 1968, after the dismissal of ELSI's employees,
and found that the United States had failed to establish the feasibility of liquidation. Based on the court's answers to
these questions, Italy's actions or omissions were found not to have directly impaired the management and control of
ELSI, thereby leaving no cause of action.
The court enumerated the factors that rendered the potential success of the liquidation plan questionable. In order for
the plan to have worked, the court reasoned, ELSI's major creditors must have been willing to wait for payment,
which was unlikely. The court found that ELSI's twin aims of speed and maximum price were potentially
incompatible and pointed out that ELSI had been warned that sending dismissal letters to its employees might result
in requisition. The court held that the United States had not demonstrated the feasibility of an orderly liquidation,
and therefore no violation of article III (2) of the FCN Treaty existed
The court then considered the U.S. claims under article V of the treaty, the first of which concerned the protection
and security of nationals, in this case, U.S. investors and their property in Italy. The United States argued that the
occupation by the workers diminished the plant's value, both because it caused the plant to deteriorate, and because
it impeded efforts by the bankruptcy trustee to dispose of the plant. The treaty provides for application of a national
standard; in the court's judgment, the United States failed to demonstrate any departure from a national standard.
The court also pointed out that ELSI's management was aware that sending dismissal letters was likely to result in
worker unrest. Neither party contested the fact that there had been many requisitions of Italian companies in similar
situations. The United States also argued that the Prefect's sixteen-month delay in ruling on ELSI's appeal of the
requisition order violated Italy's obligations under article V. However, the I.C.J. did not find that the delay fell below
either the minimum international or the national standard.
The second U.S. claim under article V alleged that the requisition and sale of assets constituted a taking without due
process and without just and effective compensation under article V (2). The U.S. charge included not just the
requisition of the plant but also the subsequent acquisition of ELSI's assets for a sum far below market value;
essentially, Italy's conduct amounted to disguised expropriation. Declining to resolve the controversy over textual
interpretation, the court found that Italy's acts or omissions could not constitute a taking unless Raytheon and
Machlett were significantly deprived of their interests. In light of the attitude of local authorities, the Italian
bankruptcy laws, the attitude of the various creditors, and the attitude of its workers, both ELSI's financial woes and
the pending closure made bankruptcy inevitable. The court did not find that the Italian government's conduct in any
way precipitated the bankruptcy, nor amounted to a taking.

The court dismissed the claim under article I of the supplement, which protects against arbitrary and discriminatory
measures. For the reasons enumerated above, the court found no causal connection between the requisition of the
plant and the failure of the orderly liquidation plan. Although the requisition alone may not necessarily have
produced adverse results, the court found it necessary to consider whether the requisition order was arbitrary and
discriminatory. The court found the requisition unlawful, but its status under municipal law is not determinative of
its status under international law. In order for an action to be arbitrary, it is not enough that it be against a rule of
law; it must be against "the rule of law." In other words, it was not sufficient for an action to be illegal--it must have
flouted the very concept of a legal system. The I.C.J. chamber did not find the mayor's actions against the rule of
law.
The final claim rested upon article VII of the FCN Treaty, which provides for the right to acquire, own, and dispose
of immovable property within Italy. The court found that the provision had not been violated, and that qualification
(a), referring to the rights of Italian nationals in the United States, did not apply. The court also found that the
treatment of ELSI had not been less favourable than that which had been accorded Italy's own nationals in similar
situations. Italy demonstrated, and the United States did not dispute, that similar requisitions of Italian companies
occurred frequently. In addition, the difficulty of finding a causal connection between the requisition and the
bankruptcy given ELSI's precarious financial situation led the court to find no violation of article VII.
DISSENTING OPINION OF JUDGE SCHWEBEL
Judge Schwebel, the sole dissenter, endorsed the court's position as to the exhaustion of local remedies and agreed
with the court's interpretation of the FCN Treaty. However, he disagreed with the majority's factual determinations
and agreed with the U.S. position on those matters. He disagreed with the majority's finding on the feasibility of an
orderly liquidation and with the majority's position with respect to the requisition order. Judge Schwebel agreed with
the U.S. interpretation of the treaty. His dissent emphasized the history behind FCN treaties and relied more
extensively upon the preparatory work of the U.S.-Italy FCN than did the opinions of other members of the court.
He also found the exhortations of the Italian authorities that Raytheon not close the ELSI plant to be evidence that,
far from precipitating its bankruptcy, the Italian authorities pressed ELSI not to go into bankruptcy. Finally, he found
that the Italian judgments supported the conclusion that the Palermo Mayor's requisition was arbitrary, unreasonable,
and capricious under international law.
CONTRIBUTION OF THE ELSI CASE TO INTERNATIONAL LAW
The I.C.J. exercises both contentious and advisory jurisdiction. Compulsory jurisdiction, the third of the three types
of contentious jurisdiction, has been the subject of controversy with regard to the United States. But the case
concerning Elettronica Sicula falls under the second form of contentious jurisdiction: over cases arising under
treaties stipulating I.C.J. jurisdiction for dispute resolution. The willingness of the United States to bring a dispute to
the international tribunal has symbolic significance. The United States maintains that it is still willing to accept I.C.J.
jurisdiction where appropriate under U.S. standards, as in this dispute.
