consented.
They thus created rights and duties in international law for the
Maritime Delimitation and Territorial Questions
between Qatar and Bahrain
(Qatar v. Bahrain)
On 8 July 1991, Qatar filed an Application instituting proceedings before the
Court against Bahrain concerning certain disputes relating to sovereignty
over the Hawar islands, sovereign rights over the shoals of Dibal and Quit'at
Jaradah, and the delimitation of the maritime areas of the two states. Qatar
founded the jurisdiction of the Court upon two agreements between the
parties dated December 1987 and December 1990. The subject and scope of
the commitment to jurisdiction were to be determined by a formula proposed
by Bahrain to Qatar in October 1988 and accepted by Qatar in December
1990. Bahrain contested the jurisdiction of the Court arguing that none of the
documents referred to by Qatar contained a commitment to have the dispute
settled by the Court.
In 1987, the Parties accepted, in an exchange of letters, proposals by Saudi
Arabia which provided for a settlement by the Court of all matters in dispute
between the parties. These proposals included the formation of a Tripartite
Committee, composed of representatives from Bahrain, Qatar and the
Kingdom of Saudi Arabia, "for the purpose of approaching the International
Court of Justice and satisfying the necessary requirements to have the dispute
submitted to the Court in accordance with its regulations and instructions so
that a final ruling, binding upon both parties, be issued."
In 1988, Bahrain transmitted a text to Qatar (the "Bahraini formula") in
which the Parties request the Court "to decide any matter of territorial right
or title or interest which may be a matter of difference between their
respective maritime areas of seabed, subsoil and superjacent waters." At the
1990 annual meeting of the Co-operation Council of Arab States of the Gulf,
Qatar let it be known that it was ready to accept the Bahraini formula. The
minutes of the meeting (Doha Minutes) show the two parties reaffirmed what
was agreed previously between them: that they continue to use the good
offices of Saudi Arabia until May 1991, following which date the matter may
be submitted to the Court in accordance with the Bahraini formula. Bahrain
contends that neither the 1987 agreements nor the 1990 minutes constitute
legally binding instruments which allow for a unilateral seizure of the Court.
In its judgement of 1 July 1994, the Court concluded that the 1987 exchange
of letters and the 1990 minutes were international agreements binding upon
the parties. The Court found that the minutes were not only a simple record
of negotiations, but enumerated commitments to which the parties had
parties.
As to the content of the agreements, the Court held that already in 1987 the
parties had committed themselves to submit all disputed matters to the Court.
The determination of "disputed matters", according to the Court, was settled
by the 1990 minutes, in which Qatar consented to the Bahraini formula.
Therefore, both parties had accepted that the Court, once seized, should
decide "any matter of territorial right or other title or interest which may be a
matter of difference between [the Parties]; and should "draw a single
maritime boundary between their respective maritime areas of seabed,
subsoil and superjacent waters". While permitting the presentation of distinct
claims by each of the Parties, the Bahraini formula, nonetheless, pre-
supposed that the whole of the dispute would be submitted to the Court.
As the Court had before it only an Application by Qatar and since Bahrain
claimed that this Application did not comprise the whole dispute, the Court
decided to afford the Parties an opportunity to ensure that the whole of the
dispute as comprehended by the 1990 minutes and the Bahraini formula be
submitted. The Parties were given until 30 November 1994 to do this jointly
or by separate acts.
In it's judgement of 15 February 1995, the Court decided finally on the
questions of jurisdiction and admissibility. On 30 November 1990, Qatar
filed a document entitled "Act to comply with paragraphs (3) and (4) of
operative paragraph 41 of the Judgement of the Court dated 1 July 1994". In
this document Qatar referred to the absence of an agreement between the
parties to act jointly and declared that therefore Qatar was submitting to the
Court "the whole of the dispute between Qatar and Bahrain as circumscribed
by the text ... referred to in the 1990 Doha Minutes as the Bahraini formula."
Qatar enumerated the subjects which, in its view, fell within the Court's
jurisdiction:
"1. The Hawar Islands, including the island of Janan;
2. Fasht al Dibal and Qit'at Jaradah;
3. The archipelagic baselines;
4. Zubarah;
The areas for fishing for pearls and for fishing for swimming fish and other
5.
matters connected with maritime boundaries."
On 30 November 1994, the Registry of the Court received a document from
Bahrain entitled "Report of the State of Bahrain to the International Court of
Justice on the attempt by the Parties to implement the Court's Judgement of
1st July, 1994". In that document Bahrain argued that the Judgement of 1 July
1994 required a consensual submission of the whole of the dispute. Yet, the
documents presented by Qatar rested within the unilateral Application of 8
July 1991. In its observations of 5 December 1994 regarding Qatar's Act of
30 November 1994, Bahrain argued that the Court did not declare in its
Judgement of 1 July 1994 that it had jurisdiction. Bahrain submitted that the
Court lacked jurisdiction at that time because of the unilateral application of
Qatar. According to Bahrain, as the Act of 30 November 1994 presented by
Qatar rested within the framework of the initial unilateral application the
Court still lacked jurisdiction. The Court therefore had to decide whether the
exchange of letters or the 1990 Doha Minutes permitted a unilateral
application.
The Court held that the exchange of letters, together with the Doha Minutes,
constituted an agreement between the parties to submit the whole of the
dispute to the Court. Concerning the modalities of application, the parties had
different views on the interpretation of the arabic term "al-tarafan". Bahrain
argued that it meant both parties whereas Qatar understood it as meaning
"each party". The Court interpreted the term in the light of its context and its
aim and came to the conclusion that it meant an alternative, not cumulative
seisen. Therefore, the Court understood the Doha Minutes to allow a
unilateral application by each of the parties.
As to the question of whether the "whole of the dispute" was submitted, the
Court held that with the Act of 30 November 1994 Qatar had indeed
submitted the whole of the dispute. The Court therefore considered that it had
jurisdiction and that the case was admissible.
Five Judges appended dissenting opinions. According to Judge Schwebel, the
Court did not examine thoroughly enough the drafting of the 1990 Doha
Minutes during which the explicit possibility for each party to seize the Court
was amended to a text which only meant "the parties". This element of the
"travaux prparatoires" led Judge Schwebel to the conclusion that a unilateral
application was excluded. Judge Oda repeated his opinion from the first
judgement where he considered the Doha Minutes not to constitute an
agreement within Article 36 (1) of the Court's Statute. Judge Koroma and
judge ad-hoc Valticos were of the opinion that the term "al-tarafan" and the
drafting history must lead to the conclusion that a unilateral application was
not intended by the parties. Since no joint action by Bahrain and Qatar was
taken they considered that the Court had no jurisdiction.
 assaulted. She suffered mental, but no physical, injury. She claimed damages
A I R F R A NC E V SA K S : 1 9 8 5 against the airline under
Held: The assault was a special risk inherent in air . .
the Convention.