The case concerning Elettronica Sicula marked the first U.S. appearance before the I.C.J. since its withdrawal in
1986, and therefore strengthened the World Court. Italy's success on the merits demonstrates not only that the Italian
courts provided adequate local remedies for a foreign claimant, but also that the I.C.J. was not wary of finding
against the United States or dismissing its claims. The United States failed to win the case, despite the fact it was
heard by a special fivemember chamber comprised of judges from Latin America, Japan, Britain, Italy, and the

United States. In the past the United States had suggested that the I.C.J. tended to reflect Third World views, and
thus submitted disputes to chambers reflecting Western thought. The court's decision on the merits reflects its
willingness, even on the part of such special chambers, to find against the United States. Its holding on treaty
interpretation supports the U.S. interpretation and should therefore encourage more parties to bring their disputes
before the I.C.J. by adopting the U.S. argument that local exhaustion may not be a prerequisite to I.C.J. jurisdiction
in the absence of explicit treaty provisions. By ruling that only the substance of the allegations must have been
pursued in the local courts in the absence of a strong showing by Italy of a local remedy that should have been
pursued, the court has clearly lowered the threshold for jurisdiction.
The United States expressed its satisfaction with the judgment and agreed to respect the I.C.J. decision. Consistent
with the prevalent view regarding the lack of precedential value of I.C.J. judgments, the United States asserted it did
not regard the judgment to have implications beyond the specific case. The next time a dispute arises under one of
the hundreds of foreign-investment treaties to which the United States is a party, the United States may well bring it
directly before the I.C.J. The question remains, however, whether the United States will be as compliant when
summoned as a defendant.

Summary of the Summary of the Advisory Opinion of 26 April 1988

APPLICABILITY OF THE OBLIGATION TO ARBITRATE UNDER SECTION 21 OF
THE UNITED NATIONS HEADQUARTERS AGREEMENT OF 26 JUNE 1947
Advisory Opinion of 26 April 1988
The Court delivered a unanimous Advisory Opinion on the question concerning the Applicability of the Obligation to Arbitrate under
Section 21 of the United Nations Headquarters Agreement of 26 June 1947. It delivered this Advisory Opinion, after the application of
an accelerated procedure, in response to a request submitted by the General Assembly of the United Nations under resolution 42/229
B, adopted on 2 March 1988.
In its decision, the Court gave its opinion that the United States of America is under an obligation, in accordance with section 21 of
the United Nations Headquarters Agreement, to enter into arbitration for the settlement of a dispute between itself and the United
Nations.
The Court was composed as follows: President Ruda Vice-President Mbaye; Judges Lachs, Nagendra Singh Elias, Oda, Ago.
Schwebel, Sir Robert Jennings, Bedjaoui, Ni, Evensen, Tarassov, Guillaume and Shahabuddeen.
Judge Elias appended a declaration to the Advisory Opinion.
Judges Oda, Schwebel and Shahabuddeen appended separate opinions.
The General Assembly's request had arisen from the situation which had developed following the signing of the Anti-Terrorism Act
adopted by the United States Congress in December 1987, a law which was specifically aimed at the Palestine Liberation
Organization and inter alia declared illegal the establishment or maintenance of an office of the Organization within the jurisdiction of
the United States. The law thus concerned in particular the office of the PLO Observer Mission to the United Nations, established in
New York after the General Assembly had conferred observer status on the PLO in 1974. The maintenance of the office was held by
the Secretary-General of the United Nations to fall within the ambit of the Headquarters Agreement concluded with the United States
on 26 June 1947.
Alluding to reports submitted by the Secretary-General of contacts and conversations he had pursued with the United States
Administration with a view to preventing the closure of the PLO office, the General Assembly put the following question to the Court:
" In the light of facts reflected in the reports of the Secretary-General, is the United States of America, as a party to the Agreement
between the United Nations and the United States of America regarding the Headquarters of the United Nations, under an obligation
to enter into arbitration in accordance with section 21 of the Agreement?"