Cited Barclay -v- British Airways plc CC (Bailii, [2008] EW Misc 1

July 10, 2015 dls 0 Personal Injury, Transport,
(EWCC))
References: [1985] 470 US 392 (Oxford County Court) The claimant slipped as she boarded an aircraft and
Coram: OConnor J sought damages for injuries to her knee. Her claim was brought under the
(United States Supreme Court) The claimant suffered damage to and become Convention. The defendant denied that the injury occurred as the result of an
accident, saying that an . .
permanently deaf in one ear as a result of pressurisation changes while the Cited Barclay -v- British Airways Plc CA (Bailii, [2008] EWCA Civ
aircraft descended to land. The pressure system had worked normally. The 1419, Times)
airline said that the normal operation of a normal pressurisation system could The claimant sought damages for personal injury. The airline said that the injury
not qualify as an article 17 accident. was not the result of an accident within article 17.1. She was walking down the
Held: The text of the Convention implies that, however the word aisle and slipped.
accident is defined, it is the cause of the injury that must satisfy that Held: The appeal was dismissed. The meaning of accident . .
definition rather than the occurrence of the injury alone. We conclude that
liability under Article 17 of the Warsaw Convention arises only if a
passengers injury is caused by an unexpected or unusual event or
happening that is external to the passenger. This definition should be flexibly
applied after assessment of all the circumstances surrounding a passengers
injuries. and But when the injury indisputably results from the
passengers own internal reaction to the usual, normal, and expected
operation of the aircraft, it has not been caused by an accident, and Article 17
of the Warsaw Convention cannot apply. and Any injury is the product
of a chain of causes, and we require only that the passenger be able to prove
that some link in the chain was an unusual or unexpected event external to
the passenger.
Statutes: Warsaw Convention 17
This case is cited by:
Cited In re Deep Vein Thrombosis and Air Travel Group Litigation QBD
(Times 17-Jan-03, Bailii, [2002] EWHC 2825 (QB))
The claimants claimed to have suffered deep vein thrombosis having been sat in
cramped conditions for long periods whilst travelling by air. They sought
compensation, saying that the failure by the airlines to warn them and take steps
to minimise . .
Cited Chaudhari -v- British Airways Plc CA (Times 07-May-97, Bailii,
[1997] EWCA Civ 1413, CCRTI 96/0229/G)
The passenger injured himself as he fell from an aeroplane chair because of pre-
existing injury.
Held: He had no claim under the Convention. The falling of a semi-paralysed
person whilst he was trying to get to his feet to go to the lavatory . .
Cited Morris -v- KLM Royal Dutch Airlines CA (Times 15-Jun-01, Gazette
21-Jun-01, Bailii, [2001] EWCA Civ 790, [2001] 3 WLR 351, [2001] 3 All ER
126, [2002] QB 100, [2001] CLC 1460, [2001] 2 All ER (Comm) 153)
An unaccompanied female passenger aboard an aircraft was indecently
Fisheries Jurisdiction (United Kingdom
v. Iceland)
Facts
Iceland (defendant) sought to extend its exclusive fisheries jurisdiction from
twelve to fifty miles around its shores. The United Kingdom (UK) challenged
this extension of jurisdiction and sought to submit the case to the
International Court of Justice (ICJ.) The UK relied upon an earlier treaty
agreement between the parties where the UK agreed to recognize Icelands
twelve-mile exclusive fisheries jurisdiction in exchange for Icelands
agreement to submit all disputes over fisheries jurisdiction to the ICJ. Iceland
argued that it was not bound by this agreement to submit all disputes to the
ICJ, however, because of changing legal circumstances in international law.
Iceland argued that the standard, default limit for exclusive fisheries
jurisdiction for states was typically now twelve miles. This was not the case
when Iceland first signed its agreement with the UK, however, and the
agreement to a twelve-mile limit then constituted a compromise for Iceland.
Due to changing trends in international law, Iceland argued that its previous
agreement to the twelve-mile compromise in exchange for ICJ jurisdiction
was now void for lack of consideration on the UKs part.

Rule of Law

The rule of law is the black letter law upon which the court rested its
decision. To access this section, start your 7-day free trial of Quimbee for
Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a
question. To access this section, start your 7-day free trial of Quimbee for
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Holding and Reasoning

The holding and reasoning section includes:

A yes or no answer to the question framed in the issue section;

A summary of the majority or plurality opinion, using the CREAC method; and
The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

Advisory Opinion on Namibia
A summary of the majority or plurality opinion, using the CREAC method; and
The procedural disposition (e.g. reversed and remanded, affirmed, etc.).
International Court of Justice, Advisory Opinion
1971 I.C.J. 16

Facts
South Africa occupied Namibia (formerly South West Africa) where it
instituted a system of apartheid. In 1966, in response to apartheid, the United
Nations General Assembly issued a resolution stating that South Africas
continued mandate from the League of Nations to Namibia was terminated.
The General Assembly concluded that South Africa breached the mandate by
instituting apartheid and was thus in Namibia illegally. South Africa ignored
the General Assemblys resolution, however, and the United Nations
Security Council considered the situation. The Security Council reaffirmed
the General Assemblys resolution and stated that South Africas
continued presence in Namibia was illegal. South Africa remained
unresponsive to this resolution. The Security Council requested an advisory
opinion from the International Court of Justice on the following questions:
What are the legal consequences for States of the continued presence of
South Africa in Namibia, notwithstanding Security Council resolution 276
(1970)?

Rule of Law

The rule of law is the black letter law upon which the court rested its
decision. To access this section, start your 7-day free trial of Quimbee for
Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a
question. To access this section, start your 7-day free trial of Quimbee for
Law Students.

Holding and Reasoning

The holding and reasoning section includes:

A yes or no answer to the question framed in the issue section;

(Hungary/Slovakia)
Judgment of 25 September 1997
The case arose out of the signature, on 16 September 1977, by the Hungarian
People's Republic and the Czechoslovak People's Republic, of a treaty
concerning the construction and operation of the Gabckovo-Nagymaros
system of locks in order to further the utilization of the natural resources of
the Bratislava-Budapest section of the Danube river. The project was
essentially aimed at the production of hydroelectricity, the improvement of
navigation on the relevant section of the Danube and the protection of the
areas along the banks against flooding. It provided for the building of two
series of locks, one at Gabckovo (in Czechoslovak territory) and the other at
Nagymaros (in Hungarian territory), to constitute a single and indivisible
operational system of works.
As a result of intense criticism which the project had generated in Hungary,
the Hungarian Government decided on 13 May 1989 to suspend the works at
Nagymaros pending the completion of various studies. In October 1989,
Hungary decided to not continue the work any further.
During this period, negotiations took place between the parties.
Czechoslovakia also started investigating alternative solutions. One of them,
an alternative solution subsequently known as "Variant C", entailed a
unilateral diversion of the Danube by Czechoslovakia on its territory. On 23
July 1991, the Slovak Government decided to begin construction to put the
Gabckovo Project into operation by the above-mentioned alternative
solution.
On 19 May 1992, the Hungarian Government transmitted to the
Czechoslovak Government a note verbale unilaterally terminating the 1977
Treaty with effect from 25 May 1992. On 15 October 1992, Czechoslovakia
began work to enable the Danube to be closed and, starting on 23 October,
proceeded to the damming of the river, before Slovakia became an
independent State on 1 January 1993.
Slovakia and Hungary then concluded in April 1993 a compromis, inter
alia requesting the Court to decide whether the Republic of Hungary had
been entitled to suspend and subsequently abandon, in 1989, the works on the
project.
In its judgment of 25 September 1997, the Court started by taking the view
that in many respects the provisions of the Vienna Convention concerning the
termination and the suspension of the operation of treaties, set forth in its
Articles 60 to 62, are to be considered as a codification of customary
international law. It then found that in suspending and subsequently
abandoning the works for which it was still responsible Hungary had
expressed its unwillingness to comply with at least some of the provisions of
the Treaty of 1977, the effect of which was to render impossible the
accomplishment of the system of works that the Treaty expressly described as
single and indivisible.
The Court further considered that the state of necessity is a ground
recognized by customary international law for precluding the wrongfulness
of an act not in conformity with an international obligation. It also
considered, moreover, that such ground for precluding wrongfulness can only
be accepted on an exceptional basis. It acknowledged that the concerns
expressed by Hungary for its natural environment in the region related to an
essential interest, but that the perils invoked by Hungary, without prejudging
their possible gravity, were not sufficiently established in 1989, nor had they
been imminent; and that Hungary had had available to it at that time means
of responding to these perceived perils other than the suspension and
abandonment of works with which it had been entrusted.
The Court also noted that Hungary - when it decided to conclude the 1977
Treaty had been presumably aware of the situation as then known; and
that the need to ensure the protection of the environment had not escaped the
parties. The Court therefore concluded that, even if it had been established
that there was, in 1989, a state of necessity linked to the performance of the
1977 Treaty, Hungary would not have been permitted to rely upon that state
of necessity in order to justify its failure to comply with its treaty obligations,
as it had helped to bring it about. In the light of the conclusions reached