*
**
Submission of the request and subsequent procedure
(paras. 1-6)
The question upon which the Court's advisory opinion had been sought was contained in resolution 421229 B of the United Nations

General Assembly, adopted on 2 March 1988. This resolution read in full as follows:
"The General Assembly,
"Recalling its resolution 42/210 B of 17 December 1987 and bearing in mind its resolution 42/229 A above,
"Having considered the reports of the Secretary-General of 10 and 25 February 1988 [A/42/915 and Add. l ],
"Affirming the position of the Secretary-General that a dispute exists between the United Nations and the host country concerning the
interpretation or application of the Agreement between the United Nations and the United States of America regarding the
Headquarters of the United Nations, dated 26 June 1947 [see resolution 169 (II)], and noting his conclusions that attempts at amicable
settlement were deadlocked and that he had invoked the arbitration procedure provided for in section 21 of the Agreement by
nominating an arbitrator and requesting the host country to nominate its own arbitrator,
"Bearing in mind the constraints of time that require the immediate implementation of the dispute settlement procedure in accordance
with section 21 of the Agreement,
"Noting from the report of the Secretary-General of 10 February 1988 [A/42/915] that the United States of America was not in a
position and was not willing to enter formally into the dispute settlement procedure under section 21 of the Headquarters Agreement
and that the United States was still evaluating the situation,
"Taking into account the provisions of the Statute of the International Court of Justice, in particular Articles 41 and 68 thereof,
"Decides, in accordance with Article 96 of the Charter of the United Nations, to request the International Court of Justice, in
pursuance of Article 65 of the Statute of the Court, for an advisory opinion on the following question, taking into account the time
constraint:
"'In the light of facts reflected in the reports of the Secretary-General [A/42/915 and Add. l], is the United States of America, as a
party to the Agreement between the United Nations and the United States of America regarding the Headquarters of the United
Nations [see resolution 169 (II)], under an obligation to enter into arbitration in accordance with section 21 of the Agreement?'"
In an Order dated 9 March 1988 the Court found that an early answer to the request would be desirable (Rules of Court, Art. 103), and
that the United Nations and the United States of America could be considered likely to furnish information on the question (Statute,
Art. 66, para. 2), and, accelerating its procedure, fixed 25 March 1988 as the time-limit for the submission of a written statement from
them, or from any other State party to the Statute which desired to submit one. Written statements were received from the United
Nations, the United States of America, the German Democratic Republic and the Syrian Arab Republic. At public sittings on 11 and
12 April 1988, held for the purpose of hearing the comments of any of those participants on the statements of the others, the Court
heard the comments of the Legal Counsel of the United Nations and his replies to questions put by certain Members of the Court.
None of the States having presented written statements expressed a desire to be heard. The Court also had before it the documents
provided by the Secretary-General in accordance with Article 65, paragraph 2, of the Statute.
Events material to the qualification of the situation
(paras. 7-22)
In order to answer the question put to it, the Court had first to consider whether there existed between the United Nations and the
United States a dispute as contemplated by section 21 of the Headquarters Agreement, the relevant part of which was worded as
follows:
"(a) Any dispute between the United Nations and the United States concerning the interpretation or application of this agreement or of
any supplemental agreement, which is not settled by negotiation or other agreed mode of settlement, shall be referred for final
decision to a tribunal of three arbitrators, one to be named by the Secretary-General, one to be named by the Secretary of State of the
United States, and the third to be chosen by the two, or, if they should fail to agree upon a third, then by the President of the
International Court of Justice."
For that purpose the Court set out the sequence of events which led first the Secretary-General and then the General Assembly to
conclude that such a dispute existed.
The events in question centred round the Permanent Observer Mission of the Palestine Liberation Organization (PLO) to the United
Nations in New York. The PLO had on 22 November 1974 been invited, by General Assembly resolution 3237 (XXIX), to "participate
in the sessions and the work of the General Assembly in the capacity of observer". It had consequently established an observer
mission in 1974 and maintained an office in New York City outside the United Nations Headquarters District.
In May 1987 a Bill had been introduced into the Senate of the United States, the purpose of which was "to make unlawful the
establishment and maintenance within the United States of an office of the Palestine Liberation Organization"; section 3 of that Bill
provided inter alia that it would be unlawful after its effective date:
"notwithstanding any provision of the law to the contrary, to establish or maintain an office, headquarters, premises or other facilities
or establishments within the jurisdiction of the United States at the behest or direction of, or with funds provided by, the Palestine
Liberation Organization . . ."
The text of that Bill became an amendment, presented in the Senate in the autumn of 1987, to the "Foreign Relations Authorization
Act, Fiscal Years 1988 and 1989". From the terms of that amendment it appeared that the United States Government would, if the Bill
became law, seek to close the office of the PLO Observer Mission. On 13 October 1987 the Secretary-General accordingly
emphasized, in a letter to the United States Permanent Representative to the United Nations, that the legislation contemplated ran

counter to obligations arising from the Headquarters Agreement, and the following day the PLO Observer brought the matter to the
attention of the United Nations Committee on Relations with the Host Country. On 22 October a spokesman for the Secretary-General
issued a statement to the effect that sections 11-13 of the Headquarters Agreement placed a treaty obligation on the United States to
permit the personnel of the Mission to enter and remain in the United States in order to carry out their official functions.
The report of the Committee on Relations with the Host Country was placed before the Sixth Committee of the General Assembly on
24 November 1987. During consideration of that report the Representative of the United States noted:
"that the United States Secretary of State had stated that the closing of that mission would constitute a violation of United States
obligation under the Headquarters Agreement, and that the United States Government was strongly opposed to it; moreover the United
States Representative to the United Nations had given the Secretary-General the same assurances".