above, the Court found that Hungary had not been entitled to suspend and
subsequently abandon the works for which it was responsible.
As to the question whether the Czech and Slovak Federal Republic had been
entitled to proceed, in November 1991, to the provisional solution and to put
into operation from October 1992 this system, the Court observed that the
basic characteristic of the 1977 Treaty was to provide for the construction of
the system of locks as a joint investment constituting a single and indivisible
operational system of works. The Court accordingly concluded that
Czechoslovakia, in unilaterally putting Variant C into operation, was not
applying the 1977 Treaty but, on the contrary, violated certain of its express
provisions, and, in so doing, had committed an internationally wrongful act.
As to the legal effects of the notification of the termination of the Treaty by
the Republic of Hungary, the Court first observed that, even if a state of
necessity is found to exist, it is not a ground for the termination of a treaty
but may be only invoked to exonerate from its responsibility a State which President Schwebel and Judge Rezek appended declarations to the judgment
has failed to implement a treaty. while Judges Weeramantry, Bedjaoui and Koroma all appended separate
opinions. Finally, Judges Oda, Ranjeva, Herzegh, Fleischhauer, Vereshetin
Besides, in the Court's view, the prevailing political conditions had not been
and Parra-Aranguren and Judge ad hoc Skubiszewski appended dissenting
so closely linked to the object and purpose of the Treaty that they constituted
opinions.
an essential basis of the consent of the parties and, in changing, therefore did
not radically alter the extent of the obligations still to be performed. The On September 3, 1998, Slovakia, on the basis of Article 5 (3) of the Special
changed circumstances advanced by Hungary had thus, in the Court's view, Agreement, filed a request for an additional judgment in the case, such an
not been of such a nature that their effect would radically transform the additional judgment being necessary, according to Slovakia, because of the
extent of the obligations still to be performed in order to accomplish the unwillingness of Hungary to implement the Judgment delivered by the Court.
project. At the moment of writing, this item was still under negotiations between the
Parties; no formal act having been taken by the Court.
While reiterating that Czechoslovakia had violated the treaty when it diverted
the waters of the Danube, the Court found that it had not yet done so when
constructing the works which eventually led to the putting into operation of
Variant C. In the Court's view, therefore, the notification of termination by
Hungary on 19 May 1992 had been premature and Hungary had thus not
been entitled to invoke any such breach of the treaty as a ground for
terminating it when it did.
Finally, the Court took the view that although it had found that both Hungary
and Czechoslovakia had failed to comply with their obligations under the
1977 Treaty, this reciprocal wrongful conduct did not bring the Treaty to an
end nor did it justify its termination.
In the light of these conclusions, the Court found that the notification of
termination by Hungary of 19 May 1992 did not have the legal effect of
terminating the 1977 Treaty.
As to the question whether Slovakia had become a party to the 1977 Treaty
as a successor State of Czechoslovakia, the Court referred to the principle
that treaties of a territorial character remain unaffected by a succession of
States, a principle which, according to the Court, is part of customary
international law. The Court accordingly concluded that the Treaty itself had
not been affected by a succession of States and had thus become binding
upon Slovakia on 1 January 1993.
As to the legal consequences of the judgment, the Court observed that the
1977 Treaty was still in force and consequently primarily governed the
relationship between the Parties. Taking into account the fact, however, that
the Treaty had not been fully implemented by either party for years, it
considered that the factual situation as it had developed since 1989 was to be
placed within the context of the preserved and developing treaty relationship,
in order to achieve its object and purpose in so far as that is feasible.
Edye v. Robertson 112 U.S. 580 (1884)

Facts:

In 1882 the Congress passed an act providing that a duty of fifty cents should be
collected for each and every passenger who was not a citizen of the United States,
coming from a foreign port to any port within the United States. Individuals and
steamship companies brought suit against the collector of customs at New York, Mr.
WH Robertson, for the recovery of the sums of money collected. The act was challenge
on the grounds that it violated numerous treaties of the US government with friendly
nations.

Issue:

WON the act is void because of the conflict with the treaty.

Ruling:

A treaty is a compact between independent nations, which depends for its enforcement
upon the interest and honor of the governments that are parties to a treaty. Treaties that
regulate the mutual rights of citizens and subjects of the contracting nations are in the
same category as acts of Congress. When these rights are of such a nature as to be
enforced by a court of justice, the court resorts to the treaty as it would to a statute.
However, a constitution gives a treaty no superiority over an act on congress. In short, so
far as a treaty made by the United States with any foreign nation can become the subject
of judicial cognizance in the courts of this country, it is subject to such acts as Congress
may pass for its enforcement, modification, or repeal.
 Whitney v. Robertson
124 U.S. 190 (1888)

Brief Fact Summary. The claim which Whitney (P) brought before the court
was that a treaty between the U.S and the Dominican Republic guaranteed that
no higher duty would be assessed on goods from the Dominican Republic than
was assessed on goods from any other country and that duties had been
wrongfully assessed on his sugar imports.

Synopsis of Rule of Law. Where a treaty and an act of legislation conflict, the
one last in date will control.

Facts. The claim which Whitney (P) brought before the court was that a treaty
between the U.S and the Dominican Republic guaranteed that no higher duty
would be assessed on goods from the Dominican Republic than was assessed on
goods from any other country and that duties had been wrongfully assessed on
his sugar imports.

Issue. Where a treaty and an act of legislation conflict, will the one last in date
control?