The position taken by the Secretary of State, namely that the United States was
"under an obligation to permit PLO Observer Mission personnel to enter and remain in the United States to carry out their official
functions at United Nations Headquarters",
was also cited by another representative and confirmed by the Representative of the United States.
The provisions of the amendment referred to above became incorporated into the United States "Foreign Relations Authorization Act,
Fiscal Years 1988-1989" as Title X, the "Anti-Terrorism Act of 1987". At the beginning of December 1987 the amendment had not yet
been adopted by Congress. On 7 December, in anticipation of such adoption the Secretary-General reminded the Permanent
Representative of the United States of his view that the United States was under a legal obligation to maintain the long-standing
arrangements for the PLO Observer Mission and sought assurances that, in the event the proposed legislation became law, those
arrangements would not be affected.
The House and Senate of the United States Congress adopted the Anti-Terrorism Act on 15-16 December 1987 and the following day
the General Assembly adopted resolution 42/210 B whereby it called upon the host country to abide by its treaty obligations and to
provide assurance that no action would be taken that would infringe on the arrangements for the official functions of the Mission.
On 22 December the Foreign Relations Authorization Act Fiscal Years 1988-1989, was signed into law by the President of the United
States. The Anti-Terrorism Act forming part thereof was, according to its own terms, to take effect 90 days later. In informing the
Secretary-General of this development, the Acting Permanent Representative of the United States, on 5 January 1988, stated that:
"Because the provisions concerning the PLO Observer Mission may infringe on the President's constitutional authority and, if
implemented, would be contrary to our international legal obligations under the United Nations Headquarters Agreement, the
Administration intends during the ninety-day period before this provision is to take effect, to engage in consultations with the
Congress in an effort to resolve this matter."
The Secretary-General responded, however, by observing that he had not received the assurance he had sought and did not consider
that the statements of the United States enabled full respect for the Headquarters Agreement to be assumed. He went on:
"Under these circumstances, a dispute exists between the Organization and the United States concerning the interpretation and
application of the Headquarters Agreement and I hereby invoke the dispute settlement procedure set out in section 21 of the said
Agreement."
The Secretary-General then proposed that negotiations should begin in conformity with the procedure laid down in section 21.
While agreeing to informal discussions, the United States took the position that it was still evaluating the situation which would arise
from the application of the legislation and could not enter into the dispute settlement procedure of section 21. However, according to a
letter written to the United States Permanent Representative by the Secretary-General on 2 February 1988:
"The section 21 procedure is the only legal remedy available to the United Nations in this matter and . . .the time is rapidly
approaching when I will have no alternative but to proceed either together with the United States within the framework of section 21
of the Headquarters Agreement or by informing the General Assembly of the impasse that has been reached."
On 11 February 1988 the Legal Counsel of the United Nations informed the Legal Adviser of the Department of State of the United
Nations' choice of its arbitrator, in the event of an arbitration under section 21, and, in view of the time constraints, urged him to
inform the United Nations as soon as possible of the United States' choice. No communication in that regard was however received
from the United States.
On 2 March 1988 the General Assembly adopted two resolutions on the subject. In the first, resolution 42/229 A, the Assembly, inter
alia, reaffirmed that the PLO should be enabled to establish and maintain premises and adequate facilities for the purposes of the
Observer Mission, and expressed the view that the application of the Anti-Terrorism Act in a manner inconsistent with that
reaffirmation would be contrary to the international legal obligations of the United States under the Headquarters Agreement, and that
the dispute-settlement procedure provided for in section 21 should be set in operation. The other resolution, 42/229 B already cited,
requested an advisory opinion of the Court. Although the United States did not participate in the vote on either resolution, its Acting
Permanent Representative afterwards made a statement pointing out that his Government had made no final decision concerning the
application or enforcement of the Anti-Terrorism Act with respect to the PLO Mission and that it remained its intention "to find an
appropriate resolution of this problem in light of the Charter of the United Nations, the Headquarters Agreement, and the laws of the
United States''
Material events subsequent to the submission of the request

(paras. 23-32)
The Court, while noting that the General Assembly had requested it to give its opinion "in the light of facts reflected in the reports"
presented by the Secretary-General prior to 2 March 1988, did not consider in the circumstances that that form of words required it to
close its eyes to relevant events subsequent to that date. It therefore took into account the following developments, which had
occurred after the submission of the request.
On 11 March 1988, the United States Acting Permanent Representative informed the Secretary-General that the Attorney-General had
determined that the Anti-Terrorism Act required him to close the office of the PLO Observer Mission, but that, if legal actions were
needed to ensure compliance, no further actions to close it would be taken
"pending a decision in such litigation. Under the circumstances, the United States believes that submission of this matter to arbitration
would not serve a useful purpose".