Held. (Field, J.). Yes. The one with a later date will control where a treaty
and an act of legislation conflict. The act of congress under which the duties
were collected was passed after the treaty and therefore is controlling.
Affirmed.

Discussion. A later inconsistent statute does not abrogate or repeal a treaty.

The treaty still exists as an international obligation although the terms of the
treaty may not be enforceable.

Walter Upright, Appellant, v. Mercury Business Machines Co., Inc.,
Respondent
Appellate Division of the Supreme Court of the State of New York, First
Department.
BREITEL, J. P.
Plaintiff, an individual, sues as the assignee of a trade acceptance drawn on
and accepted by defendant in payment for business typewriters sold and
delivered* to it by a foreign corporation. The trade acceptance is in the
amount of $27,307.45 and was assigned to plaintiff after dishonor by
defendant.
Involved on this appeal is only the legal sufficiency of the first affirmative
defense. It alleges that the foreign corporation is the creature of the East
German Government, a government not recognized by the United States. It
alleges, moreover, that such corporation is an enterprise controlled by and
that it is an arm and instrument of such government.
[13 A.D.2d 38]
On motion addressed to its sufficiency Special Term sustained the defense. For the
reasons that follow the defense should have been stricken as legally insufficient pursuant
to subdivision 6 of rule 109 of the Rules of Civil Practice.
A foreign government, although not recognized by the political arm of the
United States Government, may nevertheless have de facto existence which
is juridically cognizable. The acts of such a de facto government may affect
private rights and obligations arising either as a result of activity in, or with
persons or corporations within, the territory controlled by such de
facto government. This is traditional law (Russian Reinsurance Co. v.
Stoddard, 240 N.Y. 149; Salimoff & Co. v. Standard Oil Co., 262 N.Y.
220; Texas v. White, 74 U.S. 700, 733, overruled in part Morgan v. United
States, 113 U.S. 476, 496; cf. United States v. Rice, 4 Wheat. [17 U. S.] 246,
involving the effect of enemy occupation of United States territory; 1 Hyde,
International Law [2d rev. ed., 1945], pp. 195-197; 48 C. J. S., International
Law, 5, pp. 8-10).
In the Russian Reinsurance Co. case, LEHMAN, J., later Chief Judge,
summarized the principles (p. 158): "The fall of one governmental
establishment and the substitution of another governmental establishment
which actually governs; which is able to enforce its claims by military force
and is obeyed by the people over whom it rules, must profoundly affect all
the acts and duties, all the relations of those who live within the territory over
which the new establishment exercises rule. Its rule may be without lawful
foundation; but lawful or unlawful, its existence is a fact and that fact cannot
be destroyed by juridical concepts. The State Department determines whether
it will recognize its existence as lawful, and until the State Department has
recognized the new establishment, the court may not pass upon its legitimacy
or ascribe to its decrees all the effect which inheres in the laws or orders of a
sovereign. The State Department determines only that question. It cannot
determine how far the private rights and obligations of individuals are
affected by acts of a body not sovereign or with which our government will
have no dealings. That question does not concern our foreign relations. It is
not a political question, but a judicial question. The courts in considering that
question assume as a premise that until recognition these acts are not in full
sense law. Their conclusion must depend upon whether these have
nevertheless had such an actual effect that they may not be disregarded. In
such case we deal with result rather than cause. We do not pass upon what
such an unrecognized governmental authority may do, or upon the right or
wrong of what
[13 A.D.2d 39]
it has done; we consider the effect upon others of that which has been done, primarily
from the point of view of fact rather than of theory."
So, too, only limited effect is given to the fact that the political arm has not
recognized a foreign government. Realistically, the courts apprehend that
political nonrecognition may serve only narrow purposes. While the judicial
arm obligates itself to follow the suggestions of the political arm in effecting
such narrow purposes, nevertheless, it will not exaggerate or compound the
consequences required by such narrow purposes in construing rights and
obligations affected by the acts of unrecognized governments (Sokoloff v.
National City Bank of N. Y., 239 N.Y. 158; Salimoff & Co. v. Standard Oil
Co., supra). Thus, in Sokoloff v. National City Bank of N. Y., CARDOZO, J.,
later Chief Judge, said (p. 165): "Juridically, a government that is
unrecognized may be viewed as no government at all, if the power
withholding recognition chooses thus to view it. In practice, however, since
juridical conceptions are seldom, if ever, carried to the limit of their logic, the
equivalence is not absolute, but is subject to self-imposed limitations of
common sense and fairness."