The Secretary-General took strong issue with that viewpoint in a letter of 15 March. Meanwhile the Attorney-General, in a letter of 11
March, had warned the Permanent Observer of the PLO that, as of 21 March, the maintenance of his Mission would be unlawful.
Since the PLO Mission took no steps to comply with the requirements of the Anti-Terrorism Act, the Attorney-General sued for
compliance in the District Court for the Southern District of New York. The United States' written statement informed the Court,
however, that no action would be taken
"to close the Mission pending a decision in that litigation. Since the matter is still pending in our courts, we do not believe arbitration
would be appropriate or timely."
Limits of the Court's task
(para. 33)
The Court pointed out that its sole task, as defined by the question put to it, was to determine whether the United States was obliged to
enter into arbitration under section 21 of the Headquarters Agreement. It had in particular not to decide whether the measures adopted
by the United States in regard to the PLO Observer Mission ran counter to that Agreement.
Existence of a dispute
(paras. 34-44)
Given the terms of section 21 (a), quoted above, the Court was obliged to determine whether there existed a dispute between the
United Nations and the United States and, if so, whether that dispute concerned the interpretation or application of the Headquarters
Agreement and had not been settled by negotiation or other agreed mode of settlement.
To that end, the Court recalled that the existence of a dispute, that is to say, a disagreement on a point of law or a conflict of legal
views or interests, is a matter for objective determination and cannot depend upon the mere assertions or denials of parties. In the
present case, the Secretary-General was of the view, endorsed by the General Assembly, that a dispute within the meaning of section
21 existed from the moment the Anti-Terrorism Act was signed into law and in the absence of adequate assurances that the Act would
not be applied to the PLO Observer Mission; he had moreover formally contested the consistency of the Act with the Headquarters
Agreement. The United States had never expressly contradicted that view, but had taken measures against the Mission and indicated
that they were being taken irrespective of any obligations it might have under that Agreement.
However, in the Court's view, the mere fact that a Party accused of the breach of a treaty did not advance any argument to justify its
conduct under international law did not prevent the opposing attitudes of the parties from giving rise to a dispute concerning the
treaty's interpretation or application. Nonetheless, the United States had during consultations in January 1988 stated that it "had not
yet concluded that a dispute existed" between it and the United Nations, "because the legislation in question had not yet been
implemented", and had subsequently, while referring to "the current dispute over the status of the PLO Observer Mission", expressed
the view that arbitration would be premature. After litigation had been initiated in the domestic courts, its written statement had
informed the Court of its belief that arbitration would not be "appropriate or timely".
The Court could not allow considerations as to what might be "appropriate" to prevail over the obligations which derived from section
21. Moreover, the purpose of the arbitration procedure thereunder was precisely the settlement of disputes between the United Nations
and the host country without any prior recourse to municipal courts. Neither could the Court accept that the undertaking not to take
any other action to close the Mission before the decision of the domestic court had prevented a dispute from arising.
The Court deems that the chief, if not the sole, objective of the Anti-Terrorism Act was the closure of the office of the PLO Observer
Mission and noted that the Attorney-General considered himself under an obligation to take steps for that closure. The SecretaryGeneral had consistently challenged the decisions first contemplated and then taken by the United States Congress and
Administration. That being so, the Court was obliged to find that the opposing attitudes of the United Nations and the United States
showed the existence of a dispute, whatever the date on which it might be deemed to have arisen.
Qualification of the dispute
(paras. 46-50)
As to whether the dispute concerned the interpretation or application of the Headquarters Agreement, the United Nations had drawn
attention to the fact that the PLO had been invited to participate in the sessions and work of the General Assembly as an observer;
hence the PLO Mission was covered to establish and maintain premises and adequate functional facilities. In the United Nations' view,
the measures envisaged by Congress and eventually taken by the United States Administration would thus be incompatible with the

Agreement if applied to the Mission, and their adoption had accordingly give rise to a dispute with regard to the interpretation and
application of the Agreement.
Following the adoption of the Anti-Terrorism Act, the United States had first contemplated interpreting it in a manner compatible with
its obligations under the Agreement, but on 11 March its Acting Permanent Representative had informed the Secretary-General of the
Attorney-General's conclusion that the Act required him to close the Mission irrespective of any such obligations. The SecretaryGeneral had disputed that view on the basis of the principle that international law prevailed over domestic law. Accordingly, although
in a first stage the discussions had related to the interpretation of the Agreement and, in that context, the United States had not
disputed that certain of its provisions applied to the PLO Observer Mission, in second stage the United States had given precedence to
the Act over the Agreement, and that had been challenged by the Secretary-General.
Furthermore, the United States had taken a number of measures against the PLO Observer Mission. Those had been regarded by the
Secretary-General as contrary to the Agreement. Without disputing that point, the United States had stated that the measures in
question had been taken "irrespective of any obligations the United States may have under the Agreement". Those two positions were
irreconcilable; thus there existed a dispute between the United Nations and the United States concerning the application of the
Headquarters Agreement.
The question might be raised as to whether in United States domestic law the Anti-Terrorism Act could only be regarded as having
received effective application when or if, on completion of the proceedings before the domestic courts, the Mission was in fact closed.
That was however not decisive in regard to section 21, which concerned the application of the Agreement itself, not of the measures
taken within the municipal laws of the United States.
Condition of non-settlement by other agreed means
(paras. 51-56)
The Court then considered whether the dispute was one "not settled by negotiation or other agreed mode of settlement", in the terms
of section 21(a). The Secretary-General had not only invoked the dispute-settlement procedure but also noted that negotiations must
first be tried, and had proposed that they begin on 20 January 1988. Indeed consultations had already started on 7 January and were to
continue until 10 February. Moreover on 2 March the Acting Permanent Representative of the United States had stated in the General
Assembly that his Government had been in regular and frequent contact with the United Nations Secretariat "concerning an
appropriate resolution of this matter". The Secretary-General had recognized that the United States did not consider those contacts and
consultations to lie formally within the framework of section 21 and had noted that the United States was taking the position that,
pending evaluation of the situation which would arise from application of the Anti-Terrorism Act, it could not enter into the dispute
settlement procedure outlined in section 21.
The Court found that, taking into account the United States' attitude, the Secretary-General had in the circumstances exhausted such
possibilities of negotiation as were open to him, nor had any "other agreed mode of settlement" been contemplated by the United
Nations and the United States. In particular, the current proceedings before the United States courts could not constitute and "agreed
method of settlement" within the meaning of section 21, considering that their purpose was the enforcement of the Anti-Terrorism Act
and not the Agreement. Furthermore, the United Nations had never agreed to a settlement in the domestic courts.
Conclusion
(paras. 57-58)
The Court had therefore to conclude that the United States was bound to respect the obligation to enter into arbitration. That
conclusion would remain intact even if it were necessary to interpret the settlement that the measures against the Mission were taken
"irrespective of any obligations" of the United States under the Headquarters Agreement as intended to refer not only to any
substantive obligations under sections 11-13 but also to the obligation to arbitrate provided for in section 21. It was sufficient to recall
the fundamental principle of international law that international law prevailed over domestic law, a principle long endorsed by judicial
decisions.
For those reasons, the Court was unanimously of the opinion:
"that the United States of America, as a party to the Agreement between the United Nations and the United States of America
regarding the Headquarters of the United Nations of 26 June 1947, is under an obligation, in accordance with section 21 of that
Agreement, to enter into arbitration for the settlement of the dispute between itself and the United Nations".
*
**
Judge Elias appended to the Advisory Opinion a declaration expressing the view that the dispute already came into being when the
Congress of the United States passed the Anti-Terrorism Act, signed on 22 December 1987, and adding that the purpose of the
Secretary-General could only be achieved if Congress adopted further legislation to amend the Act.
Judge Oda appended a separate opinion stressing that little difference of views subsisted between the United Nations and the United
States as to the interpretation of the substantive provisions of the Headquarters Agreement affecting the PLO Observer Mission, and
that, where application of the Agreement was concerned, both sides agreed that any forced closure of the Mission's office would
conflict with the international obligations of the United States. The issue was rather as to what course of action within the domestic
legal structure would be tantamount to such forced closure, and the consultations that had been undertaken had been concerned with

the applicability not so much of the relevant substantive provisions of the Agreement (sections 11-13) as of the compromissory clause
(section 21) itself. The crux of the matter was the question whether a domestic legislation had power to override treaties, an issue
which the Court had not been called upon to address. That being so, the General Assembly had not presented the Court with the
question which it would have been the most useful for it to answer if the Assembly's underlying concern was to be met.
Judge Schwebel maintained in a separate opinion that, while the Court's essential conclusion was tenable, the question posed admitted
of more than one answer. He agreed that it was axiomatic that a State could not avoid its international legal obligations by the
enactment of domestic legislation that a party to an arbitration clause could not avoid its arbitral obligations by denying the existence
of a dispute or by asserting that its arbitration would serve no useful purpose; and that international arbitral clauses do not require for
their implementation the prior exhaustion of local remedies. However, as to the interpretation of the Headquarters Agreement, it was
clear in the current case that there was no difference of interpretation between the United Nations and the United States; in the
Secretary-General's term, their interpretation "coincided". The real issue was whether a dispute had already arisen over the application
of the Agreement, or would only arise if and when the Anti-Terrorism Act were effectively applied to the PLO's Observer Mission.
The Secretary-General had repeatedly taken the position that a dispute would arise only if the United States failed to give assurances
that current arrangements for the PLO Mission would be "maintained" and application to it of the Act would be "deferred". The
United States had given assurances that no action would be taken to close the Mission pending a decision in current litigation in U.S.
courts. It was not clear why such assurances were not sufficient for the time being. Should the Act be effectively applied, a dispute
would then arise triggering the U.S. obligation to arbitrate; should the Act be held by U.S. courts not to apply to the PLO's New York
City office, there would be no dispute. However, it could be reasonably maintained, as the U.N. Legal Counsel had, that a U.S. court
ruling against applying the Act to the PLO would not mean that a dispute had never existed but merely would put an end to the
dispute, a consideration which had led Judge Schwebel to vote for the Court's Opinion.