The principles last discussed are the same as those presented by so
authoritative a compiler as Hackworth as governing the effect of
nonrecognition (1 Hackworth, Digest of International Law, p. 364 et seq.).
Applying these principles, it is insufficient for defendant merely to allege the
nonrecognition of the East German Government and that plaintiff's assignor
was organized by and is an arm and instrumentality of such unrecognized
East German Government. The lack of jural status for such government or its
creature corporation is not determinative of whether transactions with it will
be denied enforcement in American courts, so long as the government is not
the suitor.* (Actually, on the present pleadings no issue is raised that plaintiff
assignee is that government, or is an arm of that government, or that the
assignment to him of the trade acceptance is invalid or does not represent a
genuine transfer.)
The extent to which courts will recognize the legal effect of transactions
within the territory of an unrecognized government, even where the
transaction is materially affected by the action of such government, has been
dramatically demonstrated. In Salimoff & Co. v. Standard Oil Co. (262 N.Y.
220, supra) it
[13 A.D.2d 40]
was held that one who took property by purchase from the unrecognized Russian
government which had confiscated such property from its rightful owners nevertheless
had good title as against the onetime lawful owners.
Indeed, in the Salimoff case it was said (p. 227): "Such conduct [confiscation
of property] may lead to governmental refusal to recognize Russia as a
country with which the United States may have diplomatic dealings. The
confiscation is none the less effective. The government may be objectionable
in a political sense. It is not unrecognizable as a real governmental power
which can give title to property within its limits."
Consequently, Luther v. Sagor & Co. ([1921] 1 K. B. 456, revd. on other
grounds 3 K. B. 532), cited by defendant, was not viewed as authoritative (to
the same effect, see, Banque de France v. Equitable Trust Co., 33 F.2d 202;
cf. Sokoloff v. National City Bank of N. Y., 239 N.Y. 158, 164, supra). On the
contrary, in both the Salimoff and Banque de France cases it was held that
confiscatory decrees of an unrecognized Russian government might, in
proper circumstances, be deemed valid and effective in altering private
rights. A fortiori, the internal acts of the East German Government, insofar as
they concern the parties here, should be given effect generally. At least, this
is so in the absence of allegation that defendant's property was expropriated
by wrongful governmental force, or that for other reasons the transaction in
suit or that directly underlying it violates public or national policy.
This case does not involve the issues, tendered by defendant in its argument,
of jural status of the East German corporation, or of its incapacity to transfer
title, or even of its capacity to sue in our courts. These have been long
recognized as issues to be resolved by reference to the actual facts the
realities of life occurring in the territory controlled by a de
facto government, unless, of course, the contemplated juridical consequences
of such "facts" can be properly related as inimical to the aims and purposes
of our public or national policy (Russian Reinsurance Co. v.
Stoddard, supra; Petrogradsky M. K. Bank v. National City Bank of N. Y., 253
N.Y. 23; Moscow Fire Ins. Co. v. Bank of New York & Trust Co., 280 N.Y.
286, affd. by equally divided court 309 U.S. 624, overruled in United States
v. Pink, 315 U.S. 203; Thorington v. Smith, 75 U.S. 1). Even the power of a
rebel government in one of the Confederate States to create a corporation
with capacity to sue the United States Government was admitted where such
creation was not directly in furtherance of the rebellion (United States v.
Insurance Cos., 89 U.S. 99).
[13 A.D.2d 41]
It is a false notion, if it prevail anywhere, that an unrecognized government is always an
evil thing and all that occurs within its governmental purview are always evil works.
There are many things which may occur within the purview of an unrecognized
government which are not evil and which will be given customary legal significance in
the courts of nations which do not recognize the prevailing de facto government. In a
time in which governments with established control over territories may be denied
recognition for many reasons, it does not mean that the denizens of such territories or
the corporate creatures of such powers do not have the juridical capacity to trade,
transfer title, or collect the price for the merchandise they sell to outsiders, even in the
courts of nonrecognizing nations (cf. Sokoloff v. National City Bank of N. Y., 239 N.Y.
158, 165-166, supra).
Of course, nonrecognition is a material fact but only a preliminary one. The
proper conclusion will depend upon factors in addition to that of
nonrecognition. Such is still the case even though an entity involved in the
transaction be an arm or instrumentality of the unrecognized government.
Thus, in order to exculpate defendant from payment for the merchandise it
has received, it would have to allege and prove that the sale upon which the
trade acceptance was based, or that the negotiation of the trade acceptance
itself, was in violation of public or national policy. Such a defense would
constitute one in the nature of illegality and if established would, or at least
might, render all that ensued from the infected transaction void and
unenforcible. Defendant buyer cannot escape liability merely by alleging and
proving that it dealt with a corporation created by and functioning as the arm
of and instrumentality of an unrecognized government.
Put more concretely: The public policy which denies juridical recognition to
the East German Government is determined by the refusal of the political
arm to recognize it. That means the East German Government cannot sue in
our courts. The question whether its corporate instrumentality can sue is not
so clear. Perhaps it could sue. But another, not otherwise lacking in capacity
to sue, may, by way of transfer or other mesne assignment, sue on the
underlying transaction, unless such transaction itself or the assignment is
shown to violate the national or public policy. In order for such transaction or
the assignment to violate national or public policy, it must be shown either to
violate our laws or some definite policy. If the national government does not
administratively forbid, or if it facilitates, the purchase and delivery into this
country of East German
[13 A.D.2d 42]
typewriters, and no law forbids it, then defendant buyer will be hard put to show the
"illegality" of the underlying transaction, or the assignment, and thereby avoid payment
of the price for such merchandise.
Moreover, the status of the East German territory is that of territory, once
belligerent, but now occupied by a wartime ally, the Soviet Union, with the
consent of the other allies. Nonrecognition, in the past, of the East German
Government simply meant that, pending a reunification plan and free secret
elections, the State Department refused to recognize the displacement of the
Soviet Union as the power responsible for the territory and for the conduct of
affairs there.
All of this explains why defendant's pleading should be required to depend
on a sound theory. The effect of nonrecognition, used by defendant as some
sort of umbrella to protect it from liability is not the answer.
Accordingly, the order of Special Term should be reversed, on the law, and
the motion to strike the first affirmative defense granted, with $20 costs to
plaintiff-appellant, with leave, however, to defendant if it is so advised, to
serve an amended answer within 20 days containing an affirmative defense
asserting a violation of public policy with respect either to the underlying
sale or the transfer of the trade acceptance in accordance with the views
expressed in this opinion, or depending on any other theory not now passed
upon.
STEUER, J. (concurring).
I concur in the result. As pointed out in the learned majority opinion, an
unrecognized government lacks the capacity to sue. So does a branch or arm
of that government, whether it be a corporation or any other entity.
Concededly also, there is an infinite variety of relationship between
governments and their corporate creations. By a branch of the government is
meant an entity that performs governmental functions acting in its particular
sphere as the alter ego of the government. Whether a particular corporation
falls into that classification is a political rather than a juridical question, and
the determination of the State Department on that question is conclusive.
As a matter of pleading, it is a sufficient allegation that the corporation in
question, the plaintiff's assignor, is a branch of an unrecognized government.
It is not necessary to plead that our State Department has found that allowing
it access to the courts is inimical to our policy. Such would have to be the
proof, but, at this moment, we are not concerned with the proof. So lacking
the factor of the assignment, the pleading would be sufficient.
[13 A.D.2d 43]
The assignment presents several questions which do not call for decision at this point.
Conceivably, a naked assignment might leave the assignee in a different position from
that he would occupy if the assignment were a transfer of a bona fide interest in the
claim. A different public policy might determine the result and different legal principles
might well ensue. The pleading ignores the assignment. To that extent it does not meet
the issue tendered by the complaint, and the defense, to that extent, is insufficient.
Order entered on September 16, 1960, denying plaintiff's motion to strike out
the first defense pleaded in the defendant's answer, reversed, on the law, with
$20 costs and disbursements to the appellant, and the motion to strike the
first affirmative defense granted, with $10 costs, with leave, however, to
defendant if it is so advised, to serve an amended answer within 20 days after
service of a copy of the order entered herein, with notice of entry, containing
an affirmative defense asserting a violation of public policy with respect
either to the underlying sale or the transfer of the trade acceptance in
accordance with the views expressed in the opinion of this court filed herein,
or depending on any other theory not now passed upon.