Judge Shahabuddeen appended a separate opinion expressing the view that the central issue was whether a dispute existed at the date
of the request for an advisory opinion and noting that the Court had not determined the stage at which a dispute had come into
existence. In his view, the giving of assent to the Anti-Terrorism Act on 22 December 1987 had automatically brought the competing
interests of the parties to the Headquarters Agreement into collision and precipitated a dispute. As to any suggestion that no dispute
could exist before the Agreement had been breached by enforced closure of the PLO office, Judge Shahabuddeen denied for various
reasons that such actual breach formed a precondition of that kind but, even if it did, the position of the United Nations could be
construed as connoting a claim that the very enactment of the law in question, whether in itself or taken in conjunction with steps
taken in pursuance of it, interfered with the United Nations' right under the Agreement to ensure that its permanent invitees were able
to function out of established offices without needless interference; such a claim was not so unarguable as to be incapable of giving
rise to a real dispute. The parties agreed that enforced closure of the PLO office would constitute a breach of the Agreement, but did
not agree as to whether the Act was in itself creative of a current violation. Accordingly there in fact existed a dispute concerning the
interpretation of the Agreement as well as its application.
CASE OF THE MONETARY GOLD
REMOVED FROM ROME IN 1943
Judgment of 15 June 1954
The Monetary Gold Case was brought before the Court by an Application of the Italian Republic against the French
Republic, the United Kingdom of Great Britain and Northern Ireland and the United States of America.
The Court had been requested to determine certain legal questions upon which depended the delivery to Italy or to
the United Kingdom of a quantity of monetary gold removed by the Germans from Rome in 1943, recovered in
Germany and found to belong to Albania. The United Kingdom pointed out that the Court had found that Albania
was under an obligation to pay compensation to the United Kingdom for the damage caused by the explosions in the
Corfu Channel in 1946 and that the damages due to the United Kingdom had never been paid. For its part, Italy
contended, in the first place, that she had a claim against Albania arising out of the measures of confiscation
allegedly taken by the Albanian Government in 1945, and, in the second place, that her claim should have priority
over that of the United Kingdom.
The Italian Government, relying on the Statement signed at Washington on April 25th, 1951 by the Governments of
France, the United Kingdom and the United States, referred these two questions to the Court. But after filing her
Application, Italy felt some doubt as to the jurisdiction of the Court and requested the Court to adjudicate on the
question of jurisdiction as a preliminary issue.
It is upon the question of jurisdiction that the Court adjudicated in its Judgment. The Court found first, unanimously,
that in the absence of the consent of Albania, it was not authorized to adjudicate upon Italy's claim against Albania
and, secondly, by thirteen votes to one, that the priority issue could only arise if the first question had been decided
in favour of Italy.

Judge Levi Carneiro appended to the Judgment of the Court a statement of his dissenting opinion (on the second
question); two other Members of the Court (President, Sir Arnold McNair, and Judge Read), while voting in favour
of the decision, appended to the Judgment a declaration and individual opinion respectively.
The Judgment began by reciting the facts. The origin of the present case was to be found in Part III of the Agreement
on Reparation from Germany (Paris, January 14th, 1946) which provided that the monetary gold found in Germany
should be pooled for distribution among the countries entitled to receive a share of it. France, the United Kingdom
and the United States were signatories of the Agreement, as well as Albania and other States; Italy adhered
subsequently to Part III. The implementation of the provisions of Part III having been entrusted to the Governments
of France, the United Kingdom and the United States, these three Governments appointed a Tripartite Commission
to assist them in this matter In respect of a quantity of gold removed from Rome in 1943, which belonged to the
National Bank of Albania, the Tripartite Commission, confronted by competing claims of Albania and Italy, was
unable to give a decision. The three Governments then agreed to submit the question to an arbitrator (Washington
Agreement of April 25th, 1951). At the same time, they declared (Washington Statement of the same date) that if the
finding of the arbitrator should be in favour of Albania, they would be confronted by another problem since the gold
was claimed by Italy and by the United Kingdom for reasons not covered by Part III of the Paris Agreement; and
they decided that the gold would be delivered to the United Kingdom in partial satisfaction of the Judgment of the
court of December 15th, 1949, in the Corfu Channel case unless within a certain time-limit from the date of the
arbitrator's Opinion, either Albania applied to the Court requesting it to adjudicate on her rights, or Italy made an
Application to the Court for the determination of the questions, first, whether by reason of any rights which she
claimed to possess as a result of the Albanian law of January 13th, 1945, or under the provisions of the Italian Peace
Treaty, the gold should be delivered to her rather than to Albania, and second whether the Italian claim should or
should not have priority over the claim of the United Kingdom, if this issue should arise.
Thus, within the prescribed time-limit, Italy made an Application to the Court which was communicated in the
customary manner to States entitled to appear before the Court and also transmitted to the Albanian Government.
Time-limits for the filing of the pleadings were then fixed by the Court. However, instead of presenting its Memorial
on the merits, the Italian Government questioned the jurisdiction of the Court to adjudicate upon the first question
relating to the validity of the Italian claim against Albania. The Parties having been requested to submit their views
on the problem thus raised, the Italian Government contended that the Court did not have a sufficient basis for
adjudication on the ground that the proceedings contemplated by the Washington Statement were in reality directed
against Albania and that Albania was not a Party to the suit. As regards the United Kingdom, it saw in the challenge
to the Court's jurisdiction made by Italy a ground for questioning the validity of the Application which, in the
submission of the United Kingdom, should be regarded as not conforming to the Washington Statement or as invalid
and void, or as withdrawn. The two other respondent Governments France and the United States, did not deposit
formal Submissions.
After thus reciting the facts, the Court dealt with the views of both sides, beginning with the Submissions of the
United Kingdom which have just been summarized. Indeed, it was unusual that an applicant State should challenge
the jurisdiction of the Court, but regard must be had for the circumstances of the case: it was the Washington
Statement, emanating from the three Governments, that formulated the offer of jurisdiction accepted by Italy and
pre-determined the subject-matter of the suit, and it was after taking the initial step that Italy felt some doubt and
filed a Preliminary Objection on the basis of Article 62 of the Rules of Court. This Article did not preclude the
raising of a preliminary objection by an applicant in such circumstances. By this Objection, Italy's acceptance of
jurisdiction of the Court has not become less complete or less positive than was contemplated in the Washington
Statement. To request the Court to settle the problem of jurisdiction was not tantamount to asking the Court not to
determine the questions set out in the Application under any circumstances. The Application was a real one; and it
remained real unless it was withdrawn; but it had not been withdrawn. Finally, the Application, if not invalid when it
was filed, could not have become invalid by reason of the presentation of the objection to the jurisdiction.
Having thus found that it had been validly seised by the Application and that that Application still subsisted, the
Court proceeded to consideration of the Italian Objection to the jurisdiction in order to decide whether or not it could
adjudicate upon the merits of the questions submitted to it by the Application. The Court noted that, in respect of the
relations between the three Governments and Italy, the Application was in conformity with the offer made in the
Washington Statement, both as regards the subject-matter of the suit and the Parties to it; the Court therefore had
jurisdiction to deal with the questions submitted in the Application. But was this jurisdiction co-extensive with the
task entrusted to the Court?
In this connection the Court noted that it was not merely called upon to say whether the gold should be delivered to
Italy or to the United Kingdom: it was requested to determine first certain legal questions upon which the solution of
the problem depended. The first submission in the Application centred around a claim by Italy against Albania, a

claim to indemnification for an alleged wrong. Italy believed that she possessed a right against Albania for the
redress of an international wrong which, according to Italy, Albania had committed against her. In order, therefore,
to determine whether Italy was entitled to receive the gold, it was necessary to determine whether Albania had
committed any international wrong against Italy, and whether she was under an obligation to pay compensation to
her; and, if so, to determine also the amount of compensation. In order to decide such questions it was necessary to
determine whether the Albanian law of January 13th, 1945 was contrary to international law. In the determination of
these questions, which related to the lawful or unlawful character of certain actions of Albania vis--vis Italy, only
two States, Italy and Albania, were directly interested.
To go into the merits of such questions would be to decide a dispute between Italy and Albania - which the Court
could not do without the consent of Albania. If the Court did so, it would run counter to a well-established principle
of international law embodied in the Court's Statute, namely, that the Court can only exercise jurisdiction over a
State with its consent.
It has been contended that Albania might have intervened, since Article 62 of the Statute gives to a third State, which
considers that it has an interest of a legal nature which may be affected by the decision in the case, the right to do so;
that the Statute did not prevent proceedings from continuing, even when a third State which would be entitled to
intervene refrained from doing so; and that consequently the fact that Albania had abstained from doing so should
not make it impossible for the Court to give judgment. But in the present case, Albania's legal interests would not
only be affected by a decision; they would constitute the very subject-matter of the decision. Therefore, the Statute
could not be regarded, even by implication, as authorizing that proceedings could be continued in the absence of
Albania.
The Court found that, although Italy and the three respondent States had conferred jurisdiction upon the Court, it
could not exercise this jurisdiction to adjudicate on the first claim submitted by Italy. As for the second claim, which
relates to the priority between the claims of Italy and the United Kingdom, it would only arise when it had been
decided that, as between Italy and Albania, the gold should go to Italy. This claim was consequently dependent upon
the first claim in the Application. The Court accordingly found that inasmuch as it could not adjudicate on the first
Italian claim, it should refrain from examining the second